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Annual Performance Statement 2019-20

Introductory statement

We, the Board of Directors of the AAF Company, as the accountable authority of the Trust Funds present the Company’s Annual Performance Statement 2019-20. The reporting of the actual performance of the Company, in the annual report against the planned performance information outlined in its Corporate Plan is an important part of the Commonwealth’s performance framework, established under the PGPA Act 2013.

Purpose

The purpose outlined in the AAF Company Corporate Plan 2019-20 is to provide amenity and related services to Army members and their families not normally provided at Departmental level. It is achieved through amenity grants, loans, affordable holiday accommodations, and sound financial investment for self sustainment.

Results

Amenity related services

Performance criterion

Provide financial assistance through a loan or grant to fund unit amenity initiatives not normally provided at Departmental level.

Criterion source

Corporate Plan 2019-20. Activity 1

Results against performance criterion

1 During the reporting period Army Amenities Fund sponsored 18 grant bids from units totalling $97,026 plus a late payment of $6,273 from last financial year. The grants ranged from $344 up to $26,520 and overall were well within available funds. The Grants Committee, formed in July 2018, has promoted the availability of amenity funding and resulted in an increase in grant applications.

2 For this reporting period funds have been used to support sponsor the amenity costs for sporting and adventure training activities, purchase of new social club equipment and sponsorship support for social events attended by Army members, their families and Defence communities.

Holiday facilities

Performance criterion

Provide below market price quality accommodation for Army members and eligible persons through Trust-owned holiday properties.

Criterion source

Corporate Plan 2019-20. Activity 2

Results against performance criterion

  1. Holiday facilities profile met its objective to provide amenities primarily used by current and former Army members. As at 30 June 2020 the overall land and buildings value reported a total book value of $5,475,000. ($5,414,875 in 2019)
  2. Tariff rates were reviewed and found to be under the 75% commercial rate criteria. The Board agreed to retain the same rates for 2019-20 reporting period.
  3. Overall the property portfolio did not achieve an annual cash breakeven or better outcome. The seven properties received rental income of $144,176. On the expense side, the largest expense is cleaning and linen hire. Total spending on this category was $30,125. Followed by the body corporate levies in the amount of $23,895 and repairs and maintenance in the amount $14,837. The property management fee for Coogee and Docklands apartments was reported in the amount of $13,417 in total. The Goolwa property manager’s salary plus other employee benefits was reported at $29,957. A total cost of $25,973 was spent for the utilities bills amongst the properties.
  4. Occupancy levels during the reporting period have underachieved their targets. Coogee’s occupancy rate at 37%, Goolwa at 40% and Docklands at 45%. The Army occupancy level continues to be higher for Coogee at 51% and Docklands at 69% compared to other Services or eligible persons. Goolwa’s Army occupancy level remained low with only 17% during this reporting period.
  5. COVID-19 has greatly affected the occupancy rates across the three location properties with the States impose travel restrictions and quarantine guidelines. Due to isolation requirements in the Melbourne VIC and Sydney NSW area both Coogee and Docklands have experienced a severe decrease in occupancy in the second half of this reporting period

Location

Target occupancy %

Actual occupancy %

Army occupancy %

FY 18-19

FY 19-20

FY 18/19

FY 19-20

Coogee

65

51

37

56

51

Goolwa

60

51

40

24

17

Docklands

80

61

45

71

69

Financial Investment

Performance criterion

Conduct sound financial investment strategies that ensures sufficient capital is available to meet the operational goals and the Trusts remain self-sustaining.

Criterion source

Corporate Plan 2018-19. Activity 3

Results against performance criterion

1..The Company’s (as trustee for the Army Amenity Funds) investment portfolio currently totals $8,745,595 compared to $8,905,860 in 2018-19. Overall, the operational goals have been met and income generated from the investment portfolio will ensure available cash for future years of operation.

a) The investment strategy approach is to split the investment portfolio between 70 per cent growth and 30 per cent defensive components.

b) The Administrative component of the investment portfolio is to generate sufficient income to fund operating activities. A total of $300,000 was withdrawn for operations in FY 2019-20. This amount has been transferred from growth portfolio to cover future operational activities.

2..The Company’s (as trustee for the Messes Trust Fund) term deposit provided an interest return of $11,645 (last FY $16,970) at this reporting period. The total financial asset is $719,132 (last FY $701,856) as at 30 June 2020.

Analysis of performance against purpose

Holiday facilities recorded an operational loss and, as such, a negative return on accommodation investment. With gratitude, a 9 per cent land appreciation was reported for the Goolwa’s properties. In spite of the land appreciation, it was offset by building depreciation as a whole. With facilities improvement and targeted marketing, it is anticipated operational outcomes for holiday facilities will move towards a positive outcome.

The Company’s financial investment portfolio experienced downward pressure in the second half of the financial year due to pessimistic economic outlook effects. COVID-19 and the uncertainty pose a direct impact to the Company’s operations. Overall a negative return for the Company’s property and investment portfolio for the reporting period.

The Messes Trust Fund was reported to provide a grant support to a mess barrack in the amount of $898 during this reporting period. The fund is used to establish a Wi-Fi mesh throughout the mess.

Other contributing factors that have enabled the performance of the Company to achieve its purpose as set out in its Corporate Plan 2019-20 are:

  • strategic direction and decisions of the Board, and the oversight of the Audit Committee;
  • the delivery of its activities through the secretariat’s management of operations ensured;
  • self-sustainment achieved through investment portfolio continuing to generate growth to cover annual operational costs with reserves for the future needs of the Trusts;
  • the environment that the Company as the trustee operates in has not experienced any changes that would significantly impact on operations; and
  • the ability to mitigate any risk during the reporting period.

Conclusion

The Directors are responsible under the PGPA Act 2013 for the preparation and content of the report of operations in accordance with the Public Governance, Performance and Accountability (Financial Reporting) Rule 2015. This report of operations is made in accordance with a resolution of the Directors and is signed for and on behalf of the Directors.

AAF Company Director's Report Signatures W.B. Stothart, DSC, AM, CSC, Brigabier, Chair of the AAF Company, 28 August 2020. S. Trim, Lieutenant Colonel, Director, September 2020.
AAF Company Director's Report Signatures