Following the publication of this year’s annual accounts, there is an increased gap between income and expenditure for RHASS. For the financial year 2023, total charity income was £11,532,053, a 5% rise from 2022.

However, expenditure grew to £15,383,679 – leaving a funding gap of over £3.8m.

The challenging set of accounts follows two sets of Covid-affected figures, with 2022 posting a loss of £1.2m, preceded by a Covid caused loss of £0.8m in 2021.

The size of the deficit is significantly larger than the £2.4m which the board of directors had signed off. The planned deficit has been accounted for through infrastructure investment, easing the burden of costs, inflation, the cost of living, and continued investment in partners and charitable activity.

Faced with rising costs, the board decided to hold down prices, knowing costs would outweigh income, and therefore agreed part of the multi-million-pound planned deficit.

Some of the significant costs in 2023 include the international shearing competition, the Golden Shears, which cost more than expected at £500,000, partly due to increased accommodation costs.

Additionally, 2023 saw the first live Hoolie concert, costing £539,581, which did generate significant revenue but not enough to make a profit on its own.

However, the society states it is a long-term commitment, with the Hoolie going ahead again with increased confidence that income will exceed expenditure. Ticket sales are reported to be up 100% from 2023. RHS TV cost £259,645, a sharp rise following a cut in Scottish Government Covid support. With no government support available this year, the board has decided to run a streamlined one-hour version, estimated to cost less than £150,000, with an offsetting income line.

Highland show-related activities rose from £6.1m to £8.6m for the charity. RHASS explains that this has been part of a ‘perfect storm’ of the cost-of-living crisis, causing suppliers to raise their prices, on top of energy, labour supply, and interest rates cutting into their margins. The Society made the strategic choice to absorb these cost increases to protect members, show exhibitors, and trade partners.

The interest on loans, including a bank loan of £8.1m, jumped 66% from £299,000 to £495,000 per year.

Prize money for show exhibitors also rose by over £100,000, a 53% increase from 2022. There was also a 40-45% increase in raw materials and contractor spend in 2023. The costs associated with running the Ingliston estate also jumped £300,000 to £1,332,874.

RHASS state they absorbed these cost increases to protect ‘members, ticket purchasers, show exhibitors, and trade partners’. This inevitably impacted RHASS’s finances and cash flow, and RHASS assured The Scottish Farmer they have plans for the year ahead to ‘bring us back to a sustainable financial footing’.

Staff numbers in the organisation rose from 38 in 2022 to 49 in 2023, which the society attributes to a return to normal staffing levels following COVID-19. Correspondingly, staff costs have risen over £500,000, which RHASS explains reflects the cost-of-living increases, with competitive wages essential to attract and retain professional staff for a business on the edge of Edinburgh. Pay rises have been awarded in line with the RHASS remuneration committee, which takes professional advice and benchmarks to ensure pay is appropriate for the charity.

The accounts also state that trade creditors have risen from £501,000 to £2.3m for the charity, putting the total due to creditors and accrued charges at £5.2m from £1.7m. In response, RHASS stated: “2023 was a very different trading year from 2022. Our historic finance system made the processing and approval of the high volume of invoices difficult, and these difficulties were exacerbated by the change to our new finance system at year-end. There were more contractors and associated costs in 2023 than in 2022, which is also reflected in the creditor account.”

As the society aims to ‘bring us back to a sustainable financial footing,’ RHASS has implemented new budget controls and new financial systems. The society states they are engaging with stakeholders such as the Chamber of Commerce and finance institutions to keep the wider financial environment under review and enable action if required.

There is also a strategy for price rises to be aligned at a minimum to inflation. This includes new proposed membership fees after several years at static prices and ticketing prices. To improve the balance sheet the society will start the next phase of fundraising as part of a new RHASS strategy this summer. This will see the society invest in further professional support, leading to a continued increase in activity and income levels over the next five years. Outside the show the society will increase focus on events throughout the year, such as Edinburgh Summer Sessions and Comic Con Scotland.

On costs, the society plans to reduce spending on professional fees and agency spend by achieving more through their own professional teams. Travel and ancillary meeting costs will be cut through a streamlined governance structure and virtual or hybrid meetings. They will also reduce printing and postage costs by taking a more digital approach while continuing to look after their ageing membership and those in the most rural and remote areas.

Jim Warnock, chairman of the RHASS, said: “2023 saw a continued year of positive investment into the future of the charity, its work, and our infrastructure, and our accounts reflect this. We also faced daunting challenges of rising interest rates and spiralling inflation, but in recognising these difficulties, we made the strategic choice to protect our members, show exhibitors, and trade partners to demonstrate our commitment to maintaining affordable prices.

“We committed investment into important initiatives which support the sector such as Golden Shears and the launch of the Royal Highland Hoolie, which we see as a fantastic growth area for the charity.”

Alan Laidlaw, chief executive of the RHASS, said: “I’m proud of the impact our team has delivered supporting and promoting agricultural excellence in Scotland. The crucial work we deliver across the country is testament to the hard work of our team and the fantastic volunteers who support us each year. These results show the hard work of the Society in a challenging year, our long-term plan to grow our impact and invest in our core activities remains relevant, and we are confident that our strategy will increase our reach and impact for many years to come.

“RHASS is also looking forward to continuing fundraising efforts in its 240th year in 2024, with a series of initiatives including the Mighty Munro Muster and 240 Years of Stories. A nationwide sheep hunt, Hide & Sheep, was completed in March.”

“The 2024 Royal Highland Show is on track to be a fantastic event, with ticket sales up 9% from last year. Livestock entries are strong, and many classes, including some new classes, have sold out in record time.

“We are pleased that our members have embraced the digital ticketing system, with 13,500 members having reserved their tickets, significantly up from last year. We look forward to welcoming visitors to this year’s show.”