Severn Valley Railway to launch £4,000,000 share issue.

I think there is some leaping to conclusions on the basis of an unconstructively posted link to a business plan.

With respect to the business plan, the challenge would be how much time and resource were you expected to be devoted? Its not going to go to glossy designers etc etc. No doubt much is held back (detailed budgets, headcounts etc etc). The important thing is that management have thought about issues and by circulating are prepared to be challenged on ones they have missed.

This is a reference to a share offer and it is not a prospectus. Lets wait and see a prospectus. Also, whilst a number of £4m might be mentioned I wonder if that is the target raise or some upper limit to be specified for company law reasons. Also these things tend to run for as long as possible.

 

An interesting read.

This document is clearly aimed at Business investors, it's not a "layman's" document, you have to remember your audience, and this example is exactly doing that.

Any key business investor is going to look for:

a. Return on Investment
b. Value on Investment
c. Whats in it for me

I think point c is covered. However the remainder sounds more like an appeal for funds, rather than a sound business investment.

What i would be looking for, is not why the money is needed to fix problems, (I can always put a penny in the box for the Church roof fund, but I would not buy shares in the Church).
But instead how the money will be used to maximise the return and benefits.. (even if I don't expect a dividend, I expect the money will be used to make money and improve the experience)..

For example...

Value on Investment: restoration of locomotives (suggest specific examples), coaches, stations, station facilities additional tourist attractions, increased awareness, morale, attract more volunteers etc
Return on Investment: programs to encourage more visitors, additional visitor facilities and revenue streams, growth of the engineering business all of which leads to increased revenues, link to other tourism industries to generate joint income, why not even suggest potential for long term Commuter services or potential line extensions....
business readers are looking for the money.

Q. How many more tickets will the railway sell by painting a bridge or repairing a shed roof ?
A. An investor would have an expectation that the business is viable and able to support itself, which means it should be able to fund it's own infrastructure.

In short I feel it needs to be a bit more ambitious and talk up the opportunities of the railway, rather than painting a picture of regeneration.. after all peoples perception of the SVR is a very positive one.. you will be more shocked if you read a negative in this context... for example..

I was drawn to the SVR suggesting contracting out overhauls and hiring locomotives, WOW !, maybe it would have been better worded as:

SVR engineering department continues to grow in strength to such an extent that external business revenues are meaning internal work is becoming difficult to facilitate in the short term, something this share issue hopes to address and grow the business in this area ?

Additionally I mis-read that the money will be used for improving volunteer morale... Does that mean throwing a £4mn party for volunteers ? wow I'll not buy shares but I may become a volunteer !

In this climate, and to raise a medium size figure you need to be aiming higher than the granddad's pension investor... maybe a package of incentives for Businesses to buy shares.. for example: if a company signs up to buy shares in the railway, the business will be able to write down the investment as a loss against tax, whilst at the same time have the advertising rights to say it supports the railway and maybe offer a package aimed at corporate sponsors (i.e. tickets on the diner for business meetings etc ?)..

Marketing should be right up there with the strategy.. After all it's the Marketing that needs to be aligned to the business vision.
Maybe there's room for advertising opportunities at stations at the railway, in a tasteful way in keeping with the railways epoch ?

thats my thoughts, I'll email them directly also.

As for the language.. nothing wrong in a business communicating in business language... after all it's credibility thats required... talking like an ape you'll only get bananas.

 

First, I hope the SVR does well. They have been and I hope will maintain their postition as one of the top heritage railways in the country. I have a lot of repect for them.

After having played a game of bull**** bingo, again, in our management weekly meeting, I hate the way the English language is being use by some people. Had a case today of "We need to verbilise in an email" and " the project is viable" today... Both equally bad uses of English (use the OED to confirm the use of words correctly), although verbilise is not a word, unlike viable, which now is used incorrectly.......

I wish management would use English correctly. They seem to add these meaningless words to sentences to try to make it look like they know more than we do when it only shows they know less.

I must now write a 1 pager to facilitate the viability of the stakeholder engagement strategy.......

 

I do not think that the document is aimed at business investors. It will be in the language and form that it is as it is a public offering by a PLC and such offering and prospectuses have to be in a certain form.

In reality such share issues are basically appeals for donations by another name. Yes if you buy enough shares you might be entitled to a few perks, but ultimatly nobody buys the shares expecting that they will get a return on them either by way a dividend or gain in value. In my view they are little different to acquiring a life membership interest in many cases

 

I think it is an upper limit - not unrelated to the fact that the E15 scheme has an upper limit of 5 million Euros!

 

I agree - and I suspect that large scale investments by businesses would not be welcome - the Holdings Company cannot pay dividends, so the only way a business could benefit from it's investment is by way of "asset-stripping" - and some of us are old enough to remember Nabarro's attempts in that direction!

 

He might have read the responses and not wanted to get into another of NP's controversies. If so, he has my sympathy.

What is also interesting is that nobody at the SVR has commented on the matter, in particular whether it is true that the SVR is planning a share issue and for what reason and that the document the the OP refers to does actually exist. Personally I would hope that the volunteer managers at the SVR are more articulate in their use of the English language than is implied by the OP in his post.

The modern or should it be 'post-modern', perhaps current, generation of managers seem to be in the process of re-inventing English to the detriment of the language and to their ability to communicate to their staff and to the outside world. This process is continuing and seems to have become a great deal worse since I retired ten years ago. Regrettable but I doubt if it can be stopped.

Regards

 

I don't speak for the railway. I can say that a Q&A was advertised and held with staff, members, volunteers and shareholders, and that this short slide show formed the basis of the presentation and discussion.

The railway has circa £3mn of unissued shares so issuing new shares is not a big step. From memory I think it was the EIS limit of 5mn Euros that set the £4,000,000 upper limit (as mentioned above), that the tax rebate is 30%, and that it is changes to the EIS in 2012 will allow the SVR to take advantage of the scheme.

The language is what is now "business English" as she is spoke, I see it quite often! Whether that's so bad I'll leave to others' judgement. Leaving that to one side, I shall be increasing my shareholding when the time comes. I'm sure the railway will be connecting with its stakeholders ;-D (translation: talking to people) before then!


Patrick

 

It's an "association" with the company that endures after the death of the original purchaser, of course. The shareholding can be left, or sold, to whoever the original shareholder chooses. The long term concern for any plc is that they have a number of small shareholdings, and those holdings diminish in value and increase in number as shares are left to e.g. "each of my children". The administrative burden becomes inceasingly costly.

 

I've both life membership (of the "guarantee" company) and shares (in the "holdings" company, which owns the railway). The shareholding gives one the right to vote on the holdings company; around 25% of shares are held by the guarantee company (the whole membership) and 75% mostly by individuals. Shares also allow some free travel, membership gives only a discounted rate (though also being a volunteer gives me free travel anyway!).

Patrick

 

This matter get a mention in the latest edition of 'Railway Herald', where, regrettably, the same barmy management speak is used. Why try to 'incentivise' shareholders when 'encourage' or 'motivate' will do?

The impression I get from this matter is that the railway's management has grown apart from its supporters and volunteers, and this document and the presentation it supports is a ham-handed way of trying to make contact.

See: http://www.railwayherald.com/magazine/pdf/RHUK/Issue288.pdf . The report is on Page 18.

Regards

 

Or recognised that methods of communication have moved on and have sought to address them?

Note the comment in RH that the document is incomplete and that it will incorporate feedback

I've given, and received, feedback

Patrick

 

As a Gold Medallion holder and a 40 - year volunteer, I guess I'll be putting my hand in my pocket again. I know there's a lot of work which needs to be done, and paid for, which can't be funded from normal returns. I want to see my Railway grow and prosper and I want to continue driving engines on it and doing other stuff as long as I am able and, if I live long enough to become old and frail, I want to be able to go and watch other people doing it and ride up and down, until I have to head for the Great Shed in the Sky. I can feel another Direct Debit coming on...

 

I really hope the share issue is well supported. The harsh reality is that visitors rightly expect facilities to improve, the infrastructure is getting older, engines more expensive to repair and running passenger trains is not often profitable.

In the next few years the following needs doing
Bewdley tunnel (this winter) the drainage has failed and needs replacing, some of the brickwork at the portals needs repointing and track needs replacing. If it is not done very soon there will be a 17 ton axle load limit through with a 5mph slack - so that would be the end of big engine galas.

Sandbourne viaduct - once this has dried out (from last winters work) repairs are needed to parts of the stonework
Wribenhall viaduct - more repairs are needed to continue work done
Pickfords building - the main repair works for carriages and storage for lots of parts, where inside the next two years the whole roof needs replacing
Bridgnorth Bypass bridge - now needs a repaint and maintenance job on it (involving road closures)
Bridgnorth boiler shop roof - is now coming due for repairs having been up for over 20 years
Track needs replacing at lots of places as it is becoming life expired - (it costs at least 60K per half mile for rail for secondhand rail)

That's the short term list and that's standing still. Also on top of that Bridgnorth buffet was a temporary fix over 25 years ago and again is getting to the end of its life. In fact the whole of Bridgnorth station really needs a heavy investment to improve the facilities for visitors such as improved canteen, shop, bar, toilets.

All that lot does not come cheap - so in a nutshell if you want to continue enjoying the SVR and the galas that are put on buy some shares to help ensure its continued survival.

 

Plans for 'Bridgnorth 150' and development of the site are available at http://www.bridgnorthstation.co.uk/resources/bh+redev+project+comment+paper.pdf

Patrick

 

Thanks for that Patrick, a nice overview of what is planed. I hope that they are sucessfully carried out. The buffet is a much needed change and good to hear that the parking is being looked at. The opening up of the work to viewing would be a good as I find quite a few are disappointed about not being able to have look around when they visit on a normal day.

 

Newsletter tracking the progress of the Bewdley Tunnel project.

Underground Lines No 2 is on Underground Lines

Patrick

 

It must be saidd we are in the middle of the worst reccession since world war 2 and asking people for this level of money may not be the best timed idea.I assume they have looked at cost cutting first if you not making a operating profit on a day why are you operating maybe cut down on mid week running if its costing you money to run trains dont perhaps run a dmu service during the week as more of a public transport service.
How good a return on the investment is this what happens if they dont raise the money will the project go ahead anyway the railway needs to live within its means people have already given large amounts in 2007 its not to long after to be asking again.
I doubt there are that many people with great chunks of money they can afford to give away with not return if they were going for a share issue maybe some dividend payment would make people or business likey to invest.

 

I’ll preface this by saying I don’t speak for the SVR and I’m not involved with the management or running of it

It may not be, but the railway has already borrowed money for essential repair works to structures and the Permanent Way which, reading reports, the board were advised were essential and should not be deferred. The suggestion is that the railway has not been putting in enough money for a while. If you look at Underground Lines (see above) you’ll see how much work is involved. The railway can generate it through profits, obtain grants, borrow it or raise it, but they must have it!

It’s basically a £5m revenue railway, with profits of £97k and £70k in two recent years and a loss in another. The works last year were £500k and this year will be similar. It has cut down the number of trains it runs and running the railway more profitably is a must, but no amount of cost-cutting or revenue growth will consistently generate the amounts needed to fund these sorts of major works.

What happens if they don’t raise the money? I don’t know but I guess some works would happen and some would be deferred, and some other things would suffer as a result; all to the detriment of the railway

At the last Q&A I recall it being said that the last share issue was in the 1990s, although as you say there was the appeal in 2007.

The Q&A document (I can’t find it to quote it) also referred to more benefits being contemplated for shareholders.

I do recall however that the Lottery money for the Carriage Shed and Engine House came with conditions that required the railway not to pay dividends, amongst other limitations, and the company changed its articles and memorandum accordingly.

Patrick