2014 annual report

2014
ANNUAL
REPORT
LETTER FROM THE CHAIRMAN OF THE BOARD
4
KEY FIGURES AND FACTS
5
GENERAL OPERATIONS
6
Mission and Values
6
Focus
6
Membership in Networks
7
Portfolio Structure
7
Historical Development
7
Focus on New Clients 2014
10
FINANCIALS
12
Balance Sheet – Basic Information
12
Income Statement – Basic Information
12
Investors
13
Short Presentation of the Main CoopEst Investors
13
Looking Towards 2015
14
SOCIAL PERFORMANCE
15
Sustainabilty, Social Performance and Impact
15
Strengthening the Social Traceability of our Portfolio
16
Positive Social and Economic Changes by MFIs
17
Focus on Cooperative Banks
17
Appendix 1: GOVERNANCE AND ORGANISATION
18
Board of Directors
18
Appendix 2: IMPULSE EUROPE – INVESTMENT ADVISER
TABLE OF
CONTENTS
Management and Team
19
20
Appendix 3: DETAILED FINANCIAL STATEMENTS
21
DISCLAIMER
23
2014 ANNUAL REPORT
3
In accordance with the strategy defined by our investors,
CoopEst extended its territorial scope to the Caucasus
while limiting country risk as defined in the original
contract. In 2014, new investments were made in Bosnia,
Bulgaria, Poland and Kosovo. We also started client
identification in the Caucasus. At the same time, we
are proud to see evidence of the growing number of
historical client MFIs benefitting from CoopEst support.
The development of these MFIs shows that the traditional
banking sector does not meet all the financial needs in
the targeted countries. Moreover, the governance and
missions of these institutions – different from those of
LETTER FROM
THE CHAIRMAN
OF THE BOARD
cases. Nevertheless, CoopEst financial performance
remains strong allowing - even after provisions – for the
reinforcement of equity year after year.
In line with its mission of social inclusion and to support
populations typically excluded from the mainstream
financial system, CoopEst is establishing a new loan
fund project to target the development of Roma
entrepreneurship across four countries in the region.
Following the vision of CoopEst founders, we sharpened
the social performance management of our portfolio.
The year of 2015 will be dedicated to the development
of a scheme for deeper monitoring and reporting on
social performance parameters. Social performance has
become a discriminating factor in the approval of new
loan agreements in countries where CoopEst is already
operating.
With the purpose to support sustainable economic
development,
CoopEst
is
increasingly
offering
subordinated debt. This is the best way to strengthen the
capital adequacy of the institutions requesting investment
from CoopEst and allow for their balanced development.
The activity and results of 2014 show, once again,
the efficiency of the CoopEst economic model.
During the year, the first tranche of bonds released by
CoopEst expired. The concerned investors had the
possibility to stop their collaboration with CoopEst but
opted not do so. In fact, nearly 100% of the original bonds
were rolled-over. Furthermore, the French cooperative
Cheque Déjeuner (Up Group) joined us as a new
shareholder in December 2014. This represents the fourth
capital increase, the previous one being the EIF, the Credit
Cooperatif and the TISE contributions in December 2013.
mainstream banks - are essential for better responding to
the needs of micro-entrepreneurs.
The new contributions confirm CoopEst as a leader in the
supply of long-term resources to microfinance providers,
cooperative banks and non-banking institutions operating
in Central and Eastern Europe. The specific characteristics
of our approach have been well recognized by leading
international institutions such as the EIF, CoopEst second
shareholder.
The CoopEst Board of Directors is very demanding with
respect to the administrative, political and economic
backgrounds of new countries before taking any
investment decision. The scrupulous monitoring of the
portfolio – including frequent travel by our Team – led
us to place special attention on five loan agreements
and to strengthen our loan loss provision in one of these
4
2014 ANNUAL REPORT
François Soulage
CHAIRMAN OF THE BOARD
10
NUMBER OF
COUNTRIES
EUR 40.4 M
TOTAL INVESTMENT
CAPACITY
36
53
NUMBER OF
CLIENTS
LOANS
OUTSTANDING
EUR 978,000
Average Loan per
CoopEst Client
KEY FIGURES
AND FACTS
EUR 35.2 M
OUTSTANDING
PORTFOLIO
EUR 7,087
Average Loan per Final
Beneficiary
202,617
Total Number of Loans
to Final Beneficiaries
2014 ANNUAL REPORT
5
Mission and Values
The mission of CoopEst is to foster the development of
socially-rooted financial sectors in Central and Eastern
Europe and the Caucasus (CEEC).
We understand the socially-rooted financial sector
as cooperative banks, credit and savings unions,
microfinance organisations and banks with the MSME
focus, regardless of the legal form, offering their
products and services in a responsible manner.
CoopEst goal is to see cooperative and microfinancefocused institutions grow, innovate and continuously
improve services to their clients, while balancing financial
performance with positive social impact and respect
for the environment. Facilitating access to responsible
financial services is a key contribution to reduce social
and economic exclusion, to generate self-employment
and to improve the well-being of individuals, families and
disadvantaged groups in general.
In line with the social commitment of its originators,
CoopEst fosters traditional cooperative values of social
responsibility, integrity, solidarity and transparency.
Focus
Despite the development of financial markets, micro,
small and medium enterprises as well as low-income
individuals in CEE still experience difficulties in access to
financing, especially for start-up businesses and longerterm investments.
GENERAL
OPERATIONS
6
2014 ANNUAL REPORT
To support financial inclusion, CoopEst provides
subordinated and senior debt to eligible institutions
in target countries, enabling them to leverage further
funding and to expand their outreach.
CoopEst is open to funding smaller institutions where
it sometimes becomes the first external investor. Our
company supports a range of partner institutions,
covering credit unions and MFIs up to medium sized
banks, with total assets between EUR 0.5 million and
EUR 3 billion. The smallest initial loan made so far has
been EUR 150 thousand while the maximum exposure is
contractually limited to EUR 3 million.
CoopEst has been increasingly emphasizing the
importance of client protection principles, fair
competition and social performance. While we do not
impose specific solutions, we encourage our partner
institutions to introduce and comply with the best
industry standards.
The majority of our partner MFIs have endorsed the
Smart Campaign or the EC Code of Good Conduct,
showing their strong commitment towards final
beneficiaries. Some of them are also introducing
tailored social performance management systems, in
alignment with their mission and goals. All of our partner
cooperative banks and credit unions are compliant with
the client protection and transparency principles that are
covered by local banking regulations and consumer laws.
Membership in Networks
Historical Development
CoopEst is a member of the European Microfinance
Network (EMN) and the Microfinance Centre (MFC), and
shares expertise in different sectorial conferences, round
tables, trainings and workgroups. CoopEst’s in-depth
knowledge of the microfinance sector is made available
to the whole industry.
As an investment company, CoopEst was established in
2006 by renowned social economy institutions such as
the French cooperative bank Crédit Coopératif and the
insurance group MACIF, together with the IFC (World
Bank Group). In 2009, these founding institutions were
joined by the European Investment Fund (EIB Group).
Currently, CoopEst has 23 investors.
Portfolio Structure
As of 31 December 2014, CoopEst has financed 36
institutions in 10 countries for a total outstanding
amount of EUR 35.2 million. The slight portfolio decrease
compared to 2013 (-6%) is due to matching the maturity
of our assets with the contractual repayment to part of
CoopEst senior bonds issued in 2009. At the end of 2014,
free investment capacity amounts to EUR 5.2 million.
PORTFOLIO EVOLUTION AND
INVESTMENT CAPACITY
45.000
40.000
Total Portfolio
K EUR
Investment Capacity
K EUR
41.100
37.500
35.000
32.400
30.000
30.000
15.000
21.465
23.952
17.294
15.000
10.000
15.000
9.217
5.000
0
35.200
32.346
30.000
25.000
20.000
40.400
37.297
1.800
2007
2008
2009
2010
2011
2012
2013
2014
In December 2013, a new CoopEst Investment
Framework Agreement was signed in order to expand
the CoopEst area of operations to the Caucasus and
to extend the duration of operations to 2023. At the
same time, the management contract was signed with
the Belgian company Impulse Europe scrl, reorganizing
the framework of service provision while retaining the
same core team as from the outset of the investment
activities. Impulse Europe is now an investment adviser
for CoopEst, acting as manager for daily operations.
In 2014, CoopEst was registered as a self-managed
Alternative Investment Fund (AIF) in accordance with the
implementation of the European Directive on Alternative
Investment Fund Managers in Belgium. CoopEst is now
supervised by the Belgian Financial Services and Markets
Authority (FSMA).
With over 8 years of investment activity, CoopEst
possesses deep knowledge of the market, enabling
the organization to minimize risk and to serve partner
projects with expertise that can be transferred into
new initiatives undertaken within the social finance
sector. Risk diversification is essential for CoopEst in
safeguarding its portfolio. It includes maximum exposure
per country and per client. Thanks to systematic hedging,
there is no exchange rate risk on the portfolio.
As of the end of 2014, CoopEst funding capacity
amounted to EUR 40.4 million. Of the total funding,
nearly 90% had been invested.
2014 ANNUAL REPORT
7
Albania
COOPEST TARGET COUNTRIES
MFI
MFI
FondiBesa
NOA
MicroInvest
Bosnia and
Herzegovina
Poland
MFI
Countries with active
investments as per end 2014
Eligible countries
Moldova
Lider
Mikra
Mi-Bospo
Bulgaria
CREDIT UNION
Kassa Popular Russe - KreditKoop
Doverie Finance
Doverie Coop
Maritza Invest
Kosovo
MFI
KRK
AFK
COOPERATIVE BANK
Cooperative Bank Barlinek
Cooperative Bank WBS Warszawa
Cooperative Bank Przemków
Cooperative Bank Rumia
Cooperative Bank Ciechanow
Cooperative Bank Radomsko
Cooperative Bank Halinów
Cooperative Bank Chełmno
Cooperative Bank Raszyn
Cooperative Bank Stara Biała
Federal Bank SGB
Cooperative Bank Nadarzyn
Cooperative Bank Krosno
MFI
Inicjatywa Mikro
MUTUAL INSURANCE COMPANY
TUW TUW
Romania
MFI
Lithuania
CREDIT UNION
LCCU
COOPEST PARTNER INSTITUTIONS
Since the launch of its operations, CoopEst has granted
loans to 39 partner institutions (+3 in 2014). As of 31
December 2014, the outstanding portfolio includes 36
partners in 10 countries.
8
2014 ANNUAL REPORT
Macedonia
MFI
Horizonti
ROMCOM
LAM
FAER
OMRO
VITAS
RoCredit
Serbia
MICROFINANCE BANK
OBS
PORTFOLIO STRUCTURE BY SECTOR
PORTFOLIO STRUCTURE BY COUNTRY
CoopEst beneficiaries can also be categorized by sector:
44 Microfinance Institutions (MFIs)
44 Cooperative Banks
44 Credit Unions
44 Mutual
44 Microfinance Banks
OUTREACH BY COUNTRY
The CoopEst portfolio by country is as follows. In line
with the guidelines defined by the general Framework
Subscription Agreement, all investments by CoopEst
comply with specific country diversification ratios to
mitigate risk.
POLAND
Cooperative banks in Poland represent 35% of the
portfolio. They have a key position in financing micro and
small enterprises in the zone of their activities. To date,
CoopEst is the only foreign institution to issue subordinated
loans to these institutions. CoopEst also supports small
and medium-size MFIs, which represent nearly half of our
portfolio (48%). Our partner MFIs are heavily involved in
the local development of disadvantaged areas.
2.8%
8.0%
6.2%
17,729
4,250
ROMANIA
ALBANIA
3,000
KOSOVO
2.3%
4.3%
6.7%
8.5%
1,500
1,100
MOLDOVA
1,000
SERBIA
1,000
800
12.1%
Poland
TOTAL: EUR 35,229 K
EUR 17,729,647
48.1%
EUR 1,500,000
Bulgaria
Albania
Moldova
Kosovo
Serbia
EUR 2,500,000
EUR 1,000,000
Bosnia
Macedonia
EUR 3,000,000
34.9%
Lithuania
Romania
EUR 4,250,000
EUR 35.2 M
50.3%
EUR 35.2 M
7.1%
2,350
BULGARIA
MACEDONIA
2.8%
2,500
BOSNIA
LITHUANIA
2.8%
3.1%
EUR 2,350,000
EUR 1,100,000
EUR 1,000,000
EUR 800,000
PORTFOLIO STRUCTURE BY LOAN TYPE
MFIs
Mutual
Cooperative Banks
Microfinance Banks
EUR 16,931,400
EUR 12,295,015
Credit Unions
EUR 2,200,000
According to its investment guidelines, CoopEst offers
only debt products:
EUR 2,803,232
EUR 1,000,000
Senior Loans
53%
47%
Subordinated Loans
44 Subordinated loans have been granted to 17 clients for
a total amount of EUR 19 M (26 loans)
44 Senior loans have been granted to 19 clients for a total
amount of EUR 16.2 M (27 loans)
2014 ANNUAL REPORT
9
FOCUS ON NEW CLIENTS 2014
Mikra Bosnia and Herzegovina
Dragana Dobraš is a sheep farmer living in the village of
Dobraši near Banja Luka.
8,132
8,653
0.8
55%
35.7%
10
2014 ANNUAL REPORT
Loan Portfolio
in K EUR as of 31.12.2014
Number of Active Clients
as of 31.12.2014
Average Loan Size
outstanding, in K EUR as of 31.12.2014
% of Clients under the
Poverty Line
4,42$ per day per household member
Access to Finance for
Elderly Population
% of clients older than 50 years of age
Mikra started its activities in 1997 as part of CRS (Catholic
Relief Services), an American humanitarian organization.
In 2008, it registered as a microcredit foundation. Mikra
serves micro-entrepreneurs and farmers in both the
Federation BiH and the Republic of Srpska and Brcko
district with a particular focus on women.
Mikra stands out in the Bosnian context because is the
only MFI utilizing the village banking methodology
for microfinance operations. This approach facilitates
outreach and empowers comparatively poorer clients,
as the members of the group also manage a small fund
created out of their own savings and are allowed to take
short loans from this fund if needed. The group decides
on the interest rate paid on such loans share “dividends”
from the interest payments.
The clients targeted by Mikra typically conduct business
activities (49%), both registered and unregistered,
or agricultural small-scale production (35%). The MFI
principally serves poor, economically active women
(close to 90% of its clients) and recently started to focus
on rural areas by providing financial support to small
farmers.
Thirty-seven percent of Mikra’s portfolio consists of
village banking products and 63% are individual loans.
Of the total individual product portfolio, 70% are
investment loans, 15% are consumer loans, 12% are for
working capital and 3% go to registered business.
Mikra has started the integration of SPM principles into
day-to-day operations and has endorsed the Smart
Campaign, actively promoting its principles. The social
audit conducted by the Microfinance Center shows that
Mikra has a good level of compliance with Universal
Standards of SPM (35% of the standards are fully met
and 90% are partially aligned). Through the process of
the integration of USSPM, Mikra now meets 70% of the
fully aligned standards and 30% of the partially aligned
standards.
Maritza Bulgaria
Atanas and Joseph Vlashki grow vines in the countryside
of Plovdiv. The family farming is the most common form of
management of small-scale agriculture units in the region.
1,804
432
4.2
147%
86
Loan Portfolio
in K EUR as of 31.12.2014
Number of Active Clients
as of 31.12.2014
Average Loan Size
outstanding, in K EUR, as of 31.12.2014
Operational Self
Sufficiency
Clients/Personnel
In 1996, Maritza established itself as a cooperative in
the Plovdiv region, in the south of Bulgaria, to provide
access to financial and non–financial services to small
agricultural producers and entrepreneurs in rural
areas, thus supporting economic growth and local
development.
BS Krosno Poland
Krosno Odrzańskie is a small town of 12,000 inhabitants
in the south-west of Poland on the border with Germany.
The municipality is located near major transportation
routes to western Europe and the economy of the region
is based on small and medium enterprises dedicated to
the processing of natural resources.
Maritza focuses on young farmers with high potential
for economic development but does not neglect older,
experienced members of the cooperative. More than
two-thirds of the portfolio consists of loans to support
an agricultural producer (75%).
Maritza provides flexible loans ranging from EUR 500
to EUR 20,400 using social and alternative collaterals
(including guarantors) at fair interest rates (EIR of 17%).
In addition, financial counselling is provided to prevent
loan losses and over-indebtedness of clients. The
cooperative also offers insurance intermediation with the
National Insurance Institute.
The cooperative has no branch network and carries
out operations from the headquarters. New members
mostly come from referrals, encouraged by existing
members who greatly value the services provided by the
cooperative.
All employees of Maritza are engaged on long-term
contracts. All of them show a high commitment to the
mission of the cooperative.
BS Krosno is a cooperative bank founded by 13 members
in 1950 as a municipal savings bank. Currently the bank
numbers 1,562 members and grows in line with the needs
of the local community and its clients.
The bank provides financial services to farmers,
companies and individuals and is an essential partner
for local public authorities. Deposits from the municipal
budget constitute 18% of its liabilities. About 20% of the
current outstanding loans are addressed to municipal
administration entities.
9,951
5,818
10.43
Loan Portfolio
in K EUR as of 31.12.2014
Number of Active Clients
as of 31.12.2014
Average Loan Size
outstanding, in K EUR as of 31.12.2014
30%
Loans to Farmers
60%
Individual Client Deposits
To become a member, a physical or legal person has to
pay a small fee and buy a minimum of one share at a price
of EUR 37. With the small investment, local inhabitants
who become members of the bank obtain the right
to influence the direction of the bank’s development,
receive dividends and be elected for the bank bodies.
Unlike with commercial banks, they feel they can build a
financial institution geared to their needs locally.
BS Krosno Odrzanskie also takes responsibility for the
social development of the areas in which it is operating
by supporting local events and activities, and by funding
projects for youth integration.
out of the total deposits portfolio
2014 ANNUAL REPORT
11
Basic information from the financial statements is
summarized below. Full financial statements are provided
in Appendix 3.
Consolidated Balance Sheet
basic information
in EUR thousand
ASSETS
Net Portfolio
2013
2014
41,312
42,415
37,147
34,830
Gross Portfolio
37,297
35,230
Provision
-150
-400
2,200
2,150
1,852
5,329
Bonds to be Released
Cash and Cash Equivalents
Other Assets
EQUITY AND LIABILITIES
Equity
Debt to Investors
Other Liabilities
113
106
41,312
42,415
10,175
11,781
30,761
30,163
375
471
Consolidated Income
Statement
basic information
FINANCIALS
in EUR thousand
2013
2014
Financial Income
1,663
1,932
Operating Income (upfront fees)
65
85
Financial Expenses
-581
-625
NET FINANCIAL MARGIN
1,148
1,393
Operating Expenses
-501
-858
Depreciation
GROSS RESULT
Provisions
12
2014 ANNUAL REPORT
-13
-14
634
521
0
-243
Taxes (including WHT)
-152
-107
NET RESULT
483
170
Investors
CoopEst is the first financial instrument to combine primary European social economy investors
with international development financial institutions: IFC (World Bank Group) has subscribed
mezzanine bonds in 2006 allowing CoopEst to launch its operations and EIF (EIB Group) joined
in 2009 with bond and share subscription. As per the end of 2013, further to successive capital
subscriptions, EIF is second largest shareholder of the company.
CoopEst investors also include social and ethical banks and social economy financial instruments:
Short Presentation of the
main CoopEst Investors
Crédit Coopératif - Paris-Nanterre, FRANCE
Crédit Coopératif is a French cooperative banking group that offers to its
clients an extensive range of products and services.
Its clients and members are mostly corporate bodies: social economy
organizations, associations, cooperatives, mutual benefit associations,
unions, work councils, housing associations, companies affiliated to
organizations, small and medium-sized businesses. It also serves private
individuals who are closely associated with these businesses and
organizations. A banking partner for numerous non-profit organizations,
Crédit Coopératif is one of the pioneers of solidarity based finance, with
the largest existing range of ethical and shared banking products and
investments.
MACIF Insurance Group - Paris, FRANCE
MACIF is a mutual insurance company, the activities of which are guided by
sustainable development and a socially responsible approach. In that way
MACIF, through Participatory Governance, places its members in the center
of the enterprise undertakings and gives an essential role to its delegates.
EIF, EIB Group - Luxembourg, LUX
The European Investment Fund (EIF) is the European Union’s institution
specialized in small and medium-sized enterprise risk financing. The EIF’s
central mission is to support Europe’s small and medium-sized enterprises
by helping them to access finance. The EIF designs and develops equity
and guarantee instruments that specifically target this market segment. In
this role, the EIF fosters EU objectives in support of innovation, research
and regional development, entrepreneurship, growth, and employment.
IFC, World Bank Group - Washington DC, USA
International Finance Corporation (IFC), a member of the World Bank
Group, is the largest global development institution focused exclusively
on the private sector. IFC helps developing countries achieve sustainable
growth by financing investment, mobilizing capital in international financial
markets, and providing advisory services to businesses and governments.
2014 ANNUAL REPORT
13
CoopEst Shareholders
Shareholder
Country
Shareholding
Credit Cooperatif
FR
31.5%
European Investment Fund
EU
29.7%
Sberbank Europa
AT
9.7%
MACIF Participations
FR
8.1%
SOFICATRA
BE
6.3%
IDES Investissement
FR
6.2%
MACIF
FR
3.4%
Up Group
FR
1.7%
ESFIN
FR
1.6%
SEFEA
IT
1.5%
TISE
PL
1.0%
Federazione Trentina della
IT
0.1%
Cooperazione
In December 2014, new shares for an aggregate of
EUR 200,000 (premium included) were subscribed
by a new investor, the French cooperative Up Group
(former Chèque Déjeuner). Also in December 2014,
60 existing CoopEst shares held by the Italian
CFI were purchased by the Belgian SOFICATRA,
referred to as an a intra-group assignment of shares.
Most of the shareholders are represented in the
Board of Directors. Directors are directly taking
investment decisions as this gives them first-hand
insight into the financed projects and the ability to
ensure the mission focus.
The objective of CoopEst towards its shareholders
and investors is to offer a financial return in line
with market expectations considering the mission
and specific social focus. CoopEst distributed a
dividend out of the 2012 results. For the two last
years the shareholders decided to allocate the
profit to the retained earnings. At the end of 2014,
the maturing EUR 7.5 M Senior E bonds were
rolled over by the issuance of Senior J bonds for
a total amount of EUR 7 M subscribed by existing
bondholders.
14
2014 ANNUAL REPORT
CoopEst Bondholders
Looking Towards 2015
Bondholder
Country
Subscribed
Crédit Coopératif
FR
10,675
IFC
INT
7,000
SGB
PL
2,574
European Investment Fund
EU
2,375
MACIF Group
FR
1,950
Banca Etica
IT
1,000
IDES Investissement
FR
775
SOFICATRA
BE
675
APS Bank
MT
500
Credit Mutuel
FR
500
MAIF
FR
500
SEFEA
IT
350
Itas Vita
IT
300
ECOFI Investment
FR
300
Merkur Bank
DK
300
TISE
PL
150
Cultura Bank
NO
125
Improve Communication
Caisse Solidaire
FR
75
TOTAL
30,124
In 2015, CoopEst will strive to bring more added value to the communication
with its investors, client partners and all stakeholders in the microfinance,
social finance and impact investment sector (via the annual report,
refurbishment of the website, institutional presentation).
Amounts
IN K EUR
CoopEst offers a well-balanced financial structure
that must comply with the ratios 20-30-50 (capital,
mezzanine bonds, senior bonds). As of December
2014, these ratios were as follows:
Share Capital
EUR 10,293,000
25.5%
44.2%
30.3%
Mezzanine Bonds
EUR 12,274,000
Senior Bonds
EUR 17,850,000
Sustain Investment Activities
Considering that a part of the portfolio was repaid to face contractual
bond repayments in December 2014, the focus in 2015 is to generate slight
net portfolio growth by end of the year. To that purpose, investments in
2015 will target both existing clients and new clients, with a particular
focus on the Caucasus, further to the field missions conducted in 2014 and
early 2015.
Continuous Prudent Portfolio Monitoring
While pursuing our investment activities, a clear focus will remain on
portfolio quality with detailed monitoring of each client partner.
Improve Social Performance Management
The quarterly reporting commitments from our client partners now include
Social Performance. This will help us to evaluate more precisely on CoopEst
role as social accelerator for our client partners.
Important New Development: REDI - the Roma
Economic Development Initiative
The Roma Economic Development Initiative (REDI) is an important project
that is embedded into CoopEst and built in partnership with the Soros
Economic Development Funds (SEDF) and the Roma Initiative Office
(RIO), a part of Open Society Foundation. The global objective is to design
and develop a unique combination of dedicated technical assistance and
lending support for Roma entrepreneurs in Central and Eastern Europe.
This project will start in 2015 with a technical assistance component funded
partly by the Council of Europe Bank (CEB). It will focus first on Romania
and Bulgaria and will then be expanded to Macedonia and Serbia. This
development targets social inclusion of the Roma population by economic
integration.
Sustainability, Social
Performance and Impact
CoopEst’s primary goals are to see cooperative and
microfinance-focused institutions grow, innovate and
continuously improve services to their clients. Since its
first contact with potential partner institutions, CoopEst
ensures that the social profiles of our partners clearly
match with our investors’ mandate. We strongly believe
that financial sustainability is an essential requirement
for the success of microfinance but it is not sufficient to
achieve social missions. To be truly ‘social’ one needs to
demonstrate positive changes resulting from his actions
and implement socially responsible practices.
For this reason we have recently dedicated our efforts
to develop an original SPM approach to support our
clients and help them monitor their social behaviours. Our
global approach is based on the conviction that through
developing a healthy balance between financial and social
performance we may serve our clients, thus positively
impacting final beneficiaries. Through our investments,
we aim to strengthen access to responsible financial
services for income generating activities. Depending on
the development stage of the country where we operate,
our ultimate social goal is to fight exclusion or support
local development in order to have an impact on the wellbeing of final clients, their families and communities.
SOCIAL
PERFORMANCE
Inspired by cooperative models, CoopEst shows a deep
commitment to Cooperative Banks and Credit Unions,
which represent almost half of CoopEst’s investments.
CoopEst also supports MFIs promoting the development
of disadvantaged areas. The mixed composition of
CoopEst’s portfolio is the result of supporting various
types of partners with diverse social missions. Cooperative
Banks are committed to local development by supporting
local governments, microenterprises (including farmers)
and underbanked individuals through personal loans. On
the other hand, the MFIs supported by CoopEst promote
financial and social inclusion while sustaining small and
micro enterprises development.
2014 ANNUAL REPORT
15
Strengthening the Social
Traceability of our Portfolio:
the SPA Matrix
Because social commitment is one of the main drivers
of our investments, CoopEst continuously develops
its scheme for collecting, monitoring and reporting on
social performance.
At this stage, our SPA (Social Performance Assessment)
tool is based on social and impact indicators aligned with
the Universal Standards of Social Performance and with
the Global Impact Investing Network (GIIN) guidelines.
The SPA matrix is divided into 4 categories (Social goals,
Products and services, Outreach, Responsibility towards
staff) that cover the spectrum of social performance,
from analysis of the institution’s declared objectives to
the efficiency of their systems. The SPA also takes into
account the services provided by our clients and focuses
on their capacity to positively influence the life of clients
and employees.
The use of the SPA matrix throughout the investment
process helps us stay true to our mission by maximizing
the likelihood of investing in institutions providing
valuable services to end-target clients. The information
collected from our partner clients enables us to push
forward their SPM practices in fulfilling their own mission
and improving impact outcomes.
Moreover, we are planning to further align our procedures
with SPM, for example through the integration of all
SPA social indicators into the internal quarterly report
templates used for monitoring the portfolio. This will
give CoopEst a clear view on the progress of the social
achievements over the time, thus allowing us to regularly
update our operational strategies.
16
2014 ANNUAL REPORT
Positive Social and Economic Changes by MFIs
64%
Disbursed Loans with
Individual Amount < GNI
per Capita
75%
Loans for Financing
Income Generating
Activities
80%
Clients Retention Rate
15%
Staff Turnover Rate
BORROWERS BY GENDER
Male
43%
57%
Female
BORROWERS BY GEOGRAPHICAL CLASSIFICATION
45%
55%
Urban
Rural
97,000
Jobs Supported
Final Client Outreach
Products and Services
As of 31 December 2014, CoopEst partner MFIs served
more than 142,000 borrowers; 45% of them were living
in rural areas and 42% of the loans disbursed contributed
to the empowerment of women from poor households.
Looking at the depth of outreach, the average loan
distributed to final clients was equal to the 49.5% of GNI
per capita, thus highlighting a special focus towards “the
bottom of the pyramid”. This observation is supported
also by the fact that 64% of all the distributed loans
represented amounts below GNI per capita.
Our clients have a diversified product offering to their
final beneficiaries in order to match the needs of their
target groups. As of 31 December 31 2014, 99.8% of the
loans disbursed by our MFIs partner were microcredits.
68% of those loans were granted for income generating
activities, mostly business loans for micro and small
enterprises and tailored products for the agricultural
sector. Finally, the high Client Retention Rate (80%)
confirms the overall satisfaction of final beneficiaries
towards their institutions.
Aligning to International
Standards and Pursuing
Impact
TYPE OF LOANS
2%
Business
8%
Consumption / Personal
22%
45%
Agriculture
Housing
23%
Energy Efficiency
AVERAGE OUTSTANDING LOAN - evolution 2012 / 2014
25.000
20.000
15.000
10.000
5.000
0
Credit unions
2012
Banks
2013
MFIs
2014
Staff Treatment
CoopEst considers the partners’ capacity to adopt
socially-responsible behaviors with respect to their
employees and their local communities essential to longterm success. The low Staff Turnover Rate (15% in 2014)
shows high levels of job satisfaction. Moreover, looking at
the profile of staff by gender, balance is fully respected
by our client institutions with 51% of female employees.
This result also presents a good indicator for women
empowerment in local communities.
CoopEst commitment towards social responsibility has
been adopted by integrating the Universal Standards set
by the Social Performance Task Force (USSPM) into our
monitoring and reporting procedures. In 2013, CoopEst
endorsed the European Code of Good Conduct (ECGC)
for Microfinance Provision and we progressively embed
the ECGC guidelines into our due diligence process and
evaluation standards. In 2014, CoopEst actively promoted
the USSPM, the Smart Campaign and the EC Code of Good
Conduct among its clients. In fact, 76% of our partner
MFIs already endorsed the Smart Campaign or the EC
Code of Good Conduct and 53% report to the Mix Market.
Due to local banking regulations and consumer laws, we
expect that 100% of our Cooperative Banks and Credit
Unions partners are also compliant with Client Protection
Principles.
Focus on Cooperative Banks
The mission of all Polish cooperative banks in the
CoopEst portfolio is to support local development.
They strive to provide professional and comprehensive
financial services, meet the needs of their customers, and
support initiatives for the welfare and development of
their local community. As most of the cooperative bank
branches are located in the semi-urban and rural areas,
they are often the only financial institution in their area.
The cooperative banks are focused on microenterprises,
SMEs and individual consumers, but they also finance
investment projects implemented by local governments
(i.e. development of local infrastructure). Additionally,
they often distribute special credits to farmers, provide
energy efficiency loans or finance local environmental
projects (solar panels, wind farms, biomass, biogas,
sewage treatment plants). The social involvement of
cooperative banks typically covers activities such as
supporting local schools, sports clubs, cultural centers
and subsidizing holidays for children.
CoopEst operates in line with the double bottom line
approach but we aim to go further in our commitment for
acting as an impact driven organization. For this reason, we
are incorporating the recommendations made by the G8
Social Impact Investment Taskforce by integrating impact
as the 3rd main dimension of our operational strategy. Our
SPA matrix now includes some impact indicators extracted
from the Impact Reporting and Investment Standards
(IRIS). Developed by the Global Impact Investing Network,
IRIS is the catalog of generally-accepted performance
metrics that leading impact investors use to measure
social, environmental and financial outcomes. These
metrics represent a range of industries and are endorsed by
investors in each respective field, including microfinance.
Transparency is widely regulated by industry
requirements (i.e. Law on Consumer Credit, Law on
Payment Services). To disclose information, banks use
a number of channels: institution website, publications,
distributing information to shareholders. Privacy of client
data is regulated by the Law on Protection of Personal
Data and internal privacy policies. The description of
each banking product contains information about the
complaint procedure. Consumers can also complain
to the Consumer Ombudsman and to the Office of
Competition and Consumer Protection. Rules and
standards of consumer service are described in policies,
Code of Conduct or Code of Ethics.
Looking at impact through the lens of the IRIS indicators,
we observe that 70% of our partner MFIs have supported
97.644 full time jobs equivalent in 2014. At this stage, 18%
of our clients specifically collect data on the number of
new businesses created (614) extended to 3,263 when
considering business with less than 12 months activity.
It is also important for cooperative banks to create a
decent workplace for their employees. Staff turnover
is generally low, ca. 1-2% in most of the banks in the
CoopEst portfolio. Women constitute 70-90% of the
cooperative bank staff and they are also quite frequently
present in management positions.
2014 ANNUAL REPORT
17
Board of Directors
Appointed by the CoopEst General Assembly on the proposal of the investors, the Board of Directors consisted of
12 members as per the end of 2014. Aside from the representatives of the shareholders, one director is appointed
to represent the bondholders (Yaël Zlotowski from Caisse Solidaire). The Chairman is an independent position. The
European Investment Fund holds observer’s rights.
The directors were appointed in 2012 for a mandate of four years. Over the course of 2014, one new Director was
appointed further to the capital subscription by UP Group. All current mandates will end in 2016.
As of the end of 2014 the CoopEst Board of Directors consisted of:
APPENDIX 1
GOVERNANCE AND
ORGANISATION
GENERAL
ASSEMBLY
Francois Soulage
Karol Sachs
CHAIRMAN
VICE CHAIRMAN
Pierre Valentin CRÉDIT COOPÉRATIF
Hugues Fournier MACIF
DIRECTOR
DIRECTOR
Jacques Chevtchenko MACIF
Hugues Sibille IDES INVESTISSEMENT
DIRECTOR
DIRECTOR
Fabio Salviato SEFEA
Soficatra Represented by Jean Paul Feldbusch
DIRECTOR
DIRECTOR
Jean-David Barnezet SBERBANK
Lukas Röper SBERBANK
DIRECTOR resigned in 2015
DIRECTOR
Yassir Fichtali GROUP UP*
Yael Zlotowski CAISSE SOLIDAIRE
DIRECTOR since 23/12/2014
DIRECTOR Representative of senior bondholders
Samuel Clause EIF
IMPULSE
EUROPE
BOARD OF
DIRECTORS
OBSERVER
* former Chèque Dejeuner, France
18
2014 ANNUAL REPORT
CRÉDIT COOPÉRATIF
Impulse Europe is a Brussels-based investment manager
with special know-how on social investments and
microfinance institutions. From a core expertise in
cooperative equity financing, Impulse Europe developed
strong skills in managing alternative investment funds
providing tailored financing to microfinance and socially
driven financial institutions.
APPENDIX 2
COOPEST
INVESTMENT
ADVISER
With a team based in three different countries (Belgium,
Poland and France), Impulse Europe currently advises or
manages MIVs with a total aggregate investment capacity
of EUR 58 M. The geographical scope of Impulse activities
covers the European Union and neighbouring countries.
Impulse Europe has a dedicated team of multilingual and
multi-skilled professionals with extensive experience of
field and investments.
Considering its institutional background and now as part
of the Crédit Coopératif Group, Impulse Europe is deeply
rooted in both the social economy and the microfinance
sector. The excellent connections with the leading
microfinance and cooperative networks and our multiple
partnerships with respective stakeholders ensure a sound
understanding of the market Impulse Europe is working
in.
Impulse Europe developed its expertise in managing
microfinance dedicated funds from 2006 as Back-Office
Manager and now Investment Adviser of CoopEst and
CoopMed (a debt and sub-debt Fund for the Southern
and Eastern shores of the Mediterranean). The nil default
rate of the funds under management proves the aptitude
of the team to develop a safe and credible methodology
for identifying, appraising and monitoring financial
intermediaries.
2014 ANNUAL REPORT
19
Management and Team
Michał Radziwiłł
Michał has actively contributed to the creation
of
CoopEst
and
the
development
of
its
investment activity. Simultaneously to the duties
of CoopEst manager, he holds the position of
General Manager of TISE SA (Warsaw, Poland),
a company specializing in financing SMEs and
NGOs. Michał has a wide experience in various areas of finance and
audit. Michał graduated from the Economics and Finance Department
at Institut d’Etudes Politiques – Sciences Po (Paris) in 1991 and from the
Department of Applied Linguistics at Warsaw University in 1988. Bilingual
Polish/French, Michał speaks English, Russian and German.
Nicolas Gérard
Joanna Wardzińska
Nicolas joined CoopEst in 2012. Since 2007,
Joanna, Vice-President of TISE SA (Warsaw,
he has worked as an impact investment
Poland), supports CoopEst as a banking,
professional.
managing
cooperative sector and social economy expert.
the investment workflow (from prospection
Joanna has a wide range of experience, in
to the agreement), as well as financial and
particular in assessment of investment projects,
His
specialties
are
administrative management (reporting, internal
venture capital, SME and NGO financing. In 1994
control, and compliance – to name a few). He is a result-oriented,
she launched a venture capital fund with a portfolio of 15 SMEs. From
service-minded, and value-driven all-rounder – particularly motivated
1996 to 2007 Joanna worked in the BISE bank as a member and Vice-
by clear goals, responsibility, and social relevance. International at heart,
President of the management board, responsible for sales, product
Nicolas Gerard has two Master Degrees in Linguistics. He also has a
development, cooperation with guarantee funds, with the World
Master Degree in Management from the Solvay Business School (Free
Bank on local government financing, and with the Council of Europe
University of Brussels). He excels in planning and organizing, and as
Development Bank on financing SME development. Joanna graduated
such is a GTD aficionado. Nicolas is native in Dutch and French, and
from Warsaw University of Technology (Faculty of Fine Mechanics).
speaks English, Italian, Spanish, and Portuguese. He is currently learning
Native Polish, Joanna speaks English and French.
Polish.
Bruno Dunkel
Bruno
has
been
involved
in
CoopEst
Monika Czerwińska
Francesco Grieco
management since the start of the company
Francesco Grieco joined Impulse Europe as
in 2007 and was also closely involved with the
Social Performance Officer in September 2014.
investors’ negotiation preceding the launch of
From June 2012 to June 2014 Francesco was
CoopEst.
Program Manager at the European Microfinance
Bruno has 19 years of experience in SME
Network in Brussels. Previously he worked for 6
financing and service support at the European level. He has an extensive
years in Morocco where he served as Program
and successful track record of investments across a broad range of
Manager for the Development Cooperation Office of the Italian Embassy
sectors, including equity and the microfinance sector. Bruno holds a
carrying out an initiative aiming at strengthening local MFIs through
Degree in Economics from the Université Libre de Bruxelles and studied
technical and financial support. Francesco holds a master degree in
also Politics and European Studies at the Ludwig Maximilian Universität
International Relations from the University of Bologna and a master
in Munich. Native in French, Bruno speaks German, English and Italian.
degree in Microfinance from the University of Brussels. In 2008 he took
Monika joined CoopEst in 2007. She, performs
analyses of financial institutions, takes part in
due diligence and portfolio monitoring. Her
professional experience covers a wide range of
areas connected with the cooperative sector,
microfinance and social economy. Immediately
after her studies she started working for TISE, a Polish company financing
SMEs and NGOs Monika holds a Master Degree in Management from
SGGW (Warsaw University of Life Sciences) and in European Studies
from SGH (Warsaw School of Economics). Native Polish, Monika speaks
English and French.
part in the Boulder Microfinance Program of the ITCILO. Francesco
speaks Italian, French and English.
Izabela Norek
Anthony Degouve
Justine Palermo
Anthony joined the CoopEst team in 2011.
Manager in 2009. Her professional career has
always been linked to enterprise development,
Justine Palermo joined Impulse Europe as a
Finansol, the French federation dedicated to
including a start-up phase and 12 years of
Business Development Officer in November
the promotion of social finance and savings
managing
in
2014. Previous to Impulse Europe, Justine
products. In December 2010, Anthony joined
Poland. During that period, she gained an in-
worked at Adie International, international
the International Affairs Department at Crédit
depth knowledge of microfinance, supplemented by study tours of
subsidiary of the French MFI Adie, where she
Coopératif, a French cooperative bank member of the BPCE Group,
various MFIs in Europe, Asia and Latin America. She holds a Masters’
was in charge, under the direct supervision of
where he works as Project Manager in Microfinance and is in charge
degree in English philology and a post-graduate Diploma in Business
the President Maria Novak, to support the creation and development
of the follow-up of the bank’s shareholdings. Anthony graduated
from the Jagiellonian University in Krakow, Poland. She also attended
of microfinance institution in Europe and the Mediterranean basin
from Université Paris-Panthéon-Sorbonne in 2006 (Master Degree
trainings at Oregon State University and University of Colorado, USA.
(Belgium, Greece, Tunisia, Kosovo). Justine holds a master’s degree in
in Management) and from Solvay Business School – Brussels in 2008
Native Polish, Izabela is fluent in English, conversational in Russian and
International Public Management of Sciences-Po Paris. Justine speaks
(Master Degree in Microfinance). Native French, Anthony is fluent in
currently learning French.
French, English, and has knowledge of Chinese (Mandarin).
English and conversational in Spanish.
Izabela joined the CoopEst team as Risk
20
2014 ANNUAL REPORT
a
microfinance
organization
He started his professional career in 2009 at
CONSOLIDATED BALANCE SHEET
2013
ASSETS
42,415,066
Fixed Assets
83,950
71,963
Net Portfolio
37,147,287
34,829,647
Long Term
28,174,360
24,184,444
Short Term
9,122,927
11,045,203
Provision
-150,000
-400,000
Other Receivables
Bonds to Be Released
Other
APPENDIX 3
DETAILED
FINANCIAL
STATEMENTS
2014
41,312,663
Cash and Cash Equivalents
Deferred Expenses and Accrued Income
EQUITY AND LIABILITIES
Equity
2,220,685
2,176,883
2,200,000
2,150,000
20,685
26,883
1,852,461
5,329,337
8,281
7,236
41,312,663
42,415,066
10,175,428
11,780,989
Paid in Capital
8,755,000
10,163,250
Share Premium
263,180
289,995
Reserves
43,839
67,417
Retained Earnings
630,601
1,089,830
Current Year Profit
482,808
170,496
30,761,309
30,162,634
Long Term
23,261,309
30,162,634
Short Term
7,500,000
0
Other Liabilities
102,767
239,114
Accrued Expenses and Deferred Income
273,159
232,329
Debt to Investors
2014 ANNUAL REPORT
21
CONSOLIDATED INCOME STATEMENT
Financial Income
Operating Income (Upfront Fees)
Financial Expenses
NET FINANCIAL MARGIN
2013
2014
1,663,139
1,932,453
65,396
85,341
-580,833
-624,852
1,147,701
1,392,942
-500,909
-858,028
Services and Other Goods
-433,629
-826,493
Other Operating Expenses
-67,280
-31,535
Operating Expenses
Depreciation
Provisions on Portfolio
-12,803
-14,161
368
-243,190
PROFIT BEFORE TAX
634,358
277,563
Income Taxes
-151,549
-107,068
Withholding Tax
-97,420
-102,183
Corporate Income Tax
-54,129
-4,885
482,809
170,495
NET RESULT
In order to streamline CoopEst management, starting from January 2014, CoopEst signed a contract with Impulse Europe.
The previous management team was taken over by Impulse Europe, and the management fee is fixed at 1.5% of the
investment capacity.
22
2014 ANNUAL REPORT
In accordance with article 105 of the Belgian
Companies’ Act, CoopEst hereby states that the
following financial statements are an abridged
version of the full annual financial statements that
can be obtained from the company and which are
filed with the Banque Nationale de Belgique. This
abridged version does not contain all of the notes to
the company financial statements or the Statutory
Auditor’s report, which contained an unqualified
audit opinion in relation to the annual financial
statements of CoopEst.
Disclaimer
CoopEst has made every effort to ensure the accuracy of the information contained in this annual report and on CoopEst website referred to herein. However, CoopEst does not guarantee the appropriateness, completeness, accuracy or usefulness of this
information to the reader. The content of this information is also subject to change without prior notice.
This annual report may contain forward-looking statements about CoopEst strategies, beliefs and performance that are not historical facts. They are based on current expectations, estimates, and forecasts about CoopEst operations and reflect the beliefs
and assumptions made by the management. CoopEst, therefore, wishes to caution readers not to place undue reliance on the forward-looking statements for any kind of decisions. Furthermore, CoopEst undertakes no obligation to update any forwardlooking statements as a result of new information, future events or other developments. Neither CoopEst nor any of its shareholders, directors, officers or advisors makes any representation or warranty or gives any undertaking of any kind, express or
implied, or, to the extent permitted by applicable law, assumes any liability of any kind whatsoever, as to the information contained in, or otherwise in relation to, this document.
Furthermore, please be aware that the contents or URLs that are referred to in the annual report may be changed, suspended or removed without prior notice. Regardless of the reason, CoopEst assumes no responsibility, whatsoever, for any damage
resulting from the downloading of the data.
The information contained in this annual report and on the CoopEsts website has not been created to solicit investors to buy or sell shares nor bonds. Any investment decision and responsibility for investments rests solely with the user of this annual
report and /or the website content.
2014 ANNUAL REPORT
23
Av. Jules César 2 box 7
1150 Brussels – Belgium
T +32 2 770 15 62
www.coopest.eu – info@coopest.eu
Registered with the
Central Registry of Legal Entities
under n° 0876.926.025
Responsible Editor: François Soulage
The copyright to this annual report is held by CoopEst. Unauthorized reproduction or conversion is strictly prohibited. CoopEst assumes no responsibility
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