The Annual Members’ Forum took place on Saturday 11th November 2023 in the music room at Woolhanger Manor near Martinhoe Cross.
It was well attended with an interesting and varied programme.
For the benefit of those members who were unable to get there, a member who was present has kindly prepared a set of summary notes which may be downloaded by following the link below:
PLEASE NOTE THE AMENDED 'DOORS OPEN' TIME, now 10.45am
The members' forum will be held as usual in the Music Room at Woolhanger Manor on Saturday 11 November. Doors open at 10.45 am. The two-minute silence for Remembrance Day will be observed at 11.00am and proceedings will begin at 11.30.
Response to the ‘Minority Trustee Report’ by the Secretary of the L&B Blackmoor Company PLC (LBBC)
This report has been placed on the Lynton & Barnstaple Railway Trust (L&BRT) web-site at the request of the Company Secretary of the L&B Blackmoor Company PLC (LBBC) which is a subsidiary controlled by L&BRT.
The reason for preparing this document is that the ‘Minority Trustee Report’, circulated widely on social media and e-mailed unofficially to many L&BRT members, contains gross misrepresentations about LBBC. These misrepresentations are malicious and may have unfavourable commercial impacts on the LBBC business which would affect the LBBC shareholders, many of whom are L&BRT members.
This report comments only on the sections of the original ‘Minority Trustee Report’ that relate to LBBC and those parts of the original report are included below with LBBC comments.
Minority Trustee Report:-
Update on the Lynton & Barnstaple Railway Trust
September Newsletter no 81.
To members of the Lynton & Barnstaple Railway Trust
This report has been prepared by LBRT Trustees Anne Belsey, Chris Duffell & Mike Whiteaker to correct the errors, misrepresentations and mistruths contained in L&BR Newsletter 81.
[The early part of the original report not directly related to LBBC is omitted. LBBC comments are highlighted bold and in Italics]
The Trust’s relationship with the L&B Blackmoor Company PLC (LBBC) and the purchase of OSHI
Negotiations with the previous owners of OSHI have continued fitfully for several years. This is why the LBBC Prospectus still uses data from 2015 instead of data reflecting recent post-COVID realities.
The Share offer document is an authorised document under FCA rules and cannot be changed. Extensive validation had to be carried out before the authorisation was approved. The authorisation is the equivalent of Stock Market Listing rules designed to protect investors where shares are not listed and not readily saleable.
Adding information not in the authorised document such as more recent data, purchase price etc. is not allowed when promoting a share offer. Since the offer document is now dated, the decision was taken to formally close the offer at the end of October 2023.
Recognising that the pub business was not a core part of the L&B’s mission, and that the re-laid track will actually be across the pub’s garden to the west of the old route, it was sensibly decided to create an arms-length company that would allow Members and supporters to buy a useful piece of the L&B jigsaw without requiring the Trust to invest a significant sum and to take on the risk of running a pub.
For these entirely sensible reasons, and to limit the risk to the Trust, the L&B Blackmoor Company (LBBC) PLC was created; the Trust provided £12,500 in Class A (voting) shares to set LBBC up.
Not true. The Share offer document makes it quite clear that the Trust will subscribe £50,000 for A Class shares. £50,000 is the minimum share capital required for a PLC (Public Limited Company) that can offer shares to the public, 25% of which must be available to register the Company and 100% of which must be available before the Company can trade.
Once established, it was the intention that LBBC would raise all the money to purchase and refurbish OSHI by means of a public share offer.
Not true. The Share offer document makes it quite clear that while the Company offers up to £1.75 million in B Shares, once the threshold of £750,000 is achieved the project will proceed with any shortfall covered by borrowing of up to £1 million.
However, by 2022 the issue of Class B (non-voting) shares had only raised £857,983.
How is this comment relevant? The threshold of £750,000 had been achieved.
The Trust has subsequently purchased a further £37,500 Class A shares
Not true. As pointed out above the Trust simply paid for the balance of its £50,000 commitment in the Share offer document.
and £203,000 of Class B shares,
Not true. The Trust received donations specifically to support the project and using these funds to acquire Class B Shares gives the Trust an asset. The share offer document describes the long-term intention to redeem B Class shares which means the Trust would eventually realise this purchase. The £203,000 amount includes original subscribers who died and their executors donated the B Class shares to the Trust.
and has made an unsecured loan of £250,000 at 5% over 10 years. A Trust member provided an additional secured loan of £580,000 at 6% interest rate.
Adding the Trust's own Class B shares to those bought by members and supporters creates a total Class B equity of £1,110,983.
The LBBC Share register for B Class shares totals £1,100,183 as at 17/09/2023.
It also appears that in order to assist the purchase, the Board has transferred £288,386 from the LBBC (formerly OSHI) restricted fund.
This appears to include double counting the £250,000 loan amount. When the share offer was publicised for share purchase or donations to support the project, many chose to donate. Some of these donations were directly to LBBC and some to the Trust specifically to support the project. The donations received via the Trust were remitted to LBBC by the Trust. As at 17/09/2023 the LBBC accounts show £46,306 of Donations received comprising amounts directly from subscribers or donations via the Trust.
Together with the existing £12,500 of controlling Class A shares, the Trust’s exposure to LBBC is now over £850,000 – about a decade’s worth of profits from the railway at Woody Bay.
Not true. The Trust has invested £50,000 in A Class voting shares. If LBBC were dissolved the holder of A Class shares receives up to £5 million (£100 for each share held) before other unsecured creditors. Refer to the LBBC Articles.
The Trust has loaned £250,000 to LBBC repayable over 10 years. This was fully discussed in 2020 when the funding shortfall seemed to be about £250,000 because of reductions in the loan to value percentage offered by the then prospective bank lender.
The ‘exposure’ of the Trust to LBBC is therefore £300,000 (£50,000 + £250,000).
The CIC operating company does not make £85,000 profit every year. The average surplus 2013-2022 was £38,055 which is clearly shown in the published CIC accounts.
The purchase price paid for OSHI by Mr Miles and Mr Cowling (the two directors of LBBC – who, incidentally, have not themselves invested in LBBC Shares) appears to be around £2 million. But even as Trustees of the Trust (LBBC’s largest investor), none of us have actually been told the price.
The purchase price will be in the public domain once the Land Registry is updated. It is useful to compare the amount paid (2023) with the share offer document figures (2015). Originally the track-bed land was included in the purchase but subsequently it was decided that the Trust would buy this directly. In addition to the Pub/Restaurant and House the RHI (Renewable Heat Initiative) tariff attached to the wood furnace was included in the purchase. In initial discussions the vendor was to retain this.
Bank Valuation (House and Pub/Restaurant) £1,225,000
Expected Purchase premium £ 240,000
Expected purchase price £1,465,000
Add RHI value £ 250,000
Comparative total £1,715,000
Actual Purchase (2023):
Bank Valuation (House and Pub/Restaurant) £1,300,000
Purchase premium £ 250,000
Purchase price £1,550,000
Add RHI value £ 250,000
Total transaction £1,800,000
The RHI tariff will run for another 11 years to 2034. The value is based on the ‘normal’ year of 2019 (before pandemic) updated to the current tariff rates and inflated by 3 or 4% as the tariff is increased each year by the Retail Price Index.
Arguably the price paid is just £10,000 more than the original prospectus figures when the £75,000 increase in bank valuation (2015 to 2021) is taken into account.
This is a violation of the rules of information flow to Trustees, and makes it much harder to do our jobs that you elected us to undertake.
It is for the directors of the L&B Blackmoor Company PLC to monitor financial performance and publish results when these have been verified and audited.
This purchase price has been estimated by adding the share capital (£1,110,983) to the secured loan made by a Trust member (£580,000) and the unsecured loan from the Trust (£250,000). This comes to a total of £1,930,983, This figure does not include the £288,286 from the LBBC (formally OSHI) restricted fund as there is no clarity on what this fund has been used for.
It has already been explained that Donations were what was transferred to LBBC.
Newsletter 81 implies that the money was used to buy the Class B shares. However, the Class B shares were bought in the last financial year, whereas the £288k from the LBBC (formally OSHI) fund has been spent during the current financial year.
A valuation of £1.3M was obtained prior to 2019.
Not true. The valuation is dated August 2021.
However, this valuation would not have taken account of the changing times that we are experiencing now, with high interest rates, increase of costs caused by inflation and the Ukraine war, and the significant drop in property prices, especially Licenced premises such as Pubs and hotels.
So it would appear that Messrs Miles and Cowling paid significantly more than the fair market value of OSHI. Not only that, but in order to be able to purchase OSHI, they have agreed an unsecured loan from the Trust for £250,000 at 5%, at the same time as accepting a 6% secured loan with a Trust member. It is unthinkable that an unsecured loan would be cheaper than a secured loan, and the rate on the Trust loan should be at 9–12% per annum.
Various dates need to be understood in order to assess interest rates.
The Trust agreed to the £250,000 loan in August 2020 when BoE Base rate was 0.1%.
The purchase price was agreed in January 2022, respective solicitors were instructed and at that time all the required funding had to be available. BoE base rate was 0.25%.
Fixed rates loan agreements are essential for projects of this nature. The rates in force were advised at the time to be at a commercial level.
Much of the remainder of the original document makes statements based on assumptions that have been shown above to be inaccurate.
Therefore, the Board has – in contravention of explicit HMRC and Charity Commission guidance, the specific advice of the Trusts Solicitors (Stephen Scown LLP), and opposition from Chris Duffell – made a loan on non-commercial terms to LBBC. Therefore, not only is the Trust needlessly financially exposed, it is not even getting a fair, risk-based return. It should also be noted, despite the claim in Newsletter 81 that the loan was agreed in 2020, there has been no discussion on the terms and conditions of a Trust loan within Board Meetings, nor are agreement of the provision and details of such a loan recorded within any Trust Board minutes.
These comments are covered in the Trust response document on its web-site. As pointed out above, the necessary funding and loan terms needed to be agreed and available when solicitors were instructed in January 2022 when Bank of England base rates were 0.25%.
It is also not clear what has actually been purchased by LBBC for this sum. The original prospectus indicated that LBBC would be purchasing the pub, the six-bedroom house, plus some 8.5 acres of surrounding land.
It now transpires that the previous owner is retaining some of the original land, and that the Trust has purchased, directly from the Owner, the land required for the railway track and station area for a sum of £50,000. (It is not clear where the £50,000 the Trust paid for the actual trackbed has come from, as the Table above indicates that it was not taken from the Trackbed Fund). This leaves the land owned by the LBBC shareholders consisting of the actual OSHI building and six-bedroom house and the garden and carpark area.
Items purchased and their value (compared to the original prospectus) are described above.
No plan of the areas purchased has been forthcoming, and none of this information has been shared with the LBBC shareholders.
In LBBC Shareholder Bulletin #12 (March 2023) the Trust land purchase is described as follows:
“The Lynton & Barnstaple Railway Trust have also purchased approximately four acres of the adjacent land to provide for the future construction of station platforms and track-bed for the extended railway. The vendors have retained some of the adjacent land which is not needed for the railway construction or extension.”
Chris Duffell is the person who has requested a ‘plan’ which will be on the Land Registry when that is updated. At the time of the request he had already demonstrated that he had breached the confidentiality of Trust Board meetings by feeding information to various social media sites, causing a marked reluctance to answer any questions not raised generally by others.
In other words, all of the land the railway needed was purchased separately for £50,000, and yet the purchase of the pub resulted in the Board locking up more than £850,000 of Trust Funds which cannot now be used for extending the railway.
The £850,00 figure is clearly misleading as shown above
Why does this matter?
The purchase of OSHI by LBBC with Trust support matters for three reasons.
First, because the £450,000 used to prop up the purchase of OSHI by LBBC (at a significant premium above the market price) means that it is not available for the construction of Bridge 65 and the extension towards Parracombe. Despite the Board’s continuing claims that we have the money to do so, it is clear that we do not.
The figure is not £450,00 but £300,000 (see above). The Return to Parracombe Appeal was not launched until Spring 2022, about 18 months after the Trust had committed to the LBBC loan.
Second, in committing the Trust to a level of exposure of over £850,000 to the LBBC, the Board has not followed Charity Commission & HMRC rules and guidance, nor has it followed the advice given to it by its solicitors.
This comment is covered in the Trust response document.
The remainder of the original document is less relevant to LBBC.
The document is signed as follows:
Anne Belsey [email protected]
Chris Duffell [email protected]
Mike Whiteaker [email protected]
15th September 2023
‘Minority Trustee Report’ - The True Position from the L&BR Trust
As you are no doubt aware, a ‘Minority Trustee Report’ has been prepared by three disaffected trustees; Anne Belsey, Chris Duffel and Mike Whiteaker. This centres on a number of allegations all of which has been intended to damage confidence in the work carried out by the Trust and its trustees over several years.
The actual position is set out below.
We confirm that an independent audit of the 2022 accounts is now complete and signed off.
Return to Parracombe Fund
This appeal was launched last year to raise funds for the extension of the line from Killington Lane to Parracombe. The incoming funds from that appeal were put into a Restricted Fund which amassed £ 242,615.15 to date. Other funds were also received and kept in general funds.
In addition, a further £20,744.84 of donations was held in the Killington Lane Fund that was started before the Return to Parracombe appeal was launched. Other monies from legacies and donations are kept in unrestricted general funds where no preference of use is stated.
The Trustees agreed to contribute £450,000 from the general fund to support the return to Parracombe project.
As will be seen from the above the total funding that was available to the Return to Parracombe project was more than £700,000.
When the Section 73 application was withdrawn it was felt that it would be incorrect to continue the appeal. The appeal was suspended pending consideration of the way forward. These restricted funds totalling £263,359.99 are ring fenced for their specified purpose.
The above is a sensible and practical way to handle funding and is used by all heritage railways. If all the funding had been put into a Restricted Fund it could not have been used on any other works. In fact, the withdrawal of the Section 73 application provided an opportunity to proceed with the entrance road to the Blackmoor loco and carriage works which also serves Rowley Moor Farm. The existing entrance was frankly dangerous with poor line of sight, lack of security and almost non-existent entrance roadway. All this has been remedied and the Trust’s barns as well as the remainder of the site can now be serviced by vehicles.
We had the planning permission, the Devon County Council highways approval for traffic control and a small window before the bird-nesting season began. By acting quickly this piece of work was carried out – and it could not have been had the funds been placed in a Restricted Fund.
Three pages dedicated to this subject in the Minority Trustee Report are clearly aimed to confuse and spread concerns within the membership.
The Old Station Inn
The possibility of the L&BR owning the Old Station House Inn was raised by the owners many years ago. This brought with it the advantages of owning another original station, providing the trackbed and other land to reconstruct the railway and a viable business at the same time.
A Government grant was obtained in 2013 to prepare the scheme as an investment opportunity and to sell shares to enable purchase. In order to sell shares to the public a separate company would be required. This company was founded in 2015 and two directors were appointed by the Trust; Ian Cowling and Peter Miles.
The intention was to sell shares to raise a minimum of £ 750,000 with a bank loan to provide the remainder.
In order to form a PLC a minimum of £50,000 of share capital is required. These are the A Class (voting) shares purchased by the L&BR Trust to have a controlling interest. It was decided subsequently that the land required for the railway reconstruction would be purchased from the vendors by the Trust directly.
Due to a reduction in the Bank’s loan to value percentage offered a further £ 250,000 was required which the Trust decided to lend in 2020 at a commercial rate of interest. This was checked for acceptability with the Charities Commission and the L&BRT’s accountants. Incidentally Messrs. Cowling and Miles abstained from the Trust vote approving this loan.
The property purchased includes the station building forming the pub and restaurant facilities, a 6 bedroom house, the district heating initiative plant and land including entrance drive, car parking and trackbed. The agreed price for the total including the value of the heating initiative grant being very close to the value when the share offer was launched.
The Trust has paid £ 50,000 for A shares, £ 50,000 for land and loaned £ 250,000. It has also honoured the wishes of donors to transfer £203,000 for LBBC and received B Class shares which are now a Trust asset. It will be seen that the total Trust commitment of £350,000 is a much lower figure than claimed in the ‘Report’.
The information and conclusions in the ‘Minority Trustee Report’ on this matter are confused and incorrect. This is another clear attempt to denigrate the Trust’s actions and to cause unrest.
It has been claimed that Messrs Cowling and Miles have a conflict of interest but that is clearly untrue as shown above. These trustees acted as directed by the Trust at no personal gain in any way and for the benefit of the L&BR project overall.
The ‘Report’ claims that the L&BR Trust is exposed to the sum of £ 850,000 which is totally untrue.
The ‘Report’ states that the Trust now has insufficient funds to extend or develop the railway. This is untrue. At the present there is almost £ 250,000 in General Funds and £ 581,000 in Restricted Funds. Further legacies and donations continue to be received.
This entire report can be seen as an attempt to cause distrust and concern at a time of continued success by the Lynton & Barnstaple Railway. At the same time the performance of the L&BR CIC has been very successful with income 30% over budget and current funds 50% up on the same period in 2022.
This Minority Report has caused consternation in the membership, volunteers and staff and by its circulation outside of the L&BR to the heritage railway world at large; unforgivable.
I P Cowling
C Summers BEM
We have now received Exmoor National Park’s very helpful and thorough response to our pre-application enquiry to extend the operational railway from Killington Lane to Cricket Field Lane. With advice from our planning agent, this will help us define the scheme and the necessary detailed technical work that will be required to support the application. That in turn will determine how long the planning process might take. When the scheme proposals have been developed, and subject to Board approval, they will be published in a further update to members. A public meeting will also be organised with Parracombe Parish Council to explain and discuss the scheme with local residents prior to finalisation and submission of the planning application.
John Barton - Trustee
Following publication of “Next Steps” in the Options Consultation Report circulated with Newsletter 80, this is an update for members.
A pre-application enquiry for advice on a new planning application to extend the operational railway from Killington Lane to Cricket Field Lane was commenced with Exmoor National Park (ENP) during April 2023. The purpose of this is to clarify various planning formalities and to identify what detailed information may be necessary for submission with the planning application.
When ENP’s written response is received, a further notice will be issued to inform members of the outcome and how that may affect the proposals.
John Barton - Trustee
The votes cast in the re-run Trustee elections were counted by the Railway's chaplains on Friday 21 July and the results were as follows:
John Barton 698
Anne Belsey 557
Paul Curson 574
Malcolm Smith 499
Mike Whiteaker 747
Therefore John Barton, Anne Belsey, Paul Curson and Mike Whiteaker have been elected to serve on the Board of Trustees.
Company Secretary, Lynton & Barnstaple Railway Trust
I am pleased to report that on Thursday 20th July, Exmoor National Park approved the last outstanding pre-construction condition of the 44 that were placed on the 2018 planning approval. The statutory period for approval of conditions is 8 weeks but the longest took over 34 weeks with our agreement to 9 extensions of time.The information submitted to discharge these pre-construction conditions will be very helpful in any future planning application to extend the railway from Killington Lane to Cricket Field Lane.
John Barton - Trustee
The 2023 Trustee election voting papers and instructions were sent out to members on 4th July 2023 to be returned by 20th July 2023.
For overseas members only; If you do not receive your voting papers in time to return them by the 20th July please email the secretary, Tony Nicholson at [email protected] to request a PDF copy to be completed, scanned and returned to [email protected] . Emailed votes will not be counted unless a requesting email has been received by the secretary.