Annual Report ACBC Version

annual report 2011/12 enabling outcomes for the collective common good

15

years

contents

our mission and vision

1

our chair

2

our ceo

3

our people

5

our members

6

our solutions

10

our partners

12

our faith publications

14

our financial results

16

church resources

Church Resources (CR) works to support the not-for-profit sector; harnessing the combined buying power of our Members nationally to secure highly competitive pricing across a wide range of product and service solutions, and delivering some of Australia’s leading online faith-based publications.

Membership of CR is free. We review your expenses and processes and recommend improvements, at no cost or obligation to you, and introduce you to some of Australia’s leading companies who have the offerings and expertise specifically for your needs. We support you in the ongoing management of supplier relationships and give you the help and advice you need, enabling you concentrate on your core mission.

our purpose To enable outcomes for the collective common good.

our values Church Resources operates according to a set of values which underpins everything we do: ÆÆ Respect for each other, our Members, our subscribers and our partners. ÆÆ Ethical approach to business - We act in the best interest of our Members and our people. ÆÆ Care for individuals and organisations in all our dealings. ÆÆ Integrity in the way we behave. We deliver what we promise. ÆÆ Purpose in what we do - Our actions will add value and will be motivated by our vision. ÆÆ Enjoyment in the service we provide to support the mission of our Members.

1

our chair This year CR completed its internal structural realignment, a reorganisation which delivered the benefits we sought and many more. The result was a closer relationship with our Members and Preferred Partners. Our continuously improving effectiveness and enhanced offerings have contributed to even greater savings for Members and a much increased number of Members who have turned to us for solutions in an ever more complex environment.

Confident in the services and supplies which they access through us, our Members can focus on their core religious, social and pastoral mission activities.

Our flagship publication, CathNews – Australia’s leading faithbased title – was accessed by a greater number of readers. It provided a means by which readers could be in touch with the ceremonies when several new Bishops took office and even follow them to Rome, living those important days with them when they were received by the Pope and received the pallium of office. CathNews also increased its outreach to readers, offering crisis management workshops, a free public social media lecture – even a pilgrimage to the Promised Land and the Holy Land – to further engage Subscribers and readers and support their faith understanding.

Under the leadership of the CEO, Luke Kenny, management and staff have performed with renewed vigour and innovation.

Like the board, they are all determined to make CR the best solution for Members. I express my thanks to my fellow board members Danny Casey, Stephen Elder, and Francis Moore whose contribution has been integral to this year’s success.

My thanks go to the President of the Australian Catholic Bishops Commission, Archbishop Denis Hart, who has now completed his term as the Chairman of the Bishops Commission for Administration and Information, and to the General Secretary of the Australian Catholic Bishops Conference, Fr Brian Lucas, for their support and guidance during the year. All of us at CR are looking forward to working with the members of our newly elected Commission.

This year will be full of new challenges and it is one to which I look forward to very much, knowing our work contributes to the greater good delivered by those whom we serve.

Julie-Anne Schafer | Chair 2

our ceo A great sense of achievement is the best description for CR in FY2011/12. Most satisfying was to welcome 1,705 new Member organisations from the Australian Church and not-for-profit sector. General Manager of Member Services, Don Milligan, fostered these new Members who were critical to growth, with aggregated Member spend up on last year by $38m to total $254m. Most importantly we have increased savings to our Members to over $45m.

In December FY11/12, CR became Australia’s first notfor-profit Apple reseller and with expert advice and highly competitive pricing our results far exceeded sales expectations in the first six months of operation. In addition to Apple, we, under the leadership of Mark Hopcroft, our new General Manager of Strategic Partnerships, welcomed a series of new Preferred Partners that includes Medibank Private (Private Health Insurance), Voca (Video Conferencing), Randstad (Recruitment), and Maxxia (motor vehicles and salary packaging).

Our faith-based publications evolved to achieve over 200,000 CathNews readers a month. We were delighted to sponsor the Australian Catholic Media Conference, and also be acknowledged by our peers in winning a Gold Award at the Australian Catholic Press Association Awards.

Again we must thank our Chair, Julie-Anne Schafer and our Board of Management for their ongoing support to our 20102013 Strategic Plan. We thank Peter Turner who concluded his term as a Board Member in late 2011 and I would also like to acknowledge our Bishops in our Commission for Administration and Information. With commission elections completed in May 2012, we thank and farewell our Commission Chair, Archbishop Denis Hart who was elevated to President of the Australian Catholic Bishops Conference. We also farewelled the now retired Bishop Matthys. Our new Commission welcomes Bishop Les Tomlinson and Bishop Julian Porteous to join Bishop McKenna, retained for another term along with our former members, and congratulate our new Chair, Bishop Gerard Hanna.

As a business we integrated a new structure, welcomed a new Leadership Team and tested the resilience of our staff to become more effective for our Members. Once again I feel very privileged to lead this organisation, I encourage you now to read through our 2011/12 Annual Report and see how we become a little closer to be our Members’ ‘first resource’.

Luke Kenny | CEO 3

$254 million managed spend $45 million in member savings

our people The staff of CR have heard on many occasions that “our people are our most important asset�.

Our people have been through significant change during 201112, be it those who have been affected by the re-alignment, or those people we have welcomed into our business as a result of the new operating model.

The change we have implemented has been about making our business better, to better serve our Members and readers, and to drive greater value for our Preferred Partners.

Some of the guests we have welcomed include Denis Hanlon (CEO of Sony Music Australia / New Zealand and President of South East Asia), Dame Joan Carden (Opera Singer), Anita Jacoby (Iconic Australian Television Producer), Elsie Heiss (Aboriginal Catholic Ministry), June Dally-Watkins and Charlie Brown (Fashion Designer).

CR does not have machines or factories, we have our people.

The Board and Leadership Team consider our people to be our greatest asset.

Over the past two years, and especially in this period we have applied significant focus to people management and cultural development activities. The breadth of our program may be unrivalled: we have a series of flexible work arrangements, an active Performance and Development Program, a staff newsletter, a state-of-the-art Intranet called The Common Room, a staff recognition program, a revitalised Social Club, team functions, weekly business-wide communication sessions and a Special Guest Speaker Program.

5

our members St Hedwig Village, Sydney

With many categories of spend experiencing price rises, Members engaged with our Telecommunications offering have been experiencing consistent cost reductions. For the well respected aged care provider, St Hedwig Village in Sydney’s western suburbs have enjoyed year-on-year cost savings for 15 years as one of CR’s foundation Members.

Kathy Eberl, the Manager of St Hedwig’s, recently said “We have been with Church Resources on the Telstra deal since it first began, because CR has a greater amount of collective spend to negotiate better deals with competitive rates”.

Whilst Kathy explains that every competitive supplier in the Australian telecommunications industry has applied their best efforts to win over the business from the CR model, according to Kathy “we give them our bills to show what we spend, they either state that they cannot compete, or we don’t ever hear from them again”.

With the introduction of new contracted rates, St Hedwig Village received a letter inviting CR Members to check if they were still on the latest contract pricing, and therefore maximising all the possible savings. The subsequent investigation by Kathy indicated their mobile phones were not assigned to the latest pricing.

Kathy explains further the process she experienced in quickly triggering these new prices and minimising lost savings. “The process was simple, we picked up the phone to CR, we spoke to one of the call centre staff who explained the more complex and technical elements of the new mobile plans in plain English. Once we agreed the most suitable approach, I followed the their instructions by downloading the online form, filled it out, sent it in and all our mobiles were cut over to the new cheaper pricing”.

The St Hedwig Village experience in receiving and acting on the communication about new pricing, enjoying an experience over the phone with an experienced call centre person, and further reducing their mobile phone costs under the CR telecommunications contract, helps justify the program CR has deployed in recent months to drive greater awareness of its services and the associated opportunities it can present its Members.

In Kathy’s view, having access to CR as a ‘one stop shop’, makes CR the first place they look before buying anything. This is how St Hedwig have expanded and grown into a series of CR categories over the 15 years we have supported each other.

6

Catholic Archdiocese of Melbourne, Victoria

Following a period where the Catholic Archdiocese of Melbourne had enjoyed substantial savings on their energy spend under a CR arrangement over the period of a three year contract, it was time again to negotiate their arrangement.

Considering the success of their previous energy contract, Adrian Klep, Director of Finance and Operations, was keen to see what CR and their Preferred Partner, NUS Consulting could again do to preserve their saving in a market that had changed quite substantially over the past three years. Due to their existing relationship, NUS Consulting were able to take the lead with all the data required for analysis, and conducted a market assessment to present the Archdioceses with a series of pricing options. Ultimately a two year deal was chosen, with no price increase, except for the 2% increase associated with the carbon pricing scheme introduced on 1 July 2012.

When questioning Adrian as to why this deal was chosen, aside from the opportunity to retain highly competitive pricing levels and mitigate any price increases over the next two years, it was clear that there were a series of non-price benefits which helped with their decision.

Mr Klep explains “we were provided with advanced warning to our expiring contract, and were given an early insight into energy market pricing expectations along with some guidance as to the best time to strike the new arrangement.” Without the resources to monitor the market movements, exercise the tenders and negotiate with providers, Mr Klep explained “to know we have Church Resources operating with our best interests at heart, and in trusting this process for second time, we felt protected in a volatile market”.

Procurement experts will advise that negotiation is not always about price: all the anticipated savings from a low price can be quickly eaten up if an organisation fails to identify and capitalise on non-price benefits. Subsequently now, for the next two years Adrian and his team know they are supported by CR at the highest level. NUS and their new energy provider, ERM, are supporting their parishes and schools with any of their enquiries and opportunities, without having to expend their valuable resources on activities they continue trust the CR model to manage.

7

Mary’s Grange, Tasmania

The foodservice market in Tasmania has undergone a major shift over the last two years, with an opportunity emerging to revisit many established supply arrangements due to an expansion strategy now completed by CR’s Preferred Partner, Bidvest.

Mary’s Grange belongs to the Catholic Archdiocese of Hobart and has provided care to the elderly since 1957. Through a meeting between Damian Jardine, CR’s Business Development Manager for Victoria and Tasmania, and Mary’s Grange CEO, Richard Tyberek, the discussion centred around how the 115 bed aged care facility could rationalise their supplier base in the category of food.

Richard was looking for a single provider to manage all their foodservice sourcing requirements as opposed to a panel contract arrangement. The anticipated benefits from this approach were to have deeper supply lines (avoiding instances of no stock), simpler administration and stronger supplier relationship management, as well as cost savings through tighter aggregation.

In facilitating this initiative, CR were able to collect and analyse a set of spend data relating to historical food purchasing activity. Concurrently, CR arranged for Bidvest to conduct a site tour of Mary’s Grange, and for key Mary’s Grange staff to tour the new purpose-built Bidvest site located in Cambridge. The exchange was deeply informative by providing an intimate understanding of how each organisation prefers to operate, and what their expectations were with regard to doing business.

This engagement meant Mary’s Grange were able to realise cost reductions in the food category, operate with certainty with the on-time supply of all ordered goods, and deal with a single distributor in Bidvest.

Whilst all of these benefits were anticipated, as CEO, Richard explains that there were some pleasantly unforeseen benefits: “What we found by using Bidvest’s findfoodfast online ordering system was we could reduce wastage by using the reporting data to monitor usage and adjust ordering volumes down to acceptable levels.”

Other benefits explained by Richard included leveraging the negotiating power Church Resources has when working with private sector suppliers, enjoying a seamless cut over to the new arrangement under Church Resources’ supervision, enjoy the efficiency of online ordering, as well as the satisfaction of working with a fellow Church and Catholic organisation knowing its’ motivations are true, and organisational values are shared.

8

11 solutions 75 partners 100s of brands 1,000’s of products

our solutions This year, CR rolled out the ‘solutions’ model for our Members. CR’s Solutions are based around the concept that CR is able to solve key ‘problems’ being experienced by Members. the Church Resources solution The CR Team is, in itself, a solution and adds significant benefits to Members. In essence being a CR Member adds a whole team of procurement professionals to our Member organisations.

Going to tender, completing due diligence, negotiating and contract management are time consuming and expensive. Procurement processes can be risky and professional facilitation is often beyond the reach of not-for-profits. CR has a suite of aggregated procurement agreements and established relationships with Preferred Partners across a wide range of solutions.

CR provides the following benefits to our Members: ÆÆ Savings in time and money so Members can concentrate on their core business, and benefit from economies of scale with highly competitive pricing; ÆÆ Fast-tracked contract negotiation with CR’s procurement experts; ÆÆ Confidence in our range of solutions provided by suppliers who are best of breed; and ÆÆ Certainty - CR is one of the largest not-for-profit procurement aggregators, currently managing more than $254 million in spending a year; saving our Members more than $45 million annually.

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The Information Communications Solution CR offers the highest quality telecommunications, technology and video conferencing at prices enjoyed by Australia’s largest corporate organisations.

The Office Supplies Solution CR helps save money, while improving product and service quality, on office stationery, paper, furniture, computer equipment, uniforms and printing supplies.

The Energy Solution CR provides access to dynamic market prices, normally available to only the largest energy users, and consultancy services to reduce usage and increase sustainability.

The Foodservice Solution CR provides significant Foodservice savings and efficiencies through consulting and analysis with the no cost, obligation free continuous improvement program.

The Education Solution CR helps deliver the finest education outcomes for students, at the most competitive prices available and with the very best resources, equipment, stationery and furniture.

The Travel Solution CR offers confidence, efficiency and savings on business flights, car hire and accommodation with a dedicated travel agent.

The People Solution CR helps Members attract, recruit and keep the right people by enhancing and simplifying payroll, HR systems and employee benefits.

The Clean and Maintain Solution CR offers confidence and savings in facilities management, laundry and linen services, hospital and clinical-grade sanitation, medical supplies and safety disposal.

The Design and Fit-out Solution Experts to analyse and develop your fit-out with whitegoods, linen, furniture, bedding, and a configurable laundry.

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our partners Church Resources’ Partnerships evolved during 2011-12 to continue to add significant value to our Member offering with the addition of new Partners and the securing of additional categories and solutions from our existing Preferred Partners.

New Partners launched during 2011-12 include: Randstad, Maxxia, Medibank Private and Australia Post.

New offers from existing partners in 2011-12 include: a consumer retail offer from AGL, improved exclusive discounts from Qantas through our Preferred Partner FCM and a continued growth of offers available from OfficeMax and Telstra.

OfficeMax and Church Resources

OfficeMax have continued to be one of Church Resources’ solid foundations; as a leader in the Office Supplies market their success for CR Members is driven by a commitment to deliver ‘real-value’ in five key areas: ÆÆ Contract Management ÆÆ Consumption Management Product Strategies ÆÆ Continuous Improvement in streamlining the ‘procure-to-pay’ process ÆÆ Corporate Social Responsibility During the 2011/12 financial year, CR have continued in Partnership with OfficeMax to develop the range of services available to our Members including: ÆÆ A catalogue of 12,000 products over 166 categories; ÆÆ A National Church Resources pricing structure available only to Church and not-for-profit Members and serviced by a National network of offices and trained face-to-face staff; ÆÆ A ‘no-cost category analysis’ to not only save money on individual items but to assist our Members streamline their Business Solutions Basket of goods to achieve overall category savings; ÆÆ Defined Service Level Agreements (SLA’s) so our Members know exactly what they have contracted to receive; ÆÆ A commitment to Best-Practice Greening and Sustainable supply principles.

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Randstad - Recruitment and HR Solutions

This year, CR brought on board Randstad as a provider of staff recruitment and retention services. Randstad were appointed to our Preferred Partner suite after an exhaustive assessment of offerings in the Australian labour market after they demonstrated themselves to be closely aligned with the core values of the Church and not-for-profit sectors.

Randstad have a philosophy of delivering a quality service to both large and small organisations and represent an excellent value-add proposition represented by: ÆÆ A special Church Resources Pricing Structure pegged below market rates ÆÆ A comprehensive range of HR consultancy services again offered to Church Resources Members at a reduced rate ÆÆ An extensive National network of professional and qualified consultants to assist our Members through all stages of the recruitment process ÆÆ One of Australia’s largest and strongest casual and emergency staff solutions offered to our Members at reduced market cost

Medibank - Private Health Insurance

One of the greatest single costs to our Members is the people they employ. CR is frequently asked by our Members “is it possible for some of the services to be passed on to our staff?”.

To enable our Members to be an ‘employer of choice’ CR has worked to bring benefits which they can offered as an ‘add-on’ to their staff’s remuneration to help them retain good staff and, in turn, save money on their recruitment costs. This year Church Resources assessed the private healthcare sector in a search for what we felt was the best solution for our Members; staff; both small and large.

Medibank Private joined our Preferred Partner suite with some significant value-add components not offered by their competitors: ÆÆ A discount against equivalent healthcare covers that would normally be reserved for Australia’s largest corporate employers that is offered to our Members both large and small ÆÆ For Members employing over 200 staff, a tailored and managed service to assist the Member in maximising the benefit across their employee base ÆÆ Access for support via the Corporate Customer Support Team ÆÆ No Waiting Periods where a staff member is transferring across to an equivalent level of cover.

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our faith publications CathNews Pilgrimage to the Holy Land

The first CN pilgrimage to Jordan and Israel, scheduled for November and December, 2012, was devised by the Publisher in conjunction with the ancient historian Dr Brian Brennan. When it was offered to Subscribers and readers of CathNews and CathNews Perspectives in March, the response was immediate; the pilgrimage was so popular, it was fully booked within weeks. Thirty-two pilgrims will join us on this wonderful trip, which links the mission of CathNews with the desire of our Subscribers and readers for a deeper spiritual experience in a very concrete fashion.

A public lecture

As part of the Australian Catholic Media Congress activities, CR also conducted its first public lecture. Mons Paul Tighe, Secretary of the Papal Commission for Social Communications, keynote speaker at the Media Congress, gave the lecture. Entitled ‘New Media, New Paradigms: Church communications in a digital age’, it drew an audience of more than 100 to the Regis Hall at Riverview College, in Sydney.

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Media Training Day

Run at MacKillop Place in North Sydney, nearly 50 people attended the first ever CathNews event: ‘Crisis? What Crisis? A media training day for communications specialists in the church other not-for-profits’ to hear guest speakers including former Publisher and Editor in Chief of the Sydney Morning Herald, Peter Fray, the former Campaigns director for the consumer advocacy group CHOICE, Christopher Zinn, and the executive producer of ABC-TV’s Compass, Rose Hesp. They also attended workshops given by the CathNews Editor-in-Chief, Michael Visontay, founding Editor, Michael Mullins, and Parish Bulletin Editor, Anthony Neylan.

ACPA and ARPA awards In 2011, CathNews was recognised at the Australasian Catholic Press Association (ACPA) and the Australasian Religious Press Associations (ARPA) during the annual conferences of both in Adelaide during September.

ACPA awarded CathNews Highly Commended in the category for Best Media Campaign or Press Release of a Church Event/Issue in its Excellence Awards 2011 for CN’s extended coverage of the Canonisation of St Mary of the Cross in Rome in October, 2010. At its conference dinner, ARPA recognised CathNews with the gold award for overall excellence in the category for Best Electronic Publication.

These awards were the first, peer-recognised awards CathNews and CathNews Perspectives (our weekend version) had garnered since the founding of CathNews 13 years ago. Given that they were also the first for which the publication had been entered , that was an excellent result for the team of the publisher, Christine Hogan, the editor-in-chief, Michael Visontay, features editor Pauline Jasudason, and editorial consultant, Michael Mullins.

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our financial results Church Resources is a not-for-profit organisation, focused on becoming better at serving our Members through strategic procurement to enhance their mission. In order to be better, we have had to grow and that growth today delivers an acceptable level of revenue, with a modest surplus. On the reported $254m of member spend managed under CR contracts in FY11/12, our surplus of $303,000 equates to a 0.1% return. Against our $7.5m revenue achievement, our surplus result for FY11/12 represents a 4% return.

Our contracts operate with a rebate model which on average presents CR with revenues of 2.5 cents from every dollar spent by a Member, under our contract. Any surplus we make is re-invested into making the necessary business and service improvements to support our Members, towards our ‘giving program’ and ensuring the financial viability of our organisation so we can keep delivering for our Members.

FY2012 ($)

FY 2011 ($)

Revenue

7,517,285

7,275,749

Cost of Sales

(2,022,477)

(1,713,257)

5,494,788

5,562,492

(3,764,712)

(4,033,139)

Consultancy Fees

(260,469)

(387,523)

Occupancy Expenses

(533,490)

(519,717)

Gain/(Loss) on Revaluation of Investments

(13,545)

2,241

Depreciation and Amortisation Expense

(138,558)

(133,085)

Community Contributions

(63,627)

(61,574)

Other Expenses

(418,585)

(415,932)

(5,192,986)

(5,548,729)

301,802

13,763

Other Comprehensive Income

-

-

Total Comprehensive Income

301,802

13,673

Total Income Before Expenses Expenses Employee Expenses

Total Expenses Net Surplus / (Deficit)

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Statement Of Financial Position As At 30 June 2012 FY2012 ($)

FY 2011 ($)

Cash and Investments

1,633,920

1,563,464

Trade and Other Receivables

1,210,824

1,155,519

Other Current Assets

27,729

60,617

Inventory

19,757

57,522

2,892,230

3,165,703

Plant And Equipment

144,359

133,494

Intangible Assets

139,771

177,922

Total Non Current Assets

284,130

318,416

3,176,360

3,477,189

Trade and Other Payables

374,036

966,761

Provision for Annual Leave

153,787

172,547

Total Current Liabilities

527,823

1,139,308

Provision for Long Service Leave

48,280

39,356

Total Non-Current Liabilities

48,280

39,356

Total Liabilities

576,103

1,178,664

2,600,257

2,298,455

100

100

Accumulated Funds

2,600,157

2,298,355

Total Equity

2,600,257

2,298,455

Current Assets

Total Current Assets Non Current Assets

Total Assets Current Liabilities

Non-Current Liabilitiess

Net Assets Equity Settled Sum

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cr.org.au 1300 248 724 ABN 61 810 823 919 Mailing PO Box 1522 Crows Nest NSW 1585 Head Office Level 4, 504 Pacific Hwy St Leonards NSW 2065 Victoria Cardinal Knox Centre 383 Albert St East Melbourne VIC 3002 Queensland The Catholic Centre Lower Ground 143 Edward Street Brisbane 4000 QLD