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Australian Marketing Institute draws up ‘critical’ measures amid growing financial peril

The cash-strapped Australian Marketing Institute (AMI) has been warned that a failure to hit a series of “critical” business targets will throw “material uncertainty” over its future after it reported a loss of almost $170,000 in the 2016 financial year.

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An independent auditor’s report said “significant doubt” will hang over the AMI’s ability “to remain a going concern” if its business strategy is not successful.

Key targets over the next nine months include growing membership income by 20% and slashing costs by 12%.

But neither will be easy, with the need to increase income from members particularly challenging. The magnitude of the task was illustrated by figures which showed membership subscription fees in 2016 fell $157,000 to $928,00.

Details of the AMI’s perilous financial position emerged in its annual report which revealed a loss of $168,186 in the 12 months to June 30 against a surplus of almost $150,000 in 2015. It also reported a net asset “deficiency” of $718,575 – worse than the $550,00 last year.

While revenue held steady at $1.93m, expenses soared $315,000 to almost $2.1m, largely the result of a sharp increase in at item labelled “employee benefit expense” which climbed from $435,177 to $632,540.

Administration and “other expenses” increased from $280,000 to $324,000 while contractor and consultants fees rose more than $50,000 to $131,568.

More positively for the marketing body, revenue from functions and events increased from $834,000 to $969,000 which partially offset the decline in subscriptions.

The annual report spells out the need for the AMI to turn its finances around with the directors “taking steps to increase the cash flow of the company” and drawing up what effectively amounts to a rescue plan.

“The directors have forecast a budgeted surplus and positive cash flows for the year ending June 30, 2017, and are confident of the ability of the company to achieve these forecasts,” auditor Mazars wrote in the report. “However, these forecasts contain critical assumptions and performance objectives which need to be achieved in order for the company to continue as a going concern.”

Targets for the year include increasing membership income of 20% and reducing costs by 12%. It is also dependent on lenders “continuing the current financial support and undertakings”.

Mazars warned that unless cash flow improved and targets hit, then a “material uncertainty exists which may cast significant doubt about the company’s ability to continue as a going concern”.

“Therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business,” the auditor concluded.

AMI chief executive Lee Tonito has been approached for comment.

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