SENTEBALE. Company number: Charity number: FINANCIAL STATEMENTS FOR THE PERIOD 17 MARCH 2006 TO 31 AUGUST 2007

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1 Company number: Charity number: FINANCIAL STATEMENTS FOR THE PERIOD 17 MARCH 2006 TO 31 AUGUST TOGETHER WITH TRUSTEES' AND AUDITORS' REPORTS

2 Financial Statements for the period 17 March 2006 to 31 August Contents Legal and administrative Report of Trustees information Pages Independent auditors' report 9-10 Statement of financial activities 11 Balance sheet Notes to the financial statements

3 Legal and administrative information Trustees Sir Tom Shebbeare (Chair of Trustees) Geoffrey Matthews (Chief Executive) Mark Dyer Jamie Lowther-Pinkerton MVO MBE Mathias Schmale Damian West Secretary Geoffrey Matthews Registered office Clarence House London SW1A 1BA Principal address Clarence House London SW1A 1BA Auditors Buzzacott LLP 12 New Fetter Lane London EC4A lag Bankers Coutts & Co. Villiers Branch 440 Strand London WC2R OQS HSBC Private Bank (UK) Limited 78 St James's Street London SW1A 1JB Standard Bank Lesotho 1st Floor Bank Building Kingsway Road Maseru Lesotho - 2 -

4 Solicitors Harbottle and Lewis LLP 14 Hanover Square London W1S 1HP Bates Wells & Braithwaite 2-6 Cannon Street London EC4M 6YH Company number Charity number

5 Report of the Trustees for the period 17 March 2006 to 31 August (incorporating the Directors' report) The Trustees, who are also the directors of the company, submit their report and the financial statements of Sentebale for the period ended 31 March. The financial statements have been prepared under the accounting policies set out therein and comply with applicable law and the requirements of the Statement of Recommended Practice, Accounting and Reporting by Charities issued by the Charity Commission in April The long period of account is due to this being the Charity's first period of operation. The report has been prepared in accordance with Part VI of the Charities Act 1993 and also constitutes a directors' report for the purposes of company law. Principal activity The principal activity of the charity during the period was to raise funds and awareness, and to distribute money for the specific charitable purposes of supporting orphaned and vulnerable children in Lesotho. Sentebale seeks to spend its money as effectively and professionally as possible, and to raise awareness of its operations both with grant applicants and the public. Sentebale also endeavours to support grant recipients in the effective management and use of any grants received. Review of activities The Trustees' main objectives for 2006/ were: To take over the funds of the British Red Cross Lesotho Fund. To raise funds from public donations and fundraising events. To recruit and relocate a senior country director to operate and establish the charity's operations in Lesotho. To complete the funding for the British Red Cross Lesotho Fund beneficiaries. To complete an initial assessment phase designed to identify project partners. These objectives have been successfully achieved. Sentebale - Scope of Activity Sentebale has the following organisational objectives: Overall Objective To provide support to children and young people in Lesotho. Strategic Objectives To provide support of every kind to orphans and vulnerable children. To fight HIV/ AIDS, not least by supporting programmes of sexual and health education amongst children and young people

6 To target particular support to: Hard to reach communities, especially the Herd Boys Abused children Children with special needs To strengthen the capacity of communities to care for children. Operational Objectives To place particular emphasis on working through: Community based groups and organisations Traditional structures. To ensure that lack of administrative capacity or training is not a barrier to support for organisations that Sentebale would otherwise wish to support. To ensure effective monitoring and evaluation of all grants made. To involve children and young people in planning the charity's work. To be an advocate of the needs and rights of children and young people. To ensure that the charity does not discriminate in the support it offers. To work in partnership with Government and other agencies, and to ensure that the support Sentebale offers is complementary to their work. Grant-making Sentebale aims to achieve its objectives by identifying a small number of partnersorganisations which are doing, or have the potential to do, outstanding work in providing services for children and young people in Lesotho. The aim is to make significant grants of time and money to each selected Partner. Grants are determined on a case by case basis but include: Long term support of the core costs of providing services for children and young people Funding of capital projects designed to improve those services Management training Support of management structures Achievements The charity has successfully completed its aims for 2006/ in so far as it has taken on the funds of the British Red Cross Lesotho fund and has raised funds from both public donations and fundraising events. After an extensive recruitment process the charity has recruited a senior country director to undertake operations in Lesotho. He has now moved to Lesotho with his family, has set up an office and has established a team to conduct operations in Lesotho. The remaining funding for the British Red Cross Lesotho fund beneficiaries has been allocated. Reports and information have been gathered from the projects to determine - 5 -

7 their effectiveness and outcomes. Some of these projects have been identified to to receive further grants from Sentebale for the continued good work that they undertake. The country director has started to implement a strategic plan for allocating grants and has undertaken studies of potential beneficiaries as well as identified new beneficiaries to receive grants and work with. Sentebale will continue for the year ahead to identify new project partners and grant recipients in order to implement its strategy to achieve its core objectives. Effective management The charity's operations and staff in Lesotho are directed by a Country Director. He reports to a part-time CEO in London, who is supported by a Fundraising Consultant and a full-time Administrator, as well as part-time Finance and HR Directors. Financial results The results for the period are set out in the statement of financial activities on page 11. The position of the charity at the end of the period is shown in the balance sheet on page 12. During the period the charity received 1,150,000 from' public donations, fundraising activities, trading and investment. The majority of this, 752,000, was received from the British Red Cross Lesotho fund. Note 6 on page 15 shows the total grants of 84,000 that were directly allocated to projects in the period. Total expenditure for the period on charitable activities, excluding grants, was 374,000. The focus of expenditure during the period has been on establishing a robust setup for the charity to run its operations in Lesotho from. This has ranged from attracting, recruiting and relocating a senior Country Director, establishing an office in Lesotho and building a team to undertake operations. In the latter part of the period, expenditure has been focused on the running of the Lesotho office and charitable activities. During this time a strategic plan has been developed and project partners and beneficiaries identified to work with and for grants to be allocated to. 86,000 of expenditure was also incurred in setting up and developing the charity's ability to raise funds and awareness. This has been through development of the website as well as other initiatives. Investment policy All funds under management during the period are scheduled for payment within three months. Surplus cash funds are held in fixed term investment accounts in order to maximise the revenues on these funds whilst ensuring they are available when required. During the period 36,000 was generated as investment income. Reserves policy The Trustees have agreed to a reserves policy that ensures a minimum of one quarter of total annual expenditure on project disbursements, charitable activities and general overheads is maintained at all times. -6 -

8 Reserves were determined to be one quarter of annual total expenditure as the majority of grants allocated are paid quarterly. Currently reserves are greater than the reserves policy outlined. This is due to the substantial income received as a result of the transfer of the British Red Cross Lesotho Fund. Reserves are expected to be in line with the stated policy by the end of the next financial year. Grants policy The Trustees apply all funds available for charitable purposes in the pursuit of ensuring the successful delivery of the charity's objects in supporting orphaned and vulnerable children in Lesotho. Grants are approved by the Trustees dependent on the nature of the project or beneficiary and the effectiveness of the grant on achieving and fulfilling the objectives of the charity. Fundraising The majority of funds raised in the financial period have come from the British Red Cross Lesotho Fund, polo events and public donations. The British Red Cross Lesotho Fund was set up with the funds generated by a TV documentary shown in 2004, both from a public appeal by the British Red Cross and from the sale of film rights by Clarence House. Following a consultancy exercise the British Red Cross accepted the recommendation of the Fund's Management board that the fund's purposes would best be fulfilled by Sentebale. Unexpended BRCLF funds were accordingly transferred to Sentebale on its foundation. On 1st July a concert was held in memory of Diana The Princess of Wales. Sentebale was one of eight beneficiaries of the concert and currently 100,000 is expected to be received from the concert and has been recorded as accrued income. Plans for future periods The priorities during the next accounting period are: To institute the charity's first round of Partner Funding To ensure that Project Proposal and Monitoring and Evaluation procedures function smoothly To increase the Project support management resource in the Lesotho office To continue to develop the Charity's fundraising capacity. Structure, Governance and Management The charity does not have share capital and is a company limited by guarantee. It is constituted by its Memorandum and Articles of Association as amended by Special Resolution and dated 3rd April Operations in Lesotho are carried out by what under Lesotho law is a tax exempt Branch Office of a Foreign Company. The ultimate control of Sentebale is vested in the Trustees. The Board of Trustees is led by the Chairman and the day to day management of the charity is governed by the Chief Executive. The Secretary is responsible for all legal filings. The charity also has close links with The Prince's Charities Foundation. -7 -

9 New Trustees are selected and appointed by existing Trustees to maintain an appropriate balance of skills and experience. New Trustees are given a programme of induction and training is available when required and relevant. The Trustees have identified and reviewed the major risks to which the charity is exposed and have established a risk assessment procedure to identify and anticipate these risks and to consider further risks that may arise. The Trustees believe that implementation of agreed actions and procedures will significantly reduce the probability and impact of these risks. The Trustees purchased indemnity insurance during the period at a cost of 1,575 for an annual premium. This report has been prepared in accordance with the special provisions of Part VII of the Companies Act 1985 relating to small companies. Statement of Trustees' responsibilities Charity and company law require the Trustees, who are also the directors, to prepare financial statements for each financial period which give a true and fair view of the state of affairs of the charity and of the surplus or deficit for that period. In preparing those financial statements, the Trustees are required to: Select suitable accounting policies and then apply them consistently; Make judgements and estimates that are reasonable and prudent; State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation. The Trustees are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the charity to enable them to ensure that the financial statements comply with the Companies Act 1985 and the Statement of Recommended Practice "Accounting and Reporting by Charities" (2005). They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Disclosure of information to auditors The Trustees who held office at the date of approval of this Report of the Trustees confirm that, so far as they are each aware, there is no relevant audit information of which the Charity's auditors are unaware; and each Trustee has taken all steps that they ought to have taken as a Trustee to make themselves aware of any relevant audit information and to establish that the Charity's auditors are aware of that information. Auditors Buzzacott LLP have indicated their willingness to continue as auditors, reappointment at the next annual general meeting. subject to BY ORDER OF THE BOARD GEOFFREY MATTHEWS Secretary 27th February

10 Independent auditors' report to the members of Sentebale We have audited the financial statements of Sentebale for the period 17 March 2006 to 31 August which comprise the Statement of Financial Activities, Balance Sheet and related notes. These financial statements have been prepared under the accounting policies set out therein. This report is made solely to the charitable company's members, as a body, in accordance with section 235 of the Companies Act 1985 and section 43 of the Charities Act 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. Respective responsibilities of directors and auditors As described in the Statement of Trustees' Responsibilities, the Trustees, who are also the directors for the purposes of company law, are responsible for preparing the Report of the Trustees and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UKand Ireland). We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act We also report to you if, in our opinion, the charitable company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding Trustees' remuneration and transactions with the charitable company is not disclosed. We report to you whether in our opinion the information given in the Trustees' report is consistent with the financial statements. We read other information contained in the Report of the Trustees and consider whether it is consistent with the audited financial statements. We consider the implications for our report if we become aware of any apparent misstatement within it. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made by the Trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the charitable company, consistently applied and adequately disclosed. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements

11 Opinion In our opinion the financial statements: give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of affairs of the charitable company as at 31 August and of its incoming resources and application of resources including its income and expenditure in the period then ended; have been properly prepared in accordance with the Companies Act 1985; and the information given in the Trustees' report is consistent with the financial statements. Buzzacott LLP Chartered Accountants and Registered Auditors 12 New Fetter Lane London EC4A lag 27th February

12 36 FundsFunds , , Restricted Notes income objects vulnerable Supporting (incorporating for furtherance Incoming generated Voluntary Total Costs Lesotho movement of of March August of funds generating activities period resources funds: income children orphaned brought of 2006 carried the funds 17 Income incharities voluntary March funds: from forward and and 2006 Expenditure to 31 August Account ) Statement of financial activities Total All amounts relate to continuing activities of the charity. The charity has no recognised gains and losses other than those included in the results above, and therefore no separate statement of recognised gains and losses has been presented. The notes on pages 13 to 19 form part of these financial statements

13 Balance Sheet as at 31 August Notes Total Funds 000 Fixed assets Tangible assets Current assets Stock Debtors Cash at bank and in hand Creditors: amounts falling due within one year Net current assets Total assets less current liabilities Net assets 594 Funds Unrestricted funds Restricted funds Total funds Approved by the tru~tees on 27th February 2008 and signed by their behalf by: Geoffrey Matthews Secretary The notes on pages 13 to 19 form part of these financial statements

14 Notes to the financial statements For the period 17 March 2006 to 31 August 1. Accounting policies a. Basis of accounting The financial statements have been prepared under the historical cost convention and in accordance with the Companies Act 1985, applicable accounting standards and the Statement of Recommended Practice "Accounting and Reporting by Charities" (2005). The accounting policies below have been adopted for all material items. b. Fixed Assets Tangible fixed assets Tangible fixed assets are stated at historical cost. Depreciation is provided on all tangible fixed assets at rates calculated to write each asset to its estimated residual value evenly over its expected useful life, as follows:- Fixtures and fittings Computer equipment Motor vehicles 5 yrs on a straight line basis 3 yrs on a straight line basis 10 yrs on a straight line basis c. Resources expended Resources expended are accounted for on an accruals basis. Where expenditure does not fall clearly into one category, it is allocated to appropriate headings on a reasonable percentage basis. The basis of allocation is determined on the approximate proportion of costs applicable to each category. For example staff costs are based on an estimate of the time spent on each activity and legal costs are based on usage. Cost of generating voluntary income comprises fundraising and event costs, as well as marketing, PR, website development and fundraising consultancy costs. Costs of activities in furtherance of the charity's objects represents staff, support and other direct costs associated with undertaking the activities and objects of the charity. Governance costs of the charity comprise audit costs and legal fees for the establishment of the charity. d. Grants payable Grants are recognised in the statement of financial activities when they have been approved by the Trustees and a Memorandum of Understanding or verbal commitment has been made to the grant recipient. Grants are apportioned between amounts due within one year and after more than one year as appropriate. The charity monitors the usage to which a grant is put and reports are required from beneficiaries before the next annual instalment is paid. Cancelled grants are credited to the statement of financial activities when the cancellation has been ratified by the Trustees

15 e. Operating leases Rentals under operating leases are charged to the statement of financial activities on a straight-line basis over the lease term. f. Restricted funds These funds can only be used for purposes listed in note 16. as specified by the donor and are g. Unrestricted general funds The unrestricted general funds are available to cover all costs of the organisation. h. Stock Stock is stated at the lower of cost and net realisable value. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal. i. Foreign exchange An average foreign exchange rate is used during the period and adjustments are made for balance sheet items at the prevailing rate of exchange on the balance sheet date. Any foreign exchange adjustments are recorded under other resources expended in the statement of financial activities. j. Cash flow The financial statements do not include a cash flow statement because the charity, as a small reporting entity, is exempt from the requirement to prepare such a statement under Financial Reporting Standard 1 "Cash flow statements". 2. Voluntary income Fundraising events Voluntary donations Unrestricted funds Restricted funds Total funds ,112 In, fundraising events comprised 752,000 received from the Red Cross Lesotho Fund as a result of a public appeal and video made in ,000 relating to the public appeal has been allocated as restricted funds for supporting those affected by HIV and AIDS in Lesotho. 3. Activities for generating funds Activities for generating funds comprises income generated through the sale of Sentebale branded T-Shirts. Costs of sales for this trade activity are included within "cost of generating voluntary income" in the statement of financial activities

16 4. Investment income 5. UK fixed 47 Resources (note Support Grants interest costs 6) expended Income 313 Audit Other charity's interestobjects receivable Auditors Depreciation fee remuneration: Direct Total Support costs consist of staff, recruitment, legal and other professional costs which have been apportioned based on time spent or usage. 6. Grants payable in furtherance of the charity's objects Grants summary Lesotho Child Counseling Scott Hospital Katse Health Clinic Lesotho Save the Children Young Christian Students Ha Paki Youth Centre Justice & Peace Lesotho Youth Federation Sisters of Ottawa Orphanage Mantsasee Children's Home Tsepong counseling centre Other Total grants Unit Child counseling programme and buildings Peer education programme Youth centre building Child reunification programme Human rights advocacy for OVC Food security for OVC Protection, care and fulfillment of rights for OVC Youth behavioral change programme Income generating activities Orphanage running costs Orphan support group

17 7. Staff The average weekly number the charity was: Operations Fundraising Grant giving Other of persons employed by No Staff costs for the above persons comprised:- Wages and salaries Social security Other pension costs Number of employees earning over 60,000 including taxable benefits, was: 90, , Trustees per annum, No. 1 The Chief Executive who is also a Trustee, at the discretion of the other Trustees is the only remunerated Trustee. The Chief Executive received total emoluments of 38,989 in the period for day to day management and operation of the charity. In the period two Trustees incurred travel and telephone costs, on behalf of the charity, totalling 3,262, which were subsequently reimbursed. Indemnity insurance including cover for the Trustees was provided in the period at a cost of 1, Taxation The company is a registered charity and as such, for taxation purposes, is entitled to exemption from United Kingdom taxation under the Income and Corporation Taxes Act The company is also recognised as a registered charity in Lesotho and as such, for taxation purposes, is entitled to exemption from Lesotho taxation

18 10. Tangible ilxed assets ' vehicles Motor ilttings equipment 75 '000 Fixtures, 26andTotal Cost or valuation Additions from 17 March 2006 At 31 August Depreciation Charge for the period At 31 August Net book value At 31 August Debtors 000 Debtors Other debtors Prepayments and accrued income Within "Prepayments and accrued income" is 100,000 of accrued income relating to the donation received from the concert held in memory of Diana The Princess of Wales which was held in July. 12. Creditors 000 Amounts falling due within one year: Grants approved not yet paid Other creditors Accruals and deferred income Related Party Transactions A total of 46,909 was recharged during the period by the Prince of Wales and the Duchess of Cornwall. Of this 45,657 related to salary recharges and

19 1,253 related to HR consultancy charges. No amounts were outstanding at the period end. 21,715 was also recharged by Traditional Arts Limited (CRN ) during the period. Of this 1,274 related to the sale of fixed assets, 17,409 related to salary recharges, 1,857 related to telephone recharges and 1,175 related to recruitment fee recharges. 3,392 was outstanding at the period end. The charity's Chief Executive was a director of Traditional Arts Limited also during the period. 14. Members' liability The charity does not have share capital and is limited by guarantee. In the event of the charity being wound up, the maximum amount each member is liable to contribute is 1. There were six members at 31 August. 15. Unrestricted funds Balance 17 March 2006 '000 Incoming resources '000 Resources expended '000 Balance 31 August '000 General funds 831 (249) 582 Unrestricted funds 831 (249) 582 General funds represent all unrestricted income received from events and certain income from other activities, and are used to undertake the work of the charity. 16. Restricted funds ' Balance March resources (307) Resources Incoming Expended '000 Balance 31 August '000 British Red Cross Lesotho Fund Bethany Trust These restricted balances will be used to support future projects in accordance with the charity's grant-making principles and the wishes of the respective donors. The funds received from the British Red Cross Lesotho Fund were restricted for the purposes of supporting those affected by HIV and AIDS in Lesotho. The funds received from the Bethany Trust are restricted for the purposes of supporting two HlV/ AIDS clinics. An additional 100 of funds was also received from public donations in the period, restricted for the purposes of supporting the Mants'ase Children's Home

20 17. Net '000 assets '000 Total 12 -Restricted -between funds Tangible Debtors assets Unrestricted