The 2007-08 financial year saw the theatre achieve record audience levels and complete a 13-week, £2m major refurbishment.

Harrogate Theatre attracted 69,000 people to 253 live events last year and worked with 10,000 young people in outreach projects across the region.

There was also a rise in the number of seats filled for the year with all productions playing to an average of 72 per cent full houses – up nearly nine per cent on 2007.

Money taken through the box office rose by nearly four per cent on the previous year to more than £763,000 and the theatre's annual winter pantomime broke all box office records with sales totalling more than £319,000.

In addition to the in-house productions, ten amateur companies put on a total of 78 performances, combining to help value the theatre's economic impact on the district at around £3.5m.

Chairman of Harrogate Theatre Jim Clark said: "The people of Harrogate and district now have a community theatre they can be proud of.

"As a result of the Arts Council grant cut and an uncertain outlook for the country's economy we face a challenging future. However having rebuilt our financial reserves and a refurbished theatre, we face the future with confidence."

In December last year, theatre bosses vowed to help the 108-year-old Victorian theatre thrive, despite fears of having its funding slashed by £300,000 when the Arts Council announced a 75 per cent cut to its annual grant from £400,000 to just £100,000.

The news came as a surprise to the theatre's board of directors who had helped turn the venue's fortunes around just two years after facing financial ruin and the possibility of bankruptcy.

Tough times in 2005 and 2006 saw the theatre suffering severe cash shortfalls and low attendance at productions, but in a complete turnaround at the end of last year, theatre chiefs were able to announce healthy financial reserves having cleared a potentially crippling £200,000 deficit three months ahead of schedule.

Harrogate Theatre chief executive David Bown said the last 12 months have been very successful, even with the threat of grant cuts looming.

He said: "It has been a phenomenal year for us and we could not have achieved it without everyone who saw a show at the theatre, took part in a workshop or raised money for our refurbishment.

"This constant support and unceasing passion from the community means so much to all of the staff here and on behalf of them and myself, I would like to thank you all."

ashley.marshall@ypn.co.uk