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    CORDAID NAAM BU CORDAID ANNUAL REPORT 2018 FINANCIAL STATEMENTS THE HAGUE


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    CORDAID 2018 ANNUAL REPORT CONTENTS ANNUAL ACCOUNTS 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Consolidated Balance Sheet as of December 31, 2018 (after proposed appropriation of funds) . . . . . . . . 4 Consolidated Statement of Income and Expenditure for the year ended December 31, 2018 . . . . . . . . . . 5 Appropriation of the funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Performance indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Consolidated Statement of Cash Flows for the year ended December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Foundation Individual Financial Statements of Stichting Cordaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Individual Balance sheet of Stichting Cordaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Individual Statement of income and Expenditure for the year ended at December 31, 2018 . . . . . . . . . 37 NOTES TO THE FOUNDATION INDIVIDUAL FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Provision in the constitution governing the appropriation of balances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Appropriation of result . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Country offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Subsequent events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 INDEPENDENT AUDITOR’S OPINION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 2 AUGUST 2019 © CORDAID


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    AnnUAl ACCOUnTS 2018 CORDAID 2018 ANNUAL REPORT ANNUAL ACCOUNTS 2018 INTRODUCTION Overall expenditure was €141.9m, of which €132.7m (93.6% of total expenditure) was spent on Cordaid’s objectives. Delayed These financial statements reflect a detailed accounting of implementation of programs, as a consequence of political Cordaid’s activities in 2018, described in the annual report. factors in our operating environments, is the main cause for The annual accounts are an integrated part of Cordaid’s annual the lower expenditure compared to budget. report. Expenditure on fundraising amounted to €6.2m (4.4% of total expenditure) in 2018. This is in line with previous year and For Cordaid, 2018 was the first year of the the implementation €1.1m below budget. Because the foreseen lower income from of its strategic plan 2018-2020. In terms of finance and opera- inheritances, it was decided, during the year, to reduce the tions the main elements in the strategic plan are the imple- campaign budget. mentation of Project Based Working as the main organizing The costs of management and administration stood at €3.0m, principle and the implementation of Subsidiarity which which is €1.5m above budget and €0.9m above previous year. includes handing over project implementation responsibilities The expenditure above budget was due to the additionally from the Global Office to our Country Offices. approved investment budget of €1.5m for implementation of the new strategic plan. Without these additional costs, the cost Cordaid acquired an income of €136.7m, that is €5.3m below for management and administration would have been in line budget, but a growth of €7.5m (6%) compared to 2017. with budget. Private fundraising results (including companies) were well in line with budget, except for the income from inheritances The financial income & expenses amounted to €0.3m in 2018. and legacies. As a result, income from private individuals and The negative result was mainly caused by a sharp drop in share companies came out €1.2m below budget. prices in the fourth quarter of 2018. The income from lotteries was below budget (€3.6m), because an additional contribution from the Postcode Lottery was not The overall result of -€3.9m was €1.6m better than budgeted. realized. Income from non-profit organizations came out €1.4m Although satisfactory, further measures will be taken to below budget for a large part compensated by government achieve a balanced budget whilst implementing the 2018-2020 grants that were €0.8m above budget. The income from related strategic plan. organizations (Caritas members) was in line with budget. The Hague The other income, consisting mainly of income from invest- July 25, 2019 ments issued in connection with the objectives, was €1.7m below budget. The negative result is caused by significant write-off on participations and loans amounting to €5.3m, partly compensated by exchange rate gains caused by the appreciation of the US dollar in 2018 and an unrealized gain on the valuation of a hedge instrument. AUGUST 2019 © CORDAID 3


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    CORDAID 2018 ANNUAL REPORT AnnUAl ACCOUnTS 2018 Consolidated Balance Sheet as of December 31, 2018 (after proposed appropriation of funds) X € 1,000 NOTE 31/DEC/2018 31/DEC/2017 Assets Fixed assets Tangible fixed assets 5 251 444 Financial fixed assets - Issued in connection with the objectives 6 56,379 60,297 - Investments 7 20,871 21,542 77,250 81,839 Current assets Receivables 8 - Receivables from grants 13,899 10,252 - Implementing organization advances 11,086 5,253 - Receivable from inheritances 7,033 5,142 - Interest receivable 959 763 - Other receivables 1,772 1,580 34,749 22,990 Cash and Bank 9 44,066 51,813 Total assets 156,316 157,086 X € 1 .000 NOTE 31/DEC/2018 31/DEC/2017 Liabilities Reserves 10 - Continuity reserve 11,000 5,887 - Earmarked reserves 1,282 1,383 12,282 7,270 Funds 10 - Restricted funds 1,526 2,301 - Semi-restricted funds 19,489 18,067 - Loans & guarantees fund 74,589 84,099 95,604 104,467 Provisions 11 1,141 1,974 Non-current liabilities 12 - Project commitments 0 0 Current liabilities 12 - Project commitments 15,977 13,736 - Other current liabilities 31,312 29,639 47,289 43,375 Total liabilities 156,316 157,086 4 AUGUST 2019 © CORDAID


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    AnnUAl ACCOUnTS 2018 CORDAID 2018 ANNUAL REPORT CONSOLIDATED STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED DECEMBER 31, 2018 X € 1,000 NOTE 2018 BUDGET 2018 2017 Income - Income from private individuals 14 25,246 27,000 23,675 - Income from companies 15 547 - 578 - Benefits from lottery organizations 16 2,700 6,285 2,725 - Government grants 17 104,216 103,396 90,176 - Income from related (international) 18 789 734 1,811 Organizations - Income from other non-profit organizations 19 3,242 4,630 10,246 Total acquired income 136,740 142,045 129,211 - Income from sale of goods and or rendering 20 24 - 242 of services - Other income 21 1,520 3,248 -4,408 Total incoming resources 138,284 145,293 125,045 Resources expended Spent on objectives - Program costs: 22 Healthcare 76,770 78,345 59,051 Humanitarian Aid 24,752 28,110 24,804 Security & Justice 11,111 14,260 13,499 Cordaid Netherlands 365 - 435 Resilience 10,935 10,907 10,053 Investments 4,348 5,505 4,118 Other activities 29 - 4,698 - Public information / awareness campaigns 23 4,423 5,088 4,917 Expenditure on objectives 132,733 142,215 121,575 - Expenditure on fundraising 23 6,172 7,235 6,461 - Management and administration cost 23 2,959 1,469 2,061 Total resources expended 141,864 150,919 130,097 Sum of income and expenditures before -3,580 -5,626 -5,052 financial income and expenses Financial income and expenses 27 -270 180 -5 Corporate income taks -1 - -94 Balance of income and expenditures -3,851 -5,446 -5,151 AUGUST 2019 © CORDAID 5


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    CORDAID 2018 ANNUAL REPORT AnnUAl ACCOUnTS 2018 APPROPRIATION OF THE FUNDS The funds were appropriated as follows: X € 1,000 2018 2017 Appropriation of funds The balance of funds was appropriated as follows: Reserves - continuity reserve 5,113 0 - earmarked reserves -101 -2,601 5,012 -2,601 Funds - restricted funds -775 1,586 - semi-restricted funds 1,422 3,654 - loans & guarantees fund -9,510 -7,790 -8,863 -2,550 Balance of income and expenditures -3,851 -5,151 6 AUGUST 2019 © CORDAID


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    AnnUAl ACCOUnTS 2018 CORDAID 2018 ANNUAL REPORT PERFORMANCE INDICATORS In 2018 the following performance indicators were derived from the statement of income and expenditure: PERFORMANCE INDICATORS 2018 BUDGET 2017 Ability to spend income on objectives - Income-to-spending ratio (% expenditure on objectives vs. total incoming resources) 96.0% 97.9% 97.0% Overall efficiency of the organization - Total program-to-spending ratio (% expenditure on objectives vs. total resources expended) 93.6% 94.2% 93.4% - Program-to-spending ratio (% of direct program costs vs total resources expended) 87.8% 87.8% 87.9% - Program-management-to-spending ratio (% of program management costs vs total 5.8% 6.5% 5.6% resources expended) - Fundraising-to-spending ratio (% of fundraising costs vs. total resources expended) 4.4% 4.8% 5.0% - Management and administration ratio (% vs. total resources expended) 2.1% 1.0% 1.6% Efficiency of fundraising - Fundraising ratio (% cost of generating funds vs. total incoming resources) 4.5% 5.1% 5.0% ▪ Income-to-spending ratio: 96.0%. Income and expenditure ▪ Fundraising-to-spending ratio: 4.4%. Due to the savings on on objectives follow the same trend compared to prior year the campaign budget during the year as a response to lower and is slightly below budget. income from inheritances, the percentage of fundraising ▪ Program-to-spending ratio: 87.8%. In line with prior year costs is below budget and previous year. and budget. Program expenditure follows the same pattern ▪ Management & administration ratio: 2.1%. Management & as overall expenditure. administration costs were above budget and prior year, ▪ Program-management-to-spending ratio: 5.8%. Due to the because the separately budgeted investments related to the release of the hypotax reservation, program management new strategic plan are for the larger part included in the costs are relatively low compared to overall expenditure. Management & administration costs. AUGUST 2019 © CORDAID 7


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    CORDAID 2018 ANNUAL REPORT AnnUAl ACCOUnTS 2018 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2018 The movement of the cash and cash equivalents is as following: X € 1,000 NOTE 2018 2017 Cash flows from operating activities Incoming resources 14-21 138,284 125,045 Resources expended 22-23 141,864 130,097 -3,580 -5,052 Adjustments for: - Depreciation tangible fixed assets 5 277 702 - Financial income and expenses 27 -270 -5 - Corporate income tax -1 -94 - Changes in provisions 11 -833 -4,869 -827 -4,266 Changes coming from operating activities: - Receivables 8 -11,759 1,969 - Financial fixed assets (connected to the objectives) 6 3,918 2,408 - Project commitments 12 2,241 -3,154 - Investments 7 671 -679 - Other current liabilities 12 1,673 -4,674 -3,256 -4,130 Cash flows from operating activities -7,663 -13,448 Cash flows from investing activities Purchases of tangible fixed assets 5 -84 -10 Cash flows from investing activities -84 -10 Cash flows from financing activities Receipts / repayments of long-term borrowings - - Cash flows from financing activities - - Net decrease in cash -7,747 -13,458 X € 1,000 2018 2017 Balance at 1 January 51,813 65,271 Changes -7,747 -13,458 Balance at 31 december 44,066 51,813 8 AUGUST 2019 © CORDAID


  • Page 9

    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 . GENERAL NOTES Cordaid holds 100% of the shares of Cordaid Investment Management BV. 1 .1 Activities Rooted in the tradition of the Catholic Social Teachings, The street address of all foundations and companies is: Cordaid’s mission is to reduce fragility and people’s vulnerabil- Lutherse Burgwal 10 ity where it is most needed and most difficult: in fragile and 2512 CB The Hague conflict-affected settings. Cordaid does this by promoting The Netherlands equality and social inclusion, by increasing the resilience of Dutch Chamber of Commerce: 41160054 people and their communities and by strengthening the social contract between citizens and their governments. Cordaid The Board of Directors of Cordaid bears ultimate responsibility focuses aid efforts in some of world’s most conflict-torn and for the general course of affairs at Stichting Cordaid. With the volatile countries like South Sudan, Afghanistan, the Central Supervisory Board, the Board is responsible for Cordaid’s African Republic and the Democratic Republic of Congo. In the corporate governance structure and compliance with good Netherlands, Cordaid reduces poverty and promote inclusion by governance rules. The composition of the Supervisory Board is encouraging cooperative entrepreneurship for people with low such that its members can act critically and independently of incomes and a distance to the labour market. one another, of the Board and of any particular interests. The Supervisory Board is responsible for supervising the Board and Cordaid is a foundation. Its objectives as described in its the general course of affairs at Cordaid. Articles of Association are as follows (translated from Dutch): The Board of Directors is tasked with managing the founda- ‘In accordance with the evangelical message and inspired by the Catholic tion, including running its day-to-day business and imple- community in the Netherlands, the purpose of the foundation is to carry out menting its programs and activities. The budget, the annual activities focused on: report and the annual accounts that are prepared by the Board a. providing emergency and refugee aid; of Directors are subject to adoption by the Supervisory Board b. providing aid to specific groups, such as the elderly people, the disabled after advice from the Audit Committee. The Supervisory Board and children; also adopts the multi-annual strategic policy plan drafted by c. providing medical aid; and the Board of Directors and approves the annual plan. d. all aspects related to structural poverty relief of subordinated groups, especially in developing countries, and in Central and Eastern Europe and The members of the Board of Directors of Stichting Cordaid at the Netherlands.’ December 31, 2018 are: ▪ L.C. Zevenbergen, CEO The consolidated annual accounts comprise the figures of the ▪ W.J. van Wijk, CFO following entities: ▪ Stichting Cordaid, The Hague During 2018, the Supervisory Board members of Stichting ▪ Stichting Cordaid Expats, The Hague Cordaid were: ▪ Stichting Cordaid Participaties, The Hague ▪ A.J.M. Heerts, Chair ▪ Corpav BV, The Hague ▪ M.C.T. van de Coevering, member Audit Committee ▪ Cordaid Investment Management BV, The Hague ▪ J.H.M. van Bussel, member Audit Committee ▪ M. van Beek Stichting Cordaid Expats’ objective is to employ expatriates ▪ J.J.A. de Boer working for Stichting Cordaid. Stichting Cordaid Participaties’ ▪ B.L.J.M. van Dijk-van de Reijt objective is to invest through loans or participation in social ▪ M.W.J.A. Landheer-Regouw enterprises worldwide. Both foundations have the same Board of Directors as Stichting Cordaid. The Board members of Stichting Cordaid Participations and Stichting Cordaid Expats are the same as for Stichting Cordaid Corpav BV makes direct and indirect investments in social at December 31, 2018. enterprises all over the world. Stichting Cordaid Participaties is the only shareholder of Corpav BV. At December 31, 2018, the board of directors of Cordaid Invest- ment Management BV comprises J.M.F. Verheijen and F.J.M. Cordaid Investment Management BV has the objective to act as Goossens. Stichting Cordaid is the only shareholder. manager for one or more investment institutions. Currently Cordaid Investment Management BV manages the social impact investment portfolio of Stichting Cordaid. Stichting AUGUST 2019 © CORDAID 9


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS 1.2 Notes to the cash flow statement 1 .3 Changes in accounting estimates The cash flow statement is prepared using the indirect method. Cordaid made no changes to its policies for accounting The funds in the cash flow statement comprise cash and cash estimates compared to the previous year. equivalents. Cash flows in foreign currencies are translated at an average rate. Exchange differences affecting cash items, 1 .4 Estimates interest paid and interest received are included in cash from In applying accounting policies and standards for preparing operating activities. annual accounts, the Board of Cordaid is required to make estimates and judgments that might significantly influence Cash flows from operating activities the amounts disclosed in the annual accounts. If necessary for The negative gross cash flow from operating activities of €7.7m the purposes of providing the view required under Section was mainly driven by the negative balance of funds and 362(1), Book 2 of the Netherlands Civil Code, the nature of these reserves in 2018. estimates and judgments, including the related assumptions, are disclosed in the notes to the relevant items. Factors positively affecting cash flow, compared to the balance of funds in the statement of income and expenditure are: 1 .5 Consolidation ▪ A decreased value of the Fixed Financial Assets of €3.9m, as a The consolidation includes the financial information of consequence of non-cash related depreciations and Stichting Cordaid and the entities in which it exercises control write-offs. or whose central management it conducts. All entities in which ▪ Increased current liabilities of €3.9m, mainly due to higher Cordaid exercises control or whose central management it deferred grants related to advance payments received by the conducts are consolidated in full. Global Fund and higher project commitments related to a Intercompany transactions, profits and balances among recently started resilience program in South Sudan. consolidated entities are eliminated, unless these results are realised through transactions with third parties. Unrealised Factors negatively affecting cash flow compared to the balance losses on intercompany transactions are eliminated as well, of funds in the statement of income and expenditure are: unless such a loss qualifies as an impairment. The accounting ▪ Receivables increased €11.8m, mainly driven by higher policies of group companies and other consolidated entities receivables from governments, receivables from inheritances have been changed where necessary in order to align them to and advance payments to implementing organisations. The the prevailing group accounting policies. higher receivables from governments mainly relate to delayed donor payments for health and resilience projects in The consolidated entities are listed below: South Sudan and Central African Republic. The higher ▪ Stichting Cordaid Expats, The Hague advance payments to implementing organisations is due to ▪ Stichting Cordaid Participaties, The Hague advance payments to sub-recipients made for the new Global ▪ Corpav BV, The Hague Fund program in DR Congo. Because of the closure of the ▪ Cordaid Investment Management BV, The Hague previous Global Fund contract end of 2017, balances were significantly lower at the end of 2017. ▪ Provisions were settled for €0.8m, especially in connection to the redundancy provision formed year-end 2016. Cash flows from investing activities Purchases of tangible assets came to €0.1m in 2018. Invest- ments for new IT systems form the greater part of this cash outflow. Cash flows from financing activities Cordaid has no non-current liabilities for financing its opera- tions. The non-current liabilities on the balance sheet relate to long-term project financing, which are recognized as cash flows from operating activities. 10 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 2 . ACCOUNTING PRINCIPLES 2.5 Financial fixed assets 2 .1 General Issued in connection with the objectives: The financial statements have been prepared in accordance with the statutory provisions of Part 9, Book 2 of the Dutch Loans, guarantees and participations Civil Code and the firm pronouncements in the Guidelines for Loans and guarantees disclosed under financial assets are Annual Reporting in the Netherlands as issued by the Dutch recognized initially at fair value of the amount owed net of any Accounting Standards Board. More specifically, the financial provisions considered necessary. These receivables are subse- statements have been prepared in accordance with the Dutch quently measured at amortized cost. Accounting Standard for Fundraising Institutions (RJ 650). The financial statements are prepared in Euros. Balances and Participations are valued at acquisition cost adjusted for results in 2018 are compared with the budget as approved by impairments at reporting date. These participations do not the Supervisory Board and 2017 results and balances. Assets involve a structural commitment for the purposes of Cordaid’s and liabilities are generally valued at acquisition cost, produc- own operations. tion cost or at current value. If no specific valuation method is indicated, the valuation is done at the acquisition price. Derivatives References are included in the balance sheet and statement of Derivatives are initially valued at cost price and subsequently income and expenses. valued at fair value. Derivatives with a negative value are presented under current liabilities. Changes in the value of 2 .2 Comparison with previous year derivatives are recognized directly in the statement of income The accounting principles used for valuation and recognition of and expenditure. Transactions costs for derivates are included income and expenditure are unchanged from previous year. in the acquisition cost. For comparison purposes, the prior year figures of work Investments: advances paid to implementing partners have been reclassified from Other accruals and deferred income to Implementing Bonds and shares partner advances. In addition, the revaluation of the cross Bonds and shares are measured at fair value. Changes in value currency interest rate swap derivative has been reclassified and transaction costs are recognized through income or from Financial income and expenses to Other income. expenditure. Transaction costs are charged directly to the statement of income and expenditure. 2 .3 Foreign currency 2 .6 Non-current asset impairment Functional currency Cordaid assesses at each reporting date whether there is any The financial statements are presented in euros, which is the evidence of assets being subject to impairment. If any such functional and presentation currency of Cordaid. evidence exists, the recoverable amount of the relevant asset is determined. An asset is subject to impairment if its carrying Transactions, receivables and payables amount is higher than its recoverable amount; the recoverable Transactions in foreign currencies during the period are amount is the higher of net realizable value and value in use. If included in the financial statements at the exchange rate on it is established that a previously recognized impairment loss the transaction date. Monetary assets and liabilities denomi- no longer applies or has declined, the increased carrying nated in foreign currencies are translated into the functional amount of the asset in question is not set higher than the currency at the closing rate. The exchange differences arising carrying amount that would have been determined had no from the settlement and translation are credited or charged to impairment loss been recognized. the statement of income and expenditure. The net realizable value is determined based on the active Translation differences on non-monetary assets held at cost market. An impairment loss is directly expensed in the income are recognized using the exchange rates prevailing at the dates statement. of the transactions. Translation differences on non-monetary assets such as equities held at fair value through income or Cordaid assesses at each reporting date whether there is expenditure are recognized through income or expenditure as objective evidence that a financial asset or a group of financial part of the fair value gain or loss. assets is impaired. If any such evidence exists, the impairment loss is determined and recognized in the income statement. 2.4 Tangible fixed assets Buildings, IT equipment, furniture and fittings, vehicles and The amount of an impairment loss incurred on financial assets other assets are all valued at historical cost or manufacturing stated at amortized cost is measured as the difference between price including directly attributable expenditure, less straight- the asset’s carrying amount and the present value of estimated line depreciation over their estimated useful lives, and impair- future cash flows, discounted at the financial asset’s original ment losses. Grants are deducted from the acquisition or effective interest rate (i.e. the effective interest rate computed manufacturing cost of the assets to which they relate. at initial recognition). AUGUST 2019 © CORDAID 11


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS If, in a subsequent period, the amount of the impairment loss 2 .10 Provisions decreases, and the decrease can be related objectively to an Provisions are recognized for legally enforceable or construc- event occurring after the impairment was recognized, the tive obligations existing at the balance sheet date, the settle- previously recognized impairment loss shall be reversed. The ment of which will probably require an outflow of resources reversal shall not result in a carrying amount of the financial whose extent can be reliably estimated. asset that exceeds what the amortized cost would have been had the impairment not been recognized at the date the Provisions are measured on the basis of the best estimate of the impairment is reversed. The amount of the reversal shall be amounts required to settle the obligations at the balance sheet recognized through profit or loss. date. Unless indicated otherwise, provisions are stated at the present value of the expenditure expected to be required to If an impairment loss has been incurred on an investment settle the obligations. in an equity instrument carried at cost, the amount of the impairment loss is measured as the difference between the 2 .11 Liabilities carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market General rate of return for a similar financial asset. The impairment Liabilities are initially recognized at fair value. Transaction loss shall be reversed only if the evidence of impairment is costs directly attributable to the incurrence of the liabilities objectively shown to have been removed. are included in the measurement on initial recognition. Liabilities are subsequently measured at amortized cost; this is 2 .7 Receivables the amount received plus or less any premium or discount and net of transaction costs. General Receivables are initially recognized at fair value and subse- Operational lease quently carried at amortized cost. Allowances for doubtful Liabilities under operating leases (such as the lease of premis- debts are deducted from the carrying amount of receivables. es) are accounted for in the statement of income and expendi- ture equally over the term of the contract, taking into account Receivable from inheritances reimbursements received from the lessor. Inheritances on which third parties have a right of usufruct are recognized in the annual accounts. Recognition is based Project commitments the best practices prescribed by the Dutch branche organiza- Project commitments are recognized as soon as a contract is tion Goede Doelen Nederland. The valuation method used by issued or when a grant decision is communicated in writing or Cordaid is based on the calculation used by the tax authorities otherwise and are stated at the fair value stated in the con- for the calculation of inheritances tax. Receivables are recog- tract, net of any payments. nized and included in the balance sheet. Income is however recognized through the statement of income and expenditure, after which the benefits are included in a designated fund until the moment of release. 2 .8 Cash and cash equivalents Cash and cash equivalents comprise cash and bank balances and demand deposits falling due in less than 12 months. Cash and cash equivalents are stated at face value. 2 .9 Reserves and funds The equity of Cordaid is divided into the following reserves and funds: ▪ The continuity reserve is created to ensure that Cordaid can meet its legal and moral obligations in case of a significant fall in income in the future. ▪ Earmarked reserves are earmarked for future spending on the objectives of Cordaid. The Board of Directors decides on the actual purposes of the reserves, based on internally agreed criteria. ▪ The restricted funds are earmarked for a specific project as agreed with third-party donors. ▪ Semi-restricted funds are earmarked for activities related to a certain topic, but not limited to specific projects. ▪ The loans and guarantees fund has been committed for loans, guarantees and equities connected to the objectives of Cordaid. The result on these financial assets and the costs of managing this portfolio reflect the changes in the fund in a year. 12 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 3 . ACCOUNTING PRINCIPLES FOR expended resource. Cordaid accounts for gifts in kind if the discount/gift has a connection with the nature of Cordaid’s THE CONSOLIDATED STATEMENT activities and objectives and Cordaid would have purchased the OF INCOME AND EXPENDITURE services or goods if the gift/discount had not been received. 3 .1 General Other Income Income and expenses are recognized in the statement of income and expenditure in the year to which they relate. The Result of loans, guarantees and participations allocation is made consistently with previous years. The The result of loans, guarantees and participations is made up of balance of funds is defined as the difference between income interest received on loans and guarantees under the Loan and and expenses. Income is accounted for in the year it was Guarantee Program, realised and unrealised changes in the realised and losses are accounted for as soon as they are valuation of loans and participations, dividend and fees for identified. restructuring loans. 3 .2 Income recognition Income from sale of goods and or rendering of services Income from sale of goods and or rendering of services are Income from private individuals and companies accounted for in the year in which the materials are sold or Income from individuals and companies, previously classified services have been provided. as own fundraising, involves gifts and donations, mailings, collections, legacies and the sale of materials. Income from 3 .3 Exchange rate differences gifts and donations, contributions, collections and mailings Transactions denominated in foreign currencies conducted are accounted for in the year in which they are received. during the reporting period are recognized in the annual Exceptions are written undertakings that have been received accounts at the rate of exchange on the transaction date. before year-end as these can be accounted for in the current Monetary assets and liabilities denominated in foreign year. currencies are translated into the functional currency at the rate of exchange at the reporting date. Any resulting exchange Legacies are recognized based on a statement received from the differences are recognized through income or expenditure. executor in the year in which the amount can be determined Non-monetary assets and liabilities stated at cost and denomi- reliably. The valuation of legacies with property is done based nated in foreign currencies are translated at the rate of on the most recent correspondence and receipts are included exchange at the transaction date (or the approximate rate of up to the preparation of financial statements. The valuation is exchange). done prudently. 3.4 Depreciations on tangible fixed assets Income from lottery organizations Tangible fixed assets are carried at cost less straight-line Income from lottery organizations is accounted as such when depreciation over their estimated useful lives. Tangible assets Cordaid carries no risk in the fundraising campaign. The are depreciated from the time they are taken into use over their income from lottery organizations is recognized in the year in estimated useful lives. Future depreciation is adjusted if the which the income is received or pledged. estimate of future useful life changes. Gains and losses on the sale of tangible fixed assets are included in depreciation. Income from other non-profit organizations Income from non-profit organizations is accounted as such 3.5 Employee benefits when Cordaid carries no risk in the fundraising campaign. The income from non-profit organizations is recognized in the year Short-term employee benefits in which the income is received or pledged. Salaries, wages and social security contributions are recog- However, grants and subsidies from other non-profit organiza- nized in the statement of income and expenditure based on the tions are recognized in the statement of income and expendi- pay and benefits package to the extent that they are payable to ture in the year in which the subsidized costs were incurred. employees. The grants are recognized where it is likely that they will be received and Cordaid will comply with all attached conditions. Pensions Cordaid’s pension plan is administered by the Zorg en Welzijn Income from government grants Pension Fund, a pension fund for the health and welfare sector. Grants and subsidies are recognized in the statement of income Employees’ retirement and partner pensions are based on their and expenditure in the year in which the subsidized costs were pensionable salary for full-time employment, net of the incurred. The grants are recognized where it is likely that they state-pension offset. The pension fund endeavors to index-link will be received and Cordaid will comply with all attached any accrued pension entitlements and pensions in payment conditions. based on general salary trends in the collective bargaining agreements that govern its affiliated employers in a particular Gifts in kind year. The pension fund decides every year whether index-link- Gifts in kind are stated at their fair market value in the Nether- ing would be appropriate and, if so, what index to use given the lands. Where items involving gifts in kind are sent directly to financial situation and expected developments in that situa- emergency areas, their value is recognized as a gift and as an tion. In doing so, the pension fund uses nominal and realistic AUGUST 2019 © CORDAID 13


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS coverage ratios as benchmarks. Although the pension fund may 4 . FINANCIAL INSTRUMENTS decide to apply catch-up index linking, such a decision will not have a retroactive effect and will not trigger subsequent AND RISK MANAGEMENT payments. Index linking is funded partially from contributions and partially from the return on plan assets. The actual 4 .1 Market risk coverage ratio was 97.5% at 31 December 2018 (30 April 2019: 100.4%). Currency risk Cordaid operates in the European Union, Africa, Asia, Latin- Contributions are recognized as employee benefits expense as America and the United States. The currency risk for Cordaid soon as they are payable. Prepaid contributions are recognized largely concerns positions and future transactions in US within prepayments and accrued income if they entail a refund dollars and currencies whose rate is closely related to the US or a reduction in future payments. Contributions payable are dollar. Management has determined that the cost of structur- disclosed as liabilities in the balance sheet. ally hedging these currency risks does not outweigh the benefits. Based on managements risk assessment, one inciden- 3 .6 Financial income and expenses tal hedge contract is in place to cover currency risks on loan(s) denominated in Myanmar Kyat (MMK). A swap contract, MMK Interest paid and received to USD, has been used for this purpose. This swap contract does Interest paid and received is recognized on a time-weighted hold a risk, because the USD inflow is dependent on the 6 basis, taking into account the effective interest rate of the month LIBOR. Natural hedges exist because receivables and assets and liabilities concerned. When recognizing interest liabilities are often related. paid, allowance is made for transaction costs on loans received as part of the calculation of effective interest. Price risk Cordaid invests its temporary cash balances according to a Interest income and income from investments defensive to neutral strategy compared to a very conservative The line item interest income and income from investments policy in previous years. As a consequence, Cordaid faces a contains the (gross) interest, dividends and realised and limited market risk related to its portfolio of bonds and shares unrealised capital gains. Interest income and expense are that is valued at market value. recognized time proportionally. Interest rate and cash flow risk Interest income is recognized as investment income exclusive Cordaid incurs interest rate risk on interest-bearing receivables of interest received on loans and guarantees issued in the (in particular those included in financial assets and cash). context of the Loans & Guarantees Program, which is recog- nized entirely as gains on financial assets issued in connection Credit risk with the objectives. Cordaid does not have any significant concentrations of credit risk. Receivables mainly relate to grants from solid govern- Changes in financial instruments at fair value ments or multilateral institutions. Financial instruments are initially valued at cost price and subsequently valued at fair value. Changes in the value of the Liquidity risk following financial instruments are recognized directly in the Cordaid uses several banks to avail itself of a range of overdraft statement of income and expenditure: facilities. Where necessary, further securities will be furnished ▪ purchased loans, bonds (unless held to maturity) and equity to the bank for available overdraft facilities. instruments that are quoted in an active market; ▪ decreases in value of financial instruments at fair value are recognized in the statement of income and expenditure. 14 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 5 . TANGIBLE FIXED ASSETS Movements of the tangible fixed assets are as follows: X € 1,000 BUILDINGS IT EQUIPMENT FURNITURE VEHICLES OTHER ASSETS TOTAL AND FITTINGS Balance at 1 January Cost 1,990 4,516 1,601 28 283 8,418 Accumulated depreciation -1,884 -4,294 -1,485 -28 -283 -7,974 Carrying value at 1 January 106 222 116 0 0 444 Changes Purchases 0 84 0 0 0 84 Disposals 0 0 0 0 0 0 Depreciation -71 -154 -52 0 0 -277 Depreciation on disposals 0 0 0 0 0 0 Total changes -71 -70 -52 0 0 -193 Balance at 31 December Cost 1,990 4,600 1,601 28 283 8,502 Accumulated depreciation -1,955 -4,448 -1,537 -28 -283 -8,251 Carrying value at 31 December 35 152 64 0 0 251 Depreciation percentages 10% 33% 20% 33% 33% The total investments in 2018 amounted to €0.1m. Investments relate to a project monitoring application designed for internation- al development projects to capture results of our interventions worldwide. All assets are held for business operations. AUGUST 2019 © CORDAID 15


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS 6 . FINANCIAL FIXED ASSETS ISSUED IN CONNECTION WITH THE OBJECTIVES Outstanding loans, participations and guarantees are recognized as financial assets issued in connection with the objectives. This relates to loans issued to and a number of participations in partner organizations for the purposes of funding small-scale economic activities (e.g. through microfinance institutions), for which partner organizations find it difficult or impossible to secure finance from commercial banks. Interest rates on these loans are determined by country and by customer. Movements in financial assets were as follows in 2018: X € 1,000 LOANS GUARANTEES PARTICIPATIONS TOTAL Value of portfolio at 1 January 2018 41,719 1,312 19,667 62,698 Provision at 1 January 2018 -2,401 0 0 -2,401 Carrying amount 1 January 2018 39,318 1,312 19,667 60,297 Changes Loans and guarantees issued 12,834 0 0 12,834 Loans and guarantees repaid -11,968 -568 0 -12,536 Participations acquired/committed 0 0 -143 -143 Participations sold/commitments withdrawn 0 0 -8 -8 Impaired loans and guarantees 0 0 0 0 Revaluation of participations 0 0 -3,818 -3,818 Currency gains and losses 919 56 249 1,224 Value of portfolio at 31 December 2018 43,504 800 15,947 60,251 Changes in the provision Impaired loans and guarantees 0 0 0 0 Allocated to/withdrawn from provision for loans and guarantees -1,471 0 0 -1,471 Provision at 31 December 2018 -3,872 0 0 -3,872 Value of portfolio at 31 December 2018 43,504 800 15,947 60,251 Provision at 31 December 2018 -3,872 0 0 -3,872 Carrying amount 31 December 2018 39,632 800 15,947 56,379 The provision on loans and guarantees increased by €1.5m in 2018 (2017: €0.3m). The total provisions as a percentage of the out- standing portfolio is 5.8%. The main driver is liquidity issues at investees in the Rural and Agricultural Finance Portfolio (€1.7m). Loans and guarantees The outstanding loans are the amounts actually transferred to the partner organizations. At balance sheet date an amount of €2.0m was signed as loan but not yet disbursed (2017: €3.9m). This outstanding amount is not included in the figures above. To secure loans and guarantees the following type of collateral have been pledged: loan portfolio pledges, debentures, corporate and or personal guarantees, mortgages and subordinating loans to our loans and guarantees. The average interest rate on the loans and guarantees is 11.52%. For all outstanding loans, the amortized cost is equal to cost. Loans and guarantees will fall due in the following periods: X € 1,000 LOANS GUARANTEES TOTAL < 1 year 7,454 0 7,454 1-5 years 35,750 800 36,550 > 5 year 300 0 300 43,504 800 44,304 Participations Cordaid takes a prudent approach to the valuation of its participations. They are carried at acquisition cost adjusted for impair- ment. Previously recognized impairments can be (partially) reversed, if the original reasons for impairment are no longer valid, as long as the value does not become higher than original cost. Payments in foreign currencies are recorded at the payment date. Cordaid has the policy of selling all foreign currencies, besides US dollars, directly upon receipt. Cordaid operates in fragile countries where there is no active market for these equity stakes. Accurate and timely information on valuation is often limited available. As a result of these factors, Cordaid adopts a conservative approach towards valuation of participations. Their fair value is however determined taking into account suitable valuation methods such as book value principle, price-earning ratios and recent sale prices of similar investments. The fair value of the participations is equal to or above the valuation in the balance sheet according to the valuation at acquisition price adjusted for impairment. 16 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT List of participations (in €1,000): NAME OF CITY COUNTRY OPENING PURCHASED / CURRENCY REVA- SOLD CLOSING ACTIVITIES ORGANIZATION BALANCE COMMITTED GAINS AND LUATION BALANCE 2018 LOSSES 2018 Aavishkar Mumbai India 1,220 0 0 0 0 1,220 Investment fund SME India Afrioils Lilongwe Malawi 0 0 0 0 0 0 Nut processor Finance South Juba South Sudan 0 0 0 0 0 0 MFI Sudan Dia Vikas Gurgaon India 2,701 0 0 0 0 2,701 Investment fund MFIs (Uttar Pradesh) India FPM SA Kinshasa DRC 3,292 0 167 47 0 3,506 Investment fund for Financial Institutions DR Congo HEKIMA Micro Kinshasa DRC 237 0 0 0 0 237 MFI women engaged Finance SA SME DRC InReturn B.V. Rotterdam Netherlands 88 0 -29 -21 0 38 Investment fund SME Africa Liberation London UK 80 0 0 0 0 80 Nut producer association Oikocredit Amersfoort Netherlands 8 0 0 0 -8 0 Investment social investor PEAK II LP Moshi Tanzania 2 0 104 -104 0 2 Leasing fund SME Africa Progression Port Louis Mauritius 3,176 -143 144 -102 0 3,075 Investment fund SME Capital Africa LTD Africa PYME Capital Panama City Panama 938 0 0 -937 0 1 Investment fund SME Latin America Rabo Rural Fund Utrecht Netherlands 2,053 0 103 23 0 2,179 Small producers trade finance fund SICSA Panama City Panama 454 0 0 0 0 454 Investment fund MFI Central America SME Impact Fund Amsterdam Netherlands 793 0 0 -238 0 555 Investment fund SME CV Tanzania Stromme Kampala Uganda 1,000 0 -240 -301 0 459 Investment fund MFI Microfinance East Africa Africa Limited WAVF Port Louis Mauritius 2,186 0 0 -2,185 0 1 Investment fund SME Sierra Leone / Liberia WMF Accra Ghana 1,439 0 0 0 0 1,439 Investment fund MFI Ghana Total 19,667 -143 249 -3,818 -8 15,947 Debt investments carrying the same risk as equity participations are included in the list of participations. Given the nature and objectives of the participations, Cordaid enters into new participations only when an exit strategy on the short or middle longterm can be formulated. Therefore, Cordaid does not consolidate any of the participations in the list above, although for 2 participations Cordaid holds more than 50% of the shares. At December 31, 2018, the number of participations decreased to 18 and the total value of the portfolio of participations decreased from €19.7m in 2017 to €15.9m. Cordaid did not invest in new participations in 2018. Two participations have been decommitted. The main decommitment was on Progression Capital Africa Ltd: a manager of private equity funds specializing in financial services, financial technology and adjacent sector investments in Sub-Saharan Africa. Cordaid holds an interest of 11.2%. As a result of repayments of investees to the fund manager an amount of €0.1m has been decommitted. The total revaluations of intrinsic values amounted to losses of €3.8m. The following impairents have the most impact on total impairment: ▪ The participation in WAVF has been impaired to reflect result deterioration and liquidity problems. ▪ The participation in PYME Capital Latin America Fund has been impaired to reflect result deterioration and liquidity problems. ▪ Stromme Microfinance East Africa Limited has been impaired. The revaluation of €0.3m reflects the valuation of our stake. Devaluation of local currencies resulted in €0.2m currency losses. AUGUST 2019 © CORDAID 17


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS 7 . INVESTMENTS 8 . RECEIVABLES Cordaid selected ING and Van Lanschot in 2015 as their asset All receivables have a remaining maturity of less than one year. managers. Both asset managers were instructed to invest following a defensive to neutral profile. The investment X € 1,000 31/DEC/2018 31/DEC/2017 strategy has a horizon of 5 to 10 years. Both asset managers Receivables receive a fee based on the invested amount only and no performance based fee. - Receivables from grants 14,108 10,461 The portfolio investments must meet strict sustainability - Provision uncollectable receiva- -209 -209 bles from grants criteria. Cordaid invests in businesses that have sound staff policies in place, that protect the environment and that respect - Implementing organization 11,086 5,253 advances human rights. Cordaid applies its own investments policy, based on the UN Global Compact and the Standard for Finan- - Receivable from inheritances 7,033 5,142 cial Management of Fundraising Institutions of Goede Doelen - Interest receivables 959 763 Nederland. - Other receivables 1,772 1,580 34,749 22,990 The current portfolio investments can be specified as follows: X € 1,000 31/DEC/2018 31/DEC/2017 Contracts with donors lead to a receivable if costs incurred are higher than advances received from the donor. The related Bonds receivables increased by €3.6m compared to 2017. Delayed donor Government bonds 3,386 3,087 payments in health projects in South Sudan, a backlog of Performance Based Finance payments to be received in Central Corporate bonds 7,818 7,385 African Republic and high commitments to consortium Other bonds 2,207 2,542 members in the Netherlands, leading to a high level of expend- Total bonds 13,411 13,014 iture, for a resilience project in South Sudan, are the main drivers of the increased receivable. Shares 6,881 7,851 Other funds 579 677 Compared to 2017 advance payments to implementing partners increased by €5.8m in 2018 to €11.1m. During implementation 20,871 21,542 and execution of projects, Cordaid Country Office’s provide advance payments to its implementing parties. These advances The portfolio is carried at fair value based on the known market are subsequently justified by the partners after implementa- prices for the specific bonds, shares and funds in the portfolio. tion of the activities. The aforementioned increase is mainly a The fair value of the portfolio decreased €0.6m to €20.9m. result of advance payments to sub recipients for the new Global Decrease in share prices is the main reason for this decrease in Fund program in DR Congo. fair value of the portfolio. The originally invested amount for the current portfolio is €20m. The receivable from inheritances in 2018 increased by €1.9m to €7.0m In 2018, a higher number of legacies was unsettled The movement of the investments during 2018 were as follows: compared to 2017 (158 vs 137). The average amount receivable per legacy decreased compared to prior year, except for one large X € 1,000 SHARES BONDS OTHER TOTAL amount receivable of €1.7m, leading to a higher total receivable FUNDS at the end of 2018 compared to 2017. Opening balance 7,851 13,014 677 21,542 Interest receivables 1 January 2018 Purchased in 2018 562 1,028 210 1,800 X € 1,000 31/DEC/2018 31/DEC/2017 Sold in 2018 -242 -1,526 0 -1,768 Interest receivables (Un)realised gains -1,290 895 -308 -703 and losses - Banks & deposits 8 2 Closing balance 6,881 13,411 579 20,871 - Bonds 30 37 31 December 2018 - Loans & guarantees issued in 921 724 connection to the objectives 959 763 Interest receivable relates to the bonds in the investment portfolio, outstanding deposits, savings deposits and outstand- ing loans and guarantees relating to Cordaid’s objectives. The interest to be received on loans & guarantees increased by €0.2m as a result of a higher outstanding nominal amount and a higher average interest rate. 18 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT Other receivables X € 1,000 31/DEC/2018 31/DEC/2017 Cash and cash equivalents X € 1,000 31/DEC/2018 31/DEC/2017 - Deposits 13,959 21,336 Other receivables - Bank accounts 29,452 30,062 - Security deposit 11 6 - Cash in hand 347 294 - Derivatives 563 0 - Cross accounts 309 121 - Prepayments 272 757 44,066 51,813 - Other receivables 926 817 1,772 1,580 Cordaid has a bank guarantee facility up till a maximum of €5.5m. Bank guarantees have been issued for a total amount Other receivables increased with €0.2m mainly due to a €0.6m of €1.2m. Included in the cash balance is a guarantee of €0.1m positive value of a hedge contract to cover currency risks on for a donor project (2017: €0.3m) and a guarantee for the rent loans denominated in Myanmar Kyat to US Dollars. Prepay- agreement of €0.2m (2017: €0.2m). This part of the cash is not at ments of pension premiums and office rent by Cordaid the Cordaid’s free disposal. Hague decreased by €0.3m in 2018. Other guarantees with a total value of €0.8m (2017: €1.2m) in deposited cash, are presented as financial fixed assets issued in 9 . CASH AND BANK connection with the objectives. These guarantees are used as an investment instrument. The deposited cash is also not at Cash and bank comprise cash and bank balances of the Cordaid Cordaid’s free disposal. office in The Hague, in the Country Offices abroad and deposits falling due in less than one year. Cash and cash equivalents Cordaid has an amount of €0.5m deposited at a South Sudanese decreased from €51.8m to €44.1m during 2018. The main bank account, speciafically for pension liabilities towards local factors in the movements in cash and bank are explained in staff. This part of the cash is not at Cordaid’s free disposal. section 1.2 Notes to the cash flow statement. All remaining cash (€43.3m) is at Cordaid’s free disposal. 10 . RESERVES AND FUNDS X € 1,000 CONTINUITY EARMARKED RESTRICTED SEMI- RESTRICTED TOTAL RESERVE RESERVES FUNDS RESTRICTED FUND LOANS & RESERVES FUNDS GUARANTEES AND FUNDS Opening balance 5,887 1,383 2,301 18,067 84,099 111,737 1 January 2018 Changes Extraction 0 -101 -775 0 -9,510 -10,386 Dotations 5,113 0 0 1,422 0 6,535 Closing balance 11,000 1,282 1,526 19,489 74,589 107,886 31 December 2018 Continuity reserve Management BV in line with Cordaid’s objectives. In the The continuity reserve is designed to create a sufficiently large planning of repayments and re-investments it will be ensured buffer to enable Cordaid to complete ongoing programs that funds are available in case of an unforeseen event that appropriately, with due observance of existing legal and moral should be financed from the continuity reserve. obligations and staffing them with our own people, if one or more key sources of funding were to dry up unexpectedly or if On December 31, 2018, the continuity reserve amounted to an unforeseen outflow of cash occurs. €11.0m. This is below the maximum of 1.5 times total operating expenses as formulated by Centraal Bureau Fondsenwerving At the end of 2018, the Board of Directors proposed to increase (CBF). the continuity reserve with an amount of €5.1m, based on a risk analysis of future events that might lead to unforeseen outflow of funds. The Supervisory Board approved the proposal. The amount is dotated from the fund Loan & Guarantees. The amount of €5.1m will still be invested by Cordaid Investment AUGUST 2019 © CORDAID 19


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS Earmarked reserves Restricted funds Earmarked reserves comprise interest income, income from Restricted funds are funds received for an earmarked purpose, investments of temporary surpluses of semi-restricted funds such as incoming resources for project specific campaigns or and income not earmarked for specific topics. The reserves are other funds specifically allocated to one or more projects. earmarked for spending on objectives and coverage of opera- tional losses. The allocation of these reserves to different Restricted funds decreased by €0.8m to €1.5m at December 31, themes, programs and objectives is subject to a decision by the 2018 (2017: €2.3m). The decrease is mainly due to €1.7m spend- Board of Directors. Decision-making is based on internally ing of funds for the SHO action ‘Help slachtoffers hongersnood’ agreed upon criteria. and to lesser extent the 2018 spending of previously unspent received adoption funds. The effect is partly off set by the €1.1m The total amount of earmarked reserves per December 31, 2018 unspent funds for the SHO action ‘Nederland helpt Sulawesi’. is €1.3m. Operational losses and exchange results on regular operations have been charged against the earmarked reserves Schedule below comprises movements in restricted funds per in the past years. brand during financial year 2018: X € 1,000 OPENING INCOMING OVERHEAD PROJECT CLOSING BALANCE RESOURCES FEE RESOURCES BALANCE 1 JANUARY 2018 EXPENDED 31 DECEMBER 2018 Cordaid Mensen in Nood Adoptions 14 186 -2 -198 0 SHO ‘Nederland helpt Nepal’ 0 -2 0 2 0 SHO ‘Help slachtoffers hongersnood’ 1,223 0 0 -1,223 0 SHO ‘Nederland helpt Sulawesi’ 0 1,666 -567 1,099 1,237 1,850 -2 -1,986 1,099 Cordaid Kinderstem Adoptions 437 0 0 -259 178 Major donor fund 19 207 0 -207 19 456 207 0 -466 197 Cordaid Memisa Adoptions 18 0 0 -18 0 Cordaid Microkrediet Adoptions 83 0 0 -83 0 Cordaid/General Vastenaktie 256 0 0 -256 0 Adoptions 251 63 0 -84 230 507 63 0 -340 230 Total restricted funds 2,301 2,120 -2 -2,893 1,526 20 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT SHO ‘NEDERLAND HELPT NEPAL’ X €1 2018 UP TO AND INCLUDING 2018 EMERGENCY AID RECONSTRUCTION TOTAL EMERGENCY AID RECONSTRUCTION TOTAL Incoming resources from third party -2 2,297 campaigns Interest 0 1 Total incoming resources -2 2,298 Preparation and coordination costs 0 161 Total available for charitable activities -2 2,137 Resources expended Commitments undertaken by participant - support offered through local relief 0 -2 -2 757 1,109 1,866 providers - support offered through international 0 0 0 50 0 50 umbrella organization - support offered through participant 0 0 0 96 125 221 0 -2 -2 903 1,234 2,137 Available commitment capacity 0 Breakdown of participant’s cash flows Transfer by participant for: - support offered through local relief 0 254 254 757 1,109 1,866 providers - support offered through international 0 0 0 50 0 50 umbrella organization - support offered through participant 0 0 0 96 125 221 Total transferred 0 254 254 903 1,234 2,137 Breakdown of resources expended locally - support offered through local relief 0 249 249 757 1,109 1,866 providers - support offered through international 0 0 0 50 0 50 umbrella organization - support offered through participant 0 0 0 96 125 221 Total resources expended 0 249 249 903 1,234 2,137 A full report of expenditure and activities in the reconstruction phase can be found on the website of Samenwerkende Hulporganisaties (SHO) (www.giro555.nl). AUGUST 2019 © CORDAID 21


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS SHO ‘HELP SLACHTOFFERS HONGERSNOOD’ X €1 2018 UP TO AND INCLUDING 2018 EMERGENCY AID RECONSTRUCTION TOTAL EMERGENCY AID RECONSTRUCTION TOTAL Incoming resources from third party 0 5,297 campaigns Interest 0 0 Total incoming resources 0 5,297 Preparation and coordination costs 0 371 Total available for charitable activities 0 4,926 Resources expended Commitments undertaken by participant - support offered through local relief 273 0 273 1,902 0 1,902 providers - support offered through international 0 0 0 0 0 0 umbrella organization - support offered through participant 950 0 950 3,024 0 3,024 1,223 0 1,223 4,926 0 4,926 Available commitment capacity 0 Breakdown of participant’s cash flows Transfer by participant for: - support offered through local relief 761 0 761 1,902 0 1,902 providers - support offered through international 0 0 0 0 0 0 umbrella organization - support offered through participant 950 0 950 3,024 0 3,024 Total transferred 1,711 0 1,711 4,926 0 4,926 Breakdown of resources expended locally - support offered through local relief 761 0 761 1,902 0 1,902 providers - support offered through international 0 0 0 0 0 0 umbrella organization - support offered through participant 950 0 950 3,024 0 3,024 Total resources expended 1,711 0 1,711 4,926 0 4,926 A full report of expenditure and activities in the reconstruction phase can be found on the website of Samenwerkende Hulporganisaties (SHO) (www.giro555.nl). 22 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT SHO ‘NEDERLAND HELPT SULAWESI’ X €1 2018 UP TO AND INCLUDING 2018 EMERGENCY AID RECONSTRUCTION TOTAL EMERGENCY AID RECONSTRUCTION TOTAL Incoming resources from third party 1,666 1,666 campaigns Interest 0 0 Total incoming resources 1,666 1,666 Preparation and coordination costs 117 117 Total available for charitable activities 1,549 1,549 Resources expended Commitments undertaken by participant - support offered through local relief 450 0 450 450 0 450 providers - support offered through international 0 0 0 0 0 0 umbrella organization - support offered through participant 0 0 0 0 0 0 450 0 450 450 0 450 Available commitment capacity 1,099 Breakdown of participant’s cash flows Transfer by participant for: - support offered through local relief 450 0 450 450 0 450 providers - support offered through international 0 0 0 0 0 0 umbrella organization - support offered through participant 0 0 0 0 0 0 Total transferred 450 0 450 450 0 450 Breakdown of resources expended locally - support offered through local relief 0 0 0 0 0 0 providers - support offered through international 0 0 0 0 0 0 umbrella organization - support offered through participant 0 0 0 0 0 0 Total resources expended 0 0 0 0 0 0 A full report of expenditure and activities in the reconstruction phase can be found on the website of Samenwerkende Hulporganisaties (SHO) (www.giro555.nl). The resources expended locally in the overview above is set at €0, because the local relief provider sent its first report in March 2019, covering the period October 2018 - February 2019. Attribution to the period till December 2018 could not be made. AUGUST 2019 © CORDAID 23


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS SHO allocation key Loans & Guarantees Fund The key for allocating the income from fundraising activities of The Loans & Guarantees Fund comprises the resources that the SHO is based on 3-year average of the volume of emergency have been accrued within the scope of the Loans & Guarantees aid and reconstruction activities and the income from own Program. The resources for the Loans & Guarantees Fund stem fundraising of the participants of SHO. from the co-financing program and from own resources. As no new funds will be added to the fund by Cordaid, the portfolio In the table below the relevant figures for Cordaid in the period can only grow through a positive result from the social impact 2016-2018 are provided. investments itself. Grant approvals for projects supporting the social impact investments are deducted from the fund Loans & X € 1,000 2018 2017 2016 Guarantees. The operating costs consist of the cost of Cordaid Investment Management BV (CIM BV), including overhead 1. Volume of emergency 25,655 18,876 17,128 charged from Stichting Cordaid to CIM BV based on the aid and reconstruction activities service-level-agreement between these parties. Also social impact investments outside the scope of the funds managed by 2. Income from own 27,396 29,444 26,402 CIM BV are financed through this fund up to a maximum of fundraising cumulative €5m. In 2018, an amount of €2.2m was extracted for the investments made for implementation of Cordaid’s new The volume of delivered emergency aid and reconstruction strategic plan and an extraction was made to increase the activities is exclusive of SHO funds and exclusive of funds continuity reserve of Cordaid to an appropriate level. transferred to other organizations in the role of administrative lead agency/horizontal lead agency (for example in the role of X € 1,000 31/DEC/2018 31/DEC/2017 lead agency in the DRA). Opening balance 1 January 2018 84,099 91,889 The income from own fundraising for 2018 and 2017 is calculated by the sum of: Financial result assets connect to objectives: ▪ Income from private individuals Income from financial assets issued -763 -4,327 ▪ Income from companies for objectives ▪ Income from other non-profit organizations minus income Investment income (assets not 768 53 from SHO issued for objectives) ▪ Income from sale of goods and or rendering of services Unrealised change in value of 796 -234 The income from own fundraising for 2016 is equal to the derivatives SHO allocation key statements of 2016. Direct operating costs -2,021 -1,989 Allocated overhead costs -784 -982 Semi-restricted funds Grant approvals -233 -94 Semi-restricted funds are accruals of income from own Financial result assets connect -2,237 -7,573 fundraising that are not earmarked for one specific project, to objectives but only earmarked for a broadly defined purpose. The increase Financial result Corpav and Cordaid -1 -217 in semi-restricted funds of €1.4m is a result of contributions Participaties exceeding spending on projects in 2018. Cost coverage Cordaid in Transition -2,159 0 Financial result after 79,702 84,099 non-operational results Addition to continuity reserve -5,113 0 Balance 31 December 2018 74,589 84,099 11 . PROVISIONS The composition of, and movements in, the provisions were as follows: X € 1,000 REDUNDANCY PROVISION FOR BACKDONOR TOTAL PROVISION UNOCCUPIED PROJECTS OFFICE SPACE Opening balance 1 January 2018 1,014 350 610 1,974 Changes - Allocated 168 - 790 958 - Withdrawn -1,014 -72 -204 -1,290 - Released -5 - -496 -501 Closing balance 31 December 2018 163 278 700 1,141 24 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT Compared to 2017 the provisions decreased by €0.8m to €1.1m as 12 . CURRENT AND NON-CURRENT at December 31, 2018. LIABILITIES In 2018 the year-end 2016 reorganization plans have been The composition of, and movements in, the current and finalized. In 2018 €1.0m has been withdrawn for transition and non-current liabilities were as follows: redundancy fees and transition expenses. The remaining balance has been released. The remaining amount of €0.2m is X € 1,000 31/DEC/2018 31/DEC/2017 related to obliged redundancy payments of local staff in Non-current liabilities Country Offices. Project commitments 0 0 0 0 As a consequence of the restructuring process in 2016, Cordaid does not use a part of the office space, hence expenditures Current liabilities related to unoccupied work space have been provided for. The Project commitments 15,977 13,736 provision for the costs related to the unoccupied office space at Deferred grants 23,627 19,283 December 31, 2018 amounts €0.3m. Accounts payables 3,331 3,055 Taxes and social security 712 1,622 In 2018, Cordaid settled €0.2m related to several possible contributions ineligibilities coming from 2016. For a re-audit of an EU funded Reservation for leave days and 1,108 1,163 Hiatïan projects an ineligibility of €0.2m was expected, the holiday allowance final audit revealed only €0.1m. The remainder of the provision Participations payable 664 1,121 was released. Derivatives - 234 Two EU funded projects in Ethiopia have been subjected to a Other accruals and deferred 1,870 3,161 re-audit in 2018 and possible ineligibilities have been revealed. income Cordaid acted as consortium lead in this project. Cordaid took a 47,289 43,375 prudent approach in determining the total provision related to these ineligibilities. The amount declared ineligible that was spent by consortium members (€0.3m) is included in the Compared to 2017 the outstanding project commitments provision, but will be claimed from the consortium members as increased €2.2m to €16.0m at year-end 2018. The main cause soon as the final impact is known. A receivable is not included are commitments made to (Dutch) consortium partners in a in the balance sheet per 31 December 2018. A total amount of Resilience project in South Sudan that started in 2018. €0.3m has been provided. Deferred grants increased by €4.3m during 2018 to €23.6m at After an evacuation due to the civil war in South Sudan in July December 31, 2018. The main factor is received advance pay- 2016, substantial parts of our local financial administration ments from the Global Fund for the new contract started in were lost. Despite an ongoing investigation to retrieve the full 2018, while expenditure slowly took off in the startup phase. administration an amount of €1.2m was provided in 2016. At January 1, 2018 a provision €0.4m for projects in South Sudan The participations payable decreased €0.5m due to disburse- was still in place. In 2018 €0.1m has been withdrawn from this ments to participations in Progression Capital Africa LTD provision and the remainder of €0.3m has been released. and WAVF. However in 2018 possible ineligible expenses for projects in South Sudan and Central African Republic have been identified Other accruals and deferred income decreased €1.3m compared and €0.3m has been provided for. to prior year. Year-end 2017 a €1,9m accrual was in place for Zimbabwean Result Based Financing subsidies to local health At present, no legal proceedings are pending for which a centers and hospitals. As at 31 December 2018 no accrual has provision should be formed. been recognized as a result of the transfer of the Zimbabwean result based financing project to local authorities. This decrease All provisions are expected to be settled within one year. has been partly offset by an €0.8m increase in Cordaid Country Office accrued expenses for direct program expenditures (€0.2m), purchased tangible assets in DR Congo (€0.1m) and a pension reservation for South Sudanese staff (€0.5m). The movement of project commitments was as follows: X € 1,000 2018 2017 Opening balance 1 January 13,736 16,890 New commitments 27,148 33,594 Released commitments -2,482 -4,423 Payments -22,425 -32,325 Closing balance 31 December 15,977 13,736 All current liabilities are payable within one year. AUGUST 2019 © CORDAID 25


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS 13 . OFF-BALANCE SHEET COMMITMENTS AND CONTINGENCIES Off-balance sheet rights Financing contracts with donors Cordaid signed several large financing contracts with donors to carry out specific projects with end dates in 2019 and beyond. Cordaid recognizes the incoming resources from these financing contracts and grant decisions in accordance with Dutch Account- ing Standard 274. This means that incoming resources are recognized at the time resources are actually expended. The difference between the income recognized and the actual amount received in the form of contributions from donors is recorded in the balance sheet. This results in a receivable if more resources have been expended than received or in a deferred grant if incoming resources are greater than those expended. Therefore, the full amount of the contract is not disclosed in the annual accounts. Below an overview of all the contract with a spendable amount above €5m in future years: X € 1,000 DESCRIPTION OF THE DURATION CONTRACT CUMULATIVE BALANCE TO FUNDING ORGANIZATION PROJECT VALUE INCOME BE SPENT The Global Fund Investment for impact Jan 2018 – Dec 2020 125,194 26,679 98,515 against Tuberculosis and HIV in Democratic Republic of the Congo Dutch Ministry of Foreign Affairs Capacitating change: Jan 2016 - Dec 2020 34,500 17,123 17,377 Empowering people in fragile contexts Ministry of Primary, Secondary and Education Quality Mai 2018 - Feb 2021 15,297 706 14,591 Professional Education of Improvement Project in Democratic Republic Congo Democratic Republic Congo Dutch Ministry of Foreign Affairs Jeune S3 - My rights to sexual Jan 2016 - Dec 2020 30,955 19,094 11,861 and reproductive health The Embassy if the Kingdom of The Food security through Aug 2018 - Jul 2023 9,929 3,675 6,254 Netherlands in South Sudan Agribusiness in South Sudan Dutch Ministry of Foreign Affairs Partners for Resilience Jan 2016 - Dec 2020 12,104 6,451 5,653 European Union Support for Strengthening Jul 2018 - Dec 2020 5,909 699 5,210 the Health System in Central African Republic Note: the Dutch Accounting Standards can differ from the reporting requirements of certain donors. Reported income in these statements can therefore differ from what was reported to the related donors. Other off-balance sheet rights At year-end, off-balance sheet liabilities for overheads were as Cordaid has 12 legacies estimated at €1.2m which are still follows: subject to usufruct at the reporting date and therefore not reported as income in the statement of income and expendi- X € 1,000 OFFICE LEASE THE HAGUE ture. Due to uncertainties related to usufructuary’s lifespan an overview on the estimated expiration of usufruct rights can’t Payable: be reliably determined. - in less than 1 year 758 - between 1 and 5 years 1,307 Off-balance sheet commitments All commitments (including project commitments) are - in more than 5 years 163 recognized on the balance sheet. For organizational costs, Total 2,228 Cordaid’s policy, wherever possible, is to avoid long-term contracts with suppliers that include fixed commitments. Almost all contracts can be terminated within 1 year or During the reporting period, lease payments amounting amounts payable are based on actual usage. to €1.0m are included in the statement of income and expenditure. Cordaid will move to another office building in 2019. December 2018 a lease contract for office rental has been agreed upon. The rental period begins on July 1, 2019 and expires on June 30, 2024, with an optional extension of five years. 26 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 14 . INCOME FROM PRIVATE INDIVIDUALS X € 1,000 CORDAID CORDAID CORDAID CORDAID CORDAID CORDAID TOTAL TOTAL GENERAL MENSEN KINDER- MEMISA MICRO BZN 2018 2017 IN NOOD STEM CREDIT Collections - 3 - 4 - - 7 13 Donations and gifts 3,869 2,715 1,766 2,495 69 81 10,995 11,378 Legacies 1,126 1,678 140 2,988 1,728 5 7,665 6,830 Contributions 1,665 1,463 1,361 1,862 53 19 6,423 5,291 Mailing campaigns - 91 2 63 - - 156 163 Other - - - - - - - - Total 2018 6,660 5,950 3,269 7,412 1,850 105 25,246 23,675 Budget 2018 5,400 9,180 2,970 9,180 - 270 27,000 Total 2017 2,383 8,534 3,670 8,593 194 301 23,675 Income from private individuals amounted to €25.2m, €1.8m below budget, but €1.6m higher than in 2017. The main cause for the increase compared to 2017 is the higher income from contributions, offsetting to a significant extent the decrease in donations and gifts. The higher income from contributions results from the first contribution of a conditional five year contribution. One significant legacy (€1.7m) granted to Cordaid Micro Credit is the cause for a higher income from legacies and inheritances that for the remainder follows the downward trend of previous years. Given the nature of this stream of income it is hard to give a clear explanation for the lower income compared to budget. The number of supporters and income from individuals remained relatively stable over the years in a competitive fundraising market. 15 . INCOME FROM COMPANIES X € 1,000 CORDAID CORDAID CORDAID CORDAID CORDAID CORDAID TOTAL TOTAL GENERAL MENSEN KINDER- MEMISA MICRO BZN 2018 2017 IN NOOD STEM CREDIT Contributions 5 - 368 1 43 - 417 437 Donations and gifts 83 10 2 6 3 - 104 120 Grants 19 - - - - - 19 12 Mailing campaigns - - - - 7 - 7 9 Total 2018 107 10 370 7 53 - 547 578 Budget 2018 - - - - - - - Total 2017 89 35 351 8 93 2 578 The income from companies decreased from €0.6m in 2017 to €0.5m in 2018. Income from companies is in the budget included in the income from private individuals and therefore at €0 in the table above. AUGUST 2019 © CORDAID 27


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS 16 . BENEFITS FROM LOTTERY in 2018, €3.7m lower compared to 2017. In 2017 project contracts in Zimbabwe and Afghanist were extended. Major part of these ORGANIZATIONS contracts have been realized in 2017 resulting in €1.7m lower income on Afghan health projects. Incoming resources also X € 1,000 2018 BUDGET 2017 decreased by €2.8m following a shift from Performance Based 2018 Financing in Zimbabwe to merely technical assistance. These factors negatively affecting the income, have partly been Nationale Postcode Loterij 2,700 6,285 2,725 compensated by projects in Central African Republic, Democratic Republic Congo, Burundi and Liberia. Benefits from lottery organizations slightly decreased com- Income from the European Union stood at €3.7m in 2018. This pared to prior year. The regular contribution from the Dutch €3.3m below budget and a decrease of €3.6m compared to prior National Postcode Lottery (NPL) was €2.7m in 2018 (2017: €2.7m). year. The lower income was mainly related to two contracts The income from lottery organizations is significantly below that were not won, but that were included in the budget. budget in 2018 (€3.6m) because a budgeted additional contribu- Cordaid signed several large financing contracts with donors to tion was not granted. carry out specific projects with end dates in 2019 and beyond. Income from these grants is only recognized if subsidized costs are incurred or if a legal payment obligation towards partner 17 . GOVERNMENT GRANTS organizations exists. An overview of the amount to be spent per contract with a total value above €5m can be found in note 13. X € 1,000 2018 BUDGET 2017 2018 18 . INCOME FROM RELATED Dutch Government 39,443 36,157 34,317 (INTERNATIONAL) ORGANIZATIONS Global Fund 35,162 25,143 21,898 World bank 8,875 17,599 12,549 X € 1,000 2018 BUDGET 2017 European Union 3,650 7,006 7,283 2018 Other 17,086 17,491 14,129 Caritas Internationalis (members) 789 734 1,811 Total income from government 104,216 103,396 90,176 grants Incoming resources from related (international) organizations in 2018 decreased €1.0m compared to 2017 mainly due to a Government grants comprise project funding provided by such €0.9m contribution from Caritas Germany in previous year bodies as the European Union, the Dutch government, the related to the project mitigating migration in Afghanistan. Global Fund, the World Bank and various United Nations organizations. Income is recognized based on the project expenditures made within the framework of the financing 19 . INCOME FROM OTHER contract with the donor. In 2018 income from government grants significantly increased by €14.0m to €104.2m (2017: NON-PROFIT ORGANIZATIONS €90.2m). Compared to budget, the income from government grants was up by €0.8m. X € 1,000 2018 BUDGET 2017 2018 Income from Dutch Government totaled €39.4m, €3.2m above budget and €5.1m higher compared to 2017. These increases Samenwerkende Hulporganisaties 1,663 3,497 5,297 mainly relate to higher income from projects funded by Dutch Stichting Bisschoppelijke 0 79 2,147 Relief Alliance and the Royal Dutch Embassy in South Sudan Vastenaktie that were not included in the budget. Other organizations 1,579 1,054 2,802 Total income from other 3,242 4,630 10,246 Income from Global Fund increased with €13.3m to €35.2m in non-profit organizations 2018 (2017: €21.9m) and was €10.0m above budget. Global Fund and Cordaid have signed a project grant agreement Income from other non-profit organizations decreased €7.0m over the period 1 January 2018 to 31 December 2020 to fight HIV/ compared to the prior year, totaling up to €3.2m at year-end AIDS, tuberculosis and malaria in Democratic Republic Congo. 2018. This decrease is predominantly the result of €3.6m lower Project activities related to the new grant resulted in €26.7m incoming resources on the 2018 SHO campaign ‘Nederland income in 2018. Due to timing differences in recognizing helpt Sulawesi’ compared to the 2017 SHO campaign ‘Help income from the Global Fund project 2015-2017 a part of its slachtoffers hongersnood‘ and €2.1m lower income caused by income (€8.5m) shifted from 2017 to 2018. This extension and the termination of the contract with Vastenaktie. shift was not included in the budget. The decrease of incoming resources from other organizations is Incoming resources from World Bank, related to Performance primairily due to lower income from Cordaids’ matching fund Based Financing programs and health projects, totaled €8.9m that stopped in 2018. 28 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 20 . INCOME FROM SALE OF GOODS AND OR RENDERING OF SERVICES X € 1,000 CORDAID CORDAID CORDAID CORDAID CORDAID CORDAID TOTAL TOTAL GENERAL MENSEN KINDER- MEMISA MICRO BZN 2016 IN NOOD STEM CREDIT Materials sold - - 4 - - - 4 6 Rendering of services 20 - - - - - 20 236 Total 20 - 4 - - - 24 242 Budget 2018 - - - - - - - Total 2017 236 - 5 - - 1 242 21 . OTHER INCOME In 2018 the result on financial assets improved with €6.0m ending year-end 2018 with a positive result of €1.2m (2017: X € 1,000 2018 BUDGET 2017 €4.8m loss). New issued and disbursed loans contributed €0.6m 2018 positively to the interest on loans and guarantees of €4.1m compared to €3.5m in 2017. Compared to 2017 income from - Results on financial assets 1,244 3,008 -4,766 dividends and guarantees grew with €0.2m to €0.4m in 2018. - Other 276 240 358 The significant devaluation of participations and additions to Total other income 1,520 3,248 -4,408 the provision on loans and guarantees, totaling up to a loss of €5.0m fully evaporate this better performance and realized Results on financial assets comprises operating gains and income. Refer also to note 6. losses on the Loans, Guarantees and Participations program. The €0.8m unrealised change in value of derivatives comprised X € 1,000 2018 2017 the change in valuation of the cross currency interest rate swap on MMK to USD. The swap contract is held to cover Interest received on loans and guarantees 4,080 3,483 currency risks on loan(s) denominated in Myanmar Kyat Income from dividends/provision guarantees 372 170 (MMK). This derivative is measured at fair value through the Revaluation of participations -3,569 -602 statement of income and expenditures. Allocated to/withdrawn from provision for -1,471 -853 loans and guarantees The exchange rate result in 2018 amounted to €1.0m positive as Unrealised change in value of derivatives 796 -234 a consequence of the appreciation of the US dollar compared to (Un)realised currency gains and losses 1,036 -6,730 the euro in 2018 (2017: €6.7m loss). Total result on financial assets 1,244 -4,766 22 . SPENT ON OBJECTIVES Comparison of 2018 program costs and program management costs with the budget and previous year X € 1,000 ACTUAL 2018 BUDGET 2018 ACTUAL 2017 DIRECT PROGRAM TOTAL DIRECT PROGRAM TOTAL DIRECT PROGRAM TOTAL PROGRAM MANAGE- 2018 PROGRAM MANAGE- BUDGET PROGRAM MANAGE- 2017 COSTS MENT COST COSTS MENT COST 2018 COSTS MENT COSTS Healthcare 74,585 2,185 76,770 75,772 2,573 78,345 57,521 1,530 59,051 Humanitarian Aid 23,628 1,124 24,752 26,966 1,144 28,110 23,719 1,085 24,804 Security & Justice 10,850 261 11,111 12,828 1,432 14,260 13,266 233 13,499 Cordaid Netherlands 155 210 365 - - - 261 174 435 Resilience 10,049 886 10,935 9,414 1,493 10,907 9,391 662 10,053 Investments 811 3,537 4,348 2,383 3,122 5,505 527 3,591 4,118 Other 29 - 29 - - - 4,698 - 4,698 Total costs of programs 120,107 8,203 128,310 127,363 9,764 137,127 109,383 7,275 116,658 AUGUST 2019 © CORDAID 29


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS Program costs in 2018 amounted to €128.3m, €8.8m below 23 . COST ALLOCATION TO THE budget, but €11.7m higher than previous year. DIFFERENT ACTIVITIES The lower expenditures compared to budget is mainly due to Cordaid uses different allocation keys to allocate costs, making Humanitarian aid (€3.4m) and Security & Justice (€3.1m). For allowance where possible for the recommendations of Goede the Humanitarian Aid department the lower expenditure was Doelen Nederland. Costs are allocated in two stages. mainly related to missed contracts from the European Union. 1. First, costs relating directly to Programs, Fundraising and Lower expenditure for Security & Justice projects is mainly Management & administration are directly allocated to related to delayed implementation of programs as a conse- these activities. This involves the costs of the thematic quence of political circumstances in the countries where program units (programs), Private Fundraising & Communi- Cordaid operates. Total program management costs in 2018 cation (public information/awareness campaigns and stood at €8.2m, €1.6m down on budget, but €0.9m higher fundraising), the Board of Directors (management & compared to 2017. Higher costs compared to prior year mainly administration) and Finance & Control (management & relate to the higher number of projects and therefore higher administration). Costs of the department for Institutional cost of staff and travel. This effect is partly offset by the release Account Management are fully labelled as expenditure on of the hypotax reservation in 2018. In the budget a futher fundraising. increase of program management activities was foreseen, in 2. Other costs allocated to Programs, Fundraising and Man- line with higher direct program expenditure while the release agement & administration include the costs of the depart- of the hypotax was not budgeted for. ments such as Human Resource management, IT and Direct program costs on Investments is very low compared to Facility management and Quality Assurance. FTE of the the program management costs. Because new investments are departments that can be directly allocated is used as key to done with returned funds from settled investments and are allocate the costs of the mentioned departments to Pro- therefore not expressed in the statement of income and grams, Fundraising, or Management & administration. expenditure. For the 2018 budget, the public information and fundraising costs were categorized, and a list was prepared for each category outlining the specifics of the percentage of costs that should be allocated to fundraising (FR) and to public informa- tion (PI). The list of key activities/costs was used to decide on the 2018 budget for both fundraising costs and public informa- tion. The relative division between the two activities was: 1. Fundraising: 50.0% (2017: 50.0%); 2. Public Information/Awareness campaigns: 50.0% (2017: 50.0%) These percentages were used to allocate the total 2018 market- ing & funding budgets over the two activities. Costs incurred per activity and per cost category: RESOURCES EXPENDED EXPENDITURE ON EXPENDITURE MANAGEMENT TOTAL EXPENDITURE (X € 1,000) THE OBJECTIVES ON AND FUNDRAISING ADMINISTRATION PUBLIC PROGRAM TOTAL BUDGET TOTAL INFORMATION / COSTS 2018 2018 2017 AWARENESS CAMPAIGNS Grants and contributions - 108,640 - - 108,640 121,799 97,669 Publicity and communication 3,121 - 3,232 - 6,353 6,995 7,327 Staff 903 11,741 2,074 1,072 15,790 13,241 14,842 Travel and accommodation 8 1,448 34 251 1,741 568 1,217 Housing 117 899 252 98 1,366 1,094 1,248 Office & General 274 5,582 580 1,538 7,974 7,222 7,794 Total actual 2018 4,423 128,310 6,172 2,959 141,864 150,919 130,097 Budget 2018 5,088 137,127 7,235 1,469 150,919 Actual 2017 4,917 116,658 6,461 2,061 130,097 The overall costs in 2018 are €9.1m down on budget and €11.8m higher compared to 2017. 30 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT The largest deviations from budget were: 24 . COST OF STAFF ▪ Grants and contributions were €13.2m below budget due to lower spending on programs. 2018 2017 ▪ Costs for publicity and communication were €0.6m down on Head count in The Hague 186.0 177.0 budget. During the year the decision was taken to reduce spending on Publicity and communication after signals of Head count expats at field offices 36.0 42.0 lower income from inheritances. Total head count 222.0 219.0 ▪ Staff costs were €2.5m above budget. Additional staff is hired as part of the investment in Cordaid’s new strategy. Average number of FTEs including 185.1 184.9 Additional staff is needed to ensure a smooth handover of expats project responsibilities from Global Office to Country Office, without exposing project implementation to any risk and in the meantime build capacities at the level of the Country Program staf 112.1 115.6 Offices. This is a temporary situation until the transition Fundrains/Awareness staff 32.4 32.2 phase is finalized. Other departments 40.6 37.1 ▪ Housing costs are €0.3m above budget and include a release Total average FTE including 185.1 184.9 of €0.1m from the provision for unoccupied office space. expats ▪ Travel and accommodation costs are €1.2m higher than budget as a consequence of the underestimation of the number of travels. More programs in consortia and more At year-end 2018, Cordaid had a headcount of 222 (2017: 219), of cooperation with the Country Offices, implies more travels whom were 126 women and 96 men. than in prior year. X € 1,000 2018 2017 The cost per category is relatively well in line with 2017, except - Salaries and wages 11,427 9,087 for the publicity and communication cost and travel and accommodation cost. By reducing expenditures a cost saving - Social security contributions 1,423 1,545 of €1.0m on publicity and communication has been realized - Pension costs 961 1,134 (budgetted €0.6m). The higher cost for travel and accommoda- - Temporary staff 1,131 401 tion is the result of more cooperation with the Country Offices. - Cost of training and education 300 296 Housing costs are in line with prior year and include the release from the provision for unoccupied office space. - Other personnel expenses 595 433 15,837 12,896 Office & General include costs incurred for telecommunications, IT, advisory services and field offices and fees charged by Ernst Cost of staff increased in with €2.9m from €12.9m in 2017 to & Young Accountants LLP, our independent auditor. €15.8m in 2018. Salary and wages in 2017 comprises a €3.6m release from the redundancy provision following the year-end Total audit fees charged by Ernst & Young Accountants LLP 2016 reorganization. If normalized, salary costs per FTE were stood at €885k in 2018 (2017: €358k). The audit fee for the annual relatively stable in 2018 compared to 2017. Temporary staff accounts of Stichting Cordaid and Cordaid Management increased by €0.7m to €1.1m in 2018 (2017: €0.4m) as a result of Investments B.V. amounts to €653k (2017: €271k). The other additional consultancy for implementing project based amounts are fees for specific project audits and special investi- working and supporting finance & control departments at gations. Cordaid Country Offices and Global Office. The fees above relate to all the work performed at Stichting Cordaid’s pension plan is administered by the Zorg en Welzijn Cordaid and entities included in the consolidated accounts by Pension Fund, a pension fund for the health and welfare sector. the audit firms and auditors mentioned in article 1, section 1 Employees’ retirement and partner pensions are based on their Wta (Wet toezicht accountantsorganisaties) and the fees pensionable salary for full-time employment, net of the state charged by the network of the audit firm. The fees relate to the pension offset. The pension fund endeavors to index-link any fiscal year 2018, although the related work can be executed in accrued pension entitlements and pensions in payment, based other years. on general salary trends in the collective bargaining agree- ments that govern its affiliated employers in a particular year. Additionally, €348k (2017: €120k) was spent on local audits and The pension fund decides every year whether index-linking audits of partner organizations. These audits were carried out would be appropriate and, if so, what index to use given the by other audit firms than Ernst & Young Accountants LLP. financial situation and expected developments in that situa- tion. In doing so, the pension fund uses nominal and realistic coverage ratios as benchmarks. Although the pension fund may decide to apply catch-up index linking, such a decision will not have retroactive effect and will not trigger subsequent pay- ments. Index linking is funded partially from contributions and partially from returns on plan assets. The coverage ratio was 97.5% at 31 December 2018 (30 April 2019: 100.4%). AUGUST 2019 © CORDAID 31


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS Contributions are recognized as employee benefits expense as January 2018 was used to determine these weighting criteria. soon as they are payable. Prepaid contributions are recognized This has resulted in a so-called BSD score of 513 points for the within prepayments and accrued income if they entail a refund CEO and 472 points for the CFO, with a maximum annual or a reduction in future payments. Contributions payable are income of respectively €153,080 and €135,314. disclosed as liabilities in the balance sheet. The total annual income amounted to €121,816 for L.C. Zeven- bergen (CEO) and €117,491 for W.J. van Wijk (CFO). The total 25 . RELATED PARTIES annual income is within the maximum remuneration limits of the regulation of Goede Doelen Nederland. Introduction As part of Cordaid’s transition to a more social entrepreneurial Executive remuneration comprises gross salary costs inclusive approach, Cordaid wants to help develop new ideas for start-ups of holiday allowance, social security contributions, pension aimed at social impact. In addition, Cordaid wants to profes- costs, expense allowances and year-end allowance. As a rule, all sionalize the management of its social impact investments employees receive a year-end allowance. further and aims to increase its impact by finding external investors. To facilitate these changes Cordaid established two During 2018, the employed members of the Board were: foundations and two private limited companies (BV’s). Sticht- ing Cordaid has full control in all these entities and they are L .C . ZEVENBERGEN W .J . VAN WIJK therefore classified as related parties. In addition, on December CEO CFO 31, 2014 Cordaid established a foundation to pay salaries to Employment expats working for Stichting Cordaid. contract Duration 03/31/2019 08/31/2022 Cordaid identified the following related parties: Number of hours 36 36 ▪ Stichting Cordaid Expats, The Hague part-time percentage 100 100 ▪ Stichting Cordaid Participaties, The Hague Period in 2018 1/1 - 31/12 1/1 - 31/12 ▪ Cordaid Investment Management BV, The Hague Former board No No ▪ Corpav BV, The Hague member ▪ Stichting Beheer Subsidiegelden Dutch Relief Alliance, The Hague Gross salary 104,148 101,904 Holiday allowance 8,332 7,351 The Stichting Beheer Subsidiegelden Dutch Relief Alliance was Year-end bonus 9,336 8,236 founded in 2018 with the objective to channel grants from the Variable pay - - Dutch Ministery of Foreign Affairs for acute crises and innova- Total annual income 121,816 117,491 tion funds to participating organisations of the Dutch Relief Alliance. A Cordaid employee has been appointed as member of Social security 9,988 9,988 the Board of the foundation. Cordaid is also secretary of the contributions foundation. (employer’s share) Taxable allowances - - Related party transaction: Pension costs 11,912 11,882 During 2018 all transactions with the mentioned related (employer’s share) parties were done at arm’s length. The nature of the transac- Pension - - tions was mainly funding of the activities of the different compensation entities by Stichting Cordaid. In return Cordaid Investment End of contract - - benefits Management BV managed the Loans & Guarantees fund of 21,900 21,871 Stichting Cordaid and Stichting Participations held the shares Total remuneration 143,717 139,362 of Corpav BV. Corpav BV holds shares in one local investment in for 2018 South Sudan (Finance South Sudan), which is part of the Total remuneration 105,538 138,632 financial fixed assets on the consolidated balance sheet of for 2017* Cordaid. * The total remuneration for L.C. Zevenbergen in 2017 is based on 9 months of service compared to 12 months in 2018. 26 . EXECUTIVE REMUNERATION The members of the board of directors did not have any The Supervisory Board has adopted an executive remuneration outstanding loans, advances or guarantees at December 31, policy including the level of executive remuneration and other 2018 or during 2018. pay and benefits. The policy is updated periodically and was evaluated most recently in 2016. In determining the remunera- Supervisory Board tion policy and adopting the level of the remuneration, Cordaid The cost of the Supervisory Board consists of expenses for follows the regulation for executive remuneration of Goede general and special meetings, travel costs, fixed expense Doelen Nederland (see www.goededoelennederland.nl). allowances paid to members of the Supervisory Board and the The regulation uses weighting criteria to set a maximum for an hiring of expertise and advisors on request of the Supervisory executive’s annual income. The most recent VFI standard of 1 Board. In 2018 these costs were €6.504 (2017: €4,002). This 32 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT amount includes the fixed expense allowances paid to the Supervisory Board members do not receive any remuneration individual members of the Supervisory Board, as shown in the for their work. They only have the opportunity to cover their out table below. As per Cordaid’s policy for good governance of pocket expenses through a fixed expense allowance. Amounts paid for individual members of the Supervisory Board in 2018 were as follows: AMOUNT IN € 1 SUPERVISORY BOARD A .J .M . HEERTS M .C .T . VAN DE COEVERING J .H .M . VAN BUSSEL Function Chair Member Audit Committee Member Audit Committee Duration of function in 2018 (days) 365 365 365 Remuneration 0 0 0 Fixed expense allowances 0 0 0 Provisions for future payments 0 0 0 Total 0 0 0 M . VAN BEEK B .L .J .M . VAN DIJK- J .J .A . DE BOER VAN DE REIJT Function Member Member Member Duration of function in 2018 (days) 365 365 365 Remuneration 0 0 0 Fixed expense allowances 0 0 2,203 Provisions for future payments 0 0 0 Total 0 0 2,203 M .W .J .A . LANDHEER-REGOUW Function Member Duration of function in 2018 (days) 252 Remuneration 0 Fixed expense allowances 0 Provisions for future payments 0 Total 0 The fixed expense allowance paid in 2018 is a gross amount. The net amount received is €1,200 and relates to the fiscal year 2018. 27 . FINANCIAL INCOME AND EXPENSES Financial income and expenses includes interest and other income from bonds, capital gains on shares, interest earned on the bank account and currency gains and losses that are not related to the investments issued in connection with the objectives. What follows is a five-year summary of this item: X € 1,000 2018 2017 2016 2015 2014 Interest received on bonds 320 191 185 551 954 Interest received on cash and cash equivalents 14 57 139 457 508 Realised change in value of investments and liquid assets -87 1,329 -75 -680 860 Unrealised change in value of investments and liquid assets -441 -1,434 1,171 -117 1,233 -194 143 1,420 211 3,555 Investment costs -76 -148 -79 -90 -53 -270 -5 1,341 121 3,502 In 2018 the financial income and expenses amount €0.3m loss. (Un)realized losses on investments and liquid assets reduced from €1.4m loss in 2017 to €0.4m loss in 2018. In 2017 the loss was mainly related to exchange rate osses on feoriegn currencies, while in 2018 an exchange rate gain on foreign currencies was offset against unrealized loss in value of the investment portfolio held by Cordaid. AUGUST 2019 © CORDAID 33


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS 28 . BALANCE SHEET AND STATEMENT OF INCOME AND EXPENDITURE FOR THE FUND LOANS & GUARANTEES An important part of Cordaid’s activities is related to non-grant ture and balance sheet for the activities in relation to the Loans projects. Instead of providing a grant to partner organizations, & Guarantees Fund. The social impact investments through Cordaid provides loans or guarantees to its partners or it partici- Corpav BV and Stichting Cordaid Participaties are excluded pates in social entrepreneurships with the same objectives as from the statements below. Cordaid. The partner organizations involved are different from All figures originate from the figures in Cordaid’s financial Cordaid’s regular partner organizations. Rather than NGOs or statements. The principles for valuation of assets and liabilities grass-roots organizations, Cordaid mainly supports microfinance and revenue recognition are the same in the statements below, institutions, local banks, social funds and SMEs. Until June 30, only the classification and presentation of several items differ. 2015 these activities were managed by the Investments Business The costs to manage the fund, incurred by Cordaid Investment Unit, which was an integral part of Stichting Cordaid. To increase Management BV, are included in the statement of income and the impact of this social impact portfolio, Cordaid decided to expenditure and charged to the Loans & Guarantees Fund in separate the management of this portfolio from the regular full, as long as Cordaid is Cordaid Investment Management activities of Stichting Cordaid and founded Cordaid Investment BV’s only client. Management BV. The main objective of the separate entity is to All items in this financial overview can be traced to items in further professionalize the fund management and to increase the figures presented before, except for cash and investments. the impact of these social impact investments by finding new Cash and investments are allocated to the Loans & Guarantees external investors to increase the scale of the activities. Fund based on the division made in Cordaid’s financial As stakeholders interested in the Cordaid’s social impact administration. The fund has separated and designated bank investment portfolio and the work of Cordaid Investment accounts, and investments are administered separately. Management BV can have information needs other than the The right-hand column in the statements below refers to the information disclosed in Cordaid’s financial statements, notes where the corresponding item can be found in Cordaid’s Cordaid presents a separate statement of income and expendi- full financial statements. BALANCE FUND LOANS & GUARANTEES AS OF DECEMBER 31, 2018 X €1,000 NOTE 31/DEC/2018 31/DEC/2017 NOTE IN CORDAID FS Assets Net financial fixed assets issued for objectives - Debt 44,760 44,919 - Equity 2 15,947 19,667 - Guarantees 1,900 1,312 1 62,607 65,898 - Undisbursed loans and guarantees 3 -3,100 -3,944 - Loan revaluations 4 -3,573 -2,104 -6,673 -6,048 Net financial fixed assets issued for objectives 5 55,934 59,850 6 + 30 Net financial assets (not issued for objectives) Current account group companies - 217 Non Development investments 6 10,100 10,771 7 Cash and bank 16,233 14,315 Other receivables 1,294 887 Participation CIM BV 7 291 321 Net financial floating assets 27,918 26,511 Total Assets 83,852 86,361 Equity and liabilities Equity (Fund Loans & Guarantees) Fund Loans & Guarantees until prior year 8 84,316 91,889 Capital contributions fiscal year - - Operating income fiscal year 9 -2,004 -7,479 Recharged overhead fee fiscal year 10 -2,159 - Grant approvals 11 -233 -94 12 79,920 84,316 10 Liabilities Current account group companies 3,268 - Current liabilities - 925 Undisbursed equity participations 13 664 1,120 12 3,932 2,045 Total Equity and liabilities 83,852 86,361 1. Total Debt, Equity and Guarantees: Gross amount of all Cordaid’s investments 2. Equity: Equity investments have decreased significantly from €19.7m at December, commitments at year-end, distributed over various instruments. The overall level 2017 to €15.9m at the end of 2018. The net revaluation of the equity lead to a net has decreased from €65,9m in 2017 to €62.6m in 2018 mainly as a result of a decrease in value of €3.8m and limited equity was sold and no participations were significant negative revaluation of the equity portfolio. New commited loans, acquired in 2018. guarantees and participations in 2018 amount €11.9m and repayments €12.5m. 34 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 3. Undisbursed loans and guarantees: This refers to the undisbursed amounts of the 9. Operating income fiscal year: Retained earnings over the reporting period (see debt and guarantee instruments. Year-end 2018 the undisbursed loans amount the statement of income and expenditure for the Fund Loans & Guarantees €2.0m and undisbursed guarantees €1.1m. hereafter). 4. Loan revaluations: The amount of €3.6m loan revaluations equals the provision for 10. Recharged overhead fee fiscal year: The overhead fees allocated to the fund loans and guarantees. Provisioning is done in line with the Provisioning and besides the regular management fee paid to Cordaid Investment Management BV. write-off policies of Cordaid Investment Management BV. The charged fee in 2018 relates to an allocation of Cordaid in transition expnditures 5. Total net financial assets issued for objectives: Total net financial assets, as per to the fund loans & guarantees. the table, decreased €3.9m to €55.9m, mainly because of high amount of negative 11. Grant approvals: All amounts granted to partner organizations, supporting an revaulations (€3.8m), repayments (€12.5m) and undisbursed loans and guarantees investment in the same organization and grants used to support social entrepre- (€0.6m), which is partially offset by new commitments (€11.9m) and decreased neurs, are paid from the funds Loans & Guarantees. undisbursed loans. 12. Equity (Loans & Guarantees Fund): Total value of the fund is €79.9m, again a 6. Non-development investments: Part of the total fund Loans & Guarantees that is significant decrease following previous year. The decrease is mainly due to the not yet invested in connection with the objectives. Alternatively, these resources negative operational result (€2.0m) mainly as a result of the revaluation of equities are invested in regular investments managed by ING and Van Lanschot. The amount and additions on loan provision in 2018 and the approved supporting grants (€0.2m). included is 50% of the total portfolio of EUR 20.2m, see note 7 on the consolidated Including the cumulative result of Corpav BV and Stichting Cordaid Participaties financial statements. (not under management of CIM BV) the value would be €79.7m in line with the value 7. Participation CIM BV: Cordaid holds 100% of the shares of Cordaid Investment of the Loans & Guarantees fund in the consolidated balance sheet. Management BV, funded from the fund Loans & Guarantees. The net asset value of 13. Undisbursed equity participations: This refers to the undisbursed tranches of CIM BV at December 31, 2018 amounts to €0.3m (2017: €0.3m). equity investments. The outstanding amount mainly decreased by €0.5m because 8. Loans & Guarantees Fund until year-end 2017: Accumulated capital position of of the fulfilment of commitments for WAVF and PEAMEF. Please note that this has the fund at the beginning of 2018 amounting to €84.3m (2017: €91.8m). been considered a liability since 2010, in line with Dutch accounting principles. STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED DECEMBER 31, 2018 FOR THE FUND LOANS & GUARANTEES X €1,000 NOTE 31/DEC/2018 31/DEC/2017 NOTE IN CORDAID FS Financial income Interest income & fees 1+2 3,905 3,483 20 Dividends 1+2 372 170 Income from non-development investments and cash 3 768 53 26 5,045 3,706 Financial expenses Additions loan losses 4 1,471 648 20 Revaluation investments 5 3,818 602 20 Unrealised change in value of derivatives 6 -796 234 26 Currency results 7 -249 6,730 20 4,244 8,214 Margin on financial activities 801 -4,508 Operating expenses Operating expenses direct 8 2,021 1,989 10 Operating expenses indirect 9 784 982 10 2,805 2,971 Financial result from investing activities -2,004 -7,479 Non-operating income Capital contributions - - Contribution Cordaid in Transition 10 -2,159 - 10 -2,159 - Net result Social Impact investments -4,163 -7,479 10 Approvals grant reserve 11 -233 -94 Net result Fund Loans & Guarantees -4,396 -7,573 10 1+2. Interest Income & Fees + Dividends: These items refer to interest income on statement of income and expenditure. At December 31, 2018 the previous year senior/subordinated debt, guarantee fees and dividends received. The overall level current liability shifted to a receivable and thus an unrealised gain of €0.8m has increased in comparison to 2017 by €0.4m, mainly due to the extension of the been recognized. portfolio. 7. Currency results: Loans and guarantees are valued against the exchange rate at 3. Income non-development investments and cash/cash equivalents: This item balance sheet date if denominated in foreign currency. Participations that are refers to income on long and short-term excess liquidity, which is out of the scope impaired are also revalued against the exchange rate at balance sheet date. of the managed portfolio by Cordaid Investment Management B.V. More The result of this (mostly unrealized) amounted to €0.2m positive in 2018. information on the result of non-development can be found in note 27 to the 8. Operating expenses direct: This refers to the total direct costs of Cordaid financial statements. Investment Management BV plus legal and other costs incurred which are directly 4. Additions loan losses: This reflects the net addition to the provision for loans and related to the investments in the Loans & Guarantees portfolio. guarantees in the portfolio. The amount stated is the net result of the release of 9. Operating expenses indirect: This refers to the Cordaid corporate overhead costs provisions and the actual impaired loans and guarantees or write-offs. These charged to CIM BV and the indirect costs of CIM BV itself. write-offs are included in €1.5m Allocated to/withdrawn from provision for loans 10. Recharged overhead fee: The overhead fees allocated to the fund besides the and guarantees in note 21 to the consolidated financial statements. regular management fee paid to Cordaid investment Management BV. The charged 5. Revaluations Investments: This refers to the annual revaluation of the equity fee in 2018 relates to an allocation of Cordaid in transition expnditures to the fund participations. Cordaid values equity participations conservatively using the lower loans & guarantees. value of a) acquisition price or b) the value of the Cordaid share as per the end of 2018. 11. Approvals grant reserve: All amounts granted to partner organizations, 6. Unrealised change in value of derivatives: to cover currency risks on loan(s) supporting an investment in the same organization and grants used for support of denominated in Myanmar Kyat (MMK) a swap contract, MMK to USD, is in place. As social entrepreneurs are paid from the funds Loans & Guarantees. A total amount of the USD inflow is dependent on the 6 months LIBOR this swap contract holds a risk. €0.2m is available for such supporting grants. This derivative is measured at fair value, with fair value changes recognized in the AUGUST 2019 © CORDAID 35


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS FOUNDATION INDIVIDUAL FINANCIAL STATEMENTS OF STICHTING CORDAID Individual Balance sheet of Stichting Cordaid X € 1,000 NOTE 31/DEC/2018 31/DEC/2017 Assets Fixed assets Tangible fixed assets 30 251 444 Financial fixed assets 31 - Issued in connection with the objectives 55,935 59,850 - Investments 20,871 21,542 - Participations in group companies 325 105 77,131 81,497 Current assets Receivables 32 - Receivables from group companies 650 805 - Receivables from grants 13,899 10,252 - Implementing organization advances 11,086 5,253 - Receivable from inheritances 7,033 5,142 - Other receivables 1,631 1,459 - Interest receivable 959 763 35,258 23,674 Cash and Bank 33 43,640 51,215 Total assets 156,280 156,830 X € 1 .000 NOTE 31/DEC/2018 31/DEC/2017 Liabilities Reserves 34 - Continuity reserve 11,000 5,887 - Earmarked reserves 1,282 1,383 12,282 7,270 Funds 34 - Restricted funds 1,526 2,301 - Semi-restricted funds 19,489 18,067 - Loans & guarantees fund 74,589 84,099 95,604 104,467 Provisions 35 1,141 1,974 Non-current liabilities 36 - Project commitments - - Current liabilities 36 - Project commitments 15,977 13,736 - Other current liabilities 31,276 29,383 47,253 43,119 Total Liabilities 156,280 156,830 36 AUGUST 2019 © CORDAID


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    nOTeS TO The COnSOlIDATeD FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT INDIVIDUAL STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED AT DECEMBER 31, 2018 X € 1,000 NOTE 2018 2017 Income Income from private individuals 37 25,246 23,675 Income from companies 38 547 578 Benefits of lottery organizations 39 2,700 2,725 Government grants 40 104,216 90,176 Income from related (international) organizations 41 789 1,811 Income from other non-profit organizations 42 3,242 10,246 Total acquired income 136,740 129,211 Income from sale of goods and/or rendering of services 43 12 220 Other income 44 1,518 -4,203 Sum of income 138,270 125,462 Resources expended Spent on objectives - Program costs: 45 Healthcare 76,770 59,051 Humanitarian Aid 24,752 24,804 Security & Justice 11,111 13,499 Cordaid Netherlands 365 435 Resilience 10,935 10,053 Investments 4,337 4,071 Other activities 29 4,698 - Public information / awareness campaigns 46 4,423 4,917 Expenditure on the objectives 132,722 121,528 Expenditure on fundraising 46 6,172 6,460 Management and administration 46 2,959 2,061 Total expenditures 46 141,853 130,049 Sum of income and expenditures before financial income and expenses -3,583 -4,587 Financial income and expenses 48 -268 -330 Balance of funds -3,851 -5,151 AUGUST 2019 © CORDAID 37


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The FOUnDATIOn InDIvIDUAl FInAnCIAl STATemenTS NOTES TO THE FOUNDATION INDIVIDUAL FINANCIAL STATEMENTS 29 . ACCOUNTING PRINCIPLES 30 . TANGIBLE FIXED ASSETS Refer to note 5 on the consolidated financial statements 29 .1 General The Company financial statements are part of the 2018 finan- cial statements of Stichting Cordaid. With reference to the 31 . FINANCIAL FIXED ASSETS Company income and expenditure statement of Stichting Cordaid use has been made of the exemption pursuant to Part Stichting Cordaid holds three types of financial assets. 9, Book 2 of the Dutch Civil Code and the firm pronouncements Outstanding loans, participations and guarantees are recog- in the Guidelines for Annual Reporting in the Netherlands as nized as financial assets issued in connection with the issued by the Dutch Accounting Standards Board. More objectives. This relates to loans issued to and a number of specifically, the financial statements have been prepared in participations in partner organizations for the purposes of accordance with the Dutch Accounting Standard for Fundrais- funding usually small-scale economic activities (e.g. through ing Institutions (RJ 650). microfinance institutions), for which partner organizations find it difficult or impossible to secure finance from commer- 29 .2 Principles for the measurement of assets and cial banks. Interest rates on these loans are determined by liabilities and the determination of the result country and by customer. To stick to the principles for the recognition and measurement of assets and liabilities and determination of the result for its Company financial statements, Stichting Cordaid makes use of the option provided in Section 2:362 (8) of the Netherlands Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition and measurement) of the Company financial statements of Sticht- ing Cordaid are the same as those applied for the consolidated financial statements. Participating interests, over which significant influence is exercised, are stated based on the equity method. The share in the result of participating interests consists of the share of Stichting Cordaid in the result of these participating interests. Results on transactions are not incorporated insofar as they can be deemed to be unrealized, if the transfer of assets and liabilities between Stichting Cordaid and its participating interests and mutually between participating interests themselves. 38 AUGUST 2019 © CORDAID


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    nOTeS TO The FOUnDATIOn InDIvIDUAl FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT X € 1,000 LOANS GUARANTEES PARTICIPATIONS TOTAL Value of portfolio as at 1 January 2018 40,975 1,312 19,667 61,954 Provision as at 1 January 2018 -2,104 - - -2,104 Carrying amount 1 January 2018 38,871 1,312 19,667 59,850 Changes Loans and guarantees issued 12,834 - - 12,834 Loans and guarantees repaid -11,967 -568 - -12,535 Participations acquired/committed - - -143 -143 Participations sold/commitments withdrawn - - -8 -8 Impaired loans and guarantees - - - - Revaluation of participations - - -3,818 -3,818 Currency gains and losses 919 56 249 1,224 Value of portfolio as at 31 December 2018 42,761 800 15,947 59,508 Changes in the provision Impaired loans and guarantees - - - - Allocated to/withdrawn from provision for loans and -1,469 - - -1,469 guarantees Provision at 31 December 2018 -3,573 - - -3,573 Value of portfolio as at 31 December 2018 42,761 800 15,947 59,508 Provision as at 31 December 2018 -3,573 - - -3,573 Carrying amount as at 31 December 2018 39,188 800 15,947 55,935 Loans and guarantees Loans and guarantees will fall due in the following periods: X € 1,000 LOANS GUARANTEES TOTAL < 1 year 7,354 - 7,354 1-5 years 35,407 800 36,207 > 5 year - - - 42,761 800 43,561 Temporary cash surpluses are kept in deposits and savings accounts, the earmarked reserves and uninvested cash from the Fund Loans & Guarantees, are up till an amount of €20m invested by ING and Van Lanschot Bankiers on behalf of Stichting Cordaid. Refer to note 6 and 7 to the consolidated financial statements for more information. The 100% interest hold by Stichting Cordaid in the Cordaid Investment Management BV is presented as participations in group companies. The participation is valued at net asset value and amounts to €0.3m at balance sheet date (2017: €0.2m). AUGUST 2019 © CORDAID 39


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The FOUnDATIOn InDIvIDUAl FInAnCIAl STATemenTS 32 . RECEIVABLES 34 . RESERVES AND FUNDS The receivables in the individual balance sheet of Stichting Stichting Cordaid holds 100% of the shares in Cordaid Invest- Cordaid are specified as follows: ment Management BV and values this participation on the basis of net asset value. The funds and reserves of the other X € 1,000 31/DEC/2018 31/DEC/2017 entities that are included in the consolidated financial statements amount to €0.0m. Funds and reserves in the Receivables individual balance sheet is therefore equal to the funds and - Receivables from group 650 805 reserves in the consolidated balance sheet. companies - Receivable from grants 14,108 10,461 Refer to note 10 to the consolidated financial statements. - Provision uncollectable -209 -209 receivables from grants 35 . PROVISIONS - Implementing organization 11,086 5,253 advances Refer to note 11 to the consolidated balance sheet. - Receivable from inheritances 7,033 5,142 - Derivatives 563 - 36 . CURRENT AND NON-CURRENT - Interest receivables 959 763 LIABILITIES - Other receivables 1,068 1,459 The composition of the current and non-current liabilities in 35,258 23,674 the individual balance sheet of Stichting Cordaid is as follows: The receivables in the individual balance sheet are €0.5m X € 1,000 31/DEC/2018 31/DEC/2017 above the receivables in the consolidated balance sheet, mainly due to the receivable from group companies of €0.7m. The Non-current liabilities prepayments of Cordaid Investment Management BV account Project commitments - - for €0.1m and are excluded from this individual balance sheet. - - We refer to note 8 to the consolidated financial statements for disclosures on other items. Current liabilities Project commitments 15,977 13,736 All other receivables in the individual balance sheet are equal Deferred grants 23,626 8,980 to the receivables in the consolidated balance sheet. Accounts payables 3,250 2,978 Taxes and social security 766 1,554 33 . CASH AND BANK contributions Reservation for leave days and 1,023 1,071 Cash and bank comprise cash and bank balances of the Cordaid holiday allowance office in The Hague, in the Country Offices abroad and deposits falling due in less than one year. Derivatives - 234 Participations payable 664 1,121 X € 1,000 31/DEC/2018 31/DEC/2017 Other accruals and deferred 1,947 3,142 income Cash and cash equivalents 47,253 43,119 - Deposits 13,958 21,336 - Bank accounts 29,026 29,464 Compared to the consolidated financial statements current - Cash in hand 347 294 liabilities slightly lower due to excluded accruals, accounts - Cross accounts 309 121 payable and staff related current liabilities of Cordaid Investment Management BV. 43,640 51,215 All other current and non-current liabilities are equal to the The bank accounts held by Cordaid Investment Management liabilities in the consolidated balance sheet. Refer to note 12 to BV amounting to €0.4m are excluded compared to consolidated the consolidated financial statements for more information. balance sheet. The most important explanations for the change in cash and cash equivalents can be found in the consolidated cash flow statement. 40 AUGUST 2019 © CORDAID


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    nOTeS TO The FOUnDATIOn InDIvIDUAl FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 37 . INCOME FROM PRIVATE 44 . OTHER INCOME INDIVIDUALS X € 1,000 2018 2017 See note 14 to the consolidated statement of income and expenditure. Result on financial assets 1,246 -4,561 Other 272 358 Total other income 1,518 -3,969 38 . INCOME FROM COMPANIES Refer to note 15 to the consolidated statement of income and Gains and losses on financial assets issued in connection with expenditure. the objectives, comprise interest and commission received on loans and participations, as well as project income and curren- cy gains and losses, refer to table below: 39 . BENEFITS FROM LOTTERY ORGANIZATIONS X € 1,000 2018 2017 Refer to note 16 to the consolidated statement of income and Interest received on loans and 4,080 3,483 guarantees expenditure. Income from dividends/provision 372 170 guarantees 40 . GOVERNMENT GRANTS Revaluation of participations -3,569 -602 (Un)realised currency gains and 1,038 -6,730 Refer note 17 to the consolidated statement of income and losses expenditure. Unrealised change in value of 796 -234 derivatives 41 . INCOME FROM RELATED (INTER- Allocated to/withdrawn from provision for loans and guarantees -1,471 -648 NATIONAL) ORGANIZATIONS Total result on financial assets 1,246 -4,561 Refer note 18 to the consolidated statement of income and expenditure. The total result on financial assets issued in connection with the objectives equals the consolidated results. Refer to note 21 to the consolidated financial statements. 42 . INCOME FROM OTHER Related to the gains on financial assets, Stichting Cordaid NON-PROFIT ORGANIZATIONS paid a management fee of €2.7m to Cordaid Investment Refer note 19 to the consolidated statement of income and Management BV for managing the investments issued in expenditure. connection to the objectives. 43 . INCOME FROM SALE OF GOODS AND OR RENDERING OF SERVICES X € 1,000 CORDAID CORDAID CORDAID CORDAID CORDAID CORDAID TOTAL TOTAL GENERAL MENSEN KINDER- MEMISA MICRO BZN 2018 2017 IN NOOD STEM CREDIT Materials sold 5 - - - - - 5 6 Rendering of services 7 - - - - - 7 214 Total 12 - - - - - 12 220 Total 2017 214 - - 5 - 1 220 AUGUST 2019 © CORDAID 41


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    CORDAID 2018 ANNUAL REPORT nOTeS TO The FOUnDATIOn InDIvIDUAl FInAnCIAl STATemenTS 45 . SPENT ON OBJECTIVES The total program expenditure of Stichting Cordaid in 2018 can be specified as follows: X € 1,000 ACTUAL 2018 ACTUAL 2017 PROGRAM PROGRAM TOTAL PROGRAM PROGRAM TOTAL COSTS MANAGEMENT 2018 COSTS MANAGEMENT 2017 COST COST Healthcare 74,585 2,185 76,770 57,521 1,530 59,051 Humanitarian Aid 23,628 1,124 24,752 23,719 1,085 24,804 Security & Justice 10,850 261 11,111 13,266 233 13,499 Cordaid Netherlands 155 210 365 261 174 435 Resilience 10,049 886 10,935 9,391 662 10,053 Investments 811 3,526 4,337 527 3,544 4,071 Other 29 - 29 4,698 - 4,698 Total cost of programs 120,107 8,192 128,299 109,383 7,228 116,611 The operational costs of Cordaid Investment Management BV are excluded from the program management costs compared to the consolidated statement of income and expenditure. As a consequence, the allocation of costs of supporting departments to programs changes as well compared to the consolidated statement of income and expenditure. All other costs are equal to the costs as presented in the consolidated statement of income and expenditure. 46 . COST ALLOCATION TO THE DIFFERENT ACTIVITIES See note 22 to the consolidated statement of income and expenditure for more information on the method of cost allocation. The total costs of Stichting Cordaid are allocated to different categories as follows: RESOURCES EXPENDED EXPENDITURE ON THE OBJECTIVES EXPENDITURE MANAGEMENT AND TOTAL EXPENDITURES (X € 1,000) ON FUND- ADMINISTRATION PUBLIC PROGRAM RAISING ACTUAL ACTUAL INFORMATION / COSTS 2018 2017 AWARENESS CAMPAIGNS Grants and - 108,640 - - 108,640 97,493 contributions Publicity and 3,121 - 3,232 - 6,353 7,326 communication Staff 903 12,953 2,074 1,072 17,002 16,303 Travel and 8 1,350 34 251 1,643 1,132 accommodation Housing 117 899 252 98 1,366 1,248 Office & General 274 4,457 580 1,538 6,849 6,547 Total actual 2018 4,423 128,299 6,172 2,959 141,853 Total actual 2017 4,917 116,611 6,460 2,061 130,049 Total costs in the individual statement of income and expenditure are slightly lower than the total costs in the consolidated statement of income and expenditure. A shift between program management costs for the operational costs of Cordaid Investment Management BV (€2.8m) and the management fee paid to Cordaid Investment Management BV by Stichting Cordaid, classified as investment costs (€2.7m) is the other important difference between the individual accounts and the consolidated accounts. 42 AUGUST 2019 © CORDAID


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    nOTeS TO The FOUnDATIOn InDIvIDUAl FInAnCIAl STATemenTS CORDAID 2018 ANNUAL REPORT 47 . COST OF STAFF 48 . FINANCIAL INCOME AND EXPENSES 2018 2017 Financial income and expenses includes interest and other Head count in The Hague 166.0 142.0 income from bond loans, interest earned on the bank account Head count expats at field offices 36.0 42.0 and currency gains and losses. The financial income and expenses can be specified as follows: Total head count 202.0 184.0 X € 1,000 2018 2017 Average number of The Hague 168.1 168.5 Interest received on bonds 320 191 FTEs throughout the year Interest received on cash and cash 22 53 equivalents Program staf 95.1 99.2 Realised change in value of -89 1,335 Fundrains/Awareness staff 32.4 32.2 investments and liquid assets Other departments 40.6 37.1 Unrealised change in value of -448 -1,434 investments and liquid assets Total average FTE including 168.1 168.5 expats Result of participating in group 3 -327 companies Gross investment income -192 -182 The staff of Cordaid Investment Management BV consisting of 17 FTE (head count: 20) on average is not included in the Investment costs for investments -76 -148 statement above compared to the consolidated financial -268 -330 statements. The average number of FTEs in the annual accounts 2017 did not include expats. This has been corrected in the note above. Compared to the consolidated statement of income and expenditure the result of participation in group companies is X € 1,000 2018 2017 added. This line is equal to the net result of Cordaids’ group companies in which Cordaid holds 100% of the shares or chair Salaries and wages 10,146 8,102 on the Board of Directors of the entity. Social security contributions 1,249 1,384 Pension costs 852 1,027 Temporary staff 1,131 401 Cost of training and education 292 284 Other personnel expenses 579 421 14,249 11,619 As a consequence of excluding the group companies in the individual accounts, total staff costs are €1.6m lower than in the consolidated financial statements. Refer note 24 to the consolidated statement of income and expenditure for more detailed disclosure on coast of staff. AUGUST 2019 © CORDAID 43


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    CORDAID 2018 ANNUAL REPORT OTheR InFORmATIOn OTHER INFORMATION Provision in the constitution governing the Country Offices appropriation of balances At the end of 2018 Cordaid had 16 branches in 14 countries. According to article 11.4 of the constitution of Cordaid, the The Country Offices monitor and/or implement the programs Supervisory Board adopts the annual accounts drawn up by the for different thematic areas in these countries. The branches Board of Directors. Included in the annual account is a proposal are in the following countries: for the appropriation of positive or negative financial balances ▪ Afghanistan in the fiscal year concerned. The appropriation of the balance ▪ Burundi takes into account the imposed restrictions on spending by ▪ Central-African Republic third parties. ▪ Democratic Republic Congo (Kinshasa and Bukavu) ▪ Ethiopia (Country Office and Regional Office (Horn of Africa)) Appropriation of result ▪ Haiti Included in this annual account is the proposed appropriation ▪ Iraq of the negative balance of €3.9m as follows: ▪ Kenya ▪ Myanmar X € 1,000 2018 2017 ▪ Sierra Leone ▪ South Sudan Appropriation of funds ▪ Uganda The balance of funds was ▪ Zimbabwe appropriated as follows: ▪ Netherlands Reserves Subsequent events - continuity reserve 5,113 0 Cordaid did not identify any subsequent events affecting the - earmarked reserves -101 -2,601 annual accounts as presented. 5,012 -2,601 Funds - restricted funds -775 1,586 - semi-restricted funds 1,422 3,654 - loans & guarantees fund -9,510 -7,790 -8,863 -2,550 Balance of income and -3,851 -5,151 expenditures 44 AUGUST 2019 © CORDAID


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    InDepenDenT AUDITOR’S OpInIOn CORDAID 2018 ANNUAL REPORT INDEPENDENT AUDITOR’S OPINION AUGUST 2019 © CORDAID 45


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    CORDAID 2018 ANNUAL REPORT InDepenDenT AUDITOR’S OpInIOn 46 AUGUST 2019 © CORDAID


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    InDepenDenT AUDITOR’S OpInIOn CORDAID 2018 ANNUAL REPORT AUGUST 2019 © CORDAID 47


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    CORDAID 2018 ANNUAL REPORT InDepenDenT AUDITOR’S OpInIOn 48 AUGUST 2019 © CORDAID


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    contact P.O. Box 16440 2500 BK The Hague Lutherse Burgwal 10 2512 CB The Hague The Netherlands +31(0)70-31 36 300 cordaid@cordaid.nl www.cordaid.org


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