Company Number: 4589451

Absolute Return for Kids (ARK)

Trustees' Annual Report and Accounts

For the Year Ended 31 August 2013

Contents

Turstees' report

Independent auditors' report 13

Consolidated Statement of Finanmal Acoustics

Chairty Statement of Financial Activities

Consolidated Balance Sheet 17

Charity Balance Sheet 18

Consohdated Statement of Cash I'lowe

Notes to the Accouttts 20

ARK

Trustees' report for the year ended 31 August 2013

1'hc trustccs are pleased to pre~ant their report together iinth the audited financial statements of the charity

for the year ended 31st August 2013.

Refcrcnce and administrative details

Absolute Return for Kids (ARK) is a company lunited by guarantcc, rchustered in England, number 4589451,and ts a UK rchustered chruity, num)&et 1095322.

Directors

The directots of thc charitable company arc its tnistees For the purpose of chanty law and the members of the

company hmited by guarantee. Throughout tlus report they arc collccovcly rcfmrcdl to as the trustees.

Thc following mihvnluals setved as tnistees during the year:

Pan Wace (Chanmari)Arpad llussonPaul DunningLord Stanley FmkKcvht Guiitllc~ick Jenkins (appointed September. 2012)Paul hfarshall

Jcnnifcr MosesMtchaet Plat I

Blaine TomhnsonAnthony Williams

All tnistees served for the full year except where tndicaied and no trustees have resigned smce thc year cnd. .None had any beneficial mterest m the charity and remuncraoon of directors is netther paid by the chanty norpcnruttcd under its Articles of Assomation.

AuditorsF.ms i & Young 1.1.P1:vlore London PlaceLondon SL'1 2Al'T: +44 20 7951 2000

BankersLlol'ds TSB CommercialSedgemoor House, Dean Gate Avenue

Taunton, Somerset TA1 2UF'1' t44 1823 446808

SolicitotsBoodle Hatfield89 Ncw Bond StrcctLondon W1S 1DAT; +44 20 7629 7411

Registered Office65 IChtgsway

London WC2B 6&TD

T; +44 20 3116 0700

Trustees' report for the year ended 31 August 2013 (continued)

Objectives and principal activities

ARK is an international charity whose purpose is to transform cluklren's lives. Founded m 2002 by senior

figures m thc altcrnattve tnvesiment industry, ARK designs and delivers tts own programmcs and acts in

partnership with other orgarusanons to generate posiuve change, providing public benefit in each of its key

areas of Incus: educauon, health and cluld protecuon in thc UK, sul&Saharan Afnca, Romania and India.

As a board of tmstccs, we are commiiied to deploymg our skills and experuse to support ARK's auns,

adhering to Chanty Comtnission guidance on pubhc benefit when doing so. Our financial coninbutions, and

those of ARK's patrons, also ensure that ARK's central adrnuustrative costs are fully covered; this means that

100% of donations to ARK go directly to our programmcs for children.

ARK's n&ach an&1 influence goes well beyond thc programmes that are consolidated m these accounts Our

incubation and support Etc&ding m 2012/13 aml previous years has hclpcd a number of inn&saves to develop

to thc scale they have achieved today, including ARK Schools programines m the UK, with opcratmg

expen&hture of /'93 nuihon this financial year, and the I'uturc Leaders and Teaclung Leaders teacher

devclopmcnt programmes (operaung expenditure of $5.1 and /'4. 8 mdlion, respectivclyi. As ~cpa&ate legal

antibes, such 'Eanuly' orgatusations arc not mcluded in tins report, though ARK's involvement at a fundmg

and governance level is ongoing.

EDUCATION

ARK Schools: Ensuring childten achieve their potential

A1G( Schools ts a network of 27 non-sclcctivc primary and seconds&3 schools serving areas of high

&hsadvantage in London, Birmingham, I ortsmouth and Hasungs. Our ium is that every pupil, regardless of

theit background, should do well enough to go to university ot pursue thc carccr of their choice.

During the 2012/13 school year we operate&l 18 academies, reaching over 9,000 pupils, of whom almost half

received frcc school meals —three times the national avcragc —and over 45% spoke Enghsh as an iuhhuonal

language. More than a quartet of su&dents jotumg an ARK academy m year 7 ut 2012 had achieved level 3 or

below at Key Stage 2, putting thrir attainmeni iwo years behind national expectauons when they came into

our schools.

Desptie the challengittg educauonal and social coniexts tn &vhich our schools opetate, we are one ol the

country's top pcrfonmng academy operators. Between thc cnd of Key Stage 2 and GCSEs, our pupds made

more progress than in any oiher academy network in 2012/13. In january 2013, thc Fisarnhl Times conducted

a detaded analysis of L'ngland's academy networks and rated ARK Schools as "the best perfonuutg", citing

our. success in raising the attatnment of those pupds who start secondary school futthcst bclund.

National results: successes and challenges

'fhe network's GCSE results in 2012/13 were again strong, auth paruculady tmpressive performances from

our longest-stan&hng schools. Fifty-eight per cent of our students achieved the headhne ineasure of 5+ A"-C

GCSEs tnclu&hng English and mathematics, with atiainment in both sublccts outpetl'ormmg nauonal levels.

All schools reporting results for their se&.oml or subsequent year as part of the ARK nenvork unproved

student outcomes stgnificantly, bar onc where pupil results held steady. Charter Academy tn Portsmouth

reported the greatest improvcmcnt in the 5+ GE:SEs measure, up 20 percentage pouits to 08%, and up a

tematkable 65 percentage points from the 3% the school recorded in the lear when discussions about

becoming an ARK academy first began. Today Chatter Academy is thc best performing school in

Portsmoutb, havtng been bottom of the local leaguc table when it first came into thc network

Trustees' report for the year ended 31 August 2013 (continued)

Key Stage 1 results across oui scvcn schools with pupils in this age group were also sohd: 88% of cluldren

reached Level 2 for reachng and 82% Eot svrinng, compared with 89% aml 85% nationally. In our moreestablished schools, there was exceptional achicvcmcnt in reading, wriung and maths usth pup&La at Ark,Globe and I(ing Solomon acaclemies achievtng close to 100% at Level 2 in all three disciplines —far

outstnppuig nauorial averages. At Key Stage 2, however, overall network performance in reading, &vriting and

mathcmaucs was below national averages: with three of our five schools with pupils in this age group only

recently iranstttoned to the network, these results reflect the complciuty and scale of the task ue face when

talung on strugghng schools. Noncthclcss, four of our five primaries cnade stgmficant progress ui their

combined results, with pupds from ARK Globe and Tiridal in particular showing cxccptional huprovcmcnt.

Better teaching, leatning and enrichment for students

As a network, we continue to focus on tcachcr dcvclopment, pedagogical uinovation and enrichment activmes

for students. Agam in 2012/13 we ran tutee ihe standatd number of traumig days for. all staff in our sChools.

In November 2012 we also launched ARK Teacher Trauung, an accredtted one-year teacher trauung course,ui partncrdup with Canterbury Christ Church Tlniversity, in wluch trainees spend a year working in our.

schools before graduattng wtth a Post Graduate Certificate in Educauon and I )ualifie&l 'I'eacher status. 'l. 'his

comnutment to providutg the best possible trahung from the beginning of a teacher's career is another way

we can drive systemic change and address a fundacnental factor m pupil attahtmcnt,

In its second year, our lvlathematics Ivlastery programme was rolled out to a further 85 schools —including

secondary schools —bnngmg its reach to a total of 115 schools m London, Birmingham, Portsmouth and

Suffolk Tniual results frocn the first 30 schools to adopt our. niastcry approach to mathematics teaching were

uupressive: head teachers Eoutid that thc programme has enabled the lowest-perfonnuig cluldren tocomfortably reach the expected standard for their age group, and in some schools pupil~ achieved double theexpected progress. In August 2013, wc sccurcd a two-year /595k grant from the Greater London Authonty

Schools Excellence Fund to further expand the progtamme uutlun London.

To help raise aspirauons and prepare our students for. life beyond school, we connnue to run several careerand &uuvcrstty programmcs in partmrship with leading corporauons and well-respected muverdties, Providmg

mentoring, untverstty summer schooLs and taster days, and arange of other cvcnts to foster creative thinlung,

confidence and svork-related sktfls, our. muichment activ&ucs plal a vital role tn ensunng that our students are

ready and able to pursue their chosen post-school path Tn adchuon, the 2012/13 year saw us provide 21

excepiionally talented ARK students usthg95, 000 worth of bursancs to assist them unth their univetsity

studies.

ARK UK Programmes: Support for schools and social enterprises

ARK UK I'rogrammcs is a wholly owned subsidiary of ARK, prosuchng programme support to schools within

and beyond the ARK Schools network and nurturmg carly-stage social enterprises '.vfaihemaucs hfasiety and

student cnrichmcnt (U&uvcrstty and Careers Success), detailed above, fall under the auspices of ARK UKProgrammes, alongside outdoor education (Expandhtg Honzons) and our schools music programme.

This&

ear. , wc played a central role ui thc dcvclopment of Frontline, a social enterprise auuing to transform the

hves of vulnerable children by attracttng outstanduig mdividuals into child somal work. 1&ronthnc wdl recruit

htgh potenual graduates and career ssvttchers and train them over two year~, combining acadecnic siudy and

on-the-job expcriencc to dcvclop them into exceptional social workers who can help improve outcomes Eor

vulnerable children and i heir fanuhes. ARK UK Programmes provided aced funding and practical support forFronthne and continues to help it niove towards its goal of financial independence unthui two years.

ARK

Trustees' report for the year ended 31 August 2013 (continued)

India: Quality primary education and English language skills

ARK's work in India has so far focussed on facilitaong access to pnmary education and uuprovmg English

language proficiency, both criucal to cluldrcn's hfe chances as wefl as to thc nation's economic future. Iniha's

Right to Education Act 2009 supulates that pnvate schools must reserve 25% of their student places for

disailvantaged cluldren. ARK's plot programme, ENABJ.F., is an educauon voucher scheme that encourages

families in the poorest areas of Delhi to claim their enutlement to frcc school places, providing vouchers to

cover tuition fees, uniforms, textbooks and lunch for thc full five years of priniary schooL In 2012/13, our.

ptlot cohort of 605 children completed their second academic lear across 68 schools, with a retention rate of90%, compare&I to 80% in comparable voucher programmcs. Jn collaborauon with Newcastle Utuvcrsity, wc

are comparing the academic results of cbddren attending school svtth and without vouchers, so we can use

what we learn to mfiucncc government and educauon policy rnakcrs on the inost effecuve ways to implement

the legislation.

Our phonics-based Enghsh teaching programme, ASPIRE, is now used in 386 government and low-cost

private schools across nine Imban states. In the past year we trained more than 200 tcachcrs and rcachcd Just

over 20,000 chddren with our engagmg, interactive ieaclung methods and matenals that encourage pupiL~ io

speak, read and write Fnglish with confidence.

In addition to ENABLE and ASPJRF, we are leading an intetuaoonal consortium to develop a School

Qualitl Assessment Fratnework for. the Govcmment of Madhya Pradesh. With funding from the Department

for International Devclopmcnt (DFID), ARK and our paroicrs arc working to design the assessment

framework and support the Government of Madhya Pradesh to estabhsh a School Assessment Agency,

setiing robust benchmarks to improve educational opportuniues for thc state's chihlren

Uganda: Quality secondary education through public-private partnetships

ARK Joined forces with PEAS (Promoong Fquahty in African Schools) in 2011 with the aim of reducing the

muubcr of secondary-school aged children in Uganda who are currently not in schooL Working within thc

Uganda Government's pohcy for public-private parinerships (Pl I s) m education, we planned to open and

nm a network of 10 state-funded secondary schools ui rural areas unth PF.AS over the next five years.

'I'he past year has seen us deepen and repostoon our partnership with PEAS, with thc result that we are now

providing support across their enore network of 21 schools, rather than hmiung our support to 10 specific

ARK-PEAS schools. Fight new PEAS schools werc opened in 2012/13, welcommg 2,6'16 children into the

neiwotk, wlule PEAS students aducvcd 5% above national Division III results io the Ilntvetsal Certificate ofEducation (Uganda's GCSF. equivalent). An external evaluation also found that 40% of PF XS day school

students come frotn the poorest 20% of thc populatton, confirming that thcsc schools are reaching some ofthe most economically disadvantaged communities in rural U gamla

With ARK's support and gmdance PEAS is wotking with ihe Jklitustry of Educaoon and Sports in JJganda to

update current pohcy on PPPs Jor educaiion. Our global knowkxlge of PPPs will be enormously useful in

thcsc discussions, helping us to contnbute to a legislative framework that will improve educational standards

for children across the country.

ARK

Trustees' report for the year ended 31 August 2013 (continued)

HEALTH

Mozambique: Using simple technology to improve HIV patient care

ile our successful four-year programme to create a sustamahle model of HIV care in Maputo provmcc was

formally handed over to Mozambique's ishtustty of Health in August 2012, ARK's work in Mozambique

continued through to May 2013 with the innovauve SlvlSaude programme. Using text mcssagcs to remind

patients about their cluucal appointments, S'vlgaude stgtuficantly improved patients' adherence toantirctroviral therapy and serinces designed to prevent mother-to-child transnussion of HIV: 96.5% ofpatients receiving SAIS rcnundcrs werc still accessing care after six months, compared to 75% nationally Use

of SMS remimlers also increased the hkehhood of HIV posinve mothers giving birth in hospitals or clinics,

and resulted m mote newborns being tcstcd for the virus at birth. We presented thcsc findings in June tlus

year at thc International AIDS Society Confererice —the world's biggest HIV conference —in Kuala Lumpur,

demorisiranng how the benefits of SMS mcssagcs reminders could have a far-reaching effect on global

maternal mortality,

SMSaude is now hang scaled up ui Gaza province, m partnership anth the Elizabeth Glascr Pacdiatric AIDSFomidanon and with ARK m a coordinating role. The scale-up also extends thc SMS model to patients anth

tuberculosis, aiming to bnng alioui siindar huprovenients in thar care.

Uganda: Saving lives thtough increased access to cost-effective diarrhoea treatment

Fach year, snore than 10,000 Ugandan children dic from diarrhoea. With our partner, the Chnton Health

Access Initiative (CHAI), wc arc working to improve access to two central products in diarrhoea treatment:

oral rchydranon salts (ORS) and zinc. Our goal is to stgruficantly mcrease the percentage of cluldren who

receive treatment for diarrhoea with ORS and zinc, preventing more than 15,000 diarrhoca death~ by 2015and an additional 35,000 by 2020.

Thc programme aims to educate and mfiuence health workers, retailers and caregtvers wlule also

srrengthening the ORS/zinc supply cham to make treatment cheaper and niorc wide)y accessible. So far we

have hclpcd to crcatc a more diversified hase of lugh-quality, affordable suppliers, wtih four new zuic

proilucts and two new ORS ptoducts newly registered. These products represent a puce decrease of 60-85%ui companson to unport prices when the prolect began. We have also provided trainmg in iliarrhoea

management for public healthcare workers, druggists and pharmacy staff, created promononal matenals toraise awareness of zmc and ORS aniong carcgtvcrs, aml provided tecluucal and strategic support to Uganda's

blmistry of Health.

Zambia: Vaccination, treatment and behaviour change to reduce child mortality

Working rvrth ihe Munstty of Health and in partnership with local NGO, the Centre for Infectious Discase

Research ui Zambia (CIDRZ), our. diarrhoea programme ui Zambia is the first in sub-Saharan Alnca tocombme prevention anth treatment. We are pdotuig our threc-year programme in Lusaka ptovince and aim tohave halved deaths from diarrhoca and reduced child mortality by 15% by 2015,

Thc year. 2012/13 has seen impressive progress m advancing thc prevention of diarrhoea and our work anth

the hhnistry of Healih has helped to secure the national roll out of ihe rotavtrus vaccme two years ahead ofschedule. Before long, cvcry chikl in the country vali have life-savmg unmunity from rotaviius, one of the

most virulent causes of dtarrhoea

As of August tlus year, 122,100 children m Lusaka Province had been given thar first dose of rotavirus

vaccine and approximately 94,500 were fully unmunised. In theu' second year of support foi the programme,

GlaxogmithIOine donated 117,369 rotavirus vaccines, contuiumg to sustain the pilot unn) national rogout

beans.

ARK

Trustees' report for the year ended 31 August 2013 (continued)

Other key acluevements included the training of 444 front hnc health workers ui the manage&neet ofchildhood dlnesses, and builthng a new paediatric chnic in Chatnda South, which is now fully operattonal and

supported 1&y government. Wc also financed two Further cold storage famlities, secuung the nauonal

infrastructure essenual for vacmne dehvety.

Our understanding of the barriers wluch prcvcnt parents and carers from being able to manage and tteat

diarrhoea at home was significantly improved tfus year through research conducted with the London School

oE Hygiene & 'I'ropical bledicuie. Looking closely at exclusive breastfeethng, hand waslung with soap, and use

of oral rehydration salts and z&nc, wc werc able to idennfl behavioural factors which could have a substantial

impact on our efforts to promote effective, affordable diarrhoea prevenuon and treatment.

Zimbabwe: Essential health care for pregnant women and newborns

ARK Zimbabwe is now in its second yeat of work to improve Zimbabsve's startlingly poot maternal and

neonatal health outcomes. 'dl-equipped hospitals and an acute shortage of doctors anil health workers mean

that more pregnant women and ncwbom babtes ihe m Zunbabwc today than 10 years ago. By trainmg a ncw

cadre of health worker~, improvmg the slulls of crusting workers and providing csscnual equiproeut and

supplies For newborn cate, we aim to icducc thc num1&et of mothers and babies who lose then hves each yeat.

Oiu new classroom blocks for the training of chnical officers were buili and opened this year m time for our

first cohort of 37 students. Trauung also commcnceil for out nuual intake of 20 nurse aoaesiheusts. Early

curriculum reviews mdicate that our courses are heing delivered far al&ove the siandards of other clinical

ofhcer prograrnmcs (one For previous cohorts in Zimbabwe and one in Tanzatua).

'Newborn care corners', created in parmcrship with UNICEF, have bccn cstabhshed m 20 distuct hospitals,

eqmpped with cost-cffcctive, life-savmg eqmpment and staffed l&y trained health workers. L'leven of these

dcihcatcd areas are now fully eqmpped with ncw resusmtaiors, and a total of 96 health workers have been

trained in hfe-savmg newborn management skills

CHILD PROTECTION

Romania: ending the institutionalisation of children

Since 2002 we have been working, tn part netslup auth Hope and I Iomes For Children (HHC), to picvcnt thc

insutuuonalisation of rhililren and support the Romanian government in thc wholcsalc rcfoun of tts child

care system. We resettle cluldren in instituuons 1&ack wuli parents or. tdativcs, with fosier or adopuon Eanuhes,

or ui small group homes. Our goal is wholesale reform of the Romanimi duld care ay~tern, including ihe

closure of all msututions by 2020.

In Novcrnbcr 2012, ARK svas an imdted participant in an El 1 Forum event that focused on 'Supporting Child

Protection Sysiems through the implcmcntation of the EU Agenda on the Rtghts of ihe Child", ARK and

HHC werc ctcditcd with ratstng the proble of deinsututionalisation in the EU and contubuting to pohcy

development on systems refortn.

We celebrated a significant milestone in our loiuney with H11C m December 2012, when together sve

cclcbrated the closure of ihe last remaining msutution in isfaramures, Romarua. Mararnures is the first county

tn Romania to document how it closed all its tnsuiuuons, provikng a blueprint for other countues to Follow.

Along with attcntbng dignitaues, the closure was celebrated bl 9(1 childteii m the county's care, as well as their

carers, who joined us on the day.

ARK

Trustees' report for the year ended 31 August 2013 (continued)

Financial review

ARI& recorded a net suqilus of /4. 0m for thc year, as reported m the consohdated Statement of Financial

Acuviues (SoFA), compared to a $4.2&n suqilus ui the previous year. These surpluses have resulted m group

rcscrves increasing to /'24. 8m at August 2013 (2012 /'20. 8m).

ARK's cousolidated mcome in the year to 31 August 2012 totalled $14.6m (2012 $21.9m). $2.7m of the

rcducuon is clue to 'Ieachtng Leaders no longer fornung part of the Group as cxplaincd below. I'he charity

did not have a major Eutidraising dmner in 2012/13 and therefore thc cost of generaung funds was $4.8m

lower than thc previous year at $0.7m. The net income after fundraismg was $13.9m (2012 /'16. 4m, or

$13.7m on a constste&it basis with Tcaclung Leaders income excluded).

Group expenditure during the year was $6.1&n lower at /'12. 3m (2012 $18.4m). The largest component of this

was direct charitable expen&hture on grants and project operatmg costs, representing 83% (2012 69%) of total

expen&hture. The cost of gcncraung funds includes a proportion of the cost of the Development team based

upon the percentage of staff time spent on fundrmsing and, m Z012, included the cost of the gala &bnncr.

cvcnt.

Fxpen&hture by the charity &hffcrs from the group in that where a grant is made to a subsidiary company the

total amount comnutted ts shown as expen&huite (on grants and project operating costs) for the charity,

whereas for the group the value of funds actually spent by the subsi&bary is shown, as all intergroup

iransacuons are elumnated.

Dunng thc period expendiiure at the charity level on grants and project operating costs was f3.9m (2012

/9. 2m) This mcludes support costs of /'I. Om (2012 I L3m).

E.ontubuuons arranged by trustccs and patron~

Gift ui kind

ARK Islsstcrs fer rebater

Renun on uivcstmcnts

Total income rasicd for core cost~

Less Ex en&hture on core costs

2013

g'000

644

112

423

962

2,141l'I, 98ti)

2012

l,"000

730

286i

310

609

1,935

(2,323)i

Surplus / (deficit) on core costs foi the year

Balance at 1 Se i&en&her

155 (388)

2,641 3,029

Babnce at 31 Au st Z,796 2,641

As the above table shows, at 31 August 2013 a resetvc has been established to cover core costs of $2,8m,

equivalent to 17 months expenditure at the 2013 level (2012 f 2.6m —14 months). 'I'rustees and patrons are

malor supporters of thc charity and a poriion of their donauons is allocated to support thc core costs. Thc

trustees are confident that. these funds together with ARK's other sources of core income will cover core cost

cxpcnditure tn the period ahead. Tlus reserve has been estabhshed over a number of years from income

donated to ARK Eor the purposes of funding its core operatitig costs.

Ttus undertaking is central to ARK's operatuig phdosophy as it yves other donors the assurance that every

penny of every donation to programme funds goes &hrcctly to specific programmes.

Balance Sheet

Thc typical hfecycle of non-LIK programmes is 3 to 5 years and ARK undenvntes the full cost and sets aside

reserves at the outset. In the charity balance sheet these programme commitments are shown as grant

creditors. UK-based programmes typically have a longer life and ARK fundmg is often focused in the early

years of uicubation and development. For these programmes grants are awarded on an annual basis an&i

therefore there is no grant creditor relating to future period Eunduig. The total value of grant creditors in the

chanty balance sheet at 31 August was $14.7m (2012 $24.5m).

Trustees' report for the year ended 31 August 2013 (continued)

The chanty also holds an ad&ht&onal amount of $9.9&n to mvest in current and new programmes (2012/'1. 1m), $0.6m as resirtcied funds (2012 /'0. 5m) and $9.3m as unrestricted funds held in its General

Programme Fund (2012 /0. 6m).

As a result of thc change of accountmg policy adopted m the currerit year (cxplauicd m iyqote 1a to the

accounts), donor pledges are no longci accrued as debtors ui the balance sheet and we have restated the pnoi

year acco&uits. Donor pledges at August 2013 totalled $11.4m and are mostly hnked to Eutuic planned

piogramme commitmenis. The trustees arc conti(lent that donor pledges wdl continue to be honouted and

believe the new policy will result in a mote conustent mating oE programme expenditure and related

donations and grants within the satne accountmg year.

This funding model is considc&cd by the trustees to be reasonably prudent and results m a significant balance

of cash and investments clue to the receipt of funds m advance of application m programmes 'I'he total ofcash and tnvestments in the charity balance sheet remained relatively constant m the year, declitung from

$27.3m to E;27.0m.

'I'he Financtal Stewardslup Comnuttcc (FSC) oversees the charity's cash management. Duruig the year thc

chanty's main banking accounts were held with Lloyds 'I'SB t.ornmercial. Deposit accounts are also

maintamcd rvith Barclays Corporate and Royal Bank of Scotland (RBS) to provnle some diverwty for the

chanty's cash. The FSC believes that this is an appropriate low nsk approach and at 31 August 2013 81% ofthe charity's cash was invested in the Lloyds accounts (2012 88%) i&nth the balance in the RBS and Barclays

account~. 'I'he profile of the cash holdings is dependent on the working capital needs ot ARK's programmes.

The irustees have set a non cash investments target range of 40-60% of total cash and investmcnts. At 31

August 2013 thc tnvestmenis ui ARK lvlasters liund (AMF) and Eureka rcprcscnted 53% of &nial invested

funds (2012 56%) and was therefore in hne with ihese gmdelincs. Thc US Dollar denonunated AMF, which

represents 46% of thc total &.ash and tnvestments, is a rclativell low risk fund. Thc objccnvc for ARK's

invesnncnt ni thc AMF is to outperform cash without significantly mcreasing nsk.

The AMF was sct up by supporters of ARK in 2005, It is a fund of funds that invests m a range of mvestmeni

stiatcgics aiming to ensure an absolute return on tnvestment that is not curie)ared to ihe UK eqmty market.

I laving taken independent ad&etc on this investment strategy, the trustees beheve this is an appiopriatc

investment of the chant&'s funds, especially given the fact ihat ARK's donor base is largely drawn from the

hedge fund industry.

The trustees consider that the US) denominated AikIF provides a foreign currency match for progranune

grant liabihties denonunated m foreign currcn&. y and uncotnmittcd rcscrvcs that are expected to be comrruttcd

to foreign currency denominated programmes m the next 12 months. Provided that foreign currency asset~

and liabd&t&cs match to &vs&hut 2 5m no currency hedge coniract is reqmred to nutigate currency risk and at 31st

August 2013 the /5m lnrut was not exceeded so no conttact was in place. Some modest foreign currency

gatns and losses arise due to ihe nus-match within the /5m hnut and also bccausc resen es are not subject to

revaluation.

The US) denoirunatcd AMF produced an mvestmcnt return for the year of 4.0% (2012 2.1%).This compares

with an average tnterest tate of 0.2% on 1-month US LIBOR duung the year. The teported return on

mvestment in GBP terms (wluch consists of the unreahscd exchange gam on the uivesnncnt in the lund an&i

the unrealiscd value of gains m the fund itselfl in thc 12 moniha under review was 6.2% (2012 2.3%).

ARK also benefits from the A "vll' and other mvesnnents in that some of the management companies, in

ivhose fimds AMI& and ARK invests voluntarily, rcbatc their fees as a donation to ARK, Where capital is

invested m a fund controlled by the trustees of ARK, 100% of fees are donated in this way. During the penod

this resulted in donations of $0.423m (2012 $0.310m). Tlus a&klinonal return was eqmvalcnt to 3.2% (2012

2.2%) of ARK's avcragc investment in AkfF during thc penod.

Taking these two factors together ARK's total return on investmcnt in AikIF was 9.4 % durmg the 12 month

penod (2012 4.5%). The trustccs consider this to be a saosfactory performance in an cxtrcmcly difficult

economic climate.

Trustees' report for the year ended 31August 2013 (continued)

'I'he trustees beheve that the value of tlus fun&ling model has been weal demonstrated in recent years. ARK has

the resoutccs to cover existing programme comnutrncnts and has $9.9m of uncotmnittcd funds availablc to

finance future progtammes.

Risk Management

Thc major. nsks to which the chanty is exposed, as identified by the trustees, have been reviewed and systems

have beer& estabhshed to manage those nsks. Sub-comnuttees of thc Board of Trustees meet regtdarly and

consider risks in relation to indtvidual progtammes as part of the annual review of business plans In addiuon,

thc I'SC is charged auth the responsibihty to formally review the Risk Register, to monilot and manage

financial nsks and to rcport to the Board. The FSC meets on a regular quarterly basis. The main financial risks

arc describeil in the preceding secuon of this rcport, together with explanarions relating to risk-riutigauon

Funds and Reserves

Restricted fundsARK achieves its chantable objcctivcs through direct unplementation of projects by its own chantable

subsidianes and by way of grants to partner orgaiusations.

'I'he typical ptolect hfecycle for non-UK programmes ts 3 to 5 years. At launch ARK underwrites the full cost

of a programme with a transfer of umestncted funds from thc General Programme Fund (GPF) to the

relevant rcstnctcd funil. 'I'his allows the protect to bc launched with full funding in place, without the time

delay of having to raise specific funds up front and without the nsk of havmg to scale back ihe programme

due to lack of resources.

Where thc prolccts are to be implemented by group companies ihe funds comrruttcd to them are shown as

restncted funds in the group bahancc shcct. I&or this reason at ani point m nme ARK expects to be holihng ui

rcstrictetl fumls an amount equivalent to morc than one year's expenditure.

The value of restncted funds held by the group at 31st August 2013 was $12.7&n (2012 $17.6m) which is

eqiuvalcnt to 17 months' expenthture on charitable acuviues (ruin restncted funds at 2013 levels (2012 19months). The trustees consider this to bc m hne with the organisation's pohcy.

Note 12 shows how these rcscrves are split across ARK's various programmes

Unrestricted funds —General Programme FundA stgruricant proportion of the funds raised by ARK must be used to fund charitable projects (i.e. they cannot

l&e used to cover the orgatusation's core costs) but are not committed to a specific project ar the pouit ofreceipt. This uicomc is crcthted to HARK's C'eneral Programme Fun&1 and stays there tuiul such time as it is

commtttetl to a specific prolect.

In the charity balance shcct these funds are shown as unrestncted funds —General Programme Fund. Thc

balance hekl in thts Fund was $9.3m at 31st August 2013 (2012 $0.6&u). ARK anticipates that all these funds

will be comnutted to spemfic programmes witbtn the riext 24 months. The trustees consider tlus to be in lute

with thc orgarusauon's policy.

Unrestricted funds —core costsThc tnutecs ensure that the central adm'uustrativc costs of the charity are mct through funtls set asiile

specifically for ihat purpose. They understand that the chanty's growth could requtre a gradual expansion ofexpendinue on core costs m the l ears ahead and have established a reserve to provide security of fin&ding in

this arcs. Tlus rcprcsents the unrestricted reserves of thc charity.

In the balance sheet these funds arc shown umler unrestncted raids core costs. 'I'he balance held on this

fund was $2.8m at 31st August 2013 (2012 — i'2.6m) wluch is equivalent to 17 months' expenihnue on core

costs at 2012 levels (2012 14 months). The trustees consider this to be m hne with thc orgamsation's policy.

10

Trustees' report for the year ended 31August 2013 (continued)

Sttucture, Governance and Management

Governing Document

AIU( is a company hnuted by guarantee governed by its Memorandum and Arucles of Assoc&anon dated 12

November 2002, an&i is registered as a chanty &ruth the Charity Commission.

Organisation

The board of trnstccs, winch can have up to iwelve members, oversees the chanty. The board mccts at least

four times a yeat. There are also six sub committees four covenng themauc programme areas (Health, UKSchools, Other UK Programmes and Internauonal Education) and two deahng with fundrinsing anal finance

and au&ht. 'I'he sub-committees each report back to the hoard and make tccommendaiions on pohcl and

practtce in their respective areas of pirisdict&on.

Execuuvc Directors ate appomted by the trustccs to oversee the day to day opcrauons of the chanty. Tofacihtate effecuve operations, thc L'xccutive Directors have dclcgatcd authorny for opemtional matters

mcludmg finance and employment.

Related Parties

The charity has established a number of companies to implement its key programmcs.

ARK Schools is responnble for ARK's wotk in inner cuy schools in thc UK. ARK Schools is registered in

England as a charitable company limited by guarantee (company number 51120901 charity number 1111608).ARK Schools tcccivcs the majoriiy of its income from thc JJK Government and, duc to the requirement for

ultimate government control of thcsc funds, does noi form part of thc Group in these accounts.

ARK UK Programmes is responsible for ARK's work in UK education beyond the Acadcnucs programme

and is also dcvcloping the new Fronthne cluld social &vorker leadership programme. ARK I JK Programmes xs

registered m England as a company limited by guarantee (company number 5932797; charity number

1137932). From 1 Scptcmber 2012 ihe Teaclung Leaders programme conuuenccd operations as a separate

legal entity and the accumulated reserves of the programme were transferred to this new legal entity, as

explamed in Note 16 to the accounts. 'I'his ts conststent with ARK's policy of nurturmg new prograrnmcs anal

helping them to independence and sustauiability as they mature.

ARK (South Afnca) Linuted, aai association incorporated in South Africa under section 21 (regtstrauon

number 2004/003952/10) and registered m England as a charitable company hnutc&l by guarantee (company

number 4957091; charity number 1108175) runs the chaniy's programmcs in Sul&-Saharan Afnca.

ARK Mozambique (an NGO registered in hlozambique as a branch of the central charity) nms thc charity's

programmes in Mozambique and closed its office at the end of August 2013 on conclusion ol the programme.

The process of full de-registrauon will be completed in the months following tlus closure.

ARK Zimbabwe Trust was registered mApril 2012 (registration number MA0398/2012) 'I'he maternal and

newborn care programnie is accounted for through this Trust &vluch is consohdated as a subsidiary of the

charity.

ARK IJganda, a company bruited by guarantee, was registered ui May 2012 as a subsidiary of ARK (South

Afnca) Lunited and owns the share of land and buildings relating to schools m Uganda that are financed hy

ARK as part of its educaiion programme in conjunction with its local partner, Promoiing Fquahty in African

Schools (PF.AS).

ARK India, whtch runs the charity's programmes in In&ha, is registered as a Socieiy ui India.

The chanty is also affiliated to Absolute Reiurn for Kids US, Inc. (ARK US) a US philanthtopic orgarusauon

which shares ARK's passion for transformational change in the hves of disadvantaged children. ARK US

supports the work of the chanty through granta

ARK holds 40-60% of its funds m the ARK blasters Fund (Alvll&), an investment &udt trust (scc note 7). The

A &IF was set up by supporters of ARK in 2005. It is manahmd by ARK Masters Management Limtted

11

ARK

Trustees' report for the year ended 31August 2013 (continued)

(AhiklL), a company registered m the Cay&nan Islands ui which the charity owns the only beneficial sharc but

none of thc. voting shoes, and receives invcstmcnt advice from ARK Masters Advisers I.imited (AMi, tL), a

company registered m England and Wales (number 5443569) wluch is a wholly owned subsidiary of AMlvIL.

In these accomits A,"viivtL and Abbe do not form part of thc group.

Statement of public benefit

1'mstees have paid due regard to thc Chanty Commission's pubhc bcncfit guidance and are satnfied that the

chanty comphes wtth Section 4 of the Charines Act 2006. The sections at the beginning of this trustees'

report dealing with objectives and acluevemettts cxplam in deiad the activities of the charity and the sections

of ihe mtemational community that benefit &om ARK's work. 'I'he chanty does not rely to any ugmficant

extetit on thc scrviccs of volunteers unth the exception of the contubution of time and skills from the

trustees and a small number of patrons and advisors. Statement of tnistees' responsibihiies in tespect of the

finanmal statements

Statement of ttustees' tesponsibilities in respect of the financial statements

Thc trustees are responsible for preparing thc Annual Report and the finandal statemenis in accordance with

applicable law and regulation.

Company law requires the trustees to prepare finanmal statements for each financial year. Under that law the

&brcctors have elected to prepare thc financiers statements in accordance with United Kuigdom Generally

Accepted Accounnng Pracucc (United Kingdoin Accounting Standards and applicable law). Under Companylaw the directors must not approve the financial statements unless they are saosftcd that they give a irue and

fair view of ihe state of affairs of thc group and the company and of the profit ot loss of the group for that

penod. In preparing those tinancial stateinents the directors are required to:

~ select suitable accounting pohcies and then apply them consistently;

~ make judgements and estunates that are reasonable and pmdent;

~ state whether apphcable UK Accountuig Standards have been followed, subject to any material

departure disclosed and explamed in thc financial statements, and

~ prepare the financial statements on ihe gomg conccin basis unless it is inappropriate to presume that the

group will continue in busmess.

The irustees are responsible for. keeping adequate accounting records that are sufficient to show and cxplam

the group's and the company's iransacuons and disclose with reasonable accuracy at any time the financial

position of the group and company and enable them to ensure that thc financtal statements comply auth the

Companies Act 2006. They are also responsible for. safcguar&ling the assets of the group and company and

ensurutg that the asseis are properly applied in accordance with charity law; hence for talung reasonable steps

For the prevennon and detecuon of fraud and other irregular&sea,

Disclosure of infotmation to the Auditors

Thc trustees are not aware of any relevant au&it informafion of wluch thc charity's auduors are unaware. The

trustees also confirm that they have taken all the steps required of trustees to make themselves aware of any

relevant audit information, anal estabhsh that the charity's auditors are aware of that mformation.

Tlus report was a proved by the tmstccs on 12th Dece&nber 2013.

Ian WaceChairman, K

12

ARK

Independent auditors' report

to the membets of ARK

We have audited thc financial statements oC Absolute Return for Kids (ARKi Cor the year ended 31 August

2013 wluch compnse Consolidated and Charity Statement of Fmancial Activities, thc Consolidated aml

Chatity Balance Shcct, thc Consolidated Statement of Cash Flows and the related notes 1 to 19.The financial

reporting framework ihai has been applied in their preparation is apphcable law and Uifited Kingdom

Accountmg Standards (United Kmgdom Generally Accepted Accoiutting Practice)

Tlus teport is made solely to thc company's members, as a body, in accordance with Chapter 3 of Part 16 ofthc 1'omparucs Act 2006. Our audit work has been undcrtakcn so that we might state to the company's

members those mai ters we are reqmred to state to them in an audiiors' report and for no other purpose. 'I'o

the fidlest extent permitted by law, we &lo not accept or assume rcsponsil&ility to anyone oiher than the

company and the company's members as a body, for our su&ht work, for tlus report, or for thc opuuons wc

have formed.

Respective responsibilities of trustees and auditor

As explained more fully in ihe Trustees' Responsib&hi&ca Statement sei out on page 12, the trustees (who arc

also the direcrors of the charitable company for the puq&oses of company Iawi are responsible for the

preparation of the financial statcmcnts and fot hang sausfied that they give a true and fau v&ew.

Our responsibdity is to audit and cxprcss an opinion on the financial statcmcnts in accordance with apphcable

law and Intcinational Standards on Auduing (UK and Ireland). Those standards reqmre us to comply with the

Auditing Practices Board's Ethical Standards foi Auditor~.

Scope of the audit of the financial statements

An aud&i involves obtaining evidence about thc amounts and &hsclosures in thc financial statements suffiment

to give reasonable assurance that the finanmal statements mc frcc from matenal misstatement, whether caused

by fraud or error. This mcludes an assessment of: whether the accountuxg policics arc appropriate to the

charitable company's cucumstanccs anal have been consistently iIpphcd aml adequately &hsclosed; the

rcasonablcncss of signilicani accounung estimates made by thc trustees; and the overall piesentanon of the

Cinancial statements. In ad&hoon, wc icad all the financial and non-finanaal informat&on in Ihe Truslees'

Annual Report and Accounts to identify matenal mconsistcncics with the audited fuiancial statements. If &ve

become aware of any apparent material misstate&ucnts or inconsistencies we consider thc implications for. our

report.

Opinion on financial statements

In our opinion the financial statements:

give a true and fair view of the state of the charitable company's and the group's affiuts as at 31 August

2013 and of their. incomu&g icsourccs and apphcanon of resources, including their income and

cxpcnditurc, for the year then ended;

have been properly picparcd in accordance uuth Uiuted Kmgdom Generally Accepted Accounung

Practice; and

have been prcparcd in accordance anth the requirements of thc Companies Act 2006.

13

ARK

Independent auditors' report

to the members of ARK

Opinion on other matter prescribed by the Companies Act 2006

In out opuuon thc mformauon given in the Trustees' rkutual ltcport For the financtal year for wluch the

financial statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception

We have noilung to report ui respect of thc following inattets where the Companies hct. 200Ci requires us io

report to you if, m our opinion:

adcquatc accounting records have not been kept or returns adequate for. our audit have not bccnreceived From branches not visited by us; or

the tinancial statements are not in agrccmcnt with the accomitmg records anil returns; or

certain disclosmes of irusiees' remuneration spcmficd by law are not made, or

we have not icceiveil all the inforinanon and explanauons we reqmre for our audit.

hfichael John Albert FSeniot statutory auditor)

for and on behalf of htnst d'r Young ILP, Statutory Auditor

London

l+ De+.~ ~t3

ARK

Consolidated Statement of Financial Activities

For the year ended 31 August 2013

Year ended Year ended

Incoming resources

Incoming Resources from generated funds

Voluntary tncomc:

31-Aug-13

Vnrestrfcted Restricted TotalNotes g'000 g'000 sf'000

31-Aug-12

TotalA'v000

Restated

Grants and donations

Gitts in Kind

Activities for generating funds:

Fundtatsing events

112 822

3 1,255

2 3,875 8,328 12,203

934

1,255

13,092

207

7,772

Investment tncome

Incorrnng Resources from charitable acnvtues

4 164 24 188 243

626

Totalincoming resources 5,40(& '), 174 14,580 21,940

Resources eapended

Cost of gcnerattng funds

Chantable Acnvities.

6 702 702 5,518

Grants and project operating costs 5 & G 978 9,1')G 10,174 12,618

Governance costs 5 & 6 333 333 311

Teaching Leaders —transfer of reserves

Total resources expemled 2,013 1(1,2G5 12,278

16 1,0(i9 1,0G')

18,447

Netincomingrr(outgoing) resources

before other recognised gains and losses

Reahsed/unrealised gains on invcstmcnt assets

Realised/unrealised (losses)/gmns on foreigir

cunency transactions

3,393 (1,091) 2,302 3,493

7 1,1(iG 640 1,80() 1,003

(178) 33 (145) (202)

Nc tin comi ng/(on tgoing3 resources

before transfers 4,381 (418) 3)963 4/94

Gross transfers bettvecn funds 4,460 (4,460)

Net mo vemen tin ftrnds 8 8,841 (4,878) 3,9G3 4,294

Funds at 1 September

Funds at 31Angus't

3,244

12,085

17,600

12,722

20,844

24,807

16,550

20,844

The notes on pages 20 to 35 form an integral part of these financial statements.

15

ARK

Charity Statement of Financial ActivitiesFor thc year ended 31 August 2013

Year ended Fest ended

incoming resourcesIncoming Resources from gcncrated funds

Voluntary mcome:

31-Aug-13

Unrestricted Restricted Total

Notes h"'000 A'000 g'000

31-Aug-12

Total

g'000Restated

Grants and donanons

Gifts m Kmd

acuvities for generatmg funds:

Fundraistng events

Investment income

112

1,255)

164

7,553 11,428

112

1,255

164

10,23')

207

7,567

207

Tata)incoming resources 5,406 7,553 12,959 18,220

Resources e~pended

Cost of generating funds:

Chantahle Acuvines

Grants and prolcct operating coals

Governance costs

5&65 & 6

702

978 2,923

333

702

3,901

333

5,518

9,280

311

Total resvnrces expended 2,013 2,923 4,936) 15,109

Netincoming resourcesbefore other recognised gains and losses 3 393 4,630 8,023 3,111

Realised/unrcahsc&l gams on im cstment assetsReahsed/unreahscd losses on foreign)

currency transactions

Netincoming resourceshelorc translers

7 1,16G

(I ' 8)

4 381 4,630

1,166

9,011

820

(298)

3,633

Gross transfers benveen fiinds 12 4,460 (4,46l))

Netmovenientin fiinds 8 8,841 170 9 011 3,G33

Funds at 1 September

Funds at 31Augnst

3,244

12,085 635

3,709

12,720 3,709

'I'he notes on pages 20 to 35 forin an mtegral part of these finanual statements.

Consolidated Balance SheetAs at 31August 2013

Fixed assets

Tangible fixed assets

Notes

2N3

1,654

1,654

2012

g&000

Restated

1,250

1,250

Current assets

Investments

Debtors

Cash at bank and in hand

10

20,636

1,108

13,798

35,542

21,041

1,138

13,84(&

3G,025

Creditors: amounts falling due within one year

Net current assets 26,504 2G,772

(9,038) (9,253)

Total assets Jess current liabilities 28,158 28,022

Creditors: amounts falling due after one year (3,351) (7,178)

Nct assets 24,807 20,844

Funds

Unrestricted Eundu

General Programme Fund

Cote costs

Restricteil funds

Total funds

9,289

2,796

12,722

12 24,807

Ci03

2,641

17,600

20,844

'1'he noies on pages 20 to 35 Eorm an integral part of these fnsancial statements.

Appro ed bp thc Board of Directors on 12th December 2013 and signed on its behalf by:

I WaceChairman, RRK

17

ARK

Charity Balance SheetAs at 31August 2013

Fixed assets

Tangible fixed assets

2013

)Votes g'000

9 587

587

2012

gr000

Restated

G52

652

Current assets

Inaesttnents

Debtors

Cash at bank anil in hand

7 14,435

10 822

12,564

15,204

829

12,081

27,821 28,114

Creditors: amounts falling due within one year 11 (10,844) (15,837)

)Vet current assets 16,977 12,277

Total assets less curtent liabilities 17,5Ci4 12,929

Creditors: amounts falling due after orte year

Net assets

11 (4,844)

12,720

(9,220)

3,709

Funds

Unrestncted funds:

General Progratmne Fund

Core costs

Restricted funds

9,289

2,796i

G35

603

2,641

465

Total funds 12 12,720 3 709

The notes on pages 20 to 35 form an mtegral part of these financial statements.

Approved b the Board of Directors on 12th December 2013 and signed on its behalf by:

Isn WareChairman, Alii(

18

Consolidated Statement of Cash FlowsFor the year ended 31August 2013

Year ended31-A ug-13

Notes A"'000

Year ended31-Aug-12

g'000Rcstatcd

Net cash outBow fiom operating activities 18 (1,892) (2,150)

Returns on invesuuents aad servicing offinance

Interest recuvcd

Capital expenditure

Purchase of fixed assets

Redemption of mvcstmcnt in ARK Masters Fund

Invesimeni made duriiig the pear

L'ndowmcnt investment duniig the year

(556)

276

243

(681)

1,901

(28)

Decrease in cash (48) (651)

Reconciliation to net liindsr

Decrease in cash

Cash at beginnmg of pear

Cash at cnd of year

Veai ended31-Aug-13

af'000

(48)

13,846

13,798

Year ended

31-Aug-12

g'000Rcstatcd

(651)

14,497

13,846

The notes on pages 20 to 35 form an mtegral part of these gnanmal statements.

19

Notes to the AccountsFor the year ended 31August 2013

1. Accounting policics

Basis of preparation

The accounts have been prepared under thc lustorical cost convenuon with thc exceptton that investments are stated at fair

value. Thc accounts aic maccorilance with apphcablc accounting standards, the Chariucs SORP 2005 (Accountuig and

Reporting by Chariues), and comply with thc Chariues (Accounts and Reports) Regulations 2000 tssued under the Charities Act

2000&.

Thc accounts consohdate ARK and its project uuplcmenting su1&subanes, ARK (South Africa) I.imiied, ARK UK Programmes,

ARK India, ARK Uganda, ARK Zimbabwe and ARK Ivlozambiquc. All intra-group balances, transacuons, incomes and

expetiscs arc chminated on consolidation.

Fund accounting

Resttqcted funds are those wluch are to bc uscil for a specified purpose as stipulated bl the donor and agreed by the chanty.

Uiuestricted ftmds are those wluch the donor yves to the charity without stipulaiing a specific purpose. They are to be used for

thc fmtherance of the objects of the charity in gcncral anil may be applied to spcmfic protects at the discretion of the trustees.

%5&thin unrestncted funds the charity maintatns two separate Eiutds; Core Cost~, and the General Programme I'und (GPF). 'I'he

Core Costs fund covers mcome and expenibture relatuig to the central adinuustrauve costs of the charity. The I PF holds

income &vhich must 1&e used to fund charitable projects (i.e. cannot be used to cover the orgamsauon's core costs) but is not

committed to a specific project at the pomt of recetpt. The rclcvant income ts credited to thc Gpl' and when the Board

comnuts funds to a specific project ihe reqmred amount of fumling is transferred from thc GPF to the relevani restncted fund.

All income and expenihture is shown m thc Statcmcnt of Financial Activities.

Incoming resources

Ilnrestncted mcome is accounted for on a receipts bans. Restricted mcome is accounied for on a receipts basis but subject to

recogtusing any donor restricnons. Where the corresponding programme expenthture can be clearll iilenufied and matched

&vith ilonor receipts the mcome is recorded m the same accountmg period as thc expenditure and mcome is deferred if not fully

spent. Income is not accrued except where there is a clear contractual entitlement and such income is then only recognised io

the cxtcnt that the corresponding expenrhture is recorded in the same accounting period. Deposit intetest is recognised on an

accruals basis.

Thc policy related io income recoguitlon changed from 2012)13 and the poor year has been restated. Note la explains thc

pohcy change and the i&upset on the prior year accounts.

Resources expended

I.ial&ihues are recogmsed as resources cxpcnded as soon as there is a legal or. constructtve obhgation committing thc chanty to

the expcnditurc. Bxpenditure is accounted for on an accruals basis, and has been classified under headings thai aggregate all

costs relateil to the caiegory.

Costs of generating funds are those tncurred in seeking donations for the charity and in publicising ihe &vork of the charity.

Resources expemled ori chanrable acuvtues comprise cxpendtture telated to the rhrcct furtherance of die chanty's objectives. In

the accounts of the chanty the award of a grant is recorded as charitable cxpcnditure and the unexpended amount is held m the

balance sheet as a grant creditor. In the accounts of the group any such grant to a subsirbary company is not recogntsed as

cxpcnditure; instead the expenditure in the subsidiary is recogmsed as the charitable expenduure when mcurred. Any unspent

grant is recogmsed m the group balance sheet as a restncted fund. Thc operattonal treatment of the pohcy rclatcd to grant

expenrhture recogtution changed from 2012/13

Governance costs are those mcurred in connecuon with the management of the chanty's assets, organisational ailministration

and compliance with constituuonal anil statutory reqmrements.

20

ARK

Notes to the AccountsFor the year ended 31August 2013

1. Accounting policies (continued)

Allocation of ovethead and support costs

Where costs cannot be directly attnbuted, they have been allocated to ai.tiviues in hne with the time spent by uidividual

mcmbcrs of staff on each aciivtty.

Volunteers and donated services

With the exception of tntstees, patrons and a small number of advisors who all provide their services on a voluntary basis, the

charity and its subsidtaries do not rely upon volunteers or donated servic& s in delivering services. The Enanctal value of scrviccs

donated by advisors and executive members of staff is tncluded ns expen&hture at an estimated fair value aml a corresponding

value of income is mcludcd as an in-kind donation.

Tangible fixed assets and depreciation

Tangible fixed assets arc stated at cost including any incidental expcnscs of acquisuion.

Depreciauon is pro&uded on all tangible fixed assets at rates calculated to unite off thc cost on a straight-line 1&asts over their

expected useful econonuc hfc. '1'hc rates of deprectauon apphed to each class of asset are:

Computer equipment

&&fotor vehicles

Offic c&piipment

I.easehold improvements

Land and Btulding

33% per annum (covers both h atda are and software)

20% per annum

25% per annum

dcprcciated over the ierm of the lease

overseas assets 4% annum

Investments

investments are stated at market value bid price, as quoted by the invesunent manager as at the balance sheet date. The

statement of financial activities includes the net giuns and losses aiismg on revaluauon and disposals throughout thc year.

Foreign currencies

Charity

Transacuons in formgn currencies are tecorded at the rate ruling at thc date ot the transacuon, ihlonetaiy assets and lubihtics

denominated in foreign cunencies are restated at the mtc of exchange ruhng at the balance sheet date.

The charity has adopted 1'RS23 "The effects of Changes in Foreign L'xchangc Rates"

Group

The income and expendintre of ovcrscas subsidiary undertakuigs are translated mto sterhng at average rates of exchange for thc

rclcvant period. Where the chaniy inakes a grant to a subsidiary the value of funds actually spent by thc subsidiary is shown

rather than the value of the gratit.

Assets and habditics denominated in foreign currencies are translated into sterling at rates of cxchangc cffcctivc at the 1&slaoce

sheet &late.

Ag exchange differences arc rccohu&ised through the Statement of Fnmncial Activines.

Operating leaseOperanng lease rentals arc charged on a straight hne basis over the tenn of the lease

21

ARK

Notes to the AccountsFor the year ended 31August 2013

1a Prior Year Adjustment

Thc Trustees have changed an accounting policy ilunng the year, relatuig to income recogniuon, and the prior year accounts for

the year to August 2012 have been restated to reflect the amended policy

Income from donors was previously recognised when pledges were made, rcsulung in a iimuig difference between uicomc

being reported in thc accounts aml cash being received. Incrcasmgly the chanty's donors and mstitutional funders are enienng

it&to scheduled payment agreements to match thc programme expenihture that is being funded and the trustees therefore

beheve u is more appropriate to match income and expenihture by rccognising income when rcccivcd and dcfcrring any

receipts which dearly relate to future pened expenditure. As a result of this change donor pledges at August 2012 of $12.1m

have been reversed resultuig in a rcducuon in de1&tora and a corresponthng reducuon m restncted mid unrcstrictcd funds of$3.9m and /8. 2m rcspccuvely, as shown in ihe table below.

Group

SoFA:—inmme fiom grants, donations and Eundraising events

- Eurids brought forward

— funds our(cd forward

Balanu Sheet:

DebtorsGeneral Programme Funds

Res incted Funds

2011/12As re ortcd (/'000)

19,891

29 E&43

32.964

13,258

8,81321,510

PYA

(Cool)

973

(13,093)12, !20)

(17,120)

(8,210)

(3,!?10)

2011/12Restated (/'000?

20,864

16,550

20,844

1,138603

17 600

Charity

So r'.6:—income from grants, donations and Eundraisuig events

—Euiids brought foiward- Eunds ouned Forward

Balanm Sheet:—Dehron,— Gcncnl Progtamm«Funds

Restnucd Funds

2011/12As te ortcd "000

16,833

13,16915 829

12,949

8,8134 375

PYA000

973

(13,093)12, 120

(12 I Zl?)

(8,210)(3 &?10

2011/12Restated 000

17,806

76

3 709

829

603465

1b Change in operational treatment of programme grant expenditure

The accountuig policy rclatmg to programme expenditure grant recognition remams iuichangcd, with grants recorded as

expenditure when a legal or constructive obhgauon is made. However, grants relating to the funihng of UK education

programmes have lustoncally been rccordeil in the year pnor to the actual expenditure. From 2012/13 thc tmstces no longer

award grants m advance of the year of expenihture and hcncc grants for 2013/14 are not recognised in advance and only

become constructive obhgations at the start of thc year to which the grant relates. Thc financial statements therefore include no

such grant expenditure in 2012/13.

If the Charity Sol'A wss restated to record UK educauon programme grants as expenditure in the year to which the grant

rclatcs the chantable grants and project opcratmg costs would increase by /'5. 6&u in 2012/13 &vtth a corresponding reduction in

the surplus for the year. The pnor year, 2011/12, would mcbide an addiuonal /'0. 7m cost in the category, bcuig thc 2011/12grant of /6. 3m recorded in 2010/11 less the $5.6m grant relating to 2012/13.The brought forward chanty reserves at 1

September Z011 woulil be corresporuhngly /6. 3m higher. at $10.0m

22

ARK

Notes to the AccountsFor the year ended 31August 2013

2. Grants and donations

C-'ontributions to core costs

Genetal Donations

C'ranis 8& resiricied donations

Group2013

g'000

1,06C)

2,809

8,328

12,203

Charity2013

g'000

1,066

2,809

7,553

11,428

Groirp2012

g'000Re)mrs&I

1,119

3,114

8,859

13,092

Charity2012

g'000Rr.&rated

1,119

3,114

6,006

10,239

Thc tnutees ensure that the core costs of the charity arc covered. Unrestncted donanons and Gifts in Kind mcludes $1.179m

(2012 $1.32C)m) raised for tlus purpose.

3. Fundraising events

The charity &hd not hokl a malor fundraismg event in 2012/13. Income siated m the Sol&A under incoming resources &om

Fundraismg events related to gala &hnncrs hdd m previous years and is reported in the yeat in wluch the mcome was icccivcd.

Additionally pledges made at gala dinners are recorded as donanons in the year ihat they are received and reported in the SoFA

under volunta&I tncome.

4. Investment income

Invcstmcnt income arises from mterest receivable on funds held in interest beanng bank accounts aml on fixed tenn deposit.

During the year investment mcome was t'0.192m (2012 j0 243m) for the group and $0.1C)4m (2012 $0.207m) for. the chmity.

5. Allocation of support costs

Group and Charity

Chari ra hieaerrvrry

h" )000

Cost ofgenerating

fi)ods

g'000

Governanceroars

h" '000

Terai

g'000

Head offi&.e costs 675 1,986

Total 978 C)75 333 1,98C)

Support costs relate entirely to ARK's London office and thc core staff team covermg fun&lraising, communications, finance,

human resources, general management and admtnistration.

ARK uses tlus broad definition of core costs and then covers thcsc costs from funds raised and set as&dc specifically For this

purpose.

'I'he table above shows how the resources covcrcd l&y the core budget are allocated using the three broad categories requited

under the Charities SORP 2005, and is based upon an allocation of thc time spent by in&hvidual members of staff. Note 6

further apportions the charitable acuvities element between individual programmes undeitakcn &lircctly by the ARK group.

23

ARK

Notes to the AccountsFor the year ended 31August 2013

6. Analysis of resources expended

Group

Activities

undertaken

directly

g'000

Grant

fiindink) ofactivities

g)000

Supportcosts

g'000

Torsi2073

Torsi2012

a('000 g'000

Restated

Charitable expenditure

Health —Afnca Hly/AIDS

DDC —Zambra

696

76

(2, 1 04)

342

156 (1,25 I)

517

1,43(i

202

DDC —I.lganda

AINC - 7imbabwe

Health —Africa Other

Child Protection - Romania

(1u)d Protection —Other

lntl Edutanon —India

671

164

66

630

98 769

242

(I 77'))

1G1

1,712 1,888 257

128

144

758

195

574

1,853 20 1,873

Intl Eilucation —Uganda -PEAS

Inil Fducation —USA

Intl Fducation —Other

I:KEducation

'I'caching Leaders - transfer ut reserve.

186

600

2,860

is)

1,294

1,0G9

117

29

156

186

629

4,310

1,069

313

321

10,931

6,027 978 th243 12,618

Cost of generating funds

Governance costs

27 675

333

702 5,518

311

Total resources expended 6)054 4,238 1,986 12,278 18,447

Activittes uiidertalien directly represent progiammanc work by ihe central chanty and its operating subsiilunes.

Grant (unding of activtnes represents programmatic work cerned out by non-group cnnnes (includmg AIU( Schools) and

funded by grants from thc charity.

Suppori costs relate to ARK's core staff team and the I.on)Ion office and are covered by the Core Costs Iiund.

Thc ncgauvc grant funihng of /2104m is pnmarily due to thc rcclassification of durd party grants of /'1. 853nt to a new

diarrhoea control programme ui Uganda that is bcmg implemented by the Chnton Health Access Irutianvc (CIIAl), with a

corresponding reducuon m giant to CHAI for prograinmes ui Iviozambitluc. The balance of ihe negative granr reflects the

reversal of unspent grants to General Programme Funds.

The transfer of Teaclung Leaders reserves of $1.069m related to the transfer of accumulatixl rcscrvcs on the separation ofTeaclung Leaders trom thc ARI( Group form 1 September 2012.

24

Notes to the AccountsFor the year ended 31August 2013

6. Analysis of resoutces expended (cont. )

Charity

Acti vities

undertaken

directly

A"'000

Grant

funding ofacti vitics

g'000

Supportcosts

af'000

Totai2013

g'000

Torsi2N2

g'000

Restated

Charitable expenditure

Health —Africa HIP(AIDS

DDC. —Zambia

DDC — Uganda

MNC - Zimbabwe

Ilealth - Africa Other

Child Protection - Romana

Child Protection —Othm

Intl Vducauon - Inilia

Intl Etlucation —Uganda -PEAS

Intl Education —I.eading Educators

lntl Fducation —Other

UK Education

51

37

136

G6

135

IGO

120

(2,156i)

367

1,853

24

29

1,712

160

(6)

503

(46i4)

156&

20

128

29

156&

(1,96&0)

516&

1,8'73

159

243

144

423

160

(6)

652

(3t)B)

285

202

252

184

258

204

170

303

444

6,978

823 2,100 3,784 9,280

Cost of generating funds

Governance costs

27 G75

333

702

333 311

Total resources expended 850 2,100 1,869 4,818 15&109

Activities undertaken directll represents programmatic work carried out by the central charity aml where this chaniable

cxpenihture (as opposed to the cost of gencratmg ftmds) relates primarily to tcscarch and development of new programmcs.

Grant funthng of acuvities represents programmatic work cairicdl out by group and non-group companies and funded by grants

from the central chanty.

Support costs rclatc to ARK's cote staff team and the London office and are covered by thc Core Costs Fun&I.

25

ARK

Notes to the AccountsFor the year ended 31August 2013

7. Investments

Gmup

2013

+6000

Chari ty

2013

h"6000

Group

2012

+6000

Charity

2012

g'000

Investments b/fwd

Additional investment in the year

Rcdcmption

Endowment investment in the year

Investments c/Iu d

17,812

(1,413)~it '6

1G,123

12,109

(1,413)

10,69(i

19,334

28

(1,486)~617,812

13,567

28

(1,486)

12,109

Unrcahsed gates b/(wd 3,229 2,G41 2,G90

I.lnrealised gains in thc year 1,284 644 588 405

Marltet value at 31 August 20,636 14,435 21,041 15,204

Investment Income

Group

2013

ac6000

Charity

2013

h"6000

Group

2012

h"6000

Charity

2012

a('000

Unreahserl gains m the year

Realised gams in the year

1,284

522

(i44

522

588

415

405

415

1,806 1,1()(i 1,003 820

8. Nct movement in funds

Operanog lease charges 400 166 111 390

Depreciation 147 105 303 290

Aurlitors remufletatloil

- current year auiht 21

26

ARK

Notes to the AccountsFor the year ended 31 August 2013

9. Fixed assets

Group

Cost:

Leasellold

Improvements

g'000

Land

X Building

g)000

Eguipment,

Biatures

d'c finings

g)000

Motor Total

vehicles

L"'000 g'000

At 1 September 2012

Additions

D»posals

At 31 August 2013

597 ')0 1,99C)801

51440 556

(l 8) (l8)

841 1)062 599 32 2,534

Depreciation:

tt 1 September 2012

Dlsposals

C;barge (or thc year.

At 31 Aubu»t 2013

171

259

2C)

34

558

581

(12)

9

746

(t:)146

6 880

Nct Book Value:

.(t 31 August 2013

At 31 August 2012

582

Ci30

1,028

540 39

26 1,Ci54

41 1,250

Charity

Cost:

At 1 September 2012

Additions

At 31 August 2013

Leasehold

Improvements )t't Building

g'000

801

841

Equip)cent,

fixtures

)tt gtnhgs

g'000

571

571

Motor

vehicles

g'000

Total

g'000

1,372

40

1,412

Depreciatiotu

At 1 September 2012

Charge for the year

At 31 Auhmst 2013

Net Book Value:

At 31 August 2013

At 31 August 2012

171

259

Ci30

17

566

22

720

105

825

587

C) 52

27

ARK

Notes to the AccountsFor the year ended 31August 2013

10. Debtors

Receivable within 1 year

PDIRC Gift A)d

Related company debtors

Prepaynients and other del&ti&rs

Group

2013

g)000

304

82

722

Charity

2013

1,"'000

304

82

436

Group

2012sC'000

Restated

288

157

693

Charity

2012

g'000

Restated

288

157

384

1,108 822 1,138 829

11. Creditors

Amounts falling due within 1ycat

Trade Cred)tora

Related company creditors

Grant creditors

Other creditors

Deferred Income

Group

2013

h" '000

236

750

7,00Ci

810

236

Charity

2013

g'000

89

9,806

713

236

Group

2N2

g)000

Restated

761

837

7,087

56i8

Charity

2N2

d'000

Restated

26

15,289

522

9,038 10,844 9)253 15)837

Amounts falling due after 1 year

Grant crednors 31351 4,844 7)178 9,220

28

Notes to the AccountsFor the year ended 31August 2013

12. Analysis of charitable funds

Group

Restricted funds

I lealth —Africa HIV/AIDS

DDC —7ambra

DDC —Gen

DDC —Uganda

SINC —Zimbabwe

Health —Africa Other

Child Protccuon —Romania

Child Protccnon — Other

Intl Educauon - In&ha

Intl L&ducation - Uganda -PEAS

Intl Education —Other

UK Education

Other

31Aug2012

+&000

93C)

465

2,053

1 392

2 077

98

10,583

(4)

Incoming

g'000

110

267

171

223

210

1,006

C)07

7,172

TransFersin 7'(out)

g'000

(2 i1i, '

151

1,853

(119)

165

1,7Ci0

93

84

(846)

(5,372)

Outgoing

g'000

1,411

(418)

(1,851i)

(Ciy I)

(1 Cia)

(I volt)

(1 -14)

(630)

(186)

(5&1 i)

(5,228)

31Aug2013

1"'000

220

636

1,486

1

1,056

2,051

121

7,155

(4)

17,600 9)847 (4,460) (10,2Ci5) 12,722

Unrestticted funds

Core fumls

Ccnc&al programme Cunds

2,641 2, 141

4,253 4,460

(1,98C)) 2,796

CZ ) 9289

3)244 6,394 4,460 (2,013) 12&085

Total 20,844 16,241 0 (12,278) 24)807

Incoming is the amount received as income for each fund during the year mcluding gains and losses on investments and foretgn

evchangc.

Ttansfers are thc nct value of funds received as unrestrictc&l funds committed in year to ipemf&c programmer.

Outgotng is the amount spent by the group or granted io partner entities outside the gtoup. The UK L'ducation 'outgomg' &o&al

&ncludes I",1.069m relating to thc transfer of accuinulated reserves on the separation of Teaching Leaders Crom kRK Group

from 1 Scptcmber 2012.

29

ARK

Notes to the AccountsFor the year ended 31August 2013

12. Analysis of charitable funds (cont. )

Chatity

Restricted funds

Healtli —Afiica I IIV/AIDS

DDC - Zambta

DDC - Cen

DDC —Uganda

AINC —Zimbabwe

Health —Afura Other

Cluld Protection - Romania

Chdd Protection - Other

tnt I Education —India

Intl Educauon - Uganda -PEAS

Intl Lducauon —Other

UI( Educauon

31Aug2012

g'000

465

Incoming

g'000

120

267

170

180

30

51

210

1,006

608

4,911

Transfers

in /'(out)

A")000

(223;)

151

1,853

(119)

165

1,7GO

93

84

(846i)

8

(5,3"2)

Outgoing

g)000

2,117

(418)

(1,853)

(GI)

(165)

(l,vr)0)

(I 44)

(295)

(16i0)

(615)

461

31Aug2013

g'000

Gi3 5

465 7,553 (4,460) (2,923) 635

Unrestticted funds

Core funds

Oeneral programme fimds

2,641

603

2,141

4,253 4,460

(I )786)

(27)

2,79(]

9,289

3,244 6,394 4,460 (2)013) 12)085

Total 3)709 13,948 (4,936) 12,720

Incommg is thc amount received ss income for each Fund dunng the year mcluding gains and losses on utvcstmcnts and foreign

exchange.

Transfers are thc nct value of funds received as unrestricted funds comnutted in year to specific programmes.

Outgomg is the amount spent by the Charit& or corumitted as grants to other enutics inclurhng other group companies.

30

ARK

Notes to the AccountsFot the yeat ended 31 August 2013

13. Staff costs and numbers

Group

2013

Chariry

2013

h"'000

Group

201Z

h" '000

Charity

2012

g'000

Salaries and wages

Sowal secuuty costs

Pension costs

3,800

515

246

4,5(i1

1,962

317

194

2,473

4,317

529

149

4,995

1,717

356

(i7

2,140

'1'he average number of staff employed, analyscd by fuociton, was:

Group

2013

No.

Chart'ty

2013

No.

Group

2012

No.

Chari ty

2012

No.

Programmes

Support services

Fundraisuig

2(i

78

42 23

102 32 129 32

The number of staff whose emoluments (exch employer pension contributions) werc m excess of O0,000 dunng the year were

as follows:

Group

2N3

No.

Charity

2N3

No.

Group

2012

No.

Chari ty

201Z

$140,001 —O 50,000

O30,001 —$140,000

$120,001 —g, 130,000

$100,001 —$110,000

F80,001 - t(90,000

j70,001 - $80,000

O0,001 - g;70,000

Payments to voluntary dcfincd contriliunon pension schcmcs in the year in respect of cmplolees included in the banduigs

above 1'60,000 werc nil (2012 oil).

14. Ditectors' remuneration and expenses

The charity did not pay any remuneration to its trustees. No cxpcnses were reimbursed to or peril on behalf of trustees during

the year.

31

ARK

Notes to the AccountsFor the year ended 31August 2013

15. Investments in subsidiaries

~&1. d Il d k»

ARK J.JK Programmes

~COU11

Uruted Kmgdom

ARK Mozambique

AN( Ziml&al&we

ARK India & STJII

ARK Uganda

hlozambique

7&mbabwe

Indra

Uganda

ARK (South Africa) J,imited South Afnca

Basta of Consolidation

100% ownership

100% ownership

100% ownership

100% ownership

100% ow&tcrstup

100% ownerstup

Nature of acuvities

Educauon

Health/Educauon

Health

New Bom 6:are

Eilucation

Education

16. Related party transactions

ARK made nciv grants of $0 500m to its sister charity ARK Schools (2012 /;5. 490m) to cover the core costs of the charity to31 August 2013. At the year end the unpaid grant allocated to AIU( Schools was $2.986m (2012 $6.900), all of wtuch is due m

less than onc year. Thc dimtty also shares its office wiih ARK Schools, with each charitl' assuming a remonable proportion ofthc costs.

Future Lcadcrs Chantablc 'J'inst Limited (Future leaders) is a charitable compmiy in wluch ARK hokls one third of the voting

rights on the Board of Duectors. Dunng the year ARI( made no new grant (2012 iul). At the year end the utipaid grant

allocated to Future Leaders was /'0. 709m (2012 L0.824m), f'0.270m of wtuch is due m less than onc year (2012 $0.270m). ARJ(also provides office space wbtch Future leaders pays for m proporuon to thc resources useil.

Teactung Leaders is a chantablc company m which ARK holds one tlutd of the votmg nghts on thc Board of Directors. Its

opcrauons were accounted for through ARK UK Programnies, a wholly owneil substdiary, unul 1 September 2012 when it

commenced operauons through an it&dependent charitable company. At the point of transfer accumulated reserves of /'1. 069mwere transferred and ttus has bccn rccoriled as grant expenihiute tn the accoiuits of thc group. Dunng the year AN( made nonew grant (2012 iul). At the year end the unpaid grant allocated to Tcaclung I.eaders was L0.956m (2012 $1.533m), $0.480m ofwhich ts due u& less than one year (2012 $0.300m). ARJ( also provides ofhce space which Teactung Leaders pays for ui

proportion to the rcsoiuccs used.

ARK is aLso affiliated to Absolute Return for I(tds, LJS, Inc. (ARK US), a IJS phdanthropic organisation that shares the charity's

objectives. During the year Alai( received a grant of /'0. 175m ($0.277m) from ARK-LIS (2012 $2.193m ($3.426m)).

Dunng the year ARK redeemed $3.000m (2012 $3.000m) of its investment m the ARK Ivtasters I'und (Ahttt). Thc Asti' is

managed by ARK Masters htanagement Lmuted (AhfhIL), a Cayman Islands registered company havmg no directors m

common with ARK. Duting the year the chanty receiveil a iliviileod of L0.122m from Atkttt&JL (2012 10.125m). Alv1ML

receives uivcsuucnt advice from At(K t& tasters Advusers Lmuted (AJRLW), a UK rcgistcred company with five directors who are

all trustees of, (RK Dunng ihe year ihe charity recmved a donation of /'0. 122m trom AM IL (2012 L0.125m).

32

Notes to the AccountsFor the year ended 31August 2013

17. Opetating lease commitments

The amounts payable in respect of operating leases shoxvn below are analyscd accorihog to the expiry of the leases.

Group Charity Group Charity

2013 2013 2012 2012

Onc year

Be(ween two and five years

h" '000

675

675

634

C)34

g'000

19

'1,114

1,133

1,110

1,110

18. Notes to the consolidated cash flow statement.

lteconcihation of nei incoming resources to nct cash outflow from operaung acnvitics

Net incoirung rcsourccs

Depreciation

Wnte off of book value on disposal of rang)ble fixed assets

IJnreahsed gains on foreign currency tiansactions

Interest received

Decrcasc in dcl&tora

Decrease in crcihtors

Nct cash outflow from operating activities

2013

1,"000

2,302

14Ci

18

(157)

(188)

30

(4,043)

(1,892)

2012

$'000

Restate)1

3,493

303

(202)

(243)

693

~xi.)94)

(2,150)

19. Risk factots

ARI( invests its rcscrvcs to achieve ihe best return consistent with the stability oF, and ease of access to, capital. The

main risks arising from thc charity's pursuit of its objectives and the policies agreed by the trustccs for managing

each of these risks are summariscd below.

(a) Interest rate risk

Interest rate risk represents the potential financial loss tlvat the charily nught suffer duc to interest rate movements. The Charity

pays 0% interest on outstanding creditors aml does not rely on mterest camings to fund its programmes. It is thcrcforc not

exposed to any ugnificant intersect rate nsk.

(b) Market price risk

klarket pnce nsk represents thc potential financial loss that the charity nught suffer through hokhng market posinons in thc

face of price movements. 19farket pnce nsk anses over the future value of the chant&'s investmcnt in thc BRI( htasters Fund

(43191F) anil the Fineka Fund. The risk is mitigated by the Fact thai the &bsIF is a fund of hedge funds usth a range ofinvesimeni approaches, each of which mcorporates a strategy io manage tins risk. 'I'he trustees furiher manage the risk by

meeting regularly with the managers of the 6(hfF to review the performance of the fund.

33

ARK

Notes to the AccountsFor the year ended 31August 2013

(c) Currency risk

Currencv risk arises over the conmunucnt to fund current and futute overseas programme grants which are, or will be,

comnutted m foreign currencies. Currency risk also anses over the fututc value of the chanty's mvestment m the AlilF, which is

a I JS dollar-denonunated fund. The Financial Stewarilship Comnuttee considers thc portfolio of foreign currency assets and

habihues as a whole and has rnloptetl a policy whereby forward currency contracts will be put m place to cover any net

imbalance in excess of LSm. At 31st August 2013 no such contract was considered necessaiy. Thc risk may bc further. managed

l&y holding a maximum amount of 6-12 months' budgeted expenditure ui the rclcvant currency.

(d) Credit risk

Credit risk iepresents the potential linaricial loss that the chatity ought suffer through its supporters failing to honour thc

tinanmal pledges that they have made to it. Thc charity manages this risk by regularly momtormg outstambng pledges, espemally

Ihe small number of lugh value pledges that denve genetally Erotn supporters who are well known to the chanty and the

trustees. Futthemiore, pledges are no longer recognised as mcome in the accounts of the charity untd cash is received following

the change of accounting policy adopted in the curreni year.

(e) Financial assets

At the period cnd thc Chanty's financial assets coinpnsed:

loves lment in ARK Masters Bt L'ureka

Endowment mvcstmcnt

Cash at bank and tn hand

Receivables

Group

2013g'000

14,435

6&,201

13,7')8

1,108

Charity

2013g'000

14,435

12,564

822

Group

2012g&000

Ktitutrd

15,204

5,837

13,846&

309

Charity

2012g'000

Rt&t&ttt(1

15,204

12,081

829

35,542 27,821 35,196 28 114

(1) I'air value

The Chatity measures invcstmcnt values using a fair value hterarchy that rcflccts the signtficance of the inputs used ui malung

thc mcasurementw Categonsation untlun the luerarchy has bccn determined on the basis of the lowest lcvcl input that is

signtficani to the fmr value measurenient of thc rclcvant assets as follows:

Level 1 —valued using quoted pnces unadlusted iti active markets for identical assets or habilities.

Level 2 — valued by rcfcrcncc to valuatton techiuques usuig observablc inputs Eor the asset or hability other than quoted prices

included within Level 1.

Level 3 — valued by icfcrcncc to valuation techniques usmg mputs that arc not baseil on observable market data for the asset or

liab&bty.

The fau value of thc mvcstmcnt in the ARK hfasters Fund is the published islet Asset Value of the fund. It is classified as a

Level 2 asset.

34

Notes to the AccountsFor the year ended 31August 2013

(g) Liquidity risk

The current econonuc climate has emphasiscd the need to ensure the Chanty can meet its habihues as and when they fall due.

The Chaiity conunucs to ilirect considerable effort to improvmg cash fiou management and forecasts. The cash and

investments assets have an adequate level of liqmdity to meet the Chanty's financial ha&ities as they fall due.

The table below analyses the matunty profile of thc Charity's iinanctal habthues, illustrating the amounts contractually due

within the bandings specitied:

Groupwithin

1month

g'000

between between greater than

1-3 months 3-12months 12 months

g'000 g'000 g'000Totalb"'000

Financial liabiTitics

At 31August 2013'I'rade C:reditors

Related company creditors

C rant crechtors

Other creditors

Total

23G

750

243

1,229

2,422

810

3,232

4,341

4341

236750

3,351 10357810

3,351 12,153

Charitywithin

1month

+i000

between between greater than1-3months 3-12months 12months Total

g'000 g'000 g'000 g'000

Financial liabilities

At 31August 2013Trade Creditors

Grant creditors

Other creihtors

Total

290226

Ci05

3,076487

3,563

6,440

G,440

89

4,844 14;C)50

713

4,844 15,452

35