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← Pharo Foundation

2022-12-31-accounts

COMPANY LIMITED BY GUARANTEE REGISTRATION NUMBER 07678862 - (ENGLAND AND WALES) CHARITY REGISTRATION NUMBER 1143152

Pharo Foundation Annual Report 2022

CONTENT

REFERENCE AND ADMINISTRATIVE INFORMATION

TRUSTEE REPORT

Pharo Foundation At A Glance ...................................................4 Our Identity ........................................................................................5 Some Of Our ......................................................................................6 Projects ................................................................................................6 Our Timeline ......................................................................................7 Key Results In Numbers ...............................................................9

STRATEGIC REPORT

Pillars Of Work ..................................................................................10 Knowledge & Learning Through Partnerships ..................20 Knowledge & Learning .................................................................21 Through Self-Examination ...........................................................21 Structure, Governance And Management .............................22 Financial Performance ..................................................................26

FINANCIAL REPORT

Audit Report .......................................................................................27 Financial Statements ......................................................................31 Principal Accounting Policies .....................................................34 Notes To The Financial Statements .........................................38

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Pharo Foundation Annual Report 2022

REFERENCE AND ADMINISTRATIVE INFORMATION

Trustees Mr Matthieu Baumgartner
Mr Guillaume Fonkenell - Chairman
Mr Mustafa Jama
Ms Farah Jirdeh-Fonkenell
Mr Nicolas Sagna
Chief Executive Officer Ms Gulden Kazandag
Principal office 154 Brompton Road
3rd Floor
London
SW3 1HX
Charityregistration number 1143152
Companyregistration number 07678862(England and Wales)
Auditor Buzzacott LLP
130 Wood Street
London
EC2V 6DL
Principal Bankers HSBC Bank Plc
16 King Street
Covent Garden
London WC2E 8JF
Solicitors Farrer & Co LLP
66 Lincoln’s Inn Fields
London
WC2A 3LH

PHARO FOUNDATION AT A GLANCE

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Pharo Foundation Annual Report 2022

OUR IDENTITY

Who We Are

At Pharo Foundation[1] , we dream big. We believe that dreams are the first embodiment of great achievements. Much like JFK’s 1962 inspirational speech set the United States on a course to send astronauts to the moon by 1968, we too galvanize innovative development thinking towards the achievement of ambitious development milestones, across five pillars of development: education, water, agriculture, health and social ventures.

Our Mission

Our Vision

An inclusive an economically vibrant Africa.

To achieve our vision by investing in Africa’s human and physical capital, with a strong focus on job creation.

How we deliver our Vision

Under each pillar, our projects are designed and implemented in a way that makes them:

Impactful

In the words of economics Nobel Prize winner Esther Duflo, ‘you can take the guesswork out of policy-making by knowing what works, what doesn’t work and why’. In choosing development projects, we first conduct a thorough investigation of the literature on evidence around competing solutions to the development problems which we tackle. We then examine the specific solutions that are available in specific country contexts and other things being equal, we select the solution with the highest F-factor above 1, i.e. the solution with the highest impact. Once we settle on a project, our Research & Evaluation team measures the effectiveness of project implementation and feeds it back into our project design and the research community’s knowledge pool.

Systemic

A key objective of our work is to create systemic change at a society-wide level, building on the infrastructure such as schools or dams, which we have accumulated over 11 years of operation. Such systemic change requires scale through cooperation with multiple development partners, from local communities to governments, who are involved in the many facets of the development problems we tackle.

Sustainable

The ideal development intervention is a pure catalyst whose result becomes self-sustaining. In this perspective, in 2019 Pharo Foundation added a commercial arm to its non-profit activities, which became its fifth pillar. The resulting for-profit social enterprises called Pharo Ventures add a sustainability dimension to the Foundation in three different ways. They open a path towards a self-reliant East Africa through job creation, skill upgrading and value added. In addition, the mechanism through which the products are manufactured is socially and environmentally sustainable.

1 The Pharo Foundation changed its legal name to Pharo Foundation in 2023

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Pharo Foundation Annual Report 2022

01 SOME OF OUR PROJECTS

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AGRICULTURE

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Pharo Foundation Annual Report 2022

OUR TIMELINE

Pharo Foundation’s 11 year-history involves two phases:

2016 - Present

The age of own project design and the 5-pillar strategy

2011-2016

The age of grant-giving

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The age of grant-giving

From 2011 to 2016, we started as a grant-making organization, with projects chosen on the basis of the personal inclinations and passions of our founders. Early partnerships through grant-giving helped us learn how to ‘do development’ through cooperation with grantees, who shared an in-depth knowledge of their field with us.

We partnered with Amraf East Africa, Action Aid, African Education Trust, Somaliland Nursing and Midwifery Association, Windle Trust International, Medical Aid Films and VSO, amongst many. Part of our current expertise relates back to the knowledge built through these early partnerships. In education, African Education Trust and Windle Trust partnerships were of particular significance.

With African Education Trust, besides funding the education of girls in Somaliland, Puntland and Somalia, we were the first to lead and organise the automation of data on leaving certificate results at a national level in South Sudan. With Windle Trust International, we placed 50 African refugees over four rounds at UK universities with full scholarships for postgraduate study. In health, our partnership with Medical Aid Films also stands out. They made short films on key medical operations and procedures, which local doctors and midwives could download on their smart phones and which were dubbed in the local language, thereby providing state-of-the-art medical training to health practitioners without access.

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Pharo Foundation Annual Report 2022

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The age of own project design and the emergence of the 5 pillar-strategy

After 5 years of learning through grant-giving and some frustrations with our lack of control over implementation, in 2016 we decided to design and implement our own projects in order to control the agenda, and improve efficiency/accountability. Learning-by-doing and depth of intervention became two key characteristics of our approach through this phase of our growth.

We started out in education, based on its virtues as an asset that can never be taken away from an individual and whose returns are life-long. Location-wise, we started looking for the most rural and poor locations, lacking in access to quality education, and settled for Benishangul-Gumuz and the Somali Regional State in the West of Ethiopia. Following these choices, we started to build on the dream of our first state-of-the-art boarding school in Homosha, Benishangul. We also decided to operate through two channels: 1)our own Pharo Kindergartens and Schools; 2)public private partnerships with government ministries to improve the provision of public services in public schools.

Our involvement in the Somaliland education sector illustrates our learning-by-doing approach. We realised that public schools did not provide Kindergartens and as early as 2015, we started an Early Childhood Education (ECE) programme in seven pilot public schools in Hargeisa. We first ran our ECE programmes ourselves and from 2017, we became instrumental in the creation of a national ECE curriculum in conjunction with the Ministry of Education. When we realised that the children leaving our ECEs lost their advantage when they started at public primary schools, we decided to open our own primary schools and soon our own secondary schools. Finally, when we realised that the children going to our schools reached a point of decreasing returns to education due to the lack of education of their mothers, we started an adult literacy programme and a vocational training centre. This same learning-by-doing logic has applied across all pillars.

Around 2017, we started thinking about having 4 pillars of operation, namely education, health, water and agriculture, with projects largely chosen on

the basis of their social return on investment. That vision solidified in 2018, though the health pillar only emerged in 2019-20 with an initial focus on increasing access to public intensive care services. In Ethiopia, we designed a four-year Socio-Economic Empowerment Programme (SEEP) around our four pillars, which emphasised depth of impact over breadth. Some of its major outputs are the Pharo Diagnostic Centre, the Agricultural Training Centre, the vocational training centre, two Pharo ECE Centres in Assosa, the Pharo Assosa primary school, the upgrading of 11 public schools and expansion of Assosa’s Water Supply.

By the time COVID hit, we had accumulated substantial fixed assets in our four pillars. In 2019, we created the fifth pillar of Pharo Ventures to embody our concern with sustainability through the transformation of the local private sector. This allowed us to clarify our mission as investing in Africa’s human and physical capital, with a strong focus on job creation. We had set the values of respect, creativity, entrepreneurship, trust and accountability, that still guide our development ecosystems, which are deeply rooted in the community.

Guillaume Fonkenell, founder of Pharo Foundation, inspecting the new office Construction in Assosa, BGRS, 2022.

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Pharo Foundation Annual Report 2022

KEY RESULTS IN NUMBERS

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First expansion of Somaliland
Reached the milestone Early Childhood Development
of more than (ECD) programme outside
Hargeisa, reaching a total of
500
18 ECDs
employees
and more than 1,000 children. 22
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182 Somaliland mothers enrolled in ECD 6-month literacy and numeracy and

in follow-up practical skills training.

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Rehabilitation and
Top school results construction of
First graduation of
in Ethiopian
3 Somaliland dams
50 serving up to
grade 8
students from the
Somaliland Pharo and leaving exam results in 2,500
Vocational Training the region of Benishangul. households and their
programme livestock.
Completion of Assosa
town and hospital water 2,897 55 direct jobs
upgrading, leading to patients diagnosed by the
created by Pharo Ventures
24hr supply of water. Pharo Diagnostic Centre in
Somaliland, 9 by Ethiopia .
the second half of 2022.
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PILLARS OF WORK

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Pharo Foundation Annual Report 2022

Education

Pharo Foundation’s journey started out in education, because of its virtues as the one critical asset that can never be taken away from an individual. There are three aspects of education which are important to us.

Hellen Tekalign, Pharo Assosa, grade seven student at the 2023 regional technology and innovation competition.

First, education is not merely something that stays in the classroom; we view it as the fundamental driver of an individual’s opportunity path and as a lifelong process, from early childhood to midlife’s multiple career reincarnations. Hence our activities span the range from early learning to vocational training and mothers’ literacy. In the language of Nobel Prize winner Amartya Sen, education is about expanding an individual’s capabilities, and ultimately their range of life choices. In that perspective, the Foundation kick starts an individual’s education journey and then supports their opportunity transitions. Second, our approach seeks to develop the whole individual, not only empowering students with a high-quality learning experience from an academic point of view, but also equipping them with different sources of knowledge and skills that enable them to become global productive citizens. Third, for us, education is a mission which necessitates the ongoing support of key members of society, as education and work are ultimately social processes, which is why we are deeply rooted in our communities.

While the 2023 opening of Pharo Foundation’s Kenya and Rwanda primary schools will begin a new chapter in our education activities, one of our biggest impacts in this field so far has been our contribution to the development of early learning education in Somaliland, both through the creation of our own Early Childhood Development (ECD) Centres and through our input into the previously non-existent national curriculum. This year for the first time, we expanded our Somaliland ECD programme beyond the confines of the capital, Hargeisa (where we have 15 ECDs), with the opening of three ECDs

Students from Pharo Kindergarten, Somaliland.

in the city of Berbera. Replication in a different environment is always both a time for celebration because it implies a programme has been successful, but also a test of the resilience of a programme. In this case, the replication was critical both from an operational point of view and as a fresh starting point for impact evaluation of our ECD programme. Indeed, the new ECDs have given the Foundation an opportunity to start a randomised controlled trial evaluation in October on the impact of ECDs on health outcomes, on their impact on mothers’ work activities, and on which children benefit the most from ECDs. This kind of assessment is path-breaking in the Somaliland education context.

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Pharo Foundation Annual Report 2022

Mohamed Muse Elmi [far left] and Muna Juma [far right] Pharo Foundation Country Representative, Somaliland, present a scholarship to one of the 2022 recipients at the Pharo Foundation Scholarship award ceremony in Somaliland.

One of the reasons for the significant added value of the ECD programme is that is not purely focused on the child but on their environment as well. Hence our mothers’ 6-month literacy and numeracy programme is also a key component of our vision for ECD, and this year we were proud to see 182 mothers enrolled in the programme and 22 of them choosing to follow this up with a practical skills training in sewing. Given the above, the Somaliland 2023-2027 National Development Plan mentions the Foundation’s ECD programme on numerous pages.

Similarly, our capacity for systemic thinking above and beyond the classroom is evident in our vocational training programme in Somaliland, which saw 25 students graduate in Painting and Decorating and another 25 in Solar and Electrical Installation – the new cohort is now composed of 75 students in each group plus another 75 taking up a new course in plumbing. Not only do we organise for each student to have an internship upon completion, to ensure that the educational opportunities we have given them turn into an increased likelihood of employment, but we are also committed to using the programme as a trigger of social change. In particular, this year there were three female graduates in the Solar and Electrical Installation course who were then offered internship opportunities and then started freelancing – in a country where Solar and Electrical Installation is not a standard course for women. We are committed to changing perceptions one day

at a time by leading through example and are keen to partner with other like-minded organisations which also pursue such systemic change. By doing this we hope to implement change at scale, beyond the confines of our classrooms.

Finally, our sense of purpose is increasingly heightened by the academic excellence displayed by our pupils. Whether we look at primary or secondary school results, our schools’ pupils are performing at the top of their regions. Out of the 135 students who passed the Ethiopian national grade 12 exam in the Benishangul Gumuz Region just 29 were girls and 10 of these girls were from our secondary boarding school in Homosha. In October, the school graduated 25 inaugural class students, with each student planning to enrol in college and pursue different courses such as aviation, law, medicine, or pharmacology. Meanwhile, Pharo School Assosa, our Ethiopian primary school, topped the grade 8 results in the same region, with 21 students (15 girls and 6 boys) passing the regional exam. The top 3 students in the region, all girls from Pharo School Assosa scored 94%, 91% and 90% respectively. The school also upgraded to secondary school level in 2022, enrolling a total of 447 students from grades 1 to 9, with most of the primary boys continuing their grade 9 studies at the school, while girls will likely go to Pharo School Homosha. While approving its expansion, the regional education acknowledged that the school is indeed a centre of excellence and that other schools in the region can learn from its quality teaching and

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Pharo Foundation Annual Report 2022

Temesgen Zelalem, Social Studies Teacher in class. Assosa Primary School. Ethiopia

learning practices. With its 19 highly qualified teachers and 9 administrative staff, its students continue to achieve top levels in Science, Technology, Engineering, Maths (STEM) and English. In June 2022, a grade 5 student from the school won a STEM competition where 242 primary and 20 secondary schools in the Assosa zone and city participated. These performances have supported us in refining our offering as an education provider even further, and teasing out the key ingredients of our success and that of our pupils. It has encouraged us to define a Pharo Hallmark of education and identify our key characteristics in shaping graduates who lead local and global economic and social change through the encouragement of a high-quality learning experience, as well as lifelong learning and productive global citizenship.

Instilling these values in our students has led to us seeing more students from Pharo Schools going onto university and an appetite from students to study abroad. In support of this the Foundation has begun providing scholarships to some of its school’s

brightest students to aid in funding studies at leading schools abroad. By the end of 2022, three of the brightest pupils from Pharo Secondary School Sheikh were awarded university scholarships to leading schools in Malaysia and Canada. The first student the Foundation gave a scholarship to study abroad is now studying sustainable design engineering at the University of Prince Edward Island, in Canada, and has a clear ambition to return to Somaliland upon completion of her degree and put the skills she has learned into action and give back to the society she grew up in. This shows the value this adds to both the individual student but also the community they come back to. Our hope is the students we provide scholarships to act as trailblazers for African students studying abroad and act as role models and highly valuable members of the work force when they return to their home countries.

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Pharo Foundation Annual Report 2022

Water

In water, we decided to focus on the provision of large water reservoirs with plastic geomembranes, which now leaves us in the enviable position of having significant fixed assets as a strong starting point to deliver systemic change in access to water. Indeed, this year saw us significantly ramp up our financing of the water pillar.

The choices of locations for our water projects are based on several factors. These include water scarcity in a region (i.e. the lack of rainwater), the population size and the average distances people are travelling to fetch water during the dry season. Community contribution is also a significant factor in deciding the location of these large-scale water projects as the dam and berked locations are often donated by individual members of the community. Pharo Foundation is then able to officially notarise the spaces as public property with local government coordination.

While we have some rural water well rehabilitation projects in Menge and Undulu, our recent focus in our Ethiopian projects this year has been on the urban context, especially in Assosa town, where we built 3 deep wells and the necessary generators and water pumps to increase water coverage in the city by 8%. In Assosa, our other flagship project has been the upgrading of water infrastructure at Assosa Hospital. Through our intervention, the latter has gone from a situation where water trucks delivered water twice a week to 24-hr uninterrupted water supply. The implications for the prevention of infection diseases, food preparation and hygiene cannot be overestimated.

Community members using the rehabilitated Illinta Hafir Dam in Somaliland.

An ariel view of the Illinta Hafir Dam after the rains.

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Pharo Foundation Annual Report 2022

Community members using the Illinta Hafir Dam.

In Somaliland, the emphasis has been primarily rural, although we are also currently working on a subsurface dam which will increase water supply around Hargeisa. Following recent rains, the benefits of the Foundation’s three most recent rural water projects in Somaliland are more visible than ever.

The Somaliland team completed the Taysa berked in the Gabiley region in December 2022 and following the start of the rainy season in 2023 this quickly reached its full capacity of 1,260 cubic metres of water – serving almost 300 households. However, this is just the start of their success…

The Ijaara dam (Gabiley region) and the Wado-Makahiil dam (Maroodi-Jeex region) are much larger projects and having both started in November 2022 they are estimated to be complete by mid-late June 2023. The two dams will have water capacities of 60,000 cubic meters each once complete, both also potentially having capacity to serve people from neighbouring communities that might travel to them.

The Foundation’s hope is that all these water projects will have significant medium and long-term impacts on the regions they have been built in. We also aspire to building the beginnings of a sustainable medium-term model for solving the water problem in Africa. Yet the Foundation’s ability to scale up its efforts also depends on other systemic interventions, and on reaching beyond the management of its outstanding fixed asset network in a missions-based perspective. One instrument it could use for this purpose is the creation of a novel metric of water scarcity, which would create demand for its water solutions. Indeed, by creating a measurement tool, it could become a reference that other institutions come back to. Measurement means data and data is power, especially in our current AI-driven society. Based on such data, Pharo Foundation would be able to then convene high-level dialogues to improve water policy and attract partners.

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Pharo Foundation Annual Report 2022

Health

In healthcare, we have focused our interventions in areas where we perceived a real infrastructure and market gap, and this has resulted in us adding to diagnostic capabilities in one of the most remote areas of Ethiopia, namely Benishangul Gumuz.

Abiy Nigusse, Pharo Diagnostic Centre Laboratory technologist at the Diagnostic Centre.

In June 2022, we opened the Pharo Diagnostic Centre (PDC) in Assosa, Ethiopia, the only advanced diagnostic centre of its kind in Benishangul-Gumuz. It offers a range of diagnostic tests and has welcomed 5,318 people since opening, with an accelerating trajectory which saw an all-time high in patients in November at 537. One of the trends which is growing in the region is the silent epidemic of non-communicable diseases (NCD). While our PDC data does not allow us to quantify the scale of NCD diagnosis per se, we are picking up on a remarkable spread of symptoms associated with NCDs. For instance, of the 587 blood glucose tests we have performed to date, 40% showed raised blood glucose levels, which are correlated with diabetes. In the battle against NCDs, solving the diagnosis gap is only the first step. We want to play a catalytic role beyond the provision of diagnosis itself, going into the generation of data which can motivate investments by other institutions, triggering behaviour changes and recalibrating policy. This will likely be a focal point in our health mission for the next five years.

Nicolas Sagna and Guillaume Fonkenell, board members of Pharo Foundation, visit the Pharo Diagnostic Centre in Assosa, Ethiopia.

Elsabet Berhe and Alemnesh Ensermu at the PDC Reception.

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Pharo Foundation Annual Report 2022

Agriculture

Expert knowledge and access to key farm inputs are often the missing link in agricultural development and this is the gap we have focused on this year.

Mohamed Muse Elmi, Mukhtaar Abdillahi, Agriculture Development Manager alongside the Somaliland Agriculture team in Somaliland

In response, Pharo Foundation has adopted the so-called Farmer Field School approach to agricultural development both in Somaliland and Ethiopia, by establishing demonstration farms in agricultural communities. This empowers farmers through rigorous training sessions and provision of key farm inputs, like quality cash crops, pesticides and pesticide protection equipment. In Somaliland for instance, two demonstration farms were selected to train a total of 120 farmers that were previously registered and verified - 20% of whom are women. The farmers receive a total of 11 training sessions over a four-month period. This includes biopesticide and compost preparation and application methods, integrated pest management, good agricultural practices, cooperative marketing approaches, and product selling techniques at local markets. Experienced field officers spend three to four days at the demonstration farms to conduct the training sessions.

Farah Jirdeh-Fonkenell, a Trustee of Pharo Foundation, visited one of the agriculture projects in Ethiopia 2022.

Agriculture graduation ceremony, Somaliland.

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Pharo Foundation Annual Report 2022

Pharo Ventures

Our vision for Pharo Ventures has always been to nurture home-grown enterprises with a social purpose and the potential to create a large number of jobs.

Aerial footage of the construction of Ijaara Hafir Dam (132mX92mX6m) with storage capacity 57,863.00 cubic meters. This dam is located in the South East region of Gabiley, Somaliland.

We have followed through with this vision. Our first main business in Somaliland is Pharo Construction ltd (PCL), thriving and changing the landscape of construction in Somaliland. Since its inception, PCL has hired 55 permanent employees and created many indirect jobs. This has been hugely beneficial to the area in both boosting employment and leaving behind critical infrastructure. Work has included school projects and residential housing projects. One of the biggest projects is that of Ijaara dam.

Ijaara dam is a fully integrated dam with geo membrane installation, an elevated reinforced concrete tank, animal water troughs, kiosks for drinking water, a concrete inlet and concrete spillway, a security room, a pump room, solar panels, a fence and sanitation facilities.

permanent employees 55 hired by PCL

Ijaara dam has a storage capacity of

57,863m[3]

Households have access to clean water

465

Aerial footage of Illinta dam (75.5mX57mX4m) located in Gabiley, Somaliland. With storage capacity of 17,400.00 cubic meters that will provide clean and adequate water for 247 households through the year particularly during the dry season.

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Pharo Foundation Annual Report 2022

Pharo Construction team building a home located in Hargeisa, Somaliland: before and after

In the building of this dam, PCL has demonstrated its innovation by pioneering the methodology of ‘battered excavation’. Where space allows, battering the excavation sides to a safe angle of repose makes the excavation safer because the likelihood of a trench collapse is reduced. While competitors tended to dig dams down to 6 metres of depth, Pharo Ventures Somaliland only does so to a two-metre depth in Ijaara dam, which improves health and safety. When complete the dam will have a storage capacity of 57,863 cubic meters and provide access to clean water for 465 households. It is projects like this that are cementing PCL as a trusted and valuable business in the region.

RMC is also standing out from its competitors in recent months. Indeed, RMC stands out because of the high quality of its concrete despite its product remaining cheaper than the existing competition. Beyond providing much needed competition to an area keen to build and expand, RMC is also addressing community needs. Its flagship project, which is the refurbishment of the Waaheen market that experienced a major fire in 2022, will mean RMC can play a key role in reconstructing the economy and livelihoods which the market sustains.

In Ethiopia, Pharo Ventures continues its progress towards the start of production of its edible oil processing plant in November 2023.

Pharo Construction employee rebuilding the Waheen Market that was hit with massive fire on April 1 st , 2022. The market is located in Hargeisa, Somaliland.

Aerial footage of the construction at the Wado-Makahiil dam, located in Maroodi-Jeex, Somaliland

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Pharo Foundation Annual Report 2022

KNOWLEDGE & LEARNING THROUGH PARTNERSHIPS

Finally, in line with our growth, we have become increasingly aware that achieving scale and systemic impact becomes much easier when combining capabilities with other key organisations in our pillars. In this perspective, we have started experimenting with partnerships.

West London Schools Partnership

UNESCO Water Centre at the University of Thessaloniki Partnership

This year, we have started a partnership between our Sheikh secondary School in Somaliland and the West London Schools Partnership, which includes London’s prestigious St Paul’s Boys School and Latymer Upper School. Girls from Sheikh are paired up with Latymer Upper School girls, while Sheikh boys are paired up with St Paul’s boys. The boys communicate via the Colet mentoring app, an innovative education technology, which connects 11 Sheikh boys from years 9 and 10 with year 12 and year 10 mentors from St Paul’s. Via the app, the Sheikh boys put forward some maths and science problems which they struggle with to their St Paul’s peers, whose role is to guide them through the steps towards an answer. The app has stringent security mechanisms which rule out any inappropriate behaviour and it only allows for child to child communication. Meanwhile, Sheikh girls are conducting weekly conversation classes with Latymer girls. Other non-online, teaching partnership programmes with the West London School Partnership are under consideration.

Adding to East Africa’s scarce resources is not enough; the real multiplier effect occurs when development organizations trigger a change in the management of these resources. This is what Pharo Foundation has set out to achieve. It has established a significant extent of water infrastructure in both Ethiopia and Somaliland, yet to take full advantage of this infrastructure, its water resources staff require training in the latest innovations in hydraulics, hydrology and hydraulic works design. The Foundation has set up a partnership with the UNESCO Centre for Integrated and Multidisciplinary Water Resources Management at the Aristotle University of Thessaloniki, involving a 100-hour online training programme of 17 water engineers from Pharo Foundation across Ethiopia and Somaliland. The programme was recorded and the Foundation has shared its content with community stakeholders for added multiplier effect.

The duo partnerships have given us an opportunity to test the waters of collaboration with external organisations without a loss of control of our internal agenda. We are ready to instigate a selection of new partnerships at a greater scale in the coming year, beyond education and training, into health, agriculture and water solutions.

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Pharo Foundation Annual Report 2022

KNOWLEDGE & LEARNING THROUGH SELF-EXAMINATION

Having reached a critical mass of more than 500 employees, we became increasingly aware of our critical need for a research and evaluation department, which ensures that only our most impactful and cost-effective programmes are extended and potentially replicated. This department was created in 2022 and has gone from strength to strength.

It has revolutionised our programme design process, including the way we present our programme proposals in terms of the assessment of a development problem and its alternative solutions, with a rigorous estimate of F-factors to social return on investment. Between June and September, the department launched data collection for three existing projects, namely the Agricultural Development Programme, the Assosa Water Supply Project and the Somaliland Agricultural Productivity Enhancement

Programme. It also started evaluation of a pilot project in October and again, this time on the Berbera ECE, with a view to experimentally measure in the context of a randomised controlled trial the impact of ECE on early childhood development and the extent to which ECE differentially impacts certain types of children. The evidence generated through evaluation then leads to an improved new project selection and design, so that the whole project life cycle becomes an optimised process from design to implementation.

Evening Debriefing Session for Randomised Control Trials in Berbera ECE Programme, October 2022

Data Collection for Randomised Control Trials in Berbera ECE Programme, October 2022

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Pharo Foundation Annual Report 2022

STRUCTURE, GOVERNANCE AND MANAGEMENT

1.1 Governing document

The Pharo Foundation is constituted as a company limited by guarantee (Company No. 07678862) and operates under the terms of its Articles of Association. It is registered with the Charity Commission (No. 1143152).

1.2 Organisational structure

The Pharo Foundation is a medium-sized, yet growing, organisation with its Trustees overseeing its work routinely. The group ownership and control of various entities are listed under note 11 to the financial statements.

In 2019, the Foundation took the strategic decision to establish various social enterprise businesses to carry out more of its activities under the Pharo Ventures name. The enterprises have three objectives: maximising economic value added, maximising the number of jobs created and reaching profitability within a few years.

Trustees of the Foundation are appointed as a trustee through an ordinary resolution. Trustees serve for three years and thereafter they have an opportunity to seek re-appointment. The current Trustees were appointed based on the skills and experience that they offer The Pharo Foundation and their interest in the charitable objectives of The Pharo Foundation. All Trustees are given an induction pack that explains the legal obligations of the Trustees and includes The Pharo Foundation’s governing document and other key policy documents.

The Trustees who held office during the period ending 31 December 2022 and up to the date of approval of these financial statements were:

No Trustee received any remuneration for services as a Trustee, nor had any beneficial interest in any contract with the Pharo Foundation, during the year. Expenses reimbursed to Trustees are disclosed in note 9 of the financial statements.

The day-to-day management of the charity’s activities and the implementation of its policies are delegated to the CEO of the Foundation. Management reporting lines are clearly defined, and the Trustees receive regular reports on both the programme and grant activities to enable them to fulfil their responsibilities.

The key management personnel of the charity, responsible for directing and controlling, running and operating the charity on a day-to-day basis, comprises the Trustees, CEO of Pharo Foundation and CEO of Pharo Ventures Kenya. Others includes CFO and Mission Directors.

1.3 Statement of Trustees responsibilities

The Trustees (who are also directors of The Pharo Foundation for the purposes of company law) are responsible for preparing the Trustees’ Annual Report and the 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 charitable company and the group and of the income and expenditure of the charitable group for that period. In preparing these financial statements, the Trustees are required to:

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Pharo Foundation Annual Report 2022

Our Board of Trustees

Mr Matthieu Baumgartner

Mr Guillaume Fonkenell

Mrs Farah Jirdeh-Fonkenell

Mr Nicolas Sagna

Mr Mustafa Jama

The Trustees are responsible for keeping accounting records that are sufficient to show and explain the charitable company’s transactions and disclose with reasonable accuracy at any time the financial position of the 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 charitable company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Each of the Trustees confirm that:

This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006.

The Trustees are responsible for the maintenance and integrity of financial information included on the charitable company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

1.4 Risk management

The Trustees continuously assess the major risks to which the charity is exposed. As part of this process, we reviewed and updated our risk management matrix in July 2022.

Our updated risk management matrix contains 20 potential risks under eight major headings, including governance and management, law and regulation compliance, investment, operational, financial, external and reputational. For each potential risk, we have identified potential consequences and the controls we have put in place to manage the risk. We have also rated (low, medium and high) the likelihood of each potential risk happening and the impact it will have on the Foundation if the risk materialised.

24

Pharo Foundation Annual Report 2022

The following are the major risks that the Trustees have identified and established effective controls to mitigate them:

1.5 Fundraising

The Foundation does not actively seek donations from the public therefore it has not registered with the Fundraising Regulator. It does not use the services of any third-party organisation to help in its fundraising activities and no complaints were received about its fundraising activities during the financial year.

1.6 Public benefit

All the Trustees are conversant with the Charity Commission’s guidelines concerning charities and public benefit and have given consideration to them when assessing the charity’s activities. The Trustees believe that they have complied fully with the duty in Section 4 of the Charities Act 2011 to have due regard to the public benefit guidance published by the Commission.

1.7 Compliance with Trustees Duties under Section 172(2) Companies Act 2006

Trustees must act in the way they consider, in good faith, would be most likely to promote success to achieve its charitable purposes. The Trustees, in doing so, delegate day to day management and decision-making to the Chief Executive, who, with other key management, is required to act to further its strategy and to ensure that the activities are carried out in compliance with agreed plans and policies. The Trustees receive updates on performance and plans at each Board of Trustee meeting. In carrying out their duties, the Trustees have regards (among other matters) to:

1.7.1 Foster the charity’s business relationships with suppliers, customers and others

Our network of collaborations includes working with various stakeholders such as vendors, individuals’ communities and various government sectors in a move to positively contribute towards improving the livelihood of people through increase access to education, agriculture, health and water.

These partnerships are key to our work in Africa. Mutual respect together with transparency, trust and accountability form the basis of our work with others. Overall, our values govern our procurement process and all our suppliers must comply with our code of conduct and principles of our procurement policy.

1.7.2 Carbon Reporting Exemption

Pharo Foundation qualifies for a carbon reporting exemption under the Carbon Reporting (Amendment) Regulations 2018, as our energy consumption remained below 40,000 kWh during this period. We remain committed to environmental responsibility and will continue to implement sustainable practices to reduce our carbon footprint in line with our mission.

FINANCIAL REPORT

Phoy'o Foundotioii AiiJ)ual Report 2022 FINANCIAL PERFORMANCE Flnanclal Posltio cl)aritable objectives. The mol'e ci'itical objective is to 5UPPOI-t African start-lips in becoming successful ni-g3nisalioJ15 that create jobs and econoniic value. The Foundation ainis to leai'ii fi'om these invest- ments with respect to Atrican operating environ- ments and oppoj'tunities and also potenlial technol- ogy transfer whet'e applicable. The Trustees have a significant amount of invest- ment experience and expertise. The Th'ustees un. dertake due diligence and carefully evaluate an investtnent proposltion both financsal and mis- sion I'elated terms beforc an invcstment decision is made. Perfoj'tnaiice of investments is nionitored pe- riodically by the Trustees on an on-golng basis. Over the past 12 nionth.8, the value olportfolio remaii)ed uncl)anged. The Pharo Foundation received a donation of US$ 20,011,973 dui-ing the period from Pharo Develop- ment liivestment Limited IPDILI wliich was unre- sti'icted. PDIL acts as a vehicle to distribute profits received frum Pharo Managenienr {UK) LLP. During the year, tl)e Foundation's total income aiiiourlted to US$ 2 1,823,534. This incoine was sourced ft'om donations and legacies, charitable ac- tivitie.q, investtneiits, and other ti'ading operations. There was a 430A deLline in donations and legacies, equating to a decrease of US$ 43,445. Convei'sely, iiicome frotn charitable activities increased by 550kn, l'eaching an additional us$ 273,001. This rise was attributed to the introduction of an cxtra 5cliool terrn coinpared to the pi-ioi. year. Investnient incomes saw a 1% gi'owth. prlmarlly from bank interest on depo%it%. Other trading iiicomes also increased, up by us$ 678,605, largely di'iven by the Foundation's social ventures businesses. Reserves Policy The Pl)ai'o Foiirldation has cotnniitted to geveral chai'itable grant projects and pi'ogi'ammes with var- ious on-going financial comniitinents. Accordingly. the Ti'ustees nioiiitoi- the level of I.eSerVe￿ thi'ough- oiit the year to enablc it to meet thcse financial com- Initiiients and other operational liabilities. Funds committed to partners and our own programmes are shown as designated funds in the balance.sheet and are payahle only after 2'eviews of pi'oject aiid programine progress. The Pharo Foundation s re- sel'ves are those funds not already committed and thei-efore available for futui'e prograTnme spending. IL is not the intention of tlie Trustees to 2cellmulate reserve5', the Trustee5 plan to expend the charity's resoui'ces over a reasonable period. Regarding expenditLires, the Foundation I'epoi'ted a total of US$ 14,930,856. This marked a 31 increase, reflecting the Foundation's expaiision actIV￿ties. Specifically, US$ 2.866.254 was allocated to social ventures trading, up from the pi-evious figure of US$ 1,958,287. Foundatioii grants awcll-deif saw a decrease of 850k, or US1885,445, in comparison to the previous year. Expenditui-es in areas sucli as Agriciilture, Education, Health. Water, and Sanitation grew by 30%, or US$ 2,769,323. This was diie to tlie resumption of operations post the Covid-19 pandetnic and the expan5ioiI ol the Foundation's programmes during thc yeai.. As of 31 Deceinber 2022, the Foundation's unre- sti-icted funds totalled US$ 30.673.493. Froni this amount, thc net book valiie ofthe &roup and char- ity's tangible fixed asset5 srands at US$ 5,819,931. Fui'thermore, US$ 1,804,766 has been set aside for impact iiivestments, leaving an unresti-icted fund Grant Makiiig Policy Pharo Fouiidaiion provides grant5 to chai'itable or- ganisations and scholarships to individiials as part of its mission to support philaiithi'opie caiises arid educational advanceinent. Graiits aiid scliolarships are awarded tts eligible recipients based on the Foundation's established criteria and guldelines. balai)ce of US$ 23,048,796. It should be noted that The Pharo Foundation does not engage in direct fundraising activities. Approved by ihe Trusrees and signed on their belialf by.. Mi- Guillaurne Fonkenell, Trustee Approved by the Trustees on.. Investment Pollcy The Pharo Foundation had an investment portfo- lio valued al USS 1.804,766 at 31 DeceTnber 2022 [2021- US$ 1,804,7661. Tlie Pharo Foundation has a mixed motive investment charitable objective. The InvestIiient objectlve Is two-fold. One objective Is to generate annual investment return8 in exce%s of cash deposit accounts the rate 3nd/or to further it5 ay/g/13

27

Pharo Foundation Annual Report 2022

AUDIT REPORT

Independent auditor’s report For the year ended 31 December 2022

Independent auditor’s report to the member of The Pharo Foundation

Opinion

We have audited the financial statements of The Pharo Foundation (the ‘foundation’) and its subsidiaries (the ‘group’) for the year ended 31 December 2022 which comprise the consolidated statement of financial activities, the group and foundation balance sheets and consolidated statement of cash flows, the principal accounting policies and the notes to the financial statements. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

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. 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

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the charitable company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

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

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 this other information, we are required to report that fact.

We have nothing to report in this regard.

28

Pharo Foundation Annual Report 2022

Independent auditor’s report For the year ended 31 December 2022

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the foundation and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees’ report.

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

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement, the trustees are responsible for the preparation of the financial statements and for being satisfied that they 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.

In preparing the financial statements, the trustees are responsible for assessing the group’s and the charitable parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the group or the charitable parent company or to cease operations, or have no realistic alternative but to do so.

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, 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

29

Pharo Foundation Annual Report 2022

Independent auditor’s report For the year ended 31 December 2022

We assessed the susceptibility of the group and charity’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

To address the risk of fraud through management bias and override of controls, we:

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the trustees and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

A further description of our responsibilities is available on the Financial Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

30

Pharo Foundation Annual Report 2022

Independent auditor’s report For the year ended 31 December 2022

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 charitable company and the charitable company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Edward Finch, (Senior Statutory Auditor)

For and on behalf of Buzzacott LLP, Statutory Auditor

130 Wood Street

London

EC2V 6DL

Date: 29 September 2023

31

Pharo Foundation Annual Report 2022

ro FoundationAnnual Report 2022
nsolidated statement of financial activities
r the year ended 31 December 2022
Notes
NANCIAL STATEMENTS		 Group
1 Jan 2022 to
31 Dec 2022
US$		 Group
1 Jan 2021 to
31 Dec 2021
US$
Income from:
Donations and legacies
1
Charitable activities
2
Other trading activities
3
Investment
4
Total income
Expenditure on:
Social ventures trading
Charitable activities
6
Total expenditure
Minority interests
Net income before investment gains
7
Net income
Other recognised gains/losses
(Losses) on foreign exchange
Net movement in funds
8
Total funds brought forward
Total funds carried forward
Net gains/(losses) on investment
assets		 57,243
771,099
693,007
20,302,185		 100,689
498,099
14,402
20,027,792
21,823,534 20,640,982
2,866,254
12,064,602		 1,958,287
9,295,278
14,930,856
584		 11,253,565
228
6,893,262
-		 9,387,645
360,644
6,893,262
(393,936)
6,499,326
24,174,167		 9,748,289
(764,183)
8,984,106
15,190,061
30,673,493 24,174,167

FINANCIAL STATEMENTS

Consolidated statement of financial activities

For the year ended 31 December 2022

All the above results are derived from continuing operations apart from Pharo Farm Ethiopia whose operations were discontinued on 30th September 2022. All income and expenditure for the current and prior year are unrestricted. Pharo Foundation has no recognised gains or losses other than those shown above.

Discontinued operations: Pharo Farm Ethiopia

1 Jan 2022 to
31 Dec 2022
Total
US$		 1 Jan 2021 to
31 Dec 2021
Total
US$
Income
Expenditure
Net(expenditure)
Net (expenditure) from discontinued
operations
Foreign exchange		 3,180
335,766		 506
782,665
(332,586) (782,159)
14,992 21,555
(317,594) (760,604)

.12 Phay'o FouF]dotioii ArJJiuulReport Z022 Statement of Financial Position 31 December 2022 NotOS Group 2022 us$ Group 2021 us$ Foundailon 2022 us$ Foundation 2021 us$ Flxed assets Tangible assets io li 12 5,819,931 1,804.766 14.903 7,639,600 5,222.784 1,804,766 3,950.943 8,651,552 14,903 12,617,398 3,407.283 4,057,70S Debtorsdue after oneyear 7,027,550 7.464.988 CurreTrtassets IDvenroiy Debtors duewith2noneyear Cash atbankand in hand 13 14 163,083 1.245,672 23.296,985 24,705.740 160,928 556,251 20,159,191 20,876,270 899.437 17,157,953 18,057,390 654,406 16,873,664 17,528,070 Credltors.. amounts falllllgdue within oneyear 15 1,671,759 910.329 1,034.684 834,658 Net current assets 23,033.991 17,147,061 19,841.686 16,693,412 Total netassets 30,673,581 24.174.611 32.459.084 24,158,400 Mlnorltylnterests 88 444 Netassetsa¢tributable to Group 30,673.493 24,1?4,167 32,459,084 24.158.400 Fundsofthethai'lty. UnrestricLed Funds . General funds . Designated lunds 23,048,796 7,624,697 30,673,493 16,982.818 7,191,349 24,174.167 19,856.589 12,602.495 32,459.084 16,529,613 7,628,787 24,158.400 16 Approved by the Trustees of The Pharo Foundatir)n, Company Registi-ation No. 07678862 (United Kingdom) aiid Cl)ai'ity Registration No.1143152 [Englaiid aiid Wales) and signed on their behalf by.. Mr Guillaume Fonkenell, Trustee Approved on.. 19/9 /13

33

Pharo Foundation Annual Report 2022

Statement of Cash Flows

31 December 2022

Cash �lows from operating activities:
Net cash (used in) operating activities
Cash �lows from investing activities:
Income from investments
Purchase of tangible �ixed assets
Proceeds from sale of �ixed assets
Net cash provided by investing activities
Change in cash and cash equivalents in the
reporting period
Cash and cash equivalents at 01 January 2022
Change in cash and cash equivalents due to
exchange rate movements
Cash and cash equivalents at 31 December 2022		 Group
1 Jan 2022 to
31 Dec 2022
US$
Group
1 Jan 2021 to
31 Dec 2021
US$
(12,167,607)
(9,715,134)
20,302,185
20,027,792
(1,850,243)
(3,213,202)
11,907
18,463,849
16,814,590
6,296,242
7,099,456
17,157,953
10,309,165
(157,210)
(250,668)
23,296,985
17,157,953

No separate statement of the movement in net debt has been prepared as there is no difference between the movement in cash and cash equivalents disclosed above and the movements in net cash (debt) for the group.

Reconciliation of net income/(expenditure) to net cash �low from operating activities

Net income for the reporting period (as
per the statement of �inancial activities)
Adjustments for:
(Gains) / losses on investments
Depreciation charges
Impairment of �ixed assets
Disposal of �ixed assets
Income from investments
(Increase) in Inventory
(Increase) in debtors
Increase in creditors
Net cash used in operating activities		 Group
1 Jan 2022 to
31 Dec 2022
US$
Group
1 Jan 2021 to
31 Dec 2021
US$
6,893,262
9,748,289
-

(360,644)
771,576
446,674
-

375,749
232,531
-

(20,302,185)
(20,027,792)
(163,083)
-
(361,138)
(144,511)
761,430
247,101
(12,167,607)
(9,715,134)

34

Pharo Foundation Annual Report 2022

PRINCIPAL ACCOUNTING POLICIES

Principal accounting policies 31 December 2022

The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of the financial statements are as follows:

Basis of preparation

These financial statements have been prepared for the year to 31 December 2022. The financial statements are presented in US Dollar and are rounded to the nearest Dollar.

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 accounts in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) (Charities SORP FRS 102), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), Companies Act 2006 and the Charities Act 2011.

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

Basis of consolidation

The Consolidated Financial Statements incorporate the results of the charity and its subsidiaries, as listed at note 11, for the year ended 31 December 2022.The acquisition method of accounting has been adopted.

Under section 408 of the Companies Act 2006 and the SORP, The Pharo Foundation is exempt from the requirement to present its own Statement of Financial Activities.

Critical accounting estimates and areas of judgement

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including experience of future events that are believed to be reasonable under the circumstances. The Foundation makes estimates and

assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.

The items in the financial statements where significant judgements and estimates have been made include:

Estimating the useful economic lives of fixed assets

The assets of the Foundation are primarily held overseas. The useful economic life of certain assets, applied for the purposes of calculating depreciation, have therefore been assessed as being shorter than that which would ordinarily be applied to the same asset class located in the UK. This is due to the difference in the standards applicable across different jurisdictions.

Determining the value of assets granted from overseas Governments

The Foundation has been granted the use of a number of significant assets overseas. Specifically, a 26 and a 484-hectare plot of land from the Environment Forest and Land Administration Office, of Benishangul Gumuz Regional State in Ethiopia and three school sites from the Ministry of Education and Science in Somaliland.

Although the risks and rewards of ownership of these sites is held by the Foundation, no value was attributed to these sites in the year of occupation as the Foundation is unable to reliably estimate their value under the specific terms granted and there is no question of disposal for commercial gain. Improvements to these sites are capitalised where they meet the accounting policy criteria for tangible fixed assets.

The valuation of unlisted investments

The group holds unlisted investments in three companies. These are included in the financial statements at fair value, using a quoted market price or evidence of recent transactions. If fair value cannot be measured reliably investments are measured at cost less impairment. The trustees have made the following assessment in relation to each holding.

35

Pharo Foundation Annual Report 2022

Principal accounting policies 31 December 2022

Determination of overseas operations as a branch or subsidiary

The Group operates in and has a locally registered presence in overseas countries, as detailed in the trustees’ report. The legal structures available for these operations vary between countries. For the purposes of these financial statements the trustees have made an assessment of whether the locally registered presence should be classified as a branch or a subsidiary by aligning the local registration type with the most comparable format of registration under UK laws.

Other judgements applied by management include:

Going concern

The Trustees have assessed whether the use of the going concern assumption is appropriate in preparing these financial statements. The Trustees have

made this assessment in respect of a period of one year from the date of approval of these financial statements.

The Trustees have 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. This is because the charity is in a net asset position and received sufficient additional investment income after the year end to meet the cost of its budgeted programme and grant-making activities.

Since 31 December 2022, the Foundation has assessed the potential impact of political unrest and persistent increase in inflation on the Foundation and concluded that while the ability of the Foundation to undertake it’s activities as planned will be affected, as detailed on page 26 of the trustees report, there will be no material impact on the going concern status of the Group because the Foundation has sufficient assets and received its allocated profit share in May 2023 from Pharo Management (UK) LLP which is sufficient to ensure the Foundation can meet its commitments and liabilities.

Income

Income is recognised in the period in which the charity has an entitlement to the income, the amount of income can be measured reliably and it is probable that the income will be received.

Donations, including amounts received under Gift Aid, are recognised when the charity has confirmation of both the amount and settlement date. In the event of donations pledged but not received, the amount is accrued for where the receipt is considered probable.

Income from charitable activities is recognised in the period in which the service is provided. Where income is received in advance of meeting any performance-related conditions, and there is no unconditional entitlement to the income, it is recognised as deferred and included in creditors as deferred income until the performance conditions are met.

Income from investment is received from PDIL. It is measured at the fair value of the consideration received or receivable, excluding any discounts or rebates.

36

Pharo Foundation Annual Report 2022

Principal accounting policies 31 December 2022

Interest on funds held on deposit is included when receivable and the amount can be measured reliably by the charity; this is normally upon notification of the interest paid or payable by the bank.

Construction income from social ventures applies percentage of completion (“PoC”) of the contract to estimate the revenue to be recognized during the year. The stage of completion of a contract may be determined by a variety of ways. Depending on the nature of the contract, revenue is recognised as contractually agreed technical milestones are reached, as units are delivered or as the work progresses.

Investments

Investments other than subsidiaries are included in the financial statements at fair value, using a quoted market price or evidence of recent transactions. If fair value cannot be measured reliably investments are measured at cost less impairment. Gains and losses are recognised in the statement of financial activities.

Investments in subsidiaries are held at cost, less any impairment charges.

Expenditure

Liabilities are recognised once there is a legal or constructive obligation to make a payment to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably. All expenditure is inclusive of irrecoverable VAT. All expenditure is accounted for on an accrual basis.

Expenditure comprises the following:

Grants payable are included in the statement of financial activities when approved and when the intended recipient has either received the funds or been informed of the decision to make the grant and has satisfied all related conditions.

Tangible fixed assets

All tangible fixed assets costing more than $500 and with an expected useful life exceeding one year are capitalised. Assets are depreciated when they are brought into use. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life:

IT equipment 3years estimated useful life
Furniture and
fittings		 3 years estimated useful life
Motor Vehicles 2 to 5 years estimated useful
life
Plant and
Machinery		 5 years estimated useful life
Building 20years estimated useful life
Leasehold
Improvement		 5 years estimated useful life
Land No depreciation
Construction in
progress		 No depreciation

Construction in progress comprises of partial completed proportion of the buildings measured at cost.

Foreign currencies

Assets and liabilities in other currencies are translated into US$ at the rates of exchange ruling at the balance sheet date. Transactions in other currencies are translated into US$ at the rate of exchange ruling at the date of the transaction. The income statements of subsidiaries in other currencies are translated at average rates of exchange. Exchange differences are taken into account in arriving at the net movement in funds.

Although the functional and presentational currency, as stated above, is US$, the Pharo Foundation is a UK based charity and certain provisions of legal and regulatory requirements and the charity’s operating policies are stated in British Pounds (£). Within these financial statements, amounts relating to these specific requirements have also been stated in British Pounds (£).

The source of the foreign currency conversion is provided by XE.com.

37

Pharo Foundation Annual Report 2022

Principal accounting policies 31 December 2022

Operating leases

The costs of operating leases are charged to the statement of financial activities on a straight-line basis over the life of the lease.

Debtors

Debtors are recognised at the 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.

Debtors due after one year relates to a component of scholarship awarded to students that is subject to recovery under certain terms and conditions of the scholarship. See Note 12.

Inventories

Inventories are stated at the lower of cost and net realisable value. Medical supplies are valued using FIFO method. The cost of medical supplies comprises mainly laboratory reagents. Fuel is valued at cost and is stored as a caution against shortage in the country. Ready Made Concrete (RMC) comprises construction materials valued by engineers at year-end. Net realisable value is the estimate of the selling price in the ordinary course of business, less the costs of completion and selling expenses.

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.

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.

The general fund comprises those monies that may be used towards meeting the charitable objective of the charity at the Trustees’ discretion.

The designated fund comprises monies set aside out of unrestricted general funds for specific future purposes or projects. The details of the specific designations made are detailed at note 14.

Taxation

The taxation status of the group and it’s subsidiaries are disclosed in note 17. The current tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date.

Deferred tax is provided using the liability method for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Fund accounting

All of the charity’s and the group’s funds received to date have been unrestricted.

38

Pharo Foundation Annual Report 2022

NOTES TO THE FINANCIAL STATEMENTS

Notes to the financial statements 31 December 2022

1 Donations and legacies

Donations Group
1 Jan 2022 to
31 Dec 2022
US$
57,243
57,243		 Group
1 Jan 2021 to
31 Dec 2021
US$
100,689
100,689

2 Income from charitable activities

Group
Group
1 Jan 2022 to
31 Dec 2022
1 Jan 2021 to
31 Dec 2021
US$
US$
728,369
496,627
30,076
-
12,654
1,472
771,099
498,099
Pharo schools
Pharo laboratories
Other income

3 Income from social enterprise trading

Group
1 Jan 2022 to
31 Dec 2022
US$		 Group
1 Jan 2021 to
31 Dec 2021
US$
Construction income 693,007 14,402
693,007 14,402
Income from investments Group
1 Jan 2022 to
31 Dec 2022
US$		 Group
1 Jan 2021 to
31 Dec 2021
US$
Pro�it share from Pharo Management UK LLP
Bank interest		 20,011,973
290,212		 20,014,586
13,206
20,302,185 20,027,792

4 Income from investments

5 Expenditure on Social Ventures Trading

Expenditure on Social Ventures Trading
Group Group
1 Jan 2022 to 1 Jan 2021 to
31 Dec 2022 31 Dec 2021
US$ US$
Cost of sale- Social Ventures Group of companies 690,649 133,293
Operational costs from the Social Ventures Group of companies 2,126,028 1,776,022
Governance costs 49,577 48,972
2,866,254 1,958,287

39

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

6 Expenditure on charitable activities

Group
1 Jan 2022 to
31 Dec 2022
US$
163,799
14,903
11,070,274
815,626
12,064,602		 Group
1 Jan 2021 to
31 Dec 2021
US$
Grants to Institution
Scholarship awarded
Integrated Livelihood Programme
Support costs of grant making and programme activities		 1,064,147
-
7,611,524
619,607
9,295,278
Analysis of activities Activities
undertaken
directly
2022
US$		 Grant funding of
activities
2022
US$		 Support costs
2021
US$
45,968
469,862
81,374
22,403
619,607
Support costs
2022
US$
64,896
527,080
34,517
189,133
815,626		 Amount
2022
US$
Agriculture
Education
Health
Water & Sanitation		 895,041
7,090,702
476,056
2,608,475		 -
178,702
-
-		 960,985
7,796,484
510,573
2,797,608
11,070,274 178,702 12,064,602
Analysis of activities Activities
undertaken
directly
2021
US$
643,641
6,289,801
364,392
313,690
7,611,524		 Grant funding
of activities
2021
US$
-
289,147
775,000
-
1,064,147		 Amount
2021
US$
Agriculture
Education
Health
Water & Sanitation		 689,609
7,048,810
1,220,766
336,093
9,295,278

Support costs have been allocated to each of the above activities on the basis of resources used during the year.

Analysis of support costs
Communications & IT
Finance costs
General management
Of�ice and premises
Staff costs
Governance costs		 1 Jan 2022 to
31 Dec 2022
US$		 1 Jan 2021 to
31 Dec 2021
US$
63,086
429
94,899
70,233
438,402
148,576		 24,019
423
81,882
88,542
343,071
81,670
815,626 619,607

7 Gains / (Losses) on investment assets

Group Group
1 Jan 2022 to 1 Jan 2021 to
31 Dec 2022 31 Dec 2021
US$ US$
Investment gains / (losses) - 360,644
- 360,644

The Foundation did not incur a gain or loss on investment in current period.

40

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

8 Net movement in funds

This is stated after charging:

Group
1 Jan 2022 to
31 Dec 2022
US$		 Group
1 Jan 2021 to
31 Dec 2021
US$
Staff costs (note 9)
Parent company auditor's remuneration
- statutory audit services
- other services
Other companies auditor's remuneration
- statutory audit services
- other services
Depreciation
Impairment of �ixed assets
Loss on disposal of �ixed assets
Operatinglease rentals		 5,954,835
51,642
-
31,615
9,345
771,576
-
232,531
363,556		 4,059,744
26,220
-
24,454
12,645
446,674
375,749
-
329,953

9 Staff costs, key management personnel and trustee’s remuneration

Group
1 Jan 2022 to
31 Dec 2022
US$
Group
1 Jan 2021 to
31 Dec 2021
US$
5,674,622
3,867,760
38,732
21,640
241,481
170,344
5,954,835
4,059,744
Employees
- wages and salaries
- social security costs
- employer pension contributions

The average number of employees during the period totalled 463 persons (2021: 377 persons). This is analysed as follows:

Group
1 Jan 2022 to
31 Dec 2022
No.		 Group
1 Jan 2021 to
31 Dec 2021
No.
3
345
29
377
Group
1 Jan 2021 to
31 Dec 2021
No.
2
-
-
1
-
-
2
5
Number of support staff
Number of programme staff
Number of social ventures staff		 4
407
52
463
Group
1 Jan 2022 to
31 Dec 2022
No.
Employees with emoluments between £60,001 to £70,000 per annum
Employees with emoluments between £70,001 to £80,000 per annum
Employees with emoluments between £100,001 to £110,000 per annum
Employees with emoluments between £110,001 to £120,000 per annum
Employees with emoluments between £120,001 to £130,000 per annum
Employees with emoluments between £140,001 to £150,000 per annum
Employees with emoluments between £160,001 to £170,000 per annum		 4
2
2
1
1

-
-
10

The key management personnel of the Group comprise of the Trustees of the Pharo Foundation, CEO of Pharo Foundation and the CEO of Pharo Ventures Kenya. Others includes CFO and Mission directors.

The total remuneration of the key management personnel was US$ 409,588(2021: US$ 375,521) mainly due to hiring of some key staff during the year.

No Trustees received any remuneration or reimbursement of expenses in their capacity as trustees. However, Trustee’s travel expenses were incurred directly by the Foundation in connection with their duties as Trustees during the year amounting US$ 15,222 (2021: US$ 0). These cost related exclusively to field visits to the Foundation’s overseas project.

41

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

10 Tangible assets

Group Furniture
and �ittings
US$		 Plant and
Machinery
US$		 IT
equipment
US$		 Motor
Vehicles
US$		 Building
US$		 Leasehold
Improvements
US$		 Land
US$		 Work
in progress
US$		 Total
US$
Cost
At 1 January 2022
Additions
Transfers
Disposals
FX on exchange rate
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the period
Disposals
FX on exchange rate
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021		 433,001
127,572
-
(1,279)
(25,621)		 299,778
267,553
-
-
-		 173,484
136,419
-
(6,987)
(9,792)		 1,508,329
507,851
-
-
(43,362)		 2,401,929
-
860,542
(208,649)
(282,399)		 81,657
-
-
(74,885)
(6,772)		 198,824
190,907
-
-
(5,085)		 798,189
619,941
(860,542)
(280)
(10,417)		 5,895,191
1,850,243
-
(292,080)
(383,448)
533,673 567,331 293,124 1,972,818 2,771,423 - 384,646 546,891 7,069,906
101,784
145,616
(816)
(10,059)		 20,247
91,048
-
(426)		 56,993
75,330
(3,761)
(4,758)		 331,795
323,974
-
(18,607)		 138,157
123,252
(21,912)
(98,644)		 23,432
11,570
(33,060)
(1,942)		 -
786
-
(23)		 -
-
-
-		 672,408
771,576
(59,549)
(134,459)
236,525 110,869 123,804 637,162 140,853 - 763 - 1,249,975
297,148 456,462 169,320 1,335,656 2,630,570 - 383,883 546,891 5,819,931
331,217 279,531 116,491 1,176,534 2,263,772 58,225 198,824 798,189 5,222,782
Foundation Furniture
and �ittings
US$		 Plant and
Machinery
US$		 IT
equipment
US$		 Motor
Vehicles
US$		 Building
US$		 Leasehold
Improvements
US$		 Land
US$		 Work
in progress
US$		 Total
US$
Cost
At 1 January 2022
Additions
Transfers
Disposals
FX on exchange rate
At 31 December 2022
Depreciation
At 1 January 2022
Charge for the period
FX on exchange rate
At 31 December 2022
Net book value
At 31 December 2022
At 31 December 2021		 297,808
104,943
-
-
(21,106)		 122,081
-
-
-		 130,482
109,277
-
-
(6,984)		 519,164
301,954
-
-
(23,307)		 2,175,691
-
730,103
-
(180,435)		 -
-
-
-
-		 61,314
44,406
-
-
(5,085)		 719,642
472,853
(730,103)
(280)
(10,417)		 3,904,101
1,155,514
-
(280)
(247,334)
381,646 122,082 232,776 797,810 2,725,359 - 100,635 451,695 4,812,001
82,474
98,638
(8,523)		 -
14,670
(427)		 48,008
58,229
(3,666)		 239,850
123,282
(13,321)		 126,486
108,840
(13,482)		 -
-
-		 -
-
-		 -
-
-		 496,818
403,659
(39,419)
172,589 14,243 102,571 349,811 221,844 - - - 861,058
209,057 107,839 130,204 447,999 2,503,515 - 100,635 451,695 3,950,943
215,334 - 82,474 279,314 2,049,205 - 61,314 719,642 3,407,283

The write off relates to assets from Pharo Farm Ethiopia as a results of closure of operations

Assets not valued

42

Pharo Foundation Annual Report 2022

o the financial statements
mber 2022
Investments		 Group
2022
US$		 Group
2021
US$		 Pharo FoundationAnnual Report 202
Foundation
2022
US$
Foundation
2021
US$
1,803,220
1,803,221
6,848,332
2,254,484
8,651,552
4,057,705
Foundation
2022
US$
Foundation
2021
US$
4,057,705
1,976,875
4,593,847
3,055,385
-
(1,335,199)
-
360,644
8,651,552
4,057,705
Foundation
Foundation
2022
2021
US$
US$
5,151,542
5,151,542
8,318,377
3,589,681
13,469,919
8,741,223		 Pharo FoundationAnnual Report 202
Foundation
2022
US$
Foundation
2021
US$
1,803,220
1,803,221
6,848,332
2,254,484
8,651,552
4,057,705
Foundation
2022
US$
Foundation
2021
US$
4,057,705
1,976,875
4,593,847
3,055,385
-
(1,335,199)
-
360,644
8,651,552
4,057,705
Foundation
Foundation
2022
2021
US$
US$
5,151,542
5,151,542
8,318,377
3,589,681
13,469,919
8,741,223
Unlisted investments
Investment in subsidiary company		 1,804,766
-		 1,804,766
-		 1,803,220
6,848,332		 1,803,221
2,254,484
1,804,766 1,804,766 8,651,552 4,057,705
Analysis of movement in investments Group
2022
US$		 Group
2021
US$		 Foundation
2022
US$		 Foundation
2021
US$
Value at 01 January 2022
Additions
Impairment in subsidiary investment
Net (gain) on investment asset
Value at 31 December 2022		 1,804,768
-
-
-		 1,444,122
-
-
360,644		 4,057,705
4,593,847
-
-		 1,976,875
3,055,385
(1,335,199)
360,644
1,804,768 1,804,766 8,651,552 4,057,705
Analysis of historical costs Group
2022
US$		 Group
2021
US$		 Foundation
2022
US$		 Foundation
2021
US$
Unlisted investments
Investment in subsidiary company		 5,151,542
-		 5,151,542
-		 5,151,542
8,318,377		 5,151,542
3,589,681
5,151,542 5,151,542 13,469,919 8,741,223

Notes to the financial statements 31 December 2022

11 Investments

43

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

Unlisted Investments

Investment by the Group represents its investment in Pharo Management (UK) LLP, Lynk and New Forests Company Holdings Limited. In the absence of readily determined and reliable fair values, these unlisted investments are stated at a valuation determined by reference to the purchase or sale of shares between existing shareholders.

Subsidiary undertakings

At the year end, The Pharo Foundation controls the following subsidiary entities, all of which are consolidated in these financial statements:

Name Parent un-
dertaking		 Registration
status		 Registration number Nature of business
Pharo Development
Investment Limited
(‘PDIL’)		 The Pharo
Foundation -
100%		 Company lim-
ited by shares
(England &
Wales)		 Company number
7775576		 PDIL’s principal activity is to receive
profit distributions from Pharo
Management (UK) LLP and make
charitable donations to The Pharo
Foundation.
Pharo Enterprises
Limited (‘PEL’)		 The Pharo
Foundation -
100%		 Company lim-
ited by shares
(England &
Wales)		 Company number
12211206		 PEL is a holding company whose
principal activity is to establish
Social Enterprises in East Africa.
Pharo Ventures
Somaliland Limited
(‘PVSL’)		 Pharo Ven-
tures Kenya
Limited –
100%		 Company lim-
ited by shares
(Somaliland)		 Company number
18120		 The primary principal activity is
to serve as a holding company for
social enterprises with overall goal
of creating jobs, ensuring positive
social impact and generating profits
for long-term sustainability of both
subsidiaries and the company
Pharo Construction
Somaliland LTD
(PCSL)		 Pharo Ven-
tures Somalil-
and Limited
– 99.9%		 Company lim-
ited by shares
(Somaliland)		 Company number 1281 The principal activity of the compa-
ny is that of direct involvement in
rendering all types of contractual
activities in construction including
building and rehabilitation, design,
surveying, as well as road, airports,
wells and dam construction. The
company is also involved in hiring
construction machinery, concrete
and equipment.
Pharo Real Estate
Somaliland		 Pharo Ven-
tures Somalil-
and Limited
- 100%		 Company lim-
ited by shares
(Somaliland)		 Company number 1759 The Real Estate principal activity
is provision of real estate services.
It is an income-generating entity of
Pharo Ventures Somaliland Limited
Pharo Farm LTD
Somaliland
(PFSL)		 Pharo Ven-
tures Somalil-
and Limited
- 100%		 Company lim-
ited by shares
(Somaliland)		 Company number 1758 The Farm is an income-generating
part of Pharo Ventures Somaliland
Ventures.

44

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

Pharo Integrated
Agriculture
& Manufacturing PLC
Ethiopia (PVET)		 Pharo Ven-
tures Kenya
Limited -
99.9%		 Company lim-
ited by shares
(Ethiopia)		 Registered number
0073029357		 The principal activity is engaging in
manufacturing of edible oil, farming
and agro-processing of oil seeds,
wholesale of own products with the
objective ofgenerating profits.
The Pharo Founda-
tion Farm (‘FARM’)		 The Pharo
Foundation -
100%		 Company lim-
ited by shares
(Ethiopia)		 Registered
number MT/
AA10/0050443/2011		 The Farm is an income-generating
part of The Pharo Foundation’s
Ethiopia programme has ceased
activities.
Pharo Ventures Ken-
ya Limited (‘PVKL’)		 Pharo Enter-
prises Limit-
ed - 100%		 Company lim-
ited by shares
(Kenya)		 Company number
PVT-EYU97BY		 The principal activity of the compa-
ny is to build and grow, commercial-
ly and environmentally sustainable
businesses, with a focus on maxi-
mising creation of economic value
andjobs, for the local communities.
The Pharo Foun-
dation Rwanda Ltd
(‘PFRW’)		 The Pharo
Foundation -
100%		 Company limit-
ed by guaran-
tee (Rwanda)		 Registered number
112266894		 PFRW is a non-profit making entity
whose principal activity is to carry
out related charitable programs
within the country.
Pharo Ventures
Rwanda Ltd (‘PVR-
WL’)		 Pharo Ven-
tures Kenya
Limited -
100%		 Company lim-
ited by shares
(Rwanda)		 Registered number
112174801		 The principal activity of the compa-
ny is to build and grow, commercial-
ly and environmentally sustainable
businesses, with a focus on
maximising creation of economic
value and jobs, for the local com-
munities. This entity remained
dormant duringtheyear.

A summary of the results of the above subsidiaries for the year ended 31 December 2022 is as follows:

A summary of the results of the above subsidiaries for the year ended 31 December 2022 is as follows:

2022
PDIL
$		 2022
PEL
$		 2022
PVSL
$		 2022
PCL
$		 2022
RESL
$		 2022
FARM SL
$		 2022
PIAM ET
$		 2022
FARM ET
$		 2022
PVKL
$		 2022
PVRWL
$
Income
Administrative expenditure		 20,011,973
(2,209)		 -
(2,110)		 -
(324,887)		 807,410
(1,418,375)		 -
-		 -
-		 -
(148,558)		 3,180
(335,766)		 1,575,387
(1,518,780)		 -
-
Operating surplus (de�icit)
Distributions under gift aid		 20,009,764
(20,011,914)		 (2,110)
-		 (324,887)
-		 (610,965)
-		 -
-		 -
-		 (148,558)
-		 (332,586)
-		 56,607
-		 -
-
Net result
Other gains (losses)
Taxation		 (2,150)
-
-		 (2,110)
(285)
-		 (324,887)
2
-		 (610,965)
-
-		 -
-
-		 -
-
-		 (148,558)
(95,026)
-		 (332,586)
14,992
-		 56,607
389,298
(32,583)		 -
-
-
Net surplus / (de�icit)
Retained funds at 1 January 2022
FX on exchange rate
Retained funds at 31 December 2022		 (2,150)
2,971
-
821		 (2,395)
(4,814)
-
(7,209)		 (324,885)
(134,533)
-
(459,418)		 (610,965)
(274,077)
-
(885,042)		 -
-
-
-		 -
-
-
-		 (243,584)
(102,022)
(12,244)
(357,850)		 (317,594)
(821,354)
(54,271)
(1,193,219)		 413,322
47,005
1,406
461,733		 -
-
-
Called up share capital
At 31 December 2022		 2 6,848,327 3,012,697 2,425,000 1,000 1,000 1,217,123 1,140,476 7,241,213 1,000

A summary of the results of the above subsidiaries for the year ended 31 December 2021 is as follows:

2021
PDIL
$		 2021
PEL
$		 2021
PVSL
$		 2021
PCL
$		 2021
RESL
$		 2021
FARM SL
$		 2021
PIAM ET
$		 2021
FARM ET
$		 2021
PVKL
$		 2021
PVRWL
$
Income
Administrative expenditure		 20,011,801
(2,669)		 -
(2,604)		 -
(134,540)		 405,542
(679,669)		 -
-		 -
-		 -
(142,013)		 506

(782,665)		 1,268,111
(1,238,727)		 -
-
Operating surplus (de�icit)
Distributions under gift aid		 20,009,132
(20,005,801)		 (2,604)
-		 (134,540)
-		 (274,127)
-		 -
-		 -
-		 (142,013)
-		 (782,159)
-		 29,384
-		 -
-
Net result
Other gains (losses)
Taxation		 3,331
(4)
-		 (2,604)
(27)
-		 (134,540)
8
-		 (274,127)
52
-		 -
-
-		 -
-
-		 (142,013)
27,748
-		 (782,159)
21,555
-		 29,384
7,973
(26,633)		 -
-
-
Net surplus / (de�icit)
Retained funds at 1 January 2021
FX on exchange rate		 3,327
(357)
-		 (2,631)
(2,182)
-		 (134,532)
-
-		 (274,075)
-
-		 -
-
-		 -
-
-		 (114,266)
-
-		 (760,604)
(144,523)
29,502		 10,724
38,903
(1,216)		 -
-
-
Retained funds at 31 December 2021
Called up share capital		 2,970 (4,813) (134,532) (274,075) - - (114,266) (875,625) 48,411 -
At 31 December 2021 2 2,254,481 2,000,000 1,800,510 1,000 1,000 216,955 1,335,300 2,236,903 1,000

45

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

12 Debtors due after one year

Group
2022
US$		 Group
2021
US$		 Foundation
Foundation
2022
2021
US$
US$
14,903
-
14,903
-
Scholarship awarded loans 14,903 - 14,903
14,903 - 14,903

13 Inventory

Group
2022
US$		 Group
2021
US$		 Foundation
Foundation
2022
2021
US$
US$
146,112
-
14,816
-
-
-
160,928
-
Inventory - Medical
Inventory - Fuel
Inventory - RMC		 146,112
14,816
2,155		 -
-
-
163,083 -

Inventory consists of medical supplies that is used at the Pharo Diagnostic Centre in Ethiopia, a depot of fuel stored mainly due to shortage of fuel in Ethiopia and construction materials at hand from Pharo Construction Limited. No inventory was carried forward from the prior year. Medical supplies are valued at FIFO method, fuel reported at its costs whereas construction materials are valued by construction engineer at the year end.

14 Debtors

Group
2022
US$		 Group
2021
US$		 Foundation
Foundation
2022
2021
US$
US$
15,108
18,413
476,792
581,347
-
-
45132
19,219
54,040
-
-
606
556,251
654,406
Accounts Receivable
Prepayments
Accrued Income
Sundry debtors
Deferred Tax Asset
Amounts due from subsidiary undertaking		 41,895
622,164
210,491
198,298
172,824
-		 18,413
754,748
-
81,374
44,902
-
1,245,672 899,437

Sundry debtors include rent deposits of US$ 50,065 (2021 – US$ 40,285 ). The rent deposit is subject to a charge against all sums due and all The Pharo Foundation’s obligations under property leases.

15 Creditors: amounts failing due within one year

Group
2022
US$		 Group
2021
US$		 Foundation
2022
US$		 Foundation
2021
US$
Grants payable
Accruals
Provision for Severance indemnities
Deferred Income
Corporation tax payable
Social security and other taxes
Trade and other payables		 62,337
345,894
451,345
296,541
2,847
212,471
300,324
1,671,759		 -

332,872
269,672
117,623
-
56,804
133,357		 62,337
256,668
419,636
18,265
-
37,038
240,740		 -

390,837
262,288
20,630
-
16,715
144,187
910,329 1,034,684 834,658

The provision for severance indemnities relates to mandatory schemes which the group has in place outside the UK to provide for staff benefits on cessation of their employment.

46

Pharo Foundation Annual Report 2022

Notes to the financial statements 31 December 2022

16 Designated funds


Group
Grants payable
Impact investments
Investments
Tangible �ixed assets
Foundation
Grants payable
Impact investments
Investments
Tangible �ixed assets		 At 1 Jan 2022
US$
163,799
1,803,222
1,544
5,222,782
7,191,349
At 1 Jan 2022
US$
163,799
1,803,223
2,254,483
3,407,282
7,628,787		 Net new
commitments/
Investment
US$
-
-
-
1,174,715
1,174,715
Net new
commitments/
Investment
US$
-
-
4,593,846
907,900
5,501,747		 Granted /
(Reclassi�ied /
Impaired / Utilised)
US$
(163,799)
-
-
(577,566)
(741,365)
Granted /
(Reclassi�ied /
Impaired /
Utilised)
US$
(163,799)
-
-
(364,239)
(528,038)		 At 31 Dec 2022
US$
-
1,803,222
1,544
5,819,931
7,624,697
At 31 Dec 2022
US$
-
1,803,223
6,848,329
3,950,943
12,602,495


The income funds of the Group and the Foundation include the following designated funds which have been set aside out of unrestricted general funds by the Trustees for specific purposes.

The “Grants payable” fund represents monies which the Trustees have committed to various partner organisations. Net new commitments represent new grants awarded in the year less amounts committed in previous periods.

The “Impact investments” fund represents monies which the Trustees have invested in enterprises which deliver both financial and mission related returns.

The investments fund in the group represents investment of PDIL in Pharo Management (UK) LLP.

The “Tangible fixed assets” fund represents the net book value of the group and charity’s tangible fixed assets. This value has been set aside to highlight the fact that the tangible fixed assets are required for the group and charity’s activities and are not available as a reserve to fund expenditure or meet future contingencies.

17 Taxation

The Pharo Foundation is a registered charity and, therefore, is not liable for income tax or corporation tax on income derived from its charitable activities, as it falls within the various exemptions available to registered charities. The Foundation’s UK subsidiaries gift aids all profits (where applicable) to The Pharo Foundation and hence no tax is payable by them.

The Foundation’s branches registered in Ethiopia and Somaliland are non-profit making, non-government organisations. Under the respective local laws and regulations these overseas operations are exempt from income tax.

Pharo Ventures Kenya Limited is an overseas subsidiary resident in Kenya for taxation purposes. The statutory tax rate applicable for the year 2022 was 30% as per the Tax Laws (Amendment) Act 2020. As a result, the tax charge for the year was US$ 32,583 (2021 US$ 26,633 ).

Pharo Ventures Somaliland is a subsidiary of Pharo Ventures Kenya Limited and Pharo Construction Limited is a subsidiary of Pharo Ventures Somaliland and are regulated under the Tax Laws of Somaliland. The statutory tax rate applicable is 12.3% of business profit. No tax charge was reported during the year as both companies reported losses.

Pharo Integrated Agriculture & Manufacturing PLC is a subsidiary of Pharo Ventures Kenya Limited and is regulated under the Tax Laws of Ethiopia. The statutory tax rate applicable is 30% as per Proclamation No. 979/2016. No tax charge was reported during the year as the company reported losses.

47

Pharo Foundation Annual Report 2022

18 Related party transactions

The Pharo Foundation is funded by a proportion of profits realised by Pharo Management (UK) LLP, US$ 20M (2021 US$ 20M), where Mr Guillaume Fonkenell is a Managing Member.

During the prior year, a trustee procured a piece of land in Somaliland valued at $ 3.6 million with the intention of leasing out the land to the Foundation free of charge. In 2021, the Foundation assisted the trustee by facilitating this purchase. Pharo Foundation Somaliland was permitted access to the land during the year and a lease was entered into on 1 July 2023 for a period of 99 years at a rent of US$ 1 per annum.

As reported at note 11, Pharo Ventures Somaliland Limited holds 99.9% of the shares in Pharo Construction Somaliland LTD. One of the trustees holds the remaining shares

19 Analysis of net assets between funds

Group General
funds
US$		 Designated
funds
US$		 Total
2022
US$
Tangible �ixed assets
Investments
Net current assets		 -
-
23,048,796		 5,819,931
1,804,766
-		 5,819,931
1,804,766
23,048,796
23,048,796 7,624,697 30,673,493
Foundation General
funds
US$		 Designated
funds
US$		 Total
2022
US$
Tangible �ixed assets
Investments
Net current assets		 -
-
19,856,589		 3,950,943
8,651,552
-		 3,950,943
8,651,552
19,856,589
19,856,589 12,602,495 32,459,084
Group General
funds
US$		 Designated
funds
US$		 Total
US$
Tangible �ixed assets
Investments
Net current assets		 -
16,982,818		 5,222,784
1,804,766
163,799		 2021
5,222,784
1,804,766
17,146,617
16,982,818 7,191,349 24,174,167
Foundation General
funds
US$		 Designated
funds
US$		 Total
2021
US$
Tangible �ixed assets
Investments
Net current assets		 -
-
16,529,613		 3,407,283
4,057,705
163,799		 3,407,283
4,057,705
16,693,412
16,529,613 7,628,787 24,158,400

48

Pharo Foundation Annual Report 2022

20 Financial Commitments

At 31 December 2022, The Pharo Foundation had the following grant commitments where an individual has been informed of the intention to fund a scholarship but the award is contingent upon the individual meeting the eligibility criteria and conditions of the funding. These commitments are in addition to the grants payable included at note 15.

Land & Buildings
. Less than one year
. Between two to �ive years
Scholarships Awarded
. Less than one year
. Between two to �ive years		 2022
US$
199,078
349,346
548,424
2022
US$
93,522
187,043
280,565		 2021
US$
168,726
582,469
751,195
2021
US$
-
-
-

The Pharo Foundation’s commitments to scholarships and fund projects where recipients have yet to meet all conditions for receipt are shown in note 15.

21 Post balance sheet event

There have been no post year-end events to report (2021 - the Trustees made the decision to close Pharo Farm Ethiopia by 30 September 2022 due to challenges experienced in operating this farm).

CONTACT US

London

Pharo Foundation 154 Brompton Road 3rd Floor London SW3 1HX, UK Email: info@pharofoundation.org

Nairobi

Pharo Foundation The Promenade, 3rd Floor General Mathenge Road Westlands Nairobi, Kenya

Tel: +254 114099138 Email: info.ke@pharofoundation.org

Kigali

Pharo Foundation KN 14 AV, Building no.6 Kimihurura, Kigali, Rwanda Email: info.rw@pharofoundation.org

Addis Ababa

Pharo Foundation GB building 1st Floor Bole sub city Woreda 5 HN 991/1 Addis Ababa, Ethiopia

Tel: +251 (0)116684646 Email: info.et@pharofoundation.org

Hargeisa

Pharo Foundation Maansoor Road Koodbuur Hargeisa, Somaliland Tel: +252 257 2424 Email: info.sl@pharofoundation.org