10

2005 % of 2005 % of 2004 % of
Budget Revenue Actual Revenue Actual * Revenue
Gallery
Revenue $ 340,970 $ 308,740 $ 325,962
COGS $ 181,496 53% $ 170,479 55% $ 178,584 55%
Gross Profit $ 159,474 AT% $ 138,261 45% $ 147,378 45%
Administration $ 137,997 40% $ 123,745 40% $ 136,761 42%
Net Gallery Income $ 21,477 $ 14,516 $ 10,617
Guild
Revenue $ 53,526 $ 43,820 $ 52,137
Expenses $ 67,307 126% $ 54,763 124% $ 50,758 97%
Net Guild Income $ (13,781) $ (10,943) $ 1,380
Total Net Income $ 7,696 $ 3,574 $ 11,998

*2004 actual results restated for changes made to reporting and allocation in 2005.

Despite a drop in Gallery revenue of $17,000 in 2005, its operations generated a net income
of $14,516. This was accomplished through a reduction in expenses of $13,000. Several
changes to the allocation of expenses were included in the 2005 statements. Rent and
utilities became the sole responsibility of the Gallery. To offset the effect on the Gallery,
staff time spent on Guild business was transferred to the Guild’s statements along with 50%
of the accounting fees. This was done to create a more realistic picture of the financial
costs of both organizations and allocate the responsibility for the costs in line with the use
of the service and the ability to determine its cost. The net effect was marginal as the
increase to each was largely offset by a reduction.

In 2005 the Guild also transferred responsibility for accounting from Quantum Accounting to
an independent bookkeeper, Nadine Simcoe. Nadine’s efforts to rectify many outstanding
issues and review internal controls have created a more responsible and responsive
accounting process.

Guild financial results saw a significant drop in net income for the year. Despite an increase
in revenue from membership dues, the overall revenue of the Guild fell by $9,700. This was
due to a shortfall in planned revenues from events, along with a few unplanned
expenditures (most notably the BAG Exhibit). Many administrative costs were above plan,
while there were also some significant savings in other costs. However, it is important to
note that the 2005 budget was projecting a shortfall in Guild operations of $13,800. The
loss therefore is actually $3,100 less than planned. The loss was also exacerbated by a
extra-ordinary write off of bad debts of $2,600, which if it had not become an issue would
have seen the loss for the year at approximately $8,300. Given that the intent of the Guild
is to serve it members with the income form the Gallery subsidizing those services, the
overall financial results were, while lower than anticipated, still a success.

The 2006 budget has taken a conservative approach in estimating revenues given recent
trends on Granville Island. While the overall projection is a loss of $6,500, the intent of the
budget is to develop longer-term objectives and build toward those goals.

With careful financial management and the possibility that sales may actually exceed

expectations, the Potters Guild should continue its recent financial successes in the coming
year.

Potters Guild of British Columbia Newsletter

May 2006