Risk Assessment: DEAF CHOICES UK LIMITED

1. Risk Rating: LOW

Justification: This is a well-established charitable organisation (incorporated 1980) with a strong balance sheet, minimal liabilities, and healthy liquidity reserves. Net assets have recovered to £133,975 following a dip in FY2021, and the organisation maintains a clear reserves policy that it is currently meeting. The primary risks relate to income sustainability rather than solvency or immediate financial distress.

2. Key Concerns

1. Income Concentration and Donation Dependency Approximately 98.8% of total income (£284,108 of £287,415) derives from donations by charitable trusts, companies, and individuals. This heavy reliance on a single income category creates significant vulnerability. Loss of one or two major trust funders could materially impact operational capacity. The organisation has limited diversified revenue streams—only £3,307 from tuition fees, subscriptions, and investment income.

2. Historical Volatility in Net Assets Net assets declined from £165,935 (FY2019) to £119,280 (FY2021)—a 28% decrease over two years—before recovering to £133,975 in FY2022. This volatility demonstrates the organisation's susceptibility to income fluctuations and suggests that the current recovery may not be stable without underlying changes to funding structures.

3. Growth Ambition Risk The directors' report explicitly states the need to "increase income by 70% in the next financial year" to achieve aspirational aims. This level of income growth is ambitious for a small charity with 9 FTE employees and could lead to operational overextension or strategic drift if pursued without securing committed funding first. The report does note that capacity will only be extended "if we can assure that we have the funds to cover our aspirational growth," which provides some mitigation.

3. Positive Indicators

• Exceptional Liquidity: Current assets of £136,700 against current liabilities of only £7,920 yields a current ratio of approximately 17.3x. Cash at bank (£132,248) alone covers current liabilities 16.7 times over.
• Minimal Leverage: No long-term liabilities are evident. The organisation is effectively debt-free, with total liabilities representing only 5.6% of total assets.
• Reserves Policy Compliance: The charity maintains a designated reserve of £20,000 plus operating reserves equivalent to not less than three months' expenditure (~£68,181), and confirms these requirements were met at year-end.
• Regulatory Compliance: Accounts and confirmation statements are filed on time with no overdue status. The company has maintained active status for over 44 years.
• Positive Surplus: The organisation generated a surplus of £14,695 in FY2022, indicating it is not operating at a deficit.

4. Due Diligence Notes

Items to Investigate Further:

1. Restricted Funds Detail: £64,241 (48% of net assets) is restricted for specific purposes. Understanding the nature and duration of these restrictions is critical—some restricted funds may be time-limited or project-specific, affecting future financial flexibility.

2. Income Sustainability Assessment: Review the charity's major donors and trust funders. Identify concentration risk—if a single trust provides a significant portion of the £284,108, the risk profile increases substantially. Request the full trustees' annual report and impact report referenced in the accounts.

3. FY2020 Anomaly: The financial history shows no liabilities recorded for FY2020, which is unusual. Clarification should be sought on whether this reflects a genuine position or a filing peculiarity.

4. Director Status Clarification: Peter John Tuck is listed as "RETIRED" in the officer designation. Confirm whether this director remains actively engaged in governance or if this represents a legacy appointment that should be updated.

5. Name Change Implications: The company changed its name from "CUED SPEECH UK LIMITED" in December 2023. Assess whether this rebranding reflects a strategic expansion of services or mission shift that could affect future funding relationships and operational focus.

6. Post-Period Events: The most recent filed accounts are for FY2022. Given the stated 70% income growth aspiration, obtaining management accounts or internal forecasts for FY2023 and FY2024 would provide valuable insight into whether this target is being achieved.

7. PSC Register: The PSC entry shows only a generic statement rather than named individuals. For a company limited by guarantee, this may be appropriate, but confirmation that PSC obligations are being properly met should be obtained.