Financial report
Headset review
Managing change LAA Chief Executive Officer, Steve Slater, delivers the LAA 2020 financial accounts
A
s longer-term members will be aware, each year, ahead of the formal presentation of our annual accounts at the Annual General Meeting in October, we annually produce an abbreviated Financial Report in Light Aviation magazine. This year’s summary, fresh from the auditors, shows our income and expenditure for 2020, our planned deficit for 2021, and our future planning for 2022 and beyond. The figures below are based on the accounts for the 2020 financial year from the formal audit by our accountants, Henson Rees Russell LLP. As I would expect, our auditors were happy to give a clean bill of health to both our accounting processes and our governance, even taking into account the exceptional circumstances in which we have found ourselves recently.
to generate planned short-term deficits in coming years to increase engineering staffing levels, both to improve the level of service to members and to provide longer-term succession planning. This increased costs from £975,542 in 2018 to £1,072,252 in 2019 and moved us from a pre-tax surplus of £62,859 in 2018 to a planned deficit of £17,306 (1.61% of turnover) in 2019. Rather than keeping money in the bank at low interest rates, we invested instead in member services, training and the recruitment of new skilled staff. For some time, we have noted a shortfall in design engineering capability, with all three design engineers working at full capacity, leading to delays in approval work. In addition, a number of key staff (including our CEO), are approaching or beyond their 60th birthdays. We therefore needed to plan a staged succession of skills and resources for the years ahead. The extra expenditure has allowed us to bring onboard and train the extra staff. In 2020, we continued to adhere to this strategy despite the pandemic. Our original planning for 2020 was for expenditure of £1,391,260 and a planned deficit of £133,700. However, we were able to maintain expenditure at £1,122,106 and therefore generated a smaller deficit than planned, of £113,920. As a result, Association reserves have fallen from £1,365,534 at the end of 2019, to £1,293,448 at the end of 2020. This is effectively the same level of reserves as held at the end of 2017, so we continue to retain more than adequate reserves to protect our members from any further short-term challenges, and to allow the continuation of our investment in the reorganisation of our engineering functions to further improve our services to our members and promote longer term gains in efficiency.
The Covid-19 effect
The past year threw up new and unprecedented challenges for the Association, with the effects of the Covid pandemic on the wider community and on sport flying. The two ‘lockdown’ suspensions of general aviation, for several weeks in early March and again in the final weeks of the year, curtailed many traditional LAA activities including member training courses and marketing events, and also forced the cancellation of the 2020 LAA Rally. The first lockdown in particular had a significant short-term effect on revenues, but we elected not to furlough any staff and our investment in past years in remote Cloud-based IT systems meant that the LAA was able to serve its members via home working in an almost seamless manner. On behalf of the Board and all LAA members, I would like to express our thanks to all those who contributed to that achievement. With the resumption of flying in the summer of 2020, key engineering activities and revenues began to recover, eventually returning to around 90% of budget (a circa £50k deficit). Commercial revenues showed a longer-term depression, with lower membership recruitment and a number of members giving up flying in the course of the year leading to a dip in membership figures following five years of near continuous growth. Commercial revenue streams suffered longer-term disruption in areas such as magazine advertising revenue, member training and merchandise sales. As a result, overall revenues for 2020 were £1,196,160, in comparison with £1,308,724 in 2019. Careful cost control has allowed us to minimise any increase in the resulting deficit. In 2019, prior to Covid having its effect, the Board agreed to use our reserves 18 | LIGHT AVIATION | August 2021
So, where are we now?
The table below shows monies for income, outgoings, operating profits (loss) and reserves from 2016-2021.
2016
2017*
2018
2019
2020
2021 est
INCOME
£1,276,857 £1,318,576 £1,312,580 £1,308,724 £1,196,160 1,330,000
OUTGOINGS
£1,091,040 £1,180,833 £1,248,368 £1,326,030 £1,310,080 1,390,000
OPERATING
PROFIT/(LOSS) RESERVES
£185,817
£137,743
£64,212
(£17,306)
(£113,920) (£60,000)
£1,071,384 £1,294,708 £1,406,320 £1,365,534 £1,293,448 £1,233,000
Note: 2017 income data does not show transfer of £81,025 from LAAET following the trustees’ decision to close the charity. These funds are now held as ‘reserved’ deposits.
