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Treasurer's letter

Dear Member

In my letter to you last year I explained that the surpluses which the Society had made over the last few years were not expected to recur in the first few years of the new millennium. This was the case in 2000.

The Society's deficit before investment gains and losses are included was 424k. In addition, last year was a time of great upheaval in investment markets and the Society's 'book value' of investments fell by 631k. This represents a fall of 5.1%. After income from investments is taken into account, the fall is reduced to 3.3%. Although this compares unfavourably with a fall of 1.5% in the benchmark against which we measure the performance of our investment managers, we did escape the full horrors of the shake-out in technology shares.

I think it useful to put matters in context. Between 1997 and 1999, the Society's investments grew by 4.2 million, so taking last year into account, the investments have grown in four years by 2 million in excess of inflation. In the long term, we budget that investments will grow on average by some 600k per annum, around 6%. With the advice sought and given, this appears to be a reasonably prudent assumption. It means that with our annual budgeted cash deficit of around 350k , the Society's reserves should keep pace with inflation. Clearly a long term view has to be taken as the fluctuations in the investment markets each year vary considerably.

The Society's cash deficit in 2000 of 424k, while acceptable in the above context, was nevertheless a turnaround of 600k compared to 1999. The main reasons for this were:

  • A lower profit from Portland Press, partly due to substantial investment in the Colchester Customer Services Centre. This investment has resulted in a gratifying increase in the client base and bodes well for the future.
  • An increased investment in IT, which I believe is essential to maintain and enhance the future prospects of the Society.
  • Spending on the Society's Professional and Education section increased up to budget (for various reasons, this area of the Society's activities was under-spent in 1999).
  • Various one-off costs occurred in 2000, including building maintenance and professional fees.
  • A reduction in investment income from the higher than average levels seen in 1999. We also received a one-off refund of Corporation tax in 1999 of 19k.

The net costs of the Birmingham congress were similar to those incurred in 1999. I considered it reasonable to spread these over the two-year period. One extra cost resulted from an upsurge in the number of delegates which meant we had to book an extra hall at the last minute, at a cost of 60,000 (around 10% of total running costs). Were it not for this, the overall finances would have been close to budget.

Society's reserves policy.
Summary of Income and Expenditure for 2000.

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