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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

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