Shetland Charitable Trust has recorded one of its best-ever years with a surge in value of £42.3 million to £218.6 million thanks to the recovery of world financial markets. The credit crunch of the previous two years wiped £55 million from the trust but trustees heeded advice to hold their nerve rather than being panicked into drastic action.
The trust now intends reducing its exposure to volatile markets by securing a more reliable income from investing £10 million extra in the local economy, to at least £40 million, with a spin-off in boosting local business and jobs. Most of the investment will be in property, including £6 million in new offices for the council.
Ultimately the trust may part-fund the Viking Energy windfarm which it still sees as its best potential earner. In his report to a meeting of the trust tomorrow, financial controller Jeff Goddard says windfarm profits could allow the trust to increase its spending. “The Viking Energy project still appears to offer the prospect of returns significantly above that which can be expected from other investments. If that prospect becomes a reality, trustees will have found an investment that can boost income, perhaps double it.
“Trustees will have to decide whether that benefit and others outweighs potential dis-benefits. Viking Energy appears to offer, at this stage, the possibility of being able to increase spend in the longer term in a sustainable manner.”
New figures published this week in advance of tomorrow’s meeting show that after two years of heavy losses the trust’s investments grew by 24 per cent in the last financial year, up from £176.3 million to £218.6 million.
Trustees also balanced the books for the first time, reducing spending by £2 million to match the annual income of around £11 million. The target to end unsustainable spending was set in 2002 after more than £17 million was paid out during the trust’s most generous year since it started in 1976.
The trust is pleased that the progress was made without damaging local services and by avoiding knee-jerk reactions to the troubled markets, where it has £180 million invested.
Last year the trust’s property arm SLAP raised £2.5 million in rent; its district heating scheme generated £400,000 in profits; and rent from Sullom Voe oil terminal fell by 15 per cent to £1.1 million due to reduced throughput.
The trust faces difficulties too. Building costs will outstrip inflation, especially as its 30 properties get older. The funds set aside for major refurbishment and replacement of care homes, leisure centres and other buildings were lost during the stock market crash of 2000 to 2003.
Trust chairman Bill Manson said “The trustees have displayed considerable patience throughout a long period of retrenchment and understand that the difficult choices they have had to make this past year have not been easy for the organisations the trust supports.
“However we believe we have placed the future of the trust on a sounder footing than it has been for the past eight years and must now concentrate on sustaining and developing the trust’s activities into the future.”