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 2027 and the review of risks facing the charity including Covid-19. These forecasts incorporate key challenges surrounding the impact from Covid-19 and ongoing cost of living crisis and have considered sensitivities surrounding our income. 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 32% to £5,785,319 with total unrestricted income increasing by 32.9% to £5,590,554.

• Income from Donations & Legacies comprises donations to various funds which have increased from £158,958 to £385,035 in 2022, including legacies of £160,687 from the late Gwendoline and Neville Duke and £100,000 from the late Captain Eric ‘Winkle’ Brown, £45,248 from Boeing and £29,057 (2021: £47,990) raised by the Society’s Subsidiary Branches to fund their activities throughout the year.

• Income from Charitable Activities at £4,459,078 (2021: £3,829,190), represents 77.1% of the income generated by the Society in 2022; 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 51% of the Society’s income and increased by 1% in 2022 to £2,982,032 from £2,952,683. 
• The conferences and seminars were operated on hybrid and in person in 2022, the overall delegate and sponsorship income finished the year at £540,411 up by 156.3% on 2021. 
• Publications income increased by 19.5% to £151,879 by increased sales of The Aeronautical Journal (including archive sales) in 2022.
• The Education, Skills and Diversity Team generated £38,875 in 2022 (2021: £23,523), income increased by just over 65% which included sponsorship and income from its annual Careers Fair and sponsorship for some of its activity. 
• Income from End Point Assessment (EPA) increased by just over 45%, finishing the year at £737,575 (2021: £507,710). It continued to have delayed assessments in 2022 while some companies were committed to completions on time. 

• Income from Other Trading Activities, room hire services, income generated £770,712, increased by just over 226% in 2022 from £236,275, as the pandemic restrictions eased. This activity is run by the trading subsidiary Aeronautical Trading Limited (ATL) which made a profit of £71,701 (2021: £27,982) which is passed, free of Tax, to the Society. The building reopened for Room Hire services in 2022. The Society continued to lease (under licence to third parties) offices on the 4^th and 5^th floor and overall, this had generated £182,440 in 2022 (2021: £70,767).

• Investment Income increased to £168,394 from £159,241 in 2022. Of this, £96,657 (2021: £94,237) was reinvested by the Society during the year.

Expenditure

Expenditure increased by 27.2% to £4,095,471 with total unrestricted spending increasing by 26.6% to £4,492,170 as a result of the Society returning to in-person events and office usage.

• The costs of Raising Funds increased in 2022 by 362.3% to £555,809 with unrestricted costs also increasing by 415.1% to £541,814. Costs included room hire services, administration and investment fees. In 2022, 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 15.8% to £4,095,471 with unrestricted expenditure increasing by 14.8% to £3,950,356. 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 2022 Governance costs increased by 23.8% from £107,654 to £133,232. 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 £1,134,039 (2021: £727,103). During the year, the Society had losses on its investment of £842,966 and actuarial gains on the Society’s Pension Scheme of £798,333. The net movement of funds for the year was a surplus of £1,448,236 (2021: £1,814,159).

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 2022 were:

• Ineffective Organisational Structure was mitigated by conducting a Governance Review, designed to ensure we have the governance in place to remain compliant and well managed. This concluded in a revised set of By-Laws and Regulations.
• Cyber Security remains an ever-present risk our organisation; we continue to invest heavily in IT Security, Training and penetration testing to mitigate the risks.
• Decline in Relevance is being mitigated by this year’s cross-Society relevance project to ensure we remain relevant to the membership and can fully perform our Charitable objectives.

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