Neualtenburg Monthly Financial Report for April

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Sudane Erato
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Neualtenburg Monthly Financial Report for April

Post by Sudane Erato »

This report was originally posted in Aliasi's temporary forum at the beginning of May. I'm re-posting it here for completeness.
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Neualtenburg Monthly Financial Report... April 2006

Time again to look at the Neualtenburg financial situation. As usual, please refer to the reports located here, and also linked via the website.

Neualtenburg Balance Sheet in Lindens
http://www.tospitimou.com/Neualtenburg/ ... heetLD.pdf

Neualtenburg Balance Sheet in US Dollars
http://www.tospitimou.com/Neualtenburg/BalanceSheet.pdf

Neualtenburg Income/Expense Report in Lindens
http://www.tospitimou.com/Neualtenburg/ ... enseLD.pdf

Neualtenburg Income/Expense Report in US Dollars
http://www.tospitimou.com/Neualtenburg/ ... xpense.pdf


The biggest bit of news, financially, is not in Neualtenburg. It's the fact that the Lindex exchange rate seems to be stabilizing, more or less establishing itself around what the "market" would call the "psychological" level of 300 lindens to the US dollar (the sell rate, which is the important one, I believe). This is bad news for currency traders, but its good news for an entity like Neualtenburg. Stable currency is incredibly valuable in what's basically a dual-currency environment (L$ and US$). It means that our revenues and our expenses are more predictable, this being a very important quality for administering our finances.

Looking at the US$ Income/Expense report first, we show a profit of $67, a bit behind our budget of $78. it appears that we've somewhat overestimated the miscellaneous revenues we'd be able to generate each month. Healthy land fee and land sales revenues have partly made up for that, but not entirely.

On the expense side, our good performance is helped by the fact that we're not yet in a position to spend all the funds that have been authorized by the RA for this six month period. The website, for example, is a big allocation that we've not yet gotten to the "spending" stage on, so those type expenses don't show yet, and that's helped the "bottom line". Of course, we're still hoping to spend those funds, so future months may show "catch up" expenses.

Looking at the US$ Balance Sheet (the report of what we "own" minus what we "owe"), the critical fact is that the $67 net on the Income report means that the Total Equity (the total value of Neualtenburg, in financial terms) is $67 more than it was at the end of last month. We're now at US$723. this is a really important number. It is a substantial fraction.... more than half... of the cost of a new sim.

Discussion has carried on for a number of months now about purchasing and expanding into a new sim. I have been perceived as having the "go slow" position on this matter, and, of course, I have had that. Purchasing a new sim invariably means borrowing money, since Neualtenburg, even now, does not have the funds to buy it outright "for cash". Borrowing money is fine, its part of the economic system of human beings (despite various religions determination that it's sinful). But every loan of money, actually and psychologically, is an exchange. The lendor must have the confidence, whether psychological, or with hard evidence, that the funds will be repaid. Since Neualtenburg is an "experiment in democratic systems in virtual reality" (emphasis on "experiment"), there's not much psychologically to inspire a careful lendor. However, a strong Balance Sheet, showing an actual Net Value of a very substantial fraction of the expense of a new sim, makes a significant difference in the picture. Of that Net Worth of $723, $584 is in cash. That means that a lendor, assuming Neualtenburg acted to preserve its cash through a sim acquisition process, can readily see how she/he might be repaid in the event of a default. Thats a much more compelling picture for taking the step of incurring debt than last summer, when the issue was first raised.

So, yes, I am getting more friendly to the idea of the investment in a second sim. For purely financial reasons.

One more note on the Balance Sheet. You'll see there has appeared some new line items in a section called Long Term Liabilities. These are escrow deposits being held by Neualtenburg, deposited by the respective companies indicated, as a guarantee of their good faith performance in their dealings and willingness to submit to Neualtenburg authority in the case of disputes. The "City", per se, is holding these temporarily, in my opinion. Hopefully, we will soon establish a "Neualtenburg Bank", a government institution, to be sure, but a separate entity from the administrative function of the City. This Bank will be focussed solely on the administration of the funds of the City, without regard to City political issues, and will seek I hope to manage its funds for maximum stability and reasonable growth. It should have a healthy working relationship with the City finance, but be separate.

That's it for April. Questions, please IM me.


Sudane
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