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Farfield Mill

Financial performance

There are several ways the Farfield Mill project gains income through activities undertaken by both the charity and by the trading company Sedbergh Enterprises Limited, including admissions, sales, exhibitions, education, rent and weaving.

The board of Farfield Mill plans, in the short term, to stabilise the society and put it on a sound financial footing by reducing cash flow requirements through a debt for equity swap and by increasing visitor numbers through increased marketing and a better visitor experience.

In the medium term the board intends to continue to grow the society and its reserves. The increase in visitor numbers will enable more profitable trading

Performance

Farfield Mill opened to the public in 2001. At its height, Farfield Mill attracted over 20,000 visitors a year.

Currently, visitor numbers have much reduced, averaging about 14,000 a year. Like many other charities, Farfield Mill have never had an operating surplus but has survived because of grants and generous ad hoc donations to keep it afloat. The result of all the historic trading, donations and grants is a healthy reserve of £425,881, but this is predominantly made up of fixed assets.

Although Farfield Mill is asset rich, it is cash poor. The 2018 share offer will address these cash flow issues with a debt for equity swap.

Plans

The Mill's short term plans are to stabilise the society and put it on a sound financial footing by reducing cash flow requirements through a debt for equity swap and by increasing visitor numbers through increased marketing and a better visitor experience.

In the medium term the board intend to continue to grow the society and its reserves. The increase in visitor numbers will enable more profitable trading. This profitable trade will enable them to pay interest on share capital and to create the cash reserves to allow share withdrawal.

In the long term Farfield Mill intend to make further improvements to the mill and may make another share offer to resource this.

Cash flow

The cash flow tables show that the capital raise and the subsequent increase in operating cash flow will have a positive effect on Net Cash Flows. It is only in year 2019-20 that there is a negative Net Cash Flow. The cash flow forecast predicts that Farfield Mill will stay in a positive cash balance, despite an opening cash balance of -£37,694. Farfield Mill will still have access to an overdraft with the bank but it is predicted that it won't be needed.

Minimum Raise 18-19 19-20 20-21 21-22 22-23
Operating Cash Flow (39,933) (5,258) 30,774 51,280 43,049
Investing Cash Flow (126,930)
Financing Cash Flow 206,615 (359) (852) (32,802) (32,802)
Net Cash Flow 39,751 (5,617) 29,922 18,478 10,247
Opening Cash Balance (37,694) 2,057 (3,560) 26,362 44,840
Closing Cash Balance 2,057 (3,560) 26,362 44,840 55,087

The increased financing cash balance in years 2021-22 and 2022-23 is due to the proposed repayment of share capital.

The negative balance in year 2 is comfortably within the societies’ overdraft limit of £25,000.

Maximum Raise

Maximum Raise 18-19 19-20 20-21 21-22 22-23
Operating Cash Flow (41,208) (5,258) 30,774 51,280 43,049
Investing Cash Flow (126,930)
Financing Cash Flow 213,312 5,000 5,000 (33,450) (33,450)
Net Cash Flow 45,174 (258) 35,774 17,830 9,599
Opening Cash Balance (37,694) 7,480 7,222 42,996 60,826
Closing Cash Balance 7,480 7,222 42,996 60,826 70,426

The increased financing cash out in years 2021-22 and 2022-23 is due to the proposed repayment of share capital.

Profit and Loss

This capital raise will have three major effects on profitability by increasing visitor numbers, increasing sales margins and either reducing or removing the mortgage.

The reduction in Turnover in 2022-23 is due to the proposed abolition of the entrance charge in this financial year, a move intended to further increase visitor numbers and trading profits long term.

Profit and Loss 18-19 19-20 20-21 21-22 22-23
Turnover 90,775 94,163 104,468 112,138 78,473
Gross Profit 80,055 83,318 91,695 97,594 63,803
Earnings before Interest, Tax, Depreciation of Amortisation (53,051) (49,258) (43,226) (39,720) (75,951)
Gift from SEL 30,000 35,000 65,000 82,000 110,000
Extraordinary Costs (10,882) 0 0 0 0
Net Profit (37,694) (18,569) 13,734 34,292 26,439
Profit brought forward 420,142 382,448 363,879 377,613 411,905
Profit carried forward 382,448 363,879 377,613 411,905 438,344

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