BA to sell its 50 percent stake in Starley House

Starley House is owned by the Cycle and Motor Cycle Association as a 50:50 partnership. The CMCA has two members: the BAGB and the Motor Cycle Industry Association.

At yesterday’s AGM of the Bicycle Association, BA president Phillip Darnton said:

"A final offer to the CMCA has been made for the entire property of the CMCA – which includes shops/accommodation on long leases behind Starley House. The offer is from a property developer who already owns the other buildings in the station environs, and who plans to redevelop the whole precinct by 2010.

"The value of the offer to CMCA at £2.55 million has been audited by our own valuers, and is considered fair and appropriate. The offer also allows CMCA to occupy Starley House for 12 months from the date of contracts being signed, rent free.

"Capital gains tax will be payable on completion of the sale, which will amount to just under £800,000.

"The potential net proceeds for the BA from the sale will be therefore approximately £880,000. The CMCA last week agreed, following final discussion of its Board, to accept this offer.

"This capital investment in the Starley House site was made by foresighted members of the BA years ago to be the inheritance of today. We in our turn owe it to our future generations to ensure that this becomes their legacy. This sale of the property is absolutely not the winding-down or dismembering or the end of the BA: quite the opposite. It is a truly remarkable opportunity for a revitalisation of the association for today’s world.

"The sale provides us with the opportunity to create financial security for the BA after almost 10 years of struggling to match income to our overhead costs. Making ends meet without the historic benefit of an income from cycle shows, has been difficult, and subscriptions have had to remain high, on top of which we expected additional contributions in setting up the Bike Hub scheme.

With a prudent investment programme for our capital we will have a secure income for the long term. We have the opportunity to reduce our overhead, lower subscriptions and actively promote the BA to potential new members. There will be a membership drive in 2007 once we are clear on the basis for the new Bicycle Association.

"I appreciate that many cannot but receive this decision to sell as a sad day for the BA. Many – like Pat Morris – have given their working life to it; many have served as officials; joined originally because their fathers were members before. Many whose pictures are displayed on our walls.

It will be a huge change, and inevitably there will be more than a tinge of nostalgia. But the world of cycling and the industry we work in today is a world away from the old BA of the past.

"The nostalgia – the stories of how it was; of the mighty figures of our past – has its place. All great institutions carry their stories with them – their myths and legends. But this is the chance to carry them into a new future, with financial security that allows us to redesign and rebuild the Bicycle Association to be strong and fit to meet the new challenges. It is a very exciting moment."

PRESIDENT’S SPEECH : AGM – 26 APRIL 2006

Our Annual General Meeting is the moment that it makes us pause and take stock of what has been going on over the past 12 months, – review our progress and carry out a general health check on the wellbeing of our Association. This report will, I hope, reassure you that we are in good shape and fit to face some exciting challenges ahead.

The major contribution which the BA makes to the success and the future of cycling has been the creation of and backing for Bike Hub. This industry-wide scheme is now in its third year; it has brought recognition to the industry from government and its beneficiaries, and it has generated over £1/4 million each year so far to promote some key initiatives in support of encouraging more cycling.

If there is one disappointment this year it is that there are still major gaps in the list of contributors. I suppose that it is not surprising that, despite repeated efforts, we were unable to get Tandem or Saracen to join Bike Hub, and after one initial contribution of course Concept also disappeared. I am sorry that we have still been unable to convince one of our key members, Halfords, to participate. As I said last year, I would like to think that with a longer-term strategy now in place, Halfords will be able to give Bike Hub a real boost by their participation this year. I am delighted that they are once again well represented at our regular BA meetings, and – being ever the optimist – take this as an encouraging sign.

A continuing difficulty with Bike Hub is to get across to all our contributors just how valuable their participation is and, as it were, what they get for their money. We have just produced a second ‘Bike It’ report, following one about six months ago, (which Carlton Reid arranged as a centre-spread in Bike Biz) to help get to the widest possible target audience. Bike Biz, thanks to Carlton’s influence with its new owners, is also giving the BA a half-page in every issue to report on our progress. Carlton, this is very much appreciated.

The latest Bike It report should be seen and circulated by everyone here. What’s more, thanks to the very practical support of both Fishers and Madison, copies have been individually mailed to everyone on their customer list. The one thing we can’t do, of course, is make them read it, but it’s the best possible means of safeguarding the continuing loyalty of all our contributors.

You will hear during the morning more about where our £1/4 million per year is being invested. All three of our schemes have made really good progress – Bike Week; Bikeforall.net; and Bike It. Nick Harvey, who manages the sprawling network of Bike Week, is getting a new focus on the opportunity to “bike to work” – we just need a few more David Camerons, or even Gordon Brown photos in the press, since even Brown’s gone green these days.

Bikeforall.net is the industry’s portal – the gateway to everything you need to know about cycling in all its variety. In the past six months Bikeforall.net has had a major make-over; its technical underpinning has been completely revised by Si Watts, to give it much more flexibility and creative potential. Dominic Langan, with support from others in the Bike Hub committee, has sorted out and tidied up the content, and Carlton, as editor, keeps its content what I have learnt to call “sticky”. That’s a good thing by the way! Bikeforall.net is probably the most obvious manifestation of the use to which Bike Hub funding is put – everyone can access it; it’s proof of our investment to every single contributor, no matter how remote. It’s a very important “advertisement” for Bike Hub. That’s why it is so good to see now a complete list of the IBD’s on bikeforall.net. This has been put together and will be regularly updated by the ACT, and Mark Brown is to be congratulated on his perseverance in doing it. You’ll see more of bikeforall.net later, and also hear that we are now getting some marketing support to drive many more people to the site and make it famous.

Our third Bike Hub scheme is ‘Bike It’. This has become a centrepiece of our AGM reports now, with each year a different Bike It Officer bringing us news from the front line – the school bikeshed. Today we will hear from Vicki Hill who is based in York, with schools in Darlington, Doncaster and Harrogate. Bike It is really a huge success; cycling in these schools has quadrupled, and the whole idea has caught the imagination of a wide range of people – from school travel advisers across the country to Transport for London itself.

They are just introducing Bike It with 2 new schools officers to London schools, and Paul Osborne from Sustrans, who manage the scheme for, us will tell us about the recent doubling in his team’s strength and the ever-widening groups of schools getting involved.

So Bike Hub, and its schemes, is well established. It’s a major achievement of the BA. From the initial challenge to industry in 2003 from the Minister of Transport, we have created – at just 1p in the £10 – a real source of influence for the good of the whole future of cycling.

There’s another important aspect of the BA’s work that has been much on our agenda again this year, and it will remain so for the foreseeable future. That is our Technical Advisory Group and its work on the European Safety Standards – the CEN standards. It’s a topic which always sends a chill down the spines of members – sometimes in our Council discussions I feel that I see ‘rigor mortis’ setting in! – but I cannot overemphasise how very important this technical aspect of the BA’s work is. The first of the CEN standards are now published and will take effect within the next couple of years. The BA has a big role in giving guidance and advice to members on how to conform and not risk getting caught in the inevitable confusion of British and EU standards. Alan Cater will say something on how we plan to manage this for the benefit of the UK industry.

There’s another sphere of interaction with Government which has occupied us over the last 12 months, and that is our on-going discussions with HMRC – Revenue and Customs. This has been sparked by the idiosyncrasies of their published data on the import statistics for bikes, frames and other parts.

Our discussions have not been helped by our own historic inability to gather from members any accurate data on UK sales. We have had some limited success, at last, for the year 2004, where we now estimate that 3.45 million bicycles were sold in the UK – although some would still revise this downwards slightly. We are now seeking to compile figures for 2005, and I trust that all members with bicycle sales will have completed the pro-forma by now. First estimates indicate that the figure is unlikely to be above that of 2004.

Which makes the HMRC statistics all the more puzzling on total imports, since these are substantially higher. Customs do accept that various errors and some double counting has crept in, but it is now evident that, even allowing for unintentional mis-description, some significant activity is taking place deliberately to evade the tariffs on Chinese (particularly) production.

HMRC are now taking the matter seriously, and spot inspections are being carried out. There was an interesting comment in the official letter putting Saracen into administration which stated:

“Following a duty inspection it was established that the company’s agent had been using an incorrect rate for certain imported goods. As a result significant additional duty liability of £165,000 became payable”.

We should not be surprised by further random checks. Indeed the Council of the BA welcomes this, and will be pursuing the matter further. Tariffs are hard to administer, but are designed to create a level playing field for all suppliers; if breaches go unchallenged, the system will break down. The BA is determined to maintain the high standards which are expected from it as the UK industry body.

And while on the topic of maintaining standards, I would also add as a truly neutral President how much the BA deplores tactics that have been adopted on occasion by suppliers to default on payment due to their Far Eastern manufacturers as part of a “sudden death and rebirth” bankruptcy. This damages the whole industry in the UK and puts at risk the ability of importers to deal with Far East suppliers with any confidence in our integrity.

So to the final element of the BA’s work this year. (The one you’ve all been waiting for!). I said at the last AGM that the possibility of the future sale of Starley House was in an early stage of discussion. Over the past twelve months, things have moved forward, and I would like to bring everyone right up-to-date.

Let me start with a few facts:

Starley House is owned by the CMCA (Cycle and Motor Cycle Association) as a 50:50 partnership. The CMCA is not a trading company and comprises only 2 members – Motor Cycle and the BA.

Philip Taylor as Vice President; Mel Payne and I sit on the Board of CMCA, along with representatives of the Motor Cycle Association.

A final offer to the CMCA has been made for the entire property of the CMCA – which includes shops/accommodation on long leases behind Starley House. The offer is from a property developer who already owns the other buildings in the station environs, and who plans to redevelop the whole precinct by 2010.

The value of the offer to CMCA at £2.55 million has been audited by our own valuers, and is considered fair and appropriate. The offer also allows CMCA to occupy Starley House for 12 months from the date of contracts being signed, rent free.

Capital gains tax will be payable on completion of the sale, which will amount to just under £800,000.

Extensive and careful exploration of ways in which this tax burden might be reduced or deferred has been carried out. The BA Council is now satisfied that there is no satisfactory way of deferring or “rolling over” the tax liability.

The potential net proceeds for the BA from the sale will be therefore approximately £880,000.

The CMCA last week agreed, following final discussion of its Board, to accept this offer.

Now, lest anyone here gets carried away by this news, can I make one thing absolutely clear. This capital investment in the Starley House site was made by foresighted members of the BA years ago to be the inheritance of today. We in our turn owe it to our future generations to ensure that this becomes their legacy. This sale of the property is absolutely not the winding-down or dismembering or the end of the BA: quite the opposite. It is a truly remarkable opportunity for a revitalisation of the association for today’s world.

So if the last 12 months have been a time of negotiation and discussion the next year must be one of planning and execution. In one year’s time, we will leave the panelled splendour of Starley House and be ready for a new era. Together we must now consider what the BA requires, in terms of accommodation and administration, and also what it can offer in terms of benefits and services for its existing and its potential new members.

The sale provides us with the opportunity to create financial security for the BA after almost 10 years of struggling to match income to our overhead costs. It has been a balancing act – in both senses – which Mel Payne has managed for us with skill and careful thought – and still not lost his sense of humour. Making ends meet without the historic benefit of an income from cycle shows, has been difficult, and subscriptions have had to remain high, on top of which we expected additional contributions in setting up the Bike Hub scheme.

With a prudent investment programme for our capital we will have a secure income for the long term. We have the opportunity to reduce our overhead, lower subscriptions and actively promote the BA to potential new members. There will be a membership drive in 2007 once we are clear on the basis for the new Bicycle Association.

There are still many more questions than answers at this stage. It will require regular meetings of the Council and of all members to develop our plans. There will be three aspects to the plan.

– One, to address the issues of accommodation, location and administration

– One, to develop a sound financial investment strategy

And one, to review all aspects of membership and benefits

I appreciate that there are many here today who cannot but receive this decision to sell as a sad day for the BA. Many – like Pat Morris – have given their working life to it; many have served as officials; joined originally because their fathers were members before. Many whose pictures are displayed on our walls.

It will be a huge change, and inevitably there will be more than a tinge of nostalgia. But the world of cycling and the industry we work in today is a world away from the old BA of the past; the opportunity to realise this huge asset and to reinvest for the new environment is, I am sure, a remarkable chance for us.

It is the opportunity to grow, to revitalise the association, to become more active once again, to attract new members, to do new things for the new market place.

The nostalgia – the stories of how it was; of the mighty figures of our past – has its place. All great institutions carry their stories with them – their myths and legends. But this is the chance to carry them into a new future, with financial security that allows us to redesign and rebuild the Bicycle Association to be strong and fit to meet the new challenges. It is a very exciting moment.