Help Print this page 

Document 52017DC0364

Title and reference
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2016

COM/2017/0364 final
Multilingual display
Text

Brussels, 26.6.2017

COM(2017) 364 final

COMMUNICATION FROM THE COMMISSION

ANNUAL ACCOUNTS OF THE EUROPEAN DEVELOPMENT FUND 2016


EDF REPORT ON FINANCIAL IMPLEMENTATION    

ANNUAL REPORT ON IMPLEMENTATION - FUNDS MANA GED BY THE EUROPEAN INVESTMENT BANK    

 

CERTIFICATION OF THE ACCOUNTS

The annual accounts of the European Development Fund for the year 2016 have been prepared in accordance with Title IX of the Financial Regulation of the 11th European Development Fund and with the accounting principles, rules and methods set out in annex to the financial statements.

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

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

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

[signed]

Rosa ALDEA BUSQUETS

Accounting Officer

23 June 2017

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

1.BACKGROUND

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

-The EU budget;

-The European Development Fund;

-The European Investment Bank.

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

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

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

The Internal Agreement establishing the 11th EDF was signed by the participating Member States, meeting within the Council, in June 2013 1 . It came into force on 1 March 2015. In order to assure continuity between the end of the 10th EDF and the entry into force of the 11th EDF, the Commission proposed transitional measures, known as the Bridging Facility (BF) 2 . The BF is presented under the 11th EDF.

At the same time the 10th EDF Financial Regulation 3  was amended and the new Financial Regulation applicable to the transition period was adopted 4 . They entered into force on 30 May 2014. On 2 March 2015 the Council adopted the 11th EDF Financial Regulation 5 and the Implementation Rules 6 . They entered into force on 6 March 2015.

Within the framework of the ACP-EU Partnership Agreement, the Investment Facility was established. This Investment Facility is managed by the EIB and is used to support private sector development in the ACP States by financing essentially – but not exclusively – private investments. The Facility is designed as a renewable fund, so that loan repayments can be reinvested in other operations, thus resulting in a self-renewing and financially independent facility. As the Investment Facility is not managed by the Commission, it is not consolidated in the first part of the annual accounts – the financial statements of the EDF and the related report on financial implementation. The financial statements of the Investment Facility are included as a separate part of the annual accounts (part II) to provide a full picture of the development aid of the EDF 7 .

2.HOW IS THE EDF FUNDED?

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

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

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

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

3.YEAR-END REPORTING

3.1.ANNUAL ACCOUNTS

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

The preparation of the EDF annual accounts is entrusted to the Commission's Accounting Officer who is the Accounting Officer of the EDF. He/she ensures that the annual accounts of EDF present a true and fair view of the financial position of the EDF.

The annual accounts are presented as follows:

Part I: Funds managed by the Commission

(I)Financial statements and explanatory notes of the EDF

(II)Financial statements of the EU trust funds consolidated in the EDF

(III)Consolidated financial statements of EDF and the EU trust funds

(IV)Report on financial implementation of the EDF

Part II: Annual report on implementation - Funds managed by the EIB

(I)Financial statements of the Investment Facility

The part 'Financial statements of the European trust funds consolidated in the EDF' includes financial statements of the two trust funds created under the EDF: The Bêkou EU Trust Fund (see section 'Financial statements of the Bêkou EU Trust Fund') and EU Trust Fund for Africa 8 (see section 'Financial statements of EUTF for Africa'). The trust funds individual financial statements are prepared under the responsibility of the EC Accounting Officer and subject to external audit carried out by a private auditor. The trust funds' financial statements included in these annual accounts are the final financial statements, i.e. after the necessary audit adjustments.

It should be noted that the layout of the financial statements and the explanatory notes were changed in 2016. The changes are purely in the presentation of the financial information and aim at giving a closer alignment to the other EU entities'. The 2015 comparative amounts are presented in line with the new format.

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

4.AUDIT AND DISCHARGE

4.1.AUDIT

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

4.2.DISCHARGE

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

 

EUROPEAN DEVELOPMENT FUND

FINANCIAL YEAR 2016

FUNDS MANAGED BY THE EUROPEAN COMMISSION

 

FINANCIAL STATEMENTS OF THE EDF

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

 

EDF BALANCE SHEET

EUR millions

Note

31.12.2016

31.12.2015

NON-CURRENT ASSETS

Pre-financing

2.1

409

516

Trust Fund contributions

2.2

98

34

507

550

CURRENT ASSETS

Pre-financing

2.1

1 372

1 145

Exchange receivables and non-exchange recoverables

2.3

132

171

Cash and cash equivalents

2.4

680

504

2 184

1 820

TOTAL ASSETS

2 691

2 370

NON-CURRENT LIABILITIES

Provisions

2.5

(4)

(4)

Financial liabilities

2.6

(6)

(10)

(10)

(14)

CURRENT LIABILITIES

Payables

2.7

(549)

(520)

Accrued charges and deferred income

2.8

(776)

(855)

(1 324)

(1 376)

TOTAL LIABILITIES

(1 334)

(1 389)

NET ASSETS

1 357

980

FUNDS & RESERVES

Called fund capital - active EDFs

2.9

42 323

38 873

Called fund capital from closed EDFs carried forward

2.9

2 252

2 252

Called fund capital transfers between active EDFs

2.9

Economic result carried forward from previous years

(40 146)

(36 994)

Economic result of the year

(3 073)

(3 152)

NET ASSETS

1 357

980

 

EDF STATEMENT OF FINANCIAL PERFORMANCE

EUR millions

Note

2016

2015

REVENUE

Revenue from non-exchange transactions

3.1

Recovery of expenses

8

90

8

90

Revenue from exchange transactions

3.2

Financial income

3

8

Other income

62

42

66

50

Total Revenue

73

140

EXPENSES

Aid instruments

3.3

(2 970)

(3 059)

Co-financing expenses

3.4

15

(69)

Finance costs

3.6

4

(1)

Other expenses

3.7

(196)

(162)

Total Expenses

(3 146)

(3 291)

ECONOMIC RESULT OF THE YEAR

(3 073)

(3 152)

 

EDF CASHFLOW STATEMENT

EUR millions

Note

2016

2015

Economic result of the year

(3 073)

(3 152)

Operating activities

Capital increase - contributions

3 450

3 200

(Increase)/decrease in trust funds contributions

(64)

5

(Increase)/decrease in pre-financing

(120)

214

(Increase)/decrease in exchange receivables and non-exchange recoverables

39

(87)

Increase/(decrease) in provisions

4

Increase/(decrease) in financial liabilities

(4)

(24)

Increase/(decrease) in payables

28

(179)

Increase/(decrease) in accrued charges and deferred income

(80)

131

NET CASHFLOW

177

113

Net increase/(decrease) in cash and cash equivalents

177

113

Cash and cash equivalents at the beginning of the year

2.4

504

391

Cash and cash equivalents at year-end

2.4

680

504

EDF STATEMENT OF CHANGES IN NET ASSETS

EUR millions

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

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

BALANCE AS AT 31.12.2014

45 691

10 018

35 673

(36 994)

2 252

932

Capital increase - contributions

(4 795)

4 795

4 795

Capital decrease - funds committed under the Bridging Facility

(1 595)

(1 595)

(1 595)

Recognition of the 11th EDF capital

29 367

29 367

Economic result of the year

(3 152)

(3 152)

BALANCE AS AT 31.12.2015

73 464

34 590

38 873

(40 146)

2 252

980

Capital increase - contributions

(3 450)

3 450

3 450

Economic result of the year

(3 073)

(3 073)

BALANCE AS AT 31.12.2016

73 464

31 140

42 323

(43 219)

2 252

1 357

 

 

BALANCE SHEET BY EDF

EUR millions

31.12.2016

31.12.2015

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Eighth EDF

Ninth EDF

10th EDF

11th EDF

NON-CURRENT ASSETS

Pre-financing

2.1

32

242

135

63

368

84

Trust Fund contributions

2.2

98

34

32

242

232

63

368

118

CURRENT ASSETS

Pre-financing

2.1

1

50

909

412

3

67

879

195

Exchange receivables and non-exchange recoverables

2.3

1

71

59

2

1

65

103

2

Liaison accounts

2.3

196

424

3 424

214

657

1 190

Cash and cash equivalents

2.4

680

504

198

544

4 391

1 094

218

790

2 172

701

TOTAL ASSETS

198

577

4 633

1 327

218

853

2 541

819

NON-CURRENT LIABILITIES

Provisions

2.5

(4)

(4)

Financial liabilities

2.6

(6)

(10)

(6)

(4)

(10)

(4)

CURRENT LIABILITIES

Payables

2.7

(0)

(12)

(438)

(99)

(0)

(14)

(492)

(14)

Liaison accounts

2.3

(4 043)

(2 062)

Accrued charges and deferred income

2.8

(1)

(93)

(567)

(115)

(3)

(114)

(682)

(57)

(1)

(104)

(1 005)

(4 257)

(3)

(128)

(1 174)

(2 132)

TOTAL LIABILITIES

(1)

(104)

(1 011)

(4 261)

(3)

(128)

(1 184)

(2 136)

NET ASSETS

197

472

3 622

(2 934)

214

726

1 357

(1 317)

FUNDS & RESERVES

Called fund capital - active EDFs

2.9

12 164

10 973

19 187

12 164

10 973

15 737

Called fund capital from closed EDFs carried forward

2.9

627

1 625

627

1 625

Called fund capital transfers between active EDFs

2.9

(2 496)

2 214

247

35

(2 476)

2 376

35

65

Economic result carried forward from previous years

(10 100)

(14 248)

(14 415)

(1 382)

(10 107)

(14 223)

(12 183)

(481)

Economic result of the year

2

(91)

(1 397)

(1 587)

6

(26)

(2 232)

(901)

NET ASSETS

197

472

3 622

(2 934)

214

726

1 357

(1 317)

 

STATEMENT OF FINANCIAL PERFORMANCE BY EDF

EUR millions

2016

2015

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Eighth EDF

Ninth EDF

10th EDF

11th EDF

REVENUE

Revenue from non-exchange transactions

3.1

Recovery of expenses

1

5

(2)

4

1

10

77

2

1

5

(2)

4

1

10

77

2

Revenue from exchange transactions

3.2

Financial income

(0)

2

2

(1)

(0)

6

0

2

Other income

2

17

40

3

3

15

22

2

2

19

43

2

3

21

22

4

Total revenue

3

23

41

7

4

30

99

6

EXPENSES

Aid instruments

3.3

2

(95)

(1 411)

(1 465)

5

(47)

(2 197)

(820)

Co-financing expenses

3.4

15

(68)

(1)

Finance costs

3.6

(0)

(0)

4

(0)

0

7

(8)

(0)

Other expenses

3.7

(3)

(19)

(46)

(129)

(3)

(15)

(58)

(86)

Total expenses

(1)

(114)

(1 437)

(1 594)

2

(56)

(2 331)

(907)

ECONOMIC RESULT OF THE YEAR

2

(91)

(1 397)

(1 587)

6

(25)

(2 232)

(901)

 

STATEMENT OF CHANGES IN NET ASSETS BY EDF

EUR millions

Eighth EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

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

BALANCE AS AT 31.12.2014

12 840

12 840

(10 107)

627

(3 147)

214

Capital decrease - funds committed under the Bridging Facility

(676)

(676)

(676)

Transfers to/from the 10th EDF

(6)

(6)

Transfers to/from the 11th EDF

676

676

Economic result of the year

6

6

BALANCE AS AT 31.12.2015

12 164

12 164

(10 100)

627

(2 476)

214

Transfers to/from the 10th EDF

(20)

(20)

Transfers to/from the 11th EDF

Economic result of the year

2

2

BALANCE AS AT 31.12.2016

12 164

12 164

(10 098)

627

(2 496)

197

EUR millions

Ninth EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

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

BALANCE AS AT 31.12.2014

11 699

11 699

(14 223)

1 625

1 758

860

Capital decrease - funds committed under the Bridging Facility

(727)

(727)

(727)

Transfers to/from the 10th EDF

(109)

(109)

Transfers to/from the 11th EDF

727

727

Economic result of the year

(26)

(26)

BALANCE AS AT 31.12.2015

10 973

10 973

(14 249)

1 625

2 376

726

Transfers to/from the 10th EDF

(163)

(163)

Transfers to/from the 11th EDF

Economic result of the year

(91)

(91)

BALANCE AS AT 31.12.2016

10 973

10 973

(14 339)

1 625

2 214

472

EUR millions

10th EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

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

BALANCE AS AT 31.12.2014

21 152

10 018

11 134

(12 183)

(209)

(1 258)

Capital increase - contributions

(4 795)

4 795

4 795

Capital decrease - funds committed under the Bridging Facility

(192)

(192)

(192)

Transfers to/from the Eighth and Ninth EDF

84

84

Transfers to/from the 11th EDF

160

160

Economic result of the year

(2 232)

(2 232)

BALANCE AS AT 31.12.2015

20 960

5 223

15 737

(14 415)

35

1 357

Capital increase - contributions

(3 450)

3 450

3 450

Transfers to/from the Eighth and Ninth EDF

182

182

Transfers to/from the 11th EDF

30

30

Economic result of the year

(1 397)

(1 397)

BALANCE AS AT 31.12.2016

20 960

1 773

19 187

(15 812)

247

3 622

EUR millions

11th EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

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

BALANCE AS AT 31.12.2014

(481)

1 597

1 116

Recognition of the 11th EDF capital in line with the Internal Agreement

29 367

(29 367)

Transfers to/from the Eighth, Ninth and 10th EDF

(1 532)

(1 532)

Economic result of the year

(901)

(901)

BALANCE AS AT 31.12.2015

29 367

(29 367)

(1 382)

65

(1 317)

Transfers to/from the Eighth, Ninth and 10th EDF

(30)

(30)

Economic result of the year

(1 587)

(1 587)

BALANCE AS AT 31.12.2016

29 367

(29 367)

(2 969)

35

(2 934)

 

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF

 

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

1.SIGNIFICANT ACCOUNTING POLICIES

1.1.ACCOUNTING PRINCIPLES

The objective of financial statements is to provide information about financial position, performance and cash flows of an entity that is useful to a wide range of users.

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

1.2.BASIS OF PREPARATION

2.Reporting period

Financial statements are presented annually. The accounting year begins on 1 January and ends on 31 December.

3.Currency and basis for conversion

The annual accounts are presented in millions of euros, the euro being the EDF's functional and reporting currency. Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the re-translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance. Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the date when they were purchased.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are translated into euros on the basis of the European Central Bank (ECB) exchange rates applying on 31 December.

Euro exchange rates

Currency

31.12.2016

31.12.2015

Currency

31.12.2016

31.12.2015

BGN

1.9558

1.9558

PLN

4.4103

4.2639

CZK

27.0210

27.0230

RON

4.5390

4.5240

DKK

7.4344

7.4626

SEK

9.5525

9.1895

GBP

0.8562

0.7340

CHF

1.0739

1.0835

HRK

7.5597

7.6380

JPY

123.4000

131.0700

HUF

309.8300

315.9800

USD

1.0541

1.0887

4.Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to; accrued and deferred income and charges, provisions, financial risk on accounts receivables, contingent assets and liabilities, and degree of impairment of assets. Actual results could differ from those estimates.

Reasonable estimates are essential part of the preparation of financial statements and do not undermine their reliability. An estimate may need revision if changes occur in the circumstances on which the estimate was based or as a result of new information or more experience. By its nature, the revision of an estimate does not relate to prior periods and is not the correction of an error. The effect of a change in accounting estimate shall be recognised in the surplus or deficit in the periods in which it becomes known.

4.1.BALANCE SHEET

5.Intangible assets

Acquired computer software licences are stated at historical cost less accumulated amortisation and impairment losses. The assets are amortised on a straight-line basis over their estimated useful lives. The estimated useful lives of intangible assets depend on their specific economic lifetime or legal lifetime determined by an agreement. Internally developed intangible assets are capitalised when the relevant criteria of the EU accounting rules are met. The costs capitalisable include all directly attributable costs necessary to create, produce, and prepare the asset to be capable of operating in the manner intended by management. Costs associated with research activities, non-capitalisable development costs and maintenance costs are recognised as expenses as incurred.    

6.Property, plant and equipment

All property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition or construction of the asset. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits or service potential associated with the item will flow to the entity and its cost can be measured reliably. Repairs and maintenance costs are charged to the statement of financial performance during the financial period in which they are incurred. Land and works of art are not depreciated as they are deemed to have an indefinite useful life. Assets under construction are not depreciated as these assets are not yet available for use. Depreciation on other assets is calculated using the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:

Type of asset

Straight line depreciation rate

Buildings

4 % to 10 %

Plant and equipment

10 % to 25 %

Furniture and vehicles

10 % to 25 %

Computer hardware

25 % to 33 %

Other

10 % to 33 %

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

Leases

Leases of tangible assets, where the entity has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The interest element of the finance lease payment is charged to statement of financial performance over the period of the lease at a constant periodic rate in relation to the balance outstanding. The rental obligations, net of finance charges, are included in financial liabilities (non-current and current). The interest element of the finance cost is charged to the statement of financial performance over the lease period so as to produce a constant periodic interest rate on the remaining balance of the liability for each period. The assets held under finance leases are depreciated over the shorter of the assets' useful life and the lease term.

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

7.Impairment of non-financial assets

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

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

8.Financial assets

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

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

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

(II)Loans and receivables

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

(III)Held-to-maturity investments

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

(IV)Available for sale financial assets

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

Initial recognition and measurement

Purchases and sales of financial assets at fair value through profit and loss, held-to-maturity and available for sale are recognised on trade date - the date on which the entity commits to purchase or sell the asset. Cash equivalents, loans and term deposits are recognised at settlement date. Financial instruments are initially recognised at fair value. For all financial assets not carried at fair value through profit and loss transaction costs are added to the fair value at initial recognition.

Financial instruments are derecognised when the rights to receive cash flows from the investments have expired or the entity has transferred substantially all risks and rewards of ownership to another party.

Subsequent measurement

Financial assets at fair value through profit and loss are subsequently carried at fair value with gains and losses arising changes in the fair value being included in the statement of financial performance in the period in which they arise.

Loans and receivables and held-to maturity investments are carried at amortised cost using the effective interest method.

Available for sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value being recognised in the fairs value reserve. Interest on available for sale financial assets calculated using the effective interest method is recognised in the statement of financial performance.

The entity assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired and whether an impairment loss should be recorded in the statement of financial performance.

9.Pre-financing amounts

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

Pre-financing is, on subsequent balance sheet dates, measured at the amount initially recognised on the balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the period.

10.Receivables and recoverables

As the EU accounting rules require a separate presentation of exchange and non-exchange transactions, for the purpose of drawing up the accounts, receivables are defined as stemming from non-exchange transactions and recoverables are defined as stemming from exchange transactions (when the entity receives value from another entity without directly giving approximately equal value in exchange).

Receivables from exchange transactions meet the definition of financial instruments and are thus classified as loans and receivables and measured accordingly (see 1.3.4 above).

Recoverables from non-exchange transactions are carried at original amount (adjusted for interests and penalties) less write-down for impairment. A write-down for impairment is established when there is objective evidence that the entity will not be able to collect all amounts due according to the original terms of the recoverables. The amount of the write-down is the difference between the asset's carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance.

11.Cash and cash equivalents

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

12.Provisions

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

13.Payables

Included under accounts payable are both amounts related to exchange transactions such as the purchase of goods and services and non-exchange transactions related e.g. to cost claims from beneficiaries, grants or other EU funding.

Where grants or other funding is provided to the beneficiaries, the cost claims are recorded as payables for the requested amount when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

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

14.Accrued and deferred income and charges

Transactions and events are recognised in the financial statements in the period to which they relate. At year-end, if an invoice is not yet issued but the service has been rendered, the supplies have been delivered by the entity or a contractual agreement exists (e.g. by reference to a contract), an accrued income will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

Expenses are also accounted for in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Accounting Officer which aim at ensuring that the financial statements provide a faithful representation of the economic and other phenomena they purport to represent. By analogy, if a payment has been made in advance for services or goods that have not yet been received, the expense will be deferred and recognised in the subsequent accounting period.



14.1.STATEMENT OF FINANCIAL PERFORMANCE

15.Revenue

Revenue comprises gross inflows of economic benefits or service potential received and receivable by the entity, which represents an increase in net assets, other than increases relating to contributions from owners.

Depending on the nature of the underlying transactions in the statement of financial performance it is distinguished between:

(I)Revenue from non-exchange transactions

Revenue from non-exchange transactions are taxes and transfers because the transferor provides resources to the recipient entity without the recipient entity providing approximately equal value directly in exchange.

Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. The entity shall recognise an asset in respect of transfers when the entity controls the resources as a result of a past event (the transfer) and expects to receive future economic benefits or service potential from those resources, and when the fair value can be reliably measured. An inflow of resources from a non-exchange transaction recognised as an asset (i.e. cash) is also recognised as revenue, except to the extent that the entity has a present obligation in respect of that transfer (condition), which needs to be satisfied before the revenue can be recognised. Until the condition is met the revenue is deferred and recognised as a liability (pre-financing received).

(II)Revenue from exchange transactions

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

16.Expenses

Expenses are decreases in economic benefits or service potential during the reporting period in the form of outflows or consumption of assets or incurrence of liabilities that result in decreases in net assets/equity. They include both the expenses from exchange transactions and expenses from nonexchange transactions.

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

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

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

16.1.CONTINGENT ASSETS AND LIABILITIES

17.Contingent assets

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

18.Contingent liabilities

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

18.1.CO-FINANCING

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

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

19.NOTES TO THE BALANCE SHEET

ASSETS

19.1.PRE-FINANCING

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

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

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Non-current pre-financing

2.1.1

32

242

135

409

516

Current pre-financing

2.1.2

1

50

909

412

1 372

1 145

Total

1

82

1 151

546

1 781

1 661

20.Non-current pre-financing

EUR millions

31.12.2016

31.12.2015

Direct Management

71

65

Implemented by:

Commission

39

43

EU executive agencies

4

1

EU delegations

29

21

Indirect Management

338

451

Implemented by :

EIB and EIF

180

323

International organisations

87

90

Private law bodies with a public service mission

25

3

Public law bodies

13

10

Third countries

34

25

Total

409

516

21.Current pre-financing

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Pre-financing (gross)

9

231

2 945

1 560

4 745

4 250

Cleared via cut-off

(8)

(181)

(2 037)

(1 148)

(3 373)

(3 105)

Total

1

50

909

412

1 372

1 145

 

EUR millions

31.12.2016

31.12.2015

Direct Management

246

283

Implemented by:

Commission

115

123

EU executive agencies

10

1

EU delegations

122

159

Indirect Management

1 125

861

Implemented by :

EIB and EIF

372

235

International organisations

432

336

Private law bodies with a public service mission

121

5

Public law bodies

53

56

Third countries

148

229

Total

1 372

1 145

The overall pre-financing at 31 December 2016 (EUR 1 781 million) is comparable to the total pre-financing at 31 December 2015 (EUR 1 661 million).

The slight increase in current pre-financing by EUR 227 million compared to 31 December 2015 is explained by a large number of new contracts for which no costs were yet incurred in 2016. This increase is offset by a decrease of the long term pre-financing (see note 2.1.1).

22.Guarantees received in respect of pre-financing

Guarantees are held to secure pre-financing and are released when the final claim under a project is paid. At 31 December 2016 the guarantees received by the EDF in respect of pre-financing amounted to EUR 53 million (2015 EUR 83 million).

The majority of pre-financing is paid under the indirect management mode. In this case the beneficiary of the guarantee is not the EDF but the contracting authority.

22.1.TRUST FUND CONTRIBUTIONS

This heading represents the amount paid as contributions to the Bêkou EU Trust Fund and the EUTF for Africa. The contributions are net of the costs incurred by the trust funds and attributable to the EDF.

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

EUR millions

Trust Funds

Net contribution at 31.12.2015

Contributions paid in 2016

Allocation of TF's net expenses 2016

Net contribution at 31.12.2016

Africa

99

(27)

72

Bêkou

34

(8)

26

Total

34

99

(35)

98

22.2.NON-EXCHANGE RECOVERABLES AND EXCHANGE RECEIVABLES

EUR millions

Note

31.12.2016

31.12.2015

Recoverables from non-exchange transactions

2.3.1

62

104

Receivables from exchange transactions

2.3.2

70

67

Total

132

171

23.Recoverables from non-exchange transactions

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Member States

0

40

40

90

Customers

4

9

6

0

18

23

Public bodies

13

10

0

23

16

Third states

0

3

1

4

2

Write down

(3)

(17)

(5)

(25)

(29)

Liaison accounts with EU institutions

2

2

1

Total

1

8

51

2

62

104

Recoverables from Member States include ordinary contributions as well as amounts still to be received as a consequence of Bridging Facility adjustments. The activities of the Bridging Facility were financed through decommitted amounts from previous EDF's and the related capital movements were recorded in 2015.

The amounts are summarised in the table below:

EUR millions

Member States

Amounts to be received from MS

Amounts to be deducted from MS's contributions

Net amount at 31.12.2016

Belgium

25

25

Cyprus

0

0

Czech Republic

2

2

Greece

0

0

Latvia

0

0

Portugal

0

0

Romania

2

2

Slovenia

1

1

United Kingdom

10

10

Total

40

40

24.Receivables from exchange transactions

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Accrued income

0

63

7

0

70

67

Liaison accounts between EDFs

196

424

3 424

(4 043)

(0)

0

Total

196

487

3 431

(4 043)

70

67

Included under accrued income are primarily amounts of accrued interest on pre-financing related to projects (EUR 63 million) and related to the EU-Africa Trust Fund (EUR 7 million).

For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF 9 ; this leads to operations between the various EDFs, which are balanced out in the liaison accounts between the various EDF balance sheets. Liaison accounts are presented only in the individual EDFs.

24.1.CASH AND CASH EQUIVALENTS 10

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Special accounts:

Financial institutions of Member States

291

291

126

Current accounts:

Commercial banks

389

389

377

Democratic Republic Congo Special fund*

1

Total

680

680

504

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

The overall increase in cash and cash equivalents is mainly explained by the advance payment of the first 2017 contributions by some Member States in December 2016.

It should be noted that there are STABEX funds held by beneficiary ACP States and thus not included on the EDF balance sheet. STABEX is the acronym for an EU compensatory finance scheme to stabilise export earnings of the ACP countries. Once the Commission and the beneficiary (ACP) State reach agreement on how the STABEX funds are to be utilised, a transfer convention is signed by both parties. In accordance with the provisions of Article 211 of the Lomé IV Agreement 11 (as revised), the funds are transferred into an interest bearing double signature account (Commission and Beneficiary State) opened in the name of the ACP State. The funds remain in these double signature accounts until a Framework of Mutual Obligations (FMO) justifies a transfer for a project. The Commission's Authorising Officer retains the power of signature over the account in order to ensure that the funds are disbursed as intended. The funds in the double signature accounts are the property of the ACP State and are consequently not recorded as assets in the EDF accounts. The transfers to these accounts are recorded as STABEX payments. See also note 3.1.1 for more information.

With the aim of improving the presentation in the 2016 annual accounts, the classification of financial insitutions and banks has been reviewed. The comparative figures for 2015 are disclosed accordingly.

LIABILITIES

24.2.PROVISIONS

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Provisions

4

4

4

Total

4

4

4

The provision is the best possible estimation of the probable amount to be paid by the EDF to finance the orderly closure of the Centre de Development (CDE), decided by the ACP-EU Committee of Ambassadors (Decision No 4/2014 of 23 October 2014).

The amount includes court cases (EUR 1.2 million) raised against the CDE and the remaining expected cost of the passive phase (e.g. residual administrative tasks, other residual litigations, archive, etc) that started on 31 December 2016 (see note 4.3.2).

24.3.FINANCIAL LIABILITIES

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Co-financing - payables

6

6

10

Total

6

6

10

The change in the total co-financing liabilities is explained in the note 2.7.2.1.

24.4.PAYABLES

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Current payables

2.7.1

0

12

112

97

222

180

Sundry payables

2.7.2

(0)

325

2

327

340

Total

0

12

438

99

549

520

25. Current payables

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Suppliers

0

11

69

19

98

79

Member States

0

0

0

Third states

0

0

29

61

91

83

Public bodies

0

1

18

14

32

21

Other current payables

0

1

(4)

4

1

(3)

Total

0

12

112

97

222

180

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

26.Sundry payables

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Co-financing payables

2.7.2.1

63

1

64

31

Deferred fund capital contributions

2.7.2.2

261

261

307

Other sundry payables

2.7.2.3

2

2

2

Total

324

3

327

340

27.Co-financing payables

The breakdown of the non-current and current co-financing payables by Member State is summarized in the table below:

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Non-current co-financing

Belgium

2

2

1

Germany

0

0

1

United Kingdom

1

1

3

Sweden

2

2

4

Canada

0

0

1

6

6

10

Current co-financing

Belgium

3

1

4

3

Denmark

1

0

1

1

France

37

37

10

Germany

1

1

1

Netherlands

1

1

1

Spain

3

3

3

United Kingdom

11

11

1

Sweden

7

7

12

Canada

0

0

(1)

63

1

64

31

Total

69

1

70

41

The total non-current and current co-financing payables increased by EUR 29 million compared to the previous reporting period.

During 2016, new co-financing contributions were received from United Kingdom (EUR 9.4 million), Belgium (EUR 3.3 million) and Sweden (EUR 0.9 million).

The total non-current and current co-financing payables increased by EUR 15 million in order to recognise revenue and expenses related to cofinanced projects (see notes 3.1.2 and 3.4).

28.Deferred fund capital contributions

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

United Kingdom

252

252

259

Sweden

48

Hungary

9

9

Total

261

261

307

The heading deferred fund capital contributions relates to Member States' contributions paid in advance.

29.Other sundry payables

Included under this heading are mainly unallocated cash receipts and returned payments.



29.1.ACCRUED CHARGES AND DEFERRED INCOME

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Accrued charges

1

93

567

110

770

853

Other accruals and deferrals

(0)

(0)

6

6

2

Total

1

93

567

115

776

855

Accrued charges comprise estimated operating expenses for on-going or ended contracts without validated cost claims where the 2016 eligible expenses incurred by beneficiaries of EDF were estimated using the best available information about the existing contracts. The portion of the estimated accrued charges which relates to pre-financing paid has been recorded as a reduction of the pre-financing amounts (see note 2.1).

NET ASSETS

 

29.2.FUND CAPITAL

30.Called fund capital – active EDFs

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Fund capital

12 164

10 973

20 960

29 367

73 464

Uncalled fund capital

(0)

(0)

(5 223)

(29 367)

(34 590)

Called fund capital 31.12.2015

12 164

10 973

15 737

38 873

Fund capital

12 164

10 973

20 960

29 367

73 464

Uncalled fund capital

(0)

(1 773)

(29 367)

(31 140)

Called fund capital 31.12.2016

12 164

10 973

19 187

42 323

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

The called fund capital represents the amount of the initial allocations which have been called up for transfer to the treasury accounts by the Member States (see note 2.9.2 below).



31.Called and uncalled fund capital by Member State

EUR millions

Contributions

%

Uncalled capital 31.12.2015

Capital called in 2016

Uncalled capital 31.12.2016

Austria

2.41

126

(83)

43

Belgium

3.53

184

(122)

63

Bulgaria

0.14

7

(5)

2

Cyprus

0.09

5

(3)

2

Czech Republic

0.51

27

(18)

9

Denmark

2.00

104

(69)

35

Estonia

0.05

3

(2)

1

Finland

1.47

77

(51)

26

France

19.55

1 021

(674)

347

Germany

20.50

1 071

(707)

364

Greece

1.47

77

(51)

26

Hungary

0.55

29

(19)

10

Ireland

0.91

48

(31)

16

Italy

12.86

672

(444)

228

Latvia

0.07

4

(2)

1

Lithuania

0.12

6

(4)

2

Luxemburg

0.27

14

(9)

5

Malta

0.03

2

(1)

1

Netherlands

4.85

253

(167)

86

Poland

1.30

68

(45)

23

Portugal

1.15

60

(40)

20

Romania

0.37

19

(13)

7

Slovakia

0.21

11

(7)

4

Slovenia

0.18

9

(6)

3

Spain

7.85

410

(271)

139

Sweden

2.74

143

(95)

49

United Kingdom

14.82

774

(511)

263

Total

100.00

5 223

(3 450)

1 773

Capital called in 2016 comprises entirely calls from 10th EDF. The total amount composes of ordinary call (EUR 3 450 million). The capital of the Eighth and the Ninth EDF has been called up and received in its entirety. No capital has yet been called from 11th EDF.

32.Called fund capital from closed EDFs carried forward

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Funds transferred from closed EDFs

627

1 625

2 252

2 252

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

33.Called fund capital transfers between active EDFs

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Balance at 31.12.2014

(3 147)

1 758

(209)

1 597

Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs

(6)

(109)

114

Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs

(32)

32

Transfer from the 10th and 11th performance reserves to the Bridging Facility

(41)

41

Recoveries from the Bridging Facility to the 10th and 11th performance reserves

11

(11)

Return of funds committed under the Bridging Facility

676

727

192

(1 595)

Balance at 31.12.2015

(2 476)

2 376

35

65

Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs

(20)

(163)

182

Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs

(356)

356

Transfer from the 11th performance reserve to the African Peace Facility (10th EDF)

386

(386)

Balance at 31.12.2016

(2 496)

2 214

247

35

This heading includes the resources transferred between the active EDFs.

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

In 2016 EUR 386 million was taken from the 11th Performance reserve to finance the African Peace Facility under the 10th EDF.

34.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

 

REVENUE

EUR millions

Note

2016

2015

Revenue from non-exchange transactions

3.1

8

90

Revenue from exchange transactions

3.2

66

50

Total

73

140

34.1.REVENUE FROM NON-EXCHANGE TRANSACTIONS

EUR millions

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2016

2015

Recovery of expenses

0

5

13

4

23

20

Recovery of STABEX funds

3.1.1

1

1

1

Co-financing revenue

3.1.2

(15)

(15)

69

Total

1

5

(2)

4

8

90

 

The non-exchange revenue can be broken down by management mode as follows:

EUR millions

2016

2015

Direct Management

6

61

Implemented by:

Commission

1

3

EU delegations

5

58

Indirect Management

2

29

Implemented by :

Third countries

(0)

14

International organisations

2

14

Public law bodies

0

0

Private law bodies with a public service mission

0

1

Total

8

90

35.Recovery of STABEX funds

During 2016, EUR 1 million was returned to the EDF from double signature accounts in ACP countries. These revenues are included under revenue from non-exchange transactions (recovery of STABEX funds) in the statement of financial performance of the Eighth EDF.

36.Co-financing revenue

The cofinancing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and as such should not affect the statement of financial performance. The received contributions remain under liabilities (see note 2.7.2.1) until the conditions attached to the donated funds are met, i.e. eligible expenses are incurred (see note 3.4). The corresponding amount is then recognised as non-exchange revenue from cofinancing. Consequently the effect on economic result of the year is nil.

36.1.REVENUE FROM EXCHANGE TRANSACTIONS

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2016

2015

Financial income

(0)

2

2

(1)

3

8

Other income

2

17

40

3

62

42

Total

2

19

43

2

66

50

The financial income largely comprises interest on pre-financing that in 2016 amounted to EUR 3 million 12 (2015: EUR 7 million).

Other income entirely relates to the realised and unrealised foreign exchange gains.

EXPENSES

36.2.AID INSTRUMENTS

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2016

2015

Programmable aid

1

(3)

1 007

746

1 751

1 971

Macro-economic support

39

39

51

Sectoral policy

(0)

18

18

(24)

Intra ACP projects

41

301

351

693

746

Interest rate subsidies

(3)

(3)

(6)

Emergency aid

(0)

98

300

398

285

Other aid programmes related to former EDFs

1

1

0

Institutional support

5

33

38

34

Compensation export receipts

(0)

0

0

(3)

Contributions to Trust Funds

35

35

5

Total

(2)

95

1 411

1 465

2 970

3 059

 

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

36.3.CO-FINANCING EXPENSES

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2016

2015

Co-financing

(15)

(15)

69

Included under this heading are the expenses incurred on co-financing projects in 2016. It should be noted that the expenses incurred include estimated amounts related to the cut-off exercise (and consequently reversals of the estimated amounts related to last year). Because the reversals of the 2015 estimated expenses (EUR 50 million) exceed the expenses incurred in 2016 (EUR 35 million), the cofinancing expenses are negative for 2016. Corresponding negative revenue has been recognised in the statement of financial performance (see note 3.1.2).

36.4.AID INSTRUMENTS AND CO-FINANCING EXPENSES BY MANAGEMENT TYPE

EUR millions

2016

2015

Direct Management

1 173

1 106

Implemented by:

Commission

140

99

EU executive agencies

10

2

Trust Funds

36

5

EU delegations

987

1 000

Indirect Management

1 781

2 023

Implemented by :

EIB and EIF

5

31

International organisations

821

990

Private law bodies with a public service mission

143

31

Public law bodies

57

70

Third countries

756

900

Private law bodies implementing Public Private Partnership

(1)

1

Total

2 954

3 128

36.5.FINANCE COSTS

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2016

2015

Write-down of receivables

0

0

(4)

(4)

1

Other financial expenses

0

0

0

Total

0

0

(4)

0

(4)

1

The heading write-down of receivables comprises closure estimate of expenses on irrecoverable receivables and also includes reversals of the estimated amounts related to last year. Because the reversals of the 2015 amounts (EUR 29 million) exceed the amounts estimated in 2016 (EUR 25 million), the overall expenses related to write-down of receivables are negative for 2016.

36.6.OTHER EXPENSES

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2016

2015

Administrative and IT expenses

(0)

4

126

129

113

Provision for risks and charges

4

Realised losses on trade debtors

0

0

0

0

2

Exchange loses

3

19

42

3

66

44

Total

3

19

46

129

196

162

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

37.CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES

37.1. CONTINGENT ASSETS

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Performance guarantees

(0)

4

5

0

9

13

Retention guarantees

4

3

7

6

Total

(0)

7

8

0

16

20

Performance guarantees are requested to ensure that beneficiaries of EDF funding meet the obligations of their contracts with the EDF.

Retention guarantees concern only works contracts. Typically 10 % of the interim payments to beneficiaries are withheld to ensure that the contractor fulfils their obligations. These withheld amounts are reflected as amounts payable. Subject to the approval of the contracting authority, the contractor may instead submit a retention guarantee which replaces the amounts withheld on interim payments. These received guarantees are disclosed as contingent assets.

In case of contracts managed under the indirect mode, the guarantees belong to a contracting authority other than the EDF and they are not recorded by the EDF.

37.2.OTHER SIGNIFICANT DISCLOSURES

38.Outstanding commitments not yet expensed

The amount disclosed below is the budgetary RAL ('Reste à Liquider') less related amounts that have been included as expenses in the statement of financial performance. The budgetary RAL is an amount representing the open commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multi-annual programmes.

EUR millions

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2016

31.12.2015

Outstanding commitments not yet expensed

2

202

2 406

4 136

6 746

5 821

Total

2

202

2 406

4 136

6 746

5 821

At 31 December 2016 the budgetary RAL totalled EUR 7 665 million (2015: EUR 6 809 million).

39.Centre for the Development of Enterprise

The ACP-EU Council of Ministers agreed in June 2014 "to proceed with the orderly closing of the CDE", and at the same time "to ensure that the private sector support projects implemented by the CDE in ACP countries and regions are completed in full". For this purpose, the ACP-EU Council of Ministers granted a delegation of powers to the ACP-EU Committee of Ambassadors to take this matter forward with a view to adopt the necessary decisions.

The ACP-EU Committee of Ambassadors authorised, by Decision No 4/2014 of 23/10/2014, the Executive Board of the CDE to take, with immediate effect, all appropriate measures to prepare for the closure of the CDE. As stipulated in article 2 of that Decision, the Executive Board was instructed to contract a Curator to prepare and implement a closure plan.

The Curator submitted to the CDE Executive Board at the end of June 2015 a definitive strategic plan, with a budget and work-plan, which reflected the outcome of the social dialogue. The budget of the definitive strategic plan, approved by the CDE Executive Board, was the basis for the Commission's proposal for a Financing Decision that was adopted by the EC in 2015 for a total amount of EUR 18.2 million. Subsequent to the adoption of the above Financing Decision, a grant agreement was concluded in December 2015 between the CDE and the European Commission providing the necessary financing for the realization of CDE's assets and settlement of its liabilities. This grant agreement started on 1 January 2016 and will last until 31 December 2017. The value of the contract is covered by the outstanding commitments not yet expensed.

40.FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the EDF relate to the treasury operations carried out by the Commission on behalf of the EDF in order to implement its resources.

40.1.RISK MANAGEMENT POLICIES AND HEDGING ACTIVITIES

The rules and principles for the management of the treasury operations are laid down in the 11th EDF Financial Regulation and in the Internal Agreement.

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

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

-EDF contributions are paid by Member States in EUR, while the EDF's payments are denominated in EUR and in other currencies, including less well-known ones.

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

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

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

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

 

40.2.CURRENCY RISK

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

EUR millions

31.12.2016

31.12.2015

USD

GBP

DKK

SEK

EUR

Other

Total

USD

GBP

DKK

SEK

EUR

Other

Total

Financial assets

Receivables and recoverables

0

129

3

132

171

1

171

Cash and cash equivalents

2

0

678

680

4

0

500

504

Total

2

0

807

3

812

4

0

671

1

675

Financial liabilities

Non-current financial liabilities

(6)

(6)

0

(10)

(10)

Payables

0

(495)

(54)

(549)

0

(473)

(47)

(520)

Total

0

(501)

(54)

(555)

0

(483)

(47)

(530)

Total

2

0

306

(51)

257

4

0

188

(46)

145

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

 

40.3.INTEREST RATE RISK

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

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

Contributions to the EDF budget are credited by each Member State to a special account opened with the financial institution designed by it. As the remuneration applied to some of these accounts may currently be negative, cash management procedures are in place to minimise balances kept on the accounts concerned. In addition, in accordance with Council Regulation (EU)2016/888, any negative remuneration on these accounts is borne by the relevant Member State.

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

 

40.4.CREDIT RISK (COUNTERPARTY RISK)

Financial assets that are neither past due nor impaired:

EUR millions

Total

Neither past due nor impaired

Past due but not impaired

< 1 year

1-5 years

> 5 years

Exchange receivables and non-exchange recoverables

132

93

36

4

Total at 31.12.2016

132

93

36

4

Exchange receivables and non-exchange recoverables

171

50

120

1

Total at 31.12.2015

171

50

120

1

Financial assets by risk category:

EUR millions

31.12.2016

31.12.2015

Receivables

Cash

Total

Receivables

Cash

Total

Counterparties with external credit rating

Prime and high grade

34

284

318

6

167

173

Upper medium grade

3

371

374

34

16

50

Lower medium grade

2

16

18

36

312

348

Non- investment grade

1

9

10

14

9

23

Total

40

680

720

90

503

593

Counterparties without external credit rating

Group 1 (debtors without defaults in the past)

92

0

92

81

1

82

Group 2 (debtors with defaults in the past)

Total

92

0

92

81

1

82

Total

132

680

812

171

504

675

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

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

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

In addition, specific guidelines are applied for the selection of commercial banks in order to further minimise counterparty risk to which the EDF is exposed.

All commercial banks are selected by call for tenders. The minimum short-term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be required in specific and duly justified circumstances.

40.5.LIQUIDITY RISK

Maturity analysis of financial liabilities by remaining contractual maturity

EUR millions

< 1 year

1-5 years

> 5 years

Total

Financial liabilities

549

6

555

Total at 31.12.2016

549

6

555

Financial liabilities

520

10

530

Total at 31.12.2015

520

10

530

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

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

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

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

 

41.RELATED PARTY DISCLOSURES

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

The EDF has no separate management since it is managed by the Commission. The entitlements of the key management of the EU, including the Commission, have been disclosed in the Consolidated annual accounts of the European Union under heading 7.2 "Key management entitlements".

42.EVENTS AFTER THE BALANCE SHEET DATE

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

43.RECONCILIATION OF ECONOMIC RESULT AND BUDGET RESULT

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

EUR millions

2016

2015

ECONOMIC RESULT OF THE YEAR

(3 073)

(3 152)

Revenue

Entitlements not affecting the budget result

(2)

(1)

Entitlements established in current year but not yet collected

(7)

(11)

Entitlements established in previous years and collected in current year

16

19

Net effect of pre-financing

43

28

Accrued revenue (net)

8

29

Expenses

Expenses of the current year not yet paid

63

61

Expenses of previous years paid in the current year

(129)

(221)

Payments cancellation

22

12

Net effect of pre-financing

(459)

(53)

Accrued expenses (net)

168

200

BUDGET RESULT OF THE YEAR

(3 350)

(3 088)

43.1.RECONCILING ITEMS - REVENUE

The budgetary revenue of a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years.

The entitlements not affecting the budget result are recorded in the economic result but from a budgetary perspective cannot be considered as revenues as the cashed amount is transferred to reserves and cannot be recommitted without a Council decision.

The entitlements established in the current year but not yet collected are to be deducted from the economic result for reconciliation purposes as they do not form part of budgetary revenue. On the contrary, the entitlements established in previous years and collected in the current year must be added to the economic result for reconciliation purposes.

The net effect of pre-financing is the clearing of the recovered pre-financing amounts. This is a cash receipt which has no impact on the economic result.

The net accrued revenue mainly consists of accruals made for year-end cut-off purposes. Only the net effect, i.e. the accrued revenue of the current year less the reversal of accrued revenue of the previous year, is taken into consideration.

43.2.RECONCILING ITEMS – EXPENDITURE

Expenses of the current year not yet paid are to be added for reconciliation purposes as they are included in the economic result but do not form part of budgetary expenditure. On the contrary, the expenses of previous years paid in the current year must be deducted from the economic result for reconciliation purposes as they are part of the current year's budgetary expenditure but have either no effect on the economic result or they decrease the expenses in case of corrections.

The cash receipts from payment cancellations do not affect the economic result whereas they impact the budget result.

The net effect of pre-financing is the combination of the new pre-financing amounts paid in the current year (recognised as budgetary expenditure of the year) and the clearing of pre-financing paid in the current year or previous years through the acceptance of eligible costs. The latter represents an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of EDF funds but not yet reported to the EDF. Only the net effect, i.e. the accrued expenses of the current year less the reversal of accrued expenses of the previous year, is taken into consideration.

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF

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

 

FINAL ANNUAL ACCOUNTS OF THE BÊKOU EU TRUST FUND

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

 

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND

General background on Union Trust Funds

A trust fund is a legal arrangement with a distinct financial structure that pools the funds of several donors to jointly finance an action on the basis of commonly agreed objectives and reporting formats.

In accordance with Article 187(1) of the Financial Regulation applicable to the general budget of the Union (EU FR) and Article 42 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR), the Commission is authorised to create Union Trust Funds for external actions (EUTF). The EUTFs are created under an agreement concluded with other donors to respond to emergency, post-emergency or thematic actions. The establishment of an EUTF needs to be justified namely by EU added value (its objectives can be better met at EU than at national level), and complementarity (the trust fund should not duplicate already existing and similar instruments).

EUTFs are created for a limited duration, which is, together with its objectives, defined by the constitutive act of each trust fund. In accordance with Article 187 of the EU FR, the EUTF has specific governance arrangements and contributions are placed outside the EU budget. Each EUTF has a governing board ('trust fund board') chaired by the Commission with representation of the donors and the non-contributing Member States as observers.

The Operational Board that is composed of the EU representative (the 'Chair'), founding Members ('Deputy Chairs') and representatives of other donors, who contributed at least EUR 3 million ('Members'), decides upon the use of the funds of the EUTF and assesses the effectiveness of the activities financed by the EUTF. On the administrative level the Operational Board is amongst others responsible for approval of the annual report, audited annual accounts, assessing the effectiveness of the internal control systems, follow up of observations by internal and external auditors, etc.

EUTFs are managed by the Commission under the responsibility of the authorising officer by delegation who provides assurance on the use of the funds to the Commission and to third donors. The EUTF manager is the authorising officer by sub-delegation. As is the case for the European Development Fund, the accounting officer of a EUTF is the accounting officer of the Commission, who is responsible for laying down accounting procedures and chart of accounts common to all EUTFs.

The Bêkou Trust Fund

The first multi-donor EU Trust Fund called Bêkou, which means 'hope' in Sango, was established on 15 July 2014, by the EU Commission (represented by DGs DEVCO and ECHO, and the EEAS ) and three of its Member States (Germany, France and the Netherlands ), with the aim of promoting the stabilisation and reconstruction of the Central African Republic (CAR). It has been established for a maximum duration of 60 months. The trust fund is managed from Brussels.

Annual accounts of the Bêkou Trust Fund

According to Article 8 of the Agreement establishing the European Union Trust Fund for the Central African Republic, the 'Bêkou EU Trust Fund' and article 11.2.1 of the Constitutive agreement, the annual accounts comprise two parts: (1) The annual financial report prepared by the EUTF manager and (2) The annual financial statements prepared by the EC Accounting Officer, who is, based on the same article also the Accounting Officer of the trust fund.

According to Article 8 of the Constitutive agreement the financial statements shall be prepared in accordance with the accounting rules adopted by the Commission's Accounting Officer (EU Accounting Rules, EAR) that are based on the International Public Sector Accounting Standards (IPSAS).

The annual accounts are subject to independent external audit and the final annual accounts are submitted by the EUTF manager and the Accounting Officer to the operational board for approval (Article 8.3.4(c)).

Highlights of the year

At the end of 2016, 7 donors contributed to the Bêkou Trust Fund: the European Development Fund (EDF), the EU Budget, 4 Member States (MS) and 1 non-Member State.

The Trust Fund will finance activities that contribute to assisting the Central African Republic in its recovery from crisis and in all aspects of reconstruction, with the emphasis on measures designed to:

·Restore essential public services (e.g. electricity, transport, access to justice and access to water) and basic social services (health and education), and stabilise the food and nutrition situation;

·Revive economic activity;

·Stabilise the country and restore the social fabric, in particular through reconciliation, peaceful coexistence between the communities of CAR and respect for human rights;

·Re-establish the legitimacy, rebuild capacity and restore the operation of national and local administrative structures.

It will also finance activities that contribute to mitigating the impact of the crisis on the countries sharing a common border with CAR and/or sheltering refugees and those fleeing the violence in CAR.

At the end of 2016 the total contribution pledged to the EUTF amounted to approximately EUR 173 million: EDF with EUR 68 million, EU Budget with EUR 50 million while MS and other donors have announced pledges of EUR 55 million.

In total, 11 programmes had been adopted for the recovery of the country. Up to the end of 2016 an amount of EUR 91.3 million in the areas of health, food and nutrition security, infrastructure, integration of women in the society as well as aid to central african refugies in surrounding countries had been committed.

BALANCE SHEET OF THE BÊKOU EU TRUST FUND

 

EUR '000

31.12.2016

31.12.2015

NON-CURRENT ASSETS

Pre-financing

3 604

3 446

3 604

3 446

CURRENT ASSETS

Pre-financing

12 458

6 047

Exchange receivables and non-exchange recoverables

1 455

1 364

Cash and cash equivalents

43 036

52 461

56 949

59 873

TOTAL ASSETS

60 554

63 319

NON-CURRENT LIABILITIES

Financial liabilities

(59 339)

(63 125)

(59 339)

(63 125)

CURRENT LIABILITIES

Accrued charges and deferred income

(1 215)

(193)

(1 215)

(193)

TOTAL LIABILITIES

(60 554)

(63 319)

NET ASSETS

-

FUNDS & RESERVES

Accumulated surplus

Economic result of the year

NET ASSETS

 

STATEMENT OF FINANCIAL PERFORMANCE OF THE BÊKOU EU TRUST FUND

EUR '000

2016

2015

REVENUE

Revenue from non-exchange transactions

Revenue from donations

17 232

9 354

17 232

9 354

Revenue from exchange transactions

Financial income

48

101

48

101

Total Revenue

17 280

9 455

EXPENSES

Operating expenses

(16 432)

(8 824)

Other expenses

(848)

(631)

Total Expenses

(17 280)

(9 455)

ECONOMIC RESULT OF THE YEAR

 

CASHFLOW STATEMENT OF THE BÊKOU EU TRUST FUND

EUR '000

2016

2015

Economic result of the year

Operating activities

(Increase)/decrease in pre-financing

(6 569)

(9 493)

(Increase)/decrease in exchange receivables and non-exchange recoverables

(91)

(1 364)

Increase/(decrease) in financial liabilities

(3 786)

18 125

Increase/(decrease) in accrued charges and deferred income

1 021

193

NET CASHFLOW

(9 425)

7 461

Net increase/(decrease) in cash and cash equivalents

(9 425)

7 461

Cash and cash equivalents at the beginning of the year

52 461

45 000

Cash and cash equivalents at year-end

43 036

52 461

 

STATEMENT OF CHANGES IN NET ASSETS OF THE BÊKOU EU TRUST FUND

EUR '000

Accumulated surplus/

(deficit)

Economic result of the year

Net assets

BALANCE AS AT 31.12.2015

Economic result of the year

BALANCE AS AT 31.12.2016

 

FINAL ANNUAL ACCOUNTS OF THE EUTF FOR AFRICA

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

 

BACKGROUND INFORMATION ON THE EUTF FOR AFRICA

General background on Union Trust Funds

A trust fund is a legal arrangement with a distinct financial structure that pools the funds of several donors to jointly finance an action on the basis of commonly agreed objectives and reporting formats.

In accordance with Article 187(1) of the Financial Regulation applicable to the general budget of the Union (EU FR) and Article 42 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR), the Commission is authorised to create Union Trust Funds for external actions (EUTF). The EUTFs are created under an agreement concluded with other donors to respond to emergency, post­emergency or thematic actions. The establishment of an EUTF needs to be justified namely by EU added value (its objectives can be better met at EU than at national level), and complementarity (the trust fund should not duplicate already existing and similar instruments).

EUTFs offer a number of advantages: they are EU led instruments, offering better coordination with EU Member States; better control of operations by the Union and other donors and enhanced EU visibility. The EUTFs benefit from fast decision-making processes and from their capacity to pool larger sums from different sources making them a flexible, proactive and adaptable tool.

The work plan of the EUTF is approved by the Operational Board that is composed of the EU representative (the 'Chair'), founding Members ('Deputy Chairs') and representatives of other donors, who contributed at least EUR 3 million ('Members') who also assesses the effectiveness of the activities financed by the EUTF. On the administrative level the Operational Board is amongst others resonsible for approval of the annual report, audited annual accounts, assessing the effectiveness of the internal control systems, follow up of observations by internal and external auditors, etc.

EUTFs are managed by the Commission under the responsibility of the authorising officer by delegation who provides assurance on the use of the funds to the Commission and to third donors. The EUTF manager is the authorising officer by sub-delegation. As is the case for the European Development Fund, the accounting officer of a EUTF is the accounting officer of the Commission, who is responsible for laying down accounting procedures and chart of accounts common to all EUTFs.

The EUTF for Africa

European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa ('EUTF for Africa') was launched on 12 November 2015 during the Valletta Summit on Migration . The main objectives of this trust fund is to support all aspects of stability and contribute to better migration management as well as addressing the root causes of destabilisation, forced displacement and irregular migration, in particular by promoting resilience, economic and equal opportunities, security and development and addressing human rights abuses.

The trust fund operates in three main geographic areas, namely t he Sahel region and Lake Chad area , the Horn of Africa and the North of Africa but also the neighbouring countries of the eligible countries may benefit, on a case by case basis, from the Trust fund's project. The Trust Fund is established for a limited period, until 31 December 2020 in order to provide a short and medium-term response to the challenges of the regions. The trust fund is managed from Brussels.

Annual accounts of the EUTF for Africa

According to Article 7 of ' The agreement establishing the European Union emergency trust fund for stability and addressing root causes of irregular migration and displaced persons in Africa and its internal rules' ('Constitutive agreement') the annual accounts comprise two parts: (1) The annual financial report prepared by the EUTF manager and (2) The annual financial statements prepared by the EC Accounting Officer, who is, based on the same article also the Accounting Officer of the trust fund.

According to Article 8 of the Constitutive agreement the financial statements shall be prepared in accordance with the accounting rules adopted by the Commission's Accounting Officer (EU Accounting Rules, EAR) that are based on the International Public Sector Accounting Standards (IPSAS).

The annual accounts are subject to independent external audit and the final annual accounts are submitted by the EUTF manager and the Accounting Officer to the operational board for approval (Article 8.3.4(c)).

The 2016 is the first year in which the financial statements of the EUTF for Africa are issued. This is in accordance with Article 8.3.2 following which the obligation of the accounting officer to prepare financial statements only applies in respect of that first financial year if the trust fund existed for more than six months. The transactions of 2015 are reflected in the comparative figures.

Highlights of the year

At the end of 2016 the total pledged resources amounted to EUR 2 555 million. Total external contributions amounted to EUR 152 million and the contributions from the EU and EDF budgets amounted to EUR 2 403 million.

In just a year, a total of 106 projects worth EUR 1.589 million have been approved for the Sahel/Lake Chad, the Horn of Africa and the North of Africa regions. The projects can be split by a geographical window as follows: 65 programs in the Sahel/Lake Chad region for a total amount of EUR 918.5 million; 35 programs in the Horn of Africa region for a total amount of EUR 606 million, and 6 programs in the North of Africa region for a total amount of EUR 64.5 million. The projects cover the following priority areas: development benefits of migration (EUR 942 million); legal migration and mobility (EUR 68 million); protection and asylum (EUR 233 million); prevention of and fight against irregular migration; migrant smuggling and trafficking in human beings (EUR 170 million); return, readmission and reintegration (EUR 163 million) and other (EUR 13 million). Out of the approved amount EUR 1 488 million has been committed and EUR 600 million has been contracted to implementing partners.

BALANCE SHEET OF THE EUTF FOR AFRICA

EUR '000

31.12.2016

31.12.2015

NON-CURRENT ASSETS

Pre-financing

44 854

44 854

CURRENT ASSETS

Pre-financing

70 731

Exchange receivables and non-exchange recoverables

9 476

Cash and cash equivalents

14 879

32 642

95 086

32 642

TOTAL ASSETS

139 941

32 642

NON-CURRENT LIABILITIES

Financial liabilities

(138 502)

(32 642)

(138 502)

(32 642)

CURRENT LIABILITIES

Payables

(702)

Accrued charges and deferred income

(736)

(1 439)

TOTAL LIABILITIES

(139 941)

(32 642)

NET ASSETS

FUNDS & RESERVES

Accumulated surplus

Economic result of the year

NET ASSETS

 

STATEMENT OF FINANCIAL PERFORMANCE OF THE EUTF FOR AFRICA

EUR '000

2016

2015

REVENUE

Revenue from non-exchange transactions

Revenue from donations

52 246

52 246

Revenue from exchange transactions

Financial income

54

Other exchange revenue

43

97

Total revenue

52 343

EXPENSES

Operating expenses

(49 042)

Other expenses

(3 301)

Total expenses

(52 343)

ECONOMIC RESULT OF THE YEAR

 

CASHFLOW STATEMENT OF THE EUTF FOR AFRICA

EUR '000

2016

2015

Economic result of the year

Operating activities

(Increase)/decrease in pre-financing

(115 585)

(Increase)/decrease in exchange receivables and non-exchange recoverables

(9 476)

Increase/(decrease) in financial liabilities

105 860

32 642

Increase/(decrease) in payables

702

Increase/(decrease) in accrued charges and deferred income

736

NET CASHFLOW

(17 763)

32 642

Net increase/(decrease) in cash and cash equivalents

(17 763)

32 642

Cash and cash equivalents at the beginning of the year

32 642

Cash and cash equivalents at year-end

14 879

32 642

 

STATEMENT OF CHANGES IN NET ASSETS OF THE EUTF FOR AFRICA

EUR '000

Accumulated surplus/

(deficit)

Economic result of the year

Net assets

BALANCE AS AT 31.12.2015

Economic result of the year

BALANCE AS AT 31.12.2016

 

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS

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

 

CONSOLIDATED BALANCE SHEET

EUR millions

31.12.2016

31.12.2015

NON-CURRENT ASSETS

Pre-financing

457

520

Trust Fund contributions

Exchange receivables and non-exchange recoverables

457

520

CURRENT ASSETS

Pre-financing

1 455

1 151

Exchange receivables and non-exchange recoverables

143

172

Cash and cash equivalents

738

589

2 336

1 912

TOTAL ASSETS

2 794

2 432

NON-CURRENT LIABILITIES

Provisions

(4)

(4)

Financial liabilities

(106)

(72)

(110)

(76)

CURRENT LIABILITIES

Payables

(549)

(520)

Accrued charges and deferred income

(778)

(855)

(1 327)

(1 376)

TOTAL LIABILITIES

(1 437)

(1 451)

NET ASSETS

1 357

980

FUNDS & RESERVES

Called fund capital - active EDFs

42 323

38 873

Called fund capital from closed EDFs carried forward

2 252

2 252

Called fund capital transfers between active EDFs

Economic result carried forward from previous years

(40 146)

(36 994)

Economic result of the year

(3 073)

(3 152)

NET ASSETS

1 357

980

 

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

EUR millions

2016

2015

REVENUE

Revenue from non-exchange transactions

Recovery of expenses

8

90

Revenue from trust funds donations

35

4

43

94

Revenue from exchange transactions

Financial income

4

8

Other income

62

42

66

50

Total Revenue

108

144

EXPENSES

Aid instruments

(2 935)

(3 059)

Co-financing expenses

15

(69)

Finance costs

4

(1)

Expenses implemented by trust funds

(65)

(4)

Other expenses

(200)

(163)

Total Expenses

(3 181)

(3 296)

ECONOMIC RESULT OF THE YEAR

(3 073)

(3 152)

 

CONSOLIDATED CASH FLOW STATEMENT

EUR millions

2016

2015

Economic result of the year

(3 073)

(3 152)

Operating activities

Capital increase - contributions

3 450

3 200

(Increase)/decrease in trust funds contributions

(0)

39

(Increase)/decrease in pre-financing

(242)

204

(Increase)/decrease in exchange receivables and non-exchange recoverables

29

(43)

Increase/(decrease) in provisions

4

Increase/(decrease) in financial liabilities

34

(7)

Increase/(decrease) in payables

29

(179)

Increase/(decrease) in accrued charges and deferred income

(78)

132

NET CASHFLOW

149

198

Net increase/(decrease) in cash and cash equivalents

149

198

Cash and cash equivalents at the beginning of the year

589

391

Cash and cash equivalents at year-end

738

589

 

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

 

EUR millions

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

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

BALANCE AS AT 31.12.2014

45 691

10 018

35 673

(36 994)

2 252

932

Capital increase - contributions

(4 795)

4 795

4 795

Capital decrease - funds committed under the Bridging Facility

(1 595)

(1 595)

(1 595)

Recognition of the 11th EDF capital

29 367

29 367

Economic result of the year

(3 152)

(3 152)

BALANCE AS AT 31.12.2015

73 464

34 590

38 874

(40 146)

2 252

980

Capital increase - contributions

(3 450)

3 450

3 450

Economic result of the year

(3 073)

(3 073)

BALANCE AS AT 31.12.2016

73 464

31 140

42 323

(43 219)

2 252

1 357

 

EDF REPORT ON FINANCIAL IMPLEMENTATION

 

REPORT ON FINANCIAL IMPLEMENTATION - 2016

INTRODUCTORY NOTE

Previous EDFs

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

·As in past years, to ensure transparency in the presentation of the accounts for 2016, the tables set out separately for the Eighth EDF the part used for Lomé Convention programming and the part used for p