Financial Risk Management

Aligning the cash resources held to the requirements of the reserves policy and future designations and investments is the key objective of managing the financial risk. Cash flow forecasts and their relationship with restricted, designated and free reserves are monitored regularly and reviewed quarterly by the Financial Sustainability and Growth Committee. Additional scenario analysis is also incorporated into this analysis to provide wider context and understanding. There remains a significant exposure to price risk relating to non-current investments and the Trustees have set an investment policy which does not embrace any more risk than a medium risk investor and utilises Francis Clark Financial Planning (‘FCFP’) to oversee the investment manager.

The appointment of the Auditor is reviewed annually with a tender carried out periodically – a tender was carried out in the year in relation to the 2023 audit with an auditor due to be appointed following the sign-off of this Annual Report. The decision to appoint a new Auditor was driven by the Board wanting to introduce fresh perspective and challenge, recognising the value to good governance of periodically changing auditors.

Investment Powers

Under the Memorandum and Articles of Association, the Charity has the power to invest in any way the Trustees wish.

Investment Policy

A strict investment mandate is in place with Investec and monitored by FCFP and is in line with a detailed Investment Policy. This Policy is under constant review and was updated in the prior year predominantly to reflect an increased risk approach but also to update for other factors including the extension of the social investment approach. The objective was updated in 2021 and is currently stated as achieving a total return of 3% above inflation (as measured by CPI) on an annualised basis over a rolling 5-year period, to retain the real value of the capital's purchasing power. While high levels of inflation in the current year have put pressure on this target the Board believes it remains relevant. The Trustees are averse to capital volatility and aim not to embrace any more risk than a medium risk investor. A diversified geographical and asset class mix of assets is permitted, although high risk assets such as derivatives must only make up a small portion of the portfolio and be used for portfolio management rather than speculation.

These arrangements are reviewed periodically and following the updates in 2021 they are believed to remain the best options for Devon Air Ambulance’s current needs despite the short-term variabilities which have been seem in domestic and international markets through 2022.

Investments

Investment losses of £733,000 in the year included £659,000 of unrealised losses with the balance of £74,000 relating to realised losses. Investments are expected to fluctuate in the short term and the Trustees are comfortable with the performance of the investments since the transfer to Investec and through the year in the context of difficult market conditions.

The majority of losses were incurred in the first 6 months of the years, while the portfolio value remained relatively flat in the second half of the year after an initial increase was offset by a fall in December.

The Trustees are confident that this investment remains aligned to the Charity’s requirements and that the medium risk investment mandate is being implemented. FCFP monitor Investec and provide independent feedback to the Board who also monitor the performance in line with their expectations and have direct contact and feedback from Investec.

Investment income has increased in the year to £159,000 from £119,000, back towards the pre pandemic level of £165,000 received in 2019.

Social Investment Policy

With environmental sustainability and stewardship being one of our four key strands underpinning the strategy, the social investment policy has continued to be a key consideration for Trustees. Environmental, Social and Governance (‘ESG’) factors were part of the criteria used when evaluating the tender in 2021 and the appointment of a new manager has assisted in updating the policy.

Other Factors in Achievement of Objectives

Devon Air Ambulance works closely with the South Western Ambulance Service NHS Foundation Trust (SWASFT) who up until 31st March 2019 employed the paramedics seconded to our service. In partnership with our neighboring air ambulance charities, Cornwall, Dorset & Somerset, Wiltshire and Great Western we commission SWASFT to provide a specialist dispatch team who do a vital job ensuring our services are tasked to the patients who most need the enhanced and critical care we provided.

Investment

The support of councils and communities across Devon have been and continue to be significant factors in the achievement of our night operations objective as well as the initial money received through the LIBOR funding which helped finance much of the night-landing site implementation.

Membership of the Peninsula Trauma Network provides great benefit through peer support, networking and communication across the region.

Through the Air Ambulances UK we connect with our fellow Air Ambulance Services around the country. This provides opportunities for learning and sharing of best practice across all our activities. In addition, members of the Senior Leadership Team subscribe to relevant professional bodies.

Working in partnership with other organisations is seen as key opportunity to work towards our charitable objectives. Mission Zero is a great example where working with other local organisations gives us more support to make a greater impact on our charitable objectives.