Our strategic performance in 2018-19
Our difference: Reach, relevance and resources
What this means in practice
we invest in ACCA’s unique combination of reach, relevance and resources as our differentiator in the profession and our greatest source of competitive advantage, now and into the future.
Strategic measure applied
net operating surplus/(defecit).
Why we use this measure
this demonstrates the extent to which we have exercised good financial discipline and also how we have invested against our strategy during the year. This KPI measure is consistent with the operating surplus reported in our statutory accounts, net of finance costs.
Financial performance 2018-19
2018-19 was a year of significant change for ACCA. Revenue continued to grow with total revenue of £206.1m, which represents a 3.3% increase on the prior year.
This was achieved through a combination of growth in our student and member population, combined with the strong adoption of our new strategic case study exam, which was launched during the year. The previous changes in our exam delivery model, comprising four exam sessions per year and computer-based delivery, are now largely embedded across our markets and have been well received by our students and partners.
|Net operating surplus/(deficit)||£2.8m||£4.3m||£(6.0)m||£(8.6)m||£(35.2)m||-|
Note: the current year result for the net operating deficit includes investment income, finance costs and other gains/(losses). In previous years these weren’t included as part of the measure.
The market for professional qualifications remains very competitive but our focus on strategic pricing, commercial relationships and working closely with strategic partners in key markets has ensured that our offering remains competitive.
Operating expenditure (millions)
Operating expenditure increased to £195.9m, which represents a 3.8% increase from prior year. Through close monitoring and focus on costs, operating expenditure was £1m below the original budget (0.5% favourable). The increase on prior year was largely related to inflation on salary costs and the changing mix from paper to computer-based exam delivery.
Going forward, our Budget for 2019-20, which was approved by Council in March, continues to be built on cost-conscious principles to maximise the value obtained from our operational expenditure.
We have increased the investment in our strategic change programme by £6.1m (which includes the impact of intangible capitalisation and amortisation) during 2018-19. During the year we increased the investment in our digital programme, which will update our IT infrastructure and make improvements to our digital capabilities to improve the services,
experience and ease of doing business for members, students, employers, learning providers and our other stakeholders. In addition, ACCA is continuing to invest in innovations to the ACCA Qualification, with the delivery of the strategic business leader case study during September 2018.
Net operating deficit (millions)
We delivered a pre-tax net operating deficit of £35.2 million against a planned pre-tax deficit of £14.8m. During 2018-19 we recognised an exceptional accounting adjustment relating to ACCA’s defined benefit pension scheme. After longstanding work to clarify the legal commitments and benefits of the scheme, a charge of £12.5m for past service costs has been recognised. A decision was made during the year to accelerate spend relating to the timing of investment in our IT infrastructure and digital transformation amounting to £6.1m. Other items relate to a combination of smaller items totalling £1.8m, the largest of which is a reduction in investment income, and a change to our accounting policies following adoption of IFRS 15, Revenue from Contracts with Customers and IFRS 9, Financial Instruments.
Other financial information
There are a range of transactions that arise after net operating deficit is accounted for, including tax, actuarial gains/(losses) income and other comprehensive income.
Our total comprehensive result for the year to March 2019 amounted to a deficit of £35.1m.
Total comprehensive result (£ million)
We operate defined benefit pension schemes in the UK and Ireland, both of which are closed to future accrual. These schemes are valued each year-end and actuarial gains or losses are taken to comprehensive income. This year, the actuarial losses amounted to £1.0m, which was driven by a change in the financial ssumptions, e.g. a small decrease in the discount rate and a small increase in the inflation rate.
The balance sheet remains strong and provides ACCA with a platform to continue to deliver sustainable growth.
Funds and liquid reserves (millions)
Council has a long-term guide to build the accumulated fund to 60 days of operating expenditure. At March 2019, the Accumulated Fund represented 32 days of operating expenditure. This is below the guide and reflects the ongoing current investment in our transformation programme and the impact of historic pension adjustment.
Council also monitors balance sheet liquidity, and has agreed that it will maintain a level of liquid reserves to cover ACCA’s exposure to corporate risks that would result in a consequential loss to ACCA, which could reduce overall financial strength and create a risk that ACCA was unable to settle liabilities as they fall due. Liquid reserves are defined as the total of cash, liquid short-term and long-term investments, less any short-term borrowing.
Total assets fell from £208.0m to £191.3m, mainly as a result of the deficit for the year.
At March 2019, our investment portfolio including short-term cash funds was £114.4m and our cash balances were £15.6m.