consolidated glossy financial statements & annual report 2015...and a roundtable about...

Consolidated Glossy Financial

Statements & Annual Report 2015

VIDANOVA PENSION FUND

Vidanova Annual Report 2015 3

I. Board of Managing Directors’ Report 6

Foreword 6

Mission Vision and core values 8

Customer Satisfaction 8

Governance 10

International investment portfolio 15

developments

Majority stake in SFT Bank N.V. 16

Expectations 2016 18

Acknowledgements 19

II. Management’s report 22

Financial development of the Fund 22

during the year

Development in Provision 22

pension obligations

Coverage Ratio development 22

Indexation 23

Development several reserves 23

Asset Management 23

Investment portfolio 24

Fund Return 24

Performance international 25

investment portfolio

Performance local investment 27

portfolio

Pension Management 29

Development in participants 29

Development with respect to 29

our sponsors

Pension arrangements 30

New pension schemes 30

Risk Management 32

General 32

Operational Costs 32

III. Consolidated Balance Sheet as per 36

December 31, 2015

IV. Consolidated Profit and Loss 37

Statement for the year ended

December 31, 2015

V. Consolidated Statement of Cash 38

Flows for the year ended

December 31, 2015

VI. Notes to the consolidated 40

financial statements 2015

General 40

Sponsors 40

Changes in accounting policies 41

Comparative figures 41

Consolidation & Participation 41

Accounting policies 41

Impairment of non-current 42

assets

Going Concern 44

Foreign currency 44

Rental income 44

Consolidated statement 44

of cash flows

Use of estimates 44

General reserve DB and DC 45

Provision pension obligations 45

DB Plan

Pension Capital DC Plan 46

(Spaarkapitaal)

Long term debt 46

VII. Contingencies and commitments 47

VIII. Related Parties and related 47

party transactions

IX. Other Information 47

Statutary appropiation of 47

the Surplus

Subsequent Events 47

Independent auditor’s report 48

Independent actuarial report 51

Contents

“Great things are done by a series of small things brought together”- Vincent van Gogh-

Board of Managing Directors’

Report

Vidanova Annual Report 20156

Foreword

Vidanova Pension Fund Foundation (“the Fund” or “Vidanova”) is a tax exempt private and

open, multi employer collective pension fund foundation. The Fund executes and administers

the collective pension arrangements offered by its sponsors (affiliated companies) to their

employees.

The rights and responsibilities of the participants and the sponsors and their relationship with the Fund are

described in the financing agreement entered into between the Fund and each individual sponsor and in the

respective pension plans, as well as in the articles of incorporation of the Fund.

Vidanova started operations on April 25, 1968 originally as “Stichting Pensioenfonds voor de Antiliaanse Energie

Bedrijven”. After it changed its name into: “Stichting Pensioenfonds Utiliteitsbedrijven” on May 2, 1991, on

December 23, 2002, the current name “Stichting Pensioenfonds Vidanova” or “Vidanova Pension Fund

Foundation” was adopted.

Herewith we present to you the 2015 Annual Report of the Fund. The main objective of the report is to inform

you about the performance and the development of the Fund for the year and give a fair view of the assets and

the liabilities and all other financial or other relevant information of your Pension Fund.

I. Board of Managing Directors’ Report


General

All pension funds are continuously confronted with challenges. One of these challenges is life expectancy at birth

which continues to be the focal point of discussion of many institutional investors worldwide. The following table

shows the life expectancy estimate at birth for 2015 as mentioned in “The World Factbook”, a report produced for

US policymakers and coordinated throughout the US Intelligence Community.

In the table we can see the life expectancy estimate at birth for 2015 for several countries, starting with the three

countries with the longest life expectancy, followed by a number of relevant countries being the Dutch Kingdom

countries and a number of countries in the region.

As can be observed from the table, the life expectancy at birth is considerably high for our islands. People are

living longer which on the one hand is a good thing. However, it also implies higher costs considering that not

many pension funds or countries have taken such a substantial longevity into consideration.

Country comparison » life expectancy at birth

Another related development is the continued declining birth

rates. Both these issues combined, require more research how to

develop and fund an adequate system to carry the generation

that continues to age in the years to come.

Also Vidanova is addressing these issues. The Fund continues to

analyze this risk on a continued basis to adapt its policies in such

a way that this risk is manageable.

The Fund tries to mitigate the risk resulting of the increased life

expectancy as much as possible by means of for instance the in-

troduction of new pension schemes with a higher retirement age

(65 years) which was introduced in 2015. A number of sponsors already migrated to this new pension scheme in

2015. We will continue discussing this with the other sponsors in order to try to convince them to also migrate

in the year 2016.

Furthermore, we evaluate every year the adequacy of the mortality tables we use. We will transfer to new mortality

tables starting 2016 and will continue migrating to more recent mortality tables every two years.

Ranking Country Years

1 Monaco 89.52

2 Japan 84.74

3 Singapore 84.68

24 Netherlands 81.23

25 Bermuda 81.15

26 Cayman Islands 81.13

38 European Union 80.20

43 United States 79.68

57 BVI 78.46

62 Curacao 77.98

63 Dominican Republic 77.97

67 Sint Maarten 77.61

83 Aruba 76.56

98 Colombia 75.48


In order to be able to fund this change to a newer table, we maintain a specific reserve for adjustment to more

recent mortality tables (RAS). Going forward, we will continue monitoring the results on short and long life and

eventually review our reservation and other policies when considered necessary.

Mission Vision and core values

Mission

Vidanova strives to support current and future participating companies in the structuring, realization and imple-

mentation of the pension policy portion of their employee benefits policy and hereby wants to maintain a strong

financial position in order to be able to comply with its financial obligations towards its participants.

Vision

Vidanova’s vision is to realize consistent but managed growth in participants and sponsors, while guaranteeing

efficiency, quality of service and continuity.

Core values

Vidanova’s core values are:

• Professional and meticulous.

• Accessible and involved.

• Motivated and innovative.

• Efficient and result oriented.

• Independent and transparent.

• Client and service oriented.

Customer Satisfaction

For Vidanova, it is of utmost importance that our clients are satisfied with our performance and service. In order

to continuously assess whether this is the case, the Fund conducts on a yearly basis a customer satisfaction sur-

vey amongst a representative sample of our sponsors and pensioners based on the ISO 9001 quality assurance

policy / system.

Rise up, start fresh, see the bright opportunity in each new day.


The customer satisfaction survey aims to assess how the interviewee perceives the service level of Vidanova on

the following areas:

• Attention

• Accessibility

• Speed

• General experience regarding the service

• Communication and information sharing

The Fund aims at receiving a score of > 8.

The 2015 Customer satisfaction survey indicated that the clients are satisfied to very satisfied with the perfor-

mance and service of Vidanova. The Fund was granted a score of 8.0 by its sponsors and the pensioners granted

the Fund a score of 8.5. We are open for suggestions or improvements, and thank our clients for their coop-

eration and the continued confidence, and assure all of you that we will continue to strive for excellence as we

always do.

Governance

Board composition and day to day management

The composition of the Board of Supervisory Directors, the Board of Managing Directors, and Management as

of December 31, 2015 was respectively as follows:

Board of Supervisory Directors:

Name Function Representative of

1 Mr. A. Haile Independent Chairman Independent

2 Mr. S. Frankena Secretary Sponsor

3 Mr. I. Hanst Member Sponsor

4 Mw. A. Martha-Weert Member Sponsor

5 Mr. M. Dorego Member Participant

6 Mr. S. Antonisia Member Participant

7 Mr. D. Salomons Member Participant

8 Mr. P.A. Gunasekera Member Participant

9 Mr. R. Sprecher Member Sponsor

10 Mr. G.G.A. Cijntje Member Sponsor

11 Mr. A. Brobbel Member Participant

12 Mw. H. Etnel Member Sponsor

13 Mr. H. Doran Member Participant

14 Mr. R.E. Ricardo Member Participant

15 Mr. J. Soliano Member Sponsor

16 Mr. M. Manuela Member Participant


As per December 2015 there was one vacant position in the Board.

Board of Managing Directors

Mr. H.C. d’ Abreu de Paulo Independent President

Mr. W.J. Curiel Treasurer

Mr. R.S. Pichardo Secretary

Management of the Fund

The day to day activities of the Fund and the support to the Managing Board of Directors are executed by

Vidanova Pension Management Foundation (“VPM”), a full subsidiary of the Fund. VPM is led by its Executive

Director Mrs. Drs. C. Alberto, supported by the Finance Manager Mr. U. Dalnoot RA.

Board meetings

During the year 2015 the Board of Supervisory Directors met 4 times alone, and 4 times with the Board of Man-

aging Directors. Furthermore, there was a 2 day special information meeting between the Board of Supervisory

Directors and the Board of Managing Directors about amongst others the Integrated Financial Services concept

for the Fund.

The Board of Managing Directors met with the Management of Vidanova Pension Management on a Bi-weekly

basis regarding the Fund’s issues and developments, as well as its policies. These meetings were prepared by the

Executive Director in close cooperation with the Board of Managing Directors. All decisions have been recorded

in the minutes.

Changes in the Board of Managing Directors.

The Supervisory Board of the Fund has undergone the following changes during the year 2015:

- Mrs. I. Arrindell left the Supervisory Board and was subsequently replaced by Mr. D. Salomons.

- Mr. R. Maduro left the Supervisory Board but has not been replaced yet.

Promotion of Knowledge and effective Management

Vidanova ensures that the board members and management are competent for their tasks, and that the com-

petent persons serve as a member in the two boards. At the start of each membership, a prospective member

undergoes a review based on a number of selection criteria like knowledge, profile, experience etc. The members

must ensure that they continue to meet the requirements set forth at the time they became a member.


Furthermore, Vidanova ensures that especially the members of the Managing Board and Management follow

an adequate program of continuing education during the year. In order to ensure the suitability and continued

education of the full Board of Supervisors, it has reserved a specific budget for the year 2015 for permanent ed-

ucation of all its members.

During the year, the Managing Board members, the Chairman and Secretary of the Supervisory Board and Man-

agement attended several courses either together or separately. Some of these courses were “Sustainability of the

pension system” organized by CaPAs, the representative organization of pension funds of the Dutch Caribbean,

and a Roundtable about “Pension Issues” at the Central Bank of Curacao and St. Maarten. Furthermore, they

attended the “FIAP annual conference”, and the annual “Pension Summit” in the Netherlands as well as other

lectures on certain economic or subjects of interest that were held.

Compliance

Management and Board follow developments in the legislative or supervisory area closely and discuss possible

consequences for the Fund and how the Fund could react either pro-actively or repressively. Management is

confident that the Fund complies with all rules and regulations.

The Fund undergoes twice a year a thematic audit by an external party. Furthermore, on a yearly basis, the quality

management system is subject to an external independent ISO 9001 audit performed by Dekra Certification B.V.

This was also the case in 2015.

The scope of the Dekra Audit is as follows:

• To determine whether our internal management systems continue to fulfill the relevant norms.

• To determine whether by using our internal management systems assurance is given that we continue to

comply with the applicable contractual stipulations, law, and other regulations.

• To determine whether the use of our management systems will ensure that we will meet the objectives

of the Fund.

• To identify where applicable any possible improvement points.

Based on the result of the audit, the Fund continues to hold the ISO 9001 certificate up to January 1, 2017.

This continued to be possible due to the dedication and motivation of the staff and personnel of Vidanova Pen-

sion Management, for which we are very thankful. It shows also that Management is in control and that the risks

involved with the processes are managed adequately.


Key figures for the last five (5) years

1) Consists of the Provision Pension Obligation DB plan, the Pension Capital DC plan and the disability reserve.

2) Consists of the fund capital and other reserves.


International investment portfolio developments The Fund’s investment policy is based on a long term perspective. We focus on downside protection, trying to

protect the invested money as much as possible considering the volatile markets of the last few years.

During 2014, we saw on the international investment front a major strengthening of the dollar combined with

weakening of the Euro and a significant drop in oil prices as well as other commodities. This all had a major

impact on the international investment returns and also of our Fund.

During 2015 we saw a further increase in the global market volatility driven by a number of factors.

The factors which played a major role in 2015 were amongst others:

• Currency volatility.

• Continuing decline in global oil markets.

• The Chinese investment markets crises.

Although experts do not consider these to be fundamental issues, these had a negative effect on the international

market performance as a whole and the Fund’s international return.

The year 2015 started with a moderately slow increase in performance of the international financial market. Au-

gust and September 2015 however, showed a sharp decrease in mentioned performance. This was mainly due to

the effect of the slowing economy in China and its effect on the international investment market including our

own international investment portfolio. Furthermore, currencies tied to Emerging Markets, security selection

in technology and financial sectors did not do well. All this, combined with the continuous decline in global oil

prices during 2015, with the WTI oil dropping dramatically during the year led to a lagging year 2015.

Especially, the third quarter was characterized by sell offs. This led to a wipe out of the fair value gains (unrealized

gains) built up by the Fund during the first half of the financial year and considerable losses for the international

portfolio during the third quarter. During the last quarter, the Fund managed to gain back a major part of the

losses incurred during the third quarter. However, this was not strong enough to be able to make up for all the

losses of the third quarter, leading to a poor performance for the year as a whole.

We do on a yearly basis analyze the performance of the Fund. At the same instance however, the Fund’s focus

continues to be on the long term, taking full market cycles into account. That long term focus and a periodic

review of our investment policy together with our investment consultants are the basis for the Fund’s decisions.

15

We are aware of the fact that the main purpose of the investment portfolio is to generate enough return at an

acceptable level of risk, so that the Fund is able to comply with its pension obligations on the long term.

Considering the changing environment on the investment market of the last two years, without losing focus of

our long term horizon, also taking into account the risks on the pension side amongst which longevity risk that

is becoming more and more eminent, the Fund decided and engaged an external advisor to perform a continuity

analysis.

Through this analysis the Fund’s current policies (investment, pension, premium, and indexation policies) are

tested in order to determine to what extent the Fund can comply with its pension obligations on the long term

and realize its indexation ambition. This analysis provides insight in the impact of several scenarios and of im-

portant risks such as the longevity risk and the effect on the coverage ratio. The analysis will also indicate to what

extent the Fund can use the available tools such as premium, indexation, and/or the investment policy to mitigate

the risks. In that sense, the continuity analysis is an important step in the process to (re)-design policies that will

contribute to a solid financial future of the Fund and protection of the interest of all our participants.

The Managing Board and Management will continue to review the international investment portfolio periodically

in order to determine, in close cooperation with our external investment advisors, whether any changes in the

strategic and tactical asset allocation is necessary.

Majority stake in SFT Bank N.V.By means of strategic alliances, the Fund aims to provide

its members with all the possible financial services and

products which they may need during their lives. This is

basically the Integrated Financial Services (IFS) concept.

As part of this concept, the Fund has finalized the pur-

chase of 67% of the shares of SFT Bank.

This acquisition was effectuated as per January 1, 2016.

SFT Bank, established in Curacao, was incorporated in

1980. It has 55 staff members and total assets of ANG

482 million.

During 2016, the Board will, in its role as a shareholder, undertake the necessary actions in order to align the

bank in such a manner that it will further support the IFS concept.


It always seems impossible, until it’s done.


Both shareholders do expect a fruitful cooperation. The acquisition of SFT will entail for the participants of

Vidanova, a sound bank which can offer them an extensive package of banking products.

Expectations 2016Our main goal is to safeguard continuity. In this regard, the Fund strives to improve its financial position by

working towards re-achieving a coverage ratio of at least 115%. This will be a challenge in these difficult times

with lower returns / interest rates than in the past.

On the investment side, we will continue the periodic process of reviewing our investment policy in order to be

able to achieve the necessary returns to guarantee continuity and fund our liabilities.

On the liability side, we will continue working with the sponsors with a DB plan towards tempering the increase

in the Provision Pension Obligations (“VPV”) in 2016 and the next years and synchronize the retirement age with

the AOV age for especially our biggest sponsors with DB plans.

For the year 2016 the Fund, based on the results of the continuity analysis, will finalize the analysis of the possi-

bility to tie the indexation policy to the funding ratio.

Furthermore, a complete analysis of the reservation policy will be finalized. The amendments will be described in

the new ABTN and presented for approval to the Supervisory Board.


Acknowledgements

The Board of Managing Directors wishes to express its gratitude and appreciation to the management and staff

of Vidanova Pension Management for their efforts and dedication during the past year. We also want to thank the

Board of Supervisory Directors for their supervision and support during the year 2015.

A special word of thanks goes to all the Supervisory Members that have left the Board. We thank you for the

support and the works performed as a member of the Supervisory Board during the last year and wish you all

the best for the future.

At the same time we wish to welcome the new Supervisory Board member to the Fund and wish him all the best

in this new position. We are sure we will have a fruitful cooperation to the benefit of the Fund. At the end of 2016

the next election and appointment of members for the supervisory board will take place.

Curaçao, April 21, 2016

Every day may not be good, but there is something good in every day.

Management’s report


II. Management’s report

Financial development of the Fund during the year

Development in Provision pension obligations

The provision for pension obligations amounted to ANG 682,146,643 as per December 31, 2015 (2014: ANG

657,806,207). This is an increase of 3.7% compared to 2014. This amount is excluding the pension capital of the

DC plans which amounted to ANG 45,637,914 as per December 31, 2015, (ANG 38,940,694 last year), an increase

of 17.2% compared to last year.

Coverage Ratio development

The coverage ratio of the Fund decreased to 113%, mainly due to the poor performance of the international

investment portfolio (-1.33%) for the year 2015, combined by an incidental loan loss provision of ANG 5.7 mil-

lion. The return for the year is below the 4% actuarial rate used by the Fund while there is a stable increase in

the pension provision. We can however, conclude that the Fund still continues to show a strong coverage ratio

compared to our peers.

Please see below a chart, that gives a graphic overview of the development of the pension assets versus the pen-

sion liabilities since inception.


Indexation

The Fund has indexation guidelines which detail the procedure to determine if indexation can be granted or not.

Based on the Fund’s indexation guidelines described in the ABTN, the Fund has to consider amongst others the

average inflation figures for Curacao, St. Maarten, and Bonaire as per October 2015. For Bonaire however, as of

October 10, 2010, only quarterly figures are issued by the Central Bureau of Statistics. Therefore, the December

2015 figure has been used.

The inflation figures are as follows: Curacao as per October 31, 2015: 0.1%. Sint Maarten: 0.6%. Bonaire as per

December, 2015: -0.9%; all based on the figures of the Central Bureau of Statistics of the countries. This leads to

an average inflation figure of -0.2%, therefore, lower than 0%.

Taking into consideration that there is a negative inflation (deflation), based on the indexation guidelines, no

indexation has been granted as per January 1, 2016 since there is no need to do so.

In close cooperation with our external actuary the Fund has been working on a different format of the indexation

guidelines. After the final approval of these proposals these new indexation guidelines will be enacted for the

year 2016.

Development several reserves

The sum of the “Technical and other Designated reserves”, consisting of the “Other reserves” excluding the “Dis-

ability reserve”, decreased in 2015 by 20.29% compared to 2014.

Asset Management

About half of the Fund’s investment portfolio is invested internationally through several investment managers.

The remaining amount is invested locally and in the Dutch Speaking Caribbean region. In order to control the

risk associated with especially its international investment portfolio, the Fund diversifies its investment portfolio

as much as possible, and maintains an investment reserve that serves as a buffer for fluctuations in the interna-

tional investment markets.

Furthermore, the Fund has positioned its international investment portfolio conservatively, taking downside pro-

tection as a primary goal of the international investment portfolio mix while maintaining an acceptable level of

return over full market cycles. The Fund’s international investment portfolio is diversified into countries, regions,

asset classes, sectors, and currencies.


The Fund has also adequate policies in place to identify and limit concentration risk. In its IPS, it has set certain

thresholds for various types of exposures in order to limit concentration to a certain borrower (group) and sector.

In doing so the Fund wants to ensure that over a full market cycle it will achieve enough return to enable it to

fund its liabilities, cover its organizational costs, strengthen the reserves it maintains, make conditional index-

ation of pensions and deferred rights possible. This policy has worked relatively well for years. This does not

entail however, that the returns are always as desired. The international investment portfolio is subject to market

volatility as in 2014 and 2015 we experienced higher market volatility especially in the second half of 2015 as

explained earlier.

Investment portfolio

In order to give a better insight in the distribution of the investment portfolio of the Fund, mainly the interna-

tional investment portfolio, we present to you the following graphics.

Asset Allocation – Combined Portfolio:

Note: Pie chart Graphic of allocations is based on

Independent Investment Advisor’s information.

Fund Return

The following graph gives an impression of the development of the Fund’s returns for the past five years.


Performance international investment portfolio

Calendar year 2015 was marked by an increase in global market volatility driven by a handful of factors. These

include the following, based on our investment advisor (LCG Associates) information:

• Currency volatility – As markets spent much of 2015 worrying whether or not the U.S. Federal Reserve was

going to raise interest rates for the first time in over a decade, most other global Central Banks were becom-

ing more accommodative in their monetary policies. This disparity caused volatility in the currency markets,

resulting in the U.S. Dollar strengthening against most major currencies. As an example, the EURO declined

10% against the Dollar falling from 1.21 to 1.09. During the year, the Swiss Franc and Chinese Yuan were

other hotspots of volatility.

• Spurred by a global supply/demand imbalance, global oil markets continued to decline during 2015. WTI

Oil dropped dramatically during the year. This in turn sparked a selloff in Energy related equities and credit.

Energy was the worst performing sector of the U.S. Equity markets, as stocks in that sector declined -21.1%.

• The Chinese equity markets exhibited an extreme amount of volatility during the year. The A share markets,

which are relatively new markets dominated by individual investors, saw a large increase in leverage and pos-

itive sentiment during the first half of the year, which sent the markets skyrocketing. As all bubbles eventually

pop, so did these markets, which fell 43% from mid-June to the last week of August. This abrupt fall spooked

other markets throughout the world.

Below are for illustration purposes some of the returns for the major capital markets during 2015:

• Despite a very eventful year, the U.S. equity markets returned a muted +1.4% (as measured by the

S&P 500).

• Non-US equity markets declined 2.4% (as measured by the MSCI ACWI ex US Index). Developed Markets (as

measured by the MSCI EAFE Index) returned -0.8% and outperformed their Emerging Markets (as measured

by the MSCI Emerging Markets Index) peers which declined -14.9%.

• Global Fixed Income markets also faced headwinds and returned -3.2% (as measured by the Barclays Global

Aggregate Index). U.S. Fixed Income fared slightly better with a return of +0.5% (as measured by the Barclays

Aggregate Index).

The international investment markets showed thus distressed scenarios in almost all important asset classes.

Please refer to the following graphs (source: LCG Associates) to appreciate that for investors worldwide, 2015 was

a very difficult year and that it was hardly possible for any combination of asset types to give you a decent return

in 2015.


The Fund’s international portfolio was also influenced by the above mentioned factors since it also belongs to

the international investment spectrum. Considering that the whole international spectrum did not do well, the

Fund’s international portfolio also suffered. However, the way the portfolio is positioned, with main characteristic

downside protection, protected the Fund from incurring higher losses as the markets did.


Performance local investment portfolio

During 2015, the local return was lower than 2014. This lower return can almost fully be attributed to an inci-

dental provisioning of a loan for an amount of ANG 5.7 million. This provisioning became necessary based on

prudent accounting principles, considering a special situation of the Borrower.

Unfortunately, the Fund continued to see that there were almost no investment opportunities in the local market.

During the year 2015, the Fund only managed to place one new loan. There were almost no projects available

during the year that would give a good return at an acceptable risk that fits the risk profile of Vidanova. We con-

tinued seeing a weak, non-growing economy. We hope that next year and the upcoming years the economy will

finally pick up. The Fund is however aware that to certain extent it has to develop its own investments opportu-

nities to generate returns for its local portfolio.

Considering the economic situation, the Fund continues preparing itself for the execution of its own local proj-

ects. We are looking carefully at all schemes and towards a careful layout of these projects in order to avoid bad

timing as much as possible in rolling out especially the Hofi Vidanova project. The Fund’s advisors continue to

prepare carefully this project and requesting the necessary licenses from the Government authorities. Once these

licenses have been granted, the next phase of the project will be continued whereby a market analysis of the type

of houses needed, will be performed and subsequently the infrastructure can be implemented (in part or in full)

if sufficient demand exists.

In 2016, the Fund, together with its partners, will continue working on the realization of the Courtyard Marriott

project. This project is still in the preparation phase whereby a number of issues are being dealt with. These are

two projects that will reach an important stage during 2016 and the upcoming five years will lead to self devel-

oped investment opportunities for the Fund.

We hope that 2016 will show signs of recovery for the Curaçao economy, and that there will be much more eco-

nomic activity on the island, which we may be able to support as long as the risks are acceptable. However, we

do realize that it is an election year. Therefore, the activities may depend on whether investors will await these

results. In any case, the Fund will keep on reviewing all prospective projects that have a good risk-return ratio and

that may contribute to the further development of the Dutch speaking Caribbean Islands, while being cautious

not to increase risks in a non-prudent manner.

A river cuts through a rock not, because of its power but its persistence


Pension Management

Development in participants

The year 2015 showed an increase in the number of active participants of 3.46% compared to last year. On the

other hand, the participants with deferred rights increased with 14.19% compared to last year. The pensioner’s

grew with 6.6% compared to last year, which is in line with last year’s growth. It is clear that the increase in the

number of inactive participants exceeds the increase in the number of active participants. The Fund is maturing.

This phenomenon implies additional challenges for the Fund as one of its policy instruments i.e. the premium

policy will become less effective. The following graph gives a graphic insight in this development.

The development of the aging ratio of the Fund is as follows:

Development with respect to our sponsors

During 2015 the number of affiliated sponsors of the Fund continued growing. A total of three (3) new compa-

nies affiliated with the Fund. For these companies we saw a continuation of the trend of the last years that all

new sponsors opted for a defined contribution plan instead of a defined benefit plan. This development is a direct

result of the major costs involved with a defined benefit plan and the reporting reserve requirements involved

with such a plan. We expect this trend to continue.


Pension arrangements

The Fund has the following twenty (20) different pension arrangements and /or plans active in its systems as per

December 31, 2015. These plans can be amended or modified based on certain specific parameters:

1. Final Pay Plan (PB= 13 x Salary -/- franchise)

2. Final Pay Plan (PB= 13 x Salary -/- franchise) BES

3. Basic Average Indexed Pay Plan (PB= 12 x Salary -/- independent franchise)

4. Average Indexed Pay Plan (PB= 13 x Salary -/- independent franchise)

5. Basic Average Indexed Pay Plan (PB= 12 x Salary -/- independent franchise) BES

6. Average Indexed Pay Plan (PB= 13 x Salary -/- independent franchise) BES

7. Average Indexed Pay Plan (PB= 13 x Salary -/- independent franchise) BES pension age 65

8. Basic Defined Contribution Plan (6% premium)

9. Defined Contribution Plan (9% premium, on 12,72 and 13 of month salary)

10. Defined Contribution Plan (5% premium of pension base, on 12,72 of month salary)

11. Defined Contribution Plan (9% premium, on 12 of month salary) in USD

12. Defined Contribution Plan (12% premium)

13. Defined Contribution Plan (12% premium) BES

14. Defined Contribution Plan (15% premium)

15. Defined Contribution Plan (15% premium, invalidity 50% of year salary)

16. Defined Contribution Plan (15% premium on 12,96 of month salary)

17. Defined Contribution Plan (15% premium, invalidity 70% of pension base)

18. Defined Contribution plan (16% premium)

19. Defined Contribution plan (16% premium) Aruba

20. Defined Contribution Plan based on age related premiums (18%-28% premium)

New pension schemes

To provide our actual and new sponsors with an adequate pension plan that leads to reduced costs for our

sponsors while also synchronizing with the AOV pension age of 65 in Curacao and in the BES, Management has

worked diligently on two new pension schemes. The first plan is a new flexible basic DB plan with a basic pension

age of 65 and a yearly pension accrual of 1.75% instead of 2%. This scheme has been rolled out during 2015 and

a couple of sponsors, especially in the BES, have transferred.

The other scheme that management has developed in close cooperation with our external actuary is a Collective

DC plan, being a DC plan with some DB characteristics. This scheme has not been rolled out as yet.


Risk Management

General

Risk-management frameworks is defined by the Organization for Economic Co-operation and Development

(“OECD”) as: “the process effected by an organization’s board of directors, management and other personnel,

designed to provide reasonable assurance regarding the achievement of objectives in terms of: effectiveness and

efficiency of operations; reliability of financial reporting; and compliance with laws and regulations”.

One of the key activities that the Board of Managing Directors and Management do on a regularly basis is

approving and reviewing the overall risk strategy of the Fund. This involves understanding the risks; setting

acceptable levels of risk; measuring, monitoring and controlling these risks; and ensuring that an adequate and

effective internal control system is in place.

In this regard a process for identifying risks has been established enabling quick identification, measuring, de-

scribing, and controlling of the risks encountered.

The Fund’s main aim with its existing and future risk control mechanism is to provide reasonable, but not abso-

lute, assurance to its stakeholders, that the entity’s business objectives are achieved. In determining the policy,

and taking important decisions, the Managing Board does its utmost to achieve the right balance between risk,

achieving of objectives and adequate control of risks.

The risk analysis of the Fund is done on a strategic and on an operational level. The Fund uses a Risk Monitoring

Matrix in which for each top level risk it has outlined the corresponding key risks, the control mechanism, and the

key risk indicator. The Risk Monitoring matrix is used to monitor the several risks of the Fund on a periodic basis.

Operational CostsOne of the ratios to measure the efficiency of a pension Fund or comparative competitor is the operating costs of

the entities in relation to the pension schemes and assets they manage. These operational costs include all costs

of administration and investment management etc which are engaged to make the process of transforming

pension into retirement benefits possible.


Considering the few number of pension funds locally and the exclusive character of our pension fund, there is

not much benchmark information available. However, in general, economies of scale will play an important role

in the level of both administrative and investment costs.

The operational expenses of the Fund have been in general in line with last year and the budget.

As can be observed from the Key Figures, the cost per participant dropped compared to 2014. At Vidanova we

always strive to maintain the cost as low as possible.

ON BEHALF OF VIDANOVA PENSION FUND FOUNDATION

35

Consolidated Financial

Statements


III. Consolidated Balance Sheet as per December 31, 2015(After profit appropriation)

Note: the Fund capital is the minimum capital required being a foundation for an amount of ANG 100.00.

All risks are for the account of the Fund.


IV. Consolidated Profit and Loss Statement for the year ended December 31, 2015

Note: The “Adjustment previous years and rounding” refers to a number of entries through the Equity referring

to a number of corrections from previous years which do not affect the Profit and Loss account and rounding.

All risks are for the account of the Fund.


V. Consolidated Statement of Cash Flows for the year ended December 31, 2015

When someone tells you it can’t be done, it’s more a reflection of their limitations not yours.


VI. Notes to the consolidated financial statements 2015

General

The purpose of the Fund, with its statutory seat in Willemstad, Curaçao, is to extent or facilitate the extension

of pensions and other benefits to participants or former participants, and their posthumous positions, all this

in accordance with the articles of incorporation, the existing policies and other relevant regulations set by the

supervisory and managing board, and within the limits of the means of the Fund. These consolidated financial

statements have been approved on April 21, 2016.

Sponsors

The pension plan of the personnel of VPM (the Fund’s execution office), is being carried out by the Fund itself.

Besides this arrangement, the following companies are affiliated to the Fund as per December 31, 2015:

ACSION CURA B.V., Curacao MIJNMAATSCHAPPIJ, Curacao

AIC FINANCIAL SERVICES N.V., Curacao N.V. AUTOBUSBEDRIJF, Curacao

AMERICAN CONSULATE, Curacao N.V. GEBE, Sint Maarten

AQUALECTRA (I.U.H. N.V.), Curacao PBC OPERATING N.V. (Hotel), Curacao

AQUALECTRA DISTRIBUTION, Curacao PRINCESS BEACH CASINO, Curacao

AQUALECTRA PRODUCTION, Curacao PRODUCTIVE BUSINESS SOLUTIONS (ARUBA)

ASKA SCHADEVERZEKERING N.V., Curacao PRODUCTIVE BUSINESS SOLUTIONS (Curacao) B.V.

BAKER TILLY DUTCH CARIBBEAN, Curacao REFINERIA DI KORSOU N.V., Curacao

BETONWARENFABRIEK BRIEVENGAT, Curacao SABA ELECTRIC COMPANY N.V., Saba

BINT BRANCH ZORGSECTOR CURACAO, Curaçao SATEL, Saba

BLUE BANK INTERNATIONAL N.V., Curacao SMITH & NEPHEW Inc., Curacao

BONAIRE HOLDING MAATSCHAPPIJ N.V., Bonaire ST. EUSTATIUS SPORTS FACILITIES FOUNDATION, Sint Eustatius

BROAD SERVICES N.V., Curacao ST. KORPORASHON PA DESAROYO DI KORSOU, Curacao

CARIBBEAN MEDIC HEALTH CARE SYSTEMS, Curacao ST. WEGENFONDS, Curacao

CCR CASINO MANAGEMENT N.V., Curacao STATIA HOUSING FOUNDATION, Sint Eustatius

CCR HOTEL MANAGEMENT N.V., Curacao STATIA UTILITY COMPANY N.V., Sint Eustatius

CURAÇAO INDUSTRIAL SERVICES N.V., Curacao STICHTING ANIMO, Curacao

CURAÇAO REFINERY UTILITIES, Curacao STICHTING HAMIËD, Curacao

CURGAS, Curacao STICHTING OPVANGTEHUIS BRASAMI, Curacao

CUROIL (BONAIRE), Bonaire STICHTING SPERANSA, Curacao

CUROIL GASSTATION, Curacao TELBO N.V., Bonaire

DYNAF CARIBBEAN B.V., Curacao TELEM, Sint Maarten

ECOPOWER, Bonaire THE GALAN GROUP, Curacao

EUTEL N.V., Sint Eustatius TOUCAN BEACH RESORT N.V. , Curacao

FIRST INDEPENDENT TRUST (Curacao) TOURISM CORPORATION BONAIRE, Bonaire

FLORIS SUITE HOTEL, Curacao TRUSTMOORE (Curacao) N.V., Curacao

FUNDASHON NOS TEI PA OTRO, Curacao UNITED TELECOMMUNICATIONS SERVICES N.V., Curacao

FUNDASHON PA MANEHO DI ADIKSHON, Curacao USONA, Curacao

HEREN2 CARIBBEAN B.V., Curacao UTILITY CREDIT UNION, Curacao

INSEL AIR INTERNATIONAL B.V., Curacao WEB N.V., Bonaire


Changes in accounting policies

There were no changes in accounting policy for the year.

Comparative figures

Where necessary, comparative figures have been adjusted to align with the presentation in the current year.

Consolidation & Participation

In the consolidated financial statements of the Fund, the assets and liabilities of Vidanova Pension Management

Foundation, Vidanova Beheer B.V., Kaya Flamboyan Real Estate 1 C.V. (“KFR”), In the Blue 2 C.V. and Vidanova

Real Estate Development N.V. are consolidated. All these entities have their statutory seat in Willemstad, Curaçao.

The Fund has an absolute majority and control over all the above mentioned entities, and has also a minority

stake in the capital of CMC Real Estate N.V. with its statutory seat in Willemstad, Curaçao. Therefore, except for

CMC Real Estate N.V., it has consolidated the figures of all these entities fully in its own financial figures, taking

into consideration the interest of its partners as “minority interest” on the balance sheet and profit and loss

statement. The subsidiaries have the same functional currency as the Fund being: “ANG”.

Accounting policies

The consolidated financial statements have been prepared in accordance with Book 2, Title 2 of the Civil Code

of Curaçao and the generally accepted accounting principles in the Netherlands, among which the “Richtlijnen

voor de Jaarverslaggeving” as published by the “Raad voor de Jaarverslaggeving” taking as much as possible into

consideration “Richtlijn 610”. RJ 610 is linked to the Dutch “Pensioenwet” and specified regulations regarding

valuation principles and presentation for Pension funds as included in the related “Algemene Maatregelen van

Bestuur”. Since Vidanova has its statutory seat in Curaçao, Management has decided to apply RJ 610 as much as

possible except where it may be in contrast with local regulations, and/or where the situation in Curaçao differs

from the Netherlands”. Furthermore, the applicable rules and regulations of the Central Bank of Curaçao and St.

Maarten have been observed.

If not otherwise mentioned, the assets and liabilities are stated at nominal value less incurred impairment losses.

Realized investment income regards the accrued interest on bonds, savings and bank accounts and mortgage

loans, as well as received dividend on shares and rental income on real estate. Dividends are being recorded on

cash basis and interest is recorded in the period they relate to.

Unrealized investment income regards gains and losses on the per year end outstanding investment portfolio

resulting from the valuation of investments at fair values.


The investments are valued as follows:

Fixed Income instruments, consisting of:

• Bonds held till maturity: amortized cost;

• Bonds trading account: fair value;

• Equity instruments and Alternative Investments (Publicly and non Publicly traded): fair value;

• Loans and mortgage loans: these are recognized initially at fair value of the amount owed, which normally

consists of its face value, net of any provisions co nsidered necessary. These receivables are subsequently

measured at amortized cost.

• Time deposits: These are recognized initially at fair value of the amount owed, which normally consists of

its face value, net of any provisions considered necessary. These receivables are subsequently measured at

amortized cost.

• Mutual Fund: the valuation is based on (un)audited Net Assets Value figures received from the fund admin-

istrators. For a number of these mutual funds, the audited financial statements will only be available in the

second quarter of 2016. For these funds, the unaudited financial figures have been used.

• Receivables: Receivables are recognized initially at fair value of the amount owed, which normally consists

of its face value, net of any provisions considered necessary. These receivables are subsequently measured

at amortized cost. When a trade receivable is uncollectible, it is written off against the allowance account for

trade receivables.

• Cash and Cash Equivalents include cash at hand, bank balances, and deposits held at call with maturities of

less than 12 months. Cash and Cash equivalent are stated at face value. All Cash and Cash Equivalents are at

free disposal of the Fund.

The accounting policies have been consistently applied to all the years presented, with the exception of the

changes in accounting policies set out under the heading: “changes in accounting policies”.

Impairment of non-current assets

At each balance sheet date, the Fund tests whether there are any indications of assets being subject to impair-

ment. If any such indications exist, the recoverable amount of the asset is determined. If this proves to be im-

possible, the recoverable amount of the cash generating unit to which the asset belongs is identified. An asset

is subject to impairment if its carrying amount exceeds its recoverable amount; the recoverable amount is the

higher of an asset’s fair value less costs to sell and value in use.

Going Concern


The going concern assumption was applied during the preparation of these consolidated financial statements.

Foreign currency

Assets and liabilities denominated in foreign currency are being translated in Antillean guilders using the per

year end applicable exchange rate. Profit and loss statement transactions are being recorded based on the ex-

change rate applicable at the moment of the transaction.

Per December 31, 2015 the following exchange rates are used:

USD 1 = ANG 1.78

EURO 100 = ANG 197.81

Rental income

Rental income from investment property is recognized in the profit and loss statements on a straight-line basis

over the term of the lease.

Consolidated statement of cash flows

The consolidated statement of cash flows is prepared according to the direct method. The cash and cash equiva-

lents balance consists of the cash balance and the balances on bank accounts. Cash flows denominated in foreign

currency are translated in Antillean guilders using the weighted average exchange rates for the period.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted

in the Netherlands requires management to make estimates and assumptions that affect the amounts reported

in the consolidated financial statements and accompanying notes. Actual results could differ from those esti-

mates.


General reserve DB and DC

The movements in the general reserve are as follows:

Provision pension obligations DB Plan

The calculation of the provision for pension obligations regarding the Defined Benefit plan are performed taking

into account the discount rate of 4% and making use of the same mortality tables for man and woman as last

year being GBM/GBV 2000 – 2005 minus a 1 year life time deduction. It is assumed that all participants are mar-

ried with respectively a 4 year older man or a 4 year younger woman. The overvalue as a result of this assumption

together with a 1% increase of the net buy sum for old age pension for female participants is used to cover the

orphan risk. All provisions are long term.

The movement in the provision is as follows:


Pension Capital DC Plan (Spaarkapitaal)

The provision pension obligations regarding the Defined Contribution plans consist of the saving capital of the

individual participants per year end. All provisions are long term.

The movement in the provision is as follows:

Long term debt

The long term debt refers to an amount that the Fund has received in advance from a

client to execute the management and payment of a retirement program on its behalf.


VII. Contingencies and commitments

The Fund has a number of outstanding commitments or contingencies as per December 31, 2015:

Furthermore, the Fund has a number of mid and long term lease contracts with its service providers of copying

machines, air conditioning, software licenses etc. All these contracts can be terminated taking a notice period

into consideration.

VIII. Related Parties and related party transactions

The related parties of the Fund are the consolidated entities, key management, and its sponsors. As per Decem-

ber 31, 2015, the Fund has a total amount of ANG 26.4 million in loans to sponsors, which all have been done

at arm’s length. All transactions between the Fund and its consolidated entities have been fully eliminated in the

consolidation.

IX. Other Information

Statutory appropriation of the surplus

In the articles of incorporation, there is no specific stipulation regarding the appropriation of any surplus or

deficit for the Fund. Any surplus or deficit for the year is however, booked respectively in favor of, or charged to

the several reserves of the Fund. The Fund is a tax-exempt entity.

Subsequent events

There are no relevant subsequent events, other than the acquisition of SFT Bank N.V. please refers to the Board

of Managing Director’s report, section: “Acquisition of SFT Bank N.V.” for more detail.


Independent Auditor’s report


Haaksbergweg 75 1101 BR Amsterdam The Netherlands Tel: +31 (0)20 7601 888 Fax: +31 (0)20 7601 899 www.milliman.com

Actuary’s Statement We have certified the actuarial figures of Stichting Vidanova Pension Fund for the year ended December 31, 2015. We hereby declare that the provision of the fund for the defined benefits pension arrangements amounts to ANG 682,147,000 at balance date per December 31, 2015. In this amount the single premium for indexation is included. The pension capital for the defined contribution pension arrangements as per December 31, 2015 amounts to ANG 45,638,000. In our actuarial report over the year 2015 we expressed an independent opinion on the actuarial figures of the fund which we believe to be adequate. The solvency test we performed based on the former Actuarial Principles Pension fund guidelines of the Dutch Central Bank (DNB) showed that the financial means of the fund are at least equal to the minimum prescribed norm. The funding ratio at balance date is 113.1%. The financial position of Stichting Vidanova Pension Fund end 2015 is in our opinion sufficient. Amsterdam, April 21, 2016 Milliman Pensioenen

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