2002 Annual General Meeting and Presentation of Awards Another busy year for the RNLI saw crews answer 6,882 calls and rescue 6,918 people.

Education and safety work is starting to show results and successful trial schemes ran to develop new ways of saving lives.At the 177th Annual General Meeting of the RNLI, Chairman Peter Nicholson looked back at the achievements of the past year and set out the plans for the future. He highlighted the shifting demands of people who use the water, whether for business or for recreation, and the developing social patterns which affect the volunteer and full-time workforce.

The RNLI enters 2002 in a very sound operational and financial position: • The average age of the on station all-weather lifeboat fleet has been reduced to 9.6 years.

Nearly 40% of lifeboats are capable of 2.5 knots.

• The average age of the on station inshore lifeboat fleet has been reduced to 6.8 years.

• A new generation of lifeboats, Fast Slipway Boat 2, Fast Carriage Boat 2, Fast Inshore Boat 1 and Inshore Boat 1 are currently under design or at prototype stage.• The lifeboat service is more than halfway through a major shoreworks refurbishment programme, the bulk of which will be complete by 2007.

• A new operational communications system, COACS, is being installed at every lifeboat station and will become fully functional during 2002.

• Competence based training is being introduced and will be rolled out to all lifeboat crews from 2002 to 2005.

• The RNLI accounts for 2001, summarised opposite, show free reserves covering 22 months of expenditure.

To increase the RNLI's capability to save lives, it has run trials of a series of initiatives. These involved providing beach rescue teams in five beach areas in southern England, the establishment of two lifeboat stations on inland waters and the trial of a light hovercraft at selected lifeboat stations, mainly in estuary locations. The RNLI has also established four lifeboat stations on the upper tidal reaches of the Thames, including central London, which became operational on 2 January 2002.

To cope with humanitarian disasters, it has set up rapid response teams, ready to respond at short notice at home or abroad. In addition, preventative and educational work through sea safety, SEA Check and with children is widely acclaimed and is beginning to have an effect on the number and type of incidents and their severity.

To provide a better service from Poole to the coast and to underpin the work of the crews and supporters, a major building project at Poole will commence soon to provide a residential Lifeboat College, a new lifeboat support centre, a lifeboat maintenance depot and a visitor centre.

'All these developments involve some change,' he said. 'Nevertheless, no-one need be in any doubt that our main focus always has been and will remain the provision of a lifeboat service second to none, crewed largely by volunteers, ready to save life in any weather, 24 hours a day, 365 days a year.'RNLI summarised accounts for 2001 : funds generated Lifeboat maintenance Crew and station costs Crew training Sea safety Dependants' pensions Management and administration writable expenditure : income as) on investments movement in reserves 2001 £m 105.7 40.8 31.3 3.9 2.0 0.5 3.1 81,6 24.1 (36.2) (12.1) 2000 £m 78,9 40.9 23.7 2.2 ; 3 3 ' 72.7 6.2 (4.3) • B increase in funds generated was almost exclusively i to a high level of legacy income, up over 50% on )0's level. The higher station and crew costs fleeted the expansion into beach rescue, inland aters and the River Thames, the continuing Dlementation of the new call-out and communications stem and increases in the number of full-time rational staff.

sstment valuations fell by £36 million during 2001.

tital expenditure in the year has been increased as 3ws: feboats Btions ana shoreworks jnching equipment Dts and office property iputer equipment, plant and vehicles 2001 Em 16.4 11.4 0.9 95 49 43.1 balance sheet is summarised below: I assets Lifeboats and stations Other properties, equipment end vehicles tments • net assets I assets 2001 £m 140.4 38.8 179.2 312.6 11.7 5035 2000 £m g B - ' l : 3 ' B.fl 30.9 2000 £m 127.2 27.B 155.0 350.2 10.4 515.6 i RNLI's free reserves ended the year at £148m, uivalent to 22 months' cover for the cost of operating the sboat service.

I tummiriMd account* may not contain sufficient Information to allow for a I understanding of the financial affairs of the RNLI. If you would Ilka to IB* the I innual statutory •ccounts, they may be obtained, free, from: iHnam* Director, RNLI. West Quay Road, Pool*. Dorset BH15 1HZ Why does the RNLI need reserves? The RNLI undertakes to provide a lifeboat service around the coasts of the United Kingdom and Republic of Ireland 24 hours a day, seven days a week. This is a fixed and increasingly costly commitment. To fund it, the RNLI is entirely dependent on voluntary contributions, which can be a variable and uncertain source of income.

In addition, the Institution has to make long-term investments in new lifeboats and shoreworks to ensure that lifeboat crews have the most effective, safe and reliable equipment. The main purpose of reserves is to provide cover to ensure the service is maintained if, at any time, current income is insufficient to meet the RNLI's expenditure.

What level of reserves is appropriate? The Trustees of the RNLI are responsible for setting a reserves policy. They take account of planned expenditure and the amount of cover that would be sensible in view of the Institution's high dependence on unpredictable legacies and the risks to the financial base from external shocks, such as stock market declines. The Trustees also review best practice elsewhere in the charity sector in close consultation with the Charity Commissioners. The result of this detailed process this year has been that the Trustees have set a reserves policy that 'free reserves' be kept within a range of one to three years' cover of the cost of providing the RNLI's lifesaving services.

What are free reserves? The RNLI, like most charities, has a number of different types of reserves. Some are specifically restricted by the donors' wishes, while others are available for any part of the Institution's operations.

Restricted reserves consist of endowment reserves, where the donor has given a capital sum to the RNLI, but instructed that only the income from the capital may be used for a given purpose, and restricted reserves, which are donations for a specific part of the RNLI, such as an individual station or lifeboat.

The rest of the reserves may be applied at the Trustees' discretion but, before identifying what are actually free reserves, the Trustees are required to designate a reserve to match the fixed assets used by the RNLI, called the fixed assets in use reserve, which is similar to the fixed capital of a commercial undertaking. Taking into account the scale of the RNLI's capital expenditure programme, notably for new lifeboats, lifeboat stations and the Lifeboat College, the Trustees have also set aside a reserve for planned capital expenditure, to ensure that there will be funds available for the next three years of these programmes.

The rest of reserves are free reserves which represent the RNLI's safeguard against fluctuations in its financial position damaging its ability to provide a lifeboat service. The Trustees will adjust the business plan if free reserves are forecast to move outside the one to three years' cover range..