cordaid annual report 2017€¦ · these financial statements reflect a detailed accounting of...
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CORDAIDANNUAL REPORT 2017FINANCIAL STATEMENTSTHE HAGUE
CORDAID NAAM BU
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CORDAID 2017 ANNUAL REPORT
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CONTENTS
ANNUAL ACCOUNTS 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheet as of December 31, 2017 (after proposed appropriation of funds) . . . . . . . . 4
Consolidated Statement of Income and Expenditure for the year ended December 31, 2017 . . . . . . . . . . 5
Appropriation of the funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Performance indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Statement of Cash Flows for the year ended December 31, 2017 . . . . . . . . . . . . . . . . . . . . . . . 8
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Foundation Individual Financial Statements of Stichting Cordaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Individual Balance sheet of Stichting Cordaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Individual Statement of income and Expenditure for the year ended at December 31, 2017 . . . . . . . . . 35
NOTES TO THE FOUNDATION INDIVIDUAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Provision in the constitution governing the appropriation of balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Appropriation of result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Country offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Subsequent events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
INDEPENDENT AUDITOR’S OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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CORDAID 2017 ANNUAL REPORTAnnuAl ACCOunts 2017
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ANNUAL ACCOUNTS 2017
INTRODUCTION
These financial statements reflect a detailed accounting of Cordaid’s activities in 2017, described in the annual report. The annual accounts are an integrated part of Cordaid’s annual report.
Unavoidably 2017 was a challenging year in terms of operations and finance for Cordaid. The organization was recovering from two subsequent reorganizations whilst implementing a different business model. Following the ending of the core subsidies (MFS2) from the Dutch Government as from 2016. Nevertheless, Cordaid managed to improve its operational result compared to 2015 and 2016 considerably. This was mainly done through a reduction of the workforce of approximately 30% at the end of 2016, while keeping the total acquired income at the same level.
Despite the improvement of the operational result, the overall financial result was still €5.2m negative. The financial result was to a very high extent negatively influenced by the drop of the value of the US dollar. A total amount of €6.7m mainly unrealised exchange rate losses on investments issued in connection with the objectives is included in the financial result of 2017.
Cordaid acquired an income of €129.2m in 2017, compared to €132.1m in 2016 and a budget of €114.0m. Higher income compared to budget was caused by both new contracts and higher realization of running contracts from government grants. Lower income from individuals through legacies and no additional funding from the Postcode Lottery were amply off set by income from the Giro555 action for the famine in Africa.
The other income consists mainly of the income coming from investments issued in connection with the objectives. The result amounted to €4.2m negative and was negatively influ-enced by the exchange rate differences. Excluding the €6.7m mainly unrealised exchange rate losses, the income from investments issued in connection with the objectives amount-ed to €2.2m positive.
Overall expenditure stood at €130.1m of which €121.6m (93.4% of total expenditure) was spent on Cordaid’s objectives. The expenditure on objectives was €11.3m below the expenditure last year, but €10.5m above budget. This drop in expenditure is mainly caused by lower program management costs. Direct program cost was only €4.0m lower than in 2016. It has been an enormous organizational and operational challenge to realize this level of expenditure after two subsequent staff reductions.
Expenditure on fundraising amounted to €6.5m (5.0% of total expenditure) and was in line with prior year. These costs were €1.0m above budget, mainly due to higher costs for institutional fundraising.As a result of the staff reduction done at the end of 2016 the costs for Management and Administration dropped signifi-cantly compared to prior year and were well below budget.
The overall financial result of €5.2m negative consists of a negative financial result on the fund Loans & guarantees of €7.8m, mainly caused by the aforementioned exchange rate loss.
The semi-restricted and restricted project funds grew in 2017 with €5.2m. Those funds represent a timing difference between income and expenditure and will be spent for the greater part in the upcoming years. The remaining deficit of €2.6m was extracted from the earmarked reserves.
The Board of Directors is very pleased with the improvement of the operational financial result (not taking into account exchange rate losses and incidental costs) compared to prior years despite the large reductions in staff over the past two years and will continue to implement the strategy of working in and on fragility at scale. However, the level of reserves has drastically decreased in the last couple of years. Therefore, strengthening the financial basis under the work of Cordaid will still be a main objective for the near future.
The Hague, November 8, 2018
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CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2017 (after proposed appropriation of funds)
X € 1,000 NOTE 31/DEC/2017 31/DEC/2016
Assets Fixed assets Tangible fixed assets 5 444 1,136
Financial fixed assets
- Issued in connection with the objectives 6 60,297 62,705
- Investments 7 21,542 20,863
81,839 83,568
Current assets Receivables 8 - Subsidies governments / organizations 10,252 11,336
- Receivable from inheritances 5,142 6,612
- Interest receivable 763 908
- Other receivables 6,833 6,103
22,990 24,959
Cash and Bank 9 51,813 65,271
Total assets 157,086 174,934
X € 1 .000 NOTE 31/DEC/2017 31/DEC/2016
Liabilities Reserves 10 - Continuity reserve 5,887 5,887
- Earmarked reserves 1,383 3,984
7,270 9,871
Funds 10 - Restricted funds 2,301 715
- Semi-restricted funds 18,067 14,413
- Loans & guarantees fund 84,099 91,889
104,467 107,017
Provisions 11 1,974 6,843
Non-current liabilities 12 - Project commitments 0 0
Current liabilities 12 - Project commitments 13,736 16,890
- Other current liabilities 29,639 34,313
43,375 51,203
Total liabilities 157,086 174,934
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CONSOLIDATED STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED DECEMBER 31, 2017
X € 1,000 NOTE 2017 BUDGET 2017 2016
Income
- Income from private individuals 14 23,675 25,600 26,384
- Income from companies 578 26 96
- Benefits of lottery organizations 15 2,725 3,167 4,985
- Government grants 16 90,176 75,354 92,589
- Income from related (international) organizations
17 1,811 133 358
- Income from other non-profit organizations 18 10,246 9,702 7,672
Total acquired income 129,211 113,982 132,084
- Income from sale of goods and or rendering of services
19 242 360 291
- Other income 20 -4,174 3,908 2,113
Total incoming resources 125,279 118,250 134,488
Resources expended
Spent on objectives
- Program costs: 21
Healthcare 59,051 53,648 75,318
Humanitarian Aid 24,804 21,729 26,900
Security & Justice 13,499 14,069 7,024
Cordaid Netherlands 435 454 6,079
Resilience 10,053 7,927 7,750
Investments 4,118 4,374 5,027
Other activities 4,698 4,866 1,052
- Public information / awareness campaigns 22 4,917 3,984 3,680
Expenditure on objectives 121,575 111,051 132,830
- Expenditure on fundraising 22 6,461 5,465 6,110
- Management and administration cost 22 2,061 2,515 3,606
Total resources expended 130,097 119,031 142,546
Sum of income and expenditures before financial income and expenses
-4,818 -781 -8,058
Financial income and expenses 26 -239 781 1,341
Corporate income tax -94 0 0
Balance of income and expenditures -5,151 0 -6,717
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AnnuAl ACCOunts 2017CORDAID 2017 ANNUAL REPORT
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APPROPRIATION OF THE FUNDS
The funds were appropriated as follows:
X € 1,000 2017 2016
Appropriation of funds
The balance of funds was appropriated as follows:
Reserves
- continuity reserve 0 -3,988
- tangible fixed assets reserve 0 -1,283
- earmarked reserves -2,601 -4,811
-2,601 -10,082
Funds
- restricted funds 1,586 -755
- semi-restricted funds 3,654 5,554
- loans & guarantees fund -7,790 -1,434
-2,550 3,365
Balance of income and expenditures -5,151 -6,717
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PERFORMANCE INDICATORS
In 2017 the following performance indicators were derived from the statement of income and expenditure:
PERFORMANCE INDICATORS 2017 BUDGET 2016
Ability to spend income on objectives
- Income-to-spending ratio (% expenditure on objectives vs. total incoming resources) 97.0% 93.9% 98.8%
Overall efficiency of the organization
- Total program-to-spending ratio (% expenditure on objectives vs. total resources expended) 93.4% 93.3% 93.2%
- Program-to-spending ratio (% of direct program costs vs total resources expended) 87.9% 86.3% 82.1%
- Program-management-to-spending ratio (% of program management costs vs total resources expended)
5.6% 7.0% 11.1%
- Fundraising-to-spending ratio (% of fundraising costs vs. total resources expended) 5.0% 4.6% 4.3%
- Management and administration ratio (% vs. total resources expended) 1.6% 2.1% 2.5%
Efficiency of fundraising
- Fundraising ratio (% cost of generating funds vs. total incoming resources) 5.0% 4.8% 4.6%
▪ Income-to-spending ratio: 97.0%. This is in line with last year (98.8%) and budget (93.9%). As income, after normalization of unrealised exchange rate losses, and expenditure on objectives followed the same trend.
▪ Program-to-spending ratio: 87.9%. The savings related to the staff reduction mainly brought down the management & administration costs and program management costs, while direct program costs decreased less drastic. A direct consequence is a higher program to spending ratio compared to prior year.
▪ Program-management-to-spending ratio: 5.6%.The program management costs are mainly driven by staff costs. The reduction of staff lead to a significantly lower program management to spending ratio.
▪ Fundraising-to-spending ratio: 5.0% (budget: 4.6%). The higher ratio compared to previous year (4.3%) is mainly caused by savings in the fundraising budget in 2016, while in 2017 the direct fundraising costs were in line with the planning. The higher ratio compared to the budget is mainly caused by higher costs for institutional fundraising. Continous investments are done in the institutional funding strategy, necessary to keep Cordaid’s income at desired levels.
▪ Management and administration ratio: 1.6% (budget 2.1%). The absence of additional costs for the reorganization and the savings in management and administration costs realized through the staff reduction are the main causes for the lower absolute management and administration costs. With total expenditure falling less, the ratio improved.
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AnnuAl ACCOunts 2017CORDAID 2017 ANNUAL REPORT
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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2017
The movement of the cash and cash equivalents is as following:
X € 1,000 NOTE 2017 2016
Cash flows from operating activities
Incoming resources 14-20 125,279 134,488
Resources expended 21-22 130,097 142,546
-4,818 -8,058
Adjustments for:
- Depreciation tangible fixed assets 5 702 432
- Financial income and expenses 26 -239 1,341
- Corporate income tax -94 0
- Changes in provisions 11 -4,869 4,387
-4,500 6,160
Changes coming from operating activities:
- Stocks for emergency aid 8 0 96
- Receivables 8 1,969 5,554
- Financial fixed assets (connected to the objectives) 6 2,408 -7,426
- Project commitments 12 -3,154 -19,441
- Investments 7 -679 -1,038
- Other current liabilities 12 -4,674 16,581
-4,130 -5,674
Cash flows from operating activities -13,448 -7,572
Cash flows from investing activities
Purchases of tangible fixed assets 5 -10 -285
Cash flows from investing activities -10 -285
Cash flows from financing activities
Receipts / repayments of long-term borrowings 0 0
Cash flows from financing activities 0 0
Net decrease in cash -13,458 -7,857
X € 1,000 2017 2016
Balance at 1 January 65,271 73,128
Changes -13,458 -7,857
Balance at 31 december 51,813 65,271
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CORDAID 2017 ANNUAL REPORTnOtes tO the COnsOlIDAteD FInAnCIAl stAtements
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Business Incubator decided to terminate activities in 2016. Running projects will be finalized according to plan, but new activities will not be started. Final liquidation of the SBI is expected in 2018.
Stichting Cordaid Participaties’ objective is to invest through loans or participation in social enterprises worldwide. The foundation has the same Board of Directors as Stichting Cordaid.
Corpav BV makes direct and indirect investments in social enterprises all over the world. Stichting Cordaid Participaties is the only shareholder of Corpav BV.
Cordaid Investment Management BV has the objective to act as manager for one or more investment institutions. Currently Cordaid Investment Management BV manages the social impact investment portfolio of Stichting Cordaid. Stichting Cordaid holds 100% of the shares of Cordaid Investment Management BV.
The street address of all foundations and companies is:Lutherse Burgwal 102512 CB The HagueThe Netherlands
The Board of Directors of Cordaid bears ultimate responsibility for the general course of affairs at Stichting Cordaid. With the Supervisory Board, the Board is responsible for Cordaid’s corporate governance structure and compliance with good governance rules. The composition of the Supervisory Board is such that its members can act critically and independently of one another, of the Board and of any particular interests. The Supervisory Board is responsible for supervising the Board and the general course of affairs at Cordaid.
The Board of Directors is tasked with managing the founda-tion, including running its day-to-day business and imple-menting its programs and activities. The budget, the annual report and the annual accounts that are prepared by the Board of Directors are subject to adoption by the Supervisory Board after advice from the Audit Committee. The Supervisory Board also adopts the multi-annual strategic policy plan drafted by the Board of Directors and approves the annual plan.
The members of the Board of Directors of Stichting Cordaid
at December 31, 2017 are:
▪ L.C. Zevenbergen, CEO ▪ W.J. van Wijk, CFO
1 . GENERAL NOTES
1 .1 ActivitiesRooted in the tradition of the Catholic Social Teachings, Cordaid’s mission is to reduce fragility and people’s vulnerability where it is most needed and most difficult: in fragile and conflict- affected settings. Cordaid does this by promoting equality and social inclusion, by increasing the resilience of people and their communities and by strengthening the social contract between citizens and their governments. Cordaid focuses aid efforts in some of world’s most conflict-torn and volatile countries like South Sudan, Afghanistan, the Central African Republic and the Democratic Republic of Congo. In the Netherlands, Cordaid reduces poverty and promote inclusion by encouraging cooperative entrepreneurship for people with low incomes and a distance to the labour market.
Cordaid is a foundation. Its objectives as described in its Articles of Association are as follows (translated from Dutch): ‘In accordance with the evangelical message and inspired by the Catholic community in the Netherlands, the purpose of the foundation is to carry out activities focused on:a. providing emergency and refugee aid;b. providing aid to specific groups, such as the elderly people, the disabled
and children;c. providing medical aid; andd. all aspects related to structural poverty relief of subordinated groups,
especially in developing countries, and in Central and Eastern Europe and the Netherlands.’
The consolidated annual accounts comprise the figures of the following entities:
▪ Stichting Cordaid, The Hague ▪ Stichting Cordaid Expats, The Hague ▪ Stichting Social Business Incubator, The Hague ▪ Stichting Cordaid Participaties, The Hague ▪ Cordaid Investment Management BV, The Hague ▪ Corpav BV, The Hague
Stichting Cordaid Expats’ objective is to employ expatriates working for Stichting Cordaid and has the same Board of Directors as Stichting Cordaid.
The Stichting Social Business Incubator’s objective is to find, stimulate and develop new ideas that provide sustainable solutions for environmental problems, aimed at improving the quality of life of people living at the bottom of the income pyramid. The Chief Financial Officer of Stichting Cordaid is the chair of the Board of Stichting Social Business Incubator and has the final say in strategic decisions, according to the articles of the foundation. At the end of 2015, the Board of Social
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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very recently started Joint Response project where high commitments towards consortium members were made just before year-end.
▪ Other current liabilities decreased €4.9m. Deferred grants went down by €2.9m because The Global Fund project and an EU funded project in Ethiopia came close to the end, bringing the deferred grants down, this effect was partly off set by an increase in the deferred grants of the Strategic Partnerships funded by the Ministry of Foreign Affairs, due to low expenditure level in 2017.
Cash flows from investing activities
Purchases of tangible assets came to €0.01m in 2017. Investments for new IT systems form the greater part of this cash outflow.
Cash flows from financing activities
Cordaid has no non-current liabilities for financing its opera-tions. The non-current liabilities on the balance sheet relate to long-term project financing, which are recognized as cash flows from operating activities.
1 .3 Changes in accounting estimatesCordaid made no changes to its policies for accounting estimates compared to the previous year.
1 .4 EstimatesIn applying accounting policies and standards for preparing annual accounts, the Board of Cordaid is required to make estimates and judgments that might significantly influence the amounts disclosed in the annual accounts. If necessary for the purposes of providing the view required under Section 362(1), Book 2 of the Netherlands Civil Code, the nature of these estimates and judgments, including the related assumptions, are disclosed in the notes to the relevant items.
1 .5 ConsolidationThe consolidation includes the financial information of Stichting Cordaid and the entities in which it exercises control or whose central management it conducts. All entities in which Cordaid exercises control or whose central management it conducts are consolidated in full. Intercompany transactions, profits and balances among consolidated entities are eliminated, unless these results are realised through transactions with third parties. Unrealised losses on intercompany transactions are eliminated as well, unless such a loss qualifies as an impairment. The accounting policies of group companies and other consolidated entities have been changed where necessary in order to align them to the prevailing group accounting policies.
The consolidated entities are listed below: ▪ Stichting Cordaid Expats, The Hague ▪ Stichting Social Business Incubator, The Hague ▪ Stichting Cordaid Participaties, The Hague ▪ Cordaid Investment Management BV, The Hague ▪ Corpav BV, The Hague
During 2017, the Supervisory Board members of Stichting
Cordaid were:
▪ E.M.H. Hirsch Ballin, Chair up till June 30, 2017 ▪ A.J.M. Heerts, Chair as of July 1, 2017 ▪ M.C.T. van de Coevering, member Audit Committee ▪ J.H.M. van Bussel, member Audit Committee ▪ M. van Beek ▪ J.J.A. de Boer ▪ B.L.J.M. van Dijk-van de Reijt
The Board members of Stichting Cordaid Participations and Stichting Cordaid Expats are the same as for Stichting Cordaid at December 31, 2017.
Stichting Cordaid Participaties is the only shareholder and Board member of Corpav BV per December 31, 2017.
At December 31, 2017, the board of directors of Cordaid Investment Management BV comprises L.J.E. Wessemius-Chibrac and F.J.M. Goossens. Stichting Cordaid is the only shareholder.
The Board members of Stichting Social Business Incubator at December 31, 2017 are:
▪ W.J. van Wijk, Chair ▪ B.P. Alberda, Treasurer ▪ B.P. Meijs, Secretary ▪ F.V. van der Have
According to the articles of the foundation the chair has the final say in strategic decisions. The foundation will be liqui dated in 2018.
1.2 Notes to the cash flow statementThe cash flow statement is prepared using the indirect method. The funds in the cash flow statement comprise cash and cash equivalents. Cash flows in foreign currencies are translated at an average rate. Exchange differences affecting cash items, interest paid and interest received are included in cash from operating activities.
Cash flows from operating activities
The negative gross cash flow from operating activities was mainly driven by the negative balance of funds in 2017 (€4.9m).
Factors positively affecting cash flow, compared to the balance of funds in the statement of income and expenditure are:
▪ Receivables decreased €2.0m, mainly driven by a lower receivable for legacies and lower receivables from governments. The latter is mainly caused by the settlement of a large project and lower advance payments due to lower expenditure for the Strategic Partnerships.
▪ Repayments on the financial fixed assets issues in connection with the objectives were higher than new loans granted and actually paid.
Factors negatively affecting cash flow compared to the balance of funds in the statement of income and expenditure are:
▪ Provisions were settled for €4.9m. An high amount of payments was especially made in connection to the redundancy provision formed at the end of 2016.
▪ Project commitments decreased €3.2m. The main cause were outstanding project commitments at the end of 2016 for a
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2.4 Tangible fixed assetsBuildings, IT equipment, furniture and fittings, vehicles and other assets are all valued at historical cost or manufacturing price including directly attributable expenditure, less straight-line depreciation over their estimated useful lives, and impair-ment losses. Grants are deducted from the acquisition or manufacturing cost of the assets to which they relate.
2.5 Financial fixed assets
Issued in connection with the objectives:
Loans, guarantees and participations
Loans and guarantees disclosed under financial assets are recognized initially at fair value of the amount owed net of any provisions considered necessary. These receivables are subsequently measured at amortized cost.
Participations are valued at acquisition cost adjusted for impairments at reporting date. These participations do not involve a structural commitment for the purposes of Cordaid’s own operations.
Derivatives:Derivatives are initially valued at cost price and subsequently valued at fair value. Derivatives with a negative value are presented under current liabilities. Changes in the value of derivatives are recognized directly in the statement of income and expenditure.
Investments:
Bonds and shares
Bonds and shares are measured at fair value. Changes in value and transaction costs are recognized through income or expenditure. Transaction costs are charged directly to the statement of income and expenditure.
2 .6 Non-current asset impairmentCordaid assesses at each reporting date whether there is any evidence of assets being subject to impairment. If any such evidence exists, the recoverable amount of the relevant asset is determined. An asset is subject to impairment if its carrying amount is higher than its recoverable amount; the recoverable amount is the higher of net realizable value and value in use. If it is established that a previously recognized impairment loss no longer applies or has declined, the increased carrying amount of the asset in question is not set higher than the carrying amount that would have been determined had no impairment loss been recognized.
The net realizable value is determined based on the active market. An impairment loss is directly expensed in the income statement.
Cordaid assesses at each reporting date whether there is objective evidence that a financial asset or a group of financial assets is impaired. If any such evidence exists, the impairment loss is determined and recognized in the income statement.
2 . ACCOUNTING PRINCIPLES
2 .1 GeneralThe financial statements have been prepared in accordance with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. More specifically, the financial statements have been prepared in accordance with the Dutch Accounting Standard for Fundraising Institutions (RJ 650). The financial statements are prepared in Euros. Balances and results in 2017 are compared with the budget as approved by the Supervisory Board and 2016 results and balances. Assets and liabilities are generally valued at acquisition cost, produc-tion cost or at current value. If no specific valuation method is indicated, the valuation is done at the acquisition price. References are included in the balance sheet and statement of income and expenses.
2 .2 Change in accounting principlesIn this 2017 financial statements Cordaid has adopted the change in Dutch Accounting Standard 650 Fundraising Institutions (RJ 650). This mainly means an adjusted presenta-tion and classification of income in the statement of income and expenditure, including disclosure notes, and in addition, the change also applies to income from inheritances as legacies on which a usufruct is vested must be valued. The change in accounting policies has been applied retrospectively and for comparison reasons the comparable figures of 2016 have been adjusted to reflect this change. The valuation of the usufruct vested on specific inheritances was under the previous direc-tive €0 and under the new directive the amount is trivial, as a result of which valuation of usefructs has not been retrospec-tively applied. The impact of the change in accounting policies on reserves and funds as well as balance of income and expenditures is €0.
2 .3 Foreign currency
Functional currency
The financial statements are presented in euros, which is the functional and presentation currency of Cordaid.
Transactions, receivables and payables
Transactions in foreign currencies during the period are included in the financial statements at the exchange rate on the transaction date. Monetary assets and liabilities denomi-nated in foreign currencies are translated into the functional currency at the closing rate. The exchange differences arising from the settlement and translation are credited or charged to the statement of income and expenditure.
Translation differences on non-monetary assets held at cost are recognized using the exchange rates prevailing at the dates of the transactions. Translation differences on non-monetary assets such as equities held at fair value through income or expenditure are recognized through income or expenditure as part of the fair value gain or loss.
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2 .9 Reserves and fundsThe equity of Cordaid is divided into the following reserves and funds:
▪ The continuity reserve is created to ensure that Cordaid can meet its legal and moral obligations in case of a significant fall in income in the future.
▪ Earmarked reserves are earmarked for future spending on the objectives of Cordaid. The Board of Directors decides on the actual purposes of the reserves, based on internally agreed criteria.
▪ The restricted funds are earmarked for a specific project as agreed with third-party donors.
▪ Semi-restricted funds are earmarked for activities related to a certain topic, but not limited to specific projects.
▪ The loans and guarantees fund has been committed for loans, guarantees and equities connected to the objectives of Cordaid. The result on these financial assets and the costs of managing this portfolio reflect the changes in the fund in a year.
2 .10 ProvisionsProvisions are recognized for legally enforceable or construc-tive obligations existing at the balance sheet date, the settle-ment of which will probably require an outflow of resources whose extent can be reliably estimated.
Provisions are measured on the basis of the best estimate of the amounts required to settle the obligations at the balance sheet date. Unless indicated otherwise, provisions are stated at the present value of the expenditure expected to be required to settle the obligations.
2 .11 Liabilities
General
Liabilities are initially recognized at fair value. Transaction costs directly attributable to the incurrence of the liabilities are included in the measurement on initial recognition. Liabilities are subsequently measured at amortized cost; this is the amount received plus or less any premium or discount and net of transaction costs.
Operational lease
Liabilities under operating leases (such as the lease of premis-es) are accounted for in the statement of income and expendi-ture equally over the term of the contract, taking into account reimbursements received from the lessor.
Project commitments
Project commitments are recognized as soon as a contract is issued or when a grant decision is communicated in writing or otherwise; they are stated at the fair value stated in the contract, net of any payments.
The amount of an impairment loss incurred on financial assets stated at amortized cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition).
If, in a subsequent period, the amount of the impairment loss decreases, and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be reversed. The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed. The amount of the reversal shall be recognized through profit or loss.
If an impairment loss has been incurred on an investment in an equity instrument carried at cost, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. The impair-ment loss shall be reversed only if the evidence of impairment is objectively shown to have been removed.
2 .7 Receivables
General
Receivables are initially recognized at fair value and subse-quently carried at amortized cost. Allowances for doubtful debts are deducted from the carrying amount of receivables.
Receivable from inheritances
Inheritances on which third parties have a right of usufruct are recognized in the annual accounts. Recognition is based the best practices prescribed by the Dutch branche organiza-tion Goede Doelen Nederland. The valuation method used by Cordaid is based on the calculation used by the tax authorities for the calculation of inheritances tax. Receivables are recog-nized and included in the balance sheet. Income is however recognized through the statement of income and expenditure, after which the benefits are included in a designated fund until the moment of release.
2 .8 Cash and cash equivalentsCash and cash equivalents comprise cash and bank balances and demand deposits falling due in less than 12 months. Cash and cash equivalents are stated at face value.
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and as an expended resource. Cordaid accounts for gifts in kind if the discount/gift has a connection with the nature of Cordaid’s activities and objectives and Cordaid would have purchased the services or goods if the gift/discount had not been received.
Other Income
Result of loans, guarantees and participationsThe result of loans, guarantees and participations is made up of interest received on loans and guarantees under the Loan and Guarantee Program, realised and unrealised changes in the valuation of loans and participations, dividend and fees for restructuring loans.
Income from sale of goods and or rendering of servicesIncome from sale of goods and or rendering of services are accounted for in the year in which the materials are sold or services have been provided.
3 .3 Exchange rate differencesTransactions denominated in foreign currencies conducted during the reporting period are recognized in the annual accounts at the rate of exchange on the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the rate of exchange at the reporting date. Any resulting exchange differences are recognized through income or expenditure. Non-monetary assets and liabilities stated at cost and denomi-nated in foreign currencies are translated at the rate of exchange at the transaction date (or the approximate rate of exchange).
3.4 Depreciations on tangible fixed assetsTangible fixed assets are carried at cost less straight-line depreciation over their estimated useful lives. Tangible fixed assets are depreciated from the time they are taken into use over their estimated useful lives. Future depreciation is adjusted if the estimate of future useful life changes. Gains and losses on the sale of tangible fixed assets are included in depreciation.
3.5 Employee benefits
Short-term employee benefits
Salaries, wages and social security contributions are recognized in the statement of income and expenditure based on the pay and benefits package to the extent that they are payable to employees.
Pensions
Cordaid’s pension plan is administered by the Zorg en Welzijn Pension Fund, a pension fund for the health and welfare sector. Employees’ retirement and partner pensions are based on their pensionable salary for full-time employment, net of the state-pension offset. The pension fund endeavors to index-link any accrued pension entitlements and pensions in payment based on general salary trends in the collective bargaining agreements that govern its affiliated employers in a particular year. The pension fund decides every year whether index-link-ing would be appropriate and, if so, what index to use given the
3 . ACCOUNTING PRINCIPLES FOR THE CONSOLIDATED STATEMENT OF INCOME AND EXPENDITURE
3 .1 GeneralIncome and expenses are recognized in the statement of income and expenditure in the year to which they relate. The allocation is made consistently with previous years. The balance of funds is defined as the difference between income and expenses. Income is accounted for in the year it was realised and losses are accounted for as soon as they are identified.
3 .2 Income recognition
Income from private individuals and companies
Income from individuals and companies, previously classified as own fundraising, involves gifts and donations, mailings, collections, legacies and the sale of materials. Income from gifts and donations, contributions, collections and mailings are accounted for in the year in which they are received. Exceptions are written undertakings that have been received before year-end as these can be accounted for in the current year.
Legacies are recognized based on a statement received from the executor in the year in which the amount can be determined reliably. The valuation of legacies with property is done based on the most recent correspondence and receipts are included up to the preparation of financial statements. The valuation is done prudently.
Income from lottery organizations
Income from lottery organizations is accounted as such when Cordaid carries no risk in the fundraising campaign. The income from lottery organizations is recognized in the year in which the income is received or pledged.
Income from other non-profit organizations
Income from non-profit organizations is accounted as such when Cordaid carries no risk in the fundraising campaign. The income from non-profit organizations is recognized in the year in which the income is received or pledged.However, grants and subsidies from other non-profit organiza-tions are recognized in the statement of income and expendi-ture in the year in which the subsidized costs were incurred. The grants are recognized where it is likely that they will be received and Cordaid will comply with all attached conditions.
Income from government grants
Grants and subsidies are recognized in the statement of income and expenditure in the year in which the subsidized costs were incurred. The grants are recognized where it is likely that they will be received and Cordaid will comply with all attached conditions.
Gifts in kind
Gifts in kind are stated at their fair market value in the Netherlands. Where items involving gifts in kind are sent directly to emergency areas, their value is recognized as a gift
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4 . FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
4 .1 Market risk
Currency risk
Cordaid operates in the European Union, Africa, Asia, Latin-America and the United States. The currency risk for Cordaid largely concerns positions and future transactions in US dollars and currencies whose rate is closely related to the US dollar. Management has determined that the cost of structurally hedging these currency risks does not outweigh the benefits. Based on managements risk assessment, one incidental hedge contract is in place to cover currency risks on loan(s) denomi-nated in Myanmar Kyat (MMK). A swap contract, MMK to USD, has been used for this purpose. This swap contract does hold a risk, because the USD inflow is dependent on the 6 month LIBOR. Natural hedges exist because receivables and liabilities are often related.
Price risk
Cordaid invests its temporary cash balances according to a defensive to neutral strategy compared to a very conservative policy in previous years. As a consequence, Cordaid faces a limited market risk related to its portfolio of bonds and shares that is valued at market value.
Interest rate and cash flow risk
Cordaid incurs interest rate risk on interest-bearing receivables (in particular those included in financial assets and cash).
Credit risk
Cordaid does not have any significant concentrations of credit risk. Receivables mainly relate to grants from solid govern-ments or multilateral institutions.
Liquidity risk
Cordaid uses several banks to avail itself of a range of overdraft facilities. Where necessary, further securities will be furnished to the bank for available overdraft facilities.
financial situation and expected developments in that situa-tion. In doing so, the pension fund uses nominal and realistic coverage ratios as benchmarks. Although the pension fund may decide to apply catch-up index linking, such a decision will not have a retroactive effect and will not trigger subsequent payments. Index linking is funded partially from contributions and partially from the return on plan assets. The coverage ratio was 98.6% at 31 December 2017 (30 September 2018: 103.4%).
Contributions are recognized as employee benefits expense as soon as they are payable. Prepaid contributions are recognized within prepayments and accrued income if they entail a refund or a reduction in future payments. Contributions payable are disclosed as liabilities in the balance sheet.
3 .6 Financial income and expenses
Interest paid and received
Interest paid and received is recognized on a time-weighted basis, taking into account the effective interest rate of the assets and liabilities concerned. When recognizing interest paid, allowance is made for transaction costs on loans received as part of the calculation of effective interest.
Interest income and income from investments
The line item interest income and income from investments contains the (gross) interest, dividends and realised and unrealised capital gains. Interest income and expense are recognized time proportionally.
Interest income is recognized as investment income exclusive of interest received on loans and guarantees issued in the context of the Loans & Guarantees Program, which is recog-nized entirely as gains on financial assets issued in connection with the objectives.
Changes in financial instruments at fair value
Financial instruments are initially valued at cost price and subsequently valued at fair value. Changes in the value of the following financial instruments are recognized directly in the statement of income and expenditure:
▪ purchased loans, bonds (unless held to maturity) and equity instruments that are quoted in an active market;
▪ decreases in value of financial instruments at fair value are recognized in the statement of income and expenditure.
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5 . TANGIBLE FIXED ASSETS
Movements of the tangible fixed assets are as follows:
X € 1,000 BUILDINGS IT EQUIPMENT FURNITURE
AND FITTINGS
VEHICLES OTHER ASSETS TOTAL
Balance at 1 January
Cost 1,990 4,506 1,601 28 283 -8,408
Accumulated depreciation -1,525 -4,013 -1,424 -27 -283 -7,272
Carrying value at 1 January 465 493 177 1 0 1,136
Changes
Purchases 0 10 0 0 0 10
Disposals 0 0 0 0 0 0
Depreciation -359 -281 -61 -1 0 -702
Depreciation on disposals 0 0 0 0 0 0
Total changes -359 -271 -61 -1 0 -692
Balance at 31 December
Cost 1,990 4,516 1,601 28 283 8,418
Accumulated depreciation -1,884 -4,294 -1,485 -28 -283 -7,974
Carrying value at 31 December 106 222 116 0 0 444
Depreciation percentages 10% 33% 20% 33% 33%
The total investments in 2017 amounted to €0.01m. The main investments were related to complete the new Cordaid workspace, enabling staff to work more easily in project teams worldwide.
Cordaid has impaired the buildings for €0.3m per year-end, because Cordaid will not extend its current rental agreement. The property was sold and will get another destination, hence Cordaid can not negotiate about handing over investments made in the building. This implies that the value of these investments will be zero at the end of the rental agreement.
All assets are held for business operations.
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6 . FINANCIAL FIXED ASSETS ISSUED IN CONNECTION WITH THE OBJECTIVES
Outstanding loans, participations and guarantees are recognized as financial assets, issued in connection with the objectives. This relates to loans issued to and a number of participations in partner organizations for the purposes of funding usually small-scale economic activities (e.g. through microfinance institutions), for which partner organizations find it difficult or impossible to secure finance from commercial banks. Interest rates on these loans are determined by country and by customer.
Movements in financial assets were as follows in 2017:
X € 1,000 LOANS GUARANTEES PARTICIPATIONS TOTAL
Value of portfolio at 1 January 2017 39,667 1,879 23,236 64,782
Provision at 1 January 2017 -2,077 0 0 -2,077
Carrying amount 1 January 2017 37,590 1,879 23,236 62,705
Changes
Loans and guarantees issued 14,506 0 0 14,506
Loans and guarantees repaid -6,069 -534 0 -6,603
Participations acquired/committed 0 0 245 245
Participations sold/commitments withdrawn 0 0 -1,559 -1,559
Impaired loans and guarantees -561 0 0 -561
Revaluation of participations 0 0 -1.411 -1,411
Currency gains and losses -5,824 -33 -844 -6,701
Value of portfolio at 31 December 2017 41,719 1,312 19,667 62,698
Changes in the provision
Impaired loans and guarantees 561 0 0 561
Allocated to/withdrawn from provision for loans and guarantees -885 0 0 -885
Provision at 31 December 2017 -2,401 0 0 -2,401
Value of portfolio at 31 December 2017 41,719 1,312 19,667 62,698
Provision at 31 December 2017 -2,401 0 0 -2,401
Carrying amount 31 December 2017 39,318 1,312 19,667 60,297
The provision on loans and guarantees increased by €0.3m in 2017. Both write-offs and new additions to the provision were limited.
Loans and guaranteesThe outstanding loans are the amounts actually transferred to the partner organizations. At balance sheet date an amount of €3.9m was signed as loan but not yet disbursed (2016: €9.1m). This outstanding amount is not included in the figures above.
To secure loans and guarantees the following type of collateral have been pledged: loan portfolio pledges, debentures, corporate and or personal guarantees, mortgages and subordinating loans to our loans and guarantees. The average interest rate on the loans and guarantees is 8,65%.
For all outstanding loans, the amortized cost is equal to cost.
Loans and guarantees will fall due in the following periods:
X € 1,000 LOANS GUARANTEES TOTAL
< 1 year 4,004 112 4,116
1-5 years 37,609 1,200 38,809
> 5 year 106 0 106
41,719 1,312 43,031
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ParticipationsCordaid takes a prudent approach to the valuation of its participations. They are carried at acquisition cost adjusted for impair-ment. Previously recognized impairments can be (partially) reversed, if the original reasons for impairment are no longer valid as long as the value does not become higher than original cost. Payments in foreign currencies are recorded at the payment date. Cordaid has the policy of selling all foreign currencies, besides US dollars, directly upon receipt. Cordaid operates in countries where there is no active market for these equity stakes. Their fair value is however determined taking into account suitable valuation methods such as book value principle, price-earning ratios and recent sale prices of similar investments. The fair value of the participations is equal to or above the valuation in the balance sheet according to the valuation at acquisition price adjusted for impairment.
List of participations (in €1,000):
NAME OF
ORGANIZATION
CITY COUNTRY OPENING
BALANCE
2017
PURCHASED /
COMMITTED
CURRENCY
GAINS AND
LOSSES
REVA-
LUATION
SOLD CLOSING
BALANCE
2017
ACTIVITIES
Aavishkar Mumbai India 1,220 0 0 0 0 1,220 Investment fund SME in India
Afrioils Lilongwe Malawi 0 0 0 0 0 0 Nut processor
Bank Andarra via Hivos Triodos Fonds
Jakarta Indonesia 461 0 0 0 -461 0 Investment fund in MFIs in Indonesia
Dia Vikas Gurgaon (Uttar Pradesh)
India 1,542 0 504 -371 -602 1,073 Investment fund in MFIs India
Dia Vikas Gurgaon (Uttar Pradesh)
India 1,324 0 -73 377 0 1,628 Investment fund in MFIs India
FPM SA Kinshasa DRC 3,506 0 -167 -47 0 3,292 Investment fund for Financial Institutions DR Congo
HEKIMA Micro Finance SA
Kinshasa DRC 0 237 0 0 0 237 MFI in women engaged SME in DRC
InReturn B.V. Rotterdam Netherlands 313 0 0 -58 -167 88 Investment fund SME Africa
Liberation London UK 170 0 -21 -69 0 80 Nut producer association
Oikocredit Amersfoort Netherlands 0 8 0 0 0 8 Investment social investor
PEAK II LP Moshi Tanzania 251 0 0 0 -249 2 Leasing fund SME Africa
Progression Capital Africa LTD
Port Louis Mauritius 3,867 0 -463 -148 -80 3,176 Investment fund SME Africa
PYME Capital Panama City Panama 1,381 0 -13 -430 0 938 Investment fund SMEs Latin America
Rabo Rural Fund Utrecht Netherlands 2,454 0 -247 -154 0 2,053 Small producers trade finance fund
SICSA Panama City Panama 454 0 0 0 0 454 Investment fund in MFIs Central America
SME Impact Fund CV
Amsterdam Netherlands 857 0 0 -64 0 793 Investment fund SME Tanzania
Stromme Microfinance East Africa Limited
Kampala Uganda 1,000 0 0 0 0 1,000 Investment fund in MFIs Africa
WAVF Port Louis Mauritius 2,997 0 -364 -447 0 2,186 Investment fund SME Sierra Leone / Liberia
WMF Accra Ghana 1,439 0 0 0 0 1,439 Investment fund in MFIs Ghana
Total 23,236 245 -844 -1,411 -1,559 19,667
Debt investments carrying the same risk as equity participations are included in the list of participations.
Given the nature and objectives of the participations Cordaid enters into new participations only when an exit strategy on the short or middle longterm can be formulated. Therefore, Cordaid does not consolidate any of the participations in the list above, although for 2 participations Cordaid holds more than 50% of the shares.
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8 . RECEIVABLES
All receivables have a remaining maturity of less than one year.
X € 1,000 31/DEC/2017 31/DEC/2016
Receivables
- Dutch Government 1,993 5,634
- Other governments and organizations
8,468 5,911
- Provision uncollectable receivables from governments
-209 -209
- Receivable from inheritances 5,142 6,612
- Interest receivables 763 908
- Other receivables 6,833 6,103
22,990 24,959
Contracts with back donors lead to a receivable if subsidized costs incurred are higher than advances received from the donor. The related receivables compared to 2016 decreased with €1.1m. The settlement of the first phase of the Sexual Reproductive Health program with the Ministry of Foreign Affairs and lower expenditure on the three Strategic Partnerships in which Cordaid is involved are the main causes for the decrease.
Receivables from other governments and organizations increased.
The receivable from inheritances in 2017 was €5.1m (2016: €6.6m). The decrease is mainly a consequence of a lower number of unsettled inheritances compared to prior years.
Other receivables increased to €6.8m (2016: €6.1m) mainly because of prepaid expenses and increased advance payments at the level of the Cordaid Country Offices.
Interest receivables
X € 1,000 31/DEC/2017 31/DEC/2016
Interest receivables
- Banks & deposits 2 61
- Bonds 37 42
- Loans & guarantees issued in connection to the objectives
724 805
763 908
Interest receivable relates to the bonds in the investment portfolio, outstanding deposits, savings deposits and outstand-ing loans and guarantees relating to Cordaid’s objectives.
7 . INVESTMENTS
Cordaid selected ING and Van Lanschot in 2015 as their asset managers. Both asset managers were instructed to invest following a defensive to neutral profile. The investment strategy has a horizon of 5 to 10 years. Both asset managers receive a fee based on the invested amount only and no performance based fee.The portfolio investments must meet strict sustainability criteria. Cordaid invests in businesses that have sound staff policies in place, that protect the environment and that respect human rights. Cordaid applies the UN Global Compact and the Standard for Financial Management of Fundraising Institutions of the Dutch Association of Fundraising Institutions (VFI).
The current portfolio investments can be specified as follows:
X € 1,000 31/DEC/2017 31/DEC/2016
Bonds
Government bonds 3,087 3,849
Corporate bonds 7,385 7,653
Other bonds 2,542 2,105
Total bonds 13,014 13,607
Shares 7,851 7,256
Other funds 677 0
21,542 20,863
The portfolio is carried at fair value based on the known market prices for the specific bonds, shares and funds in the portfolio. The fair value of the portfolio increased €0.7m to €21.5m mainly due exceeding purchases above sales of investments in shares (€0.6m) and other funds (€0.6m) as well as €0.2m (un)realised gains on investments, which is partially offset by the €0.7m divestment of bonds. The originally invested amount for the current portfolio is €20m.
The movement of the investments during 2017 were as follows:
X € 1,000 SHARES BONDS OTHER
FUNDS
TOTAL
Opening balance 1 January 2017
7,256 13,607 0 20,863
Purchased in 2017 1,318 6,055 1,005 8,378
Sold in 2017 -765 -6,808 -357 -7,930
(Un)realised gains and losses
42 160 29 231
Closing balance 31 December 2017
7,851 13,014 677 21,542
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9 . CASH AND BANK
Cash and bank comprise cash and bank balances of the Cordaid office in The Hague, in the country offices abroad and deposits falling due in less than one year. Cash and cash equivalents decreased from €65.3m at December 31, 2016 to €51.8m at the end of 2017. The main factors in the movements in cash and bank are explained in section 1.2 Notes to the cash flow statement.
X € 1,000 31/DEC/2017 31/DEC/2016
Cash and cash equivalents
- Deposits 21,336 34,507
- Bank accounts 30,062 30,602
- Cash in hand 294 162
- Cross accounts 121 0
51,813 65,271
All cash is at Cordaid’s free disposal, except for the guarantee for the rent agreement of €0.2m (one guarantee). December 31, 2017 another guarantee of €0.2m (2016: €0.3m) deposited at a Cordaid bank account, is presented as financial fixed assets, as it is used as an investment in connection to the objectives as Cordaid. The cash is not at Cordaid’s disposal during the duration of the guarantee.
Other receivables
X € 1,000 31/DEC/2017 31/DEC/2016
Other receivables
- Security deposit 6 64
- Prepayments 757 644
- Other receivables 6,070 5,395
6,833 6,103
Other receivables increased with €0.7m mainly because of advance payments to implementing organizations by the Cordaid Country Offices and prepaid pension premiums by Cordaid The Hague.
10 . RESERVES AND FUNDS
X € 1,000 CONTINUITY
RESERVE
EARMARKED
RESERVES
RESTRICTED
FUNDS
SEMI-
RESTRICTED
FUNDS
RESTRICTED
FUND LOANS &
GUARANTEES
TOTAL
RESERVES
AND FUNDS
Opening balance 1 January 2017
5,887 3,984 715 14,413 91,889 116,888
Changes
Extraction 0 -2,601 0 0 -7,573 -10,174
Dotations 0 0 1,586 3,654 0 5,240
Other 0 0 0 0 -217 -217
Closing balance 31 December 2017
5,887 1,383 2,301 18,067 84,099 111,737
Continuity reserve
The continuity reserve is designed to create a sufficiently large buffer to enable Cordaid to complete ongoing programs appropriately, including staffing them with our own people, if one or more key sources of funding were to dry up unexpected-ly, and with due observance of existing legal and moral obligations.
In 2017 no additions to nor withdrawals from the continuity reserve have been made. The necessary continuity reserve will be calculated in 2018 based on a new analysis of the stability of income and the cost levels of Cordaid, following the 2016 reorganization. On December 31, 2017, the continuity reserve amounted to €5.9m. This is far below the maximum of 1.5 times total operating expenses as formulated by Centraal Bureau Fondsenwerving (CBF).
Earmarked reserves
Earmarked reserves comprise interest income, income from investments financed with temporary surpluses of semi- restricted funds, other income and income which is not earmarked for specific topics but granted to Cordaid as an organization. The reserves are earmarked for spending on objectives. The allocation of these reserves to different themes, programs and objectives is subject to a decision by the Board of Directors. Decision-making is based on internally agreed upon criteria.
The total amount of earmarked reserves per December 31, 2017 is €1.4m. A large part of the extraction for 2017 relates to exchange rate losses (€1.7m) on foreign bank accounts and is partly off-set by €0.3m unrealised change in value of investments.
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Restricted funds
Restricted funds are funds received for an earmarked purpose, such as incoming resources for specific SHO campaigns or other funds specifically allocated to one or more projects.
Restricted funds increased €1.6m to €2.3m at December 31, 2017 (2016: €0.7m). The increase is mainly due to the unspent funds for the SHO action ‘Help slachtoffers hongersnood’, the fact that adoptions received late in 2017 were not yet spent and not all funds of the Vastenaktie were spent at the end of the year. The effect is partly off set by the last expenditures done with Stop Aids Now! Funds.
Schedule below comprises movements in restricted funds per brand during financial year 2017:
X € 1,000 OPENING
BALANCE
1 JANUARY 2017
INCOMING
RESOURCES
OVERHEAD
FEE
PROJECT
RESOURCES
EXPENDED
CLOSING BALANCE
31 DECEMBER
2017
Cordaid Mensen in Nood
Adoptions 54 953 -85 -908 14
SHO ‘Help slachtoffers hongersnood’ 0 5,297 -371 -3,703 1,223
54 6,250 -456 -4,611 1,237
Cordaid Kinderstem
Adoptions 137 347 -4 -43 437
Major donor fund 0 213 0 -194 19
137 560 -4 -237 456
Cordaid Memisa
Adoptions 19 0 0 -1 18
Stop Aids Now! 362 0 0 -362 0
381 0 0 -363 18
Cordaid Microkrediet
Adoptions 74 9 0 0 83
Cordaid/General
Vastenaktie 0 2,154 -145 -1,753 256
Adoptions 69 182 0 0 251
69 2,336 -145 -1,753 507
Total restricted funds 715 9,155 -605 -6,964 2,301
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SHO ‘HELP SLACHTOFFERS HONGERSNOOD‘X €1 2017 UP TO AND INCLUDING 2017
EMERGENCY AID RECONSTRUCTION TOTAL EMERGENCY AID RECONSTRUCTION TOTAL
Incoming resources from third party campaigns
5,297 5,297
Interest 0 0
Total incoming resources 5,297 5,297
Preparation and coordination costs 371 371
Total available for charitable activities 4,926 4,926
Resources expended
Commitments undertaken by participant
- support offered through local relief providers
1,628 0 1,628 1,628 0 1,628
- support offered through international umbrella organization
0 0 0 0 0 0
- support offered through participant 2,075 0 2,075 2,075 0 2,075
3,703 0 3,703 3,703 0 3,703
Available commitment capacity 1,223
Breakdown of participant’s cash flows
Transfer by participant for:
- support offered through local relief providers
1,141 0 1,141 1,141 0 1,141
- support offered through international umbrella organization
0 0 0 0 0 0
- support offered through participant 2,075 0 2,075 2,075 0 2,075
Total transferred 3,216 0 3,216 3,216 0 3,216
Breakdown of resources expended locally
- support offered through local relief providers
1,141 0 1,141 0 1,141
- support offered through international umbrella organization
0 0 0 0 0
- support offered through participant 2,075 0 2,075 0 2,075
Total resources expended 3,216 0 3,216 0 3,216
A full report of expenditure and activities in the reconstruction phase can be found on the website of Samenwerkende Hulporganisaties (SHO) (www.giro555.nl).
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Loans & Guarantees Fund
The Loans & Guarantees Fund comprises the resources that have been accrued within the scope of the Loans & Guarantees Program. The resources for the Loans & Guarantees Fund stem from the co-financing program and from own resources. As no new funds will be added to the fund by Cordaid, the portfolio can only grow through a positive result from the social impact investments itself. Grant approvals for projects supporting the social impact investments are deducted from the fund Loans & Guarantees. The operating costs consist of the cost of Cordaid Investment Management BV (CIM BV), including overhead charged from Stichting Cordaid to CIM BV based on the service-level-agreement between these parties. Also social impact investments outside the scope of the funds managed by CIM BV are financed through this fund up to a maximum of cumulative €5m. In 2017, an amount of €0.2m was extracted for this purpose from the Loan & Guarantees fund.
X € 1,000 31/DEC/2017 31/DEC/2016
Opening balance 1 January 91,889 93,323
Financial result assets connect to objectives:
Income from financial assets issued for objectives
-4,327 2,004
Investment income (assets not issued for objectives)
53 653
Unrealised change in value of derivatives
-234 0
Direct operating costs -1,989 -2,222
Allocated overhead costs -982 -1,376
Grant approvals -94 -493
Financial result -7,573 -1,434
Financial result Corpav and Cordaid Participaties
-217 0
Closing balance 31 December 84,099 91,889
SHO allocation key
The key for allocating the income from fundraising activities of the SHO is based on 3-year average of the volume of emergency aid and reconstruction activities and the income from own fundraising of the participants of SHO.
In the table below the relevant figures for Cordaid in the period 2015-2017 are provided.
X € 1,000 2017 2016 2015
1. Volume of emergency aid and reconstruction activities
18,876 17,128 18,758
2. Income from own fundraising
29,444 26,402 26,750
The volume of delivered emergency aid and reconstruction activities is exclusive of SHO funds and exclusive of funds transferred to other organizations in the role of administrative lead agency/horizontal lead agency (for example in the role of lead agency in the DRA). The income from own fundraising for 2017 is calculated by the sum of:
▪ Income from private individuals ▪ Income from companies ▪ Income from other non-profit organizations minus income
from SHO ▪ Income from sale of goods and or rendering of services
The income from own fundraising for 2015 and 2016 is equal to the SHO allocation key statements of 2015 and 2016.
Semi-restricted funds
Semi-restricted funds are accruals of income from own fundraising that are not earmarked for one specific project, but only earmarked for a broadly defined purpose (usually linked to program purposes). The increase in semi-restricted funds is mainly a result of unspent balances for Cordaid Memisa, Cordaid Mensen in Nood and Cordaid Kinderstem. Due to the enormous pressure on the organization after two subsequent staff reductions, several projects funded with these semi-re-stricted funds were postponed.
11 . PROVISIONS
The composition of, and movements in, the provisions were as follows:
X € 1,000 REDUNDANCY
PROVISION
PROVISION FOR
UNOCCUPIED
OFFICE SPACE
BACKDONOR
PROJECTS
TOTAL
Opening balance 1 January 2017 4,300 800 1,743 6,843
Changes
- Allocated 0 0 110 110
- Withdrawn -3,286 -450 -881 -4,617
- Released 0 0 -362 -362
Closing balance 31 December 2017 1,014 350 610 1,974
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12 . CURRENT AND NON-CURRENT LIABILITIES
The composition of, and movements in, the current and non-current liabilities were as follows:
X € 1,000 31/DEC/2017 31/DEC/2016
Non-current liabilities
Project commitments 0 0
0 0
Current liabilities
Project commitments 13,736 16,890
Deferred grants from other governments
8,980 13,802
Deferred grants from Dutch government
10,303 8,354
Accounts payables 3,055 4,224
Taxes and social security contributions
1,622 1,220
Reservation for leave days and holiday allowance
1,163 1,458
Participations payable 1,121 1,871
Derivatives 234 0
Other accruals and deferred income
3,161 3,384
43,375 51,203
Outstanding project commitments decreased €3.2m compared to 2016. The main cause were outstanding project commitments at the end of 2016 for a very recently started Joint Response project where high commitments towards consortium members were made just before year-end.
Deferred grants decreased by €2.9m from €22.2m ultimo 2016 to €19.3m per year-end 2017. The main factor in the decrease is the lower deferred grant for the Global Fund project in DR Congo that is coming to an end in the beginning of 2018.
For the greater part, the decrease in the other current liabili-ties of €1.8m is caused by a decrease in accounts payable (€1.2m), mainly caused by timing of payments. Furthermore the participations payable decreased €0.7m due to disbursements to participations in Progression Capital Africa LTD and WAVF.
The movement of project commitments in 2017 was as follows:
X € 1,000 2017 2016
Opening balance 1 January 16,890 36,331
New commitments 2017 33,594 36,517
Released commitments 2017 -4,423 -1,494
Payments 2017 -32,325 -54,464
Closing balance 31 December 13,736 16,890
All current liabilities are payable within one year. All non- current liabilities fall due in less than five years.
As at 31 December 2017, the provisions amounted to €2.0m (2016: €6.8m). The provision related mainly to redundancy of personnel, based upon year-end 2016 reorganization and unoccupied workspace during the remaining running period of the rental agreement. The backdonor projects provision relate to possible ineligibilities on project expenditures and amounted at 31 December 2017 €0.6m (2016: €1.7m).
As a result of the second reorganization at year-end 2017 €3.3m has been withdrawn from the €4.3m provision. These with-drawals concerned transition and redundancy fees and transition expenses. The total estimated cost for finalizing the reorganization, mainly due in 2018, is estimated at €1.0m.
As a consequence of the restructuring process Cordaid does not use a part of the office space on a daily basis anymore, hence expenditures related to unoccupied work space have been provided for. Year end 2016 approximately 10% of the office space was sublet to other organizations, however this sublet ended December 31, 2017. The remaining workforce occupies approximately 70% of the office building. Cordaid estimates that 30% of the office building will probably be unoccupied during the remaining running period of the rental agreement (until November 2019). With a rent amount of €1.0m per year, the provision for the costs related to the unoccupied office space at December 31, 2017 amounts €0.4m.
In 2017, Cordaid settled several possible ineligibilities coming from 2016. For a re-audit of EU funded projects an ineligibility of €0.3m was expected, the final audit revealed only €0.1m. The remainder of the provision was released.A re-audit of an EU funded project in Haiti was announced in 2015. Based on an internal evaluation possible ineligibilities of €0.1m were indicated. The draft audit report showed an ineligible amount of €0.2m in total. An addition of €0.1m was made to cover these probable ineligibilities.
After an evacuation due to the civil war in South Sudan in July 2016, substantial parts of our local financial administration were lost. Despite an ongoing investigation to retrieve the full administration an amount of €1.2m was provided in 2016. In 2018, as a result of great endeavours by local staff many substantiating documents have been retrieved, hence prior year expenses could be justified. Nevertheless an amount of €0.7m has been writen-off as work advances could not be supported with justifying documents, eventhough no signs of significant misuse of funds were found. An amount of €0.1m could be released as documents were found. At December 31, 2017 a provision €0.4m for projects in South Sudan is still in place.
At present, no legal proceedings are pending for which a provision should be formed.
All provisions are expected to be settled within one year.
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13 . OFF-BALANCE SHEET COMMITMENTS AND CONTINGENCIES
Off-balance sheet rights
Financing contracts with donorsCordaid signed several large financing contracts with donors to carry out specific projects with end dates in 2017 and beyond. Cordaid recognizes the incoming resources from these financing contracts and grant decisions in accordance with Dutch Accounting Standard 274. This means that incoming resources are recognized at the time resources are actually expended. The difference between the income recognized and the actual amount received in the form of contributions from donors is recorded in the balance sheet. This results in a receivable if more resources have been expended than received or in a deferred grant if incom-ing resources are greater than those expended. Therefore, the full amount of the contract is not disclosed in the annual accounts.
Below an overview of all the contract with a spendable amount above €2.5m in future years:
X € 1,000
FUNDING ORGANIZATION
DESCRIPTION OF THE
PROJECT
DURATION CONTRACT
VALUE
CUMULATIVE
INCOME
BALANCE TO
BE SPENT
Dutch Ministry of Foreign Affairs Capacitating change: Empowering people in fragile contexts
Jan 2016 - Dec 2020 34,500 9,432 25,068
Dutch Ministry of Foreign Affairs Jeune S3 - My rights to sexual and reproductive health
Jan 2016 - Dec 2020 29,813 10,696 19,117
Dutch Ministry of Foreign Affairs Strategic partnership Partners for Resilience
Jan 2016 - Dec 2020 12,554 4,222 8,332
Kf W Development Bank Improvement access to SRH through PBF in Burundi
Jan 2016 - Nov 2021 5,000 10 4,990
Central African Republic Ministry of Health
Health system support project in Central African Republic
Sept 2016 - Aug 2018 7,074 2,127 4,947
Dutch Ministry of Foreign Affairs A bright future for Afghanistan
Jan 2016 - Nov 2021 5,895 1,725 4,170
The Embassy of the Netherlands in Burundi through CARE Nederland
Improving the sexual and reproductive health of adolescents and youth in Burundi
Dec 2015 - Dec 2020 4,627 1,581 3,046
Grand total 99,463 29,793 69,670
Note: the Dutch Accounting Standards can differ from the reporting requirements of certain donors. Reported income in these statements can therefore
differ from what was reported to the related donors.
Other off-balance sheet rights
Cordaid has 12 legacies estimated at €0.7m which are still subject to usufruct at the reporting date and therefore are not reported as income in the statement of income and expenditure.
X € 1,000 USUFRUCT
Receivable:
- in less than 1 year 0
- in more than 1 year 737
Total 737
Off-balance sheet commitments
All commitments (including project commitments) are recog-nized on the balance sheet. For organizational costs, Cordaid’s policy, wherever possible, is to avoid long-term contracts with suppliers that include fixed commitments. Almost all contracts can be terminated within 1 year or amounts payable are based on actual usage. Contracts for office rent are the only exceptions.
At year-end, off-balance sheet liabilities for overheads were as follows:
X € 1,000 OFFICE LEASE THE HAGUE
Payable:
- in less than 1 year 715
- between 1 and 5 years 595
- in more than 5 years 0
Total 1,310
During the reporting period, lease payments amounting to €1.0m are included in the statement of income and expendi-ture. Cordaid has sublet a section of its office space to Mensen met een Missie until December 31, 2017. The contract ended per that date The rent charged by Cordaid is in line with current market prices for office rent. Transactions are done at arms’ length.
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Income from private individuals amounted to €23.7m, €1.9m below budget, and €2.7m less than in 2016.
The decrease in the income is mainly due to lower income from inheritances. Given the nature of this stream of income it is hard to give a clear explanation for the lower income compared to budget or prior year. The number of supporters and income from individuals remained relatively stable over the years in a competitive fundraising market.
15 . BENEFITS FROM LOTTERY ORGANIZATIONS
X € 1,000 2017 BUDGET
2017
2016
Nationale Postcode Loterij 2,725 3,167 2,700
Nationale Postcode Loterij – additional amount
0 0 2,285
Total benefits from lottery organizations
2,725 3,167 4,985
Incoming resources from lottery organizations decreased €2.3m compared to prior year to €2.7m as a result of prior year €2,3m additional contribution for a food security project (‘Boerinnen Boeren Beter’). The regular contribution from the Dutch National Postcode Lottery (NPL) was €2.7m in 2017 (2016: €2.7m).
14 . INCOME FROM PRIVATE INDIVIDUALS
X € 1,000 CORDAID
GENERAL
CORDAID
MENSEN
IN NOOD
CORDAID
KINDER-
STEM
CORDAID
MEMISA
CORDAID
MICRO
CREDIT
CORDAID
BZN
TOTAL
2017
TOTAL
2016
Collections 0 9 0 4 0 0 13 15
Donations and gifts 1,184 4,684 1,806 3,419 25 260 11,378 10,536
Legacies 1,138 2,247 357 2,981 103 4 6,830 9,401
Contributions 61 1,502 1,505 2,120 66 37 5,291 6,169
Mailing campaigns 0 92 2 69 0 0 163 196
Other 0 0 0 0 0 0 0 67
Total 2,383 8,534 3,670 8,593 194 301 23,675 26,384
Budget 2017 1,280 9,470 4,000 10,525 250 75 25,600
Total 2016 837 10,208 4,837 9,782 282 438 26,384
16 . GOVERNMENT GRANTS
X € 1,000 2017 BUDGET
2017
2016
Dutch Government - MFS II 0 0 705
Dutch Government - Alliances 0 0 -222
Dutch Government - Strategic partnerships
10,785 16,589 13,563
Dutch Government - Other 23,532 6,344 19,944
Global Fund 21,898 27,011 32,743
World Bank 12,549 306 10,244
European Union 7,283 1,569 2,531
Other 14,129 23,535 13,081
Total government grants 90,176 75,354 92,589
Government grants comprise project funding provided by such bodies as the European Union, the Dutch government, the Global Fund, the World Bank and various United Nations organizations. Income is recognized based on the project expenditures made within the framework of the financing contract with the donor. In 2017 income from government grants decreased €2,4m to €90.2m (2016: €92.6m). Compared to budget, the income from government grants was €14.8m above target.
Income from Global Fund was lower compared to 2016 due to an extension of the project for a couple of months, shifting a part of the income also from 2017 to 2018.
€0.3m higher total income from the Dutch Government is related to higher income from the Dutch Relief Alliance. In the budget 2017 the income was only taken into account to a limited extent, both the budget and the number of responses in which Cordaid was involved turned out to be higher.
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18 . INCOME FROM OTHER NON-PROFIT ORGANIZATIONS
X € 1,000 2017 BUDGET
2017
2016
SHO (‘Help slachtoffers hongersnood’) 5,297 3,500 0
Stichting Bisschoppelijke Vastenaktie
2,147 2,400 2,218
Stop Aids Now! 0 0 407
Other organizations 2,802 3,802 5,047
Total income from other non-profit organizations
10,246 9,702 7,672
Income from other non-profit organizations increased €2.6m compared to the prior year to €10.3m at year-end 2017. This increase is mainly a result of the 2017 SHO campaign ‘‘Help slachtoffers hongersnood”, which contributed €5.3m. Goal of this campaign is aimed at helping victims of the famine until they themselves are able to meet their food needs. This increase can be setoff by the decrease of income from other non-profit organizations from €5.0m in 2016 to €2.8m in 2017 and 2016 expiration of Stop Aids Now!
The decrease of incoming resources from other organizations is primairily due to lower income from Cordaids’ matching fund (€1.5m) and lower income from international NGO’s (€1.6m), partly compensated by an increase in income from of €0.9m.
Income from the World Bank, mainly relates to the Performance Based Financing program in Zimbabwe and health projects in Afghanistan. For these projects an extension was not foreseen in the budget. However, based on the satisfactory results, both contracts were extended.
Cordaid has signed a number of large contracts with other institutional donors over the past years. Income from these grants is only recognized if subsidized costs are incurred or if a legal payment obligation towards partner organizations exists. An overview of the amount to be spent per contract with a total value above €2.5m can be found in note 13.
17 . INCOME FROM RELATED (INTER-NATIONAL) ORGANIZATIONS
X € 1,000 2017 BUDGET
2017
2016
Caritas Internationalis (members) 1,811 133 358
Incoming resources from related (international) organizations increased €1.5m mainly due to a contribution from Caritas Germany related to the project mitigating migration in Afghanistan and €0.4m total contributions from Caritas Spain and Italy for project support to Resilient Auto Recovery in the Rasuwa District in Nepal.
19 . INCOME FROM SALE OF GOODS AND OR RENDERING OF SERVICES
X € 1,000 CORDAID
GENERAL
CORDAID
MENSEN
IN NOOD
CORDAID
KINDER-
STEM
CORDAID
MEMISA
CORDAID
MICRO
CREDIT
CORDAID
BZN
TOTAL
2017
TOTAL
2016
Materials sold 0 0 0 5 0 1 6 6
Rendering of services 236 0 0 0 0 0 236 285
Total 236 0 0 5 0 1 242 291
Budget 2017 360 0 0 0 0 0 360
Total 2016 285 0 0 5 0 1 291
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This item comprises operating gains and losses on the Loans, Guarantees and Participations program. 2016 ended in a gain of €2.0m, however 2017 ended in €4.5m loss mainly as a result of significant (un)realised currency revaluation losses on the portfolio. The (un)realised currency gains and losses consist of €6.4m unrealised currency losses. The unrealised currency revaluation losses are partially a reversal on prior financial years accumulated revaluation profits and caused by the drop in value of the US dollar. New issued loans and guarantees contributed €0.8m positively to the interest on loans and guarantees of €3.5m in 2017 (2016: €2.7m).
20 . OTHER INCOME
X € 1,000 2017 BUDGET
2017
2016
Results on financial assets -4,532 3,768 2,004
Other 358 140 109
Total other income -4,174 3,908 2,113
Gains and losses on financial assets issued in connection with the objectives, comprise interest and commission received on loans and participations, as well as project income and currency gains and losses, refer to table below:
X € 1,000 2017 2016
Interest received on loans and guarantees 3,483 2,730
Income from dividends/provision guarantees 170 12
Revaluation of participations -602 -983
(Un)realised currency gains and losses -6,730 674
Allocated to/withdrawn from provision for loans and guarantees
-853 -429
Total result on financial assets -4,532 2,004
21 . SPENT ON OBJECTIVES
Comparison of 2017 program costs and program management costs with the budget and previous year
X € 1,000 ACTUAL 2017 BUDGET 2017 ACTUAL 2016
DIRECT
PROGRAM
COSTS
PROGRAM
MANAGE-
MENT COST
TOTAL
2017
DIRECT
PROGRAM
COSTS
PROGRAM
MANAGE-
MENT COST
TOTAL
BUDGET
2017
DIRECT
PROGRAM
COSTS
PROGRAM
MANAGE-
MENT COSTS
TOTAL
2016
Healthcare 57,521 1,530 59,051 51,761 1,887 53,648 71,371 3,947 75,318
Humanitarian Aid 23,719 1,085 24,804 20,725 1,004 21,729 25,665 1,235 26,900
Security & Justice 13,266 233 13,499 13,312 757 14,069 4,796 2,228 7,024
Cordaid Netherlands 261 174 435 169 285 454 4,825 1,254 6,079
Resilience 9,391 662 10,053 7,328 599 7,927 6,593 1,157 7,750
Investments 527 3,591 4,118 575 3,799 4,374 428 4,599 5,027
Other 4,698 0 4,698 4,866 0 4,866 -336 1,388 1,052
Total costs of programs 109,383 7,275 116,658 98,736 8,331 107,067 113,342 15,808 129,150
Program costs in 2017 amounted to €116.7m, €9.6m above budget, but €12.5m lower than previous year.
The higher expenditure compared to budget is directly related to the higher acquired income, leaving more space for direct program expenditure. The lower expenditure compared to prior year, is mainly caused by a drop in Program Management Costs, due to the absence of additional reorganization costs and significantly lower staff costs. Also direct involvement of staff in programs increased, lowering the program management costs.
Expenditure on Investments is very low compared to the program management costs. Direct program expenses on investments are usually limited, mainly as only returned funds will be used for new investments.
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22 . COST ALLOCATION TO THE DIFFERENT ACTIVITIES
Cordaid uses different allocation keys to allocate costs, making allowance where possible for the recommendations of Goede Doelen Nederland. Costs are allocated in two stages. 1. First, costs relating directly to programs, fundraising and management & administration are directly allocated to these
activities. This involves the costs of the thematic program units (programs), Private Fundraising & Communication (public information and fundraising), the Board of Directors (management & administration) and Accounting & Reporting (manage-ment & administration). Costs incurred by the Quality Assurance department are fully labeled as costs to secure government grants. Costs of the department for Institutional Fundraising are fully labelled as expenditure on fundraising.
2. Other costs allocated to programs, fundraising and management & administration include the costs of the departments such as Human Resource management and IT and Facility management. FTE of the departments that can be directly allocated is used as key to allocate the costs of the mentioned departments to programs, fundraising, or management & administration.
For the 2017 budget, the public information and fundraising costs were categorized, and a list was prepared for each category outlining the specifics of the percentage of costs that should be allocated to fundraising (FR) and to public information (PI). The list of key activities/costs was used to decide on the 2016 budget for both fundraising costs and public information. The relative division between the two activities was: 1. Fundraising Cost: 50.0% (2016: 50.0%);2. Public Information: 50.0% (2016: 50.0%)These percentages were used to allocate the total 2017 marketing & funding budgets over the two activities.
Costs incurred by the Cordaid departments by the cost categories disclosed in the statement of income and expenditure:
RESOURCES EXPENDED(X € 1,000)
EXPENDITURE ON THE OBJECTIVES
EXPENDITURE ON
FUNDRAISING
MANAGEMENT AND
ADMINISTRATION
TOTAL EXPENDITURE
PUBLIC INFORMATION /
AWARENESS CAMPAIGNS
PROGRAM COSTS
TOTAL 2017
BUDGET 2017
TOTAL 2016
Grants and contributions 0 97,669 0 0 97,669 94,830 103,090
Publicity and communication 3,647 0 3,680 0 7,327 6,160 6,196
Staff 881 10,861 1,569 1,531 14,842 11,536 21,695
Travel and accommodation 14 1,088 57 58 1,217 510 1,268
Housing 101 814 249 84 1,248 1,246 2,049
Office & General 274 6,226 906 388 7,794 4,749 8,248
Total actual 2017 4,917 116,658 6,461 2,061 130,097 119,031 142,546
Budget 2017 3,984 107,067 5,465 2,515 119,031
Actual 2016 3,680 129,150 6,110 3,606 142,546
The overall costs in 2017 are €11.1m above budget and €12.5m below the previous year.
The largest deviations from budget were: ▪ Overall higher costs are related to the higher program
expenditure, which is closely related to the higher acquired income.
▪ Grants and contributions were €2.8m above budget due to higher spending on programs and a further shift from outsourced implementation to own implementation at the level of the Country Offices. Related trade-off can be seen with staff costs and Office & General costs.
▪ Costs for publicity and communication were €1.2m above budget. During the year the decision was taken to increase spending on fundraising and communications as an investment in retainment of existing supporters and actively looking for new supporters as a response to the slow but steady decline in the number of supporters.
▪ Staff costs were €3.3m above budget. Next to the mentioned trade-off of costs with Grants and contributions and
expenditures due to year-end 2016 announced restructure-ring, not provided for. As a result of the trade-off headcount and average number of FTE are also above budget in 2017.
▪ Housing costs are on budget and include a release of €0.2m from the provision for unoccupied office space.
▪ Travel and accommodation costs are €0.7m higher than budget as a consequence of the underestimation of the number of travels to be made. More programs in consortia and more cooperation with the Country Offices, implies more travels than in prior years.
The cost per category is relatively well in line with 2016, except for the staff costs. The staff costs are lower due to the staff reduction and the absence of the reorganization costs that were included in the 2016 figures. The same goes for the housing costs, where an addition to the provision for unoccu-pied office space was included in the 2016 figures, while in 2017 not only the addition is missing. The annual release was offset against the housing costs.
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Salary costs per FTE were relatively stable in 2017 compared to 2016. The lower salary costs can therefore be attributed to the lower number of FTE in 2017 compared to 2016. In 2016 a one-off addition to the redundancy provision was made.
Cordaid’s pension plan is administered by the Zorg en Welzijn Pension Fund, a pension fund for the health and welfare sector. Employees’ retirement and partner pensions are based on their pensionable salary for full-time employment, net of the state pension offset. The pension fund endeavors to index-link any accrued pension entitlements and pensions in payment, based on general salary trends in the collective bargaining agree-ments that govern its affiliated employers in a particular year. The pension fund decides every year whether index-linking would be appropriate and, if so, what index to use given the financial situation and expected developments in that situa-tion. In doing so, the pension fund uses nominal and realistic coverage ratios as benchmarks. Although the pension fund may decide to apply catch-up index linking, such a decision will not have retroactive effect and will not trigger subsequent pay-ments. Index linking is funded partially from contributions and partially from returns on plan assets. The coverage ratio was 98.6% at 31 December 2017 (30 September 2018: 103.4%).
Contributions are recognized as employee benefits expense as soon as they are payable. Prepaid contributions are recognized within prepayments and accrued income if they entail a refund or a reduction in future payments. Contributions payable are disclosed as liabilities in the balance sheet.
24 . RELATED PARTIES
Introduction
As part of Cordaid’s transition to a more social entrepreneurial approach, Cordaid wants to help develop new ideas for start-ups aimed at social impact. In addition, Cordaid wants to profes-sionalize the management of its social impact investments further and aims to increase its impact by finding external investors. To facilitate these changes Cordaid established two foundations and two private limited companies (BV’s). Stichting Cordaid has full control in all these entities and they are therefore classified as related parties. In addition, on December 31, 2014 Cordaid established a foundation to pay salaries to expats working for Stichting Cordaid.Cordaid identified the following related parties:
▪ Stichting Cordaid Expats, The Hague ▪ Stichting Social Business Incubator, The Hague ▪ Stichting Cordaid Participaties, The Hague ▪ Cordaid Investment Management BV, The Hague ▪ Corpav BV, The Hague
Related party transaction:
During 2017 all transactions with the mentioned related parties were done at arm’s length. The nature of the transac-tions was mainly funding of the activities of the different entities by Stichting Cordaid. In return the Social Business Incubator developed ideas for social enterprises, Cordaid Investment Management BV managed the Loans & Guarantees fund of Stichting Cordaid and Stichting Participations held the shares of Corpav BV. Corpav BV holds shares in one local
Office, general and administrative expenses include costs incurred for telecommunications, IT, advisory services and field offices. In addition to these costs, office, general and administrative expenses also include fees charged by Ernst & Young Accountants LLP, our independent auditor.
Total audit fees charged by Ernst & Young Accountants LLP stood at €358k in 2017 (2016: €643k). The audit fee for the annual accounts of Stichting Cordaid and Cordaid Management Investments B.V. amounts to €271k (2016: €544k). 2016 audit fees were higher due to additional work performed following the integration of all the administrations of the Country Offices in prior year. The other amounts are fees for specific project audits.
No additional services were provided by Ernst & Young Accountants LLP during 2017.
The fees above relate to all the work performed at Stichting Cordaid and entities included in the consolidated accounts by the audit firms and auditors mentioned in article 1, section 1 Wta (Wet toezicht accountantsorganisaties) and the fees charged by the network of the audit firm. The fees relate to the fiscal year 2017, although the related work can be executed in other years.
Additionally, €120k (2016: €177k) was spent on local audits and audits of partner organizations. These audits were carried out by other audit firms than Ernst & Young Accountants LLP.
23 . COST OF STAFF
2017 2016
Head count in The Hague 157.0 214.0
Head count expats at field offices 42.0 35.0
Total head count 199.0 249.0
Average number of FTEs including expats
184.9 229.4
Program staf 115.6 138.8
Fundrains/Awareness staff 32.2 23.0
Other departments 37.1 67.6
Total average FTE including expats
184.9 229.4
At year-end 2017, Cordaid had a headcount of 199 (2016: 249), of whom were 112 women and 87 men.
X € 1,000 2017 2016
- Salaries and wages 9,087 15,330
- Social security contributions 1,545 1,863
- Pension costs 1,134 1,324
- Temporary staff 401 240
- Cost of training and education 296 349
- Other personnel expenses 433 2,589
12,896 21,695
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work. This complies with the norms for interim-executives in the regulation of Goede Doelen Nederland and is reasonable compared to the annual income. As of April 1, 2017 L.C. Zevenbergen works for Cordaid on an employment contract. The total annual income amounted to €88,951 for L.C. Zevenbergen and €114,579 for W.J. van Wijk. The total annual income is within the maximum remuneration limits of the regulation of Goede Doelen Nederland.
Former CEO S.L.J.M. Filippini stepped down on September 22, 2016 and continued her work as executive advisor until January 31, 2017. Her remuneration includes a back payment on gross salaries of €9,982 and a severance pay of €60,000.
Executive remuneration comprises gross salary costs inclusive of holiday allowance, social security contributions, pension costs, expense allowances and year-end allowance. As a rule, all employees receive a year-end allowance.
The members of the board of directors did not have any outstanding loans, advances or guarantees at December 31, 2017 or during 2017.
investment in South Sudan (Finance South Sudan), which is part of the financial fixed assets on the consolidated balance sheet of Cordaid.
25 . EXECUTIVE REMUNERATION
The Supervisory Board has adopted an executive remuneration policy including the level of executive remuneration and other pay and benefits. The policy is updated periodically and was evaluated most recently in 2016. In determining the remunera-tion policy and adopting the level of the remuneration, Cordaid follows the regulation for executive remuneration of Goede Doelen Nederland (see www.goededoelennederland.nl). The regulation uses weighting criteria to set a maximum for an executive’s annual income. The most recent VFI standard of 1 January 2017 was used to determine these weighting criteria. This has resulted in a so-called BSD score of 513 points for the CEO and 472 points for the CFO, with a maximum annual income of respectively €146,000 and €129,559.
CEO L.C. Zevenbergen has worked on a freelance contract until March 31, 2017 and received an all-in amount of €36.509 for his
During 2017, the employed (former) members of the Board were:
L .C . ZEVENBERGEN
CEO
L .C . ZEVENBERGEN
CEO
W .J . VAN WIJK
CFO
S .L .J .M . FILIPPINI
CEO
Employment contract
Duration Contract 03/31/2019 08/31/2018 Permanent
Number of hours N/A 36 36 36
part-time percentage N/A 100 100 100
Period in 2017 1/1 - 31/3 1/4 - 31/12 1/1 - 31/12 1/1 – 31/1
Former board member No No No Yes
Gross salary 36,509 75,708 99,072 18,661
Holiday allowance 0 6,057 7,124 6,353
Year-end bonus 0 6,786 7,983 1,673
Variable pay 0 400 400 0
Total annual income 36,509 88,951 114,579 26,687
Social security contributions (employer’s share) 0 6,802 9,070 798
Taxable allowances 0 0 2,335 0
Pension costs (employer’s share) 0 8,629 11,486 960
Pension compensation 0 976 1,162 112
End of contract benefits 0 0 0 60,000
0 16,407 24,053 61,870
Total remuneration for 2017 36,509 105,358 138,632 88,557
Total remuneration for 2016 40,463 0 128,975 144,043
Supervisory Board
The cost of the Supervisory Board consists of expenses for general and special meetings, travel costs, reimbursement of costs incurred and the hiring of expertise and advisors on request of the Supervisory Board. In 2017 these costs were €4,002 (2016: €27,185). This amount includes the fixed expense allowances paid to the individual members of the Supervisory Board, as shown in the table below. As per Cordaid's policy for good governance Supervisory Board members do not receive any remuneration for their work. They only have the opportunity to cover their out of pocket expenses through a fixed expense allowance.The chair E.M.H. Hirsch Ballin stepped down as chair on June 30, 2017 and has been replaced by A.J.M. Heerts.
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Amounts paid for individual members of the Supervisory Board in 2017 were as follows:
AMOUNT IN € 1 SUPERVISORY BOARD
A .J .M . HEERTS E .M .H . HIRSCH BALLIN M . VAN BEEK
Function Chair Chair Member
Duration of function in 2017 (days) 184 181 365
Remuneration 0 0 0
Fixed expense allowances 0 0 0
Provisions for future payments 0 0 0
Total 0 0 0
J .H .M . VAN BUSSEL M .C .T . VAN DE COEVERING B .L .J .M . VAN DIJK-
VAN DE REIJT
Function Member Audit Committee Member Audit Committee Member
Duration of function in 2017 (days) 365 365 365
Remuneration 0 0 0
Fixed expense allowances 0 0 0
Provisions for future payments 0 0 0
Total 0 0 0
J .J .A . DE BOER
Function Member
Duration of function in 2017 (days) 365
Remuneration 3,308
Fixed expense allowances 0
Provisions for future payments 0
Total 3,308
The remuneration paid in 2017 is a gros amount. The net amount received is €1,800 and relate to the fiscal years 2017 and 2018 (partly).
26 . FINANCIAL INCOME AND EXPENSES
Financial income and expenses includes interest and other income from bonds, capital gains on shares, interest earned on the bank account and currency gains and losses that are not related to the investments issued in connection with the objectives, apart from the changes in value of derivatives. What follows is a five-year summary of this item:
X € 1,000 2017 2016 2015 2014 2013
Interest received on bonds 191 185 551 954 1,385
Interest received on cash and cash equivalents 57 139 457 508 810
Unrealised change in value of derivatives -234 0 0 0 0
Realised change in value of investments and liquid assets 1,329 -75 -680 860 -157
Unrealised change in value of investments and liquid assets -1,434 1,171 -117 1,233 -1,189
-91 1,420 211 3,555 849
Investment costs -148 -79 -90 -53 -51
-239 1,341 121 3,502 798
Compared to 2016, the net income from investments shifted from €1.3m profit to €0.2m loss in 2017. €1.7m unrealised losses on liquid assets are the main driver of this loss. These losses are partly off-set by €0.3m unrealised gains on bonds. Due to the further decreased interest rates and the lower average amount of cash available, the income from interest on cash decreased further in 2017 €0.1m.To cover currency risks on loan(s) denominated in Myanmar Kyat (MMK) a swap contract, MMK to USD, is in place. As the USD inflow is dependent on the 6 months LIBOR this swap contract holds a risk. This derivative is measured at fair value, with fair value changes recognized in the statement of income and expenditure. At December 31, 2017 a current liability and unrealised loss of €0.2m has been recognized.
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27 . BALANCE BALANCE SHEET AND STATEMENT OF INCOME AND EXPENDITURE FOR THE FUND LOANS & GUARANTEES
An important part of Cordaid’s activities is related to non-grant projects. Instead of providing a grant to partner organizations, Cordaid provides loans or guarantees to its partners or it partici-pates in social entrepreneurships with the same objectives as Cordaid. The partner organizations involved are different from Cordaid’s regular partner organizations. Rather than NGOs or grass-roots organizations, Cordaid mainly supports microfi-nance institutions, local banks or social funds. Until June 30, 2015 these activities were managed by the Investments Business Unit, which was an integral part of Stichting Cordaid. To increase the impact of this social impact portfolio, Cordaid decided to separate the management of this portfolio from the regular activities of Stichting Cordaid and founded Cordaid Investment Management BV. The main objective of the separate entity is to further professionalize the fund management and to increase the impact of these social impact investments by finding new external investors to increase the scale of the activities.As stakeholders interested in the Cordaid’s social impact investment portfolio and the work of Cordaid Investment Management BV can have information needs other than the information disclosed in Cordaid’s financial statements,
Cordaid presents a separate statement of income and expendi-ture and balance sheet for the activities in relation to the Loans & Guarantees Fund. All figures originate from the figures in Cordaid’s financial statements. The principles for valuation of assets and liabilities and revenue recognition are the same in the statements below, only the classification and presentation of several items differ. The costs to manage the fund, incurred by Cordaid Investment Management BV, are included in the statement of income and expenditure and charged to the Loans & Guarantees Fund in full, as long as Cordaid is Cordaid Investment Management BV’s only client. All items in this financial overview can be traced to items in the figures presented before, except for cash and investments. Cash and investments are allocated to the Loans & Guarantees Fund based on the division made in Cordaid’s financial administration. The fund has separated and designated bank accounts, and investments are administered separately.
The right-hand column in the statements below refers to the notes where the corresponding item can be found in Cordaid’s full financial statements.
BALANCE FUND LOANS & GUARANTEES AS OF DECEMBER 31, 2017X €1,000 NOTE 31/DEC/2017 31/DEC/2016 NOTE IN
CORDAID FS
Assets
Net financial fixed assets issued for objectives
- Debt 44,919 48,741
- Equity 2 19,667 23,236
- Guarantees 1,312 1,879
1 65,898 73,856
- Undisbursed loans and guarantees 3 -3,944 -9,074
- Loan revaluations 4 -2,104 -2,077
-6,048 -11,151
Net financial fixed assets issued for objectives 5 59,850 62,705 6 + 30
Net financial assets (not issued for objectives)
Current account group companies 217 0
Non Development investments 6 10,771 10,432 7
Cash and bank 14,315 21,135 10
Other receivables 887 883
Participation CIM BV 7 321 431
Net financial floating assets 26,511 32,881
Total Assets 86,361 95,586
Equity and liabilities
Equity (Fund Loans & Guarantees)
Fund Loans & Guarantees until prior year 8 91,889 93,323
Operating income fiscal year 9 -7,479 -447
Recharged overhead fee fiscal year 10 0 -494
Grant approvals 11 -94 -493
12 84,316 91,889 10
Liabilities
Current account group companies 0 1,058
Current liabilities 925 768
Undisbursed equity participations 13 1,120 1,871 12
2,045 3,697
Total Equity and liabilities 86,361 95,586
1. Total Debt, Equity and Guarantees: Gross amount of all Cordaid’s investments commitments at year-end, distributed over various instruments. The overall level has decreased from €73.9m in 2016 to €65.9m in 2017 mainly as a result of a significant negative revaluation of the portfolio. New commited loans, guarantees and participations in 2017 amount €9.0m and repayments €8.7m.
2. Equity: Equity investments have decreased significantly from €23.2m at December, 2016 to €19.7m at the end of 2017. The net revaluation of the equity lead to a net decrease in value of €1.5m and equity was sold for an amount of €2.3m, while new participations were acquired for an amount of €0.3m.
3. Undisbursed loans and guarantees: This refers to the undisbursed amounts of the debt and guarantee instruments.
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4. Loan revaluations: The amount of € 2.1m loan revaluations equals the provision for loans and guarantees. Provisioning is done in line with the Provisioning and write-off policies of Cordaid Investment Management BV.
5. Total net financial assets issued for objectives: Total net financial assets, as per the table, decreased €2.9m to €59.9m, mainly because of high amount of negative revaulations (€7.3m), repayments (€8.7m) and write-offs (€0.6m), which is partially offset by new commitments (€10.0m) and decreased undisbursed loans and guarantees (€5.2m).
6. Non-development investments: Part of the total fund Loans & Guarantees that is not yet invested in connection with the objectives. Alternatively, these resources are invested in regular investments managed by ING and Van Lanschot. The amount included is 50% of the total portfolio of EUR 21.5m, see note 7 on the consolidated financial statements.
7. Participation CIM BV: Cordaid holds 100% of the shares of Cordaid Investment Management BV, funded from the fund Loans & Guarantees. The net asset value of CIM BV at December 31, 2017 amounts to €0.3m (2106: €0.4m).
8. Loans & Guarantees Fund until year-end 2016: Accumulated capital position of the fund at the beginning of 2017 amounting to €91.9m (2016: €93.3m).9. Operating income fiscal year: Retained earnings over the reporting period (see the statement of income and expenditure for the Fund Loans & Guarantees hereafter).10. Recharged overhead fee fiscal year: The overhead fees allocated to the fund besides the regular management fee paid to Cordaid Investment Management BV. The charged
fee in 2016 relates to the development of a new management information system to monitor the investments in the fund Loans & Guarantees.11. Grant approvals: All amounts granted to partner organizations, supporting an investment in the same organization and grants used to support social entrepreneurs, are paid
from the funds Loans & Guarantees.12. Equity (Loans & Guarantees Fund): Total value of the fund is €84.3m, a significant decrease in comparison to the previous year. The decrease is mainly due to the negative
operational result (€7.5m) mainly as a result of the negative currency results in 2017 and the approved supporting grants (€0.1m). Including the cumulative result of Corpav BV and Stichting Cordaid Participaties (not under management of CIM BV) the value would be €84.1m in line with the value of the Loans & Guarantees fund in the consolidated balance sheet.
13. Undisbursed equity participations: This refers to the undisbursed tranches of equity investments. The outstanding amount mainly decreased by €0.8m because of the fulfilment of commitments for Dia Vikas. Please note that this has been considered a liability since 2010, in line with Dutch accounting principles.
STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED DECEMBER 31, 2017 FOR THE FUND LOANS & GUARANTEES
X €1,000 NOTE 31/DEC/2017 31/DEC/2016 NOTE IN CORDAID FS
Financial income
Interest income & fees 1 + 2 3,483 2,730 20
Dividends 1 + 2 170 12
Income from non-development investments and cash 3 53 652 26
3,706 3,394
Financial expenses
Additions loan losses 4 648 429 20
Revaluation investments 5 602 983 20
Unrealised change in value of derivatives 6 234 0 26
Currency results 7 6,730 -674 20
8,214 738
Margin on financial activities -4,508 2,656
Operating expenses
Operating expenses direct 8 1,989 2,222 10
Operating expenses indirect 9 982 881 10
2,971 3,103
Financial result from investing activities -7,479 -447
Non-operating income
Capital contributions 0 0
Recharged overhead fee 10 0 -494 10
0 -494
Net result Social Impact investments -7,479 -941 10
Approvals grant reserve 11 -94 -493
Net result Fund Loans & Guarantees -7,573 -1,434 10
1+2. Interest Income & Fees + Dividends: These items refer to interest income on senior/subordinated debt, guarantee fees and dividends received. The overall level increased in comparison to 2016 by €0.9m, mainly due to the extension of the portfolio.
3. Income non-development investments and cash/cash equivalents: This item refers to income on long and short-term excess liquidity, which is out of the scope of the managed portfolio by Cordaid Investment Management B.V. More information on the result of non-development can be found in note 26 to the financial statements.
4. Additions loan losses: This reflects the net addition to the provision for loans and guarantees in the portfolio. The amount stated is the net result of the release of provisions and the actual impaired loans and guarantees or write-offs. These write-offs are included in €0.8m Allocated to/withdrawn from provision for loans and guarantees in note 20 to the consolidated financial statements. €0.2m provision for loans related to loans not managed by Cordaid Investment Management BV.
5. Revaluations Investments: This refers to the annual revaluation of the equity participations. Cordaid values equity participations conservatively using the lower value of a) acquisition price or b) the value of the Cordaid share as per the end of 2017.
6. Unrealised change in value of derivatives: to cover currency risks on loan(s) denominated in Myanmar Kyat (MMK) a swap contract, MMK to USD, is in place. As the USD inflow is dependent on the 6 months LIBOR this swap contract holds a risk. This derivative is measured at fair value, with fair value changes recognized in the statement of income and expenditure. At December 31, 2017 a current liability and unrealised loss of €0.2m has been recognized.
7. Currency results: Loans and guarantees are valued against the exchange rate at balance sheet date if denominated in foreign currency. Participations that are impaired are also revalued against the exchange rate at balance sheet date. The result of this (mostly unrealized) amounted to €6.7m negative in 2017.
8. Operating expenses direct: This refers to the total direct costs of Cordaid Investment Management BV plus legal and other costs incurred which are directly related to the investments in the Loans & Guarantees portfolio.
9. Operating expenses indirect: This refers to the Cordaid corporate overhead costs charged to CIM BV and the indirect costs of CIM BV itself. 10. Recharged overhead fee: The overhead fees allocated to the fund besides the regular management fee paid to Cordaid investment Management BV. The charged fee in
2016 relates to the development of a new management information system for monitoring the investments in the fund Loans & Guarantees11. Approvals grant reserve: All amounts granted to partner organizations, supporting an investment in the same organization and grants used for support of social
entrepreneurs are paid from the funds Loans & Guarantees. A total amount of €0.1m is available for such supporting grants.
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FOUNDATION INDIVIDUAL FINANCIAL STATEMENTS OF STICHTING CORDAID
Individual Balance sheet of Stichting Cordaid
X € 1,000 NOTE 31/DEC/2017 31/DEC/2016
Assets Fixed assets Tangible fixed assets 29 444 1,136
Financial fixed assets 30
- Issued in connection with the objectives 59,850 62,704
- Investments 21,542 20,863
- Participations in group companies 105 431
81,497 83,998
Current assets
Receivables 31
- Receivables from group companies 805 0
- Subsidies governments / organizations 10,252 11,336
- Receivable from inheritances 5,142 6,612
- Other receivables 6,712 5,988
- Interest receivable 763 908
23,674 24,844
Cash and Bank 32 51,215 65,212
Total assets 156,830 175,190
X € 1 .000 NOTE 31/DEC/2017 31/DEC/2016
Liabilities Reserves 33 - Continuity reserve 5,887 5,887
- Earmarked reserves 1,383 3,984
7,270 9,871
Funds 33
- Restricted funds 2,301 715
- Semi-restricted funds 18,067 14,413
- Loans & guarantees fund 84,099 91,889
104,467 107,017
Provisions 34 1,974 6,843
Non-current liabilities 35
- Project commitments 0 0
Current liabilities 35
- Project commitments 13,736 16,890
- Other current liabilities 29,383 34,569
43,119 51,459
Total Liabilities 156,830 175,190
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INDIVIDUAL STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED AT DECEMBER 31, 2017
X € 1,000 NOTE 2017 2016
Income
Income from private individuals 36 23,675 26,384
Income from companies 578 96
Benefits of lottery organizations 37 2,725 4,985
Government grants 38 90,176 92,589
Income from related (international) organizations 39 1,811 358
Income from other non-profit organizations 40 10,246 7,672
Total acquired income 129,211 132,084
Income from sale of goods and/or rendering of services 41 220 291
Other income 42 -3,969 2,106
Sum of income 125,462 134,481
Resources expended
Spent on objectives
- Program costs: 43
Healthcare 59,051 75,318
Humanitarian Aid 24,804 26,900
Security & Justice 13,499 7,024
Cordaid Netherlands 435 6,079
Resilience 10,053 7,750
Investments 4,071 5,027
Other activities 4,698 1,052
- Public information / awareness campaigns 44 4,917 3,761
Expenditure on the objectives 121,528 132,911
Expenditure on fundraising 44 6.460 5,624
Management and administration 44 2,061 3,813
Total expenditures 44 130,049 142,348
Sum of income and expenditures before financial income and expenses -4,587 -7,867
Financial income and expenses 46 -564 1,150
Balance of funds -5,151 -6,717
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29 . TANGIBLE FIXED ASSETS
Refer to note 5 on the consolidated financial statements
30 . FINANCIAL FIXED ASSETS
Stichting Cordaid holds three types of financial assets.Outstanding loans, participations and guarantees are recog-nized as financial assets issued in connection with the objectives. This relates to loans issued to and a number of participations in partner organizations for the purposes of funding usually small-scale economic activities (e.g. through microfinance institutions), for which partner organizations find it difficult or impossible to secure finance from commer-cial banks. Interest rates on these loans are determined by country and by customer.
28 . ACCOUNTING PRINCIPLES
28 .1 GeneralThe Company financial statements are part of the 2017 finan-cial statements of Stichting Cordaid. With reference to the Company income and expenditure statement of Stichting Cordaid use has been made of the exemption pursuant to Part 9, Book 2 of the Dutch Civil Code and the firm pronouncements in the Guidelines for Annual Reporting in the Netherlands as issued by the Dutch Accounting Standards Board. More specifically, the financial statements have been prepared in accordance with the Dutch Accounting Standard for Fundraising Institutions (RJ 650).
28 .2 Principles for the measurement of assets and liabilities and the determination of the result
To stick to the principles for the recognition and measurement of assets and liabilities and determination of the result for its Company financial statements, Stichting Cordaid makes use of the option provided in Section 2:362 (8) of the Netherlands Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition and measurement) of the Company financial statements of Stichting Cordaid are the same as those applied for the consoli-dated financial statements. Participating interests, over which significant influence is exercised, are stated based on the equity method.
The share in the result of participating interests consists of the share of Stichting Cordaid in the result of these participating interests. Results on transactions are not incorporated insofar as they can be deemed to be unrealized, if the transfer of assets and liabilities between Stichting Cordaid and its participating interests and mutually between participating interests themselves.
NOTES TO THE FOUNDATION INDIVIDUAL FINANCIAL STATEMENTS
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X € 1,000 LOANS GUARANTEES PARTICIPATIONS TOTAL
Value of portfolio at 1 January 2017 39,667 1,879 23,236 64,782
Provision as at 1 January 2017 -2,078 0 0 -2,078
Carrying amount at 1 January 2017 37,589 1,879 23,236 62,704
Changes
Loans and guarantees issued 13,763 0 0 13,763
Loans and guarantees repaid -6,070 -534 0 -6,604
Participations acquired/committed 0 0 245 245
Participations sold/commitments withdrawn 0 0 -1,559 -1,559
Impaired loans and guarantees -561 0 0 -561
Revaluation of participations 0 0 -1,411 -1,411
Currency gains and losses -5,824 -33 -844 -6,701
Value of portfolio at 31 December 2017 40,975 1,312 19,667 61,954
Changes in the provision
Impaired loans and guarantees 561 0 0 561
Allocated to/withdrawn from provision for loans and guarantees
-587 0 0 -587
Provision at 31 December 2017 -2,104 0 0 2,104
Value of portfolio at 31 December 2017 40,975 1,312 19,667 61,954
Provision as at 31 December 2017 -2,104 0 0 -2,104
Carrying amount at 31 December 2017 38,871 1,312 19,667 59,850
Loans and guaranteesLoans and guarantees will fall due in the following periods:
X € 1,000 LOANS GUARANTEES TOTAL
< 1 year 4,004 112 4,116
1-5 years 36,865 1,200 38,065
> 5 year 106 0 106
40,975 1,312 42,287
Temporary cash surpluses are kept in deposits and savings accounts, the earmarked reserves and uninvested cash from the Fund Loans & Guarantees, are up till an amount of €20m invested by ING and Van Lanschot Bankiers on behalf of Stichting Cordaid.
Refer to note 6 and 7 to the consolidated financial statements for more information.
The 100% interest hold by Stichting Cordaid in the Cordaid Investment Management BV is presented as participations in group companies. The participation is valued at net asset value and amounts to €0.3m at balance sheet date (2016: €0.4m).
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The bank accounts held by Cordaid Investment Management BV and the Social Business Incubator amounting to €0.6m are excluded compared to consolidated balance sheet. The most important explanations for the change in cash and cash equivalents can be found in the consolidated cash flow statement.
33 . RESERVES AND FUNDS
Stichting Cordaid holds 100% of the shares in Cordaid Investment Management BV and values this participation on the basis of net asset value. The funds and reserves of the other entities that are included in the consolidated financial statements amount to €0.0m. Funds and reserves in the individual balance sheet is therefore equal to the funds and reserves in the consolidated balance sheet.
Refer to note 10 to the consolidated financial statements.
34 . PROVISIONS
Refer to note 11 to the consolidated balance sheet.
35 . CURRENT AND NON-CURRENT LIABILITIES
The composition of the current and non-current liabilities in the individual balance sheet of Stichting Cordaid is as follows:
X € 1,000 31/DEC/2017 31/DEC/2016
Non-current liabilities
Project commitments 0 0
0 0
Current liabilities
Project commitments 13,736 16,890
Deferred grants from other governments
8,980 13,802
Deferred grants from Dutch government
10,303 8,354
Accounts payables 2,978 4,121
Taxes and social security contributions
1,554 1,187
Reservation for leave days and holiday allowance
1,071 1,391
Payable to group companies 0 546
Derivatives 234 0
Participations payable 1,121 1,871
Other accruals and deferred income
3,142 3,297
43,119 51,459
31 . RECEIVABLES
The receivables in the individual balance sheet of Stichting Cordaid are specified as follows:
X € 1,000 31/DEC/2017 31/DEC/2016
Receivables
- Receivables from group companies
805 0
- Dutch Government 1,993 5,634
- Other governments and organizations
8,468 5,911
- Provision uncollectable receivables from governments
-209 -209
- Receivable from inheritances 5,142 6,612
- Other receivables 6,712 5,988
- Interest receivables 763 908
23,674 24,844
The receivables in the individual balance sheet are €3.8m above the receivables in the consolidated balance sheet, mainly due to the receivable from group companies. We refer to note 8 to the consolidated financial statements for disclosures on other items.
The prepayments of Cordaid Investment Management BV account for €0.1m and are excluded from this individual balance sheet.
All other receivables in the individual balance sheet are equal to the receivables in the consolidated balance sheet.
32 . CASH AND BANK
Cash and bank comprise cash and bank balances of the Cordaid office in The Hague, in the country offices abroad and deposits falling due in less than one year.
X € 1,000 31/DEC/2017 31/DEC/2016
Cash and cash equivalents
- Deposits 21,336 34,507
- Bank accounts 29,464 30,543
- Cash in hand 294 162
- Cross accounts 121 0
51,215 65,212
All cash is at Cordaid’s free disposal, except for the guarantee for the rent agreement of €0.2m (one guarantee). December 31, 2017 another guarantee of €0.2m (2016: €0.3m) deposited at a Cordaid bank account, is presented as financial fixed assets, as it is used as an investment in connection to the objectives as Cordaid. The cash is not at Cordaid’s disposal during the duration of the guarantee.
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42 . OTHER INCOME
X € 1,000 2017 2016
Result on financial assets -4,327 2,004
Other 358 102
Total other income -3,969 2,106
Gains and losses on financial assets issued in connection with the objectives, comprise interest and commission received on loans and participations, as well as project income and currency gains and losses, refer to table below:
X € 1,000 2017 2016
Interest received on loans and guarantees
3,483 2,730
Income from dividends/provision guarantees
170 12
Revaluation of participations -602 -983
Currency gains and losses -6,730 674
Allocated to/withdrawn from provision for loans and guarantees
-648 -429
Total result on financial assets -4,327 2,004
The total result on financial assets issued in connection with the objectives is €0.2m less compared to the consolidated results. In Corpav BV €0.2m has been provided on the loans an guarantees portfolio. Refer to note 20 to the consolidated financial statements.
Related to the gains on financial assets, Stichting Cordaid paid a management fee of €2.8m to Cordaid Investment Management BV for managing the investments issued in connection to the objectives.
Compared to the consolidated financial statements current liabilities are €0.3m lower in the individual balance sheet of Stichting Cordaid. The difference mainly relate to Cordaid Investment Management management fee included in accounts payable, as well as their payroll taxes, social security premiums, pensions premiums and holiday allowances to be paid, which are excluded in this individual balance sheet.
All other current and non-current liabilities are equal to the liabilities in the consolidated balance sheet. Refer to note 12 to the consolidated financial statements for more information.
36 . INCOME FROM PRIVATE INDIVIDUALS
See note 14 to the consolidated statement of income and expenditure
37 . BENEFITS FROM LOTTERY ORGANIZATIONS
Refer to note 15 to the consolidated statement of income and expenditure
38 . GOVERNMENT GRANTS
Refer note 16 to the consolidated statement of income and expenditure
39 . INCOME FROM RELATED (INTER-NATIONAL) ORGANIZATIONS
Refer note 17 to the consolidated statement of income and expenditure
40 . INCOME FROM OTHER NON-PROFIT ORGANIZATIONS
Refer note 18 to the consolidated statement of income and expenditure
41 . INCOME FROM SALE OF GOODS AND OR RENDERING OF SERVICES
X € 1,000 CORDAID
GENERAL
CORDAID
MENSEN
IN NOOD
CORDAID
KINDER-
STEM
CORDAID
MEMISA
CORDAID
MICRO
CREDIT
CORDAID
BZN
TOTAL
2017
TOTAL
2016
Materials sold 0 0 0 5 0 1 6 6
Rendering of services 214 0 0 0 0 0 214 285
Total 214 0 0 5 0 1 220 291
Total 2016 285 0 0 5 0 1 291
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43 . SPENT ON OBJECTIVES
The total program expenditure of Stichting Cordaid in 2017 can be specified as follows:
X € 1,000 ACTUAL 2017 ACTUAL 2016
PROGRAM
COSTS
PROGRAM
MANAGEMENT
COST
TOTAL 2017 PROGRAM
COSTS
PROGRAM
MANAGEMENT
COST
TOTAL 2016
Healthcare 57,521 1,530 59,051 71,371 3,947 75,318
Humanitarian Aid 23,719 1,085 24,804 25,665 1,235 26,900
Security & Justice 13,266 233 13,499 4,796 2,228 7,024
Cordaid Netherlands 261 174 435 4,825 1,254 6,079
Resilience 9,391 662 10,053 6,593 1,157 7,750
Investments 527 3,544 4,071 428 4,599 5,027
Other 4,698 0 4,698 -336 1,388 1,052
Total cost of programs 109,383 7,228 116,611 113,342 15,808 129,150
The operational costs of Cordaid Investment Management BV are excluded from the program management costs compared to the consolidated statement of income and expenditure. As a consequence, the allocation of costs of supporting departments to programs changes as well compared to the consolidated statement of income and expenditure. All other costs are equal to the costs as presented in the consolidated statement of income and expenditure.
44 . COST ALLOCATION TO THE DIFFERENT ACTIVITIES
See note 21 to the consolidated statement of income and expenditure for more information on the method of cost allocation. The total costs of Stichting Cordaid are allocated to different categories as follows:
RESOURCES EXPENDED
(X € 1,000)
EXPENDITURE ON THE OBJECTIVES EXPENDITURE
ON FUND-
RAISING
MANAGEMENT AND
ADMINISTRATION
TOTAL EXPENDITURES
PUBLIC
INFORMATION /
AWARENESS
CAMPAIGNS
PROGRAM
COSTS
ACTUAL 2017 ACTUAL 2016
Grants and contributions
0 97,493 0 0 97,493 105,706
Publicity and communication
3,647 0 3,679 0 7,326 6,196
Staff 881 12,322 1,569 1,531 16,303 20,311
Travel and accommodation
14 1,003 57 58 1,132 1,152
Housing 101 814 249 84 1,248 2,049
Office & General 274 4,979 906 388 6,547 6,934
Total actual 2017 4,917 116,611 6,460 2,061 130,049
Total actual 2016 3,761 129,150 5,624 3,813 142,348
Total costs in the individual statement of income and expenditure are slightly lower than the total costs in the consolidated statement of income and expenditure. A shift between program management costs for the operational costs of Cordaid Investment Management BV (€3.0m) and the management fee paid to Cordaid Investment Management BV by Stichting Cordaid, classified as investment costs (€2.8m) is the other important difference between the individual accounts and the consolidated accounts.
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46 . FINANCIAL INCOME AND EXPENSES
Financial income and expenses includes interest and other income from bond loans, interest earned on the bank account and currency gains and losses. The financial income and expenses can be specified as follows:
X € 1,000 2017 2016
Interest received on bonds 191 185
Interest received on cash and cash equivalents
53 139
Realised change in value of investments and liquid assets
1,335 -77
Unrealised change in value of investments and liquid assets
-1,434 551
Change in value of derivatives -234 0
Result of participating in group companies
-327 431
Gross investment income -416 1,229
Investment costs for investments -148 -79
-564 1,150
Compared to the consolidated statement of income and expenditure the result of participation in group companies is added. This line is equal to the net result of Cordaids’ group companies in which Cordaid holds 100% of the shares or chair on the Board of Directors of the entity.
45 . COST OF STAFF
2017 2016
Head count in The Hague 142.0 196.0
Head count expats at field offices 42.0 35.0
Total head count 184.0 231.0
Average number of The hague FTEs throughout the year
126.5 212.7
Program staf 49.8 122.0
Fundrains/Awareness staff 32.2 23.0
Other departments 44.5 67.7
Total average FTE including expats
126.5 212.7
The staff of Cordaid Investment Management BV consisting of 16,4 FTE (head count: 15) on average is not included in the statement above compared to the consolidated financial statements.
X € 1,000 2017 2016
Salaries and wages 8,102 14,256
Social security contributions 1,384 1,702
Pension costs 1,027 1,215
Temporary staff 401 240
Cost of training and education 284 320
Other personnel expenses 421 2,578
11,619 20,311
As a consequence of excluding the group companies in the individual accounts, total staff costs are €1.3m lower than in the consolidated financial statements. Refer note 23 to the consolidated statement of income and expenditure for more detailed disclosure on coast of staff.
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CORDAID 2017 ANNUAL REPORT OtheR InFORmAtIOn
NOVEMBER 2018 © CORDAID
Country officesAt the end of 2017 Cordaid had 14 branches in 12 countries. The country offices monitor and/or implement the programs for different thematic areas in these countries. The branches are in the following countries:
▪ Afghanistan ▪ Burundi ▪ Central-African Republic ▪ Democratic Republic Congo (Kinshasa and Bukavu) ▪ Ethiopia (Country office and Regional office (Horn of Africa)) ▪ Haiti ▪ Iraq ▪ Kenya ▪ Sierra Leone ▪ South Sudan ▪ Zimbabwe ▪ Netherlands
Subsequent eventsCordaid did not identify any subsequent events affecting the annual accounts as presented.
Provision in the constitution governing the appropriation of balancesAccording to article 11.4 of the constitution of Cordaid, the Supervisory Board adopts the annual accounts drawn up by the Board of Directors. Included in the annual account is a proposal for the appropriation of positive or negative financial balances in the fiscal year concerned. The appropriation of the balance takes into account the imposed restrictions on spending by third parties.
Appropriation of resultIncluded in this annual account is the proposed appropriation of the negative balance of €5.2m. as follows:
X € 1,000 2017 2016
Appropriation of funds
The balance of funds was appropriated as follows:
Reserves
- continuity reserve 0 -3,988
- tangible fixed assets reserve
0 -1,283
- earmarked reserves -2,601 -4,811
-2,601 -10,082
Funds
- restricted funds 1,586 -755
- semi-restricted funds 3,654 5,554
- loans & guarantees fund -7,790 -1,434
-2,550 3,365
Balance of income and expenditures
-5,151 -6,717
OTHER INFORMATION
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INDEPENDENT AUDITOR’S OPINION
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contact
P.O. Box 164402500 BK The Hague
Lutherse Burgwal 102512 CB The HagueThe Netherlands
+31(0)70-31 36 [email protected]