Lynton & Barnstaple Railway Trust Exmoor Enterprise
Exmoor Enterprise
Lynton & Barnstaple Railway
Business Plan for the Complete Railway
Lynton to Barnstaple (19 miles)
Version 201412
Overall Business Plan 201412 Page: 1 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
Contents 1 Introduction ...... 3 1.1 The Original Railway ...... 3 1.2 Phase I ...... 3 1.3 Phase II ...... 3 1.4 Phase III ...... 4 1.5 The Complete railway ...... 4 2 Local Economic benefit ...... 5 3 Economic Impact Calculation ...... 7 3.1 The Construction ...... 7 3.2 Railway Operations ...... 8 3.3 Economic benefit to the region ...... 10 3.4 Net Economic benefit ...... 11 3.5 Employment Contribution ...... 12 4 Operational Plan ...... 13 4.1 Railway Operations ...... 13 4.2 Income and Expenditure ...... 15 5 Notes and References ...... 18 5.1 Sustainable Development ...... 18 5.2 North Devon Workplace Earnings ...... 18 5.3 Ticket sales by Type ...... 19 5.4 House price levels ...... 19
Version Control Other Docs to update Base version Issued 01/02/2013 11/12/2014 Version 201412 Revised to support NDC Draft Local Plan
Overall Business Plan 201412 Page: 2 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
1 Introduction
The Lynton and Barnstaple Railway Trust (L&BR) is planning to extend the current one mile railway to nineteen miles and return the railway into Lynton and Barnstaple. The project to plan and develop this extended railway is known as Exmoor Enterprise. The activities and current operations of the railway can be viewed at the web-site: www.lynton-rail.co.uk . This document presents a business plan for the future operation of the complete railway. Other documents contain versions of the Business Plan for Phase II only (Lynton to Wistlandpound Reservoir) and Phase IIA (Woody Bay Station to Wistlandpound Reservoir).
1.1 The Original Railway
The railway was opened in 1898 and closed in 1935. Histories of the line have been regularly published since the initial definitive work of L.T. Catchpole first published in March 1936 and now in its eighth edition (2005). The railway was amalgamated into the Southern Railway in 1923. The line lost money after the spread of motorbus services in the local area during the 1920s.
Annual passenger numbers before closure were 32,000 (1934) down from 72,000 (1925) and a peak of around 100,000 during the period 1906- 1913. The railway served the communities of Barnstaple, Chelfham, Goodleigh, Bratton Fleming, Blackmoor Gate, Parracombe, Woody Bay and Lynton providing a transport link for goods and passengers.
1.2 Phase I
The current railway operates from Woody Bay Station and has a one-mile length of track to a temporary station at Killington Lane near Parracombe. Woody Bay Station was acquired in 1995 and after extensive renovation the station and 400 yards of track were opened to the public in 2004. The track was extended to Killington Lane in 2006. The re-opened one-mile railway has already carried more than 350,000 passengers (2014) with the 2014 annual total expected to be 45,000.
1.3 Phase II
Phase II will re-instate a nine-mile route from Lynton to Wistlandpound reservoir near Blackmoor Gate.. It provides the opportunity for a park and ride scheme from the edge of Exmoor National Park to Lynton, thus taking up to 50,000 cars per year off the crowded A39 road and providing a solution to tourist parking problems in Lynton and Lynmouth. It will also provide easy access to Wistlandpound reservoir.
Overall Business Plan 201412 Page: 3 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
1.4 Phase III
Phase III will re-instate a further ten miles to allow the railway to return to Barnstaple at Pilton Yard near Rolle Quay. The preliminary construction estimate for Phase III is £18-20 million.
Phase III will provide commuter access to Barnstaple and terminate 100 yards from the centre of Barnstaple shopping area at Pilton Yard..
1.5 The Complete Railway
The complete railway will provide a 19 mile link between Lynton and Barnstaple town centres.
The overall project cost for construction is estimated at £51 million. The railway will provide considerable economic benefit to North Devon estimated at a return to the local economy of more than £26 million per year and the creation of 290 additional local jobs.
An Operational Plan has been prepared to assess whether the railway would be a viable business once completed. Phase I provides reliable cost information about the railway operations. Section 4. presents future operating budgets.. The budgets contain conservative assumptions about Income and Expenditure and have assumed a much reduced level of Volunteer input from that already achieved by Phase I.
Overall Business Plan 201412 Page: 4 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
2 Local Economic benefit
In order to support funding applications L&BR has calculated the benefit expected to the local economy by implementing Exmoor Enterprise.
Various studies have attempted to quantify local economic benefit derived from tourist businesses. We have referred to the following studies and approaches: • The Cambridge Tourism Model • West Somerset Railway (WSR) Local Economic Impact Study 2004 • North Yorkshire Moors Railway (NYMR) 2008 • Yorkshire Tourist Board 2008 • British Tourist Authority (now Visit Britain) Employment Generated by Tourism in Britain (2003) • National Economics foundation & The Countryside Agency – The Money Trail: Measuring your impact on the local economy using LM3 (2002) • Economic Impact of the Ffestiniog and Welsh Highland Railways on Gwynedd (Megan Williams - Bangor University 2008) • All-Party Parliamentary Group Report on Heritage Railways (2013)
Our definition of the Local Economy is the immediate area surrounding the L&BR operations, Devon, Somerset and Cornwall.
The L&BR already runs a heritage railway business and presently spends 88% of revenues in our local area. We have used a Keynesian economic multiplier of 2.5 to assess the impact on the local economy. Even at a relatively low rate of 65% for local spend for subsequent cycles the multiplier is greater than 2.5 after five cycles of expenditure.
For the five-year major capital expenditure programme we have estimated local spend for each category of expenditure.
Five years has been allowed for growth in passenger volumes after initial opening to reach the operating target of 180,000 per year although recent trends show that initial visitor numbers may be higher.
The local economic benefit of the construction and initial five years of operation is calculated as £204 million for an investment of £51 million.
The same models have been applied to the current operations. Current passenger volumes (2014) are forecast to rise from 45,000 per year to a maximum of 50,000 per year. At this point operational constraints with the current one-mile railway will limit passenger growth.
Overall Business Plan 201412 Page: 5 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
Therefore the net local economic benefit, compared to continuing current operations, is calculated as an additional £196 million over ten years.
An increase in employment arising from future operations has been calculated using the Cambridge model. At present no employment contribution has been calculated for the initial five-year construction period although there will be significant local construction jobs created.
Future operations will support at least 63 full-time direct jobs (FTEs) and 10 apprentices. The effects of Indirect FTEs and Induced FTEs have been calculated and the effect of converting FTEs to Actual jobs has been added.
The local employment contribution of future operations with all jobs based in North Devon is calculated as a net increase of 290
The following pages present summary information from the L&BR Plan. This plan contains the detail estimates and assumptions for Phase II and outline estimates for Phase III for the construction project, future railway operations and business turnover. Early versions of this document relied on estimates about future operating costs prepared in 2007. Since then the railway operating costs have stabilised and our estimates are now based on the detail information available from operating the railway since 2007 (see section 4).
Overall Business Plan 201412 Page: 6 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
3 Economic Impact Calculation
3.1 The Construction
The construction programme allows five years for the construction of the nineteen-mile railway. This programme could be accelerated if all funding is available from the outset. The Victorians built the original 19-mile railway in three years without the benefit of modern machinery.
% Total Local Construction Costs (000's) Phase II Phase III Total spend (000's) 1. Trackbed Acquisition 1,620 1,070 2,690 100 2,690 2. Civil Engineering 7,352 2,000 9,352 70 6,546 3. Building works 875 460 1,335 90 1,202 4. Trackbed - formation & tracklaying 7,260 8,320 15,580 85 13,243 5. Signalling & Communications 1,855 2,680 4,535 70 3,175 6. Locomotives 1,415 750 2,165 50 1,083 7. Rolling Stock 1,100 440 1,540 100 1,540 8. Sundry Vehicles 100 50 150 100 150 9. Staffing 54 50 104 100 104 10. Maintenance 1,730 700 2,430 90 2,187 11. Management 1,103 200 1,303 100 1,303 12. Legal 2,516 1,000 3,516 50 1,758 13. Overheads & Profit 1,214 886 2,100 75 1,575 Sub-total before Contingency 28,194 18,606 46,800 14. Contingency @ 10% 2,819 1,861 4,680 70 3,276
Total 31,013 20,467 51,480 Total Construction local spend 39,831
Cost categories have been estimated and contingency and contractor profit has been included. For each category an estimate has been made of the Local spend percentage. From a total construction cost of £51,480,000. £39,831,000 is expected to be spent locally as above.
Overall Business Plan 201412 Page: 7 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
3.2 Railway Operations
Future railway operations have been forecast in terms of employment and passenger spend on tickets, shop and tea room sales. Direct employment will be:
Staffing for entire Railway # Stations/ Halts/ Title Weeks Salary Salary Shops No Total Salary (weekly) (annual) Paid/full time staff costs Managing Director 52 800 41600 1 41600 General manager 52 580 30160 1 30160 Commercial manager 52 450 23400 1 23400 Tea-room Supervisor 52 400 20800 1 20800 Volunteer Co-ordinator 52 400 20800 1 20800 Station staff ( 2 per Station) 52 400 20800 6 12 249600 Halt Staff (1 per Halt) 52 400 20800 4 4 83200 Shop Staff (2 per shop at Stations*) 52 300 15600 3 6 93600 Sundry staff (clerical etc) 52 340 17680 5 88400 Train crew - guards 52 520 27040 6 162240 Loco crew 52 550 28600 12 343200 Engineering 52 450 23400 5 117000 Maintenance 52 450 23400 8 187200 Apprentices 52 10 73 1,461,200
For North Devon District these salaries are regarded as good. Median annual income is approximately £16,680 (ASHE 2013).
Current Phase I operations use volunteer staff (Train Crew 70%; Shop 60%; Tea-rooms 50%). Although volunteer staff will still be encouraged the financial forecast has assumed that all key staff will be paid as shown above except for a percentage (25%) of the potential volunteer staff.
Overall Business Plan 201412 Page: 8 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
From a total operating income of £3,091,500; £2,924,072 is expected to be local spend as follows:
Railway Income % Local Total spend Net local Assumptions: Operating Surplus 888,200 80 710,560 Railway surpluses spent on rolling stock & other development Cost of Sales (Suppliers) 380,935 90 342,842 Shop cost of sales (45%) Staff salaries 1,461,200 100 1,461,200 Staffing Costs (includes NI) Volunteer displacement at 25% of [less Volunteers ] -184,210 100 -184,210 potential Other operating costs 742,100 80 593,680 All operating costs except Staff
Total Railway local spend: 2,924,072
Tourists attracted to the area by the railway are expected to spend other amounts locally on entertainment, food, accommodation etc. A percentage of total passengers (180,000) has been assumed as follows:
Other tourist spend in the area % of Passengers Amount Total Entertainment, food etc. 80 40 5,760,000 Accommodation 40 25 1,800,000
Total other Tourist spend: 7,560,000
The ongoing direct annual contribution to the local economy therefore totals £10,484,072.
Overall Business Plan 201412 Page: 9 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
3.3 Economic benefit to the region
The overall economic benefit to the region has been calculated over a ten-year period. Construction costs have been spread according to a five year construction schedule. Five years has been allowed for passenger numbers to rise to the target of 180,000 and hence the total benefit reaches £26,210,000 per year in year 10. The economic multiplier effect of those businesses and local residents spending money received from the railway has been considered. A multiplier factor of 2.5 has been assumed. Total Local Economic Benefit of £204.million is calculated as follows:
Total Economic benefit to the region (£000's) Year: 1 2 3 4 5 6 7 8 9 10 Total
Construction 6,391 10,797 9,471 9,110 4,061 39,831 Railway operations 6,290 7,339 8,387 9,436 10,484 41,936 81,767
Multiplier effect: +150% 9,586 16,196 14,207 13,665 6,092 9,436 11,008 12,581 14,153 15,726 122,650
Total Local Economic Benefit 15,977 26,993 23,678 22,776 10,153 15,726 18,347 20,968 23,589 26,210 204,417 Cumulative benefit 42,970 66,648 89,424 99,577 115,303 133,650 154,618 178,207 204,417
Assumptions Construction according to schedule 16% 27% 24% 23% 10% Railway takes 5 years to reach full passenger numbers 60% 70% 80% 90% 100%
A multiplier of 65% (proportion of money received that is subsequently spent) has been used which produces a factor of 2.5 after 5 cycles.
Multiplier calculation % Spend locally 65% 1.00 0.65 0.42 0.27 0.18 0.12 0.08 0.05 Cumulative 1.65 2.07 2.35 2.53 2.64 2.72 2.77
Overall Business Plan 201412 Page: 10 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
3.4 Net Economic benefit
If current railway operations continue until capacity limits are reached a maximum of 50,000 passengers per year could be carried on the existing one-mile railway. 2014 passenger numbers are expected to reach 45,000. If the extension was not undertaken the current operations could grow with the introduction of a ‘Heritage Train’ when locomotive “LYN” arrives at the railway in late 2016. Growth is anticipated as follows:
Current Railway operations 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Passengers # 45000 45000 48000 48000 50000 50000 50000 50000 50000 50000 Turnover (£000's) 340 340 363 363 378 378 378 378 378 378
Contribution to Economy 299 299 319 319 332 332 332 332 332 332 [88% of Turnover] Multiplier effect: +150% 449 449 479 479 499 499 499 499 499 499
Total Contribution 748 748 798 798 831 831 831 831 831 831
Cumulative total contribution 748 1496 2294 3092 3923 4754 5585 6416 7247 8078
The impact of continuing existing operations (Phase I) should therefore be set against the benefits of reinstating the complete railway.
The net Local Economic Benefit of the £51 million investment would therefore be £196.3 million (£204.4 minus £8.1).
Overall Business Plan 201412 Page: 11 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
3.5 Employment Contribution
The complete railway would employ 63 staff directly and provide training for 10 apprentices. Using the Cambridge Tourism Model a total of 310 jobs would be supported by the investment which is 290 more than the current operations evaluated on the same basis.
Employment Contribution [Based on Cambridge Model assumptions] Future Current Operations operations Net Direct employees (FTEs) 63 4 59
Total Railway local spend 2,924,072 190,000
Indirect equivalent full time employment Turnover per job: £50,000 58 4 55
Total Direct and Indirect jobs: 121 8 114
Induced equivalent full time employment Rural multiplier ratio 1:1.05 1.05 128 8 119
Estimated Total FTE jobs 249 16 233
Estimated additional actual jobs Business survey data ratio (direct jobs) 1.5 32 2 30 Census of Employment ratio (Indirect and Induced jobs) 1.16 30 3 27
Grand total job creation 310 21 290
Overall Business Plan 201412 Page: 12 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
4 Operational Plan
4.1 Railway Operations
The railway has enough operating experience (2004-2014) to give a reliable estimate of future operations costs and income projections. This section describes these estimates and the basis for calculation. Further detail information is held in spreadsheets.
The method of operating the railway will be as follows: • The complete distance (19 miles) would be constructed with termini near Lynton and Barnstaple town centres. • Rolling stock would be provided for 180,000 annual passengers. • The service would be operated daily using 3 Heritage trains with steam locomotives LYN, YEO, EXE TAW and ISAAC. • Additional diesel locomotives and Railcars would be available.
The rolling stock capacity needed for 180,000 passengers is calculated by using the current seasonal demand with a 250 day per year operating schedule. A sample timetable shows that 8 return trips per day would be operated by three trains commencing at 9am (Barnstaple) and 9.45 am (Lynton). Maximum usage of coaches is only necessary in the peak months (August and September) and calculations provide for peak traffic 50% above the average per day. The development plan provides for 12 coaches which would be sufficient for all peak demands and only require some management of peaks during August.
Overall Business Plan 201412 Page: 13 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
Three Train Operations
RETURN TRIP CAPACITY OPERATING PERIOD % of Per Total average Coaches Total Days peak Passengers Total operating Per per per train coaches Month per (+50%) year day month journey at peak required month March 3 338 5400 34 51 2 6 March 16 April 11 660 19800 66 99 3 9 April 30 May 11 639 19800 64 96 3 9 May 31 June 11 660 19800 66 99 3 9 June 30 July 11 639 19800 64 96 3 9 July 31 August 20 1161 36000 116 174 5 15 August 31 September 15 900 27000 90 135 4 12 September 30 October 11 639 19800 64 96 3 9 October 31 November 3 675 5400 68 101 3 9 November 8 December 4 600 7200 60 90 3 9 December 12 Total days 250 Total passenger numbers 180,000 180000 Passengers per carriage 35
Overall Business Plan 201412 Page: 14 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
4.2 Income and Expenditure
Basis for calculation A summary of current financial information is given in this section. Future fares income is calculated from a ‘base’ fare price with the current proportion of actual fares paid per passenger applied. This allows for the mix of fares charges e.g. Adult, Senior etc. and concessions such as the ‘under-fives travel free’ and group coach booking prices. For example 2014 Adult fare is £7.50 but the average fare received is £4.50 per passenger. In a similar way the proportional amount of other sales (Shop and Tea-rooms) per passenger and the Gross Margin for these sales is known. Non-fares sales have been assumed as 50% above current levels per passenger due to the extended visit time for a longer railway journey.
Benchmarks (2014): Adult return fare (£) 7.50 Ticket sales proportions: 64% Adult Fares per passenger (£) 4.50 3% Child Shop/Tea-room sales per passenger (£) 2.80 32% Senior Shop Sales proportion 50% 1% Family Tea-Rooms sales proportion 50% Cost of Goods Sold Shop 75% Cost of Goods Sold Tea-Rooms 50%
Future operating costs are based on current experience. The cost base has ‘stabilised’ over the last few years and all the activities needed for the future railway are reflected in the current operations. For each cost a future multiplier has been assumed as shown in the table below. Some current costs (Chelfham, and Exmoor Enterprise) would not be relevant to future operations and have been excluded. Employment costs (as now) will be a major part of the future cost base. The railway (as with other Heritage Steam railways) currently uses many part time volunteers and the assumption is that 25% of the potential volunteer jobs (32) will be staffed by volunteers.
Overall Business Plan 201412 Page: 15 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
Current costs (2015 Budget - Total £223,250) Advertising & Employment Costs 92,600 Promotion 19500 Professional fees 2000 Chelfham 1200 AGM Costs 2000 R&M Equipment 13200 Loco Hire 6000 Bank interest 1000 R&M Land & Buildings 6000 Bank charges 1000 Special Events 20500 Other Costs 9250 Staff travelling 3000 Fuel & Oil 16000 Telephone 1200 Insurance 11000 Trackwork 2300 Office Expense 1200 Utilities 5500 Premises Costs 6800 Volunteer expenses 2000
Complete Railway (Lynton to Barnstaple)
The Income calculations are:
Income Adult return price 26.00 Annual passengers 180,000
Fares 2,808,000 Adult rate discounted by current fares take Using current levels of spend plus Shop/Tea room sales 756,000 50% Total Sales 3,564,000
Cost of Goods Sold 472,500 Gross Margin 3,091,500
Overall Business Plan 201412 Page: 16 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
The Expenditure calculations are:
Expenditure Employment Costs 1,461,200 See Ph III Staff sheet
Advertising & Promotion 39,000 2.0 AGM Costs 2,000 1.0 Bank interest 0 Trading from a credit balance Bank charges 4,000 4.0 Equipment HP 0 All equipment owned Fuel & Oil 192,000 12.0 Insurance 66,000 6.0 Office Expense 4,800 4.0 Premises Costs 47,600 7.0 Professional fees 6,000 3.0 R&M Equipment 105,600 8.0 R&M Land & Buildings 60,000 10.0 Special Events 102,500 5.0 Staff travelling 15,000 5.0 Telephone 6,000 5.0 Trackwork 27,600 12.0 Utilities 44,000 8.0 Volunteer expenses 20,000 10.0
Total expense 2,203,300
Operating Profit/(Loss) 888,200 25%
Volunteer premium 736,840 25% Use Volunteers as per Staffing sheet
Potential Profit/(Loss) 1,625,040 46%
Overall Business Plan 201412 Page: 17 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
5 Notes and References
5.1 Sustainable Development
The Exmoor Enterprise project is viewed as ‘sustainable’ in Commercial and Environmental terms. We use the following definitions to judge our sustainability:
Sustainable “Capable of being maintained at a steady level without exhausting natural resources or causing severe ecological damage”
Ecological “tending to benefit or cause minimal damage to the environment”
5.2 North Devon Workplace Earnings
North Devon District has relatively low earnings levels. For 2013, median weekly full time workplace earnings were £321, 77% of the UK median of £415. Measured by Parliamentary Constituency or District Council (including Unitary Authorities), North Devon ranks in the 88 th percentile i.e. in the lowest 12%. Source: ASHE November 2014. .
Overall Business Plan 201412 Page: 18 December 2014 Lynton & Barnstaple Railway Trust Exmoor Enterprise
5.3 Ticket sales by Type
Various types of ticket are available at Woody Bay Station with sales dominated by Adult, Senior, Child and Family tickets (95.4 %)
Train ticket sales at Woody Bay Station: 1/01/2011 – 21/09/2013 Ticket type Sales % age Ticket type Sales % age Adult 26250 55.5 Group tickets 1171 2.5 Senior 15125 31.9 Special tickets 516 1.1 Child 2674 5.6 Single tickets 141 0.3 Family 1129 2.4 Railcard tickets 7 0.0 Others 314 0.7 Total ticket sales 47327 100 1st Class supplements 2011 Footplate rides 195 Footplate experience days 20
5.4 House price levels
Judging a fair price to acquire track-bed land and/or adjoining property is a difficult task with often diverging views between the Railway and Vendors. HM Land Registry is the only source of house price information based on all actual transactions in England. It is interesting to note the actual indices compared to other surveys quoted in the press.
Region/Area Index at October 2007 Index at October 2014 2014/2007 Devon (excluding Torbay and Plymouth) 325 311 96% Plymouth 295 264 89% Torbay 286 254 89% South East Region 314 335 107% London 377 500 133%
Overall Business Plan 201412 Page: 19 December 2014