Lynton and Barnstaple - Operations and Development

Regardless of the 'respect' @H Cloutt that is an uncalled for comment, without, in my opinion, justification from reading @Tobbes postings as I have seen no evidence for that allegation. He quotes the evidence and is merely asking for answers to valid questions, and, I suspect, like the rest of us, will make reasoned judgment when a response is published. When a third of the Trustees produce a minority report a response from the remaining two thirds is warranted without too much delay.

 

see https://www.lynton-rail.co.uk/trust-notices for a response from the chair and five trustees...

 

I am pleased to see that a response from the other trustees has been posted. I will be interested in the response from regular contributors. Clearly we have a different interpretation of some of the recent posts. I recognise that some people who post here are much closer to the situation than I am and are aware of the personalities involved.

 

The 'Return to Parracombe' Appeal leaflet says the cost of reinstatement to Parracombe Halt will be about £1.6m. Clearly that does not include anything further south towards Blackmoor.

The appeal includes the following sentence:

'Though £1.6m is a large sum, the good news is that, thanks to some recent legacies, we already have £450,000 committed to this project.'

So if there was not a decision by ALL Trustees or a majority of them to transfer those legacies to OSHI, if that is what has been done, and minuted by the Trust Secretary, surely we have to ask why ? It is not good enough, in my opinion, to suggest that it is all about extending the railway, so that's alright. It appears £450,000 has been shifted without proper authorisation of a decision by all the Trustees, or a majority of them.

 

Good. It is very welcome to see the alternative view which I will think about carefully.

At first reading though it leaves some questions such as the unminuted decisions. First impression is that I still don’t see how this gets resolved without an independent investigation.

 

Whatever happens to the Blackmoor business the Trust will retain the land it has bought for £50,000. But to state that the Trust's commitment is only £350,000 when it has £503,000 invested in it in shares and a loan is frankly stretching credibility. The £250,000 loan is unsecured, so if the business fails £503,000 will be at risk. It is stated that this loan is at commercial rates (as required by Charity law, as I understand it). 5% interest may have been somewhere near commercial rates when lent (although I doubt it), but surely not now.

It is all very well to state that there is almost £250,000 in general funds and £581,000 in restricted funds, but what is critical is how much cash can be spared from the needs of running the day to day activities of the Trust.

 

A cursory read of the 'non-minority Trustees' letter buried in the Members section (sic) of the L&BR website causes me to ask:
Why has it taken so long to get a response to matters which should be in the public domain, or preferably, transmitted to members by email?
Why is the information now conveyed still lacking in clear financial detail?
Why is there no explanation of why there are 'three disaffected Trustee members' anyway?

I'm sure a more careful reading will bring other unanswered questions to light but at present I think this is an insufficiently clear rebuttal lacking detail.

 

In reading that response, I have noted a number statements such as:-

"This centres on a number of allegations all of which has been intended to damage confidence in the work carried out by the Trust and its trustees over several years......"

"Three pages dedicated to this subject in the Minority Trustee Report are clearly aimed to confuse and spread concerns within the membership....."

"This is another clear attempt to denigrate the Trust’s actions and to cause unrest......

"This entire report can be seen as an attempt to cause distrust and concern at a time of continued success by the Lynton & Barnstaple Railway....."

Although the Minority Report may indeed have had one or more of the effects alleged above, there is a clear difference between 'effect' and 'intent'. I would suggest that the authors of this response have merely provided their own view of the situation without actual proof of any *intent*. It could be viewed by some as another example of attacking the messenger(s) rather than the gist of the message.

Nor have they explained how the 'average member' can be expected to equate "continued success by the L&BR" with the loss of the ENPA planning consents and the Sec73 debacle.

I will leave others on here to argue over the minutiae of the actual financial figures, but I suspect that there are examples of where the Minority Report may indeed have got the true figure slightly wrong (not having access to all the relevant data), but the fact that the non-minority response can then say "you've got it wrong" is not the same as confirming that their own figures are correct.

 

It's normal practice for a charity to maintain a cash reserve of sufficient size that, were its predicted income to suddenly dry up overnight, it could continue to maintain its committed expenditure until such time as new income sources could be identified. Ultimately it is for the Trustees to set that reserve, both in terms of how much expenditure they feel then need to cover, and for how long.

In the most recent set of accounts (for the 2021 year), that amount is set out as follows:

The Board of Trustees has examined the charity's requirements for reserves in light of the main risks to the organisation. It has established a policy whereby the unrestricted funds not committed or invested in tangible fixed assets or fixed asset investment held by the charity should be sufficient to cover administrative expenses, loan interest, and the servicing of membership commitments for a period of twelve months. This would indicate that unrestricted cash reserves of around £17,000 should be in place. The charity has designated £17,000 of funds for this purpose. However, the charity's unrestricted cash reserves fall short of this target because the majority of funds are tied up in fixed assets. The Trustees are aware that the charity needs to secure more unrestricted funds in the form of easily realisable assets.​

With the investment in OSHI (and I believe loan repayments to be made - correct me if I am wrong) it would be interesting to see whether in subsequent annual statements the level of that cash reserve is revised upwards.

It is interesting to note that although in 2021 the Trust was showing £681k of "cash and cash equivalents", the vast majority of that must have been in restricted funds, since otherwise the statement in the accounts about the £17k unrestricted contingency fund "the charity's unrestricted cash reserves fall short of this target" doesn't make sense.

Tom

 

I think that is for the 'diaaffected Trustees' to explain that.

 

I think they have explained why they are disaffected quite clearly.

 

...but maybe not (yet) to the wider public readership of the Trust website?

The problem that I see in this context is that the Board has published what amounts to a public statement on its website (so much for its past policy of 'telling the members first') that refers to a document which many of those reading the L&BR website will not have seen nor know its background. It is easy to label Trustees (or other members) as 'disaffected' without any hint of the fact that maybe - just maybe - they have good reason to be 'disaffected' by the way in which the Board has been operating. Shades of the past WSRA (and elsewhere) perhaps?

 

If the figures in the statement from the 'Chair and five trustees' are correct it does not explain why this information wasn't made available to the three 'minority report' trustees when they requested it. If they had the report'd undoubtably've been different, assuming it was still necessary. If any trustee's not given access to all the financial data and minutes etc. for their organisation how can they be expected to discharge their duties?

 

That seems a very low figure. I assume that it would also have to cover staff wages, in which case the manager might be in for a shock!

I'm not sure that the L&B would have to service any loans regarding the OHSI, as the OHSI company (yet another L&B spin off) would actually be responsible to pay the L&B for the £250,000 loan

 

I do not necessarily disagree with you on your observations but to be fair, you can pick holes in many heritage railway charities' accounts. The thorny issue of "reserves policy" is complicated. It seems highly likely to me that the rules on disclosing a reserves policy originally stemmed from "flag day" charities, where the Charity Commission concern was that the charity would build up excessive cash and not distribute it, and no-one has seen fit to amend the guidance to suit current circumstances (where many charities do not fit the traditional model of handing out grants to the needy). "reserves" for this purpose does not seem to be defined anywhere in the charity rules (government guidance defines them in terms of "funds" which is just as ambiguous) and in accounting-speak reserves normally means the balancing item on the creditor side of the balance sheet, not a cash sum. For a charity reserve analysis, one can only assume that it is intended to refer to unrestricted cash (and equivalents) as it is not possible to come up with a sensible analysis otherwise. The L&BT seems to handle the concept better than many (cf. that paragon among charities, the NYMRT, which is somewhat enigmatic in this area, saying that life is difficult and that it has "no free reserves" (not defined) but noting elsewhere that its cash reserves carried it through the winter). I get the impression that charities' policy on [cash] reserves is often designed bottom up - i.e. the policy is whatever the unrestricted cash balance would justify, although occasionally they have to fess up (like in the latest GWS accounts, item b. p.8) to say that the unrestricted cash reserves are inadequate.

 

There's another update on Trust Notices - https://www.lynton-rail.co.uk/trust-notices

 

Interesting, but I wonder why this information could not have been provided in response to reasonable requests by members, and was not made available to trustees as part of their induction.

 

>>>The purchase price will be in the public domain once the Land Registry is updated....

Maybe, but that does not explain why the information could not have been given to the Trustees in the meantime, even if with a caveat that it was not yet audited and verified.

 

A better document than the first response. Still quite a few questions and still doesn’t explain quite a number of matters.

 

I'm amazed that both the unrestricted cash reserve should be £17K and that the organisation admits to not having it. Middleton is a small organisation but requires its cash reserve to be considerably more than that. I can't remember the current level but it is at least five times that figure and covers such things as insurance, utilities, contracts and other commitments such that the railway could survive 12 months with no income stream.