COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2015
Date: 2016-07-15
Institutions: Directorate-General for Budget, European Commission
Subjects: European Development Fund, balance sheet, closing of accounts, consolidated account, general budget (EU), implementation of the budget

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 15.7.2016  COM(2016) 485 final   COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS  ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2015  
 
 
Annual accounts of the  

European Development 

Fund 2015 

 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CONTENTS 

CERTIFICATION OF THE ACCOUNTS .................................................................... 4 

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES ................................ 5 

FINANCIAL STATEMENTS AND EXPLANATORY NOTES - FUNDS MANAGED BY THE 
EUROPEAN COMMISSION .................................................................................. 8 

FINANCIAL STATEMENTS OF THE EDF ............................................................ 10 

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF ....................................... 20 

FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND ..................................... 49 

CERTIFICATION OF THE ACCOUNTS ............................................................... 50 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND .......................... 51 

NOTES TO THE FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND ................ 56 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE BÊKOU TRUST 
FUND ......................................................................................................... 63 

EDF REPORT ON FINANCIAL IMPLEMENTATION ................................................ 68 

FINANCIAL STATEMENTS AND EXPLANATORY NOTES – FUNDS MANAGED BY THE 
EUROPEAN INVESTMENT BANK ......................................................................... 82 

3 

 
 
 
 
Annual accounts of the European Development Fund 2015 

CERTIFICATION OF THE ACCOUNTS 

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

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

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

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

[signed] 

Manfred Kraff 

Accounting Officer 

12 July 2016 

4 

 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES 

1.  BACKGROUND 

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

- 
- 
- 

The EU budget; 
The European Development Fund; 
The European Investment Bank. 

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

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

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

The  Internal  Agreement  establishing  the  11th  EDF  was  signed  by  the  participating  Member  States, 
meeting  within  the  Council,  in  June  20131.  It  came  into  force  on  1  March  2015.  In  order  to  assure 
continuity  between  the  end  of  the  10th  EDF  and  the  entry  into  force  of  the  11th  EDF,  the  Commission 
proposed transitional measures, known as the Bridging Facility (BF)2. The BF is presented under the 11th 
EDF. 

At  the  same  time  the  10th  EDF  Financial  Regulation3  was  amended  and  the  new  Financial  Regulation 
applicable  to  the  transition  period  was  adopted4.  They  entered  into  force  on  30  May  2014.  On  2  March 
2015  the  Council  adopted  the  11th  EDF  Financial  Regulation5  and  the  Implementation  Rules6.  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 

1 OJ L 210, 6.8.2013, p. 1. 
2 The creation of the Bridging Facility had been first proposed as an article of the 11th EDF Implementation Regulation 
(COM(2013)445). The Commission however has proposed, as an alternative, the creation of the Bridging Facility by a 
specific  Council  decision  (Proposal  for  a  Council  decision  regarding  transitional  EDF  management  measures  from  1 
January 2014 until the entry into force of the 11th EDF European Development Fund, COM(2013)663). 
3 Council Regulation (EC) No 215/2008 of 18 February 2008 on the Financial Regulation applicable to the 10th EDF. OJ 
L 78, 19.2.2008, p.1. 
4  Council  Regulation  (EU)  No  567/2014  of  26  May  2014  amending  Regulation  (EC)  No  215/2008  on  the  Financial 
Regulation applicable to the 10th EDF as regards the application of the transition period between the 10th EDF and the 
11th EDF until the entry into force of the 11th EDF Internal Agreement. OJ L 157, 27.5.2014, p. 52. 
5  Council  Regulation  (EU)  2015/323  of  2  March  2015  on  the  financial  regulation  applicable  to  the  11th  European 
Development Fund. OJ L 58, 3.3.2015, p. 17–38. 
6 Council Regulation (EU) 2015/322 of 2 March 2015 on the implementation of the 11th European Development Fund. 
OJ L 58, 3.3.2015, p. 1–16. 

5 

 
 
                                                 
 
Annual accounts of the European Development Fund 2015 

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 EDF7. 

2.  HOW IS THE EDF FUNDED? 

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

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

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

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

3. 

YEAR-END REPORTING 

3.1.  ANNUAL ACCOUNTS 

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

The annual accounts are presented as follows: 

Part I: Funds managed by the Commission 

(i)  Financial statements of the EDF 

(ii)  Report on financial implementation of the EDF 

Part II: Funds managed by the EIB 

(i)  Financial statements of the Investment Facility 

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

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

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

6 

 
 
                                                 
 
Annual accounts of the European Development Fund 2015 

3.2.  BÊKOU TRUST FUND 

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

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

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

4.  AUDIT AND DISCHARGE 

4.1.  AUDIT 

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

4.2.  DISCHARGE 

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

7 

 
 
 
Annual accounts of the European Development Fund 2015 

EUROPEAN DEVELOPMENT FUND 
FINANCIAL YEAR 2015 

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

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

8 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CONTENTS 

FINANCIAL STATEMENTS AND EXPLANATORY NOTES - FUNDS MANAGED BY THE 
EUROPEAN COMMISSION .................................................................................. 8 

FINANCIAL STATEMENTS OF THE EDF ............................................................ 10 

EDF BALANCE SHEET ........................................................................................... 11 

EDF STATEMENT OF FINANCIAL PERFORMANCE ....................................................... 12 

EDF CASHFLOW STATEMENT ................................................................................. 13 

EDF STATEMENT OF CHANGES IN NET ASSETS ........................................................ 14 

BALANCE SHEET BY EDF ....................................................................................... 15 

STATEMENT OF FINANCIAL PERFORMANCE BY EDF................................................... 16 

STATEMENT OF CHANGES IN NET ASSETS BY EDF ................................................... 17 

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF ............................................... 20 

FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND ..................................... 49 

CERTIFICATION OF THE ACCOUNTS ....................................................................... 50 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND .................................. 51 

BÊKOU TRUST FUND BALANCE SHEET .................................................................... 52 

BÊKOU TRUST FUND STATEMENT OF FINANCIAL PERFORMANCE ................................ 53 

BÊKOU TRUST FUND CASHFLOW STATEMENT .......................................................... 54 

BÊKOU TRUST FUND STATEMENT OF CHANGES IN NET ASSETS ................................. 55 

NOTES TO THE FINANCIAL STATEMENTS OF THE BÊKOU TRUST FUND ................ 56 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE BÊKOU TRUST 
FUND ......................................................................................................... 63 

CONSOLIDATED BALANCE SHEET .......................................................................... 64 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE ...................................... 65 

CONSOLIDATED CASH FLOW STATEMENT ............................................................... 66 

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS ....................................... 67 

EDF REPORT ON FINANCIAL IMPLEMENTATION ................................................ 68 

9 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

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. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

EDF BALANCE SHEET 

Note 

31.12.2015 

31.12.2014 

 EUR millions 

NON-CURRENT ASSETS 
Pre-financing 
Trust Fund contributions 

CURRENT ASSETS 
Pre-financing 
Receivables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Provisions 
Payables 

CURRENT LIABILITIES 
Payables 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Called fund capital - active EDFs 
Called fund capital from closed EDFs carried forward 
Economic result carried forward from previous years 
Economic result of the year 
NET ASSETS 

2.1 
2.2 

2.3 
2.4 
2.6 

2.7 
2.8 

2.9 

2.10 
2.11 

 516 
 34 

 550 

1 145 
 171 
 504 

1 820 
2 370 

 (4) 
 (10) 

 (14) 

 472 
 39 

 511 

1 403 
 84 
 391 

1 879 
2 389 

– 
 (34) 

 (34) 

(1 376) 

(1 376) 
(1 390) 

(1 423) 

(1 423) 
(1 457) 

 980 

 932 

38 873 
2 252 
(36 994) 
(3 152) 
 980 

35 673 
2 252 
(33 468) 
(3 526) 
 932 

11 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

EDF STATEMENT OF FINANCIAL PERFORMANCE 

OPERATING REVENUE 

OPERATING EXPENSES 
Operating expenses 
Administrative expenses 

Note 
3.2 

3.3 
3.4 

EUR millions 

2015 
 132 

2014 
 132 

(3 179) 
 (113) 

(3 650) 
 (22) 

(3 291) 

(3 671) 

SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES 

(3 160) 

(3 539) 

Financial revenue 
Financial charges 
SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES 

3.5 

 8 
 (0) 
 8 

 13 
 (0) 
 13 

ECONOMIC RESULT OF THE YEAR 

(3 152) 

(3 526) 

12 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

EDF CASHFLOW STATEMENT 

Note 

2015 
(3 152) 

EUR millions 

2014 
(3 526) 

3 232 
1 
 214 
 5 
 (88) 
 (20) 
(211) 
132 

3 068 
14 
 (165) 
 (39) 
 (15) 
 9 
 152 
 134 

 113 

 (368) 

 113 
 391 
 504 

 (368) 
 759 
 391 

Economic result of the year 
OPERATING ACTIVITIES 
Ordinary contributions from Member States 
(Reversal of) impairment losses on receivables 
(Increase)/decrease in pre-financing 
(Increase)/decrease in Trust Fund contributions 
(Increase)/decrease in current receivables* 
Increase/(decrease) in non-current liabilities 
Increase/(decrease) in current liabilities** 
Increase/(decrease) in accrued charges and deferred income 

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 

2.6 
2.6 

* Current receivables excluding receivables relating to ordinary contributions. 
** Current liabilities excluding liabilities relating to ordinary contributions. 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EDF STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Development Fund 2015 

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) 

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

BALANCE AS AT 31.12.2013 
Capital increase - ordinary 
contributions 
Economic result of the year 
BALANCE AS AT 31.12.2014 
Capital increase - contributions 
Capital decrease - funds committed 
under the Bridging Facility 
Recognition of the 11th EDF capital 
Economic result of the year 
BALANCE AS AT 31.12.2015 

45 691 
– 

– 
45 691 

(1 595) 

29 367 
– 
73 464 

13 162 
(3 144) 

– 
10 018 
(4 795) 

29 367 
– 
34 590 

32 529 
3 144 

– 
35 673 
4 795 
(1 595) 

– 
– 
38 873 

(33 468) 
– 

(3 526) 
(36 994) 
– 

(3 152) 
(40 146) 

2 252 
– 

– 
2 252 
– 

– 
2 252 

1 313 
3 144 

(3 526) 
 932 
4 795 
(1 595) 

– 
(3 152) 
 980 

14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET BY EDF 

Annual accounts of the European Development Fund 2015 

NON-CURRENT ASSETS 
Pre-financing 
Trust Fund contributions 

CURRENT ASSETS 
Pre-financing 
Receivables 
Liaison accounts 
Cash and cash equivalents 

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Provisions 
Payables 

CURRENT LIABILITIES 
Payables 
Liaison accounts 

TOTAL LIABILITIES 

31.12.2015 

  31.12.2014 

EUR millions 

Note  Eighth EDF  Ninth EDF 

10th EDF 

11th EDF   

Eighth EDF  Ninth EDF  10th EDF 

11th EDF 

2.1 
2.2 

2.3 
2.4 
2.5 
2.6 

2.7 
2.8 

2.9 
2.5 

– 
– 
– 

 3 
 1 
 214 
– 
 218 
 218 

– 
– 
– 

 (3) 
– 
 (3) 
 (3) 

 63 
– 
 63 

 67 
 65 
 657 
– 
 790 
 853 

– 
– 
– 

 368 
– 
 368 

 879 
 103 
1 190 
– 
2 172 
2 541 

– 
 (10) 
 (10) 

 84 
 34 
 118 

 195 
 2 
– 
 504 
 701 
 819 

 (4) 
– 
 (4) 

– 

– 

 5 
 3 
 216 
– 
 224 
 224 

– 
– 
– 

 17 

 17 

 142 
 66 
 810 
– 
1 018 
1 035 

– 
– 
– 

 411 

 411 

1 178 
 15 
– 
– 
1 193 
1 604 

– 
 (34) 
 (34) 

 (128) 
– 
(128) 
(128) 

(1 174) 
– 
(1 174) 
(1 184) 

 (71) 
(2 062) 
(2 132) 
(2 136) 

 (10) 
– 
 (10) 
 (10) 

 (175) 
– 
(175) 
(175) 

(1 195) 
(1 633) 
(2 828) 
(2 862) 

 44 
 39 
 83 

 77 
 0 
 607 
 391 
1 076 
1 159 

– 
– 
– 

 (43) 
– 
 (43) 
 (43) 

NET ASSETS 

 214 

 726 

1 357 

(1 317) 

 214 

 860 

(1 258) 

1 116 

FUNDS & RESERVES 
Called fund capital - active EDFs 
Called fund capital from closed EDFs 
carried forward 
Called fund capital transfers between 
active EDFs 
Economic result carried forward from 
previous years 
Economic result of the year 

NET ASSETS 

2.10 
2.11 

12 164 
 627 

10 973 
1 625 

15 737 
– 

– 
– 

12 840 
 627 

11 699 
1 625 

11 134 
– 

– 
– 

2.12 

(2 476) 

2 376 

 35 

 65 

(3 147) 

1 758 

 (209) 

1 597 

(10 107) 

(14 223) 

(12 183) 

 (482) 

(10 114) 

(13 988)  (9 356) 

 (10) 

 6 
 214 
 214 

 (26) 
 726 
 726 

(2 232) 
1 357 
1 357 

 (901) 
(1 317) 
(1 317) 

 8 
 214 
 214 

 (235) 
 860 
 860 

(2 828) 
(1 258) 
(1 258) 

 (472) 
1 116 
1 116 

15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF FINANCIAL PERFORMANCE BY EDF 

Annual accounts of the European Development Fund 2015 

2015 

2014 

EUR millions 

Note  Eighth EDF  Ninth EDF 

10th EDF 

11th EDF 

Eighth EDF 

Ninth EDF 

10th EDF 

11th EDF 

3.2 

3.3 
3.4 

3.5 

OPERATING REVENUE 

OPERATING EXPENSES 
Operating expenses 
Administrative expenses 

SURPLUS/(DEFICIT) FROM 
OPERATING ACTIVITIES 

Financial revenue 
Financial charges 
SURPLUS/(DEFICIT) FROM 
FINANCIAL ACTIVITIES 

ECONOMIC RESULT OF THE 
YEAR 

 4 

24 

 99 

 5 

 9 

 43 

 79 

 1 

 2 
 (0) 
 2 
 6 

 (0) 
– 
 (0) 

(56) 
– 
(56) 
(32) 

(2 297) 
 (34) 
(2 331) 
(2 232) 

 (828) 
 (79) 
 (907) 
 (902) 

6 
– 
6 

 0 
 0 
 1 

 2 
 (0) 
2 

 (1) 
– 
 (1) 
 8 

 0 
– 
 0 

 (293) 
 0 
 (293) 
 (249) 

(2 881) 
 (22) 
(2 903) 
(2 824) 

 (475) 
– 
 (475) 
 (474) 

 15 
– 
 15 

 (3) 
 (0) 
 (4) 

 2 
– 
 2 

 6 

(26) 

(2 232) 

 (901) 

 8 

 (235) 

(2 828) 

 (472) 

16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
STATEMENT OF CHANGES IN NET ASSETS BY EDF 

Annual accounts of the European Development Fund 2015 

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) 

BALANCE AS AT 31.12.2013 
Transfers to/from the 10th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2014 
Capital decrease - funds committed under the 
Bridging Facility 
Transfers to/from the 10th EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 

12 840 

12 840 
 (676) 

12 164 

– 

– 

12 840 
– 
– 
12 840 
 (676) 

– 
– 
– 
12 164 

(10 114) 

 627 

 8 
(10 107) 

 6 
(10 100) 

 627 

(3 147) 

 (6) 
 676 

 627 

(2 476) 

Ninth EDF 

Fund capital 
- active 
EDFs (A) 

Uncalled 
funds - 
active EDFs 
(B) 

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

Cumulative 
Reserves 
(D) 

Called fund 
capital from 
closed EDFs 
carried 
forward (E) 

BALANCE AS AT 31.12.2013 
Transfers to/from the 10th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2014 
Capital decrease - funds committed under the 
Bridging Facility 
Transfers to/from the 10th EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 

11 699 

11 699 
 (727) 

10 973 

11 699 
– 
– 
11 699 
 (727) 

– 
– 
– 
10 973 

– 

– 

17 

(13 988) 

1 625 

 (235) 
(14 223) 

 (26) 
(14 249) 

1 625 

1 758 

 (109) 
 727 

1 625 

2 376 

Called 
fund 
capital 
transfers 
between 
active 
EDFs (F) 
(3 083) 
 (64) 

Called 
fund 
capital 
transfers 
between 
active 
EDFs (F) 
2 130 
 (372) 

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

 270 
 (64) 
 8 
 214 
 (676) 

 (6) 
 676 
 6 
 214 

EUR millions 

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

1 467 
 (372) 
 (235) 
 860 
 (727) 

 (109) 
 727 
 (26) 
 726 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Called 
fund 
capital 
transfers 
between 
active 
EDFs (F) 
 952 

 (936) 
 (225) 

EUR millions 

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

 (423) 
3 144 
 (936) 
 (225) 
 10 

(2 828) 
(1 258) 
4 795 
 (192) 

 84 
 160 
(2 232) 
1 357 

(9 365) 

– 

 10 

(2 828) 
(12 183) 

– 

 (209) 

(2 232) 
(14 415) 

– 

 84 
 160 

 35 

Annual accounts of the European Development Fund 2015 

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) 

BALANCE AS AT 31.12.2013 
Capital increase - contributions 
Transfers to/from the Eighth and Ninth EDF 
Transfers to/from the 11th EDF 
Transfer of economic result carried forward - 
treasury - from the 10th EDF to the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2014 
Capital increase – contributions 
Capital decrease - funds committed under the 
Bridging Facility 
Transfers to/from the Eighth and Ninth EDF 
Transfers to/from the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 

21 152 
– 

13 162 
(3 144) 

21 152 

 (192) 

10 018 
(4 795) 

20 960 

5 223 

7 990 
3 144 
– 

– 
11 134 
4 795 
 (192) 

– 
– 
– 
15 737 

18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

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) 

BALANCE AS AT 31.12.2013 
Capital increase - ordinary contributions 
Transfers to/from the Eighth, Ninth and 10th 
EDF 
Transfer of economic result carried forward - 
treasury - from the 10th EDF to the 11th EDF 
Economic result of the year 
BALANCE AS AT 31.12.2014 
Recognition of the 11th EDF capital in line with 
the Internal Agreement 
Transfers to/from the Eighth, Ninth and 10th 
EDF 
Economic result of the year 
BALANCE AS AT 31.12.2015 

– 
– 

– 
– 

– 
29 301 

– 
29 301 

29 301 

29 301 

– 
– 
– 

– 
– 
– 

– 

– 
– 

– 

 (10) 

 (472) 
 (482) 

 (901) 
(1 382) 

– 

– 

Called 
fund 
capital 
transfers 
between 
active 
EDFs (F) 

1 597 

1 597 

EUR millions 

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

– 
– 
1 597 

 (10) 

 (472) 
1 116 
– 

(1 532) 

(1 532) 

 65 

 (901) 
(1 317) 

19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

NOTES TO THE FINANCIAL STATEMENTS 
OF THE EDF 

20 

 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

1. 

SIGNIFICANT ACCOUNTING POLICIES 

1.1.  LEGAL BASIS AND ACCOUNTING RULES 

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

1.2.  ACCOUNTING PRINCIPLES 

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

1.3.  BASIS OF PREPARATION 

1.3.1. Currency and basis for conversion 

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

Euro exchange rates 

Currency 
BGN 
CZK 
DKK 
GBP 
HRK 
HUF 

31.12.2015 
1.9558 
27.0230 
7.4626 
0.7340 
7.6380 
315.9800 

31.12.2014 
1.9558 
27.7350 
7.4453 
0.7789 
7.6580 
315.5400 

1.3.2. Use of estimates 

Currency 
LTL 
PLN 
RON 
SEK 
CHF 
JPY 
USD 

31.12.2015 
- 
4.2639 
4.5240 
9.1895 
1.0835 
131.0700 
1.0887 

31.12.2014 
3.4528 
4.2732 
4.4828 
9.3930 
1.2024 
145.2300 
1.2141 

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. 

21 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

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 
Buildings 
Plant and equipment 
Furniture and vehicles 
Fixtures and fittings 
Computer hardware 
Other 

Straight line depreciation rate 

4% to 10% 
10% to 25% 
10% to 25% 
10% to 33% 
25% to 33% 
10% to 33% 

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

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

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

1.4.3 

Impairment of non-financial assets 

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

22 

 
 
Annual accounts of the European Development Fund 2015 

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

1.4.4 

Financial assets 

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

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

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

(ii)  Loans and receivables 

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

(iii)  Held-to-maturity investments 

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

(iv)  Available for sale financial assets 

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

1.4.5 

Pre-financing amounts 

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

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

1.4.6 

Receivables and recoverables 

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

23 

 
 
 
Annual accounts of the European Development Fund 2015 

1.4.7 

Cash and cash equivalents 

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

1.4.8 

Provisions 

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

1.4.9 

Payables 

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

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

1.4.10  Accrued and deferred income and charges 

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

1.5.  STATEMENT OF FINANCIAL PERFORMANCE 

1.5.1 

Revenue 

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

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

1.5.2 

Expenses 

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

24 

 
 
Annual accounts of the European Development Fund 2015 

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

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

1.6.  CONTINGENT ASSETS AND LIABILITIES 

1.6.1 

Contingent assets  

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

1.6.2 

Contingent liabilities  

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

1.7.  CO-FINANCING 

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

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

25 

 
 
 
Annual accounts of the European Development Fund 2015 

2.  NOTES TO THE BALANCE SHEET 

NON-CURRENT ASSETS

2.1.  PRE-FINANCING 

Pre-financing 
Total 

Eighth 
EDF 

– 
– 

Ninth 
EDF 
 63 
 63 

10th EDF 

11th EDF 

31.12.2015 

31.12.2014 

 368 
 368 

 84 
 84 

 516 
 516 

 472 
 472 

EUR millions 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 

Indirect Management 
Implemented by : 

Third countries 
International organisations 
EIB and EIF 
Public law bodies 
Private law bodies with a public service mission 

Total 

31.12.2015 
 65 

EUR millions 
31.12.2014 
 72 

 43 
 1 
 21 
 451 

 25 
 90 
 323 
 10 
 3 

 516 

 47 
 3 
 22 
 400 

 22 
 127 
 223 
 24 
 4 

 472 

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

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

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

2.2.  TRUST FUND CONTRIBUTIONS 

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

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

26 

 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
  
Annual accounts of the European Development Fund 2015 

CURRENT ASSETS  

2.3.  PRE-FINANCING 

Pre-financing (gross) 
Cleared via cut-off 
Total 

Eighth EDF  Ninth EDF 

 14 
 (11) 
 3 

 265 
 (198) 
 67 

10th EDF 
3 032 
(2 153) 
 879 

EUR millions 

11th EDF  31.12.2015  31.12.2014 
4 250 
(3 105) 
1 145 

4 335 
(2 932) 
1 403 

 939 
 (744) 
 195 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 

Indirect Management 
Implemented by : 

Third countries 
International organisations 
EIB and EIF 
Public law bodies 
Private law bodies with a public service mission 
Private law bodies implementing Public Private 
Partnership 

 31.12.2015 
 284 

EUR millions 
31.12.2014 
 227 

 123 
 1 
 159 
 861 

 229 
 336 
 235 
 56 
 5 
 0 

 116 
 4 
 106 
1 176 

 257 
 494 
 357 
 41 
 24 
 2 

Total 

1 145 

1 403 

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

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  2015  the  nominal  value  of  guarantees  received  by  the  EDF  in  respect  of  pre-financing 
amounts  to  EUR  198  million.  At  year-end,  an  in-depth  review  of  guarantees  has  been  performed  to 
comply with the accounting standards.  Following this review, guarantees in respect of pre-financing with 
a  nominal  value  of  EUR  444  million  have  been  written-off  as  not  belonging  to  the  EDF  but  to  the 
contracting authority. 

2.4.  RECEIVABLES 

Receivables from customers, 
public bodies, EFTA and third 
states 
Receivables from Member 
States 
Accrued income and deferred 
charges 
Total 

Note 

2.4.1 

Eighth 
EDF 
 1 

Ninth 
EDF 
 5 

10th 
EDF 
 6 

11th 
EDF 
 2 

2.4.2 

2.4.3 

– 

– 

– 

 90 

 60 

 7 

 1 

 65 

 103 

– 

– 

 2 

EUR millions 

 31.12.2015 

31.12.2014 

 13 

 90 

 67 

 171 

 21 

 0 

 63 

 84 

27 

 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
  
Annual accounts of the European Development Fund 2015 

Recoverables from non-exchange transactions 
Receivables from exchange transactions 
Total 

31.12.2015 
 104 
 67 
 171 

EUR millions 
31.12.2014 
 21 
 63 
 84 

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

Eighth EDF  Ninth EDF 

10th EDF  11th EDF  31.12.2015  31.12.2014 

EUR millions  

Receivables from 
customers, public 
bodies and third states 
Write-down 
Total 

 4 

 (3) 
 1 

 22 

 15 

 (17) 
 5 

 (10) 
 6 

 2 

– 
 2 

 42 

 49 

 (29) 
 13 

 (28) 
 21 

2.4.2 

Receivables from Member States 

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

Member States 

Amounts to be 
received by MS 

Belgium 
Denmark 
Greece 
Ireland 
Luxemburg 
Portugal 
Spain 
United Kingdom 
Austria 
Finland 
Cyprus 
Czech Republic 
Estonia 
Hungary 
Lithuania 
Latvia 
Malta 
Poland 
Slovenia 
Slovakia 
Romania 
Total 

1 

3 
2 

3 
28 
16 

1 
7 
1 
8 
1 
1 
– 
18 
3 
3 
5 
101 

Amounts to be deducted 
from MS's contributions 
(5) 
(2) 

EUR millions 

Net amount at 
31.12.2015 

– 

(3) 
– 

(11) 

90 

2.4.3 

Accrued income and deferred charges 

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

28 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

2.5.  LIAISON ACCOUNTS 

Liaison accounts 
Total 

Eighth EDF 
 214 
 214 

Ninth EDF 
 657 
 657 

10th EDF 
1 190 
1 190 

11th EDF 
(2 062) 
(2 062) 

EUR millions 
31.12.2015 

- 
- 

For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF8; 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 EQUIVALENTS9 

Eighth EDF  Ninth EDF 

10th EDF 

11th EDF 

31.12.2015 

EUR millions 
 31.12.2014 

Special accounts: 

Financial institutions 
of Member States 
Current accounts: 
Commercial banks 
Democratic Republic 
Congo Special fund* 

– 

– 

– 

– 

– 

– 

– 

– 

– 

 489 

 489 

 378 

 14 

 1 

 14 

 1 

 13 

 1 

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

 504 

 504 

 391 

– 

– 

– 

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

It should be noted that there are STABEX funds held by beneficiary ACP States and thus not included on 
the EDF balance sheet. STABEX is the acronym for a EU compensatory finance scheme to stabilise export 
earnings of the ACP countries. Once the Commission and the beneficiary (ACP) State reach agreement on 
how the STABEX funds are to be utilised, a transfer convention is signed by both parties. In accordance 
with the provisions of Article 211 of the Lomé IV Agreement10 (as revised), the funds are transferred into 
an interest bearing double signature account (Commission and Beneficiary State) opened in the name of 
the  ACP  State.  The  funds  remain  in  these  double  signature  accounts  until  a  Framework  of  Mutual 
Obligations  (FMO)  justifies  a  transfer  for  a  project.  The  Commission's  Authorising  Officer  retains  the 
power  of  signature  over  the  account  in  order  to  ensure  that  the  funds  are  disbursed  as  intended.  The 
funds  in  the  double  signature  accounts  are  the  property  of  the  ACP  State  and  are  consequently  not 
recorded  as  assets  in  the  EDF  accounts.  The  transfers  to  these  accounts  are  recorded  as  STABEX 
payments. See also note 3.2.1 for more information. 

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

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

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

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

29 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
 
Annual accounts of the European Development Fund 2015 

NON-CURRENT LIABILITIES 

2.7.  PROVISIONS 

Provisions 
Total 

Eighth EDF  Ninth EDF 
– 
– 

– 
– 

10th EDF 

11th EDF 

31.12.2015 

 31.12.2014 

– 
– 

 4 
 4 

 4 
 4 

– 
– 

EUR millions 

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

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

2.8.  PAYABLES 

Co-financing - payables 
Total 

Eighth 
EDF 

– 
– 

Ninth EDF 

10th EDF 

11th EDF 

31.12.2015  31.12.2014 

– 
– 

 10 
 10 

– 
– 

 10 
 10 

 34 
 34 

EUR millions 

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

30 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CURRENT LIABILITIES  

2.9.  PAYABLES 

Current payables 
Accrued charges 
Deferred fund capital 
contribution 
Total 

Note 

2.9.1 
2.9.2 
2.9.3 

Eighth 
EDF 
 0 
 3 
– 

Ninth 
EDF 
 13 
 114 
– 

10th 
EDF 
 184 
 684 
 307 

11th 
EDF 
 17 
 54 
– 

31.12.2015 

31.12.2014 

 215 
 854 
 307 

 474 
 722 
 228 

EUR millions 

 3 

 128 

1 174 

 71 

1 376 

1 423 

2.9.1 

Current payables 

Suppliers and other 
Co-financing 
payables 
Sundry payables 
Total 

Note 

2.9.1.1 
2.9.1.2 

2.9.1.3 

Eighth 
EDF 
 0 
– 

Ninth 
EDF 
 14 
 (0) 

 (0) 
 0 

 (1) 
 13 

10th 
EDF 
 153 
 31 

 (0) 
 184 

11th 
EDF 
 14 
 (0) 

 4 
 17 

EUR millions 

 31.12.2015 

 31.12.2014 

 181 
 31 

 3 
 215 

 403 
 67 

 4 
 474 

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

2.9.1.1  Suppliers and other 

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

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

2.9.1.2  Co-financing payables 

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

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

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

2.9.1.3  Sundry payables 

Sundry payables mainly comprise unallocated cash receipts and returned payments. 

31 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

2.9.2 

Accrued charges 

Accrued charges 
Total 

  Eighth EDF 

Ninth EDF 

 3 
 3 

 114 
 114 

10th EDF 
 684 
 684 

11th EDF 

 31.12.2015  31.12.2014 

 54 
 54 

 854 
 854 

 722 
 722 

EUR millions 

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

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

2.9.3 

Deferred fund capital contribution 

United Kingdom 
Sweden 
Czech Republic 
Lithuania 
Total 

  Eighth EDF 

Ninth EDF 

– 
– 
– 
– 
– 

– 
– 
– 
– 
– 

10th EDF 
 259 
 48 
– 
– 
 307 

11th EDF 

31.12.2015  31.12.2014 

EUR millions 

– 
– 
– 
– 
– 

 259 
 48 
– 
– 
 307 

 222 
– 
 4 
 1 
 228 

These are Member States' contributions paid in advance. 

32 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

NET ASSETS 

2.10.  CALLED FUND CAPITAL – ACTIVE EDFs 

Fund capital 
Uncalled fund capital 
Called fund capital 31.12.2014 

Eighth EDF 
12 840 
– 
12 840 

Ninth EDF 
11 699 
– 
11 699 

10th EDF 
21 152 
(10 018) 
11 134 

11th EDF 

– 
– 
– 

EUR millions 
Total 
45 691 
(10 018) 
35 673 

Fund capital 
Uncalled fund capital 
Called fund capital 31.12.2015 

12 164 
– 
12 164 

10 973 
– 
10 973 

20 960 
(5 223) 
15 737 

29 367 
(29 367) 
– 

73 464 
(34 590) 
38 873 

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

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

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

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

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

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

11 Council decision 2013/759/EU of 12/12/13 

33 

 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
Annual accounts of the European Development Fund 2015 

2.11.  CALLED AND UNCALLED FUND CAPITAL BY MEMBER 

STATES 

Contributions 

% 

Austria 
Belgium 
Bulgaria 
Cyprus 
Czech Republic 
Denmark 
Estonia 
Finland 
France 
Germany 
Greece 
Hungary 
Ireland 
Italy 
Latvia 
Lithuania 
Luxemburg 
Malta 
Netherlands 
Poland 
Portugal 
Romania 
Slovakia 
Slovenia 
Spain 
Sweden 
United Kingdom 
Total 

2.41 
3.53 
0.14 
0.09 
0.51 
2.00 
0.05 
1.47 
19.55 
20.50 
1.47 
0.55 
0.91 
12.86 
0.07 
0.12 
0.27 
0.03 
4.85 
1.30 
1.15 
0.37 
0.21 
0.18 
7.85 
2.74 
14.82 
100.00 

Uncalled 
10th EDF 
31.12.2014 
 (241) 
 (354) 
 (14) 
 (9) 
 (51) 
 (200) 
 (5) 
 (147) 
(1 958) 
(2 053) 
 (147) 
 (55) 
 (91) 
(1 288) 
 (7) 
 (12) 
 (27) 
 (3) 
 (486) 
 (130) 
 (115) 
 (37) 
 (21) 
 (18) 
 (786) 
 (274) 
(1 485) 
(10 018) 

Called up 
in 2015 

 111 
 162 
 6 
 4 
 23 
 92 
 2 
 68 
 900 
 944 
 68 
 25 
 42 
 592 
 3 
 6 
 12 
 1 
 223 
 60 
 53 
 17 
 10 
 8 
 361 
 126 
 682 
4 603 

Reduction of 
the 10th EDF 
capital 
 5 
 7 
 0 
 0 
 1 
 4 
 0 
 3 
 38 
 39 
 3 
 1 
 2 
 25 
 0 
 0 
 1 
 0 
 9 
 2 
 2 
 1 
 0 
 0 
 15 
 5 
 28 
 192 

EUR millions 
Uncalled 
10th EDF 
31.12.2015 
 (126) 
 (184) 
 (7) 
 (5) 
 (27) 
 (104) 
 (3) 
 (77) 
(1 021) 
(1 070) 
 (77) 
 (29) 
 (48) 
 (672) 
 (4) 
 (6) 
 (14) 
 (2) 
 (253) 
 (68) 
 (60) 
 (19) 
 (11) 
 (9) 
 (410) 
 (143) 
 (774) 
(5 223) 

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

34 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

2.12.  CALLED FUND CAPITAL FROM CLOSED EDFs CARRIED 

FORWARD 

Funds transferred from closed EDFs 
Balance at 31.12.2015 

Eighth EDFF 
 627 
 627 

Ninth EDF  10th EDF 

11th EDF 

Total 

1 625 
1 625 

- 
– 

- 
– 

2 252 
2 252 

EUR millions 

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

2.13.  CALLED FUND CAPITAL TRANSFERS BETWEEN ACTIVE 

EDFs 

Balance at 31.12.2013 
Transfer of decommitted 
amounts to the 10th EDF 
performance reserve from 
previous EDFs 
Transfer of decommitted 
amounts to the 11th EDF 
performance reserve from 
previous EDFs 
Transfer from the 10th and 
11th performance reserves to 
the Bridging Facility 
Balance at 31.12.2014 
Transfer of decommitted 
amounts to the 10th EDF 
performance reserve from 
previous EDFs 
Transfer of decommitted 
amounts to the 11th EDF 
performance reserve from 
previous EDFs 
Transfer from the 10th and 
11th performance reserves to 
the Bridging Facility 
Recoveries from the Bridging 
Facility to the 10th and 11th 
performance reserves 
Return of funds committed 
under the Bridging Facility 
Balance at 31.12.2015 

Eighth EDF  Ninth EDF 
2 130 
 (372) 

(3 083) 
 (64) 

10th EDF 
 952 
 436 

11th EDF 
– 

EUR millions 
Total 
 0 
 0 

 (225) 

 225 

 0 

(1 372) 

1 372 

(3 147) 
 (6) 

1 758 
 (109) 

 (209) 
 114 

1 597 

 0 

 0 
 0 

 (32) 

 32 

0 

 (41) 

 41 

 11 

 (11) 

 676 

 727 

 192 

(1 595) 

(2 476) 

2 376 

 35 

 65 

 0 

 0 

 0 

0 

This heading includes the resources transferred between the active EDFs. 

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

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

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

35 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

3.  NOTES  TO  THE  STATEMENT  OF  FINANCIAL 

PERFORMANCE 

3.1.  REVENUE FROM EXCHANGE AND NON-EXCHANGE 

TRANSACTIONS 

Revenue from non-exchange transactions 
Revenue from exchange transactions 
Total 

2015 
 89 
 51 
 140 

EUR millions 
2014 
 87 
 59 
 145 

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

3.2.  OPERATING REVENUE 

Recovery of expenses 
Recovery of STABEX funds 
Foreign exchange gains 
Operating income co-financing 
Total 

Note 
3.2.1 
3.2.2 

3.2.3 

Eighth EDF  Ninth EDF 10th EDF 

11th EDF 

 1 
 1 
 3 
– 
 4 

 10 
– 
 15 
– 
 24 

 9 
– 
 22 
 68 
 99 

 1 
– 
 2 
 1 
 5 

Direct Management 
Implemented by: 
Commission 
EU delegations 

Indirect Management 
Implemented by : 

Third countries 
International organisations 
Public law bodies 
Private law bodies with a public service mission 

Total operating revenue excluding foreign exchange gains 

2015 
 61 

 3 
 58 
 29 

 14 
 14 
 0 
 1 
 90 

EUR millions 

2015 
 20 
 1 
 42 
 69 
 132 

2014 
 26 
 4 
 45 
 57 
 132 

EUR millions 
2014 
 17 

 0 
 17 
 70 

 68 
 1 
– 
– 
 86 

3.2.1 

Recovery of STABEX funds 

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

3.2.2  Operating income co-financing 

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

36 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

3.3.  OPERATING EXPENSES 

Operating expenses aid 
instruments 
Operating expenses co-financing 
Foreign exchange losses 
Write-down of receivables & 
provisions for Risk and charges 
Total 

Note 

3.3.1 

3.3.2 

Eighth 
EDF 
 (5) 

Ninth 
EDF 
 47 

10th 
EDF 
2 197 

11th 
EDF 
 820 

2015 

2014 

3 059 

3 545 

EUR millions 

– 
 3 
 (0) 

– 
 14 
 (5) 

 68 
 24 
 8 

 1 
 3 
4 

 69 
 44 
 7 

 57 
 33 
 14 

 (2) 

 56 

2 297 

 828 

3 179 

3 650 

Direct Management 
Implemented by: 
Commission 
EU executive agencies 
EU delegations 
Trust Funds 
Indirect Management 
Implemented by : 

Third countries 
International organisations 
EIB and EIF 
Public law bodies 
Private law bodies with a public service mission 
Private law bodies implementing Public Private Partnership 
Persons implementing CFSP actions 

Total operating expenses: aid instruments and co-financing 

3.3.1.  Operating expenses – aid instruments 

Programmable aid 
Macro-economic 
support 
Sectoral policy 
Interest rate subsidies 
Intra ACP projects 
Emergency aid 
Refugee aid 
Risk capital 
STABEX 
SYSMIN 
Other aid programmes 
related to former EDFs 
Institutional support 
Compensation export 
receipts 
Contributions to Trust 
Funds 
Total 

Eighth EDF  Ninth EDF 

 1 

– 

 0 
 (6) 
– 
– 
 0 
– 
– 
 (0) 

– 

– 

 0 

– 

 (5) 

 18 

 51 

 (25) 
– 
 5 
 1 
– 
– 
– 
– 

 0 

– 

 (3) 

– 

 47 

10th EDF 
1 557 

– 

– 
– 
 459 
 167 
– 
– 
– 
– 

– 

 13 

– 

– 

11th EDF 

 394 

– 

– 
– 
 282 
 117 
– 
– 
– 
– 

– 

 20 

– 

 5 

2015 
1 106 

 99 
 2 
1 000 
 5 
2 023 

 900 
 990 
 31 
 70 
 31 
 1 
 0 
3 128 

EUR millions 
2014 
 933 

 114 
 2 
 817 
– 
2 670 

1 111 
1 148 
 179 
 144 
 46 
 41 
– 
3 603 

EUR millions 

 2015 
1 971 

 2014 
2 159 

 51 

 (24) 
 (6) 
 746 
 285 
 0 
– 
– 
 (0) 

 0 

 34 

 (3) 

 5 

 42 

 10 
 3 
 979 
 335 
 (0) 
 0 
 2 
 0 

 2 

 19 

 (5) 

– 

2 197 

 820 

3 059 

3 545 

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

37 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

3.3.2.  Operating expenses co-financing 

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

3.4.  ADMINISTRATIVE EXPENSES 

Administrative expenses 
Total 

Eighth EDF  Ninth EDF 
 (0) 
 (0) 

 0 
 0 

10th EDF 
 34 
 34 

11th EDF 

 79 
 79 

EUR millions 

2015 
 113 
 113 

2014 
 22 
 22 

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

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

3.5.  FINANCIAL REVENUE 

Interest income-European 
banks 
Interest on pre-financing 

Accrued interest 
Recovered interest 

Total 

Eighth EDF  Ninth EDF  10th EDF 

11th EDF 

2015 

2014 

EUR millions 

 (0) 

– 
– 
– 
 (0) 

 (0) 

 (0) 

 6 
4 
2 
 6 

 0 
 0 
 0 
 0 

 2 

 0 
– 
 0 
 2 

 1 

 7 
 4 
 3 
 8 

 (1) 

 15 
 11 
 3 
 13 

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

Financial revenue is considered as revenue from exchange transactions. 

38 

 
 
 
 
 
  
 
 
Annual accounts of the European Development Fund 2015 

4. 

CONTINGENT  ASSETS  &  LIABILITIES  AND 
OTHER SIGNIFICANT DISCLOSURES 

4.1.  CONTINGENT ASSETS 

Performance guarantees 
Retention guarantees 
Total 

Eighth 
EDF 

 0 
– 
 0 

Ninth EDF  10th EDF 

11th EDF 

31.12.2015 

EUR millions 
31.12.2014 

 7 
 3 
 10 

 7 
 3 
 10 

 (0) 
– 
 (0) 

 13 
 6 
 20 

 101 
 50 
 150 

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

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, had been the basis for the Commission's 
proposal  for  a  Financing  Decision,  that  has  been  adopted  after  having  received  the  opinion  of  the  EDF 
Committee for a total of EUR 18.2 million. Subsequent to the adoption of that Financing decision, a grant 
agreement was concluded in December 2015 between the CDE and the Commission which provides the 

39 

 
 
 
Annual accounts of the European Development Fund 2015 

necessary  financing  for  the  realization  of  CDE's  assets  and  full  settlement  of  its  liabilities.  The 
implementation  of  the  definitive  strategic  plan  started  on  1  January  2016.  Following  the  revision  of  the 
Annex III of  the Cotonou  Agreement,  currently under negotiation between the EU Council and the ACP, 
the CDE will enter into its passive phase during which it will solely exist for the needs of its liquidation - 
as  from  1  January  2017  and  for  a  period  that  will  last  up  to  5  years.    See  also  note  2.7  for  more 
information. 

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  2015  statement  of  financial  performance.  The  budgetary  RAL  is  an 
amount  representing  the  open  commitments  for  which  payments  and/or  de-commitments  have  not  yet 
been made. This is the normal consequence of the existence of multi-annual programmes. 

Eighth 
EDF 

Ninth EDF  10th EDF 

11th EDF 

31.12.2015  31.12.2014 

EUR millions 

Outstanding commitments 
not yet expensed 
Total 

 5 

 5 

 303 

 303 

3 174 

2 338 

3 174 

2 338 

5 821 

5 821 

5 291 

5 291 

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

40 

 
 
 
 
Annual accounts of the European Development Fund 2015 

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  11th  EDF 
Financial Regulation  and in the Internal Agreement. 

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

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

  EDF contributions are paid by Member States in EUR, while the EDF's payments are denominated in 

EUR and in other currencies, including less well-known ones. 

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

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

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

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

41 

 
 
 
5.2.  CURRENCY RISK 

Annual accounts of the European Development Fund 2015 

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

USD 

GBP 

DKK 

31.12.2015 
SEK 

EUR 

Other 

Total 

USD 

GBP 

DKK 

SEK 

EUR 

Other 

Total 

31.12.2014 

EUR millions 

Financial assets 
Receivables and 
recoverables 
Cash and cash 
equivalents 
Total 
Financial liabilities 
Payables 
Total 

Total 

– 

 4 

 4 

 0 
 0 

 4 

– 

 0 

 0 

– 
– 

 0 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 
– 

– 

 171 

 500 

 671 

 1 

– 

 1 

 171 

 504 

 675 

 (485) 
(485) 

 (47) 
 (47) 

 (532) 
(532) 

 186 

 (46) 

 143 

 0 

 6 

 6 

 0 
 0 

 6 

– 

 0 

 0 

– 
– 

 0 

– 

– 

– 

– 
– 

– 

– 

– 

– 

– 
– 

– 

 76 

 386 

 462 

 (691) 
(691) 

(229) 

 8 

– 

 8 

 84 

 391 

 475 

 (45) 
 (45) 

 (736) 
 (736) 

 (37) 

 (261) 

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

42 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

5.3.  INTEREST RATE RISK 

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

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

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

5.4.  CREDIT RISK (COUNTERPARTY RISK) 

Financial assets that are neither past due nor impaired: 

Receivables and recoverables 
Total at 31.12.2015 
Receivables Recoverables 
Total at 31.12.2014 

Financial assets by risk category: 

Neither past 
due nor 
impaired 

EUR millions 

Past due but not impaired 

 50 
 50 
 75 
 75 

< 1 year 
 120 
 120 
 5 
 5 

1-5 years 
 1 
 1 
 4 
 4 

> 5 years 
– 
– 

– 

Total 

 171 
 171 
 84 
 84 

31.12.2015 
Receivables  Cash 

Total 

31.12.2014 
Receivables  Cash 

Total 

EUR millions 

Counterparties with external credit rating 

Prime and high grade 
Upper medium grade 
Lower medium grade 
Non- investment grade 

 6 
 34 
 36 
 14 
Total 
 90 
Counterparties without external credit rating 
 81 
– 
 97 
 171 

Debtors without defaults in the past 
Debtors with defaults in the past 

Total 
Total 

 167 
 16 
 312 
 9 
 503 

 1 
– 
 1 
 504 

 173 
 50 
 348 
 23 
593 

 98 
– 
 98 
692 

 0 
- 
- 
- 
 0 

 83 
 1 
 84 
 84 

 318 
 39 
 7 
 27 
391 

391 

 318 
 39 
 7 
 27 
391 

 83 
 1 
 84 
475 

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

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

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

43 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

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 

Payables 
Total at 31.12.2015 
Payables 
Total at 31.12.2014 

< 1 year 
 522 
 522 
 702 
 702 

1-5 years 
 10 
 10 
 34 
 34 

> 5 years 

– 

– 

EUR millions 
Total 
 532 
 532 
 736 
 736 

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

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

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

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

44 

 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

6.  RELATED PARTY DISCLOSURES 

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

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

45 

 
 
Annual accounts of the European Development Fund 2015 

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. 

46 

 
 
 
Annual accounts of the European Development Fund 2015 

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. 

ECONOMIC RESULT OF THE YEAR 

Revenue 
Entitlements not affecting the budget result 
Entitlements established in current year but not yet 
collected 
Entitlements established in previous years and collected in 
current year 
Net effect of pre-financing 
Accrued revenue (net) 
Expenses 
Expenses of the current year not yet paid 
Expenses of previous years paid in the current year 
Payments cancellation 
Net effect of pre-financing 
Accrued expenses (net) 

2015 
(3 152) 

EUR millions 
2014 
(3 526) 

 (1) 
 (11) 

 19 

 28 
 29 

 61 
 (221) 
 12 
 (53) 
 200 

 (10) 
 (19) 

 12 

 41 
 (71) 

 165 
 (28) 
 65 
 (562) 
 417 

BUDGET RESULT OF THE YEAR  

(3 088) 

(3 516) 

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 

47 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

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. 

48 

 
 
 
Annual accounts of the European Development Fund 2015 

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. 

49 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CERTIFICATION OF THE ACCOUNTS 

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

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

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

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

[signed] 

Manfred Kraff 

Accounting Officer  

50 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

BACKGROUND  INFORMATION  ON  THE  BÊKOU  EU  TRUST 
FUND 

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

The  first  multi-donor  EU  Trust  Fund  called  Bêkou,  which  means  "hope"  in  Sango,  was  established  on 
15 July 2014, by the EU (represented by DGs DEVCO and ECHO, and the EEAS) and three of its Member 
States  (Germany,  France  and  the  Netherlands),  with  the  aim  of  promoting  the  stabilisation  and 
reconstruction  of  the  Central  African  Republic.  It  has  been  established  for  a  maximum  duration  of 
60 months in order to provide a medium-term response. At the end of 2015 7 donors contributed to the 
Bêkou  Trust  Fund:  the  European  Development  Fund,  the  European  Commission  via  the  EU  Budget,  4 
Member States and 1 non-Member State. 

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

51 

 
 
 
 
Annual accounts of the European Development Fund 2015 

BÊKOU TRUST FUND BALANCE SHEET 

NON-CURRENT ASSETS 
Pre-financing 
CURRENT ASSETS 
Pre-financing 
Exchange receivables and non-exchange recoverables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Financial liabilities 

CURRENT LIABILITIES 
Accrued charges and deferred income 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Economic result of the year 
NET ASSETS 

Note 

31.12.2015 

31.12.2014 

 EUR '000 

1.1 

1.2 
1.3 
1.4 

1.5 

 3 446 

– 

 6 047 
 1 364 
 52 461 

 59 873 

 63 319 

– 
– 
 45 000 

 45 000 

 45 000 

 (63 125) 

 (63 125) 

 (45 000) 

 (45 000) 

  (193) 

  (193) 

– 

– 

 (63 319) 

 (45 000) 

– 

– 
– 

– 

– 
– 

52 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

BÊKOU 
PERFORMANCE 

TRUST 

FUND 

STATEMENT  OF 

FINANCIAL 

REVENUE 
Revenue from non-exchange transactions 

Revenue from donations 
Revenue from exchange transactions 

Financial income 
Total 

EXPENSES 
Operating expenses 
Other expenses 
Total 

ECONOMIC RESULT OF THE YEAR 

Note 

2015 

EUR '000 

2014 

2.1 

 9 354 

2.2 
2.3 

  101 
 9 455 

 (8 824) 
  (631) 
 (9 455) 

– 

– 

– 
– 

– 
– 
– 

– 

53 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

BÊKOU TRUST FUND CASHFLOW STATEMENT 

Note 

Economic result of the year 
OPERATING ACTIVITIES 
(Increase)/decrease in pre-financing 
(Increase)/decrease in exchange receivables and non-
exchange recoverables 
Increase/(decrease) in non-current liabilities 
Increase/(decrease) in current liabilities 

2015 
– 

(9 493) 
 (1 364) 

18 125 
 193 

EUR '000 

2014 
– 

– 
– 

45 000 
– 

NET CASHFLOW 

7 461 

45 000 

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 

1.4 

7 461 
45 000 

52 461 

45 000 
– 

45 000 

54 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

BÊKOU  TRUST  FUND  STATEMENT  OF  CHANGES  IN  NET 
ASSETS 

BALANCE AS AT 31.12.2014 
Economic result of the year 
BALANCE AS AT 31.12.2015 

Accumulated surplus/ 
(deficit) 
– 
– 
– 

Economic result of 
the year 
– 
– 
– 

EUR '000 

Net assets 

– 
– 
– 

55 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

NOTES TO THE FINANCIAL STATEMENTS 
OF THE BÊKOU TRUST FUND 

56 

 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

1.  NOTES TO THE BALANCE SHEET  

NON-CURRENT ASSETS 

1.1.  PRE-FINANCING 

Pre-financing 
Total 

Direct Management 
Implemented by: 
Commission 
Indirect Management 

Implemented by: 

Public law bodies 
Private law bodies with a public service mission 

Total 

CURRENT ASSETS 

1.2.  PRE-FINANCING 

Pre-financing  
Cleared via cut-off 
Total 

Direct Management 
Implemented by: 
Commission 
Indirect Management 

Implemented by: 

Public law bodies 
Private law bodies with a public service mission 

Total 

Total 31.12.2015 
3 446 
3 446 

EUR '000 
Total 31.12.2014 
– 
– 

Total 31.12.2015 
1 078 

EUR '000 
Total 31.12.2014 
- 

1 078 
2 368 

1 155 
1 213 
3 446 

– 
- 

– 
– 
- 

Total 31.12.2015 
14 860 
(8 813) 
6 047 

EUR '000 
Total 31.12.2014 
– 
– 
– 

Total 31.12.2015 
4 046 

EUR '000 
Total 31.12.2014 
- 

4 046 
2 002 

 806 
1 196 
6 047 

– 
- 

– 
– 
- 

1.3.  EXCHANGE RECEIVABLES AND NON-EXCHANGE 

RECOVERABLES 

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

57 

 
 
 
 
 
  
 
 
 
 
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

1.4.  CASH AND CASH EQUIVALENTS 

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

NON-CURRENT LIABILITIES 

1.5.  FINANCIAL LIABILITIES 

Contributions 

European Commission 
EDF 
Member States : 
Germany 
France 
Netherlands 
Italy 
Non-Member States: 
Switzerland 
Total 

% 

6 
54 
39 

1 

100 

Paid 
contributions 
4 554 
39 000 
28 000 
15 000 
10 000 
2 000 
1 000 
 925 
 925 
72 480 

Allocation of 
net results 
 (588) 
(5 033) 
(3 614) 
(1 936) 
(1 291) 
 (258) 
 (129) 
 (119) 
 (119) 
(9 354) 

EUR '000 
Financial
liabilities 
3 966 
33 967 
24 386 
13 064 
8 709 
1 742 
 871 
 806 
 806 
63 125 

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

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

58 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

2.  NOTES  TO  THE  STATEMENT  OF  FINANCIAL 

PERFORMANCE 

2.1.  REVENUE FROM NON-EXCHANGE TRANSACTIONS 

This  heading  represents  contributions from  donors  recognised  as  operating  revenue  in  line  with  the  net 
expenses12. Consequently the economic result of the year is nil. 

2.2.  OPERATING EXPENSES 

Food aid/food security programmes 
Women's equality organisations and institutions 
Basic health care - basic and primary health care 
Urban development and management 
Reconstruction relief and rehabilitation 
Total 

Direct Management 
Implemented by: 
Commission 
Indirect Management 

Implemented by: 

Public law bodies 
Private law bodies with a public service mission 

Total 

2.3.  OTHER EXPENSES 

Other expenses 
Foreign exchange losses 
Total 

2015 
 460 
 389 
6 678 
 539 
 758 
8 824 

2015 
7 527 

7 527 
1 297 

 539 
 758 
8 824 

2015 
 615 
 16 
 631 

EUR '000 
2014 
– 
– 
– 
– 
– 
– 

EUR '000 
2014 
– 

– 
– 

– 
– 
– 

EUR '000 
2014 
- 
- 
– 

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

12  Net  expenses  are  the  expenses  incurred  by  the  trust  fund,  including  estimated  amounts  when  necessary,  net  of  the  income 

generated by the activities of the trust fund. 

59 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
Annual accounts of the European Development Fund 2015 

3.  OTHER SIGNIFICANT DISCLOSURES 

3.1.  Outstanding commitments not yet expensed 

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

3.2.  Related parties 

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

3.3.  Events after reporting date 

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

60 

 
 
 
 
Annual accounts of the European Development Fund 2015 

4. 

FINANCIAL INSTRUMENTS DISCLOSURES 

4.1.  CURRENCY RISKS 

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

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

4.2.  CREDIT RISK 

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

Financial assets that are neither past due nor impaired 

Receivables and recoverables are neither past due nor impaired. 

Financial assets by risk category 

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

4.3.  LIQUIDITY RISK 

Maturity analysis of financial liabilities by remaining contractual maturity 

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

61 

 
 
  
 
 
Annual accounts of the European Development Fund 2015 

5.  RECONCILIATION  OF  ECONOMIC  RESULT  AND 

BUDGET RESULT 

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

ECONOMIC RESULT OF THE YEAR 

Revenue 
Entitlements not affecting the budget result 
Entitlements collected in current years 
Accrued revenue (net) 
Expenses 
Net effect of pre-financing 
Accrued expenses (net) 

BUDGET RESULT OF THE YEAR  

EUR '000 
2015 
- 

(9 455) 
45 595 
40 

(18 306) 
7 703 

25 577 

62 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

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. 

63 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CONSOLIDATED BALANCE SHEET 

NON-CURRENT ASSETS 
Pre-financing 

CURRENT ASSETS 
Pre-financing 
Receivables 
Cash and cash equivalents  

TOTAL ASSETS 

NON-CURRENT LIABILITIES 
Provisions 
Payables 

CURRENT LIABILITIES 
Payables 

TOTAL LIABILITIES 

NET ASSETS 

FUNDS & RESERVES 
Called fund capital - active EDFs 
Called fund capital from closed EDFs carried forward 
Economic result carried forward from previous years 
Economic result of the year 
NET ASSETS 

31.12.2015 

 EUR millions 
31.12.2014 

 520 
 520 

1 151 
 172 
 556 
1 879 
2 399 

 (4) 
 (39) 
 (43) 

(1 376) 
(1 376) 
(1 419) 

 472 
 472 

1 403 
 84 
 436 
1 923 
2 395 

 (40) 
 (40) 

(1 423) 
(1 423) 
(1 463) 

 980 

 932 

38 873 
2 252 
(36 994) 
(3 152) 
 980 

35 673 
2 252 
(33 468) 
(3 526) 
 932 

64 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE 

OPERATING REVENUE 

OPERATING EXPENSES 
Operating expenses 
Administrative expenses 

2015 
 136 

(3 182) 
 (114) 
(3 296) 

EUR millions 
2014 
 132 

(3 650) 
 (22) 
(3 671) 

SURPLUS/(DEFICIT) FROM OPERATING ACTIVITIES 

(3 160) 

(3 539) 

Financial revenue 
Financial charges 
SURPLUS/(DEFICIT) FROM FINANCIAL ACTIVITIES 

 8 
 (0) 
 8 

 13 
 (0) 
 13 

ECONOMIC RESULT OF THE YEAR 

(3 152) 

(3 526) 

65 

 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

CONSOLIDATED CASH FLOW STATEMENT 

Economic result of the year 
OPERATING ACTIVITIES 
Ordinary contributions from Member States 
(Reversal of) impairment losses on receivables 
(Increase)/decrease in pre-financing 
(Increase)/decrease in current receivables 
(Increase)/decrease in non-current liabilities 
Increase/(decrease) in current liabilities 
Increase/(decrease) in accrued charges and deferred income 

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 

EUR millions 
2015 
(3 152) 

3 232 
 1 
 204 
 (89) 
 2 
 (211) 
 132 

 120 

 120 
 436 
 556 

66 

 
 
  
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS 

Annual accounts of the European Development Fund 2015 

BALANCE AS AT 31.12.2013 
Capital changes 
Economic result of the year 
BALANCE AS AT 31.12.2014 
Capital changes 
Economic result of the year 
BALANCE AS AT 31.12.2015 

Fund capital 
(A) 

Uncalled 
funds (B) 

45 691 
– 
– 
45 691 
27 772 
– 
73 464 

13 162 
(3 144) 
– 
10 018 
24 572 
– 
34 590 

Called fund 
capital  (C) 
= (A)-(B) 
32 529 
3 144 
– 
35 673 
3 200 
– 
38 873 

Cumulative 
Reserves (D) 

Other reserves 
(E) 

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

(33 468) 
– 
(3 526) 
(36 994) 
– 
(3 152) 
(40 146) 

2 252 
– 
– 
2 252 
– 
– 
2 252 

1 313 
3 144 
(3 526) 
 932 
3 200 
(3 152) 
 980 

67 

 
  
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

EDF REPORT ON FINANCIAL 
IMPLEMENTATION 

68 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

REPORT ON FINANCIAL IMPLEMENTATION - 2015 

INTRODUCTORY NOTE 

Previous EDFs 

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

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

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

10th EDF 

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

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

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

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

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

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

  EUR  430  million  is  for  the  Commission  to  finance  the  costs  arising  from  the  programming  and 

implementation of 10th EDF resources, in accordance with Article 6 of the Internal Agreement. 

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

- Bridging Facility 

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

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

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

- 
- 
- 

funds decommitted from Eighth and Ninth EDF up to 31/12/2013, 
uncommitted balances from the 10th EDF at 31/12/2013, 
funds decommitted from the 10th and previous EDFs as from 01/01/2014 until 28/02/2015. 

69 

 
 
 
 
Annual accounts of the European Development Fund 2015 

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

11th EDF 

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

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

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

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

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

  EUR 364.5 million is allocated to the OCTs in accordance with Article 1.2(a) and Article 3.1 of the 

Internal Agreement, of which 359.5 million is managed by the European Commission; 

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

- Remaining funds on non-mobilisable performance reserves at 31.12.2015 

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

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

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

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

Total made available on non-mobilisable performance reserves during 2014 

Less total transferred to the Bridging facility 

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

    EUR millions 

938 

661 

(1 597) 

2 

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

- 10th EDF Co-financings 
Under  the  10th  and  11th  EDF,  transfer  agreements  for  co-financings  from  Member  States  were  signed, 
and  commitment  appropriations  were  opened  for  a  total  amount  of  EUR  204.6  million,  while  payment 
appropriations were opened for the cashed amounts totalling EUR 184.9 million.  
The situation of co-financing appropriations at 31.12.2015 is shown in the table below :  

70 

 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

Commitments appropriations  Payment appropriations 

 EUR millions  

Co-financing - A Envelope 
Co-financing - Intra ACP 
Co-financing – Administrative 
expenses 

186.1 
13.4 

5.1 

204.6 

166.8 
13.4 

4.7 

184.9 

The following tables, concerning the amounts decided, contracted and paid, show net figures.  
The tables presenting the situation by instrument are annexed. 

71 

 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

72 

(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2014INCREASE OR DECREASE IN RESOURCES IN 2015NotesCURRENT LEVEL APPROPRIATIONLoméRegular MS Contributions12,967(3,252)(4)9,711       Aid for refugees120(20)100       Emergency aid (Lomé)140(4)136       Heavily indebted poor countries (Lomé)01,0601,060       Interest-rate subsidies370(291)79       Risk capital1,000161,016       Stabex1,800(1,077)723       Structural adjustment1,400971,497       Sysmin575(474)101       Total indicative programmes7,562(2,595)(4)(1)4,963       Utilisation of interest income03535CotonouRegular MS Contributions0654654       A Envelope - National Allocations0418418       B Envelope - National Allocations0237237       Interests and other receipts000ACP SUB TOTAL ACP 12,967(2,598)(4)10,365LoméRegular MS Contributions163(115)(2)47       Interest-rate subsidies9(8)1       Risk capital30(24)6       Stabex6(5)1       Sysmin3(1)2       Total indicative programmes115(78)(2)(1)36OCTSUB TOTAL OCT163(115)(2)47TOTAL 8th EDF13,130(2,713)(6)10,412(1)OCTAll decreases are decommitments transferred to the non-mobilisable performance reserve of the 10th EDF.Table 1.18th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2015ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP  
Annual accounts of the European Development Fund 2015 

73 

(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2014INCREASE OR DECREASE IN RESOURCES IN 2015NotesCURRENT LEVEL APPROPRIATIONLoméRegular MS Contributions0700(11)689       Transfers from 6th EDF - Lomé020(0)(1)20       Transfers from 7th EDF - Lomé0679(11)(1)668CotonouRegular MS Contributions8,9195,820(93)14,646       A Envelope - National Allocations5,3183,428(30)(1)8,716       B Envelope - National Allocations2,108(876)(4)(1)1,227       CDE, CTA and Parliamentary Assembly164(10)154       Implementation costs12553(1)(2) + (3)177       Interests and other receipts063(0)63       Other Intra-ACP allocations3002,363(34)(1)2,629       Peace facility0362(1)(1)360       Regional allocations904(83)(22)(1)799       Special allocation R.D. Congo0105105       Special allocation South Sudan0267(3)267       Special allocation Sudan0110(2)110       Voluntary contribution Peace facility03939ACP SUB TOTAL ACP 8,9196,520(104)15,334LoméRegular MS Contributions033       Transfers from 6th EDF - Lomé000       Transfers from 7th EDF - Lomé033CotonouRegular MS Contributions10287(5)292       A Envelope - National Allocations0244(4)(1)239       B Envelope - National Allocations044       Regional allocations840(0)(1)48       Studies / Technical assistance OCT2(1)1OCTSUB TOTAL OCT10290(5)295TOTAL 9th EDF8,9296,810(109)15,630(1)(2)(3)Table 1.29th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2015ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP OCTAll decreases are decommitments transferred to the non-mobilisable performance reserve of the 10th EDF.Following Council Decision 2010/406/EU, 150 million was added from non-mobilisable performance reserve 10th EDF for Sudan (147 million to special allocation Sudan.and 3 million to implementation costs)Following Council Decision 2011/315/EU, 200 million was added from non-mobilisable performance reserve 10th EDF for Sudan (194 million to special allocation SouthSudan and 6 million to implementation costs) 
Annual accounts of the European Development Fund 2015 

74 

(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2014INCREASE OR DECREASE IN RESOURCES IN 2015NotesCURRENT LEVEL APPROPRIATIONRegular MS Contributions20,896(25)3420,905       A Envelope - National Allocations013,526(18)(2)13,507       A Envelope reserve13,500(13,500)0       B Envelope - National Allocations02,026(5)(2)2,020       B Envelope reserve1,800(1,800)0       Implementation costs430(1)429       Institutional and support expenditure0242(1)(2)241       Interests and other receipts070(0)(2)70       Intra-ACP Reserve2,700(2,700)0       National allocations Reserve A Envelope STABEX00(0)(2)(0)       NIP/RIP reserve683(683)0       Non-mobilisable reserve0067(2)67       Other Intra-ACP allocations01,904(0)(2)1,904       Peace facility0688688       Regional allocations01,985(7)(2)1,978       Regional allocations reserve1,783(1,783)0Co-financing02022203       A Envelope - National Allocations01852(3)186       Implementation costs050(3)5       Other Intra-ACP allocations012(3)12       Peace facility01(3)1ACP SUB TOTAL ACP 20,8961773621,108Regular MS Contributions256317276       A Envelope - National Allocations0196196       A Envelope reserve195(195)0       B Envelope - National Allocations01515       B Envelope reserve15(15)0       National allocations Reserve A Envelope STABEX000       Non-mobilisable reserve0217(2)19       Regional allocations04040       Regional allocations reserve40(40)0       Studies / Technical assistance OCT606OCTSUB TOTAL OCT256317276TOTAL 10th EDF21,1521795321,384(1)(2)(3)Table 1.310th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2015ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP OCTTransfer in decommitments from projects of the 9th and previous EDF's to the non mobilisable performance reserve for 377 million less transfer out of reserves to South Sudan for 200 million (to 9th EDF). Year to date the total of the non-mobilisable reserve ACP created was 807 million, of which 350 million has been used (150 million for Sudan, 200 million for South Soudan, both transfered to 9th EDF).Transfers in/from the 10th EDF reservesFor the cofinancings, the table only presents  the commitment appropriations. 
 
 
Annual accounts of the European Development Fund 2015 

75 

(EUR million)INITIAL APPROPRIATIONINCREASES/DECREASES IN CUMULATIVE  RESOURCES AT 31 DECEMBER 2014INCREASE OR DECREASE IN RESOURCES IN 2015NotesCURRENT LEVEL APPROPRIATIONRegular MS Contributions29,008(88)17329,093       A Envelope - National Allocations065314,14614,799       B Envelope - National Allocations086108194       B Envelope reserve007171       Implementation costs1,0535(5)1,053       Institutional and support expenditure033212244       Interests and other receipts013115       Intra-ACP Reserve3,590(536)(2,848)206       National allocations Reserve A Envelope STABEX00(0)(0)       NIP/RIP reserve24,365(945)(18,752)4,668       Non-mobilisable reserve006565       Other Intra-ACP allocations0562,1842,240       Peace facility0445455900       Regional allocations01034,5374,640Co-financing0011       Implementation costs0000       Peace facility0011EC Internal SLA0011       A Envelope - National Allocations0011ACP SUB TOTAL ACP 29,008(88)17529,095Regular MS Contributions3600360       NIP/RIP reserve360(3)357       Non-mobilisable reserve000       Studies / Technical assistance OCT033OCTSUB TOTAL OCT3600360TOTAL 11th EDF29,367(87)17529,455Table 1.411th EDFEVOLUTION OF APPROPRIATIONS:  31 December 2015ANALYSIS OF CREDITS PER INSTRUMENTINSTRUMENTACP OCT 
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76 

891011TOTAL35354,9994,9994,7234,7236926929,75769210,4494188,95513,70314,79937,8752371,2322,0351943,697001541540717102405051,0701,8162,9902,8333,3849,207020620600005,0245,02486651518462,0184,6407,50400105105267267110110393965414,93821,18129,45266,226111118618650512113203120510,41215,63021,38429,45576,880TOTALA Envelope - National AllocationsImplementation Costs and Interests RevenuesIntra-ACP allocationsSUB TOTAL: CO-FINANCINGSpecial allocation SudanVoluntary contribution Peace facilitySUB TOTAL: REGULAR MS CONTRIBUTIONSA Envelope - National AllocationsSUB TOTAL: EC INTERNAL SLANIP/RIP reserveNon-mobilisable reserveRegional allocationsRegional allocations reserveSpecial allocation R.D. CongoSpecial allocation South SudanCotonouA Envelope - National AllocationsB Envelope - National AllocationsBridging facilityCDE, CTA and Parliamentary AssemblyCountry reserveImplementation Costs and Interests RevenuesIntra-ACP allocationsIntra-ACP ReserveNational allocations Reserve A Envelope STABEX                                      ALLOCATIONLoméSundry IncomeTotal indicative programmesTotal Non-Programmable AidTransfers from other fundsSUB TOTAL: REGULAR MS CONTRIBUTIONSTable 2.1EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2015PROGRESS REPORT(EUR million)EDFCummulative FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresEDFAt 31/12/2015% of allocation20082009201020112012201320142015810,404100%10,786(42)(45)(60)(64)(98)(63)(12)915,53399%16,633(54)(116)(9)(297)(72)(381)(170)1021,13799%4,7663,5012,3493,1183,5244,131(95)(156)116,53322%1,1605,37253,60732,1853,4052,1873,0493,1633,9616215,034Cummulative FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresEDFAt 31/12/2015% of allocation20082009201020112012201320142015810,385100%10,541(42)8(13)(46)(11)(37)(16)915,35598%14,2099974769(187)(96)(1)(52)1019,03589%1303,1842,8202,5143,4603,4572,687783114,02414%7313,29348,79824,8814,1403,3042,5093,2263,3503,3804,008Cummulative FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresAnnual FiguresEDFAt 31/12/2015% of allocation20082009201020112012201320142015810,376100%9,93015215890151816(3)914,98596%10,0111,8061,304906539231145431015,00970%901,1111,7721,8792,6552,7182,7602,024111,6195%5951,02441,98920,0313,0693,2332,8743,2092,9673,5163,088Total* Negative figures represent decommitmentsTotalPaymentsAggregate TotalTotalAssigned FundsAggregate TotalDecisionsAggregate Total 
 
 
 
Annual accounts of the European Development Fund 2015 

77 

%%%(1)(1)(1)35353535100%3535100%3535100%4,9994,9994,9944,994100%4,9894,989100%4,9864,986100%4,7234,7234,7224,722100%4,7114,711100%4,7064,706100%69269267867898%67167197%67067097%4188,95514,79937,8754188,91899%3,28722%26,19369%4178,86288%1,48310%22,76760%4178,79868%6735%19,18651%2371,2321943,6972351,220100%16384%3,65399%2331,21597%11358%3,53396%2311,20488%8644%3,31390%00154154154154100%154154100%154154100%02401,0701,816240100%24623%99155%24099%20819%95052%23998%19418%92951%2,9903,3849,2072,979100%1,29238%7,09877%2,95996%87126%6,55371%2,91077%55616%5,65861%8464,6407,504840100%1,54233%4,39759%80282%1,34729%3,81251%76755%1102%1,99127%105105105105100%105105100%105105100%267267266266100%21721781%535320%11011010910999%10610696%606055%3939242462%242462%242462%18692%17092%84%15684%57%10657%0570%469%45%244%20%120%11399%1100%1399%97%1100%1398%83%1075%%%%(1)(1)(1)71712062060(0)5,0245,024065151%%%(1)(1)(1)10,41215,63029,45576,88010,40415,53399%6,53322%53,60770%10,38515,35589%4,02414%48,79863%10,37614,98570%1,6195%41,98955%(1) % of appropriationsPayments100%96%15,009TOTAL: ALL ALLOCATIONSDecisions100%99%21,137Assigned funds100%98%19,03511TOTAL(1)(1)Appropriations21,3848%9%10Non-mobilisable reserve86Non-mobilisable reserveMobilisable reservesNIP/RIP reserve0Regional allocations reserve00National allocations Reserve A Envelope STABEX(0)11TOTAL(1)(1)CotonouCountry reserve0Intra-ACP ReserveAppropriations8%9%10Payments10Co-financingDecisions12Assigned funds12Intra-ACP allocationsAppropriations12Assigned funds2Payments1Appropriations5Decisions4Payments106Implementation Costs and Interests RevenuesDecisions170Assigned funds156A Envelope - National AllocationsAppropriations186Regular MS ContributionsAssigned funds62%Payments62%AppropriationsDecisions62%Payments55%Voluntary contribution Peace facilityDecisions99%Assigned funds96%Special allocation SudanAppropriationsAssigned funds81%Payments20%AppropriationsDecisions100%Payments100%Special allocation South SudanDecisions100%Assigned funds100%Special allocation R.D. CongoAppropriationsAssigned funds95%1,663Payments91%1,114Appropriations2,018Decisions99%2,016Payments97%2,193Regional allocationsDecisions100%2,827Assigned funds99%2,723Intra-ACP allocationsAppropriations2,833Assigned funds100%501Payments100%495Appropriations505Decisions100%504Payments100%Implementation Costs and Interests RevenuesDecisions100%Assigned funds100%CDE, CTA and Parliamentary AssemblyAppropriationsAssigned fundsPaymentsAppropriationsDecisionsPayments98%98%1,792Bridging facilityDecisions99%99%2,034Assigned funds98%99%1,973B Envelope - National AllocationsAppropriations2,035Assigned funds100%99%12,004Payments100%98%9,29813,703Decisions100%100%13,570CotonouA Envelope - National AllocationsAppropriationsPayments97%Regular MS ContributionsDecisions98%Assigned funds97%Transfers from other fundsAppropriationsAssigned funds100%Payments100%AppropriationsDecisions100%Payments100%Total Non-Programmable AidDecisions100%Assigned funds100%Total indicative programmesAppropriationsAssigned funds100%Payments100%Decisions100%11TOTAL(1)(1)LoméSundry IncomeAppropriations8%9%10(EUR million)EDFTable 2.2EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2015CLASS OF AID 
 
 
Annual accounts of the European Development Fund 2015 

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AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)3535100%35100%35100%3535100%35100%35100%4,9634,958(9)100%4,954(3)100%4,951(1)100%4,9634,958(9)100%4,954(3)100%4,951(1)100%100100100%100100%100100%136136100%136100%136100%1,0601,060100%1,060100%1,060100%79790100%72(7)91%6995%1,0161,015(1)100%1,012(3)100%1,012100%723723(0)100%723(0)100%722(0)100%1,4971,497100%1,497100%1,497100%101101100%101100%101100%4,7134,711(1)100%4,700(11)100%4,696(0)100%418418(0)100%417(0)100%417(0)100%418418(0)100%417(0)100%417(0)100%237235(1)233(2)99%231(1)99%237235(1)99%233(2)99%231(1)99%0010,36510,357(12)100%10,339(15)100%10,330(2)100%36360100%35(0)98%35100%36360100%35(0)98%35100%11100%1100%1100%66100%6100%6100%11100%1100%1100%220100%2(0)85%2(0)100%11110100%10(0)97%10(0)100%47470100%46(0)98%46(0)100%10,41210,404(12)100%10,385(16)100%10,376(3)100%TOTAL OCT    (B)TOTAL: ACP+OCT    (A+B)OCTRegular MS ContributionsLomé      Total indicative programmesSUB TOTAL: TOTAL INDICATIVE PROGRAMMES      Interest-rate subsidies      Risk capital      Stabex      SysminSUB TOTAL: TOTAL NON-PROGRAMMABLE AID      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESTOTAL ACP     (A)SUB TOTAL: TOTAL NON-PROGRAMMABLE AIDACP Regular MS ContributionsCotonou      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Compensation export earningsSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Heavily indebted poor countries (Lomé)      Interest-rate subsidies      Risk capital      Stabex      Structural adjustment      SysminACP Regular MS ContributionsLomé      Utilisation of interest incomeSUB TOTAL: SUNDRY INCOME      Total indicative programmesSUB TOTAL: TOTAL INDICATIVE PROGRAMMES      Aid for refugees      Emergency aid (Lomé)Table 2.3EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2015CLASS OF AIDACP + OCT - 8 th EDF(EUR million)CREDITSDECISIONSASSIGNED FUNDSPAYMENTS 
Annual accounts of the European Development Fund 2015 

79 

AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)2020(0)100%2099%20100%668654(22)98%648(16)99%647(0)100%689674(22)98%668(16)99%667(0)100%8,7168,680(60)100%8,625(54)99%8,563(6)99%8,7168,680(60)100%8,625(54)99%8,563(6)99%1,227149(7)149(6)100%149(1)100%1,056(8)1,051(5)100%1,040(0)99%1111100%11100%1,2271,216(16)99%1,211(11)100%1,200(1)99%154154100%154100%154100%154154100%154100%154100%177177(1)100%177(0)100%176099%6363(0)100%63100%63100%240240(2)100%240(0)100%2390100%2,6292,625(34)100%2,605(18)99%2,5562598%360354(7)98%354(7)100%353(1)100%2,9902,979(41)100%2,959(24)99%2,9102498%799792(25)99%756(32)95%722(3)96%799792(25)99%756(32)95%722(3)96%105105100%105100%105100%105105100%105100%105100%267266(0)100%2178581%531525%267266(0)100%2178581%531525%110109(1)99%106197%601557%110109(1)99%106197%601557%392462%24100%24100%392462%24100%24100%15,33415,239(168)99%15,063(51)99%14,6964498%00100%0100%0100%33(0)99%3100%3100%33(0)99%3100%3100%239238(2)99%237(0)100%235(1)99%239238(2)99%237(0)100%235(1)99%444100%4100%44100%4100%4100%11100%1100%1100%11100%1100%1100%48480100%46(0)97%45098%48480100%46(0)97%45098%295294(2)100%292(0)99%288(1)99%15,63015,533(170)99%15,355(52)99%14,9854398%      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONSTOTAL: OCT    (B)TOTAL: ACP+OCT    (A+B)OCTRegular MS ContributionsCotonou      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Emergency aidSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Studies / Technical assistance OCTSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESRegular MS ContributionsLomé      Transfers from 6th EDF - Lomé      Transfers from 7th EDF - LoméSUB TOTAL: TRANSFERS FROM OTHER FUNDSSUB TOTAL: VOLUNTARY CONTRIBUTION PEACE FACILITYTOTAL: ACP     (A)OCTSUB TOTAL: SPECIAL ALLOCATION R.D. CONGO      Special allocation South SudanSUB TOTAL: SPECIAL ALLOCATION SOUTH SUDAN      Special allocation SudanSUB TOTAL: SPECIAL ALLOCATION SUDAN      Voluntary contribution Peace facility      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONS      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONS      Special allocation R.D. CongoSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      CDE, CTA and Parliamentary AssemblySUB TOTAL: CDE, CTA AND PARLIAMENTARY ASSEMBLY      Implementation costs      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESACP Regular MS ContributionsCotonou      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Compensation export earnings      Emergency aid      Heavily indebted poor countriesACP Regular MS ContributionsLomé      Transfers from 6th EDF - Lomé      Transfers from 7th EDF - LoméSUB TOTAL: TRANSFERS FROM OTHER FUNDSTable 2.4EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2015CLASS OF AIDACP + OCT - 9 th EDF(EUR million)CREDITSDECISIONSASSIGNED FUNDSPAYMENTS 
 
Annual accounts of the European Development Fund 2015 

80 

AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)13,50713,375(149)99%11,87060089%9,1851,48777%13,50713,375(149)99%11,87060089%9,1851,48777%2,020210(0)188590%1683789%855(1)8261797%7135786%49490100%490100%906(5)897699%8502795%2,0202,019(6)100%1,9602897%1,77912191%4294290100%429(0)100%4251199%7069(1)99%67(1)97%65397%499499(1)100%496(1)99%4901499%241238(4)99%237(3)100%210(0)89%1,9041,901(3)100%1,8266096%1,36519875%6886880100%660(23)96%617(17)93%2,8332,827(7)100%2,7233496%2,19318181%1,9781,976(7)100%1,6289782%1,10113768%1,9781,976(7)100%1,6289782%1,10113768%1861701592%1561192%1066568%1861701592%1561192%1066568%54170%2265%1145%54170%2265%1145%1211098%11(0)99%9284%11100%199%1100%1212099%12(0)99%10285%00000(0)(0)00006767196195(1)100%134269%1131284%196195(1)100%134269%1131284%15907076%7199%66100%6100%15150100%13086%131100%65(1)88%5(0)98%5091%65(1)88%5(0)98%5091%4040(0)99%35989%13537%4040(0)99%35989%13537%0000000191921,38421,137(156)99%19,03578390%15,0092,02479%Non-mobilisable reserveReserves      Non-mobilisable reserveSUB TOTAL: NON-MOBILISABLE RESERVETOTAL: ACP+OCT (INCL. RESERVES)    (A+B)      B Envelope reserveSUB TOTAL: COUNTRY RESERVE      National allocations Reserve A Envelope STABEXSUB TOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX      Regional allocations reserveSUB TOTAL: REGIONAL ALLOCATIONS RESERVESUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Emergency aid      Other chocs with budgetary impactSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Studies / Technical assistance OCTSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONS      Non-mobilisable reserveSUB TOTAL: NON-MOBILISABLE RESERVERegular MS ContributionsAllocationsPTOM      A Envelope - National AllocationsMobilisable reservesReserves      A Envelope reserve      NIP/RIP reserveSUB TOTAL: NIP/RIP RESERVE      Regional allocations reserveSUB TOTAL: REGIONAL ALLOCATIONS RESERVENon-mobilisable reserveReserves      B Envelope reserveSUB TOTAL: COUNTRY RESERVE      Intra-ACP ReserveSUB TOTAL: INTRA-ACP RESERVE      National allocations Reserve A Envelope STABEXSUB TOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONSMobilisable reservesReserves      A Envelope reserveCo-financingAllocations      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      Implementation costsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Institutional and support expenditure      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONS      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONS      Heavily indebted poor countries      Other chocs with budgetary impactSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONS      Implementation costs      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESRegular MS ContributionsAllocationsACP       A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Compensation export earnings      Emergency aidTable 2.5EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2015CLASS OF AIDACP + OCT - 10 th EDF(EUR million)CREDITSDECISIONSASSIGNED FUNDSPAYMENTS 
81 

AGGREG.ANNUAL%AGGREG.ANNUAL%AGGREG.ANNUAL%(1)(2)(2) : (1)(3)(3) : (2)(4)(4) : (3)14,7993,2872,83022%1,4831,28645%67348845%14,7993,2872,83022%1,4831,28645%67348845%194163811134869%863976%1941638184%1134869%863976%001,05323713823%20211085%1919995%156143%5585%3347%1,06724313923%20711585%19410294%2441016841%564356%393470%2,24029123613%21621674%900900575100%59929867%51629086%3,3841,29287938%87155667%55632464%4,6401,5421,43933%1,3471,28587%110718%4,6401,5421,43933%1,3471,28587%110718%00111100%11100%111100%11100%7171206206004,6684,6686565111100%11100%1173%111100%11100%1173%00333100%1134%0039%333100%1134%0039%3573570029,4556,5335,37222%4,0243,29362%1,6191,02440%TOTAL: ACP+OCT (INCL. RESERVES)    (A+B)      NIP/RIP reserveSUB TOTAL: NIP/RIP RESERVENon-mobilisable reserveReserves      Non-mobilisable reserveSUB TOTAL: NON-MOBILISABLE RESERVERegular MS ContributionsAllocationsPTOM      Bridging facility SUB TOTAL: BRIDGING FACILITY      Studies / Technical assistance OCTSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUESMobilisable reservesReservesSUB TOTAL: NON-MOBILISABLE RESERVEEC Internal SLAReserves      A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONSSUB TOTAL: NATIONAL ALLOCATIONS RESERVE A ENVELOPE STABEX      NIP/RIP reserveSUB TOTAL: NIP/RIP RESERVENon-mobilisable reserveReserves      Non-mobilisable reserveReserves      B Envelope reserveSUB TOTAL: COUNTRY RESERVE      Intra-ACP ReserveSUB TOTAL: INTRA-ACP RESERVE      National allocations Reserve A Envelope STABEXAllocations      Implementation costsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONSMobilisable reserves      Other Intra-ACP allocations      Peace facilitySUB TOTAL: INTRA-ACP ALLOCATIONS      Regional allocationsSUB TOTAL: REGIONAL ALLOCATIONSCo-financing      Bridging facility SUB TOTAL: BRIDGING FACILITY      Implementation costs      Interests and other receiptsSUB TOTAL: IMPLEMENTATION COSTS AND INTERESTS REVENUES      Institutional and support expenditureRegular MS ContributionsAllocationsACP       A Envelope - National AllocationsSUB TOTAL: A ENVELOPE - NATIONAL ALLOCATIONS      B Envelope - National Allocations      Emergency aidSUB TOTAL: B ENVELOPE - NATIONAL ALLOCATIONSTable 2.6EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2015CLASS OF AIDACP + OCT - 11 th EDF(EUR million)CREDITSDECISIONSASSIGNED FUNDSPAYMENTS 
 
 
Annual accounts of the European Development Fund 2015 

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

82 

 
 
 
 
 
 
 
 
 
 
 
 
Annual accounts of the European Development Fund 2015 

EUROPEAN INVESTMENT BANK 

CA/491/16 

10 March 2016 

Document 16/119 

B O A R D   O F   D I R E C T O R S  

IN VESTMENT  FAC IL IT Y  

FINANCIAL STATEMENTS 

AS AT 31 DECEMBER 2015 

  Statement of financial position 

  Statement of profit or loss and other 

comprehensive income 

  Statement of changes in contributors’ resources 

  Statement of cash flows 

  Notes to the financial statements 

 

Independent auditor’s report 

ORG.: E 

83 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

STATEMENT OF FINANCIAL POSITION 
AS AT 31 DECEMBER 2015 
(In EUR’000) 

ASSETS 

Cash and cash equivalents 

Derivative financial instruments 

Loans and receivables 

Available-for-sale financial assets 

Amounts receivable from contributors 

Held-to-maturity financial assets 

Other assets 

Total assets 

LIABILITIES AND CONTRIBUTORS' RESOURCES 

LIABILITIES 

Derivative financial instruments 

Deferred income 

Amounts owed to third parties 

Other liabilities 

Total liabilities 

CONTRIBUTORS' RESOURCES 

Member States Contribution called 

Fair value reserve 

Retained earnings 

Notes 

31.12.2015 

31.12.2014 

5 

6 

7 

8 

9/15 

10 

11 

6 

12 

13 

14 

448,995 

311 

1,460,057 

419,353 

- 

228,521 

27 

545,399 

448 

1,331,918 

403,085 

42,590 

99,988 

5,522 

2,557,264 

2,428,950 

8,219 

29,325 

101,202 

2,364 

14,632 

31,310 

68,824 

2,591 

141,110 

117,357 

15 

2,157,000 

2,057,000 

163,993 

95,161 

156,122 

98,471 

Total contributors' resources 

2,416,154 

2,311,593 

Total liabilities and contributors' resources 

2,557,264 

2,428,950 

83 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME  
FOR THE YEAR ENDED 31 DECEMBER 2015 
(In EUR’000) 

Notes 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

Interest and similar income 

Interest and similar expenses 

Net interest and similar income 

Fee and commission income 

Fee and commission expenses 

Net fee and commission income 

Fair value change of derivative financial instruments  

Net realised gains on available-for-sale financial assets 

Net foreign exchange loss 

Net result on financial operations 

Change in impairment on loans and receivables, net of reversal 

Impairment on available-for-sale financial assets 

Other income 

General administrative expenses 

Loss for the year 

Other comprehensive income: 

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

Available-for-sale financial assets – Fair value reserve   

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

2. Net amount transferred to profit or loss 

Total available-for-sale financial assets 

Total other comprehensive income 

Total comprehensive income for the year 

17 

17 

18 

18 

19 

7 

8 

21 

20 

8 

90,385 

-1,556 

77,240 

-1,522 

88,829 

75,718 

932 

-63 

869 

6,276 

33,878 

-52,483 

1,163 

-37 

1,126 

-11,663 

8,109 

-222 

-12,329 

-3,776 

-33,988 

-3,646 

- 

-43,045 

-75,756 

-6,262 

337 

-38,128 

-3,310 

-46,741 

43,394 

-35,523 

7,871 

87,230 

-9,299 

77,931 

7,871 

77,931 

4,561 

31,190 

84 

 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
   
 
 
 
   
 
 
 
 
   
 
 
 
   
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES 
FOR THE YEAR ENDED 31 DECEMBER 2015 
(In EUR’000) 

At 1 January 2015 

Notes 

2,057,000 

156,122 

98,471 

2,311,593 

Contribution 
called 

Fair value 
reserve  

Retained 
earnings  

Total  

Member States contribution called during the year 

15 

100,000 

Loss for the year 2015 

Total other comprehensive income for the year 

- 

- 

- 

- 

- 

100,000 

-3,310 

-3,310 

7,871 

- 

7,871 

Changes in contributors’ resources 

100,000 

7,871 

-3,310 

104,561 

At 31 December 2015 

2,157,000 

163,993 

95,161 

2,416,154 

At 1 January 2014 

Member States contribution called during the year 

Unused interest subsidies and technical assistance 

15 

15 

Loss for the year 2014 

Total other comprehensive income for the year 

Contribution 
called 

Fair value 
reserve  

Retained 
earnings  

Total  

1,661,309 

78,191 

145,212 

1,884,712 

105,691 

290,000 

- 

- 

- 

- 

- 

- 

- 

105,691 

290,000 

-46,741 

-46,741 

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 

85 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

STATEMENT OF CASH FLOWS 
FOR THE YEAR ENDED 31 DECEMBER 2015 
(In EUR’000) 

OPERATING ACTIVITIES 

Loss for the financial year 
Adjustments made for : 
Impairment on available-for-sale financial assets   
Other income 
Net change in impairment on loans and receivables    
Interest capitalised on loans and receivables  
Change in accrued interest and amortised cost on loans and receivables 
Change in accrued interest and amortised cost on held-to-maturity financial assets 
Change in deferred income 
Effect of exchange rate changes on loans   
Effect of exchange rate changes on available-for-sale financial assets  
Effect of exchange rate changes on cash held  

Loss on operating activities before changes in operating assets and liabilities 

Loan disbursements 
Repayments of loans 
Change in accrued interest on cash and cash equivalent 
Fair value changes on derivatives  
Increase in held-to-maturity financial assets 
Maturities of held-to-maturity financial assets 
Increase in available-for-sale financial assets 
Repayments/sales of available-for-sale financial assets   
Decrease/(increase) in other assets 
(Decrease)/increase in other liabilities 
Increase/(decrease) in amounts payable to the European Investment Bank 

Net cash flows used in operating activities 

FINANCING ACTIVITIES 

Contribution received from Member States  

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

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

Net cash flows from financing activities 

Net decrease in cash and cash equivalents 

Summary statement of cash flows: 
Cash and cash equivalents at the beginning of financial year 
Net cash from: 
Operating activities 
Financing activities 
Effects of exchange rate changes on cash and cash equivalents 

Cash and cash equivalents at the end of financial year 

Cash and cash equivalents are composed of: 

Cash in hand  

Term deposits (excluding accrued interest) 

Commercial papers 

86 

Notes 

From 01.01.2015 
to 31.12.2015 

From 01.01.2014 
to 31.12.2014 

-3,310 

-46,741 

8 
21 
7 
7 

10 

7 

7 
7 
5 

10 
10 
8 
8 

15 

5 

5 

3,646 
- 
33,988 
-13,262 
1,594 
12 
-1,985 
-73,447 
-9,385 
-12,216 

-74,365 

-282,784 
205,772 
4 
-6,276 
-1,545,550 
1,417,005 
-67,449 
64,791 
5,495 
-227 
4,668 

-278,916 

100,000 

92,590 

-22,290 

170,300 

-108,616 

6,262 
-337 
75,756 
-11,915 
895 
12 
-3,773 
-92,707 
-449 
-9,362 

-82,359 

-248,326 
166,578 
7 
11,663 
-1,610,057 
1,612,619 
-42,646 
43,378 
-5,374 
19 
-175 

-154,673 

105,691 

7,410 

-21,899 

91,202 

-63,471 

545,398 

599,507 

-278,916 
170,300 
12,216 

448,998 

71,405 

290,576 

87,017 

448,998 

-154,673 
91,202 
9,362 

545,398 

9,642 

415,756 

120,000 

545,398 

 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

Notes to the financial statements as at 31 December 2015 

1  General information 

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

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

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

- 

- 

- 

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

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

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

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

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

2  Significant accounting policies 

2.1  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.  

2.2  Significant accounting judgments and estimates 

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

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

 

Measurement of fair values of financial instruments 

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

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

87 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

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

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

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

- 

- 

- 

- 

- 

Verification of observable pricing; 

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

Calibration and back testing of models against observed market transactions; 

Analysis and investigation of significant valuation movements; 

Review of significant unobservable inputs and valuation adjustments. 

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

- 

- 

- 

Determining where broker quote or pricing service pricing is appropriate; 

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

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

-  When  prices  for  similar  instruments  are  used  to  measure  fair  value,  how  these  prices  have  been  adjusted  to  reflect  the 

characteristics of the instrument subject to measurement. 

 

Impairment losses on loans and receivables 

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

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

 

Valuation of unquoted available-for-sale equity investments 

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

- 

- 

- 

recent arm’s length market transactions;  

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

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

88 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
- 

- 

adjusted net assets method; or  

other valuation models. 

INVESTMENT FACILITY 

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

 

Impairment of available-for-sale financial assets 

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

 

Consolidation of entities in which the Facility holds interest  

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

2.3  Changes in accounting policies 

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

Standards adopted 

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

- 

- 

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

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

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

Standards issued but not yet effective 

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

IFRS 9 Financial instruments 

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

IFRS 15 Revenue from Contracts with Customers  

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

89 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2.4  Summary of significant accounting policies 

INVESTMENT FACILITY 

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

2.4.1   

Foreign currency translation 

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

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

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

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

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

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

2.4.2   

Cash and cash equivalents 

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

2.4.3   

 Financial assets other than derivatives 

Financial assets are accounted for using the settlement date basis. 

 

Fair value of financial instruments 

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

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

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

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

- 

- 

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

Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. 
derived  from  prices).  This  category  includes  instruments  valued  using  quoted  market  prices  in  active  markets  for  similar 

90 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

instruments,  quoted  prices  for  identical  or  similar  instruments  in  markets  that  are  considered  less  than  active  or  other  valuation 
techniques where all significant inputs are directly or indirectly observable from market data. 

- 

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

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

 

Held-to-maturity financial assets 

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

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

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

 

Loans 

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

 

Available-for-sale financial assets 

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

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

a.  Venture capital funds 

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

b.  Direct equity investments 

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

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

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

91 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

 

Guarantees 

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

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

- 

- 

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

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

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

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

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

2.4.4   

Impairment of financial assets 

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

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

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

For  the  available-for-sale  financial  assets,  the  Facility  assesses  at  each  balance  sheet  date  whether  there  is  objective  evidence  that  an 
investment is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its costs. 
Where there is evidence of impairment, the cumulative loss (measured as the difference between the acquisition cost and the current fair 
value, less any impairment loss on that investment previously recognised in the statement of profit or loss and other comprehensive income) 
is  removed  from  contributors’  resources  and  recognised  in  the  statement  of  profit  or  loss  and  other  comprehensive  income.  Impairment 

92 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

losses  on  available-for-sale  financial  assets  are  not  reversed  through  the  statement  of  profit  or  loss  and  other  comprehensive  income; 
increases in their fair value after impairment are recognised directly in contributors’ resources. 

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

2.4.5   

Derivative financial instruments 

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

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

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

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

Derivatives are initially recognised using the trade date basis. 

2.4.6   

Contributions 

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

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

- 

- 

- 

- 

- 

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

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

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

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

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

2.4.7   

Interest income on loans 

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

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

2.4.8   

Interest subsidies and technical assistance 

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

93 

 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

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

2.4.9   

Interest income on cash and cash equivalents 

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

2.4.10 

Fees, commissions and dividends 

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

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

2.4.11 

Taxation 

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

94 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3  Risk Management 

INVESTMENT FACILITY 

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

- 

- 

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

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

-  market risk – the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will 

affect an entity’s income or the value of its holdings in financial instruments. 

3.1  Risk management organisation 

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

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

3.2  Credit risk 

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

3.2.1 

Credit risk policy 

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

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

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

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

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

- 

- 

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

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

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

95 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

3.2.2 

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

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

Maximum exposure (in EUR’000) 

ASSETS 

Cash and cash equivalents 

Derivative financial instruments 

Loans and receivables 

Amounts receivable from contributors 

Held-to-maturity financial assets 

Other assets 

Total assets 

OFF BALANCE SHEET 

Contingent liabilities 

- Signed non-issued guarantees 

Commitments 

- Un-disbursed loans 

- Issued guarantees 

Total off balance sheet 

Total credit exposure 

31.12.2015 

31.12.2014 

448,995 

311 

545,399 

448 

1,460,057 

1,331,918 

-  

228,521 

27 

42,590 

99,988 

5,522 

2,137,911 

2,025,865 

10,000 

25,000 

1,189,564 

1,161,859 

798 

2,298 

1,200,362 

1,189,157 

3,338,273 

3,215,022 

3.2.3 

Credit risk on loans and receivables 

3.2.3.1  Credit risk measurement for loans and receivables 

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

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

- 

- 

- 

- 

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

as help in distributing monitoring efforts; 

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

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

The following factors enter into the determination of an LG: 

i) 

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

96 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

ii) 

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

iii) 

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

iv) 

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

v) 

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

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

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

B  High quality loans: these represent an asset class with which the bank feels comfortable, although a minor deterioration is not ruled out 

in the future. B+ and B- are used to denote the relative likelihood of the possibility of such deterioration occurring. 

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

maturity at disbursement. 

D 

E 

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

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

F 

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

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

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

97 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3.2  Analysis of lending credit risk exposure 

INVESTMENT FACILITY 

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

At 31.12.2015 

In EUR’000 

Banks 

Corporates 

Public institutions 

States 

Total disbursed 

Signed not disbursed 

At 31.12.2014 

In EUR’000 

Banks 

Corporates 

Public institutions 

States 

Total disbursed 

Signed not disbursed 

Guaranteed 

Other credit 
enhancements 

Not guaranteed 

Total 

% of Total 

18,964 

37,431 

37,112 

- 

93,507 

135,821 

73,670 

89,170 

- 

4,295 

167,135 

- 

758,412 

272,186 

14 

168,803 

1,199,415 

1,053,743 

851,046 

398,787 

37,126 

173,098 

1,460,057 

1,189,564 

58% 

27% 

3% 

12% 

100% 

Guaranteed 

Other credit 
enhancements 

Not guaranteed 

Total 

% of Total 

16,457 

23,494 

33,279 

- 

73,230 

121,826 

106,667 

93,731 

- 

4,815 

205,213 

117,758 

571,609 

310,396 

31 

171,439 

1,053,475 

922,275 

694,733 

427,621 

33,310 

176,254 

1,331,918 

1,161,859 

52% 

32% 

3% 

13% 

100% 

Transaction  Management  and  Restructuring  is  tasked  with  the  responsibility  of  performing  borrower  and  guarantor  monitoring,  as  well  as 
project-related  financial  and  contractual  monitoring.  Thus,  the  creditworthiness  of  the  Facility’s  loans,  borrowers  and  guarantors  are 
continually  monitored,  at  least  annually  but  more  frequently  on  an  as-needed  basis  and  as  a  function  of  credit  events  taking  place.  In 
particular,  Transaction  Management  and  Restructuring  reviews  if  contractual  rights  are  met  and,  in  case  of  a  rating  deterioration  and/or 
contractual  default,  remedy  action  is  taken.  Mitigation  measures  are  pursued,  whenever  necessary  in  accordance  with  the  credit  risk 
guidelines. Also, in case of renewals of bank guarantees received for its loans, it is ensured that these are replaced or action is taken in a 
timely manner. 

98 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.2.3.3  Credit quality analysis per type of borrower 

INVESTMENT FACILITY 

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

At 31.12.2015 

In EUR’000 

 High Grade  

 Standard 
Grade  

 Min. 
Accept. Risk 

 High Risk    No grading 

 Total   % of Total 

A to B-  

C  

D+  

 D- and 
below 

Banks 

92,260 

31,558 

326,635 

990,971 

245,160 

1,686,584 

Borrower 

Corporates 

125,963 

Public institutions 

States 

- 

- 

- 

- 

- 

12,493 

450,045 

37,112 

40,014 

9,277 

288,133 

- 

- 

- 

588,501 

77,126 

297,410 

64% 

22% 

3% 

11% 

Total 

218,223 

31,558 

385,517 

1,769,163 

245,160 

2,649,621 

100% 

At 31.12.2014 

In EUR’000 

Borrower 

 High Grade  

 Standard 
Grade  

 Min. 
Accept. Risk 

 High Risk    No grading 

 Total   % of Total 

A to B-  

C  

D+  

 D- and 
below 

Banks 

Corporates 

Public institutions 

States 

75,268 

102,974 

- 

- 

7,074 

7,964 

- 

- 

307,049 

879,420 

336,318 

1,605,129 

16,713 

456,210 

33,279 

40,031 

4,815 

226,662 

- 

- 

- 

583,861 

73,310 

231,477 

65% 

23% 

3% 

9% 

Total 

178,242 

15,038 

361,856 

1,602,323 

336,318 

2,493,777 

100% 

99 

 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
INVESTMENT FACILITY 

3.2.3.4  Risk concentrations of loans and receivables 

3.2.3.4.1 

Geographical analysis 

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

Country of borrower 

Nigeria 

Kenya 

Uganda 

Regional-ACP 

Mauritania 

Jamaica 

Togo 

Dominican Republic 

Ethiopia 

Tanzania 

Cameroon 

Ghana 

Congo (Democratic Republic) 

Mozambique 

Cape Verde 

French Polynesia 

Rwanda 

Mauritius 

Malawi 

Senegal 

Zambia 

Haiti 

Mali 

Botswana 

Samoa 

Burkina Faso 

Congo 

Vanuatu 

New Caledonia 

Saint Lucia 

Palau 

Grenada 

Niger 

Micronesia 

Trinidad and Tobago 

Liberia 

Seychelles 

Tonga 

Burundi 

Sint Maarten 

Angola 

Gabon 

Fiji 

Chad 

Total 

31.12.2015 

31.12.2014 

195,290 

192,945 

178,515 

111,103 

94,123 

85,278 

75,387 

72,474 

67,589 

56,367 

51,930 

40,439 

39,766 

25,124 

24,623 

22,095 

20,466 

18,882 

13,030 

10,991 

8,733 

7,071 

6,688 

6,605 

6,267 

5,967 

5,189 

2,772 

2,705 

2,671 

2,197 

1,735 

1,372 

1,169 

1,010 

921 

468 

54 

40 

6 

- 

- 

- 

- 

137,832 

155,168 

161,657 

136,182 

95,319 

77,272 

45,780 

64,614 

68,614 

62,916 

61,067 

16,130 

39,786 

29,139 

26,101 

14,622 

14,854 

35,811 

9,945 

12,046 

5,761 

7,379 

7,207 

- 

7,595 

7,456 

6,919 

3,835 

3,211 

2,363 

2,254 

1,996 

2,581 

1,141 

1,180 

821 

- 

681 

40 

- 

3,623 

528 

474 

18 

1,460,057 

1,331,918 

100 

 
 
 
 
 
 
3.2.3.4.2 

Industry sector analysis 

INVESTMENT FACILITY 

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

Industry sector of borrower 

Global loans and agency agreements 

Urban development, renovation and transport 

Tertiary and other 

Electricity, coal and others 

Basic material and mining 

Roads and motorways 

Airports and air traffic management systems 

Materials processing, construction 

Food chain 

Telecommunications 

Waste recuperation 

Paper chain 

Total 

31.12.2015 

31.12.2014 

658,098 

207,773 

201,361 

197,547 

88,615 

48,165 

37,126 

13,719 

7,643 

6 

4 

- 

541,600 

209,849 

168,689 

198,604 

108,367 

43,993 

33,310 

16,243 

18 

6,089 

- 

5,156 

1,460,057 

1,331,918 

101 

 
 
 
 
 
3.2.3.5  Arrears on loans and impairments 

INVESTMENT FACILITY 

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

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

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

Carrying amount 

Individually impaired 

Gross amount 

Allowance for impairment 

Carrying amount individually impaired 

Collectively impaired 

Gross amount 

Allowance for impairment 

Carrying amount collectively impaired 

Past due but not impaired 

Past due comprises 

0-30 days 

30-60 days 

60-90 days 

90-180 days 

more 180 days 

Carrying amount past due but not impaired 

Notes 

 7 

Loans and receivables 

Loans and receivables 

31.12.2015 

1,460,057 

31.12.2014 

1,331,918 

214,232 

-191,046 

23,186 

210,338 

-152,137 

58,201 

- 

- 

- 

1,521 

15 

- 

- 

13 

1,549 

- 

- 

- 

2,558 

528 

5 

- 

- 

3,091 

Carrying amount neither past due nor impaired 

1,435,322 

1,270,626 

Total carrying amount loans and receivables 

1,460,057 

1,331,918 

102 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

3.2.4 

Credit risk on cash and cash equivalents 

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

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

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

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

Minimum short-term 
rating 

Minimum long-term 
rating 

(Moody’s term) 

(Moody’s term) 

P-1 

P-1 

P-1 

P-1 

Total 

Aaa 

Aa2 

A1 

A2 

3.2.5 

Credit risk on derivatives 

3.2.5.1  Credit risk policy of derivatives 

31.12.2015 

31.12.2014 

49,999 

26 

115,705 

283,265 

448,995 

11% 

0% 

26% 

63% 

100% 

47,937 

38 

137,820 

359,604 

545,399 

9% 

0% 

25% 

66% 

100% 

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

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

3.2.5.2  Credit risk measurement for derivatives 

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

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

103 

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

INVESTMENT FACILITY 

Swap contracts at 31.12.2015 

less than 

1 year 

5 years 

more than 

Total 2015 

In EUR’000 

Notional amount 

Fair Value (i.e. net discounted value) 

1 year 

to 5 years 

to 10 years 

to 10 years 

- 

- 

9,589 

-3,835 

- 

- 

- 

- 

9,589 

-3,835 

Swap contracts at 31.12.2014 

less than 

1 year 

5 years 

more than 

Total 2014 

In EUR’000 

Notional amount 

Fair Value (i.e. net discounted value) 

1 year 

to 5 years 

to 10 years 

to 10 years 

- 

- 

11,606 

-3,219 

- 

- 

- 

- 

11,606 

-3,219 

The  Facility  enters  into  foreign  exchange  short  term  currency  swaps  (“FX  swaps”)  contracts  in  order  to  hedge  currency  risk  on  loan 
disbursements  in  currencies  other  than  EUR.  FX  swaps  have  a  maturity  of  maximum  three  months  and  are  regularly  rolled-over.  The 
notional amount of FX swaps stood at EUR 1,400.0 million at 31 December 2015 against EUR 1,059.0 million at 31 December 2014. The fair 
value of FX swaps amounts to EUR -3.8 million at 31 December 2015 against EUR -10.8 million at 31 December 2014. 

The Facility enters into interest rate swap contracts in order to hedge the interest rate risk on loans disbursed. As at 31 December 2015 there 
are two interest rate swaps outstanding with a notional amount of EUR 44.9 million (2014: EUR 44.7 million) and a fair value of EUR -0.3 
million (2014: EUR -0.1 million). 

3.2.6 

Credit risk on held-to-maturity financial assets 

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

Minimum short-term 
rating 

Minimum long-term 
rating 

(Moody’s term) 

(Moody’s term) 

P-1 

P-3 

P-2 

NP 

P-1 

NP 

Total 

A2 

Baa3 

Baa2 

Ba1 

A1 

Ba2 

31.12.2015 

31.12.2014 

69,502 

50,012 

50,007 

49,000 

10,000 

-  

31% 

22% 

22% 

21% 

4% 

0% 

228,521 

100% 

-  

49,994 

-  

-  

-  

49,994 

99,988 

0% 

50% 

0% 

0% 

0% 

50% 

100% 

104 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
3.3  Liquidity risk 

INVESTMENT FACILITY 

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

3.3.1 

Liquidity risk management 

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

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

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

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

3.3.2 

Liquidity risk measurement 

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

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

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

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

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

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

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

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

105 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

Maturity profile of non-derivative financial liabilities 

In EUR’000 as at 31.12.2015 

Outflows for committed but un-disbursed loans 

Outflows for committed investment funds and share subscription 

Others (signed non-issued guarantees, issued guarantees) 

Outflows for committed interest subsidies 

Outflows for committed TA  

Total  

 3 months 
or less 

More than 
3 months 
to 1 year 

More than 
1 year to 5 
years 

More than 
5 years 

Maturity 
Undefined 

Gross 
nominal 
outflow 

41,028 

23,371 

- 

- 

811 

65,210 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,148,536 

1,189,564 

274,984 

298,355 

10,798 

10,798 

281,682 

281,682 

28,072 

28,883 

1,744,072 

1,809,282 

Maturity profile of non-derivative financial liabilities 

In EUR’000 as at 31.12.2014 

Outflows for committed but un-disbursed loans 

Outflows for committed investment funds and share subscription 

Others (signed non-issued guarantees, issued guarantees) 

Outflows for committed interest subsidies 

Outflows for committed TA  

Total  

 3 months 
or less 

More than 
3 months 
to 1 year 

More than 
1 year to 5 
years 

More than 
5 years 

Maturity 
Undefined 

Gross 
nominal 
outflow 

1,576 

4,584 

- 

- 

595 

6,755 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

1,160,283 

1,161,859 

196,053 

200,637 

27,298 

27,298 

241,890 

241,890 

18,978 

19,573 

1,644,502 

1,651,257 

Maturity profile of derivative financial liabilities 

In EUR’000 as at 31.12.2015 

CCS and CCIRS – Inflows 
CCS and CCIRS – Outflows 
Short term currency swaps – Inflows 
Short term currency swaps – Outflows 
Interest Rate Swaps – Inflows 
Interest Rate Swaps - Outflows 

Total  

Maturity profile of derivative financial liabilities 

In EUR’000 as at 31.12.2014 

CCS and CCIRS – Inflows 
CCS and CCIRS – Outflows 
Short term currency swaps – Inflows 
Short term currency swaps – Outflows 
Interest Rate Swaps – Inflows 
Interest Rate Swaps - Outflows 

Total  

 3 months or 
less 

More than 3 
months to 1 
year 

More than 1 
year to 5 
years 

More than 5 
years 

Gross 
nominal 
inflow/outflow 

5 

- 

2,307 

-3,571 

7,671 

-10,714 

1,400,000 

-1,407,763 

383 

- 

-7,375 

- 

- 

1,269 

-2,145 

-2,140 

- 

- 

6,059 

-6,127 

-3,111 

- 

- 

- 

- 

2,524 

-2,206 

318 

9,983 

-14,285 

1,400,000 

-1,407,763 

10,235 

-10,478 

-12,308 

 3 months or 
less 

More than 3 
months to 1 
year 

More than 1 
year to 5 
years 

More than 5 
years 

Gross 
nominal 
inflow/outflow 

6 

- 

2,218 

-3,202 

10,036 

-12,809 

1,059,000 

-1,070,677 

371 

- 

-11,300 

- 

- 

1,103 

-2,143 

-2,024 

- 

- 

6,495 

-6,373 

-2,651 

- 

- 

- 

- 

3,619 

-3,022 

597 

12,260 

-16,011 

1,059,000 

-1,070,677 

11,588 

-11,538 

-15,378 

106 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.4  Market risk 

INVESTMENT FACILITY 

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

3.4.1 

Interest rate risk 

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

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

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

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

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

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

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

Basis point value 

In EUR’000 

Money 

Market 

Very Short  

Short 

Medium 

Long 

Extra Long  

Total 

As at 31.12.2015 

1 year 

2 to 3 years 

4 to 6 years 

7 to 11 years  12 to 20 years 

21 years 

Total sensitivity of 
loans and micro 
hedging swaps 

-37 

-72 

-252 

-139 

-32 

- 

-532 

Basis point value 

In EUR’000 

Money 

Market 

Very Short  

Short 

Medium 

Long 

Extra Long  

Total 

As at 31.12.2014 

1 year 

2 to 3 years 

4 to 6 years 

7 to 11 years  12 to 20 years 

21 years 

Total sensitivity of 
loans and micro 
hedging swaps 

-33 

-70 

-126 

-146 

-44 

- 

-419 

107 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3.4.2 

Foreign exchange risk 

INVESTMENT FACILITY 

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

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

3.4.2.1 

Foreign exchange risk and treasury assets 

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

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

3.4.2.2 

Foreign exchange risk and operations financed or guaranteed by the IF 

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

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

3.4.2.2.1. 

Hedging of operations denominated in USD 

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

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

- 

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

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

3.4.2.2.2. 

Hedging of operations denominated in currencies other than EUR or USD 

- 

- 

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

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

108 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

3.4.2.2.3 

Foreign exchange position (in EUR’000) 

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

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

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

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

At 31 December 2015 

Assets and liabilities 

Commitments and 
contingent liabilities 

Currencies 

USD 

Local currencies  
(under synthetic hedge)* 

KES 

TZS 

DOP 

UGX 

RWF 

Local currencies  
(not under synthetic hedge)* 

HTG, MUR, MZN, XOF, ZMW 

Total non-EUR currencies 

FX position as per 
Risk Policies 

FX position excluded 
from Risk Policies 

Balance sheet FX 
position 

-207,050 

5,023 

-202,027 

270,236 

129,862 

46,246 

40,799 

30,182 

11,979 

15,474 

67,492 

3,101 

780 

1,274 

565 

164 

201 

11,108 

132,963 

47,025 

42,073 

30,747 

12,143 

15,675 

78,599 

- 

- 

- 

- 

- 

798 

271,034 

EUR 

- 

2,337,555 

2,337,555 

1,579,719 

Total EUR and non-EUR 

67,492 

2,348,663 

2,416,154 

1,850,753 

* See section 3.4.2.2.2 for explanations on synthetic hedge. 

109 

 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
At 31 December 2014 

Assets and liabilities 

Commitments and 
contingent liabilities 

INVESTMENT FACILITY 

Currencies 

USD 

Local currencies  
(under synthetic hedge)* 

KES 

TZS 

DOP 

UGX 

RWF 

Local currencies  
(not under synthetic hedge)* 

HTG, MUR, MZN, XOF 

Total non-EUR currencies 

FX position as per 
Risk Policies 

FX position excluded 
from Risk Policies 

Balance sheet FX 
position 

42,050 

3,997 

46,047 

237,987 

97,921 

52,799 

31,266 

27,028 

11,937 

15,916 

278,917 

2,481 

613 

1,273 

503 

178 

265 

9,310 

100,402 

53,412 

32,539 

27,531 

12,115 

16,181 

288,227 

- 

- 

- 

- 

- 

2,298 

240,285 

EUR 

- 

2,023,366 

2,023,366 

1,434,748 

Total EUR and non-EUR 

278,917 

2,032,676 

2,311,593 

1,675,033 

* See section 3.4.2.2.2 for explanations on synthetic hedge. 

3.4.2.3 

Foreign exchange sensitivity analysis 

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

3.4.2.4 

Conversion rates 

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

31 December 2015 

31 December 2014 

Non-EU currencies 

Dominican Republic Pesos (DOP) 

Fiji Dollars (FJD) 

Haitian Gourde (HTG) 

Kenya Shillings (KES) 

Mauritania Ouguiyas (MRO) 

Mauritius Rupees (MUR) 

Mozambican Metical (MZN) 

Rwanda Francs (RWF) 

Tanzania Shillings (TZS) 

Uganda Shillings (UGX) 

United States Dollars (USD) 

Franc CFA Francs (XAF/XOF) 

South Africa Rand (ZAR) 

Zambia Kvacha (ZMW) 

49.0144 

2.3124 

61.19 

111.3 

326.46 

38.85 

50.59 

806.36 

2,344.42 

3,665.00 

1.0887 

655.957 

16.953 

11.9571 

53.1988 

2.376 

55.23 

109.86 

350.61 

38.46 

40.04 

831.04 

2,096.58 

3,354.00 

1.2141 

655.957 

14.0353 

7.753 

110 

 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
3.4.3 

Equity price risk 

INVESTMENT FACILITY 

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

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

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

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

111 

 
 
 
 
 
 
 
4 

Fair values of financial instruments 

4.1  Accounting classifications and fair values 

INVESTMENT FACILITY 

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

Carrying amount 

Fair value 

Held for 
trading 

Available-
for-sale 

Cash, loans 
and 
receivables 

Held to 
maturity 

Other 
financial 
liabilities 

Total 

Level 1 

Level 2 

Level 3 

Total 

At 31 December 2015 

In EUR’000 

Financial assets carried at fair value: 

Derivative financial instruments  

Venture Capital Funds 

Direct Equity Investments 

Total  

Financial assets not carried at fair value: 

Cash and cash equivalents 

Loans and receivables 

Amounts receivable from contributors 

Bonds 

Other assets 

Total  

311 

- 

- 

- 

396,203 

23,150 

311 

419,353 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

448,995 

1,460,057 

- 

- 

27 

- 

- 

- 

- 

- 

- 

- 

228,521 

- 

1,909,079 

228,521 

Total financial assets 

311 

419,353 

1,909,079 

228,521 

Financial liabilities carried at fair value: 

Derivative financial instruments 

Total  

Financial liabilities not carried at fair value: 

Amounts owed to third parties 

Other liabilities 

Total  

Total financial liabilities 

-8,219 

-8,219 

- 

- 

- 

-8,219 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

112 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

311 

396,203 

23,150 

419,664 

448,995 

1,460,057 

- 

- 

- 

178 

178 

311 

- 

- 

- 

311 

396,203 

396,203 

22,972 

23,150 

311 

419,175 

419,664 

-  1,649,401 

-  1,649,401 

228,521 

124,009 

104,520 

- 

228,529 

27 

2,137,600 

124,009  1,753,921 

-  1,877,930 

2,557,264 

-8,219 

-8,219 

- 

- 

-8,219 

-8,219 

- 

- 

-8,219 

-8,219 

-101,202 

-101,202 

-2,364 

-2,364 

-103,566 

-103,566 

-103,566 

-111,785 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
4 

Fair values of financial instruments (continued) 

4.1  Accounting classifications and fair values (continued) 

INVESTMENT FACILITY 

At 31 December 2014 

In EUR’000 

Financial assets carried at fair value: 

Derivative financial instruments  

Venture Capital Funds 

Direct Equity Investments 

Total  

Financial assets not carried at fair value: 

Cash and cash equivalents 

Loans and receivables 

Amounts receivable from contributors 

Bonds 

Other assets 

Total  

Carrying amount 

Fair value 

Held for 
trading 

Available-
for-sale 

Cash, loans 
and 
receivables 

Held to 
maturity 

Other 
financial 
liabilities 

Total 

Level 1 

Level 2 

Level 3 

Total 

448 

- 

- 

- 

385,245 

17,840 

448 

403,085 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

545,399 

1,331,918 

42,590 

- 

- 

- 

- 

- 

- 

- 

- 

99,988 

5,522 

1,925,429 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

-68,824 

-2,591 

-71,415 

-71,415 

448 

385,245 

17,840 

403,533 

545,399 

1,331,918 

42,590 

99,988 

5,522 

- 

- 

1,159 

1,159 

448 

- 

- 

- 

448 

385,245 

385,245 

16,681 

17,840 

448 

401,926 

403,533 

-  1,488,215 

-  1,488,215 

99,985 

- 

- 

- 

- 

- 

99,985 

- 

2,025,417 

99,985  1,488,215 

-  1,588,200 

2,428,950 

-14,632 

-14,632 

-68,824 

-2,591 

-71,415 

-86,047 

- 

- 

-14,632 

-14,632 

- 

- 

-14,632 

-14,632 

- 

99,988 

99,988 

- 

- 

- 

- 

- 

- 

Total financial assets 

448 

403,085 

1,925,429 

Financial liabilities carried at fair value: 

Derivative financial instruments 

Total  

Financial liabilities not carried at fair value: 

Amounts owed to third parties 

Other liabilities 

Total  

-14,632 

-14,632 

- 

- 

- 

Total financial liabilities 

-14,632 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

113 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
   
 
 
 
4.2  Measurement of fair values 

4.2.1 

Valuation techniques and significant unobservable inputs 

INVESTMENT FACILITY 

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

Valuation technique 

Significant unobservable inputs 

Financial instruments carried at fair value 

Relationship of 
unobservable 
inputs to fair value 
measurement 

Derivative 
financial 
instruments 

Venture Capital 
Fund (VCF) 

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

rates 

the 

Not applicable. 

Not applicable. 

fair  value 

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

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

the 

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

the 

Direct Equity 
Investment 

Adjusted net assets. 

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

the 

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

the 

for 

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

higher 

The 
marketability 
discount, 
the 
the fair value. 

the 

lower 

Not applicable. 

Not applicable. 

Financial instruments not carried at fair value 

Loans and 
receivables 

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

into  consideration 

to  obtain 

take 

the 

to 

Held-to-maturity 
financial assets 

Discounted cash flows. 

Not applicable. 

Not applicable. 

114 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

Amounts owed 
to third parties 

Discounted cash flows. 

Not applicable. 

Not applicable. 

Other liabilities 

Discounted cash flows. 

Not applicable. 

Not applicable. 

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

4  Credit  valuation  adjustments  (CVA),  reflecting  counterparty  credit  risk  on  derivative  transactions,  amounting  to  EUR  -122k  as  at  

31 December 2015 and to EUR -184k as at 31 December 2014.  

5  Debit  valuation  adjustments  (DVA),  reflecting  own  credit  risk  on  derivative  transactions,  amounting  to  EUR  +64k  as  at                  

31 December 2015 and EUR +30k as at 31 December 2014.  

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

 

Transfers between Level 1 and 2 

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

 

Level 3 fair values 

Reconciliation of Level 3 fair values 

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

In EUR'000 

Balance at 1 January 2015 

Gains or losses included in profit or loss: 

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

- impairment on available-for-sale financial assets  

Total 

Gains or losses included in other comprehensive income: 

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

Total 

Disbursements 

Repayments 

Write offs 

Balance at 31 December 2015 

In EUR'000 

Balance at 1 January 2014 

Gains or losses included in profit or loss: 

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

- impairment on available-for-sale financial assets  

Total 

Gains or losses included in other comprehensive income: 

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

Total 

Disbursements 

Repayments 

Balance at 31 December 2014 

115 

Available-for-
sale financial 
assets 

401,926 

-33,878 

-2,665 

-36,543 

52,365 

52,365 

67,449 

-64,791 

-1,231 

419,175 

Available-for-
sale financial 
assets 

324,855 

8,109 

-2,084 

6,025 

71,778 

71,778 

42,646 

-43,378 

401,926 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

Sensitivity analysis 

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

At 31 December 2015 

(in EUR’000) 

Direct Equity Investments 

Total 

At 31 December 2014 

(in EUR’000) 

Direct Equity Investments 

Total 

5  Cash and cash equivalents (in EUR’000) 

The cash and cash equivalents are composed of: 

Cash in hand 

Term deposits 

Commercial papers 

Cash and cash equivalents in the statement of financial position 

Accrued interest  

Cash and cash equivalents in the cash flow statement 

6  Derivative financial instruments (in EUR’000) 

Increase 

Decrease 

31 

31 

-31 

-31 

Increase 

Decrease 

31 

31 

-31 

-31 

31.12.2015 

31.12.2014 

71,405 

290,573 

87,017 

448,995 

3 

448,998 

9,642 

415,757 

120,000 

545,399 

-1 

545,398 

The main components of derivative financial instruments, classified as held for trading, are as follows: 

At 31 December 2015 

Cross currency interest rate swaps 

Interest rate swaps 

FX swaps 

Total derivative financial instruments 

At 31 December 2014 

Cross currency interest rate swaps 

Interest rate swaps 

FX swaps 

Total derivative financial instruments 

Fair Value 

Assets 

Liabilities 

Notional amount 

- 

311 

- 

311 

-3,835 

-639 

-3,745 

-8,219 

9,589 

44,913 

1,400,000 

1,454,502 

Fair Value 

Assets 

Liabilities 

Notional amount 

- 

448 

- 

448 

-3,219 

-564 

-10,849 

-14,632 

11,606 

44,749 

1,059,000 

1,115,355 

116 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

7 

Loans and receivables (in EUR’000) 

The main components of loans and receivables are as follows: 

Nominal as at 1 January 2015 

Disbursements 

Repayments 

Interest capitalised 

Foreign exchange rates differences 

Nominal as at 31 December 2015 

Impairment as at 1 January 2015 

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

Reversal of impairment 

Foreign exchange rates differences 

Impairment as at 31 December 2015 

Amortised Cost 

Interest 

Global loans(*) 

Senior loans 

542,506 

196,607 

-106,921 

- 

29,600 

661,792 

-5,751 

-3,692 

381 

-341 

-9,403 

-3,129 

8,838 

782,563 

86,177 

-96,147 

- 

45,414 

818,007 

-13,491 

-7,576 

57 

-1,435 

-22,445 

-5,781 

10,533 

Subordinated 
loans 

Total 

146,643 

1,471,712 

- 

-2,704 

13,262 

3,354 

282,784 

-205,772 

13,262 

78,368 

160,555 

1,640,354 

-132,895 

-152,137 

-24,995 

-36,263 

1,837 

-3,145 

2,275 

-4,921 

-159,198 

-191,046 

284 

4 

-8,626 

19,375 

Loans and receivables as at 31 December 2015 

658,098 

800,314 

1,645 

1,460,057 

(*) including agency agreements 

Nominal as at 1 January 2014 

Disbursements 

Repayments 

Interest capitalised 

Foreign exchange rates differences 

Nominal as at 31 December 2014 

Global loans(*) 

Senior loans 

342,113 

216,672 

-58,417 

- 

42,138 

542,506 

806,007 

31,654 

-107,794 

- 

52,696 

782,563 

Impairment as at 1 January 2014 

-7,675 

-12,734 

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

Reversal of impairment 

Foreign exchange rates differences 

Impairment as at 31 December 2014 

Amortised Cost 

Interest 

- 

2,586 

-662 

-5,751 

-2,562 

7,407 

- 

907 

-1,664 

-13,491 

-5,125 

11,930 

Subordinated 
loans 

Total 

131,632 

1,279,752 

- 

-367 

11,915 

3,463 

146,643 

-50,382 

-79,249 

- 

-3,264 

-132,895 

28 

665 

248,326 

-166,578 

11,915 

98,297 

1,471,712 

-70,791 

-79,249 

3,493 

-5,590 

-152,137 

-7,659 

20,002 

Loans and receivables as at 31 December 2014 

541,600 

775,877 

14,441 

1,331,918 

(*) including agency agreements 

117 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

The main components of available-for-sale financial assets are as follows: 

Cost as at 1 January 2015 

Disbursements 

Repayments / sales 

Write offs 

Foreign exchange rates differences on repayments / sales 

Cost as at 31 December 2015 

Unrealised gains and losses as at 1 January 2015 

Net change in unrealised gains and losses 

Unrealised gains and losses as at 31 December 2015 

Impairment as at 1 January 2015 

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

Write offs 

Impairment as at 31 December 2015 

Venture Capital 
Funds 

Direct Equity 
Investments 

259,784 

63,574 

-64,181 

-1,231 

9,385 

267,331 

149,995 

3,906 

153,901 

-24,534 

-1,726 

1,231 

-25,029 

19,714 

3,875 

-610 

- 

- 

22,979 

6,127 

3,965 

10,092 

-8,001 

-1,920 

- 

-9,921 

Total 

279,498 

67,449 

-64,791 

-1,231 

9,385 

290,310 

156,122 

7,871 

163,993 

-32,535 

-3,646 

1,231 

-34,950 

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

396,203 

23,150 

419,353 

Cost as at 1 January 2014 

Disbursements 

Repayments / sales 

Foreign exchange rates differences on repayments / sales 

Cost as at 31 December 2014 

Unrealised gains and losses as at 1 January 2014 

Net change in unrealised gains and losses 

Unrealised gains and losses as at 31 December 2014 

Impairment as at 1 January 2014 

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

Impairment as at 31 December 2014 

Venture Capital 
Funds 

Direct Equity 
Investments 

256,161 

41,990 

-38,535 

168 

259,784 

71,931 

78,064 

149,995 

-22,450 

-2,084 

-24,534 

23,620 

656 

-4,843 

281 

19,714 

6,260 

-133 

6,127 

-3,823 

-4,178 

-8,001 

Total 

279,781 

42,646 

-43,378 

449 

279,498 

78,191 

77,931 

156,122 

-26,273 

-6,262 

-32,535 

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

385,245 

17,840 

403,085 

118 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9  Amounts receivable from contributors (in EUR’000) 

INVESTMENT FACILITY 

The amounts receivable from contributors are entirely composed of Member States contribution called but not paid. 

10  Held-to-maturity financial assets (in EUR’000) 

The held-to-maturity portfolio is composed of quoted bonds which have a remaining maturity of less than three months at reporting date. The 
following table shows the movements of the held-to-maturity portfolio:  

Balance as at 1 January 2015 

Acquisitions 

Maturities 

Change in amortisation of premium/discount 

Balance as at 31 December 2015 

Balance as at 1 January 2014 

Acquisitions 

Maturities  

Change in amortisation of premium/discount 

Balance as at 31 December 2014 

11  Other assets (in EUR’000) 

The main components of other assets are as follows: 

Amount receivable from EIB 

Financial guarantees 

Total other assets 

12    Deferred income (in EUR’000) 

The main components of deferred income are as follows: 

Deferred interest subsidies 

Deferred commissions on loans and receivables 

Total deferred income 

13  Amounts owed to third parties (in EUR’000) 

The main components of amounts owed to third parties are as follows: 

Net general administrative expenses payable to EIB 

Other amounts payable to EIB 

Interest subsidies and TA not yet disbursed owed to Member States 

Total amounts owed to third parties 

119 

99,988 

1,545,550 

-1,417,005 

-12 

228,521 

102,562 

1,610,057 

-1,612,619 

-12 

99,988 

31.12.2015 

31.12.2014 

1 

26 

27 

5,447 

75 

5,522 

31.12.2015 

31.12.2014 

28,683 

642 

29,325 

30,750 

560 

31,310 

31.12.2015 

31.12.2014 

43,045 

15 

58,142 

101,202 

38,348 

44 

30,432 

68,824 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

14  Other liabilities (in EUR’000) 

The main components of other liabilities are as follows: 

Loan repayments received in advance  

Deferred income from interest subsidies 

Financial guarantees 

Total other liabilities 

15  Member States Contribution called (in EUR’000) 

31.12.2015 

31.12.2014 

1,826 

512 

26 

2,364 

1,973 

542 

76 

2,591 

Member States 

Austria 

Belgium 

Bulgaria 

Cyprus 

Czech Republic 

Denmark 

Estonia 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 

Malta 

Netherlands 

Poland 

Portugal 

Romania 

Slovakia 

Slovenia 

Spain 

Sweden 

United Kingdom 

Total as at 31 December 2015 

Total as at 31 December 2014 

Contribution to 
the Facility 

Contribution to 
interest subsidies 
and technical 
assistance 

Total 
contributed 

Called and not 
paid * 

56,921 

84,164 

140 

90 

510 

46,020 

50 

31,914 

519,401 

501,015 

27,183 

550 

13,663 

270,808 

70 

120 

6,235 

30 

112,225 

1,300 

21,103 

370 

210 

180 

127,979 

58,896 

275,853 

2,157,000 

2,057,000 

6,218 

9,163 

140 

90 

510 

5,075 

50 

3,597 

54,467 

54,066 

3,266 

550 

1,801 

30,879 

70 

120 

687 

30 

12,350 

1,300 

2,544 

370 

210 

180 

16,241 

6,663 

33,054 

243,691 

143,691 

63,139 

93,327 

280 

180 

1,020 

51,095 

100 

35,511 

573,868 

555,081 

30,449 

1,100 

15,464 

301,687 

140 

240 

6,922 

60 

124,575 

2,600 

23,647 

740 

420 

360 

144,220 

65,559 

308,907 

2,400,691 

2,200,691 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

42,590 

 (*) On 10 November 2014, the Council fixed the amount of financial contributions to be paid by each Member State by 21 January 2015. As 
at 31 December 2014 EUR 42,590 were not paid in. 

120 

 
 
 
 
 
 
 
 
 
16  Contingent liabilities and commitments (in EUR’000) 

INVESTMENT FACILITY 

Commitments 

Un-disbursed loans 

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

Issued guarantees 

Interest subsidies and technical assistance 

Contingent liabilities 

Signed non-issued guarantees 

31.12.2015 

31.12.2014 

1,189,564 

298,355 

798 

352,036 

1,161,859 

200,637 

2,298 

285,239 

10,000 

25,000 

Total contingent liabilities and commitments 

1,850,753 

1,675,033 

17 

Interest and similar income and expenses (in EUR’000) 

The main components of interest and similar income are as follows: 

Cash and cash equivalents 

Held-to-maturity financial assets 

Loans and receivables 

Interest subsidies 

Total interest and similar income 

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

Derivative financial instruments 

Cash and cash equivalents 

Total interest and similar expenses 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

- 

4 

86,305 

4,076 

90,385 

543 

276 

72,135 

4,286 

77,240 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

-1,525 

-31 

-1,556 

-1,522 

- 

-1,522 

121 

 
 
 
 
 
 
 
 
   
   
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
INVESTMENT FACILITY 

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

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

Fee and commission on loans and receivables 

Fee and commission on financial guarantees 

Other 

Total fee and commission income 

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

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

Total fee and commission expenses 

19   Net realised gains on available-for-sale financial assets (in EUR’000) 

The main components of net realised gains on available-for-sale financial assets are as follows: 

Net proceeds from available-for-sale financial assets 

Dividend income 

Net realised gains on available-for-sale financial assets  

20  General administrative expenses (in EUR’000) 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

890 

42 

- 

932 

316 

78 

769 

1,163 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

-63 

-63 

-37 

-37 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

834 

33,044 

33,878 

3,179 

4,930 

8,109 

General  administrative  expenses  represent  the  actual  costs  incurred  by  the  EIB  for  managing  the  Facility  less  income  generated  from 
standard appraisal fees directly charged by the EIB to clients of the Facility. 

Actual cost incurred by the EIB 

Income from appraisal fees directly charged to clients of the Facility 

Total general administrative expenses 

From 01.01.2015 

From 01.01.2014 

to 31.12.2015 

to 31.12.2014 

-45,506 

2,461 

-43,045 

-40,912 

2,784 

-38,128 

Following the entry into force of the revised Cotonou Partnership Agreement on the 1st of July 2008, general administrative expenses are not 
covered anymore by the Member States. 

21 

Impairment on other assets (in EUR’000) 

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

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

122 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22 

Involvement with unconsolidated structured entities (in EUR’000) 

INVESTMENT FACILITY 

Definition of a structured entity 

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

 

 

 

 

Restricted activities; 

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

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

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

Unconsolidated structured entities 

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

Definition of Interests in structured entities: 

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

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

Type of 
structured entity 

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

Venture capital 
operations 

Nature and purpose 

Interest held by the Facility 

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

Net disbursed amounts; 

Interest income. 

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

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

Dividends 
income. 

received  as  dividend 

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

Type of structured entity  Caption 

Carrying 
amount at 
31.12.2015 

Carrying 
amount at 
31.12.2014 

Maximum 
exposure to 
loss at 
31.12.2015 

Maximum 
exposure to 
loss at 
31.12.2014 

Project finance operations 

Loans and receivables 

- 

7,225 

- 

7,225 

Venture capital funds 

Total 

Available-for-sale financial 
assets 

396,203 

385,245 

645,833 

555,629 

396,203 

392,470 

645,833 

562,854 

123 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
23 

Impact financing envelope (in EUR’000) 

INVESTMENT FACILITY 

In  June  2013  the  ACP-EU  Joint  Ministerial  Council  approved  the  new  financial  protocol  for  the  11th  European  Development  Fund  (EDF), 
covering the period 2014-2020.  

A new EUR 500m endowment was agreed for the Investment Facility, the so called ‘impact financing envelope’ or “IFE”, enabling the Facility 
to support projects that promise a particularly high development impact whilst bearing the greater risks inherent in such investments. This 
envelope will present new possibilities for enhancing the Facility’s private sector lending through investments in the following instruments: 

Social  impact  equity  funds  -  promoted  by  an  emerging  population  of  private  equity  fund  managers  who  put  the  alleviation  of  social  or 
environmental issues at the core of their funds' investment strategy but still target sustainability at the levels of both the fund and its investee 
companies. 

Loans to financial intermediaries - (e.g. microfinance institutions, local banks and credit unions) operating in ACP countries in which the 
EIB cannot consider financing - in particular in local currency - under the existing credit risk guidelines, e.g. due to either high country risks, 
currency volatility or lack of pricing benchmarks. The main objective of such loans will be to fund projects with a high developmental impact, 
especially in the field of support to micro and small enterprises (MSEs) and agriculture, which generally do not qualify for IF financing. 

Risk sharing  facilitating instruments -  which will take the form of first loss guarantees ("first loss pieces") that will facilitate risk sharing 
operations of the EIB with local financial intermediaries (mainly commercial banks) for the benefit of underserved SMEs and small projects 
that meet the Impact Financing Criteria in situations where a market gap has been identified in relation to the access of SMEs/small projects 
to finance. The first loss pieces would be structured as a counter-guarantee in favour of senior guarantee tranches funded by the EIB - under 
the  Investment  Facility  -  and  by  other  International  Financial  Institutions/Development  Financial  Institutions,  thus  generating  a  substantial 
leverage effect. 

Direct financing - through debt or equity instruments in projects with sound and experienced promoters and high developmental impacts, 
but that  will, however, also entail higher expectations of losses and difficulties to recover the investment (equity type risk with higher than 
usual expectation of losses). The EIB will apply strict selection and eligibility criteria for this instrument, as these projects, notwithstanding 
their high developmental impact, would not be able to meet acceptable financing criteria (i.e. low expectation of recovering the investment or 
offsetting the losses through interest rates /equity returns). 

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

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

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

Type of IFE investment 

Caption 

Social impact equity funds 

Loans to financial 
intermediaries 

Risk sharing facilitating 
instruments 

Available-for-sale financial 
assets 

Loans and receivables 

Issued guarantees 

Direct financing – equity 
participations 

Available-for-sale financial 
assets 

Total 

Carrying 
amount at 
31.12.2015 

2,257 

- 

- 

- 

2,257 

Carrying 
amount at 
31.12.2014 

Undisbursed 
amount at 
31.12.2015 

Undisbursed 
amount at 
31.12.2014 

- 

- 

- 

- 

- 

16,927 

8,237 

10,000 

- 

40,000 

66,927 

- 

- 

- 

8,237 

124 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
24  Subsequent events 

INVESTMENT FACILITY 

There  have  been  no  material  post  balance  sheet  events  which  could  require  disclosure  or  adjustment  to  the  31  December  2015  financial 
statements. 

125