# COM_2016_0485_FIN.ENG.xhtml.1_EN_ACT_part1_v5.docx

european flagEUROPEAN COMMISSION

Brussels, 15.7.2016

COM(2016) 485 final

COMMUNICATION FROM THE COMMISSION

ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2015

Annual accounts of the
  European Development Fund 2015

CONTENTS

CERTIFICATION OF THE ACCOUNTS

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

FINANCIAL STATEMENTS AND EXPLANATORY NOTES - FUNDS MANAGED BY THE EUROPEAN COMMISSION

FINANCIAL STATEMENTS OF THE EDF

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF

FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND

CERTIFICATION OF THE ACCOUNTS

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND

NOTES TO THE FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE BÊKOU TRUST FUND

EDF REPORT ON FINANCIAL IMPLEMENTATION

FINANCIAL STATEMENTS AND EXPLANATORY NOTES – FUNDS MANAGED BY THE EUROPEAN INVESTMENT BANK

CERTIFICATION OF THE ACCOUNTS

The annual accounts of the European Development Fund for the year 2015 have been prepared in accordance with Title IX of the Financial Regulation of the 11th European Development Fund and with the accounting principles, rules and methods set out in annex to the financial statements.

I acknowledge my responsibility for the preparation and presentation of the annual accounts of the European Development Fund in accordance with Article 20 of the Financial Regulation of the 11th European Development Fund.

I have obtained from the authorising officers and from the EIB, who guarantee its reliability, all the information necessary for the production of the accounts that show the European Development Fund's assets and liabilities and the budgetary implementation.

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present a true and fair view of the financial position of the European Development Fund in all material aspects.

[signed]

Manfred Kraff

Accounting Officer

12 July 2016

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

1.BACKGROUND

The European Union (hereinafter referred to as the EU) has cooperative relations with a large number of developing countries. The main objective is to promote economic, social and environmental development, with the primary aim of reducing and eradicating poverty in the long-term, by providing beneficiary countries with development aid and technical assistance. To achieve this, the EU draws up, jointly with the partner countries, cooperation strategies and mobilises the financial resources to implement them. These EU resources allocated to development cooperation come from three sources:

-The EU budget;

-The European Development Fund;

-The European Investment Bank.

The European Development Fund (hereinafter referred to as the EDF) is the main instrument for providing EU aid for development cooperation to the African, Caribbean and Pacific (hereinafter referred to as the ACP) States and Overseas Countries and Territories (hereinafter referred to as the OCTs).

The EDF is not funded by the EU budget. It is established by an internal agreement of the Representatives of the Member States, sitting within the Council, and managed by a specific committee. The European Commission (hereinafter referred to as the Commission) is responsible for the financial implementation of the operations carried out with EDF resources. The European Investment Bank (hereinafter referred to as the EIB) manages the Investment Facility.

During the period 2014-2020, the geographic aid granted to ACP States and OCTs will continue to be mainly funded by the EDF. Each EDF is usually concluded for a period of around five years and is governed by its own Financial Regulation which requires the preparation of financial statements for each individual EDF. Accordingly, financial statements are prepared separately for each EDF in respect of the part that is managed by the Commission. These financial statements are also presented in an aggregated way so as to provide a global view of the financial situation of the resources for which the Commission is responsible.

The Internal Agreement establishing the 11th EDF was signed by the participating Member States, meeting within the Council, in June 2013
  1
  . It came into force on 1 March 2015. In order to assure continuity between the end of the 10th EDF and the entry into force of the 11th EDF, the Commission proposed transitional measures, known as the Bridging Facility (BF)
  2
  . The BF is presented under the 11th EDF.

At the same time the 10th EDF Financial Regulation
  3
   was amended and the new Financial Regulation applicable to the transition period was adopted
  4
  . They entered into force on 30 May 2014. On 2 March 2015 the Council adopted the 11th EDF Financial Regulation
  5
  and the Implementation Rules
  6
  . They entered into force on 6 March 2015.

Within the framework of the ACP-EU Partnership Agreement, the Investment Facility was established. This Investment Facility is managed by the EIB and is used to support private sector development in the ACP States by financing essentially – but not exclusively – private investments. The Facility is designed as a renewable fund, so that loan repayments can be reinvested in other operations, thus resulting in a self-renewing and financially independent facility. As the Investment Facility is not managed by the Commission, it is not consolidated in the first part of the annual accounts – the financial statements of the EDF and the related report on financial implementation. The financial statements of the Investment Facility are included as a separate part of the annual accounts (part II) to provide a full picture of the development aid of the EDF
  7
  .

2.HOW IS THE EDF FUNDED?

The European Council of 2 December 2013 adopted the Multi-annual Financial Framework for 2014-2020. In this context, it was decided that geographical cooperation with the ACP States would not be integrated into the EU budget (budgetised), but would continue to be funded through the existing inter-governmental EDF.

The EU budget is annual and according to the budgetary principle of annuality, expenditure and revenue are planned and authorised for one year. Unlike the EU, the EDF is a fund operating on the basis of multiannuality. Each EDF establishes an overall fund to implement development cooperation during a period of usually five years. As resources are allocated on a multiannual basis, the allocated funds may be used over the period of the EDF. The lack of budget annuality is highlighted in the budgetary reporting, where the budgetary implementation of the EDFs is measured against the total funds.

The EDF resources are “ad hoc” contributions from the EU Member States. Approximately every five years, Member State representatives meet at intergovernmental level to decide on an overall amount that will be allocated to the fund and to oversee its implementation. The Commission then manages the fund in accordance with the Union policy on development cooperation. Since Member States have their own development and aid policies in parallell to the Union policy, the Member States must coordinate their policies with the EU to ensure they are complementary.

In addition to the above mentioned contributions, it is also possible for Member States to enter into co-financing arrangements or to make voluntary financial contributions to the EDF.

3.YEAR-END REPORTING

3.1.ANNUAL ACCOUNTS

It is the Accounting Officer's responsibility to prepare the annual accounts and ensure that they present a true and fair view of the financial position of the EDF.

The annual accounts are presented as follows:

Part I: Funds managed by the Commission

(I)Financial statements of the EDF

(II)Report on financial implementation of the EDF

Part II: Funds managed by the EIB

(I)Financial statements of the Investment Facility

In addition, since 2014 when a trust fund has been created under the EDF (see 3.2 below), its accounts, as well as the consolidated (EDF and trust fund) accounts are presented below.

The annual accounts are adopted by the Commission by 31 July of the subsequent year and presented to the European Parliament and to the Council for discharge.

3.2.BÊKOU TRUST FUND

In accordance with Article 187(1) of the Financial Regulation applicable to the general budget of the Union (EU FR) and Article 42 of the Financial Regulation applicable to the transition period, the Commission is allowed to create Union Trust Funds for external actions under an agreement concluded with other donors. These trust funds may be created for emergency, post-emergency and thematic actions. In accordance with Article 187(6) of the EU FR, the accounting officer of the Union Trust Fund shall be the Accounting Officer of the Commission.

The first multi-donor EU Trust Fund called Bêkou, was established on 15 July 2014, by the EU and Germany, France and the Netherlands, with the aim to promote the stabilisation and reconstruction of the Central African Republic. The maximum duration of the Bêkou Trust fund is 60 months.

As the Bêkou Trust fund was established under the EDF, its annual accounts are consolidated with the EDF accounts.

4.AUDIT AND DISCHARGE

4.1.AUDIT

The EDF annual accounts and resource management are overseen by its external auditor, the European Court of Auditors (hereinafter referred to as the ECA), which draws up an annual report for the European Parliament and the Council.

4.2.DISCHARGE

The final control is the discharge of the financial implementation of the EDF resources for a given financial year. The European Parliament is the discharge authority of the EDF. This means that following the audit and finalisation of the annual accounts it falls to the Council to recommend and then to the European Parliament to decide whether to grant discharge to the Commission for the financial implementation of the EDF resources for a given financial year. This decision is based on a review of the accounts and the annual report of the ECA (which includes an official statement of assurance) and replies of the Commission, and also following questions and further information requests to the Commission.

EUROPEAN DEVELOPMENT FUND

FINANCIAL YEAR 2015

FINANCIAL STATEMENTS AND EXPLANATORY NOTES - FUNDS MANAGED BY THE EUROPEAN COMMISSION

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add-up.

CONTENTS

FINANCIAL STATEMENTS AND EXPLANATORY NOTES - FUNDS MANAGED BY THE EUROPEAN COMMISSION

FINANCIAL STATEMENTS OF THE EDF

EDF BALANCE SHEET

EDF STATEMENT OF FINANCIAL PERFORMANCE

EDF CASHFLOW STATEMENT

EDF STATEMENT OF CHANGES IN NET ASSETS

BALANCE SHEET BY EDF

STATEMENT OF FINANCIAL PERFORMANCE BY EDF

STATEMENT OF CHANGES IN NET ASSETS BY EDF

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF

FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND

CERTIFICATION OF THE ACCOUNTS

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND

BÊKOU TRUST FUND BALANCE SHEET

BÊKOU TRUST FUND STATEMENT OF FINANCIAL PERFORMANCE

BÊKOU TRUST FUND CASHFLOW STATEMENT

BÊKOU TRUST FUND STATEMENT OF CHANGES IN NET ASSETS

NOTES TO THE FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE BÊKOU TRUST FUND

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

EDF REPORT ON FINANCIAL IMPLEMENTATION

FINANCIAL STATEMENTS OF THE EDF

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add-up.

EDF BALANCE SHEET

| | | | EUR millions |
| --- | --- | --- | --- |
| | Note | 31.12.2015 | 31.12.2014 |
| NON-CURRENT ASSETS | | | |
| Pre-financing | 2.1 | 516 | 472 |
| Trust Fund contributions | 2.2 | 34 | 39 |
| | | 550 | 511 |
| CURRENT ASSETS | | | |
| Pre-financing | 2.3 | 1 145 | 1 403 |
| Receivables | 2.4 | 171 | 84 |
| Cash and cash equivalents | 2.6 | 504 | 391 |
| | | 1 820 | 1 879 |
| TOTAL ASSETS | | 2 370 | 2 389 |
| | | | |
| NON-CURRENT LIABILITIES | | | |
| Provisions | 2.7 | (4) | – |
| Payables | 2.8 | (10) | (34) |
| | | (14) | (34) |
| CURRENT LIABILITIES | | | |
| Payables | 2.9 | (1 376) | (1 423) |
| | | (1 376) | (1 423) |
| TOTAL LIABILITIES | | (1 390) | (1 457) |
| | | | |
| NET ASSETS | | 980 | 932 |
| | | | |
| FUNDS & RESERVES | | | |
| Called fund capital - active EDFs | 2.10 | 38 873 | 35 673 |
| Called fund capital from closed EDFs carried forward | 2.11 | 2 252 | 2 252 |
| Economic result carried forward from previous years | | (36 994) | (33 468) |
| Economic result of the year | | (3 152) | (3 526) |
| NET ASSETS | | 980 | 932 |

EUR millions

Note

31.12.2015

31.12.2014

NON-CURRENT ASSETS

Pre-financing

2.1

516

472

Trust Fund contributions

2.2

34

39

550

511

CURRENT ASSETS

Pre-financing

2.3

1 145

1 403

Receivables

2.4

171

84

Cash and cash equivalents

2.6

504

391

1 820

1 879

TOTAL ASSETS

2 370

2 389

NON-CURRENT LIABILITIES

Provisions

2.7

(4)

–

Payables

2.8

(10)

(34)

(14)

(34)

CURRENT LIABILITIES

Payables

2.9

(1 376)

(1 423)

(1 376)

(1 423)

TOTAL LIABILITIES

(1 390)

(1 457)

NET ASSETS

980

932

FUNDS & RESERVES

Called fund capital - active EDFs

2.10

38 873

35 673

Called fund capital from closed EDFs carried forward

2.11

2 252

2 252

Economic result carried forward from previous years

(36 994)

(33 468)

Economic result of the year

(3 152)

(3 526)

NET ASSETS

980

932

EDF STATEMENT OF FINANCIAL PERFORMANCE

| EUR millions |
| --- |
| | Note | 2015 | 2014 |
| OPERATING REVENUE | 3.2 | 132 | 132 |
| | | | |
| OPERATING EXPENSES | | | |
| Operating expenses | 3.3 | (3 179) | (3 650) |
| Administrative expenses | 3.4 | (113) | (22) |
| | | (3 291) | (3 671) |
| | | | |
| SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES | | (3 160) | (3 539) |
| | | | |
| Financial revenue | 3.5 | 8 | 13 |
| Financial charges | | (0) | (0) |
| SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES | | 8 | 13 |
| | | | |
| ECONOMIC RESULT OF THE YEAR | | (3 152) | (3 526) |

EUR millions

Note

2015

2014

OPERATING REVENUE

3.2

132

132

OPERATING EXPENSES

Operating expenses

3.3

(3 179)

(3 650)

Administrative expenses

3.4

(113)

(22)

(3 291)

(3 671)

SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES

(3 160)

(3 539)

Financial revenue

3.5

8

13

Financial charges

(0)

(0)

SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES

8

13

ECONOMIC RESULT OF THE YEAR

(3 152)

(3 526)

EDF CASHFLOW STATEMENT

| | | | EUR millions |
| --- | --- | --- | --- |
| | Note | 2015 | 2014 |
| Economic result of the year | | (3 152) | (3 526) |
| OPERATING ACTIVITIES | | | |
| Ordinary contributions from Member States | | 3 232 | 3 068 |
| (Reversal of) impairment losses on receivables | | 1 | 14 |
| (Increase)/decrease in pre-financing | | 214 | (165) |
| (Increase)/decrease in Trust Fund contributions | | 5 | (39) |
| (Increase)/decrease in current receivables* | | (88) | (15) |
| Increase/(decrease) in non-current liabilities | | (20) | 9 |
| Increase/(decrease) in current liabilities** | | (211) | 152 |
| Increase/(decrease) in accrued charges and deferred income | | 132 | 134 |
| | | | |
| NET CASHFLOW | | 113 | (368) |
| | | | |
| Net increase/(decrease) in cash and cash equivalents | | 113 | (368) |
| Cash and cash equivalents at the beginning of the year | 2.6 | 391 | 759 |
| Cash and cash equivalents at year-end | 2.6 | 504 | 391 |

EUR millions

Note

2015

2014

Economic result of the year

(3 152)

(3 526)

OPERATING ACTIVITIES

Ordinary contributions from Member States

3 232

3 068

(Reversal of) impairment losses on receivables

1

14

(Increase)/decrease in pre-financing

214

(165)

(Increase)/decrease in Trust Fund contributions

5

(39)

(Increase)/decrease in current receivables*

(88)

(15)

Increase/(decrease) in non-current liabilities

(20)

9

Increase/(decrease) in current liabilities**

(211)

152

Increase/(decrease) in accrued charges and deferred income

132

134

NET CASHFLOW

113

(368)

Net increase/(decrease) in cash and cash equivalents

113

(368)

Cash and cash equivalents at the beginning of the year

2.6

391

759

Cash and cash equivalents at year-end

2.6

504

391

- Current receivables excluding receivables relating to ordinary contributions.

** Current liabilities excluding liabilities relating to ordinary contributions.

EDF STATEMENT OF CHANGES IN NET ASSETS

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Total Net Assets (C)+(D)+(E) |
| BALANCE AS AT 31.12.2013 | 45 691 | 13 162 | 32 529 | (33 468) | 2 252 | 1 313 |
| Capital increase - ordinary contributions | – | (3 144) | 3 144 | – | – | 3 144 |
| Economic result of the year | – | – | – | (3 526) | – | (3 526) |
| BALANCE AS AT 31.12.2014 | 45 691 | 10 018 | 35 673 | (36 994) | 2 252 | 932 |
| Capital increase - contributions | | (4 795) | 4 795 | – | – | 4 795 |
| Capital decrease - funds committed under the Bridging Facility | (1 595) | | (1 595) | | | (1 595) |
| Recognition of the 11th EDF capital | 29 367 | 29 367 | – | | | – |
| Economic result of the year | – | – | – | (3 152) | – | (3 152) |
| BALANCE AS AT 31.12.2015 | 73 464 | 34 590 | 38 873 | (40 146) | 2 252 | 980 |

EUR millions

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Total Net Assets (C)+(D)+(E)

BALANCE AS AT 31.12.2013

45 691

13 162

32 529

(33 468)

2 252

1 313

Capital increase - ordinary contributions

–

(3 144)

3 144

–

–

3 144

Economic result of the year

–

–

–

(3 526)

–

(3 526)

BALANCE AS AT 31.12.2014

45 691

10 018

35 673

(36 994)

2 252

932

Capital increase - contributions

(4 795)

4 795

–

–

4 795

Capital decrease - funds committed under the Bridging Facility

(1 595)

(1 595)

(1 595)

Recognition of the 11th EDF capital

29 367

29 367

–

–

Economic result of the year

–

–

–

(3 152)

–

(3 152)

BALANCE AS AT 31.12.2015

73 464

34 590

38 873

(40 146)

2 252

980

BALANCE SHEET BY EDF

| | | | | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | 31.12.2015 | | | | | 31.12.2014 | | | |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF |
| NON-CURRENT ASSETS | | | | | | | | | | |
| Pre-financing | 2.1 | – | 63 | 368 | 84 | | – | 17 | 411 | 44 |
| Trust Fund contributions | 2.2 | – | – | – | 34 | | | | | 39 |
| | | – | 63 | 368 | 118 | | – | 17 | 411 | 83 |
| CURRENT ASSETS | | | | | | | | | | |
| Pre-financing | 2.3 | 3 | 67 | 879 | 195 | | 5 | 142 | 1 178 | 77 |
| Receivables | 2.4 | 1 | 65 | 103 | 2 | | 3 | 66 | 15 | 0 |
| Liaison accounts | 2.5 | 214 | 657 | 1 190 | – | | 216 | 810 | – | 607 |
| Cash and cash equivalents | 2.6 | – | – | – | 504 | | – | – | – | 391 |
| | | 218 | 790 | 2 172 | 701 | | 224 | 1 018 | 1 193 | 1 076 |
| TOTAL ASSETS | | 218 | 853 | 2 541 | 819 | | 224 | 1 035 | 1 604 | 1 159 |
| | | | | | | | | | | |
| NON-CURRENT LIABILITIES | | | | | | | | | | |
| Provisions | 2.7 | – | – | – | (4) | | – | – | – | – |
| Payables | 2.8 | – | – | (10) | – | | – | – | (34) | – |
| | | – | – | (10) | (4) | | – | – | (34) | – |
| CURRENT LIABILITIES | | | | | | | | | | |
| Payables | 2.9 | (3) | (128) | (1 174) | (71) | | (10) | (175) | (1 195) | (43) |
| Liaison accounts | 2.5 | – | – | – | (2 062) | | – | – | (1 633) | – |
| | | (3) | (128) | (1 174) | (2 132) | | (10) | (175) | (2 828) | (43) |
| TOTAL LIABILITIES | | (3) | (128) | (1 184) | (2 136) | | (10) | (175) | (2 862) | (43) |
| | | | | | | | | | | |
| NET ASSETS | | 214 | 726 | 1 357 | (1 317) | | 214 | 860 | (1 258) | 1 116 |
| | | | | | | | | | | |
| FUNDS & RESERVES | | | | | | | | | | |
| Called fund capital - active EDFs | 2.10 | 12 164 | 10 973 | 15 737 | – | | 12 840 | 11 699 | 11 134 | – |
| Called fund capital from closed EDFs carried forward | 2.11 | 627 | 1 625 | – | – | | 627 | 1 625 | – | – |
| Called fund capital transfers between active EDFs | 2.12 | (2 476) | 2 376 | 35 | 65 | | (3 147) | 1 758 | (209) | 1 597 |
| Economic result carried forward from previous years | | (10 107) | (14 223) | (12 183) | (482) | | (10 114) | (13 988) | (9 356) | (10) |
| Economic result of the year | | 6 | (26) | (2 232) | (901) | | 8 | (235) | (2 828) | (472) |
| | | 214 | 726 | 1 357 | (1 317) | | 214 | 860 | (1 258) | 1 116 |
| NET ASSETS | | 214 | 726 | 1 357 | (1 317) | | 214 | 860 | (1 258) | 1 116 |

EUR millions

31.12.2015

31.12.2014

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Eighth EDF

Ninth EDF

10th EDF

11th EDF

NON-CURRENT ASSETS

Pre-financing

2.1

–

63

368

84

–

17

411

44

Trust Fund contributions

2.2

–

–

–

34

39

–

63

368

118

–

17

411

83

CURRENT ASSETS

Pre-financing

2.3

3

67

879

195

5

142

1 178

77

Receivables

2.4

1

65

103

2

3

66

15

0

Liaison accounts

2.5

214

657

1 190

–

216

810

–

607

Cash and cash equivalents

2.6

–

–

–

504

–

–

–

391

218

790

2 172

701

224

1 018

1 193

1 076

TOTAL ASSETS

218

853

2 541

819

224

1 035

1 604

1 159

NON-CURRENT LIABILITIES

Provisions

2.7

–

–

–

(4)

–

–

–

–

Payables

2.8

–

–

(10)

–

–

–

(34)

–

–

–

(10)

(4)

–

–

(34)

–

CURRENT LIABILITIES

Payables

2.9

(3)

(128)

(1 174)

(71)

(10)

(175)

(1 195)

(43)

Liaison accounts

2.5

–

–

–

(2 062)

–

–

(1 633)

–

(3)

(128)

(1 174)

(2 132)

(10)

(175)

(2 828)

(43)

TOTAL LIABILITIES

(3)

(128)

(1 184)

(2 136)

(10)

(175)

(2 862)

(43)

NET ASSETS

214

726

1 357

(1 317)

214

860

(1 258)

1 116

FUNDS & RESERVES

Called fund capital - active EDFs

2.10

12 164

10 973

15 737

–

12 840

11 699

11 134

–

Called fund capital from closed EDFs carried forward

2.11

627

1 625

–

–

627

1 625

–

–

Called fund capital transfers between active EDFs

2.12

(2 476)

2 376

35

65

(3 147)

1 758

(209)

1 597

Economic result carried forward from previous years

(10 107)

(14 223)

(12 183)

(482)

(10 114)

(13 988)

(9 356)

(10)

Economic result of the year

6

(26)

(2 232)

(901)

8

(235)

(2 828)

(472)

214

726

1 357

(1 317)

214

860

(1 258)

1 116

NET ASSETS

214

726

1 357

(1 317)

214

860

(1 258)

1 116

STATEMENT OF FINANCIAL PERFORMANCE BY EDF

| | | | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| | | 2015 | | 2014 |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF |
| | | | | | | | | | | |
| OPERATING REVENUE | 3.2 | 4 | 24 | 99 | 5 | | 9 | 43 | 79 | 1 |
| | | | | | | | | | | |
| OPERATING EXPENSES | | | | | | | | | | |
| Operating expenses | 3.3 | 2 | (56) | (2 297) | (828) | | (1) | (293) | (2 881) | (475) |
| Administrative expenses | 3.4 | (0) | – | (34) | (79) | | – | 0 | (22) | – |
| | | 2 | (56) | (2 331) | (907) | | (1) | (293) | (2 903) | (475) |
| SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES | | 6 | (32) | (2 232) | (902) | | 8 | (249) | (2 824) | (474) |
| | | | | | | | | | | |
| Financial revenue | 3.5 | (0) | 6 | 0 | 2 | | 0 | 15 | (3) | 2 |
| Financial charges | | – | – | 0 | (0) | | – | – | (0) | – |
| SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES | | (0) | 6 | 1 | 2 | | 0 | 15 | (4) | 2 |
| | | | | | | | | | | |
| ECONOMIC RESULT OF THE YEAR | | 6 | (26) | (2 232) | (901) | | 8 | (235) | (2 828) | (472) |

EUR millions

2015

2014

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Eighth EDF

Ninth EDF

10th EDF

11th EDF

OPERATING REVENUE

3.2

4

24

99

5

9

43

79

1

OPERATING EXPENSES

Operating expenses

3.3

2

(56)

(2 297)

(828)

(1)

(293)

(2 881)

(475)

Administrative expenses

3.4

(0)

–

(34)

(79)

–

0

(22)

–

2

(56)

(2 331)

(907)

(1)

(293)

(2 903)

(475)

SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES

6

(32)

(2 232)

(902)

8

(249)

(2 824)

(474)

Financial revenue

3.5

(0)

6

0

2

0

15

(3)

2

Financial charges

–

–

0

(0)

–

–

(0)

–

SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES

(0)

6

1

2

0

15

(4)

2

ECONOMIC RESULT OF THE YEAR

6

(26)

(2 232)

(901)

8

(235)

(2 828)

(472)

STATEMENT OF CHANGES IN NET ASSETS BY EDF

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Eighth EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2013 | 12 840 | – | 12 840 | (10 114) | 627 | (3 083) | 270 |
| Transfers to/from the 10th EDF | | | – | | | (64) | (64) |
| Economic result of the year | | | – | 8 | | | 8 |
| BALANCE AS AT 31.12.2014 | 12 840 | – | 12 840 | (10 107) | 627 | (3 147) | 214 |
| Capital decrease - funds committed under the Bridging Facility | (676) | | (676) | | | | (676) |
| Transfers to/from the 10th EDF | | | – | | | (6) | (6) |
| Transfers to/from the 11th EDF | | | – | | | 676 | 676 |
| Economic result of the year | | | – | 6 | | | 6 |
| BALANCE AS AT 31.12.2015 | 12 164 | | 12 164 | (10 100) | 627 | (2 476) | 214 |

EUR millions

Eighth EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2013

12 840

–

12 840

(10 114)

627

(3 083)

270

Transfers to/from the 10th EDF

–

(64)

(64)

Economic result of the year

–

8

8

BALANCE AS AT 31.12.2014

12 840

–

12 840

(10 107)

627

(3 147)

214

Capital decrease - funds committed under the Bridging Facility

(676)

(676)

(676)

Transfers to/from the 10th EDF

–

(6)

(6)

Transfers to/from the 11th EDF

–

676

676

Economic result of the year

–

6

6

BALANCE AS AT 31.12.2015

12 164

12 164

(10 100)

627

(2 476)

214

EUR millions

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Ninth EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Calledfund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F)) |
| BALANCE AS AT 31.12.2013 | 11 699 | – | 11 699 | (13 988) | 1 625 | 2 130 | 1 467 |
| Transfers to/from the 10th EDF | | | – | | | (372) | (372) |
| Economic result of the year | | | – | (235) | | | (235) |
| BALANCE AS AT 31.12.2014 | 11 699 | – | 11 699 | (14 223) | 1 625 | 1 758 | 860 |
| Capital decrease - funds committed under the Bridging Facility | (727) | | (727) | | | | (727) |
| Transfers to/from the 10th EDF | | | – | | | (109) | (109) |
| Transfers to/from the 11th EDF | | | – | | | 727 | 727 |
| Economic result of the year | | | – | (26) | | | (26) |
| BALANCE AS AT 31.12.2015 | 10 973 | | 10 973 | (14 249) | 1 625 | 2 376 | 726 |

Ninth EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Calledfund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F))

BALANCE AS AT 31.12.2013

11 699

–

11 699

(13 988)

1 625

2 130

1 467

Transfers to/from the 10th EDF

–

(372)

(372)

Economic result of the year

–

(235)

(235)

BALANCE AS AT 31.12.2014

11 699

–

11 699

(14 223)

1 625

1 758

860

Capital decrease - funds committed under the Bridging Facility

(727)

(727)

(727)

Transfers to/from the 10th EDF

–

(109)

(109)

Transfers to/from the 11th EDF

–

727

727

Economic result of the year

–

(26)

(26)

BALANCE AS AT 31.12.2015

10 973

10 973

(14 249)

1 625

2 376

726

EUR millions

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 10th EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2013 | 21 152 | 13 162 | 7 990 | (9 365) | – | 952 | (423) |
| Capital increase - contributions | – | (3 144) | 3 144 | | | | 3 144 |
| Transfers to/from the Eighth and Ninth EDF | | | – | | | (936) | (936) |
| Transfers to/from the 11th EDF | | | | | | (225) | (225) |
| Transfer of economic result carried forward - treasury - from the 10th EDF to the 11th EDF | | | | 10 | | | 10 |
| Economic result of the year | | | – | (2 828) | | | (2 828) |
| BALANCE AS AT 31.12.2014 | 21 152 | 10 018 | 11 134 | (12 183) | – | (209) | (1 258) |
| Capital increase – contributions | | (4 795) | 4 795 | | | | 4 795 |
| Capital decrease - funds committed under the Bridging Facility | (192) | | (192) | | | | (192) |
| Transfers to/from the Eighth and Ninth EDF | | | – | | | 84 | 84 |
| Transfers to/from the 11th EDF | | | – | | | 160 | 160 |
| Economic result of the year | | | – | (2 232) | | | (2 232) |
| BALANCE AS AT 31.12.2015 | 20 960 | 5 223 | 15 737 | (14 415) | – | 35 | 1 357 |

10th EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2013

21 152

13 162

7 990

(9 365)

–

952

(423)

Capital increase - contributions

–

(3 144)

3 144

3 144

Transfers to/from the Eighth and Ninth EDF

–

(936)

(936)

Transfers to/from the 11th EDF

(225)

(225)

Transfer of economic result carried forward - treasury - from the 10th EDF to the 11th EDF

10

10

Economic result of the year

–

(2 828)

(2 828)

BALANCE AS AT 31.12.2014

21 152

10 018

11 134

(12 183)

–

(209)

(1 258)

Capital increase – contributions

(4 795)

4 795

4 795

Capital decrease - funds committed under the Bridging Facility

(192)

(192)

(192)

Transfers to/from the Eighth and Ninth EDF

–

84

84

Transfers to/from the 11th EDF

–

160

160

Economic result of the year

–

(2 232)

(2 232)

BALANCE AS AT 31.12.2015

20 960

5 223

15 737

(14 415)

–

35

1 357

EUR millions

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 11th EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2013 | – | – | – | – | – | | – |
| Capital increase - ordinary contributions | – | – | – | | | | – |
| Transfers to/from the Eighth, Ninth and 10th EDF | | | – | | – | 1 597 | 1 597 |
| Transfer of economic result carried forward - treasury - from the 10th EDF to the 11th EDF | | | | (10) | | | (10) |
| Economic result of the year | | | – | (472) | | | (472) |
| BALANCE AS AT 31.12.2014 | – | – | – | (482) | | 1 597 | 1 116 |
| Recognition of the 11th EDF capital in line with the Internal Agreement | 29 301 | 29 301 | – | | | | – |
| Transfers to/from the Eighth, Ninth and 10th EDF | | | – | | | (1 532) | (1 532) |
| Economic result of the year | | | – | (901) | | | (901) |
| BALANCE AS AT 31.12.2015 | 29 301 | 29 301 | – | (1 382) | | 65 | (1 317) |

11th EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2013

–

–

–

–

–

–

Capital increase - ordinary contributions

–

–

–

–

Transfers to/from the Eighth, Ninth and 10th EDF

–

–

1 597

1 597

Transfer of economic result carried forward - treasury - from the 10th EDF to the 11th EDF

(10)

(10)

Economic result of the year

–

(472)

(472)

BALANCE AS AT 31.12.2014

–

–

–

(482)

1 597

1 116

Recognition of the 11th EDF capital in line with the Internal Agreement

29 301

29 301

–

–

Transfers to/from the Eighth, Ninth and 10th EDF

–

(1 532)

(1 532)

Economic result of the year

–

(901)

(901)

BALANCE AS AT 31.12.2015

29 301

29 301

–

(1 382)

65

(1 317)

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF

1.SIGNIFICANT ACCOUNTING POLICIES

1.1.LEGAL BASIS AND ACCOUNTING RULES

In accordance with Article 46 of the EDF Financial Regulation, the EDF financial statements are prepared on the basis of accrual-based accounting rules that are based on International Public Sector Accounting Standards (IPSAS). The accounting rules adopted by the Accounting Officer of the Commission are applied by all the Institutions and bodies of the EU in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements and consolidation, as required by Article 152 of the EU Financial Regulation. These rules are also applied to the EDF while taking into account the specific nature of its activities.

1.2.ACCOUNTING PRINCIPLES

The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU accounting rule 1 "Financial Statements" (the same as in IPSAS 1): fair presentation, accrual basis, going concern, consistency of presentation, aggregation, offsetting and comparative information. The qualitative characteristics of financial reporting according to Article 144 of the EU Financial Regulation are relevance, reliability, understandability and comparability.

1.3.BASIS OF PREPARATION

1.3.1.Currency and basis for conversion

The annual accounts are presented in millions of euros, the euro being the EU's functional and reporting currency. Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Year-end balances of monetary assets and liabilities denominated in foreign currencies are converted into euros on the basis of the exchange rates applying on 31 December.

Euro exchange rates

| Currency | 31.12.2015 | 31.12.2014 | Currency | 31.12.2015 | 31.12.2014 |
| --- | --- | --- | --- | --- | --- |
| BGN | 1.9558 | 1.9558 | LTL | - | 3.4528 |
| CZK | 27.0230 | 27.7350 | PLN | 4.2639 | 4.2732 |
| DKK | 7.4626 | 7.4453 | RON | 4.5240 | 4.4828 |
| GBP | 0.7340 | 0.7789 | SEK | 9.1895 | 9.3930 |
| HRK | 7.6380 | 7.6580 | CHF | 1.0835 | 1.2024 |
| HUF | 315.9800 | 315.5400 | JPY | 131.0700 | 145.2300 |
| | | | USD | 1.0887 | 1.2141 |

Currency

31.12.2015

31.12.2014

Currency

31.12.2015

31.12.2014

BGN

1.9558

1.9558

LTL

-

3.4528

CZK

27.0230

27.7350

PLN

4.2639

4.2732

DKK

7.4626

7.4453

RON

4.5240

4.4828

GBP

0.7340

0.7789

SEK

9.1895

9.3930

HRK

7.6380

7.6580

CHF

1.0835

1.2024

HUF

315.9800

315.5400

JPY

131.0700

145.2300

USD

1.0887

1.2141

1.3.2.Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to; amounts for employee benefit liabilities, provisions, financial risk on inventories and accounts receivables, accrued income and charges, contingent assets and liabilities, and degree of impairment of intangible assets and property, plant and equipment. Actual results could differ from those estimates. Changes in estimates are reflected in the period in which they become known.

1.4.BALANCE SHEET

1.4.1
     Intangible assets

Acquired computer software licences are stated at historical cost less accumulated amortisation and impairment losses. The assets are amortised on a straight-line basis over their estimated useful lives. The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime determined by an agreement. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met. The costs capitalisable include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred.

1.4.2
     Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the entity and its cost can be measured reliably. Repairs and maintenance costs are charged to the statement of financial performance during the financial period in which they are incurred. Land and works of art are not depreciated as they are deemed to have an indefinite useful life. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows:

| Type of asset | Straight line depreciation rate |
| --- | --- |
| Buildings | 4% to 10% |
| Plant and equipment | 10% to 25% |
| Furniture and vehicles | 10% to 25% |
| Fixtures and fittings | 10% to 33% |
| Computer hardware | 25% to 33% |
| Other | 10% to 33% |

Type of asset

Straight line depreciation rate

Buildings

4% to 10%

Plant and equipment

10% to 25%

Furniture and vehicles

10% to 25%

Fixtures and fittings

10% to 33%

Computer hardware

25% to 33%

Other

10% to 33%

Gains or losses on disposals are determined by comparing proceeds less selling expenses with the carrying amount of the disposed asset and are included in the statement of financial performance.

Leases

Leases of tangible assets, where the entity has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The interest element of the finance lease payment is charged to expenditure over the period of the lease at a constant periodic rate in relation to the balance outstanding. The rental obligations, net of finance charges, are included as liabilities. The assets held under finance leases are depreciated over the shorter of the asset's useful life and the lease term.

Leases where the lessor retains a significant portion of the risks and rewards inherent to ownership are classified as operating leases. Payments made under operating leases are charged to the statement of financial performance on a straight-line basis over the period of the lease.

1.4.3
     Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortisation/depreciation and are tested annually for impairment. Assets that are subject to amortisation/depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use.

Intangible assets and property, plant and equipment residual values and useful lives are reviewed, and adjusted if appropriate, at least once per year. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. If the reasons for impairments recognised in previous years no longer apply, the impairment losses are reversed accordingly.

1.4.4
     Financial assets

The financial assets are classified in the following categories: financial assets at fair value through profit or loss; loans and receivables; held-to-maturity investments; and available for sale financial assets. The classification of the financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.

(I)Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the entity. Derivatives are also categorised in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date. During this financial year, the entity did not hold any investments in this category.

(II)Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the entity provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in non-current assets, except for maturities within 12 months of the balance sheet date.

(III)Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the entity has the positive intention and ability to hold to maturity. During this financial year, the entity did not hold any investments in this category.

(IV)Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the time period in which the entity expects to dispose of them which is usually the remaining maturity at the balance sheet date.

1.4.5
     Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular contract, decision, agreement or the basic legal act. The float or advance is either used for the purpose for which it was provided during the period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditures, he has the obligation to return the pre-financing advance to the entity. The amount of the pre-financing is reduced (wholly or partially) by the acceptance of eligible costs (which are recognised as expenses) and amounts returned.

At year-end, outstanding pre-financing amounts are measured at the amount(s) initially recognised on the balance sheet less amounts returned and eligible expenses, including estimated amounts where necessary, incurred during the period.

1.4.6
     Receivables and recoverables

Receivables and recoverables are carried at original amount less write-down for impairment. A write-down for impairment is established when there is objective evidence that the entity will not be able to collect all amounts due according to the original terms of receivables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance.

1.4.7
     Cash and cash equivalents

Cash and cash equivalents are financial instruments and classified as available for sale financial assets. They include cash at hand, deposits held at call or at short notice with banks, and other short-term highly liquid investments with original maturities of three months or less.

1.4.8
     Provisions

Provisions are recognised when the entity has a present legal or constructive obligation towards third parties as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognised for future operating losses. The amount of the provision is the best estimate of the expenditures expected to be required to settle the present obligation at the reporting date. Where the provision involves a large number of items, the obligation is estimated by weighting all possible outcomes by their associated probabilities (“expected value” method).

1.4.9
     Payables

A significant amount of the payables of the entity are not related to the purchase of goods or services – instead they are unpaid cost claims from beneficiaries of grants or other EU funding. They are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount and corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the entity.

1.4.10
     Accrued and deferred income and charges

At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. Revenue is also accounted for in the period to which it relates. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the entity or a contractual agreement exists, an accrued income will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

1.5.STATEMENT OF FINANCIAL PERFORMANCE

1.5.1
     Revenue

Revenue from non-exchange transactions are taxes and transfers because the transferor provides resources to the recipient entity without the recipient entity providing approximately equal value directly in exchange. Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.

Exchange revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.

1.5.2
     Expenses

Exchange expenses arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the entity. They are valued at original invoice amount. Futhermore, at the balance sheet date expenses related to the service delivered during the period for which an invoice has not yet been received or accepted are recognised in the statement of financial performance.

Non-exchange expenses relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations. Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation or a contract has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expense.

1.6.CONTINGENT ASSETS AND LIABILITIES

1.6.1
     Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.

1.6.2
     Contingent liabilities

A contingent liability is a possible obligation that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation that arises from past events but is not recognised because: it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation or, in the rare circumstances where the amount of the obligation cannot be measured with sufficient reliability.

1.7.CO-FINANCING

Co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under condition and they are presented as payables to Member States, non-Member States and others. The EDF is required to use the contributions to deliver services to third parties or is otherwise required to return the assets (the contributions received). The outstanding payables relating to co-financing agreements represent the co-financing contributions received less the expenses incurred related to the project. The effect on net assets is nil.

Expenses relating to co-financing projects are recognised as they are incurred. The corresponding amount of contributions is recognised as operating revenue and the effect on economic result of the year is nil.

2.NOTES TO THE BALANCE SHEET

NON-CURRENT ASSETS

2.1.PRE-FINANCING

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Pre-financing | – | 63 | 368 | 84 | 516 | 472 |
| Total | – | 63 | 368 | 84 | 516 | 472 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Pre-financing

–

63

368

84

516

472

Total

–

63

368

84

516

472

| | | EUR millions |
| --- | --- | --- |
| | 31.12.2015 | 31.12.2014 |
| Direct Management | 65 | 72 |
| Implemented by: | | |
| Commission | 43 | 47 |
| EU executive agencies | 1 | 3 |
| EU delegations | 21 | 22 |
| Indirect Management | 451 | 400 |
| Implemented by : | | |
| Third countries | 25 | 22 |
| International organisations | 90 | 127 |
| EIB and EIF | 323 | 223 |
| Public law bodies | 10 | 24 |
| Private law bodies with a public service mission | 3 | 4 |
| | | |
| Total | 516 | 472 |

EUR millions

31.12.2015

31.12.2014

Direct Management

65

72

Implemented by:

Commission

43

47

EU executive agencies

1

3

EU delegations

21

22

Indirect Management

451

400

Implemented by :

Third countries

25

22

International organisations

90

127

EIB and EIF

323

223

Public law bodies

10

24

Private law bodies with a public service mission

3

4

Total

516

472

Many contracts provide for payments of advances before the commencement of works, deliveries of supplies or the provision of services. Sometimes the payment schedules of contracts foresee payments on the basis of progress reports. Pre-financing is normally paid in the currency of the country or territory where the project is executed.

The timing of the recoverability or utilisation of the pre-financing governs whether it is disclosed as a current or a non-current pre-financing asset. The utilisation is defined by the project's underlying agreement. Any repayments or utilisation due within twelve months of the reporting date are disclosed as current pre-financing. As many of the EDF projects are long-term in nature, it is necessary that the related advances are available for more than one year. Thus some pre-financing amounts are shown as non-current assets, but since the Eighth and the Ninth EDFs are winding down, most pre-financing is current.

The increase in non-current pre-financing by EUR 44 million compared to 31 December 2014 is mainly explained by the implementation of new contracts under the 11th EDF and the extension of 2 significant contracts under the Ninth EDF.

2.2.TRUST FUND CONTRIBUTIONS

This heading represents the amount paid as contributions to the Bêkou EU Trust Fund less the estimated proportion of costs incurred by the trust fund.

The trust fund contributions are implemented by the EDF under the direct management mode.

CURRENT ASSETS

2.3.PRE-FINANCING

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Pre-financing (gross) | 14 | 265 | 3 032 | 939 | 4 250 | 4 335 |
| Cleared via cut-off | (11) | (198) | (2 153) | (744) | (3 105) | (2 932) |
| Total | 3 | 67 | 879 | 195 | 1 145 | 1 403 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Pre-financing (gross)

14

265

3 032

939

4 250

4 335

Cleared via cut-off

(11)

(198)

(2 153)

(744)

(3 105)

(2 932)

Total

3

67

879

195

1 145

1 403

| | | EUR millions |
| --- | --- | --- |
| | 31.12.2015 | 31.12.2014 |
| Direct Management | 284 | 227 |
| Implemented by: | | |
| Commission | 123 | 116 |
| EU executive agencies | 1 | 4 |
| EU delegations | 159 | 106 |
| Indirect Management | 861 | 1 176 |
| Implemented by : | | |
| Third countries | 229 | 257 |
| International organisations | 336 | 494 |
| EIB and EIF | 235 | 357 |
| Public law bodies | 56 | 41 |
| Private law bodies with a public service mission | 5 | 24 |
| Private law bodies implementing Public Private Partnership | 0 | 2 |
| Total | 1 145 | 1 403 |

EUR millions

31.12.2015

31.12.2014

Direct Management

284

227

Implemented by:

Commission

123

116

EU executive agencies

1

4

EU delegations

159

106

Indirect Management

861

1 176

Implemented by :

Third countries

229

257

International organisations

336

494

EIB and EIF

235

357

Public law bodies

56

41

Private law bodies with a public service mission

5

24

Private law bodies implementing Public Private Partnership

0

2

Total

1 145

1 403

The decrease in current pre-financing by EUR 298 million compared to 31 December 2014 is mainly explained by a number of clearings under the Ninth and 10th EDF.

3.Guarantees received in respect of pre-financing

Guarantees are held to secure pre-financing and are released when the final claim under a project is paid. At 31 December 2015 the nominal value of guarantees received by the EDF in respect of pre-financing amounts to EUR 198 million. At year-end, an in-depth review of guarantees has been performed to comply with the accounting standards. Following this review, guarantees in respect of pre-financing with a nominal value of EUR 444 million have been written-off as not belonging to the EDF but to the contracting authority.

3.1.RECEIVABLES

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Receivables from customers, public bodies, EFTA and third states | 2.4.1 | 1 | 5 | 6 | 2 | 13 | 21 |
| Receivables from Member States | 2.4.2 | – | – | 90 | – | 90 | 0 |
| Accrued income and deferred charges | 2.4.3 | – | 60 | 7 | – | 67 | 63 |
| Total | | 1 | 65 | 103 | 2 | 171 | 84 |

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Receivables from customers, public bodies, EFTA and third states

2.4.1

1

5

6

2

13

21

Receivables from Member States

2.4.2

–

–

90

–

90

0

Accrued income and deferred charges

2.4.3

–

60

7

–

67

63

Total

1

65

103

2

171

84

| | | EUR millions |
| --- | --- | --- |
| | 31.12.2015 | 31.12.2014 |
| Recoverables from non-exchange transactions | 104 | 21 |
| Receivables from exchange transactions | 67 | 63 |
| Total | 171 | 84 |

EUR millions

31.12.2015

31.12.2014

Recoverables from non-exchange transactions

104

21

Receivables from exchange transactions

67

63

Total

171

84

4.Receivables from customers, public bodies, EFTA and third states

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Receivables from customers, public bodies and third states | 4 | 22 | 15 | 2 | 42 | 49 |
| Write-down | (3) | (17) | (10) | – | (29) | (28) |
| Total | 1 | 5 | 6 | 2 | 13 | 21 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Receivables from customers, public bodies and third states

4

22

15

2

42

49

Write-down

(3)

(17)

(10)

–

(29)

(28)

Total

1

5

6

2

13

21

2.4.2
     Receivables from Member States

Receivables from Member States include amounts to be received as well as the amounts to be deducted from the future Member States contributions. This is a consequence of Bridging Facility adjustments (see note 2.10 Called fund capital – active EDFs).

EUR millions

| | | | EUR millions |
| --- | --- | --- | --- |
| Member States | Amounts to be received by MS | Amounts to be deducted from MS's contributions | Net amount at 31.12.2015 |
| Belgium | 1 | (5) | |
| Denmark | | (2) | |
| Greece | 3 | | |
| Ireland | 2 | | |
| Luxemburg | | – | |
| Portugal | 3 | | |
| Spain | 28 | | |
| United Kingdom | 16 | | |
| Austria | | (3) | |
| Finland | | – | |
| Cyprus | 1 | | |
| Czech Republic | 7 | | |
| Estonia | 1 | | |
| Hungary | 8 | | |
| Lithuania | 1 | | |
| Latvia | 1 | | |
| Malta | – | | |
| Poland | 18 | | |
| Slovenia | 3 | | |
| Slovakia | 3 | | |
| Romania | 5 | | |
| Total | 101 | (11) | 90 |

Member States

Amounts to be received by MS

Amounts to be deducted from MS's contributions

Net amount at 31.12.2015

Belgium

1

(5)

Denmark

(2)

Greece

3

Ireland

2

Luxemburg

–

Portugal

3

Spain

28

United Kingdom

16

Austria

(3)

Finland

–

Cyprus

1

Czech Republic

7

Estonia

1

Hungary

8

Lithuania

1

Latvia

1

Malta

–

Poland

18

Slovenia

3

Slovakia

3

Romania

5

Total

101

(11)

90

2.4.3
     Accrued income and deferred charges

Accrued income and deferred charges include primarily accrued interest on pre-financing amounts.

4.1.LIAISON ACCOUNTS

| | | | EUR millions |
| --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 |
| Liaison accounts | 214 | 657 | 1 190 | (2 062) | - |
| Total | 214 | 657 | 1 190 | (2 062) | - |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

Liaison accounts

214

657

1 190

(2 062)

-

Total

214

657

1 190

(2 062)

-

For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF
  8
  ; this leads to operations between the various EDFs, which are balanced out in the liaison accounts between the various EDF balance sheets. Liaison accounts are presented only in the individual EDFs.

4.2.CASH AND CASH EQUIVALENTS
  9

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Special accounts: Financial institutions of Member States | – | – | – | 489 | 489 | 378 |
| Current accounts: Commercial banks | – | – | – | 14 | 14 | 13 |
| Democratic Republic Congo Special fund* | – | – | – | 1 | 1 | 1 |
| Total | – | – | – | 504 | 504 | 391 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Special accounts: Financial institutions of Member States

–

–

–

489

489

378

Current accounts: Commercial banks

–

–

–

14

14

13

Democratic Republic Congo Special fund*

–

–

–

1

1

1

Total

–

–

–

504

504

391

*This balance represents the amounts available for the Democratic Republic of the Congo in accordance with the provisions of Council Decision 2003/583/EC7.

The overall increase in cash and cash equivalents is mainly explained by the advance payment of the first 2016 contributions by some Member States in December 2015.

It should be noted that there are STABEX funds held by beneficiary ACP States and thus not included on the EDF balance sheet. STABEX is the acronym for a EU compensatory finance scheme to stabilise export earnings of the ACP countries. Once the Commission and the beneficiary (ACP) State reach agreement on how the STABEX funds are to be utilised, a transfer convention is signed by both parties. In accordance with the provisions of Article 211 of the Lomé IV Agreement
  10
  (as revised), the funds are transferred into an interest bearing double signature account (Commission and Beneficiary State) opened in the name of the ACP State. The funds remain in these double signature accounts until a Framework of Mutual Obligations (FMO) justifies a transfer for a project. The Commission's Authorising Officer retains the power of signature over the account in order to ensure that the funds are disbursed as intended. The funds in the double signature accounts are the property of the ACP State and are consequently not recorded as assets in the EDF accounts. The transfers to these accounts are recorded as STABEX payments. See also note 3.2.1 for more information.

With the aim of improving the presentation in the 2015 annual accounts, the classification of financial insitutions and banks has been reviewed. The comparative figures for 2014 are disclosed accordingly.

NON-CURRENT LIABILITIES

4.3.PROVISIONS

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Provisions | – | – | – | 4 | 4 | – |
| Total | – | – | – | 4 | 4 | – |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Provisions

–

–

–

4

4

–

Total

–

–

–

4

4

–

This is the estimate of amounts that will probably have to be paid out more than 12 months after the year-end in relation to the liquidation phase and a probable legal case with the Centre de Development of Enterprise.

The liquidation phase, to be managed by a Curator, will only comprise residual administrative tasks, for example keeping the archives of the CDE, replying to any administrative formality, or managing residual litigations that could not have been settled up to 31 December 2016. This phase will be financed by the EDF and at the date of preparation of the EDF financial statements, a very rough budget estimate of the total costs needed for the passive phase is EUR 2.6 million. An amount of around EUR 1.2 million should be as well taken into account in case the CDE will be condemned by the International Labour Organisation Tribunal to pay indemnities for the three persons currently in litigation. See also note 4.2.1 for more information.

4.4.PAYABLES

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Co-financing - payables | – | – | 10 | – | 10 | 34 |
| Total | – | – | 10 | – | 10 | 34 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Co-financing - payables

–

–

10

–

10

34

Total

–

–

10

–

10

34

The change in the total co-financing payables is explained in the note 2.9.1.2.

CURRENT LIABILITIES

4.5.PAYABLES

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Current payables | 2.9.1 | 0 | 13 | 184 | 17 | 215 | 474 |
| Accrued charges | 2.9.2 | 3 | 114 | 684 | 54 | 854 | 722 |
| Deferred fund capital contribution | 2.9.3 | – | – | 307 | – | 307 | 228 |
| Total | | 3 | 128 | 1 174 | 71 | 1 376 | 1 423 |

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Current payables

2.9.1

0

13

184

17

215

474

Accrued charges

2.9.2

3

114

684

54

854

722

Deferred fund capital contribution

2.9.3

–

–

307

–

307

228

Total

3

128

1 174

71

1 376

1 423

2.9.1
     Current payables

| | | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Suppliers and other | 2.9.1.1 | 0 | 14 | 153 | 14 | 181 | 403 |
| Co-financing payables | 2.9.1.2 | – | (0) | 31 | (0) | 31 | 67 |
| Sundry payables | 2.9.1.3 | (0) | (1) | (0) | 4 | 3 | 4 |
| Total | | 0 | 13 | 184 | 17 | 215 | 474 |

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Suppliers and other

2.9.1.1

0

14

153

14

181

403

Co-financing payables

2.9.1.2

–

(0)

31

(0)

31

67

Sundry payables

2.9.1.3

(0)

(1)

(0)

4

3

4

Total

0

13

184

17

215

474

Payables include cost statements received by the EDF relating to its grant activity. They are recorded for the amount being claimed from the moment the demand is received. The same procedure applies to invoices and credit notes received under procurement activities. The cost claims concerned have been taken into account for the year-end cut-off procedures. Following the cut-off entries, estimated eligible amounts have been recognised in the statement of financial performance.

2.9.1.1
     Suppliers and other

Included under this heading are amounts owed to suppliers as well as amounts payable to public bodies and third states.

The decrease of EUR 222 million compared to the previous reporting period relates primarly to a EUR 224 million decrease in payables to third states.

2.9.1.2
     Co-financing payables

The total non-current and current co-financing payables decreased by EUR 60 million compared to the previous reporting period.

During 2015, new co-financing contributions were received from the France (EUR 5 million), United Kingdom (EUR 1.5 million) and other countries.

The total non-current and current co-financing payables were decreased by EUR 69 million in order to recognise revenue and expenses related to co-financing projects (see 3.2.2 and 3.3.2).

2.9.1.3
     Sundry payables

Sundry payables mainly comprise unallocated cash receipts and returned payments.

2.9.2
     Accrued charges

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Accrued charges | 3 | 114 | 684 | 54 | 854 | 722 |
| Total | 3 | 114 | 684 | 54 | 854 | 722 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Accrued charges

3

114

684

54

854

722

Total

3

114

684

54

854

722

At year-end, an assessment is made concerning eligible expenses incurred by beneficiaries of EDF funds but not yet reported. Following these cut-off calculations, estimated eligible amounts are recorded as accrued charges.

In 2015 the Commission refined its methodology for estimating accrued charges for the budget support contracts. Had this refinement not been made, the operating expenses would have been EUR 3 545 million instead of EUR 3 671 million and the accrued charges amount would have been EUR 126 million lower.

2.9.3
     Deferred fund capital contribution

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| United Kingdom | – | – | 259 | – | 259 | 222 |
| Sweden | – | – | 48 | – | 48 | – |
| Czech Republic | – | – | – | – | – | 4 |
| Lithuania | – | – | – | – | – | 1 |
| Total | – | – | 307 | – | 307 | 228 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

United Kingdom

–

–

259

–

259

222

Sweden

–

–

48

–

48

–

Czech Republic

–

–

–

–

–

4

Lithuania

–

–

–

–

–

1

Total

–

–

307

–

307

228

These are Member States' contributions paid in advance.

NET ASSETS

4.6.CALLED FUND CAPITAL – ACTIVE EDFs

| | | | EUR millions |
| --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total |
| Fund capital | 12 840 | 11 699 | 21 152 | – | 45 691 |
| Uncalled fund capital | – | – | (10 018) | – | (10 018) |
| Called fund capital 31.12.2014 | 12 840 | 11 699 | 11 134 | – | 35 673 |
| | | | | | |
| Fund capital | 12 164 | 10 973 | 20 960 | 29 367 | 73 464 |
| Uncalled fund capital | – | – | (5 223) | (29 367) | (34 590) |
| Called fund capital 31.12.2015 | 12 164 | 10 973 | 15 737 | – | 38 873 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Fund capital

12 840

11 699

21 152

–

45 691

Uncalled fund capital

–

–

(10 018)

–

(10 018)

Called fund capital 31.12.2014

12 840

11 699

11 134

–

35 673

Fund capital

12 164

10 973

20 960

29 367

73 464

Uncalled fund capital

–

–

(5 223)

(29 367)

(34 590)

Called fund capital 31.12.2015

12 164

10 973

15 737

–

38 873

The fund capital represents the total amount of contributions from Member States for the relevant EDF fund as laid down in each of the Internal Agreements. The uncalled funds represent the initial allocation not yet called up from Member States.

The called fund capital represents the amount of the initial allocations which have been called up for transfer to the treasury accounts by the Member States.

The capital of the Eighth and the Ninth EDF has been called up and received in its entirety.

The activities of the Bridging Facility were financed through decommitted amounts from previous EDFs (see 2.13 Called fund capital transfers between active EDFs).

The Council decision establishing the Bridging Facility stipulates that the funds committed under the Bridging Facility should be deducted from the shares of the Member States' contributions set out in Article 1(2)(a) of the Internal Agreements of the Eighth, Ninth and 10th EDF after the entry into force of the 11th EDF Internal Agreement.
  11
  The 11th EDF internal Agreement entered into force on 1 March 2015 and total fund capital has been decreased by EUR 1.595 million (Eighth EDF – EUR 676 million, Eighth EDF – EUR 727 million, 10th EDF - EUR 192 million).

As the Internal Agreement establishing the 11th EDF enters into force, fund capital presented under the 11th EDF has been recognised in line with the Agreement.

4.7.CALLED AND UNCALLED FUND CAPITAL BY MEMBER STATES

| | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- |
| Contributions | % | Uncalled 10th EDF 31.12.2014 | Called up in 2015 | Reduction of the 10th EDF capital | Uncalled 10th EDF 31.12.2015 |
| Austria | 2.41 | (241) | 111 | 5 | (126) |
| Belgium | 3.53 | (354) | 162 | 7 | (184) |
| Bulgaria | 0.14 | (14) | 6 | 0 | (7) |
| Cyprus | 0.09 | (9) | 4 | 0 | (5) |
| Czech Republic | 0.51 | (51) | 23 | 1 | (27) |
| Denmark | 2.00 | (200) | 92 | 4 | (104) |
| Estonia | 0.05 | (5) | 2 | 0 | (3) |
| Finland | 1.47 | (147) | 68 | 3 | (77) |
| France | 19.55 | (1 958) | 900 | 38 | (1 021) |
| Germany | 20.50 | (2 053) | 944 | 39 | (1 070) |
| Greece | 1.47 | (147) | 68 | 3 | (77) |
| Hungary | 0.55 | (55) | 25 | 1 | (29) |
| Ireland | 0.91 | (91) | 42 | 2 | (48) |
| Italy | 12.86 | (1 288) | 592 | 25 | (672) |
| Latvia | 0.07 | (7) | 3 | 0 | (4) |
| Lithuania | 0.12 | (12) | 6 | 0 | (6) |
| Luxemburg | 0.27 | (27) | 12 | 1 | (14) |
| Malta | 0.03 | (3) | 1 | 0 | (2) |
| Netherlands | 4.85 | (486) | 223 | 9 | (253) |
| Poland | 1.30 | (130) | 60 | 2 | (68) |
| Portugal | 1.15 | (115) | 53 | 2 | (60) |
| Romania | 0.37 | (37) | 17 | 1 | (19) |
| Slovakia | 0.21 | (21) | 10 | 0 | (11) |
| Slovenia | 0.18 | (18) | 8 | 0 | (9) |
| Spain | 7.85 | (786) | 361 | 15 | (410) |
| Sweden | 2.74 | (274) | 126 | 5 | (143) |
| United Kingdom | 14.82 | (1 485) | 682 | 28 | (774) |
| Total | 100.00 | (10 018) | 4 603 | 192 | (5 223) |

EUR millions

Contributions

%

Uncalled 10th EDF 31.12.2014

Called up in 2015

Reduction of the 10th EDF capital

Uncalled 10th EDF 31.12.2015

Austria

2.41

(241)

111

5

(126)

Belgium

3.53

(354)

162

7

(184)

Bulgaria

0.14

(14)

6

0

(7)

Cyprus

0.09

(9)

4

0

(5)

Czech Republic

0.51

(51)

23

1

(27)

Denmark

2.00

(200)

92

4

(104)

Estonia

0.05

(5)

2

0

(3)

Finland

1.47

(147)

68

3

(77)

France

19.55

(1 958)

900

38

(1 021)

Germany

20.50

(2 053)

944

39

(1 070)

Greece

1.47

(147)

68

3

(77)

Hungary

0.55

(55)

25

1

(29)

Ireland

0.91

(91)

42

2

(48)

Italy

12.86

(1 288)

592

25

(672)

Latvia

0.07

(7)

3

0

(4)

Lithuania

0.12

(12)

6

0

(6)

Luxemburg

0.27

(27)

12

1

(14)

Malta

0.03

(3)

1

0

(2)

Netherlands

4.85

(486)

223

9

(253)

Poland

1.30

(130)

60

2

(68)

Portugal

1.15

(115)

53

2

(60)

Romania

0.37

(37)

17

1

(19)

Slovakia

0.21

(21)

10

0

(11)

Slovenia

0.18

(18)

8

0

(9)

Spain

7.85

(786)

361

15

(410)

Sweden

2.74

(274)

126

5

(143)

United Kingdom

14.82

(1 485)

682

28

(774)

Total

100.00

(10 018)

4 603

192

(5 223)

Capital called in 2015 consists of ordinary call (EUR 3 200 million) and special call (called "special consumption" - EUR 1 403 million). The special call was made in order to get funds for the reduction of the capital of the Eighth and Ninth EDF.

4.8.CALLED FUND CAPITAL FROM CLOSED EDFs CARRIED FORWARD

| EUR millions |
| --- |
| | Eighth EDFF | Ninth EDF | 10th EDF | 11th EDF | Total |
| Funds transferred from closed EDFs | 627 | 1 625 | - | - | 2 252 |
| Balance at 31.12.2015 | 627 | 1 625 | – | – | 2 252 |

EUR millions

Eighth EDFF

Ninth EDF

10th EDF

11th EDF

Total

Funds transferred from closed EDFs

627

1 625

-

-

2 252

Balance at 31.12.2015

627

1 625

–

–

2 252

This heading includes the resources transferred from closed EDFs to the Eighth and Ninth EDFs.

4.9.CALLED FUND CAPITAL TRANSFERS BETWEEN ACTIVE EDFs

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total |
| Balance at 31.12.2013 | (3 083) | 2 130 | 952 | – | 0 |
| Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs | (64) | (372) | 436 | | 0 |
| Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs | | | (225) | 225 | 0 |
| Transfer from the 10th and 11th performance reserves to the Bridging Facility | | | (1 372) | 1 372 | 0 |
| Balance at 31.12.2014 | (3 147) | 1 758 | (209) | 1 597 | 0 |
| Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs | (6) | (109) | 114 | | 0 |
| Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs | | | (32) | 32 | 0 |
| Transfer from the 10th and 11th performance reserves to the Bridging Facility | | | (41) | 41 | 0 |
| Recoveries from the Bridging Facility to the 10th and 11th performance reserves | | | 11 | (11) | 0 |
| Return of funds committed under the Bridging Facility | 676 | 727 | 192 | (1 595) | 0 |
| Balance at 31.12.2015 | (2 476) | 2 376 | 35 | 65 | 0 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Balance at 31.12.2013

(3 083)

2 130

952

–

0

Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs

(64)

(372)

436

0

Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs

(225)

225

0

Transfer from the 10th and 11th performance reserves to the Bridging Facility

(1 372)

1 372

0

Balance at 31.12.2014

(3 147)

1 758

(209)

1 597

0

Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs

(6)

(109)

114

0

Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs

(32)

32

0

Transfer from the 10th and 11th performance reserves to the Bridging Facility

(41)

41

0

Recoveries from the Bridging Facility to the 10th and 11th performance reserves

11

(11)

0

Return of funds committed under the Bridging Facility

676

727

192

(1 595)

0

Balance at 31.12.2015

(2 476)

2 376

35

65

0

This heading includes the resources transferred between the active EDFs.

Since the entry into force of the Cotonou Agreement, all the unspent funds in previous active EDFs are transferred to the most recently opened EDF after decommitment. The resources transferred from other EDFs increase the appropriations of the receiving fund and reduce the appropriations of the fund of origin. Funds transferred to the performance reserve of the 10th and 11th EDFs can be committed only under specific conditions set out in the Internal Agreements.

In 2015 funds committed under the Bridging Facility of EUR 1 595 million came back to the performance reserve of the 10th EDF and they were used to refund capital of the Eighth, Ninth and 10th EDF (see 2.10 Called fund capital – active EDFs).

At year-end the non-mobilisable Performance Reserve of the 10th EDF is EUR 84 million while the one of the 11th EDF is EUR 65 million.

5.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

5.1.REVENUE FROM EXCHANGE AND NON-EXCHANGE TRANSACTIONS

| | | EUR millions |
| --- | --- | --- |
| | 2015 | 2014 |
| Revenue from non-exchange transactions | 89 | 87 |
| Revenue from exchange transactions | 51 | 59 |
| Total | 140 | 145 |

EUR millions

2015

2014

Revenue from non-exchange transactions

89

87

Revenue from exchange transactions

51

59

Total

140

145

The EUR 89 million of revenue from non-exchange transactions is exclusively operating revenue while the EUR 51 million of revenue from exchange transactions comprises operating revenue (EUR 43 million) and financial revenue (EUR 8 million – see note 3.5).

5.2.OPERATING REVENUE

| EUR millions |
| --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2015 | 2014 |
| Recovery of expenses | 3.2.1 | 1 | 10 | 9 | 1 | 20 | 26 |
| Recovery of STABEX funds | 3.2.2 | 1 | – | – | – | 1 | 4 |
| Foreign exchange gains | | 3 | 15 | 22 | 2 | 42 | 45 |
| Operating income co-financing | 3.2.3 | – | – | 68 | 1 | 69 | 57 |
| Total | | 4 | 24 | 99 | 5 | 132 | 132 |

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2015

2014

Recovery of expenses

3.2.1

1

10

9

1

20

26

Recovery of STABEX funds

3.2.2

1

–

–

–

1

4

Foreign exchange gains

3

15

22

2

42

45

Operating income co-financing

3.2.3

–

–

68

1

69

57

Total

4

24

99

5

132

132

| | | EUR millions |
| --- | --- | --- |
| | 2015 | 2014 |
| Direct Management | 61 | 17 |
| Implemented by: | | |
| Commission | 3 | 0 |
| EU delegations | 58 | 17 |
| Indirect Management | 29 | 70 |
| Implemented by : | | |
| Third countries | 14 | 68 |
| International organisations | 14 | 1 |
| Public law bodies | 0 | – |
| Private law bodies with a public service mission | 1 | – |
| Total operating revenue excluding foreign exchange gains | 90 | 86 |

EUR millions

2015

2014

Direct Management

61

17

Implemented by:

Commission

3

0

EU delegations

58

17

Indirect Management

29

70

Implemented by :

Third countries

14

68

International organisations

14

1

Public law bodies

0

–

Private law bodies with a public service mission

1

–

Total operating revenue excluding foreign exchange gains

90

86

3.2.1
     Recovery of STABEX funds

During 2015, EUR 1 million was returned to the EDF from double signature accounts in ACP countries. These revenues are included in operating income (recovery of STABEX funds) in the statement of financial perfomance of the Eighth EDF.

3.2.2
     Operating income co-financing

The operating income relating to co-financing represents the contributions used (see 3.3.2).

5.3.OPERATING EXPENSES

| EUR millions |
| --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2015 | 2014 |
| Operating expenses aid instruments | 3.3.1 | (5) | 47 | 2 197 | 820 | 3 059 | 3 545 |
| Operating expenses cofinancing | 3.3.2 | – | – | 68 | 1 | 69 | 57 |
| Foreign exchange losses | | 3 | 14 | 24 | 3 | 44 | 33 |
| Write-down of receivables & provisions for Risk and charges | | (0) | (5) | 8 | 4 | 7 | 14 |
| Total | | (2) | 56 | 2 297 | 828 | 3 179 | 3 650 |

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2015

2014

Operating expenses aid instruments

3.3.1

(5)

47

2 197

820

3 059

3 545

Operating expenses cofinancing

3.3.2

–

–

68

1

69

57

Foreign exchange losses

3

14

24

3

44

33

Write-down of receivables & provisions for Risk and charges

(0)

(5)

8

4

7

14

Total

(2)

56

2 297

828

3 179

3 650

| | | EUR millions |
| --- | --- | --- |
| | 2015 | 2014 |
| Direct Management | 1 106 | 933 |
| Implemented by: | | |
| Commission | 99 | 114 |
| EU executive agencies | 2 | 2 |
| EU delegations | 1 000 | 817 |
| Trust Funds | 5 | – |
| Indirect Management | 2 023 | 2 670 |
| Implemented by : | | |
| Third countries | 900 | 1 111 |
| International organisations | 990 | 1 148 |
| EIB and EIF | 31 | 179 |
| Public law bodies | 70 | 144 |
| Private law bodies with a public service mission | 31 | 46 |
| Private law bodies implementing Public Private Partnership | 1 | 41 |
| Persons implementing CFSP actions | 0 | – |
| Total operating expenses: aid instruments and cofinancing | 3 128 | 3 603 |

EUR millions

2015

2014

Direct Management

1 106

933

Implemented by:

Commission

99

114

EU executive agencies

2

2

EU delegations

1 000

817

Trust Funds

5

–

Indirect Management

2 023

2 670

Implemented by :

Third countries

900

1 111

International organisations

990

1 148

EIB and EIF

31

179

Public law bodies

70

144

Private law bodies with a public service mission

31

46

Private law bodies implementing Public Private Partnership

1

41

Persons implementing CFSP actions

0

–

Total operating expenses: aid instruments and cofinancing

3 128

3 603

6.Operating expenses – aid instruments

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2015 | 2014 |
| Programmable aid | 1 | 18 | 1 557 | 394 | 1 971 | 2 159 |
| Macro-economic support | – | 51 | – | – | 51 | 42 |
| Sectoral policy | 0 | (25) | – | – | (24) | 10 |
| Interest rate subsidies | (6) | – | – | – | (6) | 3 |
| Intra ACP projects | – | 5 | 459 | 282 | 746 | 979 |
| Emergency aid | – | 1 | 167 | 117 | 285 | 335 |
| Refugee aid | 0 | – | – | – | 0 | (0) |
| Risk capital | – | – | – | – | – | 0 |
| STABEX | – | – | – | – | – | 2 |
| SYSMIN | (0) | – | – | – | (0) | 0 |
| Other aid programmes related to former EDFs | – | 0 | – | – | 0 | 2 |
| Institutional support | – | – | 13 | 20 | 34 | 19 |
| Compensation export receipts | 0 | (3) | – | – | (3) | (5) |
| Contributions to Trust Funds | – | – | – | 5 | 5 | – |
| Total | (5) | 47 | 2 197 | 820 | 3 059 | 3 545 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2015

2014

Programmable aid

1

18

1 557

394

1 971

2 159

Macro-economic support

–

51

–

–

51

42

Sectoral policy

0

(25)

–

–

(24)

10

Interest rate subsidies

(6)

–

–

–

(6)

3

Intra ACP projects

–

5

459

282

746

979

Emergency aid

–

1

167

117

285

335

Refugee aid

0

–

–

–

0

(0)

Risk capital

–

–

–

–

–

0

STABEX

–

–

–

–

–

2

SYSMIN

(0)

–

–

–

(0)

0

Other aid programmes related to former EDFs

–

0

–

–

0

2

Institutional support

–

–

13

20

34

19

Compensation export receipts

0

(3)

–

–

(3)

(5)

Contributions to Trust Funds

–

–

–

5

5

–

Total

(5)

47

2 197

820

3 059

3 545

The EDF operating expenditure covers various aid instruments and takes different forms, depending on how the money is paid out and managed.

7.Operating expenses co-financing

These are the expenses incurred on co-financing projects in 2015. As the co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under condition, a corresponding amount of contributions has been recognised as operating revenue (see 3.2.2).

7.1.ADMINISTRATIVE EXPENSES

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2015 | 2014 |
| Administrative expenses | 0 | (0) | 34 | 79 | 113 | 22 |
| Total | 0 | (0) | 34 | 79 | 113 | 22 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2015

2014

Administrative expenses

0

(0)

34

79

113

22

Total

0

(0)

34

79

113

22

This heading includes support expenditure, i.e. the administrative costs related to the programming and implementation of the EDFs. This includes expenses for preparation, follow-up, monitoring, and evaluation of projects as well as expenses for computer networks, technical assistance etc.

The variation in the administrative costs between 2014 and 2015 (EUR 91 million) is due to a change in accounting methodology in 2014. This new methodology had a one-time impact on decreasing the amount of administrative costs.

7.2.FINANCIAL REVENUE

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2015 | 2014 |
| Interest income-European banks | (0) | (0) | (0) | 2 | 1 | (1) |
| Interest on prefinancing | – | 6 | 0 | 0 | 7 | 15 |
| Accrued interest | – | 4 | 0 | – | 4 | 11 |
| Recovered interest | – | 2 | 0 | 0 | 3 | 3 |
| Total | (0) | 6 | 0 | 2 | 8 | 13 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2015

2014

Interest income-European banks

(0)

(0)

(0)

2

1

(1)

Interest on prefinancing

–

6

0

0

7

15

Accrued interest

–

4

0

–

4

11

Recovered interest

–

2

0

0

3

3

Total

(0)

6

0

2

8

13

Interest on pre-financing is recognised in accordance with the provisions of Article 9(2)d of the Financial Regulation applicable to the 11th EDF.

Financial revenue is considered as revenue from exchange transactions.

8.CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES

8.1.CONTINGENT ASSETS

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Performance guarantees | 0 | 7 | 7 | (0) | 13 | 101 |
| Retention guarantees | – | 3 | 3 | – | 6 | 50 |
| Total | 0 | 10 | 10 | (0) | 20 | 150 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Performance guarantees

0

7

7

(0)

13

101

Retention guarantees

–

3

3

–

6

50

Total

0

10

10

(0)

20

150

Overall, the amount of guarantees held to secure EDF assets under a project has increased in 2015. However, in 2015, more guarantees have been linked to contracts managed with an indirect mode. In such case, the beneficiary of the guarantee is not the EDF but the contracting authority. By comparison, in 2014, those guarantees belonging to a contracting authority other than the EDF amounted to 273 million while they amount to 723 million in 2015.

9.Performance guarantees

Performance guarantees are sometimes requested to ensure that beneficiaries of EDF funding meet the obligations of their contracts with the EDF.

10.Retention guarantees

Retention guarantees concern only works contracts. Typically, 10 % of the interim payments to beneficiaries are withheld to ensure that the contractor fulfils his/her obligations. These withheld amounts are reflected as amounts payable. Subject to the approval of the contracting authority, the contractor may instead submit a retention guarantee which replaces the amounts withheld on interim payments. These received guarantees are disclosed as contingent assets.

10.1.CONTINGENT LIABILITIES

11.Centre for the Development of Enterprise

The ACP-EU Council of Ministers agreed in June 2014 "to proceed with the orderly closing of the CDE", and at the same time "to ensure that the private sector support projects implemented by the CDE in ACP countries and regions are completed in full". For this purpose, the ACP-EU Council of Ministers granted a delegation of powers to the ACP-EU Committee of Ambassadors to take this matter forward with a view to adopt the necessary decisions.

The ACP-EU Committee of Ambassadors authorised, by Decision No 4/2014 of 23/10/2014, the Executive Board of the CDE to take, with immediate effect, all appropriate measures to prepare for the closure of the CDE. As stipulated in article 2 of that Decision, the Executive Board was instructed to contract a Curator to prepare and implement a closure plan. That closure plan "should permit the closure of the CDE in an orderly manner, while respecting the rights of all involved third parties, and ensuring that the ongoing private sector support projects are completed either by the CDE itself or by an entity to whom their management can be assigned". The closure plan is to envisage the finalisation of the winding-up of the CDE by 31 December 2016.

The curator has submitted to the CDE Executive Board, at the end of June 2015, a definitive strategic plan, with a budget and work-plan, which reflects the outcome of the social dialogue. The budget of the definitive strategic plan, approved by the CDE Executive Board, had been the basis for the Commission's proposal for a Financing Decision, that has been adopted after having received the opinion of the EDF Committee for a total of EUR 18.2 million. Subsequent to the adoption of that Financing decision, a grant agreement was concluded in December 2015 between the CDE and the Commission which provides the necessary financing for the realization of CDE's assets and full settlement of its liabilities. The implementation of the definitive strategic plan started on 1 January 2016. Following the revision of the Annex III of the Cotonou Agreement, currently under negotiation between the EU Council and the ACP, the CDE will enter into its passive phase during which it will solely exist for the needs of its liquidation - as from 1 January 2017 and for a period that will last up to 5 years. See also note 2.7 for more information.

11.1.OTHER SIGNIFICANT DISCLOSURES

12.Outstanding commitments not yet expensed

The amount disclosed below is the budgetary RAL ("Reste à Liquider") less related amounts that have been included as expenses in the 2015 statement of financial performance. The budgetary RAL is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes.

| EUR millions |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2015 | 31.12.2014 |
| Outstanding commitments not yet expensed | 5 | 303 | 3 174 | 2 338 | 5 821 | 5 291 |
| Total | 5 | 303 | 3 174 | 2 338 | 5 821 | 5 291 |

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2015

31.12.2014

Outstanding commitments not yet expensed

5

303

3 174

2 338

5 821

5 291

Total

5

303

3 174

2 338

5 821

5 291

At 31 December 2015 the budgetary RAL totalled EUR 6 809 million (2014: EUR 5 889 million). In December 2015, EUR 1 316 million were committed to finance the new Emergency EU Trust Fund for stability and addressing root causes of illegal migration in Africa (EU Trust Fund Africa). When excluding the effect of that exceptional event, the RAL would amount to EUR 5 493 million, which represents a reduction of EUR 396 million compared to the previous year.

13.FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the EDF relate to the treasury operations carried out by the Commission on behalf of the EDF in order to implement its resources.

13.1.RISK MANAGEMENT POLICIES AND HEDGING ACTIVITIES

The rules and principles for the management of the treasury operations are laid down in the 11th EDF Financial Regulation and in the Internal Agreement.

As a result of the above regulation, the following main principles apply:

The EDF contributions are paid by Member States in special accounts opened with the bank of issue of each Member State or the financial institution designated by it. The amounts of the contributions shall remain in those special accounts until the payments of EDF need to be made.

EDF contributions are paid by Member States in EUR, while the EDF's payments are denominated in EUR and in other currencies, including less well-known ones.

Bank accounts opened by the Commission on behalf of the EDF may not be overdrawn.

In addition to the special accounts, other bank accounts are opened by the Commission in the name of the EDF, with financial institutions (central banks and commercial banks), for the purpose of executing payments and receiving receipts other than the Member State contributions to the budget.

Treasury and payment operations are highly automated and rely on modern information systems. Specific procedures are applied to guarantee system security and to ensure segregation of duties in line with the Financial Regulation, the Commission’s internal control standards, and audit principles.

A written set of guidelines and procedures regulate the management of the treasury and payment operations with the objective of limiting operational and financial risk and ensuring an adequate level of control. They cover the different areas of operation, and compliance with the guidelines and procedures is checked regularly.

13.2.CURRENCY RISK

Exposure of the EDF to currency risk at year end – net position

| EUR millions |
| --- |
| | 31.12.2015 | | 31.12.2014 |
| | USD | GBP | DKK | SEK | EUR | Other | Total | | USD | GBP | DKK | SEK | EUR | Other | Total |
| Financial assets | | | | | | | | | | | | | | | |
| Receivables and recoverables | – | – | – | – | 171 | 1 | 171 | | 0 | – | – | – | 76 | 8 | 84 |
| Cash and cash equivalents | 4 | 0 | – | – | 500 | – | 504 | | 6 | 0 | – | – | 386 | – | 391 |
| Total | 4 | 0 | – | – | 671 | 1 | 675 | | 6 | 0 | – | – | 462 | 8 | 475 |
| Financial liabilities | | | | | | | | | | | | | | | |
| Payables | 0 | – | – | – | (485) | (47) | (532) | | 0 | – | – | – | (691) | (45) | (736) |
| Total | 0 | – | – | – | (485) | (47) | (532) | | 0 | – | – | – | (691) | (45) | (736) |
| Total | 4 | 0 | – | – | 186 | (46) | 143 | | 6 | 0 | – | – | (229) | (37) | (261) |

EUR millions

31.12.2015

31.12.2014

USD

GBP

DKK

SEK

EUR

Other

Total

USD

GBP

DKK

SEK

EUR

Other

Total

Financial assets

Receivables and recoverables

–

–

–

–

171

1

171

0

–

–

–

76

8

84

Cash and cash equivalents

4

0

–

–

500

–

504

6

0

–

–

386

–

391

Total

4

0

–

–

671

1

675

6

0

–

–

462

8

475

Financial liabilities

Payables

0

–

–

–

(485)

(47)

(532)

0

–

–

–

(691)

(45)

(736)

Total

0

–

–

–

(485)

(47)

(532)

0

–

–

–

(691)

(45)

(736)

Total

4

0

–

–

186

(46)

143

6

0

–

–

(229)

(37)

(261)

All contributions are held in EUR, and other currencies are purchased only when they are needed for the execution of payments. As a result the EDF's treasury operations are not exposed to currency risk.

13.3.INTEREST RATE RISK

The EDF does not borrow money and as a consequence it is not exposed to interest rate risk.

Interest is accrued on balances it holds on its different banks accounts. The Commission, on behalf of the EDF, has therefore put in place measures to ensure that interest earned regularly reflect market interest rates as well as their possible fluctuation.

Overnight balances held on commercial bank accounts are remunerated on a daily basis. The remuneration of balances on such accounts is based on variable market rates to which a contractual margin (positive or negative) is applied. For most of the accounts the interest calculation is linked to a market reference rate and is adjusted to reflect any fluctuations of this rate. As a result no risk is taken by the EDF that its balances be remunerated at rates lower than market rates.

13.4.CREDIT RISK (COUNTERPARTY RISK)

Financial assets that are neither past due nor impaired:

| | | | EUR millions |
| --- | --- | --- | --- |
| | Total | Neither past due nor impaired | Past due but not impaired |
| | | | < 1 year | 1-5 years | > 5 years |
| Receivables and recoverables | 171 | 50 | 120 | 1 | – |
| Total at 31.12.2015 | 171 | 50 | 120 | 1 | – |
| Receivables Recoverables | 84 | 75 | 5 | 4 | |
| Total at 31.12.2014 | 84 | 75 | 5 | 4 | – |

EUR millions

Total

Neither past due nor impaired

Past due but not impaired

< 1 year

1-5 years

> 5 years

Receivables and recoverables

171

50

120

1

–

Total at 31.12.2015

171

50

120

1

–

Receivables Recoverables

84

75

5

4

Total at 31.12.2014

84

75

5

4

–

Financial assets by risk category:

| | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- |
| | 31.12.2015 | 31.12.2014 |
| | Receivables | Cash | Total | Receivables | Cash | Total |
| Counterparties with external credit rating |
| Prime and high grade | 6 | 167 | 173 | 0 | 318 | 318 |
| Upper medium grade | 34 | 16 | 50 | - | 39 | 39 |
| Lower medium grade | 36 | 312 | 348 | - | 7 | 7 |
| Non- investment grade | 14 | 9 | 23 | - | 27 | 27 |
| Total | 90 | 503 | 593 | 0 | 391 | 391 |
| Counterparties without external credit rating |
| Debtors without defaults in the past | 81 | 1 | 98 | 83 | | 83 |
| Debtors with defaults in the past | – | – | – | 1 | | 1 |
| Total | 97 | 1 | 98 | 84 | | 84 |
| Total | 171 | 504 | 692 | 84 | 391 | 475 |

EUR millions

31.12.2015

31.12.2014

Receivables

Cash

Total

Receivables

Cash

Total

Counterparties with external credit rating

Prime and high grade

6

167

173

0

318

318

Upper medium grade

34

16

50

-

39

39

Lower medium grade

36

312

348

-

7

7

Non- investment grade

14

9

23

-

27

27

Total

90

503

593

0

391

391

Counterparties without external credit rating

Debtors without defaults in the past

81

1

98

83

83

Debtors with defaults in the past

–

–

–

1

1

Total

97

1

98

84

84

Total

171

504

692

84

391

475

Funds in the categories non-investment grade and lower medium grade relate mainly to Member State contributions to the EDF paid to the special accounts opened by Member States in accordance with Article 22(3) of the EDF FR. According to this regulation the amount of such contributions must remain in those special accounts until the payments need to be made.

Most of the EDF's treasury resources are kept, in accordance with the EDF FR, in the "special accounts" opened by Member States for the payment of their contributions. The majority of such accounts are held with Member States' treasuries or national central banks. These institutions carry the lowest counterparty risk for the EDF (exposure is with its Member States).

For the part of the EDF's treasury resources kept with commercial banks in order to cover the execution of payments, replenishment of these accounts is executed on a just-in-time basis and is automatically managed by the Commission treasury's cash management system. Minimum cash levels, proportional to the average amount of daily payments made from it, are kept on each account. As a consequence the amounts kept overnight on these accounts remain constantly at low levels which ensure the EDF's risk exposure is limited.

In addition, specific guidelines are applied for the selection of commercial banks in order to further minimise counterparty risk to which the EDF is exposed.

All commercial banks are selected by call for tenders. The minimum short-term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be required in specific and duly justified circumstances.

13.5.LIQUIDITY RISK

Maturity analysis of financial liabilities by remaining contractual maturity

| | | | | EUR millions |
| --- | --- | --- | --- | --- |
| | < 1 year | 1-5 years | > 5 years | Total |
| Payables | 522 | 10 | | 532 |
| Total at 31.12.2015 | 522 | 10 | – | 532 |
| Payables | 702 | 34 | | 736 |
| Total at 31.12.2014 | 702 | 34 | – | 736 |

EUR millions

< 1 year

1-5 years

> 5 years

Total

Payables

522

10

532

Total at 31.12.2015

522

10

–

532

Payables

702

34

736

Total at 31.12.2014

702

34

–

736

Budget principles applied to the EDF ensure that overall cash resources for the budgetary period are always sufficient for the execution of all related payments. Indeed the total Member States' contributions equal the overall amount of payment appropriations for the relevant budgetary period.

Member States contributions to EDF, however, are paid in three instalments per year, while payments are subject to certain seasonality.

In order to ensure that treasury resources are always sufficient to cover the payments to be executed in any given month, information on the treasury situation is regularly exchanged between the Commission' treasury and the relevant spending departments in order to ensure that payments executed in any given period do not exceed the available treasury resources.

In addition to the above, in the context of the EDF's daily treasury operations, automated cash management tools ensure that sufficient liquidity is available on each of the EDF's bank accounts, on a daily basis.

14.RELATED PARTY DISCLOSURES

The related parties of the EDF are Bêkou and Africa EU Trust Funds. Transactions between these entities take place as part of the normal operations of the EDF and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

The EDF has no separate management since it is managed by the Commission. The entitlements of the key management of the EU, including the Commission, have been disclosed in the Consolidated annual accounts of the European Union under heading 8.2 "Key management entitlements".

15.EVENTS AFTER THE BALANCE SHEET DATE

At the date of transmission of these accounts, no material issues had come to the attention of the Accounting Officer of the EDF or were reported to him that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented above.

16.RECONCILIATION OF ECONOMIC RESULT AND BUDGET RESULT

The economic result of the year is calculated on the basis of accrual accounting principles. The budget result is however based on cash accounting rules. As the economic result and the budget result both cover the same underlying operational transactions, it is a useful control to ensure that they are reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items.

| | | EUR millions |
| --- | --- | --- |
| | 2015 | 2014 |
| ECONOMIC RESULT OF THE YEAR | (3 152) | (3 526) |
| | | |
| Revenue | | |
| Entitlements not affecting the budget result | (1) | (10) |
| Entitlements established in current year but not yet collected | (11) | (19) |
| Entitlements established in previous years and collected in current year | 19 | 12 |
| Net effect of pre-financing | 28 | 41 |
| Accrued revenue (net) | 29 | (71) |
| Expenses | | |
| Expenses of the current year not yet paid | 61 | 165 |
| Expenses of previous years paid in the current year | (221) | (28) |
| Payments cancellation | 12 | 65 |
| Net effect of pre-financing | (53) | (562) |
| Accrued expenses (net) | 200 | 417 |
| | | |
| BUDGET RESULT OF THE YEAR | (3 088) | (3 516) |

EUR millions

2015

2014

ECONOMIC RESULT OF THE YEAR

(3 152)

(3 526)

Revenue

Entitlements not affecting the budget result

(1)

(10)

Entitlements established in current year but not yet collected

(11)

(19)

Entitlements established in previous years and collected in current year

19

12

Net effect of pre-financing

28

41

Accrued revenue (net)

29

(71)

Expenses

Expenses of the current year not yet paid

61

165

Expenses of previous years paid in the current year

(221)

(28)

Payments cancellation

12

65

Net effect of pre-financing

(53)

(562)

Accrued expenses (net)

200

417

BUDGET RESULT OF THE YEAR

(3 088)

(3 516)

16.1.RECONCILING ITEMS - REVENUE

The budgetary revenue of a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years.

The entitlements not affecting the budget result are recorded in the economic result but from a budgetary perspective cannot be considered as revenues as the cashed amount is transferred to reserves and cannot be recommitted without a Council decision.

The entitlements established in the current year but not yet collected are to be deducted from the economic result for reconciliation purposes as they do not form part of budgetary revenue. On the contrary, the entitlements established in previous years and collected in the current year must be added to the economic result for reconciliation purposes.

The net effect of pre-financing is the clearing of the recovered pre-financing amounts. This is a cash receipt which has no impact on the economic result.

The net accrued revenue mainly consists of accruals made for year-end cut-off purposes. Only the net effect, i.e. the accrued revenue of the current year less the reversal of accrued revenue of the previous year, is taken into consideration.

16.2.RECONCILING ITEMS - EXPENDITURE

Expenses of the current year not yet paid are to be added for reconciliation purposes as they are included in the economic result but do not form part of budgetary expenditure. On the contrary, the expenses of previous years paid in the current year must be deducted from the economic result for reconciliation purposes as they are part of the current year's budgetary expenditure but have either no effect on the economic result or they decrease the expenses in case of corrections.

The cash receipts from payment cancellations do not affect the economic result whereas they impact the budget result.

The net effect of pre-financing is the combination of the new pre-financing amounts paid in the current year (recognised as budgetary expenditure of the year) and the clearing of pre-financing paid in the current year or previous years through the acceptance of eligible costs. The latter represents an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of EDF funds but not yet reported to the EDF. Only the net effect, i.e. the accrued expenses of the current year less the reversal of accrued expenses of the previous year, is taken into consideration.

FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add-up.

CERTIFICATION OF THE ACCOUNTS

The annual accounts of the Bêkou EU Trust Fund for the year 2015 have been prepared in accordance with the Financial Regulation applicable to the general budget of the European Union and the accounting rules adopted by myself in my capacity as the Commission's Accounting Officer, as are to be applied by all the institutions and Union bodies.

I acknowledge my responsibility for the preparation and presentation of the annual accounts of the Bêkou EU Trust Fund in accordance with Article 68 of the Financial Regulation.

I have obtained from the authorising officers, who certified its reliability, all the information necessary for the production of the accounts that show the Bêkou EU Trust Fund's assets and liabilities and the budgetary implementation.

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present fairly, in all material aspects, the financial position, the results of the operations and the cash-flow of the Bêkou EU Trust Fund.

[signed]

Manfred Kraff

Accounting Officer

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND

In accordance with Article 187(1) of the Financial Regulation applicable to the general budget of the Union (EU FR) and Article 42 of the Financial Regulation applicable to the 11th European Development Fund, the Commission is authorised to create Union Trust Funds for external actions under an agreement concluded with other donors. These trust funds may be created for emergency, post-emergency and thematic actions. The constitutive act of each trust fund defines its objectives.

The first multi-donor EU Trust Fund called Bêkou, which means "hope" in Sango, was established on
  15 July 2014, by the EU (represented by DGs DEVCO and

  ECHO,

  and the

  EEAS

  ) and three of its Member States (Germany,

  France

  and the

  Netherlands

  ), with the aim of promoting the stabilisation and reconstruction of the Central African Republic. It has been established for a maximum duration of
  60 months in order to provide a medium-term response. At the end of 2015 7 donors contributed to the Bêkou Trust Fund: the European Development Fund, the European Commission via the EU Budget, 4 Member States and 1 non-Member State.

Union trust funds for external actions are required to prepare and adopt their own annual accounts. As the Bêkou EU Trust Fund was established under the EDF, its annual accounts will be consolidated in those of the EDF. The preparation of the annual accounts is entrusted to the Bêkou EU Trust Fund Accounting Officer, who is the Accounting Officer of the Commission, in accordance with Article 187(6) EU FR.

BÊKOU TRUST FUND BALANCE SHEET

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 31.12.2015 | 31.12.2014 |
| NON-CURRENT ASSETS | | | |
| Pre-financing | 1.1 | 3 446 | – |
| CURRENT ASSETS | | | |
| Pre-financing | 1.2 | 6 047 | – |
| Exchange receivables and non-exchange recoverables | 1.3 | 1 364 | – |
| Cash and cash equivalents | 1.4 | 52 461 | 45 000 |
| | | 59 873 | 45 000 |
| TOTAL ASSETS | | 63 319 | 45 000 |
| | | | |
| NON-CURRENT LIABILITIES | | | |
| Financial liabilities | 1.5 | (63 125) | (45 000) |
| | | (63 125) | (45 000) |
| CURRENT LIABILITIES | | | |
| Accrued charges and deferred income | | (193) | – |
| | | (193) | – |
| TOTAL LIABILITIES | | (63 319) | (45 000) |
| | | | |
| NET ASSETS | | – | – |
| | | | |
| FUNDS & RESERVES | | | |
| Economic result of the year | | – | – |
| NET ASSETS | | – | – |

EUR '000

Note

31.12.2015

31.12.2014

NON-CURRENT ASSETS

Pre-financing

1.1

3 446

–

CURRENT ASSETS

Pre-financing

1.2

6 047

–

Exchange receivables and non-exchange recoverables

1.3

1 364

–

Cash and cash equivalents

1.4

52 461

45 000

59 873

45 000

TOTAL ASSETS

63 319

45 000

NON-CURRENT LIABILITIES

Financial liabilities

1.5

(63 125)

(45 000)

(63 125)

(45 000)

CURRENT LIABILITIES

Accrued charges and deferred income

(193)

–

(193)

–

TOTAL LIABILITIES

(63 319)

(45 000)

NET ASSETS

–

–

FUNDS & RESERVES

Economic result of the year

–

–

NET ASSETS

–

–

BÊKOU TRUST FUND STATEMENT OF FINANCIAL PERFORMANCE

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 2015 | 2014 |
| REVENUE | | | |
| Revenue from non-exchange transactions | | | |
| Revenue from donations | 2.1 | 9 354 | – |
| Revenue from exchange transactions | | | |
| Financial income | | 101 | – |
| Total | | 9 455 | – |
| EXPENSES | | | |
| Operating expenses | 2.2 | (8 824) | – |
| Other expenses | 2.3 | (631) | – |
| Total | | (9 455) | – |
| ECONOMIC RESULT OF THE YEAR | | – | – |

EUR '000

Note

2015

2014

REVENUE

Revenue from non-exchange transactions

Revenue from donations

2.1

9 354

–

Revenue from exchange transactions

Financial income

101

–

Total

9 455

–

EXPENSES

Operating expenses

2.2

(8 824)

–

Other expenses

2.3

(631)

–

Total

(9 455)

–

ECONOMIC RESULT OF THE YEAR

–

–

BÊKOU TRUST FUND CASHFLOW STATEMENT

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 2015 | 2014 |
| Economic result of the year | | – | – |
| OPERATING ACTIVITIES | | | |
| (Increase)/decrease in pre-financing | | (9 493) | – |
| (Increase)/decrease in exchange receivables and non-exchange recoverables | | (1 364) | – |
| Increase/(decrease) in non-current liabilities | | 18 125 | 45 000 |
| Increase/(decrease) in current liabilities | | 193 | – |
| | | | |
| NET CASHFLOW | | 7 461 | 45 000 |
| | | | |
| Net increase/(decrease) in cash and cash equivalents | | 7 461 | 45 000 |
| Cash and cash equivalents at the beginning of the year | | 45 000 | – |
| Cash and cash equivalents at year-end | 1.4 | 52 461 | 45 000 |

EUR '000

Note

2015

2014

Economic result of the year

–

–

OPERATING ACTIVITIES

(Increase)/decrease in pre-financing

(9 493)

–

(Increase)/decrease in exchange receivables and non-exchange recoverables

(1 364)

–

Increase/(decrease) in non-current liabilities

18 125

45 000

Increase/(decrease) in current liabilities

193

–

NET CASHFLOW

7 461

45 000

Net increase/(decrease) in cash and cash equivalents

7 461

45 000

Cash and cash equivalents at the beginning of the year

45 000

–

Cash and cash equivalents at year-end

1.4

52 461

45 000

BÊKOU TRUST FUND STATEMENT OF CHANGES IN NET ASSETS

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Accumulated surplus/


  (deficit) | Economic result of the year | Net assets |
| BALANCE AS AT 31.12.2014 | – | – | – |
| Economic result of the year | – | – | – |
| BALANCE AS AT 31.12.2015 | – | – | – |

EUR '000

Accumulated surplus/

(deficit)

Economic result of the year

Net assets

BALANCE AS AT 31.12.2014

–

–

–

Economic result of the year

–

–

–

BALANCE AS AT 31.12.2015

–

–

–

NOTES TO THE FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND

1.NOTES TO THE BALANCE SHEET

NON-CURRENT ASSETS

1.1.PRE-FINANCING

| | | EUR '000 |
| --- | --- | --- |
| | Total 31.12.2015 | Total 31.12.2014 |
| Pre-financing | 3 446 | – |
| Total | 3 446 | – |

EUR '000

Total 31.12.2015

Total 31.12.2014

Pre-financing

3 446

–

Total

3 446

–

| | | EUR '000 |
| --- | --- | --- |
| | Total 31.12.2015 | Total 31.12.2014 |
| Direct Management | 1 078 | - |
| Implemented by: | | |
| Commission | 1 078 | – |
| Indirect Management | 2 368 | - |
| Implemented by: | | |
| Public law bodies | 1 155 | – |
| Private law bodies with a public service mission | 1 213 | – |
| Total | 3 446 | - |

EUR '000

Total 31.12.2015

Total 31.12.2014

Direct Management

1 078

-

Implemented by:

Commission

1 078

–

Indirect Management

2 368

-

Implemented by:

Public law bodies

1 155

–

Private law bodies with a public service mission

1 213

–

Total

3 446

-

CURRENT ASSETS

1.2.PRE-FINANCING

| | | EUR '000 |
| --- | --- | --- |
| | Total 31.12.2015 | Total 31.12.2014 |
| Pre-financing | 14 860 | – |
| Cleared via cut-off | (8 813) | – |
| Total | 6 047 | – |

EUR '000

Total 31.12.2015

Total 31.12.2014

Pre-financing

14 860

–

Cleared via cut-off

(8 813)

–

Total

6 047

–

| | | EUR '000 |
| --- | --- | --- |
| | Total 31.12.2015 | Total 31.12.2014 |
| Direct Management | 4 046 | - |
| Implemented by: | | |
| Commission | 4 046 | – |
| Indirect Management | 2 002 | - |
| Implemented by: | | |
| Public law bodies | 806 | – |
| Private law bodies with a public service mission | 1 196 | – |
| Total | 6 047 | - |

EUR '000

Total 31.12.2015

Total 31.12.2014

Direct Management

4 046

-

Implemented by:

Commission

4 046

–

Indirect Management

2 002

-

Implemented by:

Public law bodies

806

–

Private law bodies with a public service mission

1 196

–

Total

6 047

-

1.3.EXCHANGE RECEIVABLES AND NON-EXCHANGE RECOVERABLES

This heading represents deferred management costs (EUR 1.3 million) and accrued income (kEUR 45).

1.4.CASH AND CASH EQUIVALENTS

Funds controlled by the Bêkou EU Trust Fund were presented in the 2014 annual accounts as receivables to the common central treasury system. With the aim of improving the presentation in the 2015 annual accounts, these funds were presented as cash and cash equivalents. The comparative figures for 2014 are disclosed accordingly.

NON-CURRENT LIABILITIES

1.5.FINANCIAL LIABILITIES

| | | | | EUR '000 |
| --- | --- | --- | --- | --- |
| Contributions | % | Paid contributions | Allocation of net results | Financialliabilities |
| European Commission | 6 | 4 554 | (588) | 3 966 |
| EDF | 54 | 39 000 | (5 033) | 33 967 |
| Member States : | 39 | 28 000 | (3 614) | 24 386 |
| Germany | | 15 000 | (1 936) | 13 064 |
| France | | 10 000 | (1 291) | 8 709 |
| Netherlands | | 2 000 | (258) | 1 742 |
| Italy | | 1 000 | (129) | 871 |
| Non-Member States: | 1 | 925 | (119) | 806 |
| Switzerland | | 925 | (119) | 806 |
| Total | 100 | 72 480 | (9 354) | 63 125 |

EUR '000

Contributions

%

Paid contributions

Allocation of net results

Financialliabilities

European Commission

6

4 554

(588)

3 966

EDF

54

39 000

(5 033)

33 967

Member States :

39

28 000

(3 614)

24 386

Germany

15 000

(1 936)

13 064

France

10 000

(1 291)

8 709

Netherlands

2 000

(258)

1 742

Italy

1 000

(129)

871

Non-Member States:

1

925

(119)

806

Switzerland

925

(119)

806

Total

100

72 480

(9 354)

63 125

The total non-current financial liabilities relate to EUR 34 million of contributions from the European Development Fund, EUR 4 million from the European Commission via the EU Budget, EUR 24 million from various Member States and EUR 1 million from non-Member State.

The allocation of net results is only indicative and is made purely for accounting purposes. If the Bêkou Trust Fund is wound up, the final decision on the return of remaining funds will be made by the Trust Fund Board.

2.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

2.1.REVENUE FROM NON-EXCHANGE TRANSACTIONS

This heading represents contributions from donors recognised as operating revenue in line with the net expenses
  12
  . Consequently the economic result of the year is nil.

2.2.OPERATING EXPENSES

| | | EUR '000 |
| --- | --- | --- |
| | 2015 | 2014 |
| Food aid/food security programmes | 460 | – |
| Women's equality organisations and institutions | 389 | – |
| Basic health care - basic and primary health care | 6 678 | – |
| Urban development and management | 539 | – |
| Reconstruction relief and rehabilitation | 758 | – |
| Total | 8 824 | – |

EUR '000

2015

2014

Food aid/food security programmes

460

–

Women's equality organisations and institutions

389

–

Basic health care - basic and primary health care

6 678

–

Urban development and management

539

–

Reconstruction relief and rehabilitation

758

–

Total

8 824

–

EUR '000

| | | EUR '000 |
| --- | --- | --- |
| | 2015 | 2014 |
| Direct Management | 7 527 | – |
| Implemented by: | | |
| Commission | 7 527 | – |
| Indirect Management | 1 297 | – |
| Implemented by: | | |
| Public law bodies | 539 | – |
| Private law bodies with a public service mission | 758 | – |
| Total | 8 824 | – |

2015

2014

Direct Management

7 527

–

Implemented by:

Commission

7 527

–

Indirect Management

1 297

–

Implemented by:

Public law bodies

539

–

Private law bodies with a public service mission

758

–

Total

8 824

–

2.3.OTHER EXPENSES

| | | EUR '000 |
| --- | --- | --- |
| | 2015 | 2014 |
| Other expenses | 615 | - |
| Foreign exchange losses | 16 | - |
| Total | 631 | – |

EUR '000

2015

2014

Other expenses

615

-

Foreign exchange losses

16

-

Total

631

–

This heading includes the Commission management costs (EUR 0.4 million), technical assistance (EUR 0.15 million), audit (EUR 0.05 million) and other costs.

3.OTHER SIGNIFICANT DISCLOSURES

3.1.Outstanding commitments not yet expensed

At 31 December 2015 the outstanding commitments not yet expensed amounted to EUR 12 million. The amount comprises the budgetary RAL ("Reste à Liquider") less related amounts that have been included as expenses in the 2015 statement of financial performance. The budgetary RAL is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes.

3.2.Related parties

The related party of the Bêkou EU Trust Fund is the European Development Fund. Transactions between these entities take place as part of the normal operations of the Bêkou EU Trust Fund and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

3.3.Events after reporting date

At the date of transmission of these accounts, no material issues had come to the attention of the Accounting Officer of the Bêkou EU Trust Fund or were reported to him that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented above.

4.FINANCIAL INSTRUMENTS DISCLOSURES

4.1.CURRENCY RISKS

Exposure of the Bêkou EU Trust Fund to currency risk at year end

At 31 December 2015 the ending balances of financial assets and financial liabilities did not include any material amounts quoted in different currencies than euro.

4.2.CREDIT RISK

The financial assets compose of cash and cash equivalent of EUR 52 million and receivables and recoverables that amounted to EUR 1.4 million at 31 December 2015.

Financial assets that are neither past due nor impaired

Receivables and recoverables are neither past due nor impaired.

Financial assets by risk category

The entire amount of EUR 52 million of cash and cash equivalents is placed in a bank with prime and high grade.

4.3.LIQUIDITY RISK

Maturity analysis of financial liabilities by remaining contractual maturity

The financial liabilities are entirely composed of liabilities to donors. They will be paid when the Bêkou EU Trust Fund is wound-up.

5.RECONCILIATION OF ECONOMIC RESULT AND BUDGET RESULT

The economic result of the year is calculated on the basis of accrual accounting principles. The budget result is however based on cash accounting rules. As the economic result and the budget result both cover the same underlying operational transactions, it is a useful control to ensure that they are reconcilable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items.

| | | EUR '000 |
| --- | --- | --- |
| | | 2015 |
| ECONOMIC RESULT OF THE YEAR | | - |
| | | |
| Revenue | | |
| Entitlements not affecting the budget result | | (9 455) |
| Entitlements collected in current years | | 45 595 |
| Accrued revenue (net) | | 40 |
| Expenses | | |
| Net effect of pre-financing | | (18 306) |
| Accrued expenses (net) | | 7 703 |
| | | |
| BUDGET RESULT OF THE YEAR | | 25 577 |

EUR '000

2015

ECONOMIC RESULT OF THE YEAR

-

Revenue

Entitlements not affecting the budget result

(9 455)

Entitlements collected in current years

45 595

Accrued revenue (net)

40

Expenses

Net effect of pre-financing

(18 306)

Accrued expenses (net)

7 703

BUDGET RESULT OF THE YEAR

25 577

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE BÊKOU TRUST FUND

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add-up.

CONSOLIDATED BALANCE SHEET

| | | EUR millions |
| --- | --- | --- |
| | 31.12.2015 | 31.12.2014 |
| NON-CURRENT ASSETS | | |
| Pre-financing | 520 | 472 |
| | 520 | 472 |
| CURRENT ASSETS | | |
| Pre-financing | 1 151 | 1 403 |
| Receivables | 172 | 84 |
| Cash and cash equivalents | 556 | 436 |
| | 1 879 | 1 923 |
| TOTAL ASSETS | 2 399 | 2 395 |
| | | |
| NON-CURRENT LIABILITIES | | |
| Provisions | (4) | |
| Payables | (39) | (40) |
| | (43) | (40) |
| CURRENT LIABILITIES | | |
| Payables | (1 376) | (1 423) |
| | (1 376) | (1 423) |
| TOTAL LIABILITIES | (1 419) | (1 463) |
| | | |
| NET ASSETS | 980 | 932 |
| | | |
| FUNDS & RESERVES | | |
| Called fund capital - active EDFs | 38 873 | 35 673 |
| Called fund capital from closed EDFs carried forward | 2 252 | 2 252 |
| Economic result carried forward from previous years | (36 994) | (33 468) |
| Economic result of the year | (3 152) | (3 526) |
| NET ASSETS | 980 | 932 |

EUR millions

31.12.2015

31.12.2014

NON-CURRENT ASSETS

Pre-financing

520

472

520

472

CURRENT ASSETS

Pre-financing

1 151

1 403

Receivables

172

84

Cash and cash equivalents

556

436

1 879

1 923

TOTAL ASSETS

2 399

2 395

NON-CURRENT LIABILITIES

Provisions

(4)

Payables

(39)

(40)

(43)

(40)

CURRENT LIABILITIES

Payables

(1 376)

(1 423)

(1 376)

(1 423)

TOTAL LIABILITIES

(1 419)

(1 463)

NET ASSETS

980

932

FUNDS & RESERVES

Called fund capital - active EDFs

38 873

35 673

Called fund capital from closed EDFs carried forward

2 252

2 252

Economic result carried forward from previous years

(36 994)

(33 468)

Economic result of the year

(3 152)

(3 526)

NET ASSETS

980

932

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

| | | EUR millions |
| --- | --- | --- |
| | 2015 | 2014 |
| OPERATING REVENUE | 136 | 132 |
| | | |
| OPERATING EXPENSES | | |
| Operating expenses | (3 182) | (3 650) |
| Administrative expenses | (114) | (22) |
| | (3 296) | (3 671) |
| | | |
| SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES | (3 160) | (3 539) |
| | | |
| Financial revenue | 8 | 13 |
| Financial charges | (0) | (0) |
| SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES | 8 | 13 |
| | | |
| ECONOMIC RESULT OF THE YEAR | (3 152) | (3 526) |

EUR millions

2015

2014

OPERATING REVENUE

136

132

OPERATING EXPENSES

Operating expenses

(3 182)

(3 650)

Administrative expenses

(114)

(22)

(3 296)

(3 671)

SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES

(3 160)

(3 539)

Financial revenue

8

13

Financial charges

(0)

(0)

SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES

8

13

ECONOMIC RESULT OF THE YEAR

(3 152)

(3 526)

CONSOLIDATED CASH FLOW STATEMENT

| | EUR millions |
| --- | --- |
| | 2015 |
| Economic result of the year | (3 152) |
| OPERATING ACTIVITIES | |
| Ordinary contributions from Member States | 3 232 |
| (Reversal of) impairment losses on receivables | 1 |
| (Increase)/decrease in pre-financing | 204 |
| (Increase)/decrease in current receivables | (89) |
| (Increase)/decrease in non-current liabilities | 2 |
| Increase/(decrease) in current liabilities | (211) |
| Increase/(decrease) in accrued charges and deferred income | 132 |
| | |
| NET CASHFLOW | 120 |
| | |
| Net increase/(decrease) in cash and cash equivalents | 120 |
| Cash and cash equivalents at the beginning of the year | 436 |
| Cash and cash equivalents at year-end | 556 |

EUR millions

2015

Economic result of the year

(3 152)

OPERATING ACTIVITIES

Ordinary contributions from Member States

3 232

(Reversal of) impairment losses on receivables

1

(Increase)/decrease in pre-financing

204

(Increase)/decrease in current receivables

(89)

(Increase)/decrease in non-current liabilities

2

Increase/(decrease) in current liabilities

(211)

Increase/(decrease) in accrued charges and deferred income

132

NET CASHFLOW

120

Net increase/(decrease) in cash and cash equivalents

120

Cash and cash equivalents at the beginning of the year

436

Cash and cash equivalents at year-end

556

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

| | | | | | | EUR millions |
| --- | --- | --- | --- | --- | --- | --- |
| | Fund capital (A) | Uncalled funds (B) | Called fund capital (C) = (A)-(B) | Cumulative Reserves (D) | Other reserves (E) | Total Net Assets (C)+(D)+(E) |
| BALANCE AS AT 31.12.2013 | 45 691 | 13 162 | 32 529 | (33 468) | 2 252 | 1 313 |
| Capital changes | – | (3 144) | 3 144 | – | – | 3 144 |
| Economic result of the year | – | – | – | (3 526) | – | (3 526) |
| BALANCE AS AT 31.12.2014 | 45 691 | 10 018 | 35 673 | (36 994) | 2 252 | 932 |
| Capital changes | 27 772 | 24 572 | 3 200 | – | – | 3 200 |
| Economic result of the year | – | – | – | (3 152) | – | (3 152) |
| BALANCE AS AT 31.12.2015 | 73 464 | 34 590 | 38 873 | (40 146) | 2 252 | 980 |

EUR millions

Fund capital (A)

Uncalled funds (B)

Called fund capital (C) = (A)-(B)

Cumulative Reserves (D)

Other reserves (E)

Total Net Assets (C)+(D)+(E)

BALANCE AS AT 31.12.2013

45 691

13 162

32 529

(33 468)

2 252

1 313

Capital changes

–

(3 144)

3 144

–

–

3 144

Economic result of the year

–

–

–

(3 526)

–

(3 526)

BALANCE AS AT 31.12.2014

45 691

10 018

35 673

(36 994)

2 252

932

Capital changes

27 772

24 572

3 200

–

–

3 200

Economic result of the year

–

–

–

(3 152)

–

(3 152)

BALANCE AS AT 31.12.2015

73 464

34 590

38 873

(40 146)

2 252

980

EDF REPORT ON FINANCIAL IMPLEMENTATION

REPORT ON FINANCIAL IMPLEMENTATION - 2015

INTRODUCTORY NOTE

Previous EDFs

As the Sixth EDF was closed in 2006 and the Seventh EDF was closed in 2008, the annual accounts no longer contain implementation tables for these EDFs. However, implementation of the transferred balances can be found in the Ninth EDF.

As in past years, to ensure transparency in the presentation of the accounts for 2015, the tables set out separately for the Eighth EDF the part used for Lomé Convention programming and the part used for programming under the Cotonou Agreement.

In accordance with article 1(2)(b) of the Internal Agreement of the Ninth EDF, balances and decommitments of previous EDFs have been transferred to the Ninth EDF, and, during the life of the Ninth EDF, have been committed as Ninth EDF funds.

10th EDF

The ACP-EC Partnership Agreement signed on 23 June 2000 in Cotonou by the Member States of the European Community and the States of Africa, the Caribbean and the Pacific (ACP States) entered into force on 1 April 2003. The Cotonou Agreement was amended twice, firstly by the agreement signed in Luxembourg on 25 June 2005, secondly by the agreement signed in Ouagadougou on 22 june 2010.

The EU Council Decision of 27 November 2001 (2001/822/EC) on the association of the overseas countries and territories (OCT) with the European Union entered into force on 2 December 2001. This Decision was amended on 19 March 2007 (Decision 2007/249/EC).

The Internal Agreement on the financing of Community aid under the multiannual financial framework for the period 2008-2013 in accordance with the revised Cotonou Agreement, adopted by the Representatives of the Governments of the Member States of the European Community on 17 July 2006, entered into force on 1 July 2008.

Under the Cotonou Agreement, the second period (2008-2013) of Community aid to the ACP States and OCTs is funded by the 10th EDF for an amount of EUR 22 682 million, of which:

EUR 21 966 million is allocated to the ACP countries in accordance with the multiannual financial framework set out in Annex Ib to the revised Cotonou Agreement, of which EUR 20 466 million is managed by the European Commission;

EUR 286 million is allocated to the OCTs in accordance with Annex IIAa of the revised Council Decision on the association of the OCTs with the European Community, of which EUR 256 million is managed by the European Commission;

EUR 430 million is for the Commission to finance the costs arising from the programming and implementation of 10th EDF resources, in accordance with Article 6 of the Internal Agreement.

According to the "Sunset clause" of the 10th EDF, (articles 1(4) and 1(5) of the 10th EDF Internal Agreement) no funds could be committed after 31 December 2013. Uncommitted funds were transferred to the 11th EDF performance reserve.

- Bridging Facility

The Internal Agreement establishing the eleventh European Development Fund (11th EDF) was signed by the Member States, meeting within the Council, in June 2013. It came into force on 1 March 2015.

In order to assure continuity between the end of the 10th EDF and the entry into force of the 11th EDF, the Commission proposed transitional measures, known as the "Bridging Facility", to ensure availability of funds for cooperation with African, Caribbean and Pacific countries and with Overseas Countries and Territories, as well as for support expenditure.

The Bridging Facility was adopted on 12 December 2013 (Decision 2013/759/EU), enterred into force on 1 January 2014. The Bridging Facility and is financed from:

-funds decommitted from Eighth and Ninth EDF up to 31/12/2013,

-uncommitted balances from the 10th EDF at 31/12/2013,

-funds decommitted from the 10th and previous EDFs as from 01/01/2014 until 28/02/2015.

By the entry into force of the 11th EDF, a total of EUR 1 630 million had been de-committed from former EDF's and were therefore potentially available to the Bridging Facility, of which EUR 1 595 million were allocated and are accounted for under the 11th EDF, and EUR 4 million remained unallocated on the Bridging Facility and returned to the original performance reserve.

11th EDF

The ACP-EC Partnership Agreement signed on 23 June 2000 in Cotonou by the Member States of the European Community and the States of Africa, the Caribbean and the Pacific (ACP States) entered into force on 1 April 2003. The Cotonou Agreement was amended twice, firstly by the agreement signed in Luxembourg on 25 June 2005, secondly by the agreement signed in Ouagadougou on 22 June 2010.

The EU Council Decision of 27 November 2001 (2001/822/EC) on the association of the overseas countries and territories (OCT) with the European Union entered into force on 2 December 2001. This Decision was amended on 19 March 2007 (Decision 2007/249/EC).

The Internal Agreement on the financing of Community aid under the multiannual financial framework for the period 2014-2020 in accordance with the revised Cotonou Agreement, adopted by the Representatives of the Governments of the Member States of the European Community on August 2013, entered into force on March 2015.

Under the Cotonou Agreement, the third period (2014-2020) of Community aid to the ACP States and OCTs is funded by the 11th EDF for an amount of EUR 30 506 million, of which:

EUR 29 089 million is allocated to the ACP countries in accordance with Article 1.2(a) and Article 2(d) of the Internal Agreement, of which EUR 27 955 million is managed by the European Commission;

EUR 364.5 million is allocated to the OCTs in accordance with Article 1.2(a) and Article 3.1 of the Internal Agreement, of which 359.5 million is managed by the European Commission;

EUR 1 052.5 million is for the Commission to finance the costs arising from the programming and implementation of 11th EDF resources, in accordance with Article 1.2(a) of the Internal Agreement.

- Remaining funds on non-mobilisable performance reserves at 31.12.2015

Until the coming into force of the Bridging Facility on 1 January 2014, the amounts decommitted from projects under the Ninth and previous EDFs were transferred to the performance reserve of the 10th EDF. On 1 January 2014 the uncommited funds of the 10th EDF were transferred to the performance reserve of the 11th EDF, with the exception of Stabex funds and administrative envelope.

During 2015 all decommitted funds from previous EDFs were transferred to the respective reserves.

In accordance with article 1.4 of the 10th EDF Internal Agreement, and the Council Decision of 12 December 2013 (2013/759/EU) those funds were allocated to the Bridging Facility.

EUR millions

| Total available on non-mobilisable performance reserves at 31/12/2013 | 938 |
| --- | --- |
| Total made available on non-mobilisable performance reserves during 2014 | 661 |
| Less total transferred to the Bridging facility | (1 597) |
| Non-mobilisable performance reserve not transferred to BF at 31/12/2014 | 2 |

Total available on non-mobilisable performance reserves at 31/12/2013

938

Total made available on non-mobilisable performance reserves during 2014

661

Less total transferred to the Bridging facility

(1 597)

Non-mobilisable performance reserve not transferred to BF at 31/12/2014

2

- 11th EDF Stabex reserve

Following the closure of Stabex accounts, unused/decommitted funds are transferred to the 11th EDF Stabex A Envelope reserve (10th EDF Internal Agreement Art. 1(4)) and then to the national indicative programmes of the countries concerned.

- 10th EDF Co-financings

Under the 10th and 11th EDF, transfer agreements for co-financings from Member States were signed, and commitment appropriations were opened for a total amount of EUR 204.6 million, while payment appropriations were opened for the cashed amounts totalling EUR 184.9 million.

The situation of co-financing appropriations at 31.12.2015 is shown in the table below :

EUR millions

| | Commitments appropriations | Payment appropriations |
| --- | --- | --- |
| Co-financing - A Envelope | 186.1 | 166.8 |
| Co-financing - Intra ACP | 13.4 | 13.4 |
| Co-financing – Administrative expenses | 5.1 | 4.7 |
| | 204.6 | 184.9 |

Commitments appropriations

Payment appropriations

Co-financing - A Envelope

186.1

166.8

Co-financing - Intra ACP

13.4

13.4

Co-financing – Administrative expenses

5.1

4.7

204.6

184.9

The following tables, concerning the amounts decided, contracted and paid, show net figures. 

  The tables presenting the situation by instrument are annexed.

FINANCIAL STATEMENTS AND EXPLANATORY NOTES – FUNDS MANAGED BY THE EUROPEAN INVESTMENT BANK

| EUROPEAN INVESTMENT BANK | CA/491/16 |
| --- | --- |
| | 10 March 2016 |
| | Document 16/119 |
| | |
| | |
| BOARD OF DIRECTORS |
| Investment Facility |
| financial statements |
| as at 31 december 2015 |
| | | |
| | Statement of financial position


  Statement of profit or loss and other comprehensive income


  Statement of changes in contributors’ resources


  Statement of cash flows


  Notes to the financial statements


  Independent auditor’s report | |
| | |
| | |
| | |
| ORG.: E | |

EUROPEAN INVESTMENT BANK

CA/491/16

10 March 2016

Document 16/119

BOARD OF DIRECTORS

Investment Facility

financial statements

as at 31 december 2015

Statement of financial position

Statement of profit or loss and other comprehensive income

Statement of changes in contributors’ resources

Statement of cash flows

Notes to the financial statements

Independent auditor’s report

ORG.: E

STATEMENT OF FINANCIAL POSITION

| | Notes | 31.12.2015 | 31.12.2014 |
| --- | --- | --- | --- |
| | | | |
| ASSETS | | | |
| Cash and cash equivalents | 5 | 448,995 | 545,399 |
| Derivative financial instruments | 6 | 311 | 448 |
| Loans and receivables | 7 | 1,460,057 | 1,331,918 |
| Available-for-sale financial assets | 8 | 419,353 | 403,085 |
| Amounts receivable from contributors | 9/15 | - | 42,590 |
| Held-to-maturity financial assets | 10 | 228,521 | 99,988 |
| Other assets | 11 | 27 | 5,522 |
| | | | |
| Total assets | | 2,557,264 | 2,428,950 |
| | | | |
| | | | |
| LIABILITIES AND CONTRIBUTORS' RESOURCES | | | |
| | | | |
| LIABILITIES | | | |
| Derivative financial instruments | 6 | 8,219 | 14,632 |
| Deferred income | 12 | 29,325 | 31,310 |
| Amounts owed to third parties | 13 | 101,202 | 68,824 |
| Other liabilities | 14 | 2,364 | 2,591 |
| | | | |
| Total liabilities | | 141,110 | 117,357 |
| | | | |
| CONTRIBUTORS' RESOURCES | | | |
| Member States Contribution called | 15 | 2,157,000 | 2,057,000 |
| Fair value reserve | | 163,993 | 156,122 |
| Retained earnings | | 95,161 | 98,471 |
| | | | |
| Total contributors' resources | | 2,416,154 | 2,311,593 |
| | | | |
| Total liabilities and contributors' resources | | 2,557,264 | 2,428,950 |

Notes

Notes

31.12.2015

31.12.2015

31.12.2014

31.12.2014

ASSETS

ASSETS

Cash and cash equivalents

Cash and cash equivalents

5

5

448,995

448,995

545,399

545,399

Derivative financial instruments

Derivative financial instruments

6

6

311

311

448

448

Loans and receivables

Loans and receivables

7

7

1,460,057

1,460,057

1,331,918

1,331,918

Available-for-sale financial assets

Available-for-sale financial assets

8

8

419,353

419,353

403,085

403,085

Amounts receivable from contributors

Amounts receivable from contributors

9/15

9/15

-

-

42,590

42,590

Held-to-maturity financial assets

Held-to-maturity financial assets

10

10

228,521

228,521

99,988

99,988

Other assets

Other assets

11

11

27

27

5,522

5,522

Total assets

Total assets

2,557,264

2,557,264

2,428,950

2,428,950

LIABILITIES AND CONTRIBUTORS' RESOURCES

LIABILITIES AND CONTRIBUTORS' RESOURCES

LIABILITIES

LIABILITIES

Derivative financial instruments

Derivative financial instruments

6

6

8,219

8,219

14,632

14,632

Deferred income

Deferred income

12

12

29,325

29,325

31,310

31,310

Amounts owed to third parties

Amounts owed to third parties

13

13

101,202

101,202

68,824

68,824

Other liabilities

Other liabilities

14

14

2,364

2,364

2,591

2,591

Total liabilities

Total liabilities

141,110

141,110

117,357

117,357

CONTRIBUTORS' RESOURCES

CONTRIBUTORS' RESOURCES

Member States Contribution called

Member States Contribution called

15

15

2,157,000

2,157,000

2,057,000

2,057,000

Fair value reserve

Fair value reserve

163,993

163,993

156,122

156,122

Retained earnings

Retained earnings

95,161

95,161

98,471

98,471

Total contributors' resources

Total contributors' resources

2,416,154

2,416,154

2,311,593

2,311,593

Total liabilities and contributors' resources

Total liabilities and contributors' resources

2,557,264

2,557,264

2,428,950

2,428,950

STATEMENT OF profit or loss and other COMPREHENSIVE INCOME

| | Notes | From 01.01.2015 | From 01.01.2014 |
| --- | --- | --- | --- |
| | | to 31.12.2015 | to 31.12.2014 |
| | | | |
| Interest and similar income | 17 | 90,385 | 77,240 |
| Interest and similar expenses | 17 | -1,556 | -1,522 |
| | | | |
| Net interest and similar income | | 88,829 | 75,718 |
| | | | |
| Fee and commission income | 18 | 932 | 1,163 |
| Fee and commission expenses | 18 | -63 | -37 |
| | | | |
| Net fee and commission income | | 869 | 1,126 |
| | | | |
| Fair value change of derivative financial instruments | | 6,276 | -11,663 |
| Net realised gains on available-for-sale financial assets | 19 | 33,878 | 8,109 |
| Net foreign exchange loss | | -52,483 | -222 |
| | | | |
| Net result on financial operations | | -12,329 | -3,776 |
| | | | |
| Change in impairment on loans and receivables, net of reversal | 7 | -33,988 | -75,756 |
| Impairment on available-for-sale financial assets | 8 | -3,646 | -6,262 |
| Other income | 21 | - | 337 |
| General administrative expenses | 20 | -43,045 | -38,128 |
| | | | |
| Loss for the year | | -3,310 | -46,741 |
| | | | |
| Other comprehensive income: | | | |
| | | | |
| Items that are or may be reclassified to profit or loss: | | | |
| Available-for-sale financial assets – Fair value reserve | 8 | | |
| 1. Net change in fair value of available-for-sale financial assets | | 43,394 | 87,230 |
| 2. Net amount transferred to profit or loss | | -35,523 | -9,299 |
| Total available-for-sale financial assets | | 7,871 | 77,931 |
| | | | |
| Total other comprehensive income | | 7,871 | 77,931 |
| | | | |
| Total comprehensive income for the year | | 4,561 | 31,190 |

Notes

Notes

From 01.01.2015

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Interest and similar income

Interest and similar income

17

17

90,385

90,385

77,240

77,240

Interest and similar expenses

Interest and similar expenses

17

17

-1,556

-1,556

-1,522

-1,522

Net interest and similar income

Net interest and similar income

88,829

88,829

75,718

75,718

Fee and commission income

Fee and commission income

18

18

932

932

1,163

1,163

Fee and commission expenses

Fee and commission expenses

18

18

-63

-63

-37

-37

Net fee and commission income

Net fee and commission income

869

869

1,126

1,126

Fair value change of derivative financial instruments

Fair value change of derivative financial instruments

6,276

6,276

-11,663

-11,663

Net realised gains on available-for-sale financial assets

Net realised gains on available-for-sale financial assets

19

19

33,878

33,878

8,109

8,109

Net foreign exchange loss

Net foreign exchange loss

-52,483

-52,483

-222

-222

Net result on financial operations

Net result on financial operations

-12,329

-12,329

-3,776

-3,776

Change in impairment on loans and receivables, net of reversal

Change in impairment on loans and receivables, net of reversal

7

7

-33,988

-33,988

-75,756

-75,756

Impairment on available-for-sale financial assets

Impairment on available-for-sale financial assets

8

8

-3,646

-3,646

-6,262

-6,262

Other income

Other income

21

21

-

-

337

337

General administrative expenses

General administrative expenses

20

20

-43,045

-43,045

-38,128

-38,128

Loss for the year

Loss for the year

-3,310

-3,310

-46,741

-46,741

Other comprehensive income:

Other comprehensive income:

Items that are or may be reclassified to profit or loss:

Items that are or may be reclassified to profit or loss:

Available-for-sale financial assets – Fair value reserve

Available-for-sale financial assets – Fair value reserve

8

8

1. Net change in fair value of available-for-sale financial assets

1. Net change in fair value of available-for-sale financial assets

43,394

43,394

87,230

87,230

2. Net amount transferred to profit or loss

2. Net amount transferred to profit or loss

-35,523

-35,523

-9,299

-9,299

Total available-for-sale financial assets

Total available-for-sale financial assets

7,871

7,871

77,931

77,931

Total other comprehensive income

Total other comprehensive income

7,871

7,871

77,931

77,931

Total comprehensive income for the year

Total comprehensive income for the year

4,561

4,561

31,190

31,190

STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES

| | | Contribution called | Fair value reserve | Retained earnings | Total |
| --- | --- | --- | --- | --- | --- |
| At 1 January 2015 | Notes | 2,057,000 | 156,122 | 98,471 | 2,311,593 |
| | | | | | |
| Member States contribution called during the year | 15 | 100,000 | - | - | 100,000 |
| | | | | | |
| Loss for the year 2015 | | - | - | -3,310 | -3,310 |
| | | | | | |
| Total other comprehensive income for the year | | - | 7,871 | - | 7,871 |
| | | | | | |
| Changes in contributors’ resources | | 100,000 | 7,871 | -3,310 | 104,561 |
| | | | | | |
| At 31 December 2015 | | 2,157,000 | 163,993 | 95,161 | 2,416,154 |
| | | | | | |
| | | Contribution called | Fair value reserve | Retained earnings | Total |
| At 1 January 2014 | | 1,661,309 | 78,191 | 145,212 | 1,884,712 |
| | | | | | |
| Member States contribution called during the year | 15 | 105,691 | - | - | 105,691 |
| | | | | | |
| Unused interest subsidies and technical assistance | 15 | 290,000 | - | - | 290,000 |
| | | | | | |
| Loss for the year 2014 | | - | - | -46,741 | -46,741 |
| | | | | | |
| Total other comprehensive income for the year | | - | 77,931 | - | 77,931 |
| | | | | | |
| Changes in contributors’ resources | | 395,691 | 77,931 | -46,741 | 426,881 |
| | | | | | |
| At 31 December 2014 | | 2,057,000 | 156,122 | 98,471 | 2,311,593 |

Contribution called

Contribution called

Fair value reserve

Fair value reserve

Retained earnings

Retained earnings

Total

Total

At 1 January 2015

At 1 January 2015

Notes

Notes

2,057,000

2,057,000

156,122

156,122

98,471

98,471

2,311,593

2,311,593

Member States contribution called during the year

Member States contribution called during the year

15

15

100,000

100,000

-

-

-

-

100,000

100,000

Loss for the year 2015

Loss for the year 2015

-

-

-

-

-3,310

-3,310

-3,310

-3,310

Total other comprehensive income for the year

Total other comprehensive income for the year

-

-

7,871

7,871

-

-

7,871

7,871

Changes in contributors’ resources

Changes in contributors’ resources

100,000

100,000

7,871

7,871

-3,310

-3,310

104,561

104,561

At 31 December 2015

At 31 December 2015

2,157,000

2,157,000

163,993

163,993

95,161

95,161

2,416,154

2,416,154

Contribution called

Contribution called

Fair value reserve

Fair value reserve

Retained earnings

Retained earnings

Total

Total

At 1 January 2014

At 1 January 2014

1,661,309

1,661,309

78,191

78,191

145,212

145,212

1,884,712

1,884,712

Member States contribution called during the year

Member States contribution called during the year

15

15

105,691

105,691

-

-

-

-

105,691

105,691

Unused interest subsidies and technical assistance

Unused interest subsidies and technical assistance

15

15

290,000

290,000

-

-

-

-

290,000

290,000

Loss for the year 2014

Loss for the year 2014

-

-

-

-

-46,741

-46,741

-46,741

-46,741

Total other comprehensive income for the year

Total other comprehensive income for the year

-

-

77,931

77,931

-

-

77,931

77,931

Changes in contributors’ resources

Changes in contributors’ resources

395,691

395,691

77,931

77,931

-46,741

-46,741

426,881

426,881

At 31 December 2014

At 31 December 2014

2,057,000

2,057,000

156,122

156,122

98,471

98,471

2,311,593

2,311,593

STATEMENT OF Cash FlowS

| | Notes | From 01.01.2015 to 31.12.2015 | From 01.01.2014 to 31.12.2014 |
| --- | --- | --- | --- |
| OPERATING ACTIVITIES | | | |
| Loss for the financial year | | -3,310 | -46,741 |
| Adjustments made for : | | | |
| Impairment on available-for-sale financial assets | 8 | 3,646 | 6,262 |
| Other income | 21 | - | -337 |
| Net change in impairment on loans and receivables | 7 | 33,988 | 75,756 |
| Interest capitalised on loans and receivables | 7 | -13,262 | -11,915 |
| Change in accrued interest and amortised cost on loans and receivables | | 1,594 | 895 |
| Change in accrued interest and amortised cost on held-to-maturity financial assets | 10 | 12 | 12 |
| Change in deferred income | | -1,985 | -3,773 |
| Effect of exchange rate changes on loans | 7 | -73,447 | -92,707 |
| Effect of exchange rate changes on available-for-sale financial assets | | -9,385 | -449 |
| Effect of exchange rate changes on cash held | | -12,216 | -9,362 |
| Loss on operating activities before changes in operating assets and liabilities | | -74,365 | -82,359 |
| Loan disbursements | 7 | -282,784 | -248,326 |
| Repayments of loans | 7 | 205,772 | 166,578 |
| Change in accrued interest on cash and cash equivalent | 5 | 4 | 7 |
| Fair value changes on derivatives | | -6,276 | 11,663 |
| Increase in held-to-maturity financial assets | 10 | -1,545,550 | -1,610,057 |
| Maturities of held-to-maturity financial assets | 10 | 1,417,005 | 1,612,619 |
| Increase in available-for-sale financial assets | 8 | -67,449 | -42,646 |
| Repayments/sales of available-for-sale financial assets | 8 | 64,791 | 43,378 |
| Decrease/(increase) in other assets | | 5,495 | -5,374 |
| (Decrease)/increase in other liabilities | | -227 | 19 |
| Increase/(decrease) in amounts payable to the European Investment Bank | | 4,668 | -175 |
| Net cash flows used in operating activities | | -278,916 | -154,673 |
| FINANCING ACTIVITIES | | | |
| Contribution received from Member States | 15 | 100,000 | 105,691 |
| Amounts received from Member States with regard to interest subsidies and technical assistance | | 92,590 | 7,410 |
| Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance | | -22,290 | -21,899 |
| Net cash flows from financing activities | | 170,300 | 91,202 |
| Net decrease in cash and cash equivalents | | -108,616 | -63,471 |
| | | | |
| Summary statement of cash flows: | | | |
| Cash and cash equivalents at the beginning of financial year | | 545,398 | 599,507 |
| Net cash from: | | | |
| Operating activities | | -278,916 | -154,673 |
| Financing activities | | 170,300 | 91,202 |
| Effects of exchange rate changes on cash and cash equivalents | | 12,216 | 9,362 |
| Cash and cash equivalents at the end of financial year | | 448,998 | 545,398 |
| Cash and cash equivalents are composed of: | | | |
| Cash in hand | 5 | 71,405 | 9,642 |
| Term deposits (excluding accrued interest) | | 290,576 | 415,756 |
| Commercial papers | 5 | 87,017 | 120,000 |
| | | 448,998 | 545,398 |

Notes

From 01.01.2015 to 31.12.2015

From 01.01.2014 to 31.12.2014

OPERATING ACTIVITIES

Loss for the financial year

-3,310

-46,741

Adjustments made for :

Impairment on available-for-sale financial assets

8

3,646

6,262

Other income

21

-

-337

Net change in impairment on loans and receivables

7

33,988

75,756

Interest capitalised on loans and receivables

7

-13,262

-11,915

Change in accrued interest and amortised cost on loans and receivables

1,594

895

Change in accrued interest and amortised cost on held-to-maturity financial assets

10

12

12

Change in deferred income

-1,985

-3,773

Effect of exchange rate changes on loans

7

-73,447

-92,707

Effect of exchange rate changes on available-for-sale financial assets

-9,385

-449

Effect of exchange rate changes on cash held

-12,216

-9,362

Loss on operating activities before changes in operating assets and liabilities

-74,365

-82,359

Loan disbursements

7

-282,784

-248,326

Repayments of loans

7

205,772

166,578

Change in accrued interest on cash and cash equivalent

5

4

7

Fair value changes on derivatives

-6,276

11,663

Increase in held-to-maturity financial assets

10

-1,545,550

-1,610,057

Maturities of held-to-maturity financial assets

10

1,417,005

1,612,619

Increase in available-for-sale financial assets

8

-67,449

-42,646

Repayments/sales of available-for-sale financial assets

8

64,791

43,378

Decrease/(increase) in other assets

5,495

-5,374

(Decrease)/increase in other liabilities

-227

19

Increase/(decrease) in amounts payable to the European Investment Bank

4,668

-175

Net cash flows used in operating activities

-278,916

-154,673

FINANCING ACTIVITIES

Contribution received from Member States

15

100,000

105,691

Amounts received from Member States with regard to interest subsidies and technical assistance

92,590

7,410

Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance

-22,290

-21,899

Net cash flows from financing activities

170,300

91,202

Net decrease in cash and cash equivalents

-108,616

-63,471

Summary statement of cash flows:

Cash and cash equivalents at the beginning of financial year

545,398

599,507

Net cash from:

Operating activities

-278,916

-154,673

Financing activities

170,300

91,202

Effects of exchange rate changes on cash and cash equivalents

12,216

9,362

Cash and cash equivalents at the end of financial year

448,998

545,398

Cash and cash equivalents are composed of:

Cash in hand

5

71,405

9,642

Term deposits (excluding accrued interest)

290,576

415,756

Commercial papers

5

87,017

120,000

448,998

545,398

Notes to the financial statements as at 31 December 2015

1
     General information

The Investment Facility (“the Facility” or “IF”) has been established within the framework of the Cotonou Agreement (the “Agreement”) on co-operation and development assistance negotiated between the African, Caribbean and Pacific Group of States (the “ACP States”) and the European Union and its Member States on 23 June 2000, revised on 25 June 2005 and 22 June 2010.

The Facility is not a separate legal entity and the European Investment Bank (“EIB” or “the Bank”) manages the contributions on behalf of the Member States (“Donors”) in accordance with the terms of the Agreement and acts as an administrator of the Facility.

Financing under the Agreement is provided from EU Member States’ budgets. EU Member States contribute with the amounts allocated to finance the IF and grants for the financing of the interest subsidies as provided for under the multi-annual financial frameworks (First Financial Protocol covering the period 2000 - 2007 and referred to as the Ninth European Development Fund (EDF), Second Financial Protocol covering the period 2008 - 2013 and referred to as the 10th EDF, the “Bridging Facility” covering the period from 1 January 2014 until 28 February 2015 and the Third Financial Protocol covering the period 2014 - 2020 referred to as the 11th EDF). The EIB is entrusted with the management of:

-the Facility, a EUR 3,685.5 million risk-bearing revolving fund geared to fostering private sector investment in ACP countries of which EUR 48.5 million are allocated to Overseas Countries and territories (“OCT countries”);

-grants for the financing of interest subsidies worth max. EUR 1,220.85 million for ACP countries and max. EUR 8.5 million for OCT countries. Up to 15% of these subsidies can be used to fund project-related technical assistance (“TA”);

-the “Bridging Facility” (1 January 2014 to 28 February 2015) covering the grants to finance the interest subsidies and project-related technical assistance and being composed of un- and de-committed balances from previous EDFs.

The present financial statements cover the period from 1 January 2015 to 31 December 2015.

On a proposal from the Management Committee of EIB, the Board of Directors of EIB adopted the Financial Statements on 10 March 2016, and authorised their submission to the Board of Governors for approval by 26 April 2016.

2
     Significant accounting policies

Basis of preparation – Statement of compliance

The Facility’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

2.2Significant accounting judgments and estimates

The preparation of financial statements requires the use of accounting estimates. It also requires the European Investment Bank’s Management to exercise its judgment in the process of applying the Investment Facility’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed hereafter.

The most significant use of judgments and estimates are as follows:

Measurement of fair values of financial instruments

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or broker price quotations. Where the fair values cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The valuations are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as described and disclosed in Notes 2.4.3 and 4.

These valuation techniques may include net present value and discounted cash flow models, comparison to similar instruments for which market observable prices exist, Black-Scholes and polynomial option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

The Facility uses widely recognised valuation models for determining the fair value of common and more simple financial instruments, like interest rate and currency swaps that use only observable market data and require limited management judgement and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity securities, exchange traded derivatives and simple over the counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

For more complex instruments, the Facility uses own valuation models, which are developed from recognised valuation models. Some or all of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions. Example of instruments involving significant unobservable inputs includes certain loans and guarantees for which there is no active market. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future cash flows on the financial instrument being valued, determination of probability or counterparty default and prepayments and selection of appropriate discount rates.

The Facility has an established control framework with respect to the measurement of fair values. This framework includes the EIB’s Investment Bank’s Risk Management and Market Data Management functions. These functions are independent of front office management and are responsible for verifying significant fair value measurements. Specific controls include:

-Verification of observable pricing;

-A review and approval process for new valuation models and changes to existing models;

-Calibration and back testing of models against observed market transactions;

-Analysis and investigation of significant valuation movements;

-Review of significant unobservable inputs and valuation adjustments.

Where third-party information such as broker quotes or pricing services are used to measure fair value, the Facility verifies that such valuations meet the requirements of IFRS. This includes the following:

-Determining where broker quote or pricing service pricing is appropriate;

-Assessing whether a particular broker quote or pricing service is reliable;

-Understanding how the fair value has been arrived at and the extent to which it represents actual market transactions;

-When prices for similar instruments are used to measure fair value, how these prices have been adjusted to reflect the characteristics of the instrument subject to measurement.

Impairment losses on loans and receivables

The Facility reviews its loans and receivables at each reporting date to assess whether an allowance for impairment should be recorded in the statement of profit or loss and other comprehensive income. In particular, judgment by the European Investment Bank’s Management is required in the estimation of the amount and timing of future cash flows when determining the level of allowance required. Such estimates are based on assumptions about a number of factors and actual results may differ, resulting in future changes to the allowance. In addition to specific allowances against individually significant loans and receivables, the Facility may also book a collective impairment allowance against exposures which have not been individually identified as impaired and have a greater risk of default than when originally granted.

In principle, a loan is considered as impaired when payment of interest and principal are past due by 90 days or more and, at the same time, the European Investment Bank’s Management considers that there is an objective indication of impairment.

Valuation of unquoted available-for-sale equity investments

Valuation of unquoted available-for-sale equity investments is normally based on one of the following:

-recent arm’s length market transactions;

-current fair value of another instrument that is substantially the same;

-the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics;

-adjusted net assets method; or

-other valuation models.

The determination of the cash flows and discount factors for unquoted available-for-sale equity investments requires significant estimation. The Facility calibrates the valuation techniques periodically and tests them for validity using either price from observable current market transactions in the same instrument or from other available observable market data.

Impairment of available-for-sale financial assets

The Facility treats available-for-sale equity investments as impaired when there has been a significant or prolonged decline in the fair value below its cost or where other objective evidence of impairment exists. The determination of what is “significant” or “prolonged” requires judgment. The Facility treats “significant” generally as 30% or more and “prolonged” greater than 12 months. In addition, the Facility evaluates other factors, including normal volatility in share price for quoted equities and the future cash flows and the discount factors for unquoted equities.

Consolidation of entities in which the Facility holds interest

The Facility made significant judgements that none of the entities in which it holds interest, are controlled by the Facility. This is due to the fact that in all such entities, either the General Partner or the Fund Manager or the Management Board have the sole responsibility for the management and control of the activities and affairs of the partnership and have the power and authority to do all things necessary to carry out the purpose and objectives of the partnership complying with the investment and policy guidelines.

2.3Changes in accounting policies

Except for the changes below, the Facility has consistently applied the accounting policies set out in Note 2.4 to all periods presented in these financial statements. The Facility has adopted the following new standards and amendments to standards.

Standards adopted

The following standards, amendments to standards and interpretations were adopted in the preparation of these financial statements:

-Annual Improvements to IFRSs 2010–2012 Cycle – various standards;

-Annual Improvements to IFRSs 2011–2013 Cycle – various standards.

These changes had no material impact on the Facility’s financial statements.

Standards issued but not yet effective

The following standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015, and have not been applied in preparing these financial statements. Those of which may be relevant for the Facility are set out below.

IFRS 9 Financial instruments

The last part of the standard was issued on 24 July 2014 and replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. IFRS 9 has not yet been adopted by the EU. The Facility does not plan to adopt this standard early and the impact analysis is currently in progress.

IFRS 15 Revenue from Contracts with Customers

IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. IFRS 15 has not yet been adopted by the EU. The Facility has not yet determined the extent of the impact of this standard.

2.4Summary of significant accounting policies

The statement of financial position represents assets and liabilities in decreasing order of liquidity and does not distinguish between current and non-current items.

2.4.1 
     Foreign currency translation

The Facility uses the Euro (EUR) for presenting its financial statements, which is also the functional currency. Except as otherwise indicated, financial information presented in EUR has been rounded to the nearest thousand.

Foreign currency transactions are translated, at the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in currencies other than Euro are translated into Euro at the exchange rate prevailing at the balance sheet date. The gain or loss arising from such translation is recorded in the statement of profit or loss and other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of transactions at rates different from those at the date of the transaction, and unrealised foreign exchange differences on unsettled foreign currency monetary assets and liabilities, are recognised in the statement of profit or loss and other comprehensive income.

The elements of the statement of profit or loss and other comprehensive income are translated into Euro on the basis of the exchange rates prevailing at the date of the transaction.

2.4.2 
     Cash and cash equivalents

The Facility defines cash and cash equivalents as current accounts, short-term deposits or commercial papers with original maturities of three months or less.

2.4.3 
      Financial assets other than derivatives

Financial assets are accounted for using the settlement date basis.

Fair value of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Facility has access at that date.

When applicable, the EIB on behalf of the Facility measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an on-going basis.

Where the fair values of financial assets and financial liabilities recorded on the balance sheet cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction.

The EIB measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

-Level 1: inputs that are unadjusted quoted market prices in active markets for identical instruments to which the Facility has access.

-Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less than active or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

-Level 3: inputs that are not observable. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The Facility recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

Held-to-maturity financial assets

Held-to-maturity financial assets comprise quoted bonds with the intention of holding them to maturity, and commercial papers with original maturities of more than three months.

Those bonds and commercial papers are initially recorded at their fair value plus any directly attributable transaction cost. The difference between entry price and redemption value is amortised in accordance with the effective interest method over the remaining life of the instrument.

The Facility assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event (or event) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Impairment loss is recognised in profit and loss and the amount of the loss is measured as the difference between the carrying value and the present value of estimated future cash flows discounted at the instrument’s original effective interest rate.

Loans

Loans originated by the Facility are recognised in the assets of the Facility when cash is advanced to borrowers. They are initially recorded at cost (net disbursed amounts), which is the fair value of the cash given to originate the loan, including any transaction costs, and are subsequently measured at amortised cost, using the effective yield method, less any provision for impairment or uncollectability.

Available-for-sale financial assets

Available-for-sale financial assets are those which are designated as such or do not qualify to be classified as designated at fair value through profit or loss, held-to-maturity or loans and receivables. They include direct equity investments and investments in venture capital funds.

After initial measurement, available-for-sale financial assets are subsequently carried at fair value. Note the following details for the fair value measurement of equity investments, which cannot be derived from active markets:

a.Venture capital funds

The fair value of each venture capital fund is based on the latest available Net Asset Value (NAV), reported by the fund, if calculated based on international valuation guidelines recognised to be in line with IFRS (for example: the International Private Equity and Venture Capital Valuation guidelines, IPEV Guidelines, as published by the European Venture Capital Association). The Facility may however decide to adjust the NAV reported by the fund if there are issues that may affect the valuation.

b.Direct equity investments

The fair value of the investment is based on the latest set of financial statements available, re-using, if applicable, the same model as the one used at the acquisition of the participation.

Unrealised gains or losses on venture capital funds and direct equity investments are reported in contributors’ resources until such investments are sold, collected or disposed of, or until such investments are determined to be impaired. If an available-for-sale investment is determined to be impaired, the cumulative unrealised gain or loss previously recognised in equity is transferred to the statement of profit or loss and other comprehensive income.

For unquoted investment, the fair value is determined by applying recognised valuation techniques (for example adjusted net assets, discounted cash flows or multiple). These investments are accounted for at cost when the fair value cannot be reliably measured. To be noted that in the first 2 years of the investments, they are recognised at cost.

The participations acquired by the Facility typically represent investments in private equity or venture capital funds. According to industry practice, such investments are generally investments jointly subscribed by a number of investors, none of whom is in a position to individually influence the daily operations and the investment activity of such fund. As a consequence, any membership by an investor in a governing body of such fund does not in principle entitle such investor to influence the day-to-day operations of the fund. In addition, individual investors in a private equity or a venture capital fund do not determine policies of a fund such as distribution policies on dividends or other distributions. Such decisions are typically taken by the management of a fund on the basis of the shareholders agreement governing the rights and obligations of the management and all shareholders of the fund. The shareholders’ agreement also generally prevents individual investors from bilaterally executing material transactions with the fund, interchanging managerial personnel or obtaining privileged access to essential technical information. The Facility’s investments are executed in line with the above stated industry practice, ensuring that the Facility neither controls nor exercises any form of significant influence within the meaning of IFRS 10 and IAS 28 over any of these investments, including those investments in which the Facility holds over 20 % of the voting rights.

Guarantees

At initial recognition, the financial guarantees are recognised at fair value corresponding to the Net Present Value (NPV) of expected premium inflows. This calculation is performed at the starting date of each transaction and is recognised on balance sheet as “Financial guarantees” under “other assets” and “other liabilities”.

Subsequent to initial recognition, the Facility’s liabilities under such guarantees are measured at the higher of:

-the best estimate of expenditure required to settle any financial obligation arising as a result of the guarantee, which is estimated based on all relevant factors and information existing at the date of the statement of financial position.

-the amount initially recognised less cumulative amortisation. The amortisation of the amount initially recognised is done using the actuarial method.

Any increase or decrease in the liability relating to financial guarantees is taken to the statement of profit or loss and other comprehensive income under “fee and commission income”.

The Facility’s assets under such guarantee are subsequently amortized using the actuarial method and tested for impairment.

In addition, when a guarantee agreement is signed, it is presented as a contingent liability for the Facility and when the guarantee is engaged, as a commitment for the Facility.

2.4.4 
     Impairment of financial assets

The Facility assesses at each balance sheet date whether there is any objective evidence that a financial asset is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter into bankruptcy or other financial reorganisation and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

For the loans outstanding at the end of the financial year and carried at amortised cost, impairments are made when presenting objective evidence of risks of non-recovery of all or part of their amounts according to the original contractual terms or the equivalent value. If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference between the assets carrying amount and the present value of estimated future cash flows. The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the statement of profit or loss and other comprehensive income. Interest income continues to be accrued on the reduced carrying amount based on the effective interest rate of the asset. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account.

The Facility conducts the credit risk assessments based on each individual operation and does not consider a collective impairment.

For the available-for-sale financial assets, the Facility assesses at each balance sheet date whether there is objective evidence that an investment is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its costs. Where there is evidence of impairment, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that investment previously recognised in the statement of profit or loss and other comprehensive income) is removed from contributors’ resources and recognised in the statement of profit or loss and other comprehensive income. Impairment losses on available-for-sale financial assets are not reversed through the statement of profit or loss and other comprehensive income; increases in their fair value after impairment are recognised directly in contributors’ resources.

The European Investment Bank’s Risk Management reviews financial assets for impairment at least once a year. Resulting adjustments include the unwinding of the discount in the statement of profit or loss and other comprehensive income over the life of the asset, and any adjustments required in respect of a reassessment of the initial impairment.

2.4.5 
     Derivative financial instruments

Derivatives include cross currency swaps, cross currency interest rate swaps, short term currency swaps (“FX swaps”) and interest rate swaps.

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency forward contract with a view to hedge its currency positions, denominated in actively traded currencies other than the Euro, in order to offset any gain or loss caused by foreign exchange rate fluctuations.

The Facility does not use any of the hedge possibilities under IAS 39. All derivatives are measured at fair value through the profit or loss and are reported as derivative financial instruments. Fair values are derived primarily from discounted cash-flow models, option-pricing models and from third party quotes.

Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivative financial instruments are shown in the statement of profit and loss and other comprehensive income under “Fair value change of derivative financial instruments”.

Derivatives are initially recognised using the trade date basis.

2.4.6 
     Contributions

Contributions from Member States are recognised as receivables in the statement of financial position on the date of the Council Decision fixing the financial contribution to be paid by the Member States to the Facility.

The Member States contributions meet the following conditions and are consequently classified as equity:

-as defined in the contribution agreement, they entitle the Member States to decide on the utilisation of the Facility’s net assets in the events of the Facility’s liquidation;

-they are in the class of instruments that is subordinated to all other classes of instruments;

-all financial instruments in the class of instruments that are subordinated to all other classes of instruments have identical features;

-the instrument does not include any features that would require classification as a liability; and

-the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Facility over the life of the instrument.

2.4.7 
     Interest income on loans

Interest on loans originated by the Facility is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar income’) and on the statement of financial position (‘Loans and receivables’) on an accrual basis using the effective interest rate, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the net carrying amount of the loan. Once the recorded value of a loan has been reduced due to impairment, interest income continues to be recognised using the original effective interest rate applied to the new carrying amount.

Commitment fees are deferred and recognised in income using the effective interest method over the period from disbursement to repayment of the related loan, and are presented in the statement of profit or loss and other comprehensive income within interest and similar income.

2.4.8 
     Interest subsidies and technical assistance

As part of its activity, the Facility manages interest subsidies and technical assistance on behalf of the Member States.

The part of the Member States contributions allocated to the payment of interest subsidies and TA is not accounted for in the Facility’s contributors’ resources but is classified as amounts owed to third parties. The Facility operates the disbursement to the final beneficiaries and then decreases the amounts owed to third parties.

When amounts contributed with regard to interest subsidies and TA are not fully granted, they are reclassified as contribution to the Facility.

2.4.9 
     Interest income on cash and cash equivalents

Interest income on cash and cash equivalents is recognised in the statement of profit or loss and other comprehensive income of the Facility on an accrual basis.

2.4.10Fees, commissions and dividends

Fees received in respect of services provided over a period of time are recognised as income as the services are provided, while fees that are earned on the execution of a significant act are recognised as income when the significant act has been completed. These fees are presented in the statement of profit or loss and other comprehensive income within fee and commission income.

Dividends relating to available-for-sale financial assets are recognised when received and presented in the statement of profit or loss and other comprehensive income within net realised gains on available-for-sale financial assets.

2.4.11Taxation

The Protocol on the Privileges and Immunities of the European Union, appended to the treaty on the European Union and the treaty of the functioning of the European Union, stipulates that the assets, revenues and other property of the Institutions of the Union are exempt from all direct taxes.

3
     Risk Management

This note presents information about the Facility’s exposure to and its management and control of credit and financial risks, in particular the primary risks associated with its use of financial instruments. These are:

-credit risk – the risk of loss resulting from client or counterparty default and arising on credit exposure in all forms, including settlement risk;

-liquidity risk – the risk that an entity is not to able to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses;

-market risk – the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.

Risk management organisation

The European Investment Bank adapts its risk management on an ongoing basis.

The Risk Management of EIB independently identifies, assesses, monitors and reports the risks to which the Facility is exposed. Within a framework whereby the segregation of duties is preserved, the Risk Management is independent of the Front Offices. At EIB level the Director General of Risk Management reports for risk matters to the designated Vice-President for Risk Management. The designated Vice-President is responsible for overseeing risk reporting to the European Investment Bank’s Management Committee and the Board of Directors.

Credit risk

Credit risk is the potential loss that could result from client or counterparty default and arising on credit exposure in all forms, including settlement.

3.2.1Credit risk policy

In carrying out the credit analysis on loan counterparts, EIB assesses the credit risk and expected loss with a view to quantify and price the risk. EIB has developed an Internal Rating Methodology (IRM) to determine the Internal Ratings of its credit-relevant borrower/guarantor counterparts. The methodology is based on a system of scoring sheets tailored for each major credit counterpart type (e.g. Corporates, Banks, Public Sector Entities, etc). Taking into consideration both, Best Banking Practice and the principles set under the Basel International Capital Accord (Basel II), all counterparts that are material to the credit profile of a specific transaction are classified into internal rating categories using the IRM for the specific counterpart type. Each counterpart is assigned an Internal Rating reflecting its probability of default foreign currency rating following an in-depth analysis of the counterpart’s business and financial risk profile and its country risk operating context.

The credit assessment of project finance and other structured limited recourse operations is using credit risk tools relevant for the sector, focused mainly on cash flow availability and debt service capacity. These tools include the analysis of projects’ contractual framework, counterpart’s analysis and cash flow simulations. Similarly to corporates and financial institutions, each project is assigned an internal risk rating.

All Internal Ratings are monitored over loan life, and periodically updated.

All non-sovereign (or non sovereign guaranteed/assimilated) operations are subject to specific transaction-level and counterpart size limits. Counterpart limits are set at consolidated group exposure level, where applicable. Such limits typically reflect e.g. the size of counterparts own funds.

In order to mitigate credit risk the EIB uses, where appropriate and on a case by case basis, various credit enhancements which are:

-Counterparty or project related securities (e.g., pledge over the shares; pledge over the assets; assignment of rights; pledge over the accounts); or/and

-guarantees, generally provided by the sponsor of the financed project (e.g., completion guarantees, first demand guarantees) or bank guarantees.

The Facility does not use any credit derivatives to mitigate credit risk.

3.2.2Maximum exposure to credit risk without taking into account any collateral and other credit enhancements

The following table shows the maximum exposure to credit risk for the components of the statement of financial position, including derivatives. The maximum exposure is shown gross, before the effect of mitigation through the use of collateral.

Maximum exposure (in EUR’000)

| Maximum exposure (in EUR’000) | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| ASSETS | | |
| Cash and cash equivalents | 448,995 | 545,399 |
| Derivative financial instruments | 311 | 448 |
| Loans and receivables | 1,460,057 | 1,331,918 |
| Amounts receivable from contributors | - | 42,590 |
| Held-to-maturity financial assets | 228,521 | 99,988 |
| Other assets | 27 | 5,522 |
| Total assets | 2,137,911 | 2,025,865 |
| | | |
| OFF BALANCE SHEET | | |
| Contingent liabilities | | |
| - Signed non-issued guarantees | 10,000 | 25,000 |
| Commitments | | |
| - Un-disbursed loans | 1,189,564 | 1,161,859 |
| - Issued guarantees | 798 | 2,298 |
| Total off balance sheet | 1,200,362 | 1,189,157 |
| | | |
| Total credit exposure | 3,338,273 | 3,215,022 |

31.12.2015

31.12.2014

ASSETS

Cash and cash equivalents

448,995

545,399

Derivative financial instruments

311

448

Loans and receivables

1,460,057

1,331,918

Amounts receivable from contributors

-

42,590

Held-to-maturity financial assets

228,521

99,988

Other assets

27

5,522

Total assets

2,137,911

2,025,865

OFF BALANCE SHEET

Contingent liabilities

- Signed non-issued guarantees

10,000

25,000

Commitments

- Un-disbursed loans

1,189,564

1,161,859

- Issued guarantees

798

2,298

Total off balance sheet

1,200,362

1,189,157

Total credit exposure

3,338,273

3,215,022

3.2.3Credit risk on loans and receivables

3.2.3.1Credit risk measurement for loans and receivables

Each and every lending transaction undertaken by the Facility benefits from a comprehensive risk assessment and quantification of expected loss estimates that are reflected in a Loan Grading (“LG”). LGs are established according to generally accepted criteria, based on the quality of the borrower, the maturity of the loan, the guarantee and, where appropriate, the guarantor.

The loan grading (LG) system comprises the methodologies, processes, databases and IT systems supporting the assessment of credit risk in lending operations and the quantification of expected loss estimates. It summarises a large amount of information with the purpose of offering a relative ranking of loans’ credit risks. LGs reflect the present value of the estimated level of the “expected loss”, this being the product of the probability of default of the main obligors, the exposure at risk and the loss severity in the case of default. LGs are used for the following purposes:

-as an aid to a finer and more quantitative assessment of lending risks;

-as help in distributing monitoring efforts;

-as a description of the loan’s portfolio quality at any given date;

-as one input in risk-pricing decisions based on the expected loss.

The following factors enter into the determination of an LG:

I)The borrower’s creditworthiness: Risk Management independently reviews borrowers and assesses their creditworthiness based on internal methodologies and external data. In line with the Basel II Advanced Approach chosen, the Bank has developed an internal rating methodology (IRM) to determine the internal ratings of borrowers and guarantors. This is based on a set of scoring sheets specific to defined counterparty types.

II)The default correlation: it quantifies the chances of simultaneous financial difficulties arising for both the borrower and the guarantor. The higher the correlation between the borrower and the guarantor’s default probabilities, the lower the value of the guarantee and therefore the lower the LG.

III)The value of guarantee instruments and of securities: this value is assessed on the basis of the combination of the issuer’s creditworthiness and the type of instrument used.

IV)The contractual framework: a sound contractual framework will add to the loan’s quality and enhance its internal grading.

V)The loan’s duration: all else being equal, the longer the loan, the higher the risk of incurring difficulties in the servicing of the loan.

A loan’s expected loss is computed by combining the five elements discussed above. Depending on the level of this loss, a loan is assigned to one of the following LG classes listed below:

A
     Prime quality loans: there are three sub-categories. A comprises all EU sovereign risks, i.e. loans granted to or fully, explicitly and unconditionally guaranteed by Member States, where no repayment difficulties are expected and for which an unexpected loss of 0% is allocated. A+ denotes loans granted to (or guaranteed by) entities other than Member States, with no expectation of deterioration over their duration. A- includes those lending operations where there is some doubt about the maintenance of their current status (for instance because of a long maturity, or for the high volatility of the future price of an otherwise excellent collateral), but where any downside is expected to be quite limited.

B
     High quality loans: these represent an asset class with which the bank feels comfortable, although a minor deterioration is not ruled out in the future. B+ and B- are used to denote the relative likelihood of the possibility of such deterioration occurring.

C
     Good quality loans: an example could be unsecured loans to solid banks and corporates with a 7-year bullet, or equivalent amortising, maturity at disbursement.

D
     This rating class represents the borderline between “acceptable quality” loans and those that have experienced some difficulties. This watershed in loan grading is more precisely determined by the sub-classifications D+ and D-. Loans rated D- require heightened monitoring.

E
     This LG category includes loans with a risk profile greater than generally accepted. It also includes loans which in the course of their lives have experienced severe problems and their sliding into a situation of loss cannot be excluded. For this reason, the loans are subject to close and high monitoring. The sub-classes E+ and E- differentiate the intensity of this special monitoring process, with those operations graded E- being in a position where there is a strong possibility that debt service cannot be maintained on a timely basis and therefore some form of debt restructuring is required, possibly leading to an impairment loss.

F
     F (fail) denotes loans representing unacceptable risks. F- graded loans can only arise out of outstanding transactions that have experienced, after signature, unforeseen, exceptional and dramatic adverse circumstances. All operations where there is a loss of principal to the Facility are graded F and a specific provision is applied.

Generally, loans internally graded D- or below are placed on the Watch List. However, if a loan was originally approved with a risk profile of D- or weaker, it will only be placed on the Watch List as a result of a material credit event causing a further deterioration of its LG classification.

The table in section 3.2.3.3 shows the credit quality analysis of the Facility’s loan portfolio based on the various LG classes as described above.

3.2.3.2Analysis of lending credit risk exposure

The following table shows the maximum exposure to credit risk on loans signed and disbursed by nature of borrower taking into account guarantees provided by guarantors:

At 31.12.2015

| At 31.12.2015 | Guaranteed | Other credit enhancements | Not guaranteed | Total | % of Total |
| --- | --- | --- | --- | --- | --- |
| In EUR’000 | | | | | |
| Banks | 18,964 | 73,670 | 758,412 | 851,046 | 58% |
| Corporates | 37,431 | 89,170 | 272,186 | 398,787 | 27% |
| Public institutions | 37,112 | - | 14 | 37,126 | 3% |
| States | - | 4,295 | 168,803 | 173,098 | 12% |
| Total disbursed | 93,507 | 167,135 | 1,199,415 | 1,460,057 | 100% |
| Signed not disbursed | 135,821 | - | 1,053,743 | 1,189,564 | |
| | | | | | |
| At 31.12.2014 | Guaranteed | Other credit enhancements | Not guaranteed | Total | % of Total |
| In EUR’000 | | | | | |
| Banks | 16,457 | 106,667 | 571,609 | 694,733 | 52% |
| Corporates | 23,494 | 93,731 | 310,396 | 427,621 | 32% |
| Public institutions | 33,279 | - | 31 | 33,310 | 3% |
| States | - | 4,815 | 171,439 | 176,254 | 13% |
| Total disbursed | 73,230 | 205,213 | 1,053,475 | 1,331,918 | 100% |
| Signed not disbursed | 121,826 | 117,758 | 922,275 | 1,161,859 | |

Guaranteed

Other credit enhancements

Not guaranteed

Total

% of Total

In EUR’000

Banks

18,964

73,670

758,412

851,046

58%

Corporates

37,431

89,170

272,186

398,787

27%

Public institutions

37,112

-

14

37,126

3%

States

-

4,295

168,803

173,098

12%

Total disbursed

93,507

167,135

1,199,415

1,460,057

100%

Signed not disbursed

135,821

-

1,053,743

1,189,564

At 31.12.2014

Guaranteed

Other credit enhancements

Not guaranteed

Total

% of Total

In EUR’000

Banks

16,457

106,667

571,609

694,733

52%

Corporates

23,494

93,731

310,396

427,621

32%

Public institutions

33,279

-

31

33,310

3%

States

-

4,815

171,439

176,254

13%

Total disbursed

73,230

205,213

1,053,475

1,331,918

100%

Signed not disbursed

121,826

117,758

922,275

1,161,859

3.2.3.3Credit quality analysis per type of borrower

3.2.3.3

Credit quality analysis per type of borrower

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2015 and 31 December 2014 by the Loan Grading applications, based on the exposure signed (disbursed and un-disbursed):

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2015 and 31 December 2014 by the Loan Grading applications, based on the exposure signed (disbursed and un-disbursed):

At 31.12.2015

| At 31.12.2015 | | High Grade | Standard Grade | Min. Accept. Risk | High Risk | No grading | Total | % of Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| In EUR’000 | | | | | | | | |
| | | A to B- | C | D+ | D- and below | | | |
| Borrower | Banks | 92,260 | 31,558 | 326,635 | 990,971 | 245,160 | 1,686,584 | 64% |
| | Corporates | 125,963 | - | 12,493 | 450,045 | - | 588,501 | 22% |
| | Public institutions | - | - | 37,112 | 40,014 | - | 77,126 | 3% |
| | States | - | - | 9,277 | 288,133 | - | 297,410 | 11% |
| Total | | 218,223 | 31,558 | 385,517 | 1,769,163 | 245,160 | 2,649,621 | 100% |
| | | | | | | | | |
| At 31.12.2014 | | High Grade | Standard Grade | Min. Accept. Risk | High Risk | No grading | Total | % of Total |
| In EUR’000 | | | | | | | | |
| | | A to B- | C | D+ | D- and below | | | |
| Borrower | Banks | 75,268 | 7,074 | 307,049 | 879,420 | 336,318 | 1,605,129 | 65% |
| | Corporates | 102,974 | 7,964 | 16,713 | 456,210 | - | 583,861 | 23% |
| | Public institutions | - | - | 33,279 | 40,031 | - | 73,310 | 3% |
| | States | - | - | 4,815 | 226,662 | - | 231,477 | 9% |
| Total | | 178,242 | 15,038 | 361,856 | 1,602,323 | 336,318 | 2,493,777 | 100% |

At 31.12.2015

High Grade

High Grade

Standard Grade

Standard Grade

Min. Accept. Risk

Min. Accept. Risk

High Risk

High Risk

No grading

No grading

Total

Total

% of Total

% of Total

In EUR’000

In EUR’000

A to B-

A to B-

C

C

D+

D+

D- and below

D- and below

Borrower

Borrower

Banks

Banks

92,260

92,260

31,558

31,558

326,635

326,635

990,971

990,971

245,160

245,160

1,686,584

1,686,584

64%

64%

Corporates

Corporates

125,963

125,963

-

-

12,493

12,493

450,045

450,045

-

-

588,501

588,501

22%

22%

Public institutions

Public institutions

-

-

-

-

37,112

37,112

40,014

40,014

-

-

77,126

77,126

3%

3%

States

States

-

-

-

-

9,277

9,277

288,133

288,133

-

-

297,410

297,410

11%

11%

Total

Total

218,223

218,223

31,558

31,558

385,517

385,517

1,769,163

1,769,163

245,160

245,160

2,649,621

2,649,621

100%

100%

At 31.12.2014

At 31.12.2014

High Grade

High Grade

Standard Grade

Standard Grade

Min. Accept. Risk

Min. Accept. Risk

High Risk

High Risk

No grading

No grading

Total

Total

% of Total

% of Total

In EUR’000

In EUR’000

A to B-

A to B-

C

C

D+

D+

D- and below

D- and below

Borrower

Borrower

Banks

Banks

75,268

75,268

7,074

7,074

307,049

307,049

879,420

879,420

336,318

336,318

1,605,129

1,605,129

65%

65%

Corporates

Corporates

102,974

102,974

7,964

7,964

16,713

16,713

456,210

456,210

-

-

583,861

583,861

23%

23%

Public institutions

Public institutions

-

-

-

-

33,279

33,279

40,031

40,031

-

-

73,310

73,310

3%

3%

States

States

-

-

-

-

4,815

4,815

226,662

226,662

-

-

231,477

231,477

9%

9%

Total

Total

178,242

178,242

15,038

15,038

361,856

361,856

1,602,323

1,602,323

336,318

336,318

2,493,777

2,493,777

100%

100%

3.2.3.4Risk concentrations of loans and receivables

3.2.3.4

Risk concentrations of loans and receivables

3.2.3.4.1Geographical analysis

Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions (in EUR‘000):

Country of borrower

| Country of borrower | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Nigeria | 195,290 | 137,832 |
| Kenya | 192,945 | 155,168 |
| Uganda | 178,515 | 161,657 |
| Regional-ACP | 111,103 | 136,182 |
| Mauritania | 94,123 | 95,319 |
| Jamaica | 85,278 | 77,272 |
| Togo | 75,387 | 45,780 |
| Dominican Republic | 72,474 | 64,614 |
| Ethiopia | 67,589 | 68,614 |
| Tanzania | 56,367 | 62,916 |
| Cameroon | 51,930 | 61,067 |
| Ghana | 40,439 | 16,130 |
| Congo (Democratic Republic) | 39,766 | 39,786 |
| Mozambique | 25,124 | 29,139 |
| Cape Verde | 24,623 | 26,101 |
| French Polynesia | 22,095 | 14,622 |
| Rwanda | 20,466 | 14,854 |
| Mauritius | 18,882 | 35,811 |
| Malawi | 13,030 | 9,945 |
| Senegal | 10,991 | 12,046 |
| Zambia | 8,733 | 5,761 |
| Haiti | 7,071 | 7,379 |
| Mali | 6,688 | 7,207 |
| Botswana | 6,605 | - |
| Samoa | 6,267 | 7,595 |
| Burkina Faso | 5,967 | 7,456 |
| Congo | 5,189 | 6,919 |
| Vanuatu | 2,772 | 3,835 |
| New Caledonia | 2,705 | 3,211 |
| Saint Lucia | 2,671 | 2,363 |
| Palau | 2,197 | 2,254 |
| Grenada | 1,735 | 1,996 |
| Niger | 1,372 | 2,581 |
| Micronesia | 1,169 | 1,141 |
| Trinidad and Tobago | 1,010 | 1,180 |
| Liberia | 921 | 821 |
| Seychelles | 468 | - |
| Tonga | 54 | 681 |
| Burundi | 40 | 40 |
| Sint Maarten | 6 | - |
| Angola | - | 3,623 |
| Gabon | - | 528 |
| Fiji | - | 474 |
| Chad | - | 18 |
| Total | 1,460,057 | 1,331,918 |

31.12.2015

31.12.2014

Nigeria

195,290

137,832

Kenya

192,945

155,168

Uganda

178,515

161,657

Regional-ACP

111,103

136,182

Mauritania

94,123

95,319

Jamaica

85,278

77,272

Togo

75,387

45,780

Dominican Republic

72,474

64,614

Ethiopia

67,589

68,614

Tanzania

56,367

62,916

Cameroon

51,930

61,067

Ghana

40,439

16,130

Congo (Democratic Republic)

39,766

39,786

Mozambique

25,124

29,139

Cape Verde

24,623

26,101

French Polynesia

22,095

14,622

Rwanda

20,466

14,854

Mauritius

18,882

35,811

Malawi

13,030

9,945

Senegal

10,991

12,046

Zambia

8,733

5,761

Haiti

7,071

7,379

Mali

6,688

7,207

Botswana

6,605

-

Samoa

6,267

7,595

Burkina Faso

5,967

7,456

Congo

5,189

6,919

Vanuatu

2,772

3,835

New Caledonia

2,705

3,211

Saint Lucia

2,671

2,363

Palau

2,197

2,254

Grenada

1,735

1,996

Niger

1,372

2,581

Micronesia

1,169

1,141

Trinidad and Tobago

1,010

1,180

Liberia

921

821

Seychelles

468

-

Tonga

54

681

Burundi

40

40

Sint Maarten

6

-

Angola

-

3,623

Gabon

-

528

Fiji

-

474

Chad

-

18

Total

1,460,057

1,331,918

3.2.3.4.2Industry sector analysis

The table below analyses the Facility’s loan portfolio by industry sector of the borrower. Operations which are first disbursed to a financial intermediary before being disbursed to the final beneficiary are reported under global loans (in EUR’000):

Industry sector of borrower

| Industry sector of borrower | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Global loans and agency agreements | 658,098 | 541,600 |
| Urban development, renovation and transport | 207,773 | 209,849 |
| Tertiary and other | 201,361 | 168,689 |
| Electricity, coal and others | 197,547 | 198,604 |
| Basic material and mining | 88,615 | 108,367 |
| Roads and motorways | 48,165 | 43,993 |
| Airports and air traffic management systems | 37,126 | 33,310 |
| Materials processing, construction | 13,719 | 16,243 |
| Food chain | 7,643 | 18 |
| Telecommunications | 6 | 6,089 |
| Waste recuperation | 4 | - |
| Paper chain | - | 5,156 |
| Total | 1,460,057 | 1,331,918 |

31.12.2015

31.12.2014

Global loans and agency agreements

658,098

541,600

Urban development, renovation and transport

207,773

209,849

Tertiary and other

201,361

168,689

Electricity, coal and others

197,547

198,604

Basic material and mining

88,615

108,367

Roads and motorways

48,165

43,993

Airports and air traffic management systems

37,126

33,310

Materials processing, construction

13,719

16,243

Food chain

7,643

18

Telecommunications

6

6,089

Waste recuperation

4

-

Paper chain

-

5,156

Total

1,460,057

1,331,918

3.2.3.5Arrears on loans and impairments

Amounts in arrears are identified, monitored and reported according to the procedures defined into the bank wide “Finance Monitoring Guidelines and Procedures”. These procedures are in line with best banking practices and are adopted for all loans managed by the EIB.

The monitoring process is structured in order to make sure that (i) potential arrears are detected and reported to the services in charge with minimum delay; (ii) critical cases are promptly escalated to the right operational and decision level; (iii) regular reporting to EIB management and to Member States is provided on the overall status of arrears and on the recovery measures already taken or to be taken.

The arrears and impairments on loans can be analysed as follows (in EUR’000):

Loans and receivables

| | | Loans and receivables | Loans and receivables |
| --- | --- | --- | --- |
| | Notes | 31.12.2015 | 31.12.2014 |
| Carrying amount | | 1,460,057 | 1,331,918 |
| | | | |
| Individually impaired | | | |
| Gross amount | | 214,232 | 210,338 |
| Allowance for impairment | 7 | -191,046 | -152,137 |
| Carrying amount individually impaired | | 23,186 | 58,201 |
| | | | |
| Collectively impaired | | | |
| Gross amount | | - | - |
| Allowance for impairment | | - | - |
| Carrying amount collectively impaired | | - | - |
| | | | |
| Past due but not impaired | | | |
| | | | |
| Past due comprises | | | |
| 0-30 days | | 1,521 | 2,558 |
| 30-60 days | | 15 | 528 |
| 60-90 days | | - | 5 |
| 90-180 days | | - | - |
| more 180 days | | 13 | - |
| Carrying amount past due but not impaired | | 1,549 | 3,091 |
| | | | |
| Carrying amount neither past due nor impaired | | 1,435,322 | 1,270,626 |
| | | | |
| Total carrying amount loans and receivables | | 1,460,057 | 1,331,918 |

Loans and receivables

Notes

31.12.2015

31.12.2014

Carrying amount

1,460,057

1,331,918

Individually impaired

Gross amount

214,232

210,338

Allowance for impairment

7

-191,046

-152,137

Carrying amount individually impaired

23,186

58,201

Collectively impaired

Gross amount

-

-

Allowance for impairment

-

-

Carrying amount collectively impaired

-

-

Past due but not impaired

Past due comprises

0-30 days

1,521

2,558

30-60 days

15

528

60-90 days

-

5

90-180 days

-

-

more 180 days

13

-

Carrying amount past due but not impaired

1,549

3,091

Carrying amount neither past due nor impaired

1,435,322

1,270,626

Total carrying amount loans and receivables

1,460,057

1,331,918

3.2.4Credit risk on cash and cash equivalents

Available funds are invested in accordance with the Facility’s schedule of contractual disbursement obligations. As of 31 December 2015 and 31 December 2014, investments were in the form of bank deposits, certificates of deposit and commercial papers.

The authorized entities have a rating similar to the short- and long-term ratings required for the EIB’s own treasury placements. The minimum short term rating required for authorised entities is P-1/A-1/F1 (Moody’s, S&P, Fitch). In case of different ratings being granted by more than one credit rating agency, the lowest rating governs. The maximum authorized limit for each authorised bank (excluding the operational cash accounts of the Facility) is currently EUR 50,000,000 (fifty million euro).

All investments have been done with authorised entities with a maximum tenor of three months from trading date and up to the credit exposure limit. As at 31 December 2015 and 31 December 2014 all term deposits, commercial papers and cash in hand held by the treasury portfolio of the Facility had a minimum rating of P-1 (Moody’s equivalent) at settlement day.

The following table shows the situation of cash and cash equivalents including accrued interest (in EUR’000):

Minimum short-term rating

| Minimum short-term rating | Minimum long-term rating | 31.12.2015 | 31.12.2014 |
| --- | --- | --- | --- |
| (Moody’s term) | (Moody’s term) | | |
| P-1 | Aaa | 49,999 | 11% | 47,937 | 9% |
| P-1 | Aa2 | 26 | 0% | 38 | 0% |
| P-1 | A1 | 115,705 | 26% | 137,820 | 25% |
| P-1 | A2 | 283,265 | 63% | 359,604 | 66% |
| Total | | 448,995 | 100% | 545,399 | 100% |

Minimum long-term rating

31.12.2015

31.12.2014

(Moody’s term)

(Moody’s term)

P-1

Aaa

49,999

11%

47,937

9%

P-1

Aa2

26

0%

38

0%

P-1

A1

115,705

26%

137,820

25%

P-1

A2

283,265

63%

359,604

66%

Total

448,995

100%

545,399

100%

3.2.5Credit risk on derivatives

3.2.5.1Credit risk policy of derivatives

The credit risk with respect to derivatives is represented by the loss which a given party would incur where the other counterparty to the deal would be unable to honour its contractual obligations. The credit risk associated with derivatives varies according to a number of factors (such as interest and exchange rates) and generally corresponds to only a small portion of their notional value.

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency forward contracts, with a view to hedge its currency positions denominated in actively traded currencies other than the Euro. All the swaps are executed by the European Investment Bank with an external counterpart. The swaps are arranged by the same Master Swap Agreements and Credit Support Annexes signed between the European Investment Bank and its external counterparts.

3.2.5.2Credit risk measurement for derivatives

All the swaps executed by the European Investment Bank that are related to the Facility are treated within the same contractual framework and methodologies applied for the derivatives negotiated by the European Investment Bank for its own purposes. In particular, eligibility of swap counterparts is determined by the European Investment Bank based on the same eligibility conditions applied for its general swap purposes.

The European Investment Bank measures the credit risk exposure related to swaps and derivatives transactions using the Net Market Exposure (“NME”) and Potential Future Exposure (“PFE”) approach for reporting and limit monitoring. The NME and the PFE fully include the derivatives related to the Investment Facility.

The following table shows the maturities of cross currency swaps and cross currency interest rate swaps, sub-divided according to their notional amount and fair value:

Swap contracts at 31.12.2015

| Swap contracts at 31.12.2015 | less than | 1 year | 5 years | more than | Total 2015 |
| --- | --- | --- | --- | --- | --- |
| In EUR’000 | 1 year | to 5 years | to 10 years | to 10 years | |
| Notional amount | - | 9,589 | - | - | 9,589 |
| Fair Value (i.e. net discounted value) | - | -3,835 | - | - | -3,835 |
| | | | | | |
| | | | | | |
| Swap contracts at 31.12.2014 | less than | 1 year | 5 years | more than | Total 2014 |
| In EUR’000 | 1 year | to 5 years | to 10 years | to 10 years | |
| Notional amount | - | 11,606 | - | - | 11,606 |
| Fair Value (i.e. net discounted value) | - | -3,219 | - | - | -3,219 |

Swap contracts at 31.12.2015

less than

less than

1 year

1 year

5 years

5 years

more than

more than

Total 2015

Total 2015

In EUR’000

In EUR’000

1 year

1 year

to 5 years

to 5 years

to 10 years

to 10 years

to 10 years

to 10 years

Notional amount

Notional amount

-

-

9,589

9,589

-

-

-

-

9,589

9,589

Fair Value (i.e. net discounted value)

Fair Value (i.e. net discounted value)

-

-

-3,835

-3,835

-

-

-

-

-3,835

-3,835

Swap contracts at 31.12.2014

Swap contracts at 31.12.2014

less than

less than

1 year

1 year

5 years

5 years

more than

more than

Total 2014

Total 2014

In EUR’000

In EUR’000

1 year

1 year

to 5 years

to 5 years

to 10 years

to 10 years

to 10 years

to 10 years

Notional amount

Notional amount

-

-

11,606

11,606

-

-

-

-

11,606

11,606

Fair Value (i.e. net discounted value)

Fair Value (i.e. net discounted value)

-

-

-3,219

-3,219

-

-

-

-

-3,219

-3,219

3.2.6Credit risk on held-to-maturity financial assets

3.2.6

Credit risk on held-to-maturity financial assets

The following table shows the situation of the held-to-maturity portfolio entirely composed of treasury bills issued by Italy, Portugal and Spain with remaining maturities of less than three months. EU Member States are eligible issuers. The maximum authorized limit for each authorised issuer is EUR 50,000,000 (fifty million euro). Investments in medium and long-term bonds could also be eligible, according to the investment guidelines and depending on liquidity requirements:

The following table shows the situation of the held-to-maturity portfolio entirely composed of treasury bills issued by Italy, Portugal and Spain with remaining maturities of less than three months. EU Member States are eligible issuers. The maximum authorized limit for each authorised issuer is EUR 50,000,000 (fifty million euro). Investments in medium and long-term bonds could also be eligible, according to the investment guidelines and depending on liquidity requirements:

Minimum short-term rating

| Minimum short-term rating | Minimum long-term rating | 31.12.2015 | 31.12.2014 |
| --- | --- | --- | --- |
| (Moody’s term) | (Moody’s term) | | |
| P-1 | A2 | 69,502 | 31% | - | 0% |
| P-3 | Baa3 | 50,012 | 22% | 49,994 | 50% |
| P-2 | Baa2 | 50,007 | 22% | - | 0% |
| NP | Ba1 | 49,000 | 21% | - | 0% |
| P-1 | A1 | 10,000 | 4% | - | 0% |
| NP | Ba2 | - | 0% | 49,994 | 50% |
| Total | | 228,521 | 100% | 99,988 | 100% |

Minimum short-term rating

Minimum long-term rating

Minimum long-term rating

31.12.2015

31.12.2015

31.12.2014

31.12.2014

(Moody’s term)

(Moody’s term)

(Moody’s term)

(Moody’s term)

P-1

P-1

A2

A2

69,502

69,502

31%

31%

-

-

0%

0%

P-3

P-3

Baa3

Baa3

50,012

50,012

22%

22%

49,994

49,994

50%

50%

P-2

P-2

Baa2

Baa2

50,007

50,007

22%

22%

-

-

0%

0%

NP

NP

Ba1

Ba1

49,000

49,000

21%

21%

-

-

0%

0%

P-1

P-1

A1

A1

10,000

10,000

4%

4%

-

-

0%

0%

NP

NP

Ba2

Ba2

-

-

0%

0%

49,994

49,994

50%

50%

Total

Total

228,521

228,521

100%

100%

99,988

99,988

100%

100%

Liquidity risk

Liquidity risk

Liquidity risk refers to an entity’s ability to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. It can be split into funding liquidity risk and market liquidity risk. Funding liquidity risk is the risk that an entity will not be able to meet efficiently both expected and unexpected current and future cash flow needs without affecting its daily operations or its financial condition. Market liquidity risk is the risk that an entity cannot easily offset or eliminate a position at the market price because of inadequate market depth or market disruption.

3.2.2Liquidity risk management

The Facility is primarily funded by annual contributions from Member States as well as by reflows stemming from the Facility’s operations. The Facility manages its funding liquidity risk primarily by planning of its net liquidity needs and the required Member States annual contributions.

In order to calculate Member States’ annual contributions, disbursement patterns of the existing and pipelined portfolio is analysed and followed up throughout the year. Special events, such as early reimbursements, sales of shares or default cases are taken into account to correct annual liquidity requirements.

To further minimize the liquidity risk, the Facility maintains a liquidity reserve sufficient to cover at any point in time forecasted cash disbursements, as communicated periodically by EIB’s Lending Department. Funds are invested on the money market and bond markets in the form of interbank deposits and other short term financial instruments by taking into consideration the Facility’s cash disbursement obligations. The Facility’s liquid assets are managed by the Bank’s Treasury Department with a view to maintain appropriate liquidity to enable the Facility to meet its obligations.

In accordance with the principle of segregation of duties between the Front and Back Office, settlement operations related to the investment of these assets are under the responsibility of the EIB’s Planning and Settlement of Operations Department. Furthermore, the authorisation of counterparts and limits for treasury investments, as well as the monitoring of such limits, are the responsibility of the Bank’s Risk Management Directorate.

3.2.3Liquidity risk measurement

The tables in this section analyse the financial liabilities of the Facility by maturity on the basis of the period remaining between the balance sheet date and the contractual maturity date (based on undiscounted cash flows).

In terms of non-derivative financial liabilities, the Facility holds commitments in form of un-disbursed portions of the credit under signed loan agreements, of un-disbursed portions of signed capital subscription/investment agreements, of loan guarantees granted, or of committed interest subsidies and TA.

Loans under the IF have a disbursement deadline. However, disbursements are made at times and in amounts reflecting the progress of underlying investment projects. Moreover, the IF’s loans are transactions performed in a relatively volatile operating environment, hence their disbursement schedule is subject to a significant degree of uncertainty.

Capital investments become due when and as soon as equity fund managers issue valid calls for capital, reflecting the progress in their investment activities. The drawdown period is usually of 3 years, with frequent prolongation by one or two years. Some disbursement commitments usually survive the end of the drawdown period until full disposal of the fund’s underlying investments, as the fund’s liquidity may be insufficient from time to time to meet payment obligations arising in respect of fees or other expenses.

Guarantees are not subject to specific disbursement commitments unless a guarantee is called. The amount of guarantees outstanding is reduced alongside the repayment schedule of guaranteed loans.

Committed interest subsidies’ cash outflows occur in the case of subsidized loans financed by the Bank’s own resources. Therefore, reported outflows represent only commitments related to these loans rather than the total amount of committed un-disbursed interest subsidies. As in the case of loans, their disbursement schedule is uncertain.

Committed TA “gross nominal outflow” in the “Maturity profile of non-derivative financial liabilities” table refers to the total un-disbursed portion of signed TA contracts. The disbursement time pattern is subject to a significant degree of uncertainty. Cash outflows classified in the “3 months or less” bucket represent the amount of outstanding invoices received by the reporting date.

Commitments for non-derivative financial liabilities for which there is no defined contractual maturity date are classified under “Maturity Undefined”. Commitments, for which there is a recorded cash disbursement request at the reporting date, are classified under the relevant time bucket.

In terms of derivative financial liabilities, the maturity profile represents the contractual undiscounted gross cash flows of swap contracts including cross currency swaps (CCS), cross currency interest rate swaps (CCIRS), short term currency swaps and interest rate swaps.

Maturity profile of non-derivative financial liabilities

| Maturity profile of non-derivative financial liabilities | 3 months or less | More than 3 months to 1 year | More than 1 year to 5 years | More than 5 years | Maturity Undefined | Gross nominal outflow |
| --- | --- | --- | --- | --- | --- | --- |
| In EUR’000 as at 31.12.2015 | | | | | | |
| Outflows for committed but un-disbursed loans | 41,028 | - | - | - | 1,148,536 | 1,189,564 |
| Outflows for committed investment funds and share subscription | 23,371 | - | - | - | 274,984 | 298,355 |
| Others (signed non-issued guarantees, issued guarantees) | - | - | - | - | 10,798 | 10,798 |
| Outflows for committed interest subsidies | - | - | - | - | 281,682 | 281,682 |
| Outflows for committed TA | 811 | - | - | - | 28,072 | 28,883 |
| Total | 65,210 | - | - | - | 1,744,072 | 1,809,282 |
| | | | | | | |
| Maturity profile of non-derivative financial liabilities | 3 months or less | More than 3 months to 1 year | More than 1 year to 5 years | More than 5 years | Maturity Undefined | Gross nominal outflow |
| In EUR’000 as at 31.12.2014 | | | | | | |
| Outflows for committed but un-disbursed loans | 1,576 | - | - | - | 1,160,283 | 1,161,859 |
| Outflows for committed investment funds and share subscription | 4,584 | - | - | - | 196,053 | 200,637 |
| Others (signed non-issued guarantees, issued guarantees) | - | - | - | - | 27,298 | 27,298 |
| Outflows for committed interest subsidies | - | - | - | - | 241,890 | 241,890 |
| Outflows for committed TA | 595 | - | - | - | 18,978 | 19,573 |
| Total | 6,755 | - | - | - | 1,644,502 | 1,651,257 |
| | | | | | | |
| | | | | | | |
| Maturity profile of derivative financial liabilities | 3 months or less | More than 3 months to 1 year | More than 1 year to 5 years | More than 5 years | Gross nominal inflow/outflow |
| | | | | | |
| In EUR’000 as at 31.12.2015 | | | | | |
| CCS and CCIRS – Inflows | 5 | 2,307 | 7,671 | - | 9,983 |
| CCS and CCIRS – Outflows | - | -3,571 | -10,714 | - | -14,285 |
| Short term currency swaps – Inflows | 1,400,000 | - | - | - | 1,400,000 |
| Short term currency swaps – Outflows | -1,407,763 | - | - | - | -1,407,763 |
| Interest Rate Swaps – Inflows | 383 | 1,269 | 6,059 | 2,524 | 10,235 |
| Interest Rate Swaps - Outflows | - | -2,145 | -6,127 | -2,206 | -10,478 |
| Total | -7,375 | -2,140 | -3,111 | 318 | -12,308 |
| | | | | | |
| Maturity profile of derivative financial liabilities | 3 months or less | More than 3 months to 1 year | More than 1 year to 5 years | More than 5 years | Gross nominal inflow/outflow |
| | | | | | |
| In EUR’000 as at 31.12.2014 | | | | | |
| CCS and CCIRS – Inflows | 6 | 2,218 | 10,036 | - | 12,260 |
| CCS and CCIRS – Outflows | - | -3,202 | -12,809 | - | -16,011 |
| Short term currency swaps – Inflows | 1,059,000 | - | - | - | 1,059,000 |
| Short term currency swaps – Outflows | -1,070,677 | - | - | - | -1,070,677 |
| Interest Rate Swaps – Inflows | 371 | 1,103 | 6,495 | 3,619 | 11,588 |
| Interest Rate Swaps - Outflows | - | -2,143 | -6,373 | -3,022 | -11,538 |
| Total | -11,300 | -2,024 | -2,651 | 597 | -15,378 |

3 months or less

More than 3 months to 1 year

More than 1 year to 5 years

More than 5 years

Maturity Undefined

Gross nominal outflow

In EUR’000 as at 31.12.2015

Outflows for committed but un-disbursed loans

41,028

-

-

-

1,148,536

1,189,564

Outflows for committed investment funds and share subscription

23,371

-

-

-

274,984

298,355

Others (signed non-issued guarantees, issued guarantees)

-

-

-

-

10,798

10,798

Outflows for committed interest subsidies

-

-

-

-

281,682

281,682

Outflows for committed TA

811

-

-

-

28,072

28,883

Total

65,210

-

-

-

1,744,072

1,809,282

Maturity profile of non-derivative financial liabilities

3 months or less

More than 3 months to 1 year

More than 1 year to 5 years

More than 5 years

Maturity Undefined

Gross nominal outflow

In EUR’000 as at 31.12.2014

Outflows for committed but un-disbursed loans

1,576

-

-

-

1,160,283

1,161,859

Outflows for committed investment funds and share subscription

4,584

-

-

-

196,053

200,637

Others (signed non-issued guarantees, issued guarantees)

-

-

-

-

27,298

27,298

Outflows for committed interest subsidies

-

-

-

-

241,890

241,890

Outflows for committed TA

595

-

-

-

18,978

19,573

Total

6,755

-

-

-

1,644,502

1,651,257

Maturity profile of derivative financial liabilities

3 months or less

More than 3 months to 1 year

More than 1 year to 5 years

More than 5 years

Gross nominal inflow/outflow

In EUR’000 as at 31.12.2015

CCS and CCIRS – Inflows

5

2,307

7,671

-

9,983

CCS and CCIRS – Outflows

-

-3,571

-10,714

-

-14,285

Short term currency swaps – Inflows

1,400,000

-

-

-

1,400,000

Short term currency swaps – Outflows

-1,407,763

-

-

-

-1,407,763

Interest Rate Swaps – Inflows

383

1,269

6,059

2,524

10,235

Interest Rate Swaps - Outflows

-

-2,145

-6,127

-2,206

-10,478

Total

-7,375

-2,140

-3,111

318

-12,308

Maturity profile of derivative financial liabilities

3 months or less

More than 3 months to 1 year

More than 1 year to 5 years

More than 5 years

Gross nominal inflow/outflow

In EUR’000 as at 31.12.2014

CCS and CCIRS – Inflows

6

2,218

10,036

-

12,260

CCS and CCIRS – Outflows

-

-3,202

-12,809

-

-16,011

Short term currency swaps – Inflows

1,059,000

-

-

-

1,059,000

Short term currency swaps – Outflows

-1,070,677

-

-

-

-1,070,677

Interest Rate Swaps – Inflows

371

1,103

6,495

3,619

11,588

Interest Rate Swaps - Outflows

-

-2,143

-6,373

-3,022

-11,538

Total

-11,300

-2,024

-2,651

597

-15,378

Market risk

Market risk represents the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.

3.2.4Interest rate risk

Interest rate risk arises from the volatility in the economic value of, or in the income derived from, interest rate bearing positions due to adverse movements in interest rates.

The Facility is not directly impacted by the fluctuation of its economic value or to pricing mismatches between different assets, liabilities and hedge instruments because (i) it does not have any direct borrowing costs or interest rate bearing liabilities and (ii) it accepts the impact of interest rate fluctuations on the revenues from its investments.

The Facility measures the sensitivity of its loan portfolio and micro hedging swaps to interest rate fluctuations via a Basis Point Value (BPV) calculation.

The BPV measures the gain or loss in the net present value of the relevant portfolio, due to a 1 basis point (0.01%) increase in interest rates tenors ranging within a specified time bucket “money market – up to one year”, “very short – 2 to 3 years”, “short – 4 to 6 years”, “medium – 7 to 11 years”, “long – 12 to 20 years” or “extra-long – more than 21 years”.

To determine the net present value (NPV) of the loans’ cash flows denominated in EUR, the Facility uses the EIB’s EUR base funding curve (EUR swap curve adjusted with EIB’s global funding spread). The EIB’s USD funding curve is used for the calculation of the NPV of loan’s cash flows denominated in USD. The NPV of the loans’ cash flows denominated in currencies for which a reliable and sufficiently complete discount curve is not available, is determined by using EIB’s EUR base funding curve as a proxy.

To calculate the net present value of the micro hedging swaps, the facility uses the EUR swap curve for cash flows denominated in EUR and the USD swap curve for cash flows denominated in USD.

As shown in the following table the net present value of the loan portfolio including related micro-hedging swaps as at 31 December 2015 would decrease by EUR 532k (as at 31 December 2014: decrease by EUR 419k) if all relevant interest rates curves are simultaneously shifted upwards in parallel by 1 basis point.

Basis point value

| Basis point value | Money | Very Short | Short | Medium | Long | Extra Long | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| In EUR’000 | Market | | | | | | |
| As at 31.12.2015 | 1 year | 2 to 3 years | 4 to 6 years | 7 to 11 years | 12 to 20 years | 21 years | |
| Total sensitivity of loans and micro hedging swaps | -37 | -72 | -252 | -139 | -32 | - | -532 |
| | | | | | | | |
| Basis point value | Money | Very Short | Short | Medium | Long | Extra Long | Total |
| In EUR’000 | Market | | | | | | |
| As at 31.12.2014 | 1 year | 2 to 3 years | 4 to 6 years | 7 to 11 years | 12 to 20 years | 21 years | |
| Total sensitivity of loans and micro hedging swaps | -33 | -70 | -126 | -146 | -44 | - | -419 |

Money

Very Short

Short

Medium

Long

Extra Long

Total

In EUR’000

Market

As at 31.12.2015

1 year

2 to 3 years

4 to 6 years

7 to 11 years

12 to 20 years

21 years

Total sensitivity of loans and micro hedging swaps

-37

-72

-252

-139

-32

-

-532

Basis point value

Money

Very Short

Short

Medium

Long

Extra Long

Total

In EUR’000

Market

As at 31.12.2014

1 year

2 to 3 years

4 to 6 years

7 to 11 years

12 to 20 years

21 years

Total sensitivity of loans and micro hedging swaps

-33

-70

-126

-146

-44

-

-419

3.4.2Foreign exchange risk

Foreign exchange (“FX”) risk for the IF is the risk of loss in earnings or economic value due to adverse movements of FX rates.

Given a reference accounting currency (EUR for the IF), the Facility is exposed to FX risk whenever there is a mismatch between assets and liabilities denominated in a non-reference accounting currency. FX risk also includes the effect of changes in the value of future cash flows denominated in non-reference accounting currency, e.g. interest and dividend payments, due to fluctuations in exchange rates.

3.4.2.1Foreign exchange risk and treasury assets

The IF’s treasury assets are denominated either in EUR or USD.

FX risk is hedged by means of FX cross currency spot or forward transactions, FX swaps or cross-currency swaps. The EIB’s Treasury Department can, where deemed necessary and appropriate, use any other instrument, in line with the Bank’s policy, that provide protection against market risks incurred in connection with the IF’s financial activities.

3.4.2.2Foreign exchange risk and operations financed or guaranteed by the IF

Member States’ IF contributions are received in EUR. The operations financed or guaranteed by the IF as well as interest subsidies can be denominated in EUR, USD or any other authorized currency.

A foreign exchange risk exposure (against the EUR reference currency) arises whenever transactions denominated in currencies other than the EUR are left un-hedged. The IF’s foreign exchange risk hedging guidelines are set out below.

3.4.2.2.1.Hedging of operations denominated in USD

The FX risk generated by IF operations denominated in USD shall be covered on an aggregated basis via the use of USD/EUR FX swaps, rolled over and adjusted in terms of amount on a periodic basis. The use of FX swaps serves a dual purpose. On one side the necessary liquidity for new disbursements (loans and equity) is generated and on the other side an FX macro hedging is maintained.

At the beginning of each period, the cash flows to be received or paid in USD during the next period shall be estimated on the basis of planned or expected reflows/disbursements. Subsequently, the maturing FX swaps shall be rolled over, their amount being adjusted to cover at least the USD liquidity needs projected over the next period.

-On a monthly basis, the USD FX position shall be hedged, if exceeding the relevant limits, by means of a spot or forward operation.

-Within a roll-over period, unexpected USD liquidity deficits shall be covered by means of ad hoc FX swap operations while liquidity surpluses shall either be invested in treasury assets or converted into EUR if occurred from an increase of the FX position.

3.4.2.2.2.Hedging of operations denominated in currencies other than EUR or USD

-IF operations denominated in currencies other than EUR and USD shall be hedged through cross-currency swap contracts with the same financial profile as the underlying Loan, provided that a swap market is operational.

-IF has operations denominated in currencies for which hedging possibilities are either not efficiently available or available at a high cost. These operations are denominated in local currencies (LCs) but settled in EUR or USD. IF’s financial risk framework, which was approved by the IF Committee on 22 January 2015, offers the possibility to hedge the FX exposure in LCs that exhibit a significant positive correlation with the USD synthetically via USD-denominated derivatives. The LCs hedged synthetically with USD denominated derivatives are reported in the table in section 3.4.2.2.3 below under item “Local currencies (under synthetic hedge)”, while the LCs not hedged synthetically with the USD are reported in the same table under item “Local currencies (not under synthetic hedge)”.

3.4.2.2.3Foreign exchange position (in EUR’000)

The tables of this note show the Facility’s foreign exchange position.

The foreign exchange position is presented in the tables below in accordance with the IF’s Risk Policies (as described in the IF’s financial risk framework). The FX position as per Risk Policies is based on accounting figures and defined as the balance between selected assets and liabilities. The assets and liabilities defined in the FX position as per Risk Policies are selected so as to ensure that the earnings will only be converted into the reporting currency (EUR) when received.

The unrealised gains/losses and impairment on available-for-sale financial assets are included in the FX position as per Risk Policies, as well as impairments on loans and receivables. Derivatives included in the FX position as per Risk Policies are considered at their nominal value instead of their fair value, in order to be aligned with the retained value of the assets, considered also at their nominal value adjusted by the impairment for loans.

In the tables below the remaining part of the assets and liabilities, which includes mainly interest accruals on loans, derivatives and subsidies, is presented as “FX position excluded from Risk Policies”.

At 31 December 2015

| At 31 December 2015 | Assets and liabilities | | Commitments and contingent liabilities |
| --- | --- | --- | --- |
| Currencies | FX position as per Risk Policies | FX position excluded from Risk Policies | Balance sheet FX position | | |
| USD | -207,050 | 5,023 | -202,027 | | 270,236 |
| Local currencies
  (under synthetic hedge)* | | | | | |
| KES | 129,862 | 3,101 | 132,963 | | - |
| TZS | 46,246 | 780 | 47,025 | | - |
| DOP | 40,799 | 1,274 | 42,073 | | - |
| UGX | 30,182 | 565 | 30,747 | | - |
| RWF | 11,979 | 164 | 12,143 | | - |
| Local currencies
  (not under synthetic hedge)* | | | | | |
| HTG, MUR, MZN, XOF, ZMW | 15,474 | 201 | 15,675 | | 798 |
| Total non-EUR currencies | 67,492 | 11,108 | 78,599 | | 271,034 |
| EUR | - | 2,337,555 | 2,337,555 | | 1,579,719 |
| Total EUR and non-EUR | 67,492 | 2,348,663 | 2,416,154 | | 1,850,753 |
| |
| * See section 3.4.2.2.2 for explanations on synthetic hedge. |
| At 31 December 2014 | Assets and liabilities | | Commitments and contingent liabilities |
| Currencies | FX position as per Risk Policies | FX position excluded from Risk Policies | Balance sheet FX position | | |
| USD | 42,050 | 3,997 | 46,047 | | 237,987 |
| Local currencies
  (under synthetic hedge)* | | | | | |
| KES | 97,921 | 2,481 | 100,402 | | - |
| TZS | 52,799 | 613 | 53,412 | | - |
| DOP | 31,266 | 1,273 | 32,539 | | - |
| UGX | 27,028 | 503 | 27,531 | | - |
| RWF | 11,937 | 178 | 12,115 | | - |
| Local currencies
  (not under synthetic hedge)* | | | | | |
| HTG, MUR, MZN, XOF | 15,916 | 265 | 16,181 | | 2,298 |
| Total non-EUR currencies | 278,917 | 9,310 | 288,227 | | 240,285 |
| EUR | - | 2,023,366 | 2,023,366 | | 1,434,748 |
| Total EUR and non-EUR | 278,917 | 2,032,676 | 2,311,593 | | 1,675,033 |
| |
| * See section 3.4.2.2.2 for explanations on synthetic hedge. |

Assets and liabilities

Commitments and contingent liabilities

Currencies

FX position as per Risk Policies

FX position excluded from Risk Policies

Balance sheet FX position

USD

-207,050

5,023

-202,027

270,236

Local currencies
  (under synthetic hedge)*

KES

129,862

3,101

132,963

-

TZS

46,246

780

47,025

-

DOP

40,799

1,274

42,073

-

UGX

30,182

565

30,747

-

RWF

11,979

164

12,143

-

Local currencies
  (not under synthetic hedge)*

HTG, MUR, MZN, XOF, ZMW

15,474

201

15,675

798

Total non-EUR currencies

67,492

11,108

78,599

271,034

EUR

-

2,337,555

2,337,555

1,579,719

Total EUR and non-EUR

67,492

2,348,663

2,416,154

1,850,753

- See section 3.4.2.2.2 for explanations on synthetic hedge.

At 31 December 2014

Assets and liabilities

Commitments and contingent liabilities

Currencies

FX position as per Risk Policies

FX position excluded from Risk Policies

Balance sheet FX position

USD

42,050

3,997

46,047

237,987

Local currencies
  (under synthetic hedge)*

KES

97,921

2,481

100,402

-

TZS

52,799

613

53,412

-

DOP

31,266

1,273

32,539

-

UGX

27,028

503

27,531

-

RWF

11,937

178

12,115

-

Local currencies
  (not under synthetic hedge)*

HTG, MUR, MZN, XOF

15,916

265

16,181

2,298

Total non-EUR currencies

278,917

9,310

288,227

240,285

EUR

-

2,023,366

2,023,366

1,434,748

Total EUR and non-EUR

278,917

2,032,676

2,311,593

1,675,033

- See section 3.4.2.2.2 for explanations on synthetic hedge.

3.4.2.3Foreign exchange sensitivity analysis

As at 31 December 2015 a 10 percent depreciation of EUR versus all non EUR currencies would result in an increase of the contributors’ resources amounting to EUR 8.7 million (31 December 2014: EUR 32.0 million). A 10 percent appreciation of the EUR versus all non EUR currencies would result in a decrease of the contributors’ resources amounting to EUR 7.1 million (31 December 2014: EUR 26.2 million).

3.4.2.4Conversion rates

The following conversion rates were used for establishing the balance sheet at 31 December 2015 and 31 December 2014:

31 December 2015

| | 31 December 2015 | 31 December 2014 |
| --- | --- | --- |
| Non-EU currencies | | |
| Dominican Republic Pesos (DOP) | 49.0144 | 53.1988 |
| Fiji Dollars (FJD) | 2.3124 | 2.376 |
| Haitian Gourde (HTG) | 61.19 | 55.23 |
| Kenya Shillings (KES) | 111.3 | 109.86 |
| Mauritania Ouguiyas (MRO) | 326.46 | 350.61 |
| Mauritius Rupees (MUR) | 38.85 | 38.46 |
| Mozambican Metical (MZN) | 50.59 | 40.04 |
| Rwanda Francs (RWF) | 806.36 | 831.04 |
| Tanzania Shillings (TZS) | 2,344.42 | 2,096.58 |
| Uganda Shillings (UGX) | 3,665.00 | 3,354.00 |
| United States Dollars (USD) | 1.0887 | 1.2141 |
| Franc CFA Francs (XAF/XOF) | 655.957 | 655.957 |
| South Africa Rand (ZAR) | 16.953 | 14.0353 |
| Zambia Kvacha (ZMW) | 11.9571 | 7.753 |

31 December 2014

Non-EU currencies

Dominican Republic Pesos (DOP)

49.0144

53.1988

Fiji Dollars (FJD)

2.3124

2.376

Haitian Gourde (HTG)

61.19

55.23

Kenya Shillings (KES)

111.3

109.86

Mauritania Ouguiyas (MRO)

326.46

350.61

Mauritius Rupees (MUR)

38.85

38.46

Mozambican Metical (MZN)

50.59

40.04

Rwanda Francs (RWF)

806.36

831.04

Tanzania Shillings (TZS)

2,344.42

2,096.58

Uganda Shillings (UGX)

3,665.00

3,354.00

United States Dollars (USD)

1.0887

1.2141

Franc CFA Francs (XAF/XOF)

655.957

655.957

South Africa Rand (ZAR)

16.953

14.0353

Zambia Kvacha (ZMW)

11.9571

7.753

3.4.3Equity price risk

Equity price risk refers to the risk that the fair values of equity investments decrease as the result of changes in the levels of equity prices and/or the value of equity investments.

The IF is exposed to equity price risk via its investments in direct equity and venture capital funds.

The value of non-listed equity positions is not readily available for the purpose of monitoring and control on a continuous basis. For such positions, the best indications available include prices derived from any relevant valuation techniques.

The effects on the Facility’s contributors’ resources (as a result of a change in the fair value of the available-for-sale equity portfolio) due to a +/-10% change in the value of individual direct equity and venture capital investments, with all other variables held constant, is EUR 41.9 million respectively EUR -41.9 million as at 31 December 2015 (EUR 40.3 million respectively EUR -40.3 million as at 31 December 2014).

4
     Fair values of financial instruments

Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. These do not include fair value information for financial assets and financial liabilities not carried at fair value if the carrying amount is a reasonable approximation of fair value.

At 31 December 2015

| At 31 December 2015 | Carrying amount | | Fair value |
| --- | --- | --- | --- |
| In EUR’000 | Held for trading | Available-for-sale | Cash, loans and receivables | Held to maturity | Other financial liabilities | Total | | Level 1 | Level 2 | Level 3 | Total |
| Financial assets carried at fair value: | | | | | | | | | | | |
| Derivative financial instruments | 311 | - | - | - | - | 311 | | - | 311 | - | 311 |
| Venture Capital Funds | - | 396,203 | - | - | - | 396,203 | | - | - | 396,203 | 396,203 |
| Direct Equity Investments | - | 23,150 | - | - | - | 23,150 | | 178 | - | 22,972 | 23,150 |
| Total | 311 | 419,353 | - | - | - | 419,664 | | 178 | 311 | 419,175 | 419,664 |
| Financial assets not carried at fair value: | | | | | | | | | | | |
| Cash and cash equivalents | - | - | 448,995 | - | - | 448,995 | | | | | |
| Loans and receivables | - | - | 1,460,057 | - | - | 1,460,057 | | - | 1,649,401 | - | 1,649,401 |
| Amounts receivable from contributors | - | - | - | - | - | - | | | | | |
| Bonds | - | - | - | 228,521 | - | 228,521 | | 124,009 | 104,520 | - | 228,529 |
| Other assets | - | - | 27 | - | - | 27 | | | | | |
| Total | - | - | 1,909,079 | 228,521 | - | 2,137,600 | | 124,009 | 1,753,921 | - | 1,877,930 |
| Total financial assets | 311 | 419,353 | 1,909,079 | 228,521 | - | 2,557,264 | | | | | |
| | | | | | | | | | | | |
| Financial liabilities carried at fair value: | | | | | | | | | | | |
| Derivative financial instruments | -8,219 | - | - | - | - | -8,219 | | - | -8,219 | - | -8,219 |
| Total | -8,219 | - | - | - | - | -8,219 | | - | -8,219 | - | -8,219 |
| Financial liabilities not carried at fair value: | | | | | | | | | | | |
| Amounts owed to third parties | - | - | - | - | -101,202 | -101,202 | | | | | |
| Other liabilities | - | - | - | - | -2,364 | -2,364 | | | | | |
| Total | - | - | - | - | -103,566 | -103,566 | | | | | |
| Total financial liabilities | -8,219 | - | - | - | -103,566 | -111,785 | | | | | |

Carrying amount

Fair value

In EUR’000

Held for trading

Available-for-sale

Cash, loans and receivables

Held to maturity

Other financial liabilities

Total

Level 1

Level 2

Level 3

Total

Financial assets carried at fair value:

Derivative financial instruments

311

-

-

-

-

311

-

311

-

311

Venture Capital Funds

-

396,203

-

-

-

396,203

-

-

396,203

396,203

Direct Equity Investments

-

23,150

-

-

-

23,150

178

-

22,972

23,150

Total

311

419,353

-

-

-

419,664

178

311

419,175

419,664

Financial assets not carried at fair value:

Cash and cash equivalents

-

-

448,995

-

-

448,995

Loans and receivables

-

-

1,460,057

-

-

1,460,057

-

1,649,401

-

1,649,401

Amounts receivable from contributors

-

-

-

-

-

-

Bonds

-

-

-

228,521

-

228,521

124,009

104,520

-

228,529

Other assets

-

-

27

-

-

27

Total

-

-

1,909,079

228,521

-

2,137,600

124,009

1,753,921

-

1,877,930

Total financial assets

311

419,353

1,909,079

228,521

-

2,557,264

Financial liabilities carried at fair value:

Derivative financial instruments

-8,219

-

-

-

-

-8,219

-

-8,219

-

-8,219

Total

-8,219

-

-

-

-

-8,219

-

-8,219

-

-8,219

Financial liabilities not carried at fair value:

Amounts owed to third parties

-

-

-

-

-101,202

-101,202

Other liabilities

-

-

-

-

-2,364

-2,364

Total

-

-

-

-

-103,566

-103,566

Total financial liabilities

-8,219

-

-

-

-103,566

-111,785

4
     Fair values of financial instruments (continued)

Accounting classifications and fair values (continued)

At 31 December 2014

| At 31 December 2014 | Carrying amount | | Fair value |
| --- | --- | --- | --- |
| In EUR’000 | Held for trading | Available-for-sale | Cash, loans and receivables | Held to maturity | Other financial liabilities | Total | | Level 1 | Level 2 | Level 3 | Total |
| Financial assets carried at fair value: | | | | | | | | | | | |
| Derivative financial instruments | 448 | - | - | - | - | 448 | | - | 448 | - | 448 |
| Venture Capital Funds | - | 385,245 | - | - | - | 385,245 | | - | - | 385,245 | 385,245 |
| Direct Equity Investments | - | 17,840 | - | - | - | 17,840 | | 1,159 | - | 16,681 | 17,840 |
| Total | 448 | 403,085 | - | - | - | 403,533 | | 1,159 | 448 | 401,926 | 403,533 |
| Financial assets not carried at fair value: | | | | | | | | | | | |
| Cash and cash equivalents | - | - | 545,399 | - | - | 545,399 | | | | | |
| Loans and receivables | - | - | 1,331,918 | - | - | 1,331,918 | | - | 1,488,215 | - | 1,488,215 |
| Amounts receivable from contributors | - | - | 42,590 | - | - | 42,590 | | | | | |
| Bonds | - | - | - | 99,988 | - | 99,988 | | 99,985 | - | - | 99,985 |
| Other assets | - | - | 5,522 | - | - | 5,522 | | - | - | - | - |
| Total | - | - | 1,925,429 | 99,988 | - | 2,025,417 | | 99,985 | 1,488,215 | - | 1,588,200 |
| Total financial assets | 448 | 403,085 | 1,925,429 | 99,988 | - | 2,428,950 | | | | | |
| | | | | | | | | | | | |
| Financial liabilities carried at fair value: | | | | | | | | | | | |
| Derivative financial instruments | -14,632 | - | - | - | - | -14,632 | | - | -14,632 | - | -14,632 |
| Total | -14,632 | - | - | - | - | -14,632 | | - | -14,632 | - | -14,632 |
| Financial liabilities not carried at fair value: | | | | | | | | | | | |
| Amounts owed to third parties | - | - | - | - | -68,824 | -68,824 | | | | | |
| Other liabilities | - | - | - | - | -2,591 | -2,591 | | | | | |
| Total | - | - | - | - | -71,415 | -71,415 | | | | | |
| Total financial liabilities | -14,632 | - | - | - | -71,415 | -86,047 | | | | | |

Carrying amount

Fair value

In EUR’000

Held for trading

Available-for-sale

Cash, loans and receivables

Held to maturity

Other financial liabilities

Total

Level 1

Level 2

Level 3

Total

Financial assets carried at fair value:

Derivative financial instruments

448

-

-

-

-

448

-

448

-

448

Venture Capital Funds

-

385,245

-

-

-

385,245

-

-

385,245

385,245

Direct Equity Investments

-

17,840

-

-

-

17,840

1,159

-

16,681

17,840

Total

448

403,085

-

-

-

403,533

1,159

448

401,926

403,533

Financial assets not carried at fair value:

Cash and cash equivalents

-

-

545,399

-

-

545,399

Loans and receivables

-

-

1,331,918

-

-

1,331,918

-

1,488,215

-

1,488,215

Amounts receivable from contributors

-

-

42,590

-

-

42,590

Bonds

-

-

-

99,988

-

99,988

99,985

-

-

99,985

Other assets

-

-

5,522

-

-

5,522

-

-

-

-

Total

-

-

1,925,429

99,988

-

2,025,417

99,985

1,488,215

-

1,588,200

Total financial assets

448

403,085

1,925,429

99,988

-

2,428,950

Financial liabilities carried at fair value:

Derivative financial instruments

-14,632

-

-

-

-

-14,632

-

-14,632

-

-14,632

Total

-14,632

-

-

-

-

-14,632

-

-14,632

-

-14,632

Financial liabilities not carried at fair value:

Amounts owed to third parties

-

-

-

-

-68,824

-68,824

Other liabilities

-

-

-

-

-2,591

-2,591

Total

-

-

-

-

-71,415

-71,415

Total financial liabilities

-14,632

-

-

-

-71,415

-86,047

4.1Measurement of fair values

4.1.1Valuation techniques and significant unobservable inputs

The table below sets out information about the valuation techniques and significant unobservable inputs used in measuring financial instruments, categorised as level 2 and 3 in the fair value hierarchy:

Valuation technique

| | Valuation technique | Significant unobservable inputs | Relationship of unobservable inputs to fair value measurement |
| --- | --- | --- | --- |
| Financial instruments carried at fair value | | |
| | | | |
| Derivative financial instruments | Discounted cash flow: Future cash flows are estimated based on forward exchange/interest rates (from observable forward exchange rates and yield curves at the end of the reporting period) and contract forward/interest rates, discounted at a rate that reflects the credit risk of various counterparties. | Not applicable. | Not applicable. |
| | | | |
| Venture Capital Fund (VCF) | Adjusted net assets method: The fair value is determined by applying either the Facility’s percentage ownership in the underlying vehicle to the net asset value reflected in the most recent report adjusted for cash flows or, where available, the precise share value at the same date, submitted by the respective Fund Manager. In order to bridge the interval between the last available Net assets value (NAV) and the year-end reporting, a subsequent event review procedure is performed and if necessary the reported NAV is adjusted. | Adjustment for time elapsed between the last reporting date of the VCF and the measurement date, taking into account: operating expenses and management fees, subsequent changes in the fair value of the VCF’s underlying assets, additional liabilities incurred, market changes or other economic condition changes. | The longer the period between the fair value measurement date and the last reporting date of the VCF, the higher the adjustment for time elapsed. |
| | | | |
| Direct Equity Investment | Adjusted net assets. | Adjustment for time elapsed between the last reporting date of the investee and the measurement date, taking into account: operating expenses, subsequent changes in the fair value of the investee’s underlying assets, additional liabilities incurred, market changes or other economic condition changes, capital increase, sale/change of control. | The longer the period between the fair value measurement date and the last reporting date of the investee, the higher the adjustment for time elapsed. |
| | | | |
| | | Discount for lack of marketability (liquidity) determined by reference to previous transaction prices for similar equities in the country/region, ranging from 5 to 30%. | The higher the marketability discount, the lower the fair value. |
| | | | |
| Financial instruments not carried at fair value | | |
| | | | |
| Loans and receivables | Discounted cash flows: The valuation model uses contractual cash flows that are conditional upon the non-occurrence of default by the debtor and do not take into account any collateral values or early repayments’ scenarios. To obtain the Net Present Value (NPV) of the loans, the model retained discounts the contractual cash flows of each loan using an adjusted market discount curve. The individual loan NPV is then adjusted to take into consideration the relevant associated Expected Loss. The results are then summed to obtain the fair value of Loans and receivables. | Not applicable. | Not applicable. |
| | | | |
| Held-to-maturity financial assets | Discounted cash flows. | Not applicable. | Not applicable. |
| | | | |
| Amounts owed to third parties | Discounted cash flows. | Not applicable. | Not applicable. |
| | | | |
| Other liabilities | Discounted cash flows. | Not applicable. | Not applicable. |

Significant unobservable inputs

Relationship of unobservable inputs to fair value measurement

Financial instruments carried at fair value

Derivative financial instruments

Discounted cash flow: Future cash flows are estimated based on forward exchange/interest rates (from observable forward exchange rates and yield curves at the end of the reporting period) and contract forward/interest rates, discounted at a rate that reflects the credit risk of various counterparties.

Not applicable.

Not applicable.

Venture Capital Fund (VCF)

Adjusted net assets method: The fair value is determined by applying either the Facility’s percentage ownership in the underlying vehicle to the net asset value reflected in the most recent report adjusted for cash flows or, where available, the precise share value at the same date, submitted by the respective Fund Manager. In order to bridge the interval between the last available Net assets value (NAV) and the year-end reporting, a subsequent event review procedure is performed and if necessary the reported NAV is adjusted.

Adjustment for time elapsed between the last reporting date of the VCF and the measurement date, taking into account: operating expenses and management fees, subsequent changes in the fair value of the VCF’s underlying assets, additional liabilities incurred, market changes or other economic condition changes.

The longer the period between the fair value measurement date and the last reporting date of the VCF, the higher the adjustment for time elapsed.

Direct Equity Investment

Adjusted net assets.

Adjustment for time elapsed between the last reporting date of the investee and the measurement date, taking into account: operating expenses, subsequent changes in the fair value of the investee’s underlying assets, additional liabilities incurred, market changes or other economic condition changes, capital increase, sale/change of control.

The longer the period between the fair value measurement date and the last reporting date of the investee, the higher the adjustment for time elapsed.

Discount for lack of marketability (liquidity) determined by reference to previous transaction prices for similar equities in the country/region, ranging from 5 to 30%.

The higher the marketability discount, the lower the fair value.

Financial instruments not carried at fair value

Loans and receivables

Discounted cash flows: The valuation model uses contractual cash flows that are conditional upon the non-occurrence of default by the debtor and do not take into account any collateral values or early repayments’ scenarios. To obtain the Net Present Value (NPV) of the loans, the model retained discounts the contractual cash flows of each loan using an adjusted market discount curve. The individual loan NPV is then adjusted to take into consideration the relevant associated Expected Loss. The results are then summed to obtain the fair value of Loans and receivables.

Not applicable.

Not applicable.

Held-to-maturity financial assets

Discounted cash flows.

Not applicable.

Not applicable.

Amounts owed to third parties

Discounted cash flows.

Not applicable.

Not applicable.

Other liabilities

Discounted cash flows.

Not applicable.

Not applicable.

With the application of IFRS 13, valuation adjustments are included in the fair value of derivatives at 31 December 2015 and 2014, namely:

4Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR -122k as at 31 December 2015 and to EUR -184k as at 31 December 2014.

5Debit valuation adjustments (DVA), reflecting own credit risk on derivative transactions, amounting to EUR +64k as at 31 December 2015 and EUR +30k as at 31 December 2014.

The Facility’s policy is to recognise the transfers between Levels as of the date of the event or change in circumstances that caused the transfer.

Transfers between Level 1 and 2

In 2015 and 2014 the Facility did not make transfers from Level 1 to 2 or Level 2 to 1 of the fair value hierarchy.

Level 3 fair values

Reconciliation of Level 3 fair values

The following tables present the changes in Level 3 instruments for the year ended 31 December 2015 and 31 December 2014:

In EUR'000

| In EUR'000 | Available-for-sale financial assets |
| --- | --- |
| Balance at 1 January 2015 | 401,926 |
| Gains or losses included in profit or loss: | |
| - net realised gains on available-for-sale financial assets | -33,878 |
| - impairment on available-for-sale financial assets | -2,665 |
| Total | -36,543 |
| Gains or losses included in other comprehensive income: | |
| - net change in fair value of available-for-sale financial assets | 52,365 |
| Total | 52,365 |
| Disbursements | 67,449 |
| Repayments | -64,791 |
| Write offs | -1,231 |
| Balance at 31 December 2015 | 419,175 |
| | |
| In EUR'000 | Available-for-sale financial assets |
| Balance at 1 January 2014 | 324,855 |
| Gains or losses included in profit or loss: | |
| - net realised gains on available-for-sale financial assets | 8,109 |
| - impairment on available-for-sale financial assets | -2,084 |
| Total | 6,025 |
| Gains or losses included in other comprehensive income: | |
| - net change in fair value of available-for-sale financial assets | 71,778 |
| Total | 71,778 |
| Disbursements | 42,646 |
| Repayments | -43,378 |
| Balance at 31 December 2014 | 401,926 |

Available-for-sale financial assets

Balance at 1 January 2015

401,926

Gains or losses included in profit or loss:

- net realised gains on available-for-sale financial assets

-33,878

- impairment on available-for-sale financial assets

-2,665

Total

-36,543

Gains or losses included in other comprehensive income:

- net change in fair value of available-for-sale financial assets

52,365

Total

52,365

Disbursements

67,449

Repayments

-64,791

Write offs

-1,231

Balance at 31 December 2015

419,175

In EUR'000

Available-for-sale financial assets

Balance at 1 January 2014

324,855

Gains or losses included in profit or loss:

- net realised gains on available-for-sale financial assets

8,109

- impairment on available-for-sale financial assets

-2,084

Total

6,025

Gains or losses included in other comprehensive income:

- net change in fair value of available-for-sale financial assets

71,778

Total

71,778

Disbursements

42,646

Repayments

-43,378

Balance at 31 December 2014

401,926

In 2015 and 2014 the Facility did not make transfers out or to Level 3 of the fair value hierarchy.

Sensitivity analysis

A +/- 10 percent change at the reporting date to one of the significant unobservable inputs used to measure the fair values of the Venture Capital Funds and Direct Equity Investments, holding other inputs constant, would have the following effects on the other comprehensive income:

At 31 December 2015

| At 31 December 2015 | Increase | Decrease |
| --- | --- | --- |
| (in EUR’000) | | |
| Direct Equity Investments | 31 | -31 |
| Total | 31 | -31 |
| | | |
| At 31 December 2014 | Increase | Decrease |
| (in EUR’000) | | |
| Direct Equity Investments | 31 | -31 |
| Total | 31 | -31 |

At 31 December 2015

Increase

Increase

Decrease

Decrease

(in EUR’000)

(in EUR’000)

Direct Equity Investments

Direct Equity Investments

31

31

-31

-31

Total

Total

31

31

-31

-31

At 31 December 2014

At 31 December 2014

Increase

Increase

Decrease

Decrease

(in EUR’000)

(in EUR’000)

Direct Equity Investments

Direct Equity Investments

31

31

-31

-31

Total

Total

31

31

-31

-31

31.12.2015

| | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Cash in hand | 71,405 | 9,642 |
| Term deposits | 290,573 | 415,757 |
| Commercial papers | 87,017 | 120,000 |
| Cash and cash equivalents in the statement of financial position | 448,995 | 545,399 |
| Accrued interest | 3 | -1 |
| Cash and cash equivalents in the cash flow statement | 448,998 | 545,398 |

31.12.2015

31.12.2014

31.12.2014

Cash in hand

Cash in hand

71,405

71,405

9,642

9,642

Term deposits

Term deposits

290,573

290,573

415,757

415,757

Commercial papers

Commercial papers

87,017

87,017

120,000

120,000

Cash and cash equivalents in the statement of financial position

Cash and cash equivalents in the statement of financial position

448,995

448,995

545,399

545,399

Accrued interest

Accrued interest

3

3

-1

-1

Cash and cash equivalents in the cash flow statement

Cash and cash equivalents in the cash flow statement

448,998

448,998

545,398

545,398

At 31 December 2015

| At 31 December 2015 | Fair Value | Notional amount |
| --- | --- | --- |
| | Assets | Liabilities | |
| Cross currency interest rate swaps | - | -3,835 | 9,589 |
| Interest rate swaps | 311 | -639 | 44,913 |
| FX swaps | - | -3,745 | 1,400,000 |
| Total derivative financial instruments | 311 | -8,219 | 1,454,502 |
| | | | |
| At 31 December 2014 | Fair Value | Notional amount |
| | Assets | Liabilities | |
| Cross currency interest rate swaps | - | -3,219 | 11,606 |
| Interest rate swaps | 448 | -564 | 44,749 |
| FX swaps | - | -10,849 | 1,059,000 |
| Total derivative financial instruments | 448 | -14,632 | 1,115,355 |

At 31 December 2015

Fair Value

Fair Value

Notional amount

Notional amount

Assets

Assets

Liabilities

Liabilities

Cross currency interest rate swaps

Cross currency interest rate swaps

-

-

-3,835

-3,835

9,589

9,589

Interest rate swaps

Interest rate swaps

311

311

-639

-639

44,913

44,913

FX swaps

FX swaps

-

-

-3,745

-3,745

1,400,000

1,400,000

Total derivative financial instruments

Total derivative financial instruments

311

311

-8,219

-8,219

1,454,502

1,454,502

At 31 December 2014

At 31 December 2014

Fair Value

Fair Value

Notional amount

Notional amount

Assets

Assets

Liabilities

Liabilities

Cross currency interest rate swaps

Cross currency interest rate swaps

-

-

-3,219

-3,219

11,606

11,606

Interest rate swaps

Interest rate swaps

448

448

-564

-564

44,749

44,749

FX swaps

FX swaps

-

-

-10,849

-10,849

1,059,000

1,059,000

Total derivative financial instruments

Total derivative financial instruments

448

448

-14,632

-14,632

1,115,355

1,115,355

7
     Loans and receivables (in EUR’000)

The main components of loans and receivables are as follows:

Global loans(*)

| | Global loans(*) | Senior loans | Subordinated loans | Total |
| --- | --- | --- | --- | --- |
| Nominal as at 1 January 2015 | 542,506 | 782,563 | 146,643 | 1,471,712 |
| Disbursements | 196,607 | 86,177 | - | 282,784 |
| Repayments | -106,921 | -96,147 | -2,704 | -205,772 |
| Interest capitalised | - | - | 13,262 | 13,262 |
| Foreign exchange rates differences | 29,600 | 45,414 | 3,354 | 78,368 |
| Nominal as at 31 December 2015 | 661,792 | 818,007 | 160,555 | 1,640,354 |
| | | | | |
| Impairment as at 1 January 2015 | -5,751 | -13,491 | -132,895 | -152,137 |
| Impairment recorded in statement of profit or loss and other comprehensive income | -3,692 | -7,576 | -24,995 | -36,263 |
| Reversal of impairment | 381 | 57 | 1,837 | 2,275 |
| Foreign exchange rates differences | -341 | -1,435 | -3,145 | -4,921 |
| Impairment as at 31 December 2015 | -9,403 | -22,445 | -159,198 | -191,046 |
| | | | | |
| Amortised Cost | -3,129 | -5,781 | 284 | -8,626 |
| Interest | 8,838 | 10,533 | 4 | 19,375 |
| Loans and receivables as at 31 December 2015 | 658,098 | 800,314 | 1,645 | 1,460,057 |
| | | | | |
| (*) including agency agreements | | | | |

Global loans(*)

Senior loans

Senior loans

Subordinated loans

Subordinated loans

Total

Total

Nominal as at 1 January 2015

Nominal as at 1 January 2015

542,506

542,506

782,563

782,563

146,643

146,643

1,471,712

1,471,712

Disbursements

Disbursements

196,607

196,607

86,177

86,177

-

-

282,784

282,784

Repayments

Repayments

-106,921

-106,921

-96,147

-96,147

-2,704

-2,704

-205,772

-205,772

Interest capitalised

Interest capitalised

-

-

-

-

13,262

13,262

13,262

13,262

Foreign exchange rates differences

Foreign exchange rates differences

29,600

29,600

45,414

45,414

3,354

3,354

78,368

78,368

Nominal as at 31 December 2015

Nominal as at 31 December 2015

661,792

661,792

818,007

818,007

160,555

160,555

1,640,354

1,640,354

Impairment as at 1 January 2015

Impairment as at 1 January 2015

-5,751

-5,751

-13,491

-13,491

-132,895

-132,895

-152,137

-152,137

Impairment recorded in statement of profit or loss and other comprehensive income

Impairment recorded in statement of profit or loss and other comprehensive income

-3,692

-3,692

-7,576

-7,576

-24,995

-24,995

-36,263

-36,263

Reversal of impairment

Reversal of impairment

381

381

57

57

1,837

1,837

2,275

2,275

Foreign exchange rates differences

Foreign exchange rates differences

-341

-341

-1,435

-1,435

-3,145

-3,145

-4,921

-4,921

Impairment as at 31 December 2015

Impairment as at 31 December 2015

-9,403

-9,403

-22,445

-22,445

-159,198

-159,198

-191,046

-191,046

Amortised Cost

Amortised Cost

-3,129

-3,129

-5,781

-5,781

284

284

-8,626

-8,626

Interest

Interest

8,838

8,838

10,533

10,533

4

4

19,375

19,375

Loans and receivables as at 31 December 2015

Loans and receivables as at 31 December 2015

658,098

658,098

800,314

800,314

1,645

1,645

1,460,057

1,460,057

(*) including agency agreements

(*) including agency agreements

Global loans(*)

| | Global loans(*) | Senior loans | Subordinated loans | Total |
| --- | --- | --- | --- | --- |
| Nominal as at 1 January 2014 | 342,113 | 806,007 | 131,632 | 1,279,752 |
| Disbursements | 216,672 | 31,654 | - | 248,326 |
| Repayments | -58,417 | -107,794 | -367 | -166,578 |
| Interest capitalised | - | - | 11,915 | 11,915 |
| Foreign exchange rates differences | 42,138 | 52,696 | 3,463 | 98,297 |
| Nominal as at 31 December 2014 | 542,506 | 782,563 | 146,643 | 1,471,712 |
| | | | | |
| Impairment as at 1 January 2014 | -7,675 | -12,734 | -50,382 | -70,791 |
| Impairment recorded in statement of profit or loss and other comprehensive income | - | - | -79,249 | -79,249 |
| Reversal of impairment | 2,586 | 907 | - | 3,493 |
| Foreign exchange rates differences | -662 | -1,664 | -3,264 | -5,590 |
| Impairment as at 31 December 2014 | -5,751 | -13,491 | -132,895 | -152,137 |
| | | | | |
| Amortised Cost | -2,562 | -5,125 | 28 | -7,659 |
| Interest | 7,407 | 11,930 | 665 | 20,002 |
| Loans and receivables as at 31 December 2014 | 541,600 | 775,877 | 14,441 | 1,331,918 |
| | | | | |
| (*) including agency agreements | | | | |

Global loans(*)

Senior loans

Senior loans

Subordinated loans

Subordinated loans

Total

Total

Nominal as at 1 January 2014

Nominal as at 1 January 2014

342,113

342,113

806,007

806,007

131,632

131,632

1,279,752

1,279,752

Disbursements

Disbursements

216,672

216,672

31,654

31,654

-

-

248,326

248,326

Repayments

Repayments

-58,417

-58,417

-107,794

-107,794

-367

-367

-166,578

-166,578

Interest capitalised

Interest capitalised

-

-

-

-

11,915

11,915

11,915

11,915

Foreign exchange rates differences

Foreign exchange rates differences

42,138

42,138

52,696

52,696

3,463

3,463

98,297

98,297

Nominal as at 31 December 2014

Nominal as at 31 December 2014

542,506

542,506

782,563

782,563

146,643

146,643

1,471,712

1,471,712

Impairment as at 1 January 2014

Impairment as at 1 January 2014

-7,675

-7,675

-12,734

-12,734

-50,382

-50,382

-70,791

-70,791

Impairment recorded in statement of profit or loss and other comprehensive income

Impairment recorded in statement of profit or loss and other comprehensive income

-

-

-

-

-79,249

-79,249

-79,249

-79,249

Reversal of impairment

Reversal of impairment

2,586

2,586

907

907

-

-

3,493

3,493

Foreign exchange rates differences

Foreign exchange rates differences

-662

-662

-1,664

-1,664

-3,264

-3,264

-5,590

-5,590

Impairment as at 31 December 2014

Impairment as at 31 December 2014

-5,751

-5,751

-13,491

-13,491

-132,895

-132,895

-152,137

-152,137

Amortised Cost

Amortised Cost

-2,562

-2,562

-5,125

-5,125

28

28

-7,659

-7,659

Interest

Interest

7,407

7,407

11,930

11,930

665

665

20,002

20,002

Loans and receivables as at 31 December 2014

Loans and receivables as at 31 December 2014

541,600

541,600

775,877

775,877

14,441

14,441

1,331,918

1,331,918

(*) including agency agreements

(*) including agency agreements

8
     Available-for-sale financial assets (in EUR’000)

| | Venture Capital Funds | Direct Equity Investments | Total |
| --- | --- | --- | --- |
| Cost as at 1 January 2015 | 259,784 | 19,714 | 279,498 |
| Disbursements | 63,574 | 3,875 | 67,449 |
| Repayments / sales | -64,181 | -610 | -64,791 |
| Write offs | -1,231 | - | -1,231 |
| Foreign exchange rates differences on repayments / sales | 9,385 | - | 9,385 |
| Cost as at 31 December 2015 | 267,331 | 22,979 | 290,310 |
| | | | |
| Unrealised gains and losses as at 1 January 2015 | 149,995 | 6,127 | 156,122 |
| Net change in unrealised gains and losses | 3,906 | 3,965 | 7,871 |
| Unrealised gains and losses as at 31 December 2015 | 153,901 | 10,092 | 163,993 |
| | | | |
| Impairment as at 1 January 2015 | -24,534 | -8,001 | -32,535 |
| Impairment recorded in statement of profit or loss and other comprehensive income during the year | -1,726 | -1,920 | -3,646 |
| Write offs | 1,231 | - | 1,231 |
| Impairment as at 31 December 2015 | -25,029 | -9,921 | -34,950 |
| | | | |
| Available-for-sale financial assets as at 31 December 2015 | 396,203 | 23,150 | 419,353 |
| | | | |
| | | | |
| | Venture Capital Funds | Direct Equity Investments | Total |
| Cost as at 1 January 2014 | 256,161 | 23,620 | 279,781 |
| Disbursements | 41,990 | 656 | 42,646 |
| Repayments / sales | -38,535 | -4,843 | -43,378 |
| Foreign exchange rates differences on repayments / sales | 168 | 281 | 449 |
| Cost as at 31 December 2014 | 259,784 | 19,714 | 279,498 |
| | | | |
| Unrealised gains and losses as at 1 January 2014 | 71,931 | 6,260 | 78,191 |
| Net change in unrealised gains and losses | 78,064 | -133 | 77,931 |
| Unrealised gains and losses as at 31 December 2014 | 149,995 | 6,127 | 156,122 |
| | | | |
| Impairment as at 1 January 2014 | -22,450 | -3,823 | -26,273 |
| Impairment recorded in statement of profit or loss and other comprehensive income during the year | -2,084 | -4,178 | -6,262 |
| Impairment as at 31 December 2014 | -24,534 | -8,001 | -32,535 |
| | | | |
| Available-for-sale financial assets as at 31 December 2014 | 385,245 | 17,840 | 403,085 |

Venture Capital Funds

Venture Capital Funds

Direct Equity Investments

Direct Equity Investments

Total

Total

Cost as at 1 January 2015

Cost as at 1 January 2015

259,784

259,784

19,714

19,714

279,498

279,498

Disbursements

Disbursements

63,574

63,574

3,875

3,875

67,449

67,449

Repayments / sales

Repayments / sales

-64,181

-64,181

-610

-610

-64,791

-64,791

Write offs

Write offs

-1,231

-1,231

-

-

-1,231

-1,231

Foreign exchange rates differences on repayments / sales

Foreign exchange rates differences on repayments / sales

9,385

9,385

-

-

9,385

9,385

Cost as at 31 December 2015

Cost as at 31 December 2015

267,331

267,331

22,979

22,979

290,310

290,310

Unrealised gains and losses as at 1 January 2015

Unrealised gains and losses as at 1 January 2015

149,995

149,995

6,127

6,127

156,122

156,122

Net change in unrealised gains and losses

Net change in unrealised gains and losses

3,906

3,906

3,965

3,965

7,871

7,871

Unrealised gains and losses as at 31 December 2015

Unrealised gains and losses as at 31 December 2015

153,901

153,901

10,092

10,092

163,993

163,993

Impairment as at 1 January 2015

Impairment as at 1 January 2015

-24,534

-24,534

-8,001

-8,001

-32,535

-32,535

Impairment recorded in statement of profit or loss and other comprehensive income during the year

Impairment recorded in statement of profit or loss and other comprehensive income during the year

-1,726

-1,726

-1,920

-1,920

-3,646

-3,646

Write offs

Write offs

1,231

1,231

-

-

1,231

1,231

Impairment as at 31 December 2015

Impairment as at 31 December 2015

-25,029

-25,029

-9,921

-9,921

-34,950

-34,950

Available-for-sale financial assets as at 31 December 2015

Available-for-sale financial assets as at 31 December 2015

396,203

396,203

23,150

23,150

419,353

419,353

Venture Capital Funds

Venture Capital Funds

Direct Equity Investments

Direct Equity Investments

Total

Total

Cost as at 1 January 2014

Cost as at 1 January 2014

256,161

256,161

23,620

23,620

279,781

279,781

Disbursements

Disbursements

41,990

41,990

656

656

42,646

42,646

Repayments / sales

Repayments / sales

-38,535

-38,535

-4,843

-4,843

-43,378

-43,378

Foreign exchange rates differences on repayments / sales

Foreign exchange rates differences on repayments / sales

168

168

281

281

449

449

Cost as at 31 December 2014

Cost as at 31 December 2014

259,784

259,784

19,714

19,714

279,498

279,498

Unrealised gains and losses as at 1 January 2014

Unrealised gains and losses as at 1 January 2014

71,931

71,931

6,260

6,260

78,191

78,191

Net change in unrealised gains and losses

Net change in unrealised gains and losses

78,064

78,064

-133

-133

77,931

77,931

Unrealised gains and losses as at 31 December 2014

Unrealised gains and losses as at 31 December 2014

149,995

149,995

6,127

6,127

156,122

156,122

Impairment as at 1 January 2014

Impairment as at 1 January 2014

-22,450

-22,450

-3,823

-3,823

-26,273

-26,273

Impairment recorded in statement of profit or loss and other comprehensive income during the year

Impairment recorded in statement of profit or loss and other comprehensive income during the year

-2,084

-2,084

-4,178

-4,178

-6,262

-6,262

Impairment as at 31 December 2014

Impairment as at 31 December 2014

-24,534

-24,534

-8,001

-8,001

-32,535

-32,535

Available-for-sale financial assets as at 31 December 2014

Available-for-sale financial assets as at 31 December 2014

385,245

385,245

17,840

17,840

403,085

403,085

9
     Amounts receivable from contributors (in EUR’000)

| Balance as at 1 January 2015 | 99,988 |
| --- | --- |
| Acquisitions | 1,545,550 |
| Maturities | -1,417,005 |
| Change in amortisation of premium/discount | -12 |
| Balance as at 31 December 2015 | 228,521 |
| | |
| Balance as at 1 January 2014 | 102,562 |
| Acquisitions | 1,610,057 |
| Maturities | -1,612,619 |
| Change in amortisation of premium/discount | -12 |
| Balance as at 31 December 2014 | 99,988 |

Balance as at 1 January 2015

99,988

Acquisitions

1,545,550

Maturities

-1,417,005

Change in amortisation of premium/discount

-12

Balance as at 31 December 2015

228,521

Balance as at 1 January 2014

102,562

Acquisitions

1,610,057

Maturities

-1,612,619

Change in amortisation of premium/discount

-12

Balance as at 31 December 2014

99,988

31.12.2015

| | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Amount receivable from EIB | 1 | 5,447 |
| Financial guarantees | 26 | 75 |
| Total other assets | 27 | 5,522 |

31.12.2015

31.12.2014

31.12.2014

Amount receivable from EIB

Amount receivable from EIB

1

1

5,447

5,447

Financial guarantees

Financial guarantees

26

26

75

75

Total other assets

Total other assets

27

27

5,522

5,522

31.12.2015

| | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Deferred interest subsidies | 28,683 | 30,750 |
| Deferred commissions on loans and receivables | 642 | 560 |
| Total deferred income | 29,325 | 31,310 |

31.12.2015

31.12.2014

31.12.2014

Deferred interest subsidies

Deferred interest subsidies

28,683

28,683

30,750

30,750

Deferred commissions on loans and receivables

Deferred commissions on loans and receivables

642

642

560

560

Total deferred income

Total deferred income

29,325

29,325

31,310

31,310

31.12.2015

| | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Net general administrative expenses payable to EIB | 43,045 | 38,348 |
| Other amounts payable to EIB | 15 | 44 |
| Interest subsidies and TA not yet disbursed owed to Member States | 58,142 | 30,432 |
| Total amounts owed to third parties | 101,202 | 68,824 |

31.12.2015

31.12.2014

31.12.2014

Net general administrative expenses payable to EIB

Net general administrative expenses payable to EIB

43,045

43,045

38,348

38,348

Other amounts payable to EIB

Other amounts payable to EIB

15

15

44

44

Interest subsidies and TA not yet disbursed owed to Member States

Interest subsidies and TA not yet disbursed owed to Member States

58,142

58,142

30,432

30,432

Total amounts owed to third parties

Total amounts owed to third parties

101,202

101,202

68,824

68,824

14
     Other liabilities (in EUR’000)

The main components of other liabilities are as follows:

31.12.2015

| | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Loan repayments received in advance | 1,826 | 1,973 |
| Deferred income from interest subsidies | 512 | 542 |
| Financial guarantees | 26 | 76 |
| Total other liabilities | 2,364 | 2,591 |

31.12.2015

31.12.2014

31.12.2014

Loan repayments received in advance

Loan repayments received in advance

1,826

1,826

1,973

1,973

Deferred income from interest subsidies

Deferred income from interest subsidies

512

512

542

542

Financial guarantees

Financial guarantees

26

26

76

76

Total other liabilities

Total other liabilities

2,364

2,364

2,591

2,591

Member States

| Member States | Contribution to the Facility | Contribution to interest subsidies and technical assistance | Total
  contributed | Called and not paid * |
| --- | --- | --- | --- | --- |
| Austria | 56,921 | 6,218 | 63,139 | - |
| Belgium | 84,164 | 9,163 | 93,327 | - |
| Bulgaria | 140 | 140 | 280 | - |
| Cyprus | 90 | 90 | 180 | - |
| Czech Republic | 510 | 510 | 1,020 | - |
| Denmark | 46,020 | 5,075 | 51,095 | - |
| Estonia | 50 | 50 | 100 | - |
| Finland | 31,914 | 3,597 | 35,511 | - |
| France | 519,401 | 54,467 | 573,868 | - |
| Germany | 501,015 | 54,066 | 555,081 | - |
| Greece | 27,183 | 3,266 | 30,449 | - |
| Hungary | 550 | 550 | 1,100 | - |
| Ireland | 13,663 | 1,801 | 15,464 | - |
| Italy | 270,808 | 30,879 | 301,687 | - |
| Latvia | 70 | 70 | 140 | - |
| Lithuania | 120 | 120 | 240 | - |
| Luxembourg | 6,235 | 687 | 6,922 | - |
| Malta | 30 | 30 | 60 | - |
| Netherlands | 112,225 | 12,350 | 124,575 | - |
| Poland | 1,300 | 1,300 | 2,600 | - |
| Portugal | 21,103 | 2,544 | 23,647 | - |
| Romania | 370 | 370 | 740 | - |
| Slovakia | 210 | 210 | 420 | - |
| Slovenia | 180 | 180 | 360 | - |
| Spain | 127,979 | 16,241 | 144,220 | - |
| Sweden | 58,896 | 6,663 | 65,559 | - |
| United Kingdom | 275,853 | 33,054 | 308,907 | - |
| Total as at 31 December 2015 | 2,157,000 | 243,691 | 2,400,691 | - |
| Total as at 31 December 2014 | 2,057,000 | 143,691 | 2,200,691 | 42,590 |

Member States

Contribution to the Facility

Contribution to the Facility

Contribution to interest subsidies and technical assistance

Contribution to interest subsidies and technical assistance

Total
  contributed

Total

contributed

Called and not paid *

Called and not paid *

Austria

Austria

56,921

56,921

6,218

6,218

63,139

63,139

-

-

Belgium

Belgium

84,164

84,164

9,163

9,163

93,327

93,327

-

-

Bulgaria

Bulgaria

140

140

140

140

280

280

-

-

Cyprus

Cyprus

90

90

90

90

180

180

-

-

Czech Republic

Czech Republic

510

510

510

510

1,020

1,020

-

-

Denmark

Denmark

46,020

46,020

5,075

5,075

51,095

51,095

-

-

Estonia

Estonia

50

50

50

50

100

100

-

-

Finland

Finland

31,914

31,914

3,597

3,597

35,511

35,511

-

-

France

France

519,401

519,401

54,467

54,467

573,868

573,868

-

-

Germany

Germany

501,015

501,015

54,066

54,066

555,081

555,081

-

-

Greece

Greece

27,183

27,183

3,266

3,266

30,449

30,449

-

-

Hungary

Hungary

550

550

550

550

1,100

1,100

-

-

Ireland

Ireland

13,663

13,663

1,801

1,801

15,464

15,464

-

-

Italy

Italy

270,808

270,808

30,879

30,879

301,687

301,687

-

-

Latvia

Latvia

70

70

70

70

140

140

-

-

Lithuania

Lithuania

120

120

120

120

240

240

-

-

Luxembourg

Luxembourg

6,235

6,235

687

687

6,922

6,922

-

-

Malta

Malta

30

30

30

30

60

60

-

-

Netherlands

Netherlands

112,225

112,225

12,350

12,350

124,575

124,575

-

-

Poland

Poland

1,300

1,300

1,300

1,300

2,600

2,600

-

-

Portugal

Portugal

21,103

21,103

2,544

2,544

23,647

23,647

-

-

Romania

Romania

370

370

370

370

740

740

-

-

Slovakia

Slovakia

210

210

210

210

420

420

-

-

Slovenia

Slovenia

180

180

180

180

360

360

-

-

Spain

Spain

127,979

127,979

16,241

16,241

144,220

144,220

-

-

Sweden

Sweden

58,896

58,896

6,663

6,663

65,559

65,559

-

-

United Kingdom

United Kingdom

275,853

275,853

33,054

33,054

308,907

308,907

-

-

Total as at 31 December 2015

Total as at 31 December 2015

2,157,000

2,157,000

243,691

243,691

2,400,691

2,400,691

-

-

Total as at 31 December 2014

Total as at 31 December 2014

2,057,000

2,057,000

143,691

143,691

2,200,691

2,200,691

42,590

42,590

31.12.2015

| | 31.12.2015 | 31.12.2014 |
| --- | --- | --- |
| Commitments | | |
| Un-disbursed loans | 1,189,564 | 1,161,859 |
| Un-disbursed commitment in respect of available-for-sale financial assets | 298,355 | 200,637 |
| Issued guarantees | 798 | 2,298 |
| Interest subsidies and technical assistance | 352,036 | 285,239 |
| | | |
| Contingent liabilities | | |
| Signed non-issued guarantees | 10,000 | 25,000 |
| | | |
| Total contingent liabilities and commitments | 1,850,753 | 1,675,033 |

31.12.2015

31.12.2014

31.12.2014

Commitments

Commitments

Un-disbursed loans

Un-disbursed loans

1,189,564

1,189,564

1,161,859

1,161,859

Un-disbursed commitment in respect of available-for-sale financial assets

Un-disbursed commitment in respect of available-for-sale financial assets

298,355

298,355

200,637

200,637

Issued guarantees

Issued guarantees

798

798

2,298

2,298

Interest subsidies and technical assistance

Interest subsidies and technical assistance

352,036

352,036

285,239

285,239

Contingent liabilities

Contingent liabilities

Signed non-issued guarantees

Signed non-issued guarantees

10,000

10,000

25,000

25,000

Total contingent liabilities and commitments

Total contingent liabilities and commitments

1,850,753

1,850,753

1,675,033

1,675,033

From 01.01.2015

| | From 01.01.2015 | From 01.01.2014 |
| --- | --- | --- |
| | to 31.12.2015 | to 31.12.2014 |
| Cash and cash equivalents | - | 543 |
| Held-to-maturity financial assets | 4 | 276 |
| Loans and receivables | 86,305 | 72,135 |
| Interest subsidies | 4,076 | 4,286 |
| Total interest and similar income | 90,385 | 77,240 |
| | | |
| The main component of interest and similar expenses is as follows: |
| | | |
| | From 01.01.2015 | From 01.01.2014 |
| | to 31.12.2015 | to 31.12.2014 |
| Derivative financial instruments | -1,525 | -1,522 |
| Cash and cash equivalents | -31 | - |
| Total interest and similar expenses | -1,556 | -1,522 |

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Cash and cash equivalents

Cash and cash equivalents

-

-

543

543

Held-to-maturity financial assets

Held-to-maturity financial assets

4

4

276

276

Loans and receivables

Loans and receivables

86,305

86,305

72,135

72,135

Interest subsidies

Interest subsidies

4,076

4,076

4,286

4,286

Total interest and similar income

Total interest and similar income

90,385

90,385

77,240

77,240

The main component of interest and similar expenses is as follows:

The main component of interest and similar expenses is as follows:

From 01.01.2015

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Derivative financial instruments

Derivative financial instruments

-1,525

-1,525

-1,522

-1,522

Cash and cash equivalents

Cash and cash equivalents

-31

-31

-

-

Total interest and similar expenses

Total interest and similar expenses

-1,556

-1,556

-1,522

-1,522

18
     Fee and commission income and expenses (in EUR’000)

The main components of fee and commission income are as follows:

From 01.01.2015

| | From 01.01.2015 | From 01.01.2014 |
| --- | --- | --- |
| | to 31.12.2015 | to 31.12.2014 |
| Fee and commission on loans and receivables | 890 | 316 |
| Fee and commission on financial guarantees | 42 | 78 |
| Other | - | 769 |
| Total fee and commission income | 932 | 1,163 |
| | | |
| The main component of fee and commission expenses is as follows: |
| | | |
| | From 01.01.2015 | From 01.01.2014 |
| | to 31.12.2015 | to 31.12.2014 |
| Commission paid to third parties with regard to available-for-sale financial assets | -63 | -37 |
| Total fee and commission expenses | -63 | -37 |

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Fee and commission on loans and receivables

Fee and commission on loans and receivables

890

890

316

316

Fee and commission on financial guarantees

Fee and commission on financial guarantees

42

42

78

78

Other

Other

-

-

769

769

Total fee and commission income

Total fee and commission income

932

932

1,163

1,163

The main component of fee and commission expenses is as follows:

The main component of fee and commission expenses is as follows:

From 01.01.2015

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Commission paid to third parties with regard to available-for-sale financial assets

Commission paid to third parties with regard to available-for-sale financial assets

-63

-63

-37

-37

Total fee and commission expenses

Total fee and commission expenses

-63

-63

-37

-37

From 01.01.2015

| | From 01.01.2015 | From 01.01.2014 |
| --- | --- | --- |
| | to 31.12.2015 | to 31.12.2014 |
| Net proceeds from available-for-sale financial assets | 834 | 3,179 |
| Dividend income | 33,044 | 4,930 |
| Net realised gains on available-for-sale financial assets | 33,878 | 8,109 |

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Net proceeds from available-for-sale financial assets

Net proceeds from available-for-sale financial assets

834

834

3,179

3,179

Dividend income

Dividend income

33,044

33,044

4,930

4,930

Net realised gains on available-for-sale financial assets

Net realised gains on available-for-sale financial assets

33,878

33,878

8,109

8,109

From 01.01.2015

| | From 01.01.2015 | From 01.01.2014 |
| --- | --- | --- |
| | to 31.12.2015 | to 31.12.2014 |
| Actual cost incurred by the EIB | -45,506 | -40,912 |
| Income from appraisal fees directly charged to clients of the Facility | 2,461 | 2,784 |
| Total general administrative expenses | -43,045 | -38,128 |

From 01.01.2015

From 01.01.2014

From 01.01.2014

to 31.12.2015

to 31.12.2015

to 31.12.2014

to 31.12.2014

Actual cost incurred by the EIB

Actual cost incurred by the EIB

-45,506

-45,506

-40,912

-40,912

Income from appraisal fees directly charged to clients of the Facility

Income from appraisal fees directly charged to clients of the Facility

2,461

2,461

2,784

2,784

Total general administrative expenses

Total general administrative expenses

-43,045

-43,045

-38,128

-38,128

During 2012 the Facility made a technical assistance payment amounting to EUR 638 which due to fraudulent behaviour of the counterparty did not reach the final beneficiary. Following legal interventions, the Facility could recover EUR 301 and the remaining amount outstanding of EUR 337 was recorded as impairment in the Facility’s comprehensive income.

In 2014 the outstanding amount of EUR 337 was allocated to the interest rate subsidies and technical assistance envelope of the Facility and was recorded as other income in the Facility’s statement of profit or loss and other comprehensive income.

22
     Involvement with unconsolidated structured entities (in EUR’000)

22

Definition of a structured entity

Definition of a structured entity

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls the-entity. IFRS 12 observes that a structured entity often has some or all of the following features:

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls the-entity. IFRS 12 observes that a structured entity often has some or all of the following features:

Restricted activities;



Restricted activities;

A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities, provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors;



A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities, provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors;

Insufficient equity to permit the structured entity to finance its activities without subordinated financial support;



Insufficient equity to permit the structured entity to finance its activities without subordinated financial support;

Financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).



Financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).

Unconsolidated structured entities

Unconsolidated structured entities

The term 'unconsolidated structured entities' refers to all structured entities that are not controlled by the Facility and includes interests in structured entities that are not consolidated.

The term 'unconsolidated structured entities' refers to all structured entities that are not controlled by the Facility and includes interests in structured entities that are not consolidated.

Definition of Interests in structured entities:

Definition of Interests in structured entities:

IFRS 12 defines "interests" broadly to include any contractual or non-contractual involvement that exposes the reporting entity to variability in returns from the performance of the entity. Examples of such interests include the holding of equity interests and other forms of involvement such as the provision of funding, liquidity support, credit enhancements, commitments and guarantees to the other entity. IFRS 12 states that a reporting entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship.

IFRS 12 defines "interests" broadly to include any contractual or non-contractual involvement that exposes the reporting entity to variability in returns from the performance of the entity. Examples of such interests include the holding of equity interests and other forms of involvement such as the provision of funding, liquidity support, credit enhancements, commitments and guarantees to the other entity. IFRS 12 states that a reporting entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship.

The table below describes the types of structured entities that the Facility does not consolidate but in which it holds an interest.

Type of structured entity

| Type of structured entity | Nature and purpose | Interest held by the Facility |
| --- | --- | --- |
| Project Finance - lending to Special Purposes Vehicles (“SPV”) | Project Finance Transactions (PF Operations) are transactions where the Facility relies for the servicing of its debt on a borrower whose sole or main source of revenue is generated by a single or limited number of assets being financed by such debt or other pre-existing assets contractually linked to the project. PF operations are often financed through SPV. | Net disbursed amounts;


  Interest income. |
| Venture capital operations | The Facility finances venture capital and investment funds. Venture capital and investment funds pool and manage money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential as well as financing infrastructure projects. | Investments in units/shares issued by the venture capital entity;


  Dividends received as dividend income. |

Nature and purpose

Interest held by the Facility

Project Finance - lending to Special Purposes Vehicles (“SPV”)

Project Finance Transactions (PF Operations) are transactions where the Facility relies for the servicing of its debt on a borrower whose sole or main source of revenue is generated by a single or limited number of assets being financed by such debt or other pre-existing assets contractually linked to the project. PF operations are often financed through SPV.

Net disbursed amounts;

Interest income.

Venture capital operations

The Facility finances venture capital and investment funds. Venture capital and investment funds pool and manage money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential as well as financing infrastructure projects.

Investments in units/shares issued by the venture capital entity;

Dividends received as dividend income.

The table below shows the carrying amounts of unconsolidated structured entities in which the Facility has an interest at the reporting date, as well as the Facility's maximum exposure to loss in relation to those entities. The maximum exposure to loss includes the carrying amounts and the related un-disbursed commitments.

Type of structured entity

| Type of structured entity | Caption | Carrying amount at 31.12.2015 | Carrying amount at 31.12.2014 | Maximum exposure to loss at 31.12.2015 | Maximum exposure to loss at 31.12.2014 |
| --- | --- | --- | --- | --- | --- |
| Project finance operations | Loans and receivables | - | 7,225 | - | 7,225 |
| Venture capital funds | Available-for-sale financial assets | 396,203 | 385,245 | 645,833 | 555,629 |
| Total | | 396,203 | 392,470 | 645,833 | 562,854 |

Caption

Carrying amount at 31.12.2015

Carrying amount at 31.12.2014

Maximum exposure to loss at 31.12.2015

Maximum exposure to loss at 31.12.2014

Project finance operations

Loans and receivables

-

7,225

-

7,225

Venture capital funds

Available-for-sale financial assets

396,203

385,245

645,833

555,629

Total

396,203

392,470

645,833

562,854

23
     Impact financing envelope (in EUR’000)

The IFE will also allow diversification into new sectors, such as health and education, agriculture and food security, and the development of new and innovative risk-sharing instruments.

From a financial and accounting perspective the IFE forms part of the IF portfolio and is accounted for in the overall IF annual financial statements, but with a special tracking of the operations.

The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset:

Type of IFE investment

| Type of IFE investment | Caption | Carrying amount at 31.12.2015 | Carrying amount at 31.12.2014 | Undisbursed amount at 31.12.2015 | Undisbursed amount at 31.12.2014 |
| --- | --- | --- | --- | --- | --- |
| Social impact equity funds | Available-for-sale financial assets | 2,257 | - | 16,927 | 8,237 |
| Loans to financial intermediaries | Loans and receivables | - | - | 10,000 | - |
| Risk sharing facilitating instruments | Issued guarantees | - | - | - | - |
| Direct financing – equity participations | Available-for-sale financial assets | - | - | 40,000 | - |
| Total | | 2,257 | - | 66,927 | 8,237 |

Type of IFE investment

Caption

Caption

Carrying amount at 31.12.2015

Carrying amount at 31.12.2015

Carrying amount at 31.12.2014

Carrying amount at 31.12.2014

Undisbursed amount at 31.12.2015

Undisbursed amount at 31.12.2015

Undisbursed amount at 31.12.2014

Undisbursed amount at 31.12.2014

Social impact equity funds

Social impact equity funds

Available-for-sale financial assets

Available-for-sale financial assets

2,257

2,257

-

-

16,927

16,927

8,237

8,237

Loans to financial intermediaries

Loans to financial intermediaries

Loans and receivables

Loans and receivables

-

-

-

-

10,000

10,000

-

-

Risk sharing facilitating instruments

Risk sharing facilitating instruments

Issued guarantees

Issued guarantees

-

-

-

-

-

-

-

-

Direct financing – equity participations

Direct financing – equity participations

Available-for-sale financial assets

Available-for-sale financial assets

-

-

-

-

40,000

40,000

-

-

Total

Total

2,257

2,257

-

-

66,927

66,927

8,237

8,237

(1)


   OJ L 210, 6.8.2013, p. 1.

Council Regulation (EU) No 567/2014 of 26 May 2014 amending Regulation (EC) No 215/2008 on the Financial Regulation applicable to the 10th EDF as regards the application of the transition period between the 10th EDF and the 11th EDF until the entry into force of the 11th EDF Internal Agreement. OJ L 157, 27.5.2014, Art. 43.

In accordance with Article 59 of the Financial Regulation applicable to the 11th European Development Fund, the treasury is presented in the balance sheet of the 11th EDF.

In accordance with Article 59 of the Financial Regulation applicable to the 11th European Development Fund, the treasury is presented in the balance sheet of the 11th EDF. The nature of the various bank accounts is outlined in chapter 5, Financial Risk Management.

(10)


  OJ L 156, 29.5.1998, p. 3-106.