MSF Belgium Financial statements 2016

Transcription

1 MSF Belgium Financial statements 0

2 MSF Belgium Financial Statements MSF Belgium & OCB Finance department 1. Highlights on Profit and loss accounts Social mission expenses increasing In, MSF Belgium increased its expenses with +6 ( Mio ) compared to the budget and +3 (+8.3 Mio ) compared to This is due to increasing Social mission expenses reaching Mio in, so +6 (+18.5 Mio ) more than budgeted or +3 (+9.9 Mio ) more than in Support to other Operational centers The main reason of this increase with the initial budget is because we had not budgeted to support and fund part of the program expenses of Operational Centre Barcelona (OCBA) and Operational Centre Paris (OCP) for 18 Mio (9 Mio each). This transfer of funds is related to the agreement to rebalance reserves between all MSF Operational centers 1. More support to the field through HR reinforcement We spent less than foreseen in our initial budget directly in our missions (Programme expenses -3 (-7.4Mio ), but it was compensated with an increase in Program Support of 32 (+7.2 Mio ). This increase is the consequence of decisions taken by MSF Belgium to reinforce the support to our field missions, at first from an HR perspective to follow the increase in field projects and positions to be filled : more recruitment, more departures, more administrative support, more training, more complex local regulations, etc. Structure support in Middle East and North Africa regions The increasing needs and activities in the region Middle East (Lebanon, Turkey, Syria) and North African 2 missions led to the creation of a new cell within operations and the set up of hubs in Lebanon and in Egypt to boost recruitments and to support the communication in the region. New initiatives to improve data management and decrease paper work in the field Finally, MSF Belgium defined as a priority objective the improvement of quality care, pointing out the necessity to focus on Data Management and hospitals. In several initiatives were launched to answer the need expressed by the field missions to decrease paper work related to patients care and to collecting medical data : launch of the project Electronic Medical Record system (EMR) solution, the Monitoring and Surveillance Tools (MAST) program, Field litigations accrual In MSF Belgium made a provision of 3.4 Mio to cover existing financial risks related to litigations in some missions, mainly in South Sudan (issue related to expired drugs) and Pakistan (tax on incomes issue). We kept the provision (2.3 Mio ) made last year for the overstock at MSF Supply from our Ebola operations as the stock remains unsold. Private income increasing Total private income amounted to Mio in, so 18 better than budgeted (+52.2 Mio ), and +11 compared to 2015 (+33.9 Mio ), whereas 2015 showed already an increase of +6 compared to The increase of regular donors in all our sections initiated by the Ebola crisis exposure together boost the regular donations with not much extra fundraising investment (+0.2 Mio versus 2015 in total). Regular donations represented in average 40 of our incomes in. Moreover some big legacies and exceptional big donations were received in Sweden and Hong-Kong. Even in Belgium the legacies represent in more than 25 of the incomes. Public Institutional Income decrease In, MSF Belgium and its partner sections collected 15.2 Mio from Public Institutions such as governments and EU funds. This is a decrease -5.4 Mio compared to the initial budget and a decrease of Mio versus 2015, as a consequence of a decision taken during to freeze all Public Institutional incomes from EU & EU government countries to what was already signed : so in the Public Institutional funds covered 6of the OCB Mission expenses (14 in 2015). Final result: a surplus of 34.8 Mio As a result, MSF Belgium ended with a surplus of 34.8 Mio, which is Mio above budget. 1 in accordance with RSA3 : 3 rd Resources Sharing Agreement. See Annexe 2 2 Middle East and North African is refered as MENA 1

3 The table below summarizes the results of MSF Belgium for in respect with the budget and the actuals of MSF Belgium (K ) Prior Year variance var share share 2015 variance var Total Social Mission Total other expenses Total Expenses Public Institutional Income Total Private Income Total Other Income Total Incomes Net exchange gain (+) / loss (-) Results MSF Belgium

4 2. Expenditure MSF Belgium (K ) Prior Year variance var share share 2015 variance var Programme expenses OCB Mission expenses reinvoiced to OCA/OCP Mission expenses OCB & Int. Fund Support to other OC's Program Support (HQ & Abroad) > Program Support Abroad > Program Support Headquarters Subsidy to South Africa Brazil Expenses under MSF Belgium Raising Awareness and Access Campaign Other humanitarian activities Total Social Mission Fundraising Management, General & Administration Miscellaneous & Exceptional expenses Total other expenses Total Expenses In total MSF Belgium expenditure amounts to Mio 3, so 18.5 Mio more than budgeted, and +8.4 Mio more than The expenses are divided over two main headings: the MSF social mission expenses and other expenses. The social mission expenses (324.6 Mio ) cover all operational expenditure in the various countries, i.e. Program expenses (261.4 Mio ) which are field missions costs from salaries to medicines and supplies, warehouses, transportation and any other costs incurred in our projects. It includes also the medical, logistical, human resources and operational services delivered by the head office in Brussels to support the activities on the field (i.e. Headquarters program support) amounting to 28.1 Mio. A specific line has been created by the International Office, as from in order to distinguish the Program Support Abroad so not done from our head office in Brussels. Decentralized Program Support is clearly a need for OCB to give support physically closer to the missions. In this line includes the costs of hubs in Lebanon and Egypt, of the South African Medical Unit and of the training center in Ivory Coast. The social mission expenses of also consists of an annual subsidy for functioning expenses of the MSF South African section (2 Mio ) and Brazilian offices expenses (8.4 Mio ). Finally, social mission expenses comprise 2.6 Mio for raising awareness expenditures and information campaigns aimed at the Belgian public, as well as a share in the costs of the Access to Essential Medicines Campaign managed at international level (165 k already included in the 2.6 Mio ). Finally, the Other humanitarian activities costs include the contribution of MSF Belgium to the Drugs for Neglected Diseases Initiative fund managed by the International Office (130 k ). Since the Other humanitarian activities costs also include the annual contribution to MSF Epicentre for 586 k 4. Other expenses (15.2 Mio ) are stable compared to the budget but showing a decrease of -1.5 Mio (-9) compared to Other expenses include fundraising expenses to raise private income in Belgium like mailing campaigns, telemarketing, street fundraising activities, etc. Fundraising expenses amounts for 5.6 Mio in and represents 2 of MSF Belgium total expenses and 10 of total head offices expenses. Other expenses cover also general HQ functioning costs (6.1 Mio, -0.3 Mio versus the budget and -0.2 Mio versus 2015). It includes costs of the general direction, the HR administration for headquarters employees, the finance units not related to the support for the missions, the association and the contribution to the MSF International Office general expenses in Geneva. Finally other expenses comprise miscellaneous and extraordinary expenses (3.4 Mio ) which are mainly salaries and related expenses for employees with a Belgian contract but working for the International Office or another Operational Center that are re-invoiced to the corresponding entity (the compensating income is reported under Other income). The accrual made for risks on the field is since reported under the Program expenses as related to the field (3.4 Mio ). Last year accrual made for the overstock still at MSF Supply from our Ebola operations is not changed as the stock remains unsold. 3 This amount includes the Brazilian office expenses for a total of 10.1 Mio (versus 8.4 Mio in 2015 and 9.4 Mio in budget ). 4 reported before under Program Expenses 3

5 3. Incomes MSF Belgium (K ) Prior Year INCOMES variance var share share 2015 variance var Public Institutional Income Belgium OCB Partner sections non OCB sections Total Private Income Total Other Income Total Incomes Net exchange gain (+) / loss (-) Results MSF Belgium Total incomes for MSF Belgium amounts to Mio, +15 (+48.2 Mio ) compared to the budget and +5 (+16.8 Mio ) compared to We distinguish 3 types of incomes : 1. Incomes from private donors and legacies. This is the main source of incomes for MSF Belgium in, representing 93 of its total incomes. MSF Belgium is consolidating full private income from the Belgian donors. For legal reasons, MSF Brazil accounts are still fully integrated in MSF Belgium accounts that integrate the entire income generated by MSF Brazil. It integrates as well the net incomes from the other OCB partner sections (Italy, Sweden, Norway, Denmark, Luxemburg, Hong Kong, South Africa) and grants from some non OCB sections incomes (USA, UK and Germany mainly). Total private income amounts to Mio in, so +18 (+52.3 Mio ) better than budgeted, and +11 (+33.9 Mio ) compared to 2015, showing a continuous positive growth trend. Private incomes from the Belgian donors reach 45.1 Mio in. It is +5.7 Mio above budget and +2.8 Mio more than in The difference with budget is again mainly due to legacies reaching 13.8 Mio in (+3.8 Mio in comparison with budget aligned with the actuals of 2015), to the transfer of 0.85 Mio transferred from MSF Fondation Belgique and to defered incomes raised in previous years for measle. Net private incomes from OCB partner sections amount to Mio in, which is Mio (+17) more than budgeted and Mio (+12) more than last year. The main net contributors in are Sweden (52.7 Mio ), Italy (43.1 Mio ), Brazil (38.5 Mio ), Hong Kong (31.7 Mio ) and Norway (26.7 Mio ). The increase is linked to increased regular donors in sections (mainly Brazil, Hong Kong, Norway and Italy) and to some big donations and legacies from particular or foundations (Sweden, Hong Kong). Private incomes from other sections ( non OCB sections heading) reach 88.9 Mio, which is Mio more than budgeted and +8.8 Mio compared to We received 47.8 Mio from MSF USA, 16 Mio from MSF UK/Ireland and 11.4 Mio from MSF Germany. We could also count on earmarked incomes of 1.2 Mio from other sections like Greece, Japan, Spain and Switzerland. MSF Belgium private income from other sections also include 12.4 Mio incomes coming from the re-invoicing of part of program expenses made in Afghanistan booked through our accounts but re-invoiced to Operational Center Paris (OCP) and Operational Center Amsterdam (OCA). 2. Incomes from public institutional donors, i.e. governments institutions funding part of OCB operations on the field Mio represent 4 of MSF Belgium total incomes in (versus 6 in the budget and 9 in 2015). The public institutional incomes for are mainly coming from Unitaid and agreements signed prior to the MSF decision to stop accepting EU funds. 3. The other income of 9.9 Mio relates essentially to re-invoiced staff or expenses or supplies to other MSF sections (8.3 Mio ), but also to the miscellaneous incomes from the HQ building (offices rental to other NGO s, cantine and parking incomes for 0.8 Mio ), and an exceptional income of 0.4 Mio related to a litigation with Epicore, a former MSF supplier for ICT software. The positive result of MSF Belgium amounts to 34.8 Mio at year-end, i.e Mio more than the prior year and Mio more than budgeted. 4

6 4. Result allocation and balance sheet MSF Belgium centralizes most of the surpluses and deficits of the OCB group. The surpluses are allocated to the reserves and will be used entirely to fund programs (either emergencies or Aids) which are part of MSF Social Mission. The OCB Board, which is constituted of representatives from the boards of all OCB partnersections, approves any needed allocation of these funds to programs. MSF Belgium accounting reserves are presented as follows, with a total of Mio accumulated surplus & equity capital as of December 31 st,. in K I. Equity Capital II. Accumulated Surplus Accumulated Surplus / Deficit Surplus / Deficit of the year Total MSFB reserves

7 Here is below the balance sheet of MSF Belgium as of December 31 st,. MSF Belgium - Balance sheet (k ) ASSETS 2015 variance LIABILITIES 2015 variance I. FIXED ASSETS I. EQUITY CAPITAL Intangible Tangible II. ACCUMULATED SURPLUS Leasing Accumulated Surplus/Deficit Financial Surplus II. LONG TERM RECEIVABLES Other receivables III. SUBSIDIES III. CURRENT ASSETS IV. PROVISIONS Stocks Debtors under 1 year V. CREDITORS Short term investments Over 1 year Liquid Assets Under 1 year Other Other TOTAL ASSETS TOTAL LIABILITIES The MSF Belgium balance sheet is composed by the following accounts : Assets The fixed assets. This balance mainly represents the head office and its material, as well as the financial participation in MSF Supply, the cooperative which supplies most of the medical and logistic material to the field. In, MSF Belgium started to invest in a platform software for learning and development, and in software for data management. The tangible assets decrease accordingly to the headquarters office depreciation plan. The long term receivables. None at year end, as no private nor institutional donors are engaged to provide income in more than 1 year. The current assets include incomes to be cashed in within the next year from other MSF sections, legacies to be received, and cash on bank accounts. On December 31 st,, MSF Belgium had 42.2 Mio more current assets than in 2015, with a decrease in short term placements that were shifted to bank accounts and an increase of available as cash on our accounts to finance projects (see Short term investments and Liquid assets = Mio ). This is a result of increasing incomes and improved follow up of cash flow and transfers of incomes from our sections. Liabilities The equity capital of 60 Mio. Including the surplus from of 34.8 Mio, the accumulated surplus amounts to Mio. No subsidies. Provisions (9 Mio in ) include as every year the legally required provision for the holiday allowances of the staff in the missions (1.9 Mio for ). Then it still includes last year accrual made for the overstock still at MSF Supply from our Ebola operations (2.3 Mio ) as the stock remains unsold. Finally MSF Belgium took a provision of 3.4 Mio in to cover the existing risks related to litigations in some missions, mainly in South Sudan (issue related to expired drugs) and Pakistan (tax on incomes issue). Creditors balance (43.6 Mio ) is mainly composed by debts towards other MSF sections and MSF Supply, as well as current commercial debts or to the Belgian social security. Creditors over 1 year amount to 5.4 Mio, with a decrease of 1 Mio coming from the yearly reimbursment of the building in headquarters. Creditors under 1 year increased with 16.5 Mio, mainly due to the support to OCBA of 9 Mio to be transfered in 2017, +2 Mio for suppliers and +2.5 Mio to social security. The Other creditors decrease by Mio is mainly explained by the Unitaid contract ending as well as the ending of DGD long term subsidies. 6

8 5. MSF Belgium 2017 Here is the 2017 of MSF Belgium. On the expenditure, MSF Belgium a total of Mio, which is Mio more than the. The main variances of the budget 2017 versus the of are on : Program Expenses : Mio foreseen in 2017, so +36 Mio (+14), because the OCB Program Expenses are expected to grow with + 29 Mio, and because the OCParis and OCAmsterdam Program expenses for Afghanistan mission booked under our accounts are also expected to grow with +7 Mio (but the impact on the results is 0 as those expenses are re-invoiced and therefore the incomes from OCParis and OCAmsterdam are growing accordingly); Support to other OC s : 0, so a decrease of -18 Mio, as no rebalancing budgeted; Program Support : 34.2 Mio, so +4.4 Mio compared to. It is +1 Mio for Program Support Abroad (Mena hub and SAMU) and +3.4 Mio for Program Support from Headquarters; Brazil expenses 13.4 Mio, increasing with +3.3 Mio, but the incomes increase with +7.7 Mio. Fundraising expenses for MSF belgium only : 6.5 Mio, so increasing with +0;8 Mio. Raising awareness : 3.6 Mio, so an increase of 1 Mio Management General and Adminitration are stable 7

9 On the Income, MSF Belgium budgeted for Mio, so Mio compared to. The main variances of the budget 2017 versus the of are on : Public Institutional income decrease of 13.5 Mio, with a remaining budget of 1.5 Mioe linked to Unitaid and little non EU goverments funds. Private Incomes decrease with -3.7 Mio, despite the majoration of 10 Mio extra income foreseen on top of the given projections of all sections to OCB. OCB group acknowledges the fact it is difficult to budget at section level exceptional incomes like big donations or big legacies and that OCB sections usually underestimate their budgeted incomes. Private incomes from Brazil +7.7 Mio but Hong Kong -7.7 Mio and Sweden -16 Mio. The budgeted expenditure and income lead to a negative budgeted result of Mio. 8

10 6. OCB Results and indicators OCB profit and loss accounts should not be approved by the General Assembly and are provided for information only. They are similar on many points with MSF Belgium accounts. Presenting OCB group combined accounts enable to view the total incomes and the total costs of all OCB sections (not possible when we look at the MSF Belgium accounts only) and therefore enable to follow OCB s Social mission and London ratio s with more sense than looking at them through MSF Belgium perspective. The main differences lie in the facts that: HQ expenses of partner sections are included in the combined OCB accounts (for example fundraising expenses, program support and office costs of OCB sections are not included in MSF Belgium legal accounts, but they are in the combined OCB accounts); Private income raised from partner sections are shown as 100 under the incomes, whereas under MSF Belgium accounts it is only the net incomes (net incomes = partner section incomes less its expenses) as defined and agreed within the Resources Sharing Agreement III at MSF movement level, Operational Center Amsterdam (OCA) received in 20 from Sweden s net income plus 30 from Hong Kong s net income. And Operational Center Barcelona (OCBa) received in 20 from Norway s net income (this is new since ). This amount is mentioned under OCB social mission expenses as Support to other OC s & 3 rd parties, whereas in MSF Belgium accounts it does not appear; as it is a consolidation view the inter-sections flows are eliminated, i.e. inter-sections re-invoicing, inter-ocb sections grants (ex. South Africa subsidy); During it was decided at international level to change MSf accounting rules and to adopt the Swiss GAAP FER/RPC generally accepted accounting principles. The main effect of this change is related to the income recognition for legacies and bequests : as from incomes are accounted for at their best estimated amount when legally transferred to MSF. At OCB level, the financial impact of the migration to Swiss GAAP FER/RPC is 9.6 Mio on the incomes of, as OCB sections recognised all in prior years legacies that were still not cashed in : Italy for 4.7 Mio, Denmark for 2 Mio, Sweden for 2.5 Mio and Norway for 0.5 Mio. 6.1 OCB Expenses (in K ) <> 2015 <> 2015 Program - OCB Missions - Base Projects Program - OCB Missions - Copro & available OCB Missions Expenses Total Program - Field Transversal Expenses Program Support Abroad ena, SAMU, ) Program - Support to other OC's & 3rd parties International fund HQ program support * Awareness - Raising * Access to Essential Medicines Campaign * Other Humanitarian Activities (DNDI) SOCIAL MISSION Total Fundraising * Management, G&A * Contribution to IO * Extraordinary expenses OTHER EXPENSES Total EXPENSES Total for information : HQ Expenses ** IO Expenses (CAME/DNDI/Contribution/Int'al fund)

11 In, the total OCB expenses ended at Mio, with Mio (+4) compared to the budget, notably due to an increase of 23.2 Mio (+86) on Program Support to other Operational Centers and despite the fact that we spent less than initially foreseen directly in OCB missions with Mio (-5.4) due to a positive exchange rate effect for -8.6 Mio and some of the Copro envelop initially foreseen in the budget that have not been used for 4.6 Mio. On the other hand there is also a decrease of -2.9 Mio (-5) compared to the budget on non-social mission expenses, mainly in fundraising and in the contribution of OCB sections to the International Office costs. The increase of the support to other OC s is explained on one hand by the support to Operational Centers Barcelona (OCBA) and Operational Centers Paris (OCP) program expenses (grant of 9 Mio each) according to the Resource Sharing Agreement III to rebalance the level of the reserves between all Operational Centers (OC s). On the other hand, as the Sweden, Hong Kong and Norway incomes were 27.1 Mio higher than budgeted, their support to other Operational Centers of 20 or 30 of their net incomes also increased accordingly with +4.5 Mio compared to the budget. The Social Mission ratio and the London ratio help OCB to monitor the cost structure. OCB - Ratio's 2015 <> 2015 <> 2015 SOCIAL MISSION OTHER EXPENSES TOTAL EXPENSES Social Mission ratio 84,1 85,4 84,4 <> 2015 <> 2015 HQ Expenses Non HQ Expenses TOTAL EXPENSES London ratio 26,2 24,9 25,2 The Social misison ratio 5 compares the social mission expenses to the total expenses. According to the international agreement, the Social Mission ratio should represent more than 80 of the total expenses. For, the Social mission ratio reaches It is better than budgeted for 3 reasons : - the grant to OCBA and OCP of 18 Mio inflated considerably the social mission expenses; - the increase of HQ Program Support expenses; - the HQ expenses decrease thanks to less investments in fundraising in all our sections and to a lower contribution to the International Office costs. The London ratio calculates the weight of HQ expenses from all OCB partner sections on the total OCB expenses. The OCB Board requires that the London ratio remains below 30. In, OCB ended with a London ratio of 24.9, which again is better than foreseen in the budget. This is also a consequence of a lot more Support to Program expenses combined with less fundraising expenses than budgeted. 5 Social Mission ratio is also named Chantilly ratio 10

12 6.1.1 Operational Field Expenses in K <> 2015 <> 2015 Program - OCB Missions - Base Projects Program - OCB Missions - Copro & available OCB Missions Direct Costs Total Program - Field Transversal Expenses TOTAL Field Expenses The total Operational Field expenses reached a total of Mio in, which is -7.5 Mio versus the budget. The decrease is mainly explained by the favourable exchange rate compared to the budgeted rate (8.6 Mio ) and a lower use than forseen of some budgets made available in case of emergency (Copro envelop not used for 4.6 Mio ). The comparison with 2015 is showing a almost stable level of expenses : +2.2 Mio or Main emergencies in As one of the major emergencies of, the intervention for migrants in Europe and in the Mediterranean Sea accounted for 25.8 Mio about 40 of the Emergency Pool / Task forces expenses in. This amount comprise the Search and Rescue activities in the Mediteranean Sea managed from Italy 6, the support to refugees in transit in Greece (Lesvos Island) and Serbia (Belgrade, Preshevo, Sid), mental health support in some destination countries of refugees (Belgium and Sweden for example). Another significant emergency intervention concerned the support to the Syrian refugees hosted in Lebanon and Turkey (12.2 Mio = 20), mass vaccination consecutive to the yellow fever outbreak in Congo (9 Mio = people vaccinated with a 95,18 coverage)), the Hurricane Matthew in October in Haïti (7.4 Mio = 11) and in Burundi with cholera and paludisme outbreak. 6 Between May and November, OCB Bourbon Argos boat conducted 59 rescuing operations, assisting a total number of people. 11

13 Stable projects vs Emergencies In, our Operational Field expenses show a larger share of stable projects: stable projects expenses grew with +14 compared to 2015, reaching almost 170 Mio. Growth stable projects versus emergencies Stable projects by mission 12

14 Programme expenses broken down by nature Programme expenses can be categorized by the nature of the costs as follow : - Expatriates (XPT) costs include salaries, per diem, health and pension insurances; - National staff (NST) costs include the salaries and employer s taxes of MSF staff under local contract and well as the cost of national MOH staff partially paid by MSF; - Medical purchases (MED) include purchase of drugs, vaccines, small medical supplies, laboratory supplies and equipment, medical equipment, etc.; - Logistics costs (LOG) include purchase of all logistic equipment, material, supplies and services (purchase and rental of cars and other means of transportation, spare parts, fuel, non-food relief items and temporary shelters distributed to beneficiaries, construction material, equipment and subcontracted construction works, IT and communication equipment and costs, water and sanitation material & equipment, etc.; - Supply costs (SPL) include international (air and sea) and local freight costs as well as local custom taxes and clearance costs; - Administration costs (ADM) include rental and maintenance of premises (including accommodation for expatriates, rental of offices, warehouses and other facilities) including utilities, stationaries and small supplies, international and domestic travel costs, daily workers, local taxes, professional services. The cost structure of Programme expenses seem to have remained fairly stable between and But there are clear differences between stable projects and emergencies: Share of HR costs in total expenses : close to 45 for stable projects / close to 25 for emergencies Share of logistic purchases: almost of 1/3 of expenses for emergencies 13

15 Quality of Programme expenses budget & forecast The overall quality of the forecast for Programme expenses can be considered as satisfactory with an average variance between actuals & forecasts from September to December remaining limited to 2,6. During the last months of the year the remaining available budget increased. The variation of available between September (10,7 M ) and (13,4 M ) is due to combined reasons : adaptation of envelopes for emergencies especially Matthew Hurricane response, Nigeria and Iraq interventions; cancellation or reduction of pre-allocated envelope (Damascus, Bar Elias); adjustments of forecast by missions. Evolution of Programme expenses forecast (in Mio ) For programmes managed by Operational Cells, the forecasts of were slightly overestimated during the whole year. In the forecast of September it shows an overestimation of 4.5 (10 Mio ). Evolution of Programme expenses forecast split Epool & Cells (in Mio ) 14

16 OCB operations context and beneficiaries 7 In, a larger share of OCB operations expenses were done in stable contexts than in 2015 : 48 with 113 Mio, compared to 105 Mio in 2015 and 110 Mio in (32.4 Mio ) of OCB operations expenses were also spent in armed conflict countries and 38 (38.8 Mio ) in countries with internal instability, leading to a total of 52 of OCB Programme expenses spent in unstable contexts. In, the OCB response to the refugees crisis, the support to populations affected by conflicts in Syria and Central African Republic led to an increased percentage of our operational expenditures dedicated to populations in armed countries : 44 compared to 32 in in, the 3 of expenditures towards population affected by natural disaster are referring to Haïti with the consequences of the Matthew Hurricane, it is less than in 2015 (Nepal, Niger, Madagascar, Malawi, Pakistan and Haïti). 7 based on OCB typology reporting of OCB projects 15

17 6.1.2 HQ expenses breakdown evolution <> <> 2015 <> <> Expense type Expense type Expense type EUR EUR 2015 EUR 2015 EUR 201 HQ program support HQ program support HQ program support Awareness - Raising Awareness - Raising Awareness Raising Access to Essential Access Medicines to Essential Campaign Medicines Campaign Access to Essential Medicines Campaign Fundraising Fundraising Fundraising Management, Management, G&A G&A Management, G&A Contribution Contribution to IO to IO Contribution to IO Extraordinary Extraordinary expenses expenses Extraordinary expenses HQ Expenses HQ Total Expenses OCB Total OCB HQ Expenses Total OCB Non FR Total Non OCB FR Total OCB Non FR Total OCB FR Total OCB FR Total OCB FR Total OCB HQ Expenses HQ Total Expenses OCB Total OCB HQ Expenses Total OCB The HQ Expenses reached in Mio for the entire OCB group. This is lower than the initial budget (- 0.8 Mio ), mainly due to fundraising expenses (-1.6 Mio versus budget) and Management General administration costs (-0,6 Mio ) and despite an increase in HQ program support expenses (+2.1 Mio - related to the need to reinforce the support to growing operations in the field: recruitment & HR administration for the field, plus medical, logistics, ICT and financial support to operations). The contribution to the International Office in Geneva and to the Access Campaign to Essential Medicines amounted to 4.5 Mio for all OCB sections, which is 0.9 Mio less than budgeted but an increase of +0.6 Mio compared to Each section in the MSF movement is contributing to the funding of the International Office and the CAME in proportion of the private incomes the section raised during the previous year. Although the Raising awareness costs increased compared to last year with +1.7 Mio, showing the increasing investment of OCB in reporting and advocating on our activities and response to humanitarian crisis, it is below the budget by -0.4 Mio. Compared to the previous year, the HQ expenses increased with +4 Mio (+4), mainly in HQ program Support +3.3 Mio and in the Raising awareness costs ( +1.7 Mio ). The extraordinary expenses of the previous year relate to an exceptional provision for Ebola outstanding stock at MSF Supply that OCB could not resell. In the total OCB group HQ Expenses of Mio, the fundraising expenses done in all OCB sections represent the main area of expenses with 42. The HQ Program Support costs represent 31 (mainly in Belgium for the support and management of the missions), the Management General & Administration expenses count for 13 and the Raising Awareness expenses for

18 The graph below shows the evolution of the OCB HQ expenses between 2013 and. In average the HQ expenses increased each year with 9 since 2013, showing a similar average growth on the OCB fundraising expenses (9 in average each year) and a lower average growth for OCB non fundraising expenses (8 in average each year). The growth of OCB HQ expenses is of 4 in, which is lower than the growth registered during the 2 last years (+12 in 2015 and +9 in 2014). Total HQ Exp CAGR 9 FR CAGR 9 Non FR CAGR 8 OCB HQ expenses evolution vs OCB Missions expenses evolution ( growth versus prior year) Program exp CAGR Total HQ Exp CAGR

19 OCB tries to have a growth in HQ Expenses lower than the growth of its Program Expenses, but in the OCB Mission expenses growth was less (+1,6) than the OCB HQ Expenses growth (+4). When we look at the period of the last 4 years (2013 till ), the growth of the OCB HQ Expenses is in average each year of 9, which still remains lower than the yearly average growth of Program expenses for the same period (+14 in average) Evolution of Fundraising expenses by section OCB fundraising expenses split by section are presented below exchange exchange other other 2015 Section Section <> <> <> LC Section rate effect LC LC rate rate effect effect <> 2015 <> <> 2015 LC <> LC LC Belgium Belgium Belgium Brazil Brazil Brazil South Africa South Africa South -4 Africa Italy Italy Italy Italy Luxembourg Luxembourg Luxembourg Hong Kong Hong Kong Hong -5 Kong Singapore Singapore Singapore Taiwan Taiwan Taiwan Denmark Denmark Denmark Norway Norway Norway Sweden Sweden Sweden Fundraising Fundraising Total OCB Total OCB OCB Fundraising Total OCB The OCB fundraising expenses in amount to 42.2 Mio which is -1.6 Mio lower than budgeted, in almost all sections except Italy and Brazil (for which the increase is in fact due to a negative effect of the Brazilian Real exchange rate). The main other variances are in Sweden (-0.9 Mio, representing -12 in local currency), Belgium (-0.5 Mio, representing -9) and Denmark (-0.5 Mio, representing -12 in local currency). The sections who invested the most in fundraising are Italy, and Brazil. However, compared to last year, the fundraising expenses in increased with Mio, mainly in Brazil, Hong Kong and Italy whereas they decreased in Norway (-0.75 Mio ) and in Belgium (-0.6 Mio ). The graph below shows the evolution of the fundraising expenses between 2015 and by section. 18

20 Evolution of non-fundraising expenses by section OCB non-fundraising expenses (in K ) split by section are presented below <> <> exchange exchange other other 2015 <> <> <> Section Section LC rate Section LC effect rate effect effect <> 2015 LC LC LC Belgium Belgium Belgium Brazil Brazil Brazil South Africa South Africa South 206 Africa Italy Italy Italy Luxembourg Luxembourg Luxembourg Hong Kong Hong Kong Hong -23 Kong Singapore Singapore Singapore Taiwan Taiwan Taiwan Denmark Denmark Denmark Norway Norway Norway Sweden Sweden Sweden Non FR Total Non FR OCB FR Total OCB Non FR 487Total OCB OCB non-fundraising expenses in amount to 58 Mio and are higher than budgeted with +0.8 Mio (+1), mainly because of the increase in HQ Program Support costs in Belgium as a result of the reinforcement of the operational and HR support to the field missions together with the increase in raising awareness (Combo team and temoignages on our humanitarian activities). Some sections also show non-fundraising HQ expenses lower than budgeted : mainly Italy (-0.7 Mio ) and Hong Kong (-0.6 Mio ), mainly driven by a contribution to the International Office lower than budgeted. Compared to last year, non-fundraising expenses increased by +3.3 Mio (+6), mainly in Belgium with +1.4 Mio mainly related to HQ Program Support and raising awareness, Sweden with +0.5 Mio and Hong Kong with +0.6 Mio. The graph below shows each OCB partner section cost structure for non-fundraising expenses in. As the MSF Belgium section is an operational centre it is shown separately, because its cost structure is difficult comparable with the other sections. We can observe a real difference in Raising awareness costs between OCB sections, with a higher spendings there for Hong Kong and Italy. In, three sections present HQ Program Support costs that are exceeding one million euro: Italy, Norway and Sweden. Non-fundraising expenses by OCB section in (K ) 19

21 The graph below shows also the non-fundraising expenses by OCB partner section but showing the weight of each type of expenses in the section. This enable to see again the higher weight of raising awareness for Hong Kong and Italy (above 40), the fact that Luxemburg spends 54 of its costs on HQ Program Support as Luxemburg hosts the Operational research unit (LuxOr), and that MSF Denmark has a highest share (57) compared to other OCB sections for management and general administration costs. Finally Belgium being an operational center as well, it is logical that a larger share of spendings is done on HQ program support (73). Non-fundraising expenses by OCB section in (K ) : share by type 20

22 6.2 OCB Incomes (in K ) Share <> 2015 <> 2015 Private income Belgium OCB sections non OCB sections Deferred Income from prior years , Public institutional income , Other income , INCOMES Total OCB total incomes reached Mio in, which is Mio (+16) above budget and Mio (+11) more than in During MSF decided to change its accounting policies and to adopt the Swiss GAAP FER/RPC generally accepted accounting principles 8. Previously, the financial statements of OCB were prepared in accordance to MSF accounting policies. The main effect of this change is related to the income recognition for legacies and bequests : as from incomes are accounted for at their best estimated amount when legally transferred to MSF. At OCB level, the financial impact of the migration to Swiss GAAP FER/RPC on the incomes of is 9.6 Mio, as we recognised all in prior years legacies that were still not cashed in : Italy for 4.7 Mio, Denmark for 2 Mio, Sweden for 2.5 Mio and Norway for 0.5 Mio. In, 94 of OCB incomes were from private donors amounting to Mio. It is Mio from all OCB Partner sections (that is Belgium + OCB partner sections), so Mio (+16) versus budget. Non OCB partner sections, mainly US, UK and Germany, contributed for 76.5 Mio (+15.8 Mio or +26 versus budget). The main reason of the private incomes increase is the increase of regular donors in many sections, and even more in countries like Hong Kong and Brazil. Moreover some big legacies and big donations were received in Sweden and Hong-Kong received. We also have in deferred incomes from prior years used for 6.5 Mio. Although OCB implemented a common OCB fundraising tool for budgeting and forecasting private incomes, some improvements will be made in 2017 with an online version easier to be used for many fundraisers and easier to aggregate. Its effective use foreseen for the budget 2018 based on historical data, effective number of donors and average gifts, plus the monitoring of actuals and assumptions at each quarterly forecast should enable OCB to anticipate better its private income. Of course exceptional donations and legacies, together with the unpredictability of emergencies and a high share of december donations in our private incomes will always make it difficult to budget exactly. But the tool should enable OCB sections to monitor better the expectations during the year. Institutional income for OCB in amounted to 15.2 Mio. This is a decrease -5.4 Mio compared to the budget and a decrease of Mio versus This is the consequence of the MSF decision taken during to stop accepting Public Institutional incomes from EU governements, except for what was already signed at the date of the decision : so in the Public Institutional funds covered about 6 of the OCB Mission expenses (14 in 2015). Other income amounted to 3.2 Mio, +1.7 Mio versus budget, and +1.3 Mio more than It is partially coming from Brazilian interest incomes and from Belgium who received an exceptional income of 0.4 Mio related to a litigation with Epicore, a former MSF supplier for ICT software together with an increase of the incomes linked to the Belgian building (renting of one floor to another NGO, cantine and parking facilities incomes, ). Looking at how operations field expenses were funded in, 6 is covered by Public Institutional funds, 28 is funded by non OCB sections private income (MSF USA, MSF UK and MSF Germany mainly ), 19 is funded by earmarked private income raised by OCB partner sections and the rest (47) comes from non-earmarked funds from OCB partner sections. 8 (Swiss GAAP FER/RPC accounting framework including Swiss GAAP FER/RPC 21 specific for Non for Profit Organisations) 21

23 6.2.1 OCB private income contributors The main OCB private income contributors in were Sweden with 78.9 Mio, followed by Italy with 61.3 Mio 9, Hong Kong with 53.1 Mio, Belgium with 42.8 Mio, Norway with 40.8 Mio and the US with 47.8 Mio. 82 of private incomes come from OCB partner sections and 18 from non partner sections. In the table below, a detail of OCB private income by section, with the percentage variance expressed in Euro and in local currency (LC). We can see that we had some exchange rate impact from the GB Pound that was counterbalanced by the US dollar and the Brazilian Real. Apart from exchange rate effect, the major increases compared to the budget or to 2015 came from Sweden Mio with big donations and legacies and increasing regular donations, from the US Mio, from Italy Mio, from Hong Kong (+6.2 Mio ) and Norway (+5 Mio ). The UK also increased their grants to OCB but the unfavourable exchange rate of the GB Pound made it less positive in euros <> <> <> exchange exchange FR & other FR FR & 2015 other <> in K in in K K EUR in K LC EUR rate effect LC LC rate effect effect <> 2015 <> <> 2015 EUR LC EUR LC LC Belgium Belgium Belgium Brazil Brazil Brazil South Africa South Africa South Africa Italy Italy Italy Italy Luxembourg Luxembourg Luxembourg Hong KongHong Hong Kong Kong Hong 14 Kong Taiwan Taiwan Taiwan Singapore Singapore Singapore Denmark Denmark Denmark Norway Norway Norway Sweden Sweden Sweden Total OCB sections Total Total OCB OCB sections Total 0 OCB 16 sections USA USA USA USA UK UK UK UK Germany Germany Germany Non-OCB MSF-other Non-OCB MSF-other Non-OCB MSF-other Total NON Total OCB Total sections NON NON OCB OCB sections Total 0 NON 26 OCB sections Deferred Income Deferred from Income prior years from from prior prior years Deferred 0 44 Income 0 from 0 prior years Total Private Total Total Income Private OCB Income OCB OCB Total 0 Private 18 Income OCB inclusive the effect of the change in the way to recognise legacies for almost 5 Mio 22

24 6.2.2 Institutional donors in <> 2015 <> 2015 Institutional income Program Expenses incl. Field transversal & Program institutional funding 8,3 6,0 13,3 OCB institutional income in amounted to 15.2 Mio. This is a decrease -5.4 Mio compared to the initial budget and a decrease of Mio (-54) versus 2015, as a consequence of a decision taken during to freeze all Public Institutional incomes from the EU governments to what was already signed : so in the Public Institutional funds covered about 6 of the OCB Mission expenses (14 in 2015). The chart below gives the evolution from 2013 to of the distribution of the contributors of the OCB public institutional income. The main contributors for are Belgium for 5 Mio, Unitaid for 3 Mio, Sweden with 2 Mio, Denmark for 1.5 Mio and Norway with 1 Mio. Others comprises for Germany (0.75 Mio ) and Luxemburg (0.75 Mio ). 23

25 6.3 OCB Results Comparison versus the budget (in K ) 2017 <> incl effect migration to Swiss Gaap "restated" restated <> INCOMES Total SOCIAL MISSION Total OTHER EXPENSES Total EXPENSES Total Net exchange gains/losses (+ / -) NET RESULTS In OCB generated a surplus of 44.6 Mio 10, which is +48 Mio above the initial budget. As almost 10 Mio of income is related to the impact on incomes of the changes in accounting rules (migration to Swiss Gaap increased legacies incomes even if MSF did not received the payment), if we restate the results for OCB has a surplus of 34.9 Mio, which is Mio more than budgeted. This surplus is largely due to more incomes than budgeted for 50.6 Mio, although OCB spent Mio more than budgeted, mainly on social mission expenses, as OCB funded part of the missions expenses of 2 other Operational Centers (OCBA & OCP) for 18 Mio as respect to the agreement to rebalance the reserves among Operational Centers. Also noticeable is the net exchange rate positive effect of 4.5 Mio, inflating the OCB surplus for Comparison versus the 2015 (in K ) 2015 <> 2015 incl effect migration to Swiss Gaap "restated" restated <> 2015 INCOMES Total SOCIAL MISSION Total OTHER EXPENSES Total EXPENSES Total Net exchange gains/losses (+ / -) NET RESULTS In OCB generated a net result of Mio compared to 2015, or Mio if we do not take into consideration the 9.6 Mio of Swiss Gaap inflating effect on the incomes of. 10 following the Swiss Gaap 24

26 6.4 OCB Initial budget 2017 Total OCB incomes budget 2017 was fixed end November at Mio, which is -25 Mio (-6) lower than actuals, but it is Mio (-4) if we remove the 9.6 Mio one time effect on incomes related to the change in accounting rules for legacies. During budget process, OCB management decided to add at OCB group level a additional 10 Mio more private incomes than the projections received from the sections see line correction incomes at OCB level. It acknoledges the fact that the Private incomes projections are always underestimated in the budget compared to the actuals. Moreover, private incomes estimations received from the non OCB partner sections - especially US and UK - seemed already too conservative compared to known forecast at that time. Excluding those additional 10 Mio, we have a slight increase of 0.7 Mio on Private income from OCB sections. This is mainly coming from Brazil +8.9 Mio, Denmark +5 Mio, Italy +2.9 Mio, Norway +2.5 Mio and Luxemburg +0.7 Mio. Some other sections are decreasing, mainly Sweden Mio (as a big donations was done at the end of ). We never budget other than US, UK and Germany non OCB partner sections, as it relates to private incomes earmarked for missions that only OCB is running and therefore unpredictable (-1.2 Mio ) Mio in Public Institutional funds (the remaining amount is coming from Unitaid and very few non EU government institutional funds. incl effect Swiss Gaap "restated" 2017 <> EUR in K 2017 Belgium Brazil South Africa Italy Luxembourg Hong Kong Taiwan Singapore Denmark Norway Sweden Total OCB sections USA UK Germany Non-OCB MSF-other Total NON OCB sections Deferred Income from prior years Correction incomes at OCB level Total Private Income OCB Total Income of Total Incomes 95,9 99,4 Institutional Income OCB Mission Expenses incl. transversal expenses ,8 institutional funding 6,1 0,6 of Total Incomes 3,4 0,4 Other income Total Incomes Mio in other income. The budgeted total OCB expenses for 2017 increase with Mio (+8) compared to : Mio (+5) on the social mission expenses and Mio (+24) on other expenses. HQ expenses increase with Mio (+25) and International Office related expenses increase in the budget 2017 by +0.7 Mio (+12) compared to OCB budget presents direct operations costs by 34.2 Mio higher than the actuals, so increasing by 15. The decrease on Field Transversal expenses is budgeted to 9.7 Mio, showing a decrease of 5.2 Mio but we already know the budget is underestimated as regard to the actuals. The Support to other OC s decrease is essentially due to the Support to other Operational centers (OCBarcelona and OCParis) done in to cover partially their Missions expenses for 18 Mio. This is something impossible to budget in advance, as it will depend on the effective results of all OC s at the end of Also noticeable, OCB budget 2017 foresees an increase compared to the actuals in the HQ Program support with +9.1 Mio (+30 and mainly in Belgium), Awareness raising with +2.2 Mio (+22). Therefore, fundraising expenses increase with Mio (+27). Fundraising increases are in Brazil +2.7 Mio, in Sweden +1.9 Mio, in Italy +1.7 Mio, in Belgium +1.5 Mio, in Hong Kong +1.1 Mio, Denmark +0.7 Mio, South Africa +0.5 Mio (+49). On Management General & Administration expenses, OCB budget 2017 increase with +1.1 Mio, mainly in Italy, Hong Kong, Brazil and South Africa. The contribution to the International Office increases with 0.9 Mio versus. Finally, 2017 OCB consolidated budget presents a net deficit of Mio. 25

27 <> incl effect migration to 2017 Swiss 2017 <> 2017 incl effect migration 2017 <> to Swiss incl effect migration to Swiss (in K ) Share restated (in K ) Gaap Share "restated" restated Share Share restated Gaap "restated" Share Gaap Private income Private income ,5) Correction incomes Correction 17 incomes +2,5) ,5) s Deferred Income 535 from prior 0 Deferred years Income from prior years , ,5 Public institutional income 0 Public institutional income , ,5 Other income Other income , ,7 INCOMES Total INCOMES Total Projects Program - OCB Missions 49 - Base Program Projects OCB Missions Base Projects & available Program OCB Missions 12 - Copro Program & available - OCB Missions Copro & available OCB Missions Expenses Total 62 OCB Missions Expenses Total nses Program Field Transversal 2 Program Expenses - Field Transversal Expenses SAMU, ) Program Support Abroad 1 Program Support SAMU, ) Abroad SAMU, ) , ,4 3rd parties Program Support to other 6 Program OC's & 3rd - Support parties to other OC's & 3rd parties International fund 55 0 International fund ** HQ program support HQ program support ** ** ** Awareness Raising Awareness - Raising ** ** , ,4 mpaign** Access to Essential Medicines 0 Access Campaign** to Essential +84Medicines Campaign** , ,3 NDI) Other Humanitarian Activities 0 Other (DNDI) Humanitarian -325 Activities (DNDI) , ,4 SOCIAL MISSION Total 83 SOCIAL MISSION Total ** Fundraising Fundraising ** ** ** Management, G&A Management, ** G&A ** , ,3 ** Contribution to IO 1 Contribution ** to +894 IO ** , ,8 ** Surplus for sections 488reserves 0 Surplus for sections ** +488 reserves ** Extraordinary expenses 0 Extraordinary expenses #DIV/0! 0 #DIV/0! 0 #DIV/0! OTHER EXPENSES Total 17 OTHER EXPENSES Total EXPENSES Total EXPENSES Total (+ / -) Net exchange gains/losses Net exchange (+ / gains/losses ) (+ / -) NET RESULTS NET RESULTS ** for information : HQ Expenses for information : 29 HQ Expenses ** ** n/int'al fund) IO Expenses (CAME/DNDI/Contribution/Int'al IO Expenses (CAME/DNDI/Contribution/Int'al fund) fund) , ,5 Based on the budget, the Social Mission ratio for 2017 reaches 83.3, which is above the OCB minimum target of 80 but lower than with 2.1. The budgeted London ratio for 2017 is 28.8 and remains below the maximum target of 30 but higher than in with +3.9 as the HQ expenses in 2017 are expected to grow more than the Mission expenses, mainly due to foreseen increasing fundraising investments and to the reinforcement in HQ program support. OCB - Ratio's 2017 Share 2017 <> SOCIAL MISSION OTHER EXPENSES TOTAL EXPENSES Social Mission ratio 85,4 83,3-2, Share 2017 <> HQ Expenses Non HQ Expenses TOTAL EXPENSES London ratio 24,9 28,8 3,9 Brussels, May

28 Annexe 1 27

29 28

30 29

31 Annexe 2 In order to facilitate the comprehension of the OCB figures consolidated, you will find a small glossary. 30

32 31