Treasurer's Report2005 RFC Annual Report
Garry Cameron
Treasurer
On behalf of the Board I am pleased to present the Club's financial report for the year ended 31 October 2005.
2005 REVIEWIt is pleasing to report that the consolidated entity has recorded a profit of $41,401. This represents a $2.23 million turnaround in the Club's finances as presented in the table below.
Year Result ($ '000)
2003 (882)
2004 (2195)
2005 41
The following table presents an overview of the Club's improved trading performance from 2004 to 2005.
| | 2004 ($ '000) | 2005 ($ '000) | Improvement ($) | Improvement (%) |
| Football operations: | | | | |
| Revenue | 15,592 | 17,063 | 1,471 | 9% |
| Expenditure | (18,169) | (17,445) | 724 | 4% |
| Net Gaming revenue | 105 | 326 | 221 | 210% |
| JDF Revenue (includes Waverley proceeds) | 608 | 473 | (135) | (22%) |
| Net result before interest | (1,864) | 417 | 2,281 | 122% |
| Interest expense | (331) | (376) | (45) | (14%) |
| Net profit / (loss) | (2,195) | 41 | 2,236 | 102% |
Highlights of the 2005 result as depicted above are as follows:* The Club recorded a profit before interest of $417,000 which reflects a very healthy core business operation but the net profit is diminished by the servicing costs of the operating debt.
* Highest ever revenue recorded from football operations.
* Expenditure reduced by $724,000 from 2004.
* An improvement in gaming revenue of $210,000. This result reflects the careful management and diligent reviews that have been undertaken across all aspects of the operations of our licensed Clubs.
2005 KEY VARIANCESA summary of the key improvements between 2004 and 2005 is as follows:
| | $000 | CHANGE % |
| Increase in net membership revenue | 660 | 35% |
| Increase in net sponsorship income | 300 | 16% |
| Increase in net cotene Income | 350 | 100% |
| Increase in net corporate hospitality income | 250 | 250% |
| Improved revenue from licensed Clubs | 210 | 200% |
| Reduction in expenditure & other net improvements | 460 | |
| TOTAL | 2,230 | |
It is particularly pleasing to achieve this result given that a number of additional costs totaling $370,000 had to be absorbed which comprised additional election costs, injury payments and player milestone payments.
In last year's annual report we set out in some detail the objectives and principles that would guide our operations, particularly from a finance and governance perspective. These included:
* Recognition of the need for a significant improvement in the Club's financial performance;
* Significant (and sustained) cost reductions, particularly in those areas which were high in comparison to other Victorian Clubs;
* A restructuring of the organization to provide clearer lines of reporting and accountability;
* A restructuring of the Club's committee structure to provide improved Governance over the operation of the Club.
* Working closely with the AFL, other Clubs and key stakeholders within the industry to identify innovative solutions to common Issues.
The above objectives and principles have been strictly adhered to and have been instrumental in our financial improvement.
Importantly, these principles have again been reflected in the Club's plans for 2006. The Club has budgeted for a profit of $150,000 in 2006. In arriving at this figure we have used the following parameters:
* Using 4 year averages for match attendances despite being scheduled to play a number of "blockbuster" matches at a fully redeveloped MCG with capacity nearing 100,000;
* No prize money or bonus revenue has been budgeted. No increase in membership is budgeted;
* Growth in sponsorship revenue is based on state of actual negotiations for 2006 season; and Budgeting for minimal growth in match day hospitality despite a much improved fixture.
A number of risks still exist given the nature of the football industry - in particular in the areas of membership, match day attendances, player injuries and milestones but the board believes that the budget set includes an appropriate balancing of these risks.
THE FUTUREWhilst the 2005 result represents a very positive step forward, there remains a significant amount of work to be completed. The balance sheet contained within our financial statements shows a net asset deficiency of $700,000 and highlights the level of debt which the Club continues to carry. The Board is certainly mindful of the Club's financial position and will guide the operations of the Club accordingly.
Nevertheless, the strength of the 2005 result is underlined by the fact that whilst the Club returned improved performances on the field, the team finished twelfth on the AFL ladder and was beaten in the first round of the pre-season competition.
Accordingly, the Board is firmly of the view that the financial result is certainly sustainable.
It is our view that from a financial perspective, the Club has laid a solid foundation from which we can build further in future years.
