There’s been a few questions come in before and after Christmas about the annual accounts. We haven’t got all the answers but here they are nonetheless.
A few questions relating to Assets and Depreciation
This year there were a number of purchases which were added to our course or clubhouse assets.
Generally things that are consumable over a long period of time may be depreciated, eg the astro turf or boilers, whereas things like electricity, gas and water are used immediately. We’ve asked our Accountant, Stuart Kerr from Charles Burrows to give us an up to date asset register so that we have a comprehensive list that members can see. Once its received we’ll put it in the folder in the lounge with the minutes and accounts.
The bar purchases and stock carried forward versus course purchases and stock.
A very good question. We dont have an inventory at the end of the financial year for sand and seed, fuel etc. What members tend to see in the accounts is items like fuel will be £9000 one year, £12,000 the next, then back down to £9000 again. My own observation is I’d like a stock take of all our greens consumables just as we do with the bar but in truth it will only cost money to perform this exercise and as we dont have a history to compare it with, its moot whether it helps enough to merit the costs.
Another question on the bar related to comparisons with previous years and why we were now maintaining 55% Gross margin, whereas in 2011 and 2012 it was only 50% and 42%.
There are many facets to this improved performance over the last couple of years. Our bar Manager has spent a lot of time on the prices of individual items and quite simply negotiated and moved to the better supplier.
There’s also a £5000 loan we’re repaying to Belhaven taken out a few years ago which has hindered us to date but as we will be paying it off this year we will be free to negotiate better prices.
Additionally the profit derived goes towards covering the costs of the staff wages which have risen with the minimum wage which in 2011 was £6.08 per hour while the chancellor announced in November last year would rise to £8.21 in April.
It doesn’t take much to work out if we open the building at 06:00 to clean it and close it at 23:00 there are 17 hours to cover and the minimum wage, never mind employers NI and pension will add up to over £130 a day in the summer and £80 in the winter. This year and last members have helped out with cleaning and opening the building which has made significant savings but it is a small finger in the proverbial dyke.
There are also few if any occasions when drink is bought on a club account. If a visiting team come to play then everyone pays their own. If any member of Council wishes to entertain they do so at their own cost.
In short there are a few occasions when the bar runs at a profit and for most of the time it runs at a breakeven and in the winter a loss but is a service to the membership. Closing the bar during the winter on the quieter days has often been considered an option but we still need the building locked up. The best solution involves more members using their clubhouse and spending a little bit more when they do.
Green fees dropping highlighted again an issue which has been raised by a few members. Our income is variable and yet our costs are largely fixed. Items like lease payments due over the coming 5 years highlight some progress but also a lot of fixed cost. In the previous year our positives from our variable income were receiving the VAT refund in December 2016, then circa £5000 from a film company for the use of a section of our car park for a week. This year however saw how viciously it can swing the other way when our bar revenue and green fees were decimated by the bad weather. Unfortunately although we do have to budget cautiously, I dont think anyone expected course closures in April. The lack of this variable income hit our profit but more importantly our reserves, which I believe, was the point of the question. The reserves are there to dig into when things are as bad as they were, but we must build them back up again during the good times and that has been a tougher project during 2018.
In response to the question about how has this year started. Bar turnover figures for Oct 1st – 31st December were £32548 in 2017 and this year they were £38153. This is only a small step forward but does highlight where we were and how we’ve made a reasonable start to this year.
There’s more information below but keep the questions coming in and we’ll reply as we get them and on January 9th at the forum and the 15th at the AGM.
In the meantime, Happy New Year!
Financial review 201718
This year‘s loss was somewhat larger than intended due to three factors.
The snow on the course lead to reduced footfall in visitors and members guess seriously impacting our revenue from green fees. We had hoped to increase these in absolute terms by the six months to March we were well behind what we had considered was quite a cautious budget.
The double whammy was that this was reflected in bar takings as well. This was demonstrated in December when halfway through the month we were ahead of expectations and last year only to find the snow cancelled three parties and the revenue excluding Christmas Day And Hogmanay was non-existent. Sadly the costs associated with opening the clubhouse and bar remained.
We were able to reduce some spending commitments as we sought to address the gaping shortfall. We had however made commitments at the last AGM which we did fulfill, not least the rebuilding of the right hand side of the 6th, the new Astro turf at the first, hiring a leaf collector and buying the new brushes. It’s the first time we’ve hired a leaf collector and the plan was to buy one for this year but finances prevented it and we hired it again for the 2018 leaf fall. The brushes have been a great success but have also led to more expense as we have increased by 50% the top dressing going into the greens. This huge success will transform the greens over the next 3-5 years as the additional top dressing works it horticultural magic, but we must for the financial report note the additional costs.
There were a number of unexpected costs, not just the top dressing. The main large items of expenditure related to the plant room and a burst pipe outside the cottage. The plant room overhaul was extensive with a new pressure vessel, pumps and boilers. This was required from them breaking down and also a health and safety perspective, but will benefit us in the long run. We had targeted a reduction in energy costs and we have started seeing the benefits. During June- September our gas bill was more than half the previous year. The savings for a full year will be seen in the 2018/19 accounts as our continued active management and the benefits of a more efficient system bear fruit.
The burst pipe at the cottage led to us having to reroute it through the trolley shed. The upshot after claiming from both the insurer and the water company was that it cost the club over £6000. At one stage this cost exceeded £10,000 but the claims we made reduced the figure. We were working on reducing our water charges but this and the long hot summer meant our water charges surged, making the case for supplying our own water, via a bore hole, stronger.
As well as the long term reductions in our gas, electricity and water costs we also targeted bank and card charges and these should filter through this year and will be felt greater over 2018/19.
The work on extracting ourselves from long-term commitments continued with the handing back of the franking machine in July. Postage costs were £400 plus the £1200 for the annual lease cost. In short over five years we have paid £6000 for a franking machine we really didn’t use. Happily this is £1200 that won’t be paid in 2018/19.
The photocopying machine will see its last lease payment in January, with it leaving the premises in June. We will have paid £36,000 over the past five years by the time it goes. The strategy is to continue to lower consumption so that we do not need to replace it at anything like the same cost or specification. We decided to move to a digital platform which means instead of posters we will use the TV screens to advertise the lottery results and other club news as well as the website and social media.
Your club continues to make small gains too, many of these small amounts can lighten the financial mood, so here’s an example. Removing the plastic swizzle sticks has saved us £30 a year, enough to pay for the free juice given to junior players after a team match!
To sum up
As a Council our job is to divert our limited resources to where the members want them. Generally that is to spend less in the clubhouse and more on the course. The more efficiently we can run the clubhouse and members services the quicker these resources reach our greens, tees, bunkers and fairways.
There are sometimes costs involved in making efficiencies and this year in the plant room and the replacement bulbs we have spent money which both brings us up to date and also drastically lowers our running costs for the next 5-7 years. The savings will manifest in due course but the impact on our cash position is immediate.
Over the year our cash position has been monitored both monthly at the council meetings and weekly by all council members receiving an email with balances and any cash flow implications. We did not need to get an overdraft facility although we did enquire how much it would cost. At the AGM we will confirm what the current bank balance is and how that compares to previous years as the annual accounts will be 3 months old by the AGM January.