What do you know about North's?

We have spent significant time examining North's financial reports. We've had correspondence from North's in relation to some of our concerns, however many remain unanswered.

 

Here are some key points. You can read our due diligence document by clicking on the link below.

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To cut a long story short, we don't believe North's is as financially strong as the community is led to believe.

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• North’s presently operates around 526 poker machines across four clubs as well as Keno and TAB facilities, with annual gambling profits of around $33 million

• North’s properties are all mortgaged against a sizeable lending facility which currently stands at around $22.3 million. North’s also suffers a working capital deficiency of $7.9 million, in other words its current liabilities exceed its current assets by this amount

• With such a large amount of debt, North’s is highly exposed to rapidly rising interest rates which will impact its ability to service debts

• North’s profit margins are slim, averaging just $851,000 for the past 11 years on average annual revenues of over $46 million

• Since 2011 North’s has held an average cash balance of just $2.7 million 

• The majority (circa 75%) of North’s asset value comprises distressed asset acquisitions and upward land revaluations

• North’s debt to equity ratio stands between 40-50% which we consider high for a non-profit organisation

• We are concerned about North’s heavy reliance on gambling revenue for its financial viability. Should these revenues fall by just 5-10% we believe the club would be facing insolvency or looking to liquidate assets, including land. This is perhaps why North’s has expressed a strategic desire to diversify away from its reliance on gaming, meanwhile the Bangalow Bowlo is apparently not a profitable enterprise so we can’t see how it will assist in achieving this aim

• North’s seems to hold little regard for the social impact on increased gambling in Bangalow and has not weighed this up against any financial benefit to the Bowlo. North's says that "gaming does however remain a key part of a sustainable community club model"

• North’s was recently named in a Sydney Morning Herald article as a club suspected by NSW Liquor and Gaming of being targeted by money laundering and organised crime through its poker machines