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 (now Investec), our investment advisers. Dividend income from investments within the financial year reflected a 6% increase above the previous year but, unsurprisingly, the market value of the Society’s assets portfolio has seen a fall of about 5%. 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. There remains a significant sum yet to be paid out for grants approved. The grants payable this year are listed as less than 50% of the sum for the previous financial year. This has arisen because a number of grants which were intended to be paid in this financial year (2010-11), were approved and the applicants advised in the 2009-10 year. The awards involved in these grants had therefore to be recorded in last year’s accounts. In actuality the level of grant awards approved by the Society intended for payment in 2010-11 was about 25% higher than in the previous 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 (now Investec).

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 17 November 2011, and signed on their behalf by

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

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