BGC Financial Update

In recent days there appears to be number of rumours doing the rounds of the Club along the lines of the following:

• The auditor of the Club has resigned;
• The Club did not correctly account for flood insurance proceeds and expenses in the 2022 Annual Report; and
• The Club is not on a sound financial footing.

As incoming Honorary Treasurer following the AGM in December I have reviewed the 2022 Annual Report and insurance claim supporting information.

The above rumours are simply not true and for somebody to be suggesting otherwise they are either ill-informed or mischief making.

Let me briefly touch on these three matters:

Auditor

In accordance with the Rules of the Club, the Auditor is required to be reappointed each year at the AGM.  The correct terminology for this is that they resign and offer themselves for reappointment.  This procedure was properly undertaken at the AGM, with BDO continuing as the Club’s auditor.

Accounting for Flood Insurance Proceeds and Flood Related Expenditures

Accounting Standards require the direct costs of flooding and the impairment of any assets to be expensed in the year in which the flood occurs, and the proceeds of any insurance claim to be treated separately, usually when the claim proceeds are received or the claim is approved.  Proceeds and costs should be disclosed separately and not be netted.

The 2022 Annual Report clearly shows that $0.5M of claim proceeds were received in the 2022 financial year and $0.3M of direct expenses were incurred.  A net gain of $0.2M.  In addition the Club outlayed a further $0.3M on the replacement of flood damaged assets.  The Annual Report also notes that subsequent to year end the Club received a further $1.2M of flood insurance proceeds which will be brought to account as revenue in the 2023 Annual Report. Any direct costs re this flood event are immaterial, as already accounted for in 2023.  The Club is in the process of replacing the remainder of the flood damaged equipment using the insurance claim proceeds and this expenditure will appear as part of property plant and equipment additions in the 2023 Annual Report.  Furthermore, the President’s and Treasurer’s reports also highlighted the operating results excluding the flood impact and the costs so Members could see the results without the distortion from these items.

In my opinion Club management and accounting staff did a thorough job on the accounting and disclosures and this is attested to by the Auditors, BDO.

Overall Financial Position

I quote from the President’s and Treasurer’s addresses to the AGM which was emailed to all members in December “It is very pleasing to now be in a sound financial position which allows the course and member services to be fully funded and for the Club to have positive cash flow”.  I concur with this assessment.  The Club achieved record profitability in 2022 which is being reinvested back into the course.

As per prior years a mid year financial summary will be provided to Members in early May showing the results of the first six months of the year.  I am pleased to note that the Club has traded slightly ahead of budget for the first quarter and Management currently expects that this performance will be maintained through to the end of the financial year.  I am forecasting the Club’s net debt position (ie debt less cash at bank) at the end of the year to be the lowest in at least the last seven years.

As already highlighted to Members, the challenge for the Club, and indeed most golf clubs, is that the positive cash flow that day to day golf club operations can generate is unlikely to be sufficient to fund major capital expenditure projects that maintain and enhance the experience that Members wish to enjoy.  This is why the Committee is exploring various funding solutions, most notably releasing funds from the sale of the spare land on Fairfield Road (any sale being subject to Member approval).

In summary your Club is in a sound financial position and the Committee is prudently examining how best to maintain and enhance the Club through ongoing cost management and ensuring project expenditures are appropriately funded.  Members will continue to be brought along on this journey with significant opportunity for input.

If Members have questions on the matters highlighted then please feel free to contact the CEO Geoff Kuehner, President Mark Deuble, or myself.

Andrew Mullis, Honorary Treasurer