Archived decisions
Sir George Staunton Country Park Joint Management Committee
21 November 2005 Item 8
Revised Budget 2005/06 and Draft Forward Budget 2006/07
Report of the Treasurer
Contact : Bevis Ingram 01962 847508
1 Introduction
1.1 This report presents the revised budget for the Park for the current year (2005/06) and a draft forward budget for next year (2006/07).
1.2 Appendix A compares the budget and forecast outturn for the current financial year (2005/06), and shows a summary of the proposed budget for 2006/07, including proposed contributions from the Partner Authorities. Appendix B breaks the revised budget down into its operational elements. Appendix C presents the draft forward budget for 2006/07.
2 2005/06 Revenue Budget
2.1 There have been many positive aspects to the current year's performance in the various elements of the Park's operations. The landscaped gardens and parkland have attracted significant grants which are helping to improve the visitor experience. Visitor numbers for April to September are up 7% on 2004/05, the shop is performing well, and the tea rooms are catering for the increased throughput of customers. A limited experiment of providing refreshments in Leigh Park Gardens in the summer indicated that there is a market for this facility, which could provide a valuable financial contribution to the Park in the future.
2.2 Although the conference facilities are now available there has been very little business. This is ascribed to the unavoidably late appointment of the Marketing Officer. This has also prevented the Park from taking full advantage of the first summer following the handover of the new facilities. While the day to day operation of the tea rooms is good, the original budget included a significant element of profit from catering for the conference business, which will not now be achieved this year. The original budget was based on a challenging target for increased visitor numbers. Thus, although visitor numbers to the end of September are up on last year, they are down by 9% on the forecasts used for the original budget which has consequently reduced the income forecast. Cost saving measures have been taken to minimise the effect on the reserves, and to produce a reduced operational surplus of £882 for the year, compared with £10,982 in the original budget. The impact of this will be to delay the repayment of the Park's deficit. While this is disappointing, members will recall that adjustments made to the accounts in 2004/05 enabled a large proportion of the deficit to be repaid, so the overall reserves position remains better than forecast a year ago. The challenge now is to deliver a significant surplus in 2006/07 to pay off the rest of the deficit (see paragraph 3 below).
2.3 The expected year end reserves are now forecast to be a deficit of £16,332 after expected interest payments have been taken into account.
2.4 The variations against the original budget within the budget headings are summarised below.
a) Employees (-£49,600)
The late appointment of the Marketing Officer and the decision not to appoint to the Conference and Events post have resulted in major savings on staff costs. In addition, turnover savings have been made mainly in the Office, Landscaped Gardens, Education and Shop staff. However, these have been partially offset by additional staffing costs in the Catering and Gardens and Glasshouse operations, this latter work being funded by Heritage Lottery Fund (HLF) grant.
b) Premises (+£15,100)
Additional costs are being incurred on rising utility costs and some HLF funded work in the landscaped gardens and parkland. Some other site maintenance work on path and fencing has been postponed to generate savings.
c) Transport (-£3,300)
Overall savings are forecast in travel and vehicle repair costs, though these have been reduced a little by the rise in fuel costs.
d) Supplies & Services (+£300)
There has been significant additional expenditure on grant funded work in the Park, and on improving the IT network. There have been small savings in office expenditure and marketing. The major savings of £21,900 have been in the forecast expenditure on the conference operation which has not yet fully started , and general savings of £10,100 in the Gift Shop on stock and equipment (despite an increase in income - see below). The Management Team is taking every opportunity to minimise supplies and services expenditure.
e) Income (-£47,600)
The overall income figures are down 7% due mainly to a 10% shortfall in the forecast visitor income against the original budget forecast, and the delayed start of the conference business. These losses have been partially offset by an increase in grant income, mainly from HLF.
The income from entrance charges is down by £25,100. Conversely, income from the Gift Shop is forecast to increase by £2,200 (due mainly to good sales in the gift lines) and income in the Tea Rooms from visitor sales is forecast to rise by £2,000. These strong performances are overshadowed by the underachievement of income from children's parties (£14,700) which have been slow to re-establish following the closure, and the non-realisation of income from catering for conferences (£8,200).
The most significant single source of income to forecast a reduction is the conference, functions and events business. While some business has been taken, the underachievement of income is estimated at £63,600 (most of which has been offset by savings of £42,600 in expenditure). Intense promotion and advertising for this element of the Park's business over the coming months is being planned, and it is anticipated that it will be up and running for next financial year.
Offsetting these setbacks, grants exceeding £60,000 are expected from HLF and the Woodland Grant Scheme. Some of the work covered by the grants was already in the work programme and can thereby compensate in part for the loss of income elsewhere.
2 2006/07 Revenue Budget
2.1 The revenue budget for next year shows that the Park will return a surplus of £10,453. This is in line with the long term expectation of the Park's financial performance. While this would make a significant contribution to paying off the deficit, £6,473 would remain and the Park would not move back into the black until 2007/08, a year later than hoped. The figures are summarized in Appendix C.
2.2 The details of the budget are outlined below. Challenging targets have been set for visitor numbers, and income from catering, the gift shop and conferences / events.
2.3 Payroll costs are forecast to rise by 4.2% due to the nationally agreed pay award (2.95%) and the increase in Employer's contribution to Superannuation. Inflation on non payroll budgets has been applied to only a few budget heads at 2.5%. The inflation on the requested contributions from the partners has been restricted to 3.0% which reflects a target for efficiency savings to be made within the Park. This is in line with County Council policy at other similar Joint Managed Committees.
2.4 The major variations from the 2005/06 revised budget are as follows:
Employees (+£36,400)
The budget will increase due to the full year effect of newly appointed positions, and filling posts that have previously been held vacant (eg Conference Officer, Park Ranger). Savings will be made in the costs of temporary and casual staff. Inflation accounts for £22,000 of this increase.
Income (+£43,400)
The predicted increase in earned income is a direct result of the new Conferencing (£57,000) and Catering (£33,000) income streams becoming fully operational. A nominal (below inflation) increase in ticket prices and a continuation of the current trend in visitor numbers will generate an extra £31,000 in gate receipts, and £10,000 in shop sales. The anticipated ending of grant and other income (-£88,000) reduces the impact of the above increases, but is offset by consequent reductions in expenditure.
2.5 The Partner contributions are allocated against the Management budget. The Entrance income is apportioned across the Operations budget, together with appropriate and relevant sales income. The Commercial operations are expected to generate their own income and will make a contribution to the overall running costs of the Park, and to the Reserves.
2.6 Members may recall from several years ago the aspiration to reduce the contributions from the partners to below 50% of the Park's gross expenditure. Below is a table showing how the contributions have dropped as a percentage of the gross expenditure from 57% in 1998/99 to 29% in 2004/05, with the intention of reducing it to 25.5% in 2006/07. It is interesting to note that although gross expenditure has risen by 87% between 1998/99 and 2004/05, the total partner contributions fell by over 5% in cash terms (not allowing for inflation). This is an indicator of the success of the Park's operations, and the significance of the income derived from the commercial operations at the Park.
Gross Exp Contrib'ns %
1998/1999 393,771 224,699 57.1
1999/2000 388,115 220,489 56.8
2000/2001 426,114 205,889 48.3
2001/2002 469,601 313,889 66.8
2002/2003 507,249 205,834 40.6
2003/2004 604,114 207,243 34.3
2004/2005 737,610 212,700 28.8
2005/2006 844,000 219,082 26.0 budget figures
2006/2007 884,400 225,653 25.5 budget figures
RECOMMENDATIONS
1. That the revised budget for 2005/06 as shown in Appendices A and B be approved.
2. That the partner contributions for 2006/07 as shown in Appendices A and C be approved.
3. That the budget for 2006/07 as shown in Appendices A and C be approved.