30 August 2015

Paines Plough 2014 (Act III - assets)


Having previously looked at revenue and expenditure, this third and final part will look at what those numbers really mean for Paines Plough and consider what we might expect to see from them in the future. Here's a quick recap:

£2013/20142012/2013Growth% Growth
Arts Council Portfolio funding314,344313,8015430.17%
Project Specific funding218,483299,896(81,413)-27.15%
Production Revenue139,844168,524(28,680)-17.02%
Donations & other18,09514,7233,37222.90%
Total Revenue690,766796,944(106,178)-13.32%
Support Costs294,545260,91633,62912.89%
Production/Running Costs321,493276,42145,07216.31%
Expenditure616,038537,33778,70114.65%
Profit74,728259,607(184,879)-71.21%

Given that Paines Plough has shown a profit for the last few years (also retaining £47,777 in 2012), it could start to look as if they're swimming in cash. However, it's worth remembering that in 2011 they posted a loss of £-137,045 and that their cash assets are heavily restricted.

In the last installment I mentioned that the 'safer' option for an arts business model is to take measured risks with production costs rather than adding overhead to the support costs (IE small overhead supported by principle activities rather than large overhead to be supported once the organisation 'scales') and this appears to be exactly what happened with the loss sustained in 2011. With the appointment of James Grieve and George Perrin as Artistic Directors in February 2010, Paines Plough took the decision to use up the majority of their reserves to expand their output in an attempt to attract additional funding. An astute gamble (with fairly limited downside given the organisation's position at that time) and there's no doubt that it has paid off for them.

The reserves mentioned above are an important consideration when looking at Paines Plough's overall financial position. Whilst the charity shows a profit of £74,728 for 2014, that does not represent unrestricted cash that can be used for any purpose. Paines Plough actually split their cash holding into a number of different funds:

- 'General Funds' are unrestricted and can be put to any purpose (as long as that purpose falls within core charitable activities). These funds are as close as a charity comes to a true cash asset. ACE portfolio funding and Production Revenue come under this heading.
- 'Designated Funds' are set aside from the General Funds for a specific internal purpose. For example, Paines Plough have made the strategic decision to isolate £40,000 of General Funds for Support Costs. This fund is intended to insure against the loss of an expected funding stream so will generally not be treated as unrestricted cash unless absolutely required.
- 'Restricted Funds' are those that must be spent on a specified project. Since funding can be received and spent in different accounting periods, Restricted Funds are often carried forward to the next period. These funds are an asset but not a truly fungible cash asset.

With that in mind, the below shows how Paines Plough's funds were split at the end of the 2014 period. In addition to the growth of the General Fund, the Designated Funds have been expanded and liabilities have been reduced by around £20,000. All in all, this paints a very healthy picture. Websites like DueDil report the organisation's cash at ~£500,000 but as you see below, this is not a true cash number because it is already allocated. 

£2013/20142012/2013Growth% Growth
General Fund92,31128,54763,764223.36%
Designated Funds40,00020,00020,000100.00%
Restricted Funds349,391358,427(9,036)-2.52%
Total Funds481,702406,97474,72818.36%

So what to expect from 2015? Well, construction of The Roundabout has been completed so a substantial amount of the Restricted Funds will no doubt be converted to a tangible asset. Designated Funds should remain constant and I assume the General Fund will be put to work expanding output or improving production values. Most fascinating will be to see if The Roundabout allows for Project Specific Funding to continue to grow and how that's traded off against Production Revenue and Production Costs. Following 2011's strategic decision to expand output, Paines Plough have been able to take another astute gamble by building themselves a pop-up venue. Just as the 2011 decision has allowed them to move up to the next level, there is reason to be very optimistic that The Roundabout will do the same thing for them over the next few years.

Returning to the original question of the sustainability of small-scale touring, I suppose it all comes down to perspective. From Paines Plough's perspective it certainly seems they are in a growth stage so sustainability is likely taken as a given. Do the 18 actors employed in 2014 consider small-scale touring a sustainable activity? On average, it looks like they were paid ~£2,400 for 11 performances each so... maybe? How about the writers? Well Paines Plough paid out £14,131 for 'Theatre Writing/Royalties and Commissions' in 2014 (could well be more not shown in their accounts from collaborative productions). This was over 8 productions for an average of ~£1,750 per year per writer. Assuming those numbers are correct, I doubt that writers really consider small-scale touring a sustainable platform for their work. Obviously Paines Plough is not the only employment for those artists and this is not a criticism of Paines Plough whose support for artists, new writing and small-scale touring deserves to be held in very high regard. However, there is much to be done before questions about the sustainability of small-scale touring from all corners of the audience are a thing of the past.