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Board Report: February 2016

Hi Everyone,

As the season comes to a close a big thanks to everyone for all their work out there this year - it has been a busy one and the warm summer weather continues to keep our beaches well used!

The February Board meeting was our annual Planning Workshop held in Wellington on Friday 19th and Saturday 20th February. This was an interesting weekend as it co-incided with the Edinburgh Military Tattoo being in town so there was no accommodation available in the lower North Island and our out-of-town Board members had to be billeted out for their Friday night stay!!  

From a financial perspective the results for the eight months to 29th February are a Net Operating Surplus of $1.223 million, which is $887,500 ahead of budget.  This positive variance is all due to timing variations and is not indicative of the full year situation.  The full explanation of the variances is in the Dashboard report. 

In the latest forecast the full year Net Operating Surplus has slipped back to $16k (i.e. at a breakeven level).  We are now $334k less than budget, driven by the NZLGB grant being $200,000 less than budgeted, a short term sponsorship contract of $100,000 now being renewed and two gaming trust grants being $160,000 less than budgeted,  with a few wins along the way offsetting this.  With depreciation being close to $0.5m this year a breakeven Net Operating Surplus result still leaves (after paying for capital expenditure) with a good level of positive cashflow for the year and in line with last year, however we will need to closely monitor the run-out to the end of the year as there is a lot less 'fat' left to deal with any unexpected events. 

The targets set for this year were deliberately very aggressive, knowing that we would be starting to see the loss of State Insurance sponsorship income, so the Board is comfortable with the likely outcome for the year.

February was the first time the Board had met since December, and our agenda was dedicated solely to planning - thinking about our strategic direction and reviewing the 2016/17 Strategic Plan and budget prepared by the Management team. In a break from tradition we took two days for this meeting, which also allowed us to include some extra time with staff and some of our volunteers.

In terms of the items of note from the meeting:

  • In terms of the Strategic Plan, there are no radical departures from the path that has been successfully on over the last few years.  There will be a minor update to the presentation format of our priorities to align more with how we presented them in the 2015 Annual Report, but the core activities themselves remain the same, and it is a 'steady as she goes' approach focussed on continuing to deliver to the membership and rebuild the reserves to pre-2010 levels.   The plan document will be available soon on the SLSNZ website and circulated to clubs for any comment or feedback.
  • The top priority activity for 2016/17 is to lock in a replacement revenue for the State Insurance sponsorship.  While there are conversations underway, there is no certainty of being able to confirm a deal before the State Insurance contract ends in June.  As such we have approved two budgets for 2016/17:
    • Plan A - where $500,000 of replacement income is obtained; and
    • Plan B - where it isn't.  This version of the budget requires $500,000 of 'belt tightening' initiatives to be implemented.

      Plan A has a similar Net Operating Surplus to the forecast result for 2015/16, i.e. breakeven - with positive cashflow coming due to continuing high depreciation costs.  Plan B obviously has the same bottom line too, but with a bit of 'pain' along the way in order to achieve that.  The cost-saving initiatives are intended to be short term and focus on areas which have as little external impact as possible, with the intention of re-investing again when the extra income is obtained.
  • As part of the strategy discussions, the Board recommitted to the level of input going into Water Safety NZ - as this is a core plank in the strategy to bring more government funding into the movement.
  • With planning now starting for the 2016 AGM, the process of  Board appointments will soon begin again, so the Board spent quite a bit of time looking ahead a few years and thinking about succession planning for itself.  To give people enough time to build experience for the main leadership roles it's important to be thinking well ahead, and the Governance Sub-committee of the Board will continue to do more work on this to be in a position to give the Board Appointments Panel a good 'steer' when they are brought together in June.
  • Over the course of the two days a wide variety of other topics were covered - including the workplans of the National Sport and Lifesaving committees, the soon to be established SLSNZ Foundation, club health in general, organisation structures, the potential for major 'disruption' to the movement, risk management, health and safety, priorities for the board itself, where the operating environment is heading, the value SLS is providing its stakeholders, the high performance sport programme, and our role in the International Lifesaving Federation.  All were very valuable discussions and fed into the decisions around the strategy.

The next Board meeting will be held in Wellington on Monday 18th April.  So that's it from me - although I will add one reminder - that nominations for Regional Service Awards close on 31st March, and for National Service Awards on 30th June - please take advantage of these opportunities to reward the longstanding contributors to your clubs and the movement.

So until my next update……

Yours in surf,

Geoff Hamilton
Chairman
Surf Life Saving New Zealand