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Chairman’s Communiqué
Monday 10 September 2018
Dear members
Since September’s edition of The Wanderer has been received by members, which included the Notice of Meeting and Agenda for the Company’s Eighteenth Annual General Meeting, our social media platforms and other communication channels have been ‘running hot’ with questions and comments. The board supports this as it indicates the amount of member interest in the activities of the Club. The board also understands that there were a few items announced in the Annual Report that were significant items in the context of the normal business of the CMCA.
A good starting point for members, is that they need to understand that the Audited Financial Statements, as presented in the Annual Report, are produced in a format that is required under Corporations Law and the Australian Accounting Standards. The Club do elect to produce the ‘Net Income Streams’ report on the last page to try and assist members in improving their understanding of the trading activities of the Club. I know some members may want more information, others just want to understand that their Club is still operating profitably, which it did for 2017/18, and that the Club is being closely watched by several suitably qualified people, which it is.
Please remember at the AGM, I, as the Director appointed Chairman of Audit Committee, am responsible for delivering the Financial Report on behalf of Board. I will be presenting an extensive report to members, which is immediately posted on the Club’s website and then printed in December's The Wanderer. So, there is opportunity for members to receive additional information and ask questions if they so wish.
There have been 2 main issues of discussion, which I wish to provide more information on now rather than waiting until the AGM.
Motion 4 (Please see notice from Company Secretary at the end of this correspondence)
This motion was introduced by a CMCA Member, which of course all Ordinary Members of the CMCA can do under their rights dictated by the Club’s Constitution. This Motion is simply that the CMCA should only have one class of membership as compared to our current two, Ordinary Members and Associate Members. Of course, our Life Members would continue. The discussion around Ordinary and Associate Members has been going on for a long time and tends to arouse some passion and emotion. The board indicated its thoughts on these issues with the total rewrite of the Constitution that was presented at the 2017 AGM, and although the majority of members who voted agreed with the Board, the 75% majority required under Corporations Law for a Special Resolution to be passed was not reached.
This Motion 4, when received by the Company Secretary just before the closing time of motions, was accepted as presented. This timing was also just before the printing deadline of the Annual Report. As discussions occurred amongst the membership and more and more uncertainty about the structure of the Motion was raised, the Board and the CEO decided to seek the advice of our Company Solicitors, Cooper Grace Ward, about the validity of the Motion. Quite simply, the Motion did not provide members with adequate detail of the specific changes to the relevant clauses in the Constitution, so any vote on the Motion itself would not be effective in actually changing the current situation of two (2) classes of membership.
The legal opinion obtained from our solicitors has been shared with the proposing member and he fully understood the reasons.
Therefore, Motion 4 has now been withdrawn.
The board understands from past and present member discussions how important this issue is. It is proposed that part of the Member Forum, which will be held at the Gunnedah Rally on Tuesday 9 October at 11am, will be allocated to this subject. The board welcomes input from members who are not attending the rally. It is envisaged that this discussion will most likely lead to a properly constructed motion being presented to the 2019 AGM in Elmore, Victoria.
The Wanderer's Loss
The Wanderer’s loss of $701,020 has also generated much discussion. It seems that the financial position of The Wanderer caught some members by surprise. In the 2015 Financial Report I delivered, I stated that there were challenges facing the CMCA in that ‘publishers were no longer paying organisations to produce their magazines’ and ‘advertising revenue in hard copy magazines was in decline’. In the 2016 Financial Report I delivered, I stated, ‘we could no longer expect this publication to be a revenue source’ and ‘the arrangement with the new publisher appointed in November 2016 was a profit/loss risk sharing arrangement’. In the 2017 Financial Report, I stated that ‘the new publisher did not meet any of the financial targets that they had indicated so we changed publishers again in July 2017’. ‘At that time, we were losing $50,000 per month’.
Let’s now look at the financial aspects of The Wanderer. We earn revenue from advertising sales. When we commenced with our current publisher, it was in the vicinity of $70,000 - $80,000 per month. Their now clearly optimistic estimate was that they could push this figure to $100,000 per month. It is currently running at around $60,000 per month. This figure does vary from month to month. Our costs are that we pay the publisher a monthly flat fee of $40,000, our printing costs are $33,000 per month and postage and handling are $52,000. A very simple overview, but hopefully members can see the issues.
Members have questioned the large variance from the previous financial year. Our financial arrangement with the previous publisher was different to our current one. The previous publisher collected all the revenue, paid all the expenses and we just made up the shortfall. Hence very little income in the previous financial statements, only a cost. The new arrangement is that we pay all the expenses monthly and must wait until the advertising revenue is collected before it is paid to us.
Under Clause 9.2 of the current Constitution, there is a contractual obligation of CMCA to send each member or family unit a copy of The Wanderer. This means a hard copy as by our Company Solicitors. If a member notifies the Club that they wish to only receive a digital copy, we can cease the hard copy. We certainly hope more members do this. Without any directive from the member, a hard copy of the magazine must be sent. I have seen suggestions from members that maybe we should be reducing the number of magazines, even to as low as one per year. This may fix the loss, yes, but the board does not believe that this is in the spirit of the Constitution, nor in the best interests of the Club, and CMCA would lose one of its ‘public faces’ in the marketplace where no other RV Club can compete.
The board believes they have a fiduciary duty to investigate all options before following one of these more radical suggestions from members. Hence Motions 2,3 and 6 in the Notice of Meeting and Agenda. Members need to agree to give the board power to set annual fees in Motion 2 and/or the members need to agree that it is reasonable to adopt a ‘user pays’ system where those members who wish to continue receiving a hard copy The Wanderer pay in Motion 3. If neither motion 2 or 3 is passed, members need to agree to an increase in fees in Motion 6.
Facilitating the board to set the fees in Motion 2 will just allow the board to react to issues and risk much quicker than we currently can. We were really made aware of this magazine shortfall in February and yet here we are waiting for the AGM in October before the board can action any financial fix. Even then, it is unlikely the board can have any changes instigated before 2019, some 11 months after being made aware of the problem. CMCA has all sorts of risk management plans around its activities, but none around its financial security.
I think we are all very much used to ‘user pays’ in whatever we participate in. If the board were able to action a ‘user pays’ for a hard copy of The Wanderer as in Motion 3 and we know many members are happy for this to be introduced, for around $2 per month, nothing needs to change. I’ve seen so many posts on our social media platforms saying ‘$700,000 is a lot of money for The Wanderer, but I love receiving my monthly copy in the post’. The passing of Motion 3 will allow that to continue.
The intention of the board in Motion 6 is to indicate to members we are not proposing a substantial increase in the fees. In fact, the increase in the fees proposed will not cover the loss from The Wanderer but members should not lose sight of the fact that, CMCA did operate at a profit in 2017/18. To confirm, if Motions 2 or 3 are successful, Motion 6 will be withdrawn. (note – this corrects a slight error in Explanations on page 10 of the Annual Report in the underlined text).
This is very long with a lot of detail so hopefully some members may read it and find it useful.
Garry Lee A67278
CMCA Chairman of the Board of Directors |
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Company Secretary's Notice
Please note:
I, Richard Barwick – Company Secretary of CMCA, wish to advise that I have received in writing from David Egan V91678 (dated 8 September 2018), the request to withdraw his motion as follows:
THAT, all present and new members will be recognised as standard/full members irrespective of their chosen vehicle.
This is listed as Motion 4 under Special Resolution for the 18th Annual General Meeting of the Campervan & Motorhome Club of Australia Limited. The member is not required to give a reason and has not provided one for the withdrawal.
Richard Barwick - 10 September 2018 |
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