188. ark (absolute return for kids) annual accounts august 2010

8/3/2019 188. Ark (Absolute Return for Kids) Annual Accounts August 2010.

1/43

Com pany Number: 4589451

Absolute Return for Kids (ARK)Trustees' Annual Report and AccountsFor the Year Ended 31 August 2010


2/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st August 2010Company Num ber: 4589451Charity Number: 1095322The trustees are pleased to present their report together with the audited financial statements ofthe charity for the year ended 31st August 2010.Reference and administrative detailsAbsolute Return for Kids (ARK) is a company Iimited by guarantee, registered in England,number 4589451 , and is a UK registered charity, number 1095322.DirectorsThe directors of the charitable company are its trustees for the purpose of charity law and themembers of the com pany limited by guarantee. Throughout this report they are collectivelyreferred to as the trustees.The following individuals served as trustees during the year:Lord Stanley Fink (Chairman to 28 September 2010)Ian Wace (Chairman from 28 September 2010)Arpad BussonPaul DunningDavid Gorton (resigned 15 March 2010)Kevin GundlePaul MarshallJennifer MosesLord Paul Myners (appointed 30 November 2010)Michael PlattBlaine TomlinsonAnthony Williams (appointed 28 September 2010)AI1 trustees served for the full year and no trustees have resigned or been appointed since theyear end, except where noted above. None had any beneficial interest in the charity andremuneration of directors is neither paid by the charity nor permitted under its Adicles ofAssociation. 'AuditrsErnst & Young LLP1 More London PlaceLondon SE1 2AFT: +44 20 ?951 2000BankersHSBC Private Bank (UK) Limited78 St James's StreetLondon SW IA 1JBT: +44 20 7860 5000SolicitorsMcDermott W ill & Emery SJK LLP7 Bishopsgate,Londn EC2N 3ARAT: +44 20 7577 6900Registered Office65 KingswayLondon W C2B 6TDT: +44 20 31 16 0700

1


3/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st August 2010Objectives and principal activitiesARK is an international charity whose purpose is to transform children's lives. It was founded in2002 by senior figures in the alternative investment industry. W ith a shared vision of collectivephilanthropy, ARK delivers high social returns on philanthropic investment.ARK has a highly committed board of trustees who use their skills and experience to supportARK'S activities.Along with ARK'S patrons, the trustees ensure that administrative costs arecovered, so that 100% of donations go directly to deliver ARK'S programmes for children,ARK identifies, creates and delivers innovative and highly effective jrogrammes in the areas ofHeaIth (Mozambique, Zambia, Zimbabwe, South Africa), Educatlon (UK, India) and ChildProtection (Eastern Europe) that are transformative, scalable and sustainable. ARK applies thesame principles and disciplines to managing the charity as it would to running a business,focusing on the transformation of children's lives through rigorous research, monitoring andevaluation.HeaIthARK'S HeaIth programmes in sub-saharan Africa aim to give children a better chance of survivalby providing access to improved healthcare that will keep them and their caregivers alive.ARK is currently active in four countries, with segards to its health programmes:Mozam biqueThe goal of ARK'S programme in Mozambique is to suppod children whose caregivers are HIV+by strengthening the healthcare system in five clinics in Maputo province to provide quality HIVtreatment, within an integrated model of care, by the end of 2012.Specific objectives of the programme include:Enrolling new patients on treatment, especially children'

Building the capacity of government healthcare workers at ARK-suppoded sites'Improving quality of care through training, mentoring, technical support and developingmonitoring and evaluation systems;

Strengthening local relationships, including governm ent, and establishing partnershipswith other NGOs to maximise impact and Ieverage synergies.

Also in Mozmbique, ARK Iaunched the Young Doctors/students Programme in partnership withthe Universjty of Eduardo Mondlane and the provincial Ministry of HeaIth to help build capacityat ARK sites, while providing practical, on-site experience for first and second year students atthe primary health care level. The Clinton-ARK Initiative for Mozambique (CAIM) is apartnership with the Clinton Foundation HIV/AIDS Initiative (CHAI),seeking to enhance trainingand mentoring of health care workers in Mozambique, with particular focus on HIV/AIDS.CAIMis expanding the Chicumbane m edical training centre in Maputo to enable it to increase itscapacity for teaching medical technicians and other essential health-care workers.CAIM has also Iaunched a pilot programme to test the viability of new Point of CareTechnologies (POCT) for HIWAIDS treatment management (incfuding CD4, blood chemistry andhematology testing) to provide a viable solution in addressing the over-burdened centralisedtesting capacity, thereby increasing access while improving quality of care and patientadherence.

2


4/43

Absolute Return for Kids (ARK)Trustees' repod for the year ended 31st A ugust 2010Zam bialn the summer of 2010,the ARK Board agreed to fund a comprehensive diarrhoeal diseaseprevention and treatment programme in Zambia. The Centre for Infectious Disease Research inZambia, (CIDRZ), our implementing partner in Zambia, will be accountable for delivering theprogramme in Zambia while ARK will play a wider influencing role both in Zambia andinternationally, ensuring sustainability of the programme, working towards Ieveraging ARKfunds, and increasing the visibility of the programme and diarrhoeal disease more broadly.The Zambia programme includes three core elements:

- the introduction of rotavirus vaccine;- improved clinical management of diarrhoea;- public health awareness and education for mothers and caregivers in the community.

AIl aspects of the program me are being planned and implemented in close collaboration with theZambian Government and other national stakeholders such as UNICEF and the W orld HeaIthOrganisation (WHO). ARK and CIDRZ are also in discussion wth other potential funders inorder to Ieverage ARK'S commitment and enable the programme to scale up in Zambia andpossibly also in other sub-saharan African countries that have a high incidence of under-fivediarrhoea mortality and morbidity. Achieving this would be a major milestone for ARK, CIDRZand Zambia, as the programme aims to have a catalytic impact on the prevention and treatmentof diarrhoea, a disease that kills more children than AIDS, malaria and measles combined. W iththis accelerated programme, Zam bia is now in Iine to be one of the first countries in Africa to rollout the rotavirus vaccine,Zim babweIn Zimbabwe, one in every 140 pregnant women dies as a result of pregnancy complications. Apreviously strong healthcare system has collapsed and conditions for pregnant women and newmothers are now among the worst in the world.The impact of a failing system is worsened by high rates of HIV/AIDS infection and a Iack oftrained staff. Less than two thirds of deliveries are attended by a trained midwife, clinic baseddeliveries have decreased to around 60% and only 24% of clinics are properly equipped andstaffed for basic emergency obstetric care - aII of which put the mother and newborn atsignificant risk.In 2010 ARK has been exploring a new programme in Zimbabwe that aims to suppod thestrengthening of the health system to reduce the number of maternal deaths and improve thesurvival rate of newborns. ARK seeks to create long-term impact focusing on training new andexisting health care workers, in addition to a programme that provides the tools and equipmentto allow frontline healthcare workers to adequately provide maternal and newborn care at theclinc Ievel.South AfricaAn agreement was successfully concluded on 1 October 2009 to transfer the majority of theARK programmes in South Africa to Kheth'lmpilo, a Iocal non-governm ental organisation formedby eX-ARK employees.AIDS Treatm ent Program m eBetween December 2003 and September 2009, ARK ran an Antiretroviral Treatment (ART)programme in South Africa that:

- Extended the Iives of HlV+ caregivers through the provision of ART, thereby preventing'children from becoming orphaned'

3


5/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st A ugust 2010

- Provided treatment at a primary Ievel of healthcare thereby making access easier forthose people receiving care and treatment through Government supported facilities.The agreement with Khethllmpilo provided ARK minority funding of the ART programme for 12months to September 2010 to ensure that the inherited operations could be maintained anddeveloped as originally planned.GrantAccessARK'S Grant Access Strategy (GAS) supports vulnerable children in AlDs-affected communitiesby assisting their parents or caregivers to access government-funded social care grants.W hen ARK handed over its programme to Kheth'impilo on 1 October 2009 it provided funding tocover a portion of operational costs from October 2009, to September 201 1. ARK thereforecontinues to be a minority funder of these important ART and GAS programmes, alongside themajority funder, PEPFAR (the US President's Emergency Plan for AIDS Relief).Prevention of Mother to Child Transmission (PMTCT)In September 2008, ARK Iaunched a study into PMTCT. The aim of the study is to provderigorous data and an operational model that demonstrates that it is possible to roll out tripletherapy to pregnant mothers who do not qualify for life-long ART at a primary Ievel of care.

EducationUKARK'S education programme is designed to help close the educational achievement gapbetween children from rich and poor backgrounds.To achieve this, in partneiship with the UKgovernment, ARK is creating a network of highly effective academy schools that focus on raisingattainment and is training school Ieaders and senior teachers for inner city schools,predominantly in areas of economic disadvantage.ARK schooisARK Schools (formerly ARK Academies) was created in 2004 to develop a network of non-selective academies delivering high achievement education in challenging, inner city areas. ltsaim is to enable aII its pupils to achieve the academ ic qualifications, skills and confidence theyneed to move into higher education or pursue the career of their choice.ARK Schools now runs eight academies in London,Portsmouth and Birmingham and will open anew academy in Redbridge in 2012. ARK'S academies are generally situated in deprived urbanareas - almost half the pupils at ARK secondary schools are on free school meals.ARK Schools receives ARK funding but is a separate Iegal entity from ARK and does not formpart of the ARK group accounts.ARK'S UK education programmes also provide services to the academies to support educationalsuccess, such as extended schools, Iiteracy and music programmes, as well as funding projectswhich work to eradicate barriers to success, by improving school Ieadership and reducing schoolexclusions. These programmes operate under the umbrella of ARK UK Programmes (formerlyARK Schools).These include two Ieadership programmes for UK inher city schools, Future Leaders is anaccelerated school leadership programme Iaunched by ARK, with the support of the NationalCollege and the Specialist Schools and Academies Trust. lts aim is to develop the nextgeneration of head teachers for challenging secondary schools in disadvantaged areas.Teaching Leaders is a two year development programme for middle Ieaders (Heads of

4


6/43

Absolute Return for Kids (ARK)Trustees' rport for the year ended 31st August 2010Depadment or Heads of Year) developed with the National College, Future Leaders and TeachFirst that was Iaunched in August 2008.IndiaARK'S international education mission is to get more children into school and to raise the qualityof their education. ARK believes this will transform the Iives of millions of underprivilegedchildren and provide them a.passpod to future opportunities.In India, ARK will achieve this by developing replicable and scalable progrmme deliverymodels:

- Access - support increased access to both public and Iow cost, privately-run, qualityschools;

- School Improvement - reduce drop outs by introducing programmes that address thespecific needs of underprivileged children' improve Iong term outcomes by regularlyassessing schools and awarding them quality ratings'

- Systemic Impact - establish models that the government could replicate at scale to deliverits 2009 Right to Education (RTE) Act.

Child ProtectionThe focus of the Child Protection programme in Eastern Europe is to reduce the num ber ofchildren Iiving in, and entering, institutional care through the developm ent of preventative andalternative care services,closure of large-scale institutions and the reform of child protectionsystems.Rom aniaIn collaboration with Hope and Homes for Children in Romania, ARK provides programmemanagement, targeted capacity building and infrastructure suppod to Iocal government toenable the closure of institutions, the reintegration of children with their bidh parents or extendedfam ily, and the development of adoption, foster care and small-scale residential services.Prevention of abandonm ent work, to stop future generations from being institutionalised, is alsocentral to the programme.BulgariaBetween March 2006 and December 2009, ARK had a padnership agreement to implement adeinstitutionalisation programme in the Municipality of Stara Zagora - home to the highestnum ber of institutionalised children in Bulgaria. This was the first time the government had everexplicitly committed to such a programme and marked a huge breakthrough for both ARK andthe future of childcare in Bulgaria.ARK'S programme was designed with sustainability and exit in mind, including through:

focus on building the capacity of child care professionalssupporting partner organisations to plan and deliver services rather than ARK engagingin direct service delivery

planning the handover of services from their start and involving padners in aII decision-making

designing services with budgets in Iine with those of the stateproviding inpui to Government work on financial and quality standards for servicesinfluencing wider policy and Iegislative developments

5


7/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st August 2010Achievements, performance and future plansHealthMozam biqueARK has invested in building its organisation and team to create a foundation for sustainableand Ionger term work in the country.By adding a new site and providing additional ARK clinical support at its other four sites, ARKwas able to substantially increase access to its antiretroviral programme and in FY 09/10, ARKhad enrolled 4,114 patients onto antiretrovirals (ARVs), benefiting nearly 9,000 children. Thiswas 65% ahead of FY 09/10 targets.As part of our mentoring strategy, ARK'S two doctors have reduced the amount of time spent onconsultations (previously 100%, now 55% of their time) and are instead focusing on improvingthe skills of medical technicians and nurses on HIV case management, thereby buildingsustainable capacity at the clinics.ARK has also improved patient tracking systems, established regufar meetings at the healthcentres to discuss complicated cases and provided training on specific topics, introduced Pointof Care Technology (POCT) CD4 machines, and improved the infrastructure of the clinics.A key success has been the buy-in and support of the Mozambique M inistry of HeaIth to ARK'Sstrategy to build clinic capacity, strengthening the sustainability of ARK'S work.ARK has continued to build and expand its relationship with the University of Eduardo MondlaneMedical School (Young Doctors Programme) and developed a new programme where doctors-in-training receive practical experience at ARK-supported sites with the aim of addressing theskills gap in human resources for health in the country.ARK has developed a relationship with a community-based NGO (APFUKANE) to implement adefaulter tracing system to follow up with ARV patients with missed appointments. ARK alsodeveloped a new padnership with Population Services International (PSl) to provide communityHlV counselling and testing in areas surrounding ARK-supported sites - a vital Iink between thecommunity and health centre services.Going forward, ARK will continue to deliver the ARV programme at five ARK-supported sites,and will suppod these sites to maintain systems, including supply chain/equipment and bloodtranspod. lt will also up-skill the human resources and improve systems to retain a maximumnum ber of patients in care. lmportantly, ARK will also build and take initial steps towards exit ofthis programme, including Iobbying Iocal stakeholders to take over some site activities such asdata capturingClinton-ARK Initiative for Mozambique (CAIM)This partnership has focused on two initiatives, Firstly, there is the Chicumbane project, whoseoverall goal is to improve the quality of care for HIV patients by supporting the expansion of theChicumbane Training Centre in order to train more mid-level healthcare workers. ln August2010, the building work was completed and CAIM successfully handed over 3 new classroomsand 4 dormitories to the government. The challenge now is for the Ministry of HeaIth to accessthe approved funds from the Global Fund for soft components and equipment for 'the newbuildings.Secondly, the Point of Care Technologies (POCT) programme continues on track. Overall,more than 24,000 POCT tests (CD4 counts, chemistry and hematology) were provided acrossthe pilot sites during the second quader of the year, enabling a large number of patients to beplaced on ARVS earlier than would otherwise have been possible. The impact of the POCT CD4machines at 2 ARK sites is clear: in the fourth quarter the time between HIV diagnosis to

6


8/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st A ugust 2010enrolment for eligible patients at ARK-supported sites was between 22-25 days (versus thenational average of 89 days). This can be attributed to the combined result of variousimprovements at the sites, but the reduced turn-around time for CD4 test results is a key factor.The Ministry of HeaIth presented the evaluation and impact of the POCT programme at IAS2010 in Vienna where it generated a great deal of interest. The Ministry of HeaIth is nowplanning to support the expansion of the programme in 201 1.Zam biaARK and its Iocal partner, the Centre for Infectious Disease Research in Zambia (CIDRZ), arefocused on ensuring the programme is sustainable and that it is fully integrated into Zam bia'sexisting Expanded Programme on lmmunisation (EPI). Working with the Zambian Ministry ofHealth (MoH), the World HeaIth Organisation (W HO), UNICEF and other partners, ARK'Sambition is to ensure that all the elements of the programme (rota vaccine, improved clinicalmanagement and public health awareness) are integrated fully into the primary health carepriorities of the Zambian government.National scopeThe programme will work in partnerqhip with the MoH Child HeaIth Unit to support an expandedpaediatric vaccine roll-out through the Global Alliance for Vaccines and Immunisation (GAVI) aswell as padnerships to improve frontline clinician skills and to develop an awarenessprogramme.International scopeThis diarrhoea prevention and management programme has scope to go beyond Zambia andinto other sub- Saharan Africa countries. ARK will collaborate closely with regional and globalpartners on programme planning and design as well as keeping them apprised of theprogrammatic and scientific data collected as it will inform public health policy throughout theregion. ARK will work with and suppod padners in lobbying for additional funding for vaccinesand diarrhoea prevention and treatment internationally, and support the broader ambition of theglobal movement around the 'Decade of Vaccines'.Zim babweARK is at the very early stages of planning in Zimbabwe and is working closely wth theZimbabwean government to identify the optimal structure for its programme.The aim is to develop a national in-service training programme for midwives providing them withthe skills to deliver emergency obstetric care and Iife-saving treatment for newborn babies. Inaddition, ARK is developing a training programme aimed at Clinic Officers.ARK will be in a position to announce more details around this programme in 2011.South AfricaThrough the Antiretroviral Treatment (ART) programme, ARK successfully:

Suppoded the enrolment of over 100,000 people onto ART;Suppoded 71 primary health care and 22 secondary/tertiary Ievel facilities'Suppoded the accreditation of 37 primary health care sites to initiate ART;Employed 780 people to support the programme (directly and indirectlyl;Delivered a quality of care that was superior to the majority of cohorts reviewed fromAfrica and Iow-income countries'

7


9/43


- Provided Community Access and Adherence (CAA) suppod to 70 primary care sites'- W orked in four provinces, three of which are especially resource poor in the South African

context and have high HIV prevalence'- Processed over t0,000 grants, of which 24,389 grants were processed between October2009 and June 2010.

Through its programme ARK contributed to the well-being of over 115,000 children either byproviding their parents/primary caregivers with life-saving ART or providing paediatric ART toHIV+ children through the ART programme. The rapid expansion of the proqramme was madepossible by the padnership ARK developed with PEPFAR, the US President's Emergency Planfor AIDS Relief, and its grant management partner, PACT.PM TCTThe study was carried out at two sites and, by July 2009, approximately 135 mothers wereenrolled on triple therapy. AIDS research is developing very quickly and it became apparentthat the ARK study did not need to be extended. The decision was therefore taken to wind downthe study whilst continuing to care for the 135 mothers.EducationARK supports three major programmes in the UK - ARK Schools, Future Leaders and TeachingLeaders - and two programmes in India.UKARK SchoolsBy 2012 ARK aims to be running twelve academies eventually providing places for more than15,000 pupils.

- ARK has now opened eight academies, which are currently impacting the Iives of nearly5,000 pupils.

- Two academies (Charter Academy, Podsmouth and St Alban's Academy, Birmingham)opened in September 2009. Just after the year end, in September 2010, Ark Academyopened its secondary school and W alwodh Academy opened its sixth form. EvelynGrace Academy, Globe Academy and Ark Academy aII moved into new buildings inSeptember 2010 and W alworth Academy moved into its new building in January 2010.ARK is now working on the preparations for a new secondary academy to open in Ilford in2012.

To help tackle the problem of Iimited prior attainment that holds back many children from poorercommunities ARK Schools is expanding its primary schools programme. Under the newgovernment's Free Schools programme ARK has been approached by a number of parents'groups seeking to open new schools. ARK Schools is working with groups in Hammersmith andFulham and W estminster to open primary schools in the White City (Hammersmith) and northW estminster areas, where there are significant shodages of primary places.ARK'S academies achieved a foudh year of improvement in GCSE performance. Thepercentage of pupils achieving five GCSES at A*- C including English and mathematics rose to70% at Burlington Danes Academy (2009, 50%), 60% at W alwodh Academy (2009, 45%), 41%at Globe Academy, (2009, 35Q/o), 50% at St Alban's Academy (2009, 31%, predecessor school)and 25% at Charter Academy (2009, 21%, predecessor school).

8


10/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st August 2010From 2009 - 2010 the average GCSE pass rate (pupils achieving five A* - C passes includingEnglish and mathematics) across the five ARK academies with pupils of GCSE age increasedby 13 percentage points making ARK the top performing multi-academy sponsor for a secondyear.In 2010j 51% of ARK pupils achieved five GCSES including English and mathematics, adramatic improvement from the 20% achievement across the same schools in 2006, the yearARK'S first academy opened.In 2009/10 ARK ran an innovative pilot programme, ARK Plus, to provide academic interventionfor under-attaining Year 7 students with acute behavioral and emotional needs. Students on theprogramme were identified as being at risk of exclusion but with potential to respond positively toa six month off-site intervention to improve their academic attainment and their resilience andability to thrive in their school. The pilot involved 12 pupils from two academies each of whomhas now returned to their academy for year 8, with continuing suppod from the ARK Plus teamto help them reintegrate to their classes.In just six months, padicipating pupils aII made at Ieast one year's progress in English andmathematics and aIl reintegrated e#ectively into their home school with a significantly reducednumber of behavioural incidents.The pilot programme demonstrates the significant opportunity to prevent exclusions and thedisruption they cause to children's education and Iong-term prospects. The ARK Plus pilot isnow being evaluated to assess the best long term structure for the programme.Future Leaders

The Future Leaders programme, Iaunched in 2006 with a Cohort of 20 padicipants, iscurrently training 217 Future Leaders, who are working across some 150 challengingschools.

The programme operates in five regions - London, the North W est, the Midlands,Yorkshire and the Humber and the South Coast.This year, a fudher five participants gained headteacher status (from competitive fields) -at Ieast one year ahead of schedule, making a total of nine headteachers.The first three headteachers aII delivered improved outcomes at GCSE Ievel in their firstyear. One participant nearly doubled the percentage of pupils achieving five A*-Cgrades including English and Maths - a result that would be impressive for a seasonedschool leader, let alone a headteacher new in the post.

Teaching LeadersThe Teaching Leaders programme, Iaunched in 2008, now has recruited 147 middleIeaders across 83 complex urban schools and aims to train more than 300 middleIeaders in each cohort by 2014.

The programme is set to launch in the nodhwest in August 2011, recruiting 30 newpadicipants from the region

- 70% of the first cohort of middle Ieaders were promoted during the two years of theprogramme.

- The pupils being targeted by padicipants in the first two cohorts are significantlyoutpedorming the school expected grades.

9


11/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st A ugust 2010IndiaFluency in written and spoken English is critical if children are to have good prospects and drivesocio-economic developm ent in their communities.To address this need, in 2010 ARK developed and launched ASPIRE (AIIow Synthetic Phonicsto Improve Results in English), an English literacy programme fot Class 1 students (aged 5 and6) in a relatively deprived area of New Delhi. The programme aims to:

Train and mentor teachers to deliver quality English Ianguage teachinglnfluence the teaching of English in schools across Delhi by demonstrating the impact ofthe programme using evidence from the first year of the programmeDeliver an effective English Iiteracy programme within the Iocal school curriculum whichalso provides additional incentives for children to rem ain in school.

ARK'S year-long programme has already trained 50 teachers in government nd Iow-cost privateschools (charging fees of between 24 - 9 a month) to teach 1,500 children English using theJolly Phonics, Genki English and Read W rite techniques - all proven, evidence-basedmethodologies commonly used in UK schools. This approach teaches Ietter sounds,conversational English, reading and writing in an enjoyable and multi-sensory way. Children arequickly empowered to speak, read and write in English with confidence and fluency.The programme is being rigorously monitored and evaluated. The information gathered is beingused to develop a scalability plan and to ensure the program me is sustainable in bothgovernment and private schools.ARK'S work in Delhi has identified many communities where children are facing multiple socialand economi challenges which put them at greater risk of being excluded, dropping out ofschool or never attending school.To address this, ARK has padnered with the Centre for CivilSociety (CCS) to design a new programme providing scholarships to underprivileged children.ENABLE (Ensure Access to Better Learning Experiences) will give 1,000 children access togood, Iow-cost, private school education and will fund their education for a period of five years ormore. The programme aims to develop models and approaches that can be taken to scalethrough government as it implements some of the clauses in its recently passed Right toEducation Act.The programme is currently in the design stage and willbe Iaunched in the 2011 academic year.Child ProtectionRomaniaARK and Hope and Homes for Children (HHC) have built up a strong and unique partnership.ARK has supported HHC with two major grants since 2002 including the current HHC-ARKPadnership for Romania, 2008-2011.This joint work has demonstrably transformed the Iives of several thousand children. To date,HHC and ARK have:

- piloted a model for the direct and indirect closure of institutions'- developed a replicable model of effective family support, successfully preventing children

from being institutionalised;- directly closed 9 institutions and indirectly contributed to the closure of 7 institutions' bythe end of the current partnership a further 2 institutions will have been closed indirectly'- enabled 1,908 children to Ieave institutions' by the end of the current partnership a further242 children will have been moved out of institutions;

10


12/43


prevented 5,339 children from being institutionalised' by the end of the current partnershipwe are expecting to prevent a fudher 166 children from being institutionalised.

Through the current HHC-ARK Padnership for Romania reform of the childcare system inMaramures County will be completed with the closure of its last remaining institution - the firstquality, county-wide deinstitutionalisation in Rom ania. The partnership will also acceleratedeinstitutionalisation in Bacau county, one of the most deprived areas of Romania in order toimprove the Iives of children in care and suppod families where children are at rlsk of beingremoved.Future plansBuilding on their experience and success to date, HHC and ARK have the historic opportunity tosuppod Romania to become the first country in Eastern Europe and the Former Soviet Union tobring an end to institutional care. lmplementation of an ambitious national plan will transformthousands of childrens' Iives, bringing Iasting sustainable change to the Romanian childprotection system and having an impact throughout the region and internationally bydemonstrating that such comprehensive reform is possible.The Romanian Government's National Strategy for Children (2008-2013) explicitly commits tothe closure of alI institutions and reform of the child protection sector. The RomanianGovernment has reaffirmed its commitment to closing the remaining oId style institutions.A ten-year plan to 2020 is under dekelopment by HHC and ARK to fulfil this goal and to kick-startimplementation. A major prevention programme will be implemented in parallel with this inpadnership with Romanian counties and UNICEF.BulgariaBetween March 2006, when ARK began operations in Bulgaria, and December 2009 it:

suppoded direct work with 570 children including:o 107 successful prevention cases;placement of 207 children out of institutions' 84 re-integrations, 61 adoptions,16 children placed in foster care and 46 in small group home service;training of 35 older children in institutions and 228 prevention cases opened andstill being monitored at time of programme closure'

- planned and implemented the first closure of an institution in Bulgaria'- provided training, technical assistance and supervision to 227 professionals;- facilitated the restructuring of Stara Zagora Child Protection Department;- developed a network of prevention service providers including hospital Maternity W ard;- oversaw establishment of an independent foster care team: UNICEF now financing rollout

of ARK'S model;t d a model for and established the first com prehensive small group home service in Crea eBulgaria; and- played a key role in national and European Ievel discussions regarding de-

institutionalisation.However, the programme faced many obstacles, including: a Iack of Government commitment tode-institutionalisation, despite supportive national policy and legislation' no understanding of orengagement from the Ministry of HeaIth, directly responsible for infant institutions - the entranceroute to the system; and inadequate resourcing of Child Protection Departments that areresponsible for supporting families and placing children in care.W hilst ARK overcame' these problems at a Iocal Ievel they prevented scale-up and it wasdecided not to extend the programme beyond its first phase and the programme was closed atthe end of 2009.

11


13/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st August 2010ARK Ieaves a strong legacy in Bulgaria: its work has been pioneering in demonstrating for thefirst time what 'quality de-institutionalisation' means. The series of publications and short filmsproduced by ARK Bulgaria have been disseminated throughout the country, providing guidancefor Government, NGOs and donors on how alternative services can be developed andcomprehensive de-institutionalisation programmes designed and implemented.ARK'S work has provided a model for systemic change in Bulgaria. Some of the Iimitations ARKfaced when setting up the programme are now falling away. Using ARK'S experience, theGovernment and others now have the opportunity to continue to reform and tr@nsform the livesof thousands more children.Financial reviewIn a second year of severe global recession that has seen many charities forced to restrict theircharitable programmes due to a Ioss of fundraising income, ARK'S funding and investmentmodel has proved padicularly resilient. No committed programmes have been adverselyaffected because ARK ensures funding is fully in place for the full duration of the programmeprior to commencement. Furthermore, the policy of maintaining at least 40% of Iiquidinvestments in interest earning cash deposits has proved to be secure, and the balance ofinvestments held in the ARK Masters Fund recorded a net increase of 3%.ARK'S consolidated income in the year to 31 August 2010 totalled E14.5m compared to E23.9min 2009. E4.0m of this decline is due entirely to the non-consolidation of thlrd party grant incomein the ARK South Africa subsidiary. The successful transfer of the majority of charitable activitiesin South Africa to another non-governmental organisation with esect from 1 October 2009, inIine with ARK'S philosophy of achieving sustainability, resulted in this programme beingexcluded from the consolidated accounts for 1 1 months of the year.The charity continues to raise the majority of its funds through its annual Gala Dinner. In 2010this was held at Waterloo International rail terminalwith a keynote speech by Her MajestyQueen Rania of Jordan. Thanks to the generosity of ARK'S supporters :12.4m was raisedthrough the Dinner and associated Gift Aid reclaims (see note 3) (2009 E15.6m). Despite beingin the grip of economic recession ARK'S suppoders maintained their suppod of the event in2010.Group expenditure during the year was 33% higher at E25.4m (2009 - 219.1m). The Iargestcomponent of this, at 78%, was direct charitable expenditure on grants and project operatingcosts which increased 22% to E19.7m (2009 E16.2m). Note 6 contains details of how this wasspent by program me.The cost of generating funds represents the cost of the Gala Dinner plus a proportion f the costof the Donor Relations team based upon the percentage of staff time spent on the event. In2010 this totalled :5.4m (2009 E2.6m).Expenditure by the charity differs from the group in that where a grant is made to a subsidiarycompany the total amount committed is shown as expenditure (on grants and project operatingcosts) for the charity, whereas for the group the value of funds actualfy spent by the subsidiary isshown, as aII intergroup transactions are eliminated.During the period expenditure at the charity level on grants and project operating costs wasE5.6m (2009 E9.9m). This excludes support costs of E0.6m (2009 E0.8m). The allocation of newcommitments by theme is inevitably volatile due to the Iarge value of individual commitmentsthat often cover funding for a period of up to three years. The trustees anticipate that one ormore new international programmes may be grahted significant funding in 2011, but trustees areconcerned to ensure programmes are fully researched, and trialled where appropriate, beforecom mitting funds for a number of years.

12


14/43


NewTheme Commitments Summa of commitmentsHeaIth Africa Q(6.7)m Reversal of part of grant previously awarded to ARK- HIV/AIDS South Africa programmes but no Ionger required dueto transfer of the majority of activities to Kheth'lmpilowith effect from 1 October 2009, and reduction in grantto PMTCT programme due to early closure of study.HeaIth Africa E4.2m E3.8m relates to a 3-year grant to introduce a rotavirus- Other vaccine in Zambia and an associated diarrhoeamanagement programme.Economic E0.2m Research into future programme oppodunities.DevelopmentInternational E0.4m Small grants to third pady programmes.EducationUK E7.5m E4.2m towards the sponsorship of academies andEducation investment in the central team suppoding the 8 ARKschools' E3.0m to ARK'S charitable subsidiary, ARKSchools, including E1.3m to Teaching Leaders andE1.2m for the Extended Schools and Musicprogrammes',E0.3m to Future Leaders.Central administrative costsThe trustees and patrons continue to ensure that the central administrative costs of the charity(referred to as core costs throughout these accounts) are met through funds specifically setaside for that purpose. The income and expenditure relating to core costs in the period areshown in the following table.

2010 2009E'000 f '000

Contributions arranged by trustees and patrons 766 1,267ARK Masters fee rebates 510 675Return on investments 813 860Total income raised for core costs 2,089 2,802Less: Expenditure on core costs (1,516) (1,644)Surplus on core costs for the year 573 1,158Less: Transfer to fund new programme development costs (448) 0125 1,158Balance 1 September 2,944 1,786Balance 31 August 3,069 2,944

The trustees recognise that the charity's growth could require a gradual expansion of core costexpenditure in the years ahead. As the above table shows at 31 August 2010 they haveestablished a reserve to cover core costs equivalent to E3.1m or 24 months expenditure at the2010 level (2009 E2.9m - 21 months). They are confident that these funds together with ARK'Sexisting sources of core income will cover core cost expenditure in the period aiead.This undedaking is central to ARK'S operating philosophy as it gives other donors the assurancethat every penny of every donation to programme funds goes directly to specific projects.

13


15/43

Absolute Return for Kids (ARK)Trustees' report for the year inded 31st August 2010Balance SheetThe typical project Iifecycle is 3 to 5 years and ARK underwrites the full cost and sets asidereserves at the outset. In the charity balance sheet these programme commitments are shownas grant creditors, and the total value at 31 August was E28.6m (2009 E41.5m).The charity also holds an additional amount of 221.8m to invest in new programmes (2009E20.3m), 29.2m as restricted funds (2009 :6.8m) and E12.6 m as unrestricted funds held in itsGeneral Programme Fund (2009 E13.5m).These programme com mitments will in part be covered from match funding pledges - amechanism whereby significant individual donors agree to provide multi-year funding in line withthe working capital needs of specific projects. At 31 August 2010 the total value of outstandingmatch funding pledges was E10.0m (2009 E13.3m) - see notq 10. These pledges are drawndown against agreed schedules, and aII pledges due for payment by 31 August 2010 have beenreceived by the charity.This funding model results in an apparently high Ievel of outstanding pledges relative to incomeas well as significant balances of cajh and funds under investment as shown in the followingtable.Sum mary of Charity Balance Sheet position relating to program me funds:

E'000Grant creditors 28,567Unrestricted funds - General programme fund 12,568Restricted funds 9,248Total programme funds 50,383Match funding pledges 10,047 19%Other programme related debtors 6,621 13Q/oCash 20,330 40%lnvestment 13,385 27%Assets matching programme funds 50,383 100%

The Ievel of outstanding donor pledges i considered to be one of the charity's key risks, and isregularly reviewed by the Financial Stewardship Committee (FSC) on behalf of the trustees.Based on the fact that, to date aII match funding pledges due for payment have been receivedland on their knowledge of the Individual donors who have pledged, the FSC feels it is unlikelythat any material portion of these funds will not be received.The FSC also oversees the charity's cash management. During the year an account wasopened with Barclays Corporate to provide some diversity for the charity's cash in addition to theexisting HSBC Private Bank (UK) Limited and Lloyds Banking Corporation accounts. The FSCbelieves that this is an appropriate Iower risk approach and at 31 August 75% of the charity'scash was invested in the Lloyds account with the balance in Barclays and HSBC accounts. Theprofile of the cash holdings is dependent on the working capital needs of ARK'S programmes.In June 2010 the trustees approved a revision to the investment policy to increase non-cashinvestments from a Iimit of 35% to a target range of 40-60% of total cash and investments. At 31August the investment in ARK Masters Fund represented 39.7% of total invested funds (200931.3%) and was therefore in line with the approved policy. The US Dollar denominated ARKMasters Fund is a relatively low risk fund. The objective for ARK'S investment in the AMF is tooutperform cash without significantly increasing risk.

14


16/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st August 2010The AMF was set up by supporters of ARK in 2005. lt is a fund of funds that invests in a range ofinvestment strategies aiming to ensure an absolute return on investment that is not correlated tothe UK equity market. Having taken independent advice on this investment strategy: the trusteesbelieve this is an appropriate investment of the charity's funds, especially given the fact thatARK'S donor base is almost exclusively drawn from the hedge fund industry and its supporterswould expect to see the funds they have given to the charity invested in this way. To eliminatevirtually aII currency risk on this US$ denominated investment a forward sale currency contract,or swap, was taken out every 3 months until June 2010 for the value of the investment.In June 2010 the trustees resolved that the US$ denominated AMF provides a foreign currencymatch for programme grant Iiabilities denominated in foreign currency and uncommittedreserves that are expected to be committed to foreign currency denom inated programmes in thenext 12 months. Provided that foreign currency assets and Iiabilities match to within E5m nocurrency swap contract is required and at 31st August 2010 there was no contract in place. As aresult future reported currency gains and Iosses are Iikely to be more significant.The US$ denominated AMF produced an investment return for the year of 2.604. This compareswith an average interest rate of 0.3% on l-month US LIBOR during the year.The repoded return on investment in GBP terms (which consists of the realised gain/loss on theforeign currency swap that hedges ARK'S investment in the fund and the unrealised value ofgains in the fund itselg in the 12 months under review was -0.7% (2009 -5.8%).ARK also benefits from the AMF in that many of the management companies, in whose fundsAMF invests voluntarily, rebate their fees either directly to the AMF or as a donation to ARK.W here the capital is invested in a fund controlled by the trustees of ARK, 100% of fees aredonated in this way. During the period this resulted in donations of E0.510m (2009 E0.676m).This additional return was equivalent to 3.6% (2009 5.10A) of ARK'S average investment in AMFduring the period.Taking these 2 factors together ARK'S total return on investment in AMF was 2.9% during the 12month period (2009 -0.70/0). The trustees consider this to be a satisfactory performance in anextremely difficult economic climate.The trustees believe that the value of this funding m odel has been well demonstrated in recentyears. ARK has the resources to cover existing programme commitments and has E21.8m ofuncommitted funds available to finance future programmes.Risk Managem entThe major risks to which the charity is exposed, as identified by the trustees, have beenreviewed and systems have been establshed to manage those risks. Sub-committees of theBoard of Trustees meet regularly and consider risks in relation to individual programmes as partof the annual review of business plans. In addition, the FSC is charged with the responsibility toformally review the Risk Register and to monitor and manage financial risks. The FSC meets ona regular quarterly basis. The main financial risks are described in the preceding section of thisreport together with explanations relating to risk-mitigation.

15


17/43

Absolute Return for Kids (ARK)Trustees' report for the year ended 31st A ugust 2010Funds and ReservesRestricted fundsARK achieves its charitable objectives through direct implementation of projects by its owncharitable subsidiaries and by way of grants to partner organisations.The typical project Ifecycle is 3 to 5 years. At Iaunch ARK underwrites the full cost of aprogramme with a transfer of unrestricted funds from the General Programme Fund (GPF) to therelevant restricted fund. This allows the project to be launched with full funding in place, withoutthe time delay of having to raise specific funds up front and without the risk of having to scaleback the programme due to Iack of resources.Where the projects are to be implemented by group companies the funds committed to them areshown as restricted funds in the group balance sheet. For this reason at any point in time ARKexpects to be holding in restricted funds an amount equvalent to more than one year'sexpenditure.The value of restricted funds held by the group at 31st August 2010 was E20.2m (2009 -E30.3m) which is equivalent to 13 months' expenditure on charitable activities from restrictedfunds at 2010 Ievels (2009 - 24 months). The trustees consider this to be in Iine with theorganisation's policy.Note 12 shows how these reserves are split across ARK'S various programmes.Unrestricted funds - General Program me FundA significant propodion of the funds raised by ARK must be used to fund charitable projects (iethey cannot be used to cover the organisation's core costs) but are not committed to a specificproject at the point of receipt. This income is credited to ARK'S General Programme Fund andstays there until such time as it is committed to a specific project.In the balance sheet these funds are shown as unrestricted funds - General Programme Fund.The balance held in this fund was E12.6m at 31st August 2010 (2009 E13.5m). ARK anticipatesthat aII these funds will be committed to specific programmes within the next 24 months. Thetrustees consider this to be in line with the organisation's policy.Unrestricted funds - core costsThe trustees ensure that the central administrative costs of the charity are met through funds setaside specifically for that purpose. They understand that the charity's growth could require agradual expansion of expenditure on core costs in the years ahead and have established areserve to provide security of funding in this area. This reprsents the unrestricted reserkes ofthe charity. 'ln the balance sheet these funds are shown under unrestricted funds - core costs. The balanceheld on this fund was E3.1m at 31st August 2010 (2009 - E2.9m) which is equivalent to 24months' expenditure on core costs at 2010 Ievels (2009 - 21 months). The trustees consider thisto be in line with the organisation's policy.

16


18/43

Absolute Return for Kids (ARK)Trustees' repp for the year ended 31st August 2010Structure, Governance and Managem entGoverning DocumentAbsolute Return for Kids (ARK) is a company Iimited by guarantee governed by itsMemorandum and Articles of Association dated 12 November 2002, and is registered as acharity with the Charity Com mission.OrganisationThe board of trustees, which can have up to ten members, oversees the charity. The boardmeets at Ieast four times a year. There are also seven sub-com mittees: four covering thematicprogramme areas (HIWAIDS, UK Education, lnternational Education, and Child Protection), onedealing with strategy, one dealing with donor relations and the seventh dealing with finance andaudit. The sub-committees each report back to the board and make recommendations on policyand practice in their respective areas of jurisdiction.Executive Directors are appointed by the trustees to oversee the day to day operations of thecharity. To facilitate effective operations, the Executive Directors have delegated authority foroperational matters including finance and employment.Related PadiesThe charity has established a num ber of companies to implement its key programmes.ARK Academies is responsible for ARK'S work in inner city schools in the UK. ARK Academiesis registered in England as a charitable company Iimited by guarantee (company number5112090, charity number 111 1608). ARK Academies receives the majority of its income from theUK Government and, due to the requirement for ultimate government control of these funds,does not form pad of the Group in these accounts.ARK Schools is responsible for ARK'S work in UK Education beyond the Academiesprogramme. ARK Schools is registered in England as a company Iimited by guarantee(company number 5932797' charity number 1137932).ARK (South Africa) Limited, an association incorporated in South Africa under section 21(registration number 2004/003952/10) and registered in England as a charitable companyIimited by guarantee (company number 4957091. charity number 1 108175) runs the charity's .programmes in South Africa.ARK Mozambique (an NGO registered in Mozambique as a branch of the central charity) runsthe charity's programmes in Mozambique.ARK India, which runs the charity's program mes in India,is registered as a Society in India.The charity is also affiliated to Absolute Return for Kids US, Inc. (ARK US) a US philanthropicorganisation which shares ARK'S passion for transformational change in the Iives ofdisadvantaged children. ARK US supports the work of the charity through grants.ARK holds 40-60% of its funds in the ARK Masters Fund (AMF), an investment unit trust (seenote 7). The AMF was set up by supporters of ARK in 2005. It is managed by ARK MastersManagement Limited (AMML), a company registered in the Cayman Islands in which the charityowns the only beneficial share but none of the voting shares, and receives investment advicefrom ARK Masters Advisers Limited (AMAL), a company registered in England (number5443569) which is a wholly owned subsidiary of AMML. In these accounts AMML and AMAL donot form part of the group.Note 16 to the financial statements includes a summary of transactions with each of theseorganisations.

17


19/43

V6YCIUtO Returrl fOr Kids (ARK). pwxm ... .. . - m .w -x.sx . .. . . .. ... . r ..a .> ax . . x . .w-. v.x>. vxvvv..ww v rv ur

Trustees' report for the year ended 31st August 2010Statement of public benefitTrustees have paid due regard to the Charity Commission's public benefit guidance and aresatisfied that the charity complies with Section 4 of the Charities Act 2006. The sections at thebeginning of this trustees' report dealing with objectives and achievements explain in detail theactivities of the charity and the sections of the international community that benefit from ARK'Swork. The charity does not rely to any significant extent on the services of volunteers, with theexception of the contribution of time and skills from the trustees and a small num ber of patronsand advisors.Statem ent of trustees' responsibilities in respect of the financialstatem entsThe trustees are responsible for preparing the Annual Report and the financial statements inaccordance with applicable Iaw and regulation.Company Iaw requires the trustees to prepare fin4ncial statements for each financial year.Under that Iaw the directors have elected to prepare the financial statements in accordance withUnited Kingdom Generally Accepted Accounting Practice (United Kingdom AccountingStandards and applicable Iaw). Under Company Iaw the directors must not approve the financialstatements unless they are satisfied that they give a true and fair view of the state of affairs ofthe group and the company and of the profit or Ioss of the group for that period. ln preparingthose financial statem ents the directors are required to:@ select suitable accounting policies and then apply them consistently'* make judgements and estimates that are reasonable and prudent'. state whether applicable UK Accounting Standards have been fpllowed, subject to anymaterial departure disclosed and explained in the financial statements' and

prepare the financial statements on the going concern basis unless it is inappropriate topresume that the group will continue in business.The trustees are responsible for keeping adequate accounting records that are sufficient toshow and explain the group's and the com pany's transactions and disclose with reasonableaccuracy at any time the financial position of the group and company and enable them to ensurethat the financial statements com ply with the Companies Act 2006. They are also responsiblefor safeguarding the assets of the group and company and ensuring that the assets are properlyapplied in accordance with charity laW; hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.Disclosure of information to the AuditorsThe trustees are not aware of any relevant audit information of which the charity's auditors areunaware. The trustees also confirm that they have taken alIthe steps required of trustees tomake themselves aware of any relevant audit information, and establish that the charity'sauditors are aware of that information.This repod was a proved by the trustees on 18 January 201 1 ,

Ian W aceChairman,Absolute Return for Kids (ARK)


20/43

Independent auditors' reportto the members of Absolute Return for Kids (ARK)

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF ABSOLUTE RETURN FORKIDS (ARK)W e have audited the charitable group and company's financial statements of for the year ended31 August 2010 which comprises the consolidated and charity Statement of Financial Activities,the consolidated and charity Balance Sheet, the consolidated Statement of Cash Flows andrelated notes 1 . to 19. These financial statements have beeh prepared under the accountingpolicies set out therein.This report is made solely to the company's members, as a body, in accordance with Chapter 3of Part 16 of the Companies Act 2006. Our audit work has been undedaken so that we mightstate to the company's members those matters we are required to state to them in an auditors'report and for no other purpose. To the fullest extent permitted by Iaw, we do not accept orassume responsibility to anyone other than the compgny and the company's members as abody, for our audit work, for this repod, or for the opinions we have formed,Respective responsibilities of trustees and auditorsAs in the Statement of Trustees' Responsibilities set out on page 18, the charitable company'strustees' (who are also the directors of ARK for the purposes of company Iaw) are responsiblefor the preparation of the financial statements and the Annual Report and financial statem ents inaccordance with appiicable Iaw and Unted Kingdom Accounting Standards (United KngdomGenerally Accepted accounting Practice) and for being satisfied that the information gives a trueand fair view.Our responsibility is to audit the financial statements in accordance with relevant Iegal andregulatory requirements and Internationa! Standards on Auditing (UK and Ireland).W e report to you our opinion as to whether the financial statements give a true and fair view,have been properly prepared in accordance with United Kingdom Generally AcceptedAccounting Practice, and have been prepared in accordance with the Companies Act 2006. W ealso report to you whether, in our opinion, the information given in the Trustees' Annual Reportis consistent with those financial statements.In addition, we report to you if, in our opinion, the charitable group and company has not keptadequate accounting records, if the charitable group and company's financial statements are notin agreement with the accounting records and returns, if we have not received all the informationand explanations we require for our audit, or if cedain disclosures of trustees' rem unerationspecified by Iaw are not made.We read the Trustees' Annual Report and consider the implications for our report if we becomeaware of any apparent misstatements within it.

19


21/43

Independent auditors' reportto the members of Absolute Return for Kids (ARK)

Basis of audit opinionWe conducted our audit in accordance with lnternational Standards on Auditing (UK and lreland)issued by the Auditing Practices Board. An audit includes examination, on a test basis, ofevidence relevant to the amounts and disclosures in the financial statements. It also includes anassessment of the significant estimates and judgements made by the trustees in the preparationof the financial statements, and of whether the accounting policies are appropriate to thecharitable group and company's circumstances, consistently applied and adequately disclosed.W e planned and pe/ormed our audit so as to obtain aII information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonableassurance as to whether the financial statements are free from material misstatement, whethercaused by fraud or other irregularity or error. In forming 6ur opinion we also evaluated theoverall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:* the financial statements give a true and fair view of the state of affairs of the charitablegroup and company as at 31 August 2010 and of their incoming resources and applicationof resources including their income and expenditure,for the year then ended;* the financial statements have been properly prepared in accordance with United KingdomGenerally Accepted Accounting Practice',* the financial statements have been prepared in accordance with the Companies Act 2006., and* the infrmation given in the Trustees' Annual Report is consistent with the financial

statements.

M t uCMichael-lohn Albed (Senior Statutory Auditor)for and on behalf of Ernst & Young LLP, Statutory Auditor

ts T koondon

20


22/43

Absolute Return for Kids (ARK)

Consolidated Statem ent of Financial ActivitiesFor the year ended 31 August 2010

UnrestidedNote f '000

Fear ended Fear ended3f-Alzg-f 0 3f-Atlg-Ra tdcted Total TotalED* f *00 f *

Incomng Resouceslncoming Resources from generated fundsVoluntary income:Grants and donationsActivities f generating funds:Furdraising events

Investment incomeIncoming Resources from charitable activitiesTo/l lncoln/ng ResourcesRe otlrces ExpendedCt of gererating funds:Charitade ActivifesGrants and projed operating costsGovernance costsToll Ysollrces expendedNet incomnglloutgolng) resourcesbefore otherrecognisedgains and lossesUnrealised gains on investment assetsRealised/unrealised (Iossesl/gains on foreigncurrencytransactionsNet incominglloutgoing) resourcesbefore transfersGrosl tmnsfem between funds m ovementin fundsFunds at 1 Sepfeme rFunds at 31 Augua

234

5,3292,455346

5,86530016175

1 1 , 1942,755362175

19,8742,8791 , 1 32

8,1% 6,356 14,4% 23,885

65& 65& 6

5,438645240

19,0785,4%19,723240

2,59816,236286

6,323 19,078 25,401 19,120

(10,915) 4,7651,019 720(971) (1 ,398)

1 ,807 (12,722)7 1,019

(995 26

1 ,829 (12,696) (10,865 4,08712 (2 5:7) 2,5978 (T68) (10,9) (10,86D 4,087

16,4* 30,277 46,682 42,59515,637 20,178 35,815 46,682

The notes on pages 26 to 42 form an integral part of these financial statements.

21


23/43


Charity Statem ent of Financial ActivitiesFor the year ended 31 August 2010

UnrestidedNotes E'000

Year ended Year ended31 -Atlpf 0 31-Aug-@R tdcted Fotal Fotal

f p* '00 EP*Incom ing ResourcesIncoming Resources from genemted fundsVoluntary income:Grants and donations

Activities for generating funds:Fue raising eventsInvestment income

Toll lncomlhg ResourcesR ource ExpendedCt of generating funds:Charitable ActividesGrants and projed operating costsGoverY nce costsToll resotlrc expendedNet incoming/loutgolng) resourcesbefore otherrecognisedgains andloa esUnrealised gains on investment assetsRealised/unrealised Iosses on foreigncurrency transactionsN4 incoming/toutgoing) resourcesbefore transfersGross trapsfe?s between fundsNd movementin fundsFunds af 1 SeptemberFunds af 31 Augua

5,329

2,455346

5,163

300

10,4922,755346

1 5,5142,8181,03134

8, 130 5,463 13,593 19,363

65 & 65 & 6

6,323 5,612 11 ,935 13,684

5,4%645240

5,6125,4%6,257240

2,59810,800286

1 ,807 (149) 1,6 5,6797 1 ,019 1,019 720

(99-0 (995 (1 ,485)

1,829 (149) 1 ,680 4,914

12 (2,59D 2,5978 (768) 2,448

16,4% 6,8001,680 4,91423,2* 18,29124,885 23,2055,637 9,248

The notes on pages 26 to 42 form an integral pad of these financial statements.

22


24/43


Consolidated Balance SheetAs at 31 August 2010

Fixed assetsTangible fixed assets

Notes9

2010f %00627

2009E'X 088

627 88Current assefsDebtorsCash at bank and in handInvestment in ARK Masters Fund

10 1 7, 1 2 023,01614,57 1

21 ,94531 ,5481 3,552

54,707 67,0451 1 (14,402) (1 7,624)

40,305 49,42140,932 49,509

1 1 (5,1 17) (2,827)35,81 5 46,682

Creditors: amounts falling due within one yearNet current assefsTotal assets Iess current liabilitiesCreditors: amounts falling due after one yearNet assetsFundsUnrestricted funds:General Programme FundCore costs

Restricted fundsToial funds

1 2,5683,0692 0,1 7 8

13,4612,94430,277

12 35,815 46,682

The notes on pags 26 to 42 form an integral pad of these financial statements.

Approved by the Board of Directors on 18th January 201 1 and signed on its behalf by:/-Ian W aceChairmanAbsolute Return for Kids (ARK)

23


25/43


Charity Balance SheetAs at 31 August 2010

Notes9 61 6 2

61 6 2

2010E900 2009f':00Fixed assetsTangible fixed assets

Current assefsDebtorsCash at bank and in handInvestment in ARK Masters Fund

10 1 7,09622, 1321 4, 57 1

21 ,85129,68213,552

53,799 65,085(19,847) (31,178)33,952 33,90734,568 33,909

11 (9,683) (1 0,704)24,885 23,205

Creditors: amounts falling due within one yearNet current assef.sTotal aslets less current liaflfffesCreditors: amounts falling due after one year

Net assetsFundsUnrestricted funds:General Programme FundCore costs

Restricted fundsTotal funds

1 2, 5683,0699,248

13 ,4612,9446,800

24,885 23,205

The notes on pages 26 to 42 form an integral part of these financial statements.

Approved by the Board of Directors on 18th January 2011 and signed on its behalf by:

7.Ian W aceChairmanAbsolute Return for Kids (ARK)

24


26/43


Consolidated Statem ent of Cash Flow sFor the year ended 31 August 2010

Year ended31-Aug-10TotalNotes E X

Year ended31-Au+09TotalE'000

Net cash (outllowl4nflow from operating art/e//lea 18 (7,049) 4,573Retums on investments and serWcfng of nnanceInterest receivedRealised Iosses on foreign currency transactions

& 2(1,122)

1 , 1 32(1 ,398)

.Captal expenditurePurchase of fixed assets (723) (78)(Decreasel/increase in cash (8,532) 4,229

Rtnoncilianon to net funds:Year ended31-Aug-10TotalE'p00

(8,532) 4,22931,M 8 27,31923,016 31 ,548

Year ended31-Aug-09TotalE'000(Decreasel/increase in cashCash at b inning of yearCash at end of year

The notes on pages 26 to 42 form an integral pad of these financial stptements.

25


27/43


Notes to the AccountsFor the year ended 31 August 2010

1. Accounting policiesBasis of preparationThe accounts have been prepared under the historical cost convention with the exception that investments arestated at market value. The accounts are in accordance with applicable accounting standards, the CharitiesSORP 2005 (Accounting and Reporting by Charities), and comply with the Charities (Accounts and Reports)Regulations 2008 issued under the Charities Act 2006.The accounts consolidate Absolute Return for Kids (ARK) and its project implementing subsidiaries, ARK(South Africa) Limited, ARK Schools, ARK Bulgaria, ARK India and ARK Mozambique.AIl intra-group balances, transactions, incomes and expenses are eliminated on consolidation.Fund accountingRestricted funds are those which are to be used for a specified purpose as stipulated by the donor and agreedby the charity.Unrestricted funds are those which the donor gives to the charity without stipulating a specific purpose. Theyare to be used for the fudherance of the objects of the charity in general and may be applied to specific projectsat the discretion of the trustees. W ithin unrestricted funds the charity maintains two separate funds; Core Costs,and the General Programme Fund (GPF). The Core Costs fund covers income and expenditure relating to thecentral administrative costs of the charity. The GPF holds income which must be used to fund charitableprojects (i.e. cannot be used to cover the organisation's core costs) but is not committed to a specific project atthe point of receipt. The relevant income is credited to the GPF and when the Board commits funds to a specificproject the required amount of funding is transferred from the GPF to the relevant restricted fund.AII income and expenditure is shown in the Statement of Financial Activities.Incoming resourcesIncome is accounted for on an accruals basis, and is recognised once the charity has entitlement to the income,is certain that it will be received and is able to measure its monetary value with sufficient reliability. The Charity:s typically able to do this when lt receives credible written notification of a pledge or donation from a donor.Resources expendedLiabilities are recognised as resources expended as soon as there is a Iegal or constructive obligationcommitting the charity to the expenditure.Expenditure is accounted for on an accruals basis, and has beenclassified under headings that aggregate aII costs related to the category.Costs of generating funds are those incurred in seeking donations for the charity and in publicising the work ofthe charity.Resources expended on charitable activities comprise expenditure related to the diredt furtherance of thecharity's objectives. In the accounts of the charity the award of a grant is recorded as charitable expenditureand the unexpended amount is held in the balance sheet as a grant creditor. In the accounts of the group anysuch grant to a subsidiary company is not recognised as expenditure; instead the expenditure in the subsidiaryis recognised as the charitable expenditure when incurred. Any unspent grant is recognised in the groupbalance sheet as a restricted fund.Governance costs are those incurred in connection with the management of the charity's assets, organisationaladministration and compliance with constitutional and statutory requirements.Allocation of overhead and support costsW here costs cannot be directly attributed, they have been allocated to activities in line with the time spent byindividual members of staff on each activity.

26


28/43



1. Accounting policies (continued)Volunteers and donated servicesW ith the exception of trustees, patrons and a small number of advisors who aII provide their services on avoluntary basis, the charity and its subsidiaries do not rely upon volunteers or donated services in deliveringservices. Accordingly, no financial value for such services is recognised in these accounts.Tangible fixed assets and depreciationTangibl fixed assets are stated at cost including any incidental expenses of acquisition.Depreciation is provided on aII tangible fixed assets at rates calculated to write off the cost on a straight-linebasis over their expected useful economic Iife. The rates of depreciation applied to each class of asset are:Computer equipmentMotor vehiclesOffice equipmentLeasehold improvements-

33% er annum (covers both hardware and software)20% per annum25% per annumdepreciated over the term of the Iease

InvestmentsInvestments are stated at market value bid price, as quoted by the investment manager as at the balance sheetdate. The statement of financial activities includes the net gains and Iosses arising on revaluation and disposalsthroughout the year. 'Foreign currenciesCharityTransactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assetsand liabilities denominated in foreign currencies are restated at the rate of exchange ruling at the balance sheetdate.The charity has adopted FRS23 ''The effects of Changes in Foreign Exchange Rates''.GroupThe income and expenditure of overseas subsidiary undertakings are translated into sterling at average rates ofexchange for the relevant period. W here the charity makes a grant to a subsidiary the value of funds actuallyspent by the subsidiary is shown rather than the value of the grant.Assets and Iiabilities denominated in foreign currencies are translated into Sterling at rates of exchangeeffective at the balance sheet date.AII exchange differences are recognised through the Statement of Financial Activities.Operating IeaseOperating lease rentals are charged on a straight Iine basis over the term of the Iease.

27


29/43


Notes to the AccountsF9r the year ended 31 August 2010

2. Grants and donationsGroup2010E'000

Charity2010E'000

Group2009E'000

Charity2009E'000

Contributions to core costsGeneral DonationsGrants & restricted donations1,276 1,276 1,942 1,9424,053 4,053 9,562 9,5625,865 5,163 8,370 4,01011,194 10,492 19,874 15,514

The trustees ensure that the core costs of the charity are covered,Unrestricted donations and gifts includes:1.276m (2009 :1.942m) raised for this purpose.

3. Fundraising eventsThe charity held its annua! Gala dinner in May 2010. No other fundraising events were held during the year. The:2.755m (2009 - E2.818m) income stated in the SOFA under incoming resources from fundraising eventsrelates solely to the Gala Dinner.ln addition to this, the 2010 dinner generated donations of E9.652m (2009 E12.804m) which is included in theSOFA under voluntary income of E10.492m. The total income generated by the event was therefore E12.407m(2009 E15.622m).Of this E8.161m had been received by 31 August 2010 and E4.246m was outstanding. The outstanding am ountfor the 2010 Gala dinner is included in note 10 as follows:Due in Iess than one year

Charity evening pledges :4.246m4. Investment incom e

Investment income arises from interest receivable on funds held in interest bearing bank accounts and on fixedterm deposit. During the year investment income was 20.362m (2009 E1.132m) for the group, and E0.346m(2009 E1.031m) for the charity.

28


30/43



5. Allocation of supportCost ofCharitable generating Governanceactivity funds costsf'000 E '000 E'000

645 631 240 1,516645 631 240 1,516

FotalE'000Head office costsTotalSupport costs relate entirely to ARK'S core staff team and the London office. As well as finance, fundraising,and administrative staff, this includes programme management and monitoring and evaluation costs some or aIIof which should be considered as programme cost rather than administrative cost and charged to programmebudgets.ARK uses this broad definition of core cost and then covers these costs from funds raised and set asidespecifically for this purpose.The table above shows how the resources coverd by the core budget are allocated using the 3 broadcategories required under the Charities SORP 2005, and is based upon an allocation of the time spent byindividual members of staff. Note 6 further apportions the charitable activities element between individualprogrammes undedaken directly by the ARK group.

29


31/43

Absolute eturn for Kids (ARK)


6. Analysis of resources expendedGroup

Activitiesundertakendi- ctlyf '000

Grantfunding ofact/vft/es'000Supportcoslf 000

Fotal20f 0f '000Tota/2009f '000

Charitable expenditureHealth - Africa HIV/AIDSHeaIth - Africa OtherChild Protection - Eastern EuropeChild Protection - R&DEconomic Development - R&Dlntl Education - IndiaI ntI Education - USIntl Education - OtherUK Education

1,7821793631022329317362,472

2,5974,027121

1881295132641332136

932 506,615

4,5674,335535102553571233189,223

9 , 33072968404

5,705

Cost of generating fundsGovernance costsTotal resources expended

5,375 13,703 6454,807 631240

19,723 16,2365,438240

2,59828610,182 13,703 1 516 25 401 19 120= =

Activities undedaken directly represent programmatic work by the central charity and its operating subsidiaries.Grant funding of activities represents programmatic work carried out by non-group entities (including ARKAcademies) and funded by grants from the charity.Support costs relate to ARK'S core stal team and the London office and are covered by the core costs fund.

30


32/43



6. Analysis of resources expended (cont.)Charity

Activities Gm ntundertaken funding ofdi- ctly ' activitiesf *00 f '000SupportcoslE'000

Total2010CDXTotal2009E'000

Charitable expenditureHeaIth - Africa HIV/AIDSHealth - Africa OtherChild Protection - BulgariaChild Protection - RomaniaChild Protection - StrategyChild Protection - Eastern EuropeChild Protection - R&DEconomic Development - R&Dlntl Education - IndiaI ntl Education - USAIntl Education - OtherUK Education

( ,6 9 )4,206(122)1215

2510

17

18812919325132641332136

( ,5 )4,335(103)178

7510255641233187,579

1 ,2533921572616844

9,174

223932867,443

52 5,5604,807

645 6,257 10,800Cost of generating fundsGovernance costsTotal resources expended

Activities undertaken directly represents programmatic work carried out by the central charity and where thischaritable expenditure (as opposed to the cost of generating funds) relates primarily to research anddevelopment of new programmes.

5,4382406312402,598286

4 859 5 560 1 516= = 11,935 13,684

Grant funding of activities represents programmatic work carried out by group and non-group companies andfunded by grants from the central charity.Support costs relate to ARK'S core staff team and the London office and are covered by the core costs fund.The negative Charity grant funding of :6.690m relating to HeaIth - Africa HIV/AIDS represents the reversal ofpreviously committed grants as a result of the transfer of operations in South Africa to Kheth' lmpilo, a new non-governmental organisation from 1st October 2009.

31


33/43



7. Investments2010f '00012,067

2009E'00012,067nvestment in ARK Masters Fund b/f

Additional investment in Fund during the yearI nvestment in ARK Masters Fund clfUnrealised gains on investment assets b/fUnrealised gains on investment assets in yearMarket value at 31 August

12,067 12,0671,485 7631,019 72214,571 13,552

8. Net movement in fundsThis is stated after charging:

Group201 0F000

Charity2010F000

Gp up2009f'000

Charity2009E'000

Operating Iease chargesDepreciationAuditors' remuneration- current year audit- prior year audit- other servicesTotal

533 488 306 18770 49 83 31

18 32 17- 35 17

- - 49 -43 18 116 34

43

32


34/43



9. Fixed assetsGroup Leasehold Equipment,

Improvements fixtures& fittingsE'000 f '000

Motorvehicles

E'000

rotal

E'000Cost:At 1 September 2009AdditionsDisposalsAt 31 August 2010Depreciation:At 1 September 2009DisposalsCharge for the yearAt 31 August 2010Net Book Value:At 31 August 2010At 31 August 2009

- 393 - 393577 92 54 723- (269) (45) (314)577 216 9 802

305 - 305- (182) (18) (200)30 21 19 7030 1 44, 1 1 75

547 72 8 627- - - =- 88 ' - 88

Charity Leasehold Equipment,Improvements f/xttlres& fittingsE'000 '000

Motorvehicles

f '000

Total

E'000Cost:At 1 September 2009AdditionsDisposalsAt 31 August 2010Depreciation:At 1 September 2009DisposalsCharge for the yearAt 31 August 2010Net Book Value:At 31 August 2010At 31 August 2009

. 33

1218677

577 207 - 784

121663

11930 19 - 4930 138 - 168

547 69 - 616- - - =

- 2 - 2


35/43



10. DebtorsGroup2010f '0005,8623,985759212240

Charity2010E'0005,8623,985759212216

Group2009E'0006,9573,9343208293911 02

Charity2009f '0006,9573,93432082923916

Receivable within 1 yearCharity evening pledgesMatch funding pledgesGrant debtorsHMRC - Gift AidInter-company debtorsRelated company debtorsPrepayments and other debtors

Receivable aler 1 yearMatch funding pledgesTotal

11,058 11,034 12,533 12,4399,412 9,41221,945 21,851

6,062 6,06217,120 17,096

11. CreditorsGroup201 0E'00070529412,42640937

Charity2010E'000121818,88435799

Gm up2009f'00033110516,37051767

Charity2009E '000

2030 781

43334

Am ounts falling due within 1 yearTrade CreditorsRelated company creditorsGrant creditorsTax and social security creditorsOther creditors

14,402 19,847 17,624 ------5i7i-fAmounts falling due after 1 yearGrant creditors 5,117 9.683 2,827 10,704

34


36/43



12. Analysis of charitable fundsGroup

1 Sept2009f'O p14,929460

2,482

9,1233,283

Fransfers inlncomlng / (out)E '0* f '0002951 ,928(13)(92)3,2641 ,000

Outgoingf'000(4,379)(4,206)(484)(10)(223)(293)(110)(286)(9,087)

31 Aug2010E'0003,805790

Restricted fundsHeaIth - Africa HIV/AIDSHeaIth - Africa OtherChild Protedion - Eastern EuropeChild Protedion - R&DEconomic Development - R&DIntl Education - IndiaIntl Education - USAlntl Education - OtherUK EducationOther

( ,O3,0683710223921 102865,811

2 , 1 89

9 , 1 1 14,283-- -W ff 6,382

2,944 (448) (1 ,516) 3,06913,461 (2,149) (4,807) 12,56816,405 8,152 (2,597) (6,323) 15,63746,682 14,534 - (25,401) 35,815

2,597 (19,078) 20,178Unrestricted fundsCore fundsGeneral programme funds

2,0896,063

Totallncoming is the amount received as income for each fund during the year, inclbding gains and losses oninvestments and foreign exchange.Transfers are the net value of funds received as unrestricted funds committed in year to specific programmes.Outgoing is the amount spent by the group or granted to partner entities outside the group.

35


37/43



12. Analysis of charitable furids (cont)Charity

1 Sept2009E'* p893

Transfers nIncoming / 40*k''0* E'0002531 ,928(1 3)

(7,040)3,0683710223921102865,811

6,690(4,206)(24)(10)(223)(1 10)(286)(7,4V)

796790

3,379- 4,283

2,597 (5,612) 9,248

31 Aug2010E *00OutgoingEW00

Reestricted fundsHealth - Africa HIV/AIDSHeaIth - Africa OtherChild Protedion - Eastern EuropeChild Protedion - R&DEconomic Development - R3DIntl Education - Indialntl Education - USAIntl Education - OtherUK EducationOtherUnrestricted fundsCore fundsGeneral programme funds

TotalIncoming is the amount received as incom e for each fund during the year, including gains and losses oninvestments and foreign exchange.Transfers are the net value of funds received as unrestricted funds committed in year to specific programmes.

(92)2,624 2,3873,283 1 ,0006,800 5,4632,944 2,08913,461 6,06316,405 8,15223,205 13,615

(448) (1 ,516) 3,069(2,149) (4,807) 12,568(2,597) (6,323) 15,637- (11,935) 24,885

Outgoing is the amount spent by the Charity or committed as grants to other entities including other groupcom panies.

36


38/43



13. Staff costs and numbersGroup2010F000

Charity2010E'000

Group2009E'000

Charity2009E'000

Salaries and wagesSocial security costsPension costs3,686 1,419 7,097 1,441231 136 319 164

1 1 - -3,918 1,556 7,416 1,605The average number of staff employed, analysed by function, was:

Group2010No.

Charity2010No.

Group2009No.

Charity2009No.

Program mesSuppod servicesFundraising

10537 177 7

132 24

303 -68 216 6

377 27The number of staff whose emoluments (excl. employer pension contributions) were in excess of E60,000during the year were as follows:

Group2010No.

Charity2010No.

Group2009No.

Charity2009No.

E160,001 - E170,000E140,001 - E150,000E130,001 - E140,000E90,001 - E100,000E80,001 - E90,000E70,001 - f80,000E60,001 - E70,000Payments to voluntary defined contribution scheme in the year in respect of employees included in thebandings above E60,000 was nil (2009 nil).

21211

1111

2

11

121

37


39/43



14, Directors' remuneration and expensesThe charity did not pay to its trustees any remuneration or reimbursement of expenses during the year.

15. Investments in subsidiaries

Subsidiaw UndedakingARK SchoolsARK (South Africa) LimitedARK Mo


40/43



16- Related party transactions (cont-)Other related partiesARK made new grants of 24.189m to its sister charity ARK Academies (2009 E2.956m). E0.720m for individualgrants to two Academies and E3.469m to cover the core costs of the charity to 31 August 201 1. At the year endthe cumulative balance of grant allocated to ARK Academies was E9.546m (2009 E12.831m), E9.046m of whichis due in Iess than one year (2009 E12.831m). The charity also shares its office with ARK Academies, with eachcharity assuming a reasonable proportion of the costs, while a num ber of the charity's staff are seconded toARK Academ ies at cost.Future Leaders Charitable Trust Limited (Future Leaders) is a charitable company in which ARK, the NationalCollege for Leadership of Schools and Children's Services (the National College) and the Specialist Schoolsand Academies Trust (SSAT) each held one third of the members'v

188. ark (absolute return for kids) annual accounts august 2010

Documents