Annual financial reportand financial statements

Year to December 31, 2018

WORLD INTELLECTUAL PROPERTY ORGANIZATIONANNUAL FINANCIAL REPORTAND FINANCIAL STATEMENTS

YEAR TO DECEMBER 31, 2018

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

CONTENTSANNUAL FINANCIAL REPORTINTRODUCTIONFINANCIAL STATEMENT DISCUSSION AND ANALYSIS

33
3

STATEMENT ON INTERNAL CONTROL FOR 201823

FINANCIAL STATEMENTS
STATEMENT I – Statement of Financial Position
STATEMENT II – Statement of Financial Performance
STATEMENT III – Statement of Changes in Net Assets
STATEMENT IV – Statement of Cash Flow
STATEMENT V – Statement of Comparison of Budget and Actual Amounts – Revenue
STATEMENT V – Statement of Comparison of Budget and Actual Amounts - Expenses
NOTES TO THE FINANCIAL STATEMENTS
Note 1: Objectives and Budget of the Organization
Note 2: Significant Accounting Policies
Note 3: Cash and Cash Equivalents
Note 4: Investments
Note 5: Derivative Financial Instruments
Note 6: Receivables
Note 7: Inventories
Note 8: Equipment
Note 9: Investment Property
Note 10: Intangible Assets
Note 11: Land and Buildings
Note 12: Other Non-Current Assets
Note 13: Payables and Accruals
Note 14: Employee Benefits
Note 15: Transfers Payable
Note 16: Advance Receipts
Note 17: Borrowings
Note 18: Provisions
Note 19: Other Current Liabilities
Note 20: Contingent Assets and Liabilities
Note 21: Leases
Note 22: Related Party Transactions
Note 23: Net Assets
Note 24: Reconciliation of Statement of Budgetary Comparison and Statement of Financial Performance
Note 25: Revenue
Note 26: Expenses
Note 27: Investment Gains/(Losses)
Note 28: Financial Instruments
Note 29: Exchange Gain and Loss
Note 30: Events After the Reporting Date
Note 31: Segment Reporting

26
26
27
28
29
30
31
32
32
33
39
40
41
42
43
44
45
46
47
50
51
51
57
59
60
60
61
61
62
63
64
66
68
69
70
71
76
77
77

ANNEXESANNEX I – Statement of Financial Position by Source of Funding [Unaudited]
ANNEX II – Statement of Financial Performance by Source of Funding [Unaudited]
ANNEX III – WIPO Ex Gratia Payments

79
80
81
82

1

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

2

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

procedures are set out in the WIPO Convention of
1967, which established WIPO.

ANNUAL FINANCIAL REPORTINTRODUCTION

WIPO’s Member States determine the direction,budget and activities of the Organization through thedecision-making bodies. The main policy anddecision-making bodies of WIPO are the General
Assembly, the Conference and the Coordination
Committee. The General Assembly consists of States
party to the WIPO Convention which are members of
any of the Unions administered by WIPO. The
Conference is composed of the States party to the
WIPO Convention whether or not they are members of
any of the Unions, and is, inter alia, the competentbody for adopting amendments to the Convention.
The Coordination Committee consists of elected
members of the Executive Committees of the Paris or
the Berne Unions, or both, one-fourth of the States
party to the WIPO Convention which are not membersof any of the Unions, and Switzerland, as the State on
whose territory the Organization has its headquarters.

The financial statements of the World Intellectual
Property Organization (WIPO) for the year ended
December 31, 2018, are submitted to the Assembliesof the Member States of WIPO (“WIPO Assemblies”)
as required by Regulation 6.7 of the WIPO Financial
Regulations and Rules (FRR). The financial
statements have been prepared in accordance with
International Public Sector Accounting Standards(IPSAS), as developed and approved by theInternational Public Sector Accounting Standards
Board (IPSASB).
The report of the External Auditor on the audit of the2018 financial statements, together with his opinion on
the financial statements, are also submitted to the
WIPO Assemblies as prescribed under Regulation
8.11 and Annex II of the FRR.

The General Assembly appoints the WIPO Director
General upon nomination by the Coordination
Committee. The Director General is the chief
executive of the Organization. The Director General isassisted by the Senior Management Team (consistingof the Deputy Directors General and the Assistant
Directors General, plus the Legal Counsel and the
Director of the Human Resources Management
Department) in providing the strategic direction of
WIPO’s programs and in managing their respective
Sectors to ensure the delivery of results in line with
the Organization’s strategic goals and the Programand Budget.

The annual financial report, including financial
statement discussion and analysis, is presented in thisdocument alongside the financial statements.

FINANCIAL STATEMENT
AND ANALYSISDISCUSSION

The following financial statement discussion andanalysis includes an overview of the Organization’s
operations and environment, financial objectives andstrategies, risk management strategy, financial
performance and financial position during the year
ended December 31, 2018. It has been prepared inaccordance with IPSASB Recommended Practice
Guideline 2, and is intended to provide an explanationof the significant items, transactions, and events
presented in the financial statements and the factorsthat influenced them. This discussion and analysis is
not part of WIPO’s financial statements; however, it
should be read together with WIPO’s financial
statements.

WIPO generates most of its revenue from fees thatare paid by users of its intellectual property services
for patents, trademarks and industrial designs. These
services are provided through the Patent Cooperation
Treaty (PCT), Madrid and Hague systems. In 2018,
fees from these activities represented 93.0 per cent of
the Organization’s total revenue, with PCT system
fees alone representing 74.6 per cent. The driver forrevenue from these fee-based services is theinternational demand for intellectual property titles.
This demand is influenced by the performance of the
global economy, although since 2010 global
intellectual property filing activity has continued to
grow despite uneven economic recovery from theglobal financial crisis that began in 2008. Latest
available statistics up to the end of 2017 show thatworldwide patent and trademark applications havegrown each year since 2010. Global patentapplications rose to 3.17 million in 2017, representing
a 5.8 per cent increase over 2016. Worldwide
trademark applications showed the highest level of

Overview of WIPO’s Operations andEnvironment
WIPO is the global forum for intellectual property
services, policy, information and cooperation. It is a
specialized agency of the United Nations, with 192
Member States. The Organization’s mission is to leadthe development of a balanced and effective
international intellectual property system that enables
innovation and creativity for the economic, social andcultural development of all countries. The
Organization’s mandate, governing bodies and3

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
growth recorded in recent decades, with an estimated
9.11 million filings in 2017 (30.0 per cent more than in2016). An estimated 0.95 million industrial design
applications containing 1.24 million designs were filed
worldwide in 2017. Overall, global intellectual property
filing activity set new records in 2017.

income shortfalls and maximize the probability that theOrganization can meet its obligations in the short term
and maintain financial stability. One core element of
the policy is the mechanism for establishing therequired level of reserves as a percentage of theestimated biennial expenditure of the Unions
administered by the Organization. The policy alsoestablishes the principles and approval mechanism forthe use of reserves for one-time projects for capital
improvements and exceptional circumstances.

Other external factors that may influence theOrganization’s revenue from its fee-based services
include research and development investment levels,
technological confidence levels, and exchange rate
fluctuations. For the PCT system in particular, otherimportant factors include the level of PCT fees ascompared to those offered by other filing routes, theattractiveness and value of PCT services as comparedto other filing routes, and individual corporate patent
strategies.

The Organization manages its investments inaccordance with its Policy on Investments. The policy
states that the primary objectives of the Organization’s
investment management, in order of importance, shallbe: (i) preservation of capital; (ii) liquidity and (iii)within the constraints of (i) and (ii), the rate of return.
The Organization aims to achieve a market rate of
return whenever appropriate and possible for both
operating and core cash. Strategic cash is to beinvested over the long-term in order to achieve capital
growth and thus an overall positive return over time.

Overview of WIPO’s Financial Objectives
and Strategies
The financial activities of WIPO are governed by its
Financial Regulations, which are approved by theGeneral Assembly. Financial Rules are established by
the Director General in accordance with the provisionsof the Financial Regulations. WIPO’s Member States
are informed of any modification of the Financial
Rules. The Financial Rules govern all the financial
management activities of the Organization. Authority
and responsibility for the implementation of the
Financial Regulations and Rules is delegated by the
Director General to the Controller.

Overview of WIPO’s Risk Management
Strategy
WIPO’s Risk Management Policy sets out theOrganization’s approach to managing risks andinternal controls in a consistent and business-oriented
manner, in order to support the achievement of its
strategic goals and expected results. It iscomplemented by WIPO’s Risk and Internal Control
Management Manual, which covers the day-to-day
operational details of risk and internal control
management. The policy and the manual, together
withtheorganizationalarrangements,
theestablishment of roles and responsibilities, processes
and activities for the management of risks and internal
controls represent WIPO’s Risk Management
Framework.

Every two years, the Director General presents a
Program and Budget to Member States for approval. It
details expected results, performance measures andbudgetary planning for all proposed activities. The
Program and Budget for the 2018/19 biennium wasapproved by the Assemblies of the Member States of
WIPO on October 11, 2017. The Program and Budget
provides the planning for the biennium within theoverall strategic context of the Medium-Term Strategic
Plan.

Under the guiding principles of WIPO’s Risk
Management Policy, risk management is considered
an organization-wide responsibility. All staff areresponsible for managing risks and the ultimate
accountability for risk management lies with the Senior
Management Team. Organizational level risks are
identified and reviewed by WIPO’s Risk Management
Group, which is chaired by the Director General. Risk
management is performed as an integral part of theOrganization’s Results-Based Management cycle.
WIPO’s Risk Management Framework is guided by
the risk appetite noted by its Member States in
WIPO’s Risk Appetite Statement.

The Organization uses a Results-Based Management
system to ensure that resources are budgeted andutilized in line with organizational results and priorities.
Organizational performance is measured andanalyzed on a regular basis through performanceindicators, targets and baselines. Under this system,
both the Program and Budget and the Medium-Term
Strategic Plan form part of WIPO’s planning
framework, along with annual work plans andindividual staff objectives.
The Organization manages the levels of its reserves inaccordance with its Policy on Reserves. WIPO’s
reserves are accounted for as the net assets of theOrganization, and serve to minimize the impact of4

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Overview of the Financial Statements

Financial Statement Highlights

The financial statements prepared in accordance withIPSAS consist of:

The 2018 WIPO financial statements prepared inaccordance with IPSAS show a surplus for the year of
42.5 million Swiss francs. The net assets of theOrganization as at December 31, 2018, are 261.4
million Swiss francs.

Statement of Financial Position - details the net assets(the difference between total assets and total
liabilities) of the Organization. This statement provides
information about the financial strength of theOrganization, and the resources which are available tosupport its future objectives;

The 2018 surplus of 42.5 million Swiss francs
comprises total revenue of 430.6 million Swiss francs,
total expenses of 375.9 million Swiss francs, andinvestment losses of 12.2 million Swiss francs.

Statement of Financial Performance - measures thenet surplus or deficit (the difference between total
revenue and total expenses, plus or minus investment
gains or losses) for the year. This statement provides
information on the Organization’s sources of revenue,
and the cost of its activities. The annual surplus ordeficit is presented on a full accrual basis ofaccounting, recognizing revenue in the period it isearned and expenses when incurred, regardless ofwhen the associated cash is received or paid;

Total revenue in 2018 was up by 21.5 million Swiss
francs on the 2017 figure. Most significantly, revenue
from PCT system fees increased by 25.0 million Swiss
francs compared to the prior year. Madrid system fees
also increased compared to 2017, by 4.4 million Swiss
francs. Other/miscellaneous revenue fell by 7.2 million
Swiss francs against 2017, mainly due to the impact offoreign exchange losses in 2018. The prior year
positive total of 5.9 million Swiss francs forother/miscellaneous revenue was mainly the result of
the reversal of unused provisions for legal costs
during 2017.

Statement of Changes in Net Assets - identifies thechange in the net asset position during the year. This
statement highlights the sources of changes in the
Organization’s overall financial position, includingchanges due to the surplus or deficit for the period,
and the impact of actuarial gains or losses recognizeddirectly through net assets;

Total expenses were 18.9 million Swiss francs lower
than the 2017 figure. Notably, finance costs fell by
11.8 million Swiss francs compared to the prior year.
In 2017 the Organization took the decision to repay infull its remaining loan with the Banque Cantonale deGenève and the Banque Cantonale Vaudoise(BCG/BCV), which incurred a penalty charge of
11.6 million Swiss francs (calculated by reference tothe present value of all outstanding interest due on theloan). Personnel expenditure was 8.0 million Swiss
francs lower than in 2017, due to a combination offactors including reduced expenditure on posts andtemporary positions and for the WIPO Rewards andRecognition Program. The only expense category
which saw a significant increase compared to the prioryear was contractual services, which was 4.4 million
Swiss francs higher than in 2017.

Statement of Cash Flow - presents the movements ofcash during the year resulting from operating,investing and financing activities. This statement
provides information on how cash has been raised
and used during the year, including borrowing andrepayment of borrowing, and the acquisition anddisposal of fixed assets. In contrast to the Statementof Financial Performance, the Organization’s net cash
flow measures the difference between cash coming
into the Organization and cash going out;
Statement of Comparison of Budget and Actual
Amounts - presents a comparison of the budget
amounts under the Program and Budget, and theactual amounts for the year. This statement isprepared on the budgetary basis which is a modified
accrual basis. It provides information on the extent towhich resources were obtained and used inaccordance with the approved budget;

The Organization generated a net investment loss of
12.2 million Swiss francs in 2018, compared to a net
investment gain of 4.3 million Swiss francs in 2017.
This loss was due to a decline in the valuation of
WIPO’s strategic cash and core cash investment
portfolio assets at the reporting date. In terms ofincome generation through dividends and interest, theOrganization received 4.2 million Swiss francs in2018. In January 2018 the Organization disposed of
its investment property (the Madrid Union building) fora sale price of 7.0 million Swiss francs. This generated
an investment gain of 0.8 million Swiss francs.

Notes to the Financial Statements - assist inunderstanding the principal financial statements. The
Notes comprise a summary of significant accounting
policies and other explanatory information. They also
disclose information required by IPSAS which is notpresented on the face of the principal financial
statements.

5

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
WIPO’s total assets increased from 1,021.5 million
Swiss francs as at December 31, 2017, to 1,085.2
million Swiss francs as at December 31, 2018. Cash,cash equivalents and investments totaled 616.3
million Swiss francs at the end of 2018 (56.8 per centof total assets). This represents an increase of 72.5
million Swiss francs compared to the prior year. Under
WIPO’s Policy on Investments, the Organization’s
core and strategic cash is mainly held in non-current
investments. At the end of 2018, WIPO continued tohold significant amounts of fixed assets, including
land, buildings, intangible assets and equipment witha total net book value of 387.4 million Swiss francs(35.7 per cent of total assets). The net book value of
fixed assets fell by 15.8 million Swiss francs comparedto the prior year. Although additions of around 5.4
million Swiss francs were made to buildings andequipment during 2018, the net book value of fixed
assets was reduced by a depreciation andamortization charge of 11.3 million Swiss francs forthe year, and the impact of demolitions underbuildings projects. As noted, the Organization also
signed an act of sale for its investment property, theMadrid Union Building in January 2018. This
investment property was held at a value of 6.2 million
Swiss francs at the end of 2017.

The principal liabilities of the Organization as at
December 31, 2018 are payables and advancereceipts of 413.2 million Swiss francs (50.2 per cent of
total liabilities) and employee benefit liabilities of 334.1
million Swiss francs (40.5 per cent of total liabilities).
The largest employee benefit liability for theOrganization is the After-Service Health Insurance(ASHI) liability, which totaled 303.1 million Swiss
francs at the end of 2018. In January 2018 theOrganization repaid in full the remaining balance of
16.9 million Swiss francs of its loans with theFoundation
for
Buildings
forInternational
Organizations (FIPOI). WIPO incurred no penalty
charge for this early repayment. As a result, WIPO nolonger has any borrowings at the end of 2018.
The Organization’s net assets, consisting of its
Reserves and Working Capital Funds, totaled 261.4
million Swiss francs at the end of 2018. WIPO’s net
assets include a balance for accumulated actuarial
losses totaling 122.4 million Swiss francs.

Financial Performance
The Organization’s results for 2018 showed a surplus
for the year of 42.5 million Swiss francs, with total
revenue of 430.6 million Swiss francs, total expenses
of 375.9 million Swiss francs, and investment losses of
12.2 million Swiss francs. This can be compared to asurplus of 18.6 million Swiss francs in 2017, with total
revenue of 409.1 million Swiss francs, total expenses
of 394.8 million Swiss francs, and investment gains of
4.3 million Swiss francs.

The Program and Budget result for 2018 prepared ona modified accrual basis (i.e. before the impact of
IPSAS adjustments) was a surplus of 74.6 million
Swiss francs. The 2018 result for the Organization
under IPSAS includes Special Accounts, Projects
financed from reserves, and the impact of adjustments
related to full accrual accounting in accordance withIPSAS:

Summary of financial performance by source of funding
Program andBudgetSpecial
Accounts

2018

2018

Projects
Financed from
Reserves
2018

IPSAS
Adjustm ents

Total

Total

2018

2018

2017

(in millions of Swiss francs)
Total revenue

420.0

9.7

-

0.9

430.6

409.1

Total expenses-339.4

-11.6

-7.9

-17.0

-375.9-394.8Investment gains/(losses)

-6.0

-

-

-6.2

-12.2

4.3

Net surplus/(deficit)

74.6

-1.9

-7.9

-22.3

42.5

18.6

6

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

The chart below summarizes the principal differences
between the Program and Budget surplus of 74.6
million Swiss francs, and the surplus for the whole
Organization prepared on an IPSAS basis of 42.5
million Swiss francs:
Movement from budget result to IPSAS result 2018
74.6
-1.9

millions of Swiss francs

-7.9

-11.3
-8.5

+2.0

42.5

-6.2

BUDGETRESULT

Modifiedaccrual basis

Special
Accounts

Projects
financedfromreserves

Depreciation
andamortization

Changes in
employeebenefitliabilities

Entity differences

Investment
property
gains

Capitalization
Other
and disposal adjustmentsof fixed
assets

Accounting basis differences

The WIPO financial statements as prepared inaccordance with IPSAS include all areas andactivities of the whole Organization. The inclusionof the results before IPSAS adjustments for Special
Accounts (deficit of 1.9 million Swiss francs) and
Projects financed from reserves (deficit of 7.9
million Swiss francs) represent ‘entity differences’
between the budget result and the surplus per the
IPSAS financial statements. The application of fullaccrual basis accounting in accordance with IPSAS
leads to a number of ‘accounting basis differences’
which impact the result for the year. The net impactof these adjustments is a 22.3 million Swiss francs
reduction in the surplus:+1.7

The result for 2018 on an IPSAS basis includes
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets as the cost of these assets is
spread over their useful lives. The total cost ofdepreciation and amortization for the year was
11.3 million Swiss francs.

7

IPSAS RESULTPER
FINANCIALSTATEMENTS

Full accrual
basis



IPSAS requires that employee benefits earned
by staff but not yet paid be recognized asliabilities of the Organization. The IPSAS
adjustments bring the total liabilities recognizedin the financial statements into line with the
IPSAS compliant calculations of theseliabilities, including those prepared by external
actuaries. The net impact of these adjustments
in 2018 resulted in an increase in expenses(personnel expenditure) of 8.5 million Swiss
francs.



Under IPSAS, the Organization’s investment
property was held at its fair value of 6.2 million
Swiss francs. Following disposal of thisproperty, it was removed from the financial
statements, resulting in a corresponding
reduction of 6.2 million Swiss francs in theinvestment gain from disposal.



Under IPSAS, costs relating to theimprovement of buildings and the acquisition ofequipment are capitalized. The loss on disposal
or demolition of fixed assets also impacts theresult for the year. The net impact of theseadjustments is an increase of 1.7 million Swiss
francs in the 2018 surplus.

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Revenue Analysis
Composition of 2018 revenue on an IPSAS basis(in millions of Swiss francs)

Madrid system fees
74.3
(17.3%)

Assessedcontributions
17.4
Voluntary(4.1%)
contributions
11.6(2.7%)
Hague system fees
4.9
(1.1%)

PCT system fees
321.4
(74.6%)

Other revenue
1.0(0.2%)
2018 total revenue:
430.6m Swiss francs

provides a summary of thechangesby revenue
381.9mSwiss francs
type compared to the prior year.
Total revenue of the Organization for 2018 was
430.6 million Swiss francs, representing an increaseof 5.3 per cent compared to the 2017 total revenueof 409.1 million Swiss francs. Note that in the 2018
financial statements, investment gains/(losses) are
no longer included as part of revenue, but arereported separately after expenses and before
surplus/(deficit) for the year. The largest source ofrevenue during 2018 was PCT system fees,
accounting for 74.6 per cent of total revenue.
Revenue from PCT system fees rose by 8.4 percent compared to 2017.
Madrid system fees were the second largest sourceof revenue during the year 2018, representing 17.3
per cent of total revenue. Revenue from Madrid
system fees increased by 6.3 per cent compared to2017. Hague system fees, Lisbon system fees,
assessed contributions, voluntary contributions(contributions by donors to Special Accounts) andother revenue (publications, arbitration andmediation and other/miscellaneous revenue)
comprise the remaining 8.1 per cent of theOrganization’s total revenue. The following table

8

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Change in revenue 2017 – 2018
2018

2017

Net Change

Net Change(in millions of Swiss francs)%

Revenue
Assessed contributions

17.4

17.8

-0.4

Voluntary contributions

11.6

12.1

-0.5

-4.1

Publications revenue

0.5

0.2

0.3

150.0

PCT system

321.4

296.4

25.0

8.4

Madrid system

74.3

69.9

4.4

6.3

Hague system

4.9

5.1

-0.2

-3.9

400.6

371.4

29.2

7.9

1.8

1.7

0.1

5.9

-2.2

Fees

Sub-total fees
Arbitration and Mediation
Other/miscellaneous revenue
Total revenue

-1.3

5.9

-7.2

-122.0

430.6

409.1

21.5

5.3

PCT revenue is principally comprised ofinternational filing fees (the basic fee, plus
supplementary page fees, less reductions for efilings and least developed countries). The total
PCT system fees revenue figure also comprises
other fees (including handling and transfer fees)
and foreign exchange gains and losses:
Detail of PCT system fees 2012-2018
2018

2017

2016

2015

2014

2013

2012

240.6

(in millions of Swiss francs)
International filing fees

315.4

293.6

281.8

263.6

275.0

262.3

Payment regularization 2004-2013

-

-

-

4.7

-

-

-

Other fees

3.6

3.6

3.8

4.1

3.9

3.9

3.9

Exchange gain/(loss) on fees received

1.7

0.4

5.2

-0.7

-1.7

-6.0

7.5

Other exchange gain/(loss)

0.7

-1.2

-0.1

3.7

1.4

-2.7

-

Total PCT system fees

321.4

296.4

290.7

275.4

278.6

257.5

252.0

Revenue from PCT system fees on an IPSAS basis
increased by 8.4 per cent compared to 2017. In the
IPSAS
financialstatements,
revenueforinternational filing fees from PCT applications is
recognized only on publication of the application. In
2018 there were 237,378 publications compared to223,571 in 2017.

the following graph shows how annual revenue has
moved in line with the number of publishedapplications in the year. Two factors led to higher
numbers of publications in 2014 when compared tothe trend for the other years presented in the graph.
Firstly, in 2014 there were fifty-three weeks ofpublications, instead of the usual fifty-two.
Secondly, there was a surge in PCT applications inMarch 2014 due to the entering into force one year
earlier of the Leahy-Smith America Invents Act.

When looking at revenue from PCT international
filing fees as recognized in accordance with IPSAS,

9

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

250,000

320

240,000

310

300

230,000

290

220,000

280

210,000

270

200,000

260
250

190,000240

180,000

Revenue (millions of Swiss
francs)Number of publications

PCT - International filing fees and publications 2012-2018

230

170,000

220
2012

2013

2014

2015

Number of publications

2016

2017

2018

International fees for published applications

Exchange gains and losses are incurred on PCTinternational filing fees where these are received incurrencies other than the Swiss franc. WIPO
establishes equivalent amounts of fees in various
currencies for each year according to the exchange
rates prevailing on the first Monday of October ofthe preceding year. Equivalent amounts can bereset during the year if the exchange rate between
the other currency and the Swiss franc is changed
by 5.0 per cent or more for more than four
consecutive Fridays. The equivalent amounts
applicable at the date of filing an application
determine how much an applicant should pay in thelocal currency. The actual amount recognized by
WIPO in Swiss francs is determined by the United
Nations Operational Rates of Exchange (UNORE)
at the date of receipt of payment. The exchange

gain or loss on fees arises as the difference
between the equivalent Swiss franc fee and theactual amount in Swiss francs at the date ofpayment. In the year 2018, the Organization madea net exchange gain of 1.7 million Swiss francs on
PCT fees received (international filing fees andhandling fees). Gains concerned principally fees inJapanese yen and euro (1.3 million Swiss francs
and 0.9 million Swiss francs respectively), while an
exchange loss of 0.4 million Swiss francs wasincurred on fees received in US dollar. This net
exchange gain follows gains in both 2017 and 2016,
although in 2015, 2014 and 2013 WIPO incurred a
net exchange loss on fees received:

Detail of exchange gain/(loss) on PCT fees received 2012-2018
2018

2017

2016

2015

2014

2013

2012

4.2

(in millions of Swiss francs)
Currency of fee paym ent:
US dollar

-0.4

0.4

0.7

2.6

0.1

-1.5

Japanese yen

1.3

-1.2

4.4

-1.6

-1.3

-4.9

1.8

Euro

0.9

1.1

0.4

-1.4

-0.4

0.7

-0.1

Other currencies
Total exchange gain/(loss) on fees
received

-0.1

0.1

-0.3

-0.3

-0.1

-0.3

1.6

1.7

0.4

5.2

-0.7

-1.7

-6.0

7.5

10

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
USD – Comparison of PCT equivalent amount rate and UNORE 2012-2018
1.03
1.01
0.99

0.97
0.95
0.93
0.91
0.89
0.87
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14

Dec-14Jun-15USD Fee rates

Dec-15Jun-16

Dec-16Jun-17

Dec-17

Jun-18Dec-18Dec-17 Jun-18

Dec-18USD UNORE rates

JPY – Comparison of PCT equivalent amount rate and UNORE 2012-2018
0.013
0.012

0.011
0.010
0.009
0.008
0.007
Dec-11 Jun-12

Dec-12 Jun-13

Dec-13 Jun-14

Dec-14 Jun-15

JPY Fee rates

Dec-15 Jun-16

Dec-16 Jun-17

JPY UNORE rates

EUR – Comparison of PCT equivalent amount rate and UNORE 2012-2018

1.220
1.170

1.120
1.070
1.020
Dec-11

Jun-12

Dec-12

Jun-13

Dec-13Jun-14

Dec-14Jun-15EUR Fee rates

Dec-15Jun-16

Dec-16

EUR UNORE rates

11

Jun-17

Dec-17

Jun-18Dec-18

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Madrid system fees principally comprise basic fees
received from applications for registrations orrenewals and fees for subsequent designations:
Detail of Madrid system fees 2012-2018
2018

2017

2016

2015

2014

2013

2012

(in millions of Swiss francs)
Basic fees (registrations and renew als)

62.4

58.5

49.7

56.7

46.0

45.9

42.7

Subsequent designations

5.8

5.5

4.8

5.5

4.7

4.5

4.0

Other fees

6.1

5.9

5.1

5.7

4.4

5.0

4.9

Total Madrid system fees

74.3

69.9

59.6

67.9

55.1

55.4

51.6

In accordance with IPSAS, revenue from Madrid
fees for registrations, renewals and subsequent
designations is recognized in the financial
statements upon publication. Revenue fromregistrations and renewals (but not including otherfees) as recognized in accordance with IPSAS has
moved in line with the number of registrations andrenewals in the year. In 2016, revenue from Madrid
system fees fell by 12.2 per cent compared to 2015,

due largely to an increased backlog in registrations
linked in part to system issues with the MadridInternational Registration Information System. In
2017 WIPO made a significant effort to clear the
backlog, and revenue from Madrid system fees
increased by 17.3 per cent compared to the prioryear. In 2018, Madrid system registrations
continued to grow, totaling 60,071, against 56,267
in 2017.

100,000

65.0

95,00060.0

90,00085,00055.0

80,00050.0

75,00070,00045.0

65,00040.0

60,00035.0

55,00050,000

30.0
2012

2013

2014

2015

Registrations and renewals

2016

2017

2018

Fees for published registrations and renewals

12

Revenue (millions of Swiss
francs)Number of registrations and renewals

Madrid - basic fees and registrations/renewals 2012-2018

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Hague system fees totaled 4.9 million Swiss francs
for 2018, representing a slight decrease on the2017 figure of 5.1 million Swiss francs. Lisbon
system fees totaled 31 thousand Swiss francs in2018, compared to 39 thousand Swiss francs in2017.

subventions received under Article 11(3)(iii) of the
Lisbon Agreement.
Arbitration and mediation revenue of 1.8 million
Swiss francs was up by 0.1 million Swiss francs on
the prior year, while publications revenue of 0.5
million Swiss francs was 0.3 million Swiss francs
higher than in 2017. Other/miscellaneous revenue
had a negative total of 1.3 million Swiss francs in2018, due to the impact of foreign exchange losses
during the year. The prior year positive total of 5.9
million Swiss francs was mainly the result of thereversal of unused provisions for legal costs during
2017.

Revenue from assessed contributions of 17.4
million Swiss francs in 2018 represents 4.1 per centof total revenue, while revenue from voluntary
contributions of 11.6 million Swiss francs in 2018
represents 2.7 per cent of total revenue. Voluntary
contributions in 2018 were received under Special
Accounts, for which revenue is recognized as work
is performed and expense incurred in line with therelevant agreement. In 2017 voluntary contributions
also included 0.9 million Swiss francs ofExpense Analysis
Composition of 2018 expenses on an IPSAS basis(in millions of Swiss francs)

Contractual services
93.8(24.9%)

Personnel expenditure
220.6(58.7%)

Operating expenses
26.7(7.1%)
Travel, training andgrants
16.8(4.5%)
Depreciation andamortization
11.3(3.0%)
Other expenses
6.7(1.8%)

2018 total expenses:
375.9m Swiss francs

13

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Detailed breakdown of 2018 expenses(in millions of Swiss francs)
Personnel
expenditure
220.6

Posts
Temporary staff
Other staff costs

206.8
9.1
4.7

Travel, training
and grants
16.8

Contractual
services
93.8

Conferences
Individual contractual services
Other contractual services

4.8
15.2
73.8

Depreciation
Buildings depreciation
and amortization Equipment depreciation
11.3
Intangible assets amortization

9.3
0.6
1.4

Premises and maintenanceCommunication
Representation & other operating expenses

23.2
2.2
0.5
0.8

Internships and WIPO fellow ships
Other expenses Supplies and materials
6.7
Furniture and equipment
Finance costs

4.4
1.7
0.4
0.2

Operatingexpenses
26.7

United Nations joint services

Staff missions
Third-party travel
Training and related travel grants

5.7
9.1
2.0

Total expenses of the Organization for 2018 were
375.9 million Swiss francs, representing a decreaseof 4.8 per cent compared to 2017 total expenses of394.8 million Swiss francs. The largest expense for
the Organization was personnel expenditure of
220.6 million Swiss francs, representing 58.7 percent of total expenses. Contractual services of 93.8
million Swiss francs were the second largest
expense for the Organization, followed by operating
expenses of 26.7 million Swiss francs. The tablebelow provides a summary of the changes byexpense type compared to the prior year:
Change in expenses 2017 - 2018
2018

2017

Net Change(in millions of Swiss francs)

Net Change%

Expenses
Personnel expenditure

220.6

228.6

-8.0

-3.5

Internships and WIPO fellow ships

4.4

3.8

0.6

15.8

Travel, training and grants

16.8

18.2

-1.4

-7.7

Contractual services

93.8

89.4

4.4

4.9

Operating expenses

26.7

26.3

0.4

1.5

Supplies and materials

1.7

3.5

-1.8

-51.4
-76.5

Furniture and equipment

0.4

1.7

-1.3

Depreciation and amortization

11.3

11.3

-

-

Finance costs

0.2

12.0

-11.8

-98.3

375.9

394.8

-18.9

-4.8

Total expenses

14

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Personnel expenditure comprises principally net
base salary and post adjustments for staff in posts
or temporary positions. Combined these represent
138.4 million Swiss francs, 62.7 per cent of total
personnel expenditure for 2018. The next largest
element of personnel expenditure is theOrganization’s contributions to the United Nations
Joint Staff Pension Fund (UNJSPF), which totaled
27.2 million Swiss francs in 2018. WIPO’s
mandated contribution to the UNJSPF is currently
15.8 per cent of a staff member’s pensionable
remuneration. After-service employee benefits of
19.7 million Swiss francs represent the cost to theOrganization of ASHI, repatriation grant and travel,
and accumulated annual leave. The expense for2018 is equivalent to the actual cash payments forthese benefits, plus the movement in the amount of
the total liability in the year, excluding actuarial
gains on the ASHI liability which are recognizeddirectly in net assets. Allowances of 19.7 million
Swiss francs represent 8.9 per cent of total staff
expenditure.
Allowances
includeprincipallydependency allowances for 7.6 million Swiss francs,
education grant for 5.8 million Swiss francs andhome leave for 1.5 million Swiss francs. The cost of
the Organization’s contribution to monthly collective
medical insurance premiums for active staff totaled
10.2 million Swiss francs for the year 2018. Other
personnel expenditure of 5.4 million Swiss francs
mainly includes the impact of the recognition ofprovisions for litigation with WIPO personnel.

Composition of 2018 personnel expenditure on an IPSAS basis(in millions of Swiss francs)

UNJSPF
27.2(12.4%)

After-service
employee benefits
19.7(8.9%)
Allowances
19.7(8.9%)

Post adjustment
38.2(17.3%)

Collective medical
insurance
10.2(4.6%)Net base salary
100.2(45.4%)

2018 total personnel expenditure:
220.6m Swiss francs

15

Other
5.4
(2.5%)

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Total personnel expenditure in 2018 of 220.6 million
Swiss francs has decreased by 3.5 per centcompared to total personnel expenditure of 228.6
million Swiss francs in 2017. The table below
provides a detailed breakdown of personnel
expenditure and the variance compared to 2017:
Change in personnel expenditure 2017 – 2018
2018

2017

Net Change(in millions of Swiss francs)

Net Change%

Net base salary

95.8

94.5

1.3

1.4

Post adjustment

35.9

37.6

-1.7

-4.5

UNJSPF contribution

25.9

25.4

0.5

2.0

Allow ances

19.1

19.7

-0.6

-3.0

After-service employee benefits

19.7

24.2

-4.5

-18.6

Collective medical insurance

9.7

9.5

0.2

2.1

Other post staff expenditures

0.7

5.6

-4.9

-87.5

Staff in posts expenditure

206.8

216.5

-9.7

-4.5

Net base salary

4.4

6.1

-1.7

-27.9

Post adjustment

2.3

3.2

-0.9

-28.1

UNJSPF contribution

1.3

1.7

-0.4

-23.5

Allow ances

0.6

0.5

0.1

20.0

Collective medical insurance

0.5

0.7

-0.2

-28.6

Staff in tem porary positions expenditure

9.1

12.2

-3.1

-25.4

Other staff costs

4.7

-0.1

4.8

-4800.0

220.6

228.6

-8.0

-3.5

Total personnel expenditure

The expense for staff in posts has decreased by 9.7
million Swiss francs compared to 2017, while theexpense for staff in temporary positions has also
fallen, by 3.1 million Swiss francs. The decrease in
the expense for staff in posts is largely due to theafter-service employee benefits cost. This has
decreased by 4.5 million Swiss francs compared to2017. Although overall the ASHI liability fell only
slightly between 2017 and 2018, this was due toactuarial gains which were recognized directly in net
assets and did not impact personnel expenditure.
The decrease in the expense for staff in posts also
concerned the WIPO Rewards and Recognition
Program (RRP), which in 2018 did not include theOrganizational performance reward amounting toapproximately 2.9 million Swiss francs in 2017, anda reduction of 1.7 million Swiss francs due to
implementation of the revised post adjustment
multiplier (PAM) for Geneva in March 2018 andJune 2018. Other staff costs presented separately
in the table above represent costs common to both
posts and temporary positions (professional
accident insurance, Closed Pension Fund costs andlitigation costs). Other staff costs have increased by
4.8 million Swiss francs compared to 2017, primarily
due to movements in legal provisions related to
WIPO personnel.

The cost of interns and WIPO fellowships is shown
separately in the financial statements. Internships
and WIPO fellowships are not included as part ofpersonnel expenditure as they are not covered by
WIPO’s Staff Regulations and Rules (SRR). WIPO
fellowships aim to provide individuals withexperience to strengthen their knowledge andprofessional competence. The cost of internships
and WIPO fellowships in 2018 was 4.4 million Swiss
francs, compared to the prior year figure of 3.8
million Swiss francs.
Travel, training and grants totaled 16.8 million
Swiss francs for 2018, and account for 4.5 per centof total expenses. This represents a decrease of 1.4
million Swiss francs compared to 2017. Both thirdparty travel (conference participants and lecturers)
expense and staff mission costs were lower than in2017 (by 1.1 million Swiss francs and 0.2 million
Swiss francs respectively).
Contractual services in 2018 totaled 93.8 million
Swiss francs. These expenses have increased by
4.4 per million Swiss francs compared to the 2017
figure. Contractual services in the year 2018
concern primarily commercial translation services(29.5 million Swiss francs), IT commercial services(19.7 million Swiss francs), individual contractual

16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018services (15.2 million Swiss francs), andInternational Computing Centre services (11.9
million Swiss francs).

As previously noted, expenses under IPSAS include
the depreciation expense of buildings andequipment and the amortization expense ofintangible assets, as the cost of these assets is
spread over their useful lives. For 2018,
depreciation and amortization total 11.3 million
Swiss francs, which is the same as the charge in2017.

Operating expenses in 2018 totaled 26.7 million
Swiss francs, broadly in line with the 2017 total of
26.3 million Swiss francs. Operating expenses in2018 comprise mainly premises and maintenance
costs
(23.2
millionSwissfrancs)andcommunication expenses (2.2 million Swiss francs).

Finance costs totaled 0.2 million Swiss francs in2018, compared to 12.0 million Swiss francs in2017. The 2018 finance costs are comprised
entirely of bank charges. In 2017 the Organization
took the decision to repay in full the balance of the
BCG/BCV loan, which incurred a penalty charge of
11.6 million Swiss francs (calculated by reference tothe present value of all outstanding interest due on
the loan).

Expenses for supplies and materials havedecreased from 3.5 million Swiss francs in 2017 to
1.7 million Swiss francs in 2018. Furniture andequipment expenses are also lower, totaling 0.4
million Swiss francs in 2018 compared to 1.7 million
Swiss francs in 2017, largely due to higher IT
equipment purchases in 2017. Furniture andequipment expenses concern those items which do
not meet the Organization’s threshold of 5,000
Swiss francs for capitalization.

Financial Position
Under IPSAS 39, actuarial gains and losses, related
to WIPO’s liability for ASHI, are recognized in thefinancial statements. The increase in net assets
between 2016 and 2018 of 112.0 million Swiss
francs is due to the surplus in both 2017 and 2018,
and also actuarial gains in both years following thevaluation of WIPO’s ASHI liability:

As at December 31, 2018, the Organization had net
assets of 261.4 million Swiss francs, with total
assets of 1,085.2 million Swiss francs and total
liabilities of 823.8 million Swiss francs. Following
WIPO’s implementation in 2017 of IPSAS 39
Employee Benefits, the net assets of 2016 wererestated for presentation in the financial statements.

Movement in net assets 2016 to 2018
+16.2
+42.5

261.4

+34.7

millions of Swiss francs

202.7
+18.6

149.4

Restated net
assets
Decem ber 31,
2016

Surplus on an
IPSAS basis
2017

Actuarial gains
through net
assetsNet assets
Decem ber 31,
2017

17

Surplus on an
IPSAS basis
2018

Actuarial gains
through net
assetsNet assets
Decem ber 31,
2018

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
The following chart provides a summary of theStatement of Financial Position of WIPO as at
December 31, 2018. Total assets of 1,085.2 million
Swiss francs are composed primarily of cash, cash
equivalents, investments and fixed assets. Total

liabilities of 823.8 million Swiss francs are
principally payables and advance receipts, andemployee benefits:

Summary of assets and liabilities December 31, 2018

1,085.2

millions of Swiss francs

Net assets
261.4
823.8

Cash & cash
equivalents
and investments
616.3
Payables andadvance receipts
413.2

Fixed assets
387.4

Employee benefits
334.1

Other 81.5

Other 76.5

AssetsLiabilities

Assets
impact on net book value of 3.7 million Swiss The
total depreciation and amortization charge against
all fixed assets was 11.3 million Swiss francs for
2018.

The Organization has cash, cash equivalents andinvestment balances of 616.3 million Swiss francs,
representing 56.8 per cent of total assets. This
includes amounts totaling 182.8 million Swiss francs
which are classified as restricted, and amounts
totaling 125.8 million Swiss francs which represent
strategic cash. The total balance of 616.3 million
Swiss francs is 72.5 million Swiss francs higher
than the balance of 543.8 million Swiss francs at theend of 2017. The balance of cash and equivalents
has increased despite the Organization repaying infull the remaining balance of 16.9 million of its loans
with FIPOI.

The following table summarizes the fixed assets
held by the Organization. Land and property isclassified differently under IPSAS depending on the
purpose for which it is used, or the nature of thecontractual right or agreement under which it isheld. Apart from the land and property included in
the table as fixed assets, the Organization leases
additional depots and storage facilities in Geneva,
and has leases for some of its external offices (seeNote 21). The Organization has also been granted
land surface rights on which certain headquarterbuildings are located. These rights, acquired at nocost, are not recognized in the financial statements
but are disclosed (see Note 10).

The Organization holds significant fixed assets(land, buildings, intangible assets and equipment)with a total net book value of 387.4 million Swiss
francs. During 2018, costs totaling 5.2 million Swiss
francs for additions and improvements to existingbuildings were capitalized. Part of these
improvements entailed the partial demolition ofcomponents of existing buildings, with an estimated18

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
Fixed assets as at December 31, 2018
Decem ber 31, 2018
Net Carrying
Am ount

Liabilities

Classification in
the Financial
Statem ents

As at December 31, 2018, payables and advancereceipts total 413.2 million Swiss francs, andprincipally include deferred revenue for theprocessing of international applications (under the
PCT, Madrid and Hague systems) for 268.3 million
Swiss francs. This deferred revenue balance mainly
concerns PCT system fees of 264.9 million Swiss
francs. Revenue from fees relating to theprocessing of international applications is deferred
until the related application is published. At any
given time, a number of PCT applications will havebeen filed with either receiving Offices or WIPO
which have yet to be published. As at December 31,
2018, for applications with a 2017 or 2018 filing
date, it is estimated that approximately 191,286
applications were unpublished. At the end of theprior year 2017, approximately 184,601 applications
filed in 2016 or 2017 were unpublished and thedeferred revenue balance for PCT system fees was
252.2 million Swiss francs.

(in millions of Swiss
francs)New Building Site

30.8

Land (Note 11)

Security Perimeter

8.1

Buildings andConstructions in Use(Note 11)

New Conference Hall

61.6

Buildings andConstructions in Use(Note 11)

New Building

144.6

Buildings andConstructions in Use(Note 11)

A. Bogsch Building

44.3

Buildings andConstructions in Use(Note 11)

G. Bodenhausen Building I

9.7

Buildings andConstructions in Use(Note 11)

G. Bodenhausen Building II

3.5

Buildings andConstructions in Use(Note 11)

PCT Building

58.8

Buildings andConstructions in Use(Note 11)Land surface rights

24.3

Intangible Assets(Note 10)

Softw are (acquired anddeveloped)

0.7

Intangible Assets(Note 10)Equipment

0.8

Equipment (Note 8)

Furniture and furnishings

0.2

Furniture andfurnishings (Note 8)

Total fixed assets

Employee benefit liabilities of 334.1 million Swiss
francs are mainly comprised of the ASHI liability of
303.1 million Swiss francs, which represents 90.7
per cent of the total employee benefits liability as at
December 31, 2018. The ASHI liability has however
decreased slightly by 1.2 million Swiss francs
compared to the 2017 balance. The liability is
calculated by an independent actuary, and reflects
the acquired future cost of WIPO’s share ofcollective medical insurance premiums for both
existing WIPO retirees and the projected number ofactive WIPO staff who will retire in the future.

387.4

Other assets of the Organization totaling 81.5
million Swiss francs include accounts receivable,
inventories and advance payments. Within this, themost significant balance is PCT debtors totaling
55.6 million Swiss francs. At any given time, asignificant number of PCT applications have been
filed with receiving Offices and possibly received by
WIPO, for which no corresponding fee payment has
been received by the Organization. The balance of
PCT debtors has increased compared to the prioryear, when it totaled 50.8 million Swiss francs. This
increase is a result of higher PCT applications in
2018, with the percentage of unpaid applications atyear end remaining consistent between the twoyears at between 15 to 16 per cent of filings in theyear.

Composition of employee benefits liabilities as
at December 31, 201819

Decem ber 31,
2018(in millions of
Swiss francs)

Percentage of
Liability

After-Service Health Insurance(ASHI)

303.1

90.7

Repatriation grant and travel

17.1

5.1

Accumulated leave

8.2

2.5

Closed Pension Fund

2.0

0.6

Education grant

2.0

0.6

Accrued overtime

0.1

0.0

Home leave

0.5

0.2

Separation benefits

0.3

0.1

Performance rew ards
Total em ployee benefit
liabilities

0.8

0.2

334.1

100.0

%

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
The ASHI liability is based on a calculation
performed by an independent actuary, which
incorporates a number of actuarial assumptions.
These include the discount rate, medical cost trend
rates, staff turnover rates and mortality rates.
Changes to these assumptions year on year lead toactuarial gains and losses. Previously under IPSAS,
WIPO applied the corridor approach to its
accounting treatment of these actuarial gains andlosses, meaning that they were not immediately
recognized in the financial statements. Following
the introduction of IPSAS 39, which WIPO
implemented in 2017, these actuarial gains andlosses are recognized as part of the liability in theStatement of Financial Position. The graph below
shows how both the ASHI liability (representing thebenefit obligation including accumulated actuarial
losses) has developed since 2009, and includes
actuarial forecasts for 2019-2022 (applying thesame assumptions as for the 2018 calculation). The
graph also shows how discount rates and medical
cost trend rates have changed since 2009. It isnoted that following seven years of increase in theliability, in 2017 the liability fell by 16.5 million Swiss
francs, and the 2018 liability also fell by a further 1.2
million Swiss francs. The 2017 decrease waslargely due to the impact of changed mortality
tables, following a project to apply consistentactuarial assumptions across the United Nations
system. The 2018 decrease was mainly due to anincrease in the discount rate from 0.7% to 0.9%.
Other liabilities of the Organization are mainlycomprised of current accounts held on behalf ofapplicants and contracting parties, totaling 70.6
million Swiss francs. The Organization has also
recognized legal provisions totalling 5.6 million
Swiss francs at the end of 2018, which concern
disputes with WIPO personnel. Following therepayment of its loans with FIPOI in January 2018,
the Organization no longer has any borrowings at
the end of 2018.

Movement in ASHI liability (benefit obligation) 2009 - 2022

5.00

400.0

3.00
200.0

2019 -2022 a ctuarial forecast

2.00

100.0
1.00

0.0

0.00

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Benefit obligation

Discount rate

20

Medical cost trend rate

per cent

millions of Swiss francs

4.00
300.0

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
cash investment portfolio assets at the reporting
date. These changes in valuation reflect short termmarket volatility. Core cash balances are invested
with the objective of generating a positive return
over rolling five year periods, and strategic cash
balances are invested over the long term. WIPO’s
investments generated dividends of 4.2 million
Swiss francs during 2018.

Cash Flow
The Organization’s cash, cash equivalents andinvestments balance as at December 31, 2018 is616.3 million Swiss francs, compared to 543.8
million Swiss francs as at December 31, 2017. Thisbalance has been increasing since 2011. The
significant increase of 72.5 million Swiss francs
between 2017 and 2018 has been achieved despite
the early repayment of the FIPOI loans in January
2018, which required a cash outflow of 16.9 million
Swiss francs.

Cash vs Investments 2016-2018
700.0
Total
616.3

600.0

This loan repayment decision was taken inaccordance with the objective of capitalpreservation, as stipulated in WIPO’s Policy on
Investments. Given existing interest rate conditions,
including negative interest rates for Swiss franc
deposits, there is a cost avoidance benefit fromrepaying the loans when compared to investment of
the funds in a risk-free Swiss franc asset ofcomparable tenor.

Total
542.3
12.5

Total
543.8

mi l lions of Swiss francs

500.0
268.3

400.0
300.0
529.8

10.0

12.0

200.0
265.5

The Organization generally holds its cash deposits
in instant access bank accounts. During 2018 theOrganization continued to hold balances in term
deposit accounts (for periods up to 12 months). This
has allowed the Organization to avoid incurring
charges on certain instant access bank accounts
following the introduction of negative interest rates
during 2016.

381.4

100.0

222.9

0.0
2016

2017

2018

Cash and cash equivalents
Current investments
Non-current investments

In the financial statements cash, cash equivalents
and investments are also presented separately
between restricted, unrestricted and strategic cash
balances. There are several elements of cash andcash equivalents which are classified as restricted.
Restricted cash includes current accounts held forthird parties (applicants under the PCT, Madrid andHague systems, and also certain contracting
parties), fees collected on behalf of contracting
parties, deposits received in connection withpending procedures related to trademarks, andSpecial Accounts held on behalf of donors ofvoluntary contributions. Strategic cash represents
the funds held by the Organization which have been
allocated for the future financing of after-service
employee benefit liabilities, including ASHI. Thebalance of strategic cash was 125.8 million Swiss
francs as at December 31, 2018. This includes thelong-term investment portfolio (including unrealized
gains) of 120.3 million Swiss francs, and cash
balances yet to be invested of 5.5 million Swiss
francs. These balances include the additionalamounts generated in 2018 from the Program andBudget charge applied to the cost of posts for thefunding of after-service employee benefit liabilities.

In February 2018 the Organization completed theimplementation of its Policy on Investments whichstarted during 2017. This has resulted in asignificant transfer of funds from cash and cash
equivalents to non-current investments. As at
December 31, 2018, WIPO’s medium-term
investment portfolio (core cash investments) has afair value of 261.1 million Swiss francs, and thelong-term investment portfolio (strategic cash
investments) has a fair value of 120.3 million Swiss
francs). These balances are included in the
Organization’s 2018 total cash, cash equivalents
and investments balance of 616.3 million Swiss
francs, which means that as at December 31, 2018,
approximately 61.9 per cent of the total balance isheld in non-current investments. This represents asignificant change in the profile of WIPO’s cash,
cash equivalents and investments since WIPO
began implementing its investment strategy in 2017.
WIPO’s non-current investments are held at fairvalue in the Statement of Financial Position. During
2018, these investments generated unrealized
losses of 17.0 million Swiss francs due to a decline
in the valuation of WIPO’s strategic cash and core21

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Unrestricted, restricted and strategic cash 2010-2018
700.0

Total
616.3

600.0
Total
474.5

mi l lions of Swiss francs

500.0
400.0
300.0

Total
383.5

Total
379.7

154.3

226.8

225.4

2010

2011

Total
543.8

108.6

124.4

125.8

102.1

88.9

182.8
152.8

156.7

Total
409.9

Total
408.1

Total
489.5

Total
542.3

161.8

149.5

164.6

161.9

221.0

225.5

2014

2015

174.9

200.0

100.0

255.3

260.4

2012

2013

271.9

307.7
244.5

0.0
Unrestricted cash/investments

2016

Restricted cash

2017

2018

Strategic cash

(funds for after-service employee
benefits, including balances
generated during the year)

The principal cash inflows to the Organization are
payments of PCT system fees. Monthly cash
inflows from PCT system fees averaged 27.9 million
Swiss francs during the year 2018 compared to26.4 million Swiss francs during the year 2017. As
can be seen from the following table, there can besignificant variations in the cash inflows between
months. Inflows from PCT system fees were notably
higher in April 2018 compared to other months inthe year mainly due to catch-up payments from tworeceiving Offices.

Monthly PCT system cash inflows 2014-2018
40.0
35.0

mi l lions of Swiss francs

30.0
25.0
20.0
15.0
10.0
5.0
0.0
Jan

Feb

Mar

Apr
2018

May

Jun

2017

2016

22

Jul

Aug
2015

Sep
2014

Oct
Average

Nov

Dec

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

STATEMENT ON INTERNAL CONTROL FOR 2018

Scope of Responsibility
As Director General of the World Intellectual Property Organization (WIPO), I am accountable, in accordance with the
responsibility assigned to me, in particular, by Regulation 5.8 (d) of the Financial Regulations and Rules (FRRs), formaintaining a system of internal financial control that ensures:(i)the regularity of the receipt, custody and disposal of all funds and other financial resources of theOrganization;
the conformity of obligations and expenditures with appropriations or other financial provisions approved by
the General Assembly or with the purposes and rules relating to specific trust funds;
the effective, efficient and economic use of the resources of the Organization in pursuit of achieving the
Expected Results of the Organization.

(ii)
(iii)

Purpose of the system of internal control
The system of internal control is designed to reduce and manage rather than eliminate the risk of failure to achieving
the Organization’s goals, results and implementing and complying with related policies. Therefore, it can only provide
reasonable and not absolute assurance of effectiveness. It is based on an ongoing process designed to identify theprincipal risks, to evaluate the nature and extent of those risks, and to manage them efficiently, effectively andeconomically.
Internal control is a process, effected by the Governing Bodies, the Director General, senior management and otherpersonnel, and designed to provide reasonable assurance on the achievement of the following internal control
objectives:Effectiveness and efficiency of operations and safeguarding of assets;
Reliability of financial reporting; andCompliance with applicable rules and regulations.

Thus, on an operational level, WIPO’s internal control system is not solely a policy or procedure that is performed atcertain points in time, but rather continually operated at all levels within the Organization through internal control
processes to ensure the above objectives.
My current statement on WIPO’s internal control processes, as described above, applies for the year ended December
31, 2018, and up to the date of the approval of the Organization’s 2018 financial statements.

Risk management and control framework
The Organization has robust and comprehensive results based management processes in place, guiding all its
operations with a focus on managing for results. Financial and programmatic reporting to Member States has been
consolidated and streamlined in accordance with the FRRs, to minimize duplications and overlaps, and enhancecoherence, clarity and transparency without any loss or reduction of information or disclosure.
Risk management is fully integrated into biennial as well as annual work planning, and the Organization’s risk andinternal controls management framework is fully embedded in its regulatory framework. Risks are clearly identified
and articulated in the Program and Budget for every Program, and the biennial WIPO Performance Report presented
to Member States includes a review of the evolution and impact of these risks on the delivery of Expected Results forevery Program. Regular reporting is done with respect to critical program and organizational risks, the Organization’s
overall risk portfolio, as well as the global risk environment to WIPO’s Risk Management Group (RMG), which ischaired by me.
Within the overall risk management framework of the Organization, WIPO also proactively manages its information
security related risks through the successful maintenance of the ISO/IEC 27001 information security certification
verified by independent certification bodies, which currently covers all Global IP Systems, the Arbitration and Mediation
Center, as well as the Hire-to-Retire and Procure-to-Pay Processes. In 2018, WIPO implemented an Information
Security Operations Center to provide 24/7 monitoring and response to information security incidents, increasing its
ability to rapidly detect and contain these.

23

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018
WIPO’s Procurement Manual was substantially updated in 2018, completing the process that began with revision of
the Organization’s FRRs and its procurement policy. Training on supplier selection and supplier evaluation wasprovided to WIPO contract managers. In order to manage risks posed by external service providers processing WIPO
information, a Service Provider Security Policy has been implemented, whereby information risks from external service
providers are continually assessed and managed from procurement through to termination of the service. The rules
governing Meetings and Official Hospitality were updated, ensuring greater accountability, particularly in the realm of
meetings and events to which WIPO contributes financially.
Appropriate fraud prevention, detection, response and data collection procedures and processes exist in the
Organization, reflecting WIPO’s comprehensive anti-fraud governance framework. A Roadmap for the continued
strengthening of the framework, spanning three biennia, was approved in early 2018, and its implementation ismonitored by the RMG. Strong collaboration between the second and third Lines of Defense has enabled excellent
progress to be made in the course of 2018, with the completion of a comprehensive fraud risk assessment exercise,the revision of WIPO’s anti-fraud policy, and the compilation of a fraud risk awareness raising training program. The
reporting of alleged fraud is further supported by policies which encourage the reporting of misconduct and provide
protection against retaliation.
WIPO’s new Policy on Financial Disclosure and Declaration of Interests, issued in November 2017 and implemented
for the first time in 2018, aims to: (i) promote transparency and accountability; (ii) enhance internal and external publictrust in the integrity of the Organization; and (iii) assist the Organization to manage the risk of actual and perceived
conflicts of interest through disclosure, mitigation and prevention. Disclosures are reviewed by an external
professional Review body (KPMG), using similar tools for review of WIPO disclosures as are used for other UN andmultilateral bodies.
The implementation of investment strategies based upon the Policy on Investments, as amended by the Assemblies in
2017, was completed by mid-February 2018. This work was reviewed and supervised during the year by the Advisory
Committee on Investments (ACI), with the assistance of independent investment advisors. WIPO’s cash position
remained sound throughout 2018.

Review of effectiveness
My review of effectiveness of the system of internal controls is mainly informed by:

My senior managers, in particular Deputy Directors General and Assistant Directors General, who play
important roles and are accountable for achieving expected results, implementing their units’ activities, andmanaging the resources entrusted to them. The information channels mainly rely on periodic meetings heldby the Senior Management Team;The Management Representation Letters signed by key WIPO officers, from which I derive assurance.
These letters recognize their responsibility for having and maintaining, in the programs, well-functioning
systems and a mechanism for internal control aimed at presenting and/or detecting instances of fraud andmajor errors. The assurance provided by key WIPO officers is underpinned by a systematic process of selfassessment and internal validation of entity level controls as well as key process level controls identified on
the basis of the requirements of the FRRs as well as the Staff Regulations and Rules;



The RMG, whose purpose is to promote a culture of responsible and effective financial and risk management
in WIPO and approve its risk management strategy. The RMG is responsible for keeping under review theeffectiveness of the Organization’s internal controls and risk management systems, and for reviewing andapproving the content of the present Statement concerning internal controls and risk management;



The Chief Ethics Officer, who provides confidential advice and counsel to staff and senior managers on
ethical behavior, standards of conduct, conflicts of interest, etc., and promotes overall ethical awareness andresponsible behavior. The Chief Ethics Officer is also responsible for the implementation of the policies on
financial disclosure and declaration of interests, and for protection against retaliation for reporting misconduct
and for cooperating with duly authorized audits or investigations;

The Internal Oversight Division (IOD), on whose assurance and advisory services I rely, through reports ofinternal audit and evaluation as well as management implication reports resulting from investigations, which
are also available to the Independent Advisory Oversight Committee (IAOC) and the External Auditor. These
reports include independent and objective information on the efficiency and effectiveness of theOrganization’s system of internal controls and risk management processes, as well as program performance,and other related activities of oversight;



The IAOC, which oversees performance of Internal Oversight by monitoring of timely, effective andappropriate responses from management with regard to oversight recommendations and implementation of24

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018the same. As a result of such oversight the IAOC elucidates to Member States the implications of oversightrecommendations and observations, if any, and also highlights, where it considers necessary, particularmatters. Finally, the IAOC keeps Member States informed of its work on a regular basis and reports annuallyto the Program and Budget Committee (PBC) and to the General Assembly;

The Joint Inspection Unit (JIU) of the United Nations System;The External Auditor, whose Report, containing his/her opinion, observation and comments, is submitted to
the PBC and the Assemblies; and

The Governing Bodies’ observations.

Conclusion
Effective internal control, no matter how well designed, has inherent limitations – including the possibility ofcircumvention – and therefore can provide only reasonable assurance.
Furthermore, because of changes of conditions, the effectiveness of internal control may vary over time.
As Director General, I ensure that the “tone at the top” is a clear message that rigorous internal control is critical to theOrganization and I am committed to addressing any weaknesses in internal controls noted during the year and toensure that continuous improvement of the system of internal controls is in place.
Based on the above, I conclude that, to the best of my knowledge and information, there are no material weaknesses
that would prevent the External Auditor from providing an unqualified opinion on the Organization’s financial
statements, nor are there significant matters arising which would need to be raised in the present document for theyear ending December 31, 2018

Francis Gurry
Director General

25

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

FINANCIAL STATEMENTS
STATEMENT I – STATEMENT OF FINANCIAL POSITION
as at December 31, 2018
(in thousands of Swiss francs)

Note

Decem ber 31, 2018

Decem ber 31, 2017

ASSETS
Current assets
Cash and cash equivalents
Investments
Derivative financial instruments
Contributions receivables
Exchange transactions receivables
Inventories

3
4
5
6
6
7

222,920
12,0001,510
70,136
1,298
307,864

265,452
10,000921
965
62,434
1,349
341,121

Non-current assets
Investments
Equipment
Investment property
Intangible assets
Land and buildings
Contributions receivables
Other non-current assets

4
8
9
10
11
6
12

381,418
1,054
24,994361,334
210
8,367
777,377

268,319
1,455
6,210
26,414369,168225
8,553
680,344

1,085,241

1,021,465

TOTAL ASSETSLIABILITIESCurrent liabilities
Payables and accruals
Derivative financial instruments
Employee benefits
Transfers payable
Advance receipts
Borrow ings
Provisions
Other current liabilities

13
5
14
15
16
17
18
19

16,536314
24,98796,646296,238
5,588
70,578510,887

17,89628,121
93,901
281,999
16,8622,008
64,479505,266

Non-current liabilities
Employee benefits
Advance receipts

14
16

309,138
3,804
312,942309,605
3,937
313,542823,829

818,808

328,732
31,497
17,266-122,425
6,342

305,953
11,79017,266-138,694
6,342

261,412

202,657

TOTAL LIABILITIES
Accumulated Surpluses
Special Projects Reserve
Revaluation Reserve Surplus
Actuarial gains/(losses) through Net Assets
Working Capital Funds

23
23
23
23
23

NET ASSETS

The accompanying notes form an integral part of these financial statements
Director General

26

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

STATEMENT II – STATEMENT OF FINANCIAL PERFORMANCE
for the year ended December 31, 2018
(in thousands of Swiss francs)

2018

2017

Assessed contributions

17,361

17,829Voluntary contributions

11,605

12,096

Publications revenue

542

242

PCT system

321,348

296,356

Madrid system

74,297

69,952

Hague system

4,919

5,076

Lisbon system

31

39

400,595

371,423

Arbitration and Mediation

1,810

1,689

Other/miscellaneous revenue-1,3495,860

430,564

409,139

220,597

228,594

Note
REVENUE

25

Fees

Sub-total fees

TOTAL REVENUE
EXPENSES

26

Personnel expenditure
Internships and WIPO fellow ships

4,440

3,853

Travel, training and grants

16,764

18,195Contractual services

93,83889,422

Operating expenses

26,643

26,300

Supplies and materials

1,663

3,457

Furniture and equipment

382

1,669

11,302

11,350209

12,007

375,838

394,847-12,240

4,337

42,486

18,629Depreciation and amortization
Finance costs
TOTAL EXPENSES
Investment gains/(losses)

27

SURPLUS/(DEFICIT) FOR THE PERIOD

27

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

STATEMENT III – STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 2018
(in thousands of Swiss francs)

Actuarial
Revaluation
gains/(losses)
Working
Reservethrough Net Capital Funds
Surplus
Assets

Accum ulated
Surpluses

SpecialProjects
Reserve

Net Assets at Decem ber 31, 2016 (restated)

282,328

16,786

17,266-173,310

6,342

149,412

Surplus/(deficit) for the year 2017

22,617-3,988---18,629

-

-

-

-

-

-

1,008

-1,008

-

-

-

-

-

-

-

34,616-

34,616

305,953

11,79017,266-138,694

6,342

202,657

Surplus/(deficit) for the year 2018

47,082-4,596---42,486

Adjustment to Special Projects Reserve-27,549

27,549

-

-

-

-

3,246

-3,246

-

-

-

-

-

-

-

16,269-16,269328,732

31,497

17,266-122,425

6,342

261,412

Note

Adjustment to Special Projects Reserve
Transfer to Accumulated Surpluses
Actuarial gains/(losses)
Net Assets at Decem ber 31, 201723

Transfer to Accumulated Surpluses
Actuarial gains/(losses)
Net Assets at Decem ber 31, 2018

23

28

Net Assets
Total

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

STATEMENT IV – STATEMENT OF CASH FLOW
for the year ended December 31, 2018
(in thousands of Swiss francs)

Note

2018

2017

42,486

18,629Cash flow s from operating activities
Surplus (deficit) for the period

Statement II

Interest, investment gains/losses, exchange gains/losses (1)12,803

7,782

55,28926,411

Interest and dividends

27

4,204

12

Interest paid on borrow ings

17-

-11,760

Depreciation and amortization8, 10 & 11

11,302

11,350

Increase (decrease) in employee benefits

14-3,601-12,575(Increase) decrease in inventories

7

51

171

(Increase) decrease in receivables

6-8,232-96(Increase) decrease in other assets

12

186

190

Increase (decrease) in advance receipts

16

14,106

12,285

Increase (decrease) in payables and accruals

13-1,3607,133

Increase (decrease) in transfers payable

15

2,745

9,027

Increase (decrease) in provisions

18

3,580

-4,981

Increase (decrease) in other liabilities

19

Net cash flow s from operating activities

6,099

1,960

84,36939,127

Cash flow s from investing activities
Additions to buildings and equipment

8 & 11-5,384-4,984

Disposal of buildings and equipment

8

3,737

1,533

(Increase) decrease in intangible assets

10

-

-25

Disposal of investment property

9

6,210

-

(Increase) decrease in investments

4-115,099-265,819

Increase (decrease) in fair value of investments

4-16,994

4,326(Increase) decrease in derivative financial instruments

5

1,235

-921

-126,295-265,890-16,862-71,858-16,862-71,858

Net cash flow s from investing activities
Cash flow s from financing activities
Repayment of borrow ings

17

Net cash flow s from financing activities
Effect of recognition of Actuarial gains/losses
through Net Assets

14

16,26934,616

Effect of exchange rate changes on cash and cash
equivalents

29

-13

-360

-42,532-264,365

Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year3

265,452

529,817

Cash and cash equivalents at end of year3

222,920

265,452(1) Interest earned, dividends received, interest paid on borrowings, the effect of exchange rate changes on cash and cash
equivalents, and gains/losses on investments.

29

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS – REVENUE

for the year ended December 31, 2018
(in thousands of Swiss francs)

Original Budget
2018

Updated Budget
2018

(1)

(2)

17,376

17,376

17,377

PCT system

312,155

316,290

321,348

5,058

Madrid system
Hague system

69,026
5,418

76,4904,793

74,297
4,919-2,193
126

Assessed contributions

Actual Revenue oncom parable basis
2018

Difference
2018
(3)

1

Fees

Lisbon system
Sub-total fees
Arbitration and Mediation

20

20

31

11

386,619

397,593

400,595

3,002
260

1,550

1,550

1,810

Publications

205

205

542

337

Investment revenue

23

23-6,030-6,053

Other/miscellaneous

2,536

2,536

-284

-2,820408,309419,283

414,010-5,273TOTAL(1) Original Budget represents the first year of the approved Program and Budget for the 2018/19 biennium.
(2) Updated Budget includes updated revenue estimates for the PCT, Madrid and Hague systems as per the January 2019 Forecast
from the WIPO Economics and Statistics Division.
(3) Represents the difference between the Updated Budget 2018 and actual revenue on a comparable basis for the year ended
December 31, 2018.

30

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

STATEMENT V –STATEMENT OF COMPARISON OF BUDGET AND ACTUAL AMOUNTS - EXPENSES
for the year ended December 31, 2018
(in thousands of Swiss francs)
Original Budget after
BudgetTransfers
2018
2018
(1)
(2)
Program
1

Actual Expense
on a com parable
basis 2018

Difference
2018
(3)

Program Title
Patent Law

2,443

2,661

2,603

2

Trademarks, Industrial Designs & Geographical Indications

2,426

2,362

2,268

94

3

Copyright and Related Rights

8,261

8,423

7,509

914

4

Traditional Know ledge, Traditional Cultural Expressions &Genetic Resources

3,505

3,627

3,306

321

5

The PCT System

105,589

101,665

97,515

4,150

6Madrid System

29,10928,24927,574675

7

WIPO Arbitration and Mediation Center

5,588

5,517

5,269

248

8

Development Agenda Coordination

1,706

1,688

1,497

191

9

Africa, Arab, Asia and the Pacific, Latin America and the
Caribbean Countries, Least Developed Countries

15,17914,231

13,835396

10Transition and Developed Countries

4,293

3,935

3,498

437

11

The WIPO Academy

6,718

6,890

6,242

648

12

International Classifications and Standards

3,553

3,675

3,091

584

13

Global Databases

4,360

4,926

4,385

541

14

Services for Access to Information and Know ledge

3,912

4,324

4,032

292

15

Business Solutions for IP Offices

7,136

6,693

6,382

311

16

Economics and Statistics

3,351

3,349

3,330

19

17

Building Respect for IP

2,027

2,353

2,191

162

18

IP and Global Challenges

2,791

2,433

2,106

327

19

Communications

8,108

7,778

7,485

293

20

External Relations, Partnerships and External Offices

6,552

6,722

6,430

292

21

Executive Management

9,898

11,771

11,280491

22Program and Resource Management

18,911

18,656

17,051

1,605

23

Human Resources Management and Development

12,267

12,65816,042-3,38424

General Support Services

19,19920,157

18,674

1,483

25

Information and Communication Technology

25,94925,98323,8792,104

26Internal Oversight

2,716

2,470

2,341

129

27

Conference and Language Services

19,382

17,526

17,053

473

28

Information Assurance, Safety and Security

11,526

11,085

10,143942

30

SMEs and Entrepreneurship Support

3,113

3,020

2,861

159

31

The Hague System

5,537

8,998

8,905

93

32

Lisbon System

663

689

659

30

UN

Unallocated

3,678

5,191

-

5,191

359,446

359,705

339,436

20,26948,86359,57874,574

14,996TOTAL
Net surplus/(deficit)
IPSAS adjustments to surplus (4)-22,326

Projects financed from reserves-7,837

Special Accounts financed from voluntary contributions-1,925Adjusted net surplus per IPSAS

42,48658(1) Original Budget represents the first year of the approved Program and Budget for the 2018/19 biennium. The biennial budget
amounts to 725.9 million Swiss francs, and was approved by the Assemblies of the Member States of WIPO on October 11, 2017.
(2) Budget after Transfers includes budgetary transfers as at February 1, 2019.
(3) Represents the difference between the Budget after Transfers 2018 and Actual Expense on a comparable basis for the year
ended December 31, 2018.
(4) The IPSAS adjustments to the surplus are detailed in Note 24 of these financial statements.

31

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTES TO THE FINANCIAL
STATEMENTSNOTE 1: OBJECTIVES AND BUDGET OF
THE ORGANIZATION

Specialized Agencies of the United Nations and the1970 Headquarters Agreement with the Swiss Federal
Council, notably being exempt from paying most formsof direct and indirect taxation.

Upon the entry into force of the Convention
establishing
the
World
Intellectual
Property
Organization (WIPO) in 1970, WIPO replaced the
Bureau for the Protection of Intellectual Property(known by the French acronym for BureauxInternationaux Réunis pour la Protection de la
Propriété Intellectuelle, BIRPI) which had been
established in 1893 to administer the Paris
Convention for the Protection of Industrial Property(1883) and the Berne Convention for the Protection of
Literary and Artistic Works (1886). In 1974, WIPO
was recognized as a specialized agency of the United
Nations.

WIPO is governed by the following constituent bodies,
established by the WIPO Convention, which meet
every second year in ordinary session and traditionallymeet in extraordinary session in alternate years:

WIPO’s mission is the promotion of innovation andcreativity for the economic, social and culturaldevelopment of all countries, through a balanced andeffective international intellectual property system.
WIPO’s broad-ranging activities include the following
main areas of work: providing intellectual property
services through the Organization’s Global IP
systems; developing and maintaining the technicalinfrastructure that not only supports the international
IP system, but also provides access to its outputs,
enhances data flows, and enables global cooperation;
serving as a multilateral forum for discussions on thenormative development of intellectual property policy;
and facilitating the use of IP for social, cultural andeconomicdevelopment,bymainstreaming
development
considerations
anddeliveringdevelopment cooperation activities horizontally acrossall of the Organization’s programs.
The Organization functions in accordance with the
WIPO Convention signed in Stockholm on July 14,
1967 and as amended on September 28, 1979.
WIPO currently has 192 Member States. WIPO isbased in Geneva, Switzerland, and during 2018 hadexternal offices in Beijing, Moscow, Rio de Janeiro,
Singapore and Tokyo, and a coordination office in
New York. In 2016 Member States decided to open
additional external offices in Algeria and Nigeria. The
external office in Algeria was subsequently
established on February 26, 2019. The Organization
enjoys privileges and immunities as granted under the1947 Convention on Privileges and Immunities of

The General Assembly, consisting of States party
to the WIPO Convention which are members of
any of the Unions, is responsible for appointing
the Director General for a fixed term of not lessthan six years, for the adoption of the budget of
expenses common to all Unions, adoption of the
Financial Regulations, inviting States to become
members, and other functions specified by theConvention.



The Conference consists of all Member States
whether or not they are members of any of theUnions.
The Conference adopts its budget,
adopts amendments to the Convention andperforms other functions as appropriate.



The Coordination Committee consists ofmembers of the Executive Committees of theParis or the Berne Unions, or both, one-fourth of
the States party to the WIPO Convention which
are not members of any of the Unions, andSwitzerland, as the State on whose territory theOrganization
has its
headquarters. The
Coordination Committee nominates candidates
for Director General, drafts the agenda for the
General Assembly, and performs other duties
allocated to it under the WIPO Convention.

WIPO is funded from fees derived from services
provided by the Organization, assessed contributions
paid by its Member States and voluntary contributions
from Member States and other donors. The
Organization operates within the framework of abiennial program and budget which provides theappropriations
that
constitutethebudgetary
expenditureauthorizations
approvedbythe
Assemblies for the financial period. The approval of
the appropriations provides the authority for the
Director General to commit and authorize expenses
and to make payments for the purposes assigned
within the limits of the appropriations.

32

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 2: SIGNIFICANT ACCOUNTINGPOLICIES

ready for their intended use, are added to the cost of
those assets until such time as the assets aresubstantially ready for their intended use. Borrowing
costs relating to the construction of the New Building(interest and fees) and the New Conference Hall
(commission on undrawn loan amounts) were
capitalized as work in progress during the respective
construction phases (see Note 11). Borrowing costs(interest and fees) relating to the acquisition from theWorld Meteorological Organization of the land rights(droits de superficie) to the site on which the PCT
building has been constructed were capitalized as partof the asset value (see Note 10).

Basis of Preparation
These financial statements have been prepared inaccordance with and comply with International Public
Sector Accounting Standards (IPSAS). The financial
statements are presented in Swiss francs, which is thereporting and functional currency of WIPO, and allvalues are rounded to the nearest thousand. The
accounting policies have been applied consistently to
all years presented.
The financial statements have been prepared on thebasis of historical cost, unless stated otherwise. The
Statement of Cash Flow is prepared using the indirect
method. The financial statements are prepared on an
accrual and going-concern basis.

All other borrowing costs are recognized as expenses
in the Statement of Financial Performance in the
period in which they are incurred.

IPSAS 39 Employee Benefits was already applied in
the Organization’s 2017 financial statements, prior to
the required implementation date of January 1, 2018.

The functional currency of WIPO is the Swiss franc. Alltransactions occurring in other currencies aretranslated into Swiss francs using the United Nations
Operational Rates of Exchange (UNORE) which
represent those prevailing at the date of thetransactions. Both realized and unrealized gains andlosses resulting from the settlement of suchtransactions and from the translation at the reporting
date of assets and liabilities denominated incurrencies other than WIPO’s functional currency arerecognized in the Statement of Financial Performance.

Foreign Currency Transactions

IPSAS 40 Public Sector Combinations, published in
January 2017, has an implementation date of January
1, 2019. It is not expected that this standard will
impact the Organization’s financial statements.
IPSAS 41 Financial Instruments, was published inAugust 2018 with an implementation date of January
1, 2022. WIPO is currently analysing the impacts ofthis new standard.

Revenue Recognition

Cash and Cash Equivalents

Borrowing Costs

Revenue from exchange transactions comprising thefees charged for applications under the Patent
Cooperation Treaty (PCT) system, the Madrid systemand the Hague system is recognized at the date of
publication. Revenue from fees received for
applications not published at the reporting date isdeferred until publication has been completed. The
portion of the PCT application fee covering the costsof translation of non-English language patentability
reports received after publication is also deferred until
the translation is completed. All other fees under the
PCT, Madrid and Hague systems are recognizedwhen the services covered by the fee have been
provided. Revenue from publications is recognized
upon full delivery of the goods. Revenue from
Arbitration and Mediation services is recognized upondelivery of the services related to the submission of arequest covered by the fee received.

General and specific borrowing costs directly
attributable to the acquisition, construction or
production of qualifying assets, which are assets thatnecessarily take a substantial period of time to get

Revenue from non-exchange transactions such as
voluntary contributions to Special Accounts supported
by enforceable agreements is recognized as revenue
at the time the agreement becomes binding unless the

Cash and cash equivalents include cash in hand,deposits held at call with banks, deposits held up to 90
days and other short-term highly liquid investmentsthat are readily convertible to cash and subject toinsignificant risk of changes in value.

Investments
Investments are classified as current or non-current
assets according to the time horizon of the investment
objectives. If the time horizon is less than or equal to
one year, they are classified as current assets, and if it
is more than one year, they are classified as noncurrent assets.

33

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018agreement includes conditions related to specificperformance or the return of unexpended balances.
Such agreements require initial recognition of aliability to defer revenue recognition and then revenue
is recognized as the liability is discharged throughperformance of the specific conditions included in theagreement.

An annual physical inventory is conducted of all stocksof publication supplies and items for sale in the retailshop. A perpetual inventory is maintained of the
publications for sale and sample physical counts areundertaken throughout the year to verify inventory
balances. At the end of each year items removed fromthe catalogue of publications for sale or free
distribution, along with items for which it is anticipatedthat there will be no further free distribution or
anticipated sales, are taken out of the inventory andtheir value is written down to zero.

Assessed contributions are recognized as revenue atthe beginning of each year of the budget period towhich the assessment relates.

Expense Recognition

The cost of paper and other supplies used in the
production process has been valued using the first-in,
first-out (FIFO) method. Items held in the retail shop
are valued at cost to the Organization, and aremarked down to reflect net realizable value if
damaged or obsolete. No inventories are pledged as
security for liabilities.

Expenses are recognized as goods are received andas services are delivered.

Receivables
Receivables from exchange transactions include fees
which are charged to users of WIPO’s intellectual
property services through the PCT, Madrid and Hague
systems. These are measured at the fair value of theconsideration receivable for PCT, Madrid and Hague
system fees once the international application has
been filed.

Equipment
Equipment is valued at cost less accumulated
depreciation and impairment. Equipment is recognized
as an asset if it has a cost of 5,000 Swiss francs ormore per unit. Gains and losses on disposal are
determined by comparing the proceeds with thecarrying amount of the asset and are included in theStatement of Financial Performance. Heritage assets
including donated works of art are not valued in thefinancial statements.

Receivables from non-exchange transactions include
uncollected assessed contributions. These aremeasured at the fair value of the consideration
receivable. An allowance for non-recoverable
receivables is recorded equal to the assessed
contributions frozen by action of the General
Assembly in 1989 and 1991, plus contributions
receivable from Member States that have lost the rightto vote in accordance with Article 11, paragraph 5 of
the WIPO Convention.

Depreciation is charged so as to write off the full costof equipment over its estimated useful life using thestraight-line method. Where equipment is only in use
for part of the year (due to acquisition, disposal orretirement during the year), depreciation is charged
only for the months during which the asset was in use.
The following ranges of useful lives are applied to thedifferent classes of equipment:

Inventories
Inventories include the value of publications held forsale and publications distributed free of charge, thevalue of supplies and materials utilized in the
production of publications and the value ofmerchandise held in the retail shop. Publications held
for sale are valued at the lower of cost or net
realizable value, and publications distributed free ofcharge are valued at cost. The cost of finishedpublications is determined by using an average cost
per printed page (excluding costs of marketing anddistribution) multiplied by the number of pages ofpublications held in the publications inventory. The
value of publications that are withdrawn from sale orfree distribution is written off during the year in which
they become obsolete.

Class
Communications and IT
equipment
VehiclesFurniture and furnishings

Estimated useful life

5 years
5 years
10 years

The carrying values of equipment are reviewed for
impairment if events or changes in circumstancesindicate that the book value of the asset may not berecoverable. If such an indication exists, therecoverable amount of the asset is estimated in orderto determine the extent of impairment loss, if any. Any
impairment loss is recognized in the Statement of
Financial Performance.

34

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 20182010, the date of transition to IPSAS, the value when
new was determined by reference to a deemed costcalculated by an external consultant and representing
the value of each component at construction plus
improvements existing at the initial recognition, lessaccumulated depreciation based upon the remaining
useful life of each component. Subsequent costs ofmajor renovations and improvements to buildings andconstructions that increase or extend the future
economic benefits or service potential are valued at
cost.

Investment Property
Investment property is carried at fair value as
determined by an independent valuation inaccordance with International Valuation Standards.
Changes in fair value are recognized in the Statementof Financial Performance.

Intangible Assets
Intangible assets are carried at cost less accumulated
amortization and impairment. Amortization is provided
on a straight-line basis on all intangible assets of finite
life, at rates that will write off the cost or value of theassets over their useful lives. The useful lives of majorclasses of intangible assets have been estimated asfollows:
Class

Estimated useful life

Software acquired externally
Software internally developed
Licenses and rights

5 years
5 years
Period of license/right

Depreciation is charged so as to write off the full costof buildings and constructions in use over theirestimated useful lives using the straight-line method.
Where buildings and constructions are only in use forpart of the year (due to acquisition, disposal orretirement during the year), depreciation is charged
only for the months during which the asset was in use.
The following ranges of useful lives are applied to thedifferent components of buildings and constructions:Component
Structure – concrete/metallic
Structure – concrete/wood
Structure – specialist access
FaçadePerimeter walls
Perimeter bollards
Land Improvements
Roof
Floors, walls, stairways
Flooring, wall coverings
Specialist fittings - fixed
equipment
Specialist fittings – kitchenequipment
Specialist fittings – fixed
conference equipment
Specialist fittings - turnstiles
Heating and ventilation
Sanitary facilities
Electrical installations
Elevators

Acquired computer software licenses are capitalizedbased on costs incurred to acquire and bring to use
the specific software. Software or software licenses
purchased externally are recognized as an asset if
they have a cost of 20,000 Swiss francs or more perunit. Costs that are directly associated with thedevelopment of software for use by WIPO arecapitalized as intangible assets only if the recognition
criteria under IPSAS 31 are met. Direct costs include
the software development employee costs. Internallydeveloped software is recognized as an asset if it has
a cost of 1.0 million Swiss francs or more.
The rights to use property in the Canton of Geneva
acquired by the Organization through purchase havebeen recognized at historic cost and are amortizedover the remaining period of the grant. The rights touse property granted by the Canton of Geneva
acquired without cost, that revert back to the Canton
at the end of the grant, are not valued in the financial
statements.

Estimated useful life
100 years
80 years
50 years
50 years
80 years
20 years
40-50 years
50-60 years
50 years
20-40 years
40 years
20-40 years
15 years
20 years
25-30 years
40 years
25-50 years
40 years

The carrying values of buildings and constructions arereviewed for impairment if events or changes incircumstances indicate that the book value of theasset may not be recoverable. If such an indication
exists, the recoverable amount of the asset isestimated in order to determine the extent of
impairment loss, if any. Any impairment loss isrecognized in the Statement of Financial Performance.

Land and Buildings
Land is carried at fair value as determined by anindependent valuation in accordance with International
Valuation Standards. Changes in fair value arerecognized directly in net assets through the
Revaluation Reserve Surplus. Buildings andconstructions in use are valued at the cost of
construction when new plus the cost of subsequent
improvements, less accumulated depreciation. For the
initial recognition of buildings in use as at January 1,

35

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

objective evidence of impairment as a result of one ormore events that has occurred after the initialrecognition of the asset (an incurred ‘loss event’) andthat loss event has an impact on the estimated future
cash flows of the financial asset or the group offinancial assets that can be reliably estimated.

Financial Instruments
Financial Assets
Initial recognition and measurement
Financial assets within the scope of IPSAS 29
Financial Instruments: Recognition and Measurement
are classified as financial assets at fair value throughsurplus or deficit, loans and receivables, held-tomaturity investments or available-for-sale financial
assets, as appropriate. The Organization determines
the classification of its financial assets at initialrecognition. The Organization's financial assets
include cash and short-term deposits, investments,
loans,
receivables,andderivative
financial
instruments.

Financial Liabilities
Initial recognition and measurement
Financial liabilities within the scope of IPSAS 29 areclassified as financial liabilities at fair value throughsurplus or deficit or loans and borrowings, as
appropriate. The Organization determines theclassification of its financial liabilities at initialrecognition. All financial liabilities are recognizedinitially at fair value and, in the case of loans andborrowings, plus directly attributable transaction costs.
The Organization’s financial liabilities include tradeand other payables, loans and borrowings, andderivative financial instruments.

Subsequent measurement
The subsequent measurement of financial assets
depends on their classification.
Financial assets at fair value through surplus or deficit
Financial assets at fair value through surplus or deficit
include financial assets held for trading and financial
assets designated upon initial recognition at fair value
through surplus or deficit. Financial assets areclassified as held for trading if they are acquired forthe purpose of selling or repurchasing in the nearterm. Financial assets at fair value through surplus ordeficit are carried in the Statement of Financial
Position at fair value with changes in fair value
recognized in surplus or deficit.

Subsequent measurement
The measurement of financial liabilities depends ontheir classification.
Financial liabilities at fair value through surplus ordeficitFinancial liabilities at fair value through surplus ordeficit include financial liabilities held for trading andfinancial liabilities designated upon initial recognition
as at fair value through surplus or deficit. Financial
liabilities are classified as held for trading if they are
acquired for the purpose of selling in the near term.
Gains or losses on liabilities held for trading arerecognized in surplus or deficit.

Loans and receivables
Loans and receivables are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. After initial
measurement, such financial assets are subsequently
measured at amortized cost using the effective
interest method, less impairment. Amortized cost is
calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the effective interest rate. Losses
arising from impairment are recognized in surplus ordeficit.

Loans and borrowings
After initial recognition, loans and borrowings aresubsequently measured at amortized cost using theeffective interest method. Gains and losses arerecognized in surplus or deficit when the liabilities are
derecognized as well as through the effective interest
method amortization process. Amortized cost is
calculated by taking into account any discount or
premium on acquisition and fees or costs that are an
integral part of the effective interest rate.

Derecognition
The Organization derecognizes a financial asset or,
where applicable, a part of a financial asset or part ofa group of similar financial assets when the rights toreceive cash flows from the asset have expired or are
waived.

Derecognition
A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or
expires. When an existing financial liability is replacedby another from the same lender on substantiallydifferent terms, or the terms of an existing liability aresubstantially modified, such an exchange ormodification is treated as a derecognition of theoriginal liability and the recognition of a new liability,
and the difference in the respective carrying amounts
is recognized in surplus or deficit.

Impairment of financial assets
The Organization assesses at each reporting datewhether there is objective evidence that a financial
asset or a group of financial assets is impaired. A
financial asset or a group of financial assets isdeemed to be impaired if, and only if, there is36

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

financial period are recognized as expenses in theStatement of Financial Performance.

Derivative Financial Instruments
WIPO uses derivative financial instruments such as
forward currency contracts to hedge its foreign
currency risks. These financial instruments are initiallyrecognized at fair value on the date on which thederivative contract is entered into and aresubsequently re-measured at fair value. Derivatives
are carried as financial assets when the fair value ispositive and financial liabilities when the fair value isnegative.

Provisions
Provisions are recognized when the Organization has
a legal or constructive obligation as a result of a past
event, whereby it is probable that an outflow ofresources will be required to settle the obligation andwhere a reliable estimate of the amount of theobligation can be made.

Employee Benefits

Segment Reporting

Liabilities are established for After-Service Health
Insurance (ASHI), repatriation grants and travel, andlong-term accumulated annual leave as determined byan independent actuary on an annual basis utilizing
the projected unit credit methodology of valuation. For
the ASHI liability, actuarial gains and losses arerecognized in net assets. In addition, liabilities are
established for the value of short-term accumulated
annual leave, home leave not taken, overtime earned
but unpaid, separation benefits, performance rewards,
and for education grants payable at the reporting datethat have not been included in current expenditure.

Segment reporting is based upon the Unions that form
WIPO. Revenue and expenses incurred by theOrganization are allocated among the Unions inaccordance with an allocation methodology approvedby the WIPO Assembly [Program and Budget
2018/19, Annex III]. The methodology allocatesrevenue and expenses to each program and then toeach Union based on a combination of direct revenue
and expense, staff head count and each Union’s
ability to pay which is itself determined according to a
combination of current revenue and reserves. WIPO’s
assets and liabilities are not allocated to individual
segments, since ownership rests with theOrganization as a whole, however, each Union’sshare of the Organization’s net assets including
Reserves and Working Capital Funds is recognized bysegment (see Note 31).

WIPO is a member organization participating in the
United Nations Joint Staff Pension Fund (the UNJSPF
or the Fund), which was established by the United
Nations General Assembly to provide retirement,
death, disability and related benefits to employees.
The Fund is a funded, multi-employer defined benefit
plan. As specified by Article 3(b) of the Regulations of
the Fund, membership in the Fund shall be open to
the specialized agencies and to any otherinternational, intergovernmental organization which
participates in the common system of salaries,
allowances and other conditions of service of theUnited Nations and the specialized agencies.

Changes in Presentation
In the Statement of Financial Position, the 2017
comparative presentation has been amended by areclassification of 826 thousand Swiss francs fromadvance receipts to transfers payable to accuratelyreflect the nature of Madrid deposit balances at
December 31, 2017. This reclassification is also
reflected in Notes 3, 15 and 16 of the financial
statements, and impacts the movements included in
the Statement of Cash Flow.

The Fund exposes participating organizations toactuarial risks associated with the current and former
employees of other organizations participating in theFund, with the result that there is no consistent andreliable basis for allocating the obligation, plan assets,
and costs to individual organizations participating in
the plan. WIPO and the UNJSPF, in line with the otherparticipating organizations in the Fund, are not in aposition to identify WIPO’s proportionate share of thedefined benefit obligation, the plan assets and thecosts associated with the plan with sufficient reliability
for accounting purposes. Hence WIPO has treatedthis plan as if it were a defined contribution plan in linewith the requirements of IPSAS 39 Employee
Benefits. WIPO’s contributions to the plan during the

In the Statement of Financial Performance, investment
revenue has been renamed investment gains/(losses).
This item was previously included in total revenue, but
is now positioned after total expenses before thesurplus/(deficit) for the year. This change inpresentation has been reflected in the 2017
comparative numbers.

37

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Use of Estimates
The financial statements necessarily include amounts
basedonestimatesandassumptions
bymanagement. Estimates include, but are not limited to:
ASHI, repatriation grants and travel, and long-term
accumulated annual leave liabilities (the value of
which are calculated by an independent actuary),
other employee benefit liabilities, provisions forlitigation, valuation of publications inventory, financial
risk on accounts receivable, accrued charges and thedegree of impairment of fixed assets. Actual results
could differ from these estimates. Changes in
estimates are reflected in the period in which they
become known.
All balances are presented in thousands of Swiss
francs, as a result small rounding differences may
occur.

38

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 3: CASH AND CASH EQUIVALENTS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Cash on hand

2230

Deposits w ith banks - Sw iss francs

18,51031,820

Deposits w ith banks - other currencies

5,533

13,937

Term deposits less than 3 months - Sw iss francs

8,000

10,000

Notice accounts - Sw iss francs

2,499

-

Notice accounts - other currencies

10

4,466

Total unrestricted cash

34,57460,253Current accounts held for third parties - Sw iss francs

70,50564,336

Current accounts held for third parties - other currencies
Fees collected on behalf of contracting parties - Sw iss francs

73

143

96,646

93,901

Notice accounts Special Accounts - Sw iss francs

15,661

16,495

Total restricted cash

182,885

174,875

Deposits w ith banks - Sw iss francs

5,461

30,324

Total strategic cash

5,461

30,324

222,920

265,452

Total cash and cash equivalents

Cash deposits are generally held in instant accessbank accounts. During 2018 the Organization
continued to hold balances in term deposit accounts(for periods up to 12 months). This has allowed theOrganization to avoid incurring charges on certain
instant access bank accounts following the impact ofnegative interest rates during 2016.

The Organization holds funds allocated for the futurefinancing of after-service employee benefit liabilities,
including ASHI. Under WIPO’s Policy on Investments,
these funds are classified as strategic cash. As at
December 31, 2018, the total balance of these funds
was 125.8 million Swiss francs, split between cash
and cash equivalents (5.5 million Swiss francs) andinvestments (120.3 million Swiss francs, see Note 4).

The following categories of cash and cash equivalents
are classified as restricted:








current accounts held for third parties. WIPO
provides facilities for applicants under the PCT,
Madrid and Hague systems to deposit funds to be
used for future applications and renewals, and forcertain contracting parties to transfer funds
collected on behalf of the Organization;
fees collected on behalf of contracting parties tothe Madrid Agreement and Protocol, Hague
Agreement and on behalf of PCT International
Searching Authorities (ISAs) by the WIPO
International Bureau Receiving Office;deposits received in connection with pending
procedures related to trademarks, other than the
portion estimated to represent advance receipts
for the Organization;
Special Accounts held on behalf of donors ofvoluntary contributions.

39

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 4: INVESTMENTS
Decem ber 31,
2018

As at December 31, 2018, WIPO’s investments
include the following:

Decem ber 31,
2017(in thousands of Swiss francs)

Term deposits more than 3 months Sw iss francs

12,00010,000Total operating cash
investm ents

12,00010,000Term deposits more than 3 months Sw iss francs--

Total strategic cash investm ents--

12,00010,000178,874

109,895

82,23364,314

261,107174,20976,12356,022

44,18838,088

Total strategic cash investm ents

120,311

94,110Non-current investm ents

381,418

268,319

Total investm ents

393,418

278,319

Current investm ents
Medium term Investment portfolio Sw iss francs
Medium term Investment portfolio Other currencies
Total core cash investm ents
Long term Investment portfolio Sw iss francs
Long term Investment portfolio Other currenciesterm deposits with a remaining period of
more than 3 months but less than 12 months.
- these term deposits all relate to theOrganization’s operating cash balances,which are invested over the short-term(periods not exceeding twelve months tomaturity);
medium-term
investment
portfolio–
investment funds with no fixed maturity,
invested over a five year rolling period, which
are classified as core cash investments inaccordance
with
WIPO’s
Policyon
Investments;
long-term investment portfolio – investment
funds with no fixed maturity, invested overthe long-term for the future financing of afterservice employee benefit liabilities, which areclassified as strategic cash investments inaccordance
with
WIPO’s
Policyon
Investments.

The movement in the value of investments during theyear ended December 31, 2018 is as follows:

Operating cash
investm ents

Core cash
investm ents

Strategic cash
investm ents

Total

(in thousands of Swiss francs)
Investm ents fair value at January 1, 2017
Additional investments made--12,50012,50010,000202,758

102,186

314,944

Disposal of current investments---12,500-12,500

Disposal of non-current investments--30,600-9,400-40,000

Forex gains/(losses) on investments

-

-605

-346

-951

Fair value increase/(decrease)

-

2,656

1,670

4,326

Investm ents fair value at Decem ber 31, 2017

10,000174,209

94,110278,319

Additional investments made

2,000

94,18136,891133,072

Dividends on non-current investments invested

-

1,939

973

2,912

Disposal of current investments

-

-

-

-

Disposal of non-current investments---5,778-5,778Forex gains/(losses) on investments

-

1,222

665

1,887

Fair value increase/(decrease)--10,444-6,550-16,994

12,000261,107

120,311

393,418

Investm ents fair value at Decem ber 31, 201840

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 5: DERIVATIVE FINANCIAL INSTRUMENTS
Decem ber 31,
2018

The Organization has entered into forward foreignexchange contracts to minimize the risk arising fromexchange rate fluctuations to its US dollar core cash
and strategic cash investments. These contracts arerecognized at their fair value as at December 31,
2018, and are carried as assets when the fair value ispositive and liabilities when the fair value is negative.

Decem ber 31,
2017(in thousands of Swiss francs)
Derivative financial instrum ent
assetsForw ard foreign exchange contracts Operating cash investments--

Forw ard foreign exchange contracts Core cash investments-

578

Forw ard foreign exchange contracts Strategic cash investments

-

343

-

921

Forw ard foreign exchange contracts Operating cash investments--

Forw ard foreign exchange contracts Core cash investments

205-

Forw ard foreign exchange contracts Strategic cash investments

109-

Total derivative financial
instrum ent liabilities

314-

Total derivative financial
instrum ent assets
Derivative financial instrum ent
liabilities

41

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 6: RECEIVABLES
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Unitary contributions

1,410

Voluntary contributions

100

886
79

Contributions receivables - current

1,510

965

PCT debtors

55,62950,796

Madrid debtors

636

372

Hague debtors

3

2

Other debtors

2,749

2,301

Sw iss taxes reimbursable

1,283

15

USA taxes reimbursable

2,192

2,274

Staff advances for education grants

4,777

4,924

Other funds advanced to staff

322

127

UPOV expenditure reimbursable

917

726

Funds advanced to UNDP

500

259

Advance for FIPOI concessionary loan

124

127

Prepaid expenditure

815

322

FIPOI loan amortization

189

189

Exchange transactions receivables - current

70,13662,434

Total current accounts receivable

71,646

63,399Paris Union

80

80

Berne Union

122

136

Nice Union

6

7

Locarno Union

2

2

Contributions receivables - non-current

210

225

Total non-current accounts receivable

210

225

71,856

63,624

Total receivables

Assessed contributions represent uncollected revenue
related to the WIPO unitary contribution systemapproved by the Assemblies of the Member States
and the Unions administered by WIPO. The
Assemblies fix the value of a contribution unit in Swiss
francs together with the Budget for a biennial financial
period. Contribution classes are each required tocontribute a specific number of contribution units.
Member States are free to choose the classdetermining the basis under which they will contribute,other than certain developing countries that
automatically belong to one of three special classes.

Unions which relate to periods prior to the introductionof unitary contributions in 1994. The allowance covers
amounts due from Member States that have lost theright to vote under Article 11, paragraph 5 of the
WIPO Convention and contributions from least
developed countries which have been frozen by actionof the Assemblies in 1989 and 1991. The total of theallowance as at December 31, 2018 is 5.9 million
Swiss francs (5.9 million Swiss francs as at December
31, 2017).
PCT debtors represent unpaid international filing feesfor PCT applications filed prior to the reporting date.
This includes an estimate of those international patentapplications received by national receiving Offices
prior to the reporting date but not transferred to theAn allowance has been established to offset both thevalue of receivables due from assessed contributions
and the Working Capital Fund contributions due from42

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Organization’s PCT International Bureau by thereporting date.

USA taxes reimbursable represents amounts
advanced to US authorities on behalf of US citizens
employed at WIPO, for the payment of income taxes
due to the United States of America. Under
agreements between the Organization and the USA,these amounts are reimbursable to the Organization.

International staff, other than those living in their homecountry, are eligible to receive a grant covering
admissible costs of education for dependent children
until the fourth year of post-secondary school studies,but not beyond the end of the school year in which thechild reaches the age of 25. For the 2018-2019
scholastic year, reimbursement is based on a global
sliding scale, with declining reimbursement rates, anda fixed maximum amount of reimbursement.
International staff are eligible to receive an advanceequal to the estimated amount of the education grant
for each child at the beginning of the scholastic year.
Staff advances for education grants represent the total
grants advanced for the 2018-2019 scholastic year.

UPOV expenditure reimbursable represents payments
made on behalf of the International Union for theProtection of New Varieties of Plants by theOrganization for which reimbursement has not yet
been received.
Funds advanced to the United Nations Development
Program (UNDP) are utilized to make payments onbehalf of the Organization. The total debtor amountshown includes amounts for requests made to UNDP
for payments for which confirmation has not yet been
received or for which the confirmation is in the processof being verified.

Swiss taxes reimbursable include payments for VAT,
stamp tax and Swiss Federal withholding tax for which
the Organization is eligible for reimbursement under
its headquarters agreement with the Government of
Switzerland.

NOTE 7: INVENTORIES
Decem ber 31,
2018

Decem ber 31,
2017

The write-down of finished publications inventories to
net realizable value amounted to 87 thousand Swiss
francs (15 thousand Swiss francs in 2017). There
have been no reversals of write-downs.

(in thousands of Swiss francs)
Finished publications

1,247

1,222

Paper supplies

51

56

Retail Shop

-

71

1,298

1,349

Total inventories

Following the closure of the retail shop (WIPO
Information Centre) during 2017, the remaining stock
has now been written down to zero.

43

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 8: EQUIPMENT
Movem ent 2018

Equipm ent

Furniture& Furnishings(in thousands of Swiss francs)

Total

January 1, 2018
Gross carrying amount

7,151

993

8,144

Accumulated depreciation-5,996-693-6,689

1,155

300

1,455

Additions

212

-

212

Disposals

-944

-

-944

Net carrying am ount
Movem ents in 2018:

Disposals depreciation

914

-

914

Depreciation

-510

-73

-583

-328

-73

-401

Total m ovem ents in 2018
Decem ber 31, 2018
Gross carrying amount

6,419

993

7,412

Accumulated depreciation-5,592-766-6,358

827

227

1,054

Net carrying am ount

Movem ent 2017

Equipm ent

Furniture& Furnishings(in thousands of Swiss francs)

Total

January 1, 2017
Gross carrying amount

11,411

2,535

13,946

Accumulated depreciation-10,189-2,148-12,337

1,222

387

1,609

Net carrying am ount
Movem ents in 2017:
Additions

400

-

400

Disposals-4,660-1,542-6,202

Disposals depreciation

4,660

1,531

6,191

Depreciation

-467

-76

-543

-67

-87

-154

Total m ovem ents in 2017
Decem ber 31, 2017
Gross carrying amount

7,151

993

8,144

Accumulated depreciation-5,996-693-6,689Net carrying am ount

1,155

300

1,455

All equipment in the inventory is valued at cost lessdepreciation based upon the straight-line basis.
Furniture and furnishings are depreciated over a ten
year useful life. All other equipment is depreciatedover a five year useful life. As at December 31, 2018,

WIPO holds fully depreciated equipment which is stillin use for a gross carrying amount of 4.7 million Swiss
francs. Heritage assets including donated works of art
are not recognized as assets in the Statement of
Financial Position.

44

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 9: INVESTMENT PROPERTY
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Opening balance

-

6,210

Fair value gains/(losses) on valuation--

Closing balance

-

6,210

The Organization acquired in 1974 the Madrid Union
Building, an investment property in Meyrin, Canton of
Geneva, Switzerland. The building had first beenbrought into service in 1964. On January 31, 2018 theOrganization signed an act of sale for the building.
The sale price was 7.0 million Swiss francs, and thegain resulting from this has been recognized in theStatement of Financial Performance (see Note 27
Investment gains/(losses)).

operation of the building. Leases were generally forperiods of five years and were based on the form oflease approved by the Canton of Geneva. All leases
were non-cancellable during the period of the lease.
The managing agent received 3.90 per cent of thegross rental income as compensation for its services.
The value of non-cancellable leases as at December
31, 2018 and 2017 is as follows:
Decem ber 31,
2018

The property was held at fair value based on avaluation at October 1, 2015 carried out by anindependent expert holding recognized and relevant
professional qualifications with recent experience inproperty valuation in the Canton of Geneva. Fair value
was determined on an investment based valuation,
whereby the estimated future income stream from theproperty is capitalized at an appropriate investment
yield. The yield was selected by reference to theperceived quality and duration of the income and thepotential for further rental growth, and was crossreferenced by the evidence provided by comparable
transactions.

Decem ber 31,
2017(in thousands of Swiss francs)
Not later than one year-

31

Later than one year and not later
than five years--

Later than five years
Total non-cancellable
operating leases

-

-

-

31

In 2018, for the month of January only, the income
from rental of the building totaled 39 thousand Swiss
francs, and the operating expenditures of the building
totaled 37 thousand Swiss francs. The operating
expenditures do not include depreciation of thebuilding.

The leasing of apartments, parking and other facilities
in the Madrid Union Building was managed by aleasing agent responsible for collecting all rental
income and paying for all expenditures incurred in the45

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 10: INTANGIBLE ASSETS

Movem ent 2018Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total(in thousands of Swiss francs)
January 1, 2018
Gross carrying amount

34,290

1,115

4,419

-

39,824

Accumulated amortization-9,598-903-2,909--13,410

24,692

212

1,510

-

26,414

Additions

-

-

-

-

-

Transfers

-

-

-

-

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-440

-87

-893

-

-1,420

-440

-87

-893

-

-1,420Gross carrying amount

34,290

1,115

4,419

-

39,824

Accumulated amortization-10,038-990-3,802--14,830

24,252

125

617

-

24,994

Land surface
rightsSoftw areexternallyacquired

Softw areinternallydeveloped

Intangible
assets underdevelopm ent

Total

Net carrying am ount
Movem ents in 2018:

Amortization
Total m ovem ents in 2018
Decem ber 31, 2018

Net carrying am ount

Movem ent 2017

(in thousands of Swiss francs)
January 1, 2017
Gross carrying amount
Accumulated amortization

34,290

1,115

3,919

475

39,799-9,159-736-2,091--11,986

25,131

379

1,828

475

27,813

Additions

-

-

-

25

25

Transfers

-

-

500

-500

-

Disposals

-

-

-

-

-

Disposals amortization

-

-

-

-

-

-439

-167

-818

-

-1,424

-439

-167

-318

-475

-1,399Gross carrying amount

34,290

1,115

4,419

-

39,824

Accumulated amortization-9,598-903-2,909--13,410

24,692

212

1,510

-

26,414

Net carrying am ount
Movem ents in 2017:

Amortization
Total m ovem ents in 2017
Decem ber 31, 2017

Net carrying am ount46

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

In 1996, the Organization acquired from the World
Meteorological Organization (WMO) the land surface
rights to parcel 4008 in Petit-Saconnex in the City ofGeneva that had been granted to WMO by the
Republic and Canton of Geneva at a cost of
34.3 million Swiss francs including interest and fees.
At the date of purchase the original rights had aremaining period of 78 years under Swiss law expiringin 2073, unless renewed by the Canton. The historiccost is being amortized over the remaining useful life.
The land on which the Árpád Bogsch and Georg
Bodenhausen buildings are located is the property of
the Republic and Canton of Geneva which has
granted the Organization surface rights including theright to construct buildings for a period of 60 years

with an option exercisable solely by the Organizationof an extension for an additional period of 30 years.
These surface rights were acquired by theOrganization at no cost and no value has beenrecognized in the financial statements, as theOrganization does not have the right to dispose of therights which revert to the Republic and Canton of
Geneva unless renewed.
As from January 1, 2012, WIPO has been capitalizing
the cost of externally acquired and internallydeveloped software where this meets the recognition
criteria under IPSAS 31. Intangible assets underdevelopment relate to internally developed software
which has not yet been brought into use.

NOTE 11: LAND AND BUILDINGSThe Organization’s land and buildings comprise its
headquarters at Place des Nations, Geneva,
Switzerland and include land, buildings and a security
perimeter. Following the transition to IPSAS fromJanuary 1, 2010, buildings which were occupied atthat date were valued at an amount determined
independently by external consultants, which
represents the estimated value of the building whennew (deemed cost of construction) including theestimated value of renovations and major repairs
made since original occupancy less accumulated
depreciation and impairment. Buildings which arebrought into use after January 1, 2010 are initiallyvalued at cost. All buildings are depreciated according
to the straight-line method based upon the useful lifeof each major component of the building.

from the property. The potential income is based oncomparable rentals in the market and takes into
account the quality of the spaces as well as thelocation. The yield has been selected by reference tothe perceived quality and duration of the income andthe potential for further rental growth and is crossreferenced by the evidence provided by comparable
sales.
Three major construction projects have been
completed since the implementation of IPSAS in 2010.
The New Building was brought to use in 2011 and the
New Conference Hall in 2014. In 2015 WIPO
completed a major project to upgrade the safety andsecurity standards of its existing buildings, in line with
the implementation of the recommendations of theUnited Nations Security Management System. This
project comprised the New Access Centre (included
as part of the Árpád Bogsch building), the Security
Operations Centre (included as part of the Georg
Bodenhausen building I), and the Security Perimeter(held as a standalone construction).

The land upon which the New Building wasconstructed was acquired by the Organization at a
cost of 13.6 million Swiss francs in 1998 and wasrevalued to fair value based on International Valuation
Standards as determined by an independent appraiser
at December 31, 2009 at 28.6 million Swiss francs. An
updated valuation of the land was performed by anindependent appraiser at December 31, 2016. Thisvaluation indicated a further increase in the fair valueof the land of 2.2 million Swiss francs. The net resultof these revaluations totalling 17.3 million Swiss
francs is included in the Revaluation Reserve Surplus
which forms part of WIPO’s net assets. Market value
was estimated by capitalizing at an appropriate
investment yield the future potential income stream

During the year ended December 31, 2018,
improvement works totaling 5.2 million Swiss francs
were added to the cost of WIPO’s existing buildings.
These works also involved the partial demolition ofcomponents of existing buildings, with an estimatedimpact on net book value of 3.7 million Swiss francs.

47

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Movements for land and buildings in 2018

Movem ent 2018Year in Service

Total Land andBuildings

Buildings and Constructions in Use

Land

New Building Site

Security
Perimeter

New ConferenceHall

New Building

A. Bogsch
Building

1998

2015

2014

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

PCT Building
2003(in thousands of Swiss francs)
January 1, 2018
Cost/valuation
Accumulated depreciation

30,820
-

8,996
-634

70,605-6,925

167,834-20,075

57,956-12,001

13,647-3,316

4,527-948

69,457-10,775

423,842-54,674

Net carrying am ount

30,8208,362

63,680147,759

45,955

10,331

3,579

58,682

369,168

Additions

-

-

-

-

768

-

-

4,404

5,172

Derecognition
Derecognition accumulated
depreciation
Depreciation

-

-

-

-

-1,293---3,709-5,002

-

-

-

-

545

-

-

750

1,295

-

-272

-2,099-3,143-1,647-654-122-1,362-9,299Net m ovem ents in 2018

-

-272

-2,099-3,143-1,627

-654

-122

83

-7,834

Accumulated depreciation

30,820
-

8,996
-906

70,605-9,024

167,834-23,218

57,431-13,103

13,647-3,9704,527-1,07070,152-11,387

424,012-62,678

Net carrying am ount

30,8208,090

61,581

144,616

44,328

9,677

3,457

58,765361,334

13

13

13

13

13

Movem ents in 2018:

Decem ber 31, 2018
Cost/valuation

Check

4

13

4

13

48

4

16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Movements for land and buildings in 2017

Movem ent 2017

Year in Service

Total Land andBuildings

Buildings and Constructions in Use

Land

New Building Site

Security
Perimeter

New ConferenceHall

New Building

A. Bogsch
Building

1998

2015

2014

2011

1978

G. Bodenhausen G. Bodenhausen
Building I
Building II
1960

1987

PCT Building
2003(in thousands of Swiss francs)
January 1, 2017
Cost/valuation
Accumulated depreciation

30,820
-

8,996
-362

70,513-4,827

167,815-16,933

57,649-10,745

13,053-2,9204,527-827

68,147-9,417 -421,520-46,031

Net carrying am ount

30,8208,634

65,686150,882

46,904

10,1333,700

58,730375,489

Additions

-

-

92

19

1,699

1,464

-

1,310

4,584

Derecognition
Derecognition accumulated
depreciation
Depreciation

-

-

-

-

-1,392-870---2,262

-

-

-

-

481

259

-

-

740

-

-272

-2,098-3,142-1,737-655-121-1,358-9,383

Net m ovem ents in 2017

-

-272

-2,006-3,123

-949

198

-121

-48

-6,321

Accumulated depreciation

30,820
-

8,996
-634

70,605-6,925

167,834-20,075

57,956-12,001

13,647-3,316

4,527-948

69,457-10,775

423,842-54,674

Net carrying am ount

30,8208,362

63,680147,759

45,955

10,331

3,579

58,682

369,168

13

13

13

13

13

Movem ents in 2017:

Decem ber 31, 2017
Cost/valuation

Check

4

13

4

13

49

4

16

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 12: OTHER NON-CURRENT ASSETS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Loan to FIPOI

8,367

8,553

Total other non-current assets

8,367

8,553

rental of parking spaces) until the end of the lease in2019 would be as follows:

In 1991 the Organization entered into an agreementwith the International Centre of Geneva Foundation(FCIG) related to the construction of a building on rue
des Morillons in Geneva, Switzerland, at a total cost of
20.4 million Swiss francs. The agreement provided for
the Organization to advance the initial sum of
10.0 million Swiss francs, plus a further sum of
1.0 million Swiss francs representing interest on theinitial advance, equaling a total advance of
11.0 million Swiss francs. The balance of theconstruction cost was covered by a mortgage between
FCIG and the Banque Cantonale de Genève (BCG).
In 2016 the FCIG was absorbed by law into theFoundation
for
Buildings
forInternational
Organizations (FIPOI).

Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Not later than one year
Later than one year and not later
than five years
Later than five years
Total future lease paym ents

505

507

-

-

-

-

505

507

Upon vacating the premises, WIPO is to be repaid thebalance of the 11.0 million Swiss francs advance after
amortization. FIPOI will also retain 1.0 million Swiss
francs from the advance for restoration of the building
to its original condition.

WIPO also entered into an agreement to lease thebuilding from FCIG (subsequently amended to FIPOI).
From 2012 the lease agreement was renewed for aperiod of seven years. In 2018 the lease was
extended for a period of one year under the same
conditions, terminating on December 31, 2019. Under
the current lease agreement between the
Organization and FIPOI, both parties have the right toterminate the agreement at any point through mutual
consent formalized in writing. The annual amount ofrent payable by WIPO is equivalent to the annual
repayments (interest plus repayments of the principal)
on the mortgage between FIPOI and the BCG. The
rent paid by WIPO on this basis during 2018 totaled
229,504 Swiss francs (229,457 Swiss francs during
2017). Since January 1, 2012, WIPO has also
recognized an annual amortization charge of 188,679
Swiss francs against its advance to FIPOI. Further, theOrganization also leases covered parking spaces, fora cost of 90,072 Swiss francs in 2018. In the absenceof a mutual termination of the lease agreement,
WIPO’s future payments (including the mortgage
repayments, the amortization of the advance and the

For presentation in the financial statements, the total
value of the amortization is treated as an advancepayment of rent, and is split into both its current
portion (see Note 6) and non-current portion. As at
December 31, 2018 the non-current portion is zero as
there is only one year remaining on the existing leaseagreement. The total value of this advance payment
as at December 31, 2018 is 0.2 million Swiss francs.
The remaining balance of WIPO’s advance to FIPOIis treated as a concessionary loan in accordance withIPSAS, and is measured at amortized cost. Theinterest-free element of the concessionary loan is
also recognized as an advance payment, and is split
into both its current portion (see Note 6) and noncurrent portion. Again, as at December 31, 2018, thenon-current portion is zero. This advance payment isreduced over the period of rental agreement, and as
at December 31, 2018 has a total value of
0.1 million Swiss francs.

50

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 13: PAYABLES AND ACCRUALS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Trade creditors - accounts payable

14,964

16,530Miscellaneous transitory liabilities

953

952

Other trade creditors

619

414

16,536

17,896

Total payables and accruals

Payables and accruals include invoices received from suppliers not yet settled including the revaluation of invoices
payable in currencies other than the Swiss franc.

NOTE 14: EMPLOYEE BENEFITS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Accumulated leave (posts)

618

704

Accumulated leave (temporary staff)

261

250

Separation benefits

291

284

Closed Pension Fund

294

321

1,944

2,136

Home leave

487

329

Overtime and credit hours

157

382

1,970

1,932

Repatriation grant and travel

Education grant
Performance rew ards

794

3,224

After-Service Health Insurance

18,171

18,559Total current em ployee benefit liabilities

24,98728,121

Closed Pension Fund

1,704

1,751

Accumulated leave (posts)

7,350

7,735

Repatriation grant and travel

15,127

14,302After-Service Health Insurance

284,957

285,817

Total non-current em ployee benefit liabilities

309,138

309,605

Total em ployee benefit liabilities

334,125

337,726

Under IPSAS, employee benefits comprise:shipping of personal effects,
accumulated annual leave; andShort-term employee benefits which include salary,allowances, grant on initial assignment, grants for theeducation of dependent children, annual leave,
accident and life insurance, where these benefits are
expected to be settled within twelve months;

andlong-term

Termination benefits which include an indemnity
payable to staff members holding a permanent,
continuing or fixed term contract whose appointment
is terminated by the Organization prior to the end of
their contract.

Long-term employee benefits (or after-service
employee benefits) which include post-employment
benefits such as ASHI, and other long-term employee
benefits such as separation benefits consisting of
grants upon repatriation, repatriation travel and51

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Short-Term Employee Benefits

Performance rewards: under the WIPO Rewards andRecognition Program staff may be considered for
payment of a cash reward based on their performance
during the year. In accordance with decisions taken
during the year, the total amount of performance
rewards payable to staff as at December 31, 2018,
totaled 0.8 million Swiss francs (3.2 million Swiss
francs at December 31, 2017).

The Organization has recognized liabilities for thefollowing short-term benefits, the value of which isbased on the amount payable to each staff member at
the reporting date.
Accumulated leave (temporary staff): accumulated
annual leave is classified as a short-term employee
benefit for staff members holding temporary contracts.
Temporary staff members may accrue up to 15 days
annual leave in a given year, and a maximum of 15days accrued leave may be paid at the end of an
appointment. The total outstanding liability at thereporting date is 0.3 million Swiss francs (0.3 million
Swiss francs at December 31, 2017).

Long-Term Employee Benefits
Closed Pension Fund (CROMPI): Prior to becoming
a participating organization in the UNJSPF, WIPO’s
predecessor organization had its own pension fundestablished in 1955. This pension fund was closed to
new members on September 30, 1975 and continues
for those who were members at the time of closure
under the management of a Foundation Council. In
accordance with a decision of the ILO Administrative
Tribunal of the International Labour Organization(ILOAT) in 2006, WIPO has the obligation to covercertain differences between the pension receivable of
Closed Pension Fund members under the Closed
Pension Fund and that receivable from the UNJSPF.
Based upon the latest actuarial valuations performedfor 2018, this liability is estimated at 2.0 million Swiss
francs as at December 31, 2018 (2.1 million Swiss
francs in 2017).

Home Leave: certain internationally recruited staff
members are eligible for home leave for themselves
and their dependents to the country in which they
have their home every second year. The total
outstanding liability for home leave earned but nottaken at the reporting date is 0.5 million Swiss francs(0.3 million Swiss francs at December 31, 2017).
Overtime and credit hours: certain staff members
are eligible to be paid in cash for overtime accrued
after the expiry of a period established in the SRR. Up
until the end of 2018, staff members following theflexible working time system were able to accumulatecredit hours for time worked beyond 40 hours a week.
Following the introduction of a new policy on time
management and flexible working arrangements, any
credit hours that had been accumulated and not usedby December 28, 2018 (the last working day of theyear) were removed. The total liability at the reporting
date for overtime is 0.2 million Swiss francs (0.4
million Swiss francs at December 31, 2017, including
credit hours).

Accumulated leave (posts): accumulated annual
leave is classified as a long-term employee benefit for
staff members holding permanent, continuing or fixed
term contracts, and the liability is calculated by an
external actuary. Staff in posts may accrue up to 15
days of annual leave in a given year, and a total
accumulated balance of 60 days. However, those staff
members who accumulated more than 60 days prior
to January 1, 2013, were entitled to retain them until
December 31, 2017. On separation from service, staff
in posts who have accumulated annual leave canreceive a payment in lieu of an amount equivalent totheir salary for the period of accumulated annual
leave. In exceptional circumstances, a staff member
may be granted advance annual leave up to a
maximum of 10 working days. These staff members
are included in the calculation of the overall balance ofaccumulated leave. The total outstanding liability at
the reporting date is 8.0 million Swiss francs(8.4 million Swiss francs at December 31, 2017).

Education grant: certain internationally recruited staff
members, other than those living in their homecountry, are eligible to receive a grant covering
admissible costs of education for dependent children
until the fourth year of post-secondary school studies,but not beyond the end of the school year in which thechild reaches the age of 25. For the 2018-2019
scholastic year, reimbursement is based on a global
sliding scale, with declining reimbursement rates. The
liability for education grants payable relates to thenumber of months which have elapsed between thestart of the school year/university year and December
31, 2018, for which fees are therefore due. The total
liability at the reporting date is 2.0 million Swiss francs(1.9 million Swiss francs at December 31, 2017).

52

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Repatriation grant and travel: The Organization has
a contractual obligation to provide benefits such as
repatriation grants, travel and removal for certain
internationally recruited staff members at the time of
their separation from service. For professional staff in
temporary positions, the cost of repatriation travel andremoval on separation from service is estimated by
WIPO and is treated as a current liability. Forinternationally recruited professional staff in posts, theliability for repatriation grant, travel and removal iscalculated by an independent actuary. The total
liability was estimated as follows at the reporting date:

Actuarial
Valuation

Decem ber 31,
2018

Decem ber 31,
2017

Total

Total

WIPO Estim ate(in thousands of Swiss francs)
Current liability

1,388

556

1,944

2,136

Non-current liability

15,127-

15,127

14,302

Total liability - repatriation grant and travel

16,515556

17,071

16,438Contributions paid by the Organization for repatriation
grant and travel totaled 0.4 million Swiss francs for2018 (0.3 million Swiss francs in 2017). Expected
contributions to repatriation grant and travel in 2019are 1.6 million Swiss francs.

Concerning the actuarial valuation of repatriation grant
and travel, the table below details the expense forrepatriation grant and travel recognized in theStatement of Financial Performance:
Decem ber 31,
2018

Decem ber 31,
2017

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the repatriation grant and travel liability for2018 and the previous four years:(in thousands of Swiss francs)

Interest cost
Current service cost
Actuarial (gain)/loss
Expense recognized in theStatem ent of Financial
Perform ance

45

43

1,323

1,276

-89

-57

1,279

1,262

2018

Defined benefit obligation

2016

2015

2014

16,515 15,670 14,702 14,702 13,279

Experience (gain)/loss
adjustments on plan liability

Actuarial gains and losses for repatriation grant andtravel are recognized immediately in the Statement of
Financial Performance. The table below details thechange in the repatriation grant and travel defined
benefit obligation:
Decem ber 31,
2018

2017

(in thousands of Swiss francs)

47

-793

224

1,135 -1,295

The principal assumptions used in determining therepatriation grant and travel liability and defined
benefit obligation are as follows:
Decem ber 31,
2018

Decem ber 31,
2017

Discount rate

0.45%

0.30%

Rate of salary increase

2.53%

2.50%

Discount rate

0.30%

0.30%

Rate of salary increase

2.50%

2.43%

Decem ber 31,
2017(in thousands of Swiss francs)
Defined benefit obligation at
beginning of year
Interest cost

15,67014,70245

43

Current service cost

1,323

1,276

Contribution paid

-434

-294

Actuarial (gain)/loss on obligation
Defined benefit obligation at
end of year

-89

-57

16,515

15,670Weighted-average assumptions
to determine benefit obligations

Weighted-average assumptions
to determine net cost

53

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

After Service Health Insurance (ASHI): The
Organization also has a contractual obligation toprovide post-employment medical benefits for its staff
members in the form of insurance premiums for thecollective medical insurance plan. Staff members (andtheir spouses, dependent children and survivors)
retiring from service are eligible for ASHI coverage ifthey continue to participate in the collective medical
insurance plan after separation from service. In
accordance with WIPO’s SRR, a share of 65 per centof the monthly medical insurance premium is paid by
the Organization. From January 1, 2019, monthly
medical premiums amount to 596 Swiss francs for
adults and 265 Swiss francs for children. The present
value of the defined benefit obligations for postemployment medical benefits is determined using the

projected unit credit method including discounting theestimated future cash outflows using a discount rate
based upon Swiss franc high grade corporate bonds.
In accordance with IPSAS the Organization’s ASHI
liability is considered as unfunded as no plan assets
are held in a legally separate entity or fund, andtherefore no plan assets are deducted from the liability
as recognized in the Statement of Financial Position.
However, it should be noted that the Organization has
established separate funds (strategic cash) for the
future financing of after-service employee benefit
liabilities, including ASHI (see Notes 3 and 4). On thebasis of an actuarial valuation carried out in December
2018 by an independent actuary, the Organization’s
ASHI liability was estimated as follows at the reporting
date:
Decem ber 31,
2018

ASHI

Decem ber 31,
2017(in thousands of Swiss francs)

Current liability

18,171

18,559Non-current liability

284,957

285,817

Total liability - ASHI

303,128

304,376

The table below details the expense for ASHI
recognized in the Statement of Financial Performance:
Decem ber 31,
2018

The table below details the changes in the ASHI
defined benefit obligation, including the impact of
actuarial gains/(losses):

Decem ber 31,
2017

Decem ber 31,
2018(in thousands of Swiss francs)

Decem ber 31,
2017(in thousands of Swiss francs)

Interest cost

2,118

2,393

Current service cost
Expense recognized in theStatem ent of Financial
Perform ance

16,441

19,023

Defined benefit obligation at
beginning of year

18,55921,416

Interest cost

2,118

2,393

Current service cost

16,441

19,023Contribution paid

-3,538-3,312-3,092-17,122-14,204

3,960

1,027

-21,454

303,128

304,376

304,376

320,888

Actuarial (gain)/loss on obligation:
Experience (gain)/loss(Gain)/loss on change infinancial assumptions(Gain)/loss on change indemographic assumptions
Defined benefit obligation
recognized at end of year

Contributions paid by the Organization for ASHI
totaled 3.5 million Swiss francs for 2018(3.3 million Swiss francs in 2017). Expected
contributions to ASHI in 2019 are 3.8 million Swiss
francs. The weighted average duration of the defined
benefit obligation as at December 31, 2018, was 22.2
years.

54

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

The following table details the present value of thedefined benefit obligation and experience adjustments
arising on the ASHI liability for 2018 and the previous
four years:
2018

2017

2016

2015

2014

(in thousands of Swiss francs)
Defined benefit obligation

303,128

304,376

320,888

216,075

154,449-3,092-17,122

3,377

190

-15,301

Experience (gain)/loss adjustments on plan liability

The principal assumptions used in determining the
ASHI liability and defined benefit obligation are as
follows:
Decem ber 31, 2018

Decem ber 31, 2017

Discount rate

0.90%

0.70%

Medical cost trend rate

3.50%

3.50%

Discount rate

0.70%

0.75%

Medical cost trend rate

3.50%

3.50%

Weighted-average assumptions to determine benefit obligations

Weighted-average assumptions to determine net cost

Actuarial assumptions have a significant effect on theamounts calculated for the ASHI liability. A descriptionof the factors which impact the size of the ASHI
liability is included in the financial statement
discussion and analysis which precedes thesefinancial statements. The following sensitivity analysis
shows how the defined benefit obligation would havebeen affected by changes in significant actuarial
assumptions, the discount rate and the rate ofsickness premium increase. The per cent changes
used in the analysis are considered reasonable basedon historical movements:

0.25 per cent decreasein discount rate
0.65%

Discount rate as applied
0.90%

0.25 per cent increasein discount rate
1.15%

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2018
Per cent variation

321,100

303,128

5.9%

1 per cent decrease inm edical cost trend rate
2.5%

286,502-5.5%

Medical cost trend rate
as applied
3.5%

1 per cent increase inm edical cost trend rate
4.5%

(in thousands of Swiss francs)
Defined benefit obligation as at
December 31, 2018245,456

Per cent variation-19.0%

55

303,128

379,545
25.2%

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

United Nations Joint Staff Pension Fundvaluation date. At the time of this report, the General
Assembly has not invoked the provision of Article 26.

The Fund’s Regulations state that the Pension Board
shall have an actuarial valuation made of the Fund at
least once every three years by the Consulting
Actuary. The practice of the Pension Board has been
to carry out an actuarial valuation every two years
using the Open Group Aggregate Method. The
primary purpose of the actuarial valuation is todetermine whether the current and estimated future
assets of the Pension Fund will be sufficient to meetits liabilities.

Should Article 26 be invoked due to an actuarial
deficiency, either during the ongoing operation or due
to the termination of the UNJSPF pension plan,
deficiency payments required from each member
organization would be based upon the proportion ofthat member organization’s contributions to the total
contributions paid to the Fund during the three years
preceding the valuation date. Total contributions paid
to UNJSPF during the preceding three years (2015,2016 and 2017) amounted to 6,931.4 million US
dollars, of which 1.8 per cent was contributed by
WIPO (including participants and Organization
contributions).

WIPO’s financial obligation to the UNJSPF consists of
its mandated contribution, at the rate established by
the United Nations General Assembly (currently at 7.9
per cent for participants and 15.8 per cent for member
organizations) together with any share of any actuarial
deficiency payments under Article 26 of theRegulations of the Fund. Such deficiency payments
are only payable if and when the United Nations
General Assembly has invoked the provision of Article
26, following determination that there is a requirementfor deficiency payments based on an assessment of
the actuarial sufficiency of the Fund as of the valuation
date. Each member organization shall contribute tothis deficiency an amount proportionate to the total
contributions which each paid during the three years
preceding the valuation date.

During2018,
WIPO
contributions(including
Organization contributions only) paid to UNJSPF
amounted to 27.2 million Swiss francs (27.1 million
Swiss francs in 2017). Expected contributions due in2019 are approximately 28.4 million Swiss francs.
Membership of the Fund may be terminated bydecision of the United Nations General Assembly,
upon the affirmative recommendation of the Pension
Board. A proportionate share of the total assets of theFund at the date of termination shall be paid to theformer member organization for the exclusive benefitof its staff who were participants in the Fund at thatdate, pursuant to an arrangement mutually agreed
between the organization and the Pension Board. The
amount is determined by the Pension Board based onan actuarial valuation of the assets and liabilities of
the Fund on the date of termination; no part of theassets which are in excess of the liabilities is includedin the amount.

During 2017, the Fund identified that there wereanomalies in the census data utilized in the actuarial
valuation performed as at December 31, 2015. As
such, as an exception to the normal biennial cycle, aroll forward of the participation data as at December
31, 2013, to December 31, 2016, was used by theFund for its 2016 financial statements.
The actuarial valuation as at December 31, 2017,
resulted in a funded ratio of actuarial assets toactuarial liabilities, assuming no future pension
adjustments, of 139.2 per cent (150.1 in the 2016 roll
forward). The funded ratio was 102.7 per cent (101.4
per cent in the 2016 roll forward) when the current
system of pension adjustments was taken into
account.

The United Nations Board of Auditors carries out anannual audit of the UNJSPF and reports to the
UNJSPF Pension Board on the audit every year. The
UNJSPF publishes quarterly reports on its
investments and these can be viewed by visiting the
UNJSPF at www.unjspf.org.

After assessing the actuarial sufficiency of the Fund,
the Consulting Actuary concluded that there was norequirement, as at December 31, 2017, for deficiency
payments under Article 26 of the Regulations of theFund as the actuarial value of assets exceeded theactuarial value of all accrued liabilities under the plan.
In addition, the market value of assets also exceeded
the actuarial value of all accrued liabilities as of the56

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 15: TRANSFERS PAYABLE
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Madrid Union complementary fees

38,35637,315Madrid Union supplementary fees

4,022

3,709

Madrid Union individual fees

17,66915,410Madrid Union handling fees
Madrid Union deposits
Hague Union distribution

14

15

26,48728,651

1

458

Madrid and Hague Union repartition fees

7,592

5,781

AMC deposits

1,136

1,079

PCT International Searching Authorities

1,274

1,302

95

181

96,646

93,901

RO search fees due to International Searching Authorities
Total transfers payable

The Organization collects fees on behalf of thecontracting parties of the Madrid Agreement andProtocol and the Common Regulations of the Hague
Agreement. The Organization’s PCT International
Bureau collects funds from applicants to cover thecost of payments of International Searching
Authorities. In addition, the Organization collects feesto be paid directly to mediators, arbitrators or panelists
for cases treated through the Arbitration andMediation Centre. The Organization holds these funds
on a temporary basis until they are transferred to thefinal beneficiary in accordance with the various
treaties and agreements administered by theOrganization.

Madrid Union Individual fees: In accordance with
Article 8(7) of the Madrid Protocol and Rule 38 of theCommon Regulations, contracting parties may
establish fees which are collected by the Organizationand payable to contracting parties within the monthfollowing the recording of the registration ordesignation of renewal for which the fee was paid.
Contracting parties that have elected to establish
individual fees are not eligible to receive thecomplementary and supplementary fees describedabove. The amounts shown as payable represent thefees to be transferred at the end of the reporting
period.
Madrid Union deposits: The Organization receives
payments from applicants under the Madrid system
which represent deposits in connection with pending
procedures related to trademarks. The portion ofthese deposits which is estimated to represent funds
collected by WIPO on behalf of third parties to betransferred later in accordance with the treaty is
included within transfers payable in the financial
statements. The portion of these deposits which isestimated to represent fees of the Organization
received in advance is included within advancereceipts in the financial statements (see Note 16).

Madrid Union Complementary and Supplementary
fees: In accordance with the Madrid Agreement(Article 8(2) (b and c)) and the Madrid Protocol (Article
8(2) (ii and iii)) the Organization collects
complementary and supplementary fees of 100 Swiss
francs per application or renewal on behalf of thecontracting parties. The amount due to eachcontracting party varies based upon the services
provided by the party (examination undertaken).
Funds are transferred annually in the first half of theyear following the reporting date.

57

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Hague Union Distribution: In accordance with Rules
13.2(a)(iii), 13.2(e) and 24.2 of the Common
Regulations under the Hague Agreement, theOrganization collects ordinary state fees, state
renewal fees and novelty examination fees on behalfof contracting parties for international registrations or
their renewals. These funds are payable to thecontracting parties on a monthly basis. The amountshown as payable represents the amounts to betransferred at the end of the reporting period.

PCT International Searching Authorities: The
International Bureau collects fees from applicants forinternational patents filed at the International Bureau
to cover the costs of the international searches which
are performed by International Searching Authorities
designated by the Organization pursuant to the PCT.
The amount shown in the prior table represents theamount to be transferred to International Searching
Authorities at the reporting date.
RO Search Fees due to International Searching
Authorities: Under a netting pilot project launched in2018, the Organization collects fees from participatingreceiving Offices for transfer to participating
International Searching Authorities.
The amountshown in the prior table represents the balance oftransfers received by WIPO but not yet transferred tothe participating International Searching Authorities at
the reporting date.

Madrid and Hague Union Repartition Fees: The
Organization holds funds payable to contracting
parties when no clear payment instructions have been
received or the contracting party requests thatpayment be held pending confirmation. The amountshown includes the sum of 1.7 million Swiss francs
due to the countries making up the former Federal
Republic of Yugoslavia. Following receipt by theInternational Bureau of a mutual agreement between
the concerned Member States as to the amounts due
to each country, payment of these balances
commenced in 2018 and will continue in 2019.
AMC Deposits: The Organization collects fees forarbitrations undertaken through its Arbitration andMediation Centre covering domain names and otherissues related to intellectual property. In addition to
the fee paid to the Organization, participants deposit
an amount equal to the estimated fee of the arbitrator.
If the arbitrator’s fee exceeds the estimate, theOrganization requires the participants to provide theadditional funds required. The amount collected is
paid directly to the arbitrator and is not recognized asincome by the Organization. The amount shown in theprior table represents the net amount paid byparticipants but not paid to the arbitrator as of thereporting date.

58

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 16: ADVANCE RECEIPTS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Madrid Union deposits

8,661

9,281

Industrial design deposits

2,535

832

PCT/IBRO deposits

635

724

4,305

2,225

PCT system deferred revenue

264,891

252,193

Madrid system deferred revenue

3,047

2,609

Hague system deferred revenue

341

448

Non-exchange deferred revenue

11,691

13,555

Advance payment of contributionsFIPOI deferred revenue

132

132

296,238

281,999FIPOI deferred revenue

3,804

3,937

Total non-current advance receipts

3,804

3,937

300,042285,936

Total current advance receipts

Total advance receipts

In many cases, the Organization collects fees andcharges for services before the services are
performed completely, or before the fee is earned inaccordance with the treaties, agreements, protocols
and regulations administered by the Organization.
Revenue from fees related to the processing ofinternational applications (under the PCT, Madrid andHague systems) is recognized when the application
has been published. Revenue for additional page fees
related to PCT applications is deferred until the related
application is published. In addition, the part of thefees for PCT applications which covers the cost oftranslation of patentability reports not filed in the
English language is deferred until the translation has
been completed. All revenue from fees such as
renewals, extracts, modifications, abandonment,
transfers,
confirmations
andadjustments
isrecognized when the service has been performed.

Voluntary contributions from donors to Special
Accounts containing conditions requiring theOrganization to provide services to recipient
governments or other third parties are treated asdeferred income until the services covered by thevoluntary contributions are performed, whereupon
income is recognized.
The construction project to upgrade the safety andsecurity standards of existing WIPO buildings waspartly financed by the Foundation for Buildings forInternational Organizations (FIPOI). Construction work
financed by the FIPOI has been capitalized as part ofthe cost of the Security Perimeter, and acorresponding amount recognized as deferred
revenue. The balance of deferred revenue as at
December 31, 2018, was 3.9 million Swiss francs (4.1
million Swiss francs as at December 31, 2017). This
revenue is recognized gradually as the Security
Perimeter is depreciated over its useful life.

59

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 17: BORROWINGS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
FIPOI loan-

16,862

Total borrow ings-

16,862The Organization borrowed funds (50.8 million Swiss
francs and 8.4 million Swiss francs approved in 1977
and 1987 respectively) from FIPOI for the purpose of
constructing its headquarters buildings in Geneva,
Switzerland. These loans were originally subject tointerest payments. However, in 1996 the Swiss

Federal Department of External Relations agreed towaive any further payments of interest and the loans
subsequently required the reimbursement of principal
only. In January 2018 the Organization repaid in full
the remaining balance of 16.9 million Swiss francs of
its loans with FIPOI.

NOTE 18: PROVISIONS
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Legal costs

5,588

2,008

Total provisions

5,588

2,008

As part of its normal activities, the Organization is
subject to litigation. Events occurring prior to
December 31, 2018, have created certain legal
obligations at the reporting date. As it is probable thatthese obligations will require future settlement and as
the settlement amounts can be reliably estimated, aprovision for legal costs has been established. The
timing of any future settlements is uncertain at thereporting date. The amount of the provision has been
estimated as closely as possible on the basis of
information available.

The movement in provisions during 2017 and 2018 isdetailed as follows:
Legal Costs(in thousands of Swiss francs)
Balance as at Decem ber 31, 2016

6,989

Movem ents in 2017:
Additional provisions made498

Amounts used

-521

Unused amounts reversed-4,958

Balance as at Decem ber 31, 2017

2,008

Movem ents in 2018:60

Additional provisions made

4,381

Amounts used

-386

Unused amounts reversed-415

Balance as at Decem ber 31, 2018

5,588

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 19: OTHER CURRENT LIABILITIES
Decem ber 31,
2018

Decem ber 31,
2017

the current account balance is reduced and the funds
are considered deposits until the application has beenregistered.

(in thousands of Swiss francs)
Current accounts

70,57864,479Total other current liabilities

70,57864,479In addition, the Organization maintains bank accounts
in its name to provide a mechanism for certain
contracting parties to transfer funds which theseparties have collected on behalf of the Organization.
Until such time as the contracting party informs theOrganization that funds held in these accounts
represent income belonging to the Organization, thebalance remaining in the accounts is not recognized
as revenue.

The Organization provides facilities for applicantsunder the PCT, Madrid and Hague systems to deposit
funds entitled “current accounts” for which theOrganization acts as custodian pending the use of thefunds to cover fees required to be paid in connection
with individual applications and renewals. These funds
are held until such time as specific applications are
filed. On receipt of the application and authorization,

NOTE 20: CONTINGENT ASSETS AND
LIABILITIES
cases the amount of any claim is yet to be confirmed,
and therefore no provision is recognized. There are no
contingent liabilities for possible settlement payments
by the Organization arising from these cases at thereporting date.

There are a number of cases where members of
WIPO personnel are in dispute with the Organization.
Cases before the WIPO Appeal Board (WAB) and theILO Administrative Tribunal (ILOAT) for which
provisions have been made are reflected in Note 18.
No provision has been made for certain other cases
before the WAB or the ILOAT where legal advice
indicates it is not probable that a liability will arise. The
estimated value of contingent liabilities for possible
payments by the Organization for claims arising fromthese cases is 60,000 Swiss francs at the reporting
date.

The International Computing Centre (ICC) wasestablishedin
January
1971
pursuanttoResolution 2741 (XXV) of the United Nations General
Assembly. ICC provides Information Technology andCommunications services to Partners and Users in the
United Nations System. As a Partner bound by the
Mandate of the ICC, WIPO would be proportionately
responsible for any third party claim or liability arisingfrom or related to service activities of the ICC as
specified in the ICC Mandate. At 31 December 2018,
there are no known claims that impact WIPO.
Ownership of assets is with ICC until dissolution. Upondissolution, the division of all assets and liabilities
amongst Partner Organizations shall be agreed by theManagement Committee by a formula defined at thattime.

In addition to the cases noted above, at the end of
2018 international professional and higher category
Geneva based staff filed complaints with the ILOAT
challenging the legality of the reduction in the Geneva
post adjustment implemented in 2018 and othercompensation
matters.
The
reductionwasimplemented by WIPO as a consequence of decisionsof the International Civil Service Commission (ICSC)
taken further to the 2016 cost of living survey. If thecomplaints are successful, WIPO may have to pay thedifference between amounts actually paid to all
Geneva-based international professional and higher
category staff following the post adjustment reduction
and amounts that would have been paid had there
been no such reduction. The complainants also
requested moral damages and costs.

As at December 31, 2018, the Organization has noncancellable contracts for the delivery of goods andservices for a total value of 2.6 million Swiss francs.
WIPO has contractual commitments relating to noncancellable lease arrangements. These are detailed in
Note 21.

Personnel also have cases that have not yet reached
the appeal stage (requests for review and workplace
related conflicts and grievances). For these61

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 21: LEASESWIPO as Lessee
Decem ber 31,
2018

Decem ber 31,
2017(in thousands of Swiss francs)
Not later than one year

270

333

Later than one year and not later than five years

225

494

Later than five years
Total non-cancellable operating leases

The Organization leases additional depots andstorage facilities in the Geneva area, and space for its
external offices in Rio de Janeiro and Tokyo (paid witha voluntary contribution to a Special Account), and its
coordination office in New York. In addition, theOrganization leases printing and photocopying
equipment. The value of future minimum lease
payments under non-cancellable operating leases isshown in the table above.
The Organization has also entered into an agreement
to lease a building from the Foundation for Buildings
for International Organizations (FIPOI). The details of
this agreement, including future lease payments, areprovided separately in Note 12.
The Organization has no outstanding leases qualifying
as finance leases at the reporting date. The total
amount of lease payments for depots, storage
facilities and office space recognized as an expense
was 1.7 million Swiss francs in 2018 (1.7 million Swiss
francs in 2017).
WIPO as Lessor
The Organization has entered into a number ofagreements whereby it leases space in or on its
headquarters buildings to third parties. These leases
are all cancellable subject to notification periods
specified in the agreements. The total amount ofrental income from these arrangements in thereporting period was 0.6 million Swiss francs (0.7
million Swiss francs in 2017). The Organization alsopreviously leased apartments, parking and otherfacilities in the Madrid Union Building, as detailed in
Note 9. This building was sold in January 2018.

62

-

-

495

827

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 22: RELATED PARTY TRANSACTIONS
2018

2017

Num ber of
Individuals(full-time
equivalent basis)

Aggregate
rem uneration(in thousands of
Swiss francs)

Director General, Deputies and Assistants

9.00

Senior Officers

13.38

The Organization is governed by the WIPO General
Assembly composed of representatives of Member
States party to the WIPO Convention which are
members of any of the Unions. These representatives
do not receive remuneration from the Organization.
The Organization is managed by a Director Generaland by Deputy and Assistant Directors General andofficers (key management personnel) who are
remunerated by the Organization. The aggregate
remuneration paid to key management personnel
includes salaries, allowances, statutory travel andother entitlements paid in accordance with the Staff
Regulations and Rules, and applicable to all staff. In
addition, the Director General, Deputy Directors
General and Assistant Directors General receive
representation
allowances.
Key
management
personnel are members of the UNJSPF to which thepersonnel and the Organization contribute and arealso eligible for participation in the collective medical
insurance plan. Key management personnel and theiraggregate remuneration are detailed in the table
above. There were no loans to key management
personnel or to their close family members which were
not available to other categories of staff. There was noother remuneration or compensation to key
management personnel or to their close family
members.

Num ber of
Individuals(full-time
equivalent basis)

Aggregate
rem uneration(in thousands of
Swiss francs)

3,059

9.00

3,171

3,728

13.00

3,769

WIPO has no controlled entities and no interests inother entities which would require disclosure under
IPSAS 34-38. WIPO is a member of the UNJSPF andcertain of its former staff are members of WIPO’s
CROMPI. The relationship with these two funds is
explained in detail in Note 14.
The Organization has a relationship with theInternational Union for the Protection of New Varieties
of Plants (UPOV) whereby the Director General of theOrganization serves as Secretary General of UPOV.
The Council of UPOV which serves as UPOV’s
governing body consists of the representatives of thecontracting parties to the International Convention for
the Protection of New Varieties of Plants ofDecember 2, 1961, as revised. In accordance with theRules and Regulations of UPOV, the office of UPOV,
consisting of the UPOV Secretary General and staff,
exercises its functions in complete independence of
the Organization. The Organization is responsible forproviding space, personnel administration, financial
administration, procurement services and otheradministrative support to UPOV in accordance withthe terms of an agreement between the Organizationand UPOV dated November 26, 1982. UPOV
reimburses the Organization for the cost of suchservices in accordance with the terms of said
agreement. In 2018 the Organization received
618 thousand Swiss francs from UPOV to cover thecost of these services. In addition, WIPO receives
reimbursement of funds disbursed on behalf of UPOV.

63

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 23: NET ASSETS

Movem ent 2018

Decem ber31, 2017

Item s
Projects
recognized Program andSpecialFinanceddirectly in
BudgetAccounts
from
Net Assets
Reserves
Surplus/(deficit) before IPSAS

Adjustm ents
IPSAS
Transfer toto Special
adjustm ents Accum ulated
Projects
for the year
Surpluses
Reserve

Decem ber31, 2018(in thousands of Swiss francs)
Program and Budget 2018--

74,574----27,492-47,082

Special Accounts 2018

-

-

-

-1,925

-

-

1,925

-

-

305,953

-

-

-

-

-27,549-

50,328

328,732-138,694

16,269

-

-

-

-

-

-

-122,425

11,790----7,83727,5493,241-3,246

31,497

17,266

-

-

-

-

-

-

-

17,266

Accumulated Surpluses
Actuarial gains/losses
through Net Assets
Special Projects Reserve
Revaluation Reserve
Surplus
Working Capital Funds
Net assets

-

6,342

-

-

-

-

-

-

-

6,342

202,657

16,26974,574-1,925-7,837--22,326-

261,412The Organization’s total net assets represent thebalance of its reserves, which include its Reserves(Accumulated Surpluses, Special Projects Reserve
and Revaluation Reserve Surplus) and Working
Capital Funds. Following the implementation of IPSAS
39 in 2017, the Organization also recognizes actuarial
gains and losses directly through net assets. The
Organization manages the level of its reserves inaccordance with its Policy on Reserves. In 2015 thepolicy was revised and adopted by the Fifty-Fifth
Series of Meetings of the Assemblies of the Member
States of WIPO. The target levels of theOrganization’s reserves, including Working CapitalFunds, are defined at the level of Unions, on the basisof percentages of estimated biennial expenditure foreach Union. Under WIPO Financial Regulation 4.7, for
any Union showing a surplus at the closure of thefinancial period, the surplus is retained in its reserves
unless otherwise decided by the General Assembly or
the Assembly of the Union concerned. As decided by
the Assembly of the Madrid Union, and under Article
8(4) of the Madrid Agreement, the surplus of the
Madrid Union is distributed to Member States, unlessthey otherwise decide.

are financed by contributions and are held in trust by
WIPO for the Member States of the respective Unions.
The Accumulated Surpluses of the Organization
represent the accumulated net result of operations in2018 and prior periods after the impact of IPSAS. The
Revaluation Reserve Surplus includes the cumulative
results of revaluations of the land owned by theOrganization on which the New Building has been
constructed (see Note 11). The fair value has been
determined by an independent valuation. This wasmost recently updated in 2016, following which the fairvalue of the land was increased by 2.2 million Swiss
francs.
WIPO’s Policy on Reserves also establishes theprinciples and approval mechanism for the use ofreservesforone-time
projects
forcapitalimprovements and exceptional circumstances. The
Special Projects Reserve contains the appropriations
to these projects financed from reserves, lessaccumulated expenditure. The Special Projects
Reserve was created following the revision of WIPO’s
Policy on Reserves in 2015. Its balance at thereporting date reflects amounts to be used for projects
already approved. Projects opened in 2018 are thosewhich were approved at the Fifty-Seventh and FiftyEighth Series of Meetings of the WIPO Assemblies.
The following table details the projects which arefinanced by reserves, the expenditure during the year
and the remaining balance as at December 31, 2018:

The Policy on Reserves requires a clear separation
between Working Capital Funds and other elements of
the reserves in accounting and reporting terms. The
Working Capital Funds are established for providing
advance financing of appropriations should there be atemporary liquidity shortfall, and for such otherpurposes as the Assemblies of Member States and of
the Unions shall decide. The Working Capital Funds

64

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Projects financed from reserves

Total projectbudgetSpecial Projects
Madrid system database

Cum ulative
Rem aining
Projects
expenditure to balance as atclosedDecem ber 31, Decem ber 31,
2018
2017
2017
(in thousands of Swiss francs)

Projects
opened2018

Rem ainingbalance as at
Decem ber 31,
2018

Expenditure
2018

1,200

-1,124

76

-

-

-10

66

ERP project
ICT capital investment(closed)Security enhancement

25,341-20,876

4,465

-

-

-1,802

2,663

5,180

-5,005

175

-175

-

-

-

700

-220

480

-

-

-

480

ECM implementation

2,068-1,338

730

-

-

-483

247

PCT building renovation
Geneva lake w ater coolingsystem (closed)
AB building basement
renovation
AB building w indow s
replacement (closed)
Safety and fire protection(closed)Global IP Platform Integration(GIPPI) - Phase I
PCT Resilient and Secure
Platform - Phase I
Madrid IT Platform
Integrated Conference
Services Platform
Multi-Media Studio
PCT Building Additional
Works
Electrical Systems andMechanical Installations Pow er Outage Mitigation in
AB Building (Phase I)
Electrical Systems andMechanical Installations Functional Lighting System in
AB Building
Electrical Systems andMechanical Installations Elevators in AB Building(Phase I)
Installation of Fire Doors andWalls in GB Building
Anti Active Shooter
Measures - Phase I
Establishment of a Long-term
Capability for WIPO to Utilize
Cloud Service Providers andMigration of Legacy
Applications
Migration of Email to the
Cloud
Total reserve funded
projects

6,000-1,064

4,936

-

-

-2,264

2,672

750

-263

487

-487

-

-

-

960

-792

168

-

-

-164

4

300

-94

206

-206

-

-

-

400

-333

67

-67

-

-

-

4,547

-

-

-

4,547

-945

3,602

8,000

-

-

-

8,000

-1,336

6,664

6,000

-

-

-

6,000

-

6,000

930

-

-

-

930

-

930

1,700

-

-

-

1,700

-

1,700

1,950

-

-

-

1,950

-826

1,124

700

-

-

-

700

-

700

600

-

-

-

600

-4

596

430

-

-

-

430

-

430

220

-

-

-

220

-4

216

400

-

-

-

400

-4

396

2,095

-

-

-

2,095

-

2,095

912

-

-

-

912

-

912

71,383-31,109

11,790-935

28,484-7,842

31,497

5

Revenue in year 2018

-7,837

Net deficit in year 2018

65

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 24: RECONCILIATION OF
STATEMENT OF BUDGETARYCOMPARISON AND STATEMENT OFFINANCIAL PERFORMANCEAs required by IPSAS 24, reconciliation is provided
between the actual amounts on a comparable basis
as presented in Statement V and the actual amounts
in the financial accounts identifying separately any
basis, timing and entity differences. This is provided
separately for the annual periods of the biennium, andalso for the complete biennium in the financial
statements of the second year of the biennium (thiswill be included in the 2019 financial statements).
WIPO’s budget is adopted by the Assemblies on abiennial basis, however, separate estimates areprepared for each of the two annual periods.
Therefore, there are no timing differences to report.
Basis differences occur when the approved budget isprepared on a basis other than the full accrual
accounting basis. Basis differences include thedepreciation of assets, full recognition of liabilities andprovisions, and the capitalization of buildings andequipment expenditure. Entity differences represent
the inclusion in WIPO’s financial accounts of Special
Accounts and Projects financed from reserves, which
are not included in WIPO’s published Program andBudget. Presentation differences represent thetreatment of additions to buildings and equipment, andgains on investment property as investing activities in
the Statement of Cash Flow (Statement IV).

The WIPO Program and Budget is established on amodified accrual basis in accordance with the
Financial Regulations and Rules, and is approved by
the Assemblies of the Member States. The Programand Budget for the 2018/19 Biennium established abudget for the biennium of expenditure of
725.9 million Swiss francs.
For 2018, the first year of the biennium, the original
budget estimate for income was 408.3 million Swiss
francs. For 2018/19, budget estimates for fee income
from the PCT, Madrid and Hague systems wereprepared on an accrual basis based on forecasts fromthe WIPO Economics and Statistics Division. The
updated budget estimate for 2018 income was 419.3
million Swiss francs, including updated forecasts fromthe WIPO Economics and Statistics Division as
prepared in January 2019. Actual revenue on acomparable basis for 2018 was 414.0 million Swiss
francs.
For 2018 the original budget estimate for expenditurewas 359.4 million Swiss francs. The budget after
transfers, including budgetary transfers as at February
1, 2019, was 359.7 million Swiss francs. Actual
expenditure on a comparable basis for 2018 was
339.4 million Swiss francs.
The WIPO Performance Report for 2018 provides an
explanation of both the changes between the original
and the budget after transfers, and the material
differences between the budget and the actual
amounts. WIPO’s budget and financial accounts areprepared using two different bases. The Statement of
Financial
Position,
StatementofFinancial
Performance, Statement of Changes in Net Assets
and Statement of Cash Flow are prepared on a fullaccrual basis, whereas the Statement of Comparisonof Budget and Actual Amounts (Statement V) is
prepared on a modified accrual basis.

66

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Reconciliation for the year 20182018
Operating

Investing

FinancingTotal(in thousands of Swiss francs)
Actual am ount on com parable basis (Statem ent V)

74,574

Depreciation and amortization--

74,574-11,302-11,302--

Equipment acquisition and disposal

-

182

-

182

Capitalization of construction expense

-

5,172

-

5,172

Demolition of buildings components--3,707--3,707

Investment property gains--6,210--6,210-8,457---8,457

Other revenue

104

-

-

104

Change in provision for doubtful debts

-16

-

-

-16

Inventory recognition

20

-

-

20

1,925

-

-

1,925

Changes in employee benefit liabilities

Special Accounts revenue recognition
Other expense-37-

Total Basis differences-17,763-4,563--22,326

Projects financed from reserves
Special Accounts-7,837---1,925---7,837-1,925

Total Entity differences-9,762---9,762

Actual am ount in the Statem ent of Financial
Perform ance (Statem ent II)

47,049-4,563-

42,48667-37

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 25: REVENUE

Programand Budget

Special
Accounts

2018

2018

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2018

2018

Total

2018

2017

17,361

17,829--(in thousands of Swiss francs)

Assessed contributions

17,377---16

Voluntary contributions
Contributions to Special Accounts-

Subventions to Lisbon Union
Sub-total voluntary contributions--

11,605

11,164

9,680

-

-

-

-

-

-

932

-

9,680

-

1,925

11,605

12,096

542

-

-

-

542

242

PCT system

321,348---

321,348

296,356

Madrid system

74,297---74,297

69,952

Hague system

4,919

-

-

-

4,919

5,076

Lisbon system

31

-

-

-

31

39

400,595---

400,595

371,423

1,810

-

-

-

1,810

1,689

Exchange gain (loss)

-305

-11

5

-

-311

-125

Program support charges

1,173

-

-

-1,173--

Other/miscellaneous revenue-1,15210-

104-1,0385,985

420,040

9,679

5

840

430,564

409,139

Publications revenue

1,925

Fees

Sub-total fees
Arbitration and Mediation

Total revenue

Amounts shown for the Program and Budget
represent actual revenue received related to theOrganization’s budget as adopted by the Assemblies.

Voluntary contributions include revenue received inconnection with contributions made by donors toindividual projects under Special Accounts notincluded in the Program and Budget. Revenue fromvoluntary contributions is deferred until earned
through the delivery of the specific services provided
in the plan of work agreed with the donor. During 2017
the Organization also received the payment ofsubventions under Article 11(3)(iii) of the Lisbon
Agreement. These subventions are classified in thetable above as voluntary contributions to the Programand Budget.

Revenue from PCT, Madrid and Hague system fees isdeferred until earned through the publication of theinternational application in accordance with the rulesof each of the Unions.

68

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 26: EXPENSES

Programand Budget

Special
Accounts

2018

2018

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2018

2018

Total

2018

2017

(in thousands of Swiss francs)
195,202

2,313

803

8,465

206,783

216,451

Temporary staff

8,950

239

4

-80

9,113

12,204

Other staff costs

4,775

-

-

-74

4,701

-61

208,927

2,552

807

8,311

220,597

228,594

Posts

Total Personnel expenditure

529

-

11

-

540

470

WIPO fellow ships

3,897

3

-

-

3,900

3,383

Total Interns and WIPO fellow ships

4,426

3

11

-

4,440

3,853

Staff missions

5,212

454

-

-2

5,664

5,902

Third-party travel

6,663

2,407

-

-

9,070

10,165Internships

Training and related travel grant

1,137

893

-

-

2,030

2,128

Total Travel, training and grants

13,012

3,754

-

-2

16,764

18,195

Conferences

3,978

857

-

-

4,835

3,968

Publishing

20

-

-

-

20

46

Individual contractual services

14,006

483

721

27

15,237

15,077

Other contractual services

68,190

2,468

3,088

-

73,74670,331

Total Contractual services

86,194

3,808

3,809

27

93,83889,422Premises and maintenance

21,019258

3,214-1,29323,198

22,101

Communication
Representation and other operating
expenses

2,203

10

-

-

2,213

2,224

476

4

-

-18

462

1,071

United Nations joint services

734

36

-

-

770

904

Total Operating expenses

24,432308

3,214-1,311

26,643

26,300

Supplies and m aterials

1,672

6

1

-16

1,663

3,457

Furniture and equipm ent

564

-

-

-182

382

1,669

-

-

-

11,302

11,302

11,350

209

-

-

-

209

12,007

-

1,173

-

-1,173--

339,436

11,604

7,842

16,956375,838

394,847

Depreciation and am ortization
Finance costs
Program support costs
Total expenses

Before the impact of IPSAS adjustments, expenses in
the Program and Budget, Special Accounts andProjects financed from reserves are reported on amodified accrual basis, whereby expenses arerecognized when goods are received and services are
rendered. IPSAS adjustments concern principally therecognition of depreciation and amortization against

the cost of fixed assets. Adjustments are also
recognized to capitalize expenses for the acquisitionof equipment and additions to buildings. Adjustments
are made to personnel expenditure as a result ofbringing employee benefit liabilities, including ASHI,
into line with IPSAS compliant calculations.

69

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 27: INVESTMENT GAINS/(LOSSES)
Programand Budget

Special
Accounts

2018

2018

Projects
FinancedfromReserves

IPSAS
Adjustm ents

2018

2018

Total

2018

2017

-

-16,994

4,325(in thousands of Swiss francs)

Fair value increase/(decrease) on
investments-16,994--

Dividends

4,183

-

-

-

4,183

-

Investment property disposal

6,999

-

-

-6,210789-

Interest on current accounts anddeposits

-

-

-

-

-

7

Interest on investments

21

-

-

-

21

5

-239

-

-

-

-239

-

-6,030---6,210-12,240

4,337

Investment management andadministration cost
Total investm ent gains/(losses)

The fair value decrease on investments of 17.0 million
Swiss francs represents movements in the valuation of
the Organization’s core cash and strategic cash
portfolio assets at the reporting dates. These are
unrealized losses which impact the value at whichthese investments are held in the Statement of
Financial Position at the reporting date (see themovement table included in Note 4). The fair value
decrease in 2018 was 10.4 million Swiss francs oncore cash investments, and 6.6 million Swiss francs
on strategic cash investments. The Organization’s
investments also generated dividends of 4.2 million
Swiss francs during 2018. In January 2018 theOrganization disposed of its investment property (theMadrid Union Building) for a sale price of 7.0 million
Swiss francs. This generated an investment gain of
0.8 million Swiss francs

70

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 28: FINANCIAL INSTRUMENTS

Fair values

Financial Instruments Overview

The fair value of the financial assets and liabilities areincluded at the amount at which the instrument could
be exchanged in a current transaction between willing
parties, other than in a forced sale or liquidation. The
following methods and assumptions were used toestimate the fair values:

Financial instruments are categorized as follows:
Financial Assets andLiabilities
Cash and cash equivalents
Receivables
Loans
Borrow ings
Payables and accruals
Transfers payable
Current accounts

Derivative assets and liabilities
Held to maturity investments
arising from operating cash
Investments arising from coreand strategic cash

Category
Financial assets at fair value
through surplus and deficit
Loans and receivables (atamortized cost)
Loans and receivables (atamortized cost)
Financial liabilities at amortized
cost
Financial liabilities at amortized
cost
Financial liabilities at amortized
cost
Financial liabilities at amortized
cost
Financial assets and liabilities atfair value through surplus anddeficitHeld to maturity investments at(amortized) cost
Financial assets at fair value
through surplus and deficitCash and short-term deposits, receivables fromexchange transactions, accounts payable andother current liabilities approximate their carrying
amounts largely due to the short-term maturitiesof these instruments;



Quoted investments (in investment funds which
are publicly traded) are based on price quotations
at the reporting date;

Derivative financial instruments are based onquoted prices, adjusted for the UNORE atreporting date;Long-term loans, receivables and borrowings areevaluated by the Organization based onparameters such as interest rates and risk
characteristics.
Allowances
have
been
established for receivables from non-exchangetransactions which cover amounts due from
Member States that have lost the right to voteunder Article 11, paragraph 5 of the WIPO
Convention and for contributions from least
developed countries which have been frozen byaction of the Assemblies. The concessionary loan
to FIPOI is recognized at amortized cost withvalues based on cash flows discounted using a
discount rate of 1.48 per cent.

The Organization is exposed to certain foreign
currency exchange, credit, interest rate, price andliquidity risks which arise in the normal course of its
operations. This note presents information about theOrganization’s exposure to each of the above risks
and the policies and processes for measuring andmanaging risk.
The Organization manages its investments inaccordance with its Policy on Investments. In 2015 thepolicy was comprehensively revised and adopted by
the Fifty-Fifth Series of Meetings of the Assemblies ofthe Member States of WIPO. Some further
amendments to the Policy on Investments wereadopted at the Fifty-Seventh Series of Meetings in2017. The revised policy contains two specificinvestment policies, one covering operating and core
cash and a second one covering strategic cash.
Operating cash is the cash required by theOrganization to meet daily payment requirements andto ensure that an amount equivalent to the target
reserves is available in liquid assets. Core cash is thebalance of cash remaining once operating andstrategic cash have been deducted. Strategic cash is
the cash which has been set aside to finance afterservice employee benefit liabilities, including ASHI.

The following tables provide a comparison by class ofthe carrying amounts and fair value of theOrganization’s financial instruments:
Carrying
am ount
Financial assets

Fair value(in thousands of Swiss francs)

2018
Receivables

65,129

Loans

8,367

65,1298,367

Cash and cash equivalents

222,920

222,920

Investments

393,418

393,418

689,834

689,834

Receivables

57,676

57,676

Loans

8,553

8,553

Cash and cash equivalents

265,452

265,452

Investments

278,319

278,3192017

Derivative financial instruments

71

921

921

610,921610,921

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Carrying
am ount
Financial liabilities

Credit risk

Fair value(in thousands of Swiss francs)

Credit risk is the risk of financial loss to theOrganization if counterparties to financial instruments
fail to meet their contractual obligations, and it arises
principally from the Organization’s loans, receivables,
cash and cash equivalents, and investments. The
carrying amount of financial assets represents the
maximum credit exposure. The maximum exposure tocredit risk as at December 31, 2018 and 2017, was asfollows:

2018
Payables and accruals

16,536

16,536

Transfers payable

96,646

96,646

Current accounts

70,57870,578Derivative financial instruments

314

314

184,074

184,074

Borrow ings

16,862

16,862

Payables and accruals

17,896

17,896

Transfers payable

93,901

93,901

2017

Current accounts

64,47964,479193,138

193,138

Decem ber 31,
2018(in thousands of Swiss francs)

Fair Value Hierarchy
For those instruments categorized as fair value
through surplus or deficit, fair values are classified
according to the following hierarchy:Quoted prices (unadjusted) in active markets for
identical assets and liabilities (Level 1);

Inputs other than quoted prices included within
Level 1 that are observable for the asset or
liability, either directly or indirectly (Level 2);

Inputs for the asset or liability that are not basedon observable market data (Level 3).
Financial Assets and Liabilities

Level 1

Derivative assets and liabilities
Investments arising from core and strategic
cash

Level 2Credit Rating

Investm ents
Per cent

65,129

Loans

8,367

8,553

Cash and cash equivalents

222,920

265,452

Investments

393,418

278,319-921

689,834

610,921

Maxim um exposure to credit
risk

57,676The Organization’s receivables from non-exchangetransactions are almost exclusively from its Member
States representing sovereign governments, andtherefore risks related to credit are considered minor.
An allowance has been established against the asset
value of accounts receivable to reflect receivables forwhich payment is not anticipated in the short-term.
In accordance with the Organization’s Policy on
Investments, deposits may only be held withinstitutions with a minimum short-term credit rating of
A-2/P-2 or a minimum long-term credit rating of A/A2.
Money market investments, bonds, notes or otherobligations and other fixed income products
purchased directly by WIPO may only be held withinstitutions with a minimum short-term credit rating of
A-3/P-3 or a minimum long-term credit rating of BBB/Baa3. Where these are acquired as shares in pooledmarket traded funds, at least 65 per cent of theholdings must be in Investment Grade (AAA/Aaa to
BBB-/Baa3), while the balance of up to 35 per cent
may be held in high yield bonds (BB+/Ba1 to C/Ca).
The credit ratings attached to cash and cash
equivalents and investments as at December 31,
2018, is as follows:

Level 1

A-1+

A-1

A-2

Unrated(1)

Total

S&P short-term(in thousands of Swiss francs)

Decem ber 31, 2018
Cash and cash equivalents

Receivables

Derivative financial instruments

Fair Value Hierarchy

Cash and cash equivalents

Decem ber 31,
2017

1,870

175,90945,11922

222,920-

12,000-381,418

393,418

1,870

187,90945,119381,440

616,338

0.3%

30.5%

7.3%

61.9%

100.0%(1) Unrated balances include cash on hand and non-current investments. Non-current investments held by WIPO are in investment funds which are notrated by credit rating agencies, but in which the underlying investments are made in accordance with WIPO’s Policy on Investments.

72

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Liquidity risk

little or no cost. Core cash balances are invested withthe objective of generating a positive return overrolling five year periods. Core cash balances areinvested ideally in such a way that occasional accessto a portion of the cash is possible. Strategic cash
balances are invested over the long term, andcurrently have no short or medium term liquidity
requirements.

Liquidity risk is the risk of the Organization not being
able to meet its obligations as they fall due.
The Organization does not have significant exposure
to liquidity risk as it has substantial unrestricted cash
resources which are replenished from the results of its
operations. The Organization’s Policy on Investments
requires that operating and core cash are invested insuch a way to ensure the liquidity necessary to meet
the Organization’s cash flow requirements. Operating
cash balances are invested over the short term
(periods not exceeding twelve months to maturity) in
low-risk asset classes which are easily liquidated at

The following table provides a maturity analysis of
WIPO’s borrowings as at December 31, 2018 and2017. In January 2018 the Organization repaid in full
the remaining balance of its FIPOI loans (see Note 17
Borrowings):

1 year or less
Decem ber 31, 2018

1-5 years

Later than 5 years

Total(in thousands of Swiss francs)

FIPOI loans

-

-

-

-

Total borrow ing

-

-

-

-

1-5 years

Later than 5 years

Total

1 year or less
Decem ber 31, 2017

(in thousands of Swiss francs)

FIPOI loans

16,862--

16,862

Total borrow ing

16,862--

16,862Currency risk
The Organization’s contributions to the UNJSPF andits payments to ICC are made in US dollars. The
Organization has a further exposure to exchange risk
in connection with the cost of pensions for staff
previously enrolled in the Closed Pension Fund who
are now members of the UNJSPF. In addition, during
2018 the Organization had external offices in Brazil,
China, Japan, Russia and Singapore, and acoordination office in the USA, with limited assets inlocal currency.

The Organization receives revenue from fees incurrencies and incurs expenses in currencies otherthan its functional currency, the Swiss franc, and is
exposed to foreign currency exchange risk arisingfrom fluctuations of currency exchange rates. The
mechanism for managing foreign currency exchange
risk in relation to PCT international filing fees isdiscussed in detail in the financial statement
discussion and analysis which precedes thesefinancial statements. The Organization is also
exposed to exchange risk arising from the currency
differences between amounts payable to International
Searching Authorities pursuant to the Regulations
under the Patent Cooperation Treaty and amounts
received by national patent offices for international
search fees from applicants for international patents.
In 2018, the Organization launched a netting pilot
project to reduce the exposure of PCT fee income tomovements in currency exchange rates.

Currency exchange rate sensitivity analysis
The currency exchange rate sensitivity analysis isbased on reasonable shifts in exchange rates. A rateof 10.0 per cent has been applied to financial assets
and financial liabilities held in currencies other thanthe Swiss franc to summarize the effect on surplus in
the Statement of Financial Performance. A positive
movement in the exchange rate reflects anappreciation of the foreign currency against the Swiss
franc, a negative movement in the exchange rate
reflects a depreciation of the foreign currency against
the Swiss franc. The impact of these exchange rate
movements resulting from the Organization’s
derivative financial instruments (forward foreignexchange contracts) is shown separately:

Where investments are held in currencies other thanthe Swiss franc, the Organization may use derivative
financial instruments to minimize the risk arising fromthe fluctuation of the currency of the investment
against the Swiss franc. Investment in derivatives for
speculative purposes is not permitted.

73

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

December 31, 2018
Original currency:

USD

JPY

EUR

(in thousands of Swiss francs)
Total in the financial statem ents:
Financial assets
Cash and cash equivalents

3,899

37

Investments

126,422--PCT debtors

9,310

6,038

7,674

USA taxes reimbursable

2,192

-

-

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

14,182

608

867

Total effect on surplus of -ve m ovem ents

-14,182

-608

-867

994

Financial liabilities
PCT current accounts

-

-

73

Accounts payable

2,457

6

387

Transfer payable

1,336

4

251

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

-379

-1

-71

Total effect on surplus of -ve m ovem ents

379

1

71

Derivative financial instrum ents
Forw ard foreign exchange contracts

-314

N/A

N/A

Reasonable shift

10.0%

10.0%

10.0%

Total effect on surplus of +ve m ovem ents

-11,287

N/A

N/A

Total effect on surplus of -ve m ovem ents

11,287

N/A

N/A

TOTAL NET IMPACT
Total effect on surplus of +ve m ovem ents

2,516

607

796

Total effect on surplus of -ve m ovem ents

-2,516-607-796

Market risk
Market risk is the risk of changes in market prices,
including interest rates, affecting the Organization’s
income or the value of its financial instrument
holdings. Given prevailing interest rates at the current
time, the Organization has included limited investment
revenue in its budget for 2018/19 Program andBudget.

The Organization does not currently use financial
instruments to hedge interest rate risk. The interest
rates and maturity profile on interest generating
financial instruments as at December 31, 2018, andDecember 31, 2017, are as follows:

Interest rate atreporting date
Decem ber 31, 2018%

Financial assets
Term deposits w ith Raiffeisen

0.017Interest rate atreporting date
Decem ber 31, 2017%

Financial assets
Term deposits w ith Raiffeisen

0.018

74

1 year or
less

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

20,000--20,0001 year or
less

1-5 years

Later than 5
years

Total

(in thousands of Swiss francs)

20,000--20,000WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Interest rate sensitivity analysis
If the average interest rate during the year had been
50 basis points higher or lower, the interest income orinterest expense would have been affected as follows:
Increase (+) / decrease (-)
in basis points

Effect on surplus(in thousands of Swiss francs)

2018
Financial assets
Term deposits w ith Raiffeisen

+50

100

-50

-100

Market price sensitivity analysis
WIPO’s medium-term investment portfolio (core cash)
and long-term investment portfolio (strategic cash) are
subject to risk of movements in market prices of theunderlying investment funds. Based on historicalexperience for the investment strategies applied tothese portfolios, the expected volatility for core cash
and strategic cash is 3.70 per cent and 4.80 per cent.
The table below shows the impact on the
Organization’s surplus of a positive and negative
market price movement based on these expectedlevels of volatility:
Percentage m ovem ent inm arket priceEffect on surplus(in thousands of Swiss francs)

2018
Non-current investm ents
Medium-term investment porfolio (core cash)

Long-term investment portfolio (strategic cash)75+3.70%

9,661-3.70%-9,661+4.80%

5,775-4.80%-5,775

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 29: EXCHANGE GAIN AND LOSS

Gain

Loss

Net Impact
2018

Net impact
2017(in thousands of Swiss francs)
PCT system fees gain/(loss)
Accounts receivable
PCT fees received
PCT International Searching Authority
Total PCT system fees realized gain/(loss)
PCT bank accounts
PCT current accounts and debtors
Total PCT system fees unrealized gain/(loss)
Total PCT system fees gain/(loss)

220
2,413
2,354
4,987
1,174
313
1,487
6,474

-141
-686
-2,011-2,838-1,089-192-1,281-4,119

79
1,727
343
2,149
85
121
206
2,355

47
440
-2,002-1,515
23
735
758
-757

Investing activities gain/(loss)
Hedging instruments
Total Investing activities realized gain/(loss)
Hedging instruments
Investments
Investment bank accounts
Total Investing activities unrealized gain/(loss)
Total Investing activities gain/(loss)

1,887
1
1,888
1,888

-4,619-4,619-314-314-4,933-4,619-4,619
-314
1,887
1
1,574
-3,045

-463
-463
921
-951
-30
-493

35
146
181

-46
-140
-186

-11
6
-5

-1
28
27

Other gain/(loss)
Spot transactions
Accounts payable
Total other realized gain/(loss)
Bank accounts
Special Account bank accounts
Other assets and liabilities
Total other unrealized gain/(loss)
Total other gain/(loss)

80
218
298
611
5,228
5,839
6,137

-412
-412
-699
-5,256-5,955-6,367

80
-194
-114
-88
-28
-116
-230

60
588
648
-382
-331
-713
-65

Total exchange gain/(loss)

14,680-15,605-925-1,288The Organization realizes exchange gains and losseson accounts payable and accounts receivabletransactions incurred in currencies other than Swiss
francs based on the exchange rate in effect on thedate of the transaction. Exchange gains and losses
are realized on international filing fees and handlingfees under the PCT where these are received by theOrganization in currencies other than Swiss francs,
and on payments made to ISAs under the PCT which
are valued in the currency of the ISA but collected by
WIPO in Swiss francs or by the national receiving
Office in its local currency. Exchange gains and losses
are also realized on forward foreign exchange

contracts and foreign exchange spot transactions. In
addition, unrealized exchange gains and losses
relating to the revaluation of bank accounts and othermonetary assets and liabilities into Swiss francs at theexchange rate in effect on the reporting date arerecognized on the financial statements. Unrealized
foreign exchange gains and losses are also
recognized from the valuation of open forward foreignexchange contracts at the reporting date. The net
effect of all exchange gains and losses of a 0.9 million
Swiss francs loss in 2018 (1.3 million Swiss francs
loss in 2017) is recognized within revenue in theStatement of Financial Performance.

Arbitration and Mediation gain/(loss)
Arbitration and Mediation bank accounts
Arbitration and Mediation other assets and liabilities
Total Arbitration and Mediation unrealized gain/(loss)

76

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

NOTE 30: EVENTS AFTER THE
REPORTING DATEWIPO’s reporting date is December 31, 2018 and its
financial statements were authorized for issue on thesame date as the External Auditor’s opinion. No
material events, favourable or unfavourable, which
would have impacted upon the financial statements
have occurred between the reporting date and thedate on which the financial statements wereauthorized for issue.

NOTE 31: SEGMENT REPORTING
Most revenue (contributions, fees, publications) is
accounted for by Union in WIPO’s accounts.
Investment gains/(losses) have been allocated among
the Unions based upon the balance of Reserve andWorking
CapitalFunds
duringtheyear.
Other/miscellaneous revenue has been allocatedequally between the Unions, except for specificelements which can be directly attributed to therelevant Unions. Expenses are accounted for byprogram and then re-allocated to the various Unions
based upon a methodology accepted by the WIPO
General Assembly as part of the adoption of WIPO’s
2018/19 Program and Budget.

Segment reporting is presented in a format which
represents the various Unions as the segments thatmake up WIPO. The Unions were created by thevarious treaties administered by WIPO.
The WIPO contribution-financed Unions have been
consolidated for presentation purposes.
These
include the Paris, Berne, Locarno, Nice, Vienna and
IPC Unions along with the functions covered by the
WIPO Convention. The Patent Cooperation Treaty
Union, Madrid Union, Hague Union and Lisbon Union
are each governed by an Assembly that meetsannually to adopt a budget and take such otheractions as may be appropriate under the relevant
treaties.

A separate segment has been established for Special
Accounts,
representing voluntary contributions
administered by WIPO on behalf of individual donors
to carry out programs related to WIPO’s mandate.
Revenue and expenses related to Special Accounts
are accounted for separately in the financial
accounting system.

WIPO’s assets and liabilities, other than the reserves
representing net assets, are owned by or are theresponsibility of the entire Organization and not assets
or liabilities of individual Unions or segments. The
assets and liabilities generally support a wide range ofservice delivery activities across multiple Unions(segments). Previously the only exception was theinvestment property in Meyrin which was owned by
the Madrid Union, and which was sold in January
2018 (see Note 9 Investment Property). Therefore,
individual assets and liabilities will not be reflected in
the disclosure of information for individual segments
or Unions. Only the net assets or reserves, including
the Reserves and Working Capital Funds are shownby individual segment.

The only inter-segment charge represents the costs ofprogram support incurred by the Unions in support ofSpecial Accounts. Program support costs are charged
to the Special Accounts based on a percentage of
total direct expenditure specified in the agreementwith the donor making the voluntary contribution.

77

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

Revenue, Expenses and Reserves by Segment
UNIONS
Program Program Title

Contribution
Financed

PCT

MadridHague

Special
Accounts

LisbonTotal(in thousands of Swiss francs)
REVENUE
Contributions

17,377

-

-

-

-

9,680

27,057

Fees-

321,348

74,297

4,919

31

-

400,595

Publications

2

419

90

31

-

-

542

137

-1,912

745

376

370

-1

-285

Other/miscellaneous
Arbitration and Mediation
Sub-total revenue on budgetary basis
Miscellaneous revenue projects financed from reserves
IPSAS adjustments to revenue
TOTAL REVENUE

94

1,147

543

22

4

-

1,810

17,610321,00275,675

5,348

405

9,679

429,719

1

1

1

1

1

-

5

-23

96

41

-13

-13

752

840

17,588321,099

75,717

5,336

393

10,431

430,564

197

2,318

88

-

-

-

2,603

454

-

1,474

340

-

-

2,268

6,228

1,126

155

-

-

-

7,509

3,306

-

-

-

-

-

3,306

-

97,515----97,515EXPENSES
1
2
3
4

Patent Law
Trademarks, Industrial Designs & Geographical
Indications
Copyright and Related Rights
Traditional Know ledge, Traditional Cultural Expressions& Genetic Resources

5

The PCT System

6

Madrid System--

26,943598

33-

27,574

7

WIPO Arbitration and Mediation Center

274

3,340

1,581

63

11

-

5,269

8

Development Agenda Coordination
Africa, Arab, Asia and the Pacific, Latin America andthe Caribbean Countries, Least Developed Countries

21

1,297

179

-

-

-

1,497

195

11,991

1,649

-

-

-

13,8359
10Transition and Developed Countries

49

3,032

417

-

-

-

3,498

11

The WIPO Academy

88

5,410

744

-

-

-

6,242

12

International Classifications and Standards

216

2,720

124

31

-

-

3,091

13

Global Databases

-

3,315

1,017

53

-

-

4,385

14

Services for Access to Information and Know ledge

57

3,173

748

53

1

-

4,032

15

Business Solutions for IP Offices

90

5,531

761

-

-

-

6,382

16

Economics and Statistics

47

2,886

397

-

-

-

3,330

17

Building Respect for IP

31

1,899

261

-

-

-

2,191

18

IP and Global Challenges

30

1,825

251

-

-

-

2,106

19

Communications

105

6,488

892

-

-

-

7,485

20

External Relations, Partnerships and External Offices

91

5,573

766

-

-

-

6,430

21

Executive Management

481

7,905

2,484

370

40

-

11,28022

Program and Resource Management

664

11,237

4,422

673

55

-

17,051

23

Human Resources Management and Development

684

11,242

3,532

527

57

-

16,042

General Support Services

796

13,087

4,112

613

66

-

18,674

25

Information and Communication Technology

903

16,424

5,073

1,404

75

-

23,87926

Internal Oversight

100

1,641

515

77

8

-

2,341

27

Conference and Language Services

727

11,951

3,755

560

60

-

17,053

28

Information Assurance, Safety and Security

433

7,108

2,233

333

36

-

10,14330

SMEs and Entrepreneurship Support

40

2,480

341

-

-

-

2,861

31

The Hague System

-

-

-

8,905

-

-

8,905

32

Lisbon System

-

-

-

-

659

-

659

16,307

242,51464,914

14,6001,101-

339,436

24

Sub-total expenses on budgetary basis
Expenses on projects financed from reserves
Sub-total expenses on budgetary basis including
reserve expenses
Special Accounts
IPSAS adjustments to budgetary expenses and special
accounts

100

7,275

467

-

-

-

7,842

16,407249,789

65,381

14,6001,101-

347,278

-

-

-

-

-

11,604

11,604

1,025

15,298

4,071

907

68

-1,173

20,196-6-3,214

-20

-

-

-

-3,240TOTAL EXPENSES

17,426

261,873

69,432

15,507

1,169

10,431

375,838

Investment gains/(losses)-1,018-10,048

5,036

-

-

-

-6,030---6,210----6,210-856

49,178

5,111-10,171-776-

42,48625,457

283,087

59,418-25,570-1,041-

341,351

Actuarial gains/(losses) as at December 31, 2017-7,248-103,461-24,339-3,102-544--138,694

Net Assets as at Decem ber 31, 201718,209179,626

35,079-28,672-1,585-

202,657-856

49,178

5,111-10,171-776-

42,486

24,601

332,265

64,529-35,741-1,817-

383,837

IPSAS adjustments to projects financed from reserves

IPSAS adjustments to Investment gains/(losses)
SURPLUS/(DEFICIT) FOR THE YEARNet Assets as at Decem ber 31, 2017 - actuarial
gains/(losses) excluded

2018 surplus/(deficit)
Net Assets as at Decem ber 31, 2018 - actuarial
gains/(losses) excluded
Actuarial gains/(losses) as at December 31, 2018

-4,697-92,668-21,389-3,260-411--122,425

Net Assets as at Decem ber 31, 2018

19,904

239,597

43,140-39,001-2,228-261,412Note 1: The Madrid Union has assumed the financing of the Hague Union’s contribution of 3 million Swiss francs to the IT Modernization Program of the
Madrid and Hague international registration systems. The amount will be reimbursed by the Hague Union to the Madrid Union as soon as the level ofreserves of the Hague Union Reserve Fund so allows.
Note 2: In accordance with the decision of the Assemblies of the Member States of WIPO at their 55 th Series of Meetings in 2015, the Contributionfinanced Unions have assumed the financing of the deficit of the Lisbon Union in the biennium 2016/17 amounting to 56,157 Swiss francs. The amountwill be reimbursed by the Lisbon Union to the Contribution-financed Unions as soon as the level of reserves of the Lisbon Union so allows.
Note 3: Actuarial gains/(losses) as at December 31, 2018 have been allocated based on the relative share of headcounts for 2018.

78

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

ANNEXES79

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

ANNEX I – STATEMENT OF FINANCIAL POSITION BY SOURCE OF FUNDING [UNAUDITED]
as at December 31, 2018
(in thousands of Swiss francs)
Program and Budget(regular budget)
December 31,
2018
ASSETS
Current assets
Cash and cash equivalents
Investments
Derivative financial instruments
Contributions receivables
Exchange transactions receivables
Inventories
Other current assets

December 31,
2017

Special Accounts(voluntary contributions)
December 31,
2018

Projects financed fromreserves

December 31,
2017

December 31,
2018

IPSAS Adjustm ents

December 31,
2017

December 31,
2018

December 31,
2017

Consolidated
December 31,
2018

December 31,
2017234,920
2,132
19,222
143,121399,395

275,452921
1,626
11,250133,813423,062

29
11,951
11,980150
13,841
13,991-1-155,071-155,072-1-147,654-147,655-12,000
12,000-622
50,8861,298-151,561-10,000
10,000-661
51,035
1,349
51,723

222,920
12,0001,510
70,136
1,298
307,864

265,452
10,000921
965
62,434
1,349
341,121381,418
28,8095,394
8,679
424,300

268,319
28,8095,416
8,868
311,412--

137,419
137,419

137,419
137,419

1,054
24,994
195,106-5,184-312
215,658

1,455
6,210
26,414
202,940-5,191-315
231,513

381,418
1,054
24,994361,334
210
8,367
777,377

268,319
1,455
6,210
26,414369,168225
8,553
680,344823,695

734,474

11,98013,991-17,653-10,236

267,219

283,236

1,085,241

1,021,465

21,237314-24,576
70,15855,8195,588
70,601
199,141

22,948-21,406
65,24941,713
16,8622,008
64,516
191,89064
321
13,52013,905133
337
14,43014,900-4,765-55-4,820-5,185-55-5,24049,297
26,488226,899-23
302,661

49,24528,652
225,856-37
303,716

16,536314
24,98796,646296,238
5,588
70,578510,887

17,89628,121
93,901
281,999
16,8622,008
64,479505,266

131,174
131,174

123,778
123,778

-

-

-

-

177,964
3,804
181,768

185,827
3,937
189,764

309,138
3,804
312,942309,605
3,937
313,542TOTAL LIABILITIES

330,315315,668

13,905

14,900-4,820-5,240484,429

493,480

823,829

818,808

Accumulated Surpluses
Actuarial gains/losses through Net Assets
Special Projects Reserve
Revaluation Reserve Surplus
Working Capital Funds
NET ASSETS

487,038
6,342
493,380

412,464
6,342
418,806-1,925-1,925-909-909-44,330
31,497-12,833-16,786
11,790-4,996-112,051-122,425
17,266-217,210-88,816-138,694
17,266-210,244

328,732-122,425
31,497
17,266
6,342
261,412305,953-138,694
11,79017,266
6,342
202,657

Non-current assets
Investments
Equipment
Investment property
Intangible assets
Land and buildings
Contributions receivables
Exchange transactions receivables
Other non-current assets

TOTAL ASSETSLIABILITIESCurrent liabilities
Payables and accruals
Derivative financial instruments
Employee benefits
Transfers payable
Advance receipts
Borrow ings
Provisions
Other current liabilities
Non-current liabilities
Employee benefits
Borrow ings due after one year
Advance receipts

80

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

ANNEX II – STATEMENT OF FINANCIAL PERFORMANCE BY SOURCE OF FUNDING [UNAUDITED]
for the year ended December 31, 2018
(in thousands of Swiss francs)
Program and Budget

2018

Special Accounts

2017

2018

2017

Projects financed fromreserves

IPSAS Adjustm ents

2018

2018

2017

Consolidated

2017

2018

2017

REVENUE
Assessed contributions

17,377

17,371

-

-

-

-

-16

458

17,361

17,829

11,164

Voluntary contributions
Contributions to Special Accounts

-

-

9,680

10,327

-

-

1,925

837

11,605

Subventions to Lisbon Union

-

932

-

-

-

-

-

-

-

932

Sub-total voluntary contributions

-

932

9,680

10,327

-

-

1,925

837

11,605

12,096

542

242

-

-

-

-

-

-

542

242

PCT system fees

321,348316,266

-

-

-

-

-

-19,910

321,348

296,356

Madrid system fees

74,29770,263

-

-

-

-

-

-311

74,297

69,952

Hague system fees

4,919

5,062

-

-

-

-

-

14

4,919

5,076

Lisbon system fees

31

39

-

-

-

-

-

-

31

39

400,595

391,630

-

-

-

-

-

-20,207400,595

371,423

1,810

1,689

-

-

-

-

-

-

1,810

1,689
-125

Publications revenue
Fees

Sub-total fees
Arbitration and Mediation
Exchange gains

-305

-124

-11

-1

5

-

-

-

-311

Program support charges

1,173

1,090

-

-

-

-

-1,173-1,090--

Other/miscellaneous revenue-1,152

5,697

10

-

-

-

104

288

-1,0385,985

420,040

418,527

9,679

10,3265-840-19,714430,564

409,139

228,594

TOTAL REVENUE
EXPENSES
Personnel expenditure

208,927

220,551

2,552

2,397

807

811

8,311

4,835

220,597

Internships and WIPO fellow ships

4,426

3,847

3

6

11

-

-

-

4,440

3,853

Travel, training and grants

13,012

14,359

3,754

3,836

-

-

-2

-

16,764

18,195Contractual services

86,194

83,351

3,808

3,360

3,809

2,737

27

-26

93,83889,422

Operating expenses

24,432

26,998

308

506

3,214

1,448

-1,311-2,652

26,643

26,300

Supplies and materials

1,672

3,367

6

23

1

-

-16

67

1,663

3,457

Furniture and equipment

564

2,041

-

17

-

-

-182

-389

382

1,669

-

-

-

-

-

-

11,302

11,35011,302

11,350209

12,007

-

-

-

-

-

-

209

12,007

-

-

1,173

1,090

-

-

-1,173-1,090--339,436

366,521

11,604

11,235

7,842

4,996

16,956

12,095375,838

394,847

Investment gains/(losses)-6,030

4,337

-

-

-

-

-6,210--12,240

4,337

SURPLUS/(DEFICIT) FOR THE YEAR

74,57456,343-1,925-909-7,837-4,996-22,326-31,80942,486

18,629Depreciation and amortization
Finance costs
Program support costs
TOTAL EXPENSES

81

WIPO ANNUAL FINANCIAL REPORT AND FINANCIAL STATEMENTS 2018

ANNEX III – WIPO EX GRATIA PAYMENTS
Financial Regulation 5.10 states that a summary statement of ex gratia payments for the calendar year shall be included in
the annual financial statements of the Organization. There were no such payments made during 2018 and therefore nosummary statement is required.

82

World Intellectual Property Organization34, chemin des Colombettes
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