Microcredit foundation “MIKRO ALDI" - GORAŽDE
Financial statements for the period
ended 31 December 2008
Microcredit organisation "MIKRO ALDI"
Contents
Page
Responsibility for the financial statements 2
Independent Auditor's Report 4
General information 5
Organizational Structure 8
Ratio analysis 9
Financial Statements:
Income Statement 10
Balance sheet 11
Statement of changes in equity 12
Cash flow statement for the year 13
Notes to the Financial Statements 14-36
2
No: 200 - - 04/09
Date: 7 April 2009
Responsibility for the financial statements
This statement is issued related to Audit of Financial Statements of Micro landing
foundation MIKRO ALDI for the period ended December 31, 2008.
For the purpose of expressing of opinion do the financial statements give true and fair view
of the financial position of MIKRO ALDI as at December 31, 2008, results of its
operations and cash flow for the period than ended, we as the Management are responsible
for ensuring that financial statements are prepared for each financial year in accordance
with the Law on accounting and Auditing of the Federation of Bosnia and Herzegovina
(Official Gazette of the Federation of Bosnia and Herzegovina No 32/05) in accordance
with International Financial Reporting Standards (IFRS) and International Standards of
Audit as published by the International Accounting Standards Board (IASB).
After making enquiries, the Management has a reasonable expectation that the bank has
adequate resources to continue in operational existence for the foreseeable future. For this
reason, the Management continues to adopt the going concern basis in preparing the
financial statements.
In preparing those financial statements, the responsibilities of the foundation
include ensuring that:
suitable accounting policies are selected and then applied consistently;
judgements and estimates are reasonable and prudent;
applicable accounting standards are followed, subject to any material departures
disclosed and explained in the financial statements; and
the financial statements are prepared on the going concern basis unless it is
inappropriate to presume that the foundation will continue in business.
The Management is responsible for keeping proper accounting records, which disclose with
reasonable accuracy at any time the financial position of the foundation and must also
ensure that the financial statements comply with the Accounting Law and Audit of
Federation of Bosnia and Herzegovina. The Management is also responsible for
safeguarding the assets of the foundation and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Signed on behalf of the Management
Ferida Softić, Director
Safija Pleh, Finance manager
Panorama bb Tel: (++ 387) 38 226 456
73000 Goražde (++ 387) 38 221 004
Bosna i Hercegovina Fax: (++ 387) 38 221 004
www. mikroaldi.org E-mail [email protected]
REVIK D.O.O. SARAJEVO AUDIT, ACCOUNTING AND CONSULTING
Branilaca Sarajeva 20
tel./fax (00387) (33) 200-383 and 660-571
e-mail: revik@ bih.net.ba
2
To the Board of directors
Micro credit foundation "MIKRO ALDI"
Report of the Independent Auditors
Introduction
We have audited the financial statements of Micro credit foundation "MIKRO ALDI" –
Goražde on 31 December 2008. These financial statements are the responsibility of the
"MIKRO ALDI"’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
Scope
We conducted our audit in accordance with International Standards on Auditing. Those
Standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining on a test basis,evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and significant
estimates made by management. as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Micro credit foundation "MIKRO ALDI" - Goražde as at 31 December 2008
and the results of its operations and its cash flows for the period from 1 January 2008 to 31
December 2008 in accordance with International Financial Reporting Standards.
Revik d.o.o. Sarajevo
Enver Mulalić , partner
Edin Udovčić, certified auditor
Sarajevo, 7 April 2008
Microcredit foundation "MIKRO ALDI" Goražde
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1. General Information
Establishment and activities
Micro credit organization “MIKRO-ALDI”, as legal predecessor of microcredit foundation
MCF "MIKRO- ALDI", is established in Federation of Bosnia and Herzegovina in accordance
with the Law on micro credit organizations (“Official Gazette of Federation B&H, number
24/00), under the number R1M-5/00 and it has a license issued by the Federal Ministry of
Social Affairs, Displaced Persons and Refugees to work as a micro credit institution, which
provides loans to micro entrepreneurs (entrepreneurs with low income). This program is part
of the overall efforts to stimulate the economic growth and post-war recovery.
Microcredit project was started as a part of the Association of Citizens for Local Initiatives
(ALDI) in Goražde. Microcredit operations were initiated with the support of the UNHCR
loan assets project and technical assistance by the Local Initiatives Department until 1999.
After 1999, the microcredit project received additional loan fund from OXFAM and NOVIB.
Microcredit organization “MIKRO-ALDI” was registered on December 14, 2000 in
accordance with the Law on microcredit organization (“Official Gazette of Federation B&H,
number 24/00), under the number 05-4-35-M1-1796/00 as a non-profit, nongovernmental and
non-deposit organization.
In accordance with the Decision on establishment from 2000, ALDI is the founder of the
microcredit organization MIKRO-ALDI. ALDI provided the following assets:
1. Founder’s equity in the amount of KM 24,825 (furniture and equipment)
2. Transfer of all rights and liabilities related to microcredit activities: microcredit fund
through contract with UNHCR in the amount of KM 200,000; microcredit fund through
contract with OXFAM in the amount of KM 500,000.
3. In accordance with the Decision of the Board of Directors, Association of Citizens „ALDI“
as of September 15, 2001 transferred the ownership of KM 104.000 to „MIKRO-ALDI“ into
microcredit fund and the Decision is valid as of October 01, 2001.
Microcredit foundation "MIKRO ALDI" Goražde
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Main mission and vision of microcredit foundation “MIKRO-ALDI”:
Mission - MIKRO ALDI mission is to provide suitable financial services to economically
active population with low-income rate, in order to improve living conditions within local
economies that enables creation of an environment for development of an opened,
democratically orientated society with economically independent population.
Vision - The vision of MIKRO ALDI is to become leading microcredit institution in area of
Southeast Bosnia and Herzegovina, and to ensure a positive influence to the global trends of
economy development by its long term presence.
Goal - The goal of MIKRO ALDI is to build and develop a long term, self sustainable
institution that will provide microfinance services to low-income population.
Purpose - The purpose of MIKRO ALDI existence is to alleviate poverty among population
through financial services for start-up and development of a small business in order to
contribute the global development of economy.
Clients:
Mostly women from Bosnian-Podrinja and Sarajevo Cantons of Federation of B&H and
southeastern part of Republic Srpska.
Loans are mostly utilized for financing working capital and equipment. The largest portion of
portfolio is invested in agricultural activities followed by trade, service, and small-scale
production.
Credit methodology:
“MIKRO-ALDI” works in accordance with the solidarity group methodology, as well as in
accordance with the individual methodology.
Group crediting means forming of solidarity groups made of 2-5 women, microentrepreneurs.
All members of the solidarity group are guarantor to each other (no other form of collateral is
used).
Loan sizes grow with each new loan cycle. Loan cycles are from 3 to 36 months, with monthly
repayment of principal and interest (12% up to 18% annually), average 15%.
Legal status:
New Law on Microcredit organisation was published in Official Gazette of Federation B&H,
at 4 October 2006 prescribing that microcredit organisations have obligation to adjust their
legal status in accordance with stipulations of this law within 12 months.
Microcredit foundation "MIKRO ALDI" Goražde
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Federal Ministry of Justice issued a decree number 04-05-2-1708/07 at 30 April 2008 on
registration of Microcredit foundation "MIKRO ALDI" Goražde in Registar of microcredit
foundation in Federation B&H.
Board of directors
1. Ibrahim Imamović President
2. Vesna Nemec – Klisura Member
3. Hasan Đozo Member
4. Mehmed Ćulov Member
5. Elvedina Zec Member
Management Board
1. Ferida Softić Director
2. Safija Pleh Financial manager
3. Selma Pilav Credit manager
Audit committee
1. Mirsad Žuga President
2. Hazira Živojević Member
3. Mirza Hadžić Member
Activities of the Organisation are performed through:
1. Central office Goražde, Panorama bb street
2. Branch office Višegrad, Kralja Petra I bb street
3. Branch office Pale, Nikole Tesle bb street
4. Office Foča, Krajiška 20 street
5. Branch office Trebinje, Trebinjskih brigada 5 street .
Microcredit foundation "MIKRO ALDI" Goražde
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Organizational Structure on 31 December 2008
Microcredit foundation "MIKRO ALDI" Goražde
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Ratio analysis
Efficiency ratios December
31, 2008
December
31, 2007
Active loan clients/ number of staff 126 135
Active clients/number of loan officers 196 207
Net outstanding portfolio/number of loan officers 456,919 370,030
Percentage total operating expenses/ Average net portfolio 23.72 % 24.04%
Financial ratios December
31, 2008
December
31, 2007
Return on assets: Net operational income/average total assets 6.35 % 7.25 %
Return on equity: Net operational income/average equity 15.11 % 16.09%
Yield on portfolio: Interest income and/or fees / average net
portfolio outstanding
30.60 %
31.93%
Microcredit foundation "MIKRO ALDI" Goražde
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Income Statement
(All amounts expressed in KM)
Notes
Year ended 31
December 2008
Year ended 31
December 2007
Interest income and loan fee income 3 1,952,875 1,484,423
Interest expense 3 (328,380) (200,320)
Operating income 3 1,624,495 1,284,103
Operating expenses 4 (891,086) (810,498)
Bad and doubtful debts expense 6 (286,216) (83,197)
Operating expenses (1,177,302) (893,695)
Other income 7 141,752 44,260
Net operational income/ expense 588,945 434,668
Grant income 8 16,588 25,115
Net income after grants 605,533 459,783
The accompanying notes are an integral part of these financial statements
Microcredit foundation "MIKRO ALDI" Goražde
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Balance sheet
(All amounts expressed in KM)
Notes As at 31
December 2008
As at 31
December 2007
ASSETS
Cash and cash equivalent 10 444,263 315,874
Deposits with banks 11 80,000 20,000
Loans and advances to customers 12 7,100,295 5,595,450
Other assets 13 79,846 39,816
Tangible assets 14 198,878 196,433
Intangible assets 15 7,934 3,805
Total assets 7,911,216 6,171,378
LIABILITIES AND EQUITY
Other liabilities 16 100,363 118,790
Deferred income (donations) 17 74,781 85,827
Liabilities for loans 18 4,473,143 3,309,365
Total liabilities 4,648,287 3,513,982
Association of citizens "ALDI" 19 128,825 128,825
Capitalization 700,000 700,000
Retained earnings 20 2,434,104 1,828,571
Total equity 3,262,929 2,657,396
Total equity and liabilities 7,911,216 6,171,378
The accompanying notes are an integral part of these financial statements
Microcredit foundation "MIKRO ALDI" Goražde
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Statement of changes in equity
(All amounts expressed
in KM)
Founder's
equity
Association
of citizens
"ALDI"
Loan fund
Association
of citizens
"ALDI"
Loan fund
UNHCR
Loan
Fund
OXFAM
Retained
earnings
/(loss)
Total
Balance at 31 December 2005
24,825
104,000
200,000
500,000
939,544
1,768,369
Net result for the period - - - - 429,244 429,244 Balance at 31 December 2006
24,825
104,000
200,000
500,000
1,368,788
2,197,613
Net result for the period - - - - 459,783 459,783 Balance at 31 December 2007
24,825
104,000
200,000
500,000
1,828,571
2,657,396
Net result for the period - - - - 605,533 605,533 Balance at 31 December 2008
24,825
104,000
200,000
500,000
2,434,104
3,262,929
The accompanying notes are an integral part of these financial statements
Microcredit foundation "MIKRO ALDI" Goražde
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Cash flow statement
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Net operational result 605,533 459,783
Depreciation 45,291 33,625
Cash flows from operating profits before changes in
operating assets and liabilities 650,824
493,408
Changes in operating assets and liabilities
Net increase in loans and advances to customers (1,504,845) (1,488,844)
Net increase in other assets (40,030) (598)
Net decrease /( increase) in other liabilities (18,427) 18,024
Net cash from operating activities (1,563,302) (1,471,418)
Cash flows from investing activities
Purchase of property and equipment (44,255) (53,333)
Purchase of intangible fixed assets (7,610) (2,687)
Net cash from investing activities (51,865) (56,023)
Cash flow from financing activities
Net increase / (decrease) in deposits with banks (60,000) 165,633
Net increase in liabilities for loans 1,163,778 1,076,291
Net increase /( decrease) of deferred income (11,046) 12,894
Net cash from financing activities 1,092,732 1,254,818
Net decrease / (increase) in cash and cash equivalents 128,389 220,785
Cash and cash equivalents at beginning of year 315,874 95,089
Cash and cash equivalents at end of the year 444,263 315,874
The accompanying notes are an integral part of these financial statements
Microcredit foundation "MIKRO ALDI" Goražde
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Notes to the financial statements
1. Summary of significant accounting policies
The principal accounting policies adopted for the preparation of the Financial Statements of
the "MIKRO ALDI" and principal risks which have to be taken into account when assessing
these accounting policies are set out below:
(a) Risks
Concentration of risks that may have a significant impact on the "MIKRO ALDI" is as
follows:
Credit risk, the loan portfolio of the "MIKRO ALDI" consists only of micro
enterprises and citizens;
Direct and indirect dependence of micro entrepreneurs on the economic situation in
the local environment and wider region
(b) Basis of presentation
The financial statements are prepared in accordance with International Financial Reporting
Standards (IFRS). The financial statements are prepared under the historical cost convention
as modified by the fair valuation of available-for-sale securities, financial assets and financial
liabilities held for trading and all derivative contracts, if any.
The financial statements are stated in the Federation Bosnia and Herzegovina’s official
monetary unit, Konvertibilna Marka (KM), which is pledged to the Euro (EUR 1 = KM
1.95583).
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(c) Foreign currencies
Transactions denominated in foreign currencies are translated into KM at the official Central
Bank of Bosnia and Herzegovina exchange rate on the date of the transaction. Any gain or
loss resulting from the change in rates of exchange subsequent to the date of transaction is
included in the Statement of Income as a gain or loss from the revaluation of foreign currency
positions.
The exchange rates used for the Financial Statements are the official exchange rates as issued
by the Central Bank of the Bosnia and Herzegovina. As of May 31 / December 31, the
principal exchange rate is:
(in KM) December 31,
2008
December 31,
2007
1 EUR 1.95583 1.95583
(d) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet
when there is a legally enforceable right to set off the recognised amounts and there is an
intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
(e) Interest and Fees Income and Expense
Interest income and expenditures are recognized in income statement on accrual principles.
Anticipated income interest is differed.
Income from basic activity refers to interest income. Financial income relates to interest
earned on time deposits.
Expenses from operational activity are recognized at the moment of increase in liabilities or
decrease in assets.Financial expenditures are expenditures which include interest on borrowed
assets, loan loss cost, etc.
Microcredit foundation "MIKRO ALDI" Goražde
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Interest income and expenses are recognized in the income statement on an accrual basis.
Interest income is suspended when loans become doubtful of collection by more then 15 days.
Interest income is not recognized until received.
Fees consist of fees related to loans. Loan origination fees are amortized to income over the
life of the loan. (Note 17.)
(f) Donations / Grants
Donations / Grants are assistance by government or other parties in the form of transfer of
resources to the organization. These grants are recognised as income, whenever there is
reasonable assurance that the organisation will comply with the conditions attaching to them
(if any) and the grants will be received.
Donations of fixed assets are recorded as long term accruals and released to the income
statement in the same manner depreciation of the related fixed assets is charged to the income
statement.
There were no non-cash donations.
(g) In kind donation
In - kind donation are benefits or subsidies that the organization receives to support
operations, but which are paid by a third party,
(h) Originated loans and provisions for loan impairment
Loans originated by the Agency by providing money directly to the borrower at draw down
are categorised as Loans and advances to customers and are carried at amortised cost. Third
party expenses are treated as part of the cost of the transaction.
All loans and advances are recognised when cash is advanced to borrowers.
A credit risk provision for loan impairment is established if there is objective evidence that
the Organisation will not be able to collect all amounts due. The amount of the provision is
the difference between the carrying amount and the recoverable amount, being the present
value of expected cash flows including amounts recoverable from guarantees and collateral,
discounted based on the interest rate at inception.
Microcredit foundation "MIKRO ALDI" Goražde
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The loan loss provision also covers losses where there is objective evidence that probable
losses are present in components of the loan portfolio at the balance sheet date. These have
been estimated based upon historical patterns of losses in each component, the credit ratings
allocated to the borrowers and reflecting the current economic climate in which the borrowers
operate. When a loan is uncollectible, it is written off against the related provision for
impairments, subsequent recoveries are credited to the bad and doubtful debt expense in the
income statement.
If the amount of the impairment subsequently decreases due to an event occurring after the
write-down, the release of the provision is credited to the bad and doubtful debt expense,
In determining the overall level of the provisions required management considers numerous
factors including, but not limited to, the financial condition of the borrower, existence and
quality of collateral, domestic economic conditions, the composition of the loan portfolio and
prior bad debt experience and repayments after year-end.
The following percentages of provisioning are applied for loans in arrears:
Provisioning
Days in arrears 2008 2007
1-15 days 2% -
16-30 days 15% 20%
31-60 days 50% 40%
61-90 days 80% 60%
91-120 days 100% 80%
121-180 days 100% 100%
>180 days (written off) 100% 100%
(i) MIS development costs
MIS development costs are recognised as an expense as incurred. However, expenditure that
enhances and extends the benefits of computer software programmes beyond their original
specifications and lives is recognised as a capital improvement and added to the original cost
of the software. Computer software development costs recognised as assets are amortised
using the straight-line method over their useful lives but not exceeding a period of five years.
Costs associated with the maintenance of existing computer software programmes are
expensed as incurred.
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(j) Property and equipment
Property and equipment is stated in principal at historical cost less depreciation.
Depreciation is calculated on the straight-line method to write off the cost of each asset to their
residual values over their estimated useful life as follows:
December 31,
2008
December 31,
2007
% %
Buildings 2.0 2.0
Furniture and equipment 10-20 10-20
Vehicles 15.5 15.5
Computer equipment 33.33 33.33
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is
written down immediately to its recoverable amount. Gains and losses on disposal of property
and equipment are determined by reference to their carrying amount and are taken into
account in determining operating profit. Repairs and renewals are charged to the income
statement when the expenditure is incurred.
(k) Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents comprise of balances
with maturity less than 90 days including cash and amounts due from other banks.
(l) Provisions
Provisions are recognised when the Organisation has a present legal or constructive obligation
as a result of past events, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable estimate of the amount of the
obligation can be made.
(m) Reclassification
Certain amounts in the previous year financial statements have been reclassified to conform to
the current year
Microcredit foundation "MIKRO ALDI" Goražde
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2. Risks associated with financial instruments
In the normal course of business, the Organisation provides to its customers a variety of
financial instruments. These financial instruments involve various degrees of risk as follows:
Credit risk
In conducting business activities, the Organisation is exposed to the possibility that borrowers
may default on their obligations to the Organisation, To minimize this risk the Organisation
evaluates each customer’s credit worthiness on a case-by-case basis, The amount of collateral
obtained, if it is deemed necessary by the Organisation upon the extension of credit, is based
on credit officer's credit evaluation of the client, Collateral held varies but may include
guarantees, payment orders and acceptance letters, The Organisation strives to maintain a
credit risk profile that is diverse in terms of industry and borrower concentration,
Market risk
In the normal course of business, the Organisation is exposed to market risks, Market risks
arise from open positions in interest rate and currency, all of which are exposed to general and
specific market movements,
Currency risk
The Organisation may invest in assets denominated in currencies other than its reporting
currency, the convertible mark (KM), Consequently, the Organisation is exposed to risks that
the exchange rate of the convertible mark relative to other currencies may change in a manner
which has an adverse effect on the reported value of that portion of the Organisation’s assets
which are denominated in currencies other than the convertible mark,
Interest rate risk
The Organisation takes on exposure to the effects of fluctuations in the prevailing levels of
market interest rates on its financial position and cash flows, Interest margins may increase as
a result of such changes but may reduce or create losses in the event that unexpected
movements arise,
Liquidity risk
Liquidity risk arises from the possibility that the Organisation may be unable to satisfy current
and future financial commitments,
Microcredit foundation "MIKRO ALDI" Goražde
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The Organisation is exposed to calls on its available cash resources from maturing loans
received by the Organisation and loan drawdown, The Organisation does not maintain cash
resources to meet these needs as experience shows that a minimum level of reinvestment of
maturing funds can be predicted with a high level of certainty,
Notes to the Income Statement
3. Net operating income
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Interest income and commission
Interest on loans 1,751,936 1,326,831
Loan fee income 190,444 157,592
Penalty interest 10,495 -
1,952,875 1,484,423
Interest expense
Cost of capital from NOVIB (36,993) (71,260)
Cost of capital from Raiffeisen Bank Sarajevo (78,061) (58,707)
Cost of capital from NLB CBS Banka (32,939) (27,628)
Cost of capital from DBF Microcredit fond - (3,746)
Cost of capital from BLUE ORCHARD (21,550) (19,181)
Cost of capital UniCredit Zarebačka Bank (39,896) (16,075)
Cost of capital Planet Responsibility Fond (42,744) (3,462)
Cost of capital EFSE (67,404) -
Cost of capital from INTESA banka d.d. Sarajevo (3,978) -
Cost of capital from ABS banka d.d. Sarajevo (2,933) -
Cost of capital from PBS banka d.d. Sarajevo (1,882) -
(328,380) (200,320)
Net operating income 1,624,495 1,284,103
All income arises within Federation of Bosnia and Herzegovina and Republika Srpska.
Income from loan fees is charged as 2% of the loan amount when loan is issued, and that
income is deferred during the life time of the loan.
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4. Operating expenses
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Staff costs (Note 5) 617,171 597,785
Depreciation 45,290 33,625
Bank services 23,232 17,810
Audit fee 6,201 4,680
Education 5,773 11,352
Maintains of equipment 7,575 2,644
Communication 28,398 22,173
Energy 10,022 8,503
Fuel 37,602 45,082
Insurance of fixed assets 7,598 7,466
Stationery 8,397 6,414
Advertisement 8,285 6,652
Rent 16,358 10,742
Membership-AMFI 4,800 4,134
Promotion services 12,577 -
Currency exchange differences incomes - 8,782
Communal and republic fees 7,400 4.000
Fees paid to Bank Agency of Federation BiH and
Republic of Srpska
7,605
-
Tax after deduction and other tax and fees 12,681 -
Other 24,121 18.654
Total 891,086 810,498
5. Staff costs
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Wages and salaries (net) 342,119 320,201
Taxes and contribution on salary 220,023 203,831
Travel costs 2,443 10,539
Temporary services contract 620 17,428
Food allowance 31,416 32,176
Holliday allowance 12,962 13,610
Fees for maternity leave 2,095 -
Other fees 5,503 -
Total (Note 4) 617,171 597,785
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The average number of persons employed by the "MIKRO ALDI" on 31 December 2008 was
25 (2007 - 23).
The Foundation does not have any other retirement packages expect the one through the
retirement system of the Federation of Bosnia and Herzegovina and Republic of Srpska.
According to this system, the employer is obliged to calculate the current contributions in a
percentage from current gross salaries, and expenses debit the income statement in a period in
which employees earned their salaries. The Foundation does not have any obligations to pay
out retirement checks to employees in the future.
Foundation does not have obligation to pay out retirement checks to employees on 31
December 2008.
Foundation is calculated provision regarding expecting future payments to the employees after
retirement in amount of 3 monthly salary's on the level Foundation , but did not made
liabilities because management have opinion that amount of provision does not represent
material significant item.(0.73 % Foundation's profit before taxation for the period from 1
January 2008 to 31 December 2008).
In future, Foundation will calculate provision in accordance with MRS 19 –Employee
Benefits.
6. Bad and doubtful debts expense
(All amounts expressed in KM)
December 31,
2008
December
31, 2007
Loans and advances to customers (Note 12.f.) 257,655 83,197
Interest (Note 13.a.) 28,561 -
286,216 83,197
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7. Other income
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Release of provision for credit risks * 112,810 -
Income from previously write-off loans 21,911 23,913
Income from previously write-off interest 759 -
Reimbursement from insurance company 2,322 9,625
Currency exchange differences expenses - 8,782
Interest on deposits in banks 546 473
Collected court fees 2,750 1,467
Prepaid loans 654 -
Total 141,752 44,260
Based on decision of Board of Directors of MCF MIKRO ALDI number: 100-13-5/08 dated
19 May 2008, Foundation has recorded income relating to release of provision for credit risks
in amount of 112,810 KM, incurred in previous period.
8. Grant income
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Donation from IDB CGAP - 14,516
Donation from NOVIB for fixed assets* 16,010 10,599
Donation from EFSE 578 - Total
16,588 25,115
* See Note 17.
9. Taxation
The Foundation is tax exempted in respect of corporate tax according to the Law on Micro
Finance Organizations, which determines that micro credit foundations should be regarded as
non-profit organisations.
Microcredit foundation "MIKRO ALDI" Goražde
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Notes to the Balance Sheet
10. Cash and cash equivalents
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Cash at hand 427 585 EFSE 2,055 122,780 INTESA bank, Sarajevo 121,783 - ABS bank, Goražde 80,328 - PBS bank, Goražde 82,365 - Raiffeisen Bank, Goražde 56,139 141,303 UniCredit Zagrebačka Bank 44,040 26,244 CBS NLB Bank 57,552 24,771 Nova Bank, Foča - 191 Transfer account (426) -
Total 444,263 315,874
Interest rates on transaction accounts at banks on 31 December 2008 are 0.10 % annually.
(2007.:0,25 % annually).
11. Deposits with banks
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
UniCredit Zagrebačka bank ( Term deposit ) * 20,000 20,000
NLB Tuzlanska banka (oročena sredstva) ** 60,000 -
Total 80,000 20,000
*Term deposit represents restricted deposit at UniCredit Zagrebačka Bank, Mostar, and
contract number 15000015-ND-1/08 at 05.09.2008 and is utilized as a guarantee for a loan
received from UniCredit Zagrebačka Bank, number 15000015-KK-1/08.
Interest on a term deposit is 2.35% annually, with maturity of one year (see note 18.a.4.)
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** Specialty interest-free deposits at the bank NLB Tuzla dd Tuzla under contract no.
102055811/NZ as of 08. October 2008. year, which serves as an instrument to allow payment
long-term loans for business activities no. 102052901 at the Bank (See Note 18.a.3.)
12. Loans and advances to customers
(a) Portfolio
Organization offers four loan products:
- Business loans
- Extra loan
- Loan for other purposes
- Agricultural loan
Every loan product has its own sub-products for various types of business like agriculture,
fixed or current assets for other businesses.
Loans are granted for the period up to 48 months (2006: generally due within 36 months) but
average repayment period is 23 months (2007: 19 months). Foundation does not have renewed
loans.
Number of active clients is 3,143 (2007.:3,100).
Total number of disbursed loans – 2,460 (2007.:2,809).
The percentage of female clients is 75 % (2007.: 78 %) and male clients 25 % (2007.:22 %).
(b) Analysis by interest rates
Interest rate on all extended loans is 12 % to18 % p.a.
Organization is calculating the interest rate according to declining method. The annual
interest rate is charged monthly and is ranging from 1% to 1.5%, depending on the loan
product and loan cycle.
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c) Analysis by type of borrower
Economic sector risk concentrations within the customer loan portfolio were as follows:
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Individual production companies 430,083 472,764
Individual trade companies 2,233,564 1,683,936
Individual service companies 2,000,575 1,507,390
Agriculture 2,260,823 2,078,782
Other 385,664 -
Total (gross) 7,310,708 5,742,872
Specific provision for credit risks (210,413) (147,422)
Total (net) 7,100,295 5,595,450
(d) Geographical analysis
As of 31 December 2008 all loans were disbursed to citizens of, or companies incorporated in
the Federation of Bosnia and Herzegovina and Republika Srpska.
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Federation BiH 1,902,571 1,580,387
Republic Srpska 5,408,137 4,162,485
Total (gross) 7,310,708 5,742,872
Specific provision for credit risks (210,413) (147,422)
Total (net) 7,100,295 5,595,450
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(e) Arrears
The amounts of loans in arrears are analysed as follows:
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Principal in
arrears
Principal in
arrears
Current loans 6,816,931 5,641,491
1-15 days 131,427 -
16- 30 days 97,475 62,667
31 - 60 days 121,347 22,087
61 - 90 days 55,193 6,264
91- 180 days 88,335 10,363
over 180 - -
Total 7,310,708 5,742,872
Arrears include all amounts of loan principal due but not collected.
(f) Provisions
The movements in provisions for loan losses are as follows:
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Balance at 1 January 147,422 96,967
Doubtful debts expense - loan ( Note 6 ) 257,655 83,197
Bad debts written off (81,854) (32,742)
Release of specific provisions for loans (Note 7) (112,810) -
Balance at 31 May/December 210,413 147, 422
Micro Aldi is writing loan offs after 180 days, which in accordance with the Foundation’s
business policy.
13. Other assets
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(All amounts expressed in KM)
December 31,
2008
December
31, 2007
Accrued interest receivable 61,398 36,413
Prepaid rent expenses* 23,144 1,763
Prepaid expenses for processing of loan applications** 10,323 -
Other receivables (refundation of fees for maternity leave) 1,614 846
Consumable stores *** - 794
96,479 39,816
Specific provision for interest (16,633) -
Total 79,846 39.816
* Prepaid expenses refers to: rent expenses for offices in Sarajevo, Pale and Trebinje.
** This item represents prepaid expenses for processing of loan applications to EFSE in
amount of KM 7,823 and NLB Tuzlanska Bank in amount of KM 2,500.
*** Consumable stores are written off 100 % when put into use and rest at the end of using
period.
(a) Provisions for interest
The movements in provisions for interest losses are as follows:
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Balance at 1 January - -
Doubtful debts expense - interest ( Note 6 ) 28,561 -
Bad debts written off (11,928) -
Balance at 31 December 16,633 -
14. Property and equipment
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(All amounts expressed in KM)
Buildings
Furniture &
equipment
Vehicles
Computer
equipment
Total
Cost
As at January 1, 2008 114,403 30,239 101,879 88,277 334,798
Additions - 17,249 21,685 5,321 44,255
Writte off's - (1,667) - (9,679) (11,346)
As at December 31, 2008 114.403 45.821 123.564 83.919 367.707
Accumulated depreciation
As at January 1, 2008 9,415 23,134 67,383 38,433 138,365
Depreciation 2,291 1,628 15,123 22,768 41,810
Writte off's - (1,667) - (9,679) (11,346)
As at December 31, 2008 11,706 23,095 82,506 51,522 168,829
Net book value as at 31
December 2008 102,697 22,726 41,058 32,397 198,878
Net book value as at
31 December 2007 104,988 7,105 34,496 49,884 196,433
Micro ALDI possesses business premise in Goražde of 142 m2 which net book value is KM
99,410; part of this premise (95m2) was pledged as collateral to Raiffeisen Bank for a loan.
Organization has insurance contracts with Sarajevo Osiguranje against risks of theft, fire and
water accidents.
15. Intangible assets
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Software 11,557 8,870
Additions 7,610 2,687
Accumulated depreciation (11,233) (7,752)
Total 7,934 3,805
16. Other liabilities
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(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Salaries (net) 17,176 43,801
Contributions and taxes on salaries 6,131 27,914
Suppliers 15,348 24,477
Accrued interest payable 55,243 17,928
Accrued other costs 465 4,670
Total 100,363 118,790
17. Deferred income (donations)
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Deferred revenue (fee) * 74,781 69,817
Deferred revenue (donation of fixed assets)
(NOVIB) ** -
16,010
Total 74,781 85,827
* Deferred revenue (fee) represents 2% fee collected at extension of loans that will be
recognized as income through repayment period of respective loan (Note 1.e).
Movements during the year are presented bellow:
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
As at January 1 69,817 46,324
Additions during year 145,330 141,376
Transferred to revenue (Notes 1.e and 3) (140,366) (117,883)
As at December 31 74,781 69,817
** MIKRO ALDI has received a donation in 2002 from NOVIB in amount of KM 80,000 for
fixed assets. Income from this donation is recorded in the amount of depreciation.
Movements during the year are presented bellow:
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(All amounts expressed in KM)
December 31,
2008
December 31,
2007
As at January 1 16,010 26,609
Depreciation of fixed assets donated by NOVIB
(Notes 2.f. and 9)
16,010
(10,599)
As at December 31
-
16,010
18. Liabilities for loans
a) Analysis by type of loan
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
NOVIB(1) 312,688 552,033
Raiffeisen bank Sarajevo(2) 275,000 1,275,000
CBS NLB banka (3) 525,000 300,000
UNICREDIT Zagrebačka Bank(4) 600,000 400,000
PLANET RESPONSIBILIT FOND(5) 293,374 293,374
BLUE ORCHARD (6) 195,583 195,583
EFSE(7) 1,173,498 293,375
Intesa Sanpaolo bank Sarajevo (8) 498,000 -
PBS DD filijala Goražde (9) 200,000 -
ABS DD filijala Goražde (10) 400,000 -
4,473,143 3,309,365
(1) NOVIB
MIKRO ALDI signed contract with NOVIB for amount of EUR 512,000 on March 25,
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2002. Interest rate is 9 % p.a. Maturity of the loan is 5 years and 9 months with grace period
of 2 years. Repayment started on December 31, 2004.
An additional contract with NOVIB under number FDE-503123/L-64 was signed for amount
of EUR 300.000 on 1 February 2004. The main condition of the contract is that the purpose of
the loan is lending of loans only to the target population. Interest rate is 8 %.
Maturity of the loan is 5 years with grace period of 1 year on principal.
The guarantee for the both of loan is the portfolio which is separately recorded as NOVIB
assets.
(2) Raiffeisen bank Sarajevo
Mikrocredit organization has signed an ANEX 9 on General contract for a loan and business
cooperation with Raiffeisen bank d.d Sarajevo at 12 December 2007 number OU -5-052/03
and approved:
Short term loan number 14275/07 at 12.12.2007 in amount of 500,000 KM with
interest rate 7,35 % annually
Long term loan number 06766/07 at June 01 , 2007 in amount of 500,000 KM with
interest rate 8 % and with maturity June , 01,2009
Long term loan number 10224/07 at 3 September 2007 in amount of 400,000 KM with
interest rate 8 % annually and with maturity 3 September 2009
Guarantees for this loan are property of the Organization MIKRO ALDI (part of business
premises 95 m2) and business premises of its founder U.G. ALDI 207 m
2 and portfolio from
Raiffeisen bank funds.
(3) NLB Tuzlanska bank
MKF MIKRO Aldi is concluded as at 12 August 2008. year with NLB Tuzla BANK d.d.
Tuzla agreement on long-term loan number 102052901 in the amount of KM 600,000 (EUR
306.775,13) for a period of 24 months at a rate of 6-month EURIBOR + 4% per year.
Guarantee for this loan are: bills Foundation, assignment for the benefit of all bank claims
from the users of credit in the ratio of 1:1,5 and 10% interest-free deposit from the first
tranche loan of 60,000 KM (see Note 11).
(4) UNICREDIT ZAGREBAČKA Bank
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At 8 February 2008, Foundation concluded a new short term loan agreement number:
09/2008/0342, for period of 12 months and interest rate at 7,3%. Guarantees for this loan are:
bills of exchange of the Foundation (5), cession to the bank.
Fuundation was concluded as at 05 September 2008. under the number 09/2008/0342 new
short-term loan in the amount of KM 200,000 for a period of 12 months and interest rate of
8% (see Note 11).
(5) Planet Finance ( Responsibility SICAV ( LUX ) Mikrofinanz-Fonds )
September 11 , 2007 MIKRO ALDI has signed a short term loan for the financing credit
portfolio in amount of 150,000 EUR ( 293.375 KM ) with interest rate of 9 % annually
contract with Planet Finance ( Responsibility SICAV ( LUX ) Mikrofinanz-Fonds) from
Luxemburg . Guarantees for this loan are cession to the lender.
(6) BLUE ORCHARD
MIKRO ALDI has at April 27, 2007 signed a contract with BLUE ORCHARD on short term
loan in amount of 100,000 EUR with interest rate six months EUROLIBOR plus 6.75 % p.a.
This credit was returned at 27 April 2008. Blue Orchard is at April 28 , 2008 approved a new
loan to the Organization in amount of 100,000 EUR with interest rate six months
EUROLIBOR plus 5.50 % p.a.
There are no guarantees for this loan.
(7) EFSE
Mikrocredit organization based on General contract with European Fund for Southeast Europe
(EFSE) at 13 December 2007 has signed a long term loan contract No.XXBAS ALDI 001 in
amount of 600,000 EUR. Loan is approved with interest rate of 8.47 % on 3 years and 15
mounts grace period, with maturity 22 March 2009. MIKRO ALDI repays principal and
interest for these loans according to the contracted repayment schedules.
(8) Intesa Sanpaolo bank Sarajevo
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Microcredit Foundation is concluded with Intesa Sanpaolo bank dd Sarajevo Agreement on
short-term borrowings by the principle of current account as follows:
Contract no. KM-201508-KK/08 as of 28 October 2008. year to 166,000 KM, with
interest rate 3-month EURIBOR / Reuters / + 2.70% year;
Contract No. KM-201600-KK/08 as of 17. Novembar 2008. year to 166,000 KM, with
interest rate 3-month EURIBOR / Reuters / + 2.70% per year
Contract no. KM-201685-KK/08 as of 04. Decembar 2008. year to 166,000 KM, with
interest rate 3-month EURIBOR / Reuters / + 2.70% per year
Guarantees for this loan are bills and cession of the credit portfolio to the lender
(9) PBS DD branch office Goražde
MKF MIKRO Aldi is concluded 26. Novembar 2008. year with PBS DD branch Goražde
agreement on short-term loan for the current operation no. IV-02-183-3/08 amounting to
200,000 KM at a rate of 10% per year.
Collateral for this loan are: bills Foundation and the cession od the credit portfolio to the
lender in the amount of 400,000 KM.
(10) ABS DD branch office Goražde
Fundation is concluded 28.Novembar 2008. year with ABS banka dd - branch Goražde
agreement on short-term loan no. 054-Kp-043/08 amounting to 400,000 KM at a rate of
8.80% per annum
Collateral for this loan are: bills Foundation and the cession od the credit portfolio to the
lender
b) Maturity analysis
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
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Up to 1 year (with possibility of prolongation) 3,065,812 2,242,615
Over 1 year 1,407,331 1,066,750 4,473,143 3,309,365
19. Founder’s equity
Since the MKF "MIKRO ALDI" is a non-profit organisation, there is no share capital issued,
but in accordance with Law on Micro credit organisation it has founders' equity,
20. Retained earnings/ (loss)
(a) Movement schedule
(All amounts expressed in KM)
December 31,
2008
December 31,
2007
Balance as at 1 January 1,828,571 1,368,788
Net result of the year (before donations) 588,945 434,668
Donations from NOVIB and EFSA 16,588 25,115
Balance as at 31 December 2,434,104 1,828,571
(b) Distribution of the profit
The profit of the micro credit Fondation has to be used for the micro credit activities.
21. Related party transactions
As at 31 December 2008. the Foundation had transactions with the Managing Board and
Audit Committee as related parties on the basis of compensation as shown in the note 22.
Foundation does not have internal loans. Foundation has rules about conflict of interests
which does not allow issuing of loans to employees or to members of the Boards of Directors
and Audit Commitee.
22. Directors’ remuneration
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A listing of the members of the Management Board is shown on page 7 of the Financial
Statements. In the period from 1 January 2008 to 31 december 2008 the total remuneration of
the management was in amounts of KM 123.995 (2007: KM 115,880). The Board of Directors
and Audit Commitee as shown on page 6 of the Financial Statements has received in period
from 1 January 2008 to 31 December 2008 compensations in amount of KM 2.574.
23. Maturity analysis
The amount of total assets and total liabilities analyzed by maturity at December 31, 2008
is as follows:
(All amounts expressed in KM)
Demand
(Including
arrears)
Up to 6
months
From 6
months to
1 year
Over 1
year
Total
2008
ASSETS
Cash and cash equivalents 444,263 - - - 444,263
Deposits with banks - - 80,000 - 80,000
Loans and advances to customers 256,489 1,401,650 1,775,280 3,666,876 7,100,295
Other assets 47,955 7,880 9,456 14,555 79,846
Property, plant and equipment - - - 198,878 198,878
Intangible assets - - - 7,934 7,934
TOTAL ASSETS 748,707 1,409,530 1,864,736 3,888,243 7,911,216
LIABILITIES
Other liabilities 100,363 - - - 100,363
Deferred income (donations) 2,242 24,264 20,316 27,959 74,781
Liabilities for loans 32,011 1,485,838 1,547,963 1,407,331 4,473,143
TOTAL LIABILITIES 134,616 1,510,102 1,568,279 1,435,290 4,648,287
TOTAL ASSETS -/-
LIABILITIES 614,091 (100,572) 296,457 2,452,953 3,262,929
24. Currency analysis
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The amount of total assets and total liabilities analysed by currency at December 31, 2008 is
as follows:
(All amounts expressed in KM)
KM
EUR
Total
ASSETS
Cash and cash equivalent 444.263 - 444.263
Deposits with banks 80.000 - 80.000
Loans and advances to customers 7.100.295 - 7.100.295
Other current assets 79.846 - 79.846
Property, plant and equipment 198.878 - 198.878
Intangible assets 7.934 - 7.934
TOTAL ASSETS 7.911.216 - 7.911.216
LIABILITIES
Other liabilities 100.363 - 100.363
Deferred income (donations) 74.781 - 74.781
Liabilities for loans 2.497.999 1.975.144 4.473.143
TOTAL LIABILITIES 2.673.143 1.975.144 4.648.287
TOTAL ASSETS -/- LIABILITIES 5.238.073 (1.975.144) 3.262.929
Having in mind that local currency (KM) is linked to EURO, there is no foreign exchange risk
exposure (Bosnia and Herzegovina applies “Currency Board” Principle that is based on EUR).
25. Post Balance Sheet Events
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No any events have occurred since the balance sheet date, which significantly affect the state
of affairs of the Organisation at the balance sheet date or which require additional disclosure.