John Robinson Trust

[Matthew Turner]

Well I now see a note on the accounts

"Monies drawn down bear an interest rate of six per cent per annum is to be paid quarterly in
arrears."

This seems to be at odds with the amount of interest coming in. Can somebody explain?

[John Philpott]

Matthew Turner wrote

I have highlighted a section in David's remarks. If I look at the JRT accounts, it appears to me (I am not an accountant, so I could well be wrong) that the ECF is paying £200 a year in interest on a £20,000 loan. Does 1% represent a market rate? never mind the Greeks, the British Government would be interested to find out about this.

The accounts do indeed show £200 in loan interest. The rate of interest that this represents depends upon the length of time in the 2008/9 financial year for which the loan was outstanding. If it had been made at the end of June 2009 and the £200 therefore represented just two months interest it would equate to 6% per annum, which was the rate referred to at the July 2007 Extraordinary Council Meetings.

[Matthew Turner]

John,
OK, I guess that would make sense. Where would we find the loan in the ECF accounts? I cannot see it in the 2009-10 accounts. Surely had the loan been made at the end of June 2009 it should appear in those accounts?

[John Philpott]

Matthew Turner wrote

Where would we find the loan in the ECF accounts? I cannot see it in the 2009-10 accounts. Surely had the loan been made at the end of June 2009 it should appear in those accounts?

As I commented a few pages back, the John Robinson Trust is out of step with ECF/BCF/Chess Centre Ltd/BCF Youth Chess Trust in having a 31 August year end. All the others have a 30 April year end. The last ECF accounts were for the year ended 30 April 2009, at which stage the loan had not been drawn down. It will doubtless feature in the accounts for the year ended 30 April 2010, but you will have to wait for the October 2010 AGM paperwork to see those.

Ernie Lazenby wrote

Sometime ago when I read the terms of the trust I seem to recall it said the trustees could claim reasonable expences from the trust. Are those expences recorded anywhere (assuming any have been claimed)

Note 5 to the 31 August 2009 accounts for the Trust state:

There were trustees’ expenses paid for the year ended 31 August 2009 of £197 (2008 Nil).

[Matthew Turner]

John,

If I go to

http://www.englishchess.org.uk/wp-conte ... rt-new.doc

I can see the 'Appendix Outturn 2009-10 & Summary Budget 2010-11'. I can see no mention of the loan in the 2009-10 accounts or indeed any mention of any interest that will be due.

[David Sedgwick]

If the loan was indeed drawn down at the end of June 2009, one would expect interest payments of £1000 to feature in the forecast expenditure for 2009-10.

I too am puzzled. I've not been able to find any such figure in the 2010-11 Budget at http://www.englishchess.org.uk/wp-conte ... 0-2011.xls

[Mick Norris]

Do we know who the Investment Advisers are?

[Matthew Turner]

David,
Should the loan also be shown somewhere?
When we are projecting the balance at the end of 2009-10 as £32,000 does this include the £20,000 loan, or does it not effect the overall financial position in accounting terms as the loan also incurs a matching debt.
Apologies to the accountants out there if some of these questions are idiotic. I am trying my best to understand.

[Sean Hewitt]

David,
Should the loan also be shown somewhere?
When we are projecting the balance at the end of 2009-10 as £32,000 does this include the £20,000 loan, or does it not effect the overall financial position in accounting terms as the loan also incurs a matching debt.
Apologies to the accountants out there if some of these questions are idiotic. I am trying my best to understand.

The loan itself would not appear in the P&L (Proft & Loss Account) and therefore would not be in the budget although the cost of the loan (the interest and any arrangement fees etc) would. It is possible that the loan interest is subsumed within the total Chess for Schools Cost of £6k.

The total amount of the loan outstanding would appear within the companies balance sheet as a creditor.

And no, I'm not an accountant

[David Sedgwick]

I'm not an accountant either, but I'll do my best to answer. (John, are you still around and can you help?)

Should the loan also be shown somewhere?

As Sean has said, it won't appear in the document to which I refer. That only includes Income and Expenditure Account items. The loan is a Balance Sheet item.

When we are projecting the balance at the end of 2009-10 as £32,000 does this include the £20,000 loan, or does it not effect the overall financial position in accounting terms as the loan also incurs a matching debt.

It doesn't affect the overall position to the extent that it's been used for capital expenditure on items which have a continuing value.

Let us suppose that the loan had been utilised to buy a car. At outset the balance sheet would show a liability of £20,000 for the loan, but an asset of £20,000 for the car, so the overall position would be unaffected.

However, in a year's time the car might have depreciated in value to £16,000, so the ECF would be £4,000 worse off if nothing else had changed.

The same principle applies to the Certificate of Merit project. The expenditure to which the loan has been applied is being depreciated over time. The hope is that the project will generate sufficient sales to repay the loan (and make a profit over and above that).

The new Finance Director has decreed, quite correctly, that salary payments can't be capitalised in this way and must be treated as expenditure when paid. However, the forecast expenditure for 2010-11 reflects this, so the figure of £32,000 to which you refer should still be correct.

I can't answer any further questions about this. I haven't grasped the detailed figures any more than you have. Moreover, I'm at the limit of my understanding of the whole matter and some of what I've said above may well be wrong.

[John Philpott]

I only have time for one immediate comment, but will pick this up this evening. The budget document C12.10.2 is an Excel workbook which largely follows the template that I set up for the 2003 Finance Council meeting when I was acting Finance Director. In its original manifestation it had worksheets for the balance sheet and for the Legacies fund. I am not sure why these particular worksheets have subsequently been dropped, but I think that a more rounded and tranpsarent position would be presented if they had been retained. In particular the balance sheet tab would have shown the £20,000 explicitly.