The London Library AGM | 26 November 2024
Treasurer’s Speech Notes
Good evening.
I am pleased to report to members on the Library’s financial position for the year ending 31 March 2024. I shall summarise what I have written in the annual report and the magazine. I shall then talk briefly about the financial performance for the current year and set out the proposed fee increases. I shall end by looking back over my time as Treasurer.
Let me begin with the financial results set out in the annual report and following recommended accounting practice for charities.
Those of you attending remotely should see a summary table of our performance on your screen. Those in The Reading Room should have found a printed page on your chair when you sat down on one side of which a table showing the net movement in funds over the last three years appears.
I will discuss, in turn, all the elements that make up the movement in the Library’s overall funds during the year. This table is compiled from the audited financial statements and appears in the annual report on page 16. I have presented the results in this summary form previously and the comparatives for the last two years are also shown.
Looking first at our income from membership, events, and trading: at £3.1m this was 5% higher than the prior year. Membership and related income increased by 2% to £2.9m. We earned £202,000 from talks, venue hire, and trading. This was double the amount of the prior year: thanks in part to the producers of the film Ghostbusters: Frozen Empire. I did not watch it and, sadly, neither did anyone else. We cannot anticipate a sequel as the film was not a commercial success.
Fundraising income at £1.4m was about half the amount of the prior year. However, in 2023 we recognised two exceptional legacies totalling £2m. I echo the thanks already expressed to all who donate: all donors are recorded over three pages in the annual report. Continued success in fundraising is vital. As you have heard already, membership income covers only two-thirds of the operating costs of the Library: our remaining costs must be met from events, donations and investment income.
The total costs of operating the Library -- £4.9m relating to operations and £360,000 to the costs of fundraising -- increased by about 13%. However, this includes £300,000 of projects funded by the Tom Stoppard fund. I estimate the Library’s underlying costs increased by about 6%.
While keeping a close eye on expenditure we continue to add to the collection. During the year we added about 4,300 printed items to the catalogue. We spent £327,000 on the acquisition of printed and digital material, an increase of 18% over last year.
Investment income increased by £66,000 to £294,000. This was mostly due to the much better interest rates available, particularly for term deposits.
The net expenditure for the year is therefore £391,000. Clearly, this is a markedly different result to the prior year. However, as I mentioned earlier, the prior year included £2m of legacy income. The underlying position, excluding exceptional legacies, shows incremental improvements over the last three years.
There then follow two items that are non-cash revaluations.
First, we record an unrealised gain of £553,000 in the market value of our financial investments. These largely comprise our endowment and restricted funds and were invested in the Newton Growth & Income Fund for charities. The unrealised gain is about 7.5% of the value of the holdings and reflects general stock market performance.
Second, each year we compare the assets that support the obligations of the Staff Superannuation Fund – our closed defined benefit pension scheme – with the estimated present value of the scheme’s future obligations to its members. While the scheme remains in surplus, in the amount of £760,000 under this accounting estimate, a small reduction of £42,000 in the amount of the surplus is recognised in the statement of financial activities.
Although we record it, the Trustees do not consider this surplus is available to the Library today, it will only be after all obligations are met over many years that any surplus will revert to the Library.
As you can see from the table, both these non-cash movements can swing from being large positive to large negative numbers one year to the next. This is simply a reflection of the volatility that we have observed in share prices and the yield on government gilts, in recent years.
Overall, the Library’s funds increased this year by £120,000.
This was the sixth year of our strategic plan. One of the goals of the plan was to eliminate the Library’s operating deficit by 2024. The operating result is the key measure of financial sustainability used by the trustees: it shows whether the costs of running the Library can be met by our regular operating income, from membership, trading, and regular fundraising. In 2018 the Library was running an operating deficit of over £600,000 and this year we report a small surplus of £17,000. A reconciliation between net expenditure and this surplus is to be found on page 17 of the annual report.
I appreciate that I am reporting on the financial year ending in March almost two-thirds through the current financial year. Let me make some brief comments on the year to date.
At the end of October, the number of members was about the same as at the end of March. If we see the same trend as in recent years, we can expect a net growth in membership by the end of the financial year. The financial performance is overall in line with budget: we are ahead in voluntary income offsetting a shortfall against budgeted membership income. Furthermore, the trustees have also been advised of a possible substantial legacy of considerably more than £1m. John Colenutt, my successor, will report on this next year.
Since March we have carried out a tender process to appoint a new investment manager. The Trustees appointed Rathbones to manage the Library’s financial investments. In recent years the amount we have under management has grown considerably and a fully discretionary mandate is now better suited to the Library’s needs. We have completed the formalities of account opening today and will be transferring assets to our new manager shortly.
Later, I will propose the resolution to approve the proposed fee increases from 1 January as set out in the meeting notice. These increases are 1.8% for those paying by annual direct debit. Full membership by other payment methods will increase by 3.3%. We are aware that members continue to experience rising prices; so too does the Library. I note that the recently announced changes to Employers’ National Insurance Contributions will alone add almost 1% to the Library’s costs in a full year. We continue to encourage members to pay be annual direct debit and offer a discount now worth £60 to those who do.
As this is my last report as Treasurer, I would like to thank Chris Gilbert, Director of Finance and Resources, and our Finance team for all the work they do to control the Library and to produce the comprehensive annual report.
I want to end by comparing the financial position of the Library today to that of eight years ago. Thanks to the generosity of its many donors — especially the munificent legacies of Drue Heinz, Chris Smith, Susan Batty and Gweslan Lloyd – and the dogged efforts of the Executive and staff to grow the Library’s income from all sources while controlling costs, I can confidently state that our financial position is much improved. That is not to say that there is not more to do: our operating surplus would ideally be between 5% and 10% of our income; we need to continue to grow income from all sources; and more permanent funds would certainly reduce the pressure to grow annual fundraising.
Those of you attending remotely should see a table showing our different funds on your screen. Those in The Reading Room will find on the reverse of the printed page the table showing growth in funds 2017-24.
The table shows our funds by category. Over the last eight years these have grown by £4.4m, or 61%, while, over the same period, the Library has paid out £1.5m to the SSF, the closed pension scheme, to transform its solvency, and funded six years of operating deficits totalling over £2m.
The growth in endowment and restricted funds provides more income supporting our book acquisitions and collection care, while the designated funds allow us to invest in technology and carry out overdue maintenance to No. 14.
The charity’s total funds, are over £31 million, including the amounts shown in the table. Overall, we had free reserves of £2.3 million at the end of March.
We have no debt. We own the freehold to our buildings: surely worth very much more than the historic cost value of £16.8 million in the accounts. The collection does not appear on the balance sheet as acquisitions are charged to the revenue account when purchased but it is insured for £26m.
It is this improved position that allows the Trustees now to consider improvements to the Library’s fabric and facilities, some of which were first considered twenty years ago.
When TS Eliot became the Library’s President in 1952, he said: “The maintenance of an institution cannot be defended on the ground of its usefulness in the past: only on the ground of its value for the present and the future.”
I shall let him have the last word. It has been a privilege to serve this precious institution.
