2020-08-31-accounts

Company limited by guarantee registration number: 04589451 Charity registration number: 1095322

Annual Report and Accounts

For the year ended 31 August 2020

Contents

Legal reference and administrative details .................................................................................. 1 Trustees’ Report including Strategic Report .............................................................................. 2 Statement of Trustees’ Responsibilities ..................................................................................... 13 Independent auditor’s report ..................................................................................................... 14 Consolidated Statement of Financial Activities (including income and expenditure account) ..................................................................................................................................................... 17 Charity Statement of Financial Activities (including income and expenditure account) ....... 18 Consolidated Balance Sheet ....................................................................................................... 19 Charity Balance Sheet ................................................................................................................ 20 Consolidated Statement of Cash Flows ...................................................................................... 21 Notes to the Accounts ................................................................................................................ 23 Group ......................................................................................................................................... 29 Charity ....................................................................................................................................... 29

Legal reference and administrative details

Absolute Return for Kids (ARK) (referred to throughout as ‘Ark’, or ‘the charity’) is a company limited by guarantee, registered in England and Wales, number 04589451, and is a UK registered charity, number 1095322.

Directors

The directors of the charity are its trustees for the purposes of charity law and the members of the company limited by guarantee. Throughout this report they are collectively referred to as the trustees. The following individuals served as trustees during the year:

Ian Wace (Chairman) Lord Fink Sir Paul Marshall Anthony Clake None had any beneficial interest in the charity and remuneration of trustees is neither paid by the charity nor permitted under its Articles of Association.

Elizabeth Dawson is Company Secretary (previously Michael Sandall until 19 February 2020).

Auditors

Buzzacott LLP 130 Wood Street London EC2V 6DL T: [phone]

Bankers

Lloyds Bank Plc 39 Threadneedle Street London EC2R 8AU T: [phone]

Solicitors

Stone King LLP Boundary House 91 Charterhouse St London EC1M 6HR T: [phone]

Investment Managers

Aurum Funds Limited Ixworth House 37 Ixworth Place London SW3 3QH T: [phone]

Registered Office

The Yellow Building 1 Nicholas Road London W11 4AN T: [phone]

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Overall approach

Ark is an education charity that aims to make sure that all children, regardless of their background, have access to a great education and real choices in life.

Ark also supports Ark Schools, a separate legal entity that is a successful academy network, with 37 schools and around 26,000 pupils.

Ark runs Ark Ventures, which aims to improve education beyond our schools. We want Ark to be a home for people with great ideas that have the potential to improve education. Many of these ideas started in Ark’s schools, while others have come from partners outside Ark. We incubate, launch and scale ventures that share our mission.

Working in partnership with different organisations around the world has allowed us to spread our expertise through initiatives designed to support and improve education systems in a number of different ways.

Ark Schools, Ambition Institute, Frontline, STiR and Peepul were all incubated and supported by Ark as ventures and are now separate legal entities, not included in the financial statements in this report. Assembly, also an Ark venture, was acquired in the prior year by Groupcall, a leading provider of data, identity management and communication solutions for schools.

Trustees’ Report including Strategic Report

Activities, achievements and performance

Ark Ventures

Ark Ventures incubates, launches and scales ventures that share Ark’s mission, helping them grow into sustainable organisations. Below is a summary of the ventures that are currently being supported, and those that have become independent organisations.

Current ventures

Ark Curriculum +

Ark Curriculum Plus (AC+) was formed in 2019 following the merger of Mathematics Mastery, a venture since 2012, and English Mastery, a venture since 2017. Science Mastery was launched this year, now working with a selection of pilot schools. AC+ partners with schools to create great curricula that empower teachers to ensure that every child has the subject knowledge to succeed.

AC+ provides research-based and coherent curricula and pedagogical training and support for teachers as an antidote to inconsistent and poor-quality curriculum design and delivery. Our curriculum programmes are having the greatest impact in schools with a high proportion of disadvantaged students as this is often where teaching is weakest.

Despite the impact of Covid-19, AC+ has begun partnerships with an additional 80 subject departments, taking the total amount of school partnerships up to more than 600 across the maths, English and the new science mastery programmes.

Now Teach

Now Teach aims to help people change their profession and redeploy their talents and experience into the classroom as teachers. In the year ended 31 August 2020, Now Teach increased its cohort size from 85 up to 140. Now Teach received approval from the Charity Commission in April 2020 and is now registered as a charity. Now Teach (company no.

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11872096, registered charity no. 1189146) has been independent from Ark UK Programmes since 1 September 2020. Now Teach is noted in these accounts as a discontinued operation.

Ark Start

Ark Start has been formed to transform early education for disadvantaged children. Ark Start provides high-quality, teacher-led early education with a focus on working with parents to improve the home learning environment for pre-school children. We are creating a new model of flexible, affordable nursery education.

Achievements and performance:

• We opened our first two Ark Start nurseries in 2020/21. These are located at Ark John Archer in South London, opened in October 2020, and Ark Oval in Croydon, opened in February 2021.

• Ark Start has raised £1.7m in support of its vision for nursery education from a combination of Sequoia, the AKO Foundation, the UBS Optimus Foundation and the Mercers Company.

• Ark Start has revised its short-term plan in recognition of the uncertainties and challenges created by the Covid-19 pandemic. Although the nurseries are opening with fewer places filled, and staff, than originally planned, expectations of growth and longterm aims are still in line.

EdCity

EdCity is a non-profit project to create an education hub in White City, London. EdCity will bring social and educational benefits to the local community. The development will include:

• A newly-redeveloped Harmony Nursery with nearly double capacity.

• A rebuilt Ark Swift Primary Academy, which will benefit from modern teaching environments, new outdoor learning spaces, improved IT, and sports and performing arts facilities.

• A rebuilt Adult Community Education, which will offer an extended service to adults taking their first steps back into education, training and employment. The centre will provide training and life-long learning opportunities for local residents, with the main aim of supporting people back into employment.

• A new office building which will include office space for Ark, various charities and commercial tenants.

• A new public square and a pedestrian and cycle route, which will halve the time it takes to walk from the White City Estate to the underground station and other amenities.

• 132 homes, more than half of which will be affordable.

The project is a partnership between Ark, the youth charity Onside Youth Zone and the London Borough of Hammersmith and Fulham. It was planned that construction would begin in 2020, and Ark has incorporated three Special Purpose Vehicles to oversee the construction and ongoing management of the venture: EdCity Office (also a registered charity), EdCity Development Ltd and EdCity Management Company Ltd. The uncertainties created by the Covid-19 pandemic raised the need for the future of the EdCity project to be reassessed by all key stakeholders to the project. As a result, the project was paused to consider options. In October 2020, Ark decided to proceed with the original plan thanks to

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revised terms with the local authority. Construction is now expected to start in summer 2021.

Education Partnerships Group

Education Partnerships Group (EPG) is one of Ark’s international ventures. EPG provide services and support to governments in low and middle income countries to help them shape and strengthen their education systems. EPG believes that supporting governments to design and implement contextually relevant, evidence-based and results-focused public policy results is the best way to achieve sustainable progress towards high quality education for all.

EPG is currently working in partnership with ministries of education in Cambodia, Cote d’Ivoire, Ghana, Sierra Leone and South Africa on projects as wide-ranging as: mapping the decentralised system of service delivery; mapping and strengthening accountability for learning; conducting research into public-private partnerships; supporting new and innovative methods of using school-level data to make better evidence-based decisions about school monitoring and support; and strengthening school inspections and monitoring at scale.

The disruptions of Covid-19 and travel restrictions have significantly impacted EPG’s ability to deliver its programmes. As a result, EPG pivoted to provide specific support to governments on how to adapt their sytems to manage Covid-19 and is in conversation with a number of funders to secure long-term funding.

Global Schools Forum

Global Schools Forum (GSF) is a not-for-profit membership organisation of education entrepreneurs who are running and supporting innovative and inclusive schools across the developing world. GSF was established in response to the rapid growth of the non-state school education sector in Sub-Saharan Africa, Asia, and Latin America and has grown to include 48 members from 32 countries, representing more than 17,000 schools. GSF is diversifying its cost base and will be launching a membership fee in 2020/21.

The impact of Covid-19 on GSF has been minimal. Whilst face-to-face events have been cancelled or postponed, online activity has signficantly increased. GSF has a dedicated Covid-19 resource area on its website and has hosted multiple webinars with members and non-members attending from all-over the world to provide opportunities for sharing and collaborative working around continuity of learning, student well-being, teacher support and business continuity.

Membership enquiries have increased significantly, and the profile of the venture has increased as the content produced to support schools around the world has been used and shared widely.

Ark Family Ventures

Assembly

In 2015, Ark and the NEON Foundation established Assembly, also supported by Zing and the Fidelity Foundation. Assembly’s mission is to:

• Solve school analytics by offering live data dashboards covering all aspects of a school or Multi-Academy Trust (MAT). This product is called Assembly Analytics.

• Break down the barriers constraining school data by making it easy and cheap to move data between school improvement systems. This product is called the Assembly Platform.

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On 1 February 2019, Groupcall, a leading provider of data, identity management and communication solutions for schools acquired Assembly from Ark.

Peepul

Peepul became independent of Ark on 1 September 2019. Peepul is a non-profit organisation that aims to transform children’s lives through quality education. Formerly known as Ark India, Peepul has entered partnerships with government and non-government agencies to improve learning in government schools. As an Ark venture, Peepul has been able to use international good practice in the Indian context. More than 1,000 students are enrolled across Peepul’s three schools. Peepul also supports state governments to improve the quality of education at scale. In 2017, Peepul started its Teacher Training Programme which aims to build the capacity and skills of government teachers and, through a set of codified best practices and processes, work towards achieving quality improvements at scale. In 2019, Peepul began working in Madhya Pradesh to improve classroom practice, teacher training and to strengthen academic monitoring. This support will impact 90,000 schools in the state by 2023. Peepul is demonstrating the impact that strong partnerships and programmes can have on the quality of education within the government school system.

Frontline

Frontline is a social work charity working to ensure that all children in England have a safe and stable home, and that their life chances are not limited by their social or family circumstance. They create social change for these children and their families by developing excellent social work practice and leadership through their programmes and by building a movement of leaders in social work and broader society as part of their Fellowship. Undoubtedly the greatest challenge they have faced this year has been moving to the online delivery of their programmes in response to the pandemic, bringing approximately 175 hours of learning online while providing an equally high-quality learning experience. Despite these challenges, 452 alumni completed their programmes and joined the Fellowship.

Ambition Institute

Ambition Institute is a graduate school for teachers, school leaders and system leaders. Their programmes help educators serving children from disadvantaged backgrounds to keep getting better. Their unique graduate-school-approach combines the mission-focus of a charity, the academic rigour of a traditional university, and the essential classroomconnection of a teaching school. Their suite of programmes support educators at all levels – from new teachers through to leaders of groups of schools.

Ambition Institute was launched in March 2019 following the merger of two Ark-incubated charities, Ambition School Leadership and the Institute for Teaching.

STiR Education

STiR Education aims to develop autonomy, mastery and purpose within individuals at all levels of education systems, through government system learning and partnerships. They do this through local teacher networks – groups of 20 to 30 teachers that meet each month and gain exposire to evidence-based ideas for improving their teaching practice. The networks strengthen connections between peers, laying the foundation for mutual support and sustainable improvement.

STiR is now working at scale with more than 6 million children, 200,000 teachers, 65 districts and five national/state governments in India and Uganda. 7,000 teacher network meetings run each month across 35,000 schools.

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Future developments

Ark will continue to support its existing ventures, ensuring their sustainability and looking for opportunities to build links between our ventures and our schools. Ark UK Programmes will continue to create and test new Ark ventures.

Internationally, the Education Partnerships Group (EPG) will restart work with exisiting and new funders, continuing its focus on education programmes in developing countries.

In the UK it is expected that Ark Schools will slowly expand through growth of existing schools and the addition of new schools. As planned, funding from Ark has now ceased since schools are sustainable.

Principal risks and uncertainties

Risk management

The major risks to which the charity is exposed, as identified by the trustees, have been reviewed and systems have been established to manage those risks. Sub-committees of the Board of Trustees meet regularly and consider the risks that relate to individual programmes as part of the annual review of business plans. In addition, the Finance and Risk Committee (FRC) reviews the Risk Register to monitor and manage risks and to report to the Board. The FRC meets regularly and at least three times per year. The main risks and mitigating actions are described below.

Operational risks

The principal operational risk relates to a decline in income which, in turn, could limit the ability of the organisation to fund programmes and to cover central administrative costs. To limit this risk there has been a change in fundraising strategy since 2012 whereby Ark no longer focuses on a single major event, but instead develops long term relationships with a diversified group of institutional and individual donors. The impact of this has been seen since the start of the Covid-19 pandemic, where a number of donors have shown support to Ark and its programmes. Further, while programme plans may be developed for 4 to 5 years, funds are mostly committed annually to limit future unfunded commitments.

Covid-19 has had an impact on how Ark delivers its programmes. To limit the impact, Ventures have wherever possible moved to virtual delivery to ensure they continue to have impact despite the lockdown restrictions both internationally and in the UK. Nevertheless, Covid-19 and the disruption to the Education sector continues to make it difficult to actively engage with schools and sell the charity’s new and existing products. Major funders have been approached to secure their support for Ventures should income targets be missed as a result of the pandemic.

Financial risks

Ark invests its reserves to achieve the best return consistent with the stability of, and ease of access to, capital. The main risks arising from the charity’s pursuit of its objectives and the policies agreed by the trustees for managing each of these risks are summarised below:

• Market price risk, arising over the future value of the charity’s investments. The charity engages professionals to manage the investment portfolios and ensure that they are suitably diversified and consistent with the trustees’ investment strategy.

• Currency risk, arising over the future value of the charity’s investments, which are mainly US denominated. The FRC considers the portfolio of foreign currency assets and liabilities as a whole and has adopted a policy whereby forward currency

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contracts cover the majority of any net imbalance. The risk may be further managed by holding a maximum amount of 6-12 months' budgeted expenditure in the relevant currency of overseas operating programmes.

• Credit risk, representing the potential financial loss that the charity might suffer through its supporters failing to honour the financial pledges that they have made to it. The charity manages this risk by regularly monitoring outstanding pledges, especially the small number of high value pledges that derive generally from supporters who are well known to the charity and the trustees. Furthermore, pledges are not recognised as income in the accounts of the charity until cash is received.

• Liquidity risk, representing the ability of the charity to meet its liabilities as and when they fall due. The charity continues to direct considerable effort to improving cash flow management and forecasts. The cash and investments assets have an adequate level of liquidity to meet the charity’s financial liabilities as they fall due.

Financial instrument risks

Ark invests the majority of liquid funds in a portfolio that is mostly comprised of hedge fund investments. The majority of these investments are denominated in US Dollars and hence there is both a currency risk and a market risk on the performance of these investments. The risk is limited through diversification of the portfolio across investment strategies and across investment funds. The investment objective is to outperform cash without significantly increasing risk and historically this portfolio has proved to be significantly less volatile than global equity markets, with positive returns in each of the last 10 calendar years except 2008. Currency risk is managed by monitoring the net imbalance of foreign currency assets and liabilities and the Board has approved the use of forward foreign currency contracts to limit currency gains and losses where the imbalance is regarded as excessive. The forward contracts in place effectively offset most of the foreign currency risk.

Law and regulation risks

There are currently no significant legal or regulatory non-compliance risks perceived by the charity and its subsidiaries.

Financial review

Ark recorded a net deficit of £8.4m for the year, largely due to the return of funding received for the EdCity project (Note 17), as reported in the consolidated Statement of Financial Activities (SoFA), compared to a £13.6m surplus in the previous year. As a result, group reserves decreased to £19.0m at 31 August 2020 (2018/19 - £27.4m).

Ark’s consolidated income in the year to 31 August 2020 totalled £12.4m (2018/19 - £38.9m).

The cost of raising funds, at £0.6m, was the same as last year (2018/19 - £0.6m). The cost of raising funds includes a proportion of the cost of the Development Team incurred by the charity based upon the percentage of staff time spent on fundraising.

Group expenditure during the year was £5.0m lower at £22.5m (2018/19 - £27.5m). The largest component of this was direct charitable expenditure on grants and project operating costs, representing 90% (2018/19 - 94%) of total expenditure excluding reserves transfers.

Expenditure by the charity differs from the group in that where a grant is made to a subsidiary company the total amount committed is shown as expenditure (on grants and project operating costs) for the charity, whereas for the group the value of funds actually spent by the subsidiary is shown, as all intergroup transactions are eliminated. The charity makes grants to subsidiary companies and programmes to support their charitable activities.

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The aims and objectives of the programmes supported by the charity are consistent with its own and so support of these programmes contributes to the achivement of the charity’s own aims and objectives.

During the period, expenditure at the charity level on grants and project operating costs was £15.4m (2018/19 - £18.0m). This includes support costs of £1.7m (2018/19 - £1.6m).

Core Fund income and expenditure

Core Fund income and expenditure
	2020	2019
	£'000	£'000
Contributions arranged by trustees and patrons	325	120
Investment fee rebates	137	143
Return on investments	1,068	1,086
Other income	50	97
Total income raised for core costs	1,580	1,446
Less: Expenditure on core costs	(2,255)	(2,105)
(Deficit)/ surplus on core costs for the year	(675)	(659)
Balance at 1 September	1,579	2,238
Balance at 31 August	904	1,579

The Core Fund is a designated fund within the unrestricted fund of the Charity and Group balance sheets. The income and expenditure in this Fund is included in the unrestricted section of the Charity and Group SOFAs and is further supported by Note 4 to the accounts. It has been established by trustees to meet the central, or core, administrative costs of the charity. Trustees are major supporters of the charity and make donations to support the core costs. £0.3m was donated in the year for this purpose (2018/19 - £0.1m). The trustees are confident that these funds, together with investment income and Ark’s other sources of core income, will cover core cost expenditure in the period ahead.

This undertaking is central to Ark’s operating philosophy as it gives other donors the assurance that 100% of every donation to programme funds can go directly to specific programmes. As the above table shows, at 31 August 2020 a reserve of £0.9m (2018/19 - £1.6m) has been established to cover core costs.

Investment fee rebates, included within Core income, arise from funds that rebate their fees as a donation to Ark. Where capital is invested in a fund controlled by trustees of Ark, 100% of fees are donated in this way.

Balance Sheet

The typical lifecycle of non-UK programmes is 3 to 5 years and Ark may underwrite part or all of the cost and set aside reserves at the outset. In the group balance sheet these programme commitments are shown as grant creditors. UK-based programmes typically have a longer life and Ark funding is often focused in the early years of incubation and development. For these programmes grants are awarded mainly on an annual basis and therefore there is little or no grant creditor relating to future period funding. The total value of grant creditors in the group balance sheet at 31 August 2020 was £2.3m (2018/19 - £0.8m).

The group also holds an additional amount of £18.1m (2018/19 - £27.3m) to invest in current and new programmes, including the EdCity project: £5.6m as endowment funds (2018/19 - £6.5m) held for the benefit of individual academies within Ark Schools, £12.4m

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as restricted funds (2018/19 - £20.1m) and £0.1m as unrestricted funds held in its General Programme Fund (2018/19 - £0.6m).

This funding model is considered by the trustees to be reasonably prudent and results in a significant balance of cash and investments due to the receipt of funds in advance of application in programmes. Due to funding for programmes received in the year, the total of cash and investments in the group balance sheet is £15.5m lower than the prior year at £40.7m (2018/19 - £56.2m).

The FRC oversees the charity’s cash management. During the year the charity’s main bank accounts were held with Lloyds Banking Group. At 31 August 2020, 100% of the charity’s cash was invested in the Lloyds accounts (2019/19 - 100%). The profile of the cash holdings is dependent on the working capital needs of Ark’s programmes.

At 31 August 2020 the non-cash investments held by the charity represented 78% of total cash and invested funds (2018/19 - 76%) and the FRC has approved this as reasonable. The objective for Ark’s investments is to outperform cash without significantly increasing risk. The investment portfolio managed by Aurum includes a range of investment strategies aiming to ensure an absolute return on investment that is not correlated to the UK equity market. Having taken independent advice on this investment strategy, the trustees believe this is an appropriate investment of the charity’s funds.

The trustees consider that the investments, which are largely US$ denominated, provide a foreign currency match for programme grant liabilities denominated in foreign currency. In the event that foreign currency assets and liabilities do not match, a currency hedge contract is in place to largely mitigate currency risk.

Funds and Reserves

Total reserves at the year end amounted to £19.0m (2018/19 - £27.4m) for the group and £2.0m (2019 - £3.3m) for the charity. Ark’s policy on reserves is to maintain an unrestricted fund (General Programme Fund and Core Costs Fund) at a level that ensures Ark is able to meet its financial commitments and obligations as they fall due, fund unexpected expenditure when unplanned events or programmes occur, and safeguard the charity from uncertainty over future income. The appropriate level of reserves is set at an amount sufficient to cover unfunded expenditure from unrestricted funds for a minimum period of six months in the in the event of a significant fall in income. The value of 6 months’ core (unrestricted) operating expenditure approximates to £1.1m with the year-end unrestricted reserves standing at only £0.9m. Trustees have pledged to underwrite any shortfall on unrestricted expenditure in 2020/21.

Ark has taken all necessary steps to reduce both the operational and financial the impact of the Covid-19 pandemic. Costs have been closely monitored to ensure that unrestricted reserves remain sufficient to meet financial commitments and obligations. To date there has been minimal impact on income due to Covid-19, but this will continue to be closely monitored as the pandemic continues.

Restricted funds

Ark achieves its charitable objectives through direct implementation of projects by its own charitable subsidiaries and by way of grants to partner organisations. At the launch of a new programme Ark may underwrite a portion of the cost with a transfer of unrestricted funds from the General Programme Fund to the relevant restricted fund. This allows the project to be launched with funding in place for the initial grant period, without the time delay of having to raise specific funds up front and without the risk of having to scale back the programme due to lack of resources.

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Note 13 shows how these reserves are split across Ark’s various programmes.

Unrestricted funds – General Programme Fund

A significant proportion of the funds raised by Ark must be used to fund charitable projects (i.e. they cannot be used to cover the organisation’s core costs). Where income is not committed to a specific project at the point of receipt it is credited to Ark’s General Programme Fund and stays there until such time as it is committed to a specific project.

Ark anticipates that the balance of General Programme Funds will be committed to specific programmes within the next 12 months. The trustees consider this to be in line with the organisation’s policy.

Unrestricted funds – Core Costs

The trustees ensure that the central administrative costs of the charity are met through funds set aside specifically for that purpose. In the balance sheet these funds are shown under unrestricted funds - Core costs. The balance held on this fund is equivalent to 5 months’ expenditure on core costs at 2019/20 levels (2018/19 - 9 months). Although this is below the expectation to hold 6 months’ expenditure in reserve, the trustees have pledged to underwrite unrestricted expenditure in 2020/21, to allow unrestricted funds to recover.

Investment Policy

The Ark charity had a portfolio of investments with a market value as at 31 August 2020 of £24.7m (2018/19 - £35.1m). There has been minimal change in the value of investments as a result of the impact of Covid-19 on the economy. Ark invests in order to further the charity’s charitable aims, taking into consideration the environmental, social and governance aspects of the investments in line with our values. There are no restrictions on the charity’s power to invest. The investment strategy is set by the trustees and takes into account income requirements, with the risk profile and the investment manager’s view of the market prospects in the medium term. The overall investment policy is to outperform cash without significantly increasing risk.

Grant-Making Policy

The trustees apply the funds of Ark at their discretion and in accordance with the charitable purposes and objectives of the charity. Grants are made to programmes mostly operated within the Ark family of organisations. Grants are awarded based on the strategic and financial requirements of each programme. Requests are reviewed by the Board and subject to regular reviews of performance against the grant. Expenditure from grant-making is recognised annually in the Consolidated Statement of Financial Activities.

Statement of public benefit

Trustees have paid due regard to the Charity Commission’s public benefit guidance and are satisfied that the charity complies with Section 4 of the Charities Act 2011. The sections at the beginning of this trustees’ report dealing with objectives and achievements explain in detail the activities of the charity and the sections of the international community that benefit from Ark’s work. The charity does not rely to any significant extent on the services of volunteers, with the exception of the contribution of time and skills from the trustees and a small number of patrons and advisors.

Approach to fundraising

Ark fundraises from a defined list of individuals, companies and charitable trusts and foundations. We do not conduct mass mailing or telephone campaign fundraising and have

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no plans to start this kind of fundraising activity. Ark’s network of schools conduct their own fundraising and may use fundraising platforms to promote specific school campaigns, including Just Giving and Virgin Money. Ark has a small team of professional fundraisers and support staff. We do not out-source fundraising activities. Donor data is handled with care – information is held on a secure database and files managed by Ark. Ark is a paid member of the Fundraising Regulator and we comply with advice and guidance set by the body. We have not received any fundraising complaints.

Trustees’ assessment of going concern status

The Trustees have considered the risks facing the charity, the forecast of cash flows and the level of reserves and are satisfied that Ark will be able to meet all financial obligations as they fall due over the next 12 months following the audit and therefore conclude that the charity is a going concern.

Governance

Governing document

Ark is a company limited by guarantee governed by its Memorandum and Articles of Association dated 12 November 2002, and is registered as a charity with the Charity Commission. On 4 December 2019, Ark changed its registered address from 65 Kingsway, London WC2B 6TD to The Yellow Building, 1 Nicholas Road, London W11 4AN.

Organisation

The Board of Trustees, which can have up to 12 members, oversees the charity. The board meets at least two times a year. There is also a programme board to oversee each venture, and a Finance and Risk Committee (FRC). The sub-committees report to the board and make recommendations in their areas of responsibility. New trustees undergo an induction programme that includes meeting the Executive Team and briefing on their role and responsibilities, and meetings with existing trustees and our advisors.

Executive Directors are appointed by the trustees to oversee the day to day operations of the charity. The Executive Directors have delegated authority for operational matters including finance and employment.

Remuneration statement

Pay and benefits for the Chief Executive Officer (CEO) are determined by the Chair of the Board in consultation with other Board members and the Advisor to the Board. When deciding pay and benefits for the rest of the organisation, including the Executive team (except the CEO), salary survey information and other relevant data is used as a benchmark to compare against similar organisations in the voluntary sector.

Ark’s key management salaries are set on appointment and reviewed annually in accordance with pay review procedures. The CEO or Deputy Chief Executive of Ark approve all salaries on appointment and any base salary in excess of £75,000 per annum is also approved by Ark's Advisor to the Board, who is an employee of the charity and has delegated authority from the Ark Board.

Related parties

The charity has established a number of companies to implement its programmes. Subsidiaries are listed in Note 16.

Ark Schools is a multi-academy trust that is responsible for the schools that Ark runs in the UK. Ark is sole member of Ark Schools. Ark Schools is registered in England and Wales as a company limited by guarantee (company number 05112090) and an exempt charity. It has

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the same registered address as Ark. Ark Schools receives the majority of its income from the UK Government and, due to the requirement for ultimate government control of these funds, does not form part of the Group in these accounts.

Ark UK Programmes is responsible for Ark’s work in UK education beyond Ark Schools. Ark UK Programmes is registered in England and Wales as a company limited by guarantee (company number 05932797; charity number 1137932). It is wholly owned by Ark and consolidated in these accounts. It has the same registered address as Ark.

Despite the uncertainties created by the Covid-19 pandemic, key stakeholders are committed to the completion of the EdCity project. It will be delivered out of three Special Purpose Vehicles (SPVs):

• EdCity Office, incorporated 1 October 2018, is a registered charity and company limited by guarantee (charity number 1184547; company number 11596797) would be responsible for receiving and disbursing project funds, oversight and commissioning of marketing, leasing and fit out activity to EdCity Development Ltd and running an office once construction completed.

• EdCity Development Ltd, incorporated 10 August 2018, a company limited by guarantee (company number 11511870) would be responsible for construction delivery and implementing marketing, leasing activity and fit out commissioned by EdCity Office.

• EdCity Management Company Ltd, incorporated 21 August 2018, a company limited by guarantee (company number 11528726) would be responsible for oversight of public realm and engagement with Ark Swift lease as required.

All EdCity SPVs are wholly owned subsidiaries of Ark and are consolidated in these accounts. They are all registered in England and Wales at the same address as Ark.

Ark (South Africa) Limited, an association incorporated in South Africa under section 21 (registration number 2004/003952/10) and registered in England and Wales as a charitable company limited by guarantee (company number 04957091; charity number 1108175), runs the charity’s programmes in Sub-Saharan Africa and is part of these Group accounts. Its registered address is Mazars House, Rialto Road, Grand Mootings Precinct, Century City 7441, South Africa and is consolidated as a subsidiary of the charity.

Ark is also affiliated to Absolute Return for Kids US, Inc. (Ark US), a US philanthropic organisation which shares Ark’s mission, and which supports the work of the charity through grants.

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Statement of Trustees’ Responsibilities

The trustees (who are also the directors of Absolute Return for Kids (ARK) for the purposes of company law) are responsible for preparing the trustees’ report and financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the trustees to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the group and the charitable company and of the income or expenditure of the group for that period. In preparing those financial statements the trustees are required to:

• select suitable accounting policies and then apply them consistently;

• observe the methods and principles in Accounting and Reparing by Charities: statemment of reccommended practice appliable to chartiies preparing their accounts in accordance with the Financial Reporting Standard appliable in the UK and Republic of Ireland (FRS 102);

• make judgements and estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed, subject to any material departure disclosed and explained in the financial statements; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company and group will continue in operation.

The trustees are responsible for keeping proper accounting records and disclose with reasonable accuracy at any time the financial position of the group and charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the group and charitable company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the trustees confirms that:

• so far as the trustee is aware there is no relevant audit information of which the charitable company’s auditors are unaware;

• the trustee has taken all the steps required of trustees to make themselves aware of any relevant audit information and establish that the charity’s auditors are aware of that information.

The confirmation is given and should be interpreted in accordance with the provision of 418 of the Companies Act 2006. The trustees are responsible for the maintenance and integrity of information included on the charitable company’s website. Legalisation in the United Kingdom governing the preparation and dissemination of financial statement may differ from legislation in other jurisdictions.

This report was Approved by the Board of Trustees on 20 April 2021 and and signed on its behalf by:

Ian Wace, Trustee

13

Independent auditor’s report

to the members of Absolute Return for Kids (Ark)

We have audited the financial statements of Absolute Return for Kids (ARK) (‘the charitable company’) for the year ended 31 August 2020 which comprise the Consolidated and Charity Statement of Financial Activities, the Consolidated and Charity Balance Sheet, the Consolidated Statement of Cash Flows and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FRS 102 “The Financial Reporting standard applicable in the UK and Republic of Ireland”.

In our opinion the financial statements:

• give a true and fair view of the state of the group and parent charitable company’s affairs as at 31 August 2020 and the group and parent charitable company’s income and expenditure for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

• the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

• the trustees have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group or the charitable company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the Annual Report and Accounts other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

14

Independent auditors’ report to the members of Absolute Return for Kids (Ark)

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the trustees’ report, which is also the directors’ report for the purposes of company law, and the strategic report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the trustees’ report, which is also the directors’ report for the purposes of company law and includes the strategic report, has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In light of the knowledge and understanding of the charitable company and its environment obtained in the course of the audit, we have identified no material misstatements in the trustees’ report, including the strategic report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of trustees’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement set out on page 13, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,

15

Independent auditors’ report to the members of Absolute Return for Kids (Ark)

but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the charitable company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Date: 6 May 2021

Katharine Patel (Senior Statutory Auditor) for and on behalf of Buzzacott LLP, Statutory Auditor 130 Wood Street London EC2V 6DL

16

Consolidated Statement of Financial Activities (including income and expenditure account) For the year ended 31 August 2020

Notes Income and endowments from: Donations and legacies Donations 2 Donated services 2 Charitable activities Investment income 3a Other trading activities Non-charitable trading funds 3b Other Continuing operations Discontinued operations 2 & 21 Total Expenditure on: Raising funds 4 Charitable activities 4 & 5 Continuing operations Discontinued operations 4 & 21 Total Net income (expenditure) before gains on investment and losses on foreign exchange Net gains on investments 6 (Losses) on foreign currency transactions Net income/ (expenditure) Fund Transfers 13 Net movement in funds 7 Reconciliation of funds Total funds brought forward Total funds carried forward	Unrestricted £'000 1,360 1,196 - 187 - 3 2,746 - 2,746 583 1,672 2,255 - 2,255 491 1,236 (168) 1,559 (2,811) (1,252) 2,208 956	Restricted £'000 3,135 13 2,891 441 1,364 - 7,844 1,803 9,647 - 17,853 17,853 1,437 19,290 (9,643) 572 - (9,071) 2,811 (6,260) 18,685 12,425	Endowments £'000 - - - - - - - - - 58 931 989 - 989 (989) 83 - (906) - (906) 6,518 5,612	Year ended 31-Aug-20 Total £'000 4,495 1,209 2,891 628 1,364 3 10,590 1,803 12,393 641 20,456 21,097 1,437 22,534 (10,141) 1,891 (168) (8,418) - (8,418) 27,411 18,993	Year ended 31-Aug-19 Total £'000 29,602 2,409 3,764 353 1,900 97
					38,125 736
					38,861
					601 25,424
					26,025 1,540
					27,565
					11,296 2,338 (41)
					13,593
					—
					13,593
					13,818
					27,411

The notes on pages 22 to 47 form an integral part of these financial statements.

These are no recognised gains and losses other than those shown above.

17

Charity Statement of Financial Activities (including income and expenditure account) For the year ended 31 August 2020

Notes Income from: Donations and legacies Donations 2 Donated services 2 Charitable activities Investment income 3a Other Total Expenditure on: Raising funds 4 Charitable activities 4 & 5 Continuing operations Discontinued operations 4 & 21 Total Net income (expenditure) before gains on investment and losses on foreign exchange Net gains on investments 6 Losses on foreign currency transactions Net income/ (expenditure) Fund Transfers 13 Net movement in funds 7 Reconciliation of funds Total funds brought forward Total funds carried forward	Unrestricted £'000 1,360 1,196 - 187 3 2,746 583 1,672 2,255 - 2,255 491 1,236 (168) 1,559 (2,811) (1,252) 2,208 956	Restricted £'000 10,932 - 9 - - 10,941 - 13,728 13,728 74 13,802 (2,861) - - (2,861) 2,811 (50) 1,104 1,054	Year ended 31-Aug-20 Total £'000 12,292 1,196 9 187 3 13,687 583 15,400 15,983 74 16,057 (2,370) 1,236 (168) (1,302) - (1,302) 3,312 2,010	Year ended 31-Aug-19 Total £'000 13,097 2,254 58 281 9
				15,699
				541 17,681
				18,222 298
				18,520
				(2,821) 1,086 (41)
				(1,776) —
				(1,776) 5,088
				3,312

The notes on pages 22 to 47 form an integral part of these financial statements.

These are no recognised gains and losses other than those shown above.

18

Consolidated Balance Sheet

As at 31 August 2020 Company number 04589451 Notes Fixed assets Tangible assets 8 Investment property 9 Investments 6 Current assets Debtors 10 Cash at bank and in hand Liabilities Creditors: amounts falling due within one year 11 Net current liabilities Creditors: amounts falling due after one year 11 Total net assets Total Funds of the Group Endowment funds Restricted income funds Unrestricted funds: General Programme Fund Core costs Total Group funds 13	2020 £'000 1,928 766 31,257 33,951 4,782 9,425 14,207 (25,032) (10,825) (4,133) 18,993 5,612 12,425 52 904 18,993	2019 £'000 — 742 42,555
		43,297
		3,474 13,613
		17,087
		(18,823)
		(1,736)
		(14,150)
		27,411
		6,518 18,685 629 1,579
		27,411

The notes on pages 22 to 47 form an integral part of these financial statements.

Approved by the Board of Trustees on 20 April 2021 and and signed on its behalf by:

Ian Wace Trustee

19

Charity Balance Sheet As at 31 August 2020

Company number 04589451

Notes Fixed assets Investments 6 Current assets Debtors 10 Cash at bank and in hand Liabilities Creditors: amounts falling due within one year 11 Net current liabilities Creditors: amounts falling due after one year 11 Total net assets Total Funds of the Charity Restricted income funds Unrestricted funds: General Programme Fund Core costs Total charity funds 13	2020 £'000 24,680 24,680 897 6,703 7,600 (26,299) (18,699) (3,971) 2,010 1,054 52 904 2,010	2019 £'000 35,141
		35,141
		967 5,993
		6,960
		(32,785)
		(25,825)
		(6,004)
		3,312
		1,104 629 1,579
		3,312

The notes on pages 22 to 47 form an integral part of these financial statements. Approved by the Board of Trustees on 20 April 2021 and and signed on its behalf by:

Ian Wace Trustee

20

Consolidated Statement of Cash Flows For the year ended 31 August 2020

		Year ended	Year ended
		31-Aug-20	31-Aug-19
		Total	Total
	Notes	£'000	£'000
Net cash (used in) provided by operating activities	19	(15,150)	20,871
Cash flows from investing activities
Dividends, interest and rent from investments		628	353
Purchase of property, plant and equipment		(1,928)	-
Proceeds from sale of investments		19,479	3,382
Purchase of investment		(5,715)	(20,186)
Net cash provided by (used in) investment activities		12,464	(16,451)
Cash flows from investing activities
Endowment withdrawal		(931)	-
Net cash (used in) investment activities		(931)	-
Net change in cash and cash equivalents		(3,617)	4,420

The endowment withdrawal relates to a £931k transfer to Ark Schools for capital expenditure	The endowment withdrawal relates to a £931k transfer to Ark Schools for capital expenditure	The endowment withdrawal relates to a £931k transfer to Ark Schools for capital expenditure
projects.
Reconciliation of net funds	Year ended	Year ended
	31-Aug-20	31-Aug-19
	Total	Total
	£'000	£'000
Cash and cash equivalents at 1 September	13,902	13,613
Change in cash and cash equivalents	(3,617)	289
Cash and cash equivalents at 31 August	10,285	13,902
Reconciliation of net funds	Year ended	Year ended
	31-Aug-20	31-Aug-19
	Total	Total
	£'000	£'000
Cash at bank and in hand	9,425	13,613
Cash held byinvestment managers	860	289
Cash and cash equivalents at 31 August	10,285	13,902

21

Analysis of changes in net debt	At 1 September 2019 £’000	Cash flows £’000 (4,188) 571 10,014 6,383 (30) 6,353	Other non-cash changes £’000	At 31 August 2020 £’000
Cash at bank and in hand Cash held by investment managers Loans Finance lease obligations Total	13,613 289 (13,514)		— — —	9,425 860 3,500
	402 (132)		— —	13,785 (162)
	270		—	13,623

The notes on pages 23 to 47 form an integral part of these financial statements.

22

Notes to the Accounts For the year ended 31 August 2020

1. Accounting policies

Basis of preparation

These financial statements have been prepared for the year to 31 August 2020.

The financial statements have been prepared under the historical cost convention with items recognised at cost or transaction value unless otherwise stated in the relevant accounting policies below or the notes to these financial statements.

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their financial statements in accordance with the Financial Reporting Standard applicable to the United Kingdom and Republic of Ireland (FRS 102) (Charities SORP FRS 102), the Charities Act 2011 and the Companies Act 2006.

The charity constitutes a public benefit entity as defined by FRS 102.

The financial statements are presented in sterling and are rounded to the nearest thousand pounds.

The accounts consolidate Ark and its project implementing subsidiaries active during the year: Ark (South Africa) Limited, Ark UK Programmes, Ark India, Ark Zimbabwe, EdCity Development Limited, EdCity Management Company Limited and EdCity Office. It also consolidates its dormant subsidiaries Ark Mozambique and Ark Uganda. All intra-group balances, transactions, incomes and expenses are eliminated on consolidation.

Critical accounting estimates and areas of judgement

Preparation of the accounts requires the trustees and management to make significant judgements and estimates.

The items in the accounts where these judgements and estimates have been made include:

• Estimating the impact of Covid-19 on the charity’s income and expenditure flows for the purpose of preparing cash flow forecast and budgets to assist in the assessment of going concern;

• Allocating support costs across charitable activities;

• Timing of income recognition for programme fees;

• Classification of leases as finance or operating;

• Measurement of fair values of the investment property.

23

Notes to the Accounts For the year ended 31 August 2020

1. Accounting policies (continued)

Assessment of going concern

The trustees have assessed whether the use of the going concern assumption is appropriate in preparing these accounts. The trustees have made this assessment in respect to a period of one year from the date of approval of these accounts.

In making their assessment, the trustees of the charity have considered the impact of the global coronavirus pandemic and have acknowledged that some areas of work may be challenged by the impact of Covid-19, for example the delivery of EPG and GSF activity overseas, and ACP activity in UK schools. However, the charity has put steps in place to reduce its costs through the use of the government’s coronavirus job retention scheme and as explained in the trustees’ report, is using the lockdown to diversify its funder base as the charity adapts to the challenges presented.

A number of significant areas of judgement that affect items in the accounts are detailed above. In addition, the most significant areas that affect the carrying value of the assets held by the charity in the next accounting period (the year ending 31 August 2021), are the level of investment return and the performance of the investment markets (see the investment policy and the risk management sections of the trustees’ report for more information). Whilst this is likely to lead to a reduction in income, the trustees remain of the opinion that the charity will have sufficient resources to meet its liabilities as they fall due.

The trustees have therefore concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the ability of the charity to continue as a going concern.

Fund accounting

Unrestricted funds are those which the donor gives to the charity without stipulating a specific purpose. They are to be used for the furtherance of the objectives of the charity in general and may be applied to specific projects at the discretion of the trustees. Within 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 the central administrative costs of the charity. The GPF holds income which must be used to fund charitable projects (i.e. cannot be used to cover the organisation’s core costs) but is not committed to a specific project at the point of receipt. The relevant income is credited to the GPF and when the Board commits funds to a specific project the required amount of funding is transferred from the GPF to the relevant restricted fund.

The endowment fund represents monies invested on behalf of individual Ark academies. Any returns generated on these funds can be used without restriction, but only by the academy in question, and are therefore recognised as restricted income. The initial capital can only be used with agreement of the Secretary of State for Education, unless it is spent on ‘equipment, facilities, accommodation, landscaping and signage’ at the relevant academy. The Ark All Saints Academy endowment is a permanent endowment for which Ark UK Programmes has been appointed as the trustee.

All income and expenditure is shown in the Statement of Financial Activities.

Income

24

Notes to the Accounts

For the year ended 31 August 2020

Income is recognised when the charity has entitlement to the funds, any performance conditions attached to the income have been met, it is probable that the income will be received and that the amount can be measured reliably.

Unrestricted income is accounted for on a receipts basis. Restricted income is accounted for on a receipts basis but subject to recognising any donor restrictions. Where the corresponding programme expenditure can be clearly identified and matched with donor receipts the income is recorded in the same accounting period as the expenditure and income is deferred if not fully spent. Income is not accrued except where there is a clear contractual entitlement and such income is then only recognised to the extent that the corresponding expenditure is recorded in the same accounting period. Deposit interest is recognised on an accruals basis.

Donated services and facilities provided to the charity are recognised in the period when it is probable that the economic benefits will flow to the charity, provided they can be measured reliably. This is normally when the service is provided. An equivalent amount is included as expenditure.

Donated services and facilities are recognised on the basis of the value of the gift to the charity which is the amount the charity would have to pay to obtain facilities or services of equivalent economic benefit on the open market.

Expenditure

Liabilities are recognised as expenditure once there is a legal or constructive obligation to make a payment to a third party, it is probable that settlement will be required and the amount of the obligation can be measured reliably. Expenditure is accounted for on an accruals basis, and has been classified under headings that aggregate all costs related to the category.

Ark and Ark UK Programmes are registered as a VAT Group with Ark Schools and reclaim VAT on business-related expenditure. Irrecoverable VAT is included in expenditure when incurred.

Costs of generating funds are those incurred in seeking donations for the charity and in publicising the work of the charity.

Expenditure on charitable activities comprise expenditure related to the direct furtherance of the charity’s objectives. In the accounts of the charity the award of a grant is recorded as charitable expenditure and the unexpended amount is held in the balance sheet as a grant creditor. In the accounts of the group any such grant to a subsidiary company is not recognised as expenditure; instead the expenditure in the subsidiary is recognised as the charitable expenditure when incurred. Any unspent grant is recognised in the group balance sheet as a restricted fund.

25

Notes to the Accounts

For the year ended 31 August 2020

1. Accounting policies (continued)

Allocation of overhead and support costs

Support costs are those functions that assist the work of the charity but do not directly undertake charitable activities. Support costs include back office costs, finance, payroll and governance costs which support the charity’s programmes and activities. Governance costs are those incurred in connection with the management of the charity’s assets, organisational administration and compliance with constitutional and statutory requirements.

Where costs cannot be directly attributed, they have been allocated to activities in line with the time spent by individual members of staff or the department on each activity.

Discontinued operations

Where a decision has been made to discontinue or terminate an activity in accordance with the definitions contained within FRS 102, income, costs and obligations associated with the discontinuing operation are recognised within the year. The income, costs and obligations are disclosed separately on the face of the statement of financial activities.

Tangible fixed assets and depreciation

Tangible fixed assets are stated at cost including any incidental expenses of acquisition.

Depreciation is provided on all tangible fixed assets at rates calculated to write off the cost on a straight-line basis over their expected useful economic life. The rates of depreciation applied to each class of asset are:

Leasehold improvements	–	depreciated over the term of the lease
Land and Building	–	overseas assets 4% annum
Office equipment	–	25% per annum
Computer equipment	–	33% per annum (covers both hardware and software)
Motor vehicles	–	20% per annum

Investments

Investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value as at the balance sheet date. Realised and unrealised gains (or losses) are credited (or debited) to the statement of financial activities in the year in which they arise.

A fair value hierarchy that prioritises the inputs to valuation techniques is used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and lowest priority to unobservable inputs (Level 3 measurement). The levels of fair value hierarchy are described below:

1. Accounting policies (continued)

Investments (continued)

26

Notes to the Accounts

For the year ended 31 August 2020

• Level 1 (listed investments) – Unadjusted quoted process in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

• Level 2 (unlisted investments) – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable either directly or indirectly; and

• Level 3 (unlisted investments) – Prices or valuation that requires inputs that are both significant to the fair value measurement and unobservable.

Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices for an identical instrument, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. As Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.

The main form of financial risk faced by the charity is that of volatility in equity markets and investment markets due to wider economic conditions, the attitude of investors to investment risk, and changes in sentiment concerning equities and within particular sectors or sub-sectors.

The method of calculating realised gain on withdrawal of investments is on an average historical cost basis.

Investment Property

Investment property is held by Ark UK Programmes since May 2016 to earn rental income and for capital appreciation, rather than for use in the ordinary course of business. Investment properties are measured at cost and subsequently at fair value at the reporting date. Professional advice is sought as appropriate to determine the valuation of investment property. Changes in fair values are recognised in the statement of financial activities.

Investment property is subject to renovations or improvements at regular intervals. The cost of major renovations and improvements is capitalised. The cost of maintenance, repairs and minor improvements is recognised in the statement of financial activities when occurred.

On disposal of an investment property, the difference between the disposal proceeds and the carrying amount is recognised in the statement of financial activities.

Foreign currencies

Charity

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are restated at the rate of exchange ruling at the balance sheet date.

1. Accounting policies (continued)

Foreign currencies (continued)

Group

The income and expenditure of overseas subsidiary undertakings are translated into sterling at average rates of exchange for the relevant period.

27

Notes to the Accounts

For the year ended 31 August 2020

Assets and liabilities denominated in foreign currencies are translated into sterling at rates of exchange effective at the balance sheet date.

All exchange differences are recognised through the Statement of Financial Activities.

Operating lease

Operating lease rentals are charged on a straight line basis over the term of the lease. These are included in Charitable Activities expenditure in the Statement of Financial Activities.

Finance lease

A finance lease is recognised when it is determined that the lease arrangement transfers substantially all the risks and rewards of ownership to the lessee.

At the commencement of the lease term, Ark recognises its rights of use and obligations under the finance lease as an asset and a liability in the statement of financial position at an amount equal to the fair value of the leased asset or, if lower, the present value of the minimum lease payments, determined at the inception of the lease. Where the implicit rate cannot be determined the charity’s incremental borrowing rate is used.

Any initial direct costs are added to the amount recognised as an asset. Subsequently, the minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability using the effective interest method, to produce a constant rate of change on the balance of the capital repayments outstanding.

Debtors and prepayments

Debtors are recognised at their settlement amount, less any provision for non-recoverability. Prepayments are valued at the amount prepaid. They have been discounted to the present value of the future cash receipt where such discounting is material.

Accrued income

Accrued income is income which has been earned but not yet received. It must be recognised in the accounting period in which it arises rather than in the subsequent period in which it will be received.

Cash at bank and in hand

Cash at bank and in hand represents such accounts and instruments that are available on demand or have a maturity of less than three months from the date of acquisition. Deposits for more than three months but less than one year have been disclosed as short term deposits. Cash placed on deposit for more than one year is disclosed as a fixed asset investment.

1. Accounting policies (continued)

Creditors and provisions

Creditors and provisions are recognised when there is an obligation at the balance sheet date as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the settlement can be estimated reliably. Creditors and provisions are recognised at the amount the charity anticipates it will pay to settle the debt. They have been discounted to the present value of the future cash payment where such discounting is material.

28

Notes to the Accounts For the year ended 31 August 2020

2. Donations and legacies

. Donations and legacies
	Group	Charity	Group	Charity
	2020	2020	2019	2019
	£'000	£'000	£'000	£'000
Unrestricted funds
Contributions to core costs	325	325	120	120
General Donations	2,231	2,231	4,159	4,159
	2,556	2,556	4,279	4,279
Restricted funds
Restricted grants & donations	3,148	10,932	27,732	11,072
Continuing operations	5,704	13,488	32,011	15,351
Now Teach	428	—	—	—
Zimbabwe-Safe arrivals	—	—	350	—
Assembly	—	—	386	—
Peepul	—	—	—	—
Discontinued operations	428	—	736	—
Total	6,132	13,488	32,747	15,351

The trustees ensure that the core costs of the charity are covered. Grants and donations include £0.3m (2018/19 - £0.1m) raised for this purpose. At 31 August 2020 a total of £4.1m (2018/19 - £2.3m) had been pledged to support Ark programmes and core cost funding in future years, none of which has been reported as income.

During the year, £8.5m of restricted grants received in 2018/19 for EdCity were returned to funders (2018/19 – nil). The return of funding is net against the total balance of grants received by the Group. The Group received donated services in the amount of £1.5m (2018/19 - £2.4m) out of which £1.2m (2018/19 - £2.2m) related to pro bono services provided by Bain & Co in the form of UK education consultancy services, £0.3m was for discontinued operations.

3a. Investment income

Investment income arises from dividend income from investments, fee rebates and interest receivable on funds held in interest bearing bank accounts and on fixed term deposits. During the year investment income was £628k (2018/19 - £353k) for the group and £187k (2018/19 - £281k) for the charity.

3b. Non-charitable trading funds

Non-charitable trading funds represents the turnover generated by EdCity Development Limited through charges made to third parties for the delivery of the EdCity development project.

29

Notes to the Accounts For the year ended 31 August 2020

4. Analysis of expenditure

Group

Expenditure on charitable activities UK Education EdCity Intl Education Education Partnerships Group Global Schools Forum Intl Education - Other Continuing operations Now Teach Zimbabwe-Safe arrivals Assembly Peepul Discontinued operations Total Endowment funds Cost of raising funds: Investment management fees Grant from endowments Unrestricted funds Cost of raising funds: Other Total expenditure	Unrestrict ed funds Support costs (note 5) £'000 753 335 335 209 40 1,672 - - - - - 1,672 - - 583 583 2,255	Restricted funds Activities undertak en directly Grant fundin g of activiti es £'000 £'000 5,417 5,932 1,910 - 497 2,575 4 735 - 783 7,828 10,02 5 1,437 - - - - - - - 1,437 - 8,265 10,02 5 58 - - 931 - - 58 931 8,323 10,95 6	Total 2020 £'000 12,10 2 2,245 3,407 948 823 19,52 5 1,437 - - - 1,437 20,96 2 58 931 583 1,572 22,53 4	Total 2019 £'00 0 13,17 8 7,301 2,705 353 1,887
				25,42 4
				512 432 596
				1,540
				26,96 4
				60 - 541
				601
				27,56 5

30

Notes to the Accounts For the year ended 31 August 2020

4. Analysis of expenditure (continued)

Charity

Expenditure on charitable activities UK Education EdCity Intl Education Education Partnership Group Global Schools Forum Intl Education - Other Continuing operations Now Teach Zimbabwe - Safe arrivals Assembly Discontinued operations Total Expenditure on raising funds Cost of raising funds Total expenditure	Unrestrict ed funds Support costs (note 5) £'000 753 335 335 209 40 1,672 - - - - 1,672 583 2,255	Restricted funds Activities undertake n directly Grant funding of activities £'000 £'000 1,680 7,551 - 234 5 2,736 4 735 - 783 1,689 12,039 - 74 - - - - - 74 1,689 12,113 - - 1,689 12,113	Total 2020 £'000 9,984 569 3,076 948 823 15,400 74 - - 74 15,474 583 16,057	Total 2019 £'000 8,651 4,331 2,550 353 1,887
				17,772 (125) 332
				207
				17,979
				541
				18,520

Group activities undertaken directly represent programmatic work by the central charity and its operating subsidiaries. For the central charity, this represents where charitable expenditure (as opposed to the cost of raising funds) relates primarily to research and development of new programmes.

Grant funding of activities represents programmatic work carried out by group and nongroup companies and funded by grants from the central charity. Grant funding of activities includes donated services in the amount of £0.3m (2018 - £0.2m) that has been restricted to UK Education.

Support costs relate to Ark's core staff team and the London office and are covered by the Core Costs Fund. These costs are allocated to programmes to reflect the estimated share of staff time and related cost.

31

Notes to the Accounts For the year ended 31 August 2020

5. Allocation of support costs

Group and Charity

roup and Charity
Expenditure on charitable activities UK Education EdCity Intl Education Education Partnership Group Global Schools Forum Intl Education - Other Continuing activities Zimbabwe - Safe Arrivals Assembly Peepul Discontinued operations Expenditure on raising funds Total expenditure	Management costs £'000 245 109 109 68 14 545 - - - - 157 702	Finance £'000 245 109 109 68 14 545 - - - - 56 601	Governance costs £'000 108 48 48 30 6 240 - - - - - 240	Other overheads & support staff £'000 155 69 69 43 6 342 - - - - 370 712	Total 2020 £'000 753 335 335 209 40 1,672 - - - - 583 2,255	Total 2019 £'000 683 310 310 77 93
						1,473 77 14 -
						91
						541
						2,105

Support costs relate entirely to Ark's London office and the core staff team covering fundraising, communications, finance, human resources, general management and administration.

Ark uses this broad definition of core costs and then covers these costs from funds raised and set aside specifically for this purpose.

The table above shows how the resources covered by the core budget are allocated using the two broad categories required under the Charities SORP FRS102 i.e. charitable activities and raising funds and is based upon an allocation of the time spent by individual members of staff.

32

Notes to the Accounts For the year ended 31 August 2020

6. Investments

Market value at 1 September Additions to investments at cost Disposals at market value Net unrealised investment gains/(losses) Market value at 31 August Cash held by investment managers for reinvestment Cost of listed investments at 31 August Disposals are analysed as follows: Proceeds Realised gain Disposals at market value	Group 2020 £000 42,266 5,715 (18,726) 1,142 30,397 860 31,257 19,873 Group 2019 £000 (19,160) 434 (18,726)	Charity 2020 £000 34,870 - (12,128) 1,192 23,934 746 24,680 13,771 Charity 2020 £000 (12,439) 311 (12,128)	Group 2019 £000 23,417 20,186 (4,048) 2,711 42,266 289 42,555 30,188 Group 2019 £000 (4,181) 133 (4,048)	Charity 2019 £000 16,165 17,000 (584) 2,289
				34,870 271
				35,141
				25,377
				Charity 2019 £000 (868) 284
				(584)

All listed investments were traded on a recognised stock exchange. Investments held by the group at 31 August 2020 comprised the following:

group at 31 August 2020 comprised the following:
	2020 £000	2019 £000
Overseas equities Fixed interest Foreign exchange contracts Alternative assets Cash, deposits and short term Miscellaneous	3,475 2,420 38 24,464 860 -	3,811 998 (106) 37,240 135 477
	31,257	42,555

Alternative assets include investments in hedge funds.

Foreign exchange forward contracts are used to ameliorate the risk associated with holding investments in foreign currencies. These are held by the investment managers and form part of their strategy for managing risk.

33

Notes to the Accounts For the year ended 31 August 2020

6. Investments (continued)

Unrealised gains include above: On investments Reconciliation of movements in unrealised gains: Unrealised gains at 1 September Less: in respect to disposals in the year Add: net realised gains/ (losses)	Group 2020 £'000 10,524 10,524 12,078 (434) (1,120) 10,524	Charity 2020 £'000 10,163 10,163 9,493 (308) 978 10,163	Group 2019 £'000 12,078 12,078 9,367 (133) 2,844 12,078	Charity 2019 £'000 9,493
				9,493
				7,205 (284) 2,572
				9,493

7. Net movement in funds

Net movement in funds is stated after charging:

Operating lease charges Depreciation Auditors' remuneration - audit of consolidated accounts - audit of subsidiaries - other audit and tax fees Total	Group 2020 £'000 81 - 26 23 3 52	Charity 2020 £'000 - - 26 - 2 28	Group 2019 £'000 185 — 27 21 58 106	Charity 2019 £'000 —
				—
				27 — 3
				30

34

Notes to the Accounts For the year ended 31 August 2020

8. Fixed assets

Group

Cost: At 1 September 2019 Additions At 31 August 2020 Depreciation: At 1 September 2019 Charge in the year At 31 August 2020 Net Book Value: At 31 August 2020 At 31 August 2019	Assets under construction £'000 — 1,928 1,928 — — — 1,928 —	Total £'000 — —
		—
		— —
		—
		—

During the year £1,928k was incurred in respect of expenditure on EdCity. This expenditure was capitalised on 31 August 2020 as an asset under construction.

No fixed assets are held by the Charity (2018/19 - £nil).

9. Investment property

Cost or valuation: At 1 September 2019 Increase in fair value At 31 August 2020	£'000 742 24
	766

In the group, long leasehold investment property is held at fair value. As the property was purchased on 20 May 2016, Ark UK Programmes Directors have performed the valuation of the property based on publicly available information.

Included in the amount for investment property is £162,208 (2018/19 - £131,897) relating to assets held under a finance lease (note 12).

35

Notes to the Accounts For the year ended 31 August 2020

10. Debtors

0. Debtors
Receivable within 1 year Trade debtors Prepayments and other debtors Accrued income VAT debtor Related company debtors (EdCity Office) Related company debtors (Ark UK Programmes)	Group 2020 £'000 3,300 165 622 695 - - 4,782	Charity 2020 £'000 44 106 417 - 40 290 897	Group 2019 £'000 2,327 487 660 - - - 3,474	Charity 2019 £'000 9 328 630 - - -
				967

11. Creditors

Amounts falling due within 1 year Trade Creditors Related company creditors (Ark Schools) Grant creditors Tax and social security creditors Other creditors Deferred Income	Group 2020 £'000 790 15,163 2,263 289 5,416 1,111 25,032	Charity 2020 £'000 70 13,753 7,208 91 5,144 33 26,299	Group 2019 £'000 503 15,620 825 194 178 1,503 18,823	Charity 2019 £'000 55 14,193 17,594 97 764 82
				32,785

36

Notes to the Accounts For the year ended 31 August 2020

11. Creditors (continued)

Movements in deferred income are analysed below.

Group

Group
	At 31 August 2019 £000	Released from previous year £000	Deferred in current year £000	At 31 August 2020 £000
Programme fees Programme grant Total deferred income	1,421 82	(1,421) (82)	1,078 33	1,078 33
	1,503	(1,503)	1,111	1,111
Group	At 31 August 2018 £000	Released from previous year £000	Deferred in current year £000	At 31 August 2019 £000
Programme fees Programme grant Total deferred income	1,050 73	(1,050) (73)	1,421 82	1,421 82
	1,123	(1,123)	1,503	1,503

Charity

		At 31 August 2019 £000	At 31 August 2019 £000	Released from previous year £000	Released from previous year £000	Deferred in current year £000	At 31 August 2020 £000
Programme grant Total deferred income		82		(82)		33	33
		82		(82)		33	33
Charity		At 31 August 2018 £000		Released from previous year £000		Deferred in current year £000	At 31 August 2019 £000
Programme grant Total deferred income		42		(42)		82	82
		42		(42)		82	82

37

Notes to the Accounts For the year ended 31 August 2020

11. Creditors (continued)

The related company creditors (Ark Schools) is the creditor to Ark UK Programmes. Grant creditors to Ark Schools from the Charity is included in ‘Grant Credtiors’.

During the period ended 31 August 2020, the £8m loan held was repaid in full to the lender. This loan had been received by EdCity Office in 2018/19 from a charity based in the Netherlands to support the financing of the EdCity project. The loan was repaid following the decision in 2019/20 to pause the EdCity project.

£2.0m of a £5.5m loan from Ambition Institute was repaid during the year. £3.5m of the original loan remains (note 17).

12. Finance Lease

Not later than one year Later than one year and not later than five year Later than five years Total gross payment Less: finance charges Carrying amount of liability	2020 £'000 — 2 301 303 (141) 162	2019 £'000 — 2 301
		303 (171)
		132

Lease payments of £400 are due in no later than one year.

38

Notes to the Accounts For the year ended 31 August 2020

13. Analysis of charitable funds

Group

13. Analysis of charitable funds Group
Restricted funds UK Education EdCity Intl Education Education Partnership Group Global Schools Forum Intl Education – Other Continuing operations Now Teach Discontinued operations Total Endowment Funds Endowment held for Ark Schools Unrestricted funds Core funds General programme funds Continuing operations Zimbabwe-Safe arrivals Discontinued operations Total Total Group funds	31 Aug 2019 £'000 2,698 15,579 68 — — 18,345 340 340 18,685 6,518 6,518 1,670 629 2,299 (91) (91) 2,208 27,411	Income £'000 10,695 (6,638) 2,455 550 782 7,844 1,803 1,803	Gains/ (losses) and transfers £'000 2,001 572 620 190 — 3,383 - -	Expenditure 31 Aug 2020 £'000 £'000 (11,347) 4,047 (1,911) 7,602 (3,073) 70 (740) — (782) — (17,853) 11,719 (1,437) 706 (1,437) 706
		9,647	3,383	(19,290)	12,425
		—	83	(989)	5,612
		— 512 2,234	83 977 (2,811)	(989) (2,255) -	5,612 904 52
		2,746 — —	(1,834) 91 91	(2,255) 956 — — — —
		2,746	(1,743)	(2,255) 956
		12,393	1,723	(22,534)	18,993

Now Teach became independent on 1 September 2020. £706k funds will be transferred to the new organisation, Now Teach (company no. 11872096, registered charity no. 1189146) (note 21).

39

Notes to the Accounts For the year ended 31 August 2020

13. Analysis of charitable funds (continued)

Charity

Restricted funds UK Education EdCity Intl Education Education Partnership Group Global Schools Forum Intl Education - Other Total Unrestricted funds Core funds General programme funds Continuing operations Zimbabwe-Safe arrivals Discontinued operations Total Total Charity Funds	31 Aug 2019 £'000 1,104 — — — —	Income £'000 7,254 234 2,121 550 782 10,941 512 2,234 2,746 — — 2,746 13,687	Gains/ (losses) and transfers £'000 2,001 — 620 190 —	Expenditure £'000 (9,305) (234) (2,741) (740) (782)	31 Aug 2020 £'000 1,054 — — — —
	1,104		2,811	(13,802)	1,054
	1,670 629		977 (2,811)	(2,255) —	904 52
	2,299 (91) (91)		(1,834) 91 91	(2,255) — —	956 — —
	2,208		(1,743)	(2,255)	956
	3,312		1,068	(16,057)	2,010

Income is the amount receivable as income for each fund during the year including gains and losses on investments and foreign exchange.

Transfers are the net value of funds received as unrestricted funds committed in year to specific programmes. Unrestricted funding transferred to programmes is agreed annually by the Board and is used to further the charitable aims of each programme. Unrestricted funds committed to programmes but not used in full are transferred back to the general programme fund unless there is an agreement with the Board to hold these funds for future use.

Expenditure is the amount expend or committed as grants to other entities including other group companies.

40

Notes to the Accounts For the year ended 31 August 2020 14. Staff costs and numbers

Salaries and wages Social security costs Pension costs Total salary costs Other staff costs Total staff cost	Group 2020 £'000 5,546 553 568 6,667 104 6,771	Charity 2020 £'000 2,524 266 250 3,040 78 3,118	Group 2019 £'000 5,429 668 523 6,620 178 6,798	Charity 2019 £'000 2,499 317 241
				3,057 26
				3,083

Other staff costs include an accrual for untaken annual leave in the financial year.

Included in salaries and wages were redundancy and ex-gratia severance payments totalling £12,486 (2018/19 –£nil) committed but unpaid in the year. They will be settled in 2020/21.

The average number of staff employed, analysed by function, was:

Programmes Support services Fundraising	Group 2020 No. 92 18 4 114	Charity 2020 No. 26 14 4 44	Group 2019 No. 98 17 4 119	Charity 2019 No. 24 13 4
				41

41

Notes to the Accounts For the year ended 31 August 2020

14. Staff costs and numbers (continued)

The number of staff whose emoluments (excluding employer pension contributions) were in excess of £60,000 during the year were as follows:

	Group	Charity	Group	Charity
	2020	2020	2019	2019
	No.	No.	No.	No.
£210,001 - £220,000	-	-	1	1
£200,001 - £210,000	1	1	-	-
£150,001 - £160,000	1	1	-	-
£140,001 - £150,000	-	-	2	2
£120,001 - £130,000	-	-	2	2
£110,001 - £120,000	1	1	-	-
£100,001 - £110,000	1	-	1	-
£90,001 - £100,000	1	1	2	2
£80,001 - £90,000	4	3	3	1
£70,001 - £80,000	5	1	4	4
£60,001 - £70,000	7	4	1	2

The pension contributions made on behalf of the above employees were £165.8k (2018/19 - 115.6k) in the group and £95.2k (2018/19 - £110.3k) in the charity. No benefit other than pension has been provided to employees.

Total remuneration paid to charity key management personnel was £620k (2018/19 - £769k).

15. Directors’ remuneration and expenses

The charity did not pay any remuneration to its trustees (2018/19 – nil). No expenses were reimbursed to or paid on behalf of trustees during the year.

42

Notes to the Accounts For the year ended 31 August 2020

16. Investments in subsidiaries

Subsidiary Undertaking Ark UK Programmes Ark (South Africa) Limited Ark Mozambique Ark Uganda EdCity Development Limited EdCity Office Limited EdCity Management Company Limited	Country United Kingdom South Africa Mozambique Uganda United Kingdom United Kingdom United Kingdom	Basis of Consolidation 100% ownership 100% ownership 100% ownership 100% ownership 100% ownership 100% ownership 100% ownership	Nature of activities Education Health/Education Health Education Construction Real Estate Holding Real Estate Management	Status Trading Trading Dormant Dormant Trading Trading Dormant

2020 £’000 Income Expenditure Net gains on investments Net movement in funds Total funds brought forward Transfer of funds out of the group Total funds carried forward Fixed assets Current assets Liabilities Total funds	Ark UK Programmes £’000 6,897 (6,196) 83 784 8,449 - 9,233 7,343 5,574 (3,684) 9,233	Ark (South Africa Ltd £’000 491 (452) - 39 27 - 66 - 303 (237) 66	EdCity Office £’000 (7,927) (544) 571 (7,899) 15,579 - 7,680 9,046 6,173 (7,539) 7,680	EdCity Development Ltd £’000 3,447 (3,447) -
				- - -
				-
				- 6,820 (6,820)
				-

43

Notes to the Accounts For the year ended 31 August 2020

17. Related party transactions

Ark made no new grants to its sister charity Ark Schools (2018/19 - £nil) to cover the core costs of the charity to 31 August 2020. £2.4m grants were made by Ark in support of Ark Schools’ programmes (2018/19 - £3.8m). £2.8m grants were made by Ark in support of Ark Schools’ academies (2018/19 - £0.8m). At the year end the unpaid grant allocated to Ark Schools was £13.8m (2018/19 - £9.8m), all of which is due in less than one year. The charity also shares its office with Ark Schools, with each charity assuming a reasonable proportion of the costs.

Ark holds investments in the MW Eureka Fund, a hedge fund managed by Marshall Wace LLP. Sir Paul Marshall and Ian Wace are members of Marshall Wace LLP and are also trustees of Ark. Ark received £514k fee rebates from MW Eureka Fund for its Core operations and EdCity (2018/19 - £143k). This was 100% of the fee charged for managing the investments.

In 2018/19 the charity was gifted £17m of shares in the MW Eureka Fund. The carrying value of shares gifted to the charity at the 31 August 2020 was £12.8m (2018/19 - £21.4m). This is stated after the disposal by the charity of £9.6m shares in the year. The disposal was used to fund repayment of the £8m loan and £4.3m grant originally received for EdCity Office from the Jagclif Charitable Trust. There is a further £4.3m held in creditors at the year-end repayable to the Sequoia Charitable Trust.

£1.4m (2018/19 - £1.0m) income was received in the year from the Jagclif Charitable Trust. Ian Wace is a trustee of the Jaglif Charitable Trust and is also a trustee of Ark. This income was restricted to the Ark Academy, an Ark Schools academy and Ark unrestricted funds. Funds restricted to Ark Academy were transferred to the school during the reporting period.

£1.2m (2018/19 - £1.8m) income was received in the year from the Sequoia Trust. Sir Paul Marshall is a trustee of the Sequoia Trust and is also a trustee of Ark. The funds were restricted to the Ark Teacher Training programme, operated out of Ark Schools. The full balance was remaining at year-end and is included in creditors at 31 August 2020.

£1.0m income was received in the year from the Eureka Charitable Trust. Sir Paul Marshall and Ian Wace are trustees of the Eureka Trust and are also trustees of Ark. The income was restricted to Ark Schools’ programmes and Ark’s bursaries programme. The full balance was remaining and is included in creditors at 31 August 2020.

Other trustee donations totalled £0.1m (2018/19 - £0).

Ark is holding £3.5m received from Ambition Institute which is intended to be utilised for a capital investment for the benefit of Ambition Institute. Ambition Institute was launched in March 2019 following the merger of two Ark-incubated charities, Ambition School Leadership and the Institute for Teaching. Ark may repay any portion of the amount at any time, with interest accrued at a fixed margin above the Bank of England Base Rate. £2m was repaid in the year leaving £3.5m outstanding at the year-end (2018/19 - £5.5m). During the year there were no new grants to Ambition Institute (2018/19 - £nil). £0 cash was paid from Ark to the charity (2018/19 - £0.1m), but £38k cash (2018/19 - £0.5m) was held in creditors at the year-end for interest accrued on the loan.

Ark is also affiliated to Absolute Return for Kids, US, Inc. (Ark US), a US philanthropic organisation that shares the charity's objectives. During the year Ark received grants of £0.2m ($0.2m) from Ark US (2018 - £1.0m ($1.3m)).

44

Notes to the Accounts For the year ended 31 August 2020

18. Operating lease commitments

The amounts payable in respect of operating leases shown below are analysed according to the expiry of the leases.

Within one year	Group 2020 £'000 3 3	Charity 2020 £'000 - -	Group Charity 2019 2019 £'000 £'000 61 - 61 -

19. Notes to the consolidated statement of cash flows

Reconciliation of net movement in funds to net cash (used in) provided by operating activities:

Net income (expenditure) as per the Statement of Financial Activities Adjustments for: (Gains) on investments Dividends, interest and rents from investments Expenditure on endowments (Increase) in debtors (Decrease)/Increase in creditors (excluding endowment) Net cash provided by/(used in) operating activities	Group 2020 £'000 (8,418) (1,892) (628) 931 (1,308) (3,835) **(15,150) **	Group 2019 £'000 13,593 (2,338) (353) (194) 10,163
		20,871

20. Taxation

Absolute Return for Kids (ARK) is a company limited by guarantee, registered in England, number 4589451, and is a UK registered charity, number 1095322. Given the nature of its activities the charity will not be subject to income tax or corporation tax on income derived from its charitable activities, as it would fall within the various exemptions available to registered charities.

45

Notes to the Accounts For the year ended 31 August 2020

21. Discontinued operations

Now Teach

On 1 September 2020, Now Teach became an independent charity and will not be included within Ark UK Programmes’ accounts in future years. Income and expenditure included in the accounts relating to Now Teach in 2019/20 is shown below. In addition to Now Teach, the comparatives include balances for Zimbabwe and Assembly which were a discontinued in 2018/19.

The Now Teach fund balance of £0.7m will be shown as a transfer out in the 2020/21 accounts.

Income from: Donations and legacies: Grants and donations Donated services Charitable activities Programme fees Other income Total income Expenditure on: Charitable activities Support to programmes Total expenditure Fund transfers Net income	Restricted £000 428 288 1,087 - 1,803 1,437 1,437 - 366	Year ended 31 August 2020 Total £000 428 288 1,087 - 1,803 1,437 1,437 - 366	Year ended 31 August 2019 Total £000
			1,296 141 724 54
			2,215
			2,073
			2,073
			(202)
			142

46

Notes to the Accounts For the year ended 31 August 2020

22.Comparative consolidated statement of financial activities for the year ended 31 August 2019

Notes Income and endowments from: Donations and legacies Donations 2 Donated services 2 Charitable activities Investment income 3a Other trading activities Non-charitable trading funds 3b Other Continuing operations Discontinued operations 2 & 21 Total Expenditure on: Raising funds 4 Charitable activities 4 & 5 Continuing operations Discontinued operations 4 & 21 Total Net income (expenditure) before gains on investment and losses on foreign exchange Net gains on investments 6 Gains/(losses) on foreign currency transactions Net income/ (expenditure) Fund Transfers 13 Net movement in funds 7 Reconciliation of funds Total funds brought forward Total funds carried forward	Unrestricted £'000 2,025 2,254 — 281 — 9 4,569 — 4,569 541 1,473 2,014 91 2,105 2,464 1,086 (41) 3,509 (3,589) (80) 2,288 2,208	Restricted £'000 27,577 155 3,764 72 1,900 88 33,556 736 34,292 — 23,951 23,951 1,449 25,400 8,892 1,105 — 9,997 3,589 13,586 5,099 18,685	Endowments £'000 — — — — — — — — — 60 — 60 — 60 (60) 147 — 87 — 87 6,431 6,518	Year ended 31-Aug-19 Total £'000 29,602 2,409 3,764 353 1,900 97
				38,125 736
				38,861
				601 25,424
				26,025 1,540
				27,565
				11,296 2,338 (41)
				13,593
				—
				13,593
				13,818
				27,411

47