President's Message - High Level Financial Update
Fellow Craigleith Members,
As forewarned in my message a few days ago, here's the second instalment of my end of season update. It focuses on the Club's finances and what you can expect in the billings for annual dues, capital levies etc. that will be sent to members by email in the first or second week of July. A more detailed discussion on this subject will be included in the treasurer's report forming part of the annual report that's coming to the Club's website soon. The audited financial statements will be included in the material for the annual meeting, which we're currently planning to hold at the Club and online on Saturday 21 October 2023, in combination with a social event and an introduction to the Depot.
- The Club remains in a strong financial position, with no debt and about $5,000,000 cash on hand at year end. Based on unaudited statements, we achieved the operating surplus of about $815,000 that we had budgeted to cover the Club’s maintenance capital expenses. The operating surplus was achieved through revenues and expenses that both exceeded budget due to increased activity at the Club.
- The board has approved the operating budget for the new fiscal year (ending April 2024). This operating budget plans for an 8% increase in annual member dues for the upcoming year, in line with previous forecasts communicated to members. The Club continues to experience considerable inflationary pressure on expenses and the finance committee would have preferred to have a higher operating surplus than is currently projected by the approved budget, but it felt it important to maintain the annual dues increase within the 8% that was previously communicated.
- The board's approval of this year's capital budget and review of long term capital planning have clearly shown us the need to begin increasing the annual capital levy, which has not risen for five years. Although Project Generations is part of the Club's capital expenditures, the biggest factor in this decision is planning for future lift replacements. The lower use that our lifts get compared to a public facility generally allows for a longer lifespan, but we must account for the risk that an unexpected failure would lead to extended downtime as parts become scarcer over the years. Accordingly, we need to plan for mid-life upgrades, particularly of electronics, as well as for eventual replacement. We expect to replace the Little John chair and upgrade the National and V-Hill chairs in the coming years.
- There has been very significant inflation in lift costs since our current lifts were installed, and the cost of some of those lifts was funded through the proceeds of sales of Club land that will not recur. So, in order to build reserves for the eventual replacement of our high speed lifts and limit the need for large assessments at the time, we will increase the annual capital levy to $250 for first members and $125 for other members this year. We will also apply the capital levy to fee paying social and inactive members, who we believe share an interest in and responsibility for the Club's long term assets. We expect that further increases may be appropriate after more review and planning, but we will provide more information in due course. To provide a comparison, the annual capital levy at Georgian Peaks is as much as $860, in addition to their annual fees that are significantly higher than Craigleith’s.
- A key reason that we met our operating budget was that we had more members than we projected and our fee revenue was therefore higher. Those who have read past annual reports or heard me talk on the subject of member count may recall that it's not possible to exactly project how many members we'll have in any given year. Last year we projected being close to our "soft cap" of 3100 paid member red badge holders, but ended up with 3133 in our year end count. It is easy to calculate the financial benefit from these extra members, but harder to calculate their effect on the capacity of our facilities. At this time, our conversion of annual members to permanent members ahead of the upcoming ski season is slightly below expectations, but we haven't yet heard from some annual members. So, our numbers may come back below 3100 without any significant action by the Club. In any event, the board hasn't made a decision to actively increase the number of members. We will continue to watch and manage this diligently and update you again in due course.
I'll sign off for now with a shot of our snowmaking pond a few weeks ago. It's been drained to allow for one of our major offseason projects, namely the expansion of the snowmaking building and the rerouting of some snowmaking supply pipes that run out from it. Can you see the heron?
Have a great summer, watch for more news, and mark your calendars for the annual meeting on 21 October!
Comments are welcome at [email protected].
Cheers,
James Mathers
President
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