13 September 2015

The Gate 2015 (Act III: assets)

The Gate's balance sheet and breakdown of funds provides the focus for this final part. Since the balance sheet represents only a snapshot of a single day at the end of the accounting period, it isn't a robust thermometer in itself (much like every element of annual accounts) but it should be taken as a positive sign when it reinforces what ‘should’ be happening elsewhere in the organisation given the story the accounts are telling.

For example:

Act I: The Gate show substantial growth in revenues achieved through production model diversification and fundraising in their 35th anniversary year. We see touring income grow and fundraising income grow accordingly.

Act II: The Gate kept costs under control, with 2015 costs being kept below 2011 levels despite expanded output through touring and expanded fundraising activities. We see expected changes in things like production costs and The Gate reports a healthy surplus.

Now consider two hypothetical Act III scenarios:

1) The Gate shows minimal change on the balance sheet apart from increases in cash and consequently net assets.

2) As above but with Creditors jumping to -£275,000.

Scenario 1 would be line with the story begun in Act I and Act II and makes sense as a result of expanding activities but keeping costs under control. Scenario 2 would be a contradictory story since activities were expanded but with substantial (currently unpaid) costs incurred. The Gate's actual balance sheet is shown below.

The Gate's balance sheet nicely reinforces the earlier action with a clear through line. The standout number is cash at bank and in hand (as it should be). This has increased by 79%, from £216,271 in 2014 up to £512,038. The amount owed to The Gate is down about £10,000 from 2014 and with not much change in Tangible Fixed Assets (which have been accounted for as part of the unrestricted funds), 2015’s Net Assets stand at £540,136 (up 59% from £339,145 in 2014). There is a slight increase in the creditors number but some increase would be expected given expanded output. Trade Creditors is actually only up £11,800.

There is a note in the accounts that £200,000 has been set aside as a support reserve representing 3.5 months running costs. This currently appears to be reflected in the General Unrestricted Funds, of which about half of the remaining surplus has been earmarked to support a new Marketing and Audience Development Officer role. The Designated Unrestricted Funds have been set aside to support Gate Educate (£2,318), theatre and office improvements including sound-proofing (£49,452) and £78,363 to support organisational development out to 2018 (including salary increases across the organisation as approved by the Board's Remuneration sub-committee).

Leaving output aside, there are obvious and substantial differences between Paines Plough and The Gate. Despite their proximity in terms of ACE Portfolio funding, Paines Plough's income is much more dependent on grants than on the personal philanthropy that The Gate relies upon. The overheads involved in running a venue mean that The Gate require much larger reserves and are consequently a little less agile in their producing model than Paines Plough. The strong similarity between the two is that both organisations are clearly willing to take risks to expand their output and that both have been moving from strength to strength in recent years. The main danger for The Gate is that 2015's revenues can't be replicated in 2016 and that the costs of expanding output creep up on the hope that revenues will be replicated. Paines Plough's 2015 accounts are not available at time of writing but once they are it will be interesting to put this year's numbers side by side.