1. The Essentials
So, what’s this crowdfunding campaign about?
We are raising investment to expand. We will use the funds that we raise to treble capacity at our brewhouse, invest in our team and our brewery, and open our very first Five Points taproom, The Pembury Tavern, two minutes from our brewery, on the ‘five points’ junction from which we take our name, and install a pilot/research brew-kit.
We are listing on the Crowdcube.com crowdfunding platform. Our campaign page is at www.crowdcube.com/fivepoints
By investing in us you will become part of the Five Points family and will own shares in our company as well as have access to awesome rewards.
Why are you turning to the crowd?
We want to build a community of Five Points investors, and what we love about the idea of crowdfunding is the ability to welcome on board hundreds, possibly thousands, of passionate beer lovers and supporters of independent and growing businesses, who will be literally invested in the success of our brewery. And, because at the end of the day, banks don’t drink our beer, people do.
Do I get shares in the company?
Yes, every investor will receive shares in The Five Points Brewing Company Ltd. The number of shares you receive will be proportionate to the amount that you invest. The final number of shares issued will be dependent upon the final number of investors and amount of money raised. Our initial fundraising target is £750,000, equivalent to 5.66% of the company.
Are there rewards?
Yes, as well as shares in our company, every investor is also entitled to a range of rewards, depending upon the amount of money invested. Rewards include free birthday pints, discounts in our brewery tap and online, invitations to parties and special events, free brewery tours and tastings, and more. See our Crowdcube page for full details.
When will your crowdfunding campaign go live?
We are now live, please see fivepointsbrewing.co.uk/crowdfunding to sign up for news and updates.
How long will the campaign last for?
The campaign will last for up to 30 days, or whenever we reach or target. If we hit our target of £750,000 sooner than 30 days, then we are likely to choose to ‘overfund’, meaning that people can continue to invest. This will have no impact on the people that have already invested, it just means that we would make a larger % of the company available for sale.
What will you do with the money?
We want to treble our brewing capacity, bring all our production back to Hackney, open our first Five Points taproom opposite the brewery, and ultimately we want to realise our ambition to be one of the leading breweries not just in London, but the UK.
Please see the business plan available on our Crowdcube webpage for more details, but this will include new, state of the art equipment, new fermentation tanks, a centrifuge, investing in our team, in extending national distribution and expanding our export business and continue to invest in quality improvements to make the best-tasting beers possible.
We will also use the investment to refurbish and open the Pembury Tavern as our first taproom. In this exciting new venue, we will install a research pilot kit, to experiment and develop new beer recipes. The Pembury will have a tap dedicated to these exclusive special releases, and a cellar for our growing barrel-ageing project – tapped exclusively at the taproom.
Overfunding – what will you do with the additional investment?
Update 15.04.18 We are delighted to have reached our initial funding target on Saturday 14th April, and are now overfunding. Initially running until Thursday 19th April, we have now decided to now continue to allow investments, and will take investments until midnight the following Sunday 29th April 2018. All additional funds invested will allow us to increase our expansion drive. In particular, we would love to expand our estate of Five Points pubs and bars, in London, and elsewhere in the UK, in key markets where we already have a strong presence, such as Leeds. This will increase our routes to market, and improve our profit margins as we sell direct to the public, taking the full retail margin.
We will also be able to utilise additional funds to more swiftly expand our sales and business development team, innovate new products and to focus ever more on our quality control. Additional funds also reduce our reliance on asset finance, and for example, enable us to invest in our own population of kegs and casks.
2. Investment & Shares
What happens if you raise more than your target?
If we are fortunate to raise more than our target of £750,000 then we will be able to use this investment to grow the company even more quickly than we currently plan to, including our aspirations to open further Five Points taprooms around London, and further afield. If we raise investment above the target level, this simply means that we will have more shareholders and be ‘giving away’ a larger % of our company, it will not mean that the initial crowdfunding investors are affected in any way.
When will the payment for my investment be taken?
Initially, your investment in our campaign will be recorded as a pledge, and no funds will be taken at this stage. Following the successful completion of the campaign, Crowdcube will contact you to confirm that date that the funds will be deducted, with a minimum of seven days notice, and allowing you a final opportunity to opt out of the investment.
When will I receive my shares?
Crowdcube will issue shares following the successful completion of the campaign, and after your investment has been processed. The completion of the round and the paperwork takes a few weeks to draw up, but typically you can expect to receive your Share Certificate and shareholders discount card around 4 weeks after the campaign has ended.
Are there tax advantages?
We qualify for the EIS scheme. Eligible investors may be entitled to up to 30% of the value of your investment discounted from your income tax bill, as well as other tax reliefs. For further details please see – https://www.crowdcube.com/pg/eis-seis-tax-relief-overview-43.
What’s the difference between A shares and B shares?
There are ‘A’ shares and ‘B’ shares available in the company. Both types of share are equal in all ways regarding the right to share in dividends and capital distributions. Investors who invest at £5,000 and above will be entitled to ‘A’ ordinary shares which also have voting rights and certain pre-emption rights (a pre-emption right is a first option or first refusal on buying any future shares that are offered in the company). ‘B’ ordinary shares for investors below this level retain all rights to dividends, but no voting and pre-emption rights .
Can the shares I buy in Five Points be traded / can I sell my shares at a later date?
We are a private limited company, and in common with all such companies, at present there is no public forum for buying and selling shares in the company. Shares may be bought and sold by private arrangement, with slightly different conditions if you are an A or B shareholder – if a holder of A Ordinary Shares wants to transfer their shares, they must first offer them to the other holders of A Ordinary Shares. B Investment Shares are freely transferable which means a holder of B Investment Shares may transfer his or her shares without first complying with the pre-emption procedure, as long as that holder wishes transfer all of their shares to a single third party.
Are you likely to have a future share buyback scheme?
This is a possibility, and it is a circumstance in which you could sell your shares.
Can all shareholders attend the AGM?
All ‘A’ shareholders will be entitled to attend and vote at the AGM (Annual General Meeting).
What rewards are available to me as an investor?
There are a range of rewards available to all investors, starting from investments of £10 and up. The rewards vary according to level of investment, and include a free pint on your birthday for everyone, early bird access to new beer releases and special events, discounts in our taproom, sister venues and online, discount vouchers, brewery tours, hop picking trips, shareholder parties, and more. Please see our Crowdcube campaign page for full details.
When will I get my shareholder card to be able to claim my discounts?
We aim to dispatch your shareholder card and any other rewards around 4 weeks after the end of the campaign.
What if my birthday is before I receive my card?
You can happily have a pint on us! Just drop us an email and we’ll look after you.
4. The Pembury Tavern
What are your plans for The Pembury Tavern?
The Pembury Tavern is a legendary Hackney pub, just two minutes from the front door of our brewery. It is also the only pub situated on the landmark ‘five points’ junction from which we take our name.
The acquisition of our first taproom is a massive sales opportunity and route to market. We will sell our beers direct to the public, taking the full retail margin. This exciting venue will also have a research pilot kit, with a tap dedicated to special releases, and a cellar for our barrel-ageing project, to be tapped exclusively at the taproom. Not only will this venue help build our brand profile, it will contribute to improved profit margins. We estimate that The Pembury Tavern alone can account for minimum sales of the equivalent of 60 kegs a week across our full range of cask, keg and packaged beers, or 160,000 pints per annum. Our ambition is to add additional bars in the future.
We have agreed a deal to buy the pub, and have exchanged contracts with the current owners. Your investment will allow us to complete the acquisition, refurbish and relaunch the pub.
When will Pembury Tavern open as the Five Points Brewery tap?
We hope to complete the deal and obtain the keys by the end of April 2018. For the first 3 months we will continue to trade the pub ‘as is’, with some initial light touch tweaks to improve lighting and atmosphere, and improve the range of drinks with the addition of the full Five Points range. We will get a feel for the space and get to know the existing customers while we plan the fuller refurbishment and relaunch. We expect to be up and running with the new pilot brew-kit, our barrel-ageing cellar and the full Five Points taproom experience by September 2018.
You mention the possibility of opening other pubs and bars in your business plan, how advanced are the plans?
We would love to expand our estate of pubs and bars, both in London, and potentially elsewhere in the UK. This would increase our routes to market, and improve our profit margins as we sell direct to the public, taking the full retail margin. However, at the moment these are aspirations and do not form a part of our business plan. If we are lucky enough to be able to exceed our target and ‘overfund’, then we would be able to revisit our plans and proactively look at possibilities to open new venues more quickly.
What’s the link between Five Points and Whitelock’s Ale House, The Turk’s Head and Mason & Company?
Whitelock’s and The Turk’s Head in Leeds, and Mason & Company in Hackney Wick are owned and operated by the founder and MD of The Five Points, Ed Mason. We describe them as ‘sister’ venues, and part of the wider Five Points family. Depending upon your level of investment, you will be entitled to discounts at these venues as well as our new Five Points taproom and online. The Five Points Brewing Company does not own these venues, and you are not investing in those venues.
5. Production in Belgium
What’s this about brewing in Belgium?
In late 2016 we reached capacity at our Hackney brewery, and couldn’t brew enough beer to meet demand. We decided to brew some of our beer, mainly our Pils lager, at an independent family brewery in Belgium, 200 miles from our Hackney home. Here’s our blog post about it from the time. This investment will allow us to bring all our production back here to Hackney.
What are the advantages of bringing all the production back in house?
We took the decision to brew some of our production off-site in Belgium in order to maintain momentum and to keep growing, and we didn’t want to turn away customers. This enabled us to maintain our growth, but it also led to increased costs including higher Beer Duty, 3rd party production and packaging costs, and Belgian transport costs. By bringing all brewing back to Hackney through this expansion at our own brewery premises, these costs will be eliminated, resulting in a total £304K of savings per annum. Please see the financials presentation on the Crowdcube website for greater detail.
6. Valuation and Return On Investment
Do you have a financial pack?
Yes it is available for download on our Crowdcube campaign page. If, after reading it, you have any further questions then please do not hesitate to contact us on the details supplied in the pack, and we will be happy to answer any questions or supply additional information.
How did you arrive at your valuation?
We debated and discussed our valuation long and hard, and benchmarked ourselves against other breweries that have either sold up/been bought, or who have also run successful crowdfunding campaigns. Our valuation at 4x existing turnover, and 3 x predicted turnover for 2018 is fair, represents good value, and is in keeping with our ethos as a company. Please see page 34 of our business plan, available on Crowdcube, for more details on the comparisons used.
How will I make a return on my investment?
This is a long term investment in the relatively early stages of a fast growing company. We anticipate that the value of your investment will increase over time, giving you capital growth. The main way that an investor can make money from your investment is by selling your share for more than you paid for it.
We are a private limited company, and our shares are therefore not publicly traded at present. In the event of a future sale of the company you would be able to sell your shares at that stage to the acquiring company. Alternatively, if the business grows to a point where we float on a stock market (a long term aspiration), or the company management offer to buy back equity from investors, these are also the stages at which you are likely to be able to sell your shares.
You will be entitled to a share in the payment of dividends (please see the next question).
Please also note that, depending upon your personal circumstances, there are likely to be tax advantages to this investment (see the questions on EIS above). There are also a range of rewards available to all investors.
What are your plans regarding payment of dividends in future?
This is a long term investment in the early stages of a rapidly growing company. We have ambitious plans for the future that will require ongoing investment, including in new capacity and premises in the future. It is therefore likely that in the first few years, i.e. the 4 years that up until the end of the financial forecasts in our business plan, that all profits will be reinvested in growing the company. It is certainly our longer term ambition to pay a dividend to all shareholders, at a ratio of 50% reinvested in the company and 50% paid as dividends, so that all shareholders make a return on investment through dividends as well as through capital growth in the value of their shares, along with the ancillary benefits of being a shareholder.
What is your exit strategy?
We are committed to the long term success and growth of The Five Points as a successful independent company. We believe that our efforts are best aimed at, and shareholder interests best supported by, focussing all of our efforts on hitting our growth targets and achieving our business plan.
This campaign is not about trying to find an external buyer for a high profile brand within the next 18 months. Our aspirations are to take investors along with us for the long term success of our company, with the possibility of an IPO (public share listing) at some stage in the future.
At the same time, we are realistic about the possibility that we might at some future point be approached with takeover enquiries. We would take any approach seriously, and judge it on its own merits, before taking anything to the shareholders. In Page 34 of our Business Plan we discuss the types of merger and acquisitions activity that has been taking place in our sector, along with valuations.
How do you plan to meet your targets for growth?
Our business has continued to grow rapidly since 2013, through a combination of great beer, a reputation for excellent customer service, adding to our product range, and investing in our team. We are in the middle of ongoing growth and demand for our beers. Additionally, we have highlighted in more detail in our business plan, available from our Crowdcube campaign page, our plans and opportunities for growth (please see pages 10 & 11 of the financials presentation). These include the acquisition of our first taproom, developing export, rolling out fully across the UK, working closely with and developing new customer categories, investing in our team and in business development, and developing and expanding our product range.
How has the company funded growth to date?
Growth has been financed to date by a mixture of equity and loans from shareholders. Current shareholder loans stand at £700K. In addition, the company has finance lease agreements in place which have been used to finance the acquisition of key items of brewing assets totalling £300k. We do not hold any bank loans. The largest part of our debt is owed to existing shareholders who are extremely supportive of our plans to grow the business and do not require the repayment of these loans on a monthly basis. There are shareholder loan agreements in place which do not envisage repayment of these loans for another 4 years and beyond the term laid out in our business plan. Monthly repayments are therefore limited to those on our equipment finance leases.
It is a requirement of the EIS scheme that all funds raised are used for investment in and growth of the business. We can therefore confirm that none of the investment funds raised will be used to repay shareholder loans.
N.B. Friendly disclaimer – Investments of this nature carry risks to your capital as well as potential rewards.