GLING AUSTRAMLIA

2020

DIRECT SELLING AUSTRALIA

AGM

NOTICE OF ANNUAL GENERAL MEETING 2020Notice is given that the Annual General Meeting of Direct Selling Australia Limited will be held onTuesday 23 June 2020 commencing at 3 pm AEST. Given the effects of COVID-19, restrictions on gatherings, the meeting will be a remote meetingheld by webcast. The point of origin of the meeting will be Level 16, 175 Pitt Street, Sydney. To assist with the functionality of this virtual meeting, we would appreciate membersregistering their attendance by 4:30 pm AEST on Monday, 22 June 2020.

1. Chair’s welcome2. Apologies and Attendance3. To confirm the minutes of 52nd Annual General Meeting held in June 2019 and of anygeneral meeting held since that meeting4. Questions to directors and/or the auditor5. To receive and consider the following for the year ending 31 March 2020: a. Directors’ report

b. Financial statements - Audited Balance Sheet, Profit and Loss Statement

c. Auditor’s report

6. To appoint the Auditor7. To confirm the election of directors8. General Business

ORDINARY BUSINESS OF THE MEETING

DIRECT SELLING AUSTRALIA 1

Adele SuttonBy order the Board of Directors

Adele SuttonCompany Secretary25 May 2020

YOUR ASSOCIATION

VISION Direct Selling Australia is a vibrant transformationalassociation recognised as a peak body leading the directselling industry into a new paradigm.

PURPOSE The purpose of Direct Selling Australia is to be the advocate forthe direct selling industry and to represent and serve itsmembers.

GOALS In order to achieve our purpose, Direct Selling Australia will:1. Promote the direct selling industry2. Advocate for a conducive business environment for theconduct of direct selling3. Ensure members conduct their business to the highestprofessional and ethical standards4. Provide valuable member services and business support5. Govern and manage the association well

DSA TEAM

Gillian Stapleton CEOAdele Sutton Director of Legal & PolicyPaul Seitz Marketing & Communications ManagerChong Yeong Fong Business Development ManagerChelsea Thomson Marketing & Communications Co-Ordinator


5 WEBINARS

10 EVENTS

ANNUALCONFERENCE

MARKET RESEARCH PAPER

SPEAKER SHOWCASE

The DSA year now finishing has seen ourcountry journey through drought, bushfires,storms and now pandemic, with aninevitable recession, including highunemployment, yet to navigate. Through all of this I have observed ourindustry, represented by our Association andour member companies, performmagnificently in making significantcontributions to our communities whilstbusily adjusting our own business models todeal with these cataclysms. We were fullyengaged and challenged enough before fireand virus arrived, simply managing changeinto the online digital world and theimperative of technology driven, multi-channel consumer connection. Now, wehave much more to do. May I highlight some key observations andachievements?

SAYING GOODBYE Some years ago, Tupperware resigned fromDSA membership and more recently Avonand Mary Kay have left our shores. These arethree giants in the history and now of globaldirect selling. Their loss to DSA is trendrelated, not coincidental. Are there reasonsfor their departures that we can seek tounderstand and learn from that may helpshape our own strategic thinking?Pleasinglyin recent years, new multinationals havearrived in Australia with contemporarybusiness models that can also beeducational to us. But we still feel the lossand are less because of it.

BUSHFIRES ‘Australia on fire’ was the global headline. Weare proud that so many of our membercompanies reached deep into their pockets tosupport bushfire victims, and that the humanface of our industry was seen in the thick ofcommunity support and volunteering. Welldone to those who made the effort anddisplayed the very best that direct sellingrepresents.

COVID-19 Your Board saw the enormity of the pandemicchallenge early and moved quickly with aresolution to waiver subscriptions for a six-month period.Our ability to do so was madepossible by the wonderful management ofDSA leaders over many years, who, steadilybuilt a reserve of funds that could be utilisedwhen the inevitable day of crisis arrived. Ourthanks go to Les Dell and particularly JohnHolloway for their vision and resolution inbuilding these resources that enable us tofight the good fights. The corona virusexperience is far from over, but I can assuremembers that your Board and CEO aremonitoring its impact closely and will respondquickly and appropriately to the needs itgenerates. We will continue to explore everyopportunity to provide the best valueproposition for membership achievable.

I try to avoid clichés, but must say that we certainly live ininteresting times.

CHAIRPERSON ADDRESS


GILL AND HER TEAM Your Board has enjoyed a happy andproductive working relationship with our CEO,Gill Stapleton, and her outstanding team –Adele, Paul, Chong and Chelsea - who haveserved us all so wonderfully well.I don’t thinkthis team has ever shone brighter than in theamazing support they have given membercompanies through the recent months ofCovid-19. The weekly CEO and inspirationalZooms, the delivery of answers to Job Keeperquestions and the blessings of partnershipsforged with the ATO and the ACCI for example,has been business oxygen for us all.Oursincere congratulations and thanks to Gill andeach team member. NEVER WASTE A GOOD CRISIS There is uncertainty as to who first said this,but the thought is certainly worthconsideration. Covid-19 has opened the doorfor all of us to examine our businessparadigms and business models. Many of ushave been force-marched deeper into thetechnology driven digital world than we havebeen before, some of us with unexpectedlypleasing outcomes. Our learnings have thepotential to bless our businesses beyond thevirus. Are there changes we should make aswe approach what will be a very differentworld for some years to come? Now is a timewhen our stakeholders will understand andaccept change. Be bold and avoid unduecaution.

OPPORTUNITIES Retail is deeply wounded by Covid-19. There is areal opportunity for us to fill the gap with greatproducts, state of the art digital systems andthe person to person high touch that directsellers can best provide, and which specialistonline sellers cannot match. This will requiregreat vision and skilful execution. Can weachieve the dream that true omni-channelrepresents?

YOUR BOARD I sincerely thank and recognise the wonderfulcurrent 2019-2020 Board members it has beenmy privilege to associate with - Christine Terrill,David Fountain, Adrian Ryan, BrianO’Callaghan, Rod Taylor, Geoff watt, RochellePotter, Paul Jones and Peter Glennie. They havegiven their time, energy and resourcesvoluntarily and generously and are deserving ofthe gratitude of all DSA member companies. After more than eleven years on the Board ofDirectors and four years as Chair of the Board, Istep away satisfied that we have done our verybest to serve you, our members. I wish theincoming Board every success and lookforward, through the eyes of my own business,to see our industry grow, prosper and continueto offer with integrity the finest mediumavailable for our fellow Australians to dream, tobe recognised, rewarded, included, and tobecome with our encouragement that whichtheir potential makes possible for them tobecome.

Phil Hobby

CHAIRPERSON ADDRESS


Direct Selling Australia began this financialyear incorporated under the AssociationsIncorporation Act 2009 (NSW) registered asDirect Selling Association of Australia Inc.With Board approval and as voted by theMembers on 28 November 2019, DirectSelling Australia’s structure is now that of acompany limited by guarantee governed bythe Corporations Act 2001 (Cth). Ourconstitution was amended to align with ournew national structure and now DSA isbetter positioned to serve all of its memberscountrywide. This is of particular importanceto all of our advocacy work in Canberra onbehalf of the channel. Our new legalstructure gives DSA more freedom to pursuethe objectives of protecting, promoting andserving the interests of its members whilstthe Code of Practice continues to promotestandards of behaviour aligning with theexpectations of the ACCC and otherregulators. This year DSA received 1 informal complaintand 5 formal complaints which were allresolved by the DSA Executive without theneed to referral to the Code Administrator. Three complaints were member to member,two complaints came from direct sellers and1 complaint came from a consumer relatingto product claims.

DSA also resolved a disciplinary action itcommenced against a member through a seriesof compliance enhancements which wereimplemented by the member through itsnetwork. Following the changes to theConstitution, it is anticipated that the CodeAdministrator will have greater oversight ofdisciplinary proceedings to maximise theindependent and transparent nature of theprocess. The Code of Practice will continue toset out the high standards of conduct expectedfrom members as well as means of redress,particularly for consumers. With direction from the Board, a SubscriptionModel beta has been conceived and although itits infancy it is believed this program will havethe ability to not only attract new members intothe channel but provide an alternatesupplemental income alleviating the pressureplaced on member subscriptions to fund theongoing work of the DSA. By working in concertwith members to better enforce compliance, thiseducational platform will seek to fill a traininggap seen throughout the channel with the addedbonus of focusing the media’s attention on thepositive and the real stories that are currentlypropelling the channel’s success. In conjunction with increasing awareness andreputation, along with establishing thegroundwork for future additional revenuestreams, in March 2020, we launched the “It’s AllNext Door” campaign. This campaign was aimedat the field of members and non-members alikeacross multiple social media platforms anddesigned to educate, inspire and increase ourreach into the direct selling community.

CEO REPORT


Our Sponsors remain plentiful and generousand continue to allow us to provide firstclass events. With the success of yearlysponsorships last year, we offered oursponsors more flexibility in what eachsponsorship provides allowing them to tailora package to suit their marketing aims whilstdovetailing with our event needs. The takeup on these bespoke packages allowed us tocreate more revenue with the same numberof sponsors. Unfortunately, the onset ofCoVid 19 saw the DSA postpone and thencancel its 2020 annual conference and turnto virtual events for Members from mid-March 2020. However, prior to cancelling the2020 Conference, we had secured twice thenumber of bespoke sponsorships as 2019and were on target to exceed thesponsorship revenue from last year. Theengagement and value perceived in workingwith DSA on these events and throughoutthe year is a testament to our commitmentto win/win prospect for DSA and ourSupplier Members. Many of the 2020sponsors chose to carry over theirsponsorship payments for our 2021Conference once we had informed them thatthis year’s event would be cancelled. In alignment with DSA’s 2018 Strategic plan,we reduced operational costs by relocatingour office to a centrally located shared spacefacility which has permitted greateraccessibility to both members and staff.

Members have enjoyed utilising the conferenceand meeting facilities in the heart of the CBD atno charge. This move also allowed staff to workmore agilely over the course of the year, withcloud document storage and archives. Implementing a modern approach meant themove to remote working in mid-March due toCovid restrictions was seamless and Membersdid not experience any reduction in service as aresult from remote working requirements. We continue as always to move forward with ourtwo core values of trust and transparency in allthat we do at DSA so there are no surprises formembers, staff or the Board. Working in thisenvironment, aligned to the Board andMembers, the team remains focused and readywith the opportunity to adapt, be agile and makea difference in our industry that has a lastingimpact. We have seen our engagement with membersrising in the months during Covid 19 , throughcontinued and ever-increasing interactions withmore individuals from each of our members andsuppliers. DSA continues to maintain itsrelevance and remains in demand for itsadvisory services for members as they navigatethe anticipated changes ahead. DSA’sinteractions with members feed everything wedo as we serve their individual and collectiveneeds under the direction of the Board. This year’s financial performance has beenfavourable with the Association’s total equity at$2,221M. The auditor has also issued asatisfactory and unqualified report.

CEO REPORT


AUSTRALIAN CONSUMER LAW UNFAIR CONTRACT TERMS The Treasury is currently reviewing the unfaircontract terms regime as it relates to smallbusinesses. A public consultation was held inearly March particularly about whether suchterms should attract a penalty and whetherthere should be a change to the definition of“small business”. DSA is an active participantin these consultations. TGA The TGACC has oversight of the TGAAdvertising Code. 24 September 2019, DSAreceived a Ministerial appointment to serveon this committee. In February 2020, theFederal Government announced anindependent review assessing the impact ofthe reforms to the therapeutic goodsadvertising framework. The review has beena commitment of the Minister for Health, theHon Greg Hunt MP, to assess the reformswithin two years of their commencement in2018. The independent review is being led byMs Rosemary Sinclair AM and commencedwith industry consultation in March 2020. DSA has been working diligently throughout2019-20 to address the negative impact ondirect sellers of section 17 of the TherapeuticGood Advertising Code relating totestimonials and will seek to have the issueincluded in the review process.

MARKET UPDATEDANGEROUS GOODS The National Transport Commissionconducted a consultation process which DSAparticipated in relating to proposedamendments to Chapter 3.4 of the ADG Code7.7. The proposed amendments are designedto ensure a level of control that isproportionate to the risk while remainingsimple to comply with and are aligned tothose used throughout Europe, the UK andthe US but with additional placarding rules toaddress the use of higher capacity vehicleswithin Australia and concerns relating todangerous goods in tunnels. The proposedamendments will be presented to Ministersfor consideration.

MODERN SLAVER On 29 November 2018, the Modern Slavery Bill2018 (Cth) (Bill) was passed in theHouse ofRepresentatives establishing a Modern SlaveryReporting Requirement that requires entitiesoperating in Australia with more than AUD$100million annual revenue to produce an annualpublic statement describing what they aredoing to address modern slavery risks. Otherentities may voluntarily report. Reportingobligations relate to the steps taken torespond to the risk of modern slavery in theoperations and supply chains of the reportingentity and its controlled entities.The NSWLegislative Council's Standing Committee onSocial Issues (the Committee) was tasked withinquiring into the Act, some proposedamendments to the Act and some proposedregulations. It issued its final report on 25March 2020 and DSA will continue to monitorany prospective legislation.


The 2019 annual Direct Selling Australia MemberSurvey was conducted on behalf of Direct SellingAustralia (DSA) in January 2020 by SurveyMatters following last year’s success employingthis external provider to collect the data, andsaw further increase in participation. Thepurpose of the survey was to provide the WorldFederation of Direct Selling Association (WFDSA)with 52 of the 56 members completing thesurvey* (4 smaller members were not included inthe survey due to returning the information pastthe deadline)Estimated retail sales for 2019 were$1.250 billion compared to the estimated retailSales for 2018 at $1,270.8 billion (Survey Mattersfor 2018 reports $1,324 million) * (Figuresexclude the companies that did not respond tothe survey). This shows a decrease of 5.5% for2019. Some businesses reported moderate tolarge declines, while others reported moderateto large increases. Some new businesses doingwell, offset poorly performing ones. The 93%response rate, up from 79% last year, resulted inexcellent sector coverage. However, it should benoted that given the variances in organisationsize and operating models composition canaffect values.

SECTOR COMPOSITION Of the sales generated in the last financial year,44.4% were wellness products, 28.1% cosmeticproducts, 13.5% household goods, 4.2%homecare, 2.7 % clothing and accessories, and 2.4 % utilities.

MEMBER PERFORMANCE

1.25 BILLIONRETAIL SALES

WELLNESS

COSMETICS

HOUSEHOLD

44%

28%

14%


INDEPENDENT SALES PEOPLE DSA collected data on segmentation of theindustry. Business builder defined as ISP’sworking full time at their direct selling activitiesand likely to be earning an income that canreplace previous employment was said to be10% - a figure which has doubled since last year.Part time business builders 37% (an increasefrom last year’s 33%) are working less than 30hours a week in their direct selling business anda further 42% of ISPs have signed anindependent representative agreement and assuch are eligible to sell and keep retail profit andsponsor new people. 11% of ISP’s have signed anagreement but are not actively purchasing,selling or sponsoring showing a strong decreasefrom last year’s 29%. The channel is representedby 78.6% female ISP’s. 41% of members have apreferred customer program which equates to340,500 signed agreements accounting for 14%off Net Sales (turnover). Responses to the surveyindicated that members had 2,351,000 ofRegistered Customers. NON - MEMBERS DSA also collected data in relation to non-member companies and estimates there tobe a further 70 non- member direct sellingcompanies with retail sales revenue for thechannel at over $2B. This indicates that DSAmembers represent circ 70% of the salesgenerated, i.e. market share by revenue.

Gill Stapleton

340,500PREFERRED CUSTOMERPROGRAM

2,351,000REGISTERED CUSTOMERS

Other42%

Part Time37%

Unengaged11%

Bus Builder10%

79% FEMALE

70% CHANNELDSA MEMBERS


HOW WE OPERATEBOARD OF DIRECTORS

PHIL HOBBYCHAIRPERSON

LE RÊVE

DAVID FOUNTAINDIRECTOR (NOV-MARCH)

INTIMO LINGERIE

ROCHELLE POTTERDIRECTOR PARTYLITE

BRIAN O'CALLAGHANDIRECTORNORWEX

PETER GLENNIEDIRECTOR

THE JUICE PLUS COMPANY

CHRISTINE TERRILLVICE CHAIRPERSON

AMWAY

ADRIAN RYANDIRECTOR

LORRAINE LEA

ROD TAYLORDIRECTOR (APRIL-?)

NUTRIMETICS

GEOFF WATTDIRECTOR (APRIL -?)

USANA


CHAIRPERSON 1967 – 68 George McKay – Beauty Counsellors1968 – 69 W (Wally) Hollet – Watkins1969 – 70 Jack Wackwitz – Rena Ware1971 – 72 J (Bill) Cleghorn – Sarah Coventry1972 – 73 Kerry Sullivan – Avon1973 – 74 Graeme McDougall – Mary Kay1974 – 75 Kim Clarke – Bessemer1975 - 76 John Nevin – Field Enterprises1977 - 78 Gordon Griffiths – Salamander1979 - 81 Imelda Roche – Constan Industries1982 - 83 John Woods – Avon1984 - 85 John Watt – Mary Kay Cosmetics1986 - 87 Bruce Shankland – Amway1988 - 89 Neil Greenaway – Tupperware1990 - 91 W (Bill) Roche – Nutrimetics1991 - 92 Ian Ross – May Kay Cosmetics1993 - 94 Val Fittler – Pro-Ma Systems1995 - 97 Nigel Sinclair – Nutrimetics1997 - 00 Raymond Vidor – Emma Page2000 - 03 Val Fittler – Pro-Ma Systems2003 - 06 Nigel Sinclair – Nu Skin2006 - 09 Bill Duncan – USANA2009 - 12 Tony Greig – Amway2012 - 14 Jenny Messenger – PartyLite2014 - 16 Michial Coldwell – Amway2016 - 19 Phil Hobby – Le Reve

LIFE MEMBERS 1981 Robert Baird1981 Graeme McDougall1982 William Roche1983 John Nevin1985 Jack Walder1988 Les Dell1992 Bruce Shankland1995 Imelda Roche02 Val Fittler2005 Ian Bult2005 Nigel Sinclair2006 John Fulton2006 Jeanie McKendrick2009 Bill Duncan2013 Tony Greig2018 John Holloway


Nature's Sunshine Products of Australia Pty LtdNeoLife International Pty Ltd (fmly GNLD Int)Neora International Pty LtdNiagara Therapy Mfg. Aust P/LNorwex Australia Pty LtdNu Skin Enterprises Australia Inc.Nutrimetics Australia Pty LtdPartyLite Pty LtdPlexusPM-InternationalPostie Fashions Pty LtdPro-Ma Systems (Aust) Pty LtdRodan and Fields Australia Pty LtdSaladmaster, Inc.Scentsy, Inc.Seacret Direct Australia Pty LtdSeneGence International, Inc.Silk International Pty LtdStampin' Up! Australia Pty LtdSunrider International AustraliaThe Body Shop At HomeThe Commonwealth Key & Property RegisterThe Juice Plus Company (Australia) Pty LtdThe Mix Australia Pty LtdUSANA Australia Pty LtdWorld Organics LtdYJ International Pty LtdYOR HealthYoung Living Essential Oils (Australasia) P/LYounique LLC

A Better Chance Pty Ltd - (ETL Learning)ACN Pacific Pty LtdAmway of AustraliaArbonne Australia Pty LtdAtomy OceaniaBecome International Pty LtdBioxyne InternationalCreata Direct Pty LtdDirect CellarsDominant Homecare Products Pty LtdEnagic Australia Pty LtdEnjo Pty LtdEnvy Jewellery Pty LtdFifth Avenue Collection Pty LtdHerbalife Australasia Pty LtdIntimo LingerieIsagenix (Asia/Pacific) Australia Pty LtdJeunesse Global Australia Pty LtdKaszazz Pty LtdKyani Australia Pty LtdLe Reve Pty LtdLife Force Australasia Pty LtdLifeVantage Australia Pty LtdLily Anne JewelleryLorraine LeaMannatech Australia Pty LtdMary Kay Cosmetics Pty LtdModere Australia Pty LtdMorinda (Australia) Pty Ltd

MEMBERS


Hall Chadwick NSW Pty LtdHawaii Tourism OceaniaHyperwallet Systems Australia Pty LtdIan Evans ConsultingOrange CanvasidstcJenkonLBW & PartnersLIPA Pharmaceuticals LtdLisa SpeaksMarinova Pty LtdMarriott InternationalMatch UpMaui Jim Australia Pty LtdMCI GroupMondo SearchNational Products FulfilmentNorthern Territory Convention BureauOscar Winning ProductionsPayRightRFA Regulatory AffairsRussell KennedyShangri-La Hotels and ResortsSimpson GriersonSmartFreightSong DivisionSpeakers Institute Pty LtdSwarovski Australia Pty LtdThe Events AuthorityTourism New Zealand - Business EventsTourism PortfolioVillage Roadshow Theme Parks Pty LtdVisionScope Coaching Pty LtdVoyages Indigenous Tourism Pty LtdWallara Logistics

542 PartnersA Better Chance A Human AgencyAcquire BPOAddisons LawyersAustralian Nutraceuticals Auxano MarketingBe You Success CoachingBioxyne LimitedBrand Promotions Pty LtdBy Design TechnologiesCerticaCG Creative StudiosCINZClare Martin & AssociatesClick EnergyClockwise ConsultingClub MedCorporate Theatre Pty LtdDirect Selling SupportEmily ChadbourneEvent Travel ManagementExigoFastrack Fulfilment Pty LtdFenton Green & CoFinsbury GreenFreight & Distribution Management SystemsPty LtdGMM ConsultingGold Coast Business Events


SUPPLIER MEMBERS

02 9159 1815 [email protected] @directsellingaustralia

DIRECT SELLING AUSTRALIALIMITEDABN: 68 413 038 101 ACN: 639 273 037 REGISTERED OFFICELEVEL 16, 175 PITT STREET,SYDNEY, NSW 2000

2020

AuditorLBW & PartnersChartedAccountantsLevel 3, 845Pacific HighwayChatswood NSW2067

SolicitorRussell KennedyLevel 12, 469La Trobe StreetMelbourne VIC3000

Documents

GLING AUSTRAMLIA