The Board has reviewed the financial implications for the Club if lockdown is extended and would like to report to Members as follows.
The broad ongoing expenses incurred by the Club during lockdown are around $10,000 per month. The Club currently has over $200,000 in cash in the Bank and there is no immediate risk of insolvency. The Club expects to receive support grants from the government as we did in the COVID-19 shutdown of 2020. It has already applied for the $15,000 in emergency funding defraying any losses incurred over the first six weeks of lockdown.
Members should rest easy that the Club’s financial position has improved dramatically over the last six years and we are not threatened financially by a period of inactivity.
Quarterly Finance Report
As the Board foreshadowed in its last quarterly update to Members, we expected a strong April to June quarter that would bring the Club back towards budget. This forecast proved correct as per the table below.
All figures are expressed in $K
Oct – Dec
Jan – Mar
Apr – Jun
|Actual YTD (9 Months)||Budget YTD (9 months)|
|Profit from Operations||34||8||52||94||84|
|Cash in the Bank||263||163||218||218||>100|
The excellent third quarter performance was primarily due to good expense control and increased revenue.
While the Q1 revenue was boosted by grants primarily from JobKeeper and other support programs, Q3 revenue was far more sustainable with bar revenue on the rise after being in decline for many years. This is due to more socialising following the programs run by the coaches, the re-introduction of a food offering and more events generated byincreased marketing of the Club as a function centre. Other contributing factors to higher revenue have been increased court fees due to Members, non-Members and SCGT Members using the courts more heavily than in previous years. In short, court utilisation is up and the Club continues to grow the game of squash.
The costs side of the Club is above budget mainly for two reasons 1) increased bar revenue means increased bar costs as we are selling more and coaches costs through programs and general promotion of club and 2) several unexpected costs arising in Q2 largely relating to change of the General Manager.
The positive Q3 results are reflective of the ongoing operations of the Club as increased momentum is being built on the revenue side alongside efficiency improvements being made to the General Manager. Unfortunately, it is likely some of this momentum will be lost with the current COVID-19 shutdown. It is now unlikely the Club will make its full year budget despite being ahead of budget with good momentum at the end of the third quarter.
In line with the Board’s financial risk management policy, it has been resolved the Club will keep at least $100,000 of cash on hand at all times as a financial safety measure, but consider spending any surpluses over and above monies needed for the Club’s financial stability on improvements to the premises and services to Members. In the current year the Board has spent $93,000 primarily on replacement of the roof, improved ventilation and temperature control of the courts and renovation of the women’s bathrooms. Future projects are being discussed but are temporarily on hold due to the cessation of building works during the current lockdown.
If a Member has any questions on the Club’s financial position or performance at any time, please feel free to speak with our GM, AGM or contact any Member of the Board or the Head of the Board’s Finance Sub-Committee, Moray Vincent. The Board will look to continue to provide Members with a financial update every quarter via this Newsletter.