EC Meeting Papers March 2018

19 The potential nursery company we have met with is a husband and wife partnership. The wife is a professionally qualified early years professional with experience of running a successful nursery and working in many. Her husband is an accountant with a local Quorn accountancy firm. They jointly own a third of the accountancy company and 100% of the nursery they have. The guarantee of 5 years of rental payments would be set against the accountancy firm whose accounts we have viewed as part of due diligence under a non-disclosure agreement. 20 The nursery option creates more traffic and higher risk activities on site. It would be guaranteed income from day one. Net cash into the Trust would be guaranteed at £40k per annum. 21 The office option creates potentially less traffic on site and we are not so familiar with this market, though we are assured by estate agents there is a need. The office option could generate more gym, food and beverage and hotel business, but this is not quantifiable. Straight rental income into the Education Trust could amount to £60k per annum. This is £10k short of our intended target figure from this component of a new build. 22 The spa option would be more profitable, on previous estimates £83k a year would be generated. This could be £13k in excess of our target for this component of the new build. But we would have to take into account an additional spend on fitting the building out as a spa of around £ as an initial outlay. 24 Firstly the cost of the nursery building itself. To build a shell would cost £278,444.83. To build a Category A Shell with some fittings could cost £500k. A complete nursery would cost £566k. 25 Secondly, the question of VAT. At this stage it appears that we would not pay VAT on a nursery, or hotel extension but we would have to on the houses for rent. I have asked for further accountants’ advice on this matter. If we have to pay VAT on the housing element then building a nursery building is out of the question. 26 If we do not build the nursery building and we do not have to pay VAT on the housing we can for sure afford the entire project without a loan and leave more in our remaining investments. 23 We have other variable factors involved in our decision.

27 If we have to pay VAT on the housing element it is very unlikely we can pay for the nursery building unless the EC is prepared to leave a lower amount in the investments.

28 Another very big variable relates to the problem of not building the nursery building now, but building it later, when funds

29 are available for example to run a spa. This is actually not a desirable way forward because our project manager estimates that if you did not build the nursery building as part of this project and asked a company back later to just build that one building alone,

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