Triodos Microfinance Fund
Audited annual report 2014
TLIM
Microfinance
is the provision of financial
services to low-income
people in developing
countries. An inclusive
financial sector, where the
majority of people have
access to financial services,
provides a sustainable basis
for balanced socio-economic
development.
Triodos SICAV II Triodos Microfinance
Fund
Audited annual
report 2014
Triodos Microfinance Fund is a Sub-Fund of Triodos SICAV II (Société
d’Investissement à Capital Variable), which is established in the Grand
Duchy of Luxembourg. Triodos SICAV II, including its Sub-Funds, is
supervised by the Luxembourg regulator, the Commission de
Surveillance du Secteur Financier (CSSF). Triodos Investment
Management BV is the external alternative investment fund manager of
Triodos SICAV II- Triodos Microfinance Fund. Triodos Investment
Management BV is incorporated under the laws of the Netherlands and is
a wholly-owned subsidiary of Triodos Bank NV. Triodos Investment
Management BV is supervised by the Dutch regulator, Autoriteit
Financiële Markten.
The value of investments may fluctuate. Past performance is no
guarantee of future results.
No subscription can be accepted on the basis of the financial reports.
Subscriptions are only valid if they are made on the basis of the latest
published prospectus accompanied by the latest annual report and the
most recent semi-annual report, if published thereafter. The prospectus
is available free of charge at the registered office of Triodos SICAV II in
Luxembourg and from Triodos Bank: www.triodos.com.
3
Key figures
(amounts in EUR)
2014
2013
Total net asset value
(end of reporting period)
220,383,152 163,470,832
Income
11,646,611
7,964,260
Expenses
4,166,043
3,281,801
Net operating gain
7,480,568
4,682,459
Realised and unrealised gains/losses
on investments, swaps and foreign
exchange contracts
4,995,123
4,648,688
Net result
12,475,691
9,331,147
Ongoing charges per share class*
I-cap (EUR)
I-dis (EUR)
B-cap (EUR)
B-dis (EUR)
R-cap (EUR)
R-dis (EUR)
KI-cap (GBP)**
KI-dis (GBP)**
KB-cap (GBP)**
KB-dis (GBP)**
KR-cap (GBP)**
KR-dis (GBP)**
KZ-cap (GBP)***
KZ-dis (GBP)***
Z-cap (EUR)***
Z-dis (EUR)***
2012
2011
2010
122,404,100
7,049,159
2,402,639
4,646,520
91,679,563
4,844,089
1,598,322
3,245,767
59,977,763
3,062,474
1,181,811
1,880,663
3,959,727
8,606,247
1,337,110
4,582,877
616,267
2,496,930
2.05%
2.04%
2.50%
2.57%
2.72%
2.70%
2.00%
2.02%
2.64%
2.63%
2.63%
2.64%
2.26%
2.27%
2.35%
2.34%
2.05%
2.03%
2.72%
2.80%
2.84%
2.82%
2.03%
2.03%
2.67%
2.79%
2.75%
2.65%
2.20%
2.10%
2.29%
2.27%
2.08%
2.08%
2.90%
2.85%
2.79%
2.80%
2.07%
2.08%
2.78%
2.87%
2.64%
2.77%
n.a.
n.a.
n.a.
n.a.
2.10%
2.10%
2.83%
2.84%
2.83%
2.83%
2.05%
2.11%
2.81%
2.82%
2.82%
2.84%
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
31.12.2014
31.12.2013
31.12.2012
31.12.2011
31.12.2010
34.64
29.18
33.24
28.98
33.16
29.01
n.a.
22.24
25.63
32.68
28.57
31.57
28.35
31.49
28.39
26.12
21.71
24.33
30.49
27.68
29.66
27.47
29.58
27.51
24.27
20.96
22.74
28.06
26.54
27.50
26.35
27.43
26.39
22.31
19.71
21.07
26.45
25.91
26.11
25.80
26.04
25.77
21.10
20.97
20.06
Net asset value (NAV) per share
(amounts in EUR or GBP)
I-cap (EUR)
I-dis (EUR)
B-cap (EUR)
B-dis (EUR)
R-cap (EUR)
R-dis (EUR)
KI-cap (GBP)**
KI-dis (GBP)**
KB-cap (GBP)**
4
Net asset value (NAV) per share (continued)
(amounts in EUR or GBP)
KB-dis (GBP)**
KR-cap (GBP)**
KR-dis (GBP)**
KZ-cap (GBP)**
KZ-dis (GBP)**
Z-cap (EUR)
Z-dis (EUR)
31.12.2014
31.12.2013
31.12.2012
31.12.2011
31.12.2010
23.06
n.a.
22.25
21.78
21.48
26.91
26.77
22.53
24.38
21.72
20.57
20.54
25.45
25.45
21.79
22.82
20.97
n.a.
n.a.
n.a.
n.a.
20.65
21.12
19.76
n.a.
n.a.
n.a.
n.a.
19.77
20.08
20.81
n.a.
n.a.
n.a.
n.a.
Return*** based on NAV per share
Share class
1-year
return p.a.
3-year
return p.a.
5-year
return p.a.
Return
p.a. since
­inception
6.0%
6.0%
5.3%
5.3%
5.3%
5.3%
6.1%
5.3%
5.3%
5.4%
5.9%
6.0%
5.8%
5.8%
7.3%
7.3%
6.5%
6.5%
6.5%
6.5%
7.5%
6.7%
6.7%
6.7%
–
–
6.7%
6.7%
6.5%
6.5%
5.7%
5.7%
5.7%
5.7%
6.6%
–
–
5.8%
–
–
5.9%
5.9%
5.8%
5.7%
5.2%
5.2%
5.3%
5.3%
5.8%
5.4%
5.0%
5.1%
5.8%
6.2%
5.4%
5.4%
I-cap (EUR)
I-dis (EUR)
B-cap (EUR)
B-dis (EUR)
R-cap (EUR)
R-dis (EUR)
KI-dis (GBP)**
KB-cap (GBP)**
KB-dis (GBP)**
KR-dis (GBP)**
KZ-cap (GBP)**
KZ-dis (GBP)**
Z-cap (EUR)****
Z-dis (EUR)****
* The ongoing charges reflect the total normalised expenses charged to the result, divided by the average net asset value.
For the calculation of the average net asset value, each computation and publication of the net asset value is taken into
account. The ongoing charges are calculated over the twelve-month period ending at the end of the reporting period.
** The GBP share classes are hedged against the euro. The NAV per share is stated in GBP.
*** The return includes reinvestment of dividends, including costs.
**** This share class was launched in 2013. Due to a limited history historic returns are based on the R-share class, which
has an identical investment policy.
5
Table of Contents
Page
Introduction7
Report of the Board of Directors
8
General information
28
Summary of annual accounts 2014
30
Report of the Réviseur d'Entreprises Agréé
52
Appendix: microfinance institutions and banks in the portfolio
54
Management and administration
58
Colophon59
6
Introduction
An estimated 2.5 billion people, or close to half the
world’s population, have no access to formal
financial services. They are unable to open a bank
account, negotiate a loan to start a business or buy
insurance. Having access to these financial services
has a fundamental impact on the lives of millions of
people. It enables them to build their assets
gradually, develop micro, small and medium-sized
enterprises and improve their income earning
capacity, create employment and provide a financial
cushion for the future.
Mission
While there is still a long way to go to make sure that
everyone everywhere has access to a diverse range
of financial services, the past ten years have seen
tremendous growth in financial services being
offered to poorer people by an increasing number
and variety of financial institutions. The industry has
proved that low income populations are bankable
and can be offered financial services in a
sustainable way. On the back of the microfinance
industry’s success, commercial banks in developing
countries have partnered with microfinance
institutions to reach lower income customers. In
some markets, microfinance institutions (MFIs) have
transformed into licensed banks, enabling them to
further expand their services to small and
medium-sized enterprises or provide mortgages.
Triodos Microfinance Fund is an initiative of Triodos
Investment Management, a wholly-owned
subsidiary of Triodos Bank NV. Triodos Investment
Management started investing in developing
countries in 1994 because it recognised that
sustainable development, and addressing poverty
issues in particular, was a global issue. Since 1994,
assets under management in the microfinance
sector have increased to more than EUR 530 million,
making Triodos Investment Management one of the
leading investors in the industry. As an investor it
wishes to contribute to the development of a
sustainable financial sector in developing countries
based on fair pricing, transparency, access for all
and care for the earth.
Triodos Microfinance Fund, established in 2009 as a
sub-fund of Triodos SICAV II, enables investors to
actively contribute to the development of the
microfinance sector into an inclusive financial
sector in which the majority of people have access
to financial services. The fund provides loans and
equity to microfinance institutions and banks that
have a sustainable approach toward providing
financial services to those traditionally excluded.
Significant challenges remain, however, not least
because millions of people are still excluded. As the
microfinance sector becomes integrated into
mainstream financial systems, it also inherits many
of the industry’s existing problems. This means that
as the industry matures it must address its
challenges in a balanced way in order to shape an
inclusive financial services industry that keeps the
interests of its low-income clients at its core.
7
Report of the
Board of Directors
elevated risk. Triodos Microfinance Fund considers
this an important issue.
Triodos SICAV II-Triodos Microfinance Fund’s net
assets grew by 34.8% to EUR 220.4 million at the
end of 2014, while its investment portfolio reached a
value of EUR 192.9 million (87.5% of the fund’s net
assets). The fund increased the number of its
investments to 58 microfinance institutions (MFIs)
and Small and Medium-sized Enterprise (SME)
banks, two microfinance holding companies and one
investment in a fund, covering 31 countries across
Latin America, Asia, Africa, the Middle East and
North Africa and Eastern Europe. The MFIs in the
fund’s portfolio reached 8.2 million loan clients and
served to review 6.4 million savers. In 2014 the
return of the EUR-denominated institutional share
classes was 6.0% and the three-year average
annual return was 7.3%.
Development of the sector
The stable growth of investments in the
microfinance sector continued in 2014. This is
confirmed by Symbiotics’ annual sector report,
which states growth rates ranging from 9% in South
Asia and 13% in Latin America to 17% in Eastern
Europe & Central Asia and 18% in East Asia. The
investments in North Africa & the Middle East and
sub-Saharan Africa are much smaller in size, but an
important trend is that these investments do show
substantial growth, i.e. 44% and 34%, respectively.
This implies that MFIs and banks still have a
considerable funding requirement. International
investment funds are an important source of such
funding. According to the report by Symbiotics, the
investments by these funds totaled USD 9.9 billion
(EUR 8.2 billion); 7.6% of these total investments
was provided by the microfinance funds managed by
Triodos Investment Management, including Triodos
Microfinance Fund.
Market developments
Cautious recovery global economy
The world economy showed signs of recovery in
2014. Industrialised countries are now registering
modest economic growth again, mainly driven by
ample availability of cheap credit and reduced
government retrenchments. Financial sectors
remain vulnerable to shocks, as stricter capital
requirements need to be put into effect. In 2014,
developing countries and emerging markets
benefited from the improving economic situation in
industrialised countries. They still register positive
growth rates of around 5%.1 This growth trend is
expected to continue and will be driven mainly by
South and South-East Asia, as well as sub-Saharan
Africa.
Below the surface of these growth figures we find a
wide range of developments and diversity, which we
will illustrate by means of a number of examples.
Technology as an important driver of institutional
and market development
In order to distinguish themselves from other market
players, it is increasingly important for MFIs to take
advantage of technological possibilities. Smart use
of the available technology allows organisations to
better serve their clients with new products, but
also enables them to manage their risks and
operations more efficiently. In several countries we
are seeing that organisations are able to expand
their product offering or improve their access to
rural areas by using technology. Especially in East
Africa, the growing popularity of mobile banking is
putting traditional business models under pressure.
Even the poorest farming families in the most
remote areas can now transfer money and save or
borrow small amounts of money using their mobile
Due to the economic expansion, demand for
financial products and services in these countries
and markets continues to grow. This contributed to
the ongoing growth of MFIs and banks, including
those represented in the portfolio of Triodos
Microfinance Fund, in 2014. In most countries the
quality of the credit portfolios of these institutions
stabilised or improved. Over-crediting is still a risk
and some institutions and countries show a slightly
1
Source: IMF, World Economic Outlook
8
phones. This has a huge impact on their daily lives.
Many of the MFIs and banks in the portfolio of
Triodos Microfinance Fund use mobile phone
technology to expand their client base. Technology
also has an impact on the development of
alternative distribution channels. Petrol stations
and kiosks, for instance, are used as agents for
MFIs, which allows less densely populated areas to
be served more efficiently. In the sustainable energy
and agricultural sectors technological development
is also an important driver for the scalability of
companies. When assessing investment
opportunities, Triodos Microfinance Fund in
particular considers the extent to which
organisations take advantage of the opportunities
provided by technology.
34.8%
growth of the
fund’s net assets
in 2014
2015. Georgia has no significant ties with Russia and
is expected to grow by 5%. Other countries with
more extensive economies ties include Azerbaijan
(4.3% growth), Tajikistan (6%) and Kyrgyzstan (5%).
Especially the latter two countries have seen many
labourers emigrate to Russia. Rising unemployment
among the labour immigrants in Russia may well
cause the monthly transfers of money to their home
countries to fall sharply.
Regional developments in the Caucasus and
Central Asia
Over the past years, the microfinance sector has
evolved rapidly in the Caucasus and Central Asia. In
order to bring about further growth and
professionalisation, MFIs in these countries are
particularly in need of equity capital. In 2014,
Triodos Microfinance Fund became a shareholder in
Credo in Georgia, Arvand in Tadjzikistan and
KazMicroFinance in Kazachstan. Participations in
the equity capital of financial institutions constitute
an important pillar of Triodos Microfinance Fund's
investment policy. Such participations enable the
fund to establish a direct and long-term involvement
in the strategic policy pursued by those institutions.
Senior staff of Triodos Investment Management
represent the fund on the supervisory boards of
these institutions and thus contribute specific
knowledge and experience with respect to
sustainable banking. This contribution of banking
expertise is what clearly distinguishes Triodos
Microfinance Fund from other investors in the
sector.
Laws and regulations offer opportunities and
threats
As in Europe and the United States, governments in
developing countries and emerging markets are
becoming increasingly active with respect to
financial sector regulation. In general, the
environment in which institutions operate is steadily
improving - in terms of supervision as well as
infrastructure, such as credit bureaus. The revival of
the microfinance sector in India is remarkable. In
2010 the Indian central bank took decisive action in
reaction to a crisis in the federal state of Andra
Pradesh and imposed strict regulations with respect
to pricing and client protection. During the past year,
however, that same central bank presented a
different face when it created the opportunity for
MFIs to obtain a banking licence. Triodos
Microfinance Fund welcomes this development in
India, because this makes it possible for clients of
MFIs in India to gain access to a wider product range
and thus better fill their financial needs.
Currently, Central Asia is feeling the impact of the
economic crisis in Russia, which could cause
economic growth and the expansion of the financial
sector in neighbouring countries to slow down. The
IMF expects the Russian economy to stagnate in
Another interesting development is that in 2012,
after fifty years of isolation, Myanmar opened its
doors to foreign investors. Triodos Microfinance
9
The important role of local funding
Fund has since closely followed the developments in
this country and at the end of 2014 made an initial
investment in a participation aimed at setting up a
new microfinance institution. Given the underdevelopment of its financial sector, the country
offers many interesting investment opportunities,
both from a financial as from an impact perspective.
MFIs and SME banks increasingly attract local
funding because more institutions are granted a
licence to attract savings. Furthermore, we are
seeing that in developing countries public
confidence in the financial sector is growing, as a
result of which the total amount of savings is
increasing. Also, more financial institutions are now
able to issue bonds in their local financial markets.
Triodos Microfinance Fund plays an active part in
promoting the mobilisation of savings. The growing
balance sheet totals of the institutions and the
increase in local funding also led more and more
institutions trying to cover their remaining funding
requirement by calling on a smaller number of
strong (international) partners. In addition, there is
still a substantial demand for equity investments.
Triodos Microfinance Fund and the other funds
managed by Triodos Investment Management
together constitute a reliable, large and long-term
partner that is capable of meeting these needs.
In some countries regulation also tends to focus on
MFIs’ pricing, by setting interest rate ceilings. In
recent years, this occurred in Zambia, Bolivia and
various countries in West Africa. This could in theory
have a positive impact in an environment in which
interest rates are high, but regulations are often not
specific enough and therefore often also have
negative side-effects for the market and the
development of organisations. This could, for
instance, result in institutions focusing on clients
that are easy to serve, as a result of which clients in
rural areas find that their access to financial
services is diminished. In Colombia, the interest rate
ceiling is high, so there is no pressure to reduce
interest rates and in practice the ceiling appears to
result in less (price) competition.
Investments
Growing interest in the SME sector
Triodos Microfinance Fund’s investment portfolio
grew by 55.2% to EUR 192.9 million, which is 87.5%
of the fund’s net assets (2013: EUR 124.3 million).
The fund made 46 disbursements of both debt and
equity investments in 2014 (2013: 50). The
geographical spread was further diversified with the
addition of eight new countries: Jordan, Indonesia,
Nicaragua, Ivory Coast, Nigeria, Myanmar, Tunisia
and Uzbekistan.
In addition to lending to micro businesses, lending to
SMEs is a growing focus area. Entrepreneurs in this
sector, too, often find it difficult to get a loan. It is
estimated that over half of the SMEs in develop-ping
countries have little or no access to credit and
financial institutions.2 The total funding requirement
of this segment is estimated at USD 1 trillion (1,000
billion). MFIs play a part here, by growing in tandem
with the small businesses in their portfolios. Other
financial institutions actually focus more on the
SME segment. SMEs are an important source of job
creation in the economy and pay taxes, which are an
income source for local governments. SME banks
can also make an important contribution to making
the financial sector more sustainable, among other
things by also focusing on sustainable energy and
the agricultural sector. Triodos Microfinance Fund
therefore aims to fund MFIs as well as SME banks.
2
New debt investments
Asociacion Fondo de Desarrollo (FDL) is one of the
largest MFIs in Nicaragua. It aims to improve the
social and economic position of low-income groups,
especially in rural areas.
With a population of over 170 million inhabitants,
Nigeria is the largest microfinance market of Africa,
where still 80 million people have no or limited
access to financial services. AB Microfinance Bank
Source: IFC/World Bank
10
Microfinance institution Mitra Bisnis Keluarga
(MBK) in Indonesia issues group loans to female
entrepreneurs. MBK focuses on the lowest income
groups and is mainly active in West and Central
Java.
Nigeria strives to meet this unmet demand and aims
to be the leading provider of straightforward and
transparent financial services to micro and small
entrepreneurs.
Banco Itapúa is a niche bank in Paraguay with a
strong focus on small and medium-sized
agricultural producers, a group that is largely
unattended by the larger banks. In many cases
Banco Itapúa has been one of the first loan
providers for farmers.
Only 12% to 15% of the 23 million people in Ivory
Coast have access to finance. MicroCred Ivory
Coast offers a range of financial products and
services, ranging from credit and savings products
to ATM prepaid cards, remittances and micro
insurance.
Banco Pichincha is Ecuador’s biggest bank. It has
the most extensive branch and ATM network and is
the country’s largest provider of micro- and SME
finance. With Credifé it launched one of the first
microfinance programs in the country.
Sonata Finance (Sonata), founded in 2006, is a
credit-only microfinance institution that operates in
the northern states of India. Sonata offers mainly
group loans to women living in rural areas. In
addition, Sonata offers remittance services.
Established in 2008, Crezcamos in Colombia
supports rural development by offering a range of
credit and insurance products to small businesses
and entrepreneurs. By focusing on long-term
relationships with these clients, Crezcamos has
grown to serve over 68,000 clients across the rural
provinces of northern Colombia.
Utkarsh Microfinance (Utkarsh) is active in the
north of India, where poverty is still a pervasive
concern and demand for basic financial services is
largely unmet. Utkarsh focuses on individual
lending, in addition to its group lending activities.
Vitas Jordan is a non-bank financial institution
founded as the Middle East Micro Credit Company
and has since 1998 become one of the largest MFIs
in the country. The institution offers a diverse
selection of loan products, ranging from microloans
to female entrepreneurs, to medium-sized loans to
small factories.
Enda is the fund’s first investment in Tunisia. The
company started its operations in 1995 with the
objective of improving the quality of life for rural
Tunisians. Almost 20 years later, Enda has become a
leading MFI in Tunisia.
ESAF Microfinance and Investment Private Limited
(EMFIL) is the leading MFI in the South Indian state
of Kerala. The company provides its clients access
to finance, low cost healthcare and housing, offers
fair prices for their agro produce, and trains women
in rural and tribal areas to make handicrafts.
Equity
The equity portfolio increased by 26.6% from EUR
32.5 million to EUR 41.2 million and represents
18.7% of the net assets of the fund at December 31,
2014 (19.9% at December 31, 2013).
Microfinance institution Financiera FAMA (FAMA)
has been active in Nicaragua since 1991. FAMA
specifically focuses on female entrepreneurs in the
urban areas of Nicaragua.
The partial equity sale in February 2014 of 1.02% of
the shares in ACLEDA Bank in Cambodia and the
sale of the entire stake of 0.72% in Peruvian
Mibanco resulted in a significant decline of the
equity portfolio to below 15%. Through new equity
investments, particularly in MFIs in Central Asia and
the Caucasus, in the second half of the year, the
Established in 1991, Hamkorbank provides clients
access to a wide variety of financial products,
including micro and SME loans. This is the first loan
in Uzbekistan for Triodos Microfinance Fund.
11
organization in Kazakhstan, with a wide regional
network of 74 subdivisions and offices and 16
branches, and has a net loan portfolio of USD 118
million and over 98,000 clients. The additional funds
will allow KMF to implement its development plan
for the next five years aimed at offering a more
diversified range of services to clients in
Kazakhstan.
fund has largely succeeded in compensating for
both divestments.
Furthermore, the fund also participated in a capital
call for India Financial Inclusion Fund (IFIF). The total
exposure to ACLEDA Bank was reduced to 10.7% of
the net asset value of the fund on December 31,
2014 (year-end 2013: 15.6%). The fund remains
involved in Mibanco through a subordinated loan.
In anticipation of the microfinance licence for Early
Dawn Microfinance, a new microfinance company in
Myanmar, the fund also made a small equity
investment in a Singapore holding company. The
investment in Early Dawn is expected to materialize
in the first quarter of 2015.
New equity investments
AccessHolding is a German holding company that
provides financial services to micro and small and
medium-sized enterprises. AccessHolding has a
leading network, which includes six MFIs in
Sub-Saharan Africa and two in Central Asia, and has
a net loan portfolio of EUR 721 million. Through the
investment, the fund will support AccessHolding’s
growth by enabling it to scale up current operations
and expand into new countries. A senior
representative of Triodos will join the board of
directors.
Provisions
PRIZMA Mikro in Bosnia-Herzegovina has been
under intensive monitoring since early 2014. In spite
of the efforts and collaboration with international
and local lenders and management the company’s
equity turned negative in September. The fund has
provisioned 90% of the loan outstanding.
Microcredit Deposit-Taking Organisation Arvand LLC
(Arvand) in Tajikistan is the fund’s first equity
investment in Central Asia. The microfinance market
opportunity is clearly present, as evidenced by low
banking sector penetration (22%) and a high
percentage of (micro-)entrepreneurs without access
to credit. A senior co-worker of Triodos represents
Triodos Microfinance Fund on the Board of Directors
of Arvand.
In recent months, the government of Azerbaijan has
stepped up its offensive against human rights
activists and non-governmental organisations
(NGOs). As a result, bank accounts have been frozen
on court orders. This has affected Azercredit, one of
the fund’s investee companies in Azerbaijan. Triodos
Microfinance Fund has entered into a standstill
agreement together with all other international
lenders while awaiting the outcome of the legal
procedures. No provisions were taken during the
course of 2014. Depending on the outcome of the
legal procedures, this might change in 2015.
Together with Triodos Fair Share Fund,
AccessHolding and ResponsAbility, Triodos
Microfinance Fund has acquired the ownership of
Microfinance Organization Credo in Georgia. Credo
is the leading microfinance organization in Georgia,
with a nationwide network of 48 branches, a net loan
portfolio of USD 149 million and 153,000 clients.
Triodos Microfinance Fund holds a 9.9% equity
stake and will join the board of directors.
A quantitative description of the MFIs in the
portfolio can be found on page 54. A short
description of all MFIs can also be found under the
header ‘Know where your money goes’ on
www.triodos.com.
Triodos Microfinance Fund has taken a 6.8% equity
stake in Microcredit Organization KMF LLC and will
play an active role in the governance of the
institution. KMF is the largest microfinance
12
Portfolio data
December 31, 2014
Asset allocation (% of net asset value),
December 31, 2014
Net Asset Value
EUR 220,383,152
Microfinance portfolio
EUR 192,889,584
Number of investment funds
1
Number of MFIs
58
Number of microfinance holdings
2
Number of loans
83
Number of subordinated loans
9
Number of equity investments
8
Number of countries
31
debt 62.5%
equity 18.7%
liquidity and other
current assets 12.5%
subordinated debt 6.3%
Source: Triodos Investment Management
Source: Triodos Investment Management
Currency exposure (% of net asset value)
December 31, 2014
Five largest outstanding positions
(% of net asset value), December 31, 2014
CurrencyPercentage
Institution
USD51.0%
INR6.1%
EUR4.9%
PEN4.4%
KZT4.2%
GEL2.0%
GTQ1.4%
DOP1.4%
XOF1.4%
TJS1.3%
TND1.2%
PYG1.1%
AZN1.0%
BDT0.9%
MNT0.9%
IDR0.8%
NGN0.7%
UGX0.7%
JOD0.6%
KGS0.5%
COP0.5%
GHS0.4%
TZS0.2%
ACLEDA Bank
Cambodia
10.7%
Credo Georgia4.4%
KMF
Kazakhstan4.2%
Compartamos
FinancieraPeru
3.4%
Finca Azerbaijan
Azerbaijan
3.0%
CountryPercentage
Source: Triodos Investment Management
Source: Triodos Investment Management
13
14
KOMPANION FINANCIAL GROUP
With about 150 offices across the country and over 100,000 clients, Kompanion
is one of the top microfinance institutions in Kyrgyzstan. The organisation has
introduced expansive programmes that foster growth of micro-and smallbusinesses and preservation of natural resources, as well as good
management practices.
Kompanion is closely tied to the communities it serves and has designed and
implemented high impact community projects. It also offers technical support
to clients with sustainable agriculture needs.
15
Results
Country allocation (% of net asset value),
December 31, 2014
Financial results
CountryPercentage
The net result of Triodos Microfinance Fund for 2014
amounts to EUR 12.5 million (2013: EUR 9.3 million).
The fund’s interest income from loan investments
increased by 59.6% to EUR 10.4 million in 2014
(2013: EUR 6.5 million), which is in line with the
growth rate of the portfolio. In addition, the fund
received dividend income from two equity
investments, amounting to EUR 0.8 million
(2013: EUR 0.9 million).
Cambodia13.6%
Peru8.3%
India7.9%
Kyrgyzstan 5.8%
Azerbaijan5.6%
Tajikistan5.4%
Paraguay5.4%
Georgia 4.3%
Kazakhstan 4.2%
Ecuador3.8%
Sri Lanka
3.6%
Mongolia2.4%
Guatemala1.8%
Dominican Republic
1.4%
Tunisia1.2%
Ivory Coast
1.1%
Tanzania1.1%
Uganda1.1%
Uzbekistan0.9%
Laos0.9%
Bangladesh0.9%
Indonesia0.8%
Nigeria0.7%
Jordan0.6%
Nicaragua0.5%
Colombia0.5%
Ghana0.4%
Congo Democratic Republic
0.4%
Senegal0.2%
Bosnia Herzegovina
0.1%
Worldwide2.6%
The fund realised a gain on investments of
EUR 5.1 million as a result of the sale of shares in
ACLEDA Bank. The realised losses on investments
are related to the sale of shares in Mibanco
(EUR 1.5 million). The net increase in the value of
the investments is an exceptional result:
EUR 13.6 million. This amount consists of a gross
EUR 20.8 million increase in valuations, of which
EUR 14.5 million from exchange rate differences as a
result of the volatile currency markets towards the
end of 2014. The gross amount is adjusted for
EUR 6.2 million, consisting of a reclassification of
EUR 3.9 million to realised gains and losses resulting
from the sale of the two equity investments and
EUR 2.3 million provisions that have been taken on
non-performing loans.
The fund made a net unrealised loss of EUR 11.7
million (2013: unrealised gains of EUR 3.4 million) on
foreign exchange contracts during the same period.
These losses have to a large extent nullified the
appreciation of the portfolio as a result of foreign
exchange fluctuations. Total expenses in 2014 came
to EUR 4.2 million (2013: EUR 3.3 million). The bulk of
these expenses relates to management, distribution
and service fees, which rose to EUR 3.6 million
(2013: EUR 2.9 million) and are in line with the
growth of the assets under management.
Total87.5%
Source: Triodos Investment Management, all data as of
December 31, 2014
Return
The return in the EUR-denominated institutional
share class was 6.0% (2013: 7.2%). In the first six
months of the year, the fund had relatively high
16
Return* based on net asset value (NAV) per share
Share class
1-year
return p.a.
3-year
return p.a.
5-year
return p.a.
Return
p.a. since
­inception
5.3%
5.3%
6.0%
6.0%
5.3%
5.3%
5.8%
5.8%
5.3%
5.3%
6.1%
5.4%
5.9%
6.0%
6.5%
6.5%
7.3%
7.3%
6.5%
6.5%
6.7%
6.7%
6.7%
6.7%
7.5%
6.7%
-
5.7%
5.7%
6.5%
6.5%
5.7%
5.7%
5.9%
5.9%
6.6%
5.8%
-
5.2%
5.2%
5.8%
5.7%
5.3%
5.3%
5.4%
5.4%
5.4%
5.0%
5.8%
5.1%
5.8%
6.2%
B-cap (EUR)
B-dis (EUR)
I-cap (EUR)
I-dis (EUR)
R-cap (EUR)
R-dis (EUR)
Z-cap (EUR)**
Z-dis (EUR)**
KB-cap (GBP)***
KB-dis (GBP)***
KI-dis (GBP)***
KR-dis (GBP)***
KZ-cap (GBP)***
KZ-dis (GBP)***
* The return includes reinvestment of dividends, including costs.
**The Z-share class has a limited history. Historic returns are based on the similar R-share class which has an identical
investment policy.
*** The GPB-denominated share classes are hedged against the euro.
Source: RBC Investor Services Bank S.A. and Triodos Investment Management
year-end was 12.5%. Liquidity levels were higher
during the first 6 months of the year and came down
during the last 6 months as the result of higher
disbursement levels. The fund has approved and
committed investments of EUR 8.7 million as per
December 31, 2014, including EUR 7.7 million in new
equity investments.
liquidity levels as a result of the sale of the two
equity investments and strong inflows from
investors. This additional inflow was almost fully
absorbed in the second half of the year, when
disbursements of new investments peaked and led
to a higher investment ratio and increased returns in
the same period. The return was furthermore
negatively affected by the provision on a
non-performing loan in Bosnia Herzegovina.
Differences in the performance of share classes are
mainly attributable to the different cost bases, as
explained below in the Costs section.
Costs
The largest item in the cost structure of Triodos
Microfinance Fund is the management fee paid to
the Investment Manager, Triodos Investment
Management. Triodos Investment Management uses
this fee primarily to cover staff costs, including
travel expenses incurred in connection with
providing new finance facilities and managing
Liquidity
Triodos Microfinance Fund aims to retain a minimum
of 10% of its net asset value in cash or cash
equivalents, in order to facilitate redemptions in the
fund. The fund’s liquidity and other current assets at
17
Transparency
existing finance facilities. This is generally quite an
intensive process, especially the management of the
fund’s equity investments, which requires frequent
trips to the countries where investments are made.
Triodos Microfinance Fund analyses how the MFI
handles over-indebtedness and transparency. The
fund also assesses how the MFI aligns credits with
the repayment capacity of clients, what policy the
MFI pursues with respect to interest rates and how
products and the related liabilities are
communicated to the client. The Client Protection
Principles provide a detailed description of these
elements. 92% of the MFIs represented in the
portfolio (2013: 88%) have signed these principles.
The ongoing charges for Triodos Microfinance Fund,
which include the management fee, ranged from
2.00% to 2.05% for institutional share classes and
from 2.26% to 2.72% for the other share classes.
More detailed information on management fees and
ongoing charges can be found on pages 42 and 43.
Sustainability as a core value
Fair and transparent interest rates
Triodos Microfinance Fund analyses how the MFI
handles over-indebtedness and transparency. The
fund also assesses how the MFI aligns credits with
the repayment capacity of clients, what policy the
MFI pursues with respect to interest rates and how
products and the related liabilities are
communicated to the client. The Client Protection
Principles provide a detailed description of these
elements. 92% of the MFIs represented in the
portfolio (2013: 88%) have signed these principles.
Triodos Microfinance Fund only invests in financial
institutions that aim for a well-balanced mix
between people, planet, and profit. This basis for
the investment policy pursued by Triodos
Microfinance Fund is anchored in the analysis and
decision making process.
The fund uses a scorecard for this sustainability
assessment. This tool was first developed in 2010.
Since then, the sector has evolved and the fund
invests in a broader range of institutions, from pure
MFIs to banks that also provide loans to small and
medium enterprises. To better assess these
different institutions, the tool was reviewed and
updated in 2014. The new version will be launched in
2015. As part of the review process, relevant
industry initiatives, such as UNPRI Principles for
Investors in Inclusive Finance, the Universal
Standards for Social Performance Management,
and the SMART Campaign’s Client Protection
Principles were taken into account.
Financial education
Financial education and training of (potential)
clients is becoming increasingly important for MFIs.
KMF LLC, in Kazakhstan, provides financial literacy
training to both clients and non-clients, giving
non-clients the opportunity to become clients after
they complete the training.
47%
The new scorecard consists of 25 Environmental,
Social and Governance (ESG) related questions,
grouped in five dimensions: Governance,
Management & Staff, Product Range, Responsible
Finance and Environment.
Below, we describe in more detail how Triodos
Microfinance Fund analyses and assesses these
themes, using examples from the portfolio.
percentage
of clients
in rural areas
18
Pichincha, in Ecuador, makes a great example of
how this works in practice. In three years time, this
bank implemented 15,000 non-bank correspondents
in rural Ecuador and managed to give 300,000
previously unbanked people access to savings
accounts and debit cards.
Diverse product offering
Microfinance customers are interested in more than
just taking out loans. They also want to be able to
save, take out insurance and transfer money. A
growing number of MFIs is able to meet these
requirements. Caja Rural de Ahorra y Credito
Quillabamba (CREDINKA) in Peru, for example, is
active in regions where access to finance is limited
and where poverty levels are among the highest in
the country. The institution developed a community
savings scheme for remote Indian communities in
the Andes and a savings product for women in the
Puno-Cusco corridor.
Portfolio allocation per market segment
Microcredit 35%
Loans to SMEs 31%
Consumer credit 21%
Other forms of credit 13%
% of MFIs offering other financial services
Source: Triodos Investment Management
Agricultural sector
Money transfer services 69%
A large part of the population of developing and
emerging countries makes its income in the
agricultural sector. This sector, in particular, has
only very limited access to adequate financial
products. Uncertain cash flows and higher risks,
such as failed harvests and natural disasters, make
MFIs cautious about providing credit to this sector.
However, Triodos Microfinance Fund encourages
MFIs to service this extremely important sector and
uses its international network to support MFIs here.
Insurance products 67%
Savings products 56%
Source: Triodos Investment Management
Small and medium-sized businesses
Triodos Microfinance Fund assesses whether MFIs
provide loans to SMEs. Such businesses contribute
directly to the development of the local economy
through the employment that they provide and the
taxes that they pay. A growing number of MFIs in the
fund’s portfolio focus on this target group, including
Advans Banque Congo. This young institution is part
of the Advans network and started operations in
2009. It targets SMEs in and around Kinshasa.
As part of this initiative, the fund also highlights the
importance of sustainable agricultural practices.
Examples of institutions in the portfolio that focus
specifically on this sector are ESAF Microfinance
and Investment Private Limited in India (with 70% of
its loan portfolio in agriculture), Kompanion in
Kyrgyzstan (70%), and Contactar in Colombia (60%).
Alternative distribution channels
Attention for the environment
Alternative distribution channels, such as mobile
phones and service counters, are becoming
increasingly important. These channels make
financial services available for more people, also in
less accessible areas, and at lower costs. Banco
Triodos Microfinance Fund also considers the
efforts by MFIs to make environmental protection a
priority. Raising awareness is the first step. Many
MFIs in the fund’s portfolio organise training
19
Microfinance portfolio Triodos Microfinance Fund
31 December 2014
GLOBAL
Access Microfinance Holding
FINCA Microfinance Holding Company
BOSNIA AND
HERZEGOVINA l
Prizma Mikro
DOMINICAN
REPUBLIC l
Banco Ademi
TUNISIA l
ENDA
GUATEMALA l
FUNDEA
Génesis Empresarial
JORDAN l
Vitas Jordan
NICARAGUA l
FAMA
FDL
COLOMBIA l
Contactar
Crezcamos
SENEGAL l
MicroCred
Sénégal
ECUADOR l
Banco Pichincha
Banco Solidario
IVORY COAST l
MicroCred
PERU l
Compartamos
Financiera
Credinka
Edpyme Raíz
Mibanco
ProEmpresa
GHANA l
Advans Banque
Ghana
NIGERIA l
AB Microfinance Bank
PARAGUAY l
Banco Itapua
Visión Banco
CONGO l
Advans Banque Congo
20
GEORGIA l
Credo
AZERBAIJAN l
AccessBank
Azer Credit
FINCA Azerbaijan
KAZAKHSTAN l
KMF LLC
KYRGYSTAN l
Bai Tushum
FINCA Kyrgyzstan
Kompanion
MONGOLIA l
XacBank
TAJIKISTAN l
Arvand
Bank Eskhata
First Microfinance
Bank
IMON
UZBEKISTAN l
Hamkor Bank
LAO PDR l
ACLEDA Bank Lao
CAMBODIA l
ACLEDA Bank
Amret
PRASAC
Sathapana
BANGLADESH l
BRAC Bank
INDONESIA l
MBK
SRI LANKA l
Commercial Leasing
Company
LOLC Micro Credit
TANZANIA l
AccessBank
Tanzania
BRAC Tanzania
UGANDA l
BRAC Uganda
Centenary Bank
INDIA l
EMFIL
Grameen Koota
India Financial
Inclusion Fund
Sonata Finance
Utkarsh
Vistaar Financial
Services
21
% of MFIs in the portfolio focussing on the
environment
courses and other activities in order to educate their
clients about environmental protection and the
contribution that they can make.
Exclusion list* 85%
Triodos Microfinance Fund also analyses whether
MFIs offer green products and services aimed at
sustainable farming and energy production.
Examples are loans for biogas installations, solar
panels, and coffee tree renovation. Fondo de
Desarrollo Local (FDL) in Nicaragua is a great
example, with the highest score on environment in
our sustainability scorecard and more than 10% of
its loan portfolio in ‘green’ products.
Green office procedures 58%
Donations for environmental
protection 31%
Green credit products 29%
Environmental training for
customers 27%
*List of exclusion criteria used by MFIs when deciding
whether or not to provide loans to customers.
Source: Triodos Investment Management
The table on pages 54-57 shows a number of core
indicators for each of the MFIs in the portfolio of
Triodos Microfinance Fund. Examples include the
number of savings and loan clients, the average loan
amount and the percentage of female clients and
clients in rural areas. The table below shows these
indicators on the fund level.
Core indicators MFIs in the portfolio of Triodos Microfinance Fund
Total number of loan clients reached by MFIs in the portfolio
Total number of savings clients reached by MFIs in the portfolio
Average loan (EUR)
Percentage of female loan clients
Percentage of clients in rural areas
Number of people employed by MFIs in the portfolio
Source: Triodos Investment Management
22
2014
2013
8,186,334
6,384,915
1,390
70%
47%
86,034
5,771,464
5,818,281
1,456
62%
49%
66,700
Risk
geographical exposure across a larger number of
countries. In 2014, Triodos Microfinance Fund added
eight new countries to the portfolio. The fund
noticed a general increase in country risk in the
Caucasus and central Asia as a side effect of the
Ukraine-Russia crisis. The politically heightened
attention for the role of foreign human rights NGOs
in Azerbaijan has led to an investigation and
blocking of the accounts of one of the MFIs in the
portfolio. The portfolio management team is
following the situation closely and has adjusted the
outlook and exposure limits for countries in the
region.
Please refer to the table on page 16 for more details
about the diversification across different countries.
Triodos Microfinance Fund has a relatively high risk
profile, mainly due to its sector-specific focus. The
main risks that have been identified are described in
detail in the fund’s prospectus. Some of the risks are
highlighted below.
Country and political risk
Triodos Microfinance Fund invests in countries that
may be subject to substantial political risks,
countries that might be in an economic recession,
with perhaps high and rapidly fluctuating inflation,
countries that often have a poorly developed legal
system and countries where the standards for
financial auditing and reporting may not always be
in line with internationally accepted standards.
Credit risk
Credit risk remains the most fundamental risk to
which the lending industry in general and the
microfinance industry in particular is exposed.
Portfolio At Risk (PAR) ratios (the percentage of
non-performing loans in the total loan portfolio) of
MFIs in the Triodos Microfinance Fund portfolio are
closely monitored on a continuous basis. At fund
level, the weighted average PAR over thirty days
To limit the country risk, Triodos Microfinance Fund
has set the upper limit for investments in any
country at 20% of its assets. The country with the
highest exposure is currently Cambodia, where
13.6% of the fund´s assets are invested. This is less
than in 2013, as a result of the partial exit of ACLEDA
Bank. Country risks are mitigated by diversifying the
160
100
140
90
80
(EUR x million)
120
70
100
60
80
50
60
40
30
40
20
20
0
10
1
3
6
12
18
24
30
36
42
48
54
60
66
72
78
84
Cumulative nominal amout expiring investments December 2014 (left-hand scale)
Cumulative percentageof expiring investments Decmebr 2014 (right-hand scale)
Source: Triodos Investment Management
23
90
>90
0
(% of total invested portfolio)
Maturity of the funds' debt portfolio (as per December 31, 2014)
currencies that the fund has invested in appreciated
against the euro in 2014. The exchange rate gains on
the investment portfolio were largely nullified by the
losses on hedging contracts.
stood at 3.5% at year-end 2014, the same as at
year-end 2013.
Liquidity risk
Triodos Microfinance Fund invests in assets that are
not listed on a stock exchange and that are relatively
illiquid. In view of its open-end structure (enabling
subscription and redemption of shares on a monthly
basis), this could potentially lead to a situation in
which the fund needs to temporarily close for
redemptions. There is also the risk that at some
point in time the fund may be unable to obtain
sufficient resources to fulfill its financial
obligations. This risk is mitigated by maintaining at
least 10% of its capital in liquid assets or arrange
sufficient other guarantees. The fund conducts
regular analysis on the maturity of the debt
portfolio. The graph on page 23 shows that on
December 31, 2014, the 70.9% of the value of the
outstanding loan portfolio will be due within 30
months.
Outlook
In 2015, Triodos Microfinance Fund aims to grow its
assets under management to EUR 265 million. The
fund sees strong demand for financing and will
continue to add new investments to the portfolio
and further diversify its country exposure. New
equity investments are expected to materialise,
increasing the total equity share in the fund’s
portfolio to approximately 20%. The fund will
continue to target a broad range of institutions
active in the financial inclusion sphere, such as
(traditional) MFIs, SME banks and micro-leasing
companies. The fund plans to further diversify its
regional exposure, both in terms of debt and equity.
The fund expects a positive return that will be in line
with the five year average annual return. The actual
return will be determined partly by the change in
value of participations, provisions and exchange rate
results on unhedged local currencies.
Currency risk
Triodos Microfinance Fund is exposed to possible
losses as a result of fluctuations in the value of or
income from assets denominated in foreign
currencies. The fund may invest up to 90% of its
total assets in non-EUR denominated investments
with a maximum exposure of 60% in unhedged local
currency investments (including the equity
exposures). Triodos Microfinance Fund manages its
currency exposure risk by hedging its net foreign
currency exposure to the extent deemed appropriate
and possible. As hedging is not always possible or
cost-efficient, this implies a risk of additional
volatility in case of large fluctuations on the
international foreign exchange market. At year-end
2014, 31.7% (2013: 20.7%) of the fund’s net assets
were invested in local currencies, while 17.0% (2013:
10.5%) of the fund’s net assets were exposed to
open currency risk. The share classes denominated
in sterling are hedged against the euro. In the last
quarter of 2014, the US dollar and emerging market
currencies were subject to sharp fluctuations that
affected the fund’s performance. All major
General Developments Triodos SICAV II
Alternative Investment Fund Managers Directive
(AIFMD)
Following the implementation of the Alternative
Investment Fund Managers Directive (AIFMD) on
July 22, 2014, the Board of Directors appointed
Triodos Investment Management, having previously
acted as the Investment Manager of Triodos SICAV II,
as its external Alternative Investment Manager
within the meaning of article 4 of the AIFM Law (the
“AIFM”). The distribution structure has also been
modified further to the appointment of the AIFM; the
Board of Directors appointed Triodos Investment
Management as distributor. The Board of Directors
continued its relationship with RBC Investor
Services Bank S.A. as depositary bank and paying
24
investments in a sub-fund of Triodos SICAV II require
a medium- to long-term investment horizon of the
investor.
agent. The depositary bank and paying agent
agreement as well as the investment fund services
agreement with RBC Investor Services Bank S.A.
have been updated to comply with the AIFM
environment. An updated prospectus incorporating
the AIFM changes was published on August 2014.
On October 16, 2014, an extraordinary general
meeting of shareholders adopted the amendments
to the articles of incorporation of Triodos SICAV II
incorporating the required AIFM elements.
In general, the sub-funds will only take on risks that
are deemed reasonable to achieve their investment
objectives. The sub-funds have different investment
strategies and therefore different risk profiles.
There is no guarantee that the sub-funds will
achieve their goals, due to market fluctuations and
other risks to which the investments are exposed.
Foreign Accounting Tax Compliance Act (FATCA)
Risk management
The FATCA is a law issued by the United States of
America (US) and has been enacted to ensure that
income earned and assets held by US persons in
offshore accounts or indirectly through ownership of
foreign entities is reported to the US tax authorities
(IRS). FATCA achieves aforementioned via the
requirement that US and foreign persons - being
also entities and thus financial institutions, such as
funds - identify and document payees and
ultimately disclose information to the IRS. To
mitigate foreign legal impediments due to FATCA
compliance, intergovernmental agreements (IGA)
with the US are being negotiated. Luxembourg has
agreed an IGA with the US. Consequently and due to
the specific nature of the IGA, which can be qualified
as a model I, FATCA should become Luxembourg
domestic legislation.
Triodos Investment Management has implemented
an integral risk management framework throughout
its organisation, in order to adequately monitor and
manage the risks related to the sub-funds (as
determined in the sub-funds’ Particulars in the
prospectus of Triodos SICAV II). This risk
management framework is based on the COSO (The
Committee of Sponsoring Organisations of the
Treadway Commission) framework for integral risk
management, and furthermore contains policies
and procedures designed in accordance with
European regulations, best market practices and a
permanent, independent risk management function,
in compliance with the AIFMD.
The risk management framework describes,
amongst others, the roles and responsibilities of the
risk management function, risk governance (the
‘three-lines-of–defence’ model) at the level of both
the Investment Manager and the sub-fund, and the
risk management process to identify, measure,
mitigate, monitor, report and evaluate all relevant
risks related to the sub-funds.
Triodos SICAV II as a Foreign Financial Institution
(FFI) is qualified as a participating FFI (PFFI). Triodos
SICAV II has been registered with the IRS as a PFFI,
which resulted in the issuance of a Global
Intermediary Identification Number (GIIN). As of July
1, 2014 FATCA is in force and on boarding procedures
are in place to identify (new) shareholders.
The permanent risk management function is
responsible for the implementation and execution of
the risk management process and policies and
serves as a risk consultant. The risk management
function is functionally and hierarchically separated
from the portfolio management function.
Risk profile
All investments in the sub-funds of Triodos SICAV II
are exposed to a variety of risks. The sub-funds
generally invest in risk-bearing, most often
non-listed assets that cannot be made liquid in the
short term. In most cases, added value in the
sub-funds is generated over the longer term. Thus,
25
conducting tests under normal and exceptional
(stress test) liquidity conditions.
• Provide adequate escalation measures in case of
liquidity shortage or distressed situations
(liquidity contingency plan).
• Ensure the coherence of the sub-funds’
investment strategy, their liquidity profile and
their redemption policy.
Valuation framework
Triodos Investment Management has implemented a
comprehensive valuation framework of
requirements to ensure a sound, independent,
comprehensive and appropriate use of valuation
methodologies and procedures. This framework sets
out general requirements regarding the selection,
the implementation and the application of valuation
methodologies and techniques for all asset types,
taking into account the different nature of asset
types and the accompanying market practices in the
valuation of these assets. In addition, this
framework sets out the requirements for or with
regard to the valuation function at the fund level. It
ensures consistent procedures regarding the
selection, implementation and application of
valuation methodologies and, moreover, ensures a
consistent approach of the valuation function,
valuation committees and the use of external
valuers at the fund level.
Triodos Investment Management has implemented
standardised methods to monitor the liquidity
position of the sub-funds and to assess near-future
developments regarding liquidity, including early
warning parameters. The liquidity position of the
sub-funds is monitored at both the sub-fund level
and the Investment Manager level.
In accordance with the Law of 12 December 2013 on
alternative investment fund managers, Triodos
Investment Management conducts stress tests on a
regular basis in order to evaluate and measure the
liquidity risk of the sub-funds. Its manual for
liquidity stress testing includes a standardised
approach for conducting liquidity stress testing at
the sub-fund level, simulating normal and
exceptional liquidity circumstances.
Given the special liquidity characteristics of the
investments, the risk management function has a
specific liquidity (risk) management policy
framework applicable to the sub-funds (see
Liquidity management).
The liquidity stress testing approach is derived from
the Basel III legislation on liquidity management for
banking. Several liquidity metrics are adjusted to be
appropriate for the sub-funds and are subject to
predetermined historical and/or hypothetical stress
events and scenarios. These stress events and
scenarios are determined by the risk management
function together with the portfolio management
function.
Liquidity management
Triodos Investment Management has established a
liquidity management policy framework, in
accordance with European regulations and best
market practices, to ensure that liquidity risk is
appropriately measured, monitored and managed at
sub-fund level. The framework contains policies and
procedures to:
• Ensure the availability of sufficient liquidity to
meet financial obligations and adequately manage
excess liquidity to act in the best interest of
investors in the sub-funds. Investors should
carefully take note that given the type of assets,
there is no guarantee that there are sufficient
funds to pay for the redemption of shares of the
sub-fund and there is no guarantee that the
redemption can take place at the requested date.
• Assess the risk of insufficient liquidity by regularly
In accordance with the Law of 2013, both the
liabilities side (funding) as the asset side (market)
are subject to stress tests. A-typical redemption
requests of investors and a shortage of (market)
liquidity are, amongst others, simulated in the
stress tests. However, given the relative illiquid
nature of the sub-funds’ assets, the market side in
terms of liquidity time and liquidity value is
incorporated in a conservative manner.
26
Specific risk factors for the sub-funds
Luxembourg, March 31, 2015
As the sub-funds differ significantly in their
investment policy and associated risks, it is
important to study the specific risk factors for each
sub-fund. Please refer to the relevant sub-fund
Particulars in the prospectus of Triodos SICAV II for
specific risk factors applying to each sub-fund.
The Board of Directors of Triodos SICAV II
Pierre Aeby (Chairman)
Marilou van Golstein Brouwers
Patrick Goodman
Olivier Marquet
Garry Pieters
Alexander Schwedeler (until May 12, 2014)
Remuneration policy
Based on Article 22(2) of the AIFMD and section XIII
(Guidelines on disclosure) of the ‘ESMA Guidelines
on sound remuneration policies under the AIFMD’,
management companies are required to at least
disclose information about their remuneration
practices for employees whose professional
activities have a material impact on its risk profile
(so-called "identified staff").
All of the staff members of Triodos Investment
Management are employed by Triodos Bank. Triodos
Bank believes good and appropriate remuneration
for all its employees is very important. The core
elements of the international remuneration policy of
Triodos Bank are set out in the Principles of Fund
Governance, which can be accessed via
www.triodos.com.
The following table shows the total remuneration,
broken down into fixed and variable remuneration,
for all the staff that works for Triodos Investment
Management, categorized into senior management
and other identified staff.
(amounts in EUR)
All staff of
Triodos Investment
Management
“Identified staff” in
senior management
positions
All other
“Identified staff”
113
6
28
8,916,911
49,925
995,936
12,800
2,581,671
10,825
Number of staff (average over 2014)
Remuneration
Total fixed remuneration (over 2014)
Total variable remuneration (over 2014)
27
General information
Structure
rapid growth and are financially sustainable. The
fund is also allowed to invest in greenfield MFIs. In
most cases these institutions will be supervised by
relevant local government authorities.
Triodos Microfinance Fund was launched in March
2009 as a sub-fund of Triodos SICAV II, the first
Luxembourg investment company to be launched by
Triodos Bank. The fund has an open-end fund
structure and is not quoted on any stock market.
Triodos Microfinance Fund has euro as well as
British pound sterling share classes for retail,
private banking and institutional investors.
Triodos Microfinance Fund invests in equity,
subordinated debt, convertible debt, senior debt and
debt instruments in qualifying investments. The
fund investment amount per investment project is
assumed to be typically between EUR 1 million and
EUR 10 million, but is bound by single client
exposure and other investment restrictions as
presented in the prospectus. The fund will generally
take minority equity positions in its investees.
Triodos Microfinance Fund will mainly invest in
non-listed securities and investment instruments
other than transferable securities. However, the
fund may also, on an ancillary basis, invest in stocklisted companies. The equity investments of Triodos
Microfinance Fund will primarily be in local currency,
i.e. any currency other than US dollars and euros.
For debt financing, the investments will be a mixture
of local currency and investments in US dollars and
euros. Investments in euros and in US dollars will be
hedged to a large extent against the share classes’
reference currencies (perfect hedges of the interest
and principal flows may not be economical).
Investments in local currencies may be hedged
where possible and where deemed appropriate.
Cash and liquid assets will be mainly invested in
euros or US dollars.
The Board of Directors has appointed Triodos
Investment Management BV as the external
alternative investment fund manager of Triodos
SICAV II. Triodos Investment Management BV is
incorporated under the laws of the Netherlands and
is wholly-owned subsidiary of Triodos Bank NV.
Triodos Investment Management BV is supervised
by the Dutch regulator, Autoriteit Financiële
Markten.
The Annual General Meeting of Shareholders takes
place in the city of Luxembourg, at a place specified
in the notice of the meeting, each year on the last
Wednesday in April. If such day is not a business day,
the meeting will be held on the next business day.
Notice of any General Meeting of Shareholders will
be mailed to each registered Shareholder at least
eight days prior to the meeting and will be published
to the extent required by Luxembourg law in the
Mémorial. Triodos SICAV II publishes an integrated
detailed audited report annually. Triodos SICAV II
also publishes an integrated detailed semi-annual
report. In addition separate reports for each
sub-fund of Triodos SICAV II are published. Copies
may be obtained free of charge from the registered
office of Triodos SICAV II and can be downloaded
from Triodos Bank: www.triodos.com and www.
triodos.nl.
Triodos Microfinance Fund may enter into
syndicated finance agreements with other funds
managed by Triodos Group or managed by other
entities.
Fiscal aspects
According to the law in force and current practice,
Triodos Microfinance Fund is not subject to any
Luxembourg tax on income and capital gains.
Dividends paid by Triodos Microfinance Fund are not
subject to any Luxembourg withholding tax. Since
January 1, 2010, Triodos Microfinance Fund is no
longer subject to any subscription tax. In addition,
Investment policy
Triodos Microfinance Fund invests, directly or
indirectly, in microfinance institutions (MFIs) and
other applicable financial institutions with a track
record that have gone through the first phase of
28
make performances objective and easier to
compare. Triodos Bank is one of GRI's organizational
stakeholders.
the issue of shares in the SICAV is not subject to any
registration duties or other taxes in Luxembourg.
Some dividend and interest income from Triodos
Microfinance Fund’s portfolio may be subject to
withholding taxes at variable rates in the countries
of origin.
In 2013, GRI introduced new guidelines aimed at
making reporting more relevant for the
sustainability impact of the institution and more
useful for its stakeholders. This is done mainly by
focusing attention on the issues that Triodos Bank
and our stakeholders find the most important or
essential for their activities. We have since
enhanced this approach, which we first used in our
report for 2013. In this report the G4 guidelines have
been applied comprehensively. Further information
about the application of the G4 guidelines can be
found on www.annual-report-triodos.com.
Shareholders in Triodos Microfinance Fund in
principle do not have to pay any income and capital
gains tax, any withholding tax, or any other form of
tax in the Grand Duchy of Luxembourg (except with
regard to (I) shareholders domiciled, resident or
having a permanent establishment in Luxembourg,
(II) some non-residents of Luxembourg who own 10%
or more of the capital of the fund and who sell all or
part of their shares within six months of their
acquisition and (III) in some limited cases, some
categories of former residents of Luxembourg if they
own 10% or more of the capital of the SICAV). The
above information is based on the law in force and
current practice and is subject to change.
Our reporting is based on internal and external data.
This year's report was prepared partly on the basis
of discussions, including a thinking session with a
number of external parties organised specifically for
this purpose.
Investors should be aware that income or dividends
received or profits realised may result in taxation in
their country of origin, residence or domicile.
Climate-neutral operations
Triodos Bank's environmental policy is based on the
trias energetica. This means that the bank uses as
little energy as possible, uses sustainable energy or
sustainable resources whenever possible and
offsets the climate impact of energy that is
generated. The bank thus minimises and offsets its
environmental impact. Triodos Bank is a climate
neutral, CO2-neutral organisation.
Triodos sustainability reporting
Triodos Microfinance Fund is managed by Triodos
Investment Management B.V., a wholly-owned
subsidiary of Triodos Bank N.V. The co-workers
involved in the management of the funds are
employed by Triodos Bank. The annual report of
Triodos Bank is an integral sustainability report,
which is applicable to all entities within the Triodos
group of companies.
For further information about the social and
environmental performances of Triodos Bank and its
investment funds we refer to the annual report of
Triodos Bank.
All social policy aspects, including the remuneration
policy, are described in Triodos Bank’s annual
report.
Triodos Bank has been using the guidelines drawn
up by the Global Reporting Initiative (GRI) since 2001.
GRI was established in 1997 by the United Nations
and the Coalition for Environmentally Responsible
Economies. GRI aims to establish a consistent
framework for sustainability reporting and thus
29
Summary of annual accounts 2014 Page
Statement of net assets
31
Statement of operations
32
Statement of changes in net assets
Cash flow statement
Statement of changes in the number of shares outstanding
33
Notes to the financial statements
38
30
35
36
Statement of net assets
as at December 31, 2014
Notes
December 31,
2014
December 31,
2013
December 31,
2012
2
192,889,584
124,319,850
90,777,902
3
–
5,833
40,833
11
33,446,935
113,559
34,886,216
506,440
31,571,194
–
–
3,910,343
–
2,774,366
1,917,792
15,372
–
1,481,443
–
230,360,421
164,425,869
123,871,372
11
–
–
110,453
10
8,791,472
–
672,221
6
9
997,474
188,323
807,988
147,049
583,237
101,361
9,977,269
955,037
1,467,272
220,383,152
163,470,832
122,404,100
(amounts in EUR)
Assets
Fixed assets
Investment in financial assets
(Historic cost: EUR 172,029,935 as at December
31, 2014; EUR 117,010,403 as at December 31,
2013; EUR 84,344,803 as at December 31, 2012)
Formation expenses
Current assets
Cash and cash equivalents
Net unrealised gain on swap contracts
Net unrealised gain on forward foreign
exchange contracts
Interest receivable
Other current assets
10
2
Total assets
Liabilities
Liabilities due within one year
Net unrealised loss on swap contracts
Net unrealised loss on forward foreign
­exchange contracts
Investment management, distribution and
service fees payable
Accounts payable and accrued expenses
Total liabilities
Net assets
The accompanying notes form an integral part of these financial statements.
31
Statement of operations for the year
ended December 31, 2014
Notes
December 31,
2014
December 31,
2013
December 31,
2012
820,443
10,398,207
33,752
394,209
929,658
6,516,701
215,765
302,136
937,212
5,599,767
337,803
174,377
11,646,611
7,964,260
7,049,159
3
5,833
35,000
35,000
6
5
3,623,353
282,597
76,357
1,994
175,909
2,883,454
209,753
61,485
1,132
90,977
2,069,307
160,185
65,290
–
72,857
Total expenses
4,166,043
3,281,801
2,402,639
Net operating income
7,480,568
4,682,459
4,646,520
5,103,883
(1,492,209)
72,249
1,898,854
(2,473,448)
445,640
(151,329)
13,550,202
–
556,957
(7,065)
(411,497)
2,317,758
(2,843,675)
205,984
(109,600)
5,892,696
(5,016,350)
1,008,119
(13,827)
(135,213)
1,710,669
(2,633,156)
97,430
(138,073)
4,490,560
(1,978,414)
–
616,983
215,369
(392,881)
–
–
169,681
3,446,587
1,716,559
(11,735,519)
–
(380,296)
12,475,691
9,331,147
8,606,247
(amounts in EUR)
Income:
Dividend income
Interest on loans
Bank interest
Other income
2
2
7
Total income
Expenses
Amortisation of formation expenses
Investment management, distribution and service
fees
Administrative and custodian fees
Audit and reporting expenses
Interest paid
Other expenses
8
Realised gain on investments
Realised loss on investments
Realised gain/(loss) on swaps
Realised gain on foreign exchange contracts
Realised loss on foreign exchange contracts
Realised gain on foreign exchange
Realised loss on foreign exchange
Change in unrealised appreciation on investments
Change in unrealised depreciation on investments
Change in unrealised appreciation on swap
contracts
Change in unrealised depreciation on swap
contracts
Change in unrealised appreciation on forward
foreign exchange contracts
Change in net unrealised appreciation/
(depreciation) on forward foreign exchange
contracts
Net increase in net assets resulting from operations
The accompanying notes form an integral part of these financial statements.
32
Statement of changes in net assets
for the year ended December 31, 2014
(amounts in EUR)
December 31,
2014
December 31,
2013
December 31,
2012
7,480,568
5,103,883
(1,492,209)
72,249
1,898,854
(2,473,448)
445,640
(151,329)
13,550,202
–
–
(392,881)
4,682,459
556,957
(7,065)
(411,497)
2,317,758
(2,843,675)
205,984
(109,600)
5,892,696
(5,016,350)
616,983
–
4,646,520
1,008,119
(13,827)
(135,213)
1,710,669
(2,633,156)
97,430
(138,073)
4,490,560
(1,978,414)
215,369
–
Operations
Net operating income
Realised gain on investments
Realised loss on investments
Realised gain/(loss) on swaps
Realised gain on foreign exchange contracts
Realised loss on foreign exchange contracts
Realised gain on foreign exchange
Realised loss on foreign exchange
Change in unrealised appreciation on investments
Change in unrealised depreciation on investments
Change in unrealised appreciation on swap contracts
Change in unrealised depreciation on swap contracts
Change in unrealised appreciation on forward foreign
exchange contracts
Change in unrealised depreciation on forward foreign
exchange contracts
169,681
3,446,587
1,716,559
(11,735,519)
–
(380,296)
Net increase in net assets resulting from operations
12,475,691
9,331,147
8,606,247
38,437,110
8,347,640
233,106
2,855,523
3,407,045
1,921,845
–
1,314,545
–
15,948
–
5,418
209,510
145,904
1,626,917
65,549,598
14,380,824
1,148,240
492,760
21,452,647
3,212,131
1,700,325
–
358,584
–
213,231
–
5,661
238,248
188,576
500
500
9,955,011
2,531,552
1,272,209
12,982,922
536,460
821,422
–
567,986
–
248,230
60,275
4,651
–
–
–
–
124,070,109
43,392,227
28,980,718
Capital transactions
Capital subscriptions
I Capitalisation Share Class (EUR)
I Distribution Share Class (EUR)
B Capitalisation Share Class (EUR)
B Distribution Share Class (EUR)
R Capitalisation Share Class (EUR)
R Distribution Share Class (EUR)
K-Institutional Capitalisation Share Class (GBP)
K-Institutional Distribution Share Class (GBP)
K-B Capitalisation Share Class (GBP)
K-B Distribution Share Class (GBP)
K-Retail Capitalisation Share Class (GBP)
K-Retail Distribution Share Class (GBP)
K-Z Capitalisation Share Class (GBP)
K-Z Distribution Share Class (GBP)
Z- Capitalisation Share Class (EUR)
Z- Distribution Share Class (EUR)
Total subscriptions
The accompanying notes form an integral part of these financial statements.
33
Statement of changes in net assets
for the year ended December 31, 2014
December 31,
2014
December 31,
2013
December 31,
2012
Capital redemptions
I Capitalisation Share Class (EUR)
I Distribution Share Class (EUR)
B Capitalisation Share Class (EUR)
B Distribution Share Class (EUR)
R Capitalisation Share Class (EUR)
R Distribution Share Class (EUR)
K-Institutional Capitalisation Share Class (GBP)
K-Institutional Distribution Share Class (GBP)
K-B Capitalisation Share Class (GBP)
K-B Distribution Share Class (GBP)
K-Retail Capitalisation Share Class (GBP)
K-Retail Distribution Share Class(GBP)
K-Z Capitalisation Share Class (GBP)
K-Z Distribution Share Class (GBP)
Z- Capitalisation Share Class (EUR)
Z- Distribution Share Class (EUR)
(10,708,400)
(40,957)
(1,261,897)
(56,298,132)
(431,312)
(637,330)
(2,319,579)
(27,520)
(104,694)
(187,780)
(71,332)
(67,288)
–
–
(84,899)
(5,343,024)
(3,229,407)
–
(1,138,241)
(3,169,208)
–
(146,384)
–
(524,321)
(359,364)
–
(1,094)
(255,958)
–
–
–
–
(2,438,417)
–
(17,232)
(1,632,113)
–
(56,175)
–
(32,106)
(189,088)
(61,637)
(155,484)
(156,738)
–
–
–
–
Total redemptions
(77,584,144)
(8,823,977)
(4,738,990)
46,485,965
34,568,250
24,241,728
Net assets
Net assets at the beginning of the year
Total increase in net assets
Dividend distribution
163,470,832
58,961,656
(2,049,336)
122,404,100
43,899,397
(2,832,665)
91,679,563
32,847,975
(2,123,438)
Net assets at the end of the year
220,383,152
163,470,832
122,404,100
(amounts in EUR)
Net increase in net assets resulting from capital
­transactions
The accompanying notes form an integral part of these financial statements.
34
Cash flow statement for the year
ended December 31, 2014
December 31,
2014
December 31,
2013
December 31,
2012
12,475,691
9,331,147
8,606,247
(1,591,483)
(1,971,346)
230,760
(4,939,826)
(416,721)
270,438
(4,063,778)
145,857
216,553
9,143,622
4,245,038
4,904,879
124,070,109
(77,584,144)
(2,049,336)
43,392,227
(8,823,978)
(2,832,665)
30,549,803
(5,005,654)
(2,123,438)
44,436,629
31,735,584
23,420,711
(-) acquisitions of financial assets
(55,019,532)
(32,665,600)
(17,047,114)
Net cash used by investing activities
(55,019,532)
(32,665,600)
(17,047,114)
Net increase/(decrease) in cash and cash equivalents
Cash at the beginning of the year
(1,439,281)
34,886,216
3,315,022
31,571,194
11,278,476
20,292,718
Cash at the end of the year
33,446,935
34,886,216
31,571,194
(amounts in EUR)
Cash provided by operating activities
Profit after taxation
(-) (increase) in unrealised gains and losses on investments
and forward foreign exchange contracts
(-) decrease/(+) increase in receivables and other assets
(+) increase/(-) decrease in payables
Net cash provided by operating activities
Cash provided by financing activities
(+) proceeds from shares issued
(-) decrease from shares redeemed
(-) distributions paid to shareholders
Net cash provided by financing activities
Cash provided from investing activities
Cash
The accompanying notes form an integral part of these financial statements.
35
Statement of changes in the number of shares
outstanding for the year ended December 31, 2014
December 31,
2014
December 31,
2013
December 31,
2012
Number of Shares outstanding at the beginning of the year
I Capitalisation Share Class (EUR)
1,715,520.458
I Distribution Share Class (EUR)
947,608.782
B Capitalisation Share Class (EUR)
46,080.221
B Distribution Share Class (EUR)
1,913,893.000
R Capitalisation Share Class (EUR)
166,243.191
R Distribution Share Class (EUR)
147,122.402
K–Institutional Capitalisation Share Class (GBP)
73,880.300
K–Institutional Distribution Share Class (GBP)
390,581.346
K–B Capitalisation Share Class (GBP)
30,060.455
K–B Distribution Share Class (GBP)
29,841.123
K–Retail Capitalisation Share Class (GBP)
2,327.424
K–Retail Distribution Share Class (GBP)
18,109.626
K–Z Capitalisation Share Class (GBP)
10,149.940
K–Z Distribution Share Class (GBP)
8,242.587
Z– Capitalisation Share Class (EUR)
20.000
Z– Distribution Share Class (EUR)
20.000
1,363,943.639
906,615.976
66,655.172
1,253,099.000
60,532.331
90,999.422
73,880.300
397,315.029
42,882.088
21,575.757
2,367.424
27,780.607
–
–
–
–
1,115,102.313
814,546.885
23,383.015
830,920.000
41,821.479
62,180.921
73,880.300
376,645.774
49,991.988
14,690.809
6,101.300
34,021.460
–
–
–
–
452,994.652
40,992.806
16,368.733
775,135.000
105,710.860
61,393.815
–
14,151.426
–
8,265.366
–
229.019
10,149.940
8,242.587
20.000
20.000
333,105.081
92,069.091
43,872.157
483,057.000
18,710.852
30,913.504
–
21,916.755
–
9,356.915
2,367.424
183.688
–
–
–
–
Subscriptions over the year
I Capitalisation Share Class (EUR)
I Distribution Share Class (EUR)
B Capitalisation Share Class (EUR)
B Distribution Share Class (EUR)
R Capitalisation Share Class (EUR)
R Distribution Share Class (EUR)
K–Institutional Capitalisation Share Class (GBP)
K–Institutional Distribution Share Class (GBP)
K–B Capitalisation Share Class (GBP)
K–B Distribution Share Class (GBP)
K–Retail Capitalisation Share Class (GBP)
K–Retail Distribution Share Class (GBP)
K–Z Capitalisation Share Class (GBP)
K–Z Distribution Share Class (GBP)
Z– Capitalisation Share Class (EUR)
Z– Distribution Share Class (EUR)
1,155,975.331
291,789.528
7,340.357
100,507.000
106,537.870
67,738.000
49,091.319
589.199
207.621
8,053.995
5,534.325
63,531.613
2,568,085.860
The accompanying notes form an integral part of these financial statements.
36
Statement of changes in the number of shares
outstanding for the year ended December 31, 2014
December 31,
2014
December 31,
2013
December 31,
2012
Redemptions over the year
I Capitalisation Share Class (EUR)
I Distribution Share Class (EUR)
B Capitalisation Share Class (EUR)
B Distribution Share Class (EUR)
R Capitalisation Share Class (EUR)
R Distribution Share Class (EUR)
K–Institutional Capitalisation Share Class (GBP)
K–Institutional Distribution Share Class (GBP)
K–B Capitalisation Share Class (GBP)
K–B Distribution Share Class (GBP)
K–Retail Capitalisation Share Class (GBP)
K–Retail Distribution Share Class (GBP)
K–Z Capitalisation Share Class (GBP)
K–Z Distribution Share Class (GBP)
Z– Capitalisation Share Class (EUR)
Z– Distribution Share Class (EUR)
319,154.909
1,446.558
39,750.000
1,982,343.000
13,547.210
22,657.009
73,880.300
1,039.250
3,425.234
6,934.205
2,327.424
2,425.000
–
–
3,287.613
208,313.083
101,417.833
–
36,943.684
114,341.000
–
5,270.835
–
20,885.109
12,821.633
–
40.000
9,900.000
–
–
–
–
84,263.755
–
600.000
60,878.000
–
2,095.003
–
1,247.500
7,109.900
2,471.967
6,101.300
6,424.541
–
–
–
–
Number of Shares outstanding at the end of the year
I Capitalisation Share Class (EUR)
I Distribution Share Class (EUR)
B Capitalisation Share Class (EUR)
B Distribution Share Class (EUR)
R Capitalisation Share Class (EUR)
R Distribution Share Class (EUR)
K–Institutional Capitalisation Share Class (GBP)
K–Institutional Distribution Share Class (GBP)
K–B Capitalisation Share Class (GBP)
K–B Distribution Share Class (GBP)
K–Retail Capitalisation Share Class (GBP)
K–Retail Distribution Share Class (GBP)
K–Z Capitalisation Share Class (GBP)
K–Z Distribution Share Class (GBP)
Z– Capitalisation Share Class (EUR)
Z– Distribution Share Class (EUR)
2,552,340.880
1,237,951.752
13,670.578
32,057.000
259,233.851
192,203.393
–
438,633.415
26,635.221
23,496.117
–
15,892.247
18,203.935
13,776.912
60,264.000
2,359,792.777
1,715,520.458
947,608.782
46,080.221
1,913,893.000
166,243.191
147,122.402
73,880.300
390,581.346
30,060.455
29,841.123
2,327.424
18,109.626
10,149.940
8,242.587
20.000
20.000
1,363,943.639
906,615.976
66,655.172
1,253,099.000
60,532.331
90,999.422
73,880.300
397,315.029
42,882.088
21,575.757
2,367.424
27,780.607
–
–
–
–
The accompanying notes form an integral part of these financial statements.
37
Notes to the financial statements
1. General
Triodos Microfinance Fund is a Sub-Fund of Triodos SICAV II.
Triodos SICAV II (the ‘‘SICAV’’) has been incorporated under the laws of the Grand Duchy of Luxembourg as a
“société d’investissement à capital variable” (SICAV) under the form of a “société anonyme” on April 10, 2006
for an unlimited period. Triodos SICAV II is governed by Part II of the Luxembourg Law of December 17, 2010.
The SICAV is an alternative investment fund (“AIF”) subject to the requirements of the Directive 2011/61/EU of
8 June 2011 on Alternative Investment Fund Managers Directive (“AIFMD”) as implemented in Luxembourg
through the law of 12 July 2013 on alternative investment fund managers (the “Law of 2013”).
The Registered Office of the SICAV is established at 11/13, Boulevard de la Foire, L-1528 Luxembourg.
The Articles have been deposited with the Chancery of the District Court of Luxembourg on April 27, 2006
and published in the Mémorial C, Recueil des Sociétés et Associations (the “Mémorial”). The SICAV has been
registered with the Companies Register of the District Court of Luxembourg under number B 115.771. The
Articles were last amended at the extraordinary general meeting of shareholders held on October 16, 2014
and published in the Mémorial.
The SICAV is structured as an umbrella fund, which provides both institutional and retail investors with a
variety of Sub-Funds, each of which relates to a separate portfolio of assets permitted by law and managed
within specific investment objectives.
As at December 31, 2014 the SICAV has three Sub-Funds: Triodos Renewables Europe Fund, Triodos
Microfinance Fund and Triodos Organic Growth Fund.
Triodos Microfinance Fund, to which the separate annual report relates, does not constitute a separate legal
entity, but there are two other Sub-Funds which together with Triodos Microfinance Fund form a single
entity. An annual report which includes a complete description of the three Sub-funds of the SICAV has been
issued and can be obtained from Triodos Bank. For the purpose of the relations between shareholders, each
Sub-Fund is deemed to be a separate entity.
The overall objective of Triodos SICAV II - Triodos Microfinance Fund (the “Sub-Fund”) is to offer investors a
financially and socially sound investment in the microfinance sector, mainly through investments in
microfinance institutions (MFIs). The Sub-Fund offers the prospect of an attractive financial return
combined with the opportunity for investors to make a pro-active, measurable and sustainable contribution
to the development of the microfinance sector into an inclusive financial sector in which the majority of
people have access to financial services.
The first subscription period ended on February 27, 2009 and the first NAV was calculated on March 31, 2009.
Shares may be subscribed once a month, on the Business Day preceding the Valuation Date. The Sub-Fund is
semi open-ended, i.e. shares may be redeemed in principle once a month subject to a notice period.
However, the SICAV is entitled to (temporarily) stop trading and thus the execution of the redemption
applications received, if trading is not possible, in accordance with the stipulations of the Prospectus.
The Sub-Fund may offer Shares of the following Classes:
- Euro-denominated Class “R” Shares Capitalisation
- Euro-denominated Class “R” Shares Distribution
- Euro-denominated Class “Z” Shares Capitalisation
- Euro-denominated Class “Z” Shares Distribution
38
- Euro denominated Class “B” Shares Capitalisation
- Euro denominated Class “B” Shares Distribution
- Euro-denominated Class “I” Shares Capitalisation
- Euro-denominated Class “I” Shares Distribution
- British Pound-denominated Class “K-Retail” Shares Capitalisation
- British Pound-denominated Class “K-Retail” Shares Distribution
- British Pound-denominated Class “K-Z” Shares Capitalisation
- British Pound-denominated Class “K-Z” Shares Distribution
- British Pound-denominated Class “K-B” Shares Capitalisation
- British Pound-denominated Class “K-B” Shares Distribution
- British Pound-denominated Class “K-Institutional” Shares Capitalisation
- British Pound-denominated Class “K-Institutional” Shares Distribution
- Euro-denominated Class “P” Shares Capitalisation (not yet launched as per December 31, 2014)
• Class “R” Shares is open to certain retail investors, dependent on their country of residence.
• Class “Z” Shares is open to certain retail investors, dependent on their country of residence.
• Class “B” Shares is open to clients of private banks and other investors, who do not have access to Class “I”
Shares or to Class “R” Shares.
• Class “I” Shares is restricted to Institutional Investors.
• Class “K-Retail” Shares was offered to certain retail investors resident in the United Kingdom. Following
the implementation of the Retail Distribution Review, no new “K-Retail” Shares have been or will be issued
after December 31, 2012. This Class of Shares is hedged towards the Euro.
• Class “K-Z” Shares is open to certain retail investors who are resident in the United Kingdom. This Class of
Shares is hedged towards the Euro.
• Class “K-B” Shares was offered to investors, who do not have access to Class “K-Institutional” Shares or to
Class “K-Retail” Shares and who are resident in the United Kingdom. Following the implementation of the
Retail Distribution Review, no new “K-B” Shares have been or will be issued after December 31, 2012. This
class of Shares is hedged towards the Euro.
• Class “K-Institutional” Shares is open to Institutional Investors, which are resident in the United Kingdom.
This class is hedged towards the Euro.
• Class “P” Shares (when launched) is open to entities of Triodos Group. Class “P” Shares gives the right, in
accordance with the Articles, to propose to the general meeting of Shareholders a list containing the
names of candidates for the position of director of the SICAV from which a majority of the Directors must be
appointed.
Classes of Shares of the capitalisation type do not distribute any dividend; income earned in these classes is
reinvested.
Classes of Shares of the distribution type pay out dividend.
Initially, Shares are issued in registered form. At a later stage, Shares may also be issued in bearer form.
Shares may be subscribed once a month, on the Business Day preceding the Valuation Date.
The financial year end of the SICAV is end of December each year.
Triodos SICAV II, including the Sub-Fund, is supervised by the Luxembourg supervisory authority, the
Commission de Surveillance du Secteur Financier (CSSF).
39
Triodos SICAV II, including the Sub-Fund, is also registered with the Dutch Supervisory authorities, the
Autoriteit Financiële Markten (AFM).
2. Summary of significant accounting principles
Investments are valued at their fair value. The fair value is determined as follows:
(a) The valuation of private equity investments (such as equity, subordinated debt and other types of
mezzanine finance) are based on the International Private Equity and Venture Capital Valuation
Guidelines, as published from time to time by the International Private Equity and Venture Capital
Association, and is conducted with prudence and in good faith.
In the Sub-Fund, the subordinated debt investments are valued on the basis of the cost value less
repayments and adjustments for any impairment. The private equity investments and the underlying
investment funds are valued at fair value on the basis of adapted valuation models.
Other assets are valued according to the following rules:
(b) Senior debt instruments, invested in/granted to companies not listed or dealt in on any stock exchange
or any other Regulated Market, are valued at fair market value, deemed to be the nominal value,
increased by any interest accrued thereon; such value is adjusted, if appropriate, to reflect the appraisal
of the Advisor of the Sub-Fund on the creditworthiness of the relevant debtor. The Board of Directors
uses its best endeavors to continually assess this method of valuation and recommend changes, where
necessary, to ensure that debt instruments are valued at their fair value as determined in good faith by
the Board of Directors.
The senior debt instruments held by the Sub-Fund are valued on the basis of the cost value less
repayments and adjustments for any impairment.
(c) The value of money market instruments not listed on any stock exchange or dealt in on any other
Regulated Market and with a remaining maturity of less than 12 months is deemed to be the nominal
value thereof, increased by any interest accrued thereon.
(d) The value of securities which are admitted to official listing on any stock exchange is based on the latest
available price or, if appropriate, on the average price on the stock exchange which is normally the
principal market of such securities, and each security dealt on any other Regulated Market is based on
the last available price. In the event that this price is, in the opinion of the Board of Directors, not
representative of the fair market value of such securities, for example in the case of illiquid securities
and/or stale prices, the directors value the securities at fair market value according to their best
judgment and information available to them at that time.
(e) Units or shares of open-end UCIs are valued at their last official net asset values, as reported or provided
by such UCI or their agents, or at their last unofficial net asset values (i.e. estimates of net asset values)
if more recent than their last official net asset values, provided that due diligence has been carried out
by the relevant Advisor, in accordance with instructions and under the overall control and responsibility
of the Board of Directors, as to the reliability of such unofficial net asset values.
40
(f) The liquidating value of futures, forward or options contracts not admitted to official listing on any stock
exchange or dealt on any other Regulated Market means their net liquidating value is determined,
pursuant to the policies established prudently and in good faith by the Board of Directors, on a basis
consistently applied for each different variety of contracts.
(g) The value of any cash at hand or on deposit, bills and demand notes and accounts receivable, prepaid
expenses, cash dividends declared and interest accrued, and not yet received are deemed to be the full
amount thereof, unless, however, the same is unlikely to be paid or received in full, in which case the
value thereof is determined after making such discounts as the Board of Directors may consider
appropriate to reflect the true value thereof.
(h) Swaps, as far as credit swaps are concerned, are valued at fair market values as determined prudently
and in good faith by the Board of Directors. Cross-currency interest rate swaps are valued on the basis of
the prices provided by the counterparty.
(i) All other securities and assets are valued at fair market value as determined in good faith pursuant to
procedures established by the Board of Directors.
(j) Placements in foreign currency are quoted in euros with due observance of the currency exchange rates
most recently known.
(k) Realised and non-realised changes in the value of investments are incorporated in the profit and loss
account.
(l) The principle for determination of profit is based on the attribution of income and expenses to the
relevant period. The income from payments of profit on equity participations is accounted for in the year
in which they are made payable. Prepaid costs and costs still to be paid are taken into account in
determining the expenses.
(m)Other assets and liabilities are recorded at nominal value after deduction of any provision in respect of
anticipated non-recovery.
(n) The costs of investments expressed in currencies other than EUR are translated into EUR at the
exchange rate prevailing at purchase date.
(o) Interest income is accrued pursuant to the terms of the underlying investment. Income is recorded net of
respective withholding taxes, if any.
(p) Gains and losses arising from un-matured forward foreign exchange contracts are determined on the
basis of the applicable forward exchange rates at the valuation date and are booked in the profit and loss
accounts.
(q) Dividend income is recognised on cash basis, net of any withholding taxes.
(r) Equity investments of Triodos SICAV II are excluded from consolidation due to exemptions by temporary
holding, size and time window.
41
3. Formation expenses
The total formation expenses of the Sub-Fund will be amortised over a period of five years and amount to
EUR 175,000.
4. Taxation
According to the law in force and current practice, the SICAV, including the Sub-Fund, is not subject to any
Luxembourg tax on income and capital gains nor are dividends paid by the SICAV subject to any Luxembourg
withholding tax.
However, each of the SICAV’s Sub-Funds is subject to a subscription tax (taxe d’abonnement) at an annual
rate of 0.05% p.a. Such rate may be decreased to 0.01% p.a. for certain Sub-Funds or Classes of Shares
which are restricted to Institutional Investors as specified in the relevant Sub-Fund Particulars. This tax is
calculated and payable quarterly on the basis of the Net Asset Value of each Sub-Fund at the end of each
quarter. This tax is not due on that portion of the SICAV’s assets invested in other Luxembourg UCIs.
Since January 1, 2010 microfinance funds are no longer subject to any subscription tax. The Sub-Fund,
qualifying as a microfinance fund, is thus no longer subject to subscription tax.
In addition, the issue of Shares in the SICAV is not subject to any registration duties or other taxes in
Luxembourg.
5. Administrative and depositary fees
The Depositary and Paying Agent, the Administrative Agent, the Domiciliary and Corporate Agent and the
Registrar and Transfer Agent are entitled to receive fees in accordance with usual practice in Luxembourg
and payable monthly.
The administrative and depositary fees comprise the following:
Currency (EUR)
2014
2013
2012
Domiciliary agency fee
Administrative fee
Transfer agency fee
Depositary fee
3,437
85,005
104,431
89,724
4,827
63,623
73,270
68,033
4,683
45,986
63,998
45,518
Total
282,597
209,753
160,185
42
6. Investment management, distribution and service fees
For the services it provides, the Investment Manager is entitled to an annual fee payable quarterly and
calculated as described in the Sub-Fund’s Particulars.
The Sub-Fund pays for the provision of investment management services and supporting services an annual
fee of 1.75% for Class “I” Shares, Class “K-Institutional” Shares and Class “P” Shares (when launched), an
annual fee of 2.50% for Class “R” Shares, Class “B” Shares, Class “K-Retail” Shares and Class “K-B” Shares
and an annual fee of 1.95% for Class “Z” Shares and Class “K-Z” Shares, calculated on the relevant Class’
Net Assets, accrued monthly and payable quarterly.
The costs for marketing and distribution activities related to retail investors and attributable to Class “R”
Shares, Class “B” Shares, Class “K-Retail” Shares and Class “K-B” Shares will only be borne by Class “R”
Shares, Class “B” Shares, Class “K-Retail” Shares and Class “K-B” Shares and will be charged to the
management fee. The costs for marketing activities incurred by the Investment Manager related to retail
investors and attributable to Class “Z” Shares and Class “K-Z” Shares will only be borne by Class “Z” Shares
and Class “K-Z” Shares and may amount to maximum 0.20% (on an annual basis) of the relevant Share Class’
Net Assets.
7. Other income
The other income comprises the following:
Currency (EUR)
2014
2013
2012
Administrative fee income on loans granted by the Fund
Other income
392,697
1,512
302,136
–
174,377
–
Total
394,209
302,136
174,377
43
8. Other expenses
The other expenses comprise the following:
Currency (EUR)
Supervisory fee (CSSF)
Remuneration of the Board of Directors/Managers
Legal fees
Consulting fees
Bank fees
Portfolio transaction costs
Other expenses
Total
2014
2013
2012
2,000
6,667
85,712
5,406
4,635
38,383
33,107
3,000
10,000
44,128
–
11,806
–
22,043
2,500
8,750
30,217
–
7,015
–
24,375
175,910
90,977
72,857
9. Accounts payable and accrued expenses
As at December 31, 2014, the accounts payable and accrued expenses mainly include the following
expenses: administrative fees, audit fees, custodian fees, domiciliary agency fees, legal fees and transfer
agency fees.
10. Forward foreign exchange contracts
As at December 31, 2014 outstanding forward foreign exchange contracts are composed of:
Maturity date
06.01.2015
06.01.2015
06.01.2015
06.01.2015
06.01.2015
07.01.2015
07.01.2015
12.01.2015
13.01.2015
13.01.2015
13.01.2015
13.01.2015
13.01.2015
13.01.2015
05.02.2015
Purchase
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
GBP
GBP
GBP
GBP
GBP
GBP
EUR
Sale
1,697,101
1,132,161
374,195
1,150,108
603,005
909,992
2,169,051
1,331,880
665,315
523,124
9,488,763
340,824
385,746
285,713
1,512,974
44
USD
USD
USD
USD
USD
USD
USD
USD
EUR
EUR
EUR
EUR
EUR
EUR
USD
(2,500,000)
(1,500,000)
(500,000)
(1,500,000)
(750,000)
(1,239,000)
(2,953,000)
(1,650,000)
(843,387)
(663,138)
(12,028,434)
(432,046)
(488,992)
(362,184)
(2,000,000)
Unrealised gain/
(loss) in EUR
(115,882)
44,458
11,625
62,419
(15,251)
(111,542)
(265,648)
(28,122)
13,790
10,843
196,679
7,064
7,996
5,922
(135,418)
Maturity date
05.02.2015
05.02.2015
05.03.2015
23.03.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
07.04.2015
13.04.2015
27.04.2015
27.04.2015
06.05.2015
07.05.2015
21.05.2015
05.06.2015
05.06.2015
09.06.2015
22.06.2015
02.07.2015
03.07.2015
04.08.2015
06.08.2015
24.08.2015
03.09.2015
04.09.2015
04.09.2015
04.09.2015
04.09.2015
08.09.2015
08.09.2015
22.09.2015
22.09.2015
25.09.2015
05.10.2015
Purchase
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
Sale
748,923
539,599
581,311
5,804,841
554,590
1,479,399
744,879
558,659
751,371
2,109,051
816,504
363,399
362,621
359,144
2,247,611
4,372,617
1,088,672
393,611
504,586
257,339
2,587,621
635,666
1,820,326
5,485,564
1,946,837
284,835
366,361
730,180
1,100,594
920,471
1,199,616
577,119
2,911,526
453,553
1,105,535
1,094,292
383,068
1,158,122
1,158,749
1,544,282
281,549
1,175,641
594,967
45
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
(1,000,000)
(671,299)
(800,000)
(7,500,000)
(750,000)
(2,000,000)
(1,000,000)
(750,000)
(1,000,000)
(2,739,551)
(1,125,000)
(500,000)
(500,000)
(500,000)
(2,824,101)
(5,494,150)
(1,500,000)
(500,000)
(700,000)
(357,000)
(3,246,300)
(873,500)
(2,500,000)
(7,500,000)
(2,658,162)
(386,720)
(500,000)
(1,000,000)
(1,500,000)
(1,239,000)
(1,500,000)
(765,000)
(4,000,000)
(592,000)
(1,443,000)
(1,428,324)
(500,000)
(1,500,000)
(1,500,000)
(2,000,000)
(365,000)
(1,500,000)
(750,000)
Unrealised gain/
(loss) in EUR
23,944
(13,590)
(77,953)
(374,047)
11,129
30,171
20,272
15,204
26,774
124,056
(110,415)
(48,564)
(49,344)
(52,833)
(78,568)
(152,851)
(146,851)
(18,208)
(72,075)
(36,758)
(85,561)
(83,815)
(238,600)
(690,291)
(242,009)
(33,583)
(45,265)
(92,992)
(134,172)
(98,985)
114,365
(52,074)
17,742
(33,216)
(80,965)
(80,141)
(28,054)
(75,170)
(74,540)
(99,648)
(18,470)
(57,142)
(21,274)
Maturity date
05.10.2015
26.10.2015
26.10.2015
05.11.2015
05.11.2015
01.12.2015
01.12.2015
04.12.2015
15.12.2015
04.01.2016
06.01.2016
06.01.2016
06.01.2016
04.02.2016
04.02.2016
01.04.2016
06.04.2016
06.04.2016
06.04.2016
07.04.2016
05.05.2016
06.06.2016
07.07.2016
12.07.2016
05.08.2016
05.08.2016
04.11.2016
04.11.2016
06.12.2016
07.02.2017
07.02.2017
07.02.2017
06.06.2017
20.06.2017
13.07.2017
07.08.2017
18.09.2017
12.01.2018
07.11.2019
Purchase
EUR
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
USD
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
3,966,444
301,441
516,243
735,565
396,212
1,115,786
1,399,528
1,989,294
1,986,729
4,762,072
3,692,673
1,850,481
280,778
1,486,878
377,209
1,717,530
1,285,336
2,139,610
944,697
360,438
747,496
1,124,838
1,133,166
281,021
1,866,438
1,114,579
757,805
1,801,672
2,912,427
362,043
360,295
543,459
1,518,027
2,375,100
435,476
755,744
2,055,324
648,088
441,761
Sale
USD
USD
USD
USD
USD
USD
PEN
USD
USD
PEN
USD
USD
USD
USD
USD
PEN
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
INR
USD
USD
INR
USD
USD
Total
The counterparties linked to the forward foreign exchange contracts are:
- RBC Investor Services Bank S.A
- Triodos Bank NV
46
(5,000,000)
(385,000)
(642,000)
(1,000,000)
(500,000)
(1,399,531)
(4,000,000)
(2,750,000)
(2,500,000)
(13,600,000)
(4,762,072)
(2,500,000)
(375,000)
(2,000,000)
(500,000)
(4,750,000)
(1,717,530)
(2,800,000)
(1,250,000)
(500,000)
(1,000,000)
(1,500,000)
(1,500,000)
(378,409)
(2,500,000)
(1,500,000)
(1,000,000)
(2,500,000)
(4,000,000)
(500,000)
(500,000)
(750,000)
(2,000,000)
(237,500,000)
(594,643)
(1,000,000)
(196,000,000)
(891,964)
(600,000)
Unrealised gain/
(loss) in EUR
(141,829)
(14,803)
(11,017)
12,773
(14,389)
104,987
47,731
2,334
(64,344)
187,804
254,785
45,223
10,005
43,304
16,345
120,639
46,870
120,877
43,412
(178)
26,756
44,339
53,318
8,592
67,465
35,152
39,591
5,217
40,236
3,649
(44,107)
(63,071)
91,483
(442,194)
11,315
43,331
(257,973)
16,898
31,207
(8,791,472)
11. Swap contracts
As at December 31, 2014 outstanding cross currency interest rate swap contracts are composed of:
Description
Maturity date
Notional
in EUR
01.07.2015
01.07.2015
01.11.2016
31.01.2017
01.07.2016
25.11.2016
03.05.2016
03.07.2017
03.09.2018
01.10.2018
01.08.2017
04.01.2016
03.04.2017
01.01.2021
1,504,194
984,514
407,830
1,568,998
2,252,461
2,349,182
853,812
1,117,381
1,555,694
585,216
346,021
830,471
766,667
730,727
CIRS MFX EUR/KZT
CIRS MFX EUR/KZT
CIRS MFX EUR/GHS
CIRS MFX EUR/INR
CIRS MFX EUR/INR
CIRS MFX EUR/INR
CIRS MFX EUR/KGS
CIRS MFX EUR/KZT
CIRS MFX EUR/KZT
CIRS MFX EUR/KZT
CIRS MFX EUR/NGN
CIRS MFX EUR/TJS
CIRS MFX EUR/TJS
CIRS MFX EUR/USD
Counterparty MFX
Currency Risk Solutions
Notional in currency
KZT
KZT
GHS
INR
INR
INR
KGS
KZT
KZT
KZT
NGN
TJS
TJS
USD
282,653,000
185,000,000
2,500,000
166,000,000
208,532,839
250,000,000
81,650,000
283,189,165
550,560,000
199,500,000
100,000,000
7,248,600
7,141,500
1,000,000
Unrealised
gain/(loss)
in EUR
437,117
286,612
(23,863)
(359,690)
(240,657)
(579,617)
(71,928)
270,671
164,790
86,894
64,504
48,503
147,669
(117,448)
113,559
Total
12. Dividend distributions
During the year ended December 31, 2014 the following dividends were paid by the Sub-Fund Triodos SICAV II
- Triodos Microfinance Fund:
Class: “R” Shares Distribution (EUR)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.84
Class: “B” Shares Distribution (EUR)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.83
Class: “I” Shares Distribution (EUR)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 1.04
47
Class: “K-Retail” Shares Distribution (GBP)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.75 (GBP 0.61)
Class: “K-B” Shares Distribution (GBP)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.78 (GBP 0.63)
Class: “K-Institutional” Shares Distribution (GBP)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.93 (GBP 0.76)
Class: “K-Z” Shares Distribution (GBP)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.35 (GBP 0.28)
Class: “Z” Shares Distribution (EUR)
Ex-date: May 30, 2014
Payment date: June 6, 2014
Dividend per share: EUR 0.13
13. Off-balance sheet commitments
As at December 31, 2014 the Sub-Fund has committed to invest in the following companies:
Client
Country
Kompanion
BancoSol
BancoSol
Janalakshmi Financial Services
India Financial Inclusion Fund
Early Dawn Microfinance
Kyrgyzstan
Bolivia
Bolivia
India
India
Myanmar
48
Amount
KGS 117,297,135
BOB 48,313,739
USD 300,000
INR 200,000,000
USD 460,588
USD 735,000
14. Ongoing charges ratios
B Capitalisation Share Class (EUR)
B Distribution Share Class (EUR)
I Capitalisation Share Class (EUR)
I Distribution Share Class (EUR)
K-B Capitalisation Share Class (GBP)
K-B Distribution Share Class (GBP)
K-Institutional Capitalisation Share Class (GBP)*
K-Institutional Distribution Share Class (GBP)
K-Retail Capitalisation Share Class (GBP)**
K-Retail Distribution Share Class (GBP)
K-Z Capitalisation Share Class (GBP)***
R Capitalisation Share Class (EUR)
R Distribution Share Class (EUR)
K-Z Distribution Share Class (GBP)***
Z- Capitalisation Share Class (EUR)***
Z- Distribution Share Class (EUR)***
12 months
ending
December 31,
2014
12 months
ending
December 31,
2013
12 months
ending
December 31,
2012
2.50%
2.57%
2.05%
2.04%
2.64%
2.63%
2.00%
2.02%
2.63%
2.64%
2.26%
2.72%
2.70%
2.27%
2.35%
2.34%
2.72%
2.80%
2.05%
2.03%
2.67%
2.79%
2.03%
2.03%
2.75%
2.65%
2.20%
2.84%
2.82%
2.10%
2.29%
2.27%
2.90%
2.85%
2.08%
2.08%
2.78%
2.87%
2.07%
2.08%
2.64%
2.77%
n.a.
2.79%
2.80%
n.a.
n.a.
n.a.
* This share class has been active until January 2014. Ongoing charges are based on best estimate
** This share class has been active until June 2014. Ongoing charge are based on best estimate
*** Ongoing charges 2013 is based on best estimate
The ongoing charges reflect the total normalized expenses charged to the result, divided by the average net
asset value. For the calculation of the average net asset value, each computation and publication of the net
asset value is taken into account. The ongoing charges are calculated over the twelve month period ending at
the end of the reporting period.
49
15. Exchange rate
The exchange rates used as at December 31, 2014 are:
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
1 EUR =
94.292060
53.606078
0.776046
3.890311
9.194909
76.382401
110.128646
220.852345
3.601714
5,602.083333
6.422771
3,342.679558
1.210050
655.835659
2,874.228029
2,291.761364
BDT
DOP
GBP
GHS
GTQ
INR
KES
KZT
PEN
PYG
TJS
UGX
USD
XOF
COP
MNT
16. Other information
As at December 31, 2014, Mr. Patrick Goodman and Mr. Pierre Aeby both hold shares in Triodos Microfinance
Fund. The other directors do not hold shares in Triodos Microfinance Fund.
17. Transaction costs
The following table presents the transaction costs related to the portfolio of investments over 2014.
Currency (EUR)
2014
Triodos Microfinance Fund*
95.518
*This amount includes transaction costs related to disposition of equity investments during 2014. Also included are
transaction costs which relate to equity investments that are currently being acquired. These will be capitalized on the
cost price when the investments materialize.
50
18. Leverage
The leverage effect is determined by the AIFMD as being any method by which the AIFM increases the
exposure of Triodos Microfinance Fund, whether through borrowing of cash or securities leverage embedded
in derivative positions, or by any other means. The leverage creates risks Triodos Microfinance Fund.
The leverage is calculated on a frequent basis and shall not exceed such thresholds as further described in
the Sub-Funds Particulars in the prospectus of Triodos SICAV II, using both the ‘gross method’ and the
commitment method’. The gross method gives the overall exposure of Triodos Microfinance Fund, whereas
the commitment method gives insight in the hedging and netting techniques used by the AIFM.
Based upon the leverage ratio calculated by the commitment method as per year-end 2014 Triodos
Microfinance Fund is unleveraged. In implementing the investment policy Triodos Microfinance Fund will
generally not make use of leverage. The Sub-Fund can only use leverage for short term liquidity requirements
as described in the prospectus. This was not the case in 2014.
51
Report of the Réviseur d'Entreprises Agréé
statements, whether due to fraud or error. In making
those risk assessments, the Réviseur d’Entreprises
agréé considers internal control relevant to the
entity’s preparation and fair presentation of the
financial statements in order to design audit
procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the
entity’s internal control.
To the Shareholders of Triodos SICAV II Triodos Microfinance Fund
11/13 Boulevard de la Foire, L-1528 Luxembourg
We have audited the accompanying financial
statements of Triodos SICAV II – Triodos
Microfinance Fund, Sub-Fund of Triodos SICAV II (the
‘‘SICAV’’), which comprise the statement of net
assets as at December 31, 2014, and the statement
of operations, the statement of changes in net
assets and the cash flow statement for the year
then ended, and a summary of significant
accounting policies and other explanatory
information.
An audit also includes evaluating the
appropriateness of accounting policies used and the
reasonableness of accounting estimates made by
the Board of Directors of the SICAV, as well as
evaluating the overall presentation of the financial
statements.
Responsibility of the Board of Directors of the
SICAV
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for
our audit opinion.
The Board of Directors of the SICAV is responsible
for the preparation and fair presentation of this
financial statement in accordance with Luxembourg
legal and regulatory requirements relating to the
preparation of financial statements, and for such
internal control as the Board of Directors of the
SICAV determines is necessary to enable the
preparation of financial statements that are free
from material misstatement, whether due to fraud
or error.
Opinion
In our opinion, the financial statements give a true
and fair view of the financial position of Triodos
SICAV II- Triodos Microfinance Fund as at December
31, 2014, and of the results of its operations,
changes in its net assets and the cash flow
statement for the year then ended in accordance
with Luxembourg legal and regulatory requirements
relating to the preparation of the financial
statements.
Responsibility of the réviseur d’entreprises agréé
Our responsibility is to express an opinion on these
financial statements based on our audit. We
conducted our audit in accordance with
International Standards on Auditing as adopted for
Luxembourg by the Commission de Surveillance du
Secteur Financier. Those standards require that we
comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance
about whether the financial statements are free
from material misstatement.
Emphasis of matter
Without qualifying our opinion, we draw your
attention to note 1 to the financial statements which
describes that Triodos Microfinance Fund is a
Sub-Fund of Triodos SICAV II and does not constitute
a separate legal entity from Triodos SICAV II.
Other matter
An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures
in the financial statements. The procedures
selected depend on the judgement of the Réviseur
d’Entreprises agréé, including the assessment of
the risks of material misstatement of the financial
Supplementary information included in the annual
report has been reviewed in the context of our
mandate but has not been subject to specific audit
procedures carried out in accordance with the
standards described above. Consequently, we
52
express no opinion on such information. However,
we have no observation to make concerning such
information in the context of the financial
statements taken as a whole.
Luxembourg, March 31, 2015
KPMG Luxembourg, Société Coopérative
Cabinet de révision agréé
Jane Wilkinson
Partner
53
Appendix: microfinance institutions and banks
in the portfolio
as at December 31, 2014 and 2013
Number of borrowers
Microfinance institution
Country
AB Microfinance Bank Nigeria
Access Bank Tanzania Ltd.
AccessBank
ACLEDA Bank
ACLEDA Bank Lao
Advans Banque Congo
Percentage women
2014
2013
2014
2013
Nigeria
Tanzania
Azerbaijan
37,927
27,516
157,146
*
24,281
147,601
64%
33%
20%
*
38%
23%
Cambodia
Laos
Congo
339,627
18,685
6,135
335,627
16,711
5,835
53%
49%
38%
54%
48%
37%
Advans Ghana
Ghana
AMRET
Arvand
Asociacion Fondo de Desarrollo
AzerCredit
Bai Tushum
Cambodia
Tajikistan
Nicaragua
Azerbaijan
Kyrgyzstan
Dominican
Banco Ademi
Republic
Banco Itapúa
Paraguay
Banco Solidario
Ecuador
Bank Eskhata
Tajikistan
Bhartiya Samruddhi Finance
India
BRAC Bank
Bangladesh
BRAC Tanzania
Tanzania
BRAC Uganda
Uganda
Caja Rural de Ahorro y Crédito Credinka S.A. Peru
Centenary Bank
Uganda
Commercial Leasing Company
Sri Lanka
Compartamos Financiera
Peru
Contactar
Colombia
Credo
Georgia
Crezcamos
Colombia
Edpyme Raíz
Peru
Edpymes Proempresa S.A.
Peru
EMFIL
India
Enda
Tunisia
FAMA
Nicaragua
FINCA Azerbaijan
Azerbaijan
FINCA MicroCredit Company
Kyrgyzstan
First Microfinance Bank
Tajikistan
FUNDEA
Guatemala
Génesis Empresarial
Guatemala
Grameen Koota
India
Hamkorbank
Uzbekistan
54
11,702
11,818
51%
58%
304,211
32,080
61,555
79,305
28,847
285,828
*
*
74,372
24,112
79%
41%
50%
34%
40%
80%
*
*
35%
37%
217,425
175,328
50%
51%
13,553
384,990
54,750
***
223,225
113,959
158,833
35,539
155,821
53,810
238,361
72,095
178,132
73,369
96,702
49,311
492,067
246,788
48,044
156,879
126,537
20,236
23,897
115,306
717,283
52,631
*
382,027
35,896
360,447
201,647
101,068
129,108
30,266
142,606
54,329
198,362
66,386
139,428
*
97,152
45,073
*
*
*
152,825
128,341
*
30,998
145,831
425,589
*
25%
51%
38%
***
18%
97%
98%
49%
24%
20%
70%
46%
45%
54%
47%
50%
100%
67%
73%
28%
60%
33%
43%
65%
100%
36%
*
54%
38%
67%
17%
99%
98%
49%
24%
20%
63%
47%
42%
*
48%
50%
*
*
*
30%
62%
*
51%
63%
100%
*
Loan portfolio (EUR x 1,000)
Average loan (EUR)
% clients in rural areas
Number of saving clients
2014
2013
2014
2013
2014
2013
2014
2013
41,203
58,006
859,278
*
40,175
583,261
1,086
2,108
5,468
*
1,655
3,952
0%
0%
13%
*
0%
17%
86,121
165,908
335,277
*
128,040
165,107
1,648,226
68,612
23,904
1,068,262
64,343
15,298
4,853
3,672
3,896
3,183
3,850
2,622
86%
53%
0%
84%
39%
0%
1,424,590
44,881
18,487
1,105,167
33,667
15,478
8,957
6,852
765
580
0%
0%
26,685
24,912
237,557
31,812
61,540
71,635
88,391
147,992
*
*
52,314
61,851
781
992
1,000
903
3,064
518
*
*
703
2,565
88%
53%
68%
82%
69%
98%
*
*
77%
74%
123,060
10,842
**
**
30,978
90,627
*
*
**
7,445
219,655
180,394
1,010
1,029
5%
4%
235,625
194,170
193,188
517,539
135,764
***
1,061,788
19,941
26,402
125,773
245,846
200,013
261,544
52,639
136,936
52,501
143,315
81,540
102,728
100,225
32,002
201,836
104,913
45,953
23,508
71,831
146,750
397,247
*
441,458
89,134
55,518
1,083,886
15,151
17,324
103,406
188,455
158,615
219,254
44,193
96,440
*
128,720
67,007
*
*
*
153,440
81,503
*
22,399
65,207
65,074
*
14,254
1,344
2,480
***
4,757
175
166
3,539
1,578
3,717
1,097
730
769
716
1,482
1,654
209
406
666
1,287
829
2,271
984
623
205
7,548
*
1,156
2,483
154
5,375
150
134
3,417
1,322
2,920
1,105
666
692
*
1,325
1,487
*
*
*
1,004
635
*
723
447
153
*
4%
3%
30%
***
33%
66%
82%
32%
33%
27%
0%
84%
73%
58%
11%
29%
85%
43%
35%
64%
59%
45%
77%
83%
69%
21%
*
13%
27%
93%
33%
64%
68%
30%
56%
59%
0%
82%
73%
*
10%
30%
*
*
*
62%
59%
*
77%
90%
65%
*
32,080
88,171
88,545
***
652,031
**
**
42,790
1,057,181
**
5,890
**
**
**
**
5,076
**
**
**
**
**
43,777
**
**
**
114,671
*
91,790
74,038
**
641,973
**
**
38,095
984,557
**
1,409
**
**
*
**
540
*
*
*
**
**
*
**
**
**
*
55
Appendix: microfinance institutions and banks
in the portfolio
as at December 31, 2014 and 2013
Number of borrowers
Microfinance institution
Country
IMON
Kenya Women Finance Trust DTM
KMF LLC
Kompanion
LOLC Micro Credit
Mibanco
MicroCred Ivory Coast
MicroCred Senegal
Mitra Bisnis Keluarga
PRASAC
Prizma Mikro
Sathapana
Sonata
Utkarsh Microfinance
Visión Banco
Vistaar Financial Services
Vitas Jordan
XacBank
Percentage women
2014
2013
2014
2013
Tajikistan
Kenya
Kazakhstan
90,099
***
128,757
70,363
256,640
98,374
35%
***
67%
39%
100%
70%
Kyrgyzstan
Sri Lanka
Peru
Ivory Coast
Senegal
Indonesia
Cambodia
Bosnia Herzegovina
Cambodia
India
India
Paraguay
India
Jordan
Mongolia
115,167
229,364
300,827
19,638
35,287
492,991
251,112
14,428
94,852
361,873
504,567
242,604
46,212
7,511
26,766
108,596
185,782
364,575
*
28,538
*
196,906
35,801
78,862
*
*
275,808
22,211
*
80,116
76%
73%
56%
46%
43%
100%
86%
56%
58%
100%
99%
44%
83%
60%
50%
80%
70%
55%
*
46%
*
85%
55%
58%
*
*
44%
80%
*
57%
8,186,334
5,771,464
Grand total
* Not financed in 2013
** Not applicable
*** Repayment in 2014
56
Loan portfolio (EUR x 1,000)
Average loan (EUR)
% clients in rural areas
Number of saving clients
2014
2013
2014
2013
2014
2013
2014
2013
111,033
***
126,675
73,725
125,728
84,929
1,232
***
984
1,048
490
863
65%
***
66%
63%
70%
67%
3,772
***
**
1,015
371,512
**
66,490
150,906
1,158,280
52,371
60,506
47,870
479,792
28,456
257,352
60,826
76,449
640,219
53,906
13,137
95,775
59,259
111,860
1,177,126
*
39,999
*
275,293
36,826
132,134
*
*
488,273
22,648
*
458,202
577
658
3,850
2,667
1,715
97
1,911
1,972
2,713
168
152
2,639
1,166
1,749
3,578
546
602
3,229
*
1,402
*
1,398
1,029
1,676
*
*
1,770
1,020
*
5,719
98%
0%
25%
0%
0%
90%
89%
57%
55%
72%
69%
1%
73%
0%
37%
99%
90%
23%
*
0%
*
88%
59%
53%
*
*
2%
76%
*
40%
**
**
394,641
**
131,543
**
360,349
35,799
87,376
**
**
284,068
**
**
454,701
**
**
713,843
*
98,623
*
302,917
35,799
58,115
*
*
229,082
**
*
410,360
11,380,541
8,402,930
6,384,915
5,818,281
57
Management and administration
Depositary, Paying Agent, Domiciliary,
Corporate and Administrative Agent
Board of Directors
Pierre Aeby (Chair)
Chief Financial Officer and member of
the Executive Board of Triodos Bank NV
RBC Investor Services Bank S.A.
14, Porte de France
L-4360 Esch-sur-Alzette
Luxembourg
Marilou van Golstein Brouwers
Managing Director of Triodos Investment
Management BV
Registrar and Transfer Agent
Patrick Goodman
Independent, Partner of Innpact S.à r.l.
RBC Investor Services Bank S.A.
14, Porte de France
L-4360 Esch-sur-Alzette
Luxembourg
Olivier Marquet
Managing Director of Triodos Bank NV
(Belgian branch)
Réviseur d’Entreprises Agréé
Garry Pieters
Independent, Associate The Directors’ Office
Luxembourg
KPMG Luxembourg, Société Coopérative
39, Avenue John F. Kennedy
L-1855 Luxembourg
Luxembourg
Alexander Schwedeler (until May 12, 2014)
Managing Director of Triodos Bank NV
(German branch)
Legal Advisor in Luxembourg
Arendt & Medernach
14, rue Erasme, B.P. 39
L-2010 Luxembourg
Luxembourg
Alternative Investment Fund Manager
Triodos Investment Management BV
Nieuweroordweg 1
P.O. Box 55
3700 AB Zeist
The Netherlands
Fund Manager
Femke Bos has been Fund Manager of Triodos
Microfinance Fund since the funds' inception in
2009. Before, she was Fund Manager of Triodos
Sustainable Finance Foundation (formerly Triodos
Doen). Femke Bos is also Regional Manager for Asia
and responsible for a number of equity investments
there. She served on the Board of Directors of
XacBank in Mongolia from 2005-2009 and is
currently a member of the Board of Directors of
ACLEDA Bank in Cambodia and ACLEDA Bank Lao in
Lao PDR. Femke Bos joined Triodos Bank in 2002 as
a Senior Investment Officer Asia. Before that, she
held several (management) positions with ABN
AMRO Bank in the Netherlands. She has a Master’s
degree in Law from the University of Amsterdam.
Distributor
Triodos Investment Management BV
Nieuweroordweg 1
P.O. Box 55
3700 AB Zeist
The Netherlands
Registered Office
11-13, Boulevard de la Foire
L-1528 Luxembourg
Luxembourg
As at December 31, 2014, the fund manager does not
hold shares in Triodos Microfinance Fund.
58
Rated by:
The Luxembourg Fund Labelling Agency (LuxFLAG) is an independent, non-profit association. The Agency,
founded in 2006, aims to promote the raising of capital for Responsible Investment sectors by awarding a
recognisable label to investment funds. Its objective is to reassure investors that the applicant investment
fund invests, directly or indirectly, in the responsible investment sector. The applicant fund may be domiciled
in any jurisdiction that is subject to a level of national supervision equivalent to that available in European
Union countries.
Colophon
Triodos SICAV II - Triodos Microfinance Fund annual report 2014
Published
March 2015
Text
Triodos Investment Management, Zeist, The Netherlands
Photography
Photos in this annual report have been provided by microfinance
institutions in which Triodos Microfinance Fund invests.
Design
Michael Nash Associates, London, United Kingdom
Layout
Via Bertha, Utrecht, The Netherlands
Printing
Drukkerij Pascal, Utrecht, The Netherlands
Circulation
200 copies
Contact
If you have comments or questions about this report,
please contact Triodos Investment Management.
This document can be downloaded from: www.triodos.com.
TLEn