In the accompanying Statement of Financial Activity (SOFA) expenditure includes both the direct cost of the activity plus supporting costs which are apportioned on a basis consistent with the use of resources and is based on either the number of staff working on that activity or time allocated to support the activity. When comparing income against expenditure some activities such as Careers and Education, National Aerospace Library (NAL) and Publications and Information show a loss for the year. However, it should be noted that these activities are also supported by Membership Income which is not reallocated in the SOFA and are part of the benefits supplied by the Society to its members.

The Trustees have considered a number of factors in concluding that the adoption of a going concern basis in the preparation of these financial statement is appropriate. This includes a review of the budget and forecast including cash flow for up to December 2028 and the review of risks facing the charity. These forecasts incorporate key challenges surrounding the impact from ongoing cost of living crisis and have considered sensitivities surrounding our income in particular on Venue Hire. The Society has a strong portfolio of investment and financial performance and these continue to be monitored regularly. The Trustees have reviewed the key assumptions within forecast and satisfied that the current level of free reserves and cash balances are adequate to meet the Society’s obligations as they fall due.

Income

Total income increased by 2.7% to £5,944,376 with total unrestricted income increasing by 1.7% to £5,685,241.

• Income from Donations & Legacies comprises donations to various funds, £429,918 was received in 2023 (2022: £385,035), including legacies of £250,000 from the late Captain Eric ‘Winkle’ Brown, £43,712 from Boeing and £79,993 (2022: £29,057) raised by the Society’s Subsidiary Branches to fund their activities throughout the year.

• Income from Charitable Activities at £4,411,593 (2022: £4,459,078), represents 74.2% of the income generated by the Society in 2023; the principal income sources being Membership Services (including individual and Corporate Partner subscriptions), EPA, Conferences and Events and Publications. Income from Membership Services represents just over 52% of the Society’s income and increased by 4% in 2023 to £3,099,832 from £2,982,032.

The conferences and seminars were operated in person in 2023, the overall delegate and sponsorship income finished the year at £425,596 down by 21.2% on 2022.

Publications income increased by 21.4% to £184,337 by increased sales of Advertising and The Aeronautical Journal (including archive sales) in 2023. 

The Education, Skills and Diversity Team generated £40,700 in 2023 (2022: £38,875), income increased by 4.7% which included sponsorship and income from its annual conference and sponsorship for some of its activity.

Income from End Point Assessment (EPA) at £653,077 (2022: £737,575), down by 11.5%. It continued to have delayed assessments in 2023 and shortage of internal assessors at providers and awarding bodies in the latter part of 2023. 

• Income from Other Trading Activities, room hire services, income generated £886,425, increased by 15% in 2023 from £770,712. The room hire activity is run by the trading subsidiary Aeronautical Trading Limited (ATL) which made a profit of £88,366 (2022: £71,101) which is passed, via Gift Aid, to the Society. There are no plans to change the activities of this business, which involves the provision of facilities to external customers and the running of the Members’ facilities. The Society continued to lease (under licence to third parties) offices on the 4th and 5th floor, overall this had generated £218,163 in 2023 (2022: £182,440). Room sponsorship had generated £73,702 (2022: £49,286). Other Trading activities include the additional licence income of £150,476 from an exclusive room hire from the watchmaker Omega during February and March 2023.

• Investment Income increased to £214,969 from £168,394 in 2023. Of this, £96,328 (2022: £96,657) was reinvested by the Society during the year.

Expenditure

Expenditure increased by 6.2% to £4,941,370 with total unrestricted spending increasing by 6.9% to £4,800,276 as a result of the Society returning to in-person events and office usage.

• The costs of Raising Funds increased in 2023 by 7.2% to £595,960 with unrestricted costs also increasing by 7.5% to £582,674. Costs included room hire services, administration and investment fees. In 2023, the Society continued to upgrade its services to provide enhanced facilities to members and the general public.

• Charitable Activities Resources expended on the Society’s Charitable Activities increased by 6.1% to £4,345,410 with unrestricted expenditure increasing by 6.8% to £4,217,602. Costs include all the expenditure on the Society’s conference/event programmes, providing membership services, career advice service, library, and producing the Society’s publications.

• The Society’s headquarters at No.4 Hamilton Place continue to be invested in and upgraded in line with its Strategic Objectives.

• In 2023, Governance costs increased by 6.47% from £133,232 to £141,855. Costs includes staff costs for Head of Governance to oversee the support to the Board of Trustees, Council, and internal Boards of the Society. Other costs included expenses associated with the return of in-person Council meetings, Council elections, maintaining the Society’s constitution, external audit, and core executive management, plus travel costs for the President.

Surplus

The net incoming resources (before losses on investments) for the year produced a surplus of £1,003,006 (2022: £1,134,039). During the year, the Society had gains on its investment of £14,934 and actuarial losses on the Society’s Pension Scheme of £82,000. The net movement of funds for the year was a surplus of £935,940 (2022: £1,448,236).

• Unrestricted funds carried forward of £11,776,596 (2022: £10,997,727) represent approximately 38 months operating expenditure. However, not all these funds can be readily liquidated as they represent the functional fixed assets of the Society. In accordance with Charity Commission guidance, the Trustees have adopted a formal Reserves Policy set out below.

• The overall income for Room Hire Services (Operated by Aeronautical Trading Limited) was up by 10.33% and finished the year at £594,559. All surpluses from this activity were transferred to the Society (utilising Gift Aid) to support charitable activities and the aims of the Society (see note 18 of the accounts). The Society received income from other Trading activities including leased offices (under licence) on 4th and 5th floors, at £218,163 and room sponsorship income at £73,702 in 2023.

Pensions Scheme

• The financial statements reflect the full financial position of the Defined Benefits Pension Scheme which became a closed scheme on 31 March 2001. The Scheme must be accounted for under FRS102 and under FRS102 the scheme’s liabilities are valued based on assumptions derived from yields on AA rated corporate bonds and gilts. Changes in the assumptions applied to the Scheme’s liabilities have resulted in a decline in the FRS102 deficit in 2023 and 2022 which showed a pension scheme asset in both years. As the scheme was closed to future accruals, the Trustees feel that the recoverability of the asset is too remote and this had not been recognised in the accounts in 2023. The Society contributed £76,000 to the fund in 2023.

• From 1 April 2001 the staff pension arrangements are in the form of Group Personal Pensions with Standard Life, in 2021 this was transferred to Aegon. The Society makes contributions, but the funds are owned by and are the responsibility of the individual staff members. From August 2015 the Society adopted Automatic Enrolment and received an acknowledgement of re-declaration of compliance in September 2021 from the Pension Regulator.

• Functional Assets are also used by Aeronautical Trading Limited and these are included in support costs.

• No.4 Hamilton Place – Purchase, Valuation and Charges on the Property - In March 2009, the Society purchased the freehold of No.4 Hamilton Place at a cost of £4,859,755. Prior to the purchase, No.4 Hamilton Place was leased from the Crown Estates; in 2002 the lease was revalued by the Trustees on a draft valuation of £3,864,407 (based on existing use). From 2009 the Trustees have decided to add this valuation to the actual cost of the purchase of £4,859,755 to value the property in the Balance Sheet at £8,195,137 (less depreciation on property) as at 31/12/2023. At the time of purchase in March 2009 the Market Value of the freehold interest in No.4 Hamilton Place was £11,700,000.

• Charges on No.4 Hamilton Place - The Society’s bankers, HSBC, have taken out a charge (not exceeding £4,255,000) on No.4 Hamilton Place to act as security against their loan. The Trustees of the Society’s Defined Benefit Pension Scheme (closed) have taken out a second charge on No.4 Hamilton Place to cover the Society’s obligations if the Society defaults on its payments to the scheme. In return, by agreement with the Trustees of the Scheme, the Society will continue to pay reduced contributions to the Scheme in future years at a rate of £76,000. 

Risk Management

The Board of Trustees establishes and periodically reviews the Risk Register. This is actively managed by the Audit Committee. The Chief Executive and Audit Committee are responsible for ensuring that risk registers and management plans are reviewed regularly by the executive staff and at appropriate governance meetings, and that risk-management plans are acted upon, updated, and monitored to eliminate, minimise, or otherwise avoid identified risks. They are also responsible for highlighting risk developments to the Board of Trustees throughout the year.

The trustees have a risk management strategy which comprises:

• An annual review of the risks identified and regularly reviewed by the CEO and Audit Committee.
• The establishment of policies, systems and procedures to mitigate the principal risks.

The principal risks identified in 2023 were:

• Ineffective Organisational Structure was mitigated by conducting a Governance Review, as a result, changes to the Society’s governance structure are being implemented. The updated By-Laws and progress implementing changes and updating terms of reference.
• Cyber Security remains an ever-present risk our organisation; to protect our systems, networks, and programs from digital attacks we continue to invest heavily in IT Security, Training and we run periodic test exercises of staff and volunteers. All of these are designed to mitigate the risks and boost awareness of cyber security.
• Decline in Relevance is being mitigated by continuing to deliver and develop individual and corporate member benefits, increase awareness and generation of learned and charitable output. A programme of internal discussion on the future of the Society, particularly focusing on next generation requirements, with external expert support, occurred in 2023.

See here for full details of the Consolidated Statement of Financial Activities (SOFA).