From a finance operations point of view, 2011 was a successful year. Whilst total revenue was lower, the amount we were able to spend on Learned Society activities increased in line with expectations.
The volatility of the publishing operation of previous years was expunged with the outsourcing of PE magazine to Caspian. The partnership deal with Sage for the journals yielded royalty revenue of £1.8M and this will continue for the next four years.
In order to replace the long term profit stream from publications the Institution purchased a training business, namely SIA Limited. The purchase price was £1.3M which was taken out of investments and initial results are very encouraging. The Institution is writing the goodwill arising off over a period of five years. Five months of profitable SIA activity are included in the training results.
Our investments were affected by the general stock market turbulence and a loss on our investments of £2.0M was experienced. This malaise, together with the low interest rate environment, had a substantial effect on our defined benefit pension scheme: a loss of £4.0M was recorded.
The conclusion is that the Institution remains financially sound. The Trustee Board is committed to maintaining financial prudence and in particular ensuring a positive income from activities. Investments in relevant and appropriate new activities, as in the case of SIA, will continue to be made over the coming years.
Summarised Accounts
The Summarised Accounts are extracted from the audited Annual Accounts, which were approved by the Trustee Board on 18 April 2012. The report of the auditors on the Annual Accounts was unqualified. The Summarised Accounts do not contain sufficient information to allow for a full understanding of the financial affairs of the Institution. A copy of the full Trustees’ Report and Annual Accounts can be obtained from the Trustee Department on +44 (0)20 7973 1311.
A copy of the Trustees’ Report and Annual Accounts will be submitted to the Charity Commission in due course. The Summarised Accounts were approved by the Trustee Board on 18 April 2012 and were signed on its behalf by
Professor Roderick Smith, President, Institution of Mechanical Engineers.
Auditors’ Statement to the Members of the Institution of Mechanical Engineers
We have examined the Summarised Accounts set out opposite.
Respective Responsibility of the Trustee Board and Auditors
The Summarised Accounts are the responsibility of the Trustee Board. Our responsibility is to report to you our opinion on their preparation and consistency with the Trustees’ Report and Annual Accounts.
Basis of Opinion
We conducted our work in accordance with Auditing Guidelines The Auditors’ Statement on the Summary Financial Statement adopted by the Auditing Practice Board.
Opinion
In our opinion the Summarised Accounts are consistent with the Trustees’ Report and Annual Accounts of the Institution of Mechanical Engineers for the year ended 31 December 2011.
KPMG LLP, Chartered Accountants and Registered Auditors, St Albans