9

Our strategic performance in 2019-20

Vision

Vision

#1 in developing the accountancy
profession the world needs

What this means in practice

By delivering our strategic outcomes (Attract, Develop, Sustain and Lead), ACCA and our Qualification will be seen as leading the profession in innovation and quality. This means ACCA will be the most sought-after global designation in the profession and the clear choice for individuals and employers seeking an internationally recognised professional accountancy qualification.

Strategic measure applied

Number of members.

Why we use this measure

The expertise and ethics of our members are the main way we create value. The number who invest in our Qualification shows the value and utility of our brand in the global marketplace.

Five-year performance Prior year actuals Current year actuals Targets
2015-16 2016-17 2017-18 2018-19 2019-20 2019-20
# of members 188,137 198,614 208,549 219,031 227,332 226,400
Year-on-year % growth rate 5.6 5.6 5.0 5.0 3.8 Target met
 
2015-16 188,137 5.6
2016-17 198,614 5.6
2017-18 208,549 5.0
2018-19 219,031 5.0
2019-20 227,332 3.8
2019-20 226,400 Target met

In this final year of our 2020 strategy, we exceeded our member growth target as a result of higher admissions than anticipated. Over the life of the strategy, we’ve seen 5% annualised growth, predominantly driven by strengthening new member numbers. As the market mix of members has evolved in recent years, we’ve seen retention levels decline slightly. In 2019–20, we recorded a marginal annual fall of 0.2% to 97.4%. We recognise that we will need to demonstrate our value to members even more strongly in the coming year and we are implementing a range of initiatives to drive retention, as we move into the strategy to 2025. These include sharpening our member value proposition and promoting all the tangible and intangible benefits membership provides, across all sectors and at all stages of membership, including highlighting the value derived from being part of ACCA’s uniquely wide global community of professionals.

Difference

Difference

Reach, relevance, and resources

What this means in practice

That 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/(deficit) before tax.

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 key performance indicator (KPI) measure is consistent with the operating surplus reported in our statutory accounts, net of finance costs.

Five-year performance 2015-16 2016-17 2017-18 2018-19 2019-20
Surplus/(deficit) before tax £4.3m £(6.0)m £(8.6)m £(35.8)m £2.3m
Targets £(5.0)m £(4.9)m £(18.3)m £(14.8)m £1.0m
 
2015-16 £4.3m £(5.0)m
2016-17 £(6.0)m £(4.9)m
2017-18 £(8.6)m £(18.3)m
2018-19 £(35.8)m £(14.8)m
2019-20 £2.3m £1.0m

Financial performance in 2019-20

2019–20 has been a relatively successful year despite the challenges brought from the impacts of Covid-19 on the global economy and ACCA in general. Revenue continued to grow with total revenue of £216.4m, which represents a 5% increase on the prior year. This was achieved through a combination of price increases together with a combination of strong customer growth and continued customer retention, despite the loss of one exam session in China and other markets due to Covid-19. Performance in the other three sessions was positive, compensating for the loss of the March exam session, which demonstrates our move to four exam sessions per year is now embedded across our markets and has been well received by our students and partners.

Income £m

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 £m

Operating expenditure fell to £186.7m, which represents a 4.3% decrease from the prior year. Through close monitoring and focus on costs, operating expenditure was £9.8m below the original budget (0.5% favourable). Cost initiatives identified in the previous year were carried forward into 2019–20, e.g. less travel, more efficient use of technology. The direct and indirect impacts of Covid-19 led to lower activity in Q4, e.g. lower exam delivery costs. ACCA also made the decision not to award performance bonuses for the year, resulting in a saving of £2.2m

During the year, ACCA implemented IFRS 16, Leases using the full retrospective approach. The effect of first-time adoption of this standard has reduced opening net assets at 1 April 2019 by £1.7m and the 2018-19 accounts have been restated accordingly.

During the year, ACCA implemented IFRS 16, Leases using the full retrospective approach. The effect of first-time adoption of this standard has reduced opening net assets at 1 April 2019 by £1.7m and the 2018/19 accounts have been restated accordingly.

Going concern has been a key focus due to Covid-19, and the impact it has had and will have on future operations has been thoroughly reviewed for budgetary control and audit purposes.

Going forward, our budget for 2020–21, which was approved by the Council Board in April and Council in May, was prepared after considering the global impact of Covid-19.

Various scenarios, including reverse stress testing, were reviewed by ACCA and our auditors, Grant Thornton UK LLP, and the budget was prepared on the basis of ACCA’s most likely outcome, which assumed cancellation of all exams in June, an extra exam session in July for China, Hong Kong SAR and other ASEAN countries and some countries in Africa, and a full session of exams in September. That scenario does assume bank funding through the UK Government’s Coronavirus Large Business Interruption Loan Scheme (CLBILS) and, if necessary, divestment from the investment portfolio. The budget continues to be built on cost-conscious principles to maximise the value obtained from our operational expenditure.

Surplus before tax £m

  • Increase
  • Decrease
  • Total

We delivered a pre-tax surplus of £2.3m against a budget pre-tax surplus of £1.0m. Income growth was strong despite the loss of the March exam sessions in China. Expenditure was controlled during the year through cost-conscious initiatives and our spend on strategic investment was in line with forecast. Other income/expense includes realised and unrealised gains/(losses) on investment and gains/(losses) on forward contracts. Due to Covid-19 stock markets were very volatile in March and we have suffered unrealised losses against budget. During the year we divested from the portfolio for working capital purposes and through tight cost management we have benefited from holding surplus cash. Our investment portfolio is well diversified and despite the volatility during March, our investments have been quite resilient and losses were lower than general market falls.

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 2020 amounted to a surplus of £11.8m, mainly as a result of actuarial gains on the defined benefit pension schemes of £10.3m.

Total comprehensive Income £m

  • Increase
  • Decrease
  • Total

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 gains amounted to £10.3m, which was driven by a change in the financial assumptions, e.g. small decreases in the discount rate and the inflation rate. The deficit has reduced to £17.9m due to the above, additional pension contributions from ACCA and a successful implementation of a new investment strategy by the trustees, whereby investment asset values have remained strong despite the market volatility.

The balance sheet remains strong and provides ACCA with a platform to continue to deliver sustainable growth.

Funds and Liquid Reserves £m

  • Acc. funds
  • Liquid reserve

Operating expenditure fell to £186.7m, which represents a 4.3% decrease from the prior year. Through close monitoring and focus on costs, operating expenditure was £9.8m below the original budget (0.5% favourable). Cost initiatives identified in the previous year were carried forward into 2019–20, e.g. less travel, more efficient use of technology. The direct and indirect impacts of Covid-19 led to lower activity in Q4, e.g. lower exam delivery costs. ACCA also made the decision not to award performance bonuses for the year, resulting in a saving of £2.2m

Council has a long-term target to build the accumulated fund to 60 days of operating expenditure. At March 2020, the Accumulated Fund represented 48 days of operating expenditure. This is below the target and reflects the ongoing current investment in our transformation programme and the impact of the historic pension adjustment in the previous year.

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 and liquid short-term and long-term investments, less any short-term borrowing.

Total assets increased from £227.0m to £232.1m, mainly as a result of the surplus for the year. March 2020, our investment portfolio including short-term cash funds was £111.2m and our cash balances were £27.1m.

More detailed financial information is available in our consolidated financial statements.

Attract

Attract

Inspire people everywhere in the world to choose ACCA

What this means in practice

Developing the ACCA Qualification so that it continues to provide the skills and professionalism demanded by employers globally in every sector, and promoting ACCA through a vibrant and forward-looking brand.

Strategic measure applied

Number of students and affiliates (those who have completed ACCA’s exams but are yet to become members).

Why we use this measure

It shows our success in extending the appeal of our Qualification to the next generation and the strength of our membership pipeline.

Five-year performance Prior year actuals Current year actuals Targets
2015-16 2016-17 2017-18 2018-19 2019-20 2019-20
# of member 480,813 486,514 503,262 527,331 544,446 551,600
Year-on-year % growth rate 5.5 1.2 3.4 4.8 3.2 Target not met
 
2015-16 480,813 5.5
2016-17 486,514 1.2
2017-18 503,262 3.4
2018-19 527,331 4.8
2019-20 544,446 3.2
2019-20 551,600 Target met

We ended 2019–20 behind target, largely as a result of the impact of Covid-19 on recruitment activities in China in Q4.

Nevertheless, we continued to see double-digit growth in the key markets of China and India, both of which are seeing a strong return on market investment and the tailored strategic focus we’ve developed during the course of our strategy.

Pakistan also performed well, growing faster than predicted, and we experienced strong growth in Central and Eastern Europe and the Commonwealth of Independent States. Elsewhere, we recruited broadly to expectation, with the exception of Malaysia, where early recruitment initiatives from previous years did not translate into students sitting exams. One of the learnings from the 2020 strategy has been the need to create more effective early recruitment schemes, involving learning providers and employers more closely from the outset, to build commitment to, and confidence in, progressing.

Although recruitment did not perform to target, we saw a marginally higher intake of 112,479 new students globally, compared with 2018–19. Student retention ended the year 0.5% behind target at 84.5%, with Malaysia and Singapore accounting for most of the shortfall.

Looking over the course of the strategy, we’ve seen annualised growth of 3.8%, helping feed strong market share performance overall.

Develop

Develop

Grow our network to support our stakeholders to achieve their goals

What this means in practice

We develop members and students by investing in support that enables them to achieve their professional goals.

Strategic measure applied

100% of our three student progression targets of: 782,200 exams entered during the year; 67% of ACCA affiliates achieving membership in four years; 36.8% of students passing exams in the past year.

Why we use this measure

It gives a rounded picture of the main factors that affect progress to membership. All three element targets need to be met to achieve the Develop measure.

Five-year performance
Student progression factors Prior year actuals Current year actuals Targets
2015-16 2016-17 2017-18 2018-19 2019-20 2019-20
# exams entered 837,192 774,911 817,058 782,253 772,740 Target not met 782,200
% of affiliates becoming
members within four year
68.8 66.1 66.9 67.0 68.2 Target met 67.0
% students passing exams in
the past year
35.3 36.2 36.9 36.8 34.7 Target not met 36.8
 
2015-16 837,192 68.8 35.3
2016-17 774,911 66.1 36.2
2017-18 817,058 66.9 36.9
2018-19 782,253 67.0 36.8
2019-20
772,740 Target not met
68.2 Target met
34.7 Target not met
2019-20 782,200 67.0 36.8

Of the three element targets we needed to meet, one was achieved (% of affiliates becoming members within four years) and two were not achieved (% of students passing exams in the past year and number of exams entered).

This area of performance has challenged us throughout the lifetime of the strategy for various reasons, as we balance our commitment to making a professional qualification accessible and, at the same time, seeking to nurture students through our exams in markets with varying levels of local and online support.

Exams entered:

Until Q4 of 2019–20, we were on track to reach our global exam entry target. The Covid-19 outbreak in China affected both on-demand and sessional sittings during the final three months of the performance year, with cancellations in the region the major contributor to the shortfall. Looking more broadly, we have also seen the average number of papers sat by students decline over the life of the strategy, from a high of 1.88 per student globally in 2015–16 to 1.51 per student globally in 2019–20.

Although the average number of exams entered has fallen, exam revenue has continued to improve over the course of the strategy because of the steady growth in our student file. It will be crucial to focus on this element throughout 2020–21 in order to enable students to progress, where exams have needed to be cancelled in 2019–20, and to deliver the financial sustainability expected by Council.

% of affiliates becoming members within four years:

We’ve built on our strong performance here last year, further improving to 68.2% (an increase of 1.2% on prior year). This has been a successful area of focus for us, in response to challenges we saw earlier in the strategy, with a number of active interventions around encouraging and nurturing affiliates towards membership, which have since become part and parcel of the support they receive directly from ACCA.

% of students passing an exam in the past year:

The effort and resources we applied to student progression had notable effects in the earlier years of the strategy. Last year, we saw this progression element slow slightly following the introduction of Strategic Professional in September 2018, with more students choosing to defer or sit option papers first (the latter of which have lower pass rates). The closer and more collaborative relationships we have forged with our strategic learning partners has been instrumental in embedding market adoption of the changes we’ve made to the ACCA Qualification and we’re very conscious that this work needs to be ongoing, as Strategic Professional continues to bed in. We’ve also invested in greater, and more tailored, student support using our digital platforms and tools, but recognise that continuing to closely support learning providers and signposting students to their resources gives them the best chance of progression. This is particularly true in respect of Strategic Professional, as we continue to roll out computer-based exams around the world. 

Sustain

Sustain

Demonstrate the value of a lasting relationship with ACCA

What this means in practice

We deliver and communicate the tangible value of a relationship with us to our members and students so that they remain committed to, and advocate for, ACCA.

Strategic measure applied

Overall member, student and affiliate satisfaction.

Why we use this measure

It shows overall happiness with our brand and services.

Five-year performance Prior year actuals Current year actuals Targets
2015-16 2016-17 2017-18 2018-19 2019-20 2019-20
Overall satisfaction† 72.0% 76.9% 80.7% 79.1% 81.3% 80.0%
Year-on-year increase/decrease +2.0% +4.9% +3.8% -1.6% +2.2% Target met
Member satisfaction† 71.0% 76.4% 79.5% 77.2% 79.9%
Affiliate satisfaction† 66.0% 71.0% 75.7% 71.5% 77.9%
Student satisfaction† 76.0% 78.1% 82.5% 82.1% 83.1%
 
2015-16 72.0% +2.0% 71.0% 66.0% 76.0%
2016-17 76.9% +4.9% 76.4% 71.0% 78.1%
2017-18 80.7% +3.8% 79.5% 75.7% 82.5%
2018-19 79.1% -1.6% 77.2% 71.5% 82.1%
2019-20 81.3% +2.2% 79.9% 77.9% 83.1%
2019-20 80.0% Target met

† Survey measures for students, members and affiliates are judged achieved if within +/- 1.5% of the target to allow for accepted survey variations. Based on 28,089 members, students and affiliates responding globally.

Member satisfaction

Member satisfaction has increased to 79.9% (+2.7ppt compared with 2018–19). Following a year-on-year fall last year, member scores stand at their highest for five years. Most key markets have shown improvements from 2018–19, with Pakistan (+7ppt) and Nigeria (+5.8ppt) seeing the most improvement. Mainland China is the only market to see a marginal decline (-0.8ppt) but a remaining high satisfaction level (of 83.1%).

Member net promoter score (NPS) is +39.5 (a 2.6ppt increase compared with Q4 2018–19).

Affiliate satisfaction

Affiliate satisfaction is 77.9% (+6.4ppt compared with 2018–19). While this is a notable improvement, some of this increase can be explained by the change in the profile of our sample, with slightly more newer affiliates who tend to display higher levels of satisfaction. When adjusted to take account of this, overall affiliate satisfaction has still increased notably, but at a slower rate. Scores in the UK and mainland China, our biggest affiliate markets and therefore the biggest influence on the overall score, have improved by 12.6ppt and 8.7ppt, year-on-year, respectively.

The continued focus we’ve had on processes and outreach to help affiliates get the right practical experience and enhance their careers, alongside market-specific interventions, has helped improve affiliates’ perceptions of their relationship with ACCA.

Affiliate NPS stands at +34.1 (a 5.3ppt increase compared with 2018–19).

Student satisfaction

Student satisfaction is 83.1% (+1.0ppt compared with 2018–19). Almost all our key markets have seen at least marginal improvements since Q4 2018–19, with only Russia seeing a decline (-1.8ppt).

Student NPS stands +40.3 (a marginal fall of -0.1ppt since Q4 2018–19).

Lead

Lead

Use our pre-eminent brand and reputation to influence the market

What this means in practice

We aim to lead the profession in demonstrating the value professional accountants bring to society, which also relies on a strong, visible and credible brand.

Strategic measure applied

Brand power, assessed through 10 elements covering brand awareness, brand reputation and global market share.

Why we use this measure

It gives us a rounded picture of brand resilience and impact across our main stakeholder groups.

Five-year performance
Brand power element Prior year actuals Current year actuals Targets
2015-16 2016-17 2017-18 2018-19 2019-20 2019-20
Members who have
recommended ACCA†
57.5% 60.2% 63.5% 61.4% 60% Target not met 63.0%
Students who have
recommended ACCA†
71.1% 74.2% 78.1% 77.0% 75.7% Target not met 78.0%
Affiliates who have
recommended ACCA†
65.4% 67.7% 71.5% 70.6% 73.0% Target met 72.0%
Approved learning providers
recommending ACCA as first choice†
91.2% 89.1% 88.0% 89.9% 92.3% Target met 88.0%
Key employers preferring to
recruit ACCA†
35.0% 39.2% 43.0% 50.0% 48.3% Target met 50.0%
Members, students and affiliates
agreeing that ACCA is an
innovative and forward-thinking
organisation†
71.5% 75.5% 77.4% 79.2% 82.8% Target met 80.0%
Members, students and affiliates
agreeing that ACCA shapes the
agenda of the accountancy
profession†
68.5% 71.5% 74.8% 75.0% 78.5% Target met 76.0%
Members agreeing that ACCA
promotes public value†
67.2% 70.9% 73.4% 72.2% 74.3% Target met 73.0%
Employers believing that ACCA
provides relevant skills for their
business†
88.0% 92.0% 91.0% 90.0% 89.4% Target met 90.0%
Share of total members of ACCA,
ICAEW, AICPA, CIMA and CPA
Australia
18.7% 19.3% 19.7% 20.3% 20.8% Target met 20.6%
Overall 80.0% 80.0% 100.0% 60.0% 80.0% Target met 80.0%
 
Members who have recommended ACCA†
57.5% 60.2% 63.5% 61.4%
60% Target not met
63.0%
Students who have recommended ACCA†
71.1% 74.2% 78.1% 77.0%
75.7% Target not met
78.0%
Affiliates who have recommended ACCA†
65.4% 67.7% 71.5% 70.6%
73.0% Target met
72.0%
Approved learning providers recommending ACCA as first choice†
91.2% 89.1% 88.0% 89.9%
92.3% Target met
88.0%
Key employers preferring to recruit ACCA†
35.0% 39.2% 43.0% 50.0%
48.3% Target met
50.0%
Members, students and affiliates agreeing that ACCA is an innovative and forward-thinking organisation†
71.5% 75.5% 77.4% 79.2%
82.8% Target met
80.0%
Members, students and affiliates agreeing that ACCA shapes the agenda of the accountancy profession†
68.5% 71.5% 74.8% 75.0%
78.5% Target met
76.0%
Members agreeing that ACCA promotes public value†
67.2% 70.9% 73.4% 72.2%
74.3% Target met
73.0%
Employers believing that ACCA provides relevant skills for their business†
88.0% 92.0% 91.0% 90.0%
89.4% Target met
90.0%
Share of total members of ACCA, ICAEW, AICPA, CIMA and CPA Australia
18.7% 19.3% 19.7% 20.3%
20.8% Target met
20.6%
Overall
80.0% 80.0% 100.0% 60.0%
80.0% Target met
80.0%

† Survey measures for members, affiliates and students are judged achieved if within +/- 1.5% of the target to allow for accepted survey variations. Survey measures for employers and learning providers are judged achieved if within +/-2.5% of the target. Member results based on 8,601 responses globally; student and affiliate results based on 19,488 responses globally; employer results based on 774 contacts surveyed globally; learning provider results based on 819 contacts surveyed globally.

Our capabilities

Our capabilities

1. High-performing people motivated to deliver our strategy

We report performance against our capabilities for information, and progress here does not form part of calculations in respect of executive remuneration.

Strategic measure applied

Best Companies employee engagement index.

Why we use this measure

It is a wide-ranging index that assesses how engaged and fulfilled our employees are, and enables us to identify those drivers that are likely to affect their contentment and motivation. This is also a widely used framework for assessing employee engagement, which means we can benchmark our performance against leading employers.

Five-year performance actuals

  • One to watch status
  • 1 star status

In 2019–20, we retained our targeted 1 Star status on the Best Companies index, based on our highest response rate to date. However, following steady increases across the lifetime of the strategy, our scores fell back by 15 points this year, to the broad levels seen in 2017–18.

Employees continue to express pride in working for the organisation, believing that they are making a valuable contribution as an employee of ACCA. Employees’ perception of our people managers overall also continues to show improvement, with recognition that people managers are role modelling good behaviours; this in turn has a positive effect on team motivation.

In terms of areas for improvement, people would like even more emphasis on our values and greater two-way engagement between senior leaders and the wider workforce.

To build on this, we have begun a programme of culture change and development to support the delivery of strategy to 2025. Our refreshed purpose, values and behaviours were launched in March 2020, providing clarity to employees around the behaviours and ways of working required to successfully deliver the strategy. We have also simplified performance management processes for the year ahead and developed a new employee engagement survey to measure engagement as well as to track how well we are progressing against our culture journey. The new survey provides people managers with access to results within two weeks of the survey closing, encouraging ‘real-time’ conversations with team members and the creation of more effective and impactful action plans.

Employee Gender Diversity

  • Male
  • Female

Overall

In leadership

*Executive team and
their direct report

UK gender pay gap reporting

The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 require relevant UK employers with 250 or more employees to publish information on their gender pay gap. Although ACCA does not fall into the category of UK employers required to publish their gender pay gap, we welcome the opportunity to voluntarily report, and we’re publishing our report as a clear and visible sign of our commitment to equality and diversity.

This year we saw a reduction in both our mean and median ordinary pay figures as well as in our mean bonus figure. Our median bonus figure increased only very marginally in the period.

Full gender pay report for 2019

Modern Slavery Act commitment

We are committed to acting ethically and with integrity in all our business dealings and relationships. We act on this commitment by implementing and enforcing effective systems and controls to ensure that modern slavery is not taking place in our organisation or in any of our supply chains.

We expect the same high standards from our suppliers, contractors and other business partners, and as part of our contracting process we include prohibitions against the use of forced, compulsory or trafficked labour or anyone held in slavery or servitude. We expect that our suppliers will hold their own suppliers to the same high standards.

Our Executive team has overall accountability for ensuring that our organisation complies with this policy and for monitoring its use and effectiveness, as well as the auditing of internal control systems and procedures.

2. Customer-centred solutions

Five-year performance actuals

  • Actuals
  • Target

Strategic measure applied

A basket of customer service measures (including call, email and web chat response rates, call abandonment rate, web chat abandonment, online applications processed and digital satisfaction), which provides a rounded picture of overall customer service.

3. Operational excellence across all of our operations

Five-year performance actuals

  • Actuals
  • Target

Strategic measure applied

Operating costs per student and member against benchmark, which shows the cost-effectiveness of our service, compared with key competitors, and is taken as a proxy for the efficiency of our operations as a whole.

4. Flexible delivery: digitally enabled and flexible delivery that is responsive to evolving customer needs

Five-year performance actuals

  • Actuals
  • Target

Strategic measure applied

Strategic measure applied: digital experience service level agreements (SLAs) across a basket of measures, including website availability, website response time and digital customer satisfaction, which provide time and quality metrics on our main digital services.