Highlights from the Chairman's report to the Annual General Meeting on 22 May 2003At the Lifeboats AGM in May, Chairman Peter Nicholson looked back over another successful year, but warned that the Institution needs to react to a changing situationGood morning and a very warm welcome to the 178th Annual General Meeting of the RNLI. Once again I am delighted to see so many of you here - your presence, particularly those who come year after year, really is appreciated and helps make the Lifeboats such a special organisation. Our volunteers and supporters are the backbone of the lifeboat service and, thanks to you, much has been achieved over the past year.

Lifeboat services The lifeboat service figures for 2002 reflect a dramatic difference in comparison with 2001 due to the inclusion of Thames lifeboats. The total number of people rescued during the year increased by 425 to 7,365. This is an average of about 20 people every day (see page 2 for more rescue statistics).

At 7,729, the total number of launches demonstrates the continuing need for the search and rescue service we provide. It also shows the need for us to continue to develop our preventative and educational initiatives.

Many of us can find ourselves at risk. The sea is unpredictable. It will at times catch out even the most experienced among us.

Shore facilities Efficient and effective support for the volunteer crews and helpers wherever they operate is a vital part of our lifesaving work.

With this in mind, we opened three new purpose-built divisional bases during 2002; in Scotland, the north and the east. Designed specifically for us, the new combined divisional base and regional office for Scotland supports all our operations north of the border with much improved facilities.

Meanwhile, we have completed a range of new developments and improvements to other facilities during the last year. These include a number of major projects in Ireland. A new lifeboat station has been built at Wexford Harbour and a new boathouse at Crosshaven, just inside Cork Harbour.

Boathouses have also been rebuilt at nearby Ballycotton andYoughal, and a new pontoon berth at Dunmore East has completed the modernisation of that station.

Contracts that have been completed elsewhere include a new pontoon berth at Weymouth; new boathouses at Bude and Littiehampton; and, the biggest project of the past year, a new boathouse and berth providing combined facilities for the afloat and inshore boats at Harwich. Very few stations now lack the modem facilities considered appropriate to run an effective lifeboat service.

Over the coming year, we will be building and installing new facilities at slipway stations where the Tamar class fast slipway lifeboat will be deployed; and on beaches in the south west of England a range of buildings are required this season to support our Beach Rescue lifeguards.

Thames lifeboats 2002 was the year we established four new lifeboat stations at Teddington, Chiswick, Tower Pier and Gravesend. In the first full year of service,Thames lifeboats were called out over 800 times and rescued more than 250 people. As a result, our lifeboats have become a familiar sight on the Thames. The Thames lifeboats are the busiest in our fleet and are clearly an important search-andrescue resource for London. This has undoubtedly raised public awareness in the capital and should help us to raise even more money there, which is a vital need.

Developments to the fleet The first of our hovercraft went on service in Morecambe last December and I am pleased to be able to report that it saved its first life in April. Two more will be deployed during this year. Extending and improving rescue cover in this way does demonstrate our commitment to examining and trying out all possible ways of saving lives throughout all areas of our operation.

Orders have been placed for the last of the Severn and Trent class al[-weather lifeboats. Eight were introduced in 2002 and a further nine will be brought into service this year. In addition, the new Tamar all-weather lifeboat is on schedule and will be introduced into service in 2004.

Conversion of the experimental boat is almost complete. This has included the installation of an advanced electronic and information management system, which has been designed and developed by an external contractor with considerable input from our technical department. Further work and trials of this innovative system and the lifeboat itself will take place during this year.

There are 27 new all-weather lifeboats in the five-year build programme. This includes the ongoing development of the new fast carriage lifeboat to replace the Mersey class.stormy sea In addition, 20 new inshore lifeboats were introduced last year and a further 27 will be delivered in 2003. This programme includes new Atlantic 75s built at the Inshore Lifeboat Centre in Cowes and the development of the first production Inshore Boat 1 (IB!) this year as a replacement for the current D class lifeboats. The pre-production trials of the IB1 project were successfully completed in 2002.

Beach Rescue The successful integration of the Beach Rescue lifeguard service into mainstream operations has also proved that the RNLI can increase its life-saving capabilities beyond what has been traditionally expected. During the summer season of last year, the service operated at 43 beaches in the south west and generated a great deal of interest and support from local people and the media.

Almost 7,000 people received assistance of one kind or another from the lifeguards during the year, but what is most important is that 22 lives were saved.

This year we shall consolidate the existing service and improve the technical support we provide for the lifeguards. In partnership with other lifesaving organisations we will also develop a volunteer strategy and a joint approach to beach safety.

There is no doubt that Beach Rescue has exposed us to a whole new audience of potential supporters, especially families and young people with whom we must sustain and foster good relations for the future. This will improve our profile and help us increase public awareness, which will in turn help us to raise enough money to fund our ever increasing activities.

Promoting water safety Working across all areas of the UK and Republic of Ireland, our newly formed Beach Safety unit will be following the same principles established by our existing Water Safety teams. Prevention is better than cure and by raising awareness on beaches we can help to stop people getting into difficulties and thereby reduce accidents.

Young people are our future supporters 3nd volunteers. It is therefore essential that we continue our work in this area. We now have education officers in each region supporting the aims of the youth education section; and in 2002 a number of events and initiatives with schools, councils and groups took place, which gained positive results.

Building on the success of the work of the water safety and education teams, we have introduced a fishing safety service this year. It is a natural progression for us to do all we can to help improve safety in one of the most hazardous industries in the world We enjoy a great deal of respect among fishermen and the service will consist of a dedicated team of recently appointed coordinators who will provide advice and demonstrations to fishermen in a practical way.

Training developments Delivering effective crew and staff training is a fundamental part of the support we provide and many individuals have found real value in the courses and facilities on offer.

During the past 12 months, a new competency-based training system has been rolled out to all lifeboat stations. This will provide crew members with externally accredited qualifications for the first time and has the advantage of allowing individuals to learn at a place and time of their choosing.

Following a review of the way we manage our lifeboat stations, an updated structure, suitable for the years to come, has been trialled at a number of lifeboat stations and will be recommended to all lifeboat stations, with an aim to having it in place by 2007. Furthermore, we plan to review all working practices within the operations department this year to improve efficiencies and we aim to reduce stockholdings by 10%, without extending delivery times.

Perhaps one of the most exciting developments this year is the start of building works on the new Lifeboat College alongside Lifeboats headquarters at Poole.

The completion of the land decontamination process last November enabled us to start the construction of a purpose-built, residential college. This is now well under way and due for completion in 2004. This new facility will provide us with a modern building to train lifeboat crews, volunteers and staff.

Economic situation I hardly need remind you that we are a service and a registered charity that continuesto depend wholly on voluntary contributions and legacies for its income. All charities are having to work very hard to maintain their income in the current economic climate, which is tougher than it has been for a decade.

While it is true to say that world events and the depressed economic climate have combined to reduce the level of our free reserves, we can account for part of this reduction by increased capital expenditure on property developments at Poole. We are in the process of transferring part of our reserve from stocks and shares to property.

Investment of this kind adds real value and I am sure that it is entirely appropriate to use our funds in this way. From a financial and operational standpoint, the new property is both good business practice and a sound investment in the future of our lifeboat service and its people. In a few years time we will own a hugely valuable property estate in Poole: a very solid reserve of wealth for our successors.

Having said this, we are watching our reserves position closely, but the fact that we are able to continue with so many of our plans does, I believe, vindicate the Trustees' decision on the level of reserves it is appropriate for us to maintain and we shall continue to aim to maintain our free reserves at one to three years of operating income.

Fundraising needs Nevertheless, we must take some positive steps to safeguard our financial position. This is being done in three ways. Firstly, by saving money where possible and running the service even more efficiently. Secondly, by re-phasing our capital spending and our building programme. I am glad to say that only quite small delays should be necessary.

Thirdly, by increasing our fundraising efforts very substantially. This action will increase our fundraising costs in the short term, but will pay off in the years ahead.

Our membership subscriptions have not been changed for over three years and the Trustees therefore reviewed them at their meeting on 9 April. It was agreed that all membership subscriptions should be increased with effect from September 2003.

The new rates are: Shoreline, £20 (joint, £33); Offshore, £54 (joint, £94); Governor, £66 (joint, £116); and a one-off payment of £1,500 will buy a Life Governorship.

From sales to subscriptions, and from legacies to lifeboat days, fundraising takes many forms. 2002 was not only a bumper year for our branches and guilds, but we now have almost 262,000 members providing regular contributions and donations.

However, our plans this year are very ambitious, with more regional appeals and a clear goal to double the total number of members over the next five years; a tough, but we believe achievable, target. By increasing membership to half a million, we will develop a reliable source of regular, cost effective and tax efficient income, which will enable us to budget our future expenditure with increased confidence. Our corporate fundraising team has also been working hard to establish strong relationships with the business community.

To help achieve all this we have a new fundraising and communications department, following the merger of our fundraising and public relations activities at the beginning of this year. We strongly believe that these two functions go hand in hand and that it makes good sense to combine the skills and integrate the work of this group of people to raise awareness and generate more income.

I have every confidence that we can make significant steps forward in this area and achieve the desired response from our existing and potential supporters over the coming years.

We need your help So what is the message from all of this to you and our many thousands of supporters and volunteer fundraisers? Some argued in the past that we were too rich and over funded. Some may now fear from the recent downturn that we face financial distress.

Neither is accurate. Neither is true.

However, the simple reality is that few organisations in recent times have escaped a change to their financial fortunes and we are no exception. Financial prudence is about responding to these changing situations to ensure that we remain strong in the future.

That is why your Trustees now judge the time to be right, and the decision sensible, to increase our fundraising activities, increase our membership and increase our profile to the outside world.

So my message to our much cherished supporters is that we are now asking you to play an even more significant fundraising rolein the times ahead and so help to ensure we are building a strong and secure future for the RNLI. Our sole aim in seeking your further support is to achieve the robust financial future that will enable us to provide and maintain the same unique lifesaving service that we always have in years past. I am confident that our wonderful supporters throughout the United Kingdom and Republic of Ireland will respond to this call as you always have done in the past.

All these changes, developments and improvements form part of a carefully thought out strategic plan, which we review and publish each year. The plan outlines how we intend to meet the challenges of the future and how we deal with the uncertainty of the financial climate. It also sets down the service standards to which we aspire and describes how we measure the overall effectiveness and efficiency in key aspects of our work.

Above all, it provides every one of our supporters, volunteers and members of staff with a clear perspective of our purpose, vision and values; to save lives at sea and be recognised as the most effective, innovative and dependable lifeboat service. With your help, I feel sure we will continue to grow stronger and move the RNLI further forward..