Welcome to today’s Sydney Swans Limited’s Annual General Meeting.

In attendance are the Club’s Auditor Jeff Abela from BDO Kendalls, and our legal counsel John Mulally from Mulally and Partners.

I now declare the Annual General Meeting open.

I am advised that Mr Tim Laing is here as the appointed proxy of the AFL-which is classified as the transitional member (basically the only voting member), and therefore we have a quorum.

Can I also advise you that in accordance with Clause 28.1 of the Constitution Andrew McMaster retires as a director. The Board has resolved in accordance with Clause 28.5 to unanimously re-appoint Andrew for a further term of 3 years. His appointment is to take effect from the date of this meeting.

I’m also delighted to advise that Andrew has been appointed by the Board as Deputy Chairman.

I will now provide you with an overview of 2011 and events that have occurred since our balance date:

On Monday December 12, 2011, we announced a profit of $114,956 for the 2011 financial year.

This was achieved on a turnover of $36.2m.

Which I think highlights that this really is a very low margin business, and a low margin industry overall.

The result was nevertheless an encouraging one, after several years of losses.

It’s worth highlighting, I think, that the result was achieved after taking to account non-cash depreciation of $435,000. Mainly in respect of the Club’s leasehold assets at the Sydney Cricket Ground.

The Board continues to hold the view that for an operation such as ours the cash profit, that is to say the figure after non cash expenses are written back, is a more important result than the statutory one. The cash profit for the year was $550k.

I think it’s also important to understand that the result takes into account the first full year’s operation of the QBE Sydney Swans Academy.

The improved financial result was largely due to an increase in revenue of approximately 10%. This was mainly driven by double-digit growth in revenue from agreements we have in place with a range of corporate partners.
 
We are delighted with the number of significant organisations that have entered into long term commercial agreements with the Club.
 
This was exemplified by the long-term extension of the agreements with our major partners, QBE and Citi, and the entering into a long-term agreement with Volkswagen. These contacts constitute high quality earnings by any standards.

Through tailoring packages that are genuinely focused on achieving potential clients’ individual objectives, we are optimistic that we can continue to attract major organisations seeking national exposure.
 
In short, the corporate marketplace continues to be challenging, and there is a greater need than ever before to be able to demonstrate measurable benefits to potential partners.
 
Membership numbers and membership revenue for 2011 were roughly in line with 2010 levels. The churn rate of members leaving has been significantly reduced which is very pleasing. Our focus is to reduce this further. It is hard going; there is no doubt about that. There is definitely a different mindset to buying a season’s pass i.e. membership, in the Sydney market compared to traditional AFL markets such as Melbourne/Adelaide/Perth.

With this in mind we have focussed on the development and promotion of ‘sampling’ categories such as the Red Zone, 3-Match Membership. Such a program allows people to experience football and Swans membership at a very accessible entry-level price. This category has grown in 2011 and we will continue to promote it and use it as a migration path into an 11-match, reserved-seat membership.

The Club’s target over the next five years is to build our Membership to 40,000. Based on our experience this will be very difficult to achieve and we will therefore need to continue to be highly innovative. The key word here is innovative. Accordingly, we continue to monitor closely how major sporting clubs around the world market to, and grow, their fan bases.

Match day attendances in Sydney were disappointing when compared to our forecasts. However, match days and the weeks and days immediately prior to most matches were significantly impacted by one of Sydney’s wettest ever winters. Given games can generally be watched live on television, the presence or threat of rain is a deciding factor in many Sydney people’s decision to purchase or attend.

A wildcard in the membership and match day attendances forecasts for 2012 is the recently announced redevelopment of the Noble, Bradman, and Messenger Stands at the SCG. The capacity of the SCG has been reduced from say 45k seats to 34k, and of the remaining seats, the Club will only have 4,000 seats available for casual sales.

We think that we have responded well to the challenges at short notice of the relocation of 7,467 members from the affected areas primarily into the Victor Trumper stand. We have also worked hard to coordinate timely high quality communication with all affected stakeholders, including sponsors and corporate customers. We are hopeful that this process has ensured that the quality of our relationships with long standing members have been maintained and even improved.

Once the Redevelopment is completed we believe the new Pavilion will offer our members a new quality of facilities and comfort. We also accept that this is a necessary second stage of a three stage development that will eventually provide to our members and fans a world class stadium in which to watch the Swans play.

An activity that is central to all parts of our organisation is our Communications Department.

Its role encompasses providing information to media outlets through to direct contact with members and supporters.

It has undergone rapid changes in recent years in line with the dramatic way information is disseminated.

The club’s website has been significantly upgraded and is now one of the most visited amongst AFL clubs.

There has been strong growth in social media. Today we have nearly 80,000 Facebook likes and 15,000 Twitter followers.

During the year SwansTV experienced huge growth with nearly 500,000 views and is now an integral part of communicating with our fans.

Our challenge is to find the best ways of commercialising, or if you like, monetising these relationships.

I won’t comment, in any significant detail, on the reason our organisation exists - i.e. to field a team in the AFL. What I will say is that in football terms we consider 2011 as a pretty satisfactory year. Our ladder position is frankly irrelevant. The key question is whether the team was/is genuinely building a foundation for a tilt at the Premiership within the next few years. We’ll only know the answer to that at the end of season 2012 and beyond.

Certainly the extension of Senior Coach John Longmire’s contract to 2014 is a statement from the Board that we’re very satisfied with our progress.

With the introduction of the QBE Sydney Swans Academy, let me just say that under Dennis and Paul Roos’ leadership, the progress has been extraordinary.

We are cognisant of the environment in which we operate. These challenges include a fiercely competitive sporting market in Sydney, a brutally competitive AFL competition, and general economic factors which continue to challenge household and business spending.

2012 will see a new entrant to the already crowded Sydney marketplace with the emergence of GWS. On balance we see this as good for the code and therefore by extension good for us. We have been totally supportive of the AFL’s plans to grow its competition. And continue to be so. It has however, unquestionably put pressure on us to allocate scarce resources to maintain the supporter bases we have built up in many of the Sydney’s Western Suburbs and the Hills District, as well as in traditional Swans strongholds such as the Riverina, and the ACT. In any event we know better than most the challenges GWS faces, and we wish well all those associated with charting the club’s fortunes.

As we all know the AFL is a highly regulated code, indeed industry, in many ways. Accordingly those clubs which are financially strong are becoming progressively more focussed on investing in areas of their businesses that are not regulated. This includes increased investment in facilities, and equipment, and conditioning and medical and coaching support staff, and fitness programs such as spending time in high altitude locations overseas. Our challenge is to stay competitive in these areas without imperilling our financial position.

Let me emphasise that we are not prepared to use long term, interest bearing debt to fund any of the capital or operational costs associated with implementing any of these initiatives. For an organisation with high fixed costs, and often highly variable revenue this is a recipe for financial disaster in difficult times.

The reason that the Sydney Swans Foundation was formed was to provide capital to fund facilities and programs that the Club could not do from its own resources. It has been a vital partner in many critical football related activities over the past 6 years. I commend your involvement in it.

In a similar vein, can I say that given how fully occupied all members of our management team are, and our very limited access to capital, the prospects of us identifying, funding, and managing new businesses with a view to broadening our revenue base—are virtually non-existent.

When it’s all boiled down, our supporters - the people who effectively own this organisation - want to be part of a successful football club. Our challenge, therefore, is to continue to grow our revenue in a manner which enables us to invest, wisely, and innovatively, in our own football activities - across the board. Thus remaining competitive.

Long term, the most assured way of achieving all objectives will be by the continued strengthening of the Swans’ brand. The emphasis remains on increasing our relevance to a growing pool of die-hard supporters. Basically “More people, more engaged.” This ultimately is the test of a sporting brand. And the best buffer against economic and on-field performance downturns.

On behalf of the Board I want to acknowledge the leadership of CEO Andrew Ireland across all segments of our operation, and to all members of our management team for their unwavering commitment to the cause.