FINANCE

The Club reported an accounting operating loss of $8,489 for the period ended 31 March 2023. This loss incorporates a number of non cash items along with the Club's consistently applied, but conservative policies in relation to course enhancement expenditure. The Club’s total equity reduced to $10,956,077. This largely as a result of the adjustment made to the change in the fair value of shareholding in Glenelg Golf Links Limited. This adjustment, in line with AASB 9, requires the shares to be revalued to the last sale price which reduced retained earnings by $614,240. This adjustment is eliminated in the Consolidated result. As the value of the shares do not impact the business operating performance, the fair value adjustment does not impact the operating result. Total net income for the period was $4,494,221, with total expenditure for the year at $4,502,710.

During the financial year, the Club incurred $492,071 of expenses related to the course enhancement project which excludes costs associated with project manager wages and irrigation that were capitalised. Expenses attributable to this include completed holes 13, 14, 2 and 12, along with works to the nursery to harvest turf for the course enhancement as well as the initial works for hole 11. Course expenditure for the year was $350,989 higher than the prior year due to higher staffing levels to service the entire course enhancement and other costs directly related to the enhancement.

Back in 2021, Committee and management made the decision to purchase the bulk of the irrigation and synthetic turf (for our revetted bunker faces) required to service the course enhancement project. A prudent decision that has saved the Club considerably given the significant increase in material costs seen over the past 12-24 months.

It was another successful year for membership, the Club continues to grow the waitlist with 163 eagerly waiting acceptance to playing categories. This continues to be an excellent sign for ongoing financial sustainability for the Club.

Membership income continued to positively increase on prior years, with $3,783,960 reported for the period. After the adjustments were applied to comply with AASB 15 relating to Entrance Fee reporting, the reportable amount for the year was $271,120.

Golf Operations had an excellent year and finished with a surplus of $358,084, a 57% increase on the previous financial year. This improvement was largely as a result of increased green fee income given that we had a full year completely uninterrupted by COVID restrictions, as well as an increase to green fee pricing for visitors and groups.

Hospitality Operations finished with a surplus of $129,770. Hospitality was another sector that was heavily impacted by inflationary pressures on costs including salaries and wages and cost of goods. The Club strives to provide a high level of service and food quality that Members are accustomed to at a fair Member price. We experienced an unprecedented minimum wage increase of 4% in November 2022, as well as significant food and beverage price increases as a result of these inflationary pressures. Your Committee and Management continue to work towards improving these cost percentages while keeping the offering at a reasonable price. Function income continues to build again in a post COVID disrupted world. During 2022/23, the Club generated $125,461 additional function income than the prior financial year. Management are committed to improving marketing to generate additional function revenue back to our pre-

COVID numbers. Function revenue equated to 42% of total revenue for hospitality operations which is up 3% over the prior period.

Other income finished with a surplus of $222,408 which includes forfeited catering levies, phone tower rental income & apprentice wage subsidies. Other income reduced marginally by $16,977 as a result of reduced phone tower income recorded somewhat offset by additional government support payments received for apprentice wage subsidies. The difference in phone tower income is largely to do with a change in revenue recognition. In the prior financial year, the annual phone tower income was recorded when the cash was received. During the 2022/23 financial year however, the income is amortised over the contract period.

Expenditure for the year in Administration saw an increase of $68,566 as a result of small increases across a variety of expense accounts. These include increased bank merchant fees from higher number of credit card payments, industry wide increases in insurance costs and some small increases in marketing and staff training costs.

House expenditure finished $70,442 higher than last year. To present the Clubhouse at a level expected with higher cleaning demands in a COVID conscious world, management increased the scope of the cleaning contract which in turn increased cleaning costs by $27,484 and cleaning supplies by $17,820.

Entrance fee income was $271,120 for 2022/23. Members are reminded of the accounting standard that impacts the recognition of entrance fee revenue as referred to in Note 1(f) of the Financial Statements and the Statement by Committee. This standard resulted in a $164,285 decrease in entrance fee revenue reported for the 2022/23 financial year. Committee remains of the view that the entrance fee revenue reported as $435,405 in the cashflow statement provides more useful information to the users of the Financial Statements.

2022/23 saw unprecedented increases in multiple expense areas of the Club and the need to balance the tough economic environment along with the significant cost increases the Club is experiencing is an ongoing challenge. With inflationary pressures expected to continue, Committee and Management are committed to making prudent decisions to ensure Glenelg remains the destination Golf Club in SA.

Capital expenditure for the year was $893,925. The main project undertaken for the year was the course enhancement including the finalisation of the 13th, 14th, 2nd and 12th holes. The project manager wages, and irrigation costs associated with these projects equated to $218,495 of the capital expenditure for the year. The course added three gators, a sprayer, a fairway mower, a workman and other small machinery during the financial year totalling $306,365. The Clubhouse saw numerous upgrades totalling $128,845, including a new PA system, a new pizza oven, the front gate security system, and a dishwasher. Six new golf carts were added to the fleet and leased for $69,730 over 5 years. Administration capital expenditure totalling $17,685 included LED lighting upgrades and computers as part of a replacement program. The remaining $152,805 of capital expenditure for the financial year included work in progress for unfinalised projects at balance date. These include unused irrigation stock purchased upfront for the continuing course enhancement plan, costs associate with the pavilion project due to commence in 2023/24, a site dumper due to be delivered in July 2023, and server upgrades due to be finalised in July 2023. The server upgrades provide improved security, storage and back up facilities for the data we hold.

The Club’s cash position increased by $867,205, with $2,083,835 available at period end. Cash flow generated from operating activities was used to fund the Club’s capital expenditure programs for the year, including the course enhancement work.

The loan facility remains at $2,200,000 with $10,000 drawn down at balance date. The Club entered into a new lease agreement for Toro course equipment and also for six golf carts. As a result of these new lease agreements, overall, the Club’s total debt level increased by $5,543 to $880,739.

To be recognised by Members and the golfing industry as providing the best overall package of course, service and facilities in South Australia, it is imperative that the Club generates positive cash flow to fund ongoing capital investments and to continue to invest in our Club. The Club generated $1,769,737 net inflow from operating activities, which after capital investment payments, increased cash reserves by $867,205. The Committee and management continually manage debt throughout the year to ensure that net debt levels are kept to a prudent level.