Overview of our financial performance in 2019

Every June we share an update with the community on our financial performance from the previous year, along with an overview of the impact of our work.  This is normally presented at our annual Garden City Meeting, but we are unable to host this year’s event due to COVID-19. 

It seems a little odd to be talking about what was a good year for the Foundation as the world slowly emerges from lockdown.  Alongside this, the Foundation is facing some tough decisions over the coming weeks as we try to address a significant loss in income from our property portfolio and venues.  However, it is only right that we acknowledge the achievements of our teams and the positive impact of their work in the community. 

Financial highlights of 2019

We are pleased with the financial performance of the Foundation during 2019.  Across all funds, our income exceeded operating expenditure by £234k. This means we generated more money than it took to operate the organisation - a notable improvement on 2018 where we reported a net expenditure of £40k. As a reminder, all our income and any annual surplus that may be retained is invested back in the community.

Our improved performance in 2019 follows recent investments in new properties in the office and industrial sectors, alongside effective management of empty (void) properties.  

Here is an overview of some of the key figures:

  • Our turnover increased by £761k (6.3%), while expenditure increased at a slower rate (up £487k, 4%) from 2018.
  • We generated a £4.98m return from our investment activities.
  • Our charitable income from our venues (Broadway Cinema & Theatre and Standalone Farm) generated £2.59m.
  • This income allowed us to spend £7.33m on a range of charitable activities, including our community grants programme.
  • We managed empty units (voids) more robustly and these reduced to 6.3% from 7% in 2018, helping to maximise the return from our assets.

Better financial management

In 2019, the focus was very much on controlling our operating expenditure within our annual income.  This ensured cash generated from asset disposals could be invested for the benefit of future generations (i.e. invested to generate income), rather than topping up our income to meet operating costs. 

This discipline ensured that we entered 2020 in good shape. However, recent investments in income generating assets (for example industrial and office assets) means we entered 2020 with relatively modest cash balances. Excluding cash held on behalf of tenants (i.e. deposits and sinking funds – cash for a specific purpose) the Foundation held cash of £4.8m at the end of 2019.  To give this some context, this is equal to approximately five months’ worth of operating expenditure.   

The challenges that lie ahead

It is already clear that we won’t be able to achieve similar results in 2020.  This time next year, I imagine we will be reporting a very different picture. As I write this update, our teams are grappling with the immediate and long-term implications of COVID-19.  The pandemic has already had a significant impact on our work and income.  The nature of our operating model means the organisation is materially affected by a downturn in the local economy.  As a responsible landlord, we remain committed to work with our tenants to agree honest rental payment plans, where both parties act reasonably and in good faith.

Being more disciplined during 2019, by spending only what we generated, will stand us in good stead.  This is a more balanced way of planning for the future and will ultimately create a more sustainable organisation for future generations.  

2020 – a year like no other

None of us could have predicted what has happened over the last few months.  The impact is being felt globally and we will have to act to secure our future.   We need to make difficult choices to protect the future of the organisation before we can embark on a programme to rebuild our finances in the coming months and years. You can read more about the challenges we face in our Chief Executive’s latest blog.

You can read more about our financial performance in the 2019 Annual Report. If you have any questions about our performance during 2019, please email response@letchworth.com

Annual Report - Boy with bus