alterfin - annual report 2014

Annual Report 2014Focus on Alterfin’s activities, social and financial performance

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Highlights 20145,002 shareholders

43.7 million euros capital

+9.5 million euros in 2014

1,381,048 people benefit indirectly from Alterfin’s work

64,917 people and their families benefit directly from Alterfin

61% women

70% living in rural area

In total56.7 million euros invested

131 partners

28 countries in the South

+8.3 million euros in 2014

26 million euros invested in

58 organisations active in sustainable agriculture

79% fair trade certified

81% certified organic

29 million euros invested in

69 microfinance institutions

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In 2014, Alterfin recorded its highest growth since it first began, 20 years ago. Capital increased by EUR 9.5 million and the portfolio under management by EUR 18.2 million. Not only is the growth itself remarkable, but so is what it means for the 65,000 families in the South who benefit from our investments.

Our net result is almost equal to last year’s results. However it suffered from the EUR 750,000 in write-downs that we had to make on our portfolio in response to the difficulties encountered with some of our partners in the last two years. These write-downs were almost entirely related to our investments in the small-scale agricultural sector. Many of the organisations in this sector are weak and have little ability to withstand crisis situations caused by price volatility or climate changes which affect production. This was a lesson for us, as we want to increase our support for this agriculture sector but are obliged to revise our procedures in order to analyse and track the weaknesses of these organisations more effectively, so as to be better prepared should the situation worsen. This is an on-going process and remains one of the main challenges we face in 2015.

The exceptional growth in Alterfin’s activities in the last three years also put a great deal of pressure on the organisation. Structure, procedures, competencies and systems have to evolve so as to be able to keep pace with the growth and enable us to achieve our ambitious social mission objectives. This is why in May, the Board of Directors started a process of reorganising and strengthening Alterfin. The then-acting General Manager,

Foreword

Kris Goossenaerts, was replaced by a management committee chaired by Hugo Couderé. This committee drafted a restructuring plan. The team was reinforced with additional members, new functions were introduced and a start was made on the task of strengthening procedures and systems. This was consolidated at the end of the year with the appointment of a new General Manager, Jean-Marc Debricon, who started working at Alterfin in January 2015. His profile, experience and motivation are significant factors for Alterfin and its team.

In December 2014, we also received the good news that Alterfin’s ‘Development Fund’ status has been renewed for another five years, which means that we can extend the tax benefit for all shareholders who increase their stake in the next five years. This provides us with a good platform to ensure that raising capital will not be an issue as we move forward. With a strengthened team, a committed Board of Directors and a clear action plan to guide our further reorganisation, I believe that Alterfin is on track for an interesting and challenging 2015.

On behalf of our partners, team and board, I thank you for your support and your trust.

Dominique MorelChairwoman of the Board of Directors

Dear reader,

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About this report

Alterfin is providing a full version of the annual report detailing the company’s financial, social and environmental performances.

This report is presented in accordance with the guidelines laid down in the Global Reporting Initiative (G3 .1, level C, ‘self-declared’), including the supplement on the financial sector. The Global Reporting Initiative (GRI) is a non-profit organisation that has developed one of the world’s most widely used set of sustainability reporting guidelines. The GRI indicators published in this report were selected in accordance with the principles of relevance and feasibility. The table summarising the GRI indicators can be found on page 45.

This report was prepared by a working group comprising representatives of each Alterfin department, under the supervision of the General Manager and the Board of Directors. It also incorporates content specifically requested at the last General Assembly.

The sections giving details of our investment portfolio and its social and environmental performance take into account all the portfolios managed by Alterfin as at 31 December 2014. The financial results are based solely on the Alterfin balance sheet and profit and loss statement for the 2014 financial year.

This report is also available on our website in French and Dutch (www.alterfin.be).

For any further information, please contact Audrey Timmermans ([email protected]).

Printed versions of this report were printed with ecological inks on recycled paper and CO2 neutral.

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Index

12 Our investments in the South16 Zoom microfinance22 Zoom sustainable agriculture32 Environmental performance34 Team and Board of Directors

2 Highlights 20143 Foreword4 About this report6 Our mission8 20 years: our key moments!10 Capital growth: a new record!

32 Financial performance44 Perspectives 201546 GRI indicators

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A ‘green’ idea with commercial successMeet our Peruvian partner on p. 28.

Our mission

ContextClose to 1 billion people - mainly living in the Southern Hemisphere - have to manage on an income of lessthan 1 euro a day. To get out of that poverty trap, many of them use the few means they have to set up small businesses or engage in commercial or production activities, usually in the informal economy. More often than not, these small entrepreneurs or farmers do not have any or have very little access to credit, a lever that would in fact allow them to improve their situation. They need capital to invest in and expand their businesses. Their main problem is that they do not have any access to loans. The local financial institutions often have very little money at their disposal or feel that these particular applicants are not creditworthy. In other cases, there simply are no local lending institutions to approach.

MissionThe objective of Alterfin is to help build a financial network that is accessible to groups of socially and economically disadvantaged people in developing countries who rarely have access to financial resources. To achieve this objective, Alterfin raises capital in Belgium and invests it in the South. Alterfin raises that capital bymeans of shares anyone can subscribe to. It is thanks to this capital that Alterfin is in a position to fulfil its social mission by granting loans to microfinance institutions and fair trade farmers and producers associations in the developing world.

MicrofinanceAlterfin grants loans to microfinance institutions (MFIs) in Latin America, Africa and Asia who in turn offer microloans to small local businesses and farmers. These organisations offersavings and lending services to tens of thousands of local farmers and small businesses. Thanks to these loans, they can set up their own business or develop their activities.

Sustainable agriculture and fairtradeAlterfin directly finances organisations of small famers and producers that are active in sustainable agriculture. Many of those organisations have a fair trade or organic label. These products are the fruit of a trade that is based on sound social, economic and environmental standards.

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New countriesIn 2014, Alterfin developed for the first time cooperation with partners in Burundi and Zambia.

Back to MoroccoIn 2014, Alterfin once again financed MFIs in Morocco. Alterfin had ended financing for Moroccan partners in 2009 further to the crisis in the microfinance sector in the country.

Alterfin funds

Alterfin and third-party funds

Third-party funds

131 partners in 28 countries At the end of 2014, all the investments managed by Alterfin were spread among 131 partners, 15 more than the previous year.

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20 years: our milestones

16 November 1994 - Creation of Alterfin

1995 - First credit facility granted in Latin America

1995 - First credit facility granted in Asia

1995 - Share subscription opens for individual shareholders

1996 - First microfinance institution financed

1997 - Share capital reaches EUR 1 million

2000 - Creation of Alterfin Guarantee Fund

2000 - First African partner

2001 - Distribution of first dividend


2004 - 5 team members 2006 - 1,000 shareholders

2007 - Managing third-party funds

2009 - Capital of EUR 10 million

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2010 - Recognized as approved development fund

2010 - 10 team members

2010 - Creation of Fopepro

2010 - 2,000 shareholders

2010 - Creation of Fefisol



2013 - New logo




Discover our interactive timeline at www.alterfin.be/en/20years

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Capital growth: a new record!

Alterfin’s share capital continued its impressive growth in 2014: a total of EUR 9.5 million was added to the EUR 34.2 million already raised at the end of 2013. As at 31 December 2014, the capital therefore stood at EUR 43.7 million.

Altogether, 598 individual and institutional shareholders joined our cooperative in 2014, bringing the total to over 5,000!

Individual shareholders account for 95.8 % of the total number and contribute 82.5 % of the capital.

Alterfin gathers this capital by issuing shares. For individuals, shares cost EUR 62.50 each. Legal entities subscribe to shares at EUR 250. Alterfin uses its capital to make investments in the South. The higher the capital, the more Alterfin can provide access to financial services for people in the South, who are often excluded from the standard market.

Financite labelIn 2014, Alterfin shares obtained the Financite label. This label – the first of its kind in Belgium – certifies products that finance socially and/or environmentally useful activities.

Renewal of recognition as a Development FundIn 2010, Alterfin was the first Development Fund to be recognised by the Belgian Ministry of Finance. Since then, anyone investing in Alterfin and meeting the conditions has enjoyed a capped 5% tax reduction. This approval was given for a period of five years.In December 2014, we received confirmation of the renewal of this agreement for Alterfin until 2019. The tax benefit for our members has thus also been extended until 2019.

Discover all the advantages and conditions on our website www.alterfin.be.

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”Over 12 years ago, my husband and I, knowing that most bank investments only aimed to bring in interest on capital, were looking for ways to invest our money more ethically”, Martiale Ferauge-Poismans tell us.

The couple had worked in developing countries

for three years and were aware of the problem of socially and economically underprivileged workers. “We were looking for a formula that would respect the workers, enabling them to earn a living with dignity. We had also been concerned about the environment for a long time”, she explains. We found out about Alterfin by chance and realised that this organisation, which was still young at the time, met our criteria.”

« At every General Assembly, we

realise that we have made the

right choice. »

The decision was taken: Martiale and her husband became shareholders in 2003. Since then, they have remained just as enthusiastic about our cooperative. “At each General Assembly, we realise that we have made the right choice. It’s so lovely to see the pride of these farmers or craftsmen when they take stock of what they have achieved since they were granted a microcredit facility. The assurance that they can feed their family, send their children to school and develop their own knowledge gives them a sense of regained dignity that should be every human being’s right”, she says.

“Finally, we were surprised to see that the return on our investments was far greater than we expected. In these times of crisis, that’s no trifling matter.”

“Since my dear husband died, by continuing to invest what I can, I remain faithful to the choices we made together and it always gives me so much pleasure, at the General Assembly every year, to see the big Alterfin family which is just growing and growing.”

Martiale Ferauge-Poismans

TESTIMONIAL

Martiale Ferauge-Poismans has been an Alterfin shareholder for 12 years. Testimony of shareholder loyal to the Alterfin values.

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Our investments in the South

The vast majority of the funds invested come directly from the Alterfin capital. Alterfin’s own portfolio, built on the basis of the share capital, recorded outstanding growth (+52 %) and reached EUR 42.9 million at the end of the year. As the vast majority of our investment portfolio is in dollars, the impact on this growth of the rising value of the dollar compared with the euro cannot be ignored. After ‘adjustment’, our investment portfolio grew by 34 %, which is still one of the finest results of recent years.

Alterfin also manages investments for other organisations, either for funds set up jointly with other bodies, such as Fefisol and Fopepro, or for Calvert Foundation, an American organisation that finances social economy projects. The development of each of the portfolios managed by Alterfin is detailed below:

“When microcredit goes mobile”Discover Musoni, our new African partner. p. 20

Investments in EUR 2011 2012 2013 2014 Difference 2013-2014

Portfolio Alterfin 21,374,463 25,305,003 28,189,189 42,882,575 52%

Portfolio Fefisol 450,000 1,789,049 3,349,897 6,544,882 95%

Portfolio Calvert Foundation N.A. 756,727 4,198,758 4,370,298 4%

Portfolio Fopepro 3,844,101 3,290,394 2,507,835 3,184,559 27%

Portfolio responsAbility 20,588,468 13,071,683 468,962 0 -96%

Total managed by Alterfin 46,257,032 44,212,856 38,714,641 56,982,313 47%

At the end of 2014, the investments managed by Alterfin (including those managed for third parties) totalled EUR 56.9 million, 47 % more than the previous year. Alterfin has therefore returned to growth and has now fully offset the portfolio loss linked to the end of its cooperation with responsAbility.

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A historical presence in Latin America

Most of the investments managed by Alterfin remain concentrated in Latin America. At the end of 2014, investments in Latin America amounted to EUR 42.7 million, up EUR 11.6 million compared with 2013.

At the end of 2014, investments in Africa and Southeast Asia amounted to EUR 10.2 and EUR 3.2 million respectively.

Since 2010, Alterfin has also financed one partner in Palestine. This financing, which amounted to EUR 600,000 at the end of 2014, provides support for 1,200 olive oil producers.

But Africa is increasingly present

The African continent is increasingly present in our investment portfolio, having risen from 8 % to 18 % in two years. This result is, of course, linked to the development of Fefisol, but this is not the sole factor, since Alterfin also supports new African partners using its own funds.

Moreover, although the volume of investments in Africa is limited, the scope is significantly wider, because almost 46 % of the final beneficiaries of our financing are in Africa. The average amount of the loans made to end clients of the MFIs financed in Africa is smaller than the loans made in the other regions, which means that with the same sum of money, Alterfin reaches far more clients in Africa than on any other continent.

Fefisol is booming

Fefisol is a fund dedicated entirely to Africa, set up by Alterfin in conjunction with SIDI (Solidarite Internationale pour le Developpement et l’Investissement – a French social investment company) and Etimos (an Italian cooperative investment company). This fund has been operational since 2011. The task of identifying and following up partners is divided among Alterfin, SIDI and Etimos.

In 2014, Fefisol financing managed by Alterfin almost doubled, amounting to EUR 6.5 million at the end of the year. This trend enabled us to support 22 partners, 11 more than the previous year, in 9 African countries.

Latin America

Africa

Southeast AsiaMiddle EastD

istribution by region

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61 % of our investments affect women

Alterfin places the emphasis on access to financing for women for a number of reasons:✓ the inequalities between the sexes in developing societies hamper economic growth and development; ✓ women are over-represented among the poorest people on the planet;✓ women tend to spend more on their family. Consequently, when women are helped to increase their income, this improves the well-being of the entire family.

We fulfil our mission successfully, since 61 % of the clients of Alterfin partners are women. Women are particularly well represented if we look exclusively at our microfinance partners (66 %).

Latin America

Africa

Southeast Asia

Middle East

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s64,917 people (and their families) have benefited directly from the work of Alterfin

As at 31 December 2014, our partners worked with over 1,380,000 clients or producers worldwide: over 1,280,000 micro-entrepreneurs and over 100,000 producers. Of these 1,380,000 people, 64,917 (and their families) may be said to have benefited directly from the work of Alterfin (through investments specific to Alterfin or via funds managed on behalf of third parties), which is 7,297 more than the previous year.

The majority of them are in Africa: 46.1 %. Latin America also accounts for a substantial proportion of the total clients, with 43.9 %. Southeast Asia and the Middle East represent a smaller number of clients (9.7 % and 0.2 % respectively). Although the volume of investments in Africa is limited, their scope is substantially wider. This is due to the fact that the average amount loaned is far smaller in Africa (see p. 18).

61 % of our financing directly supports the sustainable family agriculture sector

In the developing countries, the majority of the rural population works in agriculture. Seasonal factors and climate uncertainties are often responsible for significant variations in family incomes. What is more, the rural population is widely scattered and official financial institutions (such as the commercial banks) largely avoid serving rural areas owing to the higher transaction costs and risks.Nevertheless, there is a great need for financing services which could directly help create sustainable activities and reduce poverty. This is why Alterfin prefers to support microfinance institutions operating in rural areas as well as producers’ organisations and small and medium-sized enterprises that support sustainable small-scale agriculture.

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FOCUS ON MICROFINANCE

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69 microfinance institutions financed

Investments amounting EUR 29 million

8,985 people employed by our partners

1,281,488 end clients

66% women and

68% live in rural areas

54,007 direct beneficiaries of Alterfin’s investments

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What type of partners does Alterfin finance?

Alterfin prefers to target MFIs that serve rural and less accessible areas where the need for financing is usually greater.

The MFIs financed by Alterfin have to demonstrate a combination of sustainable factors from a financial point of view, as well has having a worthwhile social profile. This twofold objective of financial sustainability and social performance must be reflected in the MFI’s ‘institutional’ profile, its credit policy and all its procedures, but also in its commitment to those on low incomes and in the relationships that it maintains with its clients, its staff and the local community.

Our investments in microfinance in 2014

At the end of 2014, investments with microfinance institutions (MFI) stood at EUR 29.2 million, accounting for 51 % of all the investments managed by Alterfin.

This financing is divided among 69 institutions, i.e. nine more than in 2013. Of these, 49 are located in Latin America, 16 in Africa and 4 in Asia.

Our microfinance partners’ social performance

As at 31 December 2014, our microfinance partners worked with 1,281,488 clients throughout the world.

The standard client? A woman living in a rural area.Women have made microcredit a tool for economic and social emancipation, which also enables them to feed their children properly and promote their education. They are even the favoured clients of many microfinance institutions. 66 % of our microfinance partners’ clients are women.

In the South, the traditional banks often refuse to help small-scale farmers as they cannot provide guarantees. Microfinance is therefore a powerful alternative for the rural and farming sector. 68 % of our partners’ clients live in rural areas.

Average microcredit facility less than the average GDP per habitantThe average microcredit (weighted in line with the number of clients per MFI) granted by our partners varies considerably among the regions: EUR 236 in Africa, EUR 926 in Asia, EUR 983 in Central America and EUR 2,138 in South America. In general terms, the average loan granted by our partners is approximately EUR 1,200 per client. In each region, the average credit is well below the average gross domestic product per inhabitant, which proves that our partners are working with relatively poor population groups.

Socially responsible interest ratesThe general public is often surprised by the interest rates that the end clients of microfinance institutions (MFI) have to pay, since at first sight they seem very high.

There are many reasons why the interest rates charged by the MFIs are higher than those applied by ordinary banks, the main ones being the operating costs, which are inevitably higher, and the impact of the financing costs. Granting 10,000 loans of $100 is

Why support microfinance?

Microfinance institutions (MFI) provide a range of financial services (including microcredit facilities) for people on low incomes who find it difficult to access the official financial sector (ordinary banks), if they are able to do so at all. These financial resources enable them to build up activities that generate income and thus benefit from development opportunities.

Alterfin finances the microfinance institutions so that they have more resources and can grant more microcredit facilities, thereby supporting more local initiatives.

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Partners concerned to protect their clientsAlterfin has joined the Smart Campaign, a worldwide initiative aimed at implementing seven Client Protection Principles. 72% of our partners have signed the Client Protection Principles (compared with only 50 % in 2010).

Services adapted to clients’ needsBesides microcredit facilities, most of our microfinance partners also offer other financial services: 66 % of our partners also offer insurance services (outstanding balance insurance, life insurance, health insurance, etc.) and 51 % of them offer savings services. Some also offer money transfers services (37 %) or facilities for making payments by cheque (28 %).

In addition to financial services, most of Alterfin’s MFI partners also offer their clients a series of non-financial services. For instance, 67 % of our partners offer adult education services so as to help their clients make better use of the financial products and services available. 58 % of our MFI partners offer women’s empowerment services aimed at alleviating social inequalities and the constraints faced by women. Finally, 28 % offer health-care services.

Client Protection Principles

1. Appropriate product design and delivery2. Prevention of over-indebtedness3. Transparency4. Responsible pricing5. Fair and respectful relations with clients6. Confidentiality of client data7. Complaint resolution mechanisms

operationally much more expensive than granting one loan of one million dollars. In addition, MFI clients do not usually have a credit history, nor can they given any guarantee that could cover the risk of non-payment.

Our partners often have high operating costs compared to other microfinance institutions: their clients live often live in remote rural areas. It is more expensive to finance this type of client and to manage their reimbursements.

At Alterfin, we believe that the MFI must legitimately be able to cover their operating costs, but that these costs should be kept as low as possible. We therefore look closely the efficiency of operations. In addition, under no circumstances should high interest rates be used to pay large profits to MFI shareholders. Alterfin therefore also keeps a close eye on the profit level and dividends policy of its partner MFIs.

Despite the emphasis on financing in rural areas, which usually gives rise to higher operating costs, the average interest rates applied by our MFI partners are similar to those applied elsewhere in the sector.

One of the new microfinance institutions financed by

Alterfin is Chamroeun. This Cambodian MFI has the

special feature that it grants exceptionally small microcredit

facilities. The average amount of the loans granted is EUR 133.

Africa 38,7%

Central America 37,9%

Asia 33,7%

Latin America 28,0%

Global 33,6%

The rates presented in the table representthe average actual costs incurred by the end-clients of our partners. They take into accountthe method of calculating interest, differentcosts related to credit, frequency of capitalizationfrequency of payments and the possible impactof compulsory savings.

Annual percentage rate of our MFI partners by region

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Musoni, an MFI set up in Kenya in 2010, has the answer to all these questions. The MFI offers its clients mobile banking services. Clients can receive and reimburse their microcredit facilities via their mobile phones. “This system has numerous advantages”, explains MFI manager James Onyutta. “Thanks to mobile banking services, the administrative costs have been sharply reduced and it costs less to run the branch. We are also among the fastest to pay out and the transactions are more secure. It’s better for our credit managers, too, because they spend less time travelling and can spend more time with clients.”The system has many advantages for clients, as well. We met three of the MFI’s clients to find out about their experiences with the MFI and its innovative services.

Alterfin has been financing Musoni since August 2014, together with Fefisol, through a joint loan of approximately EUR 500,000 (see p. 13).

REPORT FROM THE FIELD

When microcredit goes mobile

How can people gain access to credit when they live in remote areas of the country where no microfinance institutions (MFI) wish to set up a branch because the costs are too high? And for those living in urban areas, how do they avoid the long queues in a bank, only to be told that they are not considered creditworthy or that they will need to come back with additional documents? Is there a way of facilitating access to credit for these people who need financial resources in order to build a better future for themselves?

“Thanks to the credit facility, I have developped my business, my children go to school and I am building my own house. With the mobile service, I no longer waste time travelling. It saves me a lot of time!”

Richard Mbeviclient de Musoni au Kenya

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Having been granted four microcredit facilities, Richard Mbevi has become a regular client of the MFI. “I run a shop and I also provide transport services with my motorbike (called ‘boda boda’ in Kenya). I’m married with three children. I often had to close my shop to go to a bank, but none of them would give me a loan. I eventually received my first credit facility of 30,000 Kenyan shillings (approximately EUR 290) from Musoni. I’ve always repaid my loans properly and my most recent credit facility is for 140,000 shillings (approximately EUR 1,350). Thanks to the credit facility, I have developed my business, my children go to school and I am building my own house. With the mobile service, I no longer waste time travelling. It saves me a lot of time!”

Finally, George Irungu Karuiki owns a secondary school and he, too, is a client of the MFI. He received his first credit facility in December 2013 and since then has been granted a second loan of 400,000 shillings (approximately EUR 3,850). With these two loans, he bought laboratory equipment for the school and a vehicle. “It has improved the quality of the education”, George tell us. “The pupils understand the science courses better thanks to the practical exercises, and it is easier for them to get to and from school. Thanks to the Musoni mobile service, I can make payments from the school. It’s much easier and less restrictive from an administrative point of view.”

Priscilla Wanjiku Ndirangu is also a Musoni client. At 32 years of age, this mother of two has received an initial loan of 120,000 Kenyan shillings (approximately EUR 1,250) to finance her poultry business. “With this loan, I bought chicks, and food for the animals. I’ve also started building an annex and I hope to receive another credit facility from Musoni to finish it.” Priscilla has succeeded in generating a stable income and she can rely on Musoni to achieve her ambitions for the future.

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FOCUS ON SUSTAINABLE AGRICULTURE

58 partners financed

EUR 26 million in financing

20 agricultural products

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100,963 producers,10,340 of whom are women

10,911 direct beneficiaries of our financing

411,229 hectares of land farmed sustainably

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Why support sustainable agriculture?

Over two billion of the poorest people on the planet depend on agriculture as a means of subsistence. However, as long as the terms of trade in the small-scale family agriculture sector remain unfavourable to them, smallholders will remain the poorest. Supporting family agriculture is one way of stimulating local economies and fighting extreme poverty.

Sustainable agriculture contributes significantly to the eradication of hunger and poverty, improve food security, nutrition and livelihoods, management of natural resources, protection of the environment and sustainable development especially in rural areas and is also closely linked to world food safety.

For these reasons, above and beyond supporting microfinance, Alterfin is also committed to financing sustainable agriculture.

Our investments in sustainable agriculture in 2014

At the end of 2014, investments with producers’ organisations or businesses focusing on small-scale farming amounted to EUR 25.9 million, accounting for 45 % of all the investments managed by Alterfin.

This financing is spread among 58 partners, i.e. seven more than in 2013. Of these, 43 are located in Latin America, 13 in Africa, one in Southeast Asia and on in the Middle East.

What type of partners does Alterfin finance?

Alterfin finances mainly farmers’ organisations operating in the fair-trade circuit. Thanks to the loans provided by Alterfin, these organisations can prefinance producers’ harvests, giving them better access to the market. The producers’ organisations often also take care of processing and marketing the product harvested. This means that the volumes traded are bigger, and a balance of power with the buyers is restored, so that producers can receive a higher price for their harvest.

In the past few years, our activity has extended to include the financing of sustainable agricultural value chains more globally. In fact, Alterfin also finances SMEs or other organisations that are not necessarily linked to fair trade, but that focus on small-scale farming and that create added value for producers in the South. These businesses are usually too big to benefit from microfinance but too small to benefit from credit facilities granted by commercial banks.

“Thanks to the Alterfin financing we are promoting

sustainable projects and the diversify cultures that helped

support producers affected by coffee rust.”

Cocafcal, a coffee cooperative in Honduras.

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Coffee 21,3%

Cocoa 8,7%

Sesame 4,0 %

Wine 2,4%

Honey 1,9%

Other 7,4%

New agricultural products financed

In 2014, Alterfin further diversified the agricultural products it finances, including a number of new items: karate butter, tara, mangoes and other fruits and vegetables, cattle and the production of organic fertilisers.

Via the Divisoria cooperative in Peru, Alterfin invests in the production of organic fertilisers. For more information about Divisoria, see page 28.

Tara is a species of shrub that originates on the high plateaus of Peru and has adapted perfectly to the climate in the rest of South America. Its fruit is long and flat, and contains between four and seven large black seeds. These are usually

harvested by hand, then dried in the sun before being processed. Back in pre-Inca times, the seeds of this plant were used to dye textiles, tan leather or prepare medicines. These days, tara tannin is used mainly in the production of car seats and shoes. Tara gum, which is extracted from the seeds themselves, can be used in the food industry as a vegetable thickener or stabiliser. Considered to be an excellent alternative to the harmful and more expensive products used in the processing industry, demand for these natural products is increasing exponentially.

The colour of coffee We finance 21 agricultural products, but coffee is still the main product financed, accounting for 21.3 % of the investments managed by Alterfin.

Coffee accounted for 29% of our funding in 2013. However Alterfin decided to reduce the proportion of investment in coffee to avoid too much concentration in a sector that has faced many challenges in 2013 (rust epidemic, and price decrease and volatility, decreased demand for certified coffee).

A substantial proportion of our investments is also made in the cocoa sector (8.7 %).

This is followed by sesame (4 %), wine (2.4 %) and honey

(1.9 %).

Other products include, in

particular, cane sugar, olive oil,

rice, soya, quinoa, bananas, cashew nuts and blueberries, as well as the new products financed in 2014.

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Social performance of our sustainable agriculture partners

At the end of 2014, 51 partner organisations shared their social results. Together they represent 100,963 producers, including 10,340 farmers and over 2,500 permanent employees. These partners account for over 400,000 hectares of land farmed sustainably.

Together, their sales amounted to EUR 341 million in 2014, 87 % of which were certified (in line with fair trade and/or organic farming or by means of another type of certification, such as Utz or the Rainforest Alliance).

Using fair trade premiums to secure the future

In addition to the minimum price, fair trade buyers also agree to pay a premium on top of the agreed ‘fair’ price. The total granted to our ‘fair trade’ partners as a fair trade premium amounted to EUR 21.8 million in 2014.

The producers decide how to use the premiums democratically within the farmers’ organisation. In 2014, the premiums were mainly paid back to producers (66 %), but a large proportion was also used to improve infrastructures (17 %), enhance the quality of production and ensure certification (11 %) or in projects linked to the health (2 %) or education (2 %) of the community.

Certified sales growing again

Last year, we saw a fall in demand for certified products among international buyers. Our partners therefore had to sell some of the production of their members (although certified) under the standard system, without being able to benefit from either the minimum price or the fair trade premium.

In 2014, the proportion of certified sales rose again (87 % in 2014, compared with 69 % in 2013), a sign that certified products have once more become attractive to international buyers.

This year, we are again seeing very strong growth in sales with certification other than the FLO (fair trade) or organic label. Most of these are products certified by Utz or the Rainforest Alliance. This trend is the result of greater demand among international buyers for these forms of certification that do not set minimum prices.

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More than a business relationship

84% of the producers’ associations financed by Alterfin offer their members additional services, mainly technical assistance to improve quality of the harvest and the quantity and productivity of the association. There are also various education and health-care services, projects for women and other community projects.

For example, the Ecookim cooperatives union, together with two commercial partners, built two schools to facilitate access to education for their members’ children in Ivory Coast.

“The producers are now adopting working methods

that protect the environment and safeguard their health

while optimizing their returns.”

Ecookim, union of cocoa cooperatives

in Ivory Coast.

Direct payment to producers

Infrastruc-ture

Quality improvements, certifications.

Other social projects

Health

Education

Use of the fair trade premium

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REPORT FROM THE FIELD

Divisoria: a ‘green’ idea with commercial success

When it was launched in 2001, the Divisoria cooperative in Tingo Maria, Peru, worked only in coffee. In 2005, the cooperative obtained the ‘FLO’ label and in 2007 the products were granted organic certification. That same year, Divisoria diversified into cocoa and since 2008, it has also offered organic fertilisers.

Focus on qualityOne of the special features of Divisoria is its focus on quality. The cooperative in fact relies on very high quality products. A winning strategy, because the cooperative manages to cope with the competition and has also succeeded in minimising the damage caused by rust, a fungus that destroyed a great many coffee harvests in Latin America in 2013.

First Alterfin creditAlterfin first entered into a relationship with the cooperative in 2010, granting it its first loan of USD 200,000. The relationship strengthened as of 2012. That was when Alterfin granted the cooperative a medium-term credit facility (three years) to underpin Divisoria’s investments in infrastructure and equipment. Divisoria wanted to improve its warehouses and also build a fertiliser plant.

Since it was created in 2001, the Divisoria coffee producers’ cooperative has expanded its activities. Since 2007, it has offered fair-trade and organic cocoa and in 2008 it launched organic fertilisers that are enjoying huge success. Find out about this Peruvian partner.

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Organic fertilisers are boomingWith a view to fulfilling very stringent quality criteria, Divisoria developed certified organic fertilisers. After eight years of preparation, the fertilisers were placed on the market and proved an immediate success. The very high demand came from members of the cooperative, but also from private individuals and the Peruvian government. The fertilisers are currently sold four months in advance.

A coffee producer tells us“Thanks to the fertilisers, my coffee held out against the rust shock”, says Luis Rodriguez, a producer in the cooperative. “The rust had a devastating effect and many producers lost much if not all of their harvest! We are taught to take care of the land and of our plantations by using green products. What’s more, as a member of Divisoria, I receive very good prices for my coffee and cocoa beans. I can live with dignity during the difficult harvest months.”

New Alterfin financingCalvert Foundation (see p. 12) also wished to support the Peruvian cooperative by making an initial investment in 2013. Thank to Divisoria’s excellent financial health, in 2014 it was granted two new loans by Alterfin and Calvert Foundation, one for the working capital to market coffee and cocoa and the second to expand their fertiliser project.

Future projects Divisoria is not resting on its laurels. The cooperative recently opened a cafeteria in Tingo Maria and already has plans to open to others by the end of 2015. This way, the whole local population can enjoy a cup of coffee or hot chocolate.

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The Alterfin Guarantee Fund

The purpose of this non-profit association is to collect funds that can be used as a guarantee for weaker partners in the South who do not have sufficient security. Since 2013, the fund has also been used to cover the exchange risk on loans granted in local currencies. Unlike the cooperative, this fund is supplied by donations, mainly from shareholders. The Guarantee Fund currently provides security for Alterfin cooperative financing amounting to one and a half million euros.

Identifying potential partners

Credit managers have a key role in the exploration of potential partners. In addition, some organisations contact us directly, we are also frequently put into touch with potential partners by our numerous contacts (NGOs or existing partners in the South) or at the international events we attend.

Pre-selection and due diligence

Once a potential partner has been identified, a pre-selection takes place. If this pre-selection is positive, the credit manager goes to visit the partner and meet members of the organisation. This visit is essential because it enables us to confirm the information we have received, to get to know the members of the organisation and to establish a relationship of trust with the potential partner. Following this visit, the credit manager prepares a dossier which is then presented to a Credit Committee.

Our investment policy

Every investment decision is taken in line with our investment policy, as approved by our Board of Directors. This policy defines the selection criteria for each type of partner (microfinance institution or producers’ organisation), the investment limits per country and per sector and all the procedures surrounding the financing decision.

Investment decision

The Credit Committee decides to finance a partner on the basis of three types of criteria: institutional, social and financial. Partners have to be able to prove their institutional and financial viability and above all carry out activities that offer real social added value for the final beneficiaries (MFI clients or producers).

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Political riskAlterfin works in developing countries that entail significant risks. This country risk is reduced thanks on the one hand to the diversification of our investment portfolio to cover many countries. Limits are also set for each country on the basis of assessments from a rating agency and a public credit insurer. example, our investments in Guatemala are limited to 15 % of our total portfolio. On the other hand, our portfolio invested with microfinance partners is insured globally by Credendo and our portfolio invested with producers’ organisations is usually guaranteed by export contracts with foreign clients (e.g. Oxfam Fair Trade). The latter pay us directly, which reduces the risk factors inherent in the partner’s country. Finally, in certain cases the Alterfin Guarantee Fund can also be used to cover the country risk.

What are the risks and how are they managed?

By their very nature and the market on which we operate, our activities involve a series of risks. Identifying and reducing these risks are among Alterfin’s priorities and this is reflected both in our investment policy and in the day-to-day management of our operations.

Debtor riskThe risk of non-reimbursement of a credit by a partner is inherent in our activity. We restrict this risk in various ways. Firstly, we divide our entire investment portfolio over a large number of partners. Then we frame this risk with an in-depth analysis of each dossier before any investment decision is taken and by local and distance follow-up undertaken systematically for each partner. In most cases, guarantees might be included in the credit contract. They may take the form of mortgages, sales contracts, letters of guarantee from organisations in the North (NGO or other), credit portfolios, etc. Part of the Alterfin portfolio is also guaranteed by the non-profit association Alterfin Guarantee Fund (see page 30).

Exchange riskMany of the credit facilities granted by Alterfin are in dollars. This means that the value of these claims expressed in euros falls and rises in line with the rate of the dollar against the euro. If the euro falls against the dollar, the value of these claims increases. In general, Alterfin covers the exchange rate risk by taking out loans in dollars for an equal amount, for the full amount of the credit facilities granted in dollars. This limits the impact of the rate between the dollar and the euro on the balance sheet.

For credit facilities and holdings in other local currencies, Alterfin has access to exchange rate hedging possibilities through MFX Microfinance Currency Risk Solutions and, since June 2013, via the non-profit association Alterfin Guarantee Fund.

Full details of the risks linked to participation in Alterfin’s capital are given in our prospectus (approved on 4 November 2014). The prospectus is available on our website www.alterfin.be or at our office.

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At the Alterfin head office in Brussels we endeavour to reduce our environmental footprint as much as possible. Here are a few tricks and useful things we do to minimize our footprint.

Environmental performance

Electricity and cleaning

We use electricity from sustainable sources. Products that have a minimal impact on the environment are used for cleaning. All our waste is sorted.

Paper

All paper is recycled and printing is kept to a strict minimum.

We substantially reduced the volume of paper used in 2014. In fact, we developed a new graphic identity for Alterfin in 2013 and therefore had to reprint most of our communication materials (brochures, envelopes, visiting cards, etc.).

Transport

Flights taken for the purpose of following up our partners in the South are clearly the main source of our CO2 emissions. These trips are necessary to be able to analyse partners adequately before investing and to guarantee proper follow-up. We reduced our air miles where possible by grouping together as many visits to partners in the same region as possible, taking direct flights wherever this was feasible, developing local partnerships or employing local staff.

The staff use only public transport to travel between work and home. We also encourage teleworking.

Offsetting our CO2 issues as part of a reforestation project in Peru

We have decided to offset the Alterfin carbon emissions by investing in a reforestation project being undertaken by one of our partners, the Acopagro cooperative in San Martin, in the Peruvian Amazon. The project involves planting native trees within the producers’ cocoa plots. The aim is to develop model agroforestry systems which will ensure the long-term future of cocoa crops. Alterfin’s commitment will make it possible to plant around 4,000 extra trees.

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GRI code Environmental indicators 2014 2014 2013

EN 1 Total paper consumption per FTE

kg 717.9 56 91

EN 3 Direct energy consumption by primary energy source per FTE

• Gas for heating KWh 19,990 1,550 1,729

• Electricity for the utilities KWh 5,013 389 381

EN 4 Indirect energy consumption by primary source per FTE

• Commuter traffic

- Car km/year - - -

- Train km/year 98,930 7,669 9,124

- Metro/Tram/Bus km/year 4,209 326 186

- Bike km/year 3,543 275 63

- By foot km/year 461 36 81

• Travel by plane for follow-up South partners

- Plane km/year 757,571 58,726 70,593

EN 8 Total water withdrawal by source per FTE

• Water for the utilities m³ 14.58 1.13 0.85

EN 16/17 Total direct and indirect greehouse gas emissions per FTE

• Utilities

- Gas kg CO2 4,331.9 335.8 386.0

- Electricity kg CO2 151.2 11.7 11.5

• Commuter traffic

- Car kg CO2 - - -

- Train kg CO2 1,137.7 88.2 104.9

- Tram kg CO2 195.2 15.1 1.3

- Bike kg CO2 - - -

- By foot kg CO2 - - -

• Travel by plane for follow-up South partners

- Plane kg CO2 169,830.9 13,165.2 16,156.2

• Paper kg CO2 947.67 73.5 122.83

CO2 emissions total 176,594.6 13,689.5 16,782.7

Environmental indicators

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The Alter-’fine’ team

Jean-Marc Debricon General Manager

Jean-Marc is our General Manager since January 2015. He has a solid experience in investment banking and the establishment of philanthropic programmes. He has all the skills required for the optimal management of the funds invested in our cooperative and for ensuring effectiveness of our actions in the communities we support.

Alex TackPortfolio Manager for Latin America

Audrey TimmermansFinance and Administration

Manager

Caterina GiordanoPortfolio Manager for Africa

Georges KarrasCommunication and Marketing

officer

Hugo CouderéSenior AdvisorPortfolio Manager for Asia

Irène AngotJunior Credit Manager

Jan De GrandeSenior Financial Advisor

Julie DepelchinAccountant

Karin HufferCommunication and Marketing officer

Marie DepelchinCredit administrator

Mauricio DuranCredit Manager for Latin America

Saúl CastroSenior Advisor for Latin America

Sofie DesmetPortfolio Manager

Virgilio ScacchettiCredit Manager for Latin America

Tom ReniersData Manager

In January 2015, we also wel-comed Tom who is responsible for the information systems at

Alterfin.

35

Social indicators

2013 2014

Total workforce

Number of employees on December 31, 2014 Number 13 14

Total FTE on December 31, 2014 Number 12 12.9

Turnover of employees

Recruitments Number 3 3

Dismissals Number 1 1

Training and education

Number of employees who have been trained 7 7

Heures de formation reçue par an Hours/year 127 404

Breakdown per category

Men-women on December 31, 2014

· Men full-time Number 7 7

· Men part-time Number 1 1

· Women full-time Number 3 5

· Women part-time Number 2 2

According to level of education

· Higher education Number 3 3

· University Number 10 11

According to age group

· < 30 years old Number 0 1

· 30 - 50 years old Number 8 8

· > 50 years old Number 5 5

According to origin

· Latin America Number 2 2

· Belgium Number 8 8

· Europe (outside Belgium) Number 3 4

w

36

The directors are elected by the General Assembly who appoint them to manage Alterfin.

Dominique Morel (Chairwoman)Independent director

Frederick De GryseTriodos Invest scrl

Laurent Biot SOS Faim Belgique

Klaartje VandersypenPrivate shareholders

Vincent de BrouwerPrivate shareholders

Jean MattonPrivate shareholders

Mark LambrechtsIndependent director

Chris ClaesVredeseilanden

Board of Directors

37

Alterfin, an essential player in the sector

The members of the team are part of many working groups or international platforms made up of various players in the sector, whose aim is to identify and share best practices, promote their standardisation and discuss developments and innovations in the sector. Here is an overview of the main activities in which Alterfin took part in 2014.

In 2014, Alterfin attended the main forums on microfinance in Latin America, as well as various international forums bringing together players in the coffee sector. In addition, since 2013, Alterfin has acted as vice-president of FAST (Finance Alliance for Sustainable Trade), a network of producers’ organisations and backers who aim to facilitate the financing of sustainable agriculture.

Launch of CSAFIn 2013, Alterfin and six other social investors set up the ‘Council on agricultural financing for smallholders (‘CSAF’). Alterfin, Oikocredit, Rabo Rural Fund, responsAbility Investments AG, Root Capital, Shared Interest Society and Triodos Sustainable Trade Fund share a common aim: to build a financial network intended to support 450 million smallholders in developing countries.

This Council meets regularly to identify best practices and create standards for the sector as whole.

Alterfin contributes towards various action groups on the European microfinance platform (e-mfp). Alterfin is also an active member of the ‘Social Performance Task Force’ (SPTF), a worldwide network of parties involved in microfinance whose role is to promote good practices in terms of social performance.

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Ass

ets

Presented before the distribution of results

2012 2013 2014 Difference 2013-2014

Fixed assets 1,473,906 2,017,082 1,636,812 -19%

Intangible fixed assets 285 185 86 -54%

Tangible fixed assets 18,261 460,337 170,508 -63%

Financial fixed assets 1,455,360 1,556,560 1,466,218 -6%

Current assets 47,148,651 58,649,908 80,698,585 38%

Credit portfolio 22,944,541 26,099,074 40,342,835 55%

Cash and cash equivalents 23,961,652 32,184,610 39,875,894 24%

Other account receivable 242,459 366,224 479,855 31%

Transitory accounts 1,111,508 1,135,302 1,530,590 35%

Accured dividend / interests 1,111,508 1,135,302 1,530,590 35%

Total assets 49,734,065 61,802,293 83,865,987 36%

PAS

SIF

Equity 27,202,960 36,502,201 45,900,272 26%

Paid-in capital 25,004,000 34,225,188 43,734,063 28%

Legal reserve 187,013 228,723 267,692 17%

General risk reserve 1,100,000 1,087,612 1,129,924 4%

Accumulated results 77,733 181,309 14,960 -92%

Results of the period 834,214 779,369 753,634 -3%

Liabilities 22,325,976 25,117,015 37,732,123 50%

Long term liabilities (> 1 year) 4,463,705 4,686,011 5,022,216 7%

Short term liabilities (< 1 year) 17,413,370 19,857,539 32,056,928 61%

Other liabilities 448,900 573,465 652,979 14%

Transitory accounts 205,129 183,077 233,592 -11%

Interests / tax due 205,129 183,077 233,592 28%

Total liabilities and equities 49,734,065 61,802,293 83,865,987 36%

Financial performance

Balance sheet in euros

39

As at 31 December 2014, Alterfin’s assets totalled EUR 83.9 million, up 36 % compared with the previous year. On the same date, Alterfin’s equity stood at EUR 45.9 million, compared with EUR 36.5 million as at 31 December 2013. The share capital increased from EUR 34.2 to EUR 43.7 million thanks to the arrival of new shareholders and an increase in the stakes of current shareholders.

Most Alterfin partners need financing in dollars. Alterfin therefore invests most of its share capital (collected in euros) and uses these investments as collateral to obtain credit lines in dollars from commercial banks. Alterfin develops its portfolio by lending the dollars borrowed to partners in the South.

Thanks to the capital growth in 2014, Alterfin was able to provide banks with higher guarantees and thus obtain additional credit lines in dollars. This explains the 50 % increase in debts in 2014, which is directly linked to the 55 % increase in the credit portfolio. As these two balance sheet items are mainly in dollars, their growth is also being impacted by the rise the value of the dollar compared with the euro.The downward trend in tangible fixed assets is due to the recording of an impairment on the real-estate property located in Paraguay given to us in 2013 to replace a defaulting loan. It seemed to us that selling this property would be more difficult than expected and as a precautionary measure, an impairment of EUR 281,074 was booked this year.

As regards financial fixed assets, we booked an impairment on the Alterfin holding in the Fopepro fund. The fund experienced some difficulties which hampered its development and causes losses. Alterfin took over the management of this fund in full in January 2015 and will do its utmost to improve the financial results of Fopepro. Nevertheless, as a precautionary measure, it has been decided to reduce the value of the holding by EUR 226,225.

40

2012 2013 2014 Difference 2013-2014

Budget 2014

Income from Alterfin portfolio 1,867,784 2,256,120 2,924,063 30% 2,657,004

Income for portfolio managed for third parties

381,029 246,267 177,908 -28% 180,000

Income from technical assistance and consultancy

5,050 405 0 -100% 0

Income from commissions 30,132 16,724 521 -97% 0

Income from deposits 701,418 942,760 1,092,238 16% 900,000

Total operational & financial income 2,985,413 3,462,276 4,194,730 21% 3,737,004

Financial costs -725,759 -848,265 -1,027,681 21% -950,000

Financial margin 2,259,654 2,614,011 3,167,049 21% 2,787,004

Personnel -649,119 -815,449 -894,162 10% -1,011,164

Office and marketing -253,942 -277,486 -203,739 -27% -335,300

Services -19,023 -46,731 -47,137 1% -44,000

Monitoring portfolio -77,645 -106,952 -113,372 6% -130,000

Total operational costs -999,729 -1,246,618 -1,258,410 1% -1,520,464

Gross operational margin 1,259,925 1,367,393 1,908,639 40% 1,266,540

Provision for risks -326,217 -652,078 -751,508 15% -848,354

Insurance Ducroire (country risk) -39,965 -42,063 -48,038 14% -50,000

Commissions for Alterfin Guarantee Fund

-8,032 -11,524 -14,031 22% -13,000

Net operational margin 885,711 661,729 1,095,063 65% 355,187

Currency exchange result -12,388 42,312 117,118 177% 0

Extraordinary result 32,358 75,328 -457,580 507% 70,894

Taxes -71,467 0 -967 0

Net margin 834,214 779,369 753,634 -3% 426,081

Profit and loss statement

41

In 2014, Alterfin’s total financial and operating income amounted to EUR 4.2 million, 21 % more than in 2013.

The growth in income linked to our portfolio results primarily from the growth in the portfolio itself, and not an increase in the interest rates applied to our partners. The increase in financial charges (+21 %) is linked to the growth in our activities.

The operating costs rose only slightly (+1 %) owing to significant reductions in marketing activities and campaigns and the printing of communication material. In 2013, we developed a new graphic identity and reprinted most of our communication material.

The amount of the notional interest, resulting from the substantial capital increase in 2014, enables us to significantly limit the amount of tax payable.

The net result amounted to EUR 753,634, or 3 % less than in 2013. It was seriously affected by the amount of the impairments on our portfolio, which in 2014 came to over EUR 750,000, as well as the impairments on two of our real-estate assets (booked as extraordinary results in the profit and loss statement), amounting to a total of over EUR 500,000.

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Return and margin 2012 2013 2014

Return on equity (ROE) 3.52% 2.47% 1.83%

Return on Alterfin’s own portfolio 8.44% 8.26% 8.38%

Return on portfolios managed for third parties 1.74% 1.67% 1.44%

Net margin (net income/total income) 3.32% 3.36% 3.03%

The return on equity was once again impacted by the amount of the impairments that we booked to cover potential commercial risks relating to certain partners as well as additional impairments on certain fixed assets. These impairments are booked in accordance with our procedures and the precautionary principle and represent a proper valuation of the risks incurred.

The return on our portfolio remains stable. The return on the portfolios that we manage for third parties is diminishing due to the end of the collaboration with responsAbility.

The returns on investments that we use as collateral to obtain credit lines in dollars follow market yields.

The proportion of the portfolio that we consider to be ‘at risk’, either because the partner is in arrears with payments, or because their financing has been restructured, has diminished following the various impairments booked. At the end of 2014, it represented 3.4 % of the total portfolio.

The amount of the impairments that we recorded in the books in 2014 represents 1.82 % of the total portfolio.

Portfolio quality 2012 2013 2014

Risk portfolio / Total portfolio 4.58% 4.59% 3.40%

Impairments on the portfolio / Total portfolio 1.71% 1.78% 1.82%

Some key indicators

43

Efficiency 2012 2013 2014

Operational self-sufficiency (value reductions included) 142.18% 123.63% 135.33%

Operationnal costs / total assets 2.01% 2.02% 1.50%

In 2014, defaults were concentrated mainly on the agricultural portfolio (as opposed to the microfinance portfolio). The prices of many commodities, including coffee, have been very volatile over the past few years. This has contributed towards putting a growing number of our partners in difficulty.

Measures have been taken to reduce the number of defaulting partners. On the one hand, we keep a close eye on the way the situation of each defaulting partner develops and in some cases we have restructured the financing. On the other hand, we have set up an internal working group whose role is to improve our risk assessment tools and our fund recovery process.

The operating costs (including impairments) remain well below our operating income and they have fallen compared with our assets as a whole, proving that our working method remains efficient.

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Today, there are still over a billion people on the planet who live below the poverty line and two and a half billion who do not have access to transparent and fair sources of financing . In addition, over the past 50 years, more than 800 million people have left rural areas and moved to urban centres in the hope of finding Eldorado there, instead of subsistence economies marked by the deterioration of the environment .

But the size of these figures should not conceal the huge progress that has been made in less than 20 years. The number of people living below the poverty line has in fact been halved . As with every colossal task, it requires consultation and joint efforts. Thanks to you, and with our partners in the North and the South, Alterfin continues to add its contribution to this process. By calling upon social capital in the North, our team endeavours to promote transparent, fair and responsible microfinancing as well as sustainable, environmentally responsible agriculture in the South.

This action can only be sustainable if it is undertaken impeccably, respecting this vision of a fairer world, this mission to fight poverty, these values that we hold dear and, of course, in line with the principles of good management.

Once again, Alterfin is capable of producing a dividend entirely in line with the interest rates on savings paid by the vast majority of financial institution operating in Belgium. Once again, Alterfin is developing high-risk projects in almost 30 countries in the South, in an environment marked by an ongoing global financial crisis. Once again, Alterfin is asserting its direct social impact on 64,917 people (and their families) and its indirect social impact on 1,380.000 people (and their families). The impact contributed by Alterfin is growing, and with it the hope of making this colossal task feasible.

Personally, it is an honour for me to have joined Alterfin and on behalf of the entire team, I would like to thank you for your trust and invite you to continue, all together, this mission that began 20 years ago.

Perspectives 2015

Jean-Marc DebriconGeneral Manager

1 2011 Study, Word Bank. 2 Global Financial Inclusion Index, World Bank and Bill & Melinda Gates Foundation 3 Study, FAO

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GRI indicators

Profile page

Strategy and analysis

1.1 Introduction by the General Manager 3

Organizational profile

2.1 Name of the organization 1

2.2 Products and/or services 12-31

2.3 Operational structure 34-36

2.4 Location of organization’s headquarters Back cover

2.5 Number of countries where the organization operates 6, 7

2.6 Nature of ownership and legal form 10, 11

2.7 Markets served 12-31

2.8 Scale / Key figures 2, 10, 12, 33, 38-43

2.9 Significant changes regarding size, structure or ownership 10, 12-13

2.10 Awards received Website

Report parameters

3.1 Reporting period 4

3.2 Date of most recent previous report 4

3.3 Reporting cycle 4

3.4 Contact point 4

3.5 Process for defining report content 4

3.6 Boundary of the report 4

3.7 Specific limitations on the scope and boundary 4

3.8 Basis affecting comparability 4

3.9 Data measurement techniques and the bases of calculations 4

3.10 Effects on re-statements N.A.

3.11 Significant changes in the scope, boundary or measurement methods None

3.12 GRI table 45, 46

Governance, Commitments and Engagement

4.1 Governance structure 10, 34-36

4.2 Is the Chair an executive officer? 36

4.3 Number of independent / non-executive members of the Board 36

4.4 Mechanisms to provide recommendations Website

4.14 List of stakeholder groups Website

4.15 Basis for identification and selection of stakeholders Website

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Performance indicators page

Economic

EC1 Direct economic value generated and distributed 38-43

EC4 Significant financial assistance received from governement None

Environmental

EN3 Direct energy consumption by primary energy source 32-33

EN4 Indirect energy consumption by primary source 32-33

EN8 Total water withdrawal by source 32-33

EN16 Total direct and indirect greenhouse gas emissions by weight 32-33

EN18 Initiatives to reduce greenhouse gas emissions 32-33

EN26 Initiatives to mitigate environmental impacts of products and services 32-33

Labor practices and decent work

LA1 Total workforce 35

LA2 Turnover of employees 35

LA10 Training 35

LA13 Breakdown of employees per category 35

Financial Services Sector Supplement

FS1 Policies with specific envrionmental and social components 30-32

FS3 Processes for monitoring client’s implementation of and compliance with environmental and social requirements

30, 31 & website

FS6 Percentage of the portfolio for business lines by specific region 12-14, 17-18, 20-25

FS7 Monetary value of products and services designed to deliver a specific social benefit

12-13

FS8 Monetary value of products and services designed to deliver a specific environmental benefit

12-13

FS13 Access points in low-populated or economically disadvantaged areas by type

13-15, 18-19, 24-25

FS14 Initiatives to improve access to financial services for disadvantaged people

12-30

FS15 Policies fo the fair design and sale of financial products and services 6

FS16 Initiatives to enhance financial literacy 19

Guidelines GRI - G3.1 - Level C « self declared »

Chaussée de Haecht 159B-1030 BrusselsTel. 02 538 58 [email protected]

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alterfin - annual report 2014

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