The Society’s budget aims to fund its events, grants and publications from its income. The Society’s financial position has been monitored regularly by the Council and in discussions with representatives of Rensburg Sheppards, our investment advisers. Dividend income from investments within the financial year reflected an improvement from the previous year and there has been a modest increase in the market value of the Society’s assets portfolio. The investment advisers continue to work towards achieving the level of income that the Society has previously enjoyed and there are some positive signs. Our liquid reserves in the Charities Deposit Fund have increased though they continue to attract only a modest interest rate. The substantial increase in grants payable in comparison with the previous year is because of grants to be paid out in the financial year 2010-11 that were approved in 2009-10 and notified to the applicants before the end of our financial year.

Reserves policy
The Society’s reserves comprise an unrestricted fund derived from past benefactions and its annual subscriptions, including the proceeds from the sale of the Philosophical Hall to Leeds City Council in 1921. The fund has increased in value over the years as income exceeded expenditure. Since the Society adopted its new constitution in 1997, Council’s aim in the medium term has been to balance its expenditure and income without depleting the capital value of its investments. The Society’s income and expenditure do, however, vary from year to year depending on a number of factors. The Council therefore considers it prudent to hold liquid reserves in the Charities Deposit Fund and current bank account. The amount held in liquid reserves is a minimum of £5,000 (roughly 25% of current average annual expenditure, excluding investment management fees). This sum may be supplemented from time to time by provision for major expenditure to which the Council is committed in the coming year (if the anticipated income in that year will not be sufficient), or for major expenditure the possibility of which it foresees over the coming five-year period. The policy on reserves is reviewed annually by the Council as part of its annual budget review.

Investment policy
There are no restrictions in the Society’s Memorandum and Articles on the Society’s power to invest. The Council’s investment objectives are to maintain a level of income sufficient to fund the Society’s activities, while maintaining the capital value of its invested assets over the long term in line with inflation. To this end, it is the Society’s normal practice to reinvest realised gains on its assets. The Council has delegated the management of its investments on a discretionary basis to Rensburg Sheppards.

Risk management
1) Income: The investment managers pursue an active investment policy on the Society’s behalf. The arrangements are regularly reviewed by the Trustees.
2) Expenditure: Expenditure on individual Grants, Publications and Events usually represents a small part of total expenditure and risks are minimised by standard procedures for authorisation of all financial transactions. The potential risks at the Society’s events are considered as part of the planning for them, and appropriate steps are taken, including the arrangement of Public Liability insurance as necessary.
3) The quality of the Society’s Events and Publications and the outcome of Grants that have been awarded are reviewed by the Trustees at their regular meetings so as to ensure that all the Society’s activities are of a high standard consonant with its Aims.

The Society has taken advantage of the small companies’ exemption in preparing this directors’ report.

Approved by the members of the Council on 11 November 2010, and signed on their behalf by

A. C. T. North (President) and C. M. Taylor (Treasurer)

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