EUROPEAN COMMISSION Brussels, 23.7.2015 COM(2015) 379 final COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS

ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2014



Annual accounts of the

European Development Fund 2014 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 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 2014 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 13 July 2015



IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES 1.BACKGROUND The European Union (hereinafter referred to as the EU) has cooperative development 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. Each EDF 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 . 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) . The BF is presented under the 11th EDF. At the same time the 10th EDF Financial Regulation was amended and the new Financial Regulation applicable to the transition period was adopted . They entered into force on 30 May 2014. On 2 March 2015 the Council adopted the 11th EDF Financial Regulation and the Implementation Rules . 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 . 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 is the first year that a trust fund has been created under the EDF (see 3.2 below), its accounts, together with 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 European Union 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 Parliament to decide whether to grant discharge to the Commission for the financial implementation of the EDF resources for the preceding 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 2014 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 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 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 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 31.12.2014 31.12.2013 NON-CURRENT ASSETS Pre-financing 2.1 472 424 Trust Fund contributions 2.2 39 – 511 424 CURRENT ASSETS Pre-financing 2.3 1 403 1 286 Receivables 2.4 84 84 Cash and cash equivalents 2.6 391 759 1 878 2 128 TOTAL ASSETS 2 389 2 553 NON-CURRENT LIABILITIES Payables 2.7 (34) (25) (34) (25) CURRENT LIABILITIES Payables 2.8 (1 423) (1 214) (1 423) (1 214) TOTAL LIABILITIES (1 457) (1 239) NET ASSETS 932 1 313 FUNDS & RESERVES Called fund capital - active EDFs 2.9 35 673 32 529 Called fund capital from closed EDFs carried forward 2.10 2 252 2 252 Economic result carried forward from previous years (33 468) (30 396) Economic result of the year (3 526) (3 072) NET ASSETS 932 1 313 EDF STATEMENT OF FINANCIAL PERFORMANCE EUR millions Note 2014 2013 OPERATING REVENUE 3.2 132 123 OPERATING EXPENSES Operating expenses 3.3 (3 650) (3 027) Administrative expenses 3.4 (22) (167) (3 671) (3 194) SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES (3 539) (3 072) Financial revenue 3.5 13 0 Financial charges (0) 0 SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES 13 0 ECONOMIC RESULT OF THE YEAR (3 526) (3 072) EDF CASHFLOW STATEMENT

EUR millions Note 2014 2013 Economic result of the year (3 526) (3 072) OPERATING ACTIVITIES Ordinary contributions from Member States 3 068 2 961 Co-financing contributions 66 18 (Reversal of) impairment losses on receivables 14 (2) (Increase)/decrease in non-current pre-financing (47) 14 (Increase)/decrease in Trust Fund contributions (39) – (Increase)/decrease in current pre-financing (117) 48 (Increase)/decrease in current receivables* (22) (7) Increase/(decrease) in non-current liabilities 9 (15) Increase/(decrease) in current liabilities** 227 123 NET CASHFLOW (368) 69 Net increase/(decrease) in cash and cash equivalents (368) 69 Cash and cash equivalents at the beginning of the year 2.5 759 690 Cash and cash equivalents at year-end 2.5 391 759 * Current receivables excluding receivables relating to ordinary contributions and co-financing. ** Current liabilities excluding liabilities relating to ordinary contributions and co-financing 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 31.12.2012 45 691 16 112 29 579 (30 396) 2 252 1 435 Capital increase - ordinary contributions – (2 950) 2 950 – – 2 950 Economic result of the year – – – (3 072) – (3 072) 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

BALANCE SHEET BY EDF EUR millions 31.12.2014 31.12.2013 Note Eighth EDF Ninth EDF 10th EDF 11th EDF Eighth EDF Ninth EDF 10th EDF 11th EDF NON-CURRENT ASSETS Pre-financing 2.1 – 17 411 44 – 90 334 – Trust Fund contributions 2.2 – – – 39 – 17 411 83 – 90 334 – CURRENT ASSETS Pre-financing 2.3 5 142 1 178 77 5 259 1 021 – Receivables 2.4 3 66 15 0 2 58 24 – Liaison accounts 2.5 216 810 – 607 290 1 323 – – Cash and cash equivalents 2.6 – – – 391 – – 759 – 224 1 018 1 193 1 076 297 1 640 1 804 – TOTAL ASSETS 224 1 035 1 604 1 159 297 1 730 2 138 – NON-CURRENT LIABILITIES Payables 2.7 – – (34) – – – (25) – – – (34) – – – (25) – CURRENT LIABILITIES Payables 2.8 (10) (175) (1 195) (43) (28) (263) (923) – Liaison accounts 2.5 – – (1 633) – – – (1 613) – (10) (175) (2 828) (43) (28) (263) (2 536) – TOTAL LIABILITIES (10) (175) (2 862) (43) (28) (263) (2 561) – NET ASSETS 214 860 (1 258) 1 116 270 1 467 (423) – FUNDS & RESERVES Called fund capital - active EDFs 2.9 12 840 11 699 11 134 – 12 840 11 699 7 990 – Called fund capital from closed EDFs carried forward 2.10 627 1 625 – – 627 1 625 – – Called fund capital transfers between active EDFs 2.11 (3 147) 1 758 (209) 1 597 (3 083) 2 130 952 Economic result carried forward from previous years (10 114) (13 988) (9 356) (10) (10 125) (13 658) (6 614) – Economic result of the year 8 (235) (2 828) (472) 10 (331) (2 751) – 214 860 (1 258) 1 116 270 1 467 (423) – NET ASSETS 214 860 (1 258) 1 116 270 1 467 (423) – STATEMENT OF FINANCIAL PERFORMANCE BY EDF EUR millions 2014 2013 Note Eighth EDF Ninth EDF 10th EDF 11th EDF Eighth EDF Ninth EDF 10th EDF 11th EDF OPERATING REVENUE 3.2 9 43 79 1 64 34 25 – OPERATING EXPENSES Operating expenses 3.3 (1) (293) (2 881) (475) (53) (362) (2 612) – Administrative expenses 3.4 – 0 (22) – – (0) (167) – (1) (293) (2 903) (475) (53) (362) (2 779) – SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES 8 (249) (2 824) (474) 11 (328) (2 754) – Financial revenue 3.5 0 15 (3) 2 (0) (3) 3 – Financial charges – – (0) – – – 0 – SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES 0 15 (4) 2 (0) (3) 3 – ECONOMIC RESULT OF THE YEAR 8 (235) (2 828) (472) 10 (331) (2 751) – 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 31.12.2012 12 840 – 12 840 (10 125) 627 (2 980) 361 Capital increase - ordinary contributions – – – – Transfer to/from the 10th EDF – (102) (102) Economic result of the year – 10 10 BALANCE AS AT 31.12.2013 12 840 – 12 840 (10 114) 627 (3 083) 270 Capital increase - ordinary contributions – – – – Transfer to/from the 10th EDF – – (64) (64) Transfer to/from the 11th EDF – – – – Economic result of the year – 8 8 BALANCE AS AT 31.12.2014 12 840 – 12 840 (10 107) 627 (3 147) 214 EUR millions Ninth 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 31.12.2012 11 699 – 11 699 (13 657) 1 625 2 501 2 168 Capital increase - ordinary contributions – – – – Transfers to/from the 10th EDF – (371) (371) Economic result of the year – (331) (331) BALANCE AS AT 31.12.2013 11 699 – 11 699 (13 988) 1 625 2 130 1 467 Capital increase - ordinary contributions – – – – Transfers to/from the 10th EDF – (372) (372) Transfers to/from the 11th EDF – – Economic result of the year – (235) (235) BALANCE AS AT 31.12.2014 11 699 – 11 699 (14 223) 1 625 1 758 860 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 31.12.2012 21 152 16 112 5 040 (6 614) – 479 (1 095) Capital increase - ordinary contributions – (2 950) 2 950 2 950 Transfers to/from the eighth and ninth EDF – 473 473 Economic result of the year – (2 751) (2 751) BALANCE AS AT 31.12.2013 21 152 13 162 7 990 (9 365) – 952 (423) Capital increase - ordinary 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) 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 31.12.2012 – – – – – – Capital increase - ordinary contributions – – – – Transfers to/from the eighth, ninth and 10th EDF – – – Economic result of the year – – – 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

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF 1.SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the EDF are the same as those applied by the European Union (EU) and are outlined in the note 1 of the consolidated annual accounts of the EU. A summary of the most important policies is given below. 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 2 (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 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 31.12.2014 31.12.2013 Currency 31.12.2014 31.12.2013 BGN 1.9558 1.9558 LTL 3.4528 3.4528 CZK 27.7350 27.4270 PLN 4.2732 4.1543 DKK 7.4453 7.4593 RON 4.4828 4.4710 GBP 0.7789 0.8337 SEK 9.3930 8.8591 HRK 7.6580 7.6265 CHF 1.2024 1.2276 HUF 315.5400 297.0400 JPY 145.2300 144.7200 LVL - 0.7028 USD 1.2140 1.3791 1.3.1.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% Plant, machinery and equipment 10% to 25% Furniture 10% to 25% Fixtures and fittings 10% to 33% Vehicles 25% Computer hardware 25% Other tangible assets 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 inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the finance balance outstanding. The rental obligations, net of finance charges, are included as liabilities. The interest element of the finance cost is charged to the statement of financial performance over the lease period so as to produce a constant periodic interest rate on the remaining balance of the liability for each period. The assets held under finance leases are depreciated over the shorter of the assets' 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. 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. 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. 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. 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 pre-financing agreement. The float or advance is repaid or used for the purpose for which it was provided during the period defined in the agreement. If the beneficiary does not incur eligible expenditure, it 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 valued at the original amount(s) paid less: amounts returned, eligible amounts expensed, estimated eligible amounts not yet cleared at year-end, and value reductions. 1.4.6.Receivables and recoverables Receivables and recoverables are carried at original amount less write-down for impairment. A writedown 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 the 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 with banks, 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 cost. Non-exchange expenses account for the majority of the entity's expenses. They 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. 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 Total 31.12.2014 Total 31.12.2013 Pre-financing – 17 411 44 472 424 Total – 17 411 44 472 424 EUR millions Total 31.12.2014 Direct Management 72 Implemented by: Commission 47 EU executive agencies 3 EU delegations 22 Indirect Management 400 Implemented by : Third countries 22 International organisations 127 EIB and EIF 223 Public law bodies 24 Private law bodies with a public service mission 4 Total 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 80 million compared to 31 December 2013 is mainly explained by the implementation of new contracts under the Bridging Facility (EUR 77 million). 2.2.TRUST FUND CONTRIBUTIONS This heading represents the amount paid as contribution to the Bêkou EU Trust Fund.

CURRENT ASSETS 2.3.PRE-FINANCING

EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Pre-financing (gross) 20 517 3 413 384 4 335 3 931 Cleared via cut-off (15) (375) (2 235) (307) (2 932) (2 645) Total 5 142 1 178 77 1 403 1 286 EUR millions Total 31.12.2014 Direct Management 227 Implemented by: Commission 116 EU executive agencies 4 EU delegations 106 Indirect Management 1 176 Implemented by : Third countries 257 International organisations 494 EIB and EIF 357 Public law bodies 41 Private law bodies with a public service mission 24 Private law bodies implementing Public Private Partnership 2 Total 1 403 2.3.1.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 2014 the nominal value of guarantees received by the EDF in respect of pre-financing amounts to EUR 259 million. 2.4.RECEIVABLES EUR millions Note Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Receivables from customers, public bodies, EFTA and third states 2.4.1 3 10 7 0 21 24 Receivables from Member States – – – 0 0 3 Accrued income and deferred charges 2.4.2 0 56 7 (0) 63 57 Total 3 66 15 0 84 84 EUR millions Total at 31.12.2014 Total at 31.12.2013 Recoverables from non-exchange transactions 21 22 Receivables from exchange transactions 63 62 Total 84 84 2.4.1.Receivables from customers, public bodies, EFTA and third states EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Receivables from customers, public bodies, EFTA and third states 6 34 9 0 49 38 Write-down (3) (23) (2) (0) (28) (14) Total 3 10 7 0 21 24 2.4.2.Accrued income and deferred charges Accrued income and deferred charges include primarily accrued interest on pre-financing amounts. 2.5.LIAISON ACCOUNTS EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Liaison accounts 216 810 (1 633) 607 - Total 216 810 (1 633) 607 - For reason of efficiency, the single treasury covering all the EDFs is allocated to the 11th EDF ; 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. 2.6.CASH AND CASH EQUIVALENTS

EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Special accounts: financial institutions of Member States – – – 344 344 719 Current accounts: commercial banks – – – 47 47 39 Democratic Republic Congo Special fund* – – – 1 1 1 Total – – – 391 391 759 *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 decrease in cash and cash equivalents is mainly explained by the level of payments made and a higher level of budget execution than in the previous reporting period. 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 (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 3.2.2 for more information. NON-CURRENT LIABILITIES 2.7.PAYABLES EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Co-financing - payables – – 34 – 34 25 Total – – 34 – 34 25 The change in the total co-financing payables is explained in the note 2.8.1.2. CURRENT LIABILITIES 2.8.PAYABLES EUR millions Note Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Current payables 2.8.1 0 22 446 5 474 322 Accrued charges 2.8.2 10 153 521 37 722 588 Deferred fund capital contribution 2.8.3 – – 228 – 228 304 Total 10 175 1 195 43 1 423 1 214 2.8.1.Current payables EUR millions Note Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Suppliers and other 2.8.1.1 0 23 379 (0) 402 244 Co-financing payables 2.8.1.2 – (0) 67 0 67 75 Sundry payables 2.8.1.3 – (1) (0) 6 4 3 Total 0 22 446 5 474 322 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. 2.8.1.1.Suppliers and other

Included under this heading are amounts owed to suppliers as well as amounts payable to public bodies and third states. The increase of EUR 158 million compared to the previous reporting period relates primarly to a EUR 160 million increase in payables to third states. 2.8.1.2.Co-financing payables The total non-current and current co-financing payables are in line with last year. During 2014, new

co-financing contributions were received from the EIB (EUR 48 million), Belgium (EUR 5 million), Sweden (EUR 3 million) and other countries. Co-financing payables were decreased by EUR 57 million in order to recognise revenue related to co-financing projects (see 3.2.3 and 3.3.2). 2.8.1.3.Sundry payables Sundry payables mainly comprise unallocated cash receipts and returned amounts. 2.8.2.Accrued charges EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Accrued charges 10 153 521 37 722 588 Total 10 153 521 37 722 588 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. Estimated utilisation of pre-financing amounts is presented as an estimated clearing of pre-financing (see 2.3). 2.8.3.Deferred fund capital contribution EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 United Kingdom – – 222 – 222 296 Czech Republic – – 4 – 4 – Ireland – – – – – 5 Lithuania – – 1 – 1 2 Total – – 228 – 228 304 These are Member States' contributions paid in advance.

NET ASSETS 2.9.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 – – (13 162) – (13 162) Called fund capital 31.12.2013 12 840 11 699 7 990 – 32 529 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 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 2014 activities of the Bridging Facility were financed through decommitted amounts from previous EDFs (see 2.11 Called fund capital transfers between active EDFs). As the Internal Agreement establishing the 11th EDF did not yet enter into force at 31 December 2014, no fund capital is presented under the 11th EDF. Called and uncalled fund capital by Member State EUR millions Contributions % Uncalled 10th EDF 31.12.2013 Called up in 2014 Uncalled 10th EDF 31.12.2014 Austria 2.41 (317) 76 (241) Belgium 3.53 (465) 111 (354) Bulgaria 0.14 (18) 4 (14) Cyprus 0.09 (12) 3 (9) Czech Republic 0.51 (67) 16 (51) Denmark 2.00 (263) 63 (200) Estonia 0.05 (7) 2 (5) Finland 1.47 (193) 46 (147) France 19.55 (2 573) 615 (1 958) Germany 20.50 (2 698) 645 (2 053) Greece 1.47 (193) 46 (147) Hungary 0.55 (72) 17 (55) Ireland 0.91 (120) 29 (91) Italy 12.86 (1 693) 404 (1 288) Latvia 0.07 (9) 2 (7) Lithuania 0.12 (16) 4 (12) Luxemburg 0.27 (36) 8 (27) Malta 0.03 (4) 1 (3) Netherlands 4.85 (638) 152 (486) Poland 1.30 (171) 41 (130) Portugal 1.15 (151) 36 (115) Romania 0.37 (49) 12 (37) Slovakia 0.21 (28) 7 (21) Slovenia 0.18 (24) 6 (18) Spain 7.85 (1 033) 247 (786) Sweden 2.74 (361) 86 (274) United Kingdom 14.82 (1 951) 466 (1 485) Total 100.00 (13 162) 3 144 (10 018) 2.10.CALLED FUND CAPITAL FROM CLOSED EDFs CARRIED FORWARD EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total Funds transferred from closed EDFs 627 1 625 – – 2 252 Balance at 31.12.2014 627 1 625 - - 2 252 This heading includes the resources transferred from closed EDFs. 2.11.CALLED FUND CAPITAL TRANSFERS BETWEEN ACTIVE EDFs EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total Balance at 31.12.2012 (2 980) 2 501 479 – 0 Transfer of decommitted amounts to the 10th EDF from the eighth and ninth EDFs (102) (371) 473 – 0 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 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. 3.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE 3.1.REVENUE FROM EXCHANGE AND NON-EXCHANGE TRANSACTIONS EUR millions Total 2014 Total 2013 Revenue from non-exchange transactions 87 79 Revenue from exchange transactions 59 43 Total 145 123 The EUR 87 million of revenue from non-exchange transactions is exclusively operating revenue while the EUR 59 million of revenue from exchange transactions comprises operating revenue (EUR 45 million) and financial revenue (EUR 13 million – see note 3.5). 3.2.OPERATING REVENUE EUR millions Note Eighth EDF Ninth EDF 10th EDF 11th EDF Total 2014 Total 2013 Recovery of expenses 3.2.1 2 22 3 – 26 13 Recovery of STABEX funds 3.2.2 4 – – – 4 61 Foreign exchange gains 3 21 19 1 45 41 Operating income co-financing 3.2.3 – – 57 – 57 8 Total 9 43 79 1 132 123

EUR millions Total 2014 Direct Management 17 Implemented by: Commission 0 EU delegations 17 Indirect Management 70 Implemented by : Third countries 68 International organisations 1 Total operating revenue excluding foreign exchange gains 86 3.2.1.Recovery of expenses This heading represents the recovery orders issued by the EDF and the deduction from subsequent payments recorded in the EDF accounting system, to recover amounts previously paid out, based on controls, audits or eligibility analysis. It should be noted that recovery of pre-financing amounts is not included as revenue, but credited to the pre-financing heading on the balance sheet. Recovery of undue payments During 2014, recovery orders for EUR 48 million were issued in respect of undue payments, compared to EUR 23 million in 2013. Out of these, EUR 25 million related to the recovery of expenses and were thus recorded as operating revenue. EUR 23 million represented recoveries of pre-financing amounts paid and were credited to the pre-financing asset on the balance sheet.



The nature of the recovery of undue payments can be summarised as follows: EUR millions Revenue Pre-financing Total 2014 Revenue Pre-financing Total 2013 Error 0 2 2 2 4 6 Irregularity 24 20 44 4 12 16 OLAF notified 1 0 1 – 1 1 Total 25 23 48 6 17 23 3.2.2.Recovery of STABEX funds During 2014, EUR 4 million was returned to the EDF from double signature accounts in ACP countries. These funds were transferred mainly from Ivory Coast (EUR 2 million) and Uganda (EUR 1 million). These revenues are included in operating income (recovery of STABEX funds) in the statement of financial perfomance of the eighth EDF. 3.2.3.Operating income co-financing The operating income relating to co-financing represents the contributions used (see 3.3.2). 3.3.OPERATING EXPENSES EUR millions Note Eighth EDF Ninth EDF 10th EDF 11th EDF Total 2014 Total 2013 Operating expenses - aid instruments 3.3.1 (0) 261 2 813 472 3 545 2 957 Operating expenses co-financing 3.3.2 – – 57 – 57 8 Foreign exchange losses 2 18 11 3 33 60 Write-down of receivables (0) 14 0 0 14 1 Total 1 293 2 881 475 3 650 3 027 EUR millions Total 2014 Direct Management 933 Implemented by: Commission 114 EU executive agencies 2 EU delegations 817 Trust Funds – Indirect Management 2 670 Implemented by : Third countries 1 111 International organisations 1 148 EIB and EIF 179 Public law bodies 144 Private law bodies with a public service mission 46 Private law bodies implementing Public Private Partnership 41 Total operating expenses: aid instruments and co-financing 3 603

3.3.1.Operating expenses – aid instruments EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 2014 Total 2013 Programmable aid (7) (3) 2 038 130 2 159 1 719 Macro-economic support – 42 – – 42 21 Sectoral policy 0 10 (1) – 10 222 Interest rate subsidies 3 – – – 3 (0) Intra ACP projects – 215 507 258 979 645 Emergency aid – 2 250 84 335 270 Refugee aid (0) – – – (0) 1 Risk capital 0 – – – 0 0 STABEX 2 – – – 2 (1) SYSMIN 0 – – – 0 0 Other aid programmes related to former EDFs – 2 – – 2 5 Institutional support – – 19 – 19 62 Compensation export receipts 1 (6) – – (5) 13 Total (0) 261 2 813 472 3 545 2 957 The EDF operating expenditure covers various aid instruments and takes different forms, depending on how the money is paid out and managed. 3.3.2.Operating expenses co-financing These are the expenses incurred on co-financing projects in 2014. 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 3.2.3). 3.4.ADMINISTRATIVE EXPENSES EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 2014 Total 2013 Administrative expenses – (0) 22 – 22 167 Total – (0) 22 – 22 167 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 decrease in administrative expenses is mainly caused by a change in the estimation method for accruals. If the same method had been applied in 2013, total administrative expenses (including accrued charges) would have been EUR 80 million lower.



3.5.FINANCIAL REVENUE EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 2014 Total 2013 Interest income - European banks 0 1 (3) 0 (1) 0 Interest on pre-financing (0) 13 (1) 2 15 (0) - accrued interest (0) 12 (1) – 11 (5) - recovered interest 0 1 0 2 3 5 Total 0 15 (3) 2 13 (0) Interest on pre-financing is recognised in accordance with the provisions of Article 9(2)d of the Financial Regulation applicable to the transition period. The negative interest revenue in 2013 was caused by the reversal of the previous year accrual for interest on pre-financing. The higher amount of interest revenue in 2014 in the ninth EDF is mainly caused by fluctuations in the foreign currency exchange rate USD/EUR. Financial revenue is considered as revenue from exchange transactions.

4.CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES 4.1.CONTINGENT ASSETS

EUR millions Eighth EDF Ninth EDF 10th EDF 11th EDF Total 31.12.2014 Total 31.12.2013 Performance guarantees 3 44 54 – 101 116 Retention guarantees 2 30 18 – 50 56 Total 5 74 72 – 150 171 4.1.1.Performance guarantees Performance guarantees are sometimes requested to ensure that beneficiaries of EDF funding meet the obligations of their contracts with the EDF. 4.1.2.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. 4.2.CONTINGENT LIABILITIES 4.2.1.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, will be the basis for the Commission's proposal for a Financing Decision, to be adopted after having received the opinion of the EDF Committee. Subsequent to the adoption of that Financing decision, a grant agreement will be concluded between the CDE and the Commission which provides the necessary financing for the full realization of CDE's assets and full settlement of its liabilities. Following the entry into force of that grant agreement, the Curator will be able to implement the definitive strategic plan, adopt the actions it envisages and commit to paying the expenses arising. At the date of the preparation of the EDF financial statements, the strategic plan and its budget estimate that total costs related to the closure will be around EUR 18 million euro and these will be covered by the EDF. 4.3.OTHER SIGNIFICANT DISCLOSURES 4.3.1.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 2014 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 Total 31.12.2014 Total 31.12.2013 Outstanding commitments not yet expensed 12 360 4 777 143 5 291 5 243 Total 12 360 4 777 143 5 291 5 243 At 31 December 2014 the budgetary RAL totalled EUR 5 889 million (2013: EUR 6 025 million). 5.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.

5.1.RISK MANAGEMENT POLICIES AND HEDGING ACTIVITIES The rules and principles for the management of the treasury operations are laid down in the 10th EDF FR, in the Internal Agreement and in the Financial Regulation applicable to the transition period. 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. 5.2.CURRENCY RISK Exposure of the EDF to currency risk at year end – net position EUR millions 31.12.2014 31.12.2013 USD GBP DKK SEK EUR Other Total USD GBP DKK SEK EUR Other Total Financial assets Receivables and recoverables 0 76 8 84 4 75 4 84 Cash and cash equivalents 6 0 386 391 0 0 759 759 Total 6 0 – – 462 8 475 4 0 – – 834 4 843 Financial liabilities Payables 0 (691) (45) (736) (1) 0 (574) (74) (648) Total 0 – – – (691) (45) (736) (1) 0 – – (574) (74) (648) Total 6 0 – – (229) (37) (261) 3 0 – – 260 (70) 195 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. 5.3.INTEREST RATE RISK The EDF does not borrow monies and as a consequence it is not exposed to interest rate risk. It however earns interest 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 the EONIA (Euro Over Night Index Average), and is adjusted to reflect any fluctuations of this rate. For some other accounts the interest calculation is linked to the ECB rate (the one used for the ECB refinancing operations). As a result no risk is taken by the EDF that its balances be remunerated at rates lower than market rates.

5.4.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 Exchange receivables and non exchange recoverables 84 75 5 4 Total at 31.12.2014 84 75 5 4 – Exchange receivables and non exchange recoverables 84 73 9 1 – Total at 31.12.2013 84 73 9 1 – Financial assets by risk category: EUR millions 31.12.2014 31.12.2013 Receivables Cash Total Receivables Cash Total Counterparties with external credit rating Prime and high grade 0 318 318 3 606 609 Upper medium grade 39 39 12 12 Lower medium grade 7 7 123 123 Non- investment grade 27 27 17 17 Total 0 391 391 3 758 761 Counterparties without external credit rating – – Group 1 (debtors without defaults in the past) 83 83 79 79 Group 2 (debtors with defaults in the past) 1 1 2 2 Total 84 84 81 81 Total 84 391 475 84 758 842 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. 5.5.LIQUIDITY RISK Maturity analysis of financial liabilities by remaining contractual maturity EUR millions < 1 year 1-5 years > 5 years Total Payables 702 34 736 Total at 31.12.2014 702 34 – 736 Payables 623 25 648 Total at 31.12.2013 623 25 – 648 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.

6.RELATED PARTY DISCLOSURES No related party transactions requiring separate disclosure under this heading have been identified. 7.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. 8.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 2014 2013 ECONOMIC RESULT OF THE YEAR (3 526) (3 072) Revenue Entitlements not affecting the budget result (10) (68) Entitlements established in current year but not yet collected (19) (6) Entitlements established in previous years and collected in current year 12 10 Net effect of pre-financing 41 71 Accrued revenue (net) (71) 19 Expenses Expenses of the current year not yet paid 165 90 Expenses of previous years paid in the current year (28) (53) Payments cancellation 65 13 Net effect of pre-financing (562) (431) Accrued expenses (net) 417 464 BUDGET RESULT OF THE YEAR (3 516) (2 963) 8.1.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. 8.2.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 2014 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 community 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 of the Commission 05 June 2015 BACKGROUND INFORMATION ON THE 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 10th European Development Fund for the implementation of the Bridging Facility, 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. 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 European Union (represented by DGs DEVCO and ECHO, and the EEAS ) and three of its Member States (Germany, France and the Netherlands ), with the aim to promote 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. 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(5) EU FR. During 2014, the activities of the Bêkou EU Trust Fund were very limited. During the year, some contributions were received from donors but no payments were made.

BÊKOU TRUST FUND BALANCE SHEET

EUR millions Note 31.12.2014 CURRENT ASSETS Pre-financing – Receivables 1.1 45 Cash and cash equivalents – 45 TOTAL ASSETS 45 NON-CURRENT LIABILITIES Payables 1.2 (45) (45) CURRENT LIABILITIES Payables – – TOTAL LIABILITIES (45) NET ASSETS – FUNDS & RESERVES Economic result carried forward from previous years – Economic result of the year – NET ASSETS – BÊKOU TRUST FUND STATEMENT OF FINANCIAL PERFORMANCE There were no revenue or expense transactions during 2014. BÊKOU TRUST FUND CASHFLOW STATEMENT EUR millions 2014 Economic result of the year – OPERATING ACTIVITIES (Reversal of) impairment losses on receivables – (Increase)/decrease in non-current pre-financing – (Increase)/decrease in current pre-financing – (Increase)/decrease in current receivables (45) (Increase)/decrease in non-current liabilities 45 Increase/(decrease) in current liabilities – NET CASHFLOW – Net increase/(decrease) in cash and cash equivalents – Cash and cash equivalents at the beginning of the year – Cash and cash equivalents at year-end – BÊKOU TRUST FUND 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 – – – – – – Economic result of the year – – – – – – BALANCE AS AT 31.12.2014 – – – – – –

NOTES TO THE FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND NOTES TO THE BALANCE SHEET ASSETS Receivables The Bêkou EU Trust Fund does not have a treasury function of its own, instead it uses a common central treasury system established for the EU trust funds. All payments are processed via the trust funds' central treasury system and recorded on intercompany accounts which are presented under this heading. Cash receipts are accepted in a specific bank account of the Bêkou EU Trust Fund before being pooled into the trust funds' central treasury bank account. The EUR 45 million represents contributions received from the European Development Fund, France and the Netherlands during 2014. LIABILITIES Payables The contributions received from participants are presented as financial liabilities to the European Development Fund and to Member States as they fulfill the criteria of revenues from non-exchange transactions under condition. The trust fund is required to use the contributions to deliver services to third parties or is otherwise required to return the assets (the contributions received) to the donors. The total non-current financial liabilities to Member States relates to EUR 39 million of contributions from the European Development Fund, EUR 5 million from France and EUR 1 million from the Netherlands.

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 31.12.2014 NON-CURRENT ASSETS Pre-financing 472 472 CURRENT ASSETS Pre-financing 1 403 Receivables 129 Cash and cash equivalents 391 1 923 TOTAL ASSETS 2 395 NON-CURRENT LIABILITIES Payables (40) (40) CURRENT LIABILITIES Payables (1 423) (1 423) TOTAL LIABILITIES (1 463) NET ASSETS 932 FUNDS & RESERVES Called fund capital - active EDFs 35 673 Called fund capital from closed EDFs carried forward 2 252 Economic result carried forward from previous years (33 468) Economic result of the year (3 526) NET ASSETS 932 CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE EUR millions 2014 OPERATING REVENUE 132 OPERATING EXPENSES Operating expenses (3 650) Administrative expenses (22) (3 671) SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES (3 539) Financial revenue 13 Financial charges (0) SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES 13 ECONOMIC RESULT OF THE YEAR (3 526) 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 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

EDF REPORT ON FINANCIAL IMPLEMENTATION REPORT ON FINANCIAL IMPLEMENTATION - 2014 INTRODUCTORY NOTE



Previous EDFs As the 6th EDF was closed in 2006 and the 7th DF 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 9th EDF. As in past years, to ensure transparency in the presentation of the accounts for 2014, the tables set out separately for the 8th 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 9th EDF, balances and decommitments of previous EDFs have been transferred to the 9 th EDF, and, during the life of the 9th EDF, have been committed as 9th 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 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 10 th 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 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), entered into force on 1 January 2014. The Bridging Facility is financed from: -funds decommitted from 8th and 9th 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 and throughout the year. A total of EUR 1,597 million were made available on the Bridging Facility in 2014, of which EUR 1,488 million were allocated and are accounted for under the 11th EDF, and EUR 109 million remained unallocated on the Bridging Facility. The total amount available on the 11th EDF in 2014, including interests and Stabex (EUR 19 million), was EUR 1,616 million (see total of table 2.6). - Committed and uncommitted/unallocated funds as of 31/12/2014 As of 31/12/2014, EUR 1,160 million were committed and 456 million were uncommitted or unallocated:

(EUR million) Available funds 1,616 Less committed funds during 2014 -1,160 Total uncommitted and unallocated funds at 31/12/2014 456 The detail of uncommitted and unallocated funds is as follows: (EUR million) ACP uncommitted (Bilateral, regional, Intra-ACP, Reserve NIP/RIP) 333 OCT uncommitted 14 Bridging Facility unallocated 109 Total uncommitted+unallocated funds at 31/12/2014 456 - Remaining funds on non-mobilisable performance reserves at 31/12/2014 Untill the coming into force of the "Bridging Facility" on 1 January 2014, the amounts decommitted from projects under the 9th and previous EDFs were transferred to the performance reserve of the 10th EDF. On 1 January 2014 the uncommitted 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 2014 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 million) 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 Bridging Facility 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. As of 31 December 2014, the total amount of de-committed Stabex funds, transferred to the 11th EDF reached EUR 5 million. - 10th EDF Co-financings Under the 10th EDF, transfer agreements for co-financings from Member States were signed, and commitment appropriations were opened for a total amount of EUR 198.4 million, while payment appropriations were opened for the cashed amounts totalling EUR 177.1 million.

The situation of co-financing appropriations at 31.12.2014 is shown in the table below : (EUR million) Commitments appropriations Payment appropriations Co-financing - A Envelope 181.4 160.5 Co-financing - Intra ACP 12.1 12.1 Co-financing – Administrative expenses 4.9 4.5 198.4 177.1 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/481/15 12 March 2015 Document 15/082 BOARD OF DIRECTORS Investment Facility financial statements as at 31 december 2014 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 31.12.2014 31.12.2013 ASSETS Cash and cash equivalents 5 545,399 599,515 Derivative financial instruments 6 448 1,024 Loans and receivables 7 1,331,918 1,222,199 Available-for-sale financial assets 8 403,085 331,699 Amounts receivable from contributors 9/15 42,590 - Held-to-maturity financial assets 10 99,988 102,562 Other assets 11 5,522 148 Total assets 2,428,950 2,257,147 LIABILITIES AND CONTRIBUTORS' RESOURCES LIABILITIES Derivative financial instruments 6 14,632 3,545 Deferred income 12 31,310 35,083 Amounts owed to third parties 13 68,824 331,235 Other liabilities 14 2,591 2,572 Total liabilities 117,357 372,435 CONTRIBUTORS' RESOURCES Member States Contribution called 15 2,057,000 1,661,309 Fair value reserve 156,122 78,191 Retained earnings 98,471 145,212 Total contributors' resources 2,311,593 1,884,712 Total liabilities and contributors' resources 2,428,950 2,257,147 STATEMENT OF profit or loss and other COMPREHENSIVE INCOME

Notes From 01.01.2014 From 01.01.2013 to 31.12.2014 to 31.12.2013 Interest and similar income 17 77,240 69,593 Interest and similar expenses 17 -1,522 -1,175 Net interest and similar income 75,718 68,418 Fee and commission income 18 1,163 2,728 Fee and commission expenses 18 -37 -43 Net fee and commission income 1,126 2,685 Fair value change of derivative financial instruments -11,663 4,399 Net realised gains on available-for-sale financial assets 19 8,109 5,294 Net foreign exchange loss -222 -6,925 Net result on financial operations -3,776 2,768 Change in impairment on loans and receivables, net of reversal 7 -75,756 -27,334 Impairment on available-for-sale financial assets 8 -6,262 -8,176 Other income 21 337 - General administrative expenses 20 -38,128 -37,851 (Loss)/profit for the year -46,741 510 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 87,230 12,350 2. Net amount transferred to profit or loss -9,299 -2,593 Total available-for-sale financial assets 77,931 9,757 Total other comprehensive income 77,931 9,757 Total comprehensive income for the year 31,190 10,267 STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES Contribution called Fair value reserve Retained earnings Total At 1 January 2014 Notes 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 Fair value reserve Retained earnings Total At 1 January 2013 1,561,309 68,434 144,702 1,774,445 Member States contribution called during the year 15 100,000 - - 100,000 Profit for the year 2013 - - 510 510 Total other comprehensive income for the year - 9,757 - 9,757 Changes in contributors’ resources 100,000 9,757 510 110,267 At 31 December 2013 1,661,309 78,191 145,212 1,884,712 STATEMENT OF Cash FlowS Notes From 01.01.2014 to 31.12.2014 From 01.01.2013 to 31.12.2013 OPERATING ACTIVITIES (Loss)/profit for the financial year -46,741 510 Adjustments made for : Impairment on available-for-sale financial assets 8 6,262 8,176 Other income 21 -337 - Net change in impairment on loans and receivables 7 75,756 27,334 Interest capitalised on loans and receivables 7 -11,915 -10,363 Change in accrued interest and amortised cost on loans and receivables 895 -249 Change in accrued interest and amortised cost on held-to-maturity financial assets 10 12 733 Change in deferred income -3,773 -2,725 Effect of exchange rate changes on loans 7 -92,707 30,402 Effect of exchange rate changes on available-for-sale financial assets -449 -1,154 Effect of exchange rate changes on cash held -9,362 -378 (Loss)/profit on operating activities before changes in operating assets and liabilities -82,359 52,286 Loan disbursements 7 -248,326 -242,203 Repayments of loans 7 166,578 119,160 Change in accrued interest on cash and cash equivalent 5 7 -1 Fair value changes on derivatives 11,663 -4,399 Increase in held-to-maturity financial assets 10 -1,610,057 -680,635 Maturities of held-to-maturity financial assets 10 1,612,619 676,369 Increase in available-for-sale financial assets 8 -42,646 -34,700 Repayments/Sales of available-for-sale financial assets 8 43,378 38,737 (Increase)/Decrease in in other assets -5,374 76 Increase in other liabilities 19 1,419 Decrease in amounts payable to the European Investment Bank -175 -6,539 Net cash flows used in operating activities -154,673 -80,430 FINANCING ACTIVITIES Contribution received from Member States 15 105,691 187,310 Amounts received from Member States with regard to interest subsidies and technical assistance 7,410 50,000 Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance -21,899 -24,312 Net cash flows from financing activities 91,202 212,998 Net (decrease)/increase in cash and cash equivalents -63,471 132,568 Summary statement of cash flows: Cash and cash equivalents at the beginning of financial year 599,507 466,561 Net cash from: Operating activities -154,673 -80,430 Financing activities 91,202 212,998 Effects of exchange rate changes on cash and cash equivalents 9,362 378 Cash and cash equivalents at the end of the financial year 545,398 599,507 Cash and cash equivalents are composed of: Cash in hand 5 9,642 194,107 Term deposits (excluding accrued interest) 415,756 405,400 Commercial papers 5 120,000 - 545,398 599,507 Notes to the financial statements as at 31 December 2014 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 23 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 9th European Development Fund (EDF), Second Financial Protocol covering the period 2008 - 2013 and referred to as the 10th EDF as well as the “Bridging Facility” covering the period from 1 January 2014 until the entry into force of 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 3,185.5 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 586.85 million for ACP countries and max. EUR 3.5 million for OCT countries. Up to 15% of these subsidies can be used to fund project-related technical assistance (“TA”); -the “Bridging Facility” 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 2014 to 31 December 2014. On a proposal from the Management Committee of EIB, the Board of Directors of EIB adopted the Financial Statements on 12 March 2015, and authorised their submission to the Board of Governors for approval by 28 April 2015. 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. 2.2Reclassification of prior year figures The presentation of commitment fees under fee and commission income changed to interest and similar income. The impact of the reclassification on the 2013 comparatives amounts to EUR 1,323k. 2.3Significant 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 2.5.3 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,