The Society reported a net deficit for the year of $18.4M (2019: $27.1M deficit). Included in the net deficit is a significant one off item of $10.3M fair value adjustment to the St Vincent de Paul Housing properties.
The Society also contributed an additional $1.4M (2019: $0.8M) for the assistance of drought affected farmers over and above the government funding of approximately $7.7M provided by government in FY2019. The Society also provided bushfire assistance of $5.6M from its own funds with an additional $2.6M of bushfire assistance provided with federal government funding. Both drought and bushfire assistance programs will continue in the FY2021 Financial year The Society has been fortunate in the past to build sufficient reserves to be in a strong financial position to sustain this planned deficit in the short-term. As part of the approval of the 2020-21 budget, the Board endorsed the budget as well as the continuing of the strategic initiatives to be progressed including further development of the Retail and Fundraising Strategies, Property Strategy and Support Services review.
COVID-19 impact and measures in place
COVID-19 pandemic is having a significant impact on our revenue streams including fundraising, retail and investments and the Society has implemented a number of strategies to reduce our expenditure during this period including:
- establishing our eligibility for JobKeeper and commencing the rollout of this scheme;
- standing down staﬀ in areas where operations have ceased or been signiﬁcantly reduced;
- ceasing the use of casuals where possible to support the retention of permanent staﬀ;
- implementing a recruitment freeze across the organisation (unless deemed business critical);
- planning for reducing operational expenditure as well as identifying opportunities for increased revenue across each Directorate; and
- reducing excess annual and long service leave.
We are continuously monitoring our financial position with robust and timely forecasting of key financial information to assess and put additional measures in place as appropriate.
Cash and Financial position
The Society is fortunate to be in a sound financial position with net assets at 30 June 2020 of $365M. The main components of this are property assets of $427.4M, also cash assets of $67.8M and strategic and other deposits of $41.3M.
As mentioned above the Society has developed its new three year Strategic Plan commencing 2020. The result of this process will be a three year financial plan which places the people we serve at the centre, surrounded by our mission, vision, values and spirituality thus ensuring the Society’s resources are allocated to priority service delivery areas which have been identified by the Board.
The objective of the Society’s Strategic Reserves are primarily to safeguard against the risk of major unforeseen events, ensuring the long-term sustainability of the Society and its activities to support those most in need. An example in 2019-20 is a pledge of $2.2M in client assistance to Drought affected farmers across the State with spending this year totalling $1.4M with a further $800K allocated for the FY2021 year. Furthermore, these funds are utilised to fund major strategic initiatives presented to the Board, subsequent to review by the Audit and Finance (AF) Committee. The Society’s plan for 2020-21 will be fine tuning and consolidating new ways of working organisational model and continuation of major transformation projects that will further build organisational capability to ultimately support service delivery to clients.
Trends and ratio analysis
Over the last five years, operating revenues have increased on average by 9%. Over the same time operating expenses have increased by 13% on average. In 2019-2020 a significant uplift in expenditure was seen in People in Need and this was due to increased demand as a result of the prolonged drought in rural NSW as well as the devastating bushfires in FY2019.
The ratio of service delivery costs as a percentage of total costs is in line with the 5 year average of around 85%.
The ratio of fundraising and administration costs as a percentage of total costs is in line with the 5 yr. average. It should be noted that FY2019 costs includes $7M in remediation costs incurred for properties transferred to St Vincent de Paul Housing as part of the Social and Affordable Housing (SAHF) project with no further costs expected.
Analysis of results
Sales of goods from Vinnies Centres represent a significant contribution to total revenues at 25% (2019: 29%). As observed in the wider retail sector which our shops operate, there were challenging market conditions including significant COVID-19 restrictions which impacted trading. As a result Centre sales of $57.1M were down on last year by a significant $11.9M (17%).
Government funding increased during the year to $106.7M, representing the largest contribution to total revenues and other income at 46%. The increase was mainly due to the Federal Government Jobkeeper assistance initiative which included funding of approximately $11.4M. This funding assisted by offsetting the loss in rental revenue and along with other cost reduction measures helped maintain delivery of our core services with a higher demand for Society assistance during the COVID-19 pandemic. The Society is fortunate to receive significant funding from the Government, however many of our services are co-funded by the Society, as can be seen by our spending of $150.5M in areas of people in need, homeless and mental health services, disability, capacity building and housing services. As such these shortfalls are sustained by surpluses generated from Vinnies Centres, donations, client contributions and cash reserves.
Donations and appeals contributed 11% to total revenues and other income (2019: 7%). Donations were approximately $9M more than the previous year and is largely due to a targeted Bushfire Appeal as well as major gifts and performance of other appeals including Winter and Christmas. The 2020 CEO Sleepout raised approximately $2.1M for crisis accommodation and specialised services for those experiencing homelessness.
Bequests performed very strongly generating $13.4M (2019: $17.9M) and accounted for 6% (2019: 8%) of total revenues and other income. The Society is very appreciative of these valued gifts which are applied directly as per the instructions of the Estate. Bequests are unpredictable in nature, as such for budget purposes the Society applies a five year historical average with an appropriate growth target.
Investment income which is comprised of interest and dividends and fair value gains investments was down on prior year at $1.8M (2019: $4.6M). The performance of the Strategic and Employee Entitlement Reserves was down on last year including $0.2M of fair value losses ($1.8M gain in FY2019) and lower than budgeted interest rates in the current economic downturn as a result of the COVID-19 pandemic.