Financial Information July 2020

Financial Background as at July 2020

A brief history

The Gregson Community Centre, No. 33 Moorgate, was bought by the then Freehold Community Association (FCA) in 1983. The FCA was an unincorporated body and a registered charity.

In 1984 the FCA then formed the Freehold Community Club (FCC), another unincorporated body, to run the Centre on its behalf. The Centre opened it doors to the public in November 1984.

The renovation of the building was paid for with various grants, and a loan from Daniel Thwaites PLC brewery. This loan was to be repaid over time by adding an extra charge to each barrel of beer purchased.

In 1994 the FCC and FCA signed an agreement with managing agents Gregson Centre Limited to manage the day to day running of the FCC on their behalf.

This agreement gave the FCA 15% of the gross profit before wages were deducted. All income to the FCA was spent maintaining the Gregson Centre and providing charitable discounts and events.

In 1996 the FCA purchased No. 35 Moorgate. The building works to convert the ground floor to use were again paid for using a loan from Daniel Thwaites PLC brewery.

In 2006 the FCA became The Gregson Community Association Ltd (GCA), a registered company and registered charity. At the same time the FCC was renamed the Gregson Community Club (GCC) The existing agreement with Gregson Centre Limited to run the Gregson Centre on behalf of the FCC was transferred to the GCC. The GCA continued to receive 15% of the gross profit before wages of the GCC.

In 2008 the GCA took the decision to refinance to pay for building works to the upper floors of No. 35 Moorgate, bringing that space into use. A loan of £118,000 was taken out with Yorkshire Bank over 10 years. This allowed the GCA to pay of all outstanding debts to Daniel Thwaites PLC, and to pay for works to bring the upper floors of No. 35 in to use.

More recently

In 2017 the directors of Gregson Centre Limited, the managing agents, stated their intentions to retire, and sell on their company on the open market. The agreement signed back in 1994 did not give the GCA any way of ending that agreement. The GCA were very aware that they would have no say over who would purchase Gregson Centre Limited, and end up running the Gregson Centre on their behalf. The decision was taken to purchase the goodwill of Gregson Centre Limited, as a means of terminating the agreement.

Accountants were instructed by both parties to determine the value of the goodwill, and hence a fair value for terminating the agreement. The figure that was eventually agreed, based upon examination of the accounts of Gregson Centre Limited, was £63,000.

At this point the amount outstanding from the 10-year loan with the Yorkshire Bank of 2008 was £10,000. Added to this were some early termination fees, and new loan arrangement fees.

In November 2017 the GCA was receiving £21,000 per annum as its 15% of the gross profit before wages from the running of the Gregson Centre and paying £12,000 per annum in loan repayments.

The decision was taken to borrow £80,000 over 10 years from Yorkshire Bank. This would allow us to pay off the existing loan, purchase the goodwill of Gregson Centre Limited, and give us some funds for much needed maintenance work. The GCA would now be fully in control of the Gregson Centre.

The whole process of paying Gregson Centre Limited for the goodwill of the business was conducted subject to the advice of our professional advisors.  It was discussed extensively by the GCA Board and was reported to the members at successive AGM’s and was discussed at an EGM too during the process.

A change of faces

In November 2017 the organizational structure of the Gregson Centre was changed, and new managing agents appointed.

The new managing agents, Gregson Arts and Community Centre Ltd were running the Gregson Centre under an agreement with The Gregson Community Association, not on behalf of the Gregson Community Club. The Gregson Community Club was in the process of being wound down.

The new agreement would make financial planning much easier as the GCA would receive a set monthly management fee, rather than a percentage of profit.

The GCA recognized that trading had been tough in recent years and, following negotiation, the management fee was set at £16,800 per annum, set to rise with RPI.

A new loan agreement was in place with Yorkshire Bank, to be paid off over 10 years, with the first 5 years fixed repayments of £10,700 per annum.

2018 - 2019

In 2018-2019 we spent a lot of our income on major repairs to the building, making repairs as recommended by a fire risk assessment, repairing the leaking wall in the hall, repairing the wall in the back yard

Income

Management Fees

16,800

Memberships

1,200

Donations

1,000

TOTAL

19,000

Expenditure

Loan Repayments

10,700

Repairs & Renewals

16,000

Business Rates

850

Waste Water Rates

800

Insurance (Buildings & Charity)

2,500

Accountancy & Legal

2,000

Marketing

600

Sundries (inc bank charges)

250

TOTAL

33,650

This left us with general reserves of £14,788 at the end of the 2018 – 2019 financial year

2019 – 2020

This last financial year was difficult for the Gregson Centre and all the bodies within it. For commercial reasons we decided to end our arrangements with the caterers at No. 37 Moorgate. The GCA committed to installing a commercial kitchen within the Gregson Centre.

Although grants and fundraising contributed to most of the costs, we also committed a lot of our reserves to this as well.

Due to the reduced income to the Gregson Centre whilst there were no catering facilities, we also received a reduced management fee over the five summer months. We did not receive the management fee at the end of March / beginning of April 2020

management fee at the end of March / beginning of April 2020

Income

Resources Brought Forward

14,788

Management Fees

10,150

Donations

800

Membership

1,414

Donations and Auction for Kitchen

5,500

Grants for Kitchen

17,500

Reserves

4,700

TOTAL

54,852

Expenditure

Loan Repayments

10,700

Repairs & Renewals

3,176

Insurance (Buildings & Charity)

2,468

Accountancy & Legal

1,300

Business rates

776

Waste water Rates

820

Marketing

177

Sundries (inc bank charges)

300

Kitchen (inc moving toilets)

30,222

Lancashire Environmaental Fund - Seed funding

2,415

TOTAL

52,354

Grants were received from Awards for All, Galbraith Trust, Orsted – Walney Wind Farm

This left us with less than £2,500 funds, but with a future that looked like things would improve. We have our own kitchen, and the management fee was back to £1,400 per month for the final few months of the financial year. By all accounts, the situation appeared to be improving.

However, when the management fee for April 2020 was withheld due to the Gregson Centre being closed because of Covid-19, things took a turn for the worse.

2020 – 2021

In April 2020 we received 100% Business Rates relief, and £10,000 Retail, Hospitality and Leisure Grant.

We have sought a payment holiday of our business loan from Yorkshire Bank, and have been declined.

We continue to pay our business loan, water rates, various banking fees.

We have committed £1,250 towards a professional assistance in gaining grants.

Income as at 20-07-20

Resources Brought Forward

2,477

Management Fees

0

Donations

140

Membership

91

RHL Grant

10,000

TOTAL

12,708

 

Expenditure for the 2020-2021 financial year

Loan Repayments

10,700

Insurance (Buildings & Charity) (predicted)

2,468

Accountancy & Legal (predicted)

1,300

Business rates

0

Waste water Rates

820

Marketing

150

Sundries (inc bank charges)

345

Cost of fund raising

1,250

TOTAL

17,033

This shows a shortfall of £4,500 in this financial year, assuming that no income can be made from the Gregson Centre.

Should the GCA become liable for any further bills relating to the Gregson Centre, then the situation becomes much worse.

Restricted Funds

The GCA does hold grant generated monies for subgroups, namely the Highfield Recreation Group, and Gregson Lend-A-Hand. These funds have been granted monies for specific purposes and have been restricted to these purposes by the grantors. These funds are safely set aside and are being used for their designated purposes by the GCA.

There are other groups associated with the Gregson Community Association such as the Miss Whalley’s Field group, and the Gregson Festival Group. Both these groups hold their own finances, independent of the Gregson Community Association, and as such are not affected by our current predicament.

Should the GCA not be able to pay its monthly outgoings, then we risk defaulting on the business loan, which is secured against the building.