ANNUAL REPORT

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TABLE OF CONTENTS

BACKGROUND TO THE ACCORD – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 4

Purpose and Key Components – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 4

Accord Funding – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 4

Organisational Development – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 4

IMPLEMENTATION PROGRESS (November 2015) – – – – – – – – – – – – – – – – – – – – – – – – – 7

Forward from Executive Director and Chief Safety Inspector – – – – – – – – – – – – – – – – – – – 7

DIRECTOR’S REPORT – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 13

Director ’s Statement – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 13

FINANCIAL REPORT 2014 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 15

1. Balance sheet 31-12-2014 – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 16

2. Statement of income and expenditure 2014 – – – – – – – – – – – – – – – – – – – – – – – – – 17

3. Accounting policies – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 18

4. Specification of the balance sheet: current assets – – – – – – – – – – – – – – – – – – – – – – 19

Explanation of the balance sheet: current liabilities – – – – – – – – – – – – – – – – – – – – – – 20

5. Statement of income and expenditure - explanation income – – – – – – – – – – – – – – – – 22

Statement of income and expenditure - explanation expenditure (continued) – – – – – – – 22

6. Tangible fixed Assets – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 24

7. Other Information – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 25

7.1. Statutory result appropriation – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 25

7.2. Appropriation of result – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 25

7.3. Auditors Report – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 25

BOARD OF DIRECTORS – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 29

EXECUTIVE LEADERSHIP TEAM – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 29

LIST OF SIGNATORIES – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 30

Union Signatories – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 33

Witness Signatories – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 33

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BACKGROUND TO THE ACCORD

The Accord on Fire and Building Safety in Bangladesh (the Accord) was signed on May 15th 2013. It is an unprecedented five year independent, legally binding agreement between 217 garment brands and retailers and trade unions designed to build a safe and healthy Bangladeshi Ready Made Garment (RMG) industry. The agreement was signed in the immediate aftermath of the Rana Plaza building collapse that led to the death more than 1100 people and injured more than 2000.

Since its creation in May 2013, the signatories to the agreement set out to establish a fire and building safety program in Bangladesh for a period of five years. The Accord is governed by a Steering Committee consisting of equal representation of trade union and company representatives.

The Stichting Bangladesh Accord Foundation was established in the Netherlands shortly after the signing of the agreement. A Liaison office was established in Dhaka, Bangladesh in February 2014.

The Bangladesh office leads the inspection and remediation programs, constituent engagement, and the workplace occupational safety and health (OSH) elements of the Accord. The workplace programs include an OSH complaints mechanism; protections for workers at supplier factories to refuse dangerous work; and programs to support and train joint worker-management OSH Committees in Accord covered factories. The international team based in the Netherlands office are responsible for signatory account and data management, signatory company outreach, international external stakeholder engagement and external communications.

PurposeThe Accord is an independent, legally binding agreement between brands and trade unions designed to work towards a safe and healthy Bangladeshi Ready-Made Garment Industry. Our purpose is to establish a safe and sustainable Bangladeshi Ready-Made Garment (RMG) industry in which no worker needs to fear fires, building collapses, or other accidents that could be prevented with reasonable health and safety measures.

The six key components of the Accord

1. Legally binding agreement between clothing brands & retailers and trade unions.2. Independent inspections program involving workers.3. Disclosure of factories, inspection reports and corrective actions.4. Commitment to ensure sufficient funds for remediation and to maintain sourcing

relationships.5. Joint worker-management safety and health committees in all factories.6. Worker training program, complaints mechanism, right to refuse unsafe work.

Accord FundingEach signatory company contributes funding in proportion to the annual volume of its garment production in Bangladesh, relative to that of the other signatory companies, up to a maximum contribution of $500,000 per year averaged over the 5 years of the Accord. The Steering Committee may also seek financial contributions from governmental and other donors, and employs transparent procedures for the accounting and oversight of all contributions.

Organisational Development The Accord continues to grow impressively into an organisation of more than 150 staff members in Bangladesh. The team in Bangladesh consists of engineers, remediation and complaint case handlers (RCCHs), trainers, and support staff. The Executive Director and Chief Safety Inspector are also based in the Dhaka office.

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The Accord has three engineering teams (60 engineers total) specializing in the areas of inspections and remediation: fire, electrical and structural safety. The team of 25 RCCHs are responsible for coordinating inspections and remediation at assigned factories, updating the publicly available Corrective Actions Plan (CAPs) based on factory reporting and follow-up inspections by the engineers, and processing OSH complaints regarding their assigned factories.

A training team has been formed to develop the Accord’s training programs and to support the work with OSH Committees at the factory level. The Accord’s support staff now includes a Communications Officer, a Labour-Union Liaison Officer, in-house Translators, an IT specialist, and several administrative and finance staff.

The Accord is in the process of registering additional offices in Chittagong and areas just outside Dhaka where the inspected factories are located. These offices will help limit travel time for engineers and trainers visiting factories and will also provide easier access to Accord support and services for factory owners, workers, and trade unions.

The international team of the Accord is based in Amsterdam, the Netherlands, and is primarily responsible for brand outreach, data management, external communication and stakeholder engagement outside Bangladesh.

The Accord’s website was relaunched in early 2015 in both English and Bangla. The upgraded website includes: new pages about the Accord programs, signatories and governance issues, a technical resource center, and a dedicated page showing the Accord’s progress in making garment factories in Bangladesh safe. Factory-by-factory information on progress in implementing the CAPs can be found on the inspections and CAPs page.

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IMPLEMENTATION PROGRESS (NOVEMBER 2015)

Foreword from the Chief Safety Inspector and Executive DirectorThe Accord on Fire and Building Safety in Bangladesh (Accord) made substantial progress in executing the commitments of the company and labour signatories in the second year of our operations. In September 2014, the first batch of initial inspections to identify fire, electrical, and structural safety hazards were completed at 1100 supplier factories. From January to March 2015, a second batch of initial inspections were completed at an additional 180 newly listed supplier factories. An additional approximately 250 factories which supply for both Accord and Alliance for Bangladesh Worker Safety companies and retailers were inspected by the Alliance. For each of these factories, the Accord has developed and published a Corrective Action Plan which elaborates each safety finding, what needs to be done to correct the finding, and the current status of progress in correcting each safety hazard.

The Accord focused our work in four primary areas during our second year: completing initial safety inspections; supporting, verifying, and reporting on remediation of identified safety hazards at inspected factories; designing and operationalizing the workplace OSH programs of the Accord; and supporting the National Plan of Action for Fire Safety and Structural Integrity (NPoA).

The Accord conducted a series of additional, special structural inspections at 133 of vulnerable factories1 after the earthquakes which hit Bangladesh in April 2015. The Accord conducted similar special inspections at 18 factories after being contacted by employees who expressed concerns of potential structural damage at their factory resulting from the earthquakes. All identified safety concerns through these inspections were remediated with the technical support of Accord engineers.

While progress on safety remediation was made in the second year of the Accord, the pace of executing and completing this has been unacceptably delayed at the majority of inspected factories. During the course of the year, the Accord conducted several analyses to determine and address the causes for the delays. The Accord also implemented support and escalation measures to advance the level and pace of correcting identified safety hazards. These measures included hiring additional engineers to provide technical support to supplier factories, developing remediation technical resource materials, and where warranted, implementing the non-compliance escalation procedures of the Accord. These escalation measures culminate with signatory companies ending their business relationship with a supplier who, after support efforts from the Accord, fails to adequately progress in remediating safety hazards (under Article 21 of the Accord). There were 8 such cases through December 2015.

The Accord has established a Training Department, which will implement the OSH committee support and training elements of the Accord. Trainers spent much of the year developing and refining the training methodologies, approaches, and materials for supporting and training OSH committee members from labour and management. As we approached the end of the second year, a pilot program to support and train OSH committees at supplier factories with a registered union started2. In the remaining years of the Accord, training and support will be provided to labour and management representatives of OSH committees and a general worker safety education program will be delivered. This work will continue both at Accord listed factories where there is a registered workers’ union and where there is no union.

Brad Loewen, Accord Chief Safety InspectorRob Wayss, Accord Executive Director

1The Accord conducted these post-earthquake inspections at factories

which, through our initial structural safety

inspection, were deemed more

vulnerable due to the low factor of structural

safety as measured against the Accord

structural safety inspection standard.

2 The Accord began the OSH committee work at

unionized factories as we awaited the

finalization of the implementation rules of the Bangladesh Labour

Act 2013.

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Independent Inspections The Accord completed the first batch of initial inspections of 1100 factories in September 2014. A second batch of initial inspections was completed at an additional 180 newly listed factories between January and April 2015. In October 2015, a third batch commenced at an additional 100 newly listed factories. These inspections were completed in early December 2015. International engineering firms with demonstrated expertise in fire, electrical, and structural engineering were competitively selected to perform these inspections. The contracted firms utilized teams made up of international and Bangladeshi engineers who inspected the factories to identify the most urgent safety concerns in the 3 areas that the Accord inspection standard covers3.

The initial structural inspections at 32 factory buildings required convening the Review Panel4 due to findings which placed the building below the minimum acceptable factory of safety for production and occupancy to be allowed. In most of these cases, emergency remedial measures and/or temporary re-location of production and workers were exercised to avoid discontinuity of production and employment at affected suppliers. In four cases, Accord provisions on maintenance of employment and payment of regular wages were not been met. Accord labour and company signatories are in discussions to remedy these cases.

At an additional 110 facotries, urgent structural remediation was required to address building vulnerabilities and to avoid submission of the findings to the Review Panel. Accordingly, supporting and monitoring remediation at these factories was a priority for the Accord structural engineering team during the year.

In addition to the initial inspections conducted by contracted firms, the Accord fire, electrical, and structural engineering staff conducted 1304 follow up inspections at listed supplier factories to support and verify remediation. The initial inspections were designed to identify the most urgent, life safety issues so that most vulnerable situations could be immediately addressed. As the follow up inspections and remediation verification work commenced, the Accord engineers identify safety issues which the one-day initial inspections did not always reveal. These safety findings are also an element of the Accord inspections work and items that we work with the factories to remediate.

The engineering team also dedicated time to review and approve designs of automated fire alarm systems, designs of sprinkler systems, detailed engineering analyses to determine structural retrofitting requirements, and to provide technical consultation to factory technical staff to ensure remediation is performed correctly.

Safety Hazard Remediation at Inspected FactoriesIn addition to the initial inspections, executing and verifying remediation at inspected factories has been a major area of focus in the 2nd year of Accord operations. The team of Accord staff engineers are assigned to spend at least 50% of their worktime in factories performing follow up inspections, verifying safety hazards which have been corrected, and assisting factories to complete remediation. The engineers are supported by a team of 25 remediation and complaint case handlers who perform the work of coordination, data management, and public reporting of the remediation progress. A lot of progress was made in the second year of the Accord. In addition to completing initial inspections at listed factories, approximately 50% of the safety hazards identified from these inspections have been reported or verified as corrected.

While a lot of progress has been achieved in making inspected factories safer, the pace of remediating safety hazards is too far behind at too many factories. The Accord has aggressively focused on remediation and has made this a highest priority issue for our work and resource allocations. We have conducted analyses to determine the reasons or obstacles to completing remediation in a timely manner. The information gathered through these exercises has informed a remediation completion program which is now being implemented by the Accord.

The Accord is committed to safety remediation being completed at every listed factory. The Accord’s commitment of staff, financial and technical resources, implementation of support and enforcement measures, and transparency in reporting progress demonstrate our

3The Accord building

standard was developed through an inclusive

process with Accord, Alliance, and

Government of Bangladesh engineers. The discussions leading to the development of

the standard were facilitated by the ILO.

4The Review Panel has

been established through the National

Plan of Action to convene when National

Effort, Accord, or Alliance structural inspections

result in a recommendation to

suspend production or evacuate a factory

building. The 4 engineers on the Panel

[BUET (2), Accord (1), and Alliance (1)] must

unanimously decide to permit partial or full

production to resume. If there is no unanimous

decision, the production must remain suspended

until required remediation / corrective action is taken to ensure

safe re-occupation.

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dedication to this fundamental objective of our work.

The Accord’s remediation work was hampered from January – March 2015 due to the frequent blockades and strikes (hartals) which plagued the country and limited our ability to safely send engineers to the field. Our structural remediation follow up work was temporarily affected by the additional structural inspections associated with the April 2015 earthquakes which hit Bangladesh.

Approximately 350 of the inspected supplier factories produce garments for Accord and Alliance signatory companies. The Accord coordinates with the Alliance’s technical and coordination teams in our follow up inspections and remediation verification work with these factories. The Accord has committed to informing the Alliance of our scheduled follow up at common suppliers and providing information received or verified from such visits so that current information on the status of remediation is available to both and to minimize potential inconveniences to the supplier factories.

In addition to the technical support and follow up with supplier factories, the Accord works extensively with our signatory company and labour colleagues to maximize their leverage to advance remediation at the inspected factories.

Data, Transparency and Public ReportingA key and distinguishing feature of the Accord is making substantive information on our work and progress in executing the commitments of the agreement publicly available. In our second year of operations, the Accord made unprecedented amounts of information available to our signatories and to the public. The Accord made significant investments in customizing our database to support signatory companies to manage remediation at supplier factories and to enhance our public reporting.

Data management at the Accord can be divided into three key areas: factory related information, inspection and remediation data, and data pertaining to the Accord workplace programs. The Accord has been working with the Fair Factories Clearinghouse (FFC) in New York to securely manage Accord data and to publish relevant information through the Accord website in line with the Accord’s commitment to transparency.

The Accord publishes a complete factory list of all Accord covered factories. The list is updated each month and includes: the factory address, approximate number of workers, and number of signatory companies sourcing from each factory. All Accord inspection reports and corrective action plans (CAPs) are available on the Accord website and are updated continually with the latest remediation progress. In the Inspection Reports / CAPs section of the website, the Accord recently added an entry for each factory on the status of remediation and confirmation of a finance plan for remediation.

The Accord currently covers approximately 1650 factories and data on each factory is closely tracked through the Accord program from initial factory listing by company signatories, to inspection scheduling, issuance of inspection reports and CAP approval right through to the monitoring of remediation progress on an issue-by-issue basis. This information is available to each company signatory, is reported to the Accord Steering Committee and is available to the public in aggregate form through Quarterly Aggregate Reports.

The Accord also formatted more than 1200 of our factory inspection reports to be added to the Ministry of Labour public database as part of our support for the National Tripartite Plan of Action in Bangladesh; a Government of Bangladesh and ILO led initiative.

Workplace ProgramsIn the second year of our operations, the Accord advanced the work of implementing our workplace programs. Our workplace programs are comprised of: occupational safety & health (OSH) committees, an OSH complaint mechanism, protections to refuse dangerous work, and OSH training at listed factories.

The Accord has built a department with a growing team of trainers to execute these elements

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of the Accord5. The first OSH committees are now being trained and supported at factories which agreed to be part of a pilot project. The pilot OSH committee work has started at factories where there is a registered union. The Accord will soon be providing training and support for OSH committee members at factories where there is no union. Work at these factories will begin in the early part of calendar year 2016. Also in 2016, the Accord will introduce more general RMG workforce OSH training and informational programs. The Accord is coordinating closely with the ILO RMG projects and Better Work in OSH committee and OSH education work.

Training of OSH committee worker and management representatives at 15 factories is underway. Informational sessions with all employees are held at each of these factories so everyone in the factory knows of the work of and how to support their OSH committee. The methodology, informational materials, a training curriculum, and materials for each session of the OSH committee training program have been developed by the Accord in consultation with a designated working group of company and labour signatories. The experience from the OSH committee pilot will be used to inform the large scale OSH committee and worker safety training programs at listed Accord supplier factories.

The Accord considers a functioning labour-management OSH committee at the factory level as a logical progression of our work to make RMG factories safe. Factories are inspected to identify safety hazards. Safety hazards are corrected. A labour-management OSH committee is trained and supported so a structure and systems are in place to monitor and maintain safety at the remediated factories. The support and training of OSH committees will continue for the remaining years of the Accord.

Since September 20146, the Accord has received and processed 62 OSH complaints through our OSH complaint mechanism. The complaints have been received directly from workers, from workers via an RMG union federation, or from workers via Accord supported Field Resource Persons who the workers had met with previously to learn about inspection and remediation at their factory. The training programs with OSH committee members includes OSH complaint handling with the goal that most safety concerns and safety complaints will be directly resolved at the factory level.

Support for the National Plan of Action on Fire Safety and Structural Integrity (NPoA)The NPoA is an agreement signed by the national and sectoral employers, the national and sectoral trade unions, and the Ministry of Labour in May 2013 to memorialize the Bangladeshi tripartite partners’ commitment to making the RMG industry safe in the aftermath of the Tazreen Fashions and Rana Plaza tragedies. The agreement is the basis of a $26 million multi-year support program of several donor governments being implemented through the technical expertise of the international Labour Organization (ILO).

The NPoA is a major endeavor and commitment by the national actors who ultimately need to guarantee industrial safety and safe working conditions in the RMG industry. The Accord signatories have expressly committed to supporting the NPoA to help build the capacity of the local social partners to meet these mandates and obligations.

The Accord has served as technical resource to several programs organized by the ILO with relevant technical and support staff of the Ministry of Labour, Inspectorate of Factories, and the Civil Defense and Fire Service. The Accord Chief Safety Inspector and senior technical staff have served as resource persons to these programs in various subject areas including: follow up inspection procedures; remediation progress tracking systems; and data management and reporting systems. Relevant NPoA colleagues have spent time at the Accord office with Accord RCCH and engineering staff to see firsthand how our systems, operations, and protocols work in practice.

5While the trainers train on

resolving OSH complaints, the OSH

complaints submitted to the Accord are

processed by the RCCHs with the technical safety

investigation being conducted by Accord

staff engineers.

6Date of receipt of the

first complaint submitted under the Accord OSH

complaint mechanism.

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>1600 FACTORIES COVERED

>2 MILLION WORKERS COVERED

>215 SIGNATORIES

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DIRECTORS’ REPORT

Directors’ Statement In the second year of the Accord, the Directors, Steering Committee, the Executive Leadership Team and all Signatories have continued to work tirelessly to see this ground breaking initiative meet its goals and commitments.

We are proud that over 215 global brands and retailers have now signed the Accord, covering now over 1650 garment factories and in excess of 2 million workers.

We are pleased that Accord has inspected all newly listed factories that were not inspected in the first initial round of inspections. All Accord listed factories have now been inspected. We are confident that our amplified efforts and resource allocations will lead to remediation being completed at all inspected factories by the end of our 3rd year.

We publish herewith the financial report for the year ending 31st December 2014 highlighting a deficit on income over expenditure of $3,885,806. This deficit is primarily due to the costs of conducting the initial inspections of Accord listed supplier factories. An accelerated payment schedule of signatory company annual fee payments was implemented in June 2014 to address the cash flow issue created by the cost of the initial factory inspections. The accelerated payment for the 2nd year fees will be offset by equal, proportional reductions to signatory company fee payments in years 3, 4, and 5 of the Accord. We are confident that this solution will not affect the ability of the Accord to perform its work or negatively influence the budgetary position and full solvency of the Accord.

The budget for the financial year ending 31st December 2015 is projected to generate a deficit of $150,255 due to incurring the full cost of the inspection programme as previously advised. Taking into account the surplus of $4.434 million carried forward from 2013 and deficit of $3,886 million carried forward from 2014, this will result in a cumulative surplus in December 2015 of $398,700.

In conclusion, we are confident that the Accord is well positioned both financially and operationally to deliver on its stated purpose of a safe and healthy Bangladeshi RMG sector.

Alke Boessiger-RamsayMelanie Steiner

Board Members and Members of the Audit CommitteeAmsterdam, 28 April 2016

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FINANCIAL REPORT

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1 BALANCE SHEET

ASSETS

Tangible fixed assets 114.353 1.051

ReceivablesDebtors 95.581 5.523.481 Other receivables and accrued assets 210.688 172.233

306.269 5.695.714

Banks and petty cash 7.480.718 3.070.467

7.901.341 8.767.232

LIABILITIES

General reserveReserve value at January 1 4.434.760 - Balance financial year 3.885.806- 4.434.760

548.955 4.434.760

Current liabilitiesCreditors 56.312 222.210 Salaries, taxes, social contributions 41.298 63.116 Remaining accounts payable 360.116 92.142 Accounts received in advance 6.894.660 3.955.003

7.352.386 4.332.471

7.901.341 8.767.232

December 31, 2014 $

December 31, 2014 $

December 31, 2013 $

December 31, 2013 $

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2014 Budget 2014 2013

INCOME $ $ $

Signatory fees 13.422.008 12.844.000 5.322.612

Credit interest 1.076 - 94

13.423.084 12.844.000 5.322.706

Total income 13.423.084 12.844.000 5.322.706

2014 Budget 2014 2013

EXPENSES $ $ $

GeneralPersonnel costs 1.682.119 1.562.747 312.827

Organisation costs 139.523 128.200 1.287

Banking and exchange difference costs 245.614 11.837 12.226

Group corporate costs 687.648 543.050 368.860

Bangladesh operations 14.553.986 18.656.090 192.745

17.308.890 20.901.924 887.945

Total expenses 17.308.890 20.901.924 887.945

Result 3.885.806- 8.057.924- 4.434.760

2 STATEMENT OF INCOME AND EXPENDITURE

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3 ACCOUNTING POLICIES

GENERAL

The financial report has been made in accordance with the Dutch Accounting Standard Board’s Guideline RJ 640 for ‘Not for profit organizations’.

All assets and liabilities are stated at their face value, unless otherwise mentioned. Foreign currency amounts are valued against the exchange rate, using the website of the Belastingdienst. Exchange rate differences have been included in the result.

Tangible fixed assetsTangible fixed assets are valued at purchase price minus depreciation. Depreciation is based on the expected duration of life taking into account the 5 year agreement of the Accord.Depreciation of computers and laptops is 33,33%.

Liquid assetsAll cash and bank balances listed under liquid assets are discretionary.

Accounts receivable and accounts payableReceivables, liabilities and accruals are included at face value, less any provision for doubtful accounts. These provisions are determined by individual assessment of the receivables.

ACCOUNTING POLICIES FOR DETERMINING THE RESULT

IncomeIncome consists of signatory fees. The signatory fees are invoiced for the period June-May. So 7/12th is income for this year and 5/12th is deferred income. The signatory fee is calculated from a scale based on the Brands FOB value of goods exported from Bangladesh.

ResultThe result is the difference between income on the one hand and expenses at historical cost on the other hand, taking into account the above valuation principles.

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4 SPECIFICATION BALANCE SHEET: CURRENT ASSETS

Receivables

DebtorsDebtors 140.156 5.523.481

Provision doubtful debtors 44.575- -

95.581 5.523.481

Other receivables and accrued assetsTo be invoiced 59.559 141.736

VAT 43.906 4.324

Paid in advance 43.040 25.237

Deposits 62.540 937

Miscellaneous 1.643 -

210.688 172.233

Banks and petty cashING EUR 1.091.603 2.539.941

ING USD 6.156.964 499.931

ING savings 3 1

HSBC GBP 86.286 -

Dutch Bangla BDT 143.202 -

Petty Cash BDT 2.659 -

Money in transit 0 30.593

7.480.718 3.070.467

Debtors: $ 44.575 is the outstanding amount by the end of May 2015.

December 31, 2014 $

December 31, 2013 $

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General reserveAccumulated reserves

Reserve at January 1 4.434.760 -

Result 3.885.806- 4.434.760

Reserve at December 31 548.955 4.434.760

CreditorsMiscellaneous 56.312 222.210

56.312 222.210

Salaries, taxes and social contributionsSocial taxes 12.155 6.625

Remuneration foreign employees 29.129 53.705

Net salaries 13 2.786

41.298 63.116

Remaining accounts payableJD Williams - 47.562

Expenses Executive Team 11.349 21.922

Website - 4.282

Auditor 18.000 10.604

Double paid signatory fee 297.500 -

Remaining accounts payable 33.267 7.772

360.116 92.142

Accounts received in advanceDeferred income 6.894.660 3.955.003

6.894.660 3.955.003

EXPLANATION OF THE BALANCE SHEET: CURRENT LIABILITIES

This deficit was generated due to the the roll out of the inspection programme. The initial inspections mostly took place in 2014, so the costs are accounted for in 2014.The 2014 income only shows 7/12th of the total income for the period June 2014 - May 2015.

December 31, 2014 $

December 31, 2013 $

Deferred income is 5/12th of the invoiced signatory fees of year 1 (2014-2015).

The double paid signatory fee was paid back in the beginning of 2015.

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Off-balance-sheet rights, obligations and arrangements

Rent commitmentsThe Bangladesh Accord Foundation has a rental agreement in the Netherlands for Keizersgracht 62, Amsterdam which ends at 31 January 2016. The remaining obligations amounts to $ 40.917, the amount payable within one year is $ 37.917 and after five years $ 0.

There are rental agreements in the Bangladesh, which end at June 2018. The remaining obligations amounts to $ 911.077, the amount payable within one year is $ 247.462 and after five years $ 0.

Vehicle commitmentsIn Bangladesh several vehicles are rented. The commitments end at 31 December 2018. The remaining obligations amounts to $ 327.800, the amount payable within one year is $ 137.379 and after five years $ 0.

Litigation filed by Accord inspected factory ownerOn 21 May 2014, a factory owner / supplier of Accord signatory companies filed a lawsuit seeking damages and public apology after an Accord structural safety inspection. Severe structural concerns led the Accord safety engineers to submit the inspection findings to a Ministry of Labour and Employment MoLE), Government of Bangladesh formed Review Panel for such cases. After Review Panel consultations, the MoLE Inspector General issued an order of temporary evacuation of the building until such time that immediate urgent structural remediation was completed. The factory owner filed a lawsuit shortly thereafter where Accord is 1 of 7 defendants. The factory is challenging the authority of the Accord to inspect factories and of the authority of the Review Panel. The case is now pending before the Court of Joint District Judge, Dhaka, Bangladesh. Accord views this case as primarily against the MoLE, Government of Bangladesh. Accord is confident about the legality of its actions in this regard and is strongly defending its position regarding the allegations made and damages sought.

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5 STATEMENT OF INCOME AND EXPENDITURE - EXPLANATION INCOME

2014 Budget 2014 2013

INCOME $ $ $

Signatory fees 13.422.008 12.844.000 5.322.612

13.422.008 12.844.000 5.322.612

Credit interest 1.076 - 94

1.076 - 94

Expenses 2014 Budget 2014 2013

$ $ $

Personnel expensesGross salaries 407.564 432.142 17.696

Remuneration foreign employees 425.000 441.670 62.500

Social contributions 52.968 86.428 2.299

Pension contributions 275.432 88.187 6.250

Allowances 346.404 340.570 26.603

Consultancy fees 48.208 45.250 193.729

Travel & subsistence 126.543 128.500 3.750

1.682.119 1.562.747 312.827

Organisation costsCommunications 13.113 14.620 651

Rent 42.863 53.300 -

Office supplies 3.731 775 31

Computer maintenance and installation 9.289 1.580 605

Costs doubtful debtors 44.575 - -

Depreciation 25.952 57.925 -

139.523 128.200 1.287

Signatory fees 2014 is 5/12th of the total signatory fees of year 1 (2013-2014) and 7/12th of the total signatory fees of year 2 (2014-2015). There were 189 signatories by the end of 2014, were 180 were budgeted.

STATEMENT OF INCOME AND EXPENDITURE - EXPLANATION EXPENDITURES

There are 6 board members which are unremunerated.The executive team consisted of 3 persons for most of 2014. In October 2014 an executive of the Accord separated from service. A portion of the separation payment was made as a pension contribution. Allowances include medical health and life assurance, home leave, education contribution, housing contribution and hardship for the members of the executive team based in Bangladesh.

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2014 Budget 2014 2013

EXPENSES $ $ $

Banking and exchange difference costsBanking costs and exchange differences 245.614 11.837 12.226

245.614 11.837 12.226

Group corporate costsBrands and Steering Committee meetings 67.942 71.000 11.322

Website development and support 79.991 28.500 34.376

Public relations 166.816 121.800 26.492

Legal advise 56.663 83.500 50.092

Bookkeeping and salary administration 41.948 14.250 837

Auditor 32.598 24.000 10.604

Recruitment executive team 1.743 107.500 154.398

Fair Factories Clearinghouse (FFC) 236.532 68.000 49.107

Miscellaneous 3.415 24.500 31.633

687.648 543.050 368.860

Bangladesh operationsMeetings and business entertaining 19.296 21.100 -

Facilities 135.308 138.550 -

Motor pool 69.146 67.020 98

Supplies & equipment 195.547 12.100 149

Training 40.968 109.900 -

Consultants/contractor support 231.726 181.250 -

Inspections 13.500.602 17.417.285 192.498

Operations people costs 263.501 600.535 -

Travel and Subsistence 97.893 108.350 -

14.553.986 18.656.090 192.745

Most costs are due to the decline in the EUR/USD exchange rate in 2014.

Accord did not anticipate the number of new signatories joining and therefore did not take this increase into consideration in the FFC hosting and maintenance annual fee. Accord never budgeted for monthly support costs or development costs in initial FFC budget. This was because the Accord did not anticipate the amount of work required to maintain the Accord database and also the Accord did not have any staff who could do this work so relied on FFC support on a hourly fee basis through 2013-2014.

The budgeted initial inspection costs were based on three inspections per factory. 1500 factories were expected to be inspected. In reality 1100 factories were inspected.The Accord was unable to open additional field offices and hire staff at the anticiapted rate due to pressures associated with starting a new organization, managing completion of a large number of inspections in a short timeframe, and the impact of approximately 4 months of blockades and political strikes.

STATEMENT OF INCOME AND EXPENDITURE - EXPLANATION EXPENDITURES (CONTINUED)

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6 TANGIBLE FIXED ASSETS

7 OTHER INFORMATION

7.1. Statutory provisions governing profit appropriation The articles of association of the Foundation do not stipulate any provisions governing the

appropriation of profit.

7.2. Appropriation of result By decision of the board the result of $ -3.885.806 will be deducted from the general reserve.

Acquisition Lifecycle (months)

Depreciation till 2013

Value 1/1/2014

Acquisation 2014

Depreciation 2014

Value 31/12/2014

ComputersCamera 1.051 36 - 1.051 350 700

3 Sony Vaio Pro laptops, 4 22”monitors, 1 color printer - 36 - - 7.085 2.165 4.920

Asus Zenbook - 36 - - 1.605 178 1.426

MacBook - 36 - - 1.305 145 1.160

1.051 - 1.051 9.994 2.838 8.206

Disinvestments - - - - - -

total 1.051 - 1.051 9.994 2.838 8.206

Inspectors equipmentFerroscans 8 - 51 - - 115.766 22.699 93.067

Fluke thermal imager + 2 clamps meters - 43 - - 3.631 253 3.378

2 Pixel IR camera - 42 - - 6.773 161 6.612

Fluke IR camera+ 2 clamps meters - 41 - - 3.090 - 3.090

- - - 129.261 23.114 106.147

Disinvestments - - - - - -

total - - - 129.261 23.114 106.147

Total tangible fixed assets

1.051 - 1.051

139.255

25.952

114.353

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7.3. Auditors Report

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BOARD OF DIRECTORS AS OF APRIL 2016

Alke Boessiger-Ramsay, Uni Global Union Appointed 21st October 2013Jenny Holdcroft, IndustriALL Global Union Appointed 13th January 2016Karl Gunnar Fagerlin, H&M Appointed 1st March 2016Melanie Steiner, PVH Appointed 21st October 2013Roy Ramesh Ekandra, United Federation of Garments Workers Appointed 21st October 2013Santiago Martínez Lage, Inditex Appointed 15th November 2014

BOARD OF DIRECTORS IN 2014 (RESIGNED)

Aleix Gonzales Busquets, Inditex 21st October 2013 to 15th November 2014Andrew John York, N-Bown 21st October 2013 to 15th November 2014Roger Hubert, H&M 15th November 2014 to 1st March 2016Monika Kemperle 21st October 2013 to 13th January 2016

EXECUTIVE LEADERSHIP TEAM

Rob Wayss - Executive Director

Former Chief Technical Advisor in Bangladesh for the International Labour Organisation. He previously worked in several capacities for the American Center for International Labor Solidarity, an organisation with close ties to U.S. trade unions, the New York City Mayor ’s Office of Labor Relations, the United States Agency for International Development and the US Peace Corps.

Brad Loewen - Chief Safety Inspector

Former Administrator of Commercial Plan Examination and Inspections at the City of Winnipeg. He has previously worked in roles related to fire safety, workplace safety and health, mediation and conciliation, and engineering for organizations including the Canadian Government, the University of Winnipeg, the Government of the Northwest Territories, the Province of Manitoba and Steinbach Fire Dept.

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LIST OF SIGNATORIES

A&M Holmberg OyAbercrombie & FitchAccolade USA IncAdidas GroupÅhléns ABALDI NorthALDI SouthAmerican Eagle Outfitters, Inc.APG and Co.Arcadia GroupAristrocrate DistributorsArtsana S. P. A (Chicco & Prenatal)Baumhueter International GmbHBebe Clothing (UK) LtdBenettonBESTSELLERBHS LimitedBonmarcheBrand Co Management LtdBrands Fashion GmbHBristol B.VBrüzer Sportsgear LTDC&ACAMAIEUCarrefourCasino Global SourcingChantal SASCharacter World LtdCharles Vögele Trading AGChicca Body-Fashion GmbH & Co. KGCMT WindfieldColumbus Textilvertrieb GmbHComazo GmbH & Co. KgComtex GmbHCoolcatCoop DanmarkCOTTON ON GROUPCROWN TEXTIL GmbHD E B E N H A M SDanielle GroupDansk Supermarked GroupDaytex Mode GmbHDe BijenkorfDELTEX Handelsgesellschaft mbHDesignworks Clothing Company PTY LIMITEDDistra Warenhandelsgesellschaft mbH & Co. KGDK CompanyDOAPI - Auchan (registered SNC OIA)DPDB GROUPE!WOTEX GmbH (TAA MOSGEN GmbH)E. LeclercE5El Corte InglésEMC DistributionENTRADE MANUFACTURING CO. LIMITEDErnsting’s family GmbH & Co. KGESPRITEtam Groep Retail BVFace to FaceFast Retailing Co. Ltd.

Fat Face LtdFINANCIERE D’AGUESSEAUFipo GroupFlorett Textil GmbH & Co. KGForever New ClothingFruit of the LoomFull-Service Handels GmbHG-StarGekås Ullared ABG.Gueldenpfennig GmbHGEBRA Nonfood Handelsgesellschaft mbH & Co. KGGina TricotGlitter GearGruppo Coin/OVSHakro ActivewearHandels GmbH (Fashion Team)Hanson Im- und Export GmbHHawkesbay Sportswear LimitedHeli Far East LtdHelly Hansen ASHEMAHemtexHennes & Mauritz AB (H&M)Herding HeimtextilHess Natur-Textilien GmbHHolland House FashionHorizonte UnternehmensgruppeHorst Krüger GmbHHunkemöller InternationalHüren OHG professional outfitsHVEG (Fashion Linq)IC GroupICA Gruppen ABINDITEXINTERSPORT ABJ2 Licensing, IncJBCJOGILO N.V.John LewisJolo FashionJulius HuepedenJuritex (Jebsen & Jessen Group)KappAhlKARSTADT Warenhaus GmbHKik TextilienKilltec Sport - und Freizeit GmbHKmart AustraliaKnights ApparelFristads Kansas Sverige ABL.A. T SportswearLakeshirts, IncLi & FungLicensing Essentials Pty. Ltd.Lidl (Gesellschaft und Umwelt International)Loblaw Companies LimitedLPP S.AMALU N.V.MANGOMarks & Spencer

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MatalanMAVIMayoral Moda Infantil S.A.U.McGregor Fashion GroupMETRO AGMilords International Ltd.Miro Radici Hometextile GmbH (Belotex GmbH)MonoprixMosgen Limited (Peakstone Group)MothercareMS Modemultiline Textil GmbHMV Sport/WeatherproofN Brown GroupNew Frontier GmbHNew Look Retailers LtdNew Wave Group ABNEXTNu Sourcing LtdNutmeg (Wm Morrison Supermarkets plc)O’NeillOLYMP Bezner KGOrsay GmbHOspig Textil Logistik GmbHOTL Brands Ltd (Oceania Trading Ltd)Otto GroupOuterstuff LtdPadma TextilesPerrin, IncPretty Girl Fashion Group (Faith Fashion)Primark (ABF)PUMAPVHPWT Brands (Texman)Rawe Moden GmbHReima OyRenaissance Sourcing LimitedREWERheinwalt Trade & more GmbHRiver IslandRNB RETAIL AND BRANDS ABS.OliverSainsbury ’sSandrydsSchmidt Group (Bay City Textilhandels GmbH)Scoop NYC/ Zac PosenSEAN JOHNShop DirectSpecialty Fashion GroupStadium ABSteilmann Holding AGStockmann Plc (Lindex)Suprema Strick- und Wirkwarenfabrik GmbHSwitcherT-Shirt InternationalTakko Holding GmbHTally Weijl AGTarget-AustraliaTchibo GmbHTechno Manufacturing Limited

Ted BernhardtzTeddy SpaTEIDEMTEMA GROUP (LC Waikiki)TescoTex AllianceTexsport BVThe Antigua Group, Inc.The Sting B.V.The Woollen Mill (Edinburgh) LtdTop grade Int.Top of the WorldTopline ShirtsTransmarina Handelsgesellschaft mbHTV Mania UK LtdUhlsport GmbHUncle SamUnibrands ABUnited Labels AGVAN DER ERVEVarner GroupVDR Fashion Group B.V.Veldhoven International B.VVerburgt Fashion B.V.VIANIA Dessous GmbHVingino (Love for Denim BV)Vistaprint Schweiz GmbHVoice NorgeW Republic ApparelWe Europe BVWibra Supermarkt B.V.Wilson DesignsWoolworths AustraliaWorkwear GroupWunsche GroupY’Organic BVYanis Textil Trade GmbHZeeman textielSupers B.V.Zephyr Headwear

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Union Signatories IndustriALL Global UnionUNI Global UnionIndustriALL Bangladesh CouncilBangladesh Textile and Garments Workers LeagueBangladesh Independent Garments Workers Union FederationBangladesh Garments, Textile & Leather Workers FederationBangladesh Garment & Industrial Workers FederationBangladesh Revolutionary Garments Workers FederationNational Garments Workers FederationUnited Federation of Garments Workers

Witness Signatories Worker Rights ConsortiumInternational Labor Rights ForumClean Clothes CampaignMaquila Solidarity Network

BANGLADESH ACCORD FOUNDATION

Level 13, AJ Heights,Cha 72/1/d, Pragati SaraniNorth Badda, Dhaka - 1212BangladeshTel +88 02 9852093-6 +8801766695900

Keizersgracht 62-641015 CS AmsterdamThe NetherlandsTel +31 (0) 20 520 7431

contact@bangladeshaccord.comwww.bangladeshaccord.org

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April 2016

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FOR A SAFE READY-MADE GARMENT INDUSTRY

IN BANGLADESH

ACCORD