The financial situation at Eden has been in the news a lot during the last few days and as a result we felt it important to post an update here just to clarify exactly what the position is and be open about what it all means.
Eden, as a Social Enterprise, has always financed its capital investment by a mixture of public sector support, private sector loans and lease finance. In order to build the project we originally had loans of £20m including £3m from Cornwall Council. Our county was facing high levels of economic deprivation in 1999 (hence the support from the EU through Objective One). Unlike many Local Authorities, Cornwall Council was not in a financial position to gift land or give a major grant, but the Council did support Eden as a key regeneration project by taking investment funds off the London money markets and making a £3m loan to Eden. This enabled us to start the project and keep on budget and on time for the Millenium. It was a critical decision that meant we were able to go forward and have the widely publicised economic impact now valued by external sources at over £1 billion.
Over the last ten years £15m of our £20m debt has been repaid and our current loans and mortgages stand at £5m. The majority of this is a term loan with our bank. There is no outstanding balance to Cornwall Council.
To put this into context, a £5m loan on a £140m asset with a £20m turnover is a very reasonable level of debt. The current commercial borrowing maximum which banks are happy to lend stands at around 65% of the asset value, so as you can see, our debt figure is much lower than that of some other organisations.
Whilst interest rates are historically low, the issue for us is our ability to service the interest and repayments on any debt from net income. We operate in a mixed economy, with 75% of our income coming from customers (that mainly visit the site) and the balance of 25% from fundraising for the charitable purpose and new projects.
With all of these under extreme pressure in the current economic climate, we’re having to make some difficult decisions including making redundancies. We expect to have to make between 25 and 35 posts redundant and during the next four weeks, we’ll be working hard to keep the number to an absolute minimum by exploring all our options including varying contracts and changing working hours.
Many of the institutions established by the Victorians, such as the museums and botanical gardens, benefit from annual revenue grants but we do not. We rely on customers, donations and sponsorship to keep our ‘green cathedral’ running every year.
The team will continue to work extremely hard, using imagination and energy, to design and deliver a sustainable model for our social enterprise.