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Finance Committee
Reported by: MR JONATHAN KUAH Chairman
OVERVIEW OF FINANCIAL PERFORMANCE
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2020 was a challenging year for the Club as the impact from COVID-19 pandemic took its toll. As the pandemic escalates, the nation went into a lockdown from April 2020 to May 2020. During this period, our members were restricted from utilising the Club’s facilities and services. As a show of solidarity with our members who are also facing one of the worst economic crisis in history, Management Committee made an unprecedented decision to waive the subscription fees, section fees and F&B Levy for a period of two months at the peak of the pandemic.
Even when Singapore exited the circuit breaker and entered into “safe reopening” (Phase 1), with tight regulatory restrictions meant that the Club was unable to reopen fully. In view of this, the Club’s Management with the approval from Management Committee, decided to extend the waiver of F&B levy until end of December 2020.
With the expected reduction in revenues, we took immediate action to reduce cost and delayed all unnecessary and non-urgent capital expenditures.
Despite the loss of revenue, the Club managed to end the year with Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) surplus of $2.48M, representing a decline of 27% over last year and just 4% lower than budgeted EBITDA of $2.6M. Net loss for the year was $669k compared to $128k surplus previously, but a free cashflow surplus amounting to $2.1M was achieved.
The following are highlights of the performance of various sections in FY2020:
1. Membership Fees
• Subscription Fees (main source of revenue for the Club): Subscription revenues totaled $6.3M, a $1.23M decline compared to FY2019. This was due to the subscription waiver of two months given to members in the months of April and May 2020.
• Entrance & Conversion Fees:
Total revenue collected from entrance and conversion fees was $281k compared to $302k in 2019. This represented a $20k or 7% decline over FY2019.
• Transfer Fees:
A total of 151 membership transfers to third parties were transacted in FY2020. This represented a reduction of 6 cases compared to the previous year and thus resulting in a $43k reduction in transfer fees collected.
2. Rental Income
Rental Income was badly affected by the pandemic. Rental income declined by 52% to $405k.
Lower rental income was due to the mandatory four months rental relief offered to the Tenants. However, it was partially offset by the $48k cash grant received from the authorities to cover the decline in rents and also from property tax waiver amounting to $490k.
3. Interest Income
Due to the ongoing land lease renewal discussion with the authorities, the Club needs to maintain adequate cash reserves in case of any lease top-up. Therefore, surplus funds from operation during the financial year has been channeled into short term Fixed
Deposits instead of investing in Bonds. Due to the lower interest rates of the Fixed Deposits, total interest income declined by 4% from $459k to $441k. However, interest received from the existing Bond portfolio increased by $6k or 2% to $276k and now makes up 63% of total interest income. Fixed Deposit interest income declined by $25k or 13% versus FY2019’s $188k.
4. Lifestyle & Flex
Lifestyle & Flex surplus dropped by 12% from $166k to $147k. Main reason for the reduction was due to the Club’s closure for two and a half months and waiver of section fees during circuit breaker.
5. Food & Beverage (F&B) Operation
F&B sales were lower than last year by $1M or 25% given the closure of the outlets during the lockdown and reduced seating capacity to comply with safe distancing measures and safe management measures. Despite lower sales, F&B net deficit declined by $9k or 6% over FY2019 to $143k. The improved performance was attributed to prudent cost cutting measures plus Job Support
Scheme (JSS) credit provided by the authorities. Operating cost overall was lower than FY2019 by $738k or 25%.
The above numbers included the contribution from Mingle@Amber, a new addition to the Club’s F&B list of outlets. The Club’s Arrival Pavilion was renovated in 2019 and Mingle@Amber officially opened for business on 1st February 2020. Mingle has been popular amongst members and managed to achieve a respectable sales of $154k for the year despite the Club’s two and a half months closure.
6. Sports & Games
Sports & Games registered an increase in net deficit from $28k in FY2019 to $230k in FY2020. This was mainly due to higher deficit from the Swimming section where revenue fell by $731k or 53% partially offset by a decline in operating cost of 28% to $356k.
The swimming programme was disrupted as safe distancing measures and safe management measures limit the training sessions. Due to the reduced training sessions, the Club was only billing participants partially for training fees for Pre-competition and Competitive C2 squad. Other revenue contributors such as private coaching sessions, stroke clinics and water baby classes had also been suspended.
Revenues:
Subscriptions Transfer Fee Net Income fr Fruit Machine Interest Income Rental Income Entrance Fee Others 6,250,896 703,500
664,590 440,852 405,538 281,300 315,446 7,482,275 747,000
964,044 459,304 840,786 301,600 463,086 -1,231,379 -43,500
-299,454 -18,452 -435,248 -20,300 -147,640 -16.5 -5.8
-31.1 -4.0 -51.8 -6.7 -31.9
Total Revenues FY2020 FY2019 Variance $
9,062,122 11,258,095 -2,195,973 -19.5
Activities:
Lifestyle & Flex 146,684 166,298 -19,614 -11.8 Recreation Room -13,407 -14,396 989 -6.9 Food & Beverage -142,578 -151,650 9,072 -6.0 Sports & Games -229,800 -28,891 -200,909 N.M
Surplus after Activities 8,823,021 11,229,456 -2,406,435 -21.4 Less: Operating Exp
Administration 3,355,170 4,266,650 -911,480 -21.4 Club Premises 2,973,572 3,565,579 -592,007 -16.6 Finance Cost (FRS116) 8,861 9,180 -319 0.0
EBITDA 2,485,418 3,388,047 -902,629 -26.6
FINANCE COMMITTEE
OVERVIEW OF FINANCIAL PERFORMANCE
FY2020 FY2019 Variance $
Depreciation -3,347,996 -3,290,540 -57,456 1.7 Taxation -134,961 -195,090 60,129 -30.8
Net Deficit for the Year -997,539 -97,583 -899,956 N.M
Net fair value gain on Equity instruments 328,408 225,415 102,993 45.7
Total Comprehensive Loss for the Year -669,131 127,832 -796,963 N.M Free Cash Flow 2,155,566 2,408,993 -253,427 -10.5
7. Fruit Machines
Fruit machines operation registered a net surplus $665k, a reduction of $299k or 31% from $964k in FY2019. The lower net surplus was attributed to the three months closure of Joy Luck Cove and also additional regulations introduced by Gambling
Regulatory Unit on safe distancing measures and safe management measures.
8. Administrative Operating Expenses
Administrative operating expenditure declined by 21% or $911k from a total of $4.27M to $3.36M. This reduction was mainly due to cost cutting measures taken by the Club on the following: a) Freezing all staff salary and bonuses. b) Cancellation of staff functions such as birthday celebrations and annual Staff Dinner and Dance. c) Cancellation of events to comply with safe distancing measures and safe management measures. d) Government grants such as Job Support Scheme, Foreign Worker Support as well as waiver of Foreign Worker Levy.
9. Club Premises Expenses
Club premises expenditure declined by 17% or $592k to $2.97M over FY2019. This was mainly due to waiver of Property Tax by government due to COVID-19 pandemic.
LOOKING AHEAD
The year 2021 would be another challenging year for the Club financially. With safe distancing measures and safe management measures in place, F&B outlets and other programmes will be operating below optimal capacity. Notwithstanding, the Club will continue to be vigilant and prudent in managing its financials. With a current reserve in excess of $27 million, we are in a good position to weather this storm and emerge stronger and healthier than before.
I would like to express my gratitude to my fellow members of the Management Committee and the Finance Committee and not forgetting the staff of Chinese Swimming Club for their invaluable support and contributions during this term of office.
