The long-awaited accounts for Penarth Arts and Crafts Ltd [a.k.a. PACL – the limited company/charity which holds a 125 year lease on the Vale of Glamorgan Council-owned Penarth Pier Pavilion] – paints a bleak picture of the company’s financial position at the end of 2016.
The accounts have just been published on-line by Companies House and show the company is still spending far more money than it makes – and is therefore getting deeper into debt.
In the year ending December 31st 2016 PACL had a total income of £157,594 but the company spent £194,543 . That resulted in what is described as “net expenditure” [ i.e. overspend] for the year of £36,949.
That overspend of £36,949 follows an even worse overspend in the previous year totalling £82,674.
Meanwhile what is described as a “management fee” of £60,000 for the year has been paid to PACL by its trading subsidiary Penarth Pier Pavilion Ltd. The report of the Trustees [i.e. the directors of PACL] states that “The management fee received from the trading subsidiary remained at £60,000. It has been a difficult trading year for the subsidiary and as a result not all the management fees have been paid over to the charity [ i.e. PACL] at the year-end. Management have been concentrating on reducing costs and improving efficiencies in 2017 in order to rectify the situation” .
The accounts also state that no employee received emoluments in excess of £60,000 – implying that £60,000 was annual salary paid to the highest-paid employee .
The highest-paid employee is not named but may be the chairman of PACL Professor Anthony Hazell.
The report of the trustees concedes that the “The major risks…..continue to be the financial sustainability of the Pavilion and the difficulty of building up reserves”
Included in the accounts is the report of the independent financial examiner Julia Mortimer FCCA of Watts Gregory Chartered Accountants.
Setting out the basis of her examination [ which isn’t a full audit] she says “the procedures undertaken do not provide all the evidence that would be required in an audit and consequently no opinion is given as to whether the accounts present a “true and fair view””
In her statement Ms Mortimer says: – “I draw your attention to the disclosure made…concerning the charity’s ability to continue as a going concern. The charity is reporting a deficit for the year of £36,949 . The balance sheet shows net current assets of £39,055. However this includes a debtor of £64,633 owed by Penarth Pier Pavilion Ltd, the subsidiary company. The subsidiary company has net liabilities of £111,293 at 31 December 2016. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the charity’s ability to continue as a going concern.”
Ms Mortimer also points out that “The financial statements do not include the adjustments that would result if the charity was unable to continue as a going concern”.
Other parts of the accounts also reveal where Penarth Arts and Crafts gets other money from: –
TV viewers who donate cash to the BBC’s Children In Need charity telethon may be surprised to find that some of their donations – amounting to £11,683 – go into the coffers of Penarth Arts and Crafts Ltd. Children in Need gave PACL a grant for running “art workshops and other related topics for children with special needs and disabilities“.
The cycling pressure group/charity CTC – otherwise known as the Cyclists’ Touring Club – [and now rebranded as Cycling UK ] provided a grant to Penarth Arts and Crafts to deliver “deliver classes on bicycle maintenance in the Vale of Glamorgan” – and also to set up “a cycle club in the area”
Ironically in 2016 the Film Agency Wales gave Penarth Arts and Crafts “grants towards specific screenings or series throughout the year”. Penarth Arts and Crafts announced the closure of the Pier Pavilion’s new public funded £1,000,000 integral digital cinema in February 2017
Film Hub Wales also gave funding “to contribute to Welsh film support of the Roald Dahl on film project” – again just months before the PACL closed the Pavilion cinema.