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Howick Golf Club Annual General Meeting October 27 2010.

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Presentation on theme: "Howick Golf Club Annual General Meeting October 27 2010."— Presentation transcript:

1 Howick Golf Club Annual General Meeting October

2 Introduction  Key issues to consider – Including funding for Wash Down Bay / Shed project  Members need to be fully informed  To enable correct decision  Explanation of situation  Questions at the end

3 Overview  Golf Clubs under financial pressure – Howick is OK – But feeling the pinch  Declining membership – Worldwide trend  Average age of golf club member around 60  NZ Golf research: – 25 to 40 year olds biggest decline in memberships – Family, financial and time constraints – Don’t want to be tied to one club – Still play and pay at a number of courses – So green fees are important

4 Howick 85% of club income comes from: – Member subscriptions (65%) – Green Fees (20%)

5 Membership 179 full members 112 other members 291 members lost since % drop

6 Green Fees $193,000 in 2006 $154,000 in 2010 $ 39,000 20% drop

7 Impact On Income

8 The Good News Income almost back to 2006 level

9 But Expenses Have Risen Increased Costs: - Course improvements - Fertiliser -Administration -System - Catering

10 Trading ( Excluding Depreciation) Excludes $130k 10 year members Funding grant

11 Trading Including $130k from 10 year members & grant

12 Last Year In Detail 31 Aug 2010Previous Year Comment Subscriptions$521,027$529,365 Inc.$12k 10 year subs. Exc.$121k subs in advance. Green Fees$154,738$165,538 Golfing Income$58,099$71,408 Other Income$17,915$48,433 $25k repayment of grant received last year Bar$80,755$53,185 Impact of functions Shop$21,588($23,829) $36k shop wages to administration this year Catering($29,334)($24,235) Income$824,788$819,866 Course Expenditure$438,620$420,993 Continued improvements Administration$253,480$174,614 $36k shop wages, system implementation, one off costs Golfing Costs$52,950$52,549 Occupancy$111,171$98,092 Inc. provision for $40k rent from July. Still under negotiation. Finance$15,248$17,248 Expenditure$871,649$763,496 Net Trading($46,681)$56,370 $25,000 shed grant received last year Had to be repaid this year – not ready to start project. Without this the results would have been: This Year Last Year ($21,681) $31,370 The good news - $50,000 next year

13 Catering Losses Providing member service is expensive Accounts for 60% of trading loss Low sales Major drain on club resources How can we stop the losses?

14 Cash Flow  The real test is how much money we have in the bank.  Trading surplus needed to fund capital expenditure: – Course equipment replacement – Projects

15 Cash / Bank Position $240k spent on clubhouse in 2007/ 08 Committed expense back in 2006 Led to future shortage of working capital Because of drop in trading surplus from 2006

16 The Bottom Line  Golf income has dropped – Memberships – Green fees  Worldwide trend  To fund future developments we need to either – Increase golf income – Or generate more non golf income  Combination of both

17 Summary  Cash flow has suffered : – Membership and green fee income drop – Clubhouse renovation impact – ($15,000) overdraft at year end – Would have been ($135,000) without 10 year subscriptions Bank would not have funded this  We do not have the cash flow or reserves to fund major projects – Wash Down Bay – Shed – Sprig Bar  Need to borrow if projects are to proceed  And need enough money to pay it back!

18 Capital Projects  Total cost of Wash Down Bay / Shed project $275,000 – Wash Down Bay necessary for compliance – Current Green keepers facilities are dilapidated  Grant funding of $70,000 (hoping for more)  Balance required $225,000  National Bank have offered loan of $200,000 payable over 5 year term. – Floating rate – current 7.99% – Security over assets of club  Loan repayment of around $50,000 a year

19 Wash Down Bay / Shed Stage 1 Foundations, Base, Drainage, Uncovered Wash Down Bay Cost$125,000 PlanDecember Borrow$70,000 max Repayments$17,000 a year Note: - Includes cost of plans & permits - Borrowing will not be needed until later in financial year - Positive cash flow early in year -Subscription income Stage 2 Shed, Fitout Cost $150,000 Plan2011 Borrow$130,000 Repayments$31,000 a year Note: -Stage 2 will commence on achievement of trigger points: - Membership renewal - Budget being on track - Otherwise will be delayed - Need to ensure Club has cash flow to repay loan

20 Summary Of Bank Loan Proposal ADVANTAGES  Will enable us to build Wash Down Bay and Shed – Has been on drawing board for a long time – Resolve compliance issues – Better staff conditions – Undercover storage for machinery DISADVANTAGES  Need to find repayments of $50,000 a year – Additional income needed – Expenses may have to be cut if necessary (Course expenses)  Project will not bring in any additional income

21 Financial Situation  Minimum trading surplus of $100,000 needed to cover: – Bank loan repayments$50,000 – Rent Increase (being appealed)$35,000 – Capital expenditure$15,000 » $100,000

22 Hopefully The Corner Has Been Turned Inc $130k from 10 year members and grant But risk if $100,000 surplus not achieved Bank loan still has to be repaid

23 Board Strategy Board Strategy  Keep subscriptions competitive  Minimise expense  Stronger Management focus on budget accountability: – Need to be more proactive and make things happen – Can’t rely on members walking through the door any more  Increased marketing : Membership drive (including 10 year and corporate) More Golf events to increase green fees: – Trade days Green fee specials at quiet times Web site marketing Sponsorship (including Sprig Bar) Functions (weddings etc) – Competitive market

24 Club Management  Ian Higgins has confirmed he will continue as General Manager – Good news – Overall responsibility with key focus on course  Della Gray is retiring after 13 years – Thanks for everything she has done  Board has reviewed structure  Carolyne Hughes commencing November: – Administration and Development Manager – Support to Ian – Includes marketing role (in conjunction with Margaret Greer)  Increased role for Annette Smart

25 Trust Fund Trust Fund  For donations and bequeathments to the club  Separate trust fund to be used only for course and club development – As approved by Trustees  David Philippe initiative

26 Lease Situation  Club has perpetual lease – Value  Have paid $4,000 a year since 1974 !  Should have been renewed in 1995 – Lost in bureaucracy – Crown / Manukau City Council/ Treaty issues  Board wanted lease sorted before major capital projects  Negotiations over last year  Crown rental value $266,000 a year !!  Lease has “hardship” clause  Crown has offered $40,000 a year (because of financial situation)  Still under negotiation  Hopefully less than $40,000

27 Budget For Next Year BudgetLast YearComment Subscriptions$572,000$521,000Fee increase & New members. Green Fees$175,000$154,000More trade days Golfing Income$70,000$58,000 Other Income$80,000$18,000 $70,000 grant funding approved Bar$80,000 Shop$35,000$22,000 Catering($20,000)($29,000) Income$992,000$824,000 Course Expenditure$420,000$439,000Part time staff member reduction Administration$250,000$253,000 Golfing Costs$50,000$53,000 Occupancy$135,000$111,000Inc. rent at $40,000 – still under negotiation. Finance$28,000$15,000Inc. bank term loan interest Expenditure$883,000$871,000 Surplus$109,000($47,000)

28 Budget  Budget is conservative  Internal target is higher  Includes $70,000 grant funding (already received)  Includes $40,000 rent – But hoping for less  Sprig Bar not included in budget – Looking for sponsors to assist with capital cost – Will proceed when funding permits

29 Proposed Sprig Bar  Food and beverage available at all times from shop – When bar and catering are closed – Better service for members and visitors – Additional income for club  Accommodation for members if lounge is being used for function – Weddings etc – Further income opportunity  Will incorporate deck expansion  Looking for Sponsors so we can go ahead – $70,000 – Not easy!  And Volunteers – To help with materials and building

30 Drop Down Sides

31 Finally !  Proud tradition over 75 years – Built on volunteer support  Member support needed to carry on the tradition – Enable the club to continue – Overcome the difficult times  Renew your membership  Introduce new members  Get the younger people back in to the game – They are the future of the club  Support club activities  Team effort to get the Sprig Bar up and running

32 We all need to sing from the same sheet Working Together For the good of the Club

33 Remember JF Kennedy

34 Ask not what your Club can do for you Ask what you can do for your Club It’s about our future

35 Next Steps 1.Questions 2.Approve reports 3.Approve annual accounts for year to August Approve budget 5.Approve proposed bank loan for Shed / Wash Down Bay

36 Questions

37

38 Resolution REPORTS Resolution that the following reports printed in Annual Report booklet be accepted: – Chairman – Captain – Ladies Captain – Veterans – Course Superintendant – Golf Shop Manager – General Manager  Proposer  Seconder

39 Resolution BUDGET Resolution that proposed budget be approved.  Proposer  Seconder

40 Resolution ANNUAL ACCOUNTS  That Annual Accounts and Balance Sheet be adopted Proposer Seconder

41 Resolution BANK LOAN Resolution that proposed National Bank term loan limit of $200,000 repayable over 5 years be accepted, to enable proposed Wash Down Bay / Green Keepers Shed project to proceed – Stage 1 drawdown maximum $70,000 – Stage 2 drawdown $130,000, subject to Board satisfaction with financial situation of Club at the time.  Proposer  Seconder

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