February  2002

 

ROYAL NAVY SUBMARINE MUSEUM

INVESTMENT AND RESERVES POLICY

 

Reserves Policy - Introduction

 

The Trustees continually monitor the levels of the Charity’s funds expendable at their discretion, defined for the purpose of this policy as the aggregate of the amounts shown as ‘Investments’ and ‘Net Current Assets’ in the accounts of the Charity and which are attributable to Unrestricted Funds.

 

The amounts and term of the investment of the reserves are based on the Trustees’ opinion of the immediate and future needs of the Museum by identifying the requirements for continuing operations and setting aside sufficient to enable medium to long term development and expansion.

 

The Museum needs to retain a viable reserve in order to:

 

                a          Cover liabilities

            b          Cover annual deficits

            c          Provide income

            d          Fund development

 

Scope

 

Liabilities

 

The nature of major liabilities faced by the Trustees centre around the care of the five Historic Ships and the Collection. It is planned to have four out of the five ships under cover and in relatively stable conditions over the next three years, leaving the ship of primary concern to be HMS Alliance (a member of the National Core Collection). Even after a planned rolling extensive refit, the fact that she remains exposed to the elements and sitting on concrete blocks in a tidal way implies that she is capable of producing surprises that will have to be dealt with at short notice. Given that she is the ‘jewel in the crown’ of the ‘attraction’ operation, an appropriate level of reserve must be maintained to cater for any crisis. 

 

Annual deficits

 

The Museum does not entertain a deficit culture.

 

Provide income

 

The Museum operates on relatively slim profit margins, so accrued interest is a welcome boost to income.

 

 

 

Development

 

After the completion of the Fieldhouse Building project, the Museum will have completed three out its five development phases. In the process of fundraising for Fieldhouse Building (Phase 3) and HMS Alliance (Phase 4), the pool of goodwill from all sources of raising money will have been exhausted. It is therefore contingent on the Trustees to build up the reserve to a level appropriate to provide matched funding for the final phase of development, enhancing the Museum entrance and its surrounds.

 

Conclusion

 

It is the Trustees’ policy that the Reserve should be enhanced to £250,000 by the year 2008 through the generation of £15 - 20,000 surplus over the next six years.

 

Investment Policy

 

The Museum is soon to enter a further period of development during which it will be necessary to call on the Museum’s Reserves to underpin cash flow until repayments are received from the Heritage Lottery Fund and HM Customs and Excise for VAT.

The present investment policy therefore reflects the need for relatively easy access to the Reserve by maintaining it in cash, and accepting a lower rate of return than may be achieved through a stock market based investment fund, but without the attendant risks.

 

Review

 

This policy will be reviewed annually.

 

 

 

 

 

 

 

Vice Admiral Sir Roy Newman KCB JP DL

Chairman of Trustees

28th March 2002