Disability charity Action on Hearing Loss is undergoing a “significant restructuring” after its financial position has “continued to deteriorate”, according to recently filed documents.
The charity’s annual report and accounts for the year to March 2018 show that the charity made an operating deficit for the fifth time in six years, with an income of £40.1m and an expenditure of £42.7m.
It shows the charity’s reserves fell from £5.2m to just £1.3m in 2017/18. This is much below the charity’s agreed target of £6.0m.
However, the report says the charity’s trustees are confident that “steps being taken to realise assets sales and deliver a surplus budget will return free reserves to target levels over the period to the end of March 2021”.
These steps include renewing a £3m credit facility with Lloyds Bank and moving some of the charity’s operations out of London.
The charity has also sold all its investment portfolio, generating £2.6m from this in 2017/18.
The report says: “Since the year end, the financial position of the charity has continued to deteriorate and, as indicated in the future trading section above, a financial recovery plan to 2021 has been put in place.
“This involves significant restructuring of areas of the charity which are making operating deficits, cutting charitable expenditure and central costs and the relocation of some operations out of London. In addition a programme of asset sales has been agreed.”
It also says: “Central costs will be made more efficient by reducing temporary staff and moving some transactional activities out of London.”
Mark Atkinson, the charity's chief executive, said: "Part of our financial recovery plan is to sell some of the property we own to pay off our debts and rebuild our free reserves, including the Highbury office.
"We will keep a central London office and a Peterborough office. We do plan to reduce the amount of office space we have in London."
He said the charity plans to move its finance team out of London and that it has already hired an executive director of finance at its Peterborough office.
Atkinson said the charity would do "everything possible" to avoid making significant redundancies.
Income down
The charity’s overall income fell slightly to £40.3m in 2017/18, due to a £1m decrease in voluntary income.
It says the primary cause of this drop was a fall in legacy income, which was “particularly high” in 2016/17 at £9.4m and fell to £8.3m in 2017/18.
The majority of the charity’s fundraising income came through legacies, compared to just £3.3m from gifts.
Meanwhile, the charity’s staff costs grew from £23.9m to £25.4m, with redundancy costs of £100,000 paid during the year.
The charity’s average number of employees on a full-time equivalent basis during the year grew slightly to 800.
Its highest paid employee earned between £120,000 and £130,000.
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