Lochranza Country Inn Update
The board of NACBS wish to give members and the wider community an update on the current situation of NACBS and its subsidiary company Lochranza Community Inn.
To give background to the current situation, community members voted at an open meeting in November 2021 in support of a team of volunteers to work on behalf of the community to purchase the Lochranza Hotel. Following advice from Community Shares Scotland, a Community Benefit Society with charitable status was formed to purchase the Inn. NACBS is a registered charity and as such, cannot run a business. Lochranza Community Inn Ltd was set up as a wholly owned, but independent subsidiary of NACBS. The principle for setting up a wholly owned trading subsidiary is so the latter can exist and operate for the ultimate benefit of the company that owns it. This set up also ensures that, in the event of insolvency of LCI, the capital asset would not be lost to the community, and the building remain in the ownership of NACBS. As stated in the original share offer prospectus, any profits from the Inn would be donated back to NACBS for further investments in community approved Projects.
In 2023, the LCI had major losses and much of the NACBS shareholder funds were lent to the LCI to ensure it had working capital to enable it to stay operational. At the end of 2025, this debt stands at around £35,000. It is important to recognise that the Inn is the NACBS's only significant source of income, outside of grants, which we still apply for on an ongoing basis.
In December 2024 a 'Contractual Arrangement between NACBS and LCI' and a 'NACBS Requirements of Subsidiary Lochranza Community Inn' were agreed and signed by all members of both Boards. This provided that 10% of the Inn’s gross turnover would be the annual payment to NACBS to be payable the following year. 10% of gross turnover was agreed by both parties at that time, based on advice from the Plunkett Foundation, who provide specialist business advice regarding community-owned pubs. The majority of our current outgoings cover insurance of the Inn building, accounting and grant-funded salary costs for our Development Officer, who is responsible for funding applications, project managing renovations to the Inn, grant administration, working with other local organisations, and general charity administration and compliance.
As mandated by the community and supported by our 2025 Community Survey, NACBS has also pursued the community's wish to look at providing affordable housing. This project to date has been at a research stage - talking to community affordable housing project groups elsewhere in Scotland and building links with North Ayrshire Council and local landowners. Any such future project would necessarily be grant-funded and self-sustaining.
Following the sad loss of Robin Finlayson, financial director for both NACBS and LCI, and a joint board meeting in November 2025, it became apparent to NACBS that the LCI Board were not following the December '24 Agreement and Requirements in terms of financial management and reporting. In addition, NACBS also had concerns in terms of conformity with legislation as it applied at the Inn. Following legal advice on the requirements of a subsidiary to its sole shareholder a resolution was raised to require mainly that the LCI:
• Ensure that the LCI recognised that its primary objective is to maximise the profit of the LCI within the constraints of operating as a community hub and meet the legal requirements of operating an Inn.
• Provide the business plans, budget and updated capital and maintenance plans for joint discussion and approval
• Ensure that it has cover for all outstanding debts and that it retains sufficient financial reserves,
• Provide the latest financial position covering Profit and Loss, variances to budget, margins, staffing costs forecasts and cashflow
Since that difficult time, the two Boards have been working jointly and are currently holding weekly joint meetings, to try and meet the challenges going forward. Members will be aware of the current very challenging issues in the hospitality sector, including recruitment and retention of staff and the cost of living crisis. It has proved extremely difficult, but despite all the problems we still have a business open and running, for which we pay tribute to all staff and to the commitment of LCI directors, advisors and volunteer helpers.
NACBS fully appreciates the enormous effort of paid staff at the Inn and unpaid directors of the LCI Board in creating and sustaining the busy and vibrant Community Inn that exists today, with many vital improvements to the operations of the Inn implemented in the past year. We are now working hard to maximise profit margins and develop a strategic plan to carry us through the winter, with the Inn remaining open as an important hub for the community into the 2027 season and beyond.
We would very much welcome the support of new community members and new community board directors to the joint board. If you have skills and experience in hospitality, finance, accounting, IT, HR or want to support NACBS and the Inn and learn about how a Community Benefit Society works in the process, we would like to hear from you. If you live in the North Arran postcode areas and are on the electoral register, you can become a community member by paying £1 via our website or by contacting The Secretary, North Arran Community Benefit Society, Lochranza Country Inn, Lochranza, Isle of Arran KA27 8HL.
NACBS values your opinion and comments and will do our best to answer any queries.
Please contact us via our website or alternatively by writing to the above address.
Duncan Craig
Chairperson
NACBS