How the Hon Treasurer works with the Financial Director Brian Abbott - Chief Accountant Malcolm Bell - Trustee

2. Introduction Worked in Not for Profit Sector for 35 Years Worked as Head of Finance in Charities for 22 years

3. Treasurers Qualifications of Treasurers Knowledge of Charity Finance

4. Attitude Mutual Respect Confidence Understanding

5. Does A Charity Need A Treasurer ? Governance Audit Committee Application of CC8 & CC10

6. The Trustee Meddling Grid

8. The risk Making substantial investments in service provision based on an assumption that we have the reserves to do it against background already known of Recurring operating deficits Volatile stock market impact on investment performance = ? Burning reserves beyond the point where it is prudent to do so

9. The risk message Be alive to risks that you have previously thought you did not need to worry about.

10. The outcome Attitude of trustees to long term commitments clarified Framework of designated reserves established

11. The designated reserves Dissolution obligations Long term commitments to chaplains Potential Section 75 pension liabilities Additional working capital to fund Fixed Asset plans Operational deficit funding Potential uninsured liabilities Investment in ministry in ports

12. The outcome Attitude of trustees to long term commitments clarified Framework of designated reserves established Free reserves known at �3.7m pre volatility risk impact A financial resource management framework linked to reserves management in place.

13. The investment management link Do you now manage the funds on the basis of the known nature of the designated reserve? ? long term only influenced by inflation = Risk averse capital but with total return sufficient to match inflation over a cycle ? short term uncertain as to timing and amount = continue to optimise portfolio performance

15. May 2011 Honorary Treasurers Forum

16. Contents About Sightsavers How the Honorary Treasurer works with the FD Linking risk management to key policies Risk management framework Reserves policy Investment policy Treasury policy Q&A

17. Global facts Every 5 seconds, someone goes blind Every minute, that person is a child 45 million people are blind; 90% in the developing world 80% of this is avoidable or preventable Annual cost est. $25 billion (WHO) Social/humanitarian cost incalculable

18. Who we are and what we do An international development agency working with partners to - Prevent & cure blindness Promote social inclusion Improve access to education Improve community development In 2010 our overall income was in excess of �170 million. Cash income was around �34 million. Each year we receive substantial gift in kind of pharmaceutical drugs in support of our work in treating and eliminating NTD�s (neglected tropical diseases) Our reserves at the end of 2010 were around �10 million

19. Where we work

20. How the Treasurer works with the FD Treasurer role is voluntary and acts as an Honorary Officer of the organisation. FD is a full time executive position Sightsavers has a governing Council of Trustees Governance interactions; Council meetings, Audit Committee, Governance Committee and Investment Committee. Often characterised by: Council meeting intent is for Treasurer/FD to work collaboratively. Generally any presentations and support to financial matters agreed ahead of time Investment Committee more collegiate in style, reviewing UBS�s performance, FX hedging, credit risk, cash holdings and pension matters Audit Committee more formal in nature, activities focused more on risk and potential to be more fractious; operating reality vs. drive for assurance Other interactions; one to one meetings usually before or after governance meetings, and e mails, regular phone calls on issue by issue basis�.Strive for a �no surprises� environment

21. Linking risk management to policies Striving for �coherence��. Risk management is a core responsibility of Council Risk management also informs activities of committees of the Council notably Audit and Investment Risk management framework inclusive of top 12 risks is reviewed at least annually by Council. Mitigation delegated to a specific committee With regard to key financial risks the Investment Committee takes responsibility for biannual reviews and updates to Reserves, Investment and Treasury Policy Audit Committee periodically reviews in detail progress against mitigating top 12 risks � and annual review by Council Audit Committee also takes responsibility for financial assurance. Sightsavers has a detailed Financial Framework that lays out key control processes and is used by UK and International staff

22. Risk management framework Sightsavers significantly revamped its risk processes in 2009 Developed a �long list� of around 50 risks Executive team worked in conjunction with Council to prioritise �top 6� and �top 12� risks. These are periodically assessed with risks moving in and out of top 6/12 For each top risk a mitigating plan is developed, ownership assigned, and progress against plan is reviewed and assessed Different areas of the business also assess risk at a more granular level as part of annual planning cycle and common themes are distilled from this work and used to inform key risk selection Risks identified � and mitigation progress - form a core part of formulating the annual internal audit plan

23. Reserves policy Nature of reserves policy is different across the sector and requirements will vary significantly as a result of business model Sightsavers policy development process follows clear Charity Commission guidelines Understand the nature of reserves held and functional assets Understand financial impact of risk Review sources of income Impact of future plans and commitments Key financial risks include financial loss due to currency volatility, inability to raise income, financial loss due to fraud and credit events Fundamentally our reserves policy seeks to balance spending the maximum amount of income raised as quickly as possible whilst maintaining the minimum amount of reserves to ensure uninterrupted operation and provide time to adjust to change in financial circumstances Target a level of reserves at 20-30% of next twelve months unrestricted expenditure (a range of around �6-9 million)

24. Investment policy Sightsavers seeks to maintain fixed asset investments appropriate to its target level of reserves Sightsavers holds around �5 million in equities and bonds It has a further �2.5 million invested in freehold property (Sussex HQ) Investment strategy has been consistent over a long period, namely balance of equity and bond holdings. There is some fund manager discretion within 10% limits to bias the portfolio depending on view of outlook Currently reserves are above target so liquidity has not been a recent concern. However, given expansion in programmatic activities we are seeking to sell our Sussex property to ensure continued operating flexibility

25. Treasury policy Sightsavers operates in over 30 countries internationally There is a detailed Treasury Policy which sets out Bank counterparty credit limits Letter of Credit limits (particularly around supplier prepayment) FX hedging Sightsavers does some purchasing of USD under forward contracts as part of its strategy to mitigate currency exposure in the short term Simple strategy to help deliver the plan, not speculate or make profit / loss Simple accounting and disclosures Focus on currencies correlated with �:USD movements Monthly draw down of agreed USD amount against a 12 month contract Will seek to enter specific hedges with uncorrelated currencies (eg INR) if this can be done (none yet) Hedge limits include a max % of next 12 months forecast USD correlated spend, move closer to max % if USD is �cheap� against historical trends Property used as security to sweat the asset

26. Q&A Mike Chilton � Honorary Treasurer Mike Chilton (ACA) has recently joined Cenkos Securities PLC. Prior to this�Mike was Finance and Risk Director of National Savings and Investments (NS&I). Formerly Mike worked for over ten years with Standard Chartered PLC building extensive experience of delivering financial and risk management, treasury and banking services internationally particularly in Africa (as Regional CFO) and as their Group Head of Operational Risk Ken Moon � Finance Director Ken Moon (ACMA) has been FD of Sightsavers since early 2009 following a period of volunteering. The role includes responsibility for finance, planning, IT and procurement. This is Ken�s first role in the INGO sector. Formerly Ken worked for over two decades in the energy sector including ten years with Accenture as a senior executive in their consulting energy practice working with NOC�s in various international locations