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					Howick Golf Club
Annual General Meeting
    October 27 2010
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
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
Howick


85% of club income comes from:
  –Member subscriptions (65%)
  –Green Fees (20%)
Membership                        179 full members
                                  112 other members
                                  291 members lost since 2003   28% drop


1200
         1047
1000

                                                                         756
 800   735

 600                                                               556

 400    312
                                                                    200
 200

   0
        2003    2004       2005   2006     2007      2008   2009    2010

                   F ull          O ther          Total
Green Fees   $193,000 in 2006
             $154,000 in 2010
             $ 39,000 20% drop
Impact On Income
 $900,000
 $880,000            $850,000 in 2006
 $860,000            $750,000 in 2008
                     - Mainly s ubs c riptions and g reen fees
 $840,000
                     -$100,000 drop in inc ome
 $820,000
 $800,000
 $780,000
 $760,000
 $740,000
 $720,000
 $700,000
            2006   2007       2008         2009         2010
The Good News
 $900,000
                   Income almost back to 2006 level
 $880,000
 $860,000
 $840,000
 $820,000
 $800,000
 $780,000
 $760,000
 $740,000
 $720,000
 $700,000
            2006   2007       2008         2009       2010
But Expenses Have Risen
             Increased Costs:
  $860,000   - Course improvements
             - Fertiliser
  $840,000
             -Administration
  $820,000   -System
             - Catering
  $800,000

  $780,000

  $760,000

  $740,000

  $720,000

  $700,000
             2006       2007         2008   2009   2010
Trading ( Excluding Depreciation)
 $200,000

            $153K
 $150,000

                    $108K
                            $90K                       Excludes $130k
 $100,000                                              •10 year members
                                                       • Funding grant
                                                $56K
  $50,000

                                    $9K los s            $46k los s
     $-
            2005    2006     2007     2008      2009          2010

 -$50,000
Trading
$180,000                                           Including $130k
                                                   from 10 year
$160,000   $153K                                   members & grant
$140,000

$120,000           $108K                                 $80K
                           $90K                          s urplus
$100,000

 $80,000
                                                $56K
 $60,000

 $40,000

 $20,000
                                   $9K L os s
    $-

-$20,000   2005    2006     2007    2008         2009     2010
       Last Year In Detail
                     31 Aug 2010    Previous                                  Comment
                                      Year
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)
  $25,000 shed grant received last year
Income               $824,788    $819,866
  Had to be repaid
Course Expenditure   this year – not ready toContinuedproject.
                       $438,620    $420,993   start improvements
Administration        $253,480    $174,614          $36k shop wages, system implementation, one off costs
  Without this the results would have been:
Golfing Costs           $52,950      $52,549
Occupancy            This Year
                       $111,171     Last Year Inc. provision for $40k rent from July. Still under negotiation.
                                     $98,092
Finance              ($21,681)
                        $15,248      $31,370
                                     $17,248
Expenditure             $871,649    $763,496
  The good news - $50,000 next year

Net Trading             ($46,681)    $56,370
Catering Losses
     $0
           2006          2007      2008         2009   2010
 -$5,000


-$10,000
            •Providing member service is expensive

-$15,000    •Accounts for 60% of trading loss
            •Low sales
-$20,000    •Major drain on club resources
            •How can we stop the losses?
-$25,000


-$30,000
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
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
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
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!
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
Wash Down Bay / Shed
              Stage 1                                  Stage 2
    Foundations, Base, Drainage,                     Shed, Fitout
     Uncovered Wash Down Bay

Cost               $125,000             Cost               $150,000
Plan               December             Plan               2011
Borrow             $70,000 max          Borrow             $130,000
Repayments         $17,000 a year       Repayments         $31,000 a year

Note:                                   Note:
 - Includes cost of plans & permits      -Stage 2 will commence on
 - Borrowing will not be needed until      achievement of trigger points:
    later in financial year                  - Membership renewal
 - Positive cash flow early in year         - Budget being on track
    -Subscription income                 - Otherwise will be delayed
                                         - Need to ensure Club has cash flow to
                                           repay loan
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
 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
Hopefully The Corner Has Been Turned

              But risk if $100,000
              surplus not achieved
              •Bank loan still has to
              be repaid

                                        Inc $130k from
                                        10 year
                                        members and
                                        grant
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
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
 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
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
          Budget For Next Year
                     Budget      Last Year                                       Comment
Subscriptions        $572,000     $521,000    Fee increase & New members.
Green Fees           $175,000     $154,000    More trade days
Golfing Income       $70,000      $58,000

Other Income         $80,000      $18,000     $70,000 grant funding approved

Bar                  $80,000      $80,000

Shop                 $35,000      $22,000

Catering             ($20,000)    ($29,000)

Income               $992,000     $824,000

Course Expenditure   $420,000     $439,000    Part time staff member reduction

Administration       $250,000     $253,000

Golfing Costs        $50,000      $53,000

Occupancy            $135,000     $111,000    Inc. rent at $40,000 – still under negotiation.

Finance              $28,000      $15,000     Inc. bank term loan interest

Expenditure          $883,000     $871,000



Surplus              $109,000     ($47,000)
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
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
Drop Down Sides
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
We all need to sing from the same sheet




          Working Together
       For the good of the Club
Remember JF Kennedy
Ask not what your Club can do for you

 Ask what you can do for your Club


       It’s about our future
Next Steps
1.   Questions
2.   Approve reports
3.   Approve annual accounts for year to August 2010
4.   Approve budget
5.   Approve proposed bank loan for Shed / Wash Down Bay
Questions
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
Resolution
BUDGET
  Resolution that proposed budget be approved.
 Proposer
 Seconder
Resolution
ANNUAL ACCOUNTS
 That Annual Accounts and Balance Sheet be adopted

Proposer
Seconder
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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