Treasurer's and Concise financial reports

[one-eyed]

TREASURER’S REPORT

On behalf of the Board I am pleased to present the Club's financial report for the year ended 31 October 2006,

2006 REVIEW

It is pleasing to report that the consolidated entity has recorded a profit of $948,586, This represents an improvement on the Club's 2005 result of approximately $1 million as presented in the table at right.

Year	Result ($ ‘000)
2004	(2,195)
2005	(44)
2006	949

Since the commencement of this financial year there has been a change in the application of Australian accounting standards to make them more consistent with international standards.

As a result the 2006 accounts have been prepared based on the new standards.

To allow you to make a true comparison between the 2005 and the 2006 results we have also applied the new standards to the 2005 result. For comparative purposes only, the 2005 result adjusted for the new standards is a net deficit of $43,923.

A more detailed explanation of the new accounting standards is set out in the 2006 Financial Statements.
   

	2004	2005	2006	Improvement on	Improvement on
	($ '000)	($ '000)	($ '000)	prior year ($)	prior year (%)
Football operations:
Revenue	15,864	17,340	19,574	2,234	13%
Expenditure	(18,500)	(17,906)	(19.240)	(1,334)	(7%)
Gaming revenue	105	326	450	124	38%
JDF  revenue	336	196	165	(31)	(16%)
Net Profit /(Deficit)	(2,195)	(44)	949	993	2,257%

HIGHLIGHTS OF THE 2006 RESULT AS DEPICTED ABOVE ARE AS FOLLOWS:

* A record net profit of $948,586. This surpasses the previous record of $918,635 in 1990, which included $1.033 million in funds raised through the "Save Our Skins" campaign.

* The Club recorded a profit before gaming operations and jack Dyer Foundation fundraising, which reflects a profitable core business.

* Highest ever revenue recorded (excluding gaming and Jack Dyer Foundation), surpassing the previous record (2005) by $2.2 million or 13%.
* A further improvement in net gaming revenue of $124,000.

* A $3.144 million improvement over a two-year period between 2004 and 2006.
   
KEY 2006 VARIANCES

A summary of the key improvements between 2005 and 2006 is as follows:

   
 
   

	$ ‘000	Change
Increase in football income	445	10%
Increase in net membership income	296	12%
Increase in net sponsorship income	326	15%
Improved revenue from Licensed Clubs	124	37%
Increase in match day income	603	37%
Reinvestment in football department	(503)	5%
Miscellaneous changes	(298)
TOTAL	993

[one-eyed]

Re-investment in the Club's football department was certainly deemed necessary. The AFL’s 2005 Club Benchmarking Study showed that we ranked the lowest of all clubs' football department expenditure (excluding player payments).

The Board has previously communicated to members the fact that comprehensive plans were established at the conclusion of the 2004 financial year. This year's financial result reaffirms the Board and management's commitment to this plan, and the finance and governance principles that were established to support our operations.

Importantly, the results achieved over the past two years, particularly in 2006, have afforded the club the stability to commence planning over an extended term. Examples of this are documented elsewhere within this publication, and include plans for further redevelopment of our Punt Road Oval base.

Furthermore, on a micro level, we continue work closely with the AFL, other Clubs, sponsors, and other key stakeholders, to identify innovative solutions to assist all aspects of our operations.

While the 2006 financial result is particularly pleasing, our current levels of debt certainly allow no room for complacency. Plans have been established to significantly reduce our debt over the next five years.

The principle of conservative budgeting has again been reflected in the Club's financial plans for 2007. The Club's 2007 budget targets a lower profit than that achieved in 2006 as a result of the continued application of the following conservative parameters:

* Reducing our forecast match attendances from 2006 despite improving on-field results;
* No prize-money or bonus revenue;
* No increase in membership;
* No growth beyond CPI adjustments in key corporate revenues such as sponsorship, corporate hospitality, coteries, etc.

Obviously, the Club's Board, management and staff will be striving for improvements across all areas of the business to hopefully exceed our targeted levels of debt repayment and further re-invest in the business.

THE FUTURE

The 2006 record profit is obviously an excellent result for the Club. Everyone associated with the Club, including members, sponsors, donors, etc, should be very proud. The size of the profit and the financial improvement over a two year period has significantly improved the Club's Balance Sheet and sets the stage for a period of sustained financial stability.

However, the Club's Board and management are acutely aware that we are only part way through a long term plan to ensure the future prosperity of the Club. Accordingly, we will be resolute in ensuring that the foundations that have now been established, will result in significant repayment of debt in coming years.

Garry Cameron
Treasurer

[one-eyed]

CONSOLIDATED BALANCE SHEET AS AT 31 OCTOBER 2006

	2006 ($) .....	.... 2005 ($)
CURRENT ASSETS
Cash and cash equivalents	1,471,030	1,008,827
Trade and other receivables	1,250,006	971,484
Prepayments	239,187	139,057
Inventories	110,347	140,070
TOTAL CURRENT ASSETS	3,070,570	2,259,438
NON CURRENT ASSETS
Property, plant and equipment	6,021,330	5,545,476
TOTAL NON CURRENT ASSETS	6,021,330	5,545,476
TOTAL ASSETS	9,091,900	7,804,914
CURRENT LIABILITIES
Bank overdraft	-	3,880,424
Payables	3,713,974	3,631,982
Provisions	197,945	200,166
Interest bearing liabilities	4,905,036	-
Income received in advance	435,039	223,846
TOTAL CURRENT LIABILITIES	9,251,994	7,936,418
NON CURRENT LIABILITIES
Interest beanng liabilities	22,824	1,000,000
TOTAL NON CURRENT LIABILITIES	22,824	1,000,000
TOTAL LIABILITIES	9,274,818	8,936,418
NET ASSETS	(182,918)	(1,131,504)
EQUITY
Retained earnings/(accumutated losses)	(182,967)	(1,131,553)
Minority interest in controlled entities	49	49
TOTAL EQUITY	(182.918)	(1,131,504)

[one-eyed]

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 OCTOBER 2006

	2006 ($) ....	.... 2005 ($)
Revenue from continuing operations	25,840,319	23,481,022
Employee benefits Expenses	(12,819,157)	(11,877,168)
Depreciation and amortisation expenses	(172,644)	(359,451)
Marketing and promotional expenditure	(2,743,502)	(2,548,025)
Materials purchases and match day hospitality	(1,542,420)	(1,384,244)
Administration expenditure	(620,776)	(585,535)
Borrowing cost expense	(478,003)	(400,032)
Property maintenance	(590,838)	(634,793)
Football support expenditure	(2,234,449)	(2,082,080)
Membership expenditure	(1,193,510)	(1,271,909)
Property lease expenditure	(1,166,018)	(1,086,724)
Other expenses from ordinary activities	(1,330,416)	(1,294,984)
Net profit / (loss)	948,586	(43,923) [/color]

CONSOLIDED STATEMENT OF CHANGES IN EQUITY AS AT 31 OCTOBER 2006

	2006 ($) ....	.... 2005 ($)
Total equity at the beginning of the financial year	(1,131,504)	(1,087,581)
Profit / (loss) for the year	948,586	(43.923)
Total equity at the end of the financial year	(182,918)	(1,131,504)[/b]

[one-eyed]

CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 OCTOBER 2006

	2006 ($) ....	.... 2005 ($)
Cash flows from operating activities
Receipts from football operations	7,095,463	6,528,520
Receipts from marketing operations	12,056,540	11,576,804
Receipts from gaming and social operations	6,397,903	6,268,598
Receipts from other operations	-	11,758
Payments to suppliers and employees	(24,135,560)	(24,129,681)
Interest received	21,942	6,028
Borrowing costs	(478,003)	(400,032)
Jack Dyer Foundation contributions	139,254	195,723
Net cash inflow / (outflow) from operating activities	1,097,539	57,718
Cash flows from investing activities
Paymnt for property, plant and equipment	(648,498)	(152,483)
Net cash Inflow / (outflow) from investing activities	(648,498)	(152,483)
Cash flows from financing activities
Draw down of commercial bills	5,200,000	-
Repayment of borrowings	(1,306,414)	(375,000)
Net cash inflow/(outflow) from financing activities	3,893,586	(375,000)
Net increase/(decrease) in cash held	4,342,627	(469,765)
Cash at the beginning of the year	(2,871,597)	(2,401,832)
CASH AT THE END OF THE YEAR	1,471,030	(2,871,597)

[one-eyed]

Revenue

	2006 ($) ........	....... 2005 ($)
Revenue from the continuing operations
Football	7,095,463	6,528,520
Sponsorship & Marketing	12,185,757	10,833,045
Gaming and Social	6,397,903	5,906,990
Interest	21,942	6,028
Jack Dyer Foundation	139,254	195,749
Other	-	10,690
	25,840,319	23,481,022

[mightytiges]

Re-investment in the Club's football department was certainly deemed necessary. The AFL’s 2005 Club Benchmarking Study showed that we ranked the lowest of all clubs' football department expenditure (excluding player payments).

Yet other clubs get $1.5 million handouts from the AFL while paying close to 100% of the salary cap .

The principle of conservative budgeting has again been reflected in the Club's financial plans for 2007. The Club's 2007 budget targets a lower profit than that achieved in 2006 as a result of the continued application of the following conservative parameters:

* Reducing our forecast match attendances from 2006 despite improving on-field results;
* No prize-money or bonus revenue;
* No increase in membership;
* No growth beyond CPI adjustments in key corporate revenues such as sponsorship, corporate hospitality, coteries, etc.

Glad to hear we are sticking to this philosophy. Any gains should be treated as bonuses like this year  . 

[mightytiges]

Well done to the club and in particular the sponsorship and marketing departments on the significant rise in revenue generated. $2.4m increase overall  . Our cash flows are far healthier too  .

Accountancy question?

I see our $3.9m bank overdraft is "gone" but we have "gained" $4.9m in current Interest bearing liabilities while non-current Interest beanng liabilities have gone down by about $1m. Is this accountancy talk for our debt is still about the same but has be reorganised?