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actiononhearingloss.org.uk
Reserves policy
Free reserves available for use exclude restricted and designated funds and the tangible
fixed assets held as unrestricted funds. Free reserves also exclude any deficit reported on
the pension scheme.
As a matter of policy, each year the Trustees review the value of the reserves required to
be held in investments, cash and cash equivalents that are not restricted to any particular
purpose.
We also consider our exposure to the risk of any significant loss of income or unforeseen
cost. A drop in income is the major risk that these reserves are held to mitigate against. We
recognise that there is voluntary income risk in relation to the current economic climate; a
social enterprise income risk given current market conditions and the changes experienced
within public sector funding; and that the volatility of the stock markets or other factors can
lead to declining legacy values and reduced donations.
The Trustees have agreed that free reserves should be in the range of between £5.0m and
£7.0m with a target of £6.0m. Free reserves as at 31 March 2016 are above this because of
the sale of the head office building in March 2014. The Trustees have agreed to continue
investing in the door-to-door fundraising programme, from reserves, as part of an incomegrowth and diversification strategy. We expect this continual investment will bring free
reserve levels back to within the policy range by the end of the 2016–17 year.
The table below shows the change in free reserves from 31 March 2015 to 31 March 2016.
Free reserves
Total unrestricted funds
Less: Unrestricted tangible fixed assets
2016
(£m)
2015
(£m)
18.7
(11)
13.1
(4.3)
7.7
8.8
3.4
8.2
( 3.9)
3.4
8.9
(3.5)
7.7
8.8
Represented by
Investments
Current assets
Current liabilities