Open Universities Australia - 2015 Year in Review

Open Universities Australia
2 0 1 5 YEAR IN REVIEW

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Our Shareholders

Chairman's message

2015 had all the hallmarks of a tough year for a company whose business spans the whole of the online tertiary education sector. For the Australian higher education sector, 2015 was shaped by political, regulatory and funding uncertainty and the flattening of demand for programs. Student demand in the vocational education and training (VET) sector continued to be adversely affected by the uncovering of a range of shoddy practices by some providers in that market that left students and taxpayers with a liability for courses that were not fit for purpose. At the same time, political uncertainty that arose as a result of leadership tensions in the Federal Government had an influence on business confidence and, therefore, business spending.

That Open Universities Australia managed to weather the storm and record a net profit, whilst delivering shareholders a dividend in line with that paid in 2014 was testament to the board’s discipline, patience and persistence during this tough year.

At a governance level, OUA undertook an exercise in aligning shareholder interests. It is one of the deepest exercises of its type with which I have been involved in my career. It is easy to gloss over the fact that it is something of a challenge for a Board and management to deliver shareholder value when your company is owned by seven universities, each of which has slightly different objectives, financial positions, states of readiness for the digital age, and clarity about the role that OUA plays in its overall strategy. That is particularly so when the company was originally established as a distribution channel for shareholders’ online offerings, and:

a. each shareholder has subsequently developed online offerings and distribution channels outside OUA; and

b. one of the shareholders – Monash University – no longer provides courses through OUA at all.

And so, with our CEO Paul Wappett and his Executive Team leading the way, we took the opportunity during 2015 to go back to first principles and ensure that our shareholders are aligned about both what they expect OUA to be and what they expect OUA to do. The work revealed that initially there were disparate views about the direction that OUA ought to pursue and divergent views about the ways in which shareholders should derive value from OUA. By the end of 2015, however, shareholders had converged around a series of major strategic choices, and we enter 2016 with great clarity about the direction of OUA. We don’t underestimate how significant an achievement this has been, nor the positive impact it will have on OUA’s future direction and so we express our appreciation to our shareholders for having undertaken that work in the collegiate and cooperative way that they did.

During the year, Professor David Wood (Curtin University’s nominee) retired from the Board and was replaced by David Menarry. Professor Wood had been a member of the board for 5 years and was at the heart of a number of major initiatives that OUA has undertaken in that time. I would like to thank him for his service, his contribution and his wisdom whilst a member of the Board.

I would like to thank my fellow Board members for their commitment, support and rigour during 2015. It was a year in which we faced a number of issues that go to the heart of directors’ duties to act in the best interests of the company. I was pleased – although not surprised – to witness the way in which our Board approached complex and sensitive issues about which their own nominee shareholders had differing views and interests. I would also extend the Board’s and shareholders’ appreciation to Paul, his team, and to all of our staff. We thank them for their passion for delivering quality learning experiences and valuable customer interactions to our students, and for protecting the assets and reputation of the company and its shareholders.

All of us involved in the leadership of OUA face 2016 with clarified purpose, great confidence, and deep commitment.

CEO's message

As this Annual Report goes into production, government data about enrolments in tertiary education programs during 2015 is starting to be released. That data paints a picture of a sector that underwent enormous change in the 2014-2015 period; consistent with what we experienced at OUA.

In higher education, enrolments across the board plateaued for the first time since the Federal Government introduced the demand-driven system. Whilst there was (modest) growth in enrolments into online programs, the competition amongst universities and other higher education providers for those places intensified markedly. In fact, potential students have never had so many options available to them as universities modify entry requirements, offer a larger number and greater variety of scholarships, and promote their programs heavily to school leavers and non-school leavers.

OUA once enjoyed a unique position as an open access institution, but that is no longer an advantage exclusive to our organisation. Similarly, OUA’s traditional target market of time-poor non-school leaver students is now a crucial target market for just about every institution in the higher education sector.

In vocational education and training (VET) markets, enrolments across the country continued to plummet as confidence in the sector remained low following the revelations of what can only be described as shameful and unforgiveable practices on the part of a small number of providers. They led to regulatory interventions that are likely to have lasting repercussions for everybody involved in that sector and there is a high likelihood of a of a root-and-branch inquiry into the sector following the Federal election in 2016. Its aim, if it goes ahead, will be to ensure that the sector delivers real skills and valuable qualifications to students, and a return on investment to taxpayers for income-contingent loans to students.

Business confidence and earnings and revenue projections by private sector organisations stalled as the impact of an uncertain political and policy environment hit home. That led to tempered investment and staff reductions as managers and boards tried to deliver shareholder value.

For OUA, 2015 was a year in which this combined uncertainty hit our bottom line. Enrolments in our higher education business are down on the high water mark of 2012 (the year in which the demand driven system was introduced) and potential students are taking advantage of the buyer’s market that has emerged - they are ‘shopping around’. In our VET business, Open Training Institute, we see an external environment that has little prospect of growth in the short term and so we undertook a comprehensive review of OTI’s future during 2015, which culminated in the decision in early 2016 to cease taking new enrolments and to teach out our existing students.

Having spent about 12 months making a range of investments into the infrastructure that supports our corporate training subsidiary, e3 Learning, in 2015 we started to make the gains that we have projected for that business. Increased revenue from recurring, subscription-style business increased markedly and we invested in the next phase of growth from our proprietary learning management system, LearnForce.

Education Solutions, our online learning services business, signed major contracts with La Trobe University, Sydney TAFE and Murdoch University and is now emerging as Australia’s leading provider of services to enable educational institutions to take their offerings online.

The Chairman has written about the exercise we undertook during 2015 to align our shareholders’ direction for OUA into the future. This clarity is exciting for management and we are setting about implementing a new model for higher education that we believe will provide enormous value to students and to our provider universities.

Any CEO is only as good as his or her people, and I feel privileged to lead the staff of OUA. They are as talented and committed a group of people as I have worked with in any capacity and in any organisation. I would like to thank all of them for their support, their ingenuity, their patience, their resilience and their adaptability. On their behalf, I would like to thank the Board for giving us the support and space to shape OUA for the future. It is a future about which we are very confident.

Board of Directors

Professor S. Bruce Dowton More info

Professor S. Bruce Dowton
Nominee Director – Macquarie University Chairman of the Board

Professor S. Bruce Dowton is the Vice-Chancellor of Macquarie University. He is a paediatrician, clinical geneticist, molecular biologist, researcher and academic who has served as a senior medical executive at universities, healthcare institutions and consulting organisations in Australia and the United States. He has also held visiting Professorial and External Examiner appointments at several overseas universities.
Mr Stephen Beall More info

Mr Stephen Beall
Nominee Director – Swinburne University of Technology Member of Finance, Audit & Risk Management Committee

Stephen Beall is the Vice-President (Strategy and Business Innovation) at Swinburne University of Technology. Stephen has extensive management experience, and has previously held executive roles in the areas of employee relations, workers’ compensation, occupational health and safety and business development. Stephen is a member of the Board’s Finance, Audit & Risk Management Committee.
Mr David Pitt More info

Mr David Pitt
Nominee Director – Monash University Member of Finance, Audit & Risk Management Committee

David Pitt is the Senior Vice-President and Chief Financial Officer of Monash University. Prior to joining Monash University David held senior positions at Telstra in the areas of research, engineering, human resources, finance, television, superannuation and offshore entities.
Professor Ian O’Connor More info

Professor Ian O’Connor
Nominee Director – Griffith University

Professor Ian O’Connor is the Vice-Chancellor of Griffith University. Professor O’Connor is widely published in the field of juvenile justice, child welfare and the future directions of social work and human services.
Mr David Menarry More info

Mr David Menarry
Nominee Director – Curtin University

David is Curtin University's Chief Financial Officer. Curtin is Western Australia’s largest university, with over 60,000 students locally and internationally, assets of $1.5 billion and annual revenues of approximately $900 million. David’s strategic financial leadership supports Curtin’s achievement of research and teaching outcomes.
Mr Paul Beard More info

Mr Paul Beard
Nominee Director – University of South Australia Chair – Finance, Audit & Risk Management Committee

Paul Beard is the Chief Operating Officer at the University of South Australia, with responsibility for finance, facilities, IT, planning and institutional analytics. Prior to joining the University of South Australia, Paul held senior roles in both the private and public sectors in Australia and the United Kingdom. Paul is a Chartered Accountant.
Professor Gill Palmer More info

Professor Gill Palmer
Nominee Director – RMIT University

Professor Gill Palmer is Deputy Vice-Chancellor, Academic at RMIT University. Professor Palmer has experience in education, government and private sector management having held senior roles in the university sector in Australia.
Retired in 2015:

Professor David Wood – nominee Director of Curtin University

Executive team

Matthew Walsh Executive General Manager - Corporate Services (CFO)

Matthew Walsh
Executive General Manager - Corporate Services (CFO)

In 2015 we consolidated our online reporting environment for the consumer facing business lines. This allowed us to make tactical decisions in response to shifting markets. We also centralised our project management and IT services for the benefit of all businesses. Our focus remains on building and expanding the services and capabilities that let us grow in increasingly competitive and challenging market conditions.
Janine Harper Executive General Manager - Education Delivery

Janine Harper
Executive General Manager - Education Delivery

It was wonderful to see our team rise to a number of challenges in 2015. While completing a huge volume of work for internal stakeholders, we maintained a high level of service for our Education Solutions clients. The diligence and dedication of our staff allowed us to innovate and deliver new initiatives, services and products for our customers, helping improve the online learning experience for students.
Paul Wappett Chief Executive Officer

Paul Wappett
Chief Executive Officer

Despite uncertainty and instability in the higher education market in 2015, there was much to celebrate here. We secured clarity and focus for OUA, rejuvenated the e3Learning business and secured major contracts for Education Solutions. I’d like to thank all of our staff for their ingenuity, resilience and adaptability, and the Board for giving us the support and space to shape OUA for the future.
José Herrera Perea Executive General Manager - Education Programs

José Herrera Perea
Executive General Manager - Education Programs

In 2015, we remained focused on attracting new students and supporting existing students as they progressed through their course. We turned around the performance of our online sales channel and launched new programs that are already recognised as world-class in their field. In a climate of uncertainty and increasing competition, we continued to demonstrate OUA’s value to our students and to our providers.
Carlos Schäfer Executive General Manager - Industry and Training

Carlos Schäfer
Executive General Manager - Industry and Training

In 2015 we made strategic investments to improve critical infrastructure in two key areas. Firstly, we looked at new ways of communicating with corporate clients and students to ensure their interests come first. We also developed a roadmap for the release of new technologies which allow us to better respond to customer needs and the external marketplace, culminating in the release of LearnForce 9 in early 2016.

Our brands

Open Universities Australia makes undergraduate and postgraduate degrees from leading Australian universities available online.

e3Learning helps businesses stay productive and compliant by offering training, compliance and workforce management technology.
Open2Study’s four-week courses are entirely free, available to everyone and an excellent foundation for further study.
Education Solutions provides market-ready, proven technology solutions, combined with unrivalled expertise in learning and content production
Open Training Institute offers nationally recognised certificate and diploma qualifications.