User:Woodpeck/Draft Treasurer Report for 2015 AGM
Treasurer's report for the December 2015 AGM
Please also consult:
- Income QI-QIII 2015 PDF without annotations, preliminary
- Balance Sheet QI-QIII 2015 PDF without annotations, preliminary
- Official Financial Statement 2014 (PDF as submitted to HMRC)
- Budget 2015
2014 Business Year
All figures are rounded.
The 2014 business year had been extended to 16 months, to bring the business year in sync with the calendar year and make financial figures easier to grasp for the non-initiated in the future.
Income from membership was £18,000 in 2014 (up from £8,000), partly due to the newly created corporate membership programme which brought in £3,000. We didn't run a donation drive in 2014, and therefore we only took in £35,000 in 2014 vs. £53,000 in 2013; most of the 2014 donations are actually late-coming donations of that same donation drive.
The State of the Map conference brought in more money in 2014 (Buenoes Aires) than in 2013 (Birmingham), but it also cost more; the total budget effect of the conference was earnings of £7,000 in 2014 vs. earnings of £23,000 in 2013. Conference earnings are taxed at 20%, not yet included in these numbers.
The total income minus money spent in direct relation to generating that income (the "Cost of Sales") is called the "Gross Profit". For us, the only "Cost of Sales" we have is the conference expenditure; and our Gross Profit was £60,000 in 2014, down from £84,000 in 2013.
Our administrative and other expenses were lower in 2014, £57,000 down from £61,000 in 2013. The bulk of these expenses comes from server operations: We accounted for £29,000 in equipment depreciation and paid £12,000 for server hosting, together making up almost three quarters of our expense.
After taxes, our total profit in 2014 was £1,400, down from £18,800 in 2013.
Note that this amount does not correspond to the actual change in our funds because in financial reporting you differentiate between "operational expenditure" and "capital expenditure". When we buy a server, this doesn't count as an expense, it is an investment - and hence doesn't even show up in the income statement. What does show up in the income statement is the depreciation charge, reflecting the value loss of the server over the years. So if you buy a server for £6,000 in year 1, your bank balance is reduced by £6000 in year 1, but your expenditure is perhaps only £2000 in each of the years 1, 2 and 3.
The total asset value of OSMF - that is, the book value of its servers and money in the bank combined - was £138,000 at the end of 2013, and £133,000 at the end of 2014. Normally the difference between these two numbers would exactly be the 2014 profit (you'd expect the 2014 number to be the 2013 number plus profit), however adjustments had to be made for some taxes and write-offs in 2013 that had not yet been considered in the £138,000 figure.
2015 business year
The 2015 business year is characterised by the absence of a SotM conference - if you remember, the New York conference was run by OSM-US and had no financial impact on OSMF - and us running a server donation drive.
In the first three quarters of the 2015 business year, we earned £4,800 from individual memberships and £7,000 from corporate memberships (more on that below). Comparing this with 2014 is, again, difficult because our member join dates tend to cluster in the last quarter of the year and the extended 2014 year contained that period twice. But it now looks as if the total individual membership income will only be around £8,500 in 2015.
The first three quarters brought us £8,000 in "normal" donations, and another £58,000 in donations from the server donation drive.
Our main expenditure items in the first three quarters of 2015 were server operations (£11,000 - note that depreciation is only calculated at the end of the year and hence not yet included in the numbers), insurance (£5,000), accountancy (£4,000), legal fees (£2,000), as well as the board F2F meeting (see below).
Comparison with Budget
I have drawn up a budget at the beginning of 2015, but many things went slower than expected. On the income side, the corporate membership didn't grow as quickly as planned and it now looks more likely that our corporate membership income will be around £15,000 rather than the budgeted £25,000 in 2015.
On the other hand, of the £83,000 budgeted for computer operations (without depreciation), only £20,000 have been used in QI-QIII so we assume that the overall expenditure here will be smaller than expected. (Of course the money from the server donation drive is strictly earmarked for server purchases, whether they happen this year or next.)
Also, we had budgeted small sums for paying someone to do administrative tasks for the board, and for taking out insurance for our servers; both haven't happened yet.
It is fair to say that the budget hasn't worked out but it isn't for the worst, and we'll try better next time. The budget is currently just a planning exercise for us and we hope to get better at it year after year.
The published figures can sometimes hide certain things - for example, if the OSMF board holds a face-to-face meeting, the costs for that can be distributed among several line items in the profit and loss report (travel, professional services, general expenses). I'll therefore try to make a separate reporting on extraordinary events.
In 2015, we had a Face-to-Face meeting in Berlin which incurred total costs of about £5,000. Almost half of that money was spent on getting an external moderator/mediator to run the meeting; the rest was spent on hotel accommodation for four board members (2 were local, one stayed with friends) and travel for four board members (2 were local, one traveled on company expenses).
There were no other similar events involving the whole board in 2014 or 2015, although some reimbursements were made for board members travelling to SOTM 2014 and SOTM-US 2014.
We are currently owed £2,000 from a 2013 SOTM sponsorship invoice, £1,560 from two 2014 SOTM sponsorship invoices, and £1,000 from one corporate membership invoice in early 2015. This is money that has been recorded as income but not yet materialised (income is recorded when we write the invoice, not when the money hits our account). We are trying to recover that money but we can't really do much more than write nagging emails. If trying to recover the money becomes hopeless, the debts are written off and count as an expenditure in the year they are written off.
The preliminary QI-QIII figures show a corporate membership income of £7,000 but we meanwhile have 15 confirmed corporate members, so we're expecting at least £8,000 more in the 2015 business year.
- We are cancelling our Barclaycard credit card which, due to communication problems between us and the bank, accrued several hundred £ in interest and late payment fees.
- We have introduced a new rule that requires board members to bring an expense estimate to the board before incurring expenses, and expenses are only automatically agreed for the main SotM conference and face-to-face board meetings; anything else is decided on a case-by-case basis. It is not that there was any abuse before, but the rules said that "essential travel" was covered and in theory, everyone could have a very different idea of what "essential travel" is.
- We are (pending discussion in the new board) likely to introduce a volunteer auditing scheme where one or two community members will get access to our financial records and will verify that our finances are handled properly.
We currently expect our total income from non-hardware donations and membership fees to be sufficient to cover our expenditure in 2015 (not including the estimated hardware depreciation). The financial year will likely end with a profit of around £45,000 to £50,000 (already including the estimated depreciation) because of the hardware donation drive; without the donation drive, it would have been a loss of roughly £10,000.
(Again: Do not confuse these numbers with "money in the bank" - a loss made due to depreciation is just our hardware losing value; the money has left our bank long ago, when we bought the servers. On the other hand, existing servers losing value usually means that replacements have to be bought sooner or later.)
Our total liquid assets - money in the bank - was £68,000 at the beginning of the year and £108,000 at the end of QIII for which you see the reporting. By the end of the year, I expect this to be down to about £85,000 again, depending on when exactly OWG request their next hardware purchases.
On the whole, the numbers are not worrying but the hardware donation drive is currently necessary to be sustainable; without the donation drive we would not be able to replace aging servers or even buy new ones. Our non-hardware-donation income covers our non-hardware-related costs but there is currently not much leeway to embark on larger spending without also securing more income.