CLUB TREASURER’S REPORT for the year ended 31 October 2014 Introduction I am pleased to present to you my report on the financial affairs of the Club for the year ended 31st October 2014. In advance of the AGM, the Financial Statements for the year ended 31st October, 2014, the Financial Summary for the five years 2010 to 2014 and the Financial Estimates for the year to 31st October 2015 have been posted on the Notice Board in the Clubhouse and on the Members’ Section of the Club’s website. The format of the financial information and the accounting policies are unchanged from previous years. In preparing the accounts, the new VAT arrangements introduced by the Revenue Commissioners for golf clubs have been adopted and a cash reserves policy adopted by the Management Committee is included in the notes. Overview of the results for the year ended 31st October 2014 The accounts have been prepared on the basis of the new VAT rules which apply to golf clubs since 1st January, 2014. In short, VAT is no longer chargeable on green fees and we no longer recover VAT from golf related activities. During the year, we also reviewed our VAT arrangements for bar and restaurant related activities. Operating income of €1,175,434 was ahead of budget of €1,147,971 by €27,463, though less than the previous year’s figure of €1,212,332 by €36,898. Operating expenditure of €1,353,960 was below the estimate of €1,464,400 by €110,440 and less than the 2013 figure of €1,228,978 by €124,982. The outcome was an operating deficit of €178,526, compared with a budgeted deficit of €316,429 and an actual deficit of €16,646 in 2013. The variance with budget is due in the main to certain works on course and house being deferred – Practice Garden and Junior Locker room. When account is taken of ‘other income and expenditure’ of €671,484 i.e. entrance fees from new members, a depreciation charge and net income from ‘other activities’, the result is a net surplus of income over expenditure of €492,958. As the installation of the new course irrigation system was only completed at year end, the higher depreciation charge which was budgeted for did not arise. Hence, the depreciation figure remained at last year’s level. The table below sets out the results for the year, the main changes compared with 2012/2013 and the budget variances: Overview of the Results for the Year 2013/14 All figures in €000 Actual Variance v 2012/13 Variance v Budget Subscription income 1,011.1 (15.2) Adverse 11.1Favourable Green Fees 60.7 1.5 Favourable 0.9 Favourable Entrance fees (one third) 40.1 (8.1) Adverse 23.5 Favourable Competitions and Sponsorship 26.3 (11.9) Adverse (5.4) Adverse Bank Deposit Interest 5.9 (3.0) Adverse (2.6) Adverse Other Operating Income 31.4 (0.2) Adverse 0.0 Total Operating Income 1,175.4 (36.9) Adverse 27.5 Favourable Bar Trading (Loss) Course Expenses Clubhouse Expenses General Expenses Security Course Machinery Clubhouse equipment, fittings etc. Total Operating Expenditure
45.8 473.7 434.5 84.5 94.5 170.6 50.3 1,353.9
4.1 Favourable (18.4) Adverse (17.4) Adverse 5.2 Favourable (0.9) Adverse (55.2) Adverse (42.4) Adverse (125.0) Adverse
3.3 Favourable (13.1) Adverse (0.4) Adverse 8.7 Favourable 2.3 favourable 61.7 Favourable 47.9 Favourable 110.4 Favourable
(Deficit)Surplus arising from operating activities
(178.5)
(161.9) Adverse
137.9 Favourable
80.1 641.4 (50.1) 492.9
(16.2) Adverse 641.4 Favourable 463.3Favourable
46.8 Favourable 641.4 Favourable 18.0 Favourable 844.1 Favourable
Entrance Fees (two thirds) Other activities (net) Depreciation Surplus of Income over Expenditure
Income and Expenditure Account Operating Income: Subscriptions: There was a decline in subscriptions of €15,242 on the previous year. The decline is due in the main to resignations, transfers out of the Ordinary Member category to Life Honorary Membership and to 5 Day Membership. Having only 15 holes open significantly detracted from our capacity to attract new ordinary members. Green fees: Income from green fees has been adjusted by an amount from the ‘Other Activities’ funds, (as mentioned at the SGM in 2012). Otherwise, income would have been significantly below budget and down on last year. This was necessary as we had only 15 holes for the year which led to many cancellations by societies. The plan in the year ahead is to contact those societies, as well as new societies, to regain the business. Income from casual green fees was also well down. Entrance fees: The total entrance fees of €120,225 were down on last year by €24,275 and ahead of the budget of €50,000, by €70,225. (It has been longstanding Club policy that one third of entrance fees, €40,075, is allocated to day to day Club expenditure and the balance, €80,150, to other income.) Competitions and Sponsorship: Income of €26,312 was less than budget by €5,438 and down €11,929 on the previous year; due to the fact that we had only 15 holes available for the year. Restaurant contribution: The restaurant contribution from wine sales amounted to €14,262; worse than budget by €1,559 and down €2,034 on the previous year. This is due in the main to less footfall through the Restaurant from visitors by virtue of having only 15 holes available for the year. Snooker receipts: Receipts of €1,173 were down marginally on the previous year’s figure of €1,251 and just below budget of €1,250. Lotto (net): The Lotto offers an attractive cash windfall for members and generates valuable income for the Club. The outcome for the year was a net income of €4,558, compared with a budget of €5,500 and a net income of €5,011 in 2013. Bank Interest: Bank deposit interest of €5,893 was down on last year (€8,924) and budget of €8,500, due mainly to declining interest rates and an increase in DIRT tax to 41%. Operating Expenditure: Apart from the Bar Trading Account, the new VAT arrangements applying from 1st January, 2014 which added to our cost base, are taken into account in the results below. Bar Trading Account-Net Loss: Bar sales were up by just over 1% on last year and the operating ratio was maintained. A loss was incurred of €45,810, as compared with a loss of €49,912 in 2013 and a budgeted loss of €49,150. The better than expected performance related to members strong support for the extra efforts of the Social Committee in maintaining an interesting social calendar at a time when the course activity was reduced. Please see Note 1(c) to the Financial Statements which outlines the overheads allocated to the Bar Account. Course Expenses: The ‘active’ 15 holes required more materials input and staff attention due to heavier traffic for a period longer than anticipated. Extra materials and staff and maintenance costs relating to the 12-14 holes is also included here. Expenditure of €473,692 was €18,401 more than the previous year’s figure of €455,291 and €13,092 more than budget of €460,600. Clubhouse Expenses: The expenditure of €434,479 was more than budget of €434,050 by €429 and up on the previous year of €417,115 by €17,364. The increase on previous year was due mainly to rising costs for rent, rates and insurance, as well as professions fees relating to VAT. Looking forward, we are hoping for some relief on our rates bill in 2015 as a result of the recent announcement of relief for sports clubs under the Valuation (Amendment) Bill currently being debated before Seanad Eireann. General Expenses: The result was expenditure of € 84,515; €5,216 less than €89,731 in 2013 and €8,685 less than budget of €93,200. Security Expenses: Expenses of €94,484 were marginally ahead of last year by €858 and €2,316 less than budget of €96,800. Course Machinery, Fixtures and Greens Irrigation System: Expenditure for the year was €170,636 and less than budget of €232,400 by €61,764. Expenditure includes new leaf blowers at €10,184 not included in budget, as well as Astroturf paths at 1st, 4th, 5th and 6th to 7th, upgrade to six tees, the purchase of mower, turf gator and stabilising the ‘garden’ wall. The new course irrigation system, including computerised controller, cost €195,049. The only course project in the capital programme for the year not yet commenced is the upgrade of the practice garden while the new bunkers at the 14th green have yet to be completed. Other capital projects were undertaken by the Club, under the direction of DCC, while the flood alleviation works project was underway included new ball-catch fencing to right of 12th and 13th holes and a new well for the provision of additional water for the irrigation system. Clubhouse equipment, fittings and refurbishment expenses: Expenditure for the year was €50,344; less than budget of €98,200 by €47,856. The projects completed were new computer systems, a refrigerator fan, car parking fencing and landscaping and alterations to layout of car park. The following projects were not undertaken: Junior Locker Room, re-routing of roof water and replacement of dining room chairs. These projects are included in the capital budget for 2014/15.
Surplus arising from operating activities: Expenditure of €1,353,960 exceeded operating income of €1,175,434 by €178,526 and less than the forecasted deficit of €316,429. This is due in the main to capital expenditure being below budget above. Other Income and Expenditure: Other Income and Expenditure comprised: (1) Entrance fees (2/3rds) generated from new members amounted to €80,150; (2) A depreciation charge of €50,072 on the clubhouse, machinery compound and pro shop is a recurring annual charge and will increase by €10,000 annually from 2014/15 arising from the new course irrigation system which is being depreciated over 20 years. Roof works will also be capitalised in 2014/15. (3) A net figure of €641,406 is in respect of the works on the 12-14th holes. DCC undertook to provide enhancements of these holes during their reinstatement and our agreement with them is typical of a project of this type. For the Club, aspects of the work overseen by DCC were a cheaper option than if we had directly engaged a private contractor to do the work. Note 11 in the accounts refers. Additional claims are also being made of DCC in respect of the prolonged delays in completing course works. Surplus of Income and Expenditure: The net result was a surplus of income over expenditure of €492,958, compared with €29,615 in the previous year and a budgeted loss of €351,101. Balance Sheet: The Club’s balance Sheet remains very strong. The increase in fixed assets is due to the inclusion of expenditure on the new course irrigation system (€195,049), after the recurring annual charge of €50,072 in depreciation. At year end, the Club had €1,054,127 in cash and at bank; €364,039 more than last year. Total assets less current liabilities amounted to €2,208,315, an increase of €492,958 on last year. After taking account of a debt of €32,560, the Club has €2,175,755 in total net assets. Sources and Uses of Cash Operations generated a surplus of €492,958 and after deducting €195,049 for the new course irrigation project and adding back a depreciation charge of €50,072 and the increase in working capital of €16,058, the Club’s cash balances improved by €364,039 at the year end. Reserves Policy During the course of the year, the Management Committee adopted a Cash Reserves Policy in the interest of the long term sustainability of the Club and to guide future management. The Committee has settled the level of reserves to be maintained by the Club at €625,000, comprising (1) a minimum of €500,000 as a General Reserve for major unforeseen events e.g. structural issues requiring major repairs to and around the house, (2) €125,000 as the ‘Flood Reserve Fund’ to be used for course clean-ups following future major flood events affecting the quarry holes. The balance of reserves will be used for capital expenditure to meet the ongoing Course and House Development Plans. These cash reserves are on deposit with NTMA (An Post) and a number of banks. The approach adopted reflects the risks inherent in managing a golf club of its size, the current uncertain economic environment, the changing nature of golf club membership generally, the potential impact of flooding on the course arising from the Flood Alleviation Scheme, as well as any unforeseen future events that may arise e.g. major repairs to the Clubhouse which is an old structure requiring high maintenance, or future rail line developments. Managing our Funds For the foreseeable future the Club will have strong bank reserves. In the current low interest rate environment, the return on our bank deposits, even before the deduction of DIRT tax, is less than the rate of inflation and this situation will continue to obtain over the coming years. Our professional advisors have recommended that members consider investing a percentage of cash reserves into other classes of assets. They advise ‘over the long term, a low cost portfolio of equities, bonds and property will give potential returns ahead of inflation. This will increase the risk profile of the portfolio, compared to a portfolio invested completely in cash. Therefore, these investments should only be made for cash with a long term horizon (suggest 7 years+)’. The Management Committee will now consider this recommendation in the months ahead in accordance with the provision 19.2.5. of the Club Constitution and, in the meantime, any Member wishing to offer his/her own advice on this recommendation is invited to do so by 31st March 2015. Financial Outlook for 2015, 2016 and 2017 The general outlook for the club finances for 2015, 2016 and 2017 is: ever increasing inflation in our day to day costs, at around 2/3% annually, uncertainty around income from subscriptions and entrance fees from new members, due to the high age profile of the Club and competition from other clubs. Around 50 vacancies at the Ordinary Member level is the likely outlook, and reduced capital Expenditure on Course and Clubhouse given the major investments that have already been undertaken in recent years.
The long term challenge for the Club is to continue to manage costs and generate sufficient income to cover the costs of the day to day operations of the Club and generate a sufficient surplus to meet our future development needs. Over the next year or so, our current levels of reserve provide an adequate cushion to cover our development needs. In order to maintain a long term perspective on development activities within the Club, the Course Development Plan (already published) and the House Development Plan (in course of preparation) are designed to assist in this regard and will be reviewed annually. Auditors FMB are recommended for appointment as Club auditors for another year. Conclusion The year gone by has been a successful year for the Club in financial terms, despite our course being severely disrupted and limited. We are all now looking forward to more and better golf in 2015. This will also benefit our financial future. Appreciation I would like to express my appreciation of the support I have received over the last three years from all the Officers, Committee Members and Members generally. I wish to express my particular thanks to our dedicated General
Manager and his equally committed staff. ANDREW CULLEN, Club Treasurer
