Printing Industries has posted a loss of $1.27 million for calendar year 2016 after income slumped from $3.9 million in 2015 to $2.2 million last year.
CEO Andrew Macaulay says a forensic audit of operations ordered in July 2016 has revealed that the peak industry body has been "operating beyond its means for many years."
The value of the association's total assets - including land, buildings and investments - has also fallen: from $11.3 million in 2015 to $9.2 million in 2016.
The shock figures are revealed in the PIAA's 92nd annual report, for the year ended December 2016. In his Chief Executive Officer Report, Macaulay tells members that operations have been "hindered also by antiquated operating systems and processes."
The CEO was appointed in May 2016 with a remit to review the operations of the association but the first stage of the process was to "settle the angst caused by too-sudden changes made in 2015, with little member consultation."
He says a new finance team appointed in July 2016 to complete a forensic audit of operations then uncovered that the association had been operating beyond its means for many years.
According to Macaulay, operating losses were not obvious because the Association was living on the proceeds from shows such as PacPrint and PrintEx as well as the sale of the Association's real estate."Neither of these sources of income was sustainable. Industry trade shows are in decline worldwide, and assets must be managed for growth. The decline of participants in the industry is directly reflected in our decline in membership subscription," says Macaulay.
"The financial performance of the Association over the last 25 years is alarmingly reflected with a new degree of transparency in the following graphs [see below]. They show that subscription income has been in constant decline since the 1996 peak of $3.8M, to less than half that in 2016 of $1.74M."
The intention now is for the Association to get back in the black within three years by following a new strategy known as the 'Three Pillars.' This has a focus on industry advocacy, workplace relations and valuable services to members.
"The Association’s re-alignment to operating within the Three Pillars strategy has already resulted in the operating budget being set within income forecasts, and staffing being optimised," says Macaulay.
"We are transitioning to a sustainable model that doesn’t rely on asset sales and declining trade shows, we will inspire membership renewal, and our performance will be the springboard for success. It is my intention, with the support of your Board, the staff team, and most importantly, the membership, to return the Printing Industries Association of Australia to being the pre-eminent voice of the largest manufacturing sector in Australia."
Outgoing PIAA president Kieran May says the 2016 result has been "15 years in the making" but he's confident the association can now move forward.
"We demanded a forensic analysis of our finances and the results revealed in this report reflect that diligence," says May. "They make apparent what this Board, and many prior Boards, had suspected. In response, we have approved long-overdue capital expenditure to bring our management and information systems up-to-date, and we will immediately see the benefit in Q2 2017.
May says the result has been at least 15 years in the making and believes "responsibility should be borne by every Board (and State and National Council), director, CEO and every senior manager throughout that time. It is, however, the future that will define your Association and I am confident we are now on the right path."
May anounced last week he was stepping down from the role of president and will be replaced by Walter Kuhn.
Here is the table showing the PIAA's statement of income: