10

10 Strategic
performance
in 2020-21

Our performance discussion concentrates on our three areas of critical strategic focus for the year and the four targets agreed with the Council Board in relation to these. We achieved three of these four targets in 2020-21:

Critical strategic focus 2020–21 year-end target 2020-21 year-end result Achievement
Critical strategic focus Member retention 2020–21 year-end target 94.7% 2020-21 year-end result 97% Achievement Met
Critical strategic focus Future member retention 2020–21 year-end target 82.1% 2020-21 year-end result 83.8% Achievement Met
Critical strategic focus Inclusion: % agreeing that ACCA acts with members’ and future members’ best interests at heart 2020–21 year-end target 70% 2020-21 year-end result 67.4% Achievement Not met
Critical strategic focus Surplus/(deficit) before tax 2020–21 year-end target -£8.9m 2020-21 year-end result £20.3m* Achievement Met

In addition, we’ve provided an overview of our performance across our balanced scorecard, highlighting areas of strong performance as well as the challenges that will inform our focus for 2021-22.

Member retention

Five-year performance

Prior year actuals Current year actuals Targets
2016-17 Prior year actuals 2017-18 Current year actuals 2018-19 Targets 2019-20 2020-21 2020-21 2021-22
% of members retained Prior year actuals 97.9 Current year actuals 97.4 Targets 97.7 97.4 97.0 94.7 97.0

All our key markets achieved their targets (except for mainland China, where our original pre-pandemic target was not reduced to take account of the effects of the outbreak, in anticipation of quicker and stronger recovery than proved to be the case within the performance year). While we have ended the year 2.3% above expectation, member retention nevertheless fell by 0.4% from the prior year.

At 233,019, our member full file exceeded expectation, primarily due to the stronger than expected retention we achieved. Globally, this represents year-on-year growth in membership of 2.5%. All our major markets met or exceeded expectation, except for India, where the pandemic hit especially hard in Q4 of 2020-21 and continues to have a devastating effect on the economy and society.

Globally, new member admissions of 12,504 for the year were also slightly ahead of expectation, but 1,431 behind the prior year.

Future member retention

Five-year performance

Prior year actuals Current year actuals Targets
2016-17 Prior year actuals 2017-18 Current year actuals 2018-19 Targets 2019-20 2020-21 2020-21 2021-22
% of future members retained Prior year actuals 83.0 Current year actuals 84.7 Targets 85.5 84.5 83.8 82.1 83.8

Retention (83.8%) was above expectation (82.1%), if below last year (84.5%).

Among our major markets, Mainland China, Nigeria and Pakistan ended the year below expectation, but all had higher relative targets than other markets. Singapore, which had low retention performance in 2019-20, bounced back strongly in 2020-21, despite the challenges of the pandemic.

Our future member file ended better than expected, despite lower than anticipated initial registrations. However, this nevertheless represents a contraction of -1.4% on our 2019-20 future members’ full file, reflecting the effects of the pandemic on recruitment and entry-level positions. As a direct result of these economic and social restriction effects, student recruitment ended 3,663 behind expectation and 16.4% down on 2019-20 levels.

Financial performance in 2020-21

Five-year performance

2016-17 2017-18 2018-19 2019-20 2020-21
Surplus/(deficit) before tax 2016-17 £(6.0)m 2017-18 £(8.6)m 2018-19 £(35.8)m 2019-20 £2.3m 2020-21 £20.3m
Target 2016-17 £(4.9)m 2017-18 £(18.3)m 2018-19 £(14.8)m 2019-20 £1.0m 2020-21 £(8.9)m
Revenue (£M)

ACCA has access to strong, secure revenue streams through the recurring subscriptions from members and future members. With the unprecedented impacts from Covid-19 across the world, ACCA reacted quickly to support our members through access to hardship and support funds to maintain membership, and the provision of free and low-cost CPD and virtual networking opportunities. Given the various local control orders in our markets, the ability to run centre-based exams was impacted, but the development and launch of our remote exams solution meant that future members were supported with another option for them to continue their journey with us.

Operating expenditure (£M)

Operating expenditure fell to £180.5m, which represents a 3.3% decrease from the prior year. ACCA revised its initial budget expectations at the start of the year as the extent of the Covid-19 pandemic became apparent. Activities and events were moved to the second half of the year, as it was assumed that local control orders would prevent any planned activities from going ahead. All mandatory meetings were moved to virtual delivery methods and employees were supported to work from home through access to laptops and online collaboration tools. Due to the second wave impact, many of the planned activities and events were unable to be delivered and ACCA was able to reduce its operating expenditure for the year.

Our strategic investment this year has continued to support our strategy to 2025 and our digital ambition. We have successfully rolled out our remote examination solution and deployed this to great effect during the pandemic, and our transition to modern, cloud-based finance, CRM and data systems continues with the first deployment scheduled for July 2021.

Surplus before tax (£M)

Our pre-tax surplus of £20.3m was achieved against a budget pre-tax deficit of £8.9m. ACCA responded quickly and effectively against the impacts of Covid-19, and the rapid investment and delivery of our remote exam solution helped mitigate impacts on our revenue, while the cost management measures put in place resulted in planned contingency not being required. Our financial investments recovered strongly after the extreme volatility experienced in the prior year. The investments are held for the long term, are well diversified and the majority are held in liquid funds.

Other financial information

There are a range of transactions that arise after net operating surplus is accounted for, including tax, actuarial losses and other comprehensive income.

Total comprehensive income (£M)

Our total comprehensive result for the year to March 2021 amounted to a surplus of £13.1m, mainly as a result of tax of £1.8m and actuarial losses of £5.5m on the defined benefit pension schemes.

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 £5.5m, which was driven by a change in the financial assumptions, e.g. a small decrease in the discount rate and increase in the inflation rate. The deficit remains consistent with the prior year at £17.8m.

Funds and liquid reserves (£M)

Council has a long-term target to build the accumulated fund to 60 days of operating expenditure. At March 2021, the Accumulated Fund represented 68 days of operating days expenditure and reflects the strong surplus generated in the 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, liquid short-term and long-term investments, less any short-term borrowing. ACCA also has access to a £25m revolving credit facility supported by the UK government’s CLBIL scheme, but hasn’t needed to draw down on this facility during 2020-21.

Total assets increased from £232.1m to £246.7m, mainly as a result of the surplus for the year. At March 2021, our liquid investments including short-term cash funds was £94.6m and our cash balances were £40.9m.

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

Inclusion: % agree that ACCA acts with members’ and future members’ best interests at heart.

Our critical strategic focus for 2020-21 pointed our attention towards a key question in our monthly relationship survey – the percentage of members and future members who agree that ACCA acts with their best interests at heart.

Data is now collected monthly from one-twelfth of members and future members, allowing us to see long-term trends more clearly. Reporting is based on 12 months of rolling data, providing the moving annual total. As this is a new sampling methodology for ACCA, we are not providing prior-year comparatives for this measure.

Our combined ‘best interests’ result was 67.4%, ending the year 2.6% below the target of 70%, and 0.1% below the +/- 2.5% margin set for the 2020-21 target.

This year has presented unique challenges for our community, but insight-driven actions have helped our members and future members feel supported. Members’ and affiliates’ perceptions have improved over the course of the year, and student perceptions remained stable overall, despite the impact of the pandemic on progression. Providing a well-connected community, understanding needs and providing value for money are the drivers we need to continue to focus on to improve our scores, while maintaining our strong brand and further improving our tailored communications.

Members

72.3% of members agree that ACCA has its members’ best interests at heart. One of the main insights we gained this year is the importance of relevant communication for members, and the actions being implemented here are aimed at improving perceptions.

Members' perceptions of ACCA steadily improved this year as we have focused intently on engagement and support during the global pandemic. We hope that recent activity, such as segmentation for our AB Direct communication and the launch of our Practice Connect hub, will begin to have an impact in the coming year. It will be important to build on the segmented approach we have started this year and leverage our assets to improve members' perceptions of ACCA as having their best interests at heart.

All employment sectors are beginning to benefit from this more segmented approach to our communications and resources, with all seeing at least a small increase. We saw the most significant gains in the public sector, corporate sector and small practice firms. In particular, members in small practices perceived increases in most areas we surveyed, and we saw especially large gains for our communications, resources and ‘understands my needs’ measures.

Students

63.1% of students agree that ACCA has its students’ best interests at heart. This result has remained relatively stable since Q1, with some fluctuations around exam periods.

Students expressed a range of worries relating to lockdowns. These included the impact on their wellbeing and that of their families, their ability to sit exams and their financial situation. Overall, despite some ups and downs, we managed to maintain student sentiment across the year.

To address students' challenges, we introduced remote invigilation, our InSession series, podcasts and Instagram Live sessions to further support their studies. To improve sentiment in the year ahead, we recognise that we need to consider the student experience of sitting ACCA exams and their experience of ACCA between exam sessions. We plan to use what we’ve learnt to further support students by capitalising on the coordination we've established between our central and market communications, continuing to consider the impacts of changes to exams, and helping students study smarter, all of which will support them in their progression with ACCA.

Affiliates

56.6% of affiliates agree that ACCA has its future members’ best interests at heart. While remaining the lowest-scoring group, it has also seen the most improvement over the year.

Affiliates expressed concerns about the pandemic’s impact on their employment and their ability to complete their practical experience requirements. Our focus on understanding the challenges affiliates face, and subsequent quick action in providing support to them – via an improved communications journey, our Covid-19 hub resources, virtual careers fairs and financial assistance for subscriptions – helped ease these concerns.

In the long term, affiliates' interests in skills development are being addressed by our new affiliate-focused events. A working group has helped increase awareness of the challenges this group face in their journey to membership. Additional research has been undertaken to provide an in-depth understanding of barriers to progression and investigate potential solutions to support affiliates further.

We have now collected one year’s worth of perception data from our relationship survey. In the coming year, we’ll begin to look at year-on-year changes and use supporting research to continue targeted actions to improve our members’ and future members’ perceptions and the support we offer.

Performance across our balanced scorecard in 2020‑21.

Although we chose to focus on defined critical strategic focus areas in 2020-21 – and will be doing the same in 2021-22 – we’ve nevertheless monitored performance across our entire balanced scorecard throughout the year. This is to both inform where we need to focus our attention in future years and so that we have this complete performance picture to build on when conditions return to greater normality. Early in 2020-21, we adjusted our performance expectations across the balanced scorecard to reflect the anticipated impact of the pandemic on our original projections.

Outcome Measure 2020-21 original expectation 2020-21 Covid-adjusted expectation 2020-21 result
Outcome Vision Measure # of members 2020-21 original expectation 234,600 2020-21 Covid-adjusted expectation 227,612 2020-21 result 233,019
Outcome Lead Measure Innovation: % agree that ACCA shapes the accountancy profession 2020-21 original expectation 80% 2020-21 Covid-adjusted expectation 80% 2020-21 result 83.8%
Outcome Measure Integrity: % agree that ACCA promotes the highest professional and ethical standards 2020-21 original expectation 80% 2020-21 Covid-adjusted expectation 80% 2020-21 result 87.8%
Outcome Measure Inclusion: % agree that ACCA acts with members’ and future members’ best interests at heart 2020-21 original expectation 70% 2020-21 Covid-adjusted expectation 70% 2020-21 result 67.4%
Outcome Measure Market share 2020-21 original expectation 21.2% 2020-21 Covid-adjusted expectation 20.6% 2020-21 result 21.1%
Outcome Business and society Measure Financial sustainability 2020-21 original expectation £1.0m surplus (before tax) 2020-21 Covid-adjusted expectation £8.9m deficit (before tax) 2020-21 result £20.3m surplus (before tax)
Outcome Community Measure Net promoter score (NPS) 2020-21 original expectation +32.0 2020-21 Covid-adjusted expectation +32.0 2020-21 result +31.4
Outcome Create Measure # of future members 2020-21 original expectation 578,800 2020-21 Covid-adjusted expectation 533,105 2020-21 result 536,815
Outcome Knowledge Measure % agree that ACCA understands my needs as a member/future member 2020-21 original expectation 60% 2020-21 Covid-adjusted expectation 60% 2020-21 result 62.1%
Outcome Value Measure # of exam entries 2020-21 original expectation 831,000 2020-21 Covid-adjusted expectation 708,364 2020-21 result 595,425
Outcome Measure % of students passing an exam in the year 2020-21 original expectation 35.7% 2020-21 Covid-adjusted expectation 27.0% 2020-21 result 29.3%
Outcome Measure % affiliate to member conversion 2020-21 original expectation 68.5% 2020-21 Covid-adjusted expectation 67.2% 2020-21 result 67.5%

Despite the challenging environment, we grew our member file by 2.5%. However, we also saw the lowest member retention levels since at least 2007. This highlights the importance of our continued critical strategic focus on member support.

Another notable highlight is the strong performance in our perception measures, with 83.8% of our community agreeing that we shape the accountancy profession, and 87.8% agreeing that we promote the highest of professional and ethical standards. As these are two of our defining values and so central to our brand, strong scores here are really pleasing. Similarly, we’ve performed well in terms of our overall net promoter score.

On market share – which we measure in relation to the member numbers of our key international competitors – we have achieved a 21.1% share, outperforming our expectation of 20.6% share. Our member growth rate, at 2.5% in 2020-21, is the highest among those bodies we measure our market share against, and represents strong performance in a volatile and challenging global environment.

We saw greater challenges in terms of our future members, where numbers dropped by 1.4% overall. We achieved 18,465 fewer recruits than the previous year, which is a 16% contraction. We also saw retention challenges across all future member groups – at 83.8%, only our 2016-17 retention performance was lower.

Despite our intensive work on offering new ways for students to continue their exam journey, we ended the year 235,575 exam entries behind our original expectation. This reflects the fact that every student had at least one exam session disrupted in the year. This disruption is reflected in student perceptions, where the ability to take exams and the exam experience is a key driver of satisfaction.