The attached report covers the Library s financial performance as at the end of June for the financial year 2012/13.

Transcription

1 IN CONFIDENCE THE BRITISH LIBRARY BOARD BLB 12/57 (a) QUARTER 1 FINANCE REPORT 2012/13 1. PURPOSE OF THE PAPER The attached report covers the Library s financial performance as at the end of June for the financial year 2012/ SUMMARY The current year is the second year of the Government s current Spending Review and builds on the major budgetary savings delivered in previous years, requiring in particular the delivery of further salary reductions and the need to absorb inflation in acquisitions and most operational budgets while continuing to create enough headroom to deliver on the Library s digital ambitions in line with the 2020 strategy. In particular, the Board is asked to note: 1) The full year forecast aggregate position, (excluding the ring-fenced Newspaper Programme budget), shows a projected net over-spend of 708k. It is believed this over-commitment can be covered from within current budget allocations including an expected under-spend on severance and salaries, not yet factored into the forecasts, and if required access to reserves granted by DCMS of 750k this year. 2) The need to re-balance DCMS DEL targets with regard to resource and capital spend. 3) The level of aggregate financial risk the Library is currently facing. 3. ACTION REQUESTED OF THE BOARD The Board is requested to note the contents of this report and the progress against the approved budget. Management Accounts Finance and Corporate Services July 2012

2 FINANCIAL REPORT AND UPDATE QUARTER 1 JUNE 2012 Report by Steve Morris, Director of Finance and Corporate Services Produced by: Management Accounts 2

3 1. SUMMARY 1.1 This report provides the Board with information on the BL s financial position in 2012/13. It summarises the current forecast position and highlights the risks to achievement of its financial targets. 1.2 The full year forecast aggregate position, (excluding the ring-fenced Newspaper Programme budget), shows a projected net over-spend of 708k. It is believed this overcommitment can be covered from within current budget allocations including an expected under-spend on severance and salaries, not yet factored into the forecasts, and if required access to reserves granted by DCMS of 750k this year. 2. REVENUE EXPENDITURE 2.1 The BL s budgetary framework delegates budget responsibilities from the Chief Executive, as Chief Accounting Officer, to directors. As part of this responsibility we require each director to review their financial performance regularly and to advise the Executive Team of any potential deviation from budget and to report any remedial actions being taken to address these. 2.2 The original budget, as agreed by the Board, for revenue expenditure for 2012/13 is 107,354k funded by 91,739k in Grant in Aid and 15,617k in incoming funds from other sources resulting in a small surplus of 2k FULL YEAR REVENUE FORECAST At this early stage of the year the current aggregate forecast is that the Library will underspend by 1,838k but will require these funds to supplement the capital budget. The details and explanations are set out below. In addition, there are also some significant and/or emerging risks which are highlighted in section 5 of the report. Major Revisions to Forecast/Budget Impact on net expenditure increase/(decrease) GIA Info Services Contribution External Funds Total Original Budget Surplus/(Deficit) ( 3,421) 3, Priced Services Income re-forecasts (see ( 66) - - ( 66) 2.1.2) Priced Services cost re-forecasts (see ) Other Income adjustments (see 2.1.3) Fund returned to centre and/or 1,478 ( 149) - 1,329 reallocated (see 2.1.4) Business Cases Approved (see 2.1.5) ( 572) ( 140) - ( 712) Net managed transfers between revenue 1, ,199 and capital (see 2.1.6) TOTAL Surplus/(Deficit) ( 1,296) 3,134 0k 1,838 3

4 2.1.2 The forecast revenue and associated costs have been reviewed by PSSG (Priced Services Strategy Group) for all Priced Services in light of current trends. This has resulted in the following changes in the forecast outturn: Priced Services Income (Decrease)/Increase Direct Costs (Decrease)/Increase Gross margin (Decrease)/Increase Bookshop (Online) ( 100) Licensing & Royalties 34 ( 34) - ( 66) 66 - Bookshop development of the Online Bookshop is now deferred due to a lack of eis resource leading to reduced sales through this channel. Costs have been adjusted to maintain overall margins. Licensing & Royalties additional income and costs in relation to the NCCO contract Forecast additional bank interest receivable based on current performance Following the quarter 1 review the following funds have been returned to the centre for reallocation. Asbestos budget - 790k which was accounted for within the 2011/12 financial year. Utilities - 534k due to price inflation being lower than planned and consumption reduced by the energy efficiency works completed last year. Business Case 187-5k now forms part of the eis Road Map (see below) The Executive Team has formally approved Business Cases for extra resource budget in support of the following approved Business Cases: IRMDS (195) - additional resource to achieve new delivery dates - 140k Security Fibre Optic LAN (196) - 10k Storage Planning System (200) - 140k Feasibility study re Reading Room access (201) - 50k IT Security action plan (203) - 125k Feasibility study re Treasures Gallery (204) - 72k Mughal Exhibition underwrite (205) - 125k Network Road Map - 50k The transfer of budget between Capital and Revenue expenditure is in relation to the recategorisation of costs under the Digital Initiatives Programme including eis staff working on capital programmes, (e.g. Legal Deposit Programmes, Website re-development etc.) and reallocations from the Investment Fund to individual capital programmes. 3. CAPITAL EXPENDITURE 3.1 The original capital expenditure budget for 2012/13 as agreed by the Board was 12,137k against GIA DEL of 15,047k. The allocation includes 12,000k in relation to the Newspaper Programme of which at least 2,636k will need to be carried forward into future years in line with the Programme s deliverables. 4

5 3.2 The Executive Team formally approved Business Cases for extra capital budget in support of the following approved Business Cases: Security Fibre Optic LAN (196) - 130k St Pancras catering area (197) - 140k CCTV to cover NSB (198) - 10k CCTV Matrix (199) - 40k St Pancras Chillers (202) - 600k IT Security action plan (203) - 225k Conference Centre Projector (206) - 50k 3.3 The Capital Expenditure forecast including the above decisions and the transfers to capital as set out in is detailed below: Core Programme External Funds Total Grant in Aid 3,047 12, ,047 Original Budgeted Expenditure ( 2,773) ( 9,364) - ( 12,137) Business Cases Approved ( 1,195) - - ( 1,195) Net managed transfers between revenue and ( 1,199) ( 1,199) capital Slippage on Newspaper Programme Allocated from DII Investment Fund ( 506) - - ( 506) Hand-back re BC TOTAL Surplus/(Deficit) ( 2,546) 2,918 0k The overall capital position forecasts a net 372k surplus at the end of quarter 1. The additional business cases were predicated on covering the additional capital cost through a transfer from resource to capital thereby ensuring that the ring-fenced Programme budget for the Newspaper programme is protected and available to carry forward into 2013/14 and beyond when the balance of these funds is required. A formal request for the transfer and carry forward is being prepared for submission to DCMS and they have being alerted to this requirement. 4. EXTERNAL FUNDING 4.1 The BL relies on sponsors and research funds to deliver its overall strategy. A summary of Restricted Funds activity for the year is as follows. Opening Balance April 2012 Income Expenditure Closing Balance June 2012 Trust Funds 11,619 4 ( 72) 11,550 External Funds 9,852 3,725 ( 867) 12,710 St Cuthbert Gospel ( 845) ( 241) Account Total 20,626 4,333 ( 939) 24,020 5

6 4.2 The net in-year impact on Revenue DEL to-date is currently a surplus of 3,394k ( 581k on Capital) although it is anticipated this will reduce as payments to EU partners and expenditure on projects kicks in. Procedures are now in place to enable a forecast position to be reported at the end of quarter A surplus against Capital DEL of c 800k is forecast as a result of the final Cuthbert pledges arriving which will be factored into our request to DCMS. 4.4 Major incoming funds in the first quarter of the year include 1,549k for the Qatar project (invoiced 30/6/12 received 10/7/12), 205k BIPC, 246k BL LABS Project, 604k capital donation towards the St Gospel purchase among others. 5. RISKS 5.1 The current year is the second year of the Government s current Spending Review and continues to contain major budgetary cuts, built on top of several years of reductions. 5.2 The BL has being in discussion with DCMS since the announcement of its funding to seek its support in helping to address the financial challenge in continuing to deliver on its Digital Strategy and the need to realign its resource and capital budgets to facilitate this. The risk remains that DCMS may not have the flexibility to allow this. 5.3 During Q1 revenue from document supply services is significantly declining and is expected to remain at risk due to the economic downturn, changes to overseas Library Privilege and the reduced CLA mandate and its impact on document supply fulfilment rates. The Priced Services Steering Group (PSSG) continues closely to manage all revenue targets 5.4 The Newspaper building construction and the overall programme is funded to the tune of 12m this year. DCMS has been notified of the need to carry funds forward into future years and of the need to secure funds from a successful sale of the Colindale site in 2013/14 to ensure this programme can be completed. 6. RECOMMENDATIONS 6.1 That the Board note the contents of this report. 7. APPENDICES Appendix 1 Income and Expenditure Report (Page 7) 6

7 Appendix INCOME AND EXPENDITURE SUMMARY June 2012 Resource Expenditure Summary YEAR TO DATE FULL YEAR Variance Original Quarter 1 Original Quarter 1 (act- Q1 Budget Forecast Actual s Budget Forecast Fore) s s s s s INCOME Variance s GRANT-IN-AID (REVENUE) 20,037 20,037 20,037 (0) 91,739 91,739 0 TRADING & NON-TRADING INCOME 1,311 1,210 1, ,020 7, DONATIONS/RESEARCH FUNDS TOTAL INCOME 21,376 21,247 21, ,827 98, EXPENDITURE SALARIES TOTAL 12,597 12,242 12,248 (7) 52,985 52, SEVERANCE (79) 3,449 3,449 0 ACQUISITIONS 1,129 1,168 1,367 (198) 14,200 14,200 0 ASBESTOS REMOVAL COSTS (341) 341 1, OTHER COSTS 5,491 5,076 5,171 (95) 30,553 29,385 1,168 OTHER DIRECT COSTS 7,020 6,244 6,276 (32) 49,263 47,305 1,958 GROSS CURRENT EXPENDITURE 19,617 18,486 18,524 (38) 102, ,270 1,978 NET GIA POSITION 1,759 2,761 2, (3,421) (1,296) 2,125 CONTRIBUTION FROM INFO SERVICES (97) 3,423 3,134 (289) NET POSITION ON TRUST/RESTRICTED/PROJECTS (Exc Capital) 0 3,040 3, TOTAL REVENUE POSITION 2,438 3,196 6,165 2, ,838 1,836 Non Cash GRANT IN AID (DEPRECIATION) 4,675 4,675 4, ,700 18,700 0 DEPRECIATION 3,931 3,975 3, ,725 16,023 (298) NET DEPRECIATION POSITION ,975 2,677 (298) Capital Expenditure GRANT-IN-AID (CAPITAL) 3,940 3,940 3, ,047 15,047 0 CAPITAL EXPENDITURE 2,897 2,972 2, ,137 14,675 (2,538) NET POSITION ON TRUST/RESTRICTED/PROJECTS NET CAPITAL POSITION 1, , , (2,538)