2020-12-31-accounts

OROYAL AIRFORCES Association The charitythat suppoits the RAF famlly THE ROYAL AIR FORCES ASSOCIATION REPORT AND FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2020 tr¢hY.H•trtrAaJostylh•Qu H*51ETedChanty226636IEr4and&Wa￿S).SCC37613￿5CQtthnd1.

THE ROYALAIRFoR￿sAS5ocIATION REPORT AND FINANCIALSTATEMENTS YEARENDED31 DECEMBER 2020 Cont&)ts Pages Reference and administrative details Trustees, report 4-24 Independent auditors, report 25-28 Group statement of financial activities 29-30 Association statement of financial actlvlties 31-32 Con501idated and Association balance sheets 33-34 Consolidated and Association Statements of cashflows 35 Notes to the financial statements 36-67

THEROYALAIR FOR￿sASs0clATION REFERENCE ANDADMINISTRATIVE DETAILS YEARENDED31 DECEMBER2020 REGISTERED CHARITY NUMBERS 2266861Englandand WaIe51,SC03767315co￿and) PRINCIPALOFFICE Atlas House.41 Wembley Road, Le1￿$ter, LE3 IUT PATRON Her Maje5tyThe Queen LIFE VICE.PRESIEENTS Marshal of the Royalir ForceThe Lord Stirrup KG GCBAFC FR4eS FCMI Air Chief Marshal Sirstephen Dalton KC8ADCBSc FRAeSCCMI Air Chief Marshal Sirjoseph GilbertKCB CBE LLD Ihcl Alr Chief Marshal Sir Glenn Torpy GCB CBE DSO ADC Bsc IEng) FRAeS Air Chief Marshal SirAndrew PulfordGCB CBE ADC Air Chief Marshal SirStephenHillier GCB CBE DFC ADC MA Air Marshal Sirjohn Kenall KCBCBE DL (Died June20211 Air Marshal Sir DustyMillerKBE Air Marshal P O SturleyCB MBE Bsc FRAeS Air Vice-marshal P Liddel CB BSC CErbg F1￿FRAes Air Vice-marshal N Bairsto CB MBE Air CommodoreA H Vaughan OBE BA FIMgt TRU.STEE MEMBERSOFTHE COUNCIL President Air Marshal Sir Baz North KCBOBE MA FRAeS Chairman Air Vice-Mar5halJ Cliffe CB OBE Vice Charrman Dr B Pattison OBE HonoraryTreasurer Mr P Tagg Elerted Member5 Dr B Pattison OBE Mr MJ Blackman Squadron Leader DGibson RAF MrCHGossMA Mr l L McEnnis DipNEBSM AlnstAM (Dipl MrAPRees Mrs B Oennettstsnnard Mr P Ramrayka MBA CIHM FIHM FIHEEM FRSP

THE ROYALAIRFORCES ASSOCIATION REFERENCEANDADMINISTRATIVE DETAIiS (CONTINUED) YEARENDED31 DECEM8ER2020 Area Representatfves Mr F C Barrett M8EISouth Eastarhd Eastern) Mr D Chappell (Northern) Mrs M Addison (Wales, Midlan(b and South Westeml Mrss Kidston (Scotland and Northem Ireland) Air CornrnodoreA Neal AFC FRAeS (European) Members appointed bythe Royal Air Force AirCommodoreGAOpieMDAMABScFCIPD RAF WingCornmanderAMorrisMBERAF Warrantoffl￿rm Rees-martin RAF Benevolent FurKI Representative Air Commodore R Atherton Appolnted Member Ms F Barber Ms S Barber Mrs P 8earblock Air Vice-marshal M Neal OBE CEng Fl SENIORMANAGEMENTTEAM SettetaryGeneral Mr N Bvntin8OBE CDir FIOD MCMI Dirertor of Welfare and Policy Mr R O'connor MA Dirèttor of Brartchand Mèmbershlp Operatlons Group Captain D Rowlands MAChartered MCIPD Director of Marketlng, Fundraislngand Trading Ms R Huxford MlnstF Chlef Finance Offlcer MrA Wilkinson-strorpe FCCAlurhtil 31 March 20211 Mrs K Parkin IP 8Sc IHonslACMACGMAMCIPPACIPD (from 12 April 20211 Chief People OffI￿r MrsA Hunter FCIPD (until 31 De￿mber 20201 Chief Information Officer Mr P Sherwin Bk IHonslMBCS Groupcompanysecretary Mrsv Hall FCG

THE ROYALAIRFORCESASSOCIATION REFERENCEANDADMINISTRATIVE DETAILS ICONTINUEDI YEARENDED31 DECEMBER2020 PROFESSIONAL ADVISORS Audltors RSM UK Audit LLP, St Philips Point. TempleFlOW, Bimlrgham B25AF Bankers Lloyds Bank plc, Law Courts Branch, 222 Strand, LondonWC2R I Investmentmanagers Rathbones Investment Management Limited, I Curzon Stree¢ London, Wll SF8 Rothschild & Co, Newcourt, Stswithin's Lane. London EC4N SAL Solicitors Freeths LLP, Onecolttsnsquare, Le1￿$ter, LEI IQH Bates Wells & Braithwaite London LLP. 10 Queen Street Pl￿, London EC4R IBE

YHE ROYALAIR FORCESASSOCIATION TRUSTEES, REPORT YEARENDED31 DECEMBER2020 The Trustee5 of The Royal Air Force5 A5sociationlthe Association) pre5entthi5 reportand the financial statementsof the AssoclatSon for the year ended 31 December 2020. The finanaal statements have been prepared based on the accountirbg policie5 Setout in note 2 ttsthe financial statements and comply with the Royal Charter. Mission Our purpose and reason for existence 15 ertshrined ￿thin the charitable objertive set out at Article two of our Roya Charter, which state5.. Yhe object for which the Association is established is to promote, thriyjgh the comrackship engendered by itSMem￿r5, thewelfareby charitablemearts of all serving andformèrmembers of OurAirForces, tsir SPOU5e5and dependants,togetheTWlth the widows and widowers and depermlants of those who diedwhilstser*ww subseqtsently." Activities We are one of the oldestmllltary charlties, with a 90-yearhistoryof supporttothe RAF communitv. We offer suptortto a communityof onè milllon people. We have athriving network of 70,OC(ImembeTsacr055 90 countries in 300branches. In 2020 We supported morethan 80,0(K) individuals to remain active. thriving and valued mernber5 of their Icca communitie5. Our dedicated helpline looked after over45.0(K) erquiries We reducedlonelirEssand i501ation by makingover 109.OQ)frlendshipand welfarÈtheck¢allstoover35XKI) member50fthe RAFfamily. Over 2.OOObeneficiariesreceived regular weekly(a115 Supported by over 8(Kjnewvoluntee￿. 6,243 beneficiarie5weresUPPOrtedbyOpCONNECT.our emergencyre5wnsetoCOVID-19. We had a f5eld force of 1,100 highlytrained welfare volunteers, who supported Over4,0(￿ welfarecases of which 2,387re￿1Ved oneto one support. 89%feklistened toand thattheir need5were understood and ful met. Over 52%of RAF communltywelfarefinancial caseswere managed by ourwelfarevolunteers. We sourced over £4.8min almonised funds for ourbenefiuarie& Oursupport,tralningand advice hub5 empowered over 4.540pecylebyhelpingthemto intfeasethewowrb resilien￿ orsupportthemental wellbeingof other Ourfour ret1￿MentaC(0MMOdat1onctsmp1exeS in the UK allowed 150peopleto retsln thelrIndep￿de￿e with a helping hand availableon-&te should they needit. More than 400 children received high-quality childcare in a welcomng and safe environment at our BAFA Kidz nurseries on UK military base5.

THE ROYAL AIR FORCESASSOCIATII]N TRUSTEES. REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Actlv5tieslcont5nuedl We relieved key elements of everyday life which can ￿uSe pressure, such as helping our serving RAF community to keep Stro￿ rektionthipswiththeir loved 0￿$. 3A57 peoplevisitedour Navi8atin8Dementiaonline hub. 531 membets of theRAF communltytookpart in ouronline'FindI￿ itToughY rnentsl well￿￿)gprograTr￿. More than 840 beneficiaries received our suppgrt in applyin8 forthe Armed Forces Compensation scheme, 5ecurin6 over £427k inawards. We se¢uredover£lAm for Branthclubs fr(¥v the Armed For￿5 Covenant Fund. We supported Branchclubstoobtainover £l.Om in Government Funding. Ourfrèe Wi-Fiwas used over 150,(#Xltimes. Our innovative online entertsinmentprogrammewa5 viewed morèthan 1.5mllllon tImesa￿o5$1he wor1, keeping peopleconnertedwith the RAF past and present. Impart of COVID-19and our response The World Health Organisation declared COVID-19 a global pandemic on 11 March 2020, followin8which the UK Governrnentmade a 5erie5 of recommendatiorLsculmin3tirEin a prolonged nationwide lockdcwn commencrgrn 23 March 2020. A resurgence in cases in the UK duri￿ the Autumn and Winter of 2020 resulted in the IntrcKluction cl further lockdowns andreStr￿t1C￿s whichareonly now beginningto beeased. whi￿ vaccines have been developed axl mas5-vaccination programme is underway, ccnsideralle uncertainty rernains. Durlng 2C120 the Assctiations, Bo¥d of Tru5tee5 Ithe CourKiO has c0nfr0ntedun￿rt8intyhead on, and thiswill contitvjein 2021. The impact of COVID-19 on the Assgciatyon has been signihcant. As with all charities. the Association's ability ts) fundraise has been severely affected with the majority of planrEd activities in 2020 beirÉ caJKelled. The AEociatitin acted swiftlytotake advantage of the varlousapplopriate formsof governmentsuppcrt, includngfurlough. The Association had to change how it delivered e)asting serm￿5 while responding to both new needs and increasiig demand. The respite hotels had to close during the lockdown and face-to-face ¢asework and befriendng We￿ Tr)t POS5ible.Atthe same time,the demand for our welfare servi￿5 incread dramaticallyasthe effects of isolation social distancing became apparent. We responded by delivering seNT￿S virtudly, and introducing our Op CON welfare servicewhich has supported over 30.(K)O p0tentiallyvu1nerab￿ membersofthe RAF community. In re5P to the pandemit.the Councl had toconsider decisveand significantaction to protectthe work of the Associati￿ts) meetthe needs of the RAF communtyfor the Ic*ng-term.The difficultdecisK)n to repurw)sethe respite care hote& a to reshapethe organisationto posltion itforthe future resukedin the unfortunate needfor redundartles

THE ROYALAIR FORCESAS50CIATION TRUSTEES. REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Impact of COVlD-19￿d our respOr￿e {continuedl Thè Association hasadopted a five-stage approachin respondingtothe pandemic.. Address the immediatechallengesthat COVID-19presentstothe Assoaationand siakehddeys. Manage the shortto medium-terrnfinancialchallenges. Create a detailed plan to returnthe Association to'scale'as quicHy as possible. Reirnagine the next normal,the implications forthe Associationand howthe charityshouk4 renventand p0sf￿n itself. Change the structures, prcKes5es and servi￿5 delivered by the Associatiory addressing the new, emerging need, the changing landscape andthe available reSoUr￿s. To ensure the A&sociatlDncomesthrcMJghthe pandemicand 15 P051tioned to meetthe post-COVID welfare needs ofthe RAFcommunity. the Council reviewed the charity'sstrategicobjective& In doingthis, the Council reèfflrmed thatthe primary purw5e of the A550ciation 15 to promote. through comradeship ewerKlered by its members, the welfJe charitsble mean5 of the RAF c(ThmuThty- i.e. itisa welfare charity. The Councila150 agreed thatthe charity'sstrate objective5 will remain relevant a post-COMD environmenL although achIe￿ing these objectives wll require the Associatlgn to adapt to societsl and economic chan8es caused by the pandemic. The Council is approaching the challenges ahead with an open mind. strong leadership, 3gile management, and evidence-tmsed decision-makng to ensure the Association makes the most effertive use of it5 limited and constrained re50urtes. In support of this, the Council has adoptedthe follo￿Ing strategic'designprlnci￿es'. Decisionswill be evidence-based., where necessarydats is unavailable, the Assctiation will invest in research. The needs of the majorityof benefiaarieswill be putbeforeall else. 3. The charity's funds will be used to besteffertin deliveringwelfaresupportto the RAF community. 4. The charity will strive formaximLm Scale and reach in itsdel1veryofservi￿$, whilestill providing speaalistseNces to niche groups whereverprarticable. 5. The Association recognisesthe valueof volunteers and will promole and supwrtthem, be theymembersornot. 6. The charity will seek out okportunitiesto partner with other organisatitsns tothe mutual benefrtof its beneficiarie% 7. The charitywill adopt digital toolsand ways of worknngto enhancetheefficiency, compliarhce, andeffectlvenessof its outputs. OpCONNECT In March 2020 the Association develok*d Op CONNECT, a four-pronged. immediate resp[￿se to the COVIL¥19 pandemic to address the issues of isolation and loneliness, anxletyand access to food I hygieneproducts. Each of Ihe four emergency projects cOm￿emented, en￿a￿ed and extended existing welfare se1vi￿S and they were launched immediately after the lockdown be8an. The projects were managed by a skeleton trew of employees lover 51YA of emp1oyeeswerefurto￿hed},wIth the support tsfenthLtsiasticrnembersand volunteers.

THE ROYAL AIR FORCESASSOCIAnON TRUSTEES. REPORTIcoNnNUED} YEARENDED31 DECEMBER2020 OpCONNECTlcontinuedl The four emergency prc¥ects promded c74er 500 doorstep drcps of f￿d & hy8ierp produLts, over l(Q,(KIote￿PhOne welfare checkswere made to hlgher-ri￿k individJaL8 and aseven-dayon dernand helpllnewas established. Bythe eNJ of 2020. over 2.COQ people were receI￿1ng weewy befrEnding ca115 and over 8(M) volunteers had bn recruited aNJ trained, digitally 5UPPQrted and managedto help u5 deliverop CONNECT.The Ass(Kiationwishes to acknO￿edge 3fKI thank all its volunteers and 15 particularly grateful to CGI, ICAP, MBDA, Raytheon. Rolls Royce and Sage and the employees forsupFX)rtlngtheprojects. Ourinnovative tsnline entertainment program. Project ENTERTAIN. wasvie¥%ed more than 1.5 million timesacrossthe world. keeplry people connected with the RAF pastand present. Itdelivereda daily, wide-rangingschedule of Fa￿b￿k Live and Zoom ses￿OrE including low-irnpactfitness, tap dancing. drill tuition. aviation history, con￿rtS and sing-alongs. quilles, read and watchlrec1s￿S and guestinterviewees. The success of Op CONNECThighlighted an increased and unmet need for servicesto address lonelinessand isolation and the four projects have been incorporated into theAssociatiorfs permanentwelfare ser￿lCe5. ProjertHELPLINE BAGDROP supported over 6,200 benef￿laries and has been incorporated into the As50ciation'5 welfare casewk service. Project ENTERTAIN, which was re-introduced durirg the second lockdown, will, duri￿ 2021. be evol￿ ints 'Air Mail+'. Project OUTREACH has been combined with the Association's befrien(fing servi￿ under the banrEr 'Connections For Life.. Welfare strateiv Our welfare strategy aims to proide the RAF community with person<entred, proactive and easy-t0-ae￿s 5UPPOrt and servicesthatwill enhancetheirhealth,financial sewrity and independence. Italso integrate5 a bespoke portfrfKI of assistance from the State, the Association and other specialist providers to enable the members of the RAF communityto overcomebarrierstheyfacethroughouttheirlive5. In 2020, 0￿r80,0(￿) rneMbe￿ ofthe RAF communty who required practical. emotional orfinancial assistan￿ were SLPPOrted by the Associaticn. This was made pos%ble by our thrivin8 nthork of members and supporters who volJnteered theirtime to supp(Kt the Association and ow employees. As onè of the oldest military charitie5, Wlth a 90-year history of support to the RAF tommunity. the Associati(m committed to delivering need5-led, evidenced-b85ed welfare serV￿es. The Association is working alorEside the other principal welfare caseworkiry military charitie5, the Royal Brit15h Legion and SSAFA. to.. Develop an ovenriewof our collective reac￿ work and impact. Share informatlonon variws on-and off4inetrainlng methods. Reviewstandard clEntconsentdeclarations. Consider howwe bettersupport indwiduals I households digitally. Develop common stsndardson CMS21 In 2020 we launched a research study to identifythe longer-term effects of COVID-19 on the flAF community. Thi% eviden￿ will infomi the futuredevelopmentof seNI￿s. l The Client Mana8ementSystem ICMSICMS21 IcoFltrolled bythe Confederation of BritishSekviceOr8anisations ICOBSEOI and managed bySSAFAI

THE ROYALAIR FORCESASSOCIATION TRUSTEES. REPORTICONTINUEOI YEARENDED31 DECEMBER2020 Emotional and mentalwellbeir Our national befriend1r￿ servi￿, designed to reduce the loneline5S Within the RAF veteran comrnunty, continued during 2020 although it was transformed from a face-to-face to tslephone Servi￿ in response to the pandenic. Followingthe success ofProjectOUTREA(H the ￿0serVI￿5h8ve been amalgamated and nowform'connertions For Life'.The Association's ethos Is that once you are partof the RAF cornmunity. you are always partof it.That is whys%e are determined to do all we can to make sijre no one feels alone. Connections For Life"ft8hts lonellness throL friendshi￿ and will continueto match carin&friendlyvolunteerswith thi)seexFeriencing isolatiw, and will proattnte contsct potentiallyvulneraNemembersof the RAF communityto check on thelrwelfare. Improving mentsl wellbeingcontinue5to be a keythe￿£ forthe Asy)ciatiornA newbespokemental WdIbel￿tralni￿E course for non-sermng member5 of the RAF comfnunity. 'Finding it Tough?, (Fin wa5 develoFed during late 2019. Originally designed as a face-to-face training course. in response to the lockdown a shorter. online version was developed and h35 been delniered to over 530 Indivi￿al$. The FIT course helps people to reccgni that evewr struggles Wlth life fromtlme to tlme.we discusshowthe specBI ex[erIen￿ of being partof the widerRAFcomm(nty can also come with challeryges and suggestpractical strategies to help irnprove resilience. In line with our ctThmilnEnt to providing the highest qlkility support for the RAF community, the training is Quality Marked, and partiupants ¥e encouragedtotake part in a long-term research 5tudyto determlne its effeciivene5S. Developmentworka150 continuedto providea bespoke tsnline hub for peop￿ in the 5erMng RAF communitywho are carlngfor family members with dementia. Research byAlzheimerfs Societysuggeststhatan estimated 70,000 peop with an RAF background have dementia. In 2018 an Associatior study, which sought to understand the social, geographical andbiological characteristics of the RAF community. revea5edthat9% of sermng RAF KErsonnel had un￿ld caring respcnsibilitiesforan olderadult.TheAssoci3tion teamed upwith Alzheimerfs Society and CGI to createthe first phase of our new'NavigatirE Dementia, project. an online hub. The hubcomFlements the support alreadyprowjed by the RAF by Sinking indiMdua15 With other RAF carersand families affected by dernentia. proMdI￿ a vital knowledge hub and steering themtoWardsfurtherre￿urCes and support. The hubhad over 3.￿oUniql￿VI51tOrSduri￿ 2020. Hou5in8and respite breaks Otherwelfare seryiw included Te5Pltecareand holida￿ provÉded by ourWin8s Break hotels and chalets. lunchclubs and our sheltered and independent livingschemesatfour locations acrossthe UK. All respite care andholiday setvices hadto c105ein March 2020as a resultof COVID-related reStr￿tIC￿$.The panderric particularly affected the Wings Break Hotels IRothExJry HoLL5e and Flowerd)wn House), a5 the rn3jorty of the hoÈ guests were in COVID-19 'higher r$k' categories. COVID-19. the introduction of social distsncinE and the sh¢Id1￿ of vulnerablegroup5 has consderablych3rEed the landseèpeoftherespite care marketandccffisickrat4e cha11erEeswere identified in rtropeningthewings Break Hotels.giving riseto a significantT15kforthe Association. The two Wings Break Hotels have historically struggled to achieve full occuparKy, requiring tonsiderable subsiL* from the charity and the level of cost of providiry respite breaks to a limited number of beneficiaries was significant. The need to mainlan a COVID-safe envsronment bwth enhanced infertion-ryjntrol praCtI￿S and social distarKirE would ha￿ increased costs, further reduced guest numbers and diminished the quality ofthe guests. experience. Atthe same time, Op CONNE had identified otherconsKlerable unmetneeds, whichthe Association needed to re5Fx)nd to if possible.

THE ROYAL AIR FORCESASSOCIATION TRUSTEES. REPORTICONTJNUEDI YEARENDED31 DECEMBER20ZO Houslngand resplte breakslcontlnuedl Against this background, and following consultation with affected employees, in july 2020 the Council agreed reluctantly to cease the delwery of organic respite care. resulting in the permanent c{￿ure of Rothbury House Flowerdown House a5 WingsBreak faalities forre5￿te B￿#5. However,the Council 15 committed to Meetingtt￿ of those who, ordinarily, would visitwings Breakfacilities for ressite care breaks throughalternativemeans. Re￿h has since been carried outto deteminethe bestfutureuse of both hote151tes. In February 202L the Council decickd Ihat, based on the findi5￿5 of this researth, Rothbury Houseshould beretsined bytheAss(iation and Isubjectto locd authority permissions) be converted to retirement accommodation. A long-term lease agreement for Flower¢h House ha5 been agreed with the YMCADulverton Group,a Somerset-ksed charity. The Association's holKlay servres re-0￿ned in Septem￿rSUppxyrtlng 180gue5ts. The Association operates four sheltered hO￿ing schemes. in Melton Mowbray, Moffat, Rothbjry and, throuth RAFA Housing Limited. Storrin8ton, whid) in total are hometo 150 tenants. Financial support In 2020, over4,5CK) cases were supported by our stsnd-alone we￿are caSew(￿kerS. In addition to this, our brathes 5UPPQrted many tho￿and5 more cases locally. The AsSociatic￿, via the military charity sector grant system and the Client Management System ICMSI Icontrolled by the Confederation of Britlsh Service organi￿tiOnS (COB￿0) ayl managed by 55AFAI almoni5ed over £3m, principally fr(xn the RAF Benevolent Fund, in financial support for these beneficiarie5. Additionally, the Aswciation received morethan 840ArmedForces Comper6ation Schemeand war penslonenqui￿4 and provided speci31i5t adviceand stjpportto Secure £327k in compensation forbenefidaries. Support tothe serving We a150 maintained our effwts to keepserwng families strongand connectedthrou8h'. our SUPPLrtto contacthows on RAF ststions,. Storybo)kWingslwhichallowed children to bet*fitfrom a bedtime sloryevenwhentheirparent servlngawayl,. and D(K)dle Boxes2 which were i5suedto children ar￿ parents aeross 21statior￿. Our free Wi-Fi promded in 43 facilities across 14 stations / MOD sites and to 82 houses used for welfare purposes by the RAF, kept senring personnel in touchwith family and friends andwasusedover 150,(QOtimes in 2020. IWF FamillÈsFedÈration Our management Of the RAF Families Federation has also played a key role in capturing evidence on issues whKh oncem serving RAF peF50nnel and theirfamilies- and in 5haringthiswith military and Governmentdeasion-maker& RAF Families Federation e￿dence on family life is frequently cited in the report by Andrew Selous MP, 'Living in (Kjr Shoes.. Understand¥)g the needs of UKArrned FOr￿S Families13 thatwas Commissioned by the Secretary of ststs for Defence. The A$5(Kiation is delithted that, having managedthe Familes Federati(￿ contracts1n￿ its In￿ptIOn n 2(K)7. it ha5 been awardedthe contractby the RAF forafurthertiveyear5. Doodle Boxes are memory boxescreated bythe ch'ldren of the deployed to remind them ofhome. Livin in our sho nderstandi then dsofUK Armed F families RAF Familie5 Federation raf-ff.o

THE ROYALAIRFORCESASSOCIATSThN TRUSTEES, REPORT ICONMNUEDI YEARENDED31 DECEMBER2020 RAFA Kidz The PAF'S Community Needs Awsunent ICNAI identified the proV￿10n of childcare as a critScal area of need #i 2019 we wereapprgathedbythe RAFto assistfurtherin alleviatingthis needthroughthe development of a neWstr￿d of work. Through our subsdiaries, we took responsibility for the nurserie5 at RAF Odiham and RAFC Cranwell during 2019, and the nursery at RAFDigbyln january2020.we nowsuFportover4(M)children andtheir familes. which directy contribute5 to both the charitable objects of the Asscoation and it5 Strategic welfare aim. Membership Since 2014, over 43,0)O new members have joined the Association, brin@"ng the cul￿nt rnemberstryp las of 31 December 20201 to 69,OCKJ. Recruitment is acr055 all age groups and over half of those servirE in the RAFt0d￿ arè rnember5 of the Asscciation. The vitsl role played by our members cannot be overstated,. manythousands vdurrteer their time to deliver welfare 5ervKe5, raise essential fu￿15. provide ccmradeship and 5UFPOrt to each other. man our branch and branth Club netWLYkand helpin countlessotherways. Branthes There are approximately 3CKJ RAF A5SOUation branthes located across the UK and in 18 othèr countries across Ihe world. Branches are charities in their own right, managedbytheir br￿ch committee5 biJt5ubjectto the A5S0Ctat￿Jn'5 Royal Charter, Rules, Byelaws and Stan(krd Regulations. Branches maintaincontactatloeal level with the Setving and ex-sermce cornmunity. prcwide weffaresupportand r funds. For social purposes. some brdnthes have memberg clubs affiliated to them. During 2020 the Associati)n was Successf￿ in securing over £1.4million of fundingfor 31 branchesfromtheAmied Forces Ccwenant Fund Trustthro their Veterans, Community Centres programme. This funding was restricted for approved renovations and improvementstothe branche5' club5. The Assotiation also supported fourbranthesthrO￿h ltsown branch pnJFeity grantscheme. Brancheswere unaLle to meetface-ttrface during muchof 2020 due to COVID-restrKticns and their clubs havebeen temporarily closed. Branches have worked hard to maintain contact with thelr members, includin8 deliverirg an outreach pro8ramme to thoseover70 year501d. The Assoclation has supwrted its branches andbranch clubs thrO￿hl)utthe yearwith guidance onthe restrictionsand the governMent5UP￿rt availableto them, enablingthem to claimover £1 million in grants and fUrI￿ghsUpp0rt.Th income is recorded in the branches. and clubs. financial statements, which are not consdidated with those of the Association. io

THE ROYALAIR FORCESASSOCIATION TRUSTEES. REPORT ICONTINUEDI YEARENDE031 DECEMBER2020 VolLFnteering The As50cialion's robust volunteer recrutmert arld training prows contin￿d to play a central rde in buiklirg rnaintainin8 a highly competsnt welfare volunteer field force, undertakirE casework and Connertions For Life l(FLI. Fate-to-facetrainlng sesSior￿were curtailed in 2020dueto COVID. but0verl.0￿VOlu)teers attended onlnetrèiThng All our welfare volunteer5 are provided with regulèr continual professional development opportunities, al￿ our Voluntee￿ are 5UPPOrted both practically and emotionally throuth our Community Sur4)ort team. The impact of the welfare serVi￿S delivered by our volunteerson ihe mental wellbeirE of the individuabthey as5iStls monitored u&ng Ihe internationally validated Short Warwick-EdinbLrgh Mental WellbeirE Scale. The Association remain5 the on milltarycharltyto provlde nationallyaccrec¥tedtrainingto itswelfare volunteers. Fundraislng As part ofthe Asscoatiorfscommf(menttothe hEhestPo￿ib1e 5tandard5 offunthaisng. wedid ￿rut￿OStthro￿)ut 2020 to ensurethatall our activities were complkAntwith legislative, reguLAtoryand best praCti￿Standards.We hwe been re815tered wilh the Fundraising ReguLHtor sirteits inception in 2016, demcnstratingour commitmenttothe C(xle of Fundraising Prattice and the Fundrdi5irg Pr(Thise. Successful fundraisiryg is crltical to the sustained financial health of the A550CBtion and our abilityto provide support to the RAF community. The pandernic has had a significant effect on all areas of our fundraising activity. but the generosityof our members, branches,volunteers and supporters in responseto our emergencyappeals has been vtsl in replacing sorneof our lostincome.The mainsourcesof fundraising inc(Kne duriry 2020were gifts in wills,volLnteer fundraisingactivrties, donation5 frorll indwidua&,grantsfromtrustsand foundationsand fundin8andgifts in kind frcm corporate partnerships. The Association is grateful for the support shown to its work by all those who funded it durirE 2020. Supp)rt to the Association frcn trusts, foundations and other organisations came fr(m a number of SOLtrces. Some wish to re￿in anonymous butothers included.. Annjane GreenTrust Annington Trust Armed For￿$ CovenantFundTrust Aerosuprbatics Ltd Asali Aviation Focus Group B D Thornas Charitsble Trust Community Foundationfor Lancashire CGI CTC London Ltd Davis-RubensCharltab￿ Trust Edith Murphy Foundation Foundation SeotlarKI Gerald Bentall char￿ableTrUst Green Hall Foundation Hilda Farr CharitableTru5t l.M.L.D. Forde CharitsbleTrust JP Morgan Chase li

THE ROYALAIR FORCESASSOCIATION TRUStEES' REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Fundraislnglcontlnuedl Fujitsu Lelcestershireand Rutland Community Foundatlon Lillie Cjohnson CharltableTrust Lockheed Martin UK Masonic Charitable FourKlation Maud Elkington CharitableTrust Mazars Charitable Trust MBDA Michael Watson CharitableTrust Mr & Mrswilliam Donald's Memorial Tru# Pukaar News Rare Tea Companv Raytheon UK Rigby Foundation Sage Selkirk No 2 Trust Sir Donald and Lady Edna WilsonCharitsbleTrust Sirjeremiah Colman GiftTrust The DCMSand National Lotterycommunity Fund The Ministry of Defe￿can￿ the Cabinetoffi The Scottish Government Wilkln & Sons TP ICAP Vichai Srivaddhanaprabha Foundation Western PowèrDlstrl￿t1On During 2020, all our interactionswith theEe￿ra1 publicwerecarrEdout byour efflployees and vol￿teers, exceptfcf two suppliers whose seNiceswe employed to interactdirectly with the public to adrninister our Weekly Lotto and to support our ChristmasTV campaign.we ensuredthatcontracts,which includedfundr&i5ing Complian￿ clauses.were in place with these suppliers, and with all corpordte partners who raised furKls for us. As part of our work to ensure compliance with fundrasing reg(4ation and best practi￿, we monrtored our SUP￿lerS cOrstan￿V to ensure they nEt the same high stsndardswe exk*Cted of ourown fundra￿ers.The Association ha5 a FundraisngComF4aints PolwarKI has processes in plèce to protect vulnerable doTh)rs. During 2020 we received no c(ThplHints about ourfundtsian& whether carried out by us direcdy or bythe supplier5 in relationto Lotto or the ChrGtmasTVcampaign. Governan Public scrutinyof charl￿e5 ha5continuedthroLEhout 2020 andwe recognisethe importance of demonstratlng biyj) the mpact of ourservSces and the integrity with which we operate. The Association iscomrnittèd to meetlngthe hlgFEst 5tand3rd5 of governano in all it5 activities and to ensuring that everyone who acts in the name of the ASsocialK￿. volunteers, employees, and members, meets the highest stsndard5 of conduct and probity. The Association has adopted the Charity Governan￿ Code and conducts an annual review against the Code to support continuw5 improvement. Furtherdetai15are pr(Ni(kd laterin thls report. 12

THE ROYAL AIR FORCESASSOCIATION TRUSTEES. REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Publicbenefit When reviewing the Associat1￿7,5 aims and objectives and in planning activitie5 and policies, the Trustees h• consideredthe Charity Commission'sgeneralgUidan￿ on public be¢￿fitand to its 5upplementaryguidanceon publc benefit and fee chargirg. All service5 are eTther free or heavily5ub5idised. whe￿ fees are charged, for exam￿ the Costs of a respite break or occupyng a residential property, the benefiaary'5 mean5 are alwayscon%dered so that Th) eligible memberof the RAFcomrnunitV15 prevented from accessingthe services of theAssociation because they ￿not afford the fvll cost. The AsSOClaticn also provi&sa public benefit as itpromoteselfldency in the RAF, by underpinnw spiritof pride and mutual loyalty. and so contributingto the defe￿ of the Llnited King(k)m and its Interests. In draftin8the above5tatements, the Trustees have complied with the dutytn the CharitiesAct 201L to have due regard to public bènefitguidanTr pullished bythè Charitycommissicth. FINANCIALREVIEW Income During the year, the con5didated inc(The raised from rnembers volunteers, the general public, and inve5trnents £13.922k, a decrease of 14 percent12019.. £16.236kl. Accurate predictions of income are extreme￿ difficuk due uncertainty surrounditE donations inclurfing legacies, and the impactof economicand other external factors. In 2020 legacy income was £2,886k1£4,272k in 20191, a reducticn of £1,386k from 2019. The annual Wings Appeal was significantly reduced dueto COVID-restrictions in 2020 butthe Associatitt)'s emergency3p￿aLK raised over£230kurith branches donating an additional £59(M(. Investment income of £864k decreased by 15.5% year-onwear reflectirg a volatile year with markets impacted by COVID, Brex￿ and the US electian12019.. £1.023kl. Despite the challereng market conditions, the Association's investment performance wa5 robust. out-perfoming the benchmark and its charity peergroup. Duringthe year thegr0uPre￿Trled Govemmentjob Retentionscheme grantincome of£l,138kforstaff fvrf0￿h vthrh has enabled the Assc(iaticn to retainstaff duringthe period. Expenditure In 2020 expendture of£17,240k was £31kabove the 2019 le￿I1£17,209k). £14,824k12019.. £12,5%k) w35 spenton harttable activitie5. 87.3pon every pourxl raised was spenton welfareactivities. Oue to the COVID-19 pandemKthe Council reluctantly deaded to cease the provsion of organicrespite care, permanentlyclosing ROthI￿ry House Fk)tel and Flowerdown House Hotel. A wider reshaping of the organisation wa5 undertaken to engjre that the Associatsn was able to generatesaving50f C£2.￿j0k￿h11e detsveringthevery bestsuw)ortto currentand futurebenefiaarie5. Th5 resulted in 91 redundanaes. RAFATRAD RAFATRAD Limed, the Ass[￿￿￿tIOn,5 trading and publ&hln@ arm, made an operating loss in 2020 of £3 loprair Ios5 in 2019 of £47kl. This was primarily due to the cancellation of air shows due to COVID-19, althO￿h a signific￿t Increase in online retailing made up in part for this. The Trustees antiapate that some tradirE, particularly air thcw events, should resune in late 2021 andthata breakeven pogtion will begeneratedas a re5uIt. RAFATRAD has rEdu￿d its expenditure to bri￿ It In line wtth ltsactlvity levels forthe forecastablefuture. 13

THE ROYAL AIRFORCESASSOCIATION TRUSTEES. REPORTICONTINUEDI YEARENDED31 DECEMBER2020 RAFA Houslng RAFA Housing Limited, the Association's independent Iiv5n8 scheme, made an operating profit in 2020 of £29k (operating profitin 2019 of £61klThiswas in line with expectations. with the inccAne andexpenditure of RAFAH0￿r Limitsd largely unaffected by COVID-19. Althoughface-to-facecontartwith tenants at RAFA Housingwas not possible during lockdoNn and sornecontractorworks had to be delayed, service5 are now largeW backto normal. IIAFA Kidz RAFA Kidz Limited continued to operateits earlyyear5' nursery activity.taking overthe operationof the nurseryatMF Digby in january 2020. Our prescho)I nurserEs, operated by RAFA Kidz Limlted and its charitable subsidiary, RAFA Kidzone Limlted, continued to open throughout lockd¢Jwn. offering childcare for our key workers. Whil# inconp i5 impacted, by managing our costsand acces5ingthe GovemrnenYSfurl￿8h scheme,we made a deficit of £300kover the year. The netassets of subsidiaries are consdidatedatGrouplevel. Investmentpolicy and perforMa￿e The Trustees have the powerto investanyofthe fund5 ofthe Assoclation not immediately requiredfor the pu¢pTh5 of the Association in accordance with the provisions of the Trustee Act 2000. The Tru5tee-appointed investrnEnt managers, Rathbones Investmentmanagement Limitedand Rothschild & Co areman3ged bythe Council's Fin￿￿ Investmentcommittee. assisted with independent oversight pro¥idèd byAsset Rlsk Consultants. The investment porffolio comprises three main elemerrts managed by Rathbones'.111 an unrestricted fund,121 the Formby Branch Depositfund. and131 the Branch Deposit Fund. a pooled fundof monies hÈldin trustfor and Investrd on behalf of the Assockltion's branches. The Rothschild Fund is also a pooled fund held in trust for and invested on behalf of the Association's brarKhes. The Association continues to rein￿St dividend income back into the portfd*), which amounted to £747kduring 20201£658k in 20191. The Association's investments were reviewed at quarterlycommittee meetingsin 2020 and perfornia￿e reportedto the Council. The review of the investment managers planned for 2020 was not undertaken due to COVID-19 aNJ the significant market volatility. It is planned to undertake this review again in 2022. The A550tiation will coniinue tr) employ the services of Asset Risk Consultants throughout 2021 to provide analysis and evaluation of investn￿nt performance, whichservesto enhan￿the decigon-makingcapability of the FInan￿and Investmentcommittee. The Association's investmerrt porttolio of £22,812k12019.. £26,782kl reflects a reduction in marketvalue of £3970k frorn 2019 in light of the uncertainty and volatility in the financial markets caused by COVID-19, Brexit and the U5 election.Thataside. the perfom)anceofthe AS￿cIation'S investmentportfoltowhencompared with thecharity secbx peer group and the agreed benchmark was strong by cornparison durin8 this turbulent time. Cash holdings ¥e optimi5ed to mitigate any need to 5ellanyfund investmentholding5to redu￿ anyassoaatedmarketrisk. Higher￿ of cash are currentlybeingheldduringthistime of economr uncertainty. 14

THE ROYAL AIR FORCESASSOCIAnON TRU5TEES' REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Pensions The deficitin the defirEd benefitpension scheme at31 December2020has beencalculated in acc(rdanowith Ff6102 regulations.The amountofthe deficit has increased from £430k in 2019to £830katthe end of 2020.The increa s primarily due to the agreed suspension of employer contributions in 2020, due to the challenges faced by tr Association duetts COVID. The Association made additional payments of £105kin 20201£506kin 20191 intothe Sche￿ and remains firmly committed to reducing the deficlt and in the long term eradicating it complete￿. The A5soaaton has agreed a revised recovery plan with the Pensicn Trustees and the ReB￿ator, refletting the likely income cl the Association in 2021and 2022. Reserves policy The reserves policywas reVIe￿d by the Counal in November 2020. Trustees have adopted a prudent approath to ensure that the As50Clation holds enough reserves to respond to current and future welfare need5 quIc￿V effectively. Resetves planning is H keycomponentof the Assoaatiorfs strategicplanning prO￿55,the Counol reguk review the level of reseNesto ensurethatfunds are availableto dellverourwe1fareserv￿es and programmesand secure the long-term sustainatx.lity of the Association. From research undertaken in recent years. the AssouatK)n aware of a growing need amongthe youngergeneration and this need is likely to grow. Linkedto this uncertainty L trend of cuts in social welfare budgets across the UK and there is evdencè of Increasing levels of social isolatp)n loneliness amongstall ages. There isa150 the riska550Ciated with having a large value investmentportfolk) where political un￿r￿lDtythro the USA, China. the UK and mainland Europe has resulted in a high level of volatility in the financial markets. wh￿￿ could lead to a largercorrection atanytime.Takingall thesefactors into account,the Tru5téÈs have adopted a resetves policy which seeks to mitigate risks associated with holdin8 largevalue investmerrts and property assets. The Associatlon adopts a forward-lookng strategic rlsk-based ouilook on the needs of the RAF community consequentlydoes not use5hort-term measures focusingon a limited number of months, operatirg costs. The Fin￿ and Investmentcorrfflittee review5 the Medium-Term Financial Plan la rolling plan lookin6f0n￿ard5 year51 in re¥xxr£ to the needs of the RAF community at each of its meetings and makes recommendation to the Council on the management of financial risks. However. the Association is heavily reliant on voluntsry income from fundraising legacies and donations, which is not guaranteed, and which was particularly affected by COVID-19 throUgh￿rt 2020. The Trustees have therefcfe agreed to maintain a minimum level of unrestricted free reserves to cover the costs a5$0Clated with normal operatlOn5 over a 12-month period to addre￿ the risks of COVID-19 to the delivery of our services and programme5 to beneficiarES, mernbers and employees. In addition, as considerable uncertainty re￿n5 aboutthe continuing impactofthe par￿emIe0n vduntaryincome in 2021, theTrustees hake alsoagreed to Under￿ffIte anydeficit inthe fundraisingtsrget inclLKled in the 2021bucÈetfromthe re5ervesto maintain the welfare service& At the end of December 2020. consolidated general unrestricted reserve5 totalled £11.515k1£14,(19k in 20191 including charityassets of £6.229k1£6.376k in 20191. Cor601idated free reserves {￿t general reseNesl at the end of December 2020 totalled £5,286k1£7,673k in 20191, which the Association is holding to fund 2021 operattona expendiiure of up to twelve rnonths and are therefore in-line with the stated reserves policy, however a prudent approach 15 being adopted to ensure thatstrategictran5formationprojects can be funded. Restricted reservesfunds receivedfor specific activity, increased from£L769k in 2019to £2.551katthe end of De￿mber 2020. 15

THE ROYALAIR FORCE5ASSOCiATION TRUSTEES, REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Reserves politylontlnuedl The Council has designated fLtndsof £18.769k12019 £20.335kl to be u5edto undertake multi-yearactivityto InCre￿e our welfare servI￿s, reaching more of the RAF community, respond to the implicatlons ol the COVID-19 pandenK, support our plans to increase and diversify our income in the long-term, and support the imprcwement of our b￿k- office functic)sto divertmoreexpenditure towards ourbereficiaries. R15k Management The Trustees have overall re5ponsbilityfor ensuring that the Association has an appropriate system of contrc4s. financial and otherwise, across the A5S(Kk4tion and its Subsidiaries to provide reasonab1ea5St2rar￿e that relevant I and regulations are complEd with, that their assets are safeguarded against un3Uthorised use or disposal, and that proper recordsare maint3ined, and inforniation is reliat4e. The Association does notgenerally havean appetite forhigh exposure risk5,' nevertheless,the Trusteesreco8nisethat deliverirg uponthe ambitio￿ strategicaim5 and objertives outlinedin the Strategic Plan to 2030wll involvea degree of risk-taking and Un￿rtainty. Assuch there isan appetitefi)rhigher levels of r￿kwhereapproprlate todellveragalnst strategic aims, objectivesand targets provided thereis a compreh2nsiveunderstanding ofthe exposure5 Invol￿￿d potential benefits arising, and 5ubjecttothere beingapproprHte controls and approval pro￿SSeS in place. In tem￿ of prioritie5, Trustees have agreed that the needto avotd reputational, Compliar￿ and exce55ive finanaal risk will te priority overotherfactors, recognising balanced assessments must be made as, in many cases. risks are attachedty to doingsomething and doing nothing. The Associatlon's rlsk mana8ement process is designed to identify and assess risks such that appropriate rEk managementstrategies are implemented, and their effectiveY*ss monitored. Trustses have identifled the followngas its key risks and the 5trategtc risk register is le￿ew@d3teach Council meetirE. FÈ7ilureto sustoin o lorgetsndengogedmemLErshiB Plans inclu(k recruitmentcampaigrs, improved retenton by engaglngwith personnel leavngthe RAF,and improvingengagementwlth current memlRrslDp. Foilureto deliverquo1ityondsofeseThi￿5. Mits'gation includes regdarreviews of policies, KPIS and assuM sources. Counciv Committee oversight, employment of profes51£￿allY qualffjied staff, safer recruithEnt processes and training of employeesand voluntsers. 8n7nch and Club governan￿ t7nd complAantrfoilure. The Council has identified regulatory compliance at branch level asa strategic risk with concerls aboutthe wlderrewtstional riskthatthe Association Lya decentralised structure where branches are separate charitie5 but operating under a shared name 3nd constitution. The As50Clation ha5 undertaken considera)le activity to ensure that branch committees understand their re5ponsitylities as charlty trustees and to provide guithnce and advi￿. 8etween Ocbjber 2018 and February 2020. 23 brdnth goVernan￿wOrkShop$weredel1Vered, 3nd a 8ranch Governance Action Plan has been agreed with the Charity Commission to rnitigate fuTtherthe risk whilesupporting branches. Long termfinunciolsustoinubilityandshort-tem?c05hflowfoilure. Mltlgation plans indude fin0r￿talpIarW1n￿ and performance monltorin& both in terms ofannual bud8ets, reserve5 and investments, subjertto ongong Committee and Council oversEht, continuirg to invest in fundraisng capacity and diverslfication of streams. E¥tem(Jl threots. Mitigation plans include collabcrfation with other charitie5 and organisations, devekpi unique serwce propositiors and diversificationof Serv￿eproV￿sICfi. 16

THE ROYAL AIR FORCESASSOCIATION TRU5TEES' REPORTICONTINUEDI YEAR ENDE031 DECEM8ER2020 Risk Management Icontlnue(11 Loss of opemtiont71capobilty. Plans indude development of business continuity plans, cvoer security, a range of proce5se5 toenswerecnjthientand rèiention of appropriately qualrfied and trainedemployeesarnj volunteers. SignificontLJungemunagementprojects. Mitigation plans include developmentof busne55cases, project ri reglsters, ènd over%ght by pr(4ectgoVernan￿boards,5mTènd committees. Infomjation risk. Data is recognised as a strategic asset and protected accordingly. The Association errWctys profe5siorolly qualified stsff who regularly review cyber and data policies and processes and has recenty achievedcyber Esserrtrals Plus certification. Corporote9overnoncef17Alurettndgroup leglslotive/regulutoryfuilure. Mitigation incknde5 reguL4r rev￿￿$ of policies, Council, Committee andlor subsidiary Board over%ght, employmentof professionallyquatsfied $￿f and mandatorytraining. Operational risk regsters arealso subjectto regukr review bythe approwiate Council Committee SothatassUr￿￿ providedto the Council thatoperationalrisks arebeirgeffectively mana8ed. The Council considersthat the major risks facing the A550C(ation inclu(k the ongoing and long-term impact on its activitiesand incomes resulting from the currentCOVID-19 pandemic, includngthecontinuedpressureon fundraisrg the threatof reduced incornefrixn evertsgenerallyand the increased costin meet1ngdemarn4sforitswelfareserw￿s. The Cguncil 1$ Satisfied that, notwthstsndin8 the increase in risk due to COVID-19. all risks are bein8 appropriatr addressed. The A550ciation also recognises that the pandemlc presents opportunities both at a Strategic and operational le￿lwhIchthe charity will continueto exploreoverthe comin8months. STRUCTURE.GOVERNANCEAND MANAGEMENT The RAF Association, which was establithed in 1930, wa5 incorporated by Roydl Charter in 1953. The Association LE a registered charity governed bythe Royal Charter, ils Rulesand Byekws. The charity is alsoknown asthe RAFAssociation and RAFA. The Association is registered with the Charity Commission and with the Office of the Scottish Charty Regulator. Itis a150 registered with the FundraisirÉ Reg¢Jlatorand Information commissiorEr'sOffi￿I1Col. Followrg the closure of the two Wings hotels the Assouation is no longer registered with, or règulated by, the Care Quarty Commission ICQCI.The Association is a democratic, non-sectsrian nonyoliÉical organisationwith no affiliation to any partyor partyorganisationor trade uniomThe Association is a memberofthe Confederation of British se￿1￿ and Ex- service Organisations ICOBSEOI. The Association is an 1nternationalorgani￿tIQn with 69,￿ member5 and in the regionof 300branches in the UK oversea5. It is 0150 the ultimate parerht UndertakIr￿ of fourtrading subsidkiries IRAFATRAD Limited, Royal Air FOr￿S A550Clation Hou5in& RAFAKidz timited, RAFA Kidzone Limitedland two non-active companieslRAFAClubs Lirnited and RAFA Kidz Wings Limited). 17

THE ROYAL AIR FQRCESASSOCWTION TRUSTEES, REPORTICONTINUEDI YEARENDED31 DECEMBER2020 The Board ofTrustees ICouncll} The Council is the Assockltion's Board of Trustees and is collertively accountable to the Association's meM￿r$ •d other stakeholdersfor the long-term successof the Association. Member5 of the Council are eletted for a threewr lerm, after which they are eligiue to stand for relection on a further two occagons, they may not hold office for a continuous period exceeding nirE years. The Council is respofBible for the As￿CIatIOn'S cCmpli￿￿ with all relev legislative and regulatory requirements. It is respon%ble for determining the strategy and values of the Associab"cn. approving the annual busiress plan, 5UPPOrting strateges and the associated budget, holdrng the Secretary General (who is responsible for the day-to-day management of the Association's affairs) and Senior Management Team b) accountforthe Association's perfornan￿. standard90fconductand cOr￿rates0verna￿ts. The Council recogni5e5 that good governan￿ is fundamental to the succe55 of the charity and is committed to contlnuoL4S improvement in terms of Its own effectiveness, the governance of all group companies and braxh governance. The Council has adopted the Charty Governance Code for larger charities and assesses annually h(yN r( meets the pritXiFles, outcomes andrecommended practi￿. WhereareasfoTimprovementare identifiedan action p is agreed and its implementation is monitored bythe Council. In 2020. the Council reviewed itsa5surance prctessesto ensure the Association's corporate governarKe arrangements appropriateW match the complexity and Scale. and associated risks, of it5 activities and structure. The Council acknowledges that protecting people from harrn 15 a governan￿ priority. During 2020 the Assoaètion commissioned an independent audit of its safeguardirg activitie5 by the Sccial Care Institute of Excellence. Thè ajdit concluded that significant progress had been made in recent years in the development of quality assurance arKI governance to support the developmènt of safeguarding which, in many ways, represent5 practice that is m￿e advanced and establish￿ than may be seen in the wider sector. Neverthdess the report identified further areas for improvementand the Council hasapproved an action plan to implementthe5e. The comp051tion ofthe C0￿clI ispreKritredbythe Association's Rules and Byelaws and comwises upto 24trustees-. The Presidentof Council, eletted trienniallyatAnnual Conferen￿. Air Marshal Sir 632 North KCB OBE MA FWS was re-elected fora second term in 2020. The Chairman of Council, elected triennialy at Annual Conference. Air Wice-marshal John cliffe CB OBE was re- elected fora setorKI termin 2019. The Treasurer of Councll. Mr PhilipTaggwas re-elertedfor afinal third term irh 2020. Eightelected members. Elections are hekl triennially and are nextdue to be held in 2021. Five area repTe5entative5 electedby Area Councils. Electionsareheldtriennialty and aredue in 2022. Three serwice representatwe5 nominated bythe Royal Air For￿. A representative nominated bythe RAF Benevolent Fund.The Fund has confirmed thatltwill no longer nomin a representativewhenthe currentterm of office held bythe incumbertexpires in 2021. Up to a rnaximum offour co-opted trustees. All Trustees give thelr time voluntsrity and receive no benefits from the Charity. Any expenses redaimed from tt charity are setout in note 9t0 thè aCco￿ts. 18

THE ROYALAIR FORCESASSOCIATION TRUSTEES, REPORTICONTINUEDI YEAR ENDED 31 DECEMBER2020 The Board of Trustees Icounoll Icontinuedl The CharityGovernance Code recommend5 atrustee board of ro rnorethan 12 men-bersand thecounol hasexpresd its intention to reduce its size. The Council is consulting with branches on its proposals and expect5 to submit appropriateresdutscnstoAntwal conferen￿ in October 2021. The Council approved a skills matrix in 2020 and an audit h35 been undertakento identify any gaps which C￿ te ddressed through trustse recruitment and/ or devebpment. The Council has established a Nominati4Jns Committee to oversee trustee recruilrnent in line with the skills matrix. When new Trustees are elected or appointed, a for induction on the work of the ASs￿latIon and Tru5tee5' role5 and responsibilities is provided. The Council, either a5 a whole or through its sub19. The Council has 0 adopted a procedurefor makin8derisi0Th8eX-￿mmIttee. All ex-committee deosions are subjectto ratification atthe nextcouncil meeting CoMmitteeStr￿tUre Throughout the year the work of the Council was supported by Committees. Each Committee has written tern￿ of reference approved by the Council. Terms of referen￿ are reviewed at least every three years and will next t reviewed in 2021. MemkErs of the committees are a cornbinatlon of Associatlon Trustees and personnel co-opted a5 determined bythe Council. 19

THE ROYALAIR FORCESA550CIATION TRUSTEES. REPORTICONTINUEDI YEARENDED31 DECEMBER2020 commlttsestr￿t￿eI(0nt1nuedj Committee Chair Number of membeys Numberof meetings Finance and Inve*ment Mr P Tagg Fundraising and Communi¢atiOTk8 Mr CGoss Branch and Membership Mrs B Dennettstsnnard io Information AVM M Neal Welfare Ms F Barber Annual Conferen Mr A Rees Audit Mrl Gawn Remuneration AVM J Cliffe Committeesgenerally meet in advance of Councll meetlngs. with minLrtes of meetings being provided tothe Cotjncil. together with any recommendation& In 2020 the Councd also agreed to establi5htwo newcommittees.. a Safe@J¥ding Committee (to replace the previous Safeguarding W¢yk'n8 Grwpl and a NominatIor￿ Committee. The Association currently seeking an independentchair forihe safeg￿4rdingCOMrn1ttee. The Council isalso supported byad hocworkinggroupsortask and fini5hgrow5. All suchgroups havewritten tems of referen￿WIth minutes and recommendations presented tothe Council. During 2020theCouncll establisheda COVI 19 Working Group Inowthe Counal Strate8yWorking Group) Comprisingthe Chairman and Vice-chairmanof Council, President, Chair5 of the Welfare, Branch and Membership. Fundraising and Communication and InformatK)n Committees and the Secretary General The Worklng Gr(xJp met weekty throughout 2020 and ex￿Cts to C(￿tInUe It) meet everytwoweeks until Step4 ofthe Govemmenvs Roadmap outof COVID-19restricti<n5 ha5 beenimplernented. Dele8ated Authorlty The Council has a fomial schedule of matters speufically ￿Served for Its approval which cannot be delegated. Other specifi¢ rnatters have been delegated to its Committees and Wor￿ng / Task and Finish Groups and these are cle defined within therelevanttermsof refeIen￿. Day-t¢iday management of theA5$0ciationis delegated tothesecretsry General and histeam and the Council reviews itsscheme of delegated authorityon an annual basis. Notwlthstandi any delegation, the Council remainscolectivelyaccwntableforthe work of the As51xlation. 20

THE ROYAL AIR FORCESASSOCIATIThN TRUSTEES, REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Branchesand Areas Branches are separate organisatlons from the Association,. branch accounts are not consolKl3ted with those of the Association. 8rand)esfundraiseon their own behalf and on behalf of the Association (the annual WingsAppeall. Association provicksbranches with an annual rebatetosupport branch memtrRr5hip afbd wewareactivty. Branches sharethe sameobjectiveand constitution astheA5s(Kion and, assuch. are IndivKlual charitiesin their own rightand are required to registeras charities in accordancewith the relewdnt local jurisdictio The Association has been workingwiththe ChartyCommis5x)n and branchesthrouthout2020to pr0vldegtjidance￿d 5upportto branchesto lrnprovetheir80vernan￿. Witheffectfrom I September2020, the Trustee5 approvedrewtsed Byelaw5 and new Branch Regulations as part of this work and these will be subject to ratification atthe next Ann Conferen￿, currentlyplanned foroctober 2021. In response to a resdution at Conference 2019, the Asxscialion has been revEwi18 the administrative tier bthen branches and the Council to ensure that its structures are fit and ready for the future and able to deliver the Association's strategyto 2030. As a member-ledwelfare charity itis irnportsntthatall members can contribute to the future direction of theAssociatic#) and C(￿$U1tation ona new structure was underway asthe pandemicarrved and the countrywent into lockdcwn. The consultation includedpropo&4lsto amend the Roy21 Charterand Rules, butthe cwldnotbe progressedduethe pandemic, which re5ukedinthe cancellationof the Area Conferences and the Annual Conferencein 2020.To addre one of the keyissues identifled in thecurrentArea strurture, with effectfrom Iseptember 2020the C￿ncl rebalarttd the existing fiveArea4 equalisiw asfar as possible the num1￿1 of branchesin each UK Area and combining into a sin Area all branches outside the UK. The Council is a150 Still considering how tts implement a further 2019 Conferen resolution to enfranchise the memtrrship, in particularthose groupsS￿has setving personnel andthose onthe ￿￿traI rolls, thatare not represented bythe curientbraneh delegate system. Annual Conference Although Annualconference couldnottake placein 202Clduetothepandemicandgovemment restrictions, the Counul implementedan alternative, hybrid, arrarEementto rneetthe mlnimum govemance requrements. RSM UK Audit LLP were re-electedas auditorsof the AsscKiation folowinga postal and emailvote. Air Marshal Sir Baz NorthKCB OBEM4 FAAeS was re-elected unopposed as Presidentand Mr PhilipTag6 was re-elected unoptx)sed asTreasurer.The re￿nS bythe Chairman ofcouncil, Treasurer and SecretaryGeTral were presented VB a webinarand brancheswere prcfvkled with an opportunityto raise questions both in advanceand durin8the presentation.The webinar recorcln& together with all questions and answerswere made available forAssociationmember5. The 2021 Annual Conference is planned for October. A5 part gf it5 contingency planntng,the Council 15 consultings branchesto amend the Byelawsto allow, on atemptsrarybasls. branchesto be ableto vote on Conference re501utK￿5 by post or online in advarKe of Annual Conference. This Is desgned to enable all branches to participate in d￿1￿¢ making should attendance at large indoor gatherings contiwe to be restricted or branch delegates do not feel comfortable attendin8afaCe-to-faceConferen￿. 21

THE ROYALAIR FORCESASSOCIATION TRUSTEES. REPORTICONTINUEDI YEARENDED31 DECEMBER2020 Subsldiarles RAFATRAD Limitedisa whollyowned subsidoryof the A5￿)cIall0r4WhiChsellstommemorative item5 andmemorabliA and undertakesfulfilmentactivityforthecharity. RAFATRAD knmited Is a companylimitedby shares incorporatsd urKkT CompaniesAct2CO6. Royal Air Forces Assooation Housing Limited (RAFA Housin81 is a wholly owned subsidiary of the Association. It 1% community benefit50cY&ty registeredunderthe Co-operative and CommunityBenefitSocietiesAct 2014. regulated by the FCA. RAFA Housiw isa registered provK4er of social housing regulated bythe Regulatorof Social Housin8 IforrrEr known asthe Home5 and Communities Agencyl. RAFA Kidz Limited isawhollyowned subsidiary company limited by shares incorporated underc0rnpaniesAct2Th￿. ti operates pre-sclN)d nurserie5 in accordan￿ with the Early Years Found3tion Slage at RAF Odiham and wrap-wwTh care at RAF Digby. RAFA Kidzone Limf(ed, a company limited byguaranree and registered charity, is a wholly 0￿ed subsidiary of RAFA Kidz and operates a pre-sthool nursery and wrap-around care at RAFC Cranwell. Both RAFA ￿dZ Limited and RAFA Kidzone Limited are registered with Otsted. RAFA Club5 Limited and RAFAKidz Wng5 Limitedare both companies limited by sharesincorFx)ratÈd UnderCompa￿e5 Act 2006. RAFAKid2Wings Limited isa subsidiaryof RAFA Kith Limited. Neither RAFAClubsnor RAFA Kidz WirEs trayed in 2020. Remunèrion Polity The Associationiscommittedto recruiting, retaining and develq)irgpe(plewith the ne￿$Sary5kills and knowledgelD make a positive contributicn in helping delwer the organisatlon's oblectives Making effertive deci%ons in relatvjn to remuneration and reward is congdered both centr31 and crucial to the continued s￿￿SS of the AssDciatiorfs overal aims. The Association's Remuneration Policy centres on the following principles.. Reward employees uslng prO￿Se5thatare fair, equitable, and transparent. Aimto paycompetitivelyagainst ourrelevdntcomparators in the voluntary sector. Enhance the organisati¢y's competitive p051tioning by promoting a totsl reward approach. recognising thar other a5perts olthe employment package le.g. benefits and developmentopp(xtunities aswell as theintringc mDral value of working fora charity) are alsovaluable to employees. Remurieralion ReviewandAnnual PayAward The Council, through the ReMU￿ratIOn Committee. compod of threeTrustee& both sets pay and conditionsforal Association employees. including the Senior management team. and reviews the Remunerati(M Policy annual￿, ensuring th3tthe Principles outlined above are adhe￿d to and remainappropriatewithin thewidereconomiccontexl Employee remuneration is reMe￿EdannUally inAugustandany thange5 are implemented from the following ljanuary. Salary benchmarkirE is undertaken using dats fromthe Officefor National Statlstlcs IONS) and surveys byCrorera￿l XpertHR. The Assouation has intrOdU￿d the LIVI￿ Wageon a discretionarybasis and voluntarily recc8ni5esthe GMB trade union for couective barBainirgfor5tatutoryactivity, induding pav. 22

THE ROYALAIR FORCESASSOCIATION TRUSTEES. REPORT ICONMNUEDI YEARENDED31 DECEMBER2020 Remuneratlon Reviewand Annual PayAward (continued) Employees earningover£60,CK)O perannum are 5hownat note 10 of the accounts. This include5the senlor rnanagementtearn which comptised eight eMplo￿e5 during 2020.. SeCretaryGej￿ra1, Directorof Branch and Memberslip Operations, Director of Welfareand Policy, Directorof Marketing, Fundrai%ngand Trading,Chlef Finance Off1cer, Chief Information offi￿r, Chief PeoFAe Officerand Group Company Secretary. With effectfrom I January 2021there is no longer a Chief Peopleofficer role. Thi5 remuneration poltyand rewew appliesto Assoc+ation emploiEe5 on￿. Employeesof subsidiJycornpanie5 are subjectto separate arrangementsset bythe respective Boards of Directors. Future outloc4( The Association has risen tothè challergeof fulfill￿16 emerg￿16 andchan8ingwelfareneed5whibtcontiniingto man the ifflpact of the COVID-19 Pandem￿ on revenue generation of the Association and its subsidiaries into 2021, Particularly in relationto our abilityto fundraise. Assuch. the charity and itSsubsidiarie5 will continue to revw h)w to best delivertheir muth-needed Servi￿5. The Courtil considers that the action5 taken in 2020. combined with the past prudentapproach to accumulating inve5trnentsand cashbacked unrestrirtedreserves, place5 the Asscoation in a strong position to notonlysurvivethe parKlemic, butto continuestoaffectthe widerRAFcommunty. Trustees'respcmsibilitiesin relation to financtal statements The Trustees are responsi1￿e for preparin8the Tru5tee5' Report and the financial statements in accordance with applicable law and Unitsd Kingdom Accounting Stand3rds. The law applicable to charities in England and Wales Scotland and Northern Ireland requiresthe Trusteesto prepare fina￿43[ statement5 for eaehfinancial year, which gve a true and fair viewof the Association and thegroup, and of the incomin8re￿u￿ceS and applicaticn of r￿oUrceS of the Association and the gr(xJp forthatperiad. In prep3ringthese finarKBI statsmert5, the Trustees are requiredto.. Selectsuitable accountlng policiesand thenapplythem consistently. Observethe methcds and principle5 inthe Charities Statementof RecomrnendedPrartlce. Make judgmentsand estimatesthatare reaS(nab￿ and prudent. stste whether applica￿e accounting standards have been followed, subjert to any material departyres disc105ed and explained in the finartial statements. Prepare the financial statements on the going concem basis unless it is inappropr14￿ to presume that the Association will continue in business. The Trustees are reyonsi￿e forkeeping properactountlng records thatdisckjsewith rea50naL4e accuracyatanytine the financial positionof the Association and the groupand enablethem to ensurethatthe financial statements conp with the CharitiesArt2011,theCharity IAccountsand Reports) Regulations 2008,The Charlties andTrustee Invesfftnt Iscotlandl Act2005,the CharitiesAccounts Iscotlandl Regulations 2(06and the provisior6 of the Royal Charter. are also responsible forsafeguardirEthe assetsof the Associationand thegroup and hencefortaking reasonablesteps forthe preventionand detection of fraud and other irregularstie5. 23

THE ROYAL AIR FORCESA550CWTlCh TRUSTEES. REPORTICONTINUEDI YEARENDED310ECEMBER2020 Trustees, respL￿sibIlIt[eSin relaticntofinanaalstatements Icontinuedl In so far as the Trusteesareaware.. There is rho releydntauditinformationof whichthe Assoaaticm's auditoris unaware,. and The Trustee5 have taken all step5 that they ought to have taken to make themselve5 aware of any relevdnt auditinformatron and to establish thatthe auditorisaware of thatinformatiorn The Council has given due regard to the increased pressure on income streams brought about by the COVID-19 pandemic and have Cc￿clUded thatthe positive levelofgeneral reserves, a healthy cashand investments balan￿,the benefitof Government measuresand supportas well as the continued Sup￿rtOf its regularcontrilyjtors, mearsthe going concernbasis remains appropriatefor the prep3ration of the5efinancial ststements. Thls reportwas approvedbythèTrustees on -3 •- and 518ned on its behalf by.. Air Vi Chair BOBE of the Co ncil 24

THEROYALAIRFORCESASSOCIATION INDEPENDENT AUDITOR'S REPORTTO THETRUSTEES OFTHE ROYALAIR FORCESASS(KIAMI)N Oprnion We have audited the financial statements of the Royal Atr FOr￿sASs0ClatIon Ithe'parentcharity'l and it5 subsidiarie5 Ithe'group'l for the year ended 31 December 2020 which comprise the Group and Association Statementof FIna￿J Activities. the Consolidatedand A%sociatIc￿ Balance SFEets,the Consolidated andA5SCKk?tion Ststements of Cash Aoy and notes to the finanaal statements, indudng a summary of significant accounting pdicies The finarKial reP￿tirE framework that has been applied in their preparallon Is applicable law and United Kingdom Accounting StandJd Including FRS 102'The Financial Retxjrting Stand¥d appllcable in the UK and Republic of Ireland" (United KingdLKn Generally Accepted Accounting Practi￿1. In our opinion thefinancial statements.. give a true and falrviewof the state of the group'sand parentcharity'saffairs as at 31 December 2020 and ofd group's and parentcharitrf5 incomingre50urcesand applicationof resourcesforthe yearthenended,. have been properly prepared in accordancewith UnitedKingd(xn GenerallyAccepted Accounting PrKtice; and have been prepared in accordance with the requirementsof the Charities and Trustee Investment IkotlarK41 Act 2005, re8ulatlc￿$6 and8 of theCharitiesAccrAJnts IScotlandlRegulalions 2[￿6{as amerKledl andthe ChartssAtt 2011. Basis for oplnion We have been appolntedauditors undersection 44llllcl of the Charities and Trustee InvestTnentlScotlèndl Act2￿5 and under sertion 151of the Charitie5Act2011 and rep￿tin attordarKewith regulations made underth05eActs. We condurted our audit in accorthn￿ with International Standards on Audking IUKI IISAS IUKII and applicable law. Our respon5ilxlities underthose stsndards are further described in the Audtorfs responsibilities for the audit of the financial ststementssectionofourreFort. We are independentofthe groupand parentcharty in accordancewith the ethical requirements that are relevant to our audit of the financial statement5 in the UK. Including the F Rc's EthKal Standard and we have fulfilled our other ethical respon5iblities in aCC￿dance with these requirements. We believe that the audit evidencewe haveobtained issufficient and apprc4)rialeto providè a b3slsforouropinicn. Conclusionsrelatingtogoingconcern In auditingthe financial statements, we haveconcludedthatthe trustees, use of the gO1￿COnCern basis Qf accounting in the preparationofthe financial staternents 15 appropriate. Based on the work we have performed, we have not identified any material uncertainties relating to events ¢ondlt(ons that, individually or tollectively. may cast significant doubt on the 8roup's or parent charity's ability Continue as agolngconcernfor a periodof at leasttwelve monthsfrom when the financial statements are authortsed for issue. Our responsibilities and the resp)nsibilitiesof the trustee5 with re5pectto go[ng¢on￿rnare described in the re￿rt sections of this report. other information The other informationcompisesthe information included in the annval rep(Kt otherthan the financial statements and our auditor's rep)rtthereon.The trusteesare responsible fortheother information containedwithin theannual reporL Our opinion on the finanaal statements does not cover the other informati(n and. we do not express any fom of a55urance c(ndusion thereon. Our re5P(YLsibilityisto read theother1nf￿Mation and, in doingso. consKler whether the otherinformation 15 materia inconsistenlwith the financial statements ()r our kno￿edgeobtalned in the course of the auditor otherwise appear5 to be materially misstated. If we identify such material incorsistencie5 or apparent material misstatements, ￿ we required to determine whether there is a material misstatement in the financial siatements themselves. If, based c the work we have perforrned, we condude that there is a material misstatement of this other infomiatiorn we are required to rep)rtthatfact. We have nothingto reFK)rt in this regard. 25

THE ROYALAIR FORCESASSOCIATION INDEPENDENT AUDITOWS REPORTTO THETRUSTEES OFTHE ROYALAIR FORCESASSOCIATION (continued) Mattersonwhith we are requiredto reportbyexception We have nothing to repcrt in ressRct of the following matters where the Charities Accounts (Scotlandl Regulati￿5 2006 lasamendedl and thecharities Act 2011 require usto reporttoyou if, in our opinion.. the information given in the finarbcial statements is inconsistent in any rnaterial respectwith the trustees, annua report,. or proper and suffKientaccountin8 reccrd5 havenot been kept by the parentcharity.or the parentcharityfinancial ststement5 are not in agreementwith the accounting rècords and returns,. or we have not received all the inforrnationand explanation5 we requirefctrrour audit. Responsibilltiesof trustees Asexplained more fullyin the Statementof Trustees, Responsitil¢tie5 setouton page 23,the trustee5 are re5ponsblE forthe preparationof the financial ststements and for beirgsatisfied thattheygive 3 true and fair view, and for5uth internal contrd asthe trusteesdetermine is necessaryto enable the preparati(n of financial statementsthatare free from material misstatement, whetherdueto fraud or error. In preparirgthe financial statements.the trusteesare responsibleforassessingthe group and parent¢harity's abilty to continueas agoingconcern,disclosin& as applicable, matter5 related to going concem and usifEthe going con￿rn basis tsf accounting unless the truste￿ eitherintend to liquidatethe group orparentcharityorto cease operdtittA or have no realistic alternative butto do so. Audttor's reSpOr￿]bilItIESfortheaudit of the financialstatements Our objective5 are to obtain reasonable assurance about whetherthe fina￿￿1 statements as a whole are free frorn material mi5Staternent. whether due to fraud or error, and to issue an auditorfs report that includes our opinK)n. Reasonable a$surar￿e is a high level of aSsU￿nce but is not a guarantee that an audit conducted in accordanTr with ISAS IUKI will always detert a material misstaternent when it exists. Misststements can arise from fraud or error are considered material if, indwiduallyor intheaggregate, theycould reasonably ￿ expected tolnflle￿e the econcm decisions of userstakenon the basisof thesefinèncial statements. The extenttowhlchthe audltwas consldered Capable of deterting irregularities, includingfraud IrregtJlaritie5 are instanTrs of non-complrdnce with laws and regulations. The objectives of our audit are to obtsin sufficient appropriate auditevidenceregarding Complian￿ with law5 and regulations that have a directeffecton th2 determination of material amounts and disclosures in the financial 5tatement5. to perform audit procedures to h21p identify instancesof non-compliancewith other laws and regulationsthat may have a material effecton the financi41 ststements, and to respond appropriately to identlfied or suspected non-complian￿ wlth laws and regulathy identified duringthe audit. In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient approprptè èudit eviden￿ regarding the a$5e55ed risks of material misstatement due to fraud through designing and implementfng appropriate responses and to reSp￿d appropriately to fraud orsuspected fraud identifEdduringthe audrt. However, it is the primary responsibility of mana8ement, with the oversight of those charged with governance, tt) ensure thatthe entity's ot*rations are¢0nd￿ted in aCcOrd3n￿WIth the provisonsof laws and regulation5 andfor tt prevention and detedionof fraud. 26

THE ROYALAIR FORCESASSOCIATION INDEPENDENT AUDITOR'S REPORTTOTHETRUSTEES OF THE ROYALAIR FoRCEsA55￿ IATION IcontSnuedl In identifyingand assessing risksof material misstatementin respectof irregularities, incI￿Y1rgfraVd, the gro￿ auth engagementteam.. obtained an understanding of the natureof the sector, includingthe le8al and re8ulatoryfraTheworksthattt group and parent charStable company operates in and how the group and parent charitable company are complyingwith the legal and regulatoryframeworks.. inquired of management. and those chargedwith govemance,abouttheirown identificationand aSses￿nt of the risks of irregularities. incI￿1ng any known actual, suspected oralleged instan￿5 of fraud,. discussed matters about non-compliarKe with laws and regulations and how fraud might occur incluclng assessment of howand wherethe financialstatements may be susceptible tofraud. As a resultof these procedures we consiyer the m05tsignificant law5 and re8ulationsthathave a direct impact cnthe linancial statements are FRS 102, Charities SORP IFRS 1021, Companie5 Aci 2006, Chartie5 and Trustee Inve5kntnt (Scotlandl Act 2005. regulations 6 and 8 of the Charities Accounts (Scotlandl Regulations 20(￿ las amended). the Charities Act 2011. the parent charitable cornpanrfs governing document and tax legislation. We performed aud proceduresto detectnon-¢ompliance5 which rnay have a materlal impact on the financial staternentswhich inctuded reviewlng thefinan¢lal ststements includingtheTrvstees' Rew)rt. remain1￿ alert to newor uNsual transactionsthrh may net be in accordan￿ with the governing documents, inspectyng corresponderte wlth local tsx authoriti￿ aMI evaluating advice receivedfrom internavexternal advisors. The mostsigrbificant laws and re8ulation5that havean indirect impartonthefinancial statements are Keepire Chihjren Safe in Edutation undersection 175 ofthe EducationAct 2002,the Childcare Att2(K)6,the UK General Data Protectp)n Regulation IUK GDPRI, Health and Safety at WorkAct 1974and the Regulatorof Social Housing Regulatorystsndards Iboth Economicand Consumerstsndardsl. We performed aUdttpr(￿e￿jreSto inquire ofwhether the groupand p&ent charity are in compliance with these law and re8ulatiors and inspetted Corresponden￿ with licensing or regulabjy uthoritie5. The group auditerEzgementtearn identified the riskof management overrideof controls andcapital andMalntsrw￿e activities. as the area where the financial statements were most susceptible to material misstatement due to fraud. Audit procedLJres performed ind￿4ed but were not limited to testing rn3nual journal entries and other adjustments, evaluating the business rationale in relation to significant, and unusual transaction5 and iransactions entered inb) outside the normal of bvsiress, challerEing judgementsand estimates. Afurther description ofourresponsibiif(lesf￿theaudIt0f thefinancial ststements is locatedonthe Financial Reportng Councll'sweb%te at http.'//wNw.frC.or8.￿CIaLK￿ItDrSre5pOnSi￿NIitIes. Thls descripticn fornis partof ouraud'torfs repcrt 27

THEROYALAIRFORCESAssoaATION INDEPENDENT AUDITOWS REPORTTO THETRUSTEES OFTHE ROYALAIRF0RCESASS￿IATION {COntin￿dI Use of our report This report is made solely to the charity'strustees, as a body, in accOrdan￿with section 44llllcl of the Charitps Trustee Investment (Scotlandl Act 2￿5, and reguktion 10 of the Charities Accounts (Scotlandl Regulations 2(m￿ las amended) and the Charitie5 Act 2011. Our audit work has been undertaken so that we might state to the charitrfs tru5teesthose matter5 we are required to state tothem in an auditor's reportand for no other purpose.To the ful￿st extent permitted by law, we do not acceptor assume resp¢J)sibilityto anyone otherthan the charityand itstrustee5 as a body,for our auditworl forthi5 repK)rL or for the opiThonswe haveformed. RSM UK AuditLLP Statutory Auditor St Philips Point Ternple Row Birmingham B2 SAF Date 21 st September 2021 RSM UKAudit LLP iseligibleto actas an auditor in termsof section 1212 of the CompaniesAct2006 28

THE ROYAL AIR FORCESASSOCIATION GROUPSTATEMENTOF FINANCIALACTllllTIES FOR THE YEARENDED31 DECEMBER2020 Notes Unrestrfrted Funds Restricted Funds Total Total 2020 2019 £'ooo £'ooo £'ooo E'OOO INCOME: Donatlonsand Legaties Donations- assets gifted from clc6ed branches Donation in kind on acquisition 5.383 1,271 6,654 7,956 30 19511 19511 1,375 128 Charitable Artivities: 2,786 3,089 5,875 4.226 otherTradingActivitie5: Trading incorne Grand Drawand other fundrai%in8 income 302 302 418 1,178 1,178 I,iio lftvestmentlntt>me 864 864 1,023 Total Income 9.562 4,360 13,922 16,236 EXPENDITURE: Cost of Raising Funds 2,140 2.140 4,212 Charitable Activltles: Residential & Re5Plte Care Home Friendship& Welfaresupport Grants 2.878 7,640 65 34 2,912 10.967 151 3,756 7,656 308 3,327 86 Other Supportcosts 790 794 876 Other Expenditwe.. Interest Paid on Branch Depc*sits Intere5ton Defined Benefit Pension 17 17 iioi Share of the reducti(￿ in valueof the jointventure. dueto the distributionof the jointventure funds. as intended 14 252 252 409 Total Expenditure 13,789 3,451 17,240 17,209 29

THE ROYAL AIRFORCESASSOCiATION GROUPSTATEMENTOF FINANCIALACTIVITIES (cont1n￿d) FOR THE YEARENDED 31 DECEMBER 2020 Notes Unrestrfcted Restrirted Total Total Funds £'ooo Funds £'ooo 2020 2019 £'ooo £'ooo Net gain50n investmentassets 141bl 27 27 3,010 Net lexpeThlitureifincome 14.2001 909 13.2911 2.037 Gr05Stransfers betww fund5 127 11271 Net lexpendlturel￿nt￿￿e 14,0731 782 13.2911 2,037 Other reco8Thsed1055es: Actvarial1055es on defirEd berEffit pension scheme li 14271 14271 15541 Net movementin funds 145001 782 13.7181 1.483 Reconciliatlonof Funds Total Funds Brought Forward 33,954 1,769 35,723 34,240 Total Funds Carried Forward All Income and expenditLre derlve from continuingactivities. The Group Statementof Finanual Activitie5 indude5 all gain5 and losses reccgnlsed in the year. 30

THE ROYALAIR FORCES ASSOCIATION AS50CIA710N STATEMENTOF FINANCIAL ACnVITIES FOR THEYEARENDED31 DECEMBER2020 Notes Unrestrfcted Restrirted Total Total 2019 Funds Funds 2020 £'ooo £'ooo £'ooo £'ooo INCOME: Donati0Th5 and Legacie5 Donations- assetsgifted from clased branches 5.383 1,163 6.546 8,047 30 19511 19511 1.375 CharltableArtlvltks: 1,375 3,089 4,464 3,721 Other TradingArtivities: Grand Drawand other fundraising income 1,178 1,178 I,iio In￿StmentIncOme 864 864 1,023 Total Income 7,849 4.252 12,101 15276 EXPENDITURE Cost of Raising Fund5 1,765 1,765 3,778 Charitable Activitie5: Residential & RespiteCareHome Welfare Surport Grant5 2,757 6,055 65 34 2,791 9.382 151 3.573 7,335 308 3,327 86 Other Supportcosts 794 798 876 Other Empenditwe: Interest Paid on Branch DeEK)5its Intereston Defined BenefitPerGion Liabilitie5 17 17 iioi Total EKpendlture 11,460 3,451 14,911 IS￿62 31

THE ROYALAIRFORCESASSOCIATION ASSOCIATION STATEMENTOF FINANax ACTIVITIES Icontrnuedl FORTHEYEARENDED310ECEMBER2020 Notes Unrestricted Re5trtctÈd Total Total 2019 £'ooo Funds £'ooo Funds £'ooo 2020 £'ooo Netgainson investmentassets 141bl 27 27 3,010 Net lexperKlituYelfincome 13.5841 801 12,7831 2.424 Grosstransfers betweenfunds 127 11271 Net lexpernllturellincome 13,4571 674 12.7831 2,424 Other reco8Thsedlosses: Actuarial losses on definedberEfit pension scheme li 14271 14271 15541 Net movementin funds 13,8841 674 13,2101 1,870 Reconclllatlon of Funds Total Funds Brought Forward 33,212 1,769 34,981 33,111 Total Fundscarrled Forward 43 All income and eX￿ndItUrederive fr(xN corrtinuingactivitie5. The Association Statementof Financial ACtIv￿e5 indudes all 8ains and losses reccEnisedin the year. 32

THE ROYAL AIRFORCE5ASSOCIATION CONS0LIDATEDANDASSOCIAT￿N BALANCE5HEETS AT31 DECEMBER2020 Notes Group 2020 Association 2019 2020 2019 £'ooo £'ooo £'ooo £'ooo Fixed assets: Intangible assets Tangible assets- Properties Equipmentand furnitwe 12 1,689 1.689 13 6,229 689 6,376 2.200 5.843 522 5,988 2,054 13 8,607 8,576 8,054 8.042 Investments: InvestrnentS 14 22,812 26,782 22,812 26,530 Programme related investments loan to branchès 15 131 132 131 132 Totalfixed assets 31.550 35.490 30,997 34,704 Current assets: Assets held for resale Stocks 16 580 1.415 335 580 1,415 435 Debtors Cash at bank and in hand 17 402 619 1,252 3,886 1,073 1,926 4.382 2,344 Totalcurrent assets 5,799 4,713 5.718 4,422 Current liabilities: Creditors.. amountsfalllt)gdue wtthlnone year 18 14,2351 13.7671 14,1141 13,7151 Net currentassets 1.564 33,114 946 1,604 32,601 707 Totalassets leSS￿rrent Irabilities 36.436 35,411 Creditors.. amounts falling due afterrnore than one year 19 12791 12831 Netassets emduding pènsion scheme 32.835 36,153 32,601 35,411 Defined benefitpensionschemeliability li 18301 14301 18301 14301 Net assetsindudingpen5ion5theme 33

THE ROYALAIR FORCES ASSOCIATION CONSOLIDATED ANDASSOCIATION BALANCE5HEETS Icontit)uedl AT 31 DECEMBER2020 Notes Group 2020 £'ooo Assod*ion 2020 £'ooo 2019 £'ooo 2019 £'ooo Funds: Income fund5: Restricted funds 21 2,551 1.769 2,443 1,769 Unrestricied funds.. Designated funds 22 18,769 20.335 18,769 20,335 General funds 11,517 18301 13,688 14301 11.389 18301 13.307 14301 Pension scheme defKit li Netgeneral funds 10,687 13,258 10,559 12,877 Non-charitsble fund5 361 Total funds 32.005 35,723 31,771 34,981 The financial statements on pa8es 29 to 67 were approved and authorised for issue by the Trustees on and signedon theirbehalf by- Airvi Chair arshalj Cli of the Coundl BOBE 34

THE ROYAL AIR FORCE5ASSOCIATIChN CONSOLIDATEDANDASSOCIATION STATEMENTSOF CASHFLOWS FOR THEYEARENDED31 DECEMBER2020 Notes Group 2020 Association 2020 2019 2019 £'o £'ooo £'ooo £'ooo Cashflowsfrom operatingactivities 24 12,1581 12.2411 12,2951 12,3091 Cashflowsfrom investin8activities Investrnent Income 861 1,017 861 1,017 Interest receiyable Interest payable Receiptof Kaupthingsingerand Friedlandermonies Paymentsto acquire intangible fixed assets 1171 io 1171 io 13 13 14611 1861 13 13131 3,635 14611 1171 13 Paymentsto acquiretangiblefixed assets Receiptsfrom disp)sals of fixedassets Paymentsto acquireinvestments Receiptsfrom disposals of investments Cash funds transfer on acquistion 19831 832 11,0181 1,706 154 19201 832 13131 3,625 11,0181 1,706 Net cash provhded bylnvestlngactlvltles 3,648 1,724 3,707 1,633 Cagh flowsfrom flnanclng actlvitles Decrease in loans to branche5 Decrease in deposits by branches 547 268 547 268 Net cash from financingartivities 548 275 548 275 Change incash and cash equivalentsin the year 2,038 12421 1,960 14011 Cash arhd cash equivalentsatthe be8innÉngof the year 2,344 2,586 1.926 2,327 Cashand cash equlvalentsat theend of the year 25 4,382 2,344 3.886 1,926 35

THE ROYALAIR FORCESA5SOCIATFON NOTESTO THE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 l. Critical acwuntingestimatesand areasofjud8ement Estimates and judgements are contTnually evaluatedand arebased onhistorical eXperien￿aThd otherfactC￿$, indudir expectation5 of futvre events that are believed to be reasonable under the circumstan￿& There are no Crit￿31 a¢countingestimate5 and areasof jud8emertto note. 2. PrlnclpalAccountlng Polldes General Informatlon The Royal Air Forces ASs￿latIon is inCor￿rated by Royal Charterand is a regISte￿d charFty atthe Charttycomm￿s10n in England and Wales Icharty number 2266861 andatthe Scottish Charity Reg￿ator(05CR> inscotland ltharity nun4Jer SC0376731. The address of thecharltvs registered0ffi￿and prinapalplace of busirEs51sAtla5 Hou, 41 Wembley Road, Leicester LE3 IUT. The group consists of the Association and its subsidiaries a5 set out in note 4. The nature of the grou￿$ operations aresetoutln the Trustees. ReFOrt. Basis of preparation The financial Statements have been prepared underihe historical costconvention modified to includethe revèluatic) of freehold property and to include investment properties at fair value, and in accordance with applicable United Kingdom AccountingStandard5. The financial statements have been prepared in accordan￿ with Accountiw Reporting by Charities.. Statement of ReCOmme￿ed Practlce applicable to charities prepari￿ their atcothts in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland. the Financial Rep(Ytirg Standard applicable in the United Klfgdom and Republic of Ireland induding the adoption of the amendments issued in December 2017 IFRS1021. the Charities Act 2011, the Charitie5 and Trustee InvestnEnt (Scotlandl Act2005 and the CharitiesAccwnts {Sco￿and) Regulations 2￿)6(aS amended) and UK Generally Acceptsd AccountirE practi￿ as Itappliesfrom l January 2015. The flnancial statements have been prèpared to give a 'true and fair, view and have departed from the Charilies (Accounts and Reports) Regdations 20CB onlytothe extent requiredto provide a'true and fair'view.This deparknre ha5 involved followin8Accountin8and Rew>rting byCharr(ies preparingtheiraccounts in acc(xdancewiththe Fina)oa Reporting Standard applical￿e in the UK and Republic of Ireland IFRS 1021 issued on 16 July 2014 rather than the Accountirg and Reporting by Charitie5.' Statement of Recommended Praaice effective from l April 2005 which has since beenWithdra¥￿. The fi'nancial ststements of the Association comprise the fund5 of the A550Clation but not the branches whith are separate registered charlties and do not sharecommon Trustees with the Association. The Royal Air Forces Association meets the definition of a public beneflt endty under FRS 102 and have theref￿e applied the relevantpublicbenefitrequirements of FRS 102. Monetsry amount5 in the financial Statements are rounded to the nearest £l.000. The flnancial statements we presented in 5terlingwhich 15 alsothe functionalcurrencyof the Asxsciats'on. Goin8Concern The Council acknowledges that the unprecedented level of uncertainty caused by COVID-19 and rapidly Cha￿ng circuMstan￿g mean that the judgernerts and estimates required by management are more ¢hallerEing th￿ uNkr normal circumstances. 36

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER2020 2. PrinapalAccountingPolitie5lcontrnuÈdJ G0ingCon￿rn Icontinuedl As set out In the Trustees ReKx)rt on page 24, the Coundl ha5 gSven due regard to the increased p￿ssure on incorre streams broughtaboutbythe p3ndernic and havecondUt￿dthatthe positive level of general reserves, a healthy cash and investments balance, the benefit gf Govemment measures and support as well as the continued 5UPP(Yt of rf5 regular contritxjtors, means the going concem basis remains approwiate for the preparaticm of these financk?I Statements. Based on the Association's forecasts, the Council has adopted the going concem basis In preparing the Financkil Statements. The Trustees have made this asse5%nent after conyderation of the AS5(￿￿tiOn,S eash flows and related assumptionsand in accordancewith the Guidance publi%hed by the UK FinancialRepcftingCouncil. Consolidation The group Statement of Financial Activities and group Balance Sheet consolidale the financial statements of the Association and its subsidiarEs. The results of the subsidiariesare consolidated on a line by line basis. Intra grojp transaction5. balances and unrealisedgains are eliminated on cong)lidation. Where ne￿Ssary, adjustmentsare m to the financial statements of subsidiaries to bring the accountin8 poliaes used into line wlth those used by other membersofthe Group. Joint Ventures Entitie5 in which the group holds an interest. and which are jointly contrdled by the group and one or more other ventures under a contractual arrangement are treated as joint venture5. In the group financial statements. joint ventures areaccounted forusingthe equitymethod. Under the equity methryl of accounti￿. an equity investment initially recognised at transaction price lincluding transaction c05ts1 and is 5ub5equently adjusted to reflect the investors, shareof the profitor loss, othercomwehensive incomeand equity of thejointventure. Fund accounting General fundsare unrestrirted fund5whichare availableforuse atthe dlscretlonofthe Tru5tee5 in furtheran￿0fthe objèciivèsof the Associationand which have notbeendesEnated forotherpurp)ses. Designated funds are UnreStr￿tedl￿ndsIhat have beensetaside bytheTrusteesforpartlcularpurposes. Thesefijnds are reviewedannually. Restricted fundsare funds which are to be used in accordance with specrfic restrictioTh% imposed by doTh)rs or have been raised by the A$50ciation for particular purposes. Eypenditwe is charged to the Statement of Finanaa Activities when Incur￿d. Income All income is ind￿led inthe StstementOI Fiianaal Activibe5 ISOFAI when theA550ciation hasentitlementtothefun any performancecondtionsattachedto the incomehave been met, it is probaEAethatthe incomewill be receivedand the amountcan be measured reliably.The following5peuficpolioes areapplied to partitularCateg￿1es0f inccme. Income inthe form of donationsand subscripilcY)s is Inclu(kd whenreceiVa￿e. Legaaesare accountedforas SO￿ a entitlement, probabillty and a monetsry valije can be established.The sumsdue under the contraLtfrgm the MOD i5 included as intcme in the perK)d itlsearned. 37

THE ROYAL AIR FORCESASSOCIAnON NOTESTOTHE FINANCIALSTATEMENTS YEAR ENDE0310ECEMBER2020 PrlnclpalAccountlngPolides{continuedl Income Icontinuel Fundraising income is included in inccthe in the period in whith the Associati￿ beconRs entitled to receipt. Traling income is recognisedas earned. Investment income 15 iriclu(kd when receiwdble. Income from charitable activities 15 included in income in the period in which the Association becomes entitled receipt. Government grants are recognised at the fair value of the a55et received or receivable when there is reasona) assurance thatthe grantcorKlitionswill be metand the grantswill be received. A grant that 5pecifie5 performance conditions is reeognised in income when the perfttman￿ Conditiot￿ are met Where agrantdoe5 notspecifyperforrnanceconditions itis recognised in income when the proceedsare recewed or receivaE4e.A grant re￿lVedbefcrethe recognition criteria aresatisfiedis recognised a5 a liability. Expenditure All expenditureisaccounted foron an accruals basisas 3 liability is incurred orwhen the Association isdeemedto hwe a legal or constructive obligation which will result in a probable transfer Of economic benefits. Expenditure has been classified underheadings thataggregateall costs rebtedtothe category. Costs of ¥aisin8 funds include fun(traisingtradin8 costs and investment managementcosts. These costs are reg￿￿ as necessarytogenerate fundsthatare neededtofinancecharitable activities. Charitable actlvities expeNJlture enables the Association to meet it5 charitsble alms and objettives and include both directand Supp￿tc0sts relatingtothe activity. support costs, which include the secretariat, flnance. information techndogy and human resources, have teen Ilocated to costof raisingfunds and charitsble activities on the mostappropriate basls. Secretariatand financecosts have been allocated on the basis of time spent. Information technology costs have been allocated on the basts of equipment usage. Human Resourcecost5 have been allocatedon the basisof staff number5. Grants Grants are accountedfor when either the recipienthasa reasonable expectstion thattheywill receweagrantor then theTrustees havea8reed to pay the grantwithoutcond'tiorL Intanglble flxed assets Intangible assets are Initial￿ recorckd atcost and subsequentlymeasured atcost netof accurnulated amortisation and any impèirmentloss. AmoTtisation is probided for onall intangibleassetsat rates calculated to write off the costof e a5setle55 its residualvalue evenly over it5 expected useful economiclives as follows: . Softwwe over 15 years Impairmentrevrews are carried OutWhe￿ the¥e are indicationsthat recoverableamounts of intangblefixed assets we belowtheir carryi￿values. Shortfalls between the carrying value of intangible fixed assets and their recoverable amounts are recognised impalrmentlosses in the Statementof Financial Activities. 38

THE ROYALAIR FORCESA550CIATION NOTESTO THE FINANCIALSTATEMENT5 YEARENDED31 DECEMBER2020 Princlpal AccountlngPoli(ies Itontlnuedl Tan8iblefixed35set5 Tangible fixed assets are initially recorded atcostand subsequently measured at cost or valuation net of depreciation and any impairmentloss. The Associationand each sutsidiary will capitalise items overthe valueof £500. Depreciation is provided for on all tangible fixed asset5 at rates calculated to write each asset down to its estimated Val￿ even over itsexpetteduse￿l ecorL)mic lives a5follow5-. Freehold proFerties Short kahold propertEs - Corypuier equipment Other equiprrEnt and furniture Motor vehicles 2%on cost over the term50f the leases 25% on c05t between 15%and 25%on net book value 25% on netbookvalueloverls years Impairment reviews are carried out where there are indications that recoverable amounts of fixed assets are their carryir6values. Shortfalls between theCarryl￿V2Iue of fixedassetsand theirrecoVerdb￿ am(AJnlsare recognised asimpairmentk)ss in the Statementof FinanclalActivities. Revaluatlonof Propertles Propertieswhosefairvaluecanbe me35uredreliètAyare heldundertherevaluationmodel andare carried ata revahjed amount, beingtheirfairvalue atthe date of valuation lessanysubsequentacctwnulated depreciation and subseqwnt accumulated impairrnent105ses. The fairvalue of the land and buildings is usually considered to be their marketvdue. Revaluation gains and lossesare reccEni%edin Other Gainsand Losses in the Statementof FinancKIl Actimties. Investments Long term Investments areclasslfiedas fixed assets. Short-term investments are classified ascurrentassets. Listed investments are stated at fair value at the balance sheet date. Unlisted irivestments are stated at cost less impairment at the bèlance sheèt date. Both realised and unrealised gains and1955es a￿ shown in the StatenEnt Of Financial Activltles.The faIrval￿ of the Investmenisquotedon a recognisedstockexchange isihe quoted bid pri￿. InvestmentproFertsesareinitially measured at cosland sUbSequen￿V measured atfairvalue whilsta reliable meagjre of fair value is available without undue cost or effort. Changes In fair value in gains/losse5 in Investment Assets are recognised in the Statementof FinancialActivities. stocks Stocks ère valued atthelower ofcostand netrealsablevalue. Net realisab￿ value is based upon estirnatedsellingprre les5 further costs expLrted to be incLrred to completionand disposal. Provision is made for obsdete and slow-nvmg items. Finanaal instruments The Group haselected to ap ￿¥the prOv￿lOn$ of Secticn Il'Ba5icFin3nual Instruments. andSection12'0therFinarKkHI Instruments Issues. of FRS 102. in full.to all of its financial instruments. Financial assets and flnanclal Ilablllties are reccgnised when the Group becomesa partyto the contractual provNon5 of the instrument, and are offset onlywhen the Grwp currently has a legallyenforceable rghtto setoffthe recognwd amountsand intend5 eitherto settle on a netbasis, or to realise the asset and settlethe liabilltysimultsneousty. 39

THE ROYALAIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEAR ENDED31 DECEMBER 2020 Principal Attountin8 Policies Icontinud) Finanaal assets Trade debtors.Eroupdebtorsand otherdebtows Trade debtors,8roupdebtorsand otherdebtors lincludin8 accruedincomel whlchare receivablewithin one year which do not constitute a financing transaction are initially measured at the transaction priTr and are subsequenty measured atamortisedcost, beirE the transaction price lessany amountssettled and any impaimientlosse5. A provision for impalrmertof trade debtors isestablishedwhenthere isobjertiveevid2ncethatihe amounts due wll not be collected accordingtothe originalterms of the tontract. Impairmentlossesare rec(Eni5ed irh profitor105sfor the excess of the carrwng value of the trade debtoroverthe present value of the futkjre cash flows discounted u&ng the original effective Interest rate. Subsequent reversak of an impairment loss that objectively relate to an event occurringafter the impairment loss was recognised, are recognised immedwtelyin the Statementof FinancialArtivitEs Finanaal liabilitiesand equitv Financial instrumentsare classified as liabilitiesand equity instruments accordin8to the substance of the contracttl arrangements enteredinto. An equityinstrumentisanycontrxtthatevidences a residual interest in the assets of Ihe Group afterdeducting all of itsliabilities. Othèr credttotsand a￿u41$ Othercredltors Ilncludingaccwalslpayable withln oneyear thatdo notconstitute afinancingtransaetion are Initial¥ measured atthe transaction pri￿ and subsequently measured atamortised cost, beingthetransactionprice le& a)y amounts settled. DerecoÈnitionof financial assets and li•bÉlities A financial assetls derecognised onlywhen thecontrartual rightsto tash flows expwe or aresettled, orsubstsntialty all the risks and rewards of ownership are transferred to another party. or if some significant risks and rewards of ownership are retained but control of the asset has transferred to an()ther party that is able to sell the asset in its entirety to an unrelatedthird party.A financial liabilty lor partthereofl 15 derecognised when the obligation speC￿d in the contract is discharged.cancelled orexpires. Pension costs The Association opèratès a defined EEnefit pension schemethat closed to newentrants in December2¢J)Oandto fu￿re accrual on 31 December2012. Contributionsare paid to the scheme in aCccrdan￿With the recommend4tionsof the schemeactuary. Actuarial gains and losse5 arising from any newvaluation and from updatirE the latest actuarial valuation to reflect corkdition5 atthe balance5heetdate are rectydnised in the Statement of Finanaal Activities. The interestcosts arKI the intereston assets areshown as a netamountof income oreXper￿ltUreaS appropriate. Other adjustments areinduded within employeecosts. As detaSled in note 11, pension scheme assets are measured at fair vakne and liabilitie5 are flleasured on an actuaia basis and discounted at a rate equiwdlent to the current rate of retum of a high qualitycorFX)rate bond of equivaent currencyand term ofthe scheme liabilities. Full vpdated actuarial v3luatiLYlS areobtainedtrienniallyand arerevEwed in the followingtwo years at each balanCes￿et date. The defined beneff( pensionscheme assetorliabilty is pre￿nted separately afterother net assetson the face of the balanceshe@t. The 355et5 relating to the pension scheme are held separately from those of the Association in separate tru#ee admini5teredfund5.

THE ROYALAIRFORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 Principal Accountingpoliues Icontinuedl Pension costs (continued) The Association also contributes to individual ernployees, personal stakeholder pension arrangements. W￿re employees are not members of the defined benefit scheme. Contribthion5 payable are ch¥ged to the 5￿te￿Ent Of Financial Activitie5 asthey becomepayable. DIffe￿nceS between cOntri￿lti0ns payable in the year and contrilxjtiors actually paid are shown in either accrua150rprepayments In the balancesheet. Termination payments The best estimate of the expencliture required to settle an obligation for termlnation benefits, is recogry5ed immediBtelyas an expense. ¥vhen the GrcupisdemOnstrab￿ committedto termlnatethe emp1oymentofanem￿9Yee. orto provide termination benefrts. Operatin8 lease a8reements Rentals underoperatin8leases where substartiallyall of the benefits2nd risks of owne￿hlPrerna1n with the lessor¥e harged tothe Staternentof Financial ACti￿1t1es on astrai8ht-line basis over the lea temi. Voluntee No amounts are included inthe financial statementsto reflectthe valueof workundertaken byvolunteer5. DONATIONS, LEGACIES AND SUB5CRIPTION5 UNestrirted Funds £.￿0 Restritted fund5 £'ooo Total 20ZO £'LrJO Total 2019 £'ooo Group Donations Re$￿entIal respite care ho￿e5 ArnEd Forces Cona)t Fund Trust Others LegacEs Sub%riptK)ns 29 1.027 215 29 1,027 1,827 2,886 885 78 1,612 2,886 885 2.628 4.272 978 5,383 1.271 6,654 7,956 Ur*estrlcted Funds £'o)o Re5trirted fund5 £'o)o Total 2020 £'th)o Total 2019 £'ooo Association Donations ResKlential and respite care honEs ArnEd Fcrtes Covena)t Fund Trust Others LegacEs SubxriptDn5 29 1,027 107 29 1,027 1,719 2,886 885 78 1,612 2,886 885 2.719 4,272 978 5,383 1,163 6.546 8,047 41

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 4. SUBSIDIARIES Durlng the year. the Assc(latlon ownedthe whde of the share caFAtal of RAFATRAD ￿mIted, RAFA Ho￿Ing bmti£d, RAFA Clubs Limited3nd RAFAKidz Limited. The activity of RAFATRAD Limited IComp3nyNo. 034552551 isthe sale of commemorative iternsand memorabllig the provision of fundrai&n& memterslip and marketingpro(kJrtstothe Associationand its branches The activity of RAFA HouslngLlmlted (Registered number IP17723R) 15 that of the provisionof independent housin8 f re￿red membersof the RAFfamily based in Storrington. We5tSussex. RAFA Club5 Limrtedlcompary 119270891 15 CU￿entlynottr3dIng. The activity of RAFA Kidz Limited (Company No. 119270271 isthatof operatingnurserie5 and outof school clubs. RAFA Kidz Limitedowns RAFA Kidzone Limited (Compary No. 08418367and Charity registrationNo. 11548221 whKh i an it)corporated charity registered in England and Wales. The activity of RAFA Kidzone Limited is to enhance the developmentand educationof children by offering inclugveand appropriate playand learningfacilities. RAFA Kidz Limited owns RAFA Kidz Wings Limtted (Company No. 123728141. RAFA Kidz Wings Limited is cu rrenty dormant The results of the subsidiaries and the amounts included wlthin the Group Statement of Financial Actiirities are as follow5.. RAFA FLRAFATRAD RAFAClubs 2020 Z020 2020 £,￿0 £'rJ)o £'ooo RAFA Kklz RAFA Kidzone 2020 2020 £'coo £'ooo Incorr 176 451 729 671 Expenditure 11481 14891 11,0291 16171 Svrpluslloss forthe financial priod 28 1381 13001 54 All of the incorne and expenditwe 15 unrestrictedfor both years exceptfor £108k whichisincluded within the Ir￿0￿ for RAFA Kidzone Limitedin the currentyearand ts restricted The aggregate of the assets, liabilities and fund50fthe 5ub5idi3rytompanies at 31 Decemberwere.. RAFA PLRAFATRAD RAFA Clubs 2020 2020 £,￿0 £'ooo RAFA KKIZ RAFA Kklzone 2020 2020 £'(x)o £'ooo £'o)o Asts 783 540 iii 13011 16141 14641 1291 Fund5 (Share capital and reserves 482 1741 13531 179 42

THE ROYALAIR FORCESASSOCIAMON NOTE5TO THE FINANCIALSYATEMENTS YEARENDED31 DECEMBER2020 SUBSIDIARIES Icontinuedl RAFA Kidi Wirgs Limited was incorporated on 20 December 2019 and has been dorrnant for its first period up b) 31 December 2020. The registeredofficeof all subsidiaries isAtlas House, 41 Wembley Road, Leicester LE3 iur. During the year RAFATRAD Limrted charged the Association £148k12019'. £328kl in respert of Air Mail and RAF Association branded go(x15. A150, during the year. the Association charged RAFATRAD Limited £25k12019'. £131k) li respectof premi5e5 recharges, RAFAssociation branded good5 and accountantcosts. Atthe yearendthe Associat"on was owed £552k12019=£419kl by RAFATl￿DLIMlted. During the yeai the Association charged RAFA Hous1￿ Limited £9k12019.. £nill and at the year end the Association owed £39kl2019.. £68k) to RAFA Housing Limited. Duringthe year,there have been recharges between theAssociation and RAFA Kid2 Limited forvarious expenses,the net movement amounted to £167kl2019 £141kl.Atthe yearendtr A550ciation wasowed £359k12019..£190kl by RAFAKidz. INVESTMENT INCOMEAND INTEREST Group and Assoaation 2020 £'ooo 2019 £'ooo UK listed investments Cash deposits Branch and otherloans Properties 747 787 114 229 864 All investment inccme and interest is unrestrictedfor both years. 6. INCOME FROMCHARITABLEACnVITIES Group UnTestrirted Fund5 £'wo Restrirted funds £,￿)0 Total 2020 £,￿0 Total 2019 £'ooo Accommodath)n fees Grant5 and fundrasingir£orr Nursery fees UK governrT*nt Coronavru5 job re•Ent¥)n 458 167 1,076 458 3,256 1,076 1,160 2,805 261 2,786 3,C@9 5,875 4,226 The group received a further£53,10912019.. fnill underthe UK govemmentcoronavirusjob retention 5chemewhich has been allocatedto trading income within othertradin8 activitie5. 43

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIAL5TATEMENTS YEARENDED31DECEMBER2020 6. INCOME FROMCHARITABLEACTIVMES Icontinuedl Associatlon Unrestrirted Funds £,￿0 Rèstrictèd funds £'ooo Total Total 2019 £'ooo £.￿0 AccOmmodat￿n fees Grants and fundrasing incon UK governnEnt coronavir￿ job retentDn Khen 321 162 892 321 3,251 892 I,ooi 2,720 1,375 3,721 7. TOTAL EXPENDITURE Group Employèe nd related st5 Depre(iatK)ti and 3mort15atx)n Other COSts Total 2020 Total 2019 £'ooo £'ooo £'ooo £'ooo £'ooo Costs of raising funds.. Directcosts 1.257 880 2.137 4,078 134 Allocated SUPFX)rtcosts Charlty's charltableactlvities Directcosts 4.873 2,054 5,051 2,379 9,924 4.900 7.289 5.307 Allocated suppK)rtcosts Other expenditu Interest Paid on Branch Deposits Intsreston Oeflned Benefit Pension Llabillties Share of the reduction in valueof the jointvenbjre. due to the dispersal ofthe jointventurefunds, as intended Isee note 141 467 17 17 iioi 252 252 409 8.184 470 8,586 17.240 17.209 44

THE ROYAL AIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 7. TOTAL EXPENDITURE{continuedl 2020 2019 £'ooo Alloeated supportC05ts= Heatand light Other slte Costs AdvertI51￿and promotions Printing and ststionery Telephone Insurance E'ooo 45 64 287 52 225 108 58 61 46 226 128 Repairs and rna1ntena￿e Depreaationand amortisation Other expenditure Other equiwient Staff costs 27 66 470 508 1,292 26 1,169 52 2,054 359 2,203 815 Governan￿ costs 4,903 5,441 Included within totsl expenditurearepayments underoperatirglea5esa5 follows.. Land and building5 paymentsof £47k12019-£52kl Equipmentpaymentsof£8kl2019-£23kl The costs of raisingfunds includes WirgsAppeal rebates allocated tg branchestotalllng £23kl2019- £199kl. Supportcosts incluJe£92k in respectof additional payments into the defined benefitpensicn scheme,12019- £470kl Total expenditure includesauditCf5' remunerationof £29k12019..£27kl, and a loss on disposal of fixed assetsof £16k 12019=£1(1(l. Fees payable to RSM UK Audlt LLP and its associatesin respectof non-a￿41tareforT¥X ctynp1lan￿ £6k12019.. £3k) other services £19k12019.. £17k). 45

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 7. TOTAL EXPENDITURE (continued) Assoclatlon Employee and related 05ts Depredat* and amortisatr £'ooo Other tosts Total 2020 Total 2019 £'ooo £'ooo £'ooo £'ooo Costsof raising funds.. DirectC05ts Allocated Sup￿rtc0sts Charity'scharitableactivities Direct Costs Allocated supp)rtcosts Other expenditure InterestPaid on Branch Oeposits Intereston Defined Benefit Pensic￿ Liabilities 1.028 737 1,765 3.648 130 3,551 1,945 4,803 2,386 8,354 4,768 6.811 5,281 437 17 17 iioi 6,524 437 7,950 14,911 15.862 2020 £'ooo 2019 £'ooo Allocated supportcosts- Heatand light Other site costs AdvertisirE and promction5 Printing and stationery Telephone Insurance Repairs and maintenance Depreaation and amortisation Other expenditure Other equipment Staff costs GoVernan￿c0sts 45 64 38 221 287 58 107 61 224 128 24 437 66 478 1,273 26 1.169 52 1,945 409 2,203 815 4,768 5,411 46

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER2020 8. GRANTS PAYABLE Group and A5soaation 2020 2019 £'ooo £'ooo Welfare grantsto individuals Association property grant5 to branches Armed For￿ScoVenant Fund Trustgrarbts paid to branche5 26 33 526 559 33 9. TRANSACTtONSWITHTRUSTEES The Trustee5 neitherreceivednorwaived any emoluments duringtheyear12019- £nill. Trustees eX￿nSeS of £101135 were reimbursed for directly incurred travel and subsistence expen5e512019- £47,794) to 24 trustee512019.. 23 trustees). 10. STAFFCOSt5 Group 2020 Associatlon 2019 2020 £'ooo 2019 £'ooo £'ooo £'ooo Wagesand Salaries Social 5ecurityc05ts Employer contributions to defined contribution5 schemes 7.125 592 6,610 561 5,665 504 5,813 509 372 513 334 486 8,C189 7,684 6,503 6.808 Included in the staff c05t5 above is an amount of £235.281 which relates to the total re5tructurirg costs for tl or8anisations. 47

THE ROYALAIR FORCESASSOCIATION N07ESTO THE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 10. STAFF COSTS Icontinuedl The average number ofemployees throughouttheyear, calculated ona full-time equivalent basis, analysed by localhjn was.. Group 2020 Association 2019 2020 2019 Number Number Number Number Welfare Membership Headquarters Families Federation Sermce RAFATRAD 69 84 69 84 29 30 29 30 65 60 65 64 io io io io RAFA HousSng RAFA Kid2 linc Kid20nèl 59 36 239 229 173 188 The average numberof emplcryees Iheadcountl dtjringthe yearwas 31312019.. 3131. The numberofemployeeswhose emoluments forthe year fell within the following bands was.. Groupand Association 2020 2019 Number Number £60,OOlto £70.( £70,001 to £80.(KK) £80,ODlto £90,(KX) £90,001 to £lOO.000 £120,OOlto £130.OQKI li 11 ernployees12019.. 91 eaming morethan £60,OOOparticipated in an AsSOCPtion defined contr1t￿tion pension xhenE. Employer contrib￿lOnS to individual 5takeholderschemes were £62.06912019.' £57,086). The totsl employee benefrts of the key management personnel of the Associatign were £897k12019'. £￿7k1, wh￿h includes Salary, Employers National Insuranee Contribution, Employers Pension Contribution, all allowan￿ redundancyand notice period payments. IL PENSION SCHEMES{Groupand A55QCiation} The AssoclatSon operates a defined benefit pension scheme, which cb5ed to new entrants in December 20(K) future atcru31 on 31 December 2012.The assets of the scheme are heldseparétely fromthose of the AsscKiaticn in an independently admlnlstered fund. Contributions arebased uponthe reC(ThMenda￿0nsof a qualified actuary. The most recent actuarial valuation of the stheme was carried out as at l January 2019 by an indepencknt actLHV usingthe projected unit method. This valuation 5howedthatthe value of the scheme's assets was £15,99o,(QOWh￿h representedonly 91 percentof the benefitsthat had acenjedto members, afterallowingforexpectedfutureincreases in earnings. In valuingthefund, itwasassumed thatthe investment retum would be 5.5 percentperannum comFX)und. The scheme deficit is secured againsta chargeon the Ass¢xiation's headquarters Atlas Houseat Leicester. 48

THE ROYAL AIR FORCESASSOCIATICh NOTESTOTHE FINANcfALSTATEMENTS YEARENDED31 DECEMBER2020 IL PENSION SCHEMES (continued) A full actuarièl valuation was tarrSed out at l January 2019 and upd3ted as at 31 December 2020 by a quali independent actuary. The majorassumption5U5ed bythe actuarywere.. 2020 2019 Rate of increase of pensions in payment Discount rat Inflation assumptiori IRPII 3.0% 1.3% 3.0% 2.9% 1.9% 2.9% The mortality assumptions usedin the valuationof the pensbn liabiliiieswere: 2020 Years 21.7 23.9 2019 Years 21.6 23.7 Retiringtoday (CU￿entlyased 651.. Males Females Retiring in 20yearslcurrently aged 451.. Males Females 22.7 24.7 22.6 24.5 The A550Clation's assetswerè transferred from Legaland General with-profrts policy to managedfund investments on 15 January 2010. The Associatiorfs assetsin the schemeat31 December 2020were.' 2020 £'ooo 2019 £'ooo Bonds Equities Property Insurance Cc￿traCts Diversified fund5 LDI funds Netcurrentassets 3,315 2,801 I,oio 5.885 2.393 2.145 177 3,151 4,020 1,226 5,859 1.908 818 51 Totsl assets 17,726 17,033 2020 £'ooo 2019 É'ooo Fair value of scheme assets Presentvalueof scheme liabilities 17.726 17,033 118.5561 117,4631 Deficit in the scheme 18301 1430 49

THE ROYAL AIR FORCES ASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEAR ENDED31 DECEMBER 2020 11. PENSION SCHEMES1uirttin￿dJ In accordarKe with FRS102, prowsion has been made bythe A550ciatiorhforthe deficitof the scheme. This is ref￿cted in the financial statementsasfollows.. Analysisof thè amountstharged to Stenntof FinandalActlvltles 2020 £'ooo 2019 £'ooo Expenses paid bythe scheme 58 88 Analysisof financial elementof pension5COSt 2020 £'ooo 2019 £'ooo Intereston assets Interest on pension St￿Me liabilities 318 13251 442 14441 Netcost 171 Analysis of the actuarialEainl110s51 on deffined beneflt pensionscheme 2020 £'ooo 2019 £'ooo Gain on asset return Experiencegainllbssl on liabilities Changes in assumptionsunderlyin6the pre*ntvalue of the scheme liabilties 1,048 58 11,5331 1,523 11331 11,9441 Actuarial10s5 recogThsed in Statementof Financial Attivitie5 14271 15541 CumulatSve actuario110ssrecognised in Slatementof FinancialActivities 13,1711 12,7441 Changesln the prèsertvalue of defined benefitobllgatlor6 2020 £'ooo 2019 £'ooo Openlngdefined benefit¢bligation Intere5tcost Experiencelgainiilosson liabilitie5 L055 on changes in assumptions Benelits paid 17,463 325 1581 1,533 17071 15.696 444 133 1,944 17541 Closing defined benefitobligation 18.556 17.463 50

THE ROYALAIRFORCESASSOCIAllON NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 IL PENSION SCHEMESlcontinued) Changesinthèfairvalue of plana5sets 2020 £'ooo 2019 E'OOO Opening plan assets Interest on assets Gain on asset return Contributionsby employer Benefit5 paid Expenses paid bythe sc￿rne 17,033 318 1,048 92 17071 1581 15,440 442 1,523 470 17541 1881 Closing defined benefitobligation 17,726 17.033 The actual retLtrn on planassetswas £1,366kl2019= £1.965kl. Thè Assoclation expert5to contribute £IOOkto itsdefined benefitpension plansin the yearended31 December2021. The AsSOClation also contributes to a WPP scheme. With eflect from l August 2020 the Association redU￿d its contributionto the scheme from 9 percentor 10 percentto4 percertof each memberfs grosssalary and the per&on costfor the year was £369k12019- £506kl. 12. INTANGIBLE FIXEDASSETS Computer software £'ooo Total Group and Association £'ooo Cost or valuation: At l January 2020 Additions Transfer from tangiblefixed assets 461 1.429 461 1.429 At31 December2020 1,890 1,890 Amortisatio At l January 2020 Charge for year Transfer fromtangiblefixed assets iii 90 iii 90 At 31 December2020 201 201 Net bookvalue: At31 December2020 1,689 1.689 At31 December2019 51

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIALsfATEMENTS YEAR ENDED31 DECEMBER2020 Il TANGIBLEFIXEDASSETS Properties Short Leasehold £'ooo Equipment and Furniture £'ooo Total Group Freehold £'ooo £'ooo Cost orvaluation: At l January 2020 Additions Disposa15 Transfers 8,346 19 59 3A96 67 11951 11.4461 12,301 86 11951 11,4461 At31 December2020 8,365 59 2,322 10,746 Depreaation: At ljanuary 2020 Charge for year Depreaationon disP05al Transfer to 5ntangible fiKedassets 2,003 165 26 1,696 193 11661 1901 3,725 359 11661 1901 At31 December2020 2.168 27 1.633 3,828 Net bookvalue: At31 December2020 6.197 32 689 6.918 At31 December2019 6,343 33 2,200 8,576 Properties Short Leasehold £'ooo Equipment and Furniture £'ooo Associatlon Freehold £'ooo Total £'ooo Cost orvaluatlon- At l January 2020 Additions Disposals Transferto Intangible fixedas5ets 7.662 59 3,499 11.220 17 11951 11.4291 11951 11,4291 At 31 December2020 7.671 59 1,883 9,613 Depreaation: At l January 2020 Charge for year Depreciationon disposaLs Transfer to Intangible fixedassets 1,707 153 26 1.445 172 11661 1901 3.178 326 11661 1901 At 31 December2020 1,860 27 1,361 3,248 Net bookvalue: At31 December2020 5,811 32 522 6.365 At31 December2019 33 52

THE ROYALAIRFORCESASSOCIATION NOTESTO THE FINANCIALSTATEMENTS YEAR ENDED31 DECEMBER2020 13. TANGIBLE FIXEDASSETS (Contin￿d) Freehold property with a carrying amount of £ 1.796k12019.. £I,8￿k) was revalued at 31 December 2Q19 by an employee of the Ass￿lation, who isa memberof the Royal Institution of Chartered survey0￿, on an existing u* cFen rnarketvalue basi5. The historical c05tof the freehold proFerty carriedatvaluation is £468k12019.. £468kl. 14. INVESTMENTS Fair Value 2020 £'ooo HistorÉcal Cost 2020 £'ooo Group 2019 £'ooo 2019 E'ooo al Flxed assets Listed investments Inve5tmentpropertie5 Investmentinjointventure Longterm savings bond 20,973 1,839 23,326 3,049 252 155 12,834 165 15,639 165 252 ISS 22,812 26,782 12,999 16,211 Falrvalue 2020 £'ooo Historical Cost 2020 £'ooo Association 2019 £'ooo 2019 £'ooo al Fixed assets Listed investments Investmentproperties Long term savings bond 20.973 1,839 23,326 3,049 155 12,834 165 15.639 165 155 It is the Association's intention to undertake a professI￿allY remewed valuation of the investment propertie5 every five years. The last professional valuation was at 30 November 2010 and was undertaken by Frank Marshall & Co, qualified chartered surveyors. Trustees considerthe valuation at the 31 December 2020 to be not materiall differenttothe 30 November2010 valuation 8nd the valuation is therefore the Trustees. estimatedfair value. butit our intentionto have these professionally valued in 2021.The basis of valuation is the open marketvalue of the Icng leasehold interests in the property, subjecttoemistirytenancles. M0￿ments0nfairva1Ué duringthe year-Association Listed InvestmÈnt Investments property E'OOO £'ooo Longterm savings bond £'ooo Total £'ooo l January 2020 AdditlQE15 Disposals Netinvestmentgains 23,326 313 12,8301 164 3,049 40 11,iooi 11501 155 26,530 353 11551 14,0851 14 31 December 2020 The net inve5tmentgains reflectthe revaluationof Investments atthe year end. 53

THE ROYAL AIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 14. INVESTMENTS Icontinuedl No one investsnentrepresents morethan S per certofthe portfolio by marketvalue. Investmeniinlolnt venture Share ofjoint venture 2020 2019 £'ooo £'ooo Carrying valueatbe8innirg of year Share of net expenditure injointventure 252 12521 661 14091 Carryingvalueatend of year 252 The Group holds an interestin ajointly controlledentity,The RAFIOoAp￿aj1CompanY No. 09977273 and Regi51Ered Charity No. 11673981 which is a company not having a share capitsl. The Group ha5 guaranteed an amount of £1 contributionto assets of the charityin the eventof it beingwound up. The RAFIOO Appeal is ajoint venturebetweenthe Assouationand threeothercharities.The investmentis accounted for underthe equity method. Theregistered office ofThe RAFIOOApk*al is 67 Portland Place, London. WIB IAR. A surnmaryofthe Assoclation'5 shareof RAFIOOApkEal's results isshown below: 2020 £'ooo 2019 £'ooo Income Expenditure 27 4361 11151 Netexpenditure 115 409 The A5sociation'sshare of RAFIWAppeal's assets and liabilities is as follows: 2020 £'ooo 2019 £'ooo Currentassets Currentliabilities 214 12141 264 1121 Netassets 252 The results for the cwrentyearare basedon the draftfinarKialstatements forthe year ended 31 De￿Mber202o.The prioryear figures werebased on the managementaccountsprepared upto 31 October2019. The Association holds investments of £10512019.. £1051 reFresentingthe entireordinarysharecapital of itssubsidw, companies which arè efirninated on the groupconsoSidaticn. detaik of the subsidiary companiesare given in note 4 of the accounts. 54

THE ROYALAIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER2020 14. INVESfMENTSlcontinuedl Overseas investments Branch Deposit Branch Deposit Fund- Formby Fund Branch £'ooo £'ooo Total £'ooo 2020 North America European Asia Pacific Emerging rnarket Global 3,602 385 1,427 495 4.365 154 17 80 3,756 402 1.507 495 4.589 224 10,274 475 10,749 2019 North America European Asia Pacific Emerging Market Global 3.OS3 306 i.o?1 118 3,262 149 13 51 3,202 319 1,122 118 3.421 159 7,810 372 8.182 bl Net Èainson investmentassets Group and As50aation 2020 £'ooo 2019 £'ooo Netgain5 on listed investments Netgains on currentassetproperties Netgains on currentasset investments Kaupthingsingerand Friedlander distribution (see note 261 14 2,910 loo 13 27 The Revaluation Reserve of £11,141k12019.. £11,953kl inckndedwithin thè unrestrkted furKls withinthe balan￿ sTr￿et of boththe Group and Association, ariseson the yearend fairvalue of Investments and freehdd property held atfar value, less their historicalcosts. 15. LOANSTO BRANCHES Included underthis headingis an arnountof £nil12019- £4.4421 falling duewithin oneyear. 55

THE ROYALAIR FORCESASSOCIATION NOTESTOTHE FINANCIAL5TATEMENTS YEAR ENDED31 DECEMBER 2020 16. ASSEtS HELD FOR RESALE 2020 £'ooo 2019 £'ooo GroupandAssoclatlon Freeholdpr(perties 580 1,415 17. DEBTORS:AMOUNTSFALUNG DUEWITHINONEYEAR oup Association 2020 2019 £'ooo £'ooo 2020 £'ooo 2019 £'ooo Trade debtors Amountsdue from subsKliaries Prepayrnents and accrued incryne Other debtors 23 166 21 911 294 26 lis 644 304 io 321 58 392 61 402 619 1,252 1.073 Within the Association, amounts due from subsKJiaries includes£50,(K)012019.. £50,0(K)Iwhichi5 due after moreth one year. Within theGroup. otherdebtors incI￿￿e5 £niS12019.. £22,725lwhichis due after more than orie year. I& CREDITORS.. AMOUNTSFALLINGDUEWITHIN ONEYEAR Group 2020 £'ooo A$50tiation 2020 £'ooo 2019 £'ooo 2019 £'ooo Taxation and social security costs Other creditors Accrualsand deferred income Dep051ts by brancEEs Formby Branch Amounts owed to 5ub5idiaries 281 830 467 1,717 940 164 668 82S 1,170 940 263 708 447 1,717 940 39 151 606 780 1,170 940 68 4.235 3.767 4,114 3,715 Deposits by branches are held in a separate portfolio of investments comprising UK listed investments and c&h deposits, managed byeitherRathborEslnvestment Management Llmited or Rotklild5. 56

THE ROYAL AIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER2020 18. CREDITORS: AMOUNTSFALUNG DUEWITHIN ONEYEAR (continued The amounts included in aC￿￿1$and deferredincome can be analysedasfollows.. Group A550ciation 2020 £'ooo 2019 £'ooo 2020 £'ooo 2019 £'ooo Accruals Deferredincome 252 215 487 338 238 209 462 318 467 825 447 780 Included in accruals is an amountof £37k12019- £131kl in respectof unpald pensicn contributions. Group £'ooo Associatlon £'ooo Movementindeferred income: 2020 operin8balance Release duringthe year 2020 donations and subsuiptic￿s in advan 338 13331 210 318 13181 209 2020 Closin8 balarKe 215 209 Withinthe Group and Associatiorn deferred incomecompri5es membershipsubscriptionincome, Govemrnentfunc4ng and deposits re￿iVed in advan￿. 19. CREDITORS: AMOUNfs FALUNG DUE AFTERMORETHAN ONEYEAR Group 2020 £'ooo Association 2020 2019 £'ooo £'ooo 2019 £'ooo Deferred income- capi(al grant 279 283 279 283 57

THE ROYAL AIR FORCES A550CIATION NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 20. OPERATING LEASECOMMITMENTS The total future minimtjm lease payments under n0Th-Can￿lIableOperatlnsjea5esareSet outbelow.. Group 2020 £'ooo Asso¢iatlon 2020 2019 £'ooo £'ooo 2019 £'ooo Equipment.. Due within one year Due betweentwo and fwe years li 33 io io 27 io Land and buildings: Due withirb one year Due betweentwoand fNe years 40 46 40 13 13 92 96 53 30 21. RE5TRICTEDFUNDS At l January 2020 £'ooo 84 151 82 113 38 li 361 60 86 22 At 31 December 2020 £'ooo 109 Isi A55oaation Income £'ooo 32 Expenditure £'ooo Transfers £'ooo Eastern AreaChaletFund Homes RefurbiEhment Flichard Peck House FlowerdownHouse Rothbury House Richard Peck House Stairlrfl Respite Care and Welfare Sussexdown Residents, Fund tvor Maloney Scottish Development Fund Talking Air Mail Preston Offi Forces in Mind Trust Storybook WirE5 RAF BenevolentFund Grants Libor Vehicle fundfor Areas Volunteer Welfare Officers Wexford Befriending Veterans Other Restrlcted Funds 1821 151 113 49 li 361 12 1601 86 22 51 63 50 142 165 1861 197 109 56 12 66 2.693 12,6611 141 229 105 56 141 1171 1301 15261 11091 58 17 1,027 292 13 501 388 205 1,769 4.252 13,4511 11271 2,443 Grotrp Digby Nursery Fu￿1 108 108 127 58

THE ROYAL AIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 ZI. RESTRICTED FUND5{contlnued GroLtp and Association At l January 2019 £'ooo 84 151 82 115 34 li 361 60 86 22 16 52 121 At 31 De￿mber 2019 E'OOO 84 151 82 113 38 li 361 60 86 22 Income £'ooo Expenditure £'ooo Transfers £'ooo Eastern Area ChaletFund Homes Refurbishment Richard Peck House FlowerdownHouse Rothbury House Richard Peck Housestalrl Respite Care and Welfare Sussexdown Residents, Fund Ivor Maloney Scottish DevelopmentFund Talking Air Mail Preston Office Forces in Mind Trust Storybookwings RAF BenevolentFund Grants Llbor Vehicle fundfor Area5 Volunteer WelfareOffj￿rs Wexford 8efriending Other Restricted Funds 38 34 1401 1301 806 18061 1181 51 63 86 1211 207 109 56 12 66 89 191 1.408 11.4181 197 109 56 12 66 69 13 178 305 1691 1131 12671 12911 205 The purpose of each fund is as stated above except for the Re5Plte Care and Welfare fund, which represents an aggregation of each Areas Respitecarefunds. which havethe commonpurposeof contriixJtingtowardswelfarebres for eligible individuals. Transfersfrcm unrestrictedfundsto restrictedfunds have been made to supportthe objertives of therestrirtedfund% Transfers frorn restricted funds to unrestricted fund 15 reprentative of the Richard Peck House Fund ceasing to be restricteduponthe Sale of the pr(perty, and Sussexdownftesidents, Fund being reclassifiedas unrestricted 59

THE ROYAL AIR FORCESASSOCIAnON NOTESTO THE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 22. DESIGNATED FUNLIS At ljanuary 2020 £'ooo At 31 December 2020 £'ooo GroupandAs50ciation Intome £'ooo Expendlture £'ooo Transfers £'ooo Fixed Assets Home5 Review Membership Innovation InvestmentFund Homes Fund Welfare Fund PropertyRepairsand Maintenance Defined Benefit Pert%onScheme 3.375 86 346 4,310 1,355 1,500 7,375 1.988 3,375 1861 346 4,310 11,3551 6,500 16,6251 8,000 750 1,988 20,335 1,5661 18,769 At ljanuarv 2019 f'ooo At 3IDe￿Mber 2019 É'ooo Groupand A550ciation Income £'ooo Expendlture £'ooo Transfers £'ooo Council Projects Other Projects Fixed Assets Homes Review MembersFMp Innoydtion Investrnent Fund Homes Fund Investrnent in 5trategicGrovrth FuThl Welfare FLtnd PropertyRepairs and MaintenarKe Defined Benefit Pen￿onScheme 18 413 4,562 86 346 2,505 1,500 3.114 902 4,894 1181 14131 11,1871 3.375 86 346 4,310 1.355 1,8OS 11451 13.1141 598 2,481 1,988 1,995 1,500 7,375 1,988 20,335 18,340 60

THE ROYALAIR FORCESASSOCIATION NOTESTO THE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 22. DESIGNATED FUNDSIContinuedl In 5upportofthe p13n to 2023 the Trustees have approved a numberof changesto designatedfunds. The valueof Ihe property ful￿ has been reducedfollow￿)gthe reshapingof the Associationin re¥onseto COVID-19 andcharEedws of working. Adesignated fundof £1,988kwa5 createdin 2019 to coverany future 5horrfall on thedefined benefit pen5ionschent resulting from adverse financial market rnovements and the resulting impact on the scheme assets. This is still onsideredvalid in lightof the impact of COVID-19on markets and the initial suspen%on and subquentredwtion of ernployercontributionsto the pensi￿ Scheme, as more particular￿ referred to in note 11. A full revlewofthe membershipoffering is planned for202 land2022and it Isthereforebelievedthatthe Membership Innovation fund of £346k is still valid. The Invesbment Fund, remansat£4,310ktotake accountof the continued uncertaintlesseen In the financial markets resulting from the ongoing uncertainties arourKI COVID-19 and global political and trade un￿rtaIntieS The Tru51ees believe thatthis fund is sufficierttowithstand a slgnificantmarketcorrection. Whilst difficult to quantify with any degree of uncertainty it 15 widely believed that the Welfare needs of the Association'5 beneficiaries will continue to evdve with increasng complexity and Considerab￿ unmet need ha% teen identified as a resultof the COVIO pandemic. The Trustees havetherefore increased the amounts setasldefor We￿￿e deliveryby £6.5(KlktO£8.o￿kto enable research, designand irnplementationof Welfareproducts and Serm￿S￿ undertaken. The Homes Reviewand HomesFund have been released followin8thedea5ion to cea* deliverin8or8anr re5piÈ cwe for Rothbury Hou5eand Flowerdown House. 61

THE ROYAL AIR FORCES ASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEAR ENDED31 DECEMBER2020 23. ANALYSI50FN￿ASSETSBETwEEN FUN[6 Group: Unrestritted Funds £'ooo Restrirted Funds £'ooo Total Funds £'ooo Funds balances at 31 Detember2020 are representedby: Intangible fixed assets Tangible fixed asset5 Investments Loansto branches Currentassets Currentliabilities Creditors dueafteroneyear Pension promsion 1,689 6.918 22.812 131 3.248 14,2351 12791 18301 1,689 6.918 22,812 131 5.799 14,2351 12791 18301 2.551 Total net assets 29,454 2,551 32.005 Assodatlon.. Unrestrirted Funds £'ooo Restrictèd Funds £'ooo Total Funds £'ooo Funds balan￿$ at 31 De￿mber2020 are representedbv: Intanglble fixed assets Tangible fixed a55ets Investments Loansto branches Current assets Current liabilities Pension prowsicn 1,689 6,365 22,812 131 3,275 14,1141 18301 1.689 6.365 22.812 131 5.718 14,1141 18301 2,443 Total netassets 29,328 31,771 62

THE ROYAL AIR FORCE5ASSOCIATION NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 23. ANALYSISOFNET ASSETS BETWEEN FUN[6 Iconttnuedl Group: Unrestricted Funds £'ooo Restricted Funds £'ooo Total Funds £'ooo Fundsbalantes at 31 De￿Mber20l9 arè representedby.. Tangible fixed assets Investments Loans to branches Currentassets Current liabilities Credltors dueafteroneyear Penslon prO￿ls1(n 8,576 26,782 132 2,944 13.7671 12831 14301 8,576 26,782 132 4,713 13.7671 12831 14301 1,769 Total netassets 33,954 1,769 35,723 A550aation: Unre5trirted Funds £'ooo Restrirted Fund5 £'ooo Total Funds £'ooo Funds balancesat 31 Oetomber2019 art rÈpre5entedby: Tangible fixed assets Investments Loansto branches Currentassets Currentliabilities Pension pro*isic 8.042 26,530 132 2.653 3.7151 14301 8,042 26.530 132 4,422 13,7151 14301 1,769 Total netassets 33.212 1,769 34,981 63

THE ROYAL AIR FORCESASSOCIATION NOTESTOTHE FINANCIALSTATEMENT5 YEARENDED31 DECEMBER2020 24. RECONCIUATIONOF NETINCOME/IEXPENt#TUREITO N￿cAsH FLOWFROM OPERATrNGACTIV￿IES Group 2020 £'ooo Association 2020 £'ooo 2019 £'ooo 2019 £'ooo Netlexpenditurel/income Adjustment5for'. Donation gift in kind Gifted propertie5 Share ofjointventure Contributionsto defined benefit scheme Expenses borne by pen5ionscheme Depreciationcharges Amortisation charges Amortisation of capital grant Loss on disposal of fixed assets Gains on investments Deficiton fixed assets Investment incorne Return on defined benefit Scheme assets Interestpaid Intereston definedbenefr(pension liabilities Decreasein assets for resale Ilncreaselldecrease in stocks Decreasellincreasel in debtors IDecrea*l in creditors 13,2911 2,037 12.7831 2,424 11281 11,3751 409 14701 88 508 951 252 1921 58 359 iii 951 11,3751 1921 58 326 iii 14701 88 478 16 1271 io 12,9781 378 11,0231 14421 iioi 444 1,170 11141 184 19241 16 1271 io 12,9781 378 11,0231 14421 iioi 444 1.170 87 12141 18761 18641 13181 17 325 294 iiooi 234 1791 18641 13181 17 325 294 11691 11481 Netcash lused Inl by operatlng actlvltles 12,1581 12,241 2,2951 12,3091 25. CASH ANDCASH EQUIVALENTS Group 2020 £'ooo Assooation 2020 2019 £'ooo £'ooo 2019 £'ooo Cash and cash equivalents represent.. Cash at bank Cash held by investmentmanagers 1,853 2,529 1,465 879 1.357 2,529 1.047 879 4.382 2,344 3,886 1,926 26. LEGACIES The Association is aware of a numberof legacpsto be received due to the legacy pipeline infomiation but we difficultto quantify as the rnonetsryvalue is uncertain and cannotbe establ$hed.

THE ROYAL AIR FORCE5ASSOCIATIChll NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 DECEMBER2020 27. CONTINGENT AS5 The A550ciation has recovered 85.75p in the £ in respect of its claim in the Kaupthing Singer & Fr1edIa￿r Administration. The Administrators currently estimate that total distributions to unsecured cre ditors should b rnaximum of 86.5p in the £. The asset is not recognidin the accounts asthere is no certainty regardingthe amount and timing of future distributions. 28. RELATED PARTYTRANSACTIONS The branche5 fO￿arded Wtyigs Appeal income of £ 121k12019.. £967kl to the Association which is included in Wing5 Appeal income. The Assoaation returned £23k12019.. £199kl to the branches for them to use for their own weW¥e fundswhich is included in eXpe￿lture. In addition, £lk12019.. £9k) was paid to thebranches in respectof w1n8sA￿E￿ expendr(ureand the empensesare includedin the costof raisingfunds. Membership subscription rebates of £91k12019:£146kl areto be paid to branc￿ are included in expendlture. The Assotlatitsn paid interest of £18k12019.' £IOkl to the branches holdire detosit accryjntswiththe Associatlonlsee note 141. The Association received interest of £nil12019.. £lkl from branches that have received loans frotm t A550Clation (see note 151. 29. FINANaALINSTRUMENTS The carryingamountofthe Grou￿5 and Association5finartiallnstruments at31 De￿Mberwere.' Group Association 2020 2020 £'ooo E'OOO 2019 £'ooo 2019 £'ooo Financial assets.. Equity instruments measured at fair value through rEt income / expendthre 20,973 23,326 20,973 23,326 30. DONATIONS-GIFTED PROPERTY ASSErs Duringthe year, the RoyalAir Forces A5￿cIationbranCheS atAberthre, Stanley and penZan￿ closedresulting in 11Yee properties bein8transferredto The Royal AirForces Associationfor £nil consideration. The transfer hasbeenaccounted foras a combinationthat is in substarKeagift. The prO￿rtieStrar￿ferred werevaued attheir fairvaluesand recc£nised in the Balan￿ Sheetunder theapprq)riate heaYirE with a ccrresponding netamjnt recognisedin the Statementof FinancialA¢tiMties as Donatlons- Assets Gifted from Closed Bra￿he5. During the year. managernent clarified ownership of three properties previously held as assets held for sale arKI investments properties re5ultin8in an 3dju5tmenttothevaluationof thetotal Pro￿rtieS held. ThefollowIngtab￿ sets outthe fairvalues of propertiestransferredand an analysisof theirrec0￿lt10n in the Statement of Financial ActivitE& 2020 £'ooo 2019 £'ooo Investment properties Assets held for resale 14101 15411 880 495 19511 1.375 All propertiestran5ferred areclassifiedas UnrestrKted Fund5. Shortly after the yeaTenda furtherpropertyfor resale wasgifted tothe Association atavalue of £350k. 65

THE ROYAL AIR FORCESA550CIATION NOTESTO THE FINANCIALSTATEMENTS YEAR ENDED 31 DECEMBER2020 31. PRIOR YEARGROUPSTATEMENTOF FINNNCIALACTIMTIES Note5 UnTe5trrtted Funds £'ooo Restricted Funds E'OOO Total £'ooo INCOME: Donatlonsand Legadès Donatlons-assetsgiftedfrom closed bra￿heS Donatlon in kind on acquisition 7,575 1,375 128 381 7,956 1,375 128 29 Charitable Artivities: Residential and respite care homes Nurseryfees 1.399 261 2,566 3,965 261 otherTradlngActlvitles: Tradlng income Grand Drawand other fUndra￿Ing income 418 I,iio 418 I,iio Investmentlncome 1,023 1,023 Total Income 13,289 2,947 16,236 EXPENDITURE.. Cost of Raising Funds 4,212 4,212 Charitable Activities.. Residential & RespiteCareHome Friendship& Welfaresupport Grants Other Supportcosts 3.710 4,883 148 871 46 2,773 160 3,756 7.656 308 876 Other Expenditure: Interest Paid on Branch Deposits Interest on Defined Benefit Persicyi Liabilities Share of netloss in jointventure Total Expenditure iioi iioi 409 14,225 409 17,209 2.984 Net gainson hnvestmentassets 13 3,010 3,010 Net incomellexpenditurel 2,074 1371 2.037 Other recognlsedlosses: Actuarial losses on defined benefit pension scheme li 15541 15541 Net movementin funds 1,520 1371 1,483 Reconciliation of Funds Total Funds Brought Forward 32.434 1,806 34.240 Total Fundscarried Forward 66

THE ROYALAIR FORCESASSOCIATtON NOTESTOTHE FINANCIALSTATEMENTS YEARENDED31 OECEMBER2020 31. PRIOftYEARAssoaAmON STATEMENTOF FINANaALACTIVITIES Notes Unrestricted Funds £'ooo Restricted Funds £'ooo Total £'ooo INCOME: Donationsand Legades Donations- assetsgifted fromclosed bra￿￿S 7.666 1,375 381 8,047 1,375 Charitable Artivities: Residential and respitecare homes 1,155 2,566 3.721 OtherTradlnBActivities: Grand Drawand other fundrasing income I,iio I,iio Investmentlntome 1,023 1,023 Totol Incgme 12,329 2,947 15.276 EXPENDITURE Cost of Raising Funds 3,778 3,778 Charltable Activltles.. Residential & Re5Plte Care Home Welfare SUpp￿t Grants Other Supportcosts 3,527 4,562 148 871 46 2,773 160 3,573 7,335 308 876 Other Expenrfitwe: Interest Paid on Branth Dep)stts Intereston Defined Benefit Pension Liabilities iioi iioi Total Empenditurè 12.878 2.984 15.862 Net 8ainson investmentassets 13 3,010 3,010 Net inc0mellexpendltu￿I 2,461 1371 2,424 Other recognisedtosses: Actuarial losson defI￿d benefit pertslonscheme li 15541 15541 Net movementinfunds 1,907 1371 1.870 Reconciliation of Funds Total FundsBrou8ht Forward 31,305 1,806 33,111 Total Fundscarried Forward 33.212 1.769 34,981 67