The Society

160th Annual General Meeting (May 16 2001)

Hard decision needed on future budgeting

Some hard decisions remained to be taken on the Society's future budgeting, the TREASURER, David Allen, told the annual general meeting. The Society's means did not match the enormous amount of work there was to do — including reform of the regulatory framework, continuing professional development, the national plans for the NHS, and better communications with the members, the government and the public. But the Council was determined to ensure that it went forward on a sound financial footing.

Presenting the annual accounts of the Society for 2000, the Treasurer said that, for the first time, the full accounts were available on the Society's website.

The Treasurer said that half the Society's £20m income in 2000 had come from publishing activity. Despite few major new publications, the net surplus from publishing operations had grown by 4 per cent. This had been mainly due to The Pharmaceutical Journal group of publications, in which there had been strong demand for advertising.

However, the publications directorate operated in a volatile market, where new technologies and new demands meant that the large proportion of the Society's income derived from publications was not guaranteed. The Council therefore recognised the need to seek to diversify into new ways of generating income in order to support its programme.

The Treasurer said that the 2000 year-end results showed a deficit before tax of £880,000 against the budgeted deficit of £300,000, which represents 1.5 per cent of turnover (£21m). The total deficit for the year after taxation had been £1.3m.

The unbudgeted operating deficit had resulted from a number of external drivers. For example, £775,000 had been paid from reserves to fund the Society's share of the campaign to save resale price maintenance. The Council intended to replenish the reserves over three years starting in 2002. An unbudgeted £25,000 had been spent on the legal costs of defending judicial reviews about the limit on attempts at the registration examination. The litigation continued.

Other expenditure had been made to meet the Society's own needs as an organisation. For example, new activities during the year had increased in cost from an anticipated £356,000 to £577,000. Another factor was that, during the year, the Council expenses system had been reviewed and locum and attendance fees enhanced.

Total staff costs for the year had risen by £677,000, or 8 per cent, of which 1.5 per cent was the result of exceptional costs associated with the internal restructuring of a number of staff teams and the relocation of the animal medicines division to Warwickshire. An across-the-board 3 per cent cost-of-living increase had been paid to all staff, plus normal progression and merit awards related to performance.

The British Pharmaceutical Conference had been budgeted to cost £174,000 but had cost £278,000. The budget had been based on a projection to secure £100,000 sponsorship and to raise delegate numbers by 25 per cent. In the event, sponsorship had raised only £50,000 and delegate numbers, although up, had not matched projections.

New priorities that had had significant impact on the Society's spending included investment in support for devolution. Expenditure by the Society's Scottish Department in 2000 was £455,000, compared to £298,000 in pre-devolution 1998; the Welsh Department's expenditure was £128,000 compared to £66,000 in 1998.

The Society had spent £140,000 on its policy function, while expenditure on political liaison, promotion of policy and science outreach had been £335,000.

The Treasurer then proposed the adoption of the annual accounts.

Salaries and pensions

ANTHONY COX (Birmingham) said that in both the 1999 and 2000 financial statements the section concerned with pensions had stated an assumption that salary increases would average 5.8 per cent; however, the wage bill had increased by 7.8 per cent in 1999 and 8.46 per cent in 2000, against the background of a 7 per cent fall in income and only a 5 per cent increase in the total fees collected. In addition, inflation was well below that level and the awards were double that awarded to hospital pharmacists. He asked how the Society would tackle the salary bill to keep it in line with what it could afford to pay.

The SECRETARY AND REGISTRAR said that the Society adopted a system for determining salaries that was commonly used in the industry and by some other organisations. In preparing its budget, it looked at the projections for salary increase within the sector and the budget was based on that assumption. The remuneration committee would look not only at the pharmaceutical sector but also at other parameters.

IAN CALDWELL said that the Society's honorary auditors, over the past two or three years, had questioned the structure of the Society's pensions benefits. It was their understanding that consideration would be given over the coming year to the structure of the pension fund, and they would await the outcome with interest.

The SECRETARY AND REGISTRAR said that one of the principal duties of the new remuneration committee was to review the pay and remuneration system every five years and it would also look at the arrangements for pension provision.

Publications

ASHWIN TANNA (London) asked why no more detail was published about the publications directorate, which was the major source of the Society's income.

CHARLES FRY (Director of Publishing) said that breaking down the income and expenditure account into performance by individual elements of the publications programme would give commercially sensitive information away to competitors.

Mr TANNA asked why there was not more information about directors' remuneration.

The SECRETARY AND REGISTRAR said that it was normal practice to publish in bands. Conditions of both contract and data protection had to be considered and data protection would not allow the disclosure of individual information. The bandings had been extended to give more information than in previous years, particularly for senior posts.

PETER MARTIN (Inverness) said that the Society was possibly earning between £3m and £4m from job advertisements in The Journal — from employers trying to poach pharmacists from everybody else because there was a manpower problem. If the Society successfully managed to address the manpower crisis, where was it to get its income in the future?

The SECRETARY AND REGISTRAR said that the Society was well aware of the ups and downs of classified advertising and took that into account in its forward planning. It also had to take into account the impact of Department of Health plans to advertise on its own website.

Mr ROGER PHILLIPS (Sutton Coldfield) asked whether it was possible to break down some of the income and expenditure items, for example, to see how much was spent on the branches and regions.

The TREASURER said that, on the advice of the external auditors, the financial statement complied with an accounting standard for dealing with segmental information in the accounts of professional bodies.

The PRESIDENT then put the financial statement to the meeting, and it was adopted.

Correction
In this report, we incorrectly described Peter Mutton (Inverness) as Peter Martin.