June 2019 briefing
At our Board meeting on 27 May, we discussed:
How we are tracking
We received a range of reports on how we're tracking against our targets and budget for 2018–19.
Under our new strategy, we track CHOICE's performance in three key areas: our impact, our online audience and our revenue.
The key way we track our impact is by the number of wins we help to achieve for consumers. On this measure, we've had a really solid year. Several significant pieces of legislation were passed in the final weeks of the last parliament, including laws to require electricity companies to offer better default prices, stronger obligations on financial institutions to make sure their products are fit for consumers, and powers for ASIC to intervene to curb the sale of dangerous financial products.
To help us grow the number of people who regularly visit choice.com.au, we made a number of changes to our editorial teams in 2018. Hopefully you will have gradually seen us publishing a broader range of articles both online and in our magazine. These changes are starting to have an effect, helping us to grow the visitors to our website, which is important to our sustainability.
Our revenue for the year is not as strong as we had hoped but we are expecting to end 2018-19 with modest growth, year on year.
We are forecasting to end the year with a deficit of around $1.8m, which is broadly in line with our budget and the intentional plan behind the deficit. Longer term voting members may recall that we are in the final stages of several years of deep investment in the organisation, which involves using some of our cash reserves to help the organisation to grow in the areas that are important to our future sustainability. Our cash reserves continue to remain at a healthy level and we expect our budget to move back into surplus within the next few years.
Priorities for 2019–20
Over the past few years we've moved away from setting a detailed annual business plan to setting three to four major priorities for each six-month period, to focus the attention of the organisation on the most important things that we need to achieve.
The management team presented our proposed priorities for the first half of 2019–20, which had been informed by a joint Board-management strategy workshop held in early April. Our priorities focus on:
- improving subscriptions
- reimagining membership
- testing new ways of helping consumers in services markets
- improving protection for consumers who seek assistance from mortgage brokers.
You will no doubt be pleased to see that membership is a major theme in these priorities.
We plan to improve the range of subscription options we offer to members, and test new ways to attract new members and encourage them to stay with CHOICE.
More importantly, we want to completely reimagine membership to build a new approach based on a deeper connection between members, CHOICE and our impact; a membership model that goes beyond a digital subscription. We're currently doing some research with members and supporters to inform this initiative. It's essential we consider deeply the views and thoughts of members so if you have received an invitation to participate, I encourage you to respond.
We approved a budget for next year to provide resources to support our priorities.
We are forecasting growth in revenue, especially from membership and our CHOICE Recommended licensing scheme. This in turn requires targeted increases in expenditure in areas that are necessary to drive this growth.
Overall, we anticipate a significant reduction in our deficit, as the impact of our investment over recent years takes effect. This will put us on track to return to surplus in 2020-21. Despite this deficit, we expect our cash reserves to remain healthy and well in excess of the minimum level required by our cash reserves policy, which is reviewed each year when we set the budget.
As part of reviewing our financial strategy, we also discussed some recent advice on the building that we own in Marrickville, Sydney (for those of you outside of Sydney, take a look at 57 Carrington St, Marrickville, NSW to get a sense of the size of the property). This provides an important home for CHOICE as well as rental income from an onsite childcare centre. The advice confirmed that our property is a valuable asset with a range of possible future uses. This reinforces our overall financial health and ability to continue investing in improving the ways in which we help consumers.
Following the amicable resignation of our previous Company Secretary, Jessica Hill, earlier this year, the Board was pleased to appoint Sarah Coombs, who will fulfil the role alongside her responsibilities in the CHOICE strategy team. Sarah is legally qualified and has a good understanding of CHOICE's operations, so was an excellent candidate.
Sarah will help coordinate the Board elections and annual general meeting, and is happy to answer any enquiries on these issues. She can be emailed at email@example.com.
We have begun the process of preparing for the Board elections to be held later in the year. Our first undertaking is a skills audit to identify the most important skills required.
Three current directors will step down, and one – our Deputy Chair Bill Davidson – will reach his maximum term in November. Bill has considerable experience as a senior executive and CEO, including having previously acted as CEO of CHOICE. We have already identified that his departure will leave a critical gap in the Board, so we've started the search process for a person with similar high-level strategic and commercial skills. The position has been advertised online so please feel free to share it with anybody you think may be suitable who has the capabilities and experience we need. Interested candidates can contact Sarah Coombs in the first instance.
We also approved invitations to more CHOICE members to apply to become voting members. Having a large and vibrant base of voting members is important to ensuring that CHOICE remains a strong, democratic organisation. We currently stand at around 5800 voting members, a number which has remained largely steady over the years.
Finally, we received updates on some of the important work that is underway inside the organisation.
This included an update on the work to close down our Transformer energy switching service, which provided valuable assistance to a number of voting members. I explained in my last Board briefing that we had decided to wind up this service because although we were excited about its potential, the risks of further investment had become too great.
The Board remains pleased about the impact that Transformer has had, for the individual consumers who we helped to save money and on the broader electricity market. Transformer helped us build the case for fairer default electricity prices (one of the reforms mentioned earlier in this briefing) and provided a model that has since been replicated in the NSW Government's Energy Switch Service, which is now freely available to residents of that state.
As Chair, and I know I speak for Alan as CEO and my co-directors, I feel the weight of the importance of this initiative, of the many positive effects it's had for Australians and for the market, but I also feel the weight of the sizeable risk it presented. It was a difficult decision for the Board, but the right one. As I also mentioned previously, we learned a great deal from Transformer and have worked hard to embed that learning into the organisation.
We are very excited about a new partnership with Super Consumers Australia that has allowed us to establish a small team of superannuation specialists within CHOICE. This will allow us to do deeper analysis of problems in the superannuation market, produce more information to assist consumers and campaign for reforms to the system. This is a meaty, complex area that affects the lives of all Australians so we're keen to get this up and running.
We're also working to secure larger, longer term funding for this project, which might allow it to be established as a standalone organisation. This is a great example of CHOICE using its unique role and expertise to take on a market where many consumers are confused and poorly treated.
I will be back in touch in August, with a further update on our work. As always, if you have any questions or suggestions, please email me at firstname.lastname@example.org – I would love to hear from you.
Sandra Davey, Chair of CHOICE Board