t h r o u g h r e t a i l i n n o v a t i o n

u r ba n r eg e n e rat i o n t h r o u g h r e ta i l i n n ovat i o n

Independent retail provides differentiation and the evidence of its ability to regenerate and create change in high streets is well recorded. But this is not about saving the high street. This model is about creating sustainable opportunities to mitigate against the economic trends, environmental issues and employability. Archangelus is an innovative concept for retail on the high street; creating career and life-changing opportunities for individuals, building a new destination retail brand and providing differentiation in the high street.

The phase one investment, together with bank lending, will be used to fund the acquisition of five retail properties in five cities. Critical to the success of the investment will be to provide support for the businesses through a sophisticated business mentoring and support network to drive forward each retail business to ensure they achieve their maximum potential. This will be done through the holding company which will also facilitate the acquisitions and overall management of the investment business.

IIIThIs Is An InvesTmenT opporTunITy In people And plACes. IT Is ABouT hAvIng A posITIve ImpACT on soCIeTAl Issues As well As CreATIng growTh And A posITIve eConomIC ImpACT. AT no TIme In The hIsTory of The reTAIl seCTor hAve There Been greATer opporTunITIes for InnovATIve InvesTmenT, CreATed By The eConomIC ConTexT And ThreATs To TrAdITIonAl IndependenT reTAIl.

u r ba n r eg e n e rat i o n t h r o u g h r e ta i l i n n ovat i o n

• Jobscreatedbypositivediscriminationinfavouroflong-termunemployed

• Commitmenttotraining,apprenticeships,mentoringandbusinessskillsdevelopment

• Focusonasupplychainusinglocalsuppliers,designersanddesigngraduates

• Emphasisonreducingtheuseofnon-renewableresourcesinsourcing,manufacture,packaging, use and disposal

• Focusoninnovatingnewusesfromtraditionalmaterialsandartisanskills

• Createauniquebrandidentitywhichcanbeeasilyreplicatedandisprincipally footfall and not internet driven to attract consumers back to the high street

AT The heArT of The ArChAngelus InvesTmenT Are key eThICAl drIvers for The venTure, noTABly:

The Ethos

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u r ba n r eg e n e rat i o n t h r o u g h r e ta i l i n n ovat i o n

Archangelus will sell products which have a strong sense of creating new from old. This will include clothes which have a cutting edge feel and use old fabrics, designs/accessories, or remodelled antiques and brocante which will be used as part of the fit-out and also be available to buy. we are in discussions with a leading designer who exhibits in new york, milan and london and whose creations are seen in the high streets as well as on celebrities. significant efforts will be made to create a unique look and feel to the brand which will stimulate customer loyalty.

The consumer experience will be the priority with a personalised feel and exceptional customer care and attention, to levels not normally seen on the high street. This is a key differentiator with multiple and edge of town retail as well as internet shopping. It will be a service experience that can’t be bought in a retail mallor electronically. The positive impact of intangible value being created in the Archangelus brand is not quantified in the financial model, which follows at the end.

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The intention is to open the first Archangelus store in march 2013 in Aberdeen, followed by glasgow, edinburgh, london and manchester. retail and marketing trend research will determine the locations within the cities and they will have to fit the criteria of making a change within the location and being a catalyst for regeneration by making an impact on the location. Ideally we would look to retail units of around 2,000ft2 in size with good layout to maximise sales opportunity and minimise refit costs.

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u r ba n r eg e n e rat i o n t h r o u g h r e ta i l i n n ovat i o n

retail in the uk is part of the glue binding communities together, providing vital services, essential jobs and training and making our cities and towns better places to live in. In the uk, 9% of businesses are retail and in scotland, the figure is 10% with 240,000 employed directly. It has a vital role in employing young people as well as those who would otherwise find it hard to get work. Amid the most challenging market conditions for years, retail remains one of the uk’s most innovative, enterprising and competitive sectors. It is within this context that the investment opportunity places itself. recent decades have seen a decline in the uk’s high street with aggressive competition coming from out of town retail and the increasing trend of consumers towards online shopping. This in turn has resulted in a threefold increase in high street shop vacancy rates since 2007 which stabilised at 14.5% during Q1 2011 and, encouragingly, Q3 saw a 0.2% decline in the rate (source: local data Company). one direct effect of this over supply is the substantial decrease in the cost of retail units in the last few years, providing the financial environment for the Archangelus investment.

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u r ba n r eg e n e rat i o n t h r o u g h r e ta i l i n n ovat i o n

XIIITheManagingDirectoroftheholdingcompany,ArchangeluswillbeJanewood, an experienced and high level strategist and communicator, who has worked with both national and local governments in the areas of regeneration, community asset management, retail-led regeneration and corporate responsibility. Currently she is Chief executive of hrh, prince Charles’ core charity, scottish Business in the Community. previously head of Corporate Affairs for scotland and northern Ireland for Alliance Boots, she was also Chair of the uk’s second largest Business Improvement district and is co-founder of retail rocks, a retail led regeneration model which is focused on delivering employability, new start-ups, skills development and physical regeneration in underserved markets and high streets.

JaneisamemberoftheCBIScotlandCouncil,MemberoftheFirstMinistersnational economic forum, on the scotland committee of the Institute of directors, and member of the government’s private sector-led 20:20 Climate Change delivery group. she also chairs and has successfully delivered a new community cooperative-owned artisan bakery. In 2011 she was awarded the accolade of the director of the year for the voluntary sector in the scottish Institute of directors awards.

There are, additionally, a number of key roles within Archangelus and we have identified individuals who would fill these either on a consultancy or employment basis. There will also be a group of experts available to assist the investment board including retail, investment, property and research specialists.

u r ba n r eg e n e rat i o n t h r o u g h r e ta i l i n n ovat i o n

The total funding required by Archangelus is £5.46m, with £2.96m from bank funding and £2.5m equity. five properties will be purchased with an estimated cost of £3.65m.

The holding company is in the process of being established, and it is planned to recruit up to 4 employees or consultants in addition to the managing director from may 2012 onwards. The following four months will be utilised to carry out further research on the five locations, identify potential property acquisition targets and develop the brand/image for the retail units. Aberdeen will be the first location, with property being acquired in december 2012, leading to launch of the unit in march 2013.

The model is similar to a franchise with brand, sourcing, training under the control of the holding company, but those who have been given the opportunity to create new businesses with us will not be required to pay any upfront fee, and the standard management fee of £5,000pm will be reduced by 50% for the first 12 months of trading. start-up stock will be funded by an interest free loan from the holding company, repayable over 2 years commencing in the second year of trading. rent will be charged at normal commercial rents and they will be expected to pay their own rates.

It is assumed in the financial model that over ten years, the properties will appreciate, then as part of an exit strategy the properties are sold and bank loans repaid. The detail of the full financial modelling is available upon request.

Year sales ebitda Net assets/loss

2012 £0 (£220,290) £608,703

2013 £160,000 (£412,545) £1,030,324

2014 £473,500 £330 £1,892,820

2015 £773,833 £274,297 £2,224,477

2016 £887,000 £412,815 £2,722,188

2017 £895,000 £409,666 £3,243,915

2018 £904,417 £407,934 £3,723,730

2019 £917,500 £409,869 £4,197,719

2020 £930,333 £411,553 £4,689,290

2021 £931,500 £2,226,571 £6,484,791

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