Pioneers Post

[Richard Cobbett]

See the linked Panel Report for further details and please share your responses via the Forum: PR Pioneers Post.

[Gareth Hart]

Hi Richard. Interesting one, and interesting to see how it is structured. Seems a bit odd but like you say looks ok. I wondered why London Fields, which made £27.6k profit, didn’t pass this to the shareholders PP?

If PP as a holding company does nothing my only question was how do they achieve social impact? I guess we say through the subsidiary. Happy to approve but maybe worth a discussion.

Cheers

Gareth

[Richard Cobbett]

Thanks Gareth. I think you have almost hit the nail on the head as regards both your queries, when you talk about how social impact is achieved through the subsidiary. In effect, Pioneers Post and London Fields represent the combined social enterprise; for our purposes, we are not really distinguishing one from the other when assessing such questions. The rather convoluted evolvement of ownership and directorships that Tim explains in one of the attachments I included in the evidence hopefully is enough to satisfy that this is the case; there is a certain separation of interests on these ownership and directorship levels between the two entities, but not in how the two companies relate with each other and operate.

Pioneers Post, in effect, does not do anything other than own London Fields, which performs their trading function, through which they deliver the social impact described. There is therefore no point handing profits back to Pioneers Post as the only social purpose activity being supported is through London Fields.

[Nicky Stevenson]

I’m happy to agree this subject to the governance issues being resolved as you have suggested Richard.
I don’t understand why people have these weird and wonderful structures!
Tim has been publicly rather anti prescribed structures for social enterprises – but I think this should be open to more scrutiny as the changes will hopefully achieve

[James Evans]

Also happy to agree to Richard’s proposed approach on this one, albeit with similar misgivings as other members of the Panel as to why there is a need to maintain such a convoluted structure. I don’t necessarily buy TW’s comment about a potential future community share offer as a CLS would not be a desirable legal vehicle for undertaking that. Given the ownership by the CIC is only 55% and this is not enshrined with any permanence, I think SEM will need to keep a close eye on future changes to shareholdings in LFP as well as looking to see LFP adopt revised governing documents aligning with SEM. Whilst LFP is operating under its current articles the shareholding position in LFP (and PP’s 55% majority holding in particular) could be changed by TW at the drop of a hat.

[Richard Cobbett]

From: David Butler <DButler@bishopfleming.co.uk>
Sent: 15 December 2020 17:24
To: Richard Cobbett <richardc@socialenterprisemark.org.uk>; gareth@iridescentideas.com; J.Evans@tozers.co.uk; johnr_bryant@hotmail.com; Lucy Findlay <Lucyf@socialenterprisemark.org.uk>; nickystevenson24@gmail.com; SLStevenson@marjon.ac.uk
Cc: Katrina Shipp <katrinas@socialenterprisemark.org.uk>
Subject: RE: Pioneers Post – Panel Opinion Required

HI Richard
I agree that it is an unusual one and there clearly is some level of risk that the profit extraction could be manipulated, however providing they do change their articles then it would protect the social enterprise principle.
I currently see no reason to object but think we should check that their articles do get updated.

David Butler
FCA

Partner

T: 0117 9100294
M: 07990 596472
E: DButler@bishopfleming.co.uk

[Richard Cobbett]

Thanks to Nicky, James and David for your comments.

It looks as though there is general agreement, that SEM criteria have technically been met when considering the two companies as a whole. The concerns that remain strike me as ones about the transparency of intent and commitment to social enterprise principles, that the unusual arrangement poses. However, I think we need to continue to be careful that we don’t make judgements speculating on possibilities going forward and assess on present facts. The bottom line is, we review the position every year so if they make changes or behave in ways that evidently contravene Mark requirements, this should be picked up.

I understand the concerns that the more flexible we become the greater the risk that people undermine those principles of social enterprise that the Mark is meant to encapsulate. From a personal point of view, I would probably be even stricter in how we apply certain criteria and as a result, perhaps I try to look at things too objectively! But I also think there is increasing evidence to suggest that the social enterprise model is evolving and we need to be able to accommodate this. My impression is that more people are setting up social enterprises in ways that depend on investment opportunities for them to make it happen, which is why we are seeing more companies limited by shares appear, as well as those who try to “disguise” their social enterprise credentials through setting up trading subsidiaries; sadly, investors and other types of business partner seemingly continue to mistrust the social enterprise model.

As such, I have a certain sympathy with Tim’s explanation. But having now established themselves, one would hope that it should be possible to put in place a more transparent structure that provides greater reassurance of London Fields primary commitment to being a social enterprise, so I will go back to him and say that their approval is subject to them making changes going forward, and that the Panel have asked to review the position once he has. To try and be helpful, I will also invite him to explain such plans ahead of implementing them, so that you can comment on what is being proposed ahead of making changes.

I will hold off contacting Tim until next Monday at earliest, so if any of you have anything further to add then please do.

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