We are experiencing times that are unique to our generation and which are causing severe impact on global society and our daily lives. Naturally our first concern is for you and your families and we hope that you remain healthy and safe during this period. We are conscious that many of you will be experiencing concern and uncertainty about the future and this is fully understandable. Rest assured that our thoughts are with you during the current difficulties as we work together to overcome this extraordinary situation.
For those of you that are finding these times challenging, please remember that we are still providing a range of support through our Support Network and we also offer reduced membership fees (means tested). We do believe that your registration is one of the most valuable assets you will have in helping you at work as well as in finding work or rebuilding your business in the future. At this difficult time, let us also keep the Support Network going for those who are not so fortunate.
As many of you will have already seen on the IMechE website, the normal work of our Institution has been significantly affected by the COVID-19 restrictions. In line with country guidelines, all our buildings globally have been closed for the foreseeable future in order to protect our members, staff and visitors and we have introduced remote working practices for our staff.
As engineers, we know that some of you will be playing an important role in the huge global fight against the virus and to assist this we have set up a COVID-19 page where you can learn more about how you can support and also share your own stories. Our website will be regularly updated with the latest news and stories. We encourage you to visit it and read for yourself how our members are responding at this time of need to fulfill the Institution’s vision of ‘improving the world through engineering’. Their efforts are a shining example to us all and something of which they and the Institution can be truly proud.
Whilst it is difficult to predict the extent of the operational and financial disruption to our operations due to COVID-19, we are regularly and proactively reviewing our mitigation measures in response to the crisis as it develops. We will do our upmost to maintain member services during this period, as well as develop new online services to support you, and we hope that you will be patient and understanding with the roll out of these over the next few weeks.
This week, we are launching a bi-weekly member email newsletter and, together with the new area on our website IMechE at Home, we will keep you updated and provide access to existing and new online services for our members.
To assist more generally, we have also launched this week new STEM online learning materials which we hope will support those of you with children home-schooling as well as any members still working online with local schools.
On a positive note, the Institution achieved a substantial turnaround in financial performance in 2019 compared to the previous year. Following the detailed financial review initiated in October 2018, implementation of the recommended actions has proven to be very effective.
Together with our auditor, Crowe U.K. LLP, the audit fieldwork for the 2019 year-end figures has proceeded in line with the agreed timetable. However, as a result of the uncertainties surrounding COVID-19 and the environment within which the Institution is now operating, finalisation of the annual report and accounts has been deferred and so the results presented here remain unaudited. The decision to delay has been taken to provide sufficient time to consider the impacts of COVID-19 and to deal with the challenge of concluding on going concern and other disclosures for the annual report in light of current uncertainties.
In 2019, we have achieved a £1.5m reduction in operating expenditure and a major boost in performance of our trading subsidiaries to reach an operating surplus, including £0.3m of exceptional expenditure, of £0.7m; an improvement of £3.5m compared to the £2.8m deficit in 2018. In addition, the sale of our London property at 6 Old Queen Street has contributed a further £1.9m to our reserves.
During 2019, our free reserves rose from £3.7m to £5.9m; a level approaching the target of 6 months of operational spend (equivalent to £6.9m in 2019) established by the Trustee Board. The first two months of 2020 continued in this positive trajectory. Nevertheless, we should not underestimate the negative impact of the current situation on our performance over the rest of 2020 and potentially longer. When necessary, we will need to take steps to ensure that any significant financial losses can be absorbed by the free reserves and other financial assets.
The Institution has been in existence for almost 175 years and, despite difficult times in the past, has weathered them all. We remain confident that, working together as fellow engineers, we will be able to survive the current situation and to emerge ready to support all our members in taking on the challenges of what may be a significantly changed world.
IMechE Trustee Board