Half year results.

Hi Members

Our results for the first six months of 2024 are exceptional given what we have been through.  A very big thank you to all members who have made a huge effort subsequent to the fire to not only renew memberships but pay them on time. Hopefully this continues for the remainder of the year. Some of the highlights so far this year:

• During the first half of this year we have seen 128 new members join the club with 61 resignations, a net positive increase of 67 or 8% increase so far for the year. This brings the total number of members to 875.
  Our key membership revenue line of $536k for the first half has held up strongly with a positive variance of 16% to budget and a significant 25% up on 2023 for the same period.

 

• Our green fee and cart revenue stands at $287k for the six months which is 2% ahead of budget and 10% favorable to the same period for 2023. Having said that did have a cracker of a start to the year in this category and since both the fire and the commencement of the irrigation project we have seen around a 10% fall off in green fees and 25% fall off in cart revenue. The later will come back towards budget now that we have our full complement of carts back in action.

 

• The other major revenue line is our driving range revenue. This continues to go from strength to strength with revenue of just under $100k for the first 6 months of the year. This represents a near on 40 percent favorable variance to budget and a whopping 77% increase against 2023. We are planning for this trend to continue.

 

Overall, with our overheads firmly under control we have finished the first half of the year with an operating surplus of $297k as against a budget of $125k. We are anticipating making a small loss for the reminder of the year (around 70% of membership renewals have already been made) but should finish the year with a surplus of $250k, well ahead of our full year budget of $95K.

 

Our operating cash position is the strongest it has been for many years which is something given our circumstances we are aiming to continue as we head into the rebuild at which point, we are anticipating cashflow to tighten up.

 

Insurance update

One of the first steps in the insurance claim is to compare the declared values on our policy vs the value at risk calculated by the insurers to determine if there has been any under insurance. This has been completed and we have had confirmation that the underwriter has accepted the loss adjuster’s assessment that there is no under insurance. This is great news as we had a feeling that figure could have been between 10-20 percent.

A scope of works to build a like-for-like building has been completed by the insurers appointed project managers and we are in the process of responding to this. On face value there is nothing of material note that we believe has been omitted. 

Initial costing of this scope of works has been completed and a second one is in progress. The initial costing has indicated that the like-for-like replacement will be around $4.5m. We are anticipating the second costing will be finished by end of July. We have another meeting with the loss adjuster lined up for early August to finalise this figure.  We are keen to lock in an agreed value as soon as possible to give more certainty to our design planning and associated costings of such.  

The figure of $4.5m does not include allowance for compliance upgrades to bring the building up to current standards (which we have a potential $500k maximum allowance) nor does it include contents valuation (our declared value was $375k). 

Last month we were given a $400k initial deposit on the claim to help with fire related costs we would initially incur. We have so far spent $278k of this. The golf cart replacement cost was $150k, we have spent a further $30k on make safe related items, $10k on content replacement items, $13k on claims preparation and most importantly $78k on what they term additional working capital related items (eg- portable hire, electrical and plumbing works for portables, toilet hire etc etc).
Our total allowance for the additional working capital is $300k in total with a 24 month claim period (which starts from the date of the fire).  Our spend to date and committed costs (hire estimates to take us to April 26) on this is currently around $250k.  All of these costs come under our business interruption policy component.

In terms of genuine gross profit business interruption, an initial assessment cannot be really done until we have a better trend on our revenue and thus associated gross profit. Clearly, our hospitality revenue has been hit hard and it appears green fees are trending to be around 10-20 percent down on the expected normal. We are insured for gross profit but this is adjusted for cost savings made and thus, our likely payout for loss of gross profit is not expected to be more than $5-10k per month for the 24 month period. The more important part of this insurance is the additional costs they cover along the way such as the portables. We are also looking at other infrastructure to help with key golf events like the Pink golf day, Horvat golf day, Melbourne cup gala day, and other key corporate golf days (eg- Powercor, Rotary and the Property Industry Foundation golf day). This may involve rescheduling some events from their traditional time slot.

If you have any questions or queries in relation to the above, please just approach me at any time and I will do my best to explain further.

Barry Aarons

Treasurer

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