October 12, 2005 – Overview: Each business quarter, a document will be prepared that summarizes our performance against the initial action plan that we made public in May 2005. Publication of this particular report was delayed to ensure all future reports coincide with the end of each business quarter. Readers will note that this document contains a Performance Management Scorecard that measures our progress against those May objectives. The scorecard will also show that targets in support of our organizational strategies are being met. After the first two quarters, all major initiatives are proceeding on schedule and I am forecasting that we will achieve 80% of the targets established in May.
Audited financial statements for 2004/05 show a deficit of $43,707 on revenues of $2,697,761 and expenses of $2,741,468. Of those dollars, 61% were allocated to High Performance and Development Programs, 25% to Management Expenses, and 14% to other business activities. Forecasts for the remaining two quarters show revenues remaining flat with 68% of our $2.8m in total operating expenses being directed towards High Performance and Development programs. While this does signify an improvement over High Performance and Development spending from last year, it still falls short of the 75% target set in May. Additional investment in capacity-building is the main reason for this discrepancy.
Although elements of uncertainty persist in our current business and political climate, I continue to anticipate healthy financial growth in the years ahead. Discussions with Corporate Canada have been very positive and our standing with Sport Canada has improved greatly. We were recently awarded $686,000 in “Excellence Funding” from Sport Canada for investment in High Performance Programs and Development in 2005/06. This money is over and above our current core funding level of $1.132m and will be extremely beneficial in a post-Olympic year. We will use these new dollars to modernize our national team operations, establish our national team coaching structure, and invest in sports science and national team equipment. On the corporate side, our current agreement with Tim Hortons expires at the end of December 2005. We are currently in the negotiation stage and will be in a position to make a public announcement by the end of this month on the status of our partnership. On other fronts, we have explored additional opportunities in the automotive, agricultural, banking, consumer goods, health & fitness, and transportation sectors. Contract talks are in the works with a number of companies and we should be in a position to make a number of announcements in November.
OTHER TRENDS AND ISSUES
Overall, relations with the provinces and our membership continue to improve. On October 26-27th we will be holding a PSO Summit in Ottawa to discuss areas of concern with our provincial partners. Key areas of focus to include: insurance costs, risk management, BMX integration, grassroots cycling initiatives, domestic program development and marketing policies and practices. We acknowledge that we have a lot to do on the Domestic Program Development side. We are well behind other sports in the development of coaches and officials at the local, regional and national levels, and must make significant improvements in these areas in 2006. We also need to reflect upon our current strategy of bringing large groups of riders to World Championship events for development purposes.
CCA OBJECTIVES & PERFORMANCE MANAGEMENT SCORECARD
As mentioned previously, my first quarterly report outlined strategies and plans for this fiscal year. These were developed in support of the CCA’s overall objectives and mandate, and based on my assessment of the financial, social, political and technological environment at the time. Below is an assessment of our progress to date.
Strategic Imperative # 1: Invest in Capacity Building and Organizational Renewal Initiative Targets Performance Against Targets
“¢ Organize operations around functional business lines
“¢ Implement new structure by end of Q2
“¢ Initiative achieved.
“¢ Hire senior level managers in Finance, Marketing, High Performance and Domestic Program Development
“¢ Complete capacity-building by July 2005
“¢ Initiative achieved.
“¢ Redesign web site to improve image and communication with public.
“¢ Complete by July 2005
“¢ A firm has been hired to design and build the site, but completion of the project has been delayed until November 2005. Strategic Imperative #2: Enhance Financial Performance and Establish Internal Controls Initiative Targets Performance Against Targets
“¢ Improve financial reporting practices
“¢ Complete 2004/05 audit by July 2005
“¢ Initiative achieved.
“¢ Implement sound internal controls in Finance Department
“¢ Complete by July 2005
“¢ Initiative achieved. Consulting and Audit Canada audit recommendations addressed, action plan prepared and accepted by Sport Canada.
“¢ Launch limited merchandising program
“¢ Sell 5,000 National Team jerseys in 2005 fiscal year
“¢ Progress slower than expected; sold 1,194 jerseys to date. Achieving target appears unlikely, particularly since the jersey is being discounted at the retail level (e.g. see Sport 4).
“¢ Grow revenues in 2005 fiscal year
“¢ Achieve $3.1m in annual revenues and 25% Year-Over-Year (YOY) growth by year end.
“¢ Adjusted forecast shows flat revenue growth for this year. Conservative estimate is nearer $2.7m, unless several deals fall into place during Q3.
Strategic Imperative #3: Enhance Relationships with Key Stakeholders Initiative Targets Performance Against Targets
“¢ Improve relationships with PSOs
“¢ Complete Memorandum of Understanding (MOU) by year-end
“¢ On schedule. Final details to be worked out at PSO Summit in late October 2005.
“¢ Reduce Insurance costs for our membership
“¢ Complete Risk Management Plan by end of calendar year.
“¢ On schedule. Have secured a Risk Management Specialist from British Columbia to work with the data provided by the PSOs.
“¢ Reallocate budget dollars to ensure better support for our athletes, coaches and development
“¢ Invest 75% of budget in High Performance and Athlete Development.
“¢ Slightly behind the 75% target. Currently forecasting a figure of 68% for this fiscal year.
Strategic Imperative #4: Improve CCA Marketing Initiative Targets Performance Against Targets
“¢ Invest more money and resources into marketing and communications
“¢ Invest 20% of our administrative funds in marketing and communications-related activities
“¢ On schedule. 25% of our administrative funds will be spent in these areas in 2005/06.
“¢ Sign a television contract to increase visibility in Canada
“¢ Sign one property to a TV contract in 2005
“¢ On schedule. While our Track and BMX National Championships were televised, we have yet to secure a long-term deal; however, we have an October meeting scheduled with one of the nation’s leading sports networks to discuss plans up to Beijing.
“¢ Develop fundraising strategy and plan
“¢ Organize fundraisers in our major cities “¢ On schedule. The CCA will be participating in a 6-city fundraising tour as part of the Epcor Road to Champions initiative in Oct./Nov. 2005.
Strategic Imperative #4: Improve Development Initiatives Initiative Targets Performance Against Targets
“¢ Complete Long-Term Athlete Development Model (LTAD)
“¢ Ensure completion by late 2006 and explain how its success will be defined
“¢ On schedule. LTAD sessions have been completed and results to be presented to the provinces at PSO Summit.
Launch Sprockids’ National Introduction to Cycling Program
“¢ Register 1,000 children in 2005/06
“¢ Behind schedule; however, we have trained 180 instructors and will be in a great position to meet the target early next year.
From an operational perspective, we have accomplished a great deal over the past three months. Our business units are set, key resources hired, and a national team coaching structure is nearly in place. Moreover, investment in sports science will occur this autumn and we will continue to hold talks with potential partners from Corporate Canada for the year ahead. In spite of this progress, I acknowledge there are still some areas where marked improvements are needed. Our grassroots programs have not been very successful to date and confusion surrounding Carding Criteria and National Team Selection was entirely avoidable. As a result, our program committee and National Team Coaches’ sessions in October/November will be very important for us as we set the tone for next year.
In the next three months, focus will be placed on:
“¢ Completing our strategic plan
“¢ Finalizing our National Team Coaching Structure with the addition of a National BMX Coach
“¢ Addressing gaps in the development of new coaches and commissaires
“¢ Signing sponsors at the National Partner and National Supplier levels “¢ Ensuring the successful completion of our 6-city fundraising tour “¢ Meeting with USA Cycling to harmonize national calendars for 2006 and beyond While there is a lot of work to be accomplished this quarter, the steps we took last summer have put us in a good position to generate positive results in the months ahead. My January 2006 report will capture this in greater detail. Regards, Steve Lacelle Chief Operating Officer October 2005 – 4