I have recently taken over the position of Treasurer of the National Capital Freenet. I am delighted to have the opportunity to work with such an interesting and dynamic organization and to be part of the team that tries to redefine its future while making sure it also hangs on to its past roots.

The financial statements supplied by KPMG, our auditors, are attached to the notice page on the previous screen.

Compared to last year, Freenet is not involved in any large government sponsored projects as we have been for the last few years. This means that revenues are down quite considerably, but on the other hand so are our project costs.

On an operational basis, our donation revenues are up. The trend is that these contributions are starting to spread more evenly across the year, which makes it easier to manage the organization from a cash flow point of view. On the other hand expenses are also up, so the deficit for 2004 has widened slightly from the one presented in 2003. This is also reflected in the fact that we have more cash going out than is presently coming in, shown in both the cash flow statement as well as the decreased amount of cash on the balance sheet.

Freenet has to keep on investing in equipment and software so that its services remain the best they possibly can be to serve our membership. That also means that we have to eliminate the deficits, as the organization continues to grow into the new Internet and email environment of the next five years. So it is clear that Freenet faces some challenges in the next twelve months, and in fact for the next few years. The messages from the President and the Executive Director describe some of the ideas that we are pursuing to ensure that Freenet stays vibrant, meaningful and of course financially viable.

I look forward to helping Freenet grow over the next several years.

Mike Fletcher

Treasurer