The budget presented in the Statements of Comprehensive Income, Financial Position and Changes in Equity and the Cashflow Statement is not audited.
Statement of Comprehensive Income
In 2018-19, the National Gallery and its controlled entities reported an accrual operating deficit of $10.7 million, $7.9 million better than the budgeted deficit of $18.6 million as reported in the Portfolio Budget Statements 2018-19 published on 8 May 2018.
After adjusting for non-cash operating items such as gifts of works of art, donations for the purchase of works of art and write-down and depreciation on heritage and cultural assets, the National Gallery and its controlled entities reported an operating surplus of $1.8 million.1
The National Gallery and its controlled entities’ total expenses of $87.2 million were $12.8 million more than originally budgeted. After adjusting for the $1.2 million write-down of heritage and cultural assets, the final outcome was within 1 per cent of the revised estimate of $85.1 million as published in the Portfolio Additional Estimates Statements 2018-19 (PAES).2 The revised estimates reflect the impact of the budget measure announced in the Mid-Year Economic and Fiscal Outlook 2018-19 (MYEFO), which provided $14.4 million of additional ongoing funding to allow the National Gallery to continue to safeguard and exhibit its important national collection of works of art.
The expense variance to the original budget included a $6.1 million difference in employee expenses that primarily reflected a revision to collection management activities, which resulted in costs being expensed that were anticipated to be capitalised in the original budget. The estimate was revised to $24.3 million in the PAES and the final outcome was within 3 per cent of the revised estimate. The supplier expense budget was also revised upwards in the PAES to $31.9 million and the final outcome of $31.7 million was within 1 per cent of the revised estimate.
Own-source revenue totalled $31.4 million in 2018-19, $8.7 million greater than the original budget of $22.7 million. Higher than anticipated exhibition and merchandising activities resulted in sales of goods and services exceeding budget by $2.7 million, an increase of 28%. During 2018-19, gifts of works of art valued at $5.3 million were received by the National Gallery and its controlled entities against a $2.5 million budget disclosed against other gains. By nature, these gifts are difficult to predict, and the estimate was updated to $5 million in the PAES. Interest was $0.9 million greater than the original budget due to higher than budgeted cash and investment balances and higher rates of return.
As previously noted, the Government provided an additional $14.4 million of ongoing operating funding to the National Gallery through the MYEFO. This increased revenue from Government to $45 million in 2018-19 compared to the original budget of $30.6 million.
Statement of Financial Position
As at 30 June 2019, the National Gallery and its controlled entities’ net assets were on budget at $6.3 billion. The national collection of works of art, which is recognised as heritage and cultural assets represents 94 per cent of this balance.
Financial assets totalled $56.6 million against an original budget of $13.6 million, which was estimated based on the balances of 30 June 2017.3 Accordingly, the variance to the original budget can be attributed, at least in part, to the prior-year results, which resulted in an opening balance on 1 July 2018 of $22.4 million, $8.8 million more than the budget. The original budget assumed that future cash inflows would match future outflows and that all capital funding would be spent in the same year it was received.
The National Gallery of Australia Foundation’s cash balance increased by $3.2 million between reporting dates, reflecting donations received in the latter part of the year to support future programs and acquisitions. Capital reserves have been established to meet critical capital works commitments, contribute to capital maintenance and to safeguard and develop the national collection. The National Gallery and its controlled entities use a combination of cash and term deposits to manage its cash flows.
As at 30 June 2019, non-financial assets were reported at $6.3 billion, consistent with the original budget. The $1.6 million variance in plant and equipment reflects the difference in the actual opening balance, compared to the budgeted opening balance, which was estimated before the prior period revaluation was undertaken in 2017-18.
Total liabilities were $12.4 million as at 30 June 2019, $3.4 million greater than the original budget. The results of 2017-18 and the higher than budgeted opening balance account for 50 per cent of this variance. The capital works program resulted in higher supplier balances at year end, plus movements in the probability and discount rates increased employee provisions.
Statement of Changes in Equity
The actual equity position of $6.3 billion as at 30 June 2019 is consistent with the original budget and the revised estimates published in the PAES
The original budget provided for contributions by owners of $22.7 million, comprising $16.6 million for the CDAB and $6.1 million for contributions to capital maintenance. Additional capital maintenance funding of $6.2 million was provided by the Government in the MYEFO context.
The variances between budget and actuals in the Cashflow Statement reflect the effect of the events already described.