CIPS Annual Report – a decent year (except for the Aussies)

The Chartered Institute of Purchasing (Procurement) and Supply (CIPS) lodged its annual report and accounts with the Charity Commission last month. If you pay your £160 or so every year to CIPS, it is worth taking an hour or to read it. It is already almost a year out of date of course, as it runs from December 2012 to November 2013.

It has become an increasingly complex document as CIPS has expanded. With an operation in Africa - in which CIPS has a 75% stake, and a subsidiary in Australia, it has become increasingly difficult to understand some of the detailed numbers, as we'll discuss below. And in areas such as the pension liabilities, I'm sure this isn't the fault of CIPS, but it does not make for easy comprehension by the readers.

For instance, the narrative says: "CIPS group returned an operational result for the year of £0.9 million, exceeding the budgeted target". But, call me stupid perhaps, I can't find that £0.9 figure anywhere in the detailed accounts. It looks to me like the surplus was more like £500,000 from what I can see.

So, what interesting points can we draw out, other than the general complexity of the report?

1. In headline terms, it was a good year for CIPS, better than 2011/12. The top line revenue increased by 4% to £21.6 million, while the headline surplus (my interpretation of it anyway) also increased to £508,000 compared to a small "loss" in 2011/12.

2. It is difficult to see what is really happening with membership around the world. Membership grew by 2.5% to 103,000 at year end but 46,000 of these are Chinese students, who will never become full members. And the 2.5% is also described as "1400 additional members" - but if there were around 100,000 wouldn't 2.5% equal about 2,500 new folk? Really, in the interests of transparency, CIPS should publish members - at different levels, including students - by country or at least region. We don't know what is happening to full MCIPS numbers, or UK numbers, for instance. This would appear to be deliberate obfuscation (or CIPS needs to improve its customer data management).

3. So 4% revenue growth is perhaps not as impressive as at first sight, given the membership rise, and annual membership fees going up by some 6% last year. Decent results came from membership and education, driven by those factors, but training was disappointing, down 2% at just under £10 million. Publications showed a large positive jump though, from just under £1 million to £1.4 million. Well done Redactive, the Institute’s publishing partner ( he said through gritted teeth...)

4. The pension position improved in 2012/13. We warned a year ago of quite serious problems for the Institute, but matters have improved somewhat, largely down to the stock market picking up as far as we can work out. There was a revaluation gain of around £1.7 million in the fund, which eased the situation considerably. However, CIPS is still pumping large amounts of money in to meet pension obligations - around £400,000 plus the normal salary-related contributions. That (and Australia) is where our rapidly rising fees are going, we might mischievously comment.

5. On the international front, the South African operation increased revenue by 7%, whist the Middle East contributed over £1 million in revenue, a big leap in that region. (Clearly connected to our Real World Souring events in the UAE, sponsored by Tejari and supported by CIPS)!

6. But the year in question was a disaster as far as CIPS Australia was concerned. (See our article here to understand in part why). The operation made a loss of over £500,000 on revenues of just £1.7 million - that's a major setback, although the good news is that "things are getting better," CIPS assures us. A new Chief Executive, the experienced Chris Gallagher, and the focus that having the first Australian CIPS President has brought, mean matters should be much improved in 2013/14.

7. Senior salaries have not jumped this year. David Noble, CEO, is still in the £220,000 to £230,000 bracket. However, the number of middle managers in the £60,000 to £80,000 bracket has fallen dramatically from 8 to 3 in the year. Obviously there was some re-structuring going on during the year in question, which presumably restrained costs and helped towards the surplus.

So well done generally to everyone involved. I do think that fee increases need to moderate though, having run above inflation for some years now. I have heard the view recently from a CIPS Trustee that "everyone gets their employer to pay" so there isn't much price sensitivity here. But you can't exploit that too hard, or forever, we'd suggest. And some of us do pay out of our own pockets!

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