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ANNUAL REPORT 2013

Contents

REPORT OF THE MANAGEMENT BOARD 3About FMO 3

Introduction 4Profile 4

Governance Structure 4

Our Vision 4

Our Mission 5

Our Ambition 5

Reporting Policy and Justification of Choices 6Global Reporting Initiative 6

Reporting Policy 6

Selection of Topics 6

Materiality 6

Quality of Data 6

Manner of Reporting 6

Client Case Studies 7

Assurance 7

Letter from the CEO 8

Business Strategy 9FMO IN 2013 9

An Ambitious New Strategy 10

SECTOR STRATEGY 10

Financial Institutions 11

Energy 12

Agribusiness, Food and Water 13

Diverse Sectors 14

Private Equity 15

MOBILIZING STRATEGY 16

Catalyzing Investment 16

Syndications 16

Sustainability Bond 16

Fund Management 16

GOVERNMENT FUNDS 17

BEYOND FINANCE 18

Development Impact 19

New Impact Framework 19

FMOs Footprint 19

Evaluations 20

Stakeholder Strategy 23TRANSPARENCY AND ACCOUNTABILITY 23

STAKEHOLDER MANAGEMENT 23

Reputation 23

Working in Partnership 23

Transparency 23

Increasing Dutch Interest 24

Dialogue with Regulators 24

Engaging Employees 25

Growing Workforce 25

Diversity 25

Talent, Career and Management Development 25

Education 26

Works Council 26

Financial Performance, Funding and Risk Analysis 27KEY FINANCIAL FIGURES FMO 27

General 27

Balance Sheet 28

Income 29

FUNDING 30

Sustainability Bond 30

RISK PROFILE AND MANAGEMENT 30

In Control Framework 30

Strategic Risk 30

Reputational Risk 31

Financial Risk 31

Market Risk 32

Liquidity Risk 32

Other Risks 32

OUTLOOK 2014 33

IN CONTROL STATEMENT 34

REPORT OF THE SUPERVISORY BOARD 35INTRODUCTION 35

PROPOSALS AND RECOMMENDATIONS TO THE

ANNUAL GENERAL MEETING 35

SUPERVISORY BOARD ACTIVITIES IN 2013 35

Mission and Strategy 35

Risk Profile and Risk Management 36

Management Development 36

SUPERVISORY BOARD ROLE AND STRUCTURE 36

AUDIT & RISK COMMITTEE 37

SELECTION, APPOINTMENT & REMUNERATION 37

LIFELONG LEARNING 38

SELF-EVALUATION 38

REMUNERATION POLICY 38

INDEPENDENCE, CONFLICTS OF INTEREST AND GOVERNANCE 39

CORPORATE GOVERNANCE 40GOVERNANCE STRUCTURE 40

ARTICLES OF ASSOCIATION 40

CORPORATE GOVERNANCE CODES 40

COMBINED INDEPENDENT AUDITORS AND ASSURANCE REPORT 42

CONSOLIDATED ANNUAL ACCOUNTS 51

COMPANY ANNUAL ACCOUNTS 116

OTHER INFORMATION 122

LIST OF ABBREVIATIONS 123

Annual Report 2013

3

About FMO

REPORT OF THE MANAGEMENT BOARD

FMO KEY FIGURES

The figures and percentages mentioned throughout this annual report are the figures of the financing activities from FMOs own funds

including the FOM facility. Where the FMO-managed Government funds are included, it is explicitly stated.

2013 2012* 2011 2010 2009

New investments 1 (xmln) 1,524 1,390 1,306 1,026 911

of which are Government funds 2 144 160 165 81 114

Committed investment portfolio 6,633 6,281 5,874 5,292 4,598

of which are Government funds 844 831 828 726 721

BALANCE SHEET (XMLN)

Net loans 2,981 2,817 2,585 2,269 1,942

Equity investments portfolio 3 962 914 795 688 531

Shareholders equity 1,963 1,815* 1,665 1,514 1,327

Debt securities and debentures/notes 3,610 3,292 2,679 2,365 2,180

Total assets 6,184 5,564* 5,059 4,305 3,772

PROFIT AND LOSS ACCOUNT (XMLN)

Income

Net interest income 155 154 147 133 109

Income from equity investments 43 89 46 52 27

Other income including services 56 28 45 40 30

Total income 254 271 238 225 166

Expenses

Operating expenses -62 -57* -52 -50 -52

Operating profit before value adjustments 192 214 186 175 114

Value adjustments

to loans and guarantees 4 -23 -23 -18 -46

to equity investments -22 -23 -36 -11 -6

Total value adjustments -18 -46 -59 -29 -52

Share in the results of associates -5 4 -9 5 -1

Profit before tax (including results from associates) 169 172* 118 151 61

Taxes -36 -27* -25 -25 -1

Net profit 133 145* 93 126 60

Average number of full-time employees 336 306 283 270 264

Offset CO2 emissions (tons) 4 8,100 4,620 3,600 3,791 2,227

1) New investments and Committed investment portfolio concerns both investments for FMOs account and for Government funds managed by FMO2) The Government funds include MASSIF, IDF, AEF and FOM OS3) Including associates4) Since 2012 we have used a new offsetting methodology. Before 2012 we offset our CO2 emissions solely through the Climate Neutral Group. We now offset part of our CO2 emissions through KLM,

our preferred carrier. The remaining emissions continue to be offset through the Climate Neutral Group. KLM offsets 10% of our emissions; we continue to work with the Climate Neutral Group to offset the remaining emissions.

* The 2012 financial figures have been restated for the changes in IAS 19 Employee Benefits (revised 2011). The change in this IFRS standard, which became effective in 2013, also has an effect on the figures of 2012. For a detailed description on the changes in accounting principles, please refer to the significant accounting policies of the annual accounts.

Annual Report 2013 | IntroductionAnnual Report 2013

4 5

FMO is the Dutch development bank. We

support sustainable private sector growth

in developing and emerging markets by

investing in ambitious entrepreneurs. We

specialize in sectors where our contribution

can have the highest long-term impact:

financial institutions, energy, and

agribusiness, food and water.

We share with our clients the commitment

to growing a healthy private sector in

developing countries. This is how lasting

development impact is generated. These

entrepreneurs create jobs. They employ

people to manufacture products and

services, thereby providing income and

boosting living standards.

As we are working in an increasingly

complex and interconnected world, it is

essential to have open and constructive

interaction with our stakeholders. These

include clients, partners, investors,

governments and ministries, NGOs,

knowledge centers and universities.

Cooperation through consultative meetings,

for example with NGOs in creating FMOs

complaints mechanism, conferences

on such mutually relevant topics as

sustainable finance and best practices in

ship breaking, and various other events

provide us with knowledge and insight into

our stakeholders needs. This helps us to

continually improve our business according

to the changing demands of the external

environment and developments in our focus

sectors and markets.

We offer our capital and knowledge as

partners to ambitious entrepreneurs, banks

and companies in crucial sectors so that

todays developing markets can become

tomorrows thriving ones.

Profile

Founded in 1970, FMO is a public-private

partnership, with 51% of our shares held

by the Dutch State, and 49% held by

commercial banks, trade unions and

other private-sector representatives.

FMO has five subsidiaries that serve as

intermediate holdings: Nuevo Banco

Comercial Holding B.V., FMO Antillen N.V.,

Blauser S.A., Industrias Andinas B.V. and

Asia Participations B.V., all with limited

activities and fully consolidated in the

FMO annual accounts. A minor part

of the FMO financing is guaranteed

by the Dutch State under the Faciliteit

Opkomende Markten (FOM), which is

also consolidated in the FMO annual

accounts. FMO also manages several

funds for the Dutch Government: the

MASSIF fund, Access to Energy fund

(AEF), Infrastructure Development Fund

(IDF) and the Fonds Opkomende Markten

OntwikkelingsSamenwerking (FOM-OS).

FMO has a AAA rating from Fitch Ratings

and a AA+ from Standard & Poors. We

are classified as Prime with a B rating the

second highest within our peer group by

Oekom Research, a sustainable investment

rating agency.

Our solid profile allows us to invest in

higher-risk markets, either through FMOs

own balance sheet or through projects we

finance using FMO-managed Government

funds.

Governance Structure

FMO has a two-tier board structure, with

a Management Board and a Supervisory

Board. The Management Board develops

and implements FMOs strategy and is

responsible for ensuring compliance with

relevant legislation and regulations. It

comprises three statutory directors: the

Chief Executive Officer (CEO), the Chief

Investment Officer (CIO) and the Chief Risk

and Finance Officer (CRFO).

The Supervisory Board appoints the

members of the Management Board

and supervises its activities. It advises

the Management Board on the strategic

development and management of the

company. The Supervisory Board consists of

six members with specific expertise in FMOs

primary areas of business. These members

are appointed by the Annual Meeting of

Shareholders.

Our Vision

We believe in a world in 2050 in which

nine billion people live well and within the

planets resourc