ANNUAL STATEMENT OF ACCOUNTS 2013

Transcription

1 ANNUAL STATEMENT OF ACCOUNTS 2013 Giz. Solutions that work. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Registered offices Bonn and Eschborn Friedrich-Ebert-Allee 40 Dag-Hammarskjöld-Weg Bonn Eschborn Germany Germany T T F F E info@giz.de I

2 ANNUAL STATEMENT OF ACCOUNTS 2013 contents report of the supervisory board 1 contents report of the supervisory board >> 1 REPORT OF THE SUPERVISORY BOARD 18 ANNUAL STATEMENT OF ACCOUNTS 36 AUDITors Report In the year under review, the Supervisory Board was continuously informed on management policy, the state of operations, and the liquidity and profitability of the company. 2 MANAGEMENT REPORT background, operating framework and overall performance 7 Assets, financial position and income 9 Economic situation 13 Outlook 17 Supplementary report 18 balance sheet as at 31 December profit and loss account for the period from 1 January to 31 December Notes on the accounts Notes on the balance sheet and the profit and loss account 21 General notes on accounting and valuation methods 23 Notes on the balance sheet 37 PUBLIcation DETAILS 37 GIZ AT A GLANCE Five meetings of the Supervisory Board and one meeting of the Audit Committee were held in fiscal year The auditors KPMG Aktiengesellschaft Wirtschaftsprüfungsgesellschaft examined the annual statement of accounts and management report to establish that they comply with the law, the supplementary provisions of the Articles of Association concerning the annual statement of accounts and management report, and with generally accepted accounting principles. They confirm that the bookkeeping system and the annual statement of accounts comply with the law, that the annual statement of accounts gives a true and fair view of the company s net assets, financial position and results of operations and that the management report is consistent with the annual statement of accounts and gives an accurate overall picture of the company s circumstances and of the opportunities and risks for its future development. At its meeting on 23 June 2014, the Supervisory Board approved the findings of the audit of the annual statement of accounts for 2013 carried out by the auditors and the Supervisory Board Audit Committee. The findings did not give rise to any objections. 28 Notes on the profit and loss account 30 Other information The Supervisory Board recommends that the shareholder adopt the annual statement of accounts 2013 and give formal approval to the acts of the Management Board. 31 Supervisory Board and Management Board Berlin, 23 June Appendix to the notes: Changes in fixed assets in fiscal 2013 Dr Friedrich Kitschelt Chairman of the Supervisory Board

3 2 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year Management Report for the Fiscal Year 2013 I. background, operating framework and overall performance A. The company The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH is a federal public-benefit enterprise with registered offices in Bonn and Eschborn. It helps the German Government achieve its objectives in the fields of international cooperation for sustainable development and international education and training. Quality, efficiency and innovation are at the heart of GIZ s activities as a modern, commercially run enterprise. GIZ operates in more than 130 countries worldwide. In Germany, the company operates in nearly all the federal states. Thanks to its long-standing local presence and global networks encompassing politics, business and civil society, GIZ is well placed to establish successful partnerships with a wide range of stakeholders. We have more than 16,000 staff across the globe. Over 80 % are based outside Germany (including those employed locally as national personnel). A further 869 experts are currently on assignments for GIZ in the role of development workers. The Centre for International Migration and Development (CIM) 1 places experts with local employers in partner countries. At the end of 2013, 488 integrated experts were employed directly by organisations and private businesses in partner countries. In 2013, GIZ also provided financial, advisory and other support to 439 returning experts who had chosen to return to their country of origin in order to put their know-how to good use there. GIZ s activities focus on the transfer of know-how and the development of expertise across a broad spectrum: economic development and employment; governance and democracy; peacebuilding, security, reconstruction and civil conflict transformation; food security, health and basic education; environmental protection, resource conservation and climate change mitigation. GIZ combines its services in the form of tailored solutions for specific needs, regions and contexts. These range from advice, training and skills development through to networking, dialogue, mediation, management and logistics services. The German Federal Ministry for Economic Cooperation and Development (BMZ) is our most important source of commissions. GIZ also works on behalf of other federal ministries (including the Federal Foreign Office; the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety; the Federal Ministry of Defence; the Federal Ministry for Economic Affairs and Energy; and the Federal Ministry of Education and Research), the German Länder (federal states) and municipalities, and public and private sector clients in Germany and abroad. These include governments of other countries, the European Union (EU), the United Nations and the World Bank. GIZ works in close partnership with the private sector and helps its clients to effectively combine development and foreign trade activities. B. Strategy Our strategic orientation and the range of services we offer are shaped above all by political, economic and social changes. These are driven in turn by global trends and regional upheaval. The framework for GIZ s activities as a federal enterprise is determined by the policies and priorities of the German Government and the latter s role in global processes. In today s world, the shape of international cooperation is dictated by globalisation and the worldwide realignment of economic and political power. These forces also change the nature and focus of development cooperation. The emergence of new stakeholders, new issues and new approaches reflects this change. By way of example, emerging economies are playing an increasingly important role in the political, commercial and social development of their region and in shaping and implementing global agendas. It is vital for institutions from Germany and the rest of Europe to engage in regular dialogue with these countries, as this allows us to develop joint positions at meetings of bodies such as the G20 (group of the most important industrialised countries and emerging economies) and at climate or security conferences. These countries have shown particular interest in areas where Germany has developed forward-looking solutions, e.g. the social market economy, renewable energy, environmental protection, social security systems, support for small and medium-sized enterprises (SMEs) and the dual vocational training system. At the same time, despite clear progress over the last twenty years, poverty, inequality and vulnerability remain major global challenges. Sub-Saharan Africa is still the subcontinent with the highest proportion of people living in absolute poverty. This is a result of weak governance systems, ethnic conflict, low levels of education and rapid population growth. However, even emerging market countries such as India and Brazil have not yet resolved the issue of poverty. They are marked by a growing disparity in terms of wealth and income, and this frequently generates social tension. Increasingly, the international cooperation agenda is also dominated by security, fragility and post-conflict issues. Up to 50 countries around the world are classified as fragile states. Political, economic and social instability in these countries has an impact on Germany s own foreign, security and economic interests. Finally, sustainable solutions that contribute to worldwide climate stability and protect other public goods in the environmental field are inconceivable without an international framework of rules and supranational regulation. Progress in this area depends on effective implementation at national level and on new financing mechanisms such as the Green Climate Fund. With regard to our stakeholders, the EU is emerging alongside the German Government as GIZ s most important source of new commissions and frame of reference. Both the EU s foreign aid and internal programmes offer tremendous potential for GIZ. Last year the company was awarded several commissions in Greece spanning health care, renewable energy promotion and local government. Countries such as Romania and Bulgaria have also shown considerable interest in the support offered by GIZ. Private sector companies, investors and foundations are all playing a growing role. They can mobilise additional resources and contribute fresh know-how in the area of international cooperation for sustainable development. Over recent years, GIZ has significantly increased the range of services it offers to this group of customers, expanded its network and positioned itself as a provider in this field. Looking ahead, we plan to consolidate and intensify this process of transformation in response to the national and international contexts outlined above. We aim to further diversify our client and portfolio structure while maintaining our established pattern of growth. GIZ s goal is to become the world s leading provider of international cooperation services for sustainable development. To this end, our long-term corporate plan for 2014 to 2016 specifies four strategic priorities: 1 The Centre for International Migration and Development (CIM) is run jointly by GIZ and the Federal Employment Agency s International Placement Services. It operates a number of personnel placement programmes with the aim of recruiting highly qualified experts and managers for local employers in partner countries. In the Integrated Experts Programme, German and European experts are recruited for assignments of up to six years. The purpose of the Returning Experts Programme is to support foreign experts who wish to take up important development posts in their country of origin after studies, training or employment in Germany.

4 4 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year Create visible added value for GIZ s shareholder As a federal enterprise, GIZ intends to focus even more on ways of creating visible added value for the Federal Government as a whole both in public-benefit business and its taxable business activities. This added value could take the form of development results, outcomes that enhance Germany s international profile and support for German foreign, economic and security interests. The company is also strengthening its role as an implementing organisation for the entire Federal Government and with this goal in mind plans a further expansion of its service portfolio. GIZ intends to maintain its present course, restructure its core business to encompass a broader definition of development cooperation, introduce new forms of international cooperation for sustainable development and open up new areas of business in line with the mandate established by its corporate purpose. Management. Our goal here is to achieve further gains in process efficiency and in the quality of results. As another means of boosting efficiency, GIZ plans to expand its current incentive mechanisms. This will help us to realise potential cost savings during the implementation of projects. Develop products and markets successfully GIZ plans to step up its joint product development and marketing links with approved external cooperation partners in selected areas that specifically relate to Germany, e.g. the energy revolution, dual vocational training, social security and SME promotion. We aim to position ourselves more effectively in the security, fragility and post-conflict field. This will also involve developing a broader portfolio and improving our capacity to deliver services. to maintain this reputation in order to find the right people for its assignments. GIZ s focus on sustainable development, its interdisciplinary approach, the international profile of its teams and its participatory management culture all contribute to its appeal and help to ensure that even relatively short periods of employment are seen as a valuable career experience. Whether seconded or national experts, development workers, integrated or returning experts, consultants, appraisers or cooperation partners, we regularly combine diverse groups of employees into successful teams. Our ability to do so reflects our firm commitment to diversity and a solid organisational culture. C. New markets sector and promoting an exchange of knowledge and lessons learned between Germany and Greece. At present, GIZ is also positioning itself in Germany with solutions designed to meet the country s need for more skilled workers. In response to the related shortage, GIZ is working with the German Federal Employment Agency to attract qualified personnel from other countries to the national labour market. To date, for example, we have prepared 600 qualified health care workers from Serbia, Bosnia-Herzegovina and the Philippines for employment in Germany by providing appropriate language, skills and intercultural training. Half of them have already received a contract of employment in Germany. D. Operating framework With the support of the German Federal Government, GIZ is taking steps to add a European dimension to its wider identity. As an eligible entity it will be in a position to implement EU policies even more effectively. Efficiently deliver excellent services to our commissioning parties and partners GIZ will engage in continuous dialogue with its commissioning parties and partners in order to identify new requirements and expectations and will adapt its portfolio of services and the range of instruments it employs accordingly. In this context, the measures implemented by GIZ will be chosen for their breadth of impact. We plan to focus more effectively and at an earlier stage on the potential for upscaling and to structure the implementation process with this in mind. Our aim is to increase the impact of the resources used in projects and programmes and to demonstrate success in the form of data, facts and figures. In doing so, it is vital that we continue to work closely and on a basis of trust with our local partner organisations one of GIZ s particular strengths and strengthen that cooperation where required. We will consistently implement the specific recommendations for action that emerged from the two strategic projects in 2013 entitled Efficiency for Growth and Quality Assurance in Line GIZ will continue its drive to open up new markets within the framework of the EU s foreign aid and internal programmes. To this end, we will need to focus on strengthening our representation in Brussels and consistently implementing the revised EU strategy. We will also increase our efforts to form consortia with implementing organisations in other EU member states with a view to acquiring large-scale delegated cooperation arrangements and commissions from the EU. GIZ will establish new branches and, where required, new subsidiaries in order to develop its capacity to pursue new business models both in its core operations and in new areas. Assign the best staff and teams for global sustainable development GIZ cannot meet these challenges without well-qualified and highly motivated employees. Our human resources tools and management guidelines are designed to assign the right person to the right job and to harness the potential and commitment of our staff effectively. The biggest challenges we face lie in the increasing diversity of our work and our growing involvement in fragile contexts. There are many situations in which we need to recruit appropriately qualified personnel from the wider labour market. As demonstrated in numerous rankings, GIZ has established an attractive profile as an employer and will need Within the EU, GIZ is particularly focused on the Danube region and the expansion of its activities in Greece. The EU s development strategy for the Danube region offers tremendous potential. A dedicated line of grant-based funding will be set up to facilitate the implementation of this strategy from The EU is currently examining a whole range of other project ideas in the fields of renewable energy and nature conservation. These proposals were drawn up in close collaboration with the federal state governments in Baden-Württemberg and Bavaria. The first commissions are likely to be awarded in In Greece, GIZ is currently in the process of implementing three projects, two of which are financed by the EU Commission and one by the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety. The project to strengthen local government aims to advise local authorities on the planning and implementation of their development programmes and reforms while making more effective use of the funds available to them. In another project, GIZ is advising the Greek Ministry of Health on the implementation of structural reforms designed to improve the efficiency and effectiveness of the country s health care system. The third of these projects, carried out on behalf of the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety and the EU Commission, involves providing expertise on reforms in Greece s renewable energy In terms of potential revenue, the main factors affecting GIZ s financial position are the size of the Federal Government budget and the spending plans of the individual ministries that commission services from GIZ. The amount allocated to BMZ in 2013 (Budget no. 23) was EUR 6,296 million. This is equivalent to a reduction of EUR 87 million compared with the anticipated budget for the previous year. GIZ derives its biggest commissions and revenue from BMZ s budget item entitled Bilateral technical cooperation. The cash appropriation designated for this technical cooperation budget 2 was EUR 1,119 million. This cash appropriation for technical cooperation (TC) was increased during the year due to a transfer of around EUR 31 million from within the overall BMZ budget. GIZ s total revenue from this budget item in 2013 stood at EUR 1,120 million. In addition to the commissions from BMZ, GIZ also receives commissions from other German Public Sector Clients, primarily from the German Federal Foreign Office, the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, the Federal Ministry for Economic Affairs and Energy and the Federal Ministry of Defence. 2 The same budget item is also used for other TC organisations: the Physikalisch-Technische Bundesanstalt (PTB) (Germany s national metrology institute) and the Federal Institute for Geosciences and Natural Resources (BGR).

5 6 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year The commissions awarded to GIZ from German Federal Government budgets are supplemented by commissions from other donors in the form of cofinancing for joint projects with BMZ and other German Public Sector Clients. This method of financing involves third parties providing additional funds for measures to be carried out by GIZ on behalf of a federal ministry. The list of key external donors includes the EU, the Australian Agency for International Development (AusAID), the UK s Department for International Development (DFID) and the Netherlands Directorate-General for International Cooperation (DGIS). With the consent of the German Federal Government, GIZ also accepts commissions from national governments, bilateral donors, UN organisations and agencies, and international financial institutions. As a general rule, these commissions are implemented through GIZ s taxable business arm, International Services (IS). E. Total operating performance GIZ can report a positive set of results for 2013 in terms of business volume and new commissions, both of which were again at a high level. At EUR 1,931 million 3, the total figure for business volume was EUR 161 million (8 %) below the forecast of EUR 2,092 million. As anticipated when we drew up our forecast, it was not possible to match the previous year s total business volume of EUR 2,104 million. The main reasons for this lower than expected figure in 2013 were changes in the Federal Government budget, delays in the provision of services for IS projects and (in the first half of the year) a downturn in the volume of new commissions received by IS. The total volume of new commissions received by GIZ in 2013 was EUR 2,292 million. This exceeded both our forecast of EUR 2,258 million and the previous year s total of EUR 2,285 million. This positive development is mainly attributable to GIZ s success in attracting third-party funds under cofinancing arrangements linked to commissions received from BMZ and German Public Sector Clients. GIZ s control parameter is the key ratio used in the public-benefit sector to limit management costs at Head Office level. Reflecting the company s revenue for 2013 and projections for the next few years, at the end of 2013 the control parameter stood at 12.5 %, up 0.4 percentage points on the previous year. IS again recorded a negative operating result 4 of EUR 1.2 million. This nevertheless represents a substantial increase on the previous year s total of EUR 4.1 million and is due in part to the package of measures launched in 2013 with the aim of increasing the company s income at project level while reducing its overheads. II. Assets, financial position and income A. Assets The balance sheet total fell slightly during the year under review by EUR 2 million, from EUR 1,219 million to EUR 1,217 million. Fixed assets rose from EUR 322 million to EUR 438 million. The main factors underlying this increase of EUR 116 million (36 %) were additions of EUR 80 million to the security-based investment funds and advance payments made by GIZ for the ongoing construction of two office buildings in Eschborn and Bonn. Whereas the figure for advance payments showed another rise (EUR 14 million), goods and services not yet invoiced fell by EUR 8 million (19 %) to EUR 32 million. Overall, this change produced a small increase of EUR 6 million (2 %) in the figure for inventories from EUR 280 million to EUR 286 million. Receivables and other assets were down by EUR 23 million from EUR 302 million to EUR 279 million. This was primarily due to a decline of EUR 44 million in project assets, both in the public-benefit sector and in IS. Within the public-benefit sector, the main reason for this decline was the high reporting figure for project assets in the previous year as a result of an intra-year cash transfer from the European Development Fund (EDF). The lower business volume in IS also caused a reduction in project assets. This decline is partly offset by an increase of EUR 10 million in other assets at IS to EUR 16 million. As in the previous year, this was primarily due to the recognition of construction costs incurred for an IS project in Ethiopia that GIZ can charge to the client. These costs are shown as a transient item under other assets. An equivalent sum in terms of advance payments already received from the client for this IS project is shown under other liabilities. Equity fell by EUR 2.9 million on account of the negative figure for net income, which was balanced by a release from the reserves as established by the Articles of Association. With equity lower, the equity ratio 5 stood at 5.5 %, down 0.2 percentage points compared with the previous year. Overall provisions rose by EUR 56 million from EUR 512 million to EUR 568 million. The increase of EUR 58 million in provisions for pensions was partly offset by a decline of EUR 2 million in other provisions. Various factors led to the above increase in provisions for pensions. These included newly acquired pension entitlements, a reduction in the discounting rate and the addition of the difference between pension provisions required under old and new legislation. Liabilities fell by EUR 54 million from EUR 630 million to EUR 577 million. While advance payments received declined by EUR 67 million, there were increases in both trade accounts payable (up EUR 3 million) and other liabilities (up EUR 10 million). The decline in advance payments received was due in the public-benefit sector to a fall in revenue and in IS to a reduction in total business volume. The increase in other liabilities in IS is attributable to the recognition as a further transient item of construction costs incurred for an IS project in Ethiopia that GIZ can charge to the client. 3 Revenue in the public-benefit sector plus total business volume at IS. 4 The operating result is calculated by deducting tax expenses and the financial result from the company s net income. The financial result is adjusted to exclude interest expenses for provisions. 5 The equity ratio is defined as equity less premium due as a proportion of the balance sheet total.

6 8 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year B. Income Turnover for fiscal 2013 was EUR 27 million (1 %) lower at EUR 1,945 million. The following table shows the distribution across business areas: It should be noted that the figure for 2012 includes an exceptional item in the form of a substantial intra-year cash transfer (approximately EUR 220 million) from the EDF, part of which was credited to the TC budget. As such, it is not possible to make a direct comparison with the previous year. Total operating performance Public-benefit sector International Services Change Total Public-benefit sector International Services Total Total in millions in millions in millions in millions in millions in millions in millions in % Turnover 1, ,945 1, , Changes in inventory Total operating performance 1, ,937 1, , At EUR 27 million, the financial result 6 was down by EUR 5 million on the previous year s figure of EUR 22 million. The main factors here were a rise in interest expenses as a result of appropriations to pension provisions and the low interest rates available on the capital market. The overall net loss for the year was EUR 2.9 million (2012: net loss of EUR 2.7 million). The following table shows net income according to business area: Net income Change in millions in millions in millions in % Public-benefit sector > 100 IS GIZ total The negative result for net income in IS represents an improvement on the previous year. In GIZ s public-benefit operations, the negative figure for net income is largely attributable to measures implemented and financed by the company itself 7 and to the agreed share that GIZ is obliged to pay as the sending organisation as part of the weltwärts with GIZ programme. C. Financial position As per the balance sheet date, cash and bank balances stood at EUR 213 million, down EUR 99 million on the year-end figure of EUR 312 million for Out of this total, EUR 14 million is attributable to IS and EUR 199 million to public-benefit business. This reduction is mainly due to transfers of EUR 80 million to the existing security-based investment funds. III. Economic situation A. General observations GIZ s overall results for 2013 present a stable picture. Both new commissions (EUR 2,292 million) and business volume (EUR 1,931 million) were at a high level. Apart from new commissions and business volume, two other important indicators of GIZ s performance are the control parameter (for the public-benefit sector) and the operating result (for IS). GIZ s control parameter is the key ratio for limiting Head Office costs. It is the ratio between management costs and the four-year average of revenue from the public-benefit sector. The control parameter for fiscal 2013 stood at 12.5 %, 0.4 percentage points up on the previous year s figure of 12.1 %. This was mainly due to a reduction in projected future revenue, which affects the control parameter through the four-year average. At IS, the operating result for fiscal 2013 stood at EUR 1.2 million, compared with a figure of EUR 4.1 million in This improvement was partly achieved by measures to reduce overhead costs and boost income from projects. B. Business volume The figure for total business volume in 2013 was EUR 1,931 million. This represents a decline of EUR 173 million (8 %) compared with The 2013 figure for total business volume comprises revenue of EUR 1,753 million from the public-benefit sector and a total operating performance of EUR 178 million at IS. The public-benefit sector thus contributed 91 % to the total figure, a rise of 2 percentage points on the previous year. Within the public-benefit sector as a whole, the biggest share of revenue was again generated from BMZ. However, while the proportion generated from German Public Sector Clients showed an increase on the figure for 2012, this could not fully compensate for the downturn in revenue from BMZ. Compared with the previous year, the total operating performance of IS was 23 % lower. The following table shows the year-on-year change in business volume at GIZ and the contributions made by the company s business areas and sectors to the total: Business volume Public-benefit sector total 2013 Share in millions in % 2012 Share Change 2013 to 2012 in millions in % in % 1, , of which, BMZ 1, , of which, German Public Sector Clients of which, grants of which, small-scale measures in the publicbenefit sector > 100 IS GIZ total 1, , The following section outlines the business volume situation within each of GIZ s business areas. 6 The financial result is made up of income from long-term investments and other interest income less amortisation on long-term investments and interest expenses. 7 in accordance with its Articles of Association, GIZ as a public-benefit company uses its profits exclusively for public-benefit purposes (as defined in the Articles of Association) by carrying out GIZ-financed measures.

7 10 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year Revenue in the public-benefit sector In 2013, the public-benefit sector generated total revenue of EUR 1,753 million, down EUR 121 million (6 %) on the figure for Revenue from BMZ commissions came to EUR 1,464 million. Out of this total, the amounts derived from individual BMZ budgets were EUR 1,120 million from Technical cooperation, EUR 40 million from International cooperation with regions for sustainable development and EUR 134 million from other BMZ budgets. The overall figure was down EUR 164 million (10 %) on the previous year. As explained above, this was mainly due to a cash transfer from the EDF in Any comparison between the total revenue figures for 2012 and 2013 must bear in mind this substantial non-recurring item. In 2013, third-party cofinancing of BMZ commissions generated total revenue of EUR 170 million. This was around EUR 9 million (5 %) down on the previous year. The biggest contributions to cofinancing revenue came from the EU (EUR 50 million), AusAID (EUR 23 million), DFID (EUR 18 million) and DGIS (EUR 18 million). German Public Sector Clients contributed around EUR 265 million to GIZ s total revenue. This increase of EUR 55 million (26 %) on the total for 2012 was mainly due to high levels of revenue from the Federal Foreign Office and the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety as well as third-party cofinancing revenue linked to commissions from German Public Sector Clients. Commission revenue from the German Federal Foreign Office reached EUR 119 million. In addition to numerous small-scale projects, this year-on-year increase of EUR 30 million (33 %) is primarily attributable to major projects in Afghanistan totalling EUR 58 million and a new initiative in Syria in support of the reconstruction and transition process (EUR 12.5 million). GIZ s work on behalf of the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety generated EUR 87 million, an increase of EUR 17 million (24 %) on the previous year. This revenue was mainly generated from projects linked to the International Climate Initiative (IKI; EUR 60 million) and the Special Energy and Climate Fund (EKF; EUR 24 million). Revenue from third-party donors came to EUR 9 million. This represents an increase of EUR 6 million compared with the previous year. This positive development was mainly driven by the cofinancing of commissions from the German Federal Foreign Office (e.g. in Syria and the Palestinian territories). Total operating performance of GIZ IS In 2013, the IS business area achieved a total operating performance of EUR 178 million. This was down EUR 52 million (23 %) on the previous year. The main factors behind this downturn were delays in awarding commissions, potential commissions that did not materialise (e.g. in Saudi Arabia, Libya and Qatar) and delays in the provision of services for ongoing projects, especially in Africa. In terms of funding providers, the biggest contribution to IS s total operating performance in 2013 came from national governments, which accounted for EUR 60 million. Commissions from the EU (EUR 40 million) and various UN organisations (EUR 34 million) also boosted the IS business area s total operating performance. C. New commissions and orders on hand Commissions In fiscal 2013, GIZ received commissions totalling EUR 2,292 million. This was on a par with the previous year s figure of EUR 2,285 million. Although the volume of new commissions in the public-benefit sector was up by EUR 56 million (3 %), IS recorded a year-on-year downturn of EUR 49 million (24 %). The public-benefit sector and IS accounted for EUR 2,137 million and EUR 156 million respectively out of the total for Accordingly, the proportion of all new commissions generated by the public-benefit sector rose by 2 percentage points compared with the previous year. Within this sector, an increase in the proportion of new commissions attributable to German Public Sector Clients reflected a similar shift in business volume (see III. B above). The following table shows the year-on-year change in the volume of new commissions at GIZ and the contributions made by the company s business areas and sectors to the total. New commisions Public-benefit sector total 2013 Share in millions in % 2012 Share Change 2013 to 2012 in millions in % in % 2, , of which, BMZ 1, , of which, German Public Sector Clients of which, grants > 100 of which, small-scale measures in the publicbenefit sector IS GIZ total 2, , Trends in the level of new orders received by each GIZ business sector are explained below. New commissions in the public-benefit sector In 2013, the public-benefit sector received new commissions with a total value of around EUR 2,137 million. This year-onyear increase of EUR 56 million (3 %) was achieved despite the fact that the total BMZ figure for new commissions in 2012 was boosted by an exceptional intra-year cash transfer. The improvement was largely driven by successful acquisitions from German Public Sector Clients and third-party donors. New commissions from BMZ totalled EUR 1,715 million. The lower figure compared with 2012 (EUR 1,772 million) is due to the exceptional item referred to above. It is particularly worth noting the year-on-year change in new commissions from third-party donors for the cofinancing of BMZ commissions. At EUR 242 million, the total in this category was EUR 25 million (12 %) up on the previous year. There were particularly substantial rises in new commissions from DFID (up EUR 72 million to EUR 91 million) and the Swiss Agency for Development and Cooperation (SDC) (up EUR 16 million to EUR 27 million). The main locations for large-scale cofinancing projects were Bangladesh, Tajikistan and South Sudan. The total volume of commissions received from German Public Sector Clients came to EUR 351 million. This was up EUR 65 million (23 %) on the figure for This increase was mainly driven by new commissions from the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety and the Federal Ministry of the Interior/Federal Office of Administration and by cofinancing agreements. GIZ received new commissions totalling EUR 31 million for the cofinancing of German public-sector projects. This represents an increase of EUR 24 million compared with the previous year. New commissions at GIZ IS In 2013, IS generated new commissions with a total value of EUR 156 million. This represents a decline of EUR 49 million (24 %) compared with The biggest commissions received by IS were from the EU. At EUR 68 million, this total was almost double that of the previous year (EUR 36 million). In addition, new commissions from bilateral donors rose by EUR 4 million (33 %) to EUR 17 million. Orders on hand As at 31 December 2013, the volume of orders on hand at GIZ stood at EUR 3,802 million. This was up EUR 235 million (7 %) on the year-end figure for The total volume of orders on hand was divided between the public-benefit sector (EUR 3,487 million) and IS (EUR 315 million). The total for IS was down by EUR 53 million (14 %) on the previous year. By contrast, the figure for the publicbenefit sector showed a year-on-year increase of EUR 288 million (9 %), primarily as a result of orders on hand from German Public Sector Clients.

8 12 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year D. Use of resources Personnel The following table provides a year-end comparison of staff numbers for 2012 and 2013: GIZ employees (not weighted for part-time; as per balance sheet date) Public-benefit sector staff at Head Office Change absolute in % 1,832 1, The number of staff employed in the public-benefit sector as at 31 December 2013 was 4,908. This figure is made up of 1,832 Head Office staff and 3,076 employees on projects in Germany and other countries. As at 31 December 2013, the number of employees at IS was 358, including 87 Head Office staff and 271 project staff in Germany and other countries. At the year-end, the total number of national staff employed locally by GIZ around the world was 11,244. At the year-end, 488 integrated experts and 439 returning experts were employed by organisations or companies in partner countries. A further 869 development workers 8 were deployed by GIZ. In 2013, the total value of all goods, financing, construction services and other services procured by GIZ at Head Office and in the field was approximately EUR 882 million. This figure is down by around EUR 73 million (8 %) on the previous year. The lower figure for 2013 is partly due to a reduction in the procurement of first-line medicines for the treatment of tuberculosis on behalf of the World Health Organization (WHO) following the expiry of an IS commission and partly to a fall in the volume of procurement by GIZ offices. There was another significant rise in the procurement of services from companies, although this was outweighed by a decline in the procurement of goods in other categories. IV. outlook A. Business forecast Public-benefit sector project staff in Germany 1,257 1, Public-benefit sector field staff 1,819 1, Total public-benefit sector staff 4,908 4, IS staff at Head Office IS project staff in Germany IS field staff Total IS staff Total GIZ personnel 3 (excluding national personnel) 5,266 5, National personnel 11,244 11, Total GIZ personnel 16,510 16, Development workers Integrated experts (CIM) Returning experts (CIM) Volunteers on the weltwärts programme Purchases of goods and services The following table compares the year-end figures for purchases of goods and services and for financing by GIZ: Contracts awarded 2013 in millions 2012 Change in millions in millions in % Head Office service contracts Head Office construction contracts Head Office financing agreements Head Office procurement of goods Total Head Office Local service and construction contracts, financing agreements Local procurement of goods Total local contracts Total contracts awarded Goods with a total value of almost EUR 104 million were purchased for commissions in the public-benefit sector and IS. For the reasons outlined above, this represents a decrease of around EUR 67 million (61 %) on the previous year. Over half of all goods purchases in 2013 were made locally in GIZ s partner countries. In 2013, GIZ Head Office concluded service and construction contracts and financing agreements for a total of approximately EUR 552 million. This was around EUR 4 million (1 %) higher compared with the figure for The total volume of contracts entered into with consulting firms stood at roughly EUR 300 million, around EUR 42 million (16 %) up on the figure for By far the largest share of this increase is accounted for by the public-benefit sector. The volume of contracts with institutions in fiscal year 2013 was on a par with the previous year at approximately EUR 134 million. The volume of contracts awarded to individuals (appraisers and consultants) stood at EUR 74 million and was therefore also at the same level as the previous year. At roughly EUR 34 million (down 42 %), the volume of financing agreements with local partners was well below the level of GIZ offices awarded additional contracts worth EUR 226 million to local consulting firms, appraisers, construction companies, and in the form of local subsidies. This also represents a slight decrease of around EUR 9 million (4 %) compared with the previous year. Looking ahead to 2014, the company plans to generate a total business volume of EUR 1,948 million. Compared with fiscal 2013, this is equivalent to an increase of EUR 17 million (1 %). By 2016, we expect to achieve a business volume of between EUR 1.9 billion and EUR 2.0 billion. The following chart shows the actual and projected business volume figures from 2012 up to Business volume in millions 2,500 2,000 1,500 1, ,874 Plan ,104 2, , Plan 2014 Forecast 2015 Forecast ,931 1,948 1,932 1, , , , ,766 1 Excluding the Management Board and project staff in Germany 2 Excluding project staff in Germany 3 Excluding trainees (2013: 127; 2012: 124) 4 Employment contract with local employers in partner countries 1 Consulting firms, advisory institutions, individual appraisers 2 Goods, freight forwarders Public-benefit sector revenue IS total operating performance As at the balance sheet date of 31 December 2013, GIZ employed a total of 5,266 staff (excluding national personnel). This was up by 156 (3 %) on the year-end figure for When counting the total number of development workers, BMZ only includes those it classifies as operationally active. As well as those deployed in other countries, this includes development workers currently undergoing preparations in Germany for an international assignment; staff classified at the year-end as temporary development workers; and those completing a period of Civil Peace Service. According to the definition used by BMZ, sector coordinators, project managers, supervisors for the weltwärts programme and junior development workers are not classified as operationally active development workers. As at 31 December 2013, the number of operationally active development workers stood at 832.

9 14 ANNUAL STATEMENT OF ACCOUNTS 2013 Management Report for the Fiscal Year GIZ plans to generate revenue of EUR 1,722 million from the public-benefit sector in This projection is EUR 31 million (2 %) down on the actual figure achieved in By the end of 2016 we aim to boost annual revenue to a level of around EUR 1.8 billion. This forecast is based on an assumption that we can attract new cofinancing revenue from third-party donors and on the expectation of an increase in Germany s Federal Government budget. The following table contains a detailed breakdown of actual and projected revenues for the years 2012 to 2016: Revenue in millions 2012 Plan Plan 2014 Forecast 2015 Forecast 2016 BMZ 1, , , , , ,482.0 of which, technical cooperation item (896 03) 1, , , , , ,137.0 of which, international cooperation with regions (896 06) of which, other BMZ items of which, cofinancing German Public Sector Clients of which, budget funds of which, cofinancing Grants Small-scale measures in the public-benefit sector Public-benefit sector total 1, , , , , ,766.0 In 2014 GIZ plans to generate revenue of EUR 1,445 million from BMZ commissions. Compared with our actual revenue for 2013, we anticipate a reduction in potential revenue from the BMZ budget based on the first Government draft of the 2014 Federal budget (announced in June). Nevertheless, GIZ expects to boost its revenue from third-party cofinancing agreements linked to BMZ commissions. By 2016, GIZ anticipates revenues of EUR 1,482 million from its BMZ operations. This projection is partly based on assumptions that the cash figure for the TC item (as per the first Government draft of the 2014 Federal budget) will grow by around 3 % by 2016 and that GIZ can increase its revenue from this budget to EUR 1,137 million. Furthermore, we expect revenue growth from third-party cofinancing agreements linked to BMZ commissions to stabilise at a high level as a result of more intensive cooperation with the EU and through the acquisition of partner cofinancing. In 2014 GIZ plans to generate revenue of EUR 248 million from German Public Sector Clients. This forecast is around EUR 17 million (6 %) below the actual figure for The main reason for this projected downturn is that at the time these forecasts were prepared we could not be sure of achieving the same high level of commission revenue from the Federal Foreign Office as in Over the next few years GIZ anticipates a further stabilisation of its activities on behalf of other German ministries and their subordinate institutions. By 2016, we aim to generate annual revenue of EUR 250 million in this area. As in previous years, however, the Federal Foreign Office, the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety and the Federal Ministry for Economic Affairs and Energy are likely to account for the biggest share of this revenue. Following the withdrawal of troops from Afghanistan, we anticipate a shift in the main focus of our work on behalf of the German Federal Foreign Office towards disarmament and arms control. At the same time, we expect to generate more commissions linked to the International Climate Initiative from the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety. On the basis of GIZ s revenue targets and projected management costs, the control parameter for 2014 is expected to be 12.5 %. On the assumption that revenues increase in 2014 and subsequently while management costs remain at the same level, the control parameter should begin to fall as of In 2014, the IS business area is forecast to achieve a total operating performance of EUR 226 million. This represents an increase of EUR 48 million (27 %) compared with the actual figure for The main factor behind this anticipated yearon-year rise in total operating performance in IS is a concerted effort to push ahead with the implementation of two major projects. With a view to restoring its profitability, IS plans to reduce its total volume of commissions. This involves maintaining a tight focus on market requirements and consolidating its structures accordingly. It will also continue to implement the measures initiated in 2013 to boost project revenue and minimise the associated risks. On this basis, IS expects its operating result for 2014 to remain negative at EUR 2.8 million. A further negative result is anticipated in 2015 during this transitional period. However, it should be possible to achieve a positive operating result by 2016 once all the corresponding measures take effect. B. Anticipated use of resources Personnel forecast GIZ distinguishes between project staff working on specific commissions and the structural posts of its Head Office staff. Project staff are deployed as an instrument for achieving a set of results that GIZ has committed to deliver on behalf of its clients. Employees in structural roles provide the support required to plan, manage and implement those commissions. Overall staff numbers may fluctuate in response to the level of new commissions and revenue and depending on the exact structure and make-up of those commissions, e.g. projects and programmes that that are either implemented for the most part by GIZ staff or those that are largely contracted out. Based on current forecasts of business volume, the total number of employees for 2014 is expected to stand at 4,920 (excluding national personnel), down 346 (7 %) on the year-end figure for Looking further ahead, given our expectations of future business volume and assuming that management costs do not rise over the next few years, it is likely that staff numbers will show a further decrease compared with the projection for GIZ staff Plan 2014 Forecast 2015 Forecast 2016 Staff with Head Office functions 1 1,919 1,800 1,750 1,710 Project staff in Germany 1,289 1,200 1,160 1,140 Field staff 2,058 1,920 1,850 1,820 Total employees 1 (excluding national personnel) 5,266 4,920 4,760 4,670 1 Excluding trainees (2013: 127; 2012: 124)