report of the statutory auditor - world ort | worldwide ... · 9 consolidated statement of...

Report of the statutory auditor

with consolidated financial statements as 31 December 2015 of

World ORT, Geneva

General Information World ORT

Contents

Page:

2 Report of the Trustees

7 Independent Auditors' Report

9 Consolidated Statement of Comprehensive Activities

10 Consolidated Statement of Financial Position

11 Consolidated Cash Flow Statement

12 Consolidated Statement of changes in Charitable Funds

13 Notes to the Consolidated Financial Statements

Company secretary and registered office

Stephen West, 1, Rue De Varembé, CH-1211 Genève 20, Switzerland.

Administration address

126 Albert Street, London, NW1 7NE, United Kingdom.

Auditors Ernst & Young, 59 Route de Chancy, P.O. Box 48, CH-1213 Petit Lancy 1,Switzerland.

Bankers UBS AG, case Postale 2770, CH-1211 Genève 2, Switzerland.

Solicitors Professeur François Bellanger, 8-10 Ruse de Hesse, CP-5715, 1211 Genève 11,Switzerland.

1

Report of the Trustees World ORT

for the year ended 31 December 2015

The Trustees of World ORT present their annual report for the year ended 31 December 2015.

Trustees with specific functions are termed "officers".

Officers

Non-Executive

President Mauricio MerikanskasDeputy President Conrad GilesChairman of the Board of Trustees Jean de GunzburgTreasurer Shelley FagelSecretary Dario Wertheim

Executive

Director General & CEO Shmuel Sisso

The responsibility for the financial statements lies with the Board of Trustees.

Trustees' responsibilities• The Trustees of World ORT are responsible for the preparation of the financial statements for each

financial year which give a true and fair view of the organisation's income and expenditure duringthe year and of its state of affairs at the end of the year. In preparing these financial statementsthey are required to:

• select suitable accounting policies and then apply them consistently;• make judgements and estimates that are reasonable and prudent;• state whether applicable accounting standards and statements of recommended practice have

been followed, subject to any material departures being disclosed and explained in the financialstatements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to assumethat the organisation will continue in business.

• The responsibilities of the Trustees include keeping proper accounting records which disclose, withreasonable accuracy, at any time, the financial position of the organisation. They are alsoresponsible for safeguarding the assets of the organisation and hence for taking reasonable stepsfor the prevention and detection of fraud and other breaches of laws and regulations.

Status of the World ORT groupWorld ORT is a not-for-profit organisation registered with the Registry of Commerce in Geneva anddomiciled in Switzerland. The registered address is:

1, Rue De Varembé, CH-1211 Genève 20, Switzerland.

Mission and objectivesThe mission of World ORT, a non-profit, non-political organisation whose aim is to work for theadvancement of Jewish people through training and education; to provide communities, whereverthey are, with the skills and knowledge necessary to cope with the complexities and uncertaintiesof their environment; to foster economic self-sufficiency, mobility and a sense of identity throughthe use of state-of-the-art technology.ORT International Co-operation, a division created in 1960, implements projects at the request ofinternational agencies, local communities, host governments and private firms. ORT trainingprogrammes are designed to meet local needs and are particularly successful in overcomingeconomic, cultural and linguistic barriers. A key objective of ORT technical assistance is toestablish a self-sustaining, locally based training capacity.

2

Report of the Trustees (continued) World ORT


World ORT's programmesImportant to the success of World ORT is the role of affiliated organisations in fundraising orimplementing programmes. Affiliates are autonomous national organisations forming part of theworldwide ORT network and using the "ORT" name. This network operates exclusively for educationalpurposes.

Fundraising is performed by World ORT and by the affiliate, national organisations in various countries.Fundraisers have a catalogue of World ORT projects to show potential donors. Their success dependson a number of factors including the economic environment and donor's life cycle.

Projects are not commenced until funding has been secured and project activity can be cyclical. WorldORT has managed to smooth these effects by entering into partnerships with national and localgovernments where possible.

Each relationship with a government body is defined by the relevant contract and accounted foraccordingly.

World ORT's Education Department has continued its work of coordinating ORT's global community ofeducators, facilitating the exchange of ideas and practice, and running programmes to fosterexcellence in teaching and learning.

Specifically, the department has run the following activities and programmes over 2015:

The 15th World ORT Wingate Seminar on "Serious Games and Gamification for Learning", hosted atORT House in London for teaching professionals.Four Naomi Prawer Kadar Seminars for Digital Technology in Jewish Education, hosted for localJewish Studies and Hebrew teachers in Argentina, Italy, Russia and the UK."Chibur" — a regional competition involving students aged 12-16 in countries of the former Soviet Unionand Easter Europe researching their family's and community's Jewish heritage, and presenting thesestories through the design of blogs and websites.

"iJET" — a regional competition, supported by teacher training, involving students aged 14-16 fromLatin America researching the lives of key historical Jewish personalities and presenting their findingsvia a range of digital technologies.

The World ORT Future Leaders programme, a nine-month leadership training programme to nurturethe leadership potential of 16-18 year olds from Europe and the former Soviet Union. Seminars wereheld in Strasbourg and Israel, in addition to distance learning and local community work.The World ORT English and Science Summer School, hosted at ORT House in London, for 30 ORTstudents from around the world to benefit from two weeks of intensive English language tuition andscience exploration.World ORT continue further development of the "Music of the Holocaust" website project focusing oneducational components and translation to Russian and Spanish.

In the CIS and Baltic States (the former Soviet Union) World ORT operates formal education in 17schools . In these schools, Technology Centres are established. ORT has created an integrated e-learning system to deliver a unified educational methodology in the region. Teachers from Jewishschools in the region are provided with instruction in the most recent developments in teachinginformation and communications technology.The QUEST initiative (Quality and Universal Education through Science and Technology) is allowingWorld ORT to upgrade and refresh our schools in the CIS and Baltic States. This is facilitated by anespecially generous donation.

World ORT provides adults training in the Jewish communities of the FSU through long-termprogrammes such as VTC - Yesod in St. Petersburg, 16 KesherNet centres in small communities andtraining for women in Kishinev, MoldovaAt the time of preparing the financial statements, there is some political unrest in the Russia - Ukraineregion. World ORT's education activities continue to operate. World ORT's management and Trusteesare monitoring the situation.

3

Report of the Trustees (continued) World ORT


World ORT's programmes (continued)

World ORT activities in Eastern Europe include on-going projects in the ORT-Lauder Jewishschool in Sofia, Bulgaria and the Lauder school in Prague, Czech Republic.World ORT cooperates actively with the ORT school in Rome and the affiliated school in Milan,Italy. These projects are mostly aimed at individualised learning and ICT for teaching.

World ORT International Co-operation projects in 2015 took place in Liberia, Montenegro andMyanmar (run by IC Washington office).The Heftsiba programme sends teachers from Israel to schools in CIS and Baltic States for anacademic year. This programme is sponsored by the Israel Ministry of the Diaspora.

World ORT in Israel, Kadima Mada, has a network of three schools plus 34 affiliated schoolsand has forged partnerships with other organisations. It is hoped that, with the experience ofrunning these schools, more schools can join the network as opportunities arise.

Kadima Mada programmes in 2015, generously supported by donations from manyorganisations and private individuals have included the installation and operation of OpenLearning Spaces in schools in the North and the South of the country; providing digital teachingaids in co-operation with the Israel Ministry of Education and the Ministry for the Development ofthe Negev and the Galilee.You-niversity Centres: Centres of Excellence programme was extended to Haredi and Arabstudents and continues to extend opportunities to young people to enjoy science and technologybased learning that would otherwise not be available to them.

The Kay-Or programme, in co-operation with the Israel Ministry of Education, operates 27schools within hospitals providing educational services to hospitalised children.

The home tutoring programme provides education to sick children at their home.

New programmes in Israel started such as On-Line Bio-research project, "Think Science",Collaborative Problem Solving, Anières Elite Academy, Tablet Computer pilot programme andalso applying "Assessment for Learning" approach with the goal to increase the number ofstudents studying science and technology.

Investment PolicyThe trustees have unlimited powers of investment. The trustees delegate this responsibility tothe investment committee who meet approximately three times per annum.Details of the financial assets can be found in note 11.In summary, the investment policy has three main strands:

1 Ownership of freehold land and an office building, ORT House in London, which hosts theadministrative staff.ORT House comprises most of the value of the fixed assets. Some offices in the property are letto tenants all of whom are non-commercial organisations.The revenue from the letting activity in 2015 was $452,000 (2014: $474,000). The property'srunning costs in the year were $511,000 (2014: $628,000).

2 Investment in State of Israel bonds. About half of the investment in bonds is on behalf of a long-term project in Israel.

3 Placement of funds which are not required in the day-to-day running of World ORT in the handsof an investment manager of international standing. The investment committee gives theinvestment manager the overall asset allocation which is regularly reviewed.

4

Report of the Trustees (continued) World ORTfor the year ended 31 December 2015

Risk ManagementThe trustees examine the major risks that the charity faces each financial year when preparing and updatingthe strategic plan. Details of the financial risks faced by World ORT are in note 16.

Operational risks are identified as (1) the reliance on a small number of country organisations for a largeproportion of the voluntary income, (2) project management, (3) the defined benefit pension scheme.

1 There is a risk of World ORT having a concentration of only a few fundraising countries or organisations.This risk is managed as follows:

1.1 World ORT has direct access to certain major donors in agreement with their local country organisations.

1.2 Encouraging donor country organisations to diversify their fundraising base from major individuals and familytrusts to many individual small donors.

1.3 Helping the operational countries to raise funds. In the first instance they are attracting funds fromgovernment and municipalities. Secondly, they are seeking parental contributions. Thirdly, they are seekingthird-party donations hopefully including major donors. This last point has proved very difficult in countrieswhere there is not yet a culture of giving.

2 Project management risks mainly consist of (1) the deliverable benefit is not defined and agreed by allparties, (2) projects start before adequate funding is secured, (3) the approved spending is exceeded and (4)that the benefit is not delivered within the agreed time. World ORT manages these risks using procedures,plans and reviews.

2.1 In the case of major donors or third party organisations, the tangible or intangible object to be delivered isagreed at the outset either by a project proposal document or a formal agreement.

2.2 Projects are not started until there is certainty as to the source of funds. The Director General and the ChiefFinance Officer authorise the project to start by signing a project initiation document.

2.3 The finance system is designed around project management. Reports are available by project to showprogress in funding, expenditure, the current project balance and the timeline to completion.

2.4 Project managers turn the initial project plan into purchase orders which are then authorised by theirmanager.

2.5 Project managers regularly review their data in the financial planning system and then any revised projecttimeline is authorised by their manager.

2.6 Where agreed with the donors or third-party organisations, a report is submitted to them confirming that theproject has been delivered and to the recipient's satisfaction.

3 The defined benefit pension scheme has a deficit of $707,000 as set out in note 17. The actuaries haveadvised the trustees of a recovery plan which has been put into effect. This commits World ORT to additionalpayments to the pension fund of about $100,000 each year.

The trustees closed the scheme to new members in 1999. It had three active members at the end of 2015.The next retirement is expected in 2018. The last member is due to retire in 2028.

The trustees explored the option to fix the liability with a third party. This mainly involves paying-up the deficitimmediately plus an amount for future risk. At the moment, the trustees believe it is more cost-effective tomanage the risk internally.The trustees appointed a professional trustee in early 2013 with the remit to identify scheme risk andrecommend ways to minimise it. Further considerations of the scheme risk are in note 17.

4 The risk of not letting space in ORT House is managed by:4.1 Maintaining the building to a commercially attractive standard.4.2 A large space is occupied with a conferencing activity which has a diverse set of clients in the public and

charity sectors.4.3 Dividing the rest of the excess space into smaller units to achieve a diversity of tenants.

Rental and licence fee revenue Number of tenants Actual Plan Plan2015 2016 2017

under $50,000 per annum 9 9 9$51,000 - $100,000 per annum 2 2 2 Total number of tenants 11 11 11

5

Report of the Trustees (continued) World ORTfor the year ended 31 December 2015

Results for the yearTotal revenue for the year was US$69.6 million, compared with US$47.5 million in 2014.Revenue for restricted projects was US$63 million for the year (2014: US$38.5 million).

World ORT International Co-operation projects in 2015 took place in Liberia, Myanmar andSri Lanka (run by IC Washington DC, USA office).

There was a net total deficit of $3,357,000 for the year (2014: surplus of $465,000).

Unrestricted activities showed a deficit of $914,000 for the year due to unrestricted revenueand projects' contribution both being below budget. The latter was mainly due to a differentmix of projects to that planned.

The surplus for 2014 was affected by the sale of a property in Paris by ORT France, whichwas no longer used for teaching students.

Restricted projects showed a deficit of $2,443,000 for the year due to timing differences ofproject revenue to expenditure.

Review of financial transactionsLosses on investments were $119,000 compared with a gains on investments of $268,000 in2014.

Property and fixed assetsMovements on fixed assets are set out in note 10 to the financial statements. The Trusteesare of the opinion that the market value of freehold land and buildings is at least equal to thevalue shown in these financial statements.

The financial statements, together with explanatory notes set out on pages 13 to 34, summarisethe transactions of the organisation during the year ended 31 December 2015. The financialstatements comply with International Accounting Standards.

Signed in terms of the Constitution of World ORT by:

Ste • h n WestChief ' 'nancial Officer

6

tAtuA,Peter KlauberChair, Finance Committee

22 May 2016

EYBuilding a betterworking world

Ernst & Young LtdPlace Chauderon 18

Phone +41 58 286 51 11Fax +41 58 286 51 01

P O. Box www.ey com/chCH-1002 Lausanne

To the Board of Trustees of

World ORT, Geneva

Lausanne, 22 May 2016

Report of the statutory auditor on the consolidated financial statements

As statutory auditor, we have audited the accompanying consolidated financial statements of World ORTwhich comprise the consolidated statements of comprehensive activities, consolidated statement offinancial position, consolidated cash flow statement, consolidated statement of changes in charitablefunds and notes, on pages 9 to 34 for the year ended 31 December 2015.

Board of Trustees' responsibility

The Board of Trustees is responsible for the preparation of these consolidated financial statements inaccordance with the International Financial Reporting Standards (IFRS) and the requirements of Swisslaw. This responsibility includes designing, implementing and maintaining an internal control systemrelevant to the preparation of consolidated financial statements that are free from material misstatement,whether due to fraud or error. The Board of Trustees is further responsible for selecting and applyingappropriate accounting policies and making accounting estimates that are reasonable in thecircumstances.

Auditor's responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on ouraudit. We conducted our audit in accordance with Swiss law, Swiss Auditing Standards and InternationalStandards on Auditing. Those standards require that we plan and perform the audit to obtain reasonableassurance whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe consolidated financial statements. The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the consolidated financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers the internalcontrol system relevant to the entity's preparation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity's internal control system. An audit also includes evaluatingthe appropriateness of the accounting policies used and the reasonableness of accounting estimatesmade, as well as evaluating the overall presentation of the consolidated financial statements. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

EYBuilding a betterworking world 2

OpinionIn our opinion, the consolidated financial statements for the year ended 31 December 2015 give a trueand fair view of the financial position, the results of operations and the cash flows in accordance withIFRS and comply with Swiss law.

Report on other legal requirements

We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act(AOA) and independence (article 69b Swiss Civil Code (CC) in relation with article 728 CO) and thatthere are no circumstances incompatible with our independence.

In accordance with article 69b CC in relation with article 728a paragraph 1 item 3 CO and Swiss AuditingStandard 890, we confirm that an internal control system exists, which has been designed for thepreparation of consolidated financial statements according to the instructions of the board of Trustees.

We recommend that the consolidated financial statements submitted to you be approved.

Ernst & Youn Ltd

'hill • • - StöckliLicensed audit expert(Auditor in charge)

Th '-(--7(--7mas MadoeryL ensed audit expert

Consolidated statement of comprehensive activitiesfor the year ended 31 December 2015

World ORT

NoteUnrestricted

fundsÚS$'000

Restrictedfunds

US$'000

2015Total

ÚS$'000

2014Total

ÚS$'000Revenue

Donations and grants 3a 5,881 63,016 68,897 46,901Property 3b 452 452 474

Meetings and other revenue 234 234 121

Total revenue 6,567 63,016 69,583 47,496

Expenditure

Direct project and charitable expenditure:

Grants and project costs 791 65,449 66,240 41,437Delivery costs 2,252 - 2,252 2,561Property costs 3b 511 511 628Other direct costs 581 581 333

Total 4,135 65,449 69,584 44,959

Other expenditure:

Fundraising 1,756 - 1,756 1,019Management and administration 1,560 1,560 1,367

Total 4 3,316 3,316 2,386

Total expenditure 7,451 65,449 72,900 47,345

(Deficit)/surplus before financial items 8 (884) (2,433) (3,317) 151

Financial income

Interest earned 4 - 4 5Investment income 62 13 75 41(Losses)/gains on investments, realisedand unrealised 11 (96) (23) (119) 268

Total (30) (10) (40) 314

(Deficit)/surplus for the year (914) (2,443) (3,357) 465

Other recognised gains and losses

Actuarial gain/(loss) on defined benefit17

pension scheme90 - 90 (200)

Net movement in funds (824) (2,443) (3,267) 265

The notes on pages 13 to 34 form part of these Financial Statements

9

Consolidated statement of financial positionat 31 December 2015

World ORT

NoteASSETS

Non-current assets

2015US$'000

2014

US$'000

Property, fixtures and equipment 10 3,683 3,605

Financial assets 11 11,371 11,305

15,054 14,910

Current assets

Accounts receivable 12 3,424 3,608

Cash and cash equivalents 13 11,959 12,577

15,383 16,185

TOTAL ASSETS 30,437 31,095

CHARITABLE FUNDS AND LIABILITIES

Charitable fundsRestricted funds

Restricted endowment funds 18 (a) 2,624 2,727

Restricted project funds 18 (b) 16,159 18,499

18,783 21,226

Unrestricted funds

General reserves 5,020 5,844

5,020 5,844

Total Charitable funds 23,803 27,070

Non-current liabilities

Employee benefit liability 17 707 709

Current liabilities

Accounts payable 14 5,927 3,316

Total Liabilities 6,634 4,025

TOTAL CHARITABLE FUNDS AND LIABILITIES 30,437 31,095


10

Consolidated Cash Flow statementfor the year ended 31 December 2015

World ORT

Cash flows from operating activities

Receipts from donations and other income

Payments to grant recipients, suppliers and employees

Note2015

US$'000

69,767

(70,051)

2014US$'000

47,660

(48,321)

Net cash flows from operating activities (284) (661)

Cash flows from investing activities

Purchase of tangible fixed assets 10 (170) (79)

Interest received 4 5

Investment income 75 41

Investment added 11 (915) -

Investment capital returned 11 730 160

Net cash flows from investing activities (276) 127

Unrealised foreign exchange loss on cash and cashequivalents

(58) (182)

Net decrease in cash and cash equivalents (618) (716)

Cash and cash equivalents at 1 January 12,577 13,293

Cash and cash equivalents at 31 December 11,959 12,577


11

Consolidated statement of changes in charitable funds World ORTfor the year ended 31 December 2015

Restrictedfunds

Unrestricted

funds

GeneralReservesÚS$'000

Total

funds

ÚS$'000Endowment

ÚS$'000ProjectsÚS$'000

At 1 January 2014 1,356 19,930 5,519 26,805

Surplus/(deficit) for the year 2014 1,531 (1,591) 525 465

Grant from restricted endowment fund (160) 160

Pension actuarial loss - - (200) (200)

At 31 December 2014 2,727 18,499 5,844 27,070

Deficit for the year 2015 (23) (2,420) (914) (3,357)

Grant from restricted endowment fund (80) 80 - -

Pension actuarial gain - 90 90

At 31 December 2015 2,624 16,159 5,020 23,803

An explanation of the pension actuarial (loss)/gain is set out in note 17.

An explanation of the Charitable Funds is set out in note 18.

12

Notes to the Consolidated Financial Statements World ORTat 31 December 2015

1 Authorisation of financial statements and statement of compliance with IFRSs

The consolidated financial statements of World ORT for the year ended 31 December 2015 wereauthorised for issue by the Trustees of World ORT on 22 May 2016. The consolidated financialstatements of World ORT have been prepared in accordance with International Financial ReportingStandards (IFRS) as issued by the International Accounting Standards Board.

2 Accounting policiesa. Basis of preparation

The consolidated financial statements have been prepared on a historical cost basis, except forfinancial instruments that have been measured at fair value. The accounting policies that follow set outthose policies which apply in preparing the financial statements for the year ended 31 December 2015.

The consolidated financial statements have been prepared in US Dollars as this is the functional andpresentational currency of the World ORT group. All values have been rounded to the nearestthousand (US$'000) except when otherwise indicated.

Judgements and key sources of estimation and uncertaintyThe preparation of financial statements requires the Trustees to make judgements, estimates andassumptions that affect the amounts reported for assets and liabilities at the financial position date andthe amounts reported for revenues and expenses during the year. However, the nature of estimationmeans that actual outcomes could differ from those estimates.In the process of applying World ORT's accounting policies, the Trustees have made the followingjudgements, assumptions and estimations which have the most significant effect on the amountsrecognised in the financial statements.

• Legal claimIn October 2007 ORT Israel brought a claim of US$4.7 million against World ORT and ORT Americajointly. See note 20.Trustees have to judge if it is possible to estimate with any certainty the amount, if any, that may needto be paid, whether to make a provision for the future legal cost of the dispute and, with advice fromlegal counsel, whether to make provision in these financial statements for any liability arising out of theclaims.

• Non-financial assetsWorld ORT assesses whether there are any indicators of impairment for all non-financial assets ateach reporting date.When value in use calculations are undertaken Trustees must estimate future cash flows from theasset or cash generating unit and choose a suitable discount rate in order to reflect the present value ofthose cash flows.The current carrying value of non-financial assets of $3.7 million (2014: $3.6 million) is not consideredimpaired.

• Defined benefit pension schemeThe valuation of the scheme assets and liabilities is subject to assumptions about discount rates,expected rates of return on assets, future salary increases, mortality rates and future pensionincreases.World ORT retains the services of qualified actuaries to advise the Trustees when making theseassumptions and the current applied assumptions are in line with prevailing market benchmarks.

• Fair value of financial instrumentsState of Israel bonds are valued at their nominal value as they will be held to maturity. Other financialassets are held in a portfolio. World ORT retains a fund manager to manage the portfolio and submit aperiod-end valuation. The liquid nature of the portfolio's assets leads the manager to apply their marketvalue at the financial position date (also see notes 2i and 2j).

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Accounting policies (continued)

b. JurisdictionsWorld ORT and its subsidiaries are registered in Switzerland, United States of America, Israeland the United Kingdom and are therefore subject to tax law in these jurisdictions respectively.As each entity is exempt from paying tax, no IAS 12 disclosures have to be made.

c. Basis of consolidationThe consolidated financial statements of World ORT for the year ended 31 December 2015include four subsidiary undertakings, consolidated in full, as follows:

Subsidiaries Country Status

World ORT Inc. United States of America Wholly ownedWorld ORT Trust United Kingdom Wholly ownedWorld ORT Kadima Mada Israel Effective control *

Sasa Setton Kay Or Israel Effective control *

* World ORT owns 49% of World ORT Kadima Mada. The remaining 51% of the shares are heldin trusteeship equally by seven independent, unrelated shareholders. The shares weretransferred to the trustees on 04 May 2011. World ORT considers that it has effective controlwith this share structure and benefits from an independent oversight. The World ORT KadimaMada senior staff are appointed by World ORT. The World ORT Kadima Mada budgets arecontrolled and approved by World ORT.

There is no minority interest in World ORT Kadima Mada as there are no permanent assetsand no free reserves. The ownership represented by the shares is non-beneficial.

* World ORT Kadima Mada owns 49% of Sasa Setton Kay Or. The remaining 51% of the sharesare held in trusteeship equally by seven independent, unrelated shareholders. The shares weretransferred to the trustees on 1 July 2014. World ORT Kadima Mada considers that it haseffective control with this share structure and benefits from an independent oversight. The SasaSetton Kay Or senior staff are appointed by World ORT Kadima Mada. The Sasa Setton KayOr budgets are controlled and approved by World ORT Kadima Mada.

There is no minority interest in Sasa Setton Kay Or as there are no permanent assets and nofree reserves. The ownership represented by the shares is non-beneficial.

The consolidated financial statements contain revenue and expenses of schools in the formerSoviet Union and Baltic States. These are schools for which World ORT has effective controlby appointing the school principal and providing additional funds.

All inter-entity transactions, including unrealised gains and losses, have been eliminated.

The financial statements of the subsidiaries are prepared for the same reporting period asWorld ORT, using consistent accounting policies.

World ORT provides support to subsidiaries as follows:World ORT Inc: provision of funding and liquidity support.World ORT Trust: provision of liquidity support.World ORT Kadima Mada: provision of funding and liquidity support

14



d. Foreign currency translationThe functional and presentation currency of the World ORT group is the US Dollar. It is thefunctional currency because most income is due in US Dollars and, in turn, the group matchesas much of its commitments as possible in that currency.World ORT Kadima Mada and Sasa Setton Kay Or have the functional currency of the IsraelShekel because all of its commitments and charitable funds are in that currency.World ORT Trust has the functional currency of the US Dollar because the majority of itscommitments and all of its charitable funds are in that currency.Transactions in non-dollar currencies are initially recorded in the functional currency rate rulingat the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated at thefunctional currency exchange rate ruling at the financial position date. Fixed assets aretranslated at the rate of the initial transaction.

Exchange differences are recognised in profit or loss in the period in which they arise.

e. RevenueRevenue, including donations, is recognised in the period in which World ORT is entitled toreceipt and where the revenue can be reliably measured.Revenue from government bodies is recognised either according to contracts or where WorldORT exercises control of the school.

Unrestricted funds are available for use at the Trustees' discretion in furtherance of theobjectives of World ORT.

Restricted funds are subject to specific restrictions imposed by the donor.

Gifts in kind are included in restricted income at their fair value when received.International Co-operation projects are included in restricted funds and are accounted for underthe same policies.Property income and other revenue is recognised on the accruals basis.

f. ProvisionsProvisions are recognised when World ORT or a subsidiary has a present obligation (legal orconstructive) as a result of a past event and it is probable that an outflow of resourcesembodying economic benefits will be required to settle the obligation and a reliable estimate canbe made of the amount of the obligation.

Property, fixtures and equipmentProperty, fixtures and equipment are stated at cost less accumulated depreciation andaccumulated impairment losses. Such costs include costs directly attributable to making theasset capable of operating as intended.

Depreciation is provided on all tangible fixed assets, other than freehold land, at rates calculatedto write off the cost or valuation, less estimated residual value, based on prices prevailing at thedate of acquisition or revaluation, of each asset evenly over its expected useful life. The ratesapplied are as follows:

Freehold buildings: 2% per annum on costBuilding improvements: 20% per annum on costFixtures and equipment: 20% per annum on costComputer equipment: 33.33% per annum on cost

The carrying values of tangible fixed assets are reviewed for impairment in periods if events orchanges in circumstances indicate carrying values may not be recoverable. If any suchindication exists and where the carrying values exceed the estimated recoverable amounts, theassets are written down to their estimated recoverable amounts.

An asset's recoverable amount is the higher of an asset's fair value less costs to sell and itsvalue in use. In assessing value in use, the estimated future cash flows are discounted to theirpresent value using a pre-tax discount rate that reflects the current market assessments of thetime value of money and the risks specific to the asset.

Expenditure on fixed assets to be used on projects is charged to project costs in profit or loss inthe period in which it is incurred.

g.

15


Accounting policies (continued)h. Leases

Leases as lessorProperty lease revenue is recognised in profit or loss as receipts fall due according to the contractswith the tenants.

Leases as lesseeLeases where the lessor retains substantially all the risks and benefits of ownership of the asset areclassified as operating leases. Operating lease payments are recognised as an expense in profit orloss on a straight line basis over the lease term.

i. Financial assets: initial recognition and measurementFinancial assets within the scope of IAS 39 are classified as financial assets at fair value through theprofit and loss account, loans and receivables, held-to-maturity investments, available-for-salefinancial assets, or as derivatives designated as hedging instruments in an effective hedge, asappropriate.

State of Israel bonds are held-to-maturity investments. The other financial assets are held-for-trading subject to the overall asset-allocation policy set by the World ORT investment committee tothe fund manager.

Financial assets at fair value through the profit and loss accountFinancial assets are initially recognised at fair value plus transaction costs, except in the case offinancial assets recorded at fair value through the profit and loss account. All financial assets at fairvalue through the profit and loss account are traded in active markets and so subsequentmeasurement of fair value of these financial assets is determined with reference to the quotedmarket bid price at the close of business on the financial position date.Any gains or losses are included with gains or loss on investments in the profit and loss account.

The types of financial assets held by the Group are listed in note 11.

k. Cash and cash equivalentsCash and cash equivalents comprise cash at bank and in hand and short-term deposits with anoriginal maturity of three months or less.Their carrying values equate to fair value by reason of their short term nature.

I. ReceivablesReceivables, which have terms according to their individual contracts, are recognised and carried atthe lower of their original invoice amount and their recoverable amount. Where the time value ofmoney is material, receivables are carried at amortised cost. Provision is made when there isobjective evidence that the Group will not be able to recover balances in full. Balances are writtenoff when the probability of recovery is assessed as being remote.

m. Accounts payableAccounts payable are recognised and carried at the original invoiced amount or, in the case ofaccruals, the anticipated amount to be invoiced. Where the time value of money is material,payables are carried at amortised cost.

n. Pensions and other post employment benefitsA subsidiary undertaking operates a defined benefit pension scheme and a defined contributionscheme. Both schemes require contributions to be made to separately administered funds.The defined benefit plan was established on 14 February 1974 and was closed to new memberswith effect from 1 November 1999. The cost of providing benefits under the defined benefit plans isdetermined using the projected unit credit method.Re-measurements, comprising of actuarial gains and losses, the effect of the asset ceiling,excluding net interest (not applicable to the Group) and the return on plan assets (excluding netinterest), are recognised immediately in the statement of financial position with a correspondingdebit or credit to retained earnings through OCI in the period in which they occur. Re-measurementsare not reclassified to profit or loss in subsequent periods.

J•

16



n. Pensions and other post employment benefits (continued)Past service costs are recognised in profit or loss on the earlier of:The date of the plan amendment or curtailment, andThe date that the Group recognises restructuring-related costs

Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.World ORT recognises the following changes in the net defined benefit obligation under OtherExpenditure in consolidated statement of comprehensive activities.Service costs comprising current service costs, past-service costs, gains and losses on curtailmentsand non-routine settlementsNet interest expense or incomeThe defined benefit asset or liability comprises the present value of the defined benefit obligation(using a discount rate based on high quality corporate bonds), less past service costs not yetrecognised and less the fair value of plan assets out of which the obligations are to be settled. Planassets are assets that are held by a long-term employee benefit fund or qualifying insurancepolicies. The value of any plan asset recognised is restricted to the sum of any past service costsnot yet recognised and the present value of any economic benefits available in the form of refundsfrom the plan or reductions in the future contributions to the plan.

The net defined benefit employee liability at 31 December 2015 is $707,000 (2014: $709,000).Further details, including the principal assumptions agreed with the actuary, are given in note 17.The defined contribution scheme was started from 1 April 2001 and is open to all employees whohave been in employment for at least three months. The assets of the scheme are held separatelyfrom those of World ORT. Contributions are charged to the statement of comprehensive activities asthey become payable in accordance with the scheme rules. Differences between contributionspayable in the year and the contributions actually paid are shown as either prepayments or accrualsin the financial position.

o. Ex-gratia benefitsIn the past, World ORT agreed to provide benefits to a group of former employees and benefits tosome persons with links to World ORT. No funding for the post-employment portion of the benefitswas made during that group's employment. Due to the ages of the individuals concerned whichrange from 79 to 96 years old and the amounts involved, the Trustees determined that the relatedemployee liability would not be material. World ORT have therefore decided that no furtherprovisions will be made and that the cost of the benefits will be borne in the year that the benefit ispaid. The cost is currently running at $30,000 per annum (2014: $34,000). As most of the paymentsare in Swiss Francs, the US Dollar value is uncertain. (See note 17).

p. Fund accountingEndowment funds are set aside for future purposes and form part of the restricted funds.

q• ReservesWorld ORT will maintain general funds to an amount equalling at least one year's expenditureexcluding direct project expenditure. The Trustees have established this policy in order to protect theorganisation's charitable programme in the event of a reduction in World ORT's revenue or anunexpected need for additional expenditure.

r. Project fundsProject funds are monies received from donors and partners in advance of the financial needs of theproject (see note 18).Fundraising for projects is performed up to the value of the plan set out in theproiect proposal.Occasionally the circumstances of a project change so that the funds received are in excess of therevised needs of the project. In these cases the policy is to offer the donor(s) an alternative projectto make use of their funds.

17



s. Derecognition of financial assets and liabilitiesFinancial assetsA financial asset is derecognised where the rights to receive cash flows from the asset have expired; orthe rights to receive cash flows from the asset have been transferred together with substantially all therisks and rewards of the asset, or where control of the asset has been transferred.

Financial liabilitiesA financial liability is derecognised when the obligation under the liability is discharged, cancelled orexpires.

t. Derivative financial instrumentsWorld ORT may use, from time-to-time, derivative financial instruments in the form of foreign currencycontracts to hedge its risks associated with foreign currency fluctuations as stated in note 16.Such derivative financial instruments are initially recognised at fair value on the date on which aderivative contract is entered into and subsequently re-measured at fair value and classified at fairvalue through profit and loss.Derivatives are carried as financial assets when the fair value is positive and as financial liabilities whenthe fair value is negative.

Unrealised gains and losses are booked directly in profit or loss as the conditions for hedge accountinghave not been met.

The fair value of forward exchange contracts is calculated by using the forward exchange rates at thefinancial position date for contracts with similar maturity profiles. During year 2015 no derivativefinancial instruments were used (2014: none).

u. New and amended standards and interpretationsThe Group applied for the first time certain standards and amendments, which are effective for annualperiods beginning on or after 1January 2015. The nature and the impact of each new standard andamendment is described below. This list is not exhaustive but only discloses the changes relevant tothe Group.

Amendments to IAS 19 Defined Benefit Plans: Employee ContributionsIAS 19 requires an entity to consider contributions from employees or third parties when accounting fordefined benefit plans. Where the contributions are linked to service, they should be attributed to periodsof service as a negative benefit. These amendments clarify that, if the amount of the contributions isindependent of the number of years of service, an entity is permitted to recognise such contributions asa reduction in the service cost in the period in which the service is rendered, instead of allocating thecontributions to the periods of service. This amendment had no impact on the Group as the amount ofcontributions is linked to the years of service.

18



v. Standards issued but not yet effectiveThe standards and interpretations issued, but not yet effective, up to the date of issuance of theGroup's financial statements are shown below. This list is not exhaustive but only discloses thechanges relevant to the Group. The Group intends to adopt these standards, if applicable, when theybecome effective.IFRS 9 Financial InstrumentsIn July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects allphases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognitionand Measurement and all previous versions of IFRS 9. The standard introduces new requirementsfor classification and measurement, impairment, and hedge accounting. IFRS 9 is effective forannual periods beginning on or after 1January 2018, with early application permitted. Retrospectiveapplication is required, but comparative information is not compulsory. The Group does not expect asignificant impact on its balance sheet or equity on applying the classification and measurementrequirements of IFRS 9. It expects to continue measuring at fair value all financial assets currentlyheld at fair value.

Impairments: IFRS 9 requires the Group to record expected credit losses on all of its debt securities,loans and trade receivables, either on a 12-month or lifetime basis. The Group expects to apply thesimplified approach and record lifetime expected losses on all trade receivables. The Group doesnot expect an impact on its balance sheet or equity on applying the credit losses requirements ofIFRS 9. The Group expects to continue to measure all receivables at fair value.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of InterestsThe amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interestin a joint operation, in which the activity of the joint operation constitutes a business must apply therelevant IFRS 3 principles for business combinations accounting. The amendments also clarify thata previously held interest in a joint operation is not remeasured on the acquisition of an additionalinterest in the same joint operation while joint control is retained. In addition, a scope exclusion hasbeen added to IFRS 11to specify that the amendments do not apply when the parties sharing jointcontrol, including the reporting entity, are under common control of the same ultimate controllingparty.

The amendments apply to both the acquisition of the initial interest in a joint operation and theacquisition of any additional interests in the same joint operation and are prospectively effective forannual periods beginning on or after 1January 2016, with early adoption permitted. Theseamendments are not expected to have any impact to the Group.

19


Accounting policies (continued)v. Standards issued but not yet effective (continued)

IFRS 15 Revenue from Contracts with CustomersIFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenuearising from contracts with customers. Under IFRS 15 revenue is recognised at an amount thatreflects the consideration to which an entity expects to be entitled in exchange for transferring goodsor services to a customer.The new revenue standard will supersede all current revenue recognition requirements under IFRS.Either a full or modified retrospective application is required for annual periods beginning on or after01January 2018 with early adoption permitted. The Group is currently assessing the impact of IFRS15 and plans to adopt the new standard on the required effective date. Furthermore, the Group isconsidering the clarifications issued by the IASB in an exposure draft in July 2015 and will monitorany further developments.

The principles in IFRS 15 provide a more structured approach to measuring and recognisingrevenue.

(a) Sale of GoodsContracts with education authorities in which equipment transfer is the only performance obligationare not expected to have any impact on the Group. The Group expects the revenue recognition tooccur at a point in time when control of the asset is transferred to the customer, generally on deliveryof the goods.

In applying IFRS 15, the Group considered the following:

(i) Variable considerationIf revenue cannot be reliably measured, the Group defers revenue recognition until the uncertainty isresolved. Such provisions give rise to variable consideration under IFRS 15, and will be required tobe estimated at contract inception.

(ii) Warranty obligationsThe Group provides warranties for general repairs and does not provide extended warranties ormaintenance services in its contracts with customers. As such, the Group determines that suchwarranties are assurance-type warranties which will continue to be accounted for under IAS 37Provisions, Contingent Liabilities and Contingent Assets consistent with its current practice.

(b) Rendering of servicesThe Group provides installation services within the provision of educational information technologyequipment. These services are sold either on their own in contracts with the education authoritieswhile others may be bundled together with the sale of equipment to a education authorities. TheGroup has preliminarily assessed that the services are satisfied over time given that the educationestablishment simultaneously receives and consumes the benefits provided by the Group.Consequently, the Group does not expect any significant impact to arise from these servicecontracts.

(c) Equipment received from donorsWhen an entity receives, or expects to receive, non-cash consideration, IFRS 15 requires that thefair value of the non-cash consideration is included in the transaction price. An entity would have tomeasure the fair value of the non-cash consideration in accordance with IFRS 13 Fair ValueMeasurement.

The Group occasionally receives transfers of electronic equipment from donors, which arerecognised at fair value as plant and equipment under IFRIC 18 Transfers of Assets fromCustomers. This is consistent with the requirements of IFRS 15 and the Group does not expectequipment received from donors to have any resultant significant impact.

20


Accounting policies (continued)v. Standards issued but not yet effective (continued)

IAS 16 Property, Plant and Equipment and IAS 38 Intangible AssetsThe amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern ofeconomic benefits that are generated from operating a business (of which the asset is part) ratherthan the economic benefits that are consumed through use of the asset. As a result, a revenue-basedmethod cannot be used to depreciate property, plant and equipment and may only be used in verylimited circumstances to amortise intangible assets. The amendments are effective prospectively forannual periods beginning on or after 01 January 2016, with early adoption permitted. Theseamendments are not expected to have any impact to the Group given that the Group has not used arevenue-based method to depreciate its non-current assets.

Amendments to IAS 27: Equity Method in Separate Financial StatementsThe amendments will allow entities to use the equity method to account for investments insubsidiaries, joint ventures and associates in their separate financial statements. Entities alreadyapplying IFRS and electing to change to the equity method in its separate financial statements willhave to apply that change retrospectively. The amendments are effective for annual periodsbeginning on or after 1 January 2016, with early adoption permitted. This amendment is not expectedto have any impact on the Group.

Annual improvements 2012-2014 cycleAmendments to IAS 1 Disclosure InitiativeThe amendments to IAS 1 Presentation of Financial Statements clarify, rather than significantlychange, existing IAS 1 requirements. The amendments clarify:

• The materiality requirements in IAS 1• That specific line items in the statement of Comprehensive Activities, the statement of Other

Changes in Charitable funds and the statement of Financial Position may be disaggregated.

• That entities have flexibility as to the order in which they present the notes to financial statements.

Furthermore, the amendments clarify the requirements that apply when additional subtotals arepresented in the statement of Comprehensive Activities, the statement of Other Changes inCharitable funds and the statement of Financial Position. These amendments are effective for annualperiods beginning on or after 1 January 2016, with early adoption permitted. These amendments arenot expected to have any impact on the Group.

Amendments to IAS 7: Statement of Cash FlowsThe International Accounting Standards Board (IASB) has published amendments to IAS 7'Statement of Cash Flows' in January 2016. The amendments are intended to clarify IAS 7 to improveinformation provided to users of financial statements about an entity's financing activities. Theamendments in Disclosure Initiative (Amendments to IAS 7) come with the objective that entities shallprovide disclosures that enable users of financial statements to evaluate changes in liabilities arisingfrom financing activities. They are effective for annual periods beginning on or after 1 January 2017,with earlier application being permitted.

IFRS 16: LeasesFRS 16 specifies how an IFRS reporter will recognise, measure, present and disclose leases. Thestandard provides a single lessee accounting model, requiring lessees to recognise assets andliabilities for all leases unless the lease term is 12 months or less or the underlying asset has a lowvalue. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessoraccounting substantially unchanged from its predecessor, IAS 17. The standard applies to annualreporting periods beginning on or after 1 January 2019. This amendment is not expected to have anyimpact on the Group as lessor as the Group conforms to its predecessor IAS17.The Group as lesseehas no material equipment leases over one year which would have an impact from updated IFRS 16.

21

Notes to the Consolidated Financial Statementsat 31 December 2015

World ORT

3a Donations and grants

2015ÚS$'000

2014ÚS$'000

Donations restricted to specific projects 62,785 38,179

International Co-operation grants 231 314

63,016 38,493

Unrestricted donations 5,881 8,408

68,897 46,901

3b Property

Rents and tenant recharges

Property costs

4 Other Expenditure (Fundraising and Administration)

Personnel

less: projects' contribution

Personnel costs (net)

Defined contribution pension - benefits expense

Defined benefit pension - contributions and recovery plan

Defined benefit pension - service cost and interest

Office

Travel and meetings

Premises and insurance

Operating lease rentals

Audit and consultancy fees

Legal fees

Other professional fees

Depreciation

Currency exchange losses

2015US$'000

452

(511)

2014US$'000

474

(628)

(59) (154)

2015ÚS$'000

2,450

(627)

2014ÚS$'000

2,292

(1,034)

1,823

200

246

46

70

283

160

36

176

52

153

19

52

1,258

96

209

(155)

95

219

230

26

98

146

61

20

83

3,316 2,386

22


World ORT

5 Employee benefit expenses by activity

YearProjectsUS$'000

DeliveryUS$'000

PropertyUS$'000

Fund-raising

US$'000

Admin-istrationUS$'000

5a Salariesless: projects' contribution

2015 9,641 896 120 1,752(613)

535(14)

Net salary cost 2015 9,641 896 120 1,139 521

Salariesless: projects' contribution

2014 3,599 1,446 157-

1,532(1,002)

516(32)

Net salary cost 2014 3,599 1,446 157 530 484

Fund- Admin-Projects Delivery Property raising istration

Year US$'000 US$'000 US$'000 US$'000 US$'000

5b Social security costs 2015 576 104 10 112 512014 665 297 16 110 55

Fund- Admin-Projects Delivery Property raising istration

Year US$'000 US$'000 US$'000 US$'000 US$'0005c Pension costs 2015

201453 5

2 25119 37368 82

TotalUS$'00012,944(627)

12,317

(

The cost of the defined benefit pension scheme is included in administration costs.

6 Employees by activity

Average full-time equivalentemployees

YearProjects Delivery Property

FTE FTE FTE

Fund- Admin-raising istration

FTE FTE2015 535 51 3 9 72014 72 52 4 10 7

The 2014 employees in projects and delivery activities are changed tooperational locations. The 2015 large increase in employees in projectfor the three new Israel schools and the Israel programme for tutoring

7 Depreciation, leasing and foreign exchange differences includedof comprehensive activities

7a Buildings and equipmentexpenditure overseas notcapitalised

7b Depreciation

7c Leases

7d Foreign exchangedifferences (net)

7,2501,0346,216

TotalUS$'000

8531,143

TotalUS$'000

550177

TotalFTE604145

include Group employees ins is due to additional teacherssick children at home.

in the consolidated statement

Year

2015

2014

Year2015

2014

Year20152014

Year

ProjectsUS$'000

DeliveryUS$'000

PropertyUS$'000

Fund-raising

US$'000


842

1,577

ProjectsUS$'000

DeliveryUS$'000

PropertyUS$'000

Fund-raising

US$'000


35

16

38

40

1

1

18

19

ProjectsUS$'000

DeliveryUS$'000

PropertyUS$'000

Fund-raising

US$'000


143321

297148

1912

1714

ProjectsUS$'000

DeliveryUS$'000

PropertyUS$'000

Fund-raising

US$'000


2015

2014

228

131

(44) (24)

5

(3) 55

(1) 84

23

TotalUS$'000

842

1,577

TotalUS$'000

92

76

TotalUS$'000

476495

TotalUS$'000

212

219


World ORT

8 (Deficit)/surplus before financial itemsThis is stated after charging:

2015US$'000

2014US$'000

Depreciation of owned fixed assets 92 76 *Operating lease expenses:

Buildings 300 335Cars and equipment 176 160

Auditor's remuneration - audit services 204 135The audit fees for 2014 were reduced by over-accruals for pension fund audits in prior years.

9 Key personnel compensationKey management personnel are those people having authority andresponsibility for planning, directing and controlling the activities of World 2015 2014ORT, directly or indirectly. US$'000 ÚS$'000Short term employment benefits 700 714Other long term pension costs 78 23

778 737

10 Property, fixtures and equipment

Cost

Freehold

land and

buildings

US$'000

Building

improve-

ments

US$'000

Fixtures,

equipment

& computers

US$'000Total

US$'000At 1 January 2014 3,542 39 710 4,291

Additions 79 79 *Disposals - (254) (254) *

At 1 January 2015 3,542 39 535 4,116 *Additions - 170 170Disposals - (8) (8)

At 31 December 2015 3,542 39 697 4,278DepreciationAt 1 January 2014 92 18 579 689

Charge for year 7 8 61 76 *Disposals - (254) (254) *

At 1 January 2015 99 26 386 511 *Charge for year 7 8 77 92Disposals (8) (8)

At 31 December 2015 106 34 455 595

Net book value

At 31 December 2014 3,443 13 149 3,605

At 31 December 2015 3,436 5 242 3,683

Included in the above at a nominal value of US$8 are 8 school buildings occupied by affiliatedorganisations (2014 US$8 for 8 schools).

* The 2014 figures for asset additions, disposals and depreciation are corrections. This results in an increaseof $40,000 in both asset cost and asset depreciation. The net book value is unaffected.

24


World ORT

11 Financial assets at fair value through the Statement of Comprehensive Activities2015

ÚS$'0002014

ÚS$'000

Net loss on revaluation (91) (948)

Realised (losses)/gains on sales (154) 1,216

Currency exchange differences 126 -

(Losses)/gains on investments, realised and unrealised (119) 268

Fair value at 1 January 11,305 11,195

Additions during the year (mainly Israeli bonds re-invested) 915 -

Withdrawal of capital (mainly Israeli bonds maturing) (730) (160)

Currency exchange differences 2

Fair value at 31 December 11,371 11,305

2015 2014Financial assets which are held at fair value comprise the following: US$'000 US$'000

Investment cash and deposits 33 393

State of Israel bonds 1,613 1,348

Fixed income funds 3,654 3,493

Listed equities 4,408 4,871

Options, swaps and structured assets

Alternative assets - mainly derivative funds 1,556 1,087

Gold funds 75 38

Miscellaneous - mainly cross-tracking ETFs 32 75

Fair value at 31 December 11,371 11,305

Within Within After 2015 2014Financial assets maturity profile 2016 2017 2017 Total Total

$'000 $'000 $'000 $'000 $'000

State of Israel bonds 113 1,500 1,613 1,348

Other financial assets 9,758 9,758 9,957

Fair value at 31 December 9,871 0 1,500 11,371 11,305

The carrying value and fair value of financial assets and liabilities are the same.

25


World ORT

12 Accounts receivable 2015ÚS$'000

2014ÚS$'000

Revenue accrued 781 1,441Trade receivables 702 362Due from affiliated ORT organisations 987 1,408Prepayments 343 271Other debtors 611 126

3,424 3,608

Accrued income is denominated in the following currencies: 2015 2014ÚS$'000 ÚS$'000

US Dollar 874Israel shekel 781 567

781 1,441

Trade receivables are denominated in the following currencies: 2015 2014ÚS$'000 ÚS$'000

US Dollar 123 198Israel shekel 374 102Sterling 205 62

702 362

The US Dollar and Sterling accrued income and trade receivables are non-interest bearing. There is nosignificant concentration of risk. The Sterling trade receivables balance consists mainly of rent due by tenantsoccupying space excess to World ORT's requirements. The rent is due with 7 days. The credit quality of thetenant is established in advance of the tenancy agreement.

The accrued income and trade receivables denominated in the Israel Shekel are non-interest bearing advancesfor projects and are due within 120 days. The other parties are mainly Israel government ministries whose creditquality is well established.

Maturity profileThe table below summarises the maturity profile of World ORT's accounts receivable at 31 December 2015 and2014 based on contractual undiscounted receipts.

Neither pastdue nor Less than 3 to 12 More than Total

Year ended 31 December 2015 impaired 3 months months 12 months 2015$'000 $'000 $'000 $'000 $'000

Accrued income 781 - - 781Trade receivables 533 45 124 702Due from affiliated ORT organisations 987 - - 987Prepayments 343 343Other debtors 611 - 611

Neither pastdue nor Less than 3 to 12 More than Total

Year ended 31 December 2014 impaired 3 months months 12 months 2014$'000 8'000 $'000 $'000 $'000

Accrued income 1,441 - - 1,441

Trade receivables 345 11 6 362Due from affiliated ORT organisations 1,408 - - 1,408Prepayments 271 - 271Other debtors 126 126

26


12 Accounts receivable (continued) 2015ÚS$'000

Due from affiliated ORT organisations are denominated in the following currencies:

2014ÚS$'000

Swiss Franc 632 763Sterling 155 64US Dollar 150 537Euro 50 44

987 1,408

Amounts due from affiliated ORT organisations are non-interest bearing and are due within 30 to 180days. In the amounts due from affiliated ORT organisations there was $632,000 (2014 $763,000) duefrom one organisation which was paid within 50 days of the year-end.

13 Cash and cash equivalents 2015 2014ÚS$'000 ÚS$'000

Cash at bank and in hand 3,327 3,945

Short term deposits 8,632 8,632

11,959 12,577

2015 2014Denominated in the following currencies: US$'000 US$'000US Dollar 7,697 10,217British Pound 621 1,322Israel Shekel 3,319 572Euro 182 369Russian Rouble 40 65Swiss Franc 91 26Ukraine Hryvna 9 6

11,959 12,577

2015 2014Held at the following locations: US$'000 US$'000

Management and administrative bank accounts 8,458 11,375Project bank accounts 3,501 1,202

11,959 12,577Cash restrictionsThere were bank guarantees required by contracts for certain projects in 2015 2014Israel which temporally reduced the cash available for other activities: US$'000 US$'000Bank guarantees within project bank accounts 263 308

Cash at bank earns interest at floating rates based on daily deposit rates. Short term deposits are madefor varying periods of between one day and three months depending on World ORT's immediate cashrequirements.

World ORT only deposits cash surpluses with major banks of high quality credit standing.

2015 201414 Accounts payable US$'000 US$'000

Payables 1,973 1,076Other creditors 870 208Taxation and social security 365 160Accruals 1,099 742Due to affiliated ORT organisations 1,620 1,130

5,927 3,316

27


15 Leasing - obligations

Leases with World ORT as lessor BuildingsAnnual amounts due under non-cancellable occupancy 2015 2014

leases with tenants are as follows: US$'000 US$'000

Tenant leases which expire: within one year 162 275

in two to five years 177 354

339 629

Leases with World ORT as lessee Buildings EquipmentAnnual amounts due under non-cancellable operating 2015 2014 2015 2014

leases are as follows: US$'000 US$'000 US$'000 US$'000

Operating leases which expire: within one year 218 50 186 69

in two to five years 36 1 15 50

254 51 201 119

16 Financial instrumentsFinancial risk management objectives and policiesWorld ORT's principal financial instruments, other than derivatives, comprise cash, short-term deposits,bonds and equity investments. The main purpose of these financial instruments is to preserve valuebetween the time funds were raised and their use in World ORT's operations. World ORT also hasvarious other financial instruments such as accounts receivable and accounts payable which arise directlyfrom its operations.

World ORT use derivative financial instruments in the form of foreign currency contracts but these do notform a hedge as defined by the International Accounting Standards Board.

Fair values

The fair value of financial assets through the profit and loss is determined with reference to quoted(adjusted) prices in active markets for identical assets, and so World ORT does not use a fair valuehierarchy in disclosing the fair value of these financial instrumentsThe main risks arising from World ORT's financial instruments are interest rate risk, equity market riskand foreign currency risk.

Interest rate risk

World ORT's exposure to market risk for changes in interest rates relates primarily to the money it keepsas cash, short-term deposits and bonds. It is World ORT's policy not to enter into derivative financialinstruments for this risk.The bond and fixed income funds investments are principally exposed to fair value interest rate risk asthey mainly have a fixed interest rate and are held to maturity. Cash and other short term depositinvestments are exposed to cash flow interest rate risk as they have a floating rate of interest. The equityinvestments are not directly exposed to interest rate risk.Sensitivity to cash flow interest rate changes:The currencies predominantly held by World ORT are the US Dollar, Israel Shekel and the British Pound(see note 13). Therefore the significant sensitivity to interest rate changes are to changes in the interestrates for those currencies.

Change in interest rate by Effect on loss for the year2015 2014

US$'000 ÚS$'000Change in USD interest rates 1% 90 104Change in ILS interest rates 1% 19 9Change in GBP interest rates 1% 10 10

N.B. An increase in interest rates improves the World ORT financial result.

Liquidity risk

Liquidity risk largely consists of supplier contracts for projects, mainly equipping schools. No contracts forthe supply of equipment for a project are signed until the funds for that project are in place. World ORTmanagement send explicit authority to local managers to start a project and enter into contracts for it.

28


16 Financial instruments (continued)

Equity market risk

World ORT has exposure to market risk for changes in equity values when investing its endowment andother funds. World ORT seeks to manage this risk by appointing an Investment committee. This committeehas in turn appointed professional fund managers to manage the funds in a diversified, actively managedportfolio. The Investment committee has given the fund managers a broad guideline of how the portfolioshould be allocated. The Investment committee meets with the fund managers three times a year to reviewthe allocation policy and the performance of the portfolio.

Foreign currency risk

As a result of the global nature of its operations, World ORT can be significantly affected by the movementsbetween the revenue currencies relative to the local currencies of the projects . This is managed mainly bystating the spending budget of a project in the currency of the source of the funds. Where this is not possiblethe Investment committee will recommend whether to hedge the risk. The forward currency contract must bein the same currency as the hedged item. It is World ORT's policy not to enter into forward contracts until afirm commitment is in place.

The sensitivity to reasonably possible changes in the Israel Shekel and British Pound exchange rate with allother variables held constant, of World ORT's statement of comprehensive activities is demonstrated below.

Change in

exchange rate

to US Dollar

Effect on

loss for the year Effect on funds2015 2014 2015 2014

US$'000 US$'000 US$'000 US$'000Israel Shekel 5% 164 140 164 29

-5% (181) (155) (164) (29)British Pounds 5% 68 111 (31) (66)

-5% (75) (123) 31 66Forward currency exchange contractsAt 31 December 2015 there were no forward currency exchange contracts (at 31 December 2014 - none).

Credit risk

World ORT manages credit risk mainly through the Investment committee. This committee meets severaltimes per year.The Investment committee reviews the credit risk with banks and financial institutions. The committeeensures reserves are in a diversified portfolio of institutions in an appropriate range of currencies each withadequate resources to ensure the stability of their financial market.The Finance committee reviews the credit risk with non-financial counterparties such as affiliates. TheTrustees of World ORT Trust review the credit risk of tenants. Where they perceive any impairment incounterparty ability to pay then they ensure adequate provision has been made.It is the opinion of these committees that there is no significant concentration of credit risk within World ORT.The maximum credit risk exposure relating to financial assets is represented by the carrying value at thefinancial position date.

17 Employee post-employment benefitsEx-gratia benefits provision - unfunded benefitsIn the past, World ORT agreed to provide benefits to a group of former employees and benefits to somepersons with links to World ORT. No funding for the post-employment portion of the benefits was madeduring that group's employment. Due to the ages of the individuals concerned which range from 79 to 96years old and the amounts involved, the Trustees determined that the related employee liability would not bematerial. World ORT have therefore decided that no further provisions will be made and that the cost of thebenefits will be borne in the year that the benefit is paid. The cost is currently running at $30,000 per annum(2014: $34,000). As most of the payments are in Swiss Francs, the US Dollar value is uncertain.

Movement in provision: 2015 2014US$'000 US$'000

At January (34)Utilisation 34At 31 December

29


17 Employee post-employment benefits

World ORT has a subsidiary which operates the following pension plans:The Defined Contribution Pension schemeThe assets of the defined contribution pension scheme are held separately from those of World ORT in anindependently administered fund. World ORT contributes up to 11% (mainly 5%). The cost to World ORT ofcontributions to the scheme was $178,000 (2014: $88,000).The reason for the year-on-year increase was that there was an increase in take-up of scheme membershipduring the year and some staff opted for salary sacrifice into their pension fund accounts.

Unpaid contributions at the end of the year were $5,000, paid in January 2016 (2014: $9,000 paid in January2015).

Employee benefits - The Defined Benefit Pension planThis scheme is known as the ORT Retirement Benefit Plan (ORBP) which is based in Great Britain andadministered by a third party. The assets of the scheme are held separately to those of World ORT. The planassets are 100% invested in a with-profit fund.

The plan closed to new entrants in 1999. The plan has an independent professional trustee.

Periodically, the trustee reviews the level of funding in the ORBP as required by UK pension law. Such areview includes the asset-liability matching strategy and investmentrisk management policy. The board of trustees adjusts its contribution based on the results of the triennialactuarial review.Since the pension liability is adjusted to consumer price index, the pension plan is exposed to UK's inflation,interest rate risks and changes in the life expectancy for pensioners. As the plan assets include significantinvestments in corporate bonds and quoted equity shares of entities, World ORT is also exposed to marketrisk arising in the corporate bonds and equity sectors.

A full actuarial valuation was carried out at 1 January 2012 and the process has started for the full valuationat 1 January 2015. A calculation was done to 31 December 2015 by a qualified actuary, independent of thescheme's sponsoring employer. The major assumptions used by the actuary are shown below.World ORT currently pays contributions at the rate of 38.8% of pensionable pay (2014: 38.8%). Contributorymembers pay their employee contributions at the rate of 7% of pensionable salary. The employer makes aspecial payment for the contributions of the non-contributory members at the same rate.In 2015 World ORT made an added contribution of $134,000.

The additional contribution will be reviewed as part of the valuation of 1 January 2015.

Membership of the defined benefit pension plan2015 2014

Active members at 31 December 3 3

Preserved and deferred members at 31 December 39 42

Of the active members, the average time to the plan's normal retirement age of 65 is 5.5 years with theyoungest having 12.5 years to serve.

Based on the existing schedule of contributions, World ORT expects to contribute US$130,000 plus 38.8% oftotal pensionable salaries to The ORT Retirement Benefit Plan in the next accounting year.

The projected amounts recognised in the Consolidated Statement of Comprehensive Activities are:

2015ÚS$'000

2016ÚS$'000

Current service cost (25) (21)Interest expense (on present value of obligation) (72) (79)Interest Income (on fair value of plan assets) 51 55Past service cost 0 (130)

Total cost (46) (175)

30


World ORT

17 Employee benefits - The Defined Benefit Pension plan (continued)

2015 changes in the defined benefit obligation and the fair value of plan assets

$'000

Pension cost charge to ActivitiesRe-measurement losses included in

Expenen

ContributionsOther Comprehensive Income

Pastservice

Return on planassets

(excludingamounts

Actuarialchanges

arising from

Actuarialchanges

arising from byCurrent cost sub-total included in net changes in changes in ce sub-total plan

1 Jan service (including Net included in interest demographic financial adjustme included by partici- Benefit Exch 31 Dec2016 cost curtailments) interest Activities expense) assumptions assumptions nts in OCI employer pants payments adjust 2016

Defined benefit obligation (2,241) (25) (246) (72) (343) 17 144 8 169 (8) 191 101 (2,131)Fair value of plan assets 1,532 51 51 (79) (79) 171 8 (191) (68) 1,424

Benefit liability (709) (292) (79) 17 144 8 90 171 33 (707)

2014 changes in the defined benefit obligation and the fair value of plan assets

included in Other ComprehensivePension cost charge to Activities Income Contributions

s'000Past

service

Return on planassets

(excludingamounts

Actuarialchanges

arising from

Actuarialchanges

arising from Experien byCurrent cost sub-total included in net changes in changes in ce sub-total plan

1 Jan service (including Net included in interest demographic financial adjustme included by partici- Benefit Each 31 Dec2014 cost curtailments) interest Activities expense) assumptions assumptions nts In OCI employer pants payments adjust 2014

Defined benefit obligation (2,241) (20) - (93) (113) 102 (252) (184) (334) (7) 454 0 (2,241)Fair value of plan assets 1,577 68 68 134 0 134 209 7 (454) (9) 1,532

Benefit liability (664) (45) 134 102 (252) (184) (200) 209 (9) (709)

31


World ORT


Fair value of plan assets - structure of assetsThe assets of the plan are held in the Aviva Life & Pensions UK Limited as follows:

Deferred Allocation Funding with-profits policy

Value of Guaranteed Annuity Options

During 2015 all the assets of the plan were held in the Aviva Life & Pensions UKLimited Mutual Sun Fund (PMF)

31 Dec2015

US$'000

1,346

78

95%

5%

100%

31 Dec

1,424

31 DecThe asset allocation of the fund was as follows: 2015 2014

UK shares 11 13

International shares 17 8

Property 6 5

UK fixed interest 28 13

Corporate bonds 35 55

International bonds 3 4

Cash and cash alternatives 0 2100 100

Principal assumptionsPrincipal assumptions used in determining pension benefit obligations for the defined benefit pension planFinancial assumptions 2015 2014

Discount rate 3.7% 3.4%Inflation assumption (Retail Price Index in Britain) 3.0% 3.2%Inflation assumption (Consumer Price Index in Britain) 2.2% 2.4%Salary growth 1.2% 1.2%

Pension revaluation in deferment (CPI, maximum 5%) 2.2% 2.4%

Pension increase in payment (CPI, maximum 5%) 2.2% 2.4%

Demographic assumptionsAssumed life expectancy in years, on retirement at 65: 2015 2014

Male currently aged 65 23.4 23.8

Female currently aged 65 25.7 25.8

Male currently aged 45 25.4 26.1

Female currently aged 45 27.9 28.2

Sensitivity to assumptionsThe results of the IAS19 valuation are sensitive to the assumptions adopted.The broad impact on a scheme's liabilities of changes to the principal assumptions (all other things beingequal) is set out below:

AssumptionImpact on

scheme liabilities

Change inliabilities

Discount rate

Rate of inflationRate of salary growth

Life expectancy

Decrease by 0.5%

Increase by 0.5%Increase by 0.5%

Increase by 1 year

Increase by 8%

Increase by 3%Increase by 1%

Increase by 2%

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Risks for the defined benefit pension planThe board of trustees is responsible for the administration of the plan. They appointed a professional to be atrustee of the plan in 2013. Part of the professional trustee's remit is to identify risks and recommend ways tominimise them. He will address the legislative risk of complying with the large body of legislation surroundingdefined benefit plans.

The plan assets have been taken at their fair value and the defined benefit obligation is based on marketrelated assumptions. The defined benefit obligation is calculated according to the requirements ofInternational Accounting Standard (IAS) 19, using assumptions determined by the Trustees, having takenactuarial advice.

Projection risk - The provisions of IAS1 9 do not stipulate that a full valuation is needed at each financial yearend. Instead, it is permissible to update previous valuation results (providing that the previous valuation usedhas an effective date within the last three years). As a result, we have projected the results of the lastactuarial valuation as at 1 January 2012 forward to 31 December 2015. By its nature a projection of theliabilities involves some degree of estimation. At the time of preparation of these figures we are not aware ofany reason why the true figures would differ significantly from the enclosed projections. However, we cannotbe definitive about the degree of accuracy of the projected valuation figures, as their accuracy can only bechecked with the results of a full valuation.

Investment / Mismatch risk — The discount rate used to calculate the defined benefit obligation under IAS1 9should reflect the yield available on a high quality (AA or similar) corporate bond of equivalent currency andterm to the liabilities at the date of the valuation. The actual investment strategy adopted by the trustees is notto be fully invested in corporate bonds, which means movements in the Scheme's assets may well notcorrespond to changes in the value of the IAS1 9 liabilities over time leading to volatility in the IAS1 9 resultsfrom year to year.

Longevity risk — If pensions are not bought out and members live longer than expected, the benefits will bepayable for longer than allowed for in the calculation of the liabilities leading to an experience loss on the planliabilities (all other things being equal).Annuity risk - Purchase of an annuity for an individual is an investment decision made at the choice of thetrustees to remove both the investment and mortality risks held by their scheme. The annuity remains anasset of the scheme whilst held in the name of the trustees, but its cost could be greater than allowed for inthe IAS19 liabilities.

Benefit risk - In calculating the liabilities the company must make a number of assumptions about the waythat the Scheme's benefits will increase over time e.g. pensionable salary growth and inflation. If the increasein benefits does not follow the assumptions made, there is a risk that the liabilities will increase by more thanexpected leading to an experience loss on the plan liabilities.

Solvency risk — The IAS19 liabilities are calculated on an ongoing basis, assuming that the companyremains solvent and the Scheme remains in existence. If the Scheme were to enter winding up then theScheme's benefits may have to be bought out with an insurance company and the cost is likely to be higherthan the IAS19 liabilities.

Term to RetirementThis table shows an analysis by term of retirement of Scheme membership and past service liability as at thedate of the last actuarial valuation, 1 January 2015.

ProportionNo of

membersof

liabilities

0 - 5 years 24 53.6%

6-1-years 6 21.5%

11-15 years 6 15.3%

16-20 years 2 2.6%

21 - 25 years 4 7.0%

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18 Charitable funds

a. Restricted endowment fundsThese funds are tied to particular purposes, which arise because of restrictions on their use required bythe donors at the time of receipt. In 2014, following the sale of a property in Paris, a $1.5 millionendowment fund was created to fund, at trustees discretion, future ad-hoc programs to foster bestpractice in education.

b. Restricted project fundsRestricted project funds are advances by donors and Board allocations to fund specific projects or acollection of projects. The balance represents the unspent portion at the year-end. The advanced fundswill be spent over the remaining lives of the projects; periods normally planned at up to four years. Arestricted project is undertaken only when the planned funding requirement has been received orpledged.

19 Related party disclosureDuring the year certain Trustees donated $542,323 (2014: $475,600) to World ORT. The uses of thesedonations were specified by the donors.

20 ContingenciesIn October 2007 ORT Israel brought a claim of US$4.7 million against World ORT and ORT Americajointly. One cause of the action is in respect of subvention which ORT Israel claim they are entitled toreceive. The action also involves other issues. It is not possible to estimate with certainty the amount, ifany, that may need to be paid. However, the Trustees are satisfied, on the basis of advice from legalcounsel, that adequate provision has been made in these financial statements for any liability arising outof the claims. The Trustees cannot make an estimate of the likely timing of the legal process.

The costs of the dispute to World ORT incurred to 31 December 2015 are charged in the statement ofcomprehensive activities. A provision for the future legal cost of the dispute has not been made becausesince the year-end no material legal costs have been incurred and it is not possible to estimate theextent of future legal costs.

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