Statement of Accounts for the 2018-19 financial year
The annual College financial statements for the financial year 2018-19 were approved and given an unqualified audit report by our auditors, Scott-Moncrieff in September 2019. They were then presented and approved through the College Finance, Audit and Risk Committee, and College Council in October 2019.
The College reported an overall deficit of £0.598M for the year, and a corresponding reduction in charitable funds to £22.761M, down from £23.359M reported in the previous year. This position does however include a significant benefit gained from the College investment portfolio of +£1.254M against the prior year. Without these gains, the underlying operating performance of the College would have been closer to a budget deficit of £1.852M. Despite seeing growth in income across all our activities over the past three years, the elected Trustees of the College are accountable to the Fellowship and Membership of the College to safeguard its long-term prosperity. Council took a number of difficult and challenging decisions towards the end of the financial year to address this unsustainable position.
Overall income grew to £6.968M, an increase of £0.320M (+4.8%) on prior year. There was sizeable growth in our education income, increasing by +£0.240M (+24%) on prior year. Examinations income increased by £0.059M (+2.6%) and although overall Membership numbers grew by +4.6% to 14,590, income slowed for the first time in five years and we saw a reduction of £0.057M, (-2.6%) against prior year – a priority that is being actively addressed through our renewed focus on membership recruitment and retention, particularly in the UK. 1599 Ltd has also more than doubled its turnover in 12 months and grown by +£0.202M (+206%) now that 232 St Vincent Street has been fully operational for the year following its refurbishment in late 2017.
Dividend income generated from investments was in line with expectations at £0.582M. The College investment portfolio sits at £18.076M at the year-end and has realised a +3.2% dividend yield over the year, as well as the net capital gain of + £1.254M noted above.
Expenditure increased by £1.141M to £8.820M (+14.9%). Increased staffing costs were the major contributing factor to this and approval of these resources had been based on the College plans to grow its core activities and income levels. Despite the gains made to grow income, the rate of growth in operating expenditure has outstripped these and the level of the underlying budget deficit has become unsustainable.
Throughout the year, additional savings were made in direct expenditures to improve our margins from Exams, Membership and Education. All other areas of indirect expenditure we also reviewed. A decision was taken through College Council in the latter part of the year to reduce the overall level of staffing costs through a College-wide restructure. These plans will realise a full year saving of £0.610M in staffing costs. An exceptional one-off cost for staff redundancies (£0.272M) is included in the 2018-19 expenditure statements.
Through these measures, the College is focussing its resources on its core activities, and on membership recruitment and retention in particular. The full year impact of the restructuring will bring our cost base back down towards 2017/18 levels, and will reduce our forecast operating deficit to (£0.450M) at the end of the 2019/20 financial year from (£1.852M) in 2018-19. Thereafter, the College is planning to reach a breakeven budget position in the following (2020/21) financial year.