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Community Services Committee Agenda 6 November 2000

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Community Services Committee Agenda 6 November 2000 ROBERT MCDOUGALL ART GALLERY AND ART ANNEX REPORT ON ACTIVITIES FOR THE FINANCIAL YEAR 1 JULY 1999 - 30 JUNE 2000 PREPARED BY: ART GALLERY DIRECTOR AND ART GALLERY STAFF TABLE OF CONTENTS PAGE NO. BUSINESS UNIT SUMMARY REPORT ART COLLECTION REPORT EXHIBITIONS REPORT INFORMATION & ADVICE REPORT ACQUISITION APPENDIX PAGE NO. 3 6 8 15 18 BUSINESS UNIT ART GALLERY FINANCIAL RESULTS FOR TWELVE MONTHS TO 30 JUNE 2000 Financial Performance Last Year Current Year Corporate Plan Reference Page 8.3.1 Actual Budget Actual Expenditure Art Collection $778,121 $755,678 $718,190 Exhibitions $1,218,120 $1,274,813 $1,131,178 Information & Advice $559,780 $659,545 $717,276 $2,556,021 $2,690,036 $2,566,644 Revenue Art Collection -$81,383 -$58,725 -$52,127 Exhibitions -$325,346 -$317,000 -$185,530 Information & Advice -$38,781 -$202,000 -$143,773 -$445,510 -$577,725 -$381,430 Net Cost of Art Gallery Operations $2,110,511 $2,112,311 $2,185,214 Capital Outputs Renewals & Replacements $28,764 $31,800 $35,753 Asset Improvements $0 $0 $0 New Assets $365,764 $179,887 $170,082 Sale of Assets -$22 $0 $0 Net Cost of Art Gallery Capital Programme $394,506 $211,687 $205,835 Objective To enhance the cultural well-being of the community through the cost effective provision and development of a public art museum, to maximise enjoyment of visual art exhibitions, and to promote public appreciation of Canterbury art, and more widely, the national cultural heritage by collecting, conserving, researching and disseminating knowledge about art. Operational Components 1. Introduction of SAP Reporting system. During the financial year the SAP reporting system was introduced. This uses different methodology in allocating costs, particularly in the overhead allocation area. This has tended to distort the individual output financial results by redistributing costs previously budgeted under other outputs. For the purpose of retaining some clarity in financial analysis a summary of the financial performance is being provided rather than analysis by individual output. The process for the Annual Plan in 2000/2001 has been modified to ensure this issue is not ongoing in nature. This will allow us to use the superb reporting functionality of the new Accounting system for both internal and Council reporting. 2. Overall Financial Performance The overall financial performance of the Gallery was under considerable pressure to meet budget. The impact of running the existing Gallery, and planning for an institution many times larger, continues to impact on the pressures facing staff. The Page 3 output result for the financial year was an unfavourable variance of $72,903 or 3.5%. A number of key issues have been identified and a number of key responses have also been developed as the new Gallery enters the construction phase. 3. Internal Cost Issues There were two areas relating to internal costs and processes that had a direct effect on financial performance. A change to the printing budget in December 1999 ($16k) meant that monies already committed and contracted were then removed from the budget. The Gallery was unable to avoid this expenditure. The other key internal cost issue was the unexpected growth in cost of MIS charges. Demand for use of technology has grown substantially during the review period and significant additional resources have been required to meet output requirements. This also involves upgrading existing resources. The impact of the large growth in technology use has seen costs exceeding budget by over $36k. 4. External Revenue The key exhibition event of the last twelve months has been the Wearable Art Exhibition. The revenue target for this event was set at $60k and the actual target achieved was just under $35k. This has again raised the issue of balancing the cost of an important exhibition against the access to that exhibition by the general public at a reasonable cost. 5. Monthly Financial Performance The trend of financial performance varied throughout the year. This was caused by two things with the main one being the historical practice of dividing budgets by twelve. For fixed costs this was reasonable but the nature of Gallery operations meant a number of distortions were caused in the monthly results. Having said that, there were still issues that needed addressing and strenuous efforts were made in the latter part of the year to identify and rectify variance issues. The trends shown below help explain the patterns of activity. Cumulative Financial Variance $250,000 $200,000 $150,000 $100,000 $50,000 $0 July May April June March August January October February December November September 6. Capital Programme The capital programme is mainly focused on acquisitions of art works to ensure the currency and quality of the collection is maintained on behalf of the people of Canterbury, particularly in relation to the future needs of the new Gallery. The acquisitions budget was 95% expended at the end of the year. This was reduced slightly from total budget to assist in reducing the operational deficit. The inadequacy of the budget provision is highlighted by the fact that no artworks were purchased after January due to budget constraints. Included in this budget is a small provision for Art in Public Places. An amount was set aside as a contribution towards the acquisition of the Millennium mural by Philip Trusttum for the city. The remainder was dedicated at the approval of the Art in Public Places Working Party to assist in the commissioning of the major Page 4 public sculpture for the new Christchurch Art Gallery Sculpture Garden 'Reason for Voyaging' by Graham Bennett. Page 4 7. Strategic Response to Financial Issues The key issue in dealing with financial variances is to provide some response to the situations where variances occurred to minimise the likelihood of any of those issues occurring again. On that basis the Gallery has implemented a number of initiatives that are direct responses to historical and current financial situations. 7.1 Appointment of new Finance & Building Manager. The appointment of a new Finance & Building Manager has been well documented in previous reports. The benefits of this appointment include better variance analysis, more thorough reporting and budgeting processes as well as much closer scrutiny of financial processes within the gallery. There are a number of other benefits also identified including better use of skills associated with business planning, contract management, and administrative support for the Director. All this means the level of performance and management effort has been significantly "ramped up" and this will be reflected in the financial performance of the Gallery. 7.2 Improvement in Revenue Generation from Public Events. One of the disappointments of the previous year was the loss of revenue from recoveries from public exhibitions. The ability to recover revenue is limited to the willingness of the public to pay for it. With that in mind, a serious effort has been made to target sponsorship for the major international show coming this year from Christ Church Oxford. The impact of that is the Gallery has been able to secure sponsorhip monies that are larger than the amount budgeted to be recovered from the General public. This has enabled us to limit entry costs to a gold coin donation only. This must improve the numbers scheduled to attend at no risk to the Council of reduced revenue. Sponsorship is now included as a base part of any event planning programme. 7.3 Seasonalisation of Budgets. Historically, Gallery budgets have been evenly spread over the twelve month period. Where costs are fixed this tends to balance out but the Gallery has a number of events and exhibitions which lead to uneven spending patterns. In the year under review the financial position was distorted by the impact of comparing the performance with an evenly spread budget. For the coming financial year a genuine effort has been made to spread costs in a more appropriate manner. This should mean the monthly reporting more accurately reflects the real financial position and is not artificially distorted by what is commonly known as "timing' differences. 8. Sponsorship During the last year an extraordinary amount of effort has gone into the securing of sponsorship and added value services for both the new Gallery and also the current Gallery. The efforts in this area have been above and beyond the day to day operational pressures. Sponsorship secured for the new Christchurch Gallery during the last 12 months is $6,512,000 and during that period a further sum of $240,000 in cash and kind was secured to support and assist with the current Gallery operations and related programmes. It is important to note this information as it is not provided separately anywhere else in this report but is an integral part of Gallery operations. Page 5 BUSINESS UNIT ART GALLERY OUTPUT CLASS ART COLLECTION OUTPUT MAINTENANCE Financial Performance Last Year Current Year Corporate Plan Reference Page 8.3.3 Actual Budget Actual Expenditure Maintenance $694,256 $712,046 $626,082 $694,256 $712,046 $626,082 Revenue Maintenance -$81,383 -$58,725 -$52,127 -$81,383 -$58,725 -$52,127 Net Cost of Maintenance $612,873 $653,321 $573,955 Commentary Progress on the conservation of the oil painting collection was advanced considerably with 80% having now undergone treatment. The digitised imaging of the collection was also advanced with 391 images being installed into the collection database. This improvement on the target of 95 was directly related to the first year of having a gallery based photographer employed directly within the business. Work continues on developing an effective storage and transportation programme to move all art works to the new gallery site in 2002/2003.
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