AROT_Final_Logo_Stacked_Gold.jpg
 

mini bonds

GOAL: £200,000

raised:

terms: 3yr + 5yr

interest rates: 8% + 10%*

 
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BUSINESS OVERVIEW 

Founded from the desire to make and serve delicious food everyday, A Rule of Tum was born in 2013 as the passion project of a few Herefordians. Focused on crafting honest dishes, inspired by local and seasonal ingredients, we opened Burger Shop Hereford in late 2014, The Bookshop in 2015 and most recently, Burger Shop Worcester in April 2017. And an Events arm of the business recently launched You’ll find our family of talented, passionate people, working thoughtfully to create food experiences in Herefordshire and beyond.
 

* Mini-bonds provide a regular return by lending money to established brands over a set period. Mini-bonds are unsecured, non-convertible and carry risk to your capital. Mini-bonds are not covered by the Financial Services Compensation Scheme. Liquidity is not guaranteed.
 

MINI BONDS

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POTTED HISTORY

Brothers Dorian (the chef) and Edwin (the visionary) always knew they wanted to open their own restaurant one day…

Dorian gained his culinary stripes working at restaurants in Australia and London, after graduating from Hereford Tech College in the Culinary Program. Meanwhile, Edwin worked his way up to management at Pizza Hut, gaining invaluable experience operating and running a restaurant business. This was also where he met Jon, who’s background in design, was the vital third cog needed.

Dorian, realising that large quantities of food he was ordering hailed from his very own stomping grounds of Herefordshire, decided to return home. Together, with their shared passion for creating good, quality food and interesting spaces, started to host pop-up supper clubs anywhere and everywhere that would have them. ‘Burger Thursdays’ quickly became the hottest ticket in town (along with Fish Friday and Sunday Lunches - an important test bed for a later offering). After creating a loyal following in Hereford, the boys saw a gap in the market and decided to open their own ‘humble’ burger restaurant in 2014 down a quiet street in the heart of Hereford - focusing on using only local and seasonal ingredients.

Fast forward 5 years, with Jon moving to pastures new, the business now includes The Burger Shop Worcester and The Bookshop Hereford, a steak bar, along with a successful events arm that provides catering across the country from weddings to the talk-of-the-town takeover at Hay Festival.

 

business now + future

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THE TEAM
 

DORIAN KIRK; Co-FOUNDER + DIRECTOR // AROT

Dorian gained his culinary stripes working at restaurants in Australia and London, after graduating from the culinary program at Herefordshire + Ludlow College. Since moving back to Hereford in 2013 to begin A Rule of Tum Ltd with his brother, Edwin, the duo have now set up three award-winning restaurant and an events company in Hereford and Worcester.
 

EDWIN KIRK; Co-FOUNDER + DIRECTOR // AROT

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RUPERT DAVISON; DIRECTOR // AROT

Rupert has worked in kitchens since he was a teenager and gained his catering qualifications at Hereford Tech College in 2007. A stint working at Bill Grainger’s flagship restaurant in Sydney soon followed, before he moved to London. Whilst living in the capital Rupert gained valuable experience through working for fellow Herefordian Bill Sewell at Cafe Below and from there he moved to France to work a season as Club Chef for high-end ski company VIP Ski. On his return to London Rupert spent two years as Head Chef at Street Kitchen, the street food company owned by Mark Jankel and Jun Tanaka, running the kitchen that catered for hundreds of people a day as well as coordinating large events. This was followed by periods working for Patty & Bun as well as two years running the kitchens for successful London pub company Tidalwave Bars. During this time, Rupert helped out with the initial pop ups for A Rule of Tum, and joined the company officially in 2016, working first at The Bookshop before launching Burger Shop Worcester in 2017.
 

SANDY GREEN; HR CONSULTANT // HR DEPT

Sandy has been working with the team at A Rule of Tum for about three years, helping with their Human Resources.  She is an independent HR Specialist and provides HR support to small and medium companies who do not necessarily need an in-house HR Dept.  Sandy have always been impressed by the culture that the guys at AROT want to create – they have done their best to have their contracts and handbooks done in as user-friendly way as possible and to build and maintain a good working relationship with their team.  I like to think that I have helped them achieve that through my knowledge of the catering industry and my HR training and experience of over 30 years.

 

James wood; creative direction // Shop Talk

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Terry green; business advisor // 

Non Exec Director, Author, Marketeer & Mentor with a special interest in customer journey management across digital and face to face channels and the practical application of behavioural insights. Customer experience evangelist.
 

andy edwards; accountancy advice // Thorne Widgery

Prior to TW Andy spent 25 years with Barclays as a Business Manager where he advised owner managed businesses from ‘one man bands’ to multi-million pound turnover companies. It’s this wealth of experience that makes him a creative problem solver and the natural choice to help our clients prepare for bank meetings, requests for finance and with the production of cash flow and profit forecasts.
 

ED BURRELL; CORPORATE + COMMERCIAL SOLICITOR // LANYON BOWDLER

Ed advises clients on a variety of aspects of corporate and commercial law. He has particular expertise in drafting and negotiating corporate transaction documentation, including company sale and purchase agreements as well as considerable experience in employee share schemes, shareholder disputes, franchise arrangements and commercial contracts, including software licence agreements.


FINANCIALS

Having successfully scaled to three sites, we have reached c.£1.5 million of revenues in FY2017. Moreover, we have recently expanded our infrastructure having recruited brilliant staff poised for growth and ready to power us to expand our Hereford sites, grow the events business & continue to grow from 3 to 5 sites over the coming years. We have no further need to increase personnel to execute our ambitious growth strategy in the short-term.

Net Income is expected to XXXXX. However, this is expected to turn XXXXX, with net margin averaging XXXX between FY2018 and FY2019. In fact, as our existing sites reach maturity and we expand to new locations, we expect our revenues to grow by more than XXXX yearly from FY2018. This will enable us to leverage our infrastructure and improve our margins. We expect to reach c.20% of EBITDA margin in 2018.

More specifically, we plan re-opening our two Hereford restaurants in September and November 2018. This will be closely followed by a Butchers shop in January 2019. We will expand to two new sites in 2019/20.

Looking forward, we forecast that we will have more than sufficient cash to cover the debt service (interest payments and principal repayment) during the life of the bond.

 

key risks

To help you understand the risks involved when investing in shares, mini-bonds and funds with A Rule of Tum LTD, please read the following risk summary.  Please invest aware and diversify your investments.


The need for diversification when you invest

Diversification involves spreading your money across different types of investments with different risks to reduce your overall risk. However, it will not lessen all types of risk.  Diversification is an essential part of investing. Investors should only invest a proportion of their available investment funds via A Rule Of Tum Ltd and should balance this with safer, more liquid investments.  


Risks when investing in Mini-bonds

Mini-bonds are a very different kind of investment to equity and you do not own a stake in the business issuing the mini-bond.  Instead you receive regular interest payments from the issuing company (the “Issuer”) and then return your initial investment back at the end of the mini-bonds term (the maturity).   Before investing, you must read and agree to the Bond Instrument for each mini-bond as these contain the exact terms and conditions, including the interest payments and final repayment time between investors and the company raising the money.  It is important to understand that Issuers are solely responsible for their financial status and consequently their ability to pay interest and return investors’ capital when the mini-bonds mature. Mini-bonds represent a high degree of risk and you should be aware of some of the specific risks involved in investing in them.


Loss of investment and interest payments

Issuers, like all businesses, are vulnerable to financial difficulty and investing in mini-bonds may involve significant risk of default. In the event of an Issuer being unable or unwilling to meet payments of interest and capital, it is likely that you may lose all, or part, of your initial investment and receive no outstanding or future interest payments.

If a business you invest in fails, A Rule Of Tum LTD will not pay you back your investment. You should only invest an amount that you are willing to lose and should build a diversified portfolio to spread risk.

Mini-bonds are not insured by a third party nor are they protected by any governmental authority such as the Financial Services Compensation Scheme. This means that if the Issuer becomes insolvent, investors could lose some or all of their money.


Lack of liquidity

Liquidity is the ease with which you can sell your investments to a third party after you have purchased them. Mini-bonds purchased from Issuers pitching through A Rule of Tum LTD may be transferable if specified in the Bond Instrument, however they will not be listed on any formal investment exchange or secondary trading market such as the LSE ORB and so it may be difficult or impossible to find a buyer to purchase them. Please refer to the individual mini-bond documentation for full details of transferability.  Investments in mini-bonds through A Rule Of Tum LTD should be viewed as a long term and illiquid investment.


Restricted redemption rights

Issuers of the mini-bonds set the terms for redeeming your capital. Investors should be aware that they will not be able to redeem their initial investment under any circumstances other than those set out in the terms and conditions of the documentation of an individual mini-bond, meaning their capital will be locked up for the entire term of the mini-bond, typically 3-5 years and should therefore be viewed as a long term and illiquid investment.


Unsecured investment

Unless otherwise set out in the Bond Instrument, mini-bonds are typically an unsecured obligation of the Issuer, meaning there is no security over the property or assets of the Issuer supporting the repayment of your interest or capital.  This means that if an Issuer fails, it is unlikely that an investor will have their initial investment or outstanding interest payments returned to them because there is no security over any remaining assets.


Early Call Risk

The Issuer has the right to repay you your money at any time prior to the formal repayment date. Your investment may be materially curtailed because of this.

 

Lower in the pecking order on winding up

If an Issuer falls into financial difficulty and goes out of business, other creditors and debt holders with seniority – including fixed charge holders, administrators, employees who are owed wages, banks, and secured debtors - will be compensated first. This means it is unlikely mini-bond investors, whose unsecured investment sits below all of the previously mentioned in the pecking order, will have their initial investment or outstanding interest payments returned to them after higher ranked creditors are compensated.
 

Interest rate and inflation risks

Mini-bonds pay interest at a fixed rate rather than by reference to an underlying index. Accordingly you should note that a rise in interest rates may adversely affect the relative returns that mini-bonds offer. Further, inflation may reduce the real value of the returns over time.

1. The performance of the Company and its ability to make full and timely payment of interest and the repayment of principal is materially affected by:

  • The management’s ability to successfully acquire sites

  • The management’s ability to successfully develop these sites

  • The average customer spend per store and the number of customers per store

  • The cost and timing of new shop rollouts

  • The actual maturity curve for each of the new stores

  • Reduced trading due to macroeconomic risks which can impact demand for discretionary spend in coffee shops, bars and restaurants.

2. The Company’s success depends on its ability to retain the current members of its senior management team and to recruit and retain other key personnel. If one or more of the current senior management team or key personnel recruited in future were unable or unwilling to continue in his or her position, the Company’s business could be disrupted and it might not be able to find replacements on a timely basis or with the same level of skill and experience. Finding and hiring such replacements could be costly and might require the Company to grant significant equity awards or incentive compensation, which could adversely impact its financial results.

3. The Company’s success depends on its supply chain, in particular best quality grass fed beef. A Rule of Tum is addressing this risk by setting up its own Butchery using the funds raised through our mini bond campaign.

4. The Company has more localised risks (on a site by site basis) such as the loss of an alcohol license, or closure for health and safety reasons. To minimise these risks we are extremely strict in complying with all of our licensing objectives, and have had no substantiated complaints against any of our venues, nor have any of our alcohol licenses been reviewed.

5. From a business perspective, we monitor closely the performance of each site. To date, we have three well-performing sites, but choice of location is an important ingredient of success. A Rule Of Tum has very clear ideas as to what type of location and site works for our brand. We are looking for iconic buildings with a difference, place where are customers can enjoy our Burgers, Steaks & seasonal organic vegetable dishes with cocktails and coffee in a friendly and vibrant environment.

6. The investment offered in this document may not be suitable for all recipients of the document. Investors are accordingly advised to consult an investment advisor who is authorised under the Financial Services and Markets Act 2000 and specialises in investments of this kind, before making their decision to invest.

7. Illiquid investment - The A RUle of Tum Bonds are not negotiable on the capital markets and no application will be made for A Rule Of Tum Bonds to be admitted for listing or trading on any market. Investment in an unquoted security of this nature, being an illiquid investment, is speculative, involving a degree of risk.

8. Not protected by the Financial Services Compensation Scheme – The A Rule Of Tum Bonds are not protected from loss by the Financial Services Compensation Scheme.

9. No certainty that Bondholders will be repaid at maturity or interest paid to the Bondholders from time to time- The A Rule Of Tum Bonds are an unsecured debt of the Issuer and will rank equally with any other unsecured debts of the Issuer with the exception of the outstanding shareholder convertible bond which will be subordinated to the A Rule Of Tum Bonds. There is no certainty or guarantee that the Issuer will be able to repay them or to pay any interest on them from time to time. If the Issuer were to become insolvent, there is a risk that (a) some or all of the nominal value of the A Rule Of Tum Bonds will not be redeemed; and (b) some or all of the interest return due on the A Rule Of Tum Bonds will not be paid.

 

Tax

Investors are advised to take their own tax advice on the tax consequences of acquiring, holding and disposing of the Bonds. The comments below are of a general nature and are based on current United Kingdom law and practice. They relate only to the United Kingdom withholding tax treatment of interest payable on the Bonds. The comments do not deal with any other United Kingdom tax implications of acquiring, holding or disposing of Bonds, and relate only to the position of Investors who are the absolute beneficial owners of the Bonds. Tax treatment depends upon individual circumstances and may be subject to change in the future.

For UK resident individuals, payments of interest on the Bonds will be subject to deduction of United Kingdom income tax at the basic rate (currently, 20%), subject to the availability of any domestic law exemption. The Issuer will make the necessary arrangements to deduct and pay basic rate tax due from your interest payment direct to HMRC. For investors who are non-taxpayers, interest payments will still be paid net of tax and a tax certificate will be issued to the relevant investor after each interest payment. For a corporate investor or charity, in each case resident in the UK for corporation tax purposes, the interest payment will be paid per quarter gross without any withholding of tax at source from the interest paid. Interest on the Bonds, and discounts received, may be subject to additional United Kingdom income tax or corporation tax, depending on the circumstances of a particular Investor.

 

A Rule Of Tum mini Bond Investment Process

Investing in A Rule Of Tum mini Bonds has been designed to be a straightforward process. Click on ‘Submit Intent To Invest’ then simply enter the amount of money you wish to invest in the box that says ‘Enter Amount’ and fill out your personal information and what term 3 year or 5 year suits your criteria best. You will then be contacted by one of the founders of A Rule Of Tum LTD. From there all legal and payment information will be organised along with relevant certificate of bond and rewards.

 

 

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