fres annual report 2011

Annual report 2011

PrefacePitch-black. After sunset, this is still the current situ-ation in many rural areas in Africa. People often only have light in the form of candles or oil lamps because the area has no electricity. The little light from a candle or oil lamp is insufficient to do homework or give birth safely, and running a shop in the evening is also difficult. Moreover, candles or lamp oil are a health and environ-mental hazard.

Over ten years ago, the companies NuRa and Yeelen Kura brought electric light to the pitch-black in rural areas in South Africa and Mali. In 2001, Nuon was at the inception of these two companies. Currently, FRES is responsible, as or on behalf of the shareholder, for the ins and outs of these two, as well as three other FRES companies. In addition to Mali and South Africa, we were active in Burkina Faso, Uganda and Guinea-Bissau in 2011.

And with significant impact. Via the local FRES compa-nies, we directly contribute to poverty control, stimu-lating employment, access to modern means of com-munication and improving living circumstances in development countries.

As with the previous years, we could be proud of the great results in 2011, but we also had to deal with major disappointments. The FRES companies in Mali and South Africa exceeded their targets in number of new customers. Unfortunately, this appeared to be unachievable for Burkina Faso. In Mali, two new solar power stations were opened. These two power sta-tions feed small electricity networks (mini-grids) in the villages Kolondieba and Ourikela. FRES Uganda Ltd. in Uganda connected its first customers and a new FRES company was founded in Guinea-Bissau.

The first results of interventions aimed at improving the financial performances of the FRES companies, specifi-cally in Mali and South Africa, became visible. We were awarded subsidies for six more solar power stations in Mali by AMADER/World Bank, for 1.450 SHS-customers in Uganda by World Bank/REA and for 3.000 SHS-cus-tomers in Guinea-Bissau by the European Union. Private people and companies have also supported us with donations. Unfortunately, we have not yet been able to reach an agreement with DGIS (Directoraat-generaal Internationale Samenwerking) on a fixed subsidy.

We involved our stakeholders in our activities through various means. We launched a new website, published our yearly report, organized two well-visited stake-holders meetings and became active on social media LinkedIn, Facebook and Twitter.

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At the end of 2011, over 16.000 customers in five coun-tries were connected to a Solar Home System (SHS) or mini-grid. Even though we did see a positive change in the growth of the number of customers, there is still much to do. By means of further professionalization of our local companies, improving technique and mainte-nance organization and intensifying our marketing and sales efforts, we would like to bring about accelerated customer growth with improved financial results for our companies.

Finally: the selfless contributions of our advisors, experts, volunteers and donors are of great value to us. Our many partners have helped us perform our work, for which we are grateful.

The board

Annemarie GoedmakersChair/CEO

Serge LeijtenTreasurer/CFO

Harry DroogBoard member/COO

Report of the Supervisory Board

In 2009, by altering the regulations, FRES appointed a Supervisory Board. This board supervises the manage-ment policy and the general day-to-day practices of the foundation. With this yearly report, the Board shows accountability for the performance of its tasks and responsibilities in the report year 2011.

In 2011, the Supervisory Board consisted of Aad Veen-man (chairman) and Peter Smink (secretary). Pieter van Geel (member) joined in April. He abdicated in Decem-ber 2011 to prevent a possible conflict of interest with a different position. The Supervisory Board held two meetings in 2011 and gave its approval to a number of urgent decisions from the board that did not require any further discussion via email.

Further clarification of the activities of the Supervisory Board can be found in Part 1, chapter 3 (Organizational structure and supervision), Part 3, chapter 11 (Organiza-tion) and Appendix 2 (Explanation composition of the organization) of this yearly report.

The Supervisory Board has discussed the annual report and annual account 2011, as established by the board, on April 27 2012 in the presence of the external accountant, PwC. The Board has established the annual account of 2011 and granted its approval to the annual report 2011 and the budget for 2012, after having re-ceived approval from the accountant.

The Supervisory Board thanks all employees and volun-teers, the board of FRES in the Netherlands, the Boards of Commissioners of the FRES companies and all other people involved for their hard work in 2011.

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Aad VeenmanChairman

Peter SminkSecretary

Table of contents

PART 1: FRES, ORGANIZATION WITH DURABLE GROWTH AMBITION

1 Organizational development FRES2 Vision, mission and objectives Vision Mission Objectives Strategy Strengths and weaknesses, opportunities and threats 3 Organizational structure and supervision Board Supervisory Board Management and Boards of Commissioners of FRES companies Employees FRES Netherlands Consultation structure Monitoring and evaluation Accountability declaration Financial supervision

PART 2: ACTIVITIES AND RESULTS FRES COMPANIES INTERNATIONAL

4 Yeelen Kura in Mali5 NuRa in South Africa6 Yeelen Ba in Burkina Faso7 FRES Uganda Ltd. in Uganda8 FRES Guinea-Bissau9 New markets

PART 3: ACTIVITIES AND RESULTS FRES IN THE NETHERLANDS

10 Risk management 11 Organization 12 Partners13 Fund acquisition Policy, strategy and objective Results 2011 14 Communication Policy, strategy and objective Results 2011

PART 4: FINANCIAL REPORT

15 Consolidated annual account and clarification of consolidated annual account 2011 Control declaration of the independent accountant

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PART 5: PREVIEW 2012 AND BEYOND

16 Preview FRES companies international17 Preview FRES in the Netherlands18 Objectives 2012 and beyond19 Budget 2012

APPENDICES

Appendix 1: TerminologyAppendix 2: Explanation composition of the organizationAppendix 3: Accountability and deviation Code WijffelsAppendix 4: GRI-index

Bookmark annual report

In some chapters, we refer to the appendices and/or www.fres.nl for more information.

Do you prefer a quick impression of FRES in 2011? Please read the manage-ment summary containing the objec-tives and results of 2011, the introduc-tory texts and “In short” text boxes in the various chapters.

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In the year of 2012, 1,5 billion people worldwide do not yet have access to electricity. Many people in Africa also do not have power and electric light in their homes and work environment, often because the electricity network is too far away. They need to rely on candles and lamp oil as sources of light. These are expensive and non-durable solutions, which also present health and environmental hazards.

Foundation Rural Energy Services (FRES) believes that a certain level of (economic) development of rural areas can only be achieved when the basic need for electricity is met. Therefore, the foundation aims to provide 100.000 households and small companies in Africa with safe and affordable electricity by 2020 by starting up electricity companies in rural areas.

When founding these companies, FRES opts for local entrepreneurship, financial independence of the companies and a businesslike approach to guarantee delivery of energy and offer local employees struc-tural employment. FRES preferably uses the sun as an energy source to generate electricity.

The board and office of FRES are situated in Amster-dam in the Netherlands. Five FRES companies provide the performance of activities in Africa:

• Yeelen Kura in Mali• NuRa in South Africa• Yeelen Ba in Burkina Faso• FRES Uganda Ltd. in Uganda• FRES Guinea-Bissau

FRES is an independent nonprofit foundation. Since the founding of the first FRES company in 2001, 16.718 households and small businesses have become clients, 33 energy shops have been opened and three solar power stations have been built. At the end of 2011, FRES employed 144 people, three in the Netherlands and 141 in Africa. Additionally, twelve managers and commissioners work for FRES. Finally, a large number of experts, students and volunteers support our organization.

FOUNDATION RURAL ENERGY SERVICES

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Management summary: objectives and results 2011

Overview of objectives and results 2011

For 2011, the goal was to grow to a total of 17.373 custo-mers with all FRES companies. At the end of 2011, 16.718 customers have been realized. Yeelen Kura and NuRa achieved a higher number of customers than planned; problems resulted in Uganda due to a slow government and in Burkina Faso as a result of internal problems in the company. However, a change can be seen in 2011: the growth in number of customers has been initiated and we expect it will continue in the coming years.

1. Expansion of the FRES companies in South Africa, Mali and Burkina Faso.

Achieved: yes.Yeelen Kura in Mali has connected 960 new customers and, with this, achieved its goal of 850 new customers in 2011. The growth in the number of customers has been initiated and two solar power stations have been opened that will stimulate further growth.

NuRa in South Africa has installed 4.500 SHS and, with that, has achieved its goal of 2.546 new customers. There was a net growth of 2.892 customers.

Yeelen Ba in Burkina Faso had a very limited growth in the number of customers, partly as a result of an unclear cost structure compared to Yeelen Kura, which is active in the nearby border region in Mali. A total of 184 new customers have been connected. At the end of 2011, it was decided to stimulate the growth by equating the rates of Yeelen Ba with the lower rates of Yeelen Kura.

2. The activities of FRES Uganda Ltd. will be continued and the first 250 customers will be connected.

Achieved: partly.The concession permit and subsidy agreement with the Ugandan Government were received at the end of Decem-ber 2011 and at the beginning of 2012, due to which only six customers could be connected in 2011.

3. The financial performances of the existing FRES com-panies are improved by the growth of the number of cus-tomers and by improving the operational performance, such as reducing non-payment.

Achieved: partly. Yeelen Kura has split up the management into three products (SHS, mini-grid on diesel and mini-grid on solar energy) in order to obtain clear insight into the financial performances of every product. The diesel grids proved to result in loss, while the SHS and the solar mini-grids were profitable. Therefore, the growth in SHS and solar grids will be furthered.

NuRa has started to deal with the payment arrears of customers (“non-payment”). The performances of the com-pany itself were improved with more alert and effective maintenance, which in turn increased customer satisfac-tion. Customers’ payment arrears were addressed faster.

4. Starting up a new FRES company in Benin and/or Guinea-Bissau.

Achieved: yes. In 2011, FRES received an EU-subsidy for starting up a new company in Guinea-Bissau with the goal of connecting 3.000 households and small companies within 4 years. The company FRES Guinea-Bissau was founded at the end of 2011. The General Manager has started as of January 1, 2012.

The company in Benin has been founded. Given the uncertainty about the active (financial) support from the Government of Benin and other parties involved, FRES has decided to wait with developing activities in Benin.

5. Attracting additional professional expertise.

Achieved: yes.In 2011, FRES extended the cooperation contract with Program Broadcasting Managers (PBM). Eight assignments are performed within two years. In 2011, Yeelen Kura worked on a standard operational manual. FRES has had an investigation conducted into the possibilities for the cen-tral purchase of systems. The non-payment issues of NuRa were analyzed and the possibilities of Micro Hydro Power in Uganda were investigated.

6. Attracting €5 million in subsidy monies.

Achieved: yes. In 2011, a total of €5,7 million in subsidies was awarded by the Governments of Mali and Uganda, Stichting Doen and the EU.

7. Entering into cooperation contracts with two compa-nies for corporate sponsoring.

Achieved: partlyIn 2011, FRES has made agreements with Alliander about further cooperation through formalizing the availability of expertise and knowledge and providing commissioners for FRES companies. Further agreements still need to be made with regard to taking over agreements that already existed between FRES and Nuon.

8. Acquiring at least €15.000 among private donors.

Achieved: partly. In 2011, FRES received a total of €10.522 in private dona-tions, including the yield of a Christmas action by Nuon, where employees collected €3.596.

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Part 1: FRES, organization with durable growth ambition

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1. Organizational development FRES

The independent Foundation FRES was founded in 2004. The Dutch energy company Nuon handed over the management of its interest in two joint ventures (Yee-len Kura-EDF and NuRa Nuon-RAPS) to FRES. These are two small-scale commercial energy companies in Africa: Yeelen Kura in Mali and NuRa in South Africa, that have existed since 2001.

In 2007, a new company was founded, subsidized by the European Commission and Nuon: Yeelen Ba in Burkina Faso. In that same year, Yeelen Kura and FRES founded SSD-FRES together, to develop a solar power station in Mali that was officially opened in 2008.

Subsequently, FRES, the ministry for Development cooperation (DGIS) and Nuon entered into a public-private partnership (PPP) which frees up €20 million to contribute to the growth objectives of FRES.

In 2011, two solar power stations were built and opened in Mali and a subsidy agreement was signed with AMADER/World Bank for the construction of another six solar power stations. Furthermore, a subsidy contract was signed with the EU to connect 3.000 customers in four years in Guinea-Bissau. In 2011, FRES made the last preparations to open the company in Uganda, including awarded subsidies by Stichting Doen and the World Bank.

Overview FRES companies*

Name company Yeelen Kura, Mali

NuRa, South Africa

Yeelen Ba, Burkina Faso

FRES Uganda Ltd., Uganda

FRES Guinea-Bissau, Guinea-Bissau

New initiatives

Total

Founded 2001 2001 2008 2010 2011 -

Customers in 2011

3.724 12.520 468 6 0 0 16.718

Objective customers 2016

10.000 29.000 4.500 6.000 3.500 2.500 55.500

Province/country

Sikasso and Ségou - Mali

Kwazulu-Natal – South Africa

Kénédougou - Burkina Faso

Mbarara - Uganda

Gabú – Guinea -Bissau

Technique SHS, solar mini-grids and diesel mini-grids

SHS and lpg SHS SHS SHS

* The historical development per FRES company is extensively described on our website www.fres.nl

Growth curve number of customers FRES companies*

End of the year

*Number of customers in 2010 have been slightly altered compared to earlier reports as a result of an improved definition of “customer” in South Africa.

Number of customers

0

5000

10000

15000

20000

2011201020092008200720062005200420032002200120002000

20012002

20032004

20052006

20072008

20092010

2011

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2. Vision, mission and objectives

Vision

In 2000, the member states of the United Nations agreed to make important progress in the field of poverty, educa-tion, health and the environment before 2015. Access to electricity is essential. FRES views reliable and affordable electricity, preferably generated by means of solar energy, as the way to offer that access to the people of developing countries.

Mission

FRES advances rural electrification in developing countries by setting up small-scale commercial electricity companies in areas without connection to the national electricity net-work. Our business approach ensures that the availability of electricity is structural. FRES is a multinational network of daughter companies in developing countries, where we actively expand the electrification of the rural areas in cooperation with partners.

Objectives

The goal of FRES is to advance rural electrification in developing countries, especially by means of utilizing solar energy. We aim to provide over 55.000 customers with sustainable electricity by 2016. This should be 100.000 customers by 2020.

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Strategy

To achieve the objectives, FRES supports the management of the FRES companies in Africa in developing and execu-ting business plans. An important starting point is to let the companies operate independently after the necessary initial investment per customer via the income from custo-mers. This is achievable at 5.000 to 8.000 customers depen-ding on the local situation. Goal for each FRES company is to serve at least 10.000 customers.

We focus on the affordability of the services by means of cost control of operational costs; for instance, by increasing market penetration and customer retention. Each year, we evaluate our performances, learn from these experiences and adjust our multiple year business plan accordingly. Subsequently, we write a yearly plan containing the objec-tives, strategies and actions to be undertaken.

The following basic principles form the basis of the FRES method.

The sun as energy source

FRES views power generation by means of solar energy as the way to provide rural areas in Africa with electricity in an affordable and sustainable way over the long term. We do this with individual solar systems (Solar Home Systems). In Mali, we also deliver electricity via small-scale electricity networks (mini-grids), which we preferably connect to solar power stations.

A. Solar Home System (SHS)

The FRES companies work with SHS because this is the cheapest option in rural areas where customers often live at great distances from each other. A standard SHS (see pic-ture) consists of a battery, a controller and a solar panel. This system delivers sufficient electricity to provide several lamps and electricity sockets for a radio, small ventilator, charger for cell phones or a TV with power for four to five hours a day.

>

Advantages of the use of an SHS:

• Access to energy in areas without an electricity net-work;

• Fast installation and possible disassembly in case of, for instance, the construction of an electricity net-work;

• Little maintenance;• The system can be expanded depending on the needs

and/or budget of the customer;• SHS is cheaper per lumen or kWh than traditional

alternatives (candles, batteries and/or lamp oil);• No discharge of harmful substances.

Limitations of the use of an SHS:

• The number of electric devices that can be connected is limited;

• Devices that require a lot of electric power cannot be used;

• Cooking, heating and cooling are not possible;• It concerns a technology that requires high initial

investments.

Scheme of a Solar Home Systeem (SHS)

Moriba Traoré – shop owner in Badara (Burkina Faso)

On the road to Banfoulaguè village, Moriba Traoré works in his shop. His shop is neat and tidy. Moriba is an ambi-tious entrepreneur. With his brand-new SHS from Yeelen Ba, he would like to attract more customers. “Thanks to the new lighting, I can be open until midnight. Business is exceptionally great. With the longer opening hours, I can achieve more turnover. Moreover, my customers can charge the battery of their cell phone here, for a small compensation. An extra addition to my income.”

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B. Mini-grid

A mini-grid is a small electricity network to which custo-mers, within a radius of a few kilometers, can be connected via electricity cables. When customers have a higher ener-gy need, for instance, for business use, an SHS is insufficient and a mini-grid can be a good option.

There are two types of mini-grids: fed by a diesel generator (diesel mini-grid) or by a solar power system (solar mini-grid). With regard to durability, we prefer to work with mini-grids on solar power stations, with a diesel generator as backup.

A mini-grid can give the activity within a rural area an ex-tra boost, but is only economically realizable when the distance between customers is relatively small in order to limit the necessary amount of transport cable per kWh to be delivered. Currently, only Mali has mini-grids.

The advantages of a solar mini-grid compared to a diesel mini-grid:

• Not dependent upon the supply of diesel (important for a country such as Mali which does not border the sea);

• Not dependent upon (high) fuel prices;• No emission of particulars, so fewer health risks;• Clean technology: no oil leakage, so no environmental

pollution;• No CO2, NOx, SO2 emission;• Little maintenance;• No noise.

Germain Traoré – owner of a tea shop and a small movie theater in Badara (Burkina Faso)

Germain Traoré has a knack for business. During the weekly market on Sunday, the village is buzzing with people, including a fair number of visitors from the region. The market day is always a busy day for Germain. His tea shop is busy. Re-cently, he has also started running a small movie theater in the adjoining building. The electricity comes from an SHS.

“In the theater 20 people can watch a movie. Every visitor pays a small entrance fee. On busy days, we show three films. Unfortunately we are unable to broadcast soccer, therefore I would need a satel-lite antenna. If things continue to run well, maybe I can buy such a device one day’’, Germain states.

Germain is very pleased with his solar system: “When too much sand dust covers the solar cells, the power capacity is reduced. A check light and a sound signal come on and I know it’s time to clean the solar panels on the roof.”

C. Solar power station

FRES has built solar power stations in Mali, to which we connect mini-grids to replace (polluting) diesel generators. A solar power station consists of a large number of solar panels that generate energy and deliver this to a small electricity network (mini-grid).

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batteries

inverter

generator

*

Scheme of a mini-grid

Fee-for-service principle

FRES works with the fee-for-service concept, a standar-dized commercial business model that can easily be adapted, copied and unfolded. The customer pays a fixed monthly fee for access to light and electricity. How much of a fee depends upon the service level chosen by the cus-tomer: the number of lamps and electricity sockets or in case of a higher use, an amount per kWh. The costs of the delivered services via an SHS are as high as or lower than those of the traditional alternatives (candles or lamp oil).

The FRES companies own the installed systems and are responsible for the costs of maintenance. Customers can go to an energy shop nearby for service and payments.

Advantages of the fee-for-service concept:

• Low initial investment for our customers;• Maintenance guarantee by FRES company: the SHS

will therefore remain in operation longer and the cus-tomer will not have any (unexpected) expenses for repair and/or replacement;

• Convenience for customers: customer does not have to install the system himself;

• Economic boost for the region: structural employ-ment, where the FRES company trains the employees;

• Knowledge transfer of organizational work.

Independent local FRES companies

FRES believes it is important to achieve the objectives via local entrepreneurship in the developing countries with support from FRES in the Netherlands. A procedure has been developed for starting up new FRES companies (see box on the next page). The local FRES companies are responsible for the growth in the number of customers and for building a good, sustainable business. Via the manage-ment and supervision structure, we ensure the progress and results.

Sustainability/MVO

Sustainability is in the FRES DNA. The goal of the entire organization is to structurally provide the people of Africa with electricity. FRES is the employer of local companies with local management and employees, which contributes to employment. Good employment is highly important to us. We strive for sustainable management in all companies. Sustainable solar power replaces – if possible – polluting, unhealthy and non-sustainable fuels.

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Aminata Coulibaly – midwife in a local practice in Baramba

Aminata Coulibaly has been working for four years in the hospital of Baramba, which specializes in childbirth. The infra-structure and the medical equipment in the hospital are extremely basic, but there is light – from a Yeelen Kura and FRES sys-tem.

Aminata Coulibaly tells of the need for light in the delivery room: “Children are born at every moment of the day; they do not wait for light. Our practice is standby 24 hours a day. Without electricity, it is nearly impossi-ble to assist a delivery at night. We used to have a petrol lamp, but this did not provide enough light.”

Pregnant women from the region prefer the expert support of Aminata to home delivery. After the delivery, they can stay in the hospital for further care for no more than a week. This room also has electric light. In this way, the new mothers can give the necessary attention and care to their newborns.

PROCEDURE FOR STARTING UP NEW COMPANIES

Phase 1: pre-selection of countries in three ways

• Market potential investigation;• Requests by governments or NGOs;• Applying for tenders that need to be granted to

provide an area with electricity.

Phase 2: desk research

We collect as much detailed information as possible about the laws and regulations with regard to electrification, taxes, concession areas, possible competition and the eco-nomic situation per region.

Phase 3: market research

Components of market research:

• The income level and the household expenses of candles and lamp oil, per region;

• The potential of the concession area: there need to be at least 10.000 potential customers;

• The possibility to cooperate with companies, NGOs and local partners;

• The government’s willingness to cooperate; for in-stance, by making arrangements such as exemptions from customs duties or VAT.

Phase 4: developing business plan

The business plan needs to reflect the viability of the new FRES company. The plan includes the following compo-nents: the expected number of customers, the target group of the company to be founded, the time schedule, the prognosis of the expenses and profits of the first years and a well-substantiated financing plan.

Phase 5: decision-making and implementation

The board makes a final judgment about founding a new FRES company on the basis of the business plan. The board transfers the decision to the Supervisory Board for ap-proval. When the financial aspects have been settled, we

appoint a General Manager and a Board of Commissio-ners. Each company starts small to test the best practical approach based on local circumstances. In this way, the financial risk remains limited.

Phase 6: monitoring and adjusting

A Board of Commissioners supervises the FRES company. The Board meets with the company twice a year to discuss the progress of the company. Additionally, each month the board discusses a report containing the most impor-tant developments with the company management. If necessary, this leads to an adjustment of the current policy and intended results.

FRES monitors and evaluates the companies in terms of number of customers, expenses per customer, func-tioning of employees with result dependent rewards, absence through illness, number and content of com-plaints from customers, overhead costs and investment ex-penses per new customer. If necessary, a company’s policy can be adjusted on the basis of these factors.

We partly attune the frequency and nature of our provision of information to the needs of our partners, financers and relevant regulators.

Pre-selection of countries

Desk research

Market research

Developing business plan

Decision-making & implementation

Monitoring and adjusting

Phases in setting up a company

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Strengths and weaknesses, opportunities and threats

Strengths and weaknesses, opportunities and threats have been formulated for FRES based on various studies, inventories and practical experiences. FRES has formulated a policy for managing internal and external risks (also see H.10 Risk management).

Strenghts

• Long-term experience in electrification of the rural areas in Africa

• Extensive and sound research method• A good network in the international development

and solar energy sector• A competent team with committed board members • A standardized business model as blueprint, easy to

copy in various countries• Two companies that have existed for over ten years in

a market with very few professional players• Strong partners in the Netherlands• A firm business plan 2012-2016 and detailed plans of

FRES companies for realizing objectives

Opportunities

• 1,5 billion do not have access to electricity• Increased priority within governments for rural elec-

trification, among other reasons to slow down the people’s migration from the rural areas to urban areas

• Technological innovation: cheaper solar panels, more energy-efficient lamps, mobile payment options

• The international attention for the UN’s Millennium Development Goals (MDG)

• (Potential) customers’ awareness that durable access to (solar) power is possible and affordable and con-tributes to standard of life and economic develop-ment

• Central purchasing systems

Weaknesses

• Companies in (five) different countries with very dif-ferent boundary conditions

• Stunted growth in number of customers for two FRES companies

• The FRES companies have not yet reached their break-even point

• Dependence on subsidies

Threats

• Non-payment problem• Lacking legal possibilities to address fraud• Deterioration of the local economy, due to which

purchasing power of customers is reduced, unem-ployment and poverty increase

• Higher transport costs as a result of higher fuel- prices

• Long-term, bureaucratic procedures of govern-ments and subsidy-granters

Exploiting opportunities, countering threats and fight-ing weaknesses

In order to fully exploit opportunities and counter the im-pact of threats, a number of strategies have been formu-lated:

• To ensure that the number of customers continues to grow in accordance with expectations, we establish detailed strategic (multiple year) plans in consultation with the FRES companies and we make our expertise available.

• We focus on expansion in the countries in which we are already active, before we expand to other coun-tries.

• We keep a close eye on the costs for the customer so it remains affordable. We reduce the costs as much as possible by applying efficient service, scale-advanta-ges by connecting people in clusters, replacing diesel generators by solar power stations.

• By selecting regions with economic activities outside that region, we reduce the risk of too little purchasing power.

• FRES acquires funds; both for the FRES- Companies (if that is not available in the country itself ) and for the

overage of the bureaucratic costs of FRES itself.• An important cost reduction can be achieved by

means of central purchase of systems. Boundary con-ditions are that the systems are interchangeable and that we employ a standard format of modules, capa-city of batteries and regulators.

We minimize/avoid the impact of our weaknesses in the following way:

• FRES focuses on the growth of existing companies rather than on quick growth of the number of compa-nies. This increases the size of the existing companies and reduces the cost price.

• We strive to let the FRES companies operate indepen-dently as soon as possible after the necessary initial investments. This means that we can generate suffi-cient income from customers to carry the immediate costs and make reservations in order to realize future replacements. This can be achieved with 5.000 to 8.000 customers depending on the local situation.

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We opted for a small, decisive organization in the Nether-lands and local FRES companies in the developing coun-tries, which are connected and cooperate via a supervisory structure.

We subscribed to the Wijfels Code, the code for proper management (see Appendix 3). We only deviate from point 5.5.g: the regulations do not yet stipulate further rules that are valid in case of conflicting interests and how to handle this. We are currently working on this.

3. Organizational structure and supervision

Board

The FRES board has three functions: Chief Executive Officer (CEO/chairman), Chief Financial Officer (CFO/treasurer) and Chief Operations Officer (COO/board member). The board functions as management. The CEO is responsible for the HRM-policy, internal and external communication and the start of new FRES companies. The financial policy is the responsibility of the CFO. The COO is especially con-cerned with optimizing the performances of the FRES com-panies. The board voluntarily fulfils its tasks and receives a compensation for the actual expenses.

Responsibilities board:

• Determining and steering strategy, policy, budget and results;

• Guarding progress;• Making decisions with regard to appointment and

discharge of (paid and unpaid) employees;• Acquiring funds;• Being watchful of conflicts of interest between foun-

dation and board members and/or employees.

Supervisory Board

Board FRES NL

Boards of Com-missioners of

FRES companies

Yeelen Ba Yeelen Kura

NuRaFRES

Uganda Ltd.

FRES Guinea-Bissau

Organizational chart FRES:

Structure shareholders FRES companies:

FRES is shareholderFRES acts on behalf of shareholder NuonFRES company or employees’ trust of FRES company is shareholder

FRES

SSD-FRESMali

Yeelen Ba Burkina Faso

NuRaSouth Africa

FRES Guinea-BissauGuinea-Bissau

20%

80%100% 80%

REESETSouth Africa

FRES Uganda Ltd.Uganda20%

Yeelen KuraMali

100%100%

20%

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Procedure (re)appointment board members

The board members are appointed by the Supervisory Board, on the recommendation of the board. The board selects new board members on the basis of specific know-ledge and expertise within the fields of FRES. Board mem-bers are appointed for a period of five years and can be reappointed at the end of this period.

Supervisory Board (SB)

Ever since 2009, FRES has a Supervisory Board that super-vises the board’s policy and day-to-day practice within FRES. The Supervisory Board councils the board.

Responsibilities Supervisory Board:

• Appointing board members recommended by the board and appointing the chairman of the board in function;

• Evaluating individual board members yearly for the purpose of a well functioning board;

• Appointing a recommended candidate as a member of the Supervisory Board;

• Approving the annual plan established by the board, including budget, which also contains the investment and financing plan, and the revision of this;

• Approving the board’s decisions that have not been approved in the annual plan;

• Establishing and signing the annual account.

Procedure (re)appointment members Supervisory Board

The Supervisory Board consults with the chairman of the board with regard to the profile draft and an intended appointment of a member of the Supervisory Board. The Supervisory Board appoints a candidate recommended by the board, unless the recommended candidate is unsui-table or does not lead to a good composition of the Board. A main sponsor has the right to recommend a candidate for the Supervisory Board. Members are appointed for a period of four years and can be reappointed once after the period has ended.

Management and Board of Commissioners of FRES com-panies

Each FRES company has a local management team and is supported by its own Board of Commissioners. The responsibility for managing the company and for achieving the agreed-upon objectives lies with the companies them-selves. The employees of the FRES companies in Africa are part of the local management teams; their functioning is evaluated every year.

Employees FRES Netherlands

FRES offers an interesting, socially relevant work environ-ment with ample opportunities for gaining experience and entrepreneurship in an international work field. We work with a small team of paid employees, supplemented with unpaid employees. The board supervises FRES employees in the Netherlands. A functioning and evaluation interview take place with each employee every year.

The unpaid employees have different backgrounds and specialties. They almost always work for us on a temporary basis and, just like paid employees, work on the basis of a clearly described assignment. We distinguish between ex-perts, students and interns, and other volunteers. Experts support FRES with specific knowledge, experience and networks while interns and students conduct research in various areas and a number of volunteers support various activities.

Consultation structure

The FRES board meets every two weeks to discuss the progress of the FRES companies based on monthly reports from the local companies and progress reports from the Commissioners.

The local management of the FRES companies holds progress meetings via telephone conferences with its own Board of Commissioners every month. These Boards visit the company twice a year. Once a year, the board, FRES companies and Boards of Commissioners meet to exchange knowledge and information.

The Supervisory Board meets at least twice a year and com-pares the objectives to the results .

Twice a year, stakeholders meetings are held in the Nether-lands for all people involved in FRES.

Monitoring and evaluation

The management policy is rooted in the strategic mul-tiple year plan, in which the policy goals and starting points have been stipulated. This plan serves as a basis for concrete yearly plans and budgets for FRES and the FRES companies. Constant monitoring and adjustments take place via the established management, supervisory and consultation structure. We evaluate the results from FRES companies by comparing elements from management.

Accountability declaration

The accountability declaration (Appendix 3) stipulates how we interpret the following three principles: separation between supervision, management and performing func-tions, optimal utilization of means and optimal relation-ships with shareholders.

17

Financial supervision

Planning and checks

The board is responsible for the work and the quality of the activities of FRES and adjusts where necessary. PwC (PricewaterhouseCoopers) performs the checks of the annual account and provides an accountant’s declaration. PwC specifically tests for the regulations that apply to Fund- raising Organizations. Additionally, the subsidy granters function as inspectors by following and evaluating project results. All FRES companies are inspected every year by an accountant, based on the local regulations.

Investment management committee

The investment management committee advises the board. Ever since 2009, we have been investing means that are available for a longer period of time (Nuon donation) via an external investment manager (ING). In this way, we achieve a better return than if we were to place our means in a savings account. The objective of the investments is achieving an optimal return within an average defensive investment profile and fitting within the ethical and societal boundaries that FRES sets for investment management. For this purpose we have an investment management agree-ment and an investment statute.

The investment horizon amounts to four to eight years. The portfolio division that goes with this risk profile is that 50-70% of the investment is profitable and no more than 30-50% has been invested in business values (stocks). 0-10% of the means is kept liquid. To control the risk, the in-vestment manager works according to a structured invest-ment process with clearly defined frameworks. We keep to a spread of sectors and regions in investments.

At least once every four months, the investment manager accounts for his actions to the investment management committee regarding the result of the portfolio. The invest-

ment manager measures the results of the portfolio, com-pares these to the established benchmark and analyzes the differences in performance. On the basis of these results, it is determined whether the investment policy needs to be adjusted. Moreover, a Durability scan is performed every year. This process has matured in such a way that the Invest-ment management committee has advised placing this task on the agenda of the FRES board as of 2012; the board has agreed.

18

Kadiatou Mariko – seamstress in Kimparana (Mali)

With her electric sewing machine, Kadiatou Mariko makes tailored clothes. “I used to have a machine that was operated by hand. At the end of the day, I was ex-hausted. With my new sewing machine I can do much more work every day. Also, I can use more different and fashionable sewing techniques now. I sell much more clothes than I used to. And with the electric light I can work in the evening. This provides more income to keep for my family.”

Part 2: Activities and results FRES companies international

Uganda6

Yeelen Ba468

Yeelen Kura3724

19

NuRa12520

Via local FRES companies in Africa, we are working on achieving our objectives to provide 100.000 customers with electricity in 2020. The local government appoints a concessions area, if necessary: the area for which a FRES company receives a permit to deliver electricity. In addition to a main office, we open multiple energy shops from which we serve customers in every area. At the end of 2011, FRES has running companies in Mali, South Africa, Burkina Faso, Uganda and Guinea-Bissau with a total of 16.718 customers.

Number of customers per FRES company as of 31-12-2011:

FRES directly contributes to fighting poverty, creating employment and improving the living conditions in developing countries through the availability of power for households and small companies. By founding FRES com-panies, we offer more employment. With the availability of power, we improve the living conditions and (more) small companies will have the opportunity to exist.

Our preference for the utilization of solar energy for elec-tricity reduces the use of fossil fuels, which benefits the environment. This leads to the improvement in the stan-dard of living and stimulation from local economies in rural areas.

Results are, among other things:

• More economic activity, also after dark;• Children can do homework or read in the evening;• More safety in the streets because of public lighting; • Better lighting in hospitals and schools;• Better access to means of communication such as

radio, television and cell phones;• Fewer health problems caused by the smoke of

candles, oil lamps or diesel; • Less fire hazard from falling candles or oil lamps;• Less pollution, cleaner living conditions;• Structural and durable access to energy

Impact in practice

In Mali, we saw new companies arise in Bla and Kimpara-na; for example, a company that produces ice, a modern bakery, a computer space for children, and photography shops. Carpentry workshops and sewing workshops with better machines have been opened in the communities. Furthermore, the service costs have been reduced: the costs of a photocopy, for instance, went from 100 FCFA (€0,14) to 50 FCFA (€0,07). In health care, an expansion of care can be seen, as well as the arrival of new, better equip-ment in health centers. In South Africa, supermarkets, sewing workshops and stores where cell phones could be charged appeared in the entire region in which NuRa is active.

IMPACT OF RURAL ELECTRIFICATION BY FRES

Burkina Faso

Mali

Guinea-Bissau

Uganda

Countries with FRES companies:

20

South Africa

4. Yeelen Kura in Mali

FRES is active in Mali with Yeelen Kura. Yeelen Kura deli-vers light and electricity to customers by means of So-lar Home Systems (SHS) and mini-grids that are fed by solar energy and/or diesel generators. Challenges in 2011 were: increasing the number of customers, specifically for SHS, realizing investments on time and professionalizing the company and employees.

In terms of surface area, Mali is one of the larger countries of West Africa. The country has over 15 million* inhabitants and is 175th in the Human Development Index 2011 from UNDP**. Approximately 86% of the people in the work area of Yeelen Kura do not have access to electricity. Yeelen Kura, which means “New Light” in the local language Bambara, has been active since 2001 with placing and exploiting Solar Home Systems (SHS) and mini-grids in the provinces Sikas-so and Ségou. The main office is situated in Koutiala in the Sikasso region.

Objectives

In 2016, Yeelen Kura wants to provide electricity for 10.000 customers. The customer growth can mainly be found in SHS and the solar mini-grids. Yeelen Kura’s objective for 2011 was to grow to 3.616 customers and to build two new solar power stations to replace diesel generators.

Results 2011

In 2011, 960 new customers were connected; with this, the goal of 850 new customers has been achieved. A total of 13.724 customers have been connected at the end of 2011. Thanks to extra marketing and sales efforts, the number of SHS customers grew from 934 in 2010 to 1071 in 2011. The number of SHS was rising. The purchase of energy via mini-grids increased significantly as well; on average, customers are using five times more than customers via SHS. However, investments are proportionally higher. Two solar power stations have been built and opened in the villages Kolon-dieba and Ourikela, to replace two diesel generators. The power station in Kolondieba (150 kWp) has been genera-ting electricity for 691 households and small businesses since June 2011. The power station in Ourikela (50 kWp) pro-vides electricity for 150 households and small businesses.

In 2011, a subsidy agreement for €1,9 million was signed with AMADER/World bank for the building of six new solar power stations. These power stations will partly replace the diesel generator, and will partly feed new mini-grids. The tender for delivery and installation has been completed.

Products and services

The average income of an inhabitant of rural Mali is 30.000 FCFA (€45) a month. The SHS-customers pay a monthly amount between 3.815 FCFA (€5,82) and 9.000 FCFA (€13,73) per month for the services of Yeelen Kura, depending on the chosen service level.

*Source: www.unstats.un.org **Source: www.hdr.undp.org

0

500

1000

1500

2000

2500

3000

3500

4000Aantal klanten

20112010200920082007200620052004200320022001

Number of customers per product 2009 2010 2011

Number of customers with SHS 920 934 1.071

Number of customers connected via mini-grid to solar energy

242 234 764

Number of customers connected via mini-grid to diesel generator

1.484 1.598 1.889

Number of customers

Basic information 31-12-2011

Founding year: 2001Products & services: SHS, mini-grids on solar energy and mini-grids on diesel generatorsNumber of employees: 39Number of customers: 3.724, of which 1.071 for SHS, 764 for mini-grid on solar energy and 1.889 for diesel mini-gridNumber of energy shops: 15Shareholders: 100% FRES

Sikasso

Mali

In short:

21

Organization, management and supervision

On 31-12-2011, 39 people worked at Yeelen Kura in the fol-lowing composition:

The employees are responsible for installing and maintai-ning SHS and mini-grids, collecting the monthly fees and the accounting. Employees had access to parental leave and social security via Yeelen Kura.

Amadou Diallo was the General Manager of Yeelen Kura until June; he was succeeded by Djibril Séméga (before he was the Manager Technique). The General Manager reports to the Board of Commissioners of Yeelen Kura, consisting of:

Rob Costermans – chairmanLiliane de Jager – member

Mamadou Coulibaly – director of radio station “FM Pewo” in Mpessoba (Mali)

In rural Mali, people are mainly kept informed of current events via the radio. Most families do not have a television and newspapers are not often delivered in these remote areas. In Mpessoba, Mamadou Coulibaly runs a local radio station, which runs on electricity from solar energy. “We used to work with a generator, but this used up approximately ten liters of petrol a day. This costs a fortune. Ever since we are using solar energy, our costs have decreased significantly,” director Ma-madou Coulibaly declares.

Naturally, a radio station utilizes more electricity than an average solar system. To meet the higher energy needs, Yeelen Kura installed six solar panels and 23 batteries at the radio station. In the radio studio, the enthusiastic director Mamadou talks about his radio station: “The station is very popular in our region. We bring a mix of local, national and in-ternational news. The government regularly sends us broad-casts to inform the people about health or raising children. We also give local youth an opportunity to gain experience as a presenter or deejay.”

Still, it remains difficult to make the radio station profitable. The enterprise is completely dependent upon income from advertisements, mainly from local private people. “Currently, large companies are still hesitant to buy broadcasting time with us. The station only has a range of approximately sixty kilometers. We should double this, but this would require a fifty-meter antenna. We hope we will obtain the necessary funds,” director Coulibaly explains his plans for the future.

Djibril Séméga, General Manager of Yeelen Kura in Mali

Djibril Séméga, General Manager of Yeelen Kura: “In ten years, Yeelen Kura has taken on a prominent po-sition between the electricity sup-pliers in rural areas in Mali. In order to continue to serve our customers well in the future, the theme of 2011 was redefining our objectives and ambitions. We interpret the objec-tives and ambitions with the plans for 2012. With the SHS, the solar grids and the solar power stations, we have built a great package of products and services so every customer can make his choice.”

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2010 2011

Number of employees 37 39

Male/female 31/6 34/5

Definite/indefinite contract 2/35 5/34

Fulltime/part-time 37/0 39/0

Inflow/outflow men 2/0 3/0

Inflow/outflow women 1/0 0/1

Employees older than 55 years - 0

Number of men/women in MT - 5/0

Managers energy stores - 11

5. NuRa in South Africa

In short:

In South Africa, FRES is active via NuRa. At the end of 2011, NuRa provided light and electricity for 12.520 customers. NuRa has 76 employees and thirteen energy stores. Challenges are reducing payment arrears of cus-tomers (non-payment), countering fraud and theft and further professionalizing the company.

South Africa has 50 million* inhabitants, of which 50% live in poverty as a result of extreme differences in income and unemployment. The country is 123rd in the Human Deve-lopment Index 2011 of UNDP**. Of all inhabitants, 18% do not have access to electricity.

NuRa’s main office is located in Mkuze in Kwazulu-Natal. This is one of the least developed provinces of South Africa. Approximately 70% of the population does not have access to electricity. Moreover, the region has a significant HIV/AIDS problem.

Objectives

NuRa’s objective is to provide electricity for 29.000 cus-tomers in 2016. In 2010, a subsidy agreement was signed between the South African government (80%) and FRES (20%) to place 8.000 SHS. The objective of 2011 was to con-nect the first 4.000 customers, professionalize the organi-zation and actively look for ways to increase income and reduce expenses.

Results 2011

In 2011, 4.500 new customers have been connected; with this, the objective of 12.174 customers in 2011 has been achieved. At the end of 2011, a total of 12.520 customers are connected. NuRa has made improvements, such as bet-ter (technical) training for employees and larger availability of transport resources at the energy stores. FRES took over the Nuon stocks and became 80% shareholder.

Non-payment

NuRa has a high number of payment arrears of customers. On the basis of a study conducted in 2011, a cohe-rent action plan was established to address the so-called “non-payment” problem. Measures such as improving the maintenance organization, capacity increase of the sys-tems and improving payment provisions have been imple-mented in 2011.


NuRa delivers SHS. The rates are between ZAR 65 (€7,36) and ZAR 385 (€43,59) a month, depending on the chosen service level (difference in number of lamps and electric sockets). NuRa also sells liquified petroleum gas (LPG) as an alternative to cooking on wood.



Founding year: 2001Products & services: SHS & LPGNumber of employees: 76Number of customers: 12.520Number of energy stores: 13Shareholders: 80% FRES, 20% REESET

0

3000

6000

9000

12000

15000

20112010200920082007200620052004200320022001

Number of customers

Kwazulu-Natal

South AfricaSouth Africa

23


On 31-12-2011, 76 people worked at NuRa in the following composition:

The employees are responsible for installing, maintai- ning and, if necessary, repairing the systems, collecting the monthly fees and the accounting.

In 2011, employees could make use of a pension plan, life insurance and pregnancy leave. Seventy employees were considered for a yearly evaluation after at least one year in employment. Ten employees received First Aid diplomas; one employee has received a Health and Safety certificate. All training was organized and paid by the company.

General Manager was Sifiso Dlamini. He reported to the Board of Commissioners, consisting of:

Bart Blokland – chairmanCoen de Ronde – member

FRES fulfils the role of shareholder at NuRa on behalf of Nuon.

Sifiso Dlamini, General Manager of NuRa in South Africa

In 2011, NuRa celebrated its ten-year anniversary, just as Yeelen Kura in Mali. In that time, over 12.000 households and small businesses in South Africa gained access to sustainable electricity via an SHS. “This is definitely something to pay attention to,” according to Sifiso Dlamini, General Manager of NuRa. “If we had the knowledge and experience then that we have now, we would probably have achieved even more in a decade. However, as one of the first FRES companies, we had to build our knowledge and experience in rural electrifica-tion and SHS from scratch. We have succeeded in this. We have been able to use the gained experience well in ope-ning other FRES companies in Africa.” A challenge in South Africa remains “non-payment”; payment arrears arise for various reasons. “This forms a threat for NuRa which needs to be able to function as an independent company. We trust that we will achieve control of non-payment with the established action plan,” according to Sifiso Dlamini.

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2010 2011









Managers - 15

6. Yeelen Ba in Burkina Faso

In short:

In Burkina Faso, FRES delivers light and electricity, via the local company Yeelen Ba, to households and small companies via SHS. In 2011, the company grew to 468 customers and five energy stores. Sixteen people work at Yeelen Ba. Challenges are finding new customers, expanding the areas and building a good organization.

Burkina Faso is a Sub-Sahara country with 16 million* inhabitants. The country is 181st on the Human Develop-ment Index 2011 of UNDP**. With this, it belongs to the poorest countries in the world. 82% of the population does not have access to electricity.

Yeelen Ba is active in the province Kénédougou, an area with over 300.000 inhabitants. It is located just across the border from the area in Mali in which Yeelen Kura is active. The li-ving conditions in both bordering regions are comparable.

Objectives

The goal of Yeelen Ba is to provide electricity for 4.500 households and small businesses by 2016. Therefore, the company wanted to connect 1.000 new customers in 2011. Yeelen Ba aimed for reduction of rates, customer binding and strengthening the organization.

Results 2011

In 2011, the execution of the “turnaround plan” started. This plan had been written at the end of 2010 to improve results and move past negative incidents, such as fraud by employees of energy stores. Implements of the plan were staff motivation, intensive marketing and preventing new fraud. Yeelen Ba worked with ABDEF (Burkina be Associa-tion for Family Welfare) to restore customers’ and employ-ees’ trust.

The growth in number of customers continued in 2011, from 284 to 468. However, the expected growth accel-eration has not been realized. For further growth, Yeelen Ba focused on the energy stores in Orodara and Kahyan, because this showed most growth potential.

In June, Yeelen Ba conducted a study into the purchasing power of customers in Kenedougou. In October, the com-pany was visited by a “result oriented mission”, an evalua-tion with which the EU periodically measures the progress of subsidy projects. Both studies lead to the recommen-dation and decision to equate the rates and services with those of Yeelen Kura in the neighboring region in Mali. By reducing the rates, more people will gain access to electri-city.


Yeelen Ba delivers SHS. The rates for SHS were between 6.050 FCFA (€9,22) and 13.875 FCFA (€21,15), depending on the chosen service level, and have been equated to those of Yeelen Kura as of January 1 2012.



Foundation year: 2008Products & services: SHS Number of employees: 16Number of customers SHS: 468Number of energy stores: 5Shareholders: 80% Nuon, 20% FRES

Number of customers

100

200

300

400

500Aantal klanten

201120102009

Kénédougou

Burkina Faso

25


On 31-12-2011, sixteen employees worked at Yeelen Ba in the following composition:

General Managers were Walter de Roo (until October 2011) and Emmanuel Sanou (on temporary basis from October 2011). The General Manager reported to the Board of Com-missioners, consisting of:

Rob Costermans – chairmanLiliane de Jager – memberAmadou Diallo – member (until June 2011), on behalf of shareholder Yeelen KuraDjibril Séméga – member (as of July 2011), on behalf of shareholder Yeelen Kura

2010 2011









Managers - 2

Barro Aboubacar – chief of the village Banakoro

Yeelen Ba has already installed twenty SHS in the village of Banakoro. Barro Aboubacar, the chairman of the village, is a great advocate of the energy solutions of Yeelen Ba. He has got a system at home. He also encourages other people to start using electricity at home.

Barro Aboubacar tells of the advantages of electricity: “For most families, having their own system is still too expensive, and that’s a shame. Those who don’t yet have a solar system can go to the families with a connection to charge the bat-tery of their cell phone. Many inhabitants of the villages have family in Ivory Coast or Mali. In this way, they can stay in touch. The people with electricity agreed not to ask for money for charging cell phones. Thanks to the introduction of solar energy and electric power, the entire village benefits.”

Aboubacar gives another example that clearly illustrates the positive impact of electric power: “One of the systems in the village was installed at the shop of a shop owner. He is currently the only one with electricity in the village. Ever since he has light in his business, his turnover has significantly increased.”

Emmanuel Sanou, General Manager (ad interim) of Yeelen Ba in Burkina Faso

Emmanuel Sanou, General Ma-nager (ad interim) of Yeelen Ba, was pleased with the decision of 2011 to equate the rates and servi-ces of the company in Burkina Faso with those of Yeelen Kura in Mali: “It was difficult to explain why cus-tomers in two neighboring areas had to pay different amounts for the same service, just because there is a border in between the two. Therefore, we now offer the same service for the lower rates of Yeelen Kura. Thanks to this decision, our customers in both Mali and Burkina Faso have clarity of our products and services. And, electricity is acces-sible to more people thanks to the lower rate.”

26

7. FRES Uganda Ltd. in Uganda

In short:

FRES has been active in Uganda with FRES Uganda Ltd. since 2010. At the end of 2011, the company has six cus-tomers and ten employees. The challenge is to obtain all necessary permits and subsidies and install the first 250 SHS for customers.

30% of the Ugandan population (over 34 million* inhabi-tants) live in poverty. The country is number 161 in the Hu-man Development Index 2011 of UNDP**. Approximately 8% of the population in rural areas has access to electricity, often limited to the cities and trading towns alongside the highway.

FRES Uganda Ltd. was founded in April 2010 and works in the west of Uganda in the districts Mbarara, Bushenvi and Rukungiri. District Mpigi will follow in a later stage. The main office was opened in Mbarara in 2011.

Objectives

There are over 400.000 households and small businesses in the area in which FRES is active. Objective is to grow from 250 customers in 2011 to 6.000 customers in 2016.

Results 2011

After being founded in 2010, obtaining a license from the Ugandan Government (Electricity Regulatory Agency – ERA) took much longer than expected. In 2011, we were exempt from the demand to have a license.

A subsidy request for over €0,4 million has been approved by the World Bank and the Ugandan Government (REA) and we were negotiating tax exemptions. FRES had already obtained exemption for levying VAT on the customers’ bills. A subsidy of €0,9 million was awarded by Stichting Doen.

At the beginning of 2011, ten Solar Home Systems arrived for training purposes. The theme of the first half of 2011 was the development of the organization. We reaped the rewards of the experience gained in other countries. Despite difficulties in the port, the containers with 590 SHS (beginning of 2012) arrived in Uganda. We attracted em-ployees for management and sales to be able to grow with one hundred customers a month. The first six customers have been connected.


FRES Uganda Ltd. offers SHS for a monthly service fee of between 29.000 Ugx (€9) and 47.000 Ugx (€15) and a one-time fee for connection of between 454.000 Ugx (€146) and 617.000 Ugx (€199).



Founding year: 2010Products & services: SHS Number of employees: 10Number of customers SHS: 6Number of energys stores: none, customers are served from the main officeShareholders: 100 % FRES

27

0

1

2

3

4

5

6

20112010

Number of customers

Uganda


On 31-12-2011, the company had ten employees in the fol-lowing composition:

* In 2010, the company already had one employee (General Manager)

In 2011, five employees have received an evaluation at the end of their trial period. Provisions such as pregnancy leave and a pension were available to the employees in 2011. All employees followed an internal training course about solar energy. The marketing and sales team was trained by the management. External consultants trained the manage-ment in HRM and accounting.

General Manager was Peter de Wit. He reported to the Board of Commissioners that was established in March 2011 with:

André Kuiper – chairmanMarjolein Quené – member

2011

Number of employees 10*

Male/female 8/2

Definite/indefinite contract 1/9

Fulltime/part-time 9/1

Inflow/outflow men 7/0

Inflow/outflow women 2/0

Employees older than 55 years -

Number of men/women in MT 2/2

Managers 6

Peter de Wit, General Manager of FRES Uganda Ltd. in Uganda

“You are most welcome!” is a statement Peter de Wit, General Manager of FRES Uganda Ltd., hears often from potential customers in Uganda: “Despite this warm wel-come, 2011 was charac-terized by adversity in the start of the company. From the beginning, we encountered misunder-standing and reserve with the Ugandan authorities that had to grant us permits in order to be considered for a subsidy from the government. Unfortunately, the request occurred in an election year.” By persis-ting and with persuasive power, 2012 began posi-tively with signing the subsidy agreement (on Janu-ary 13 2012). “Naturally, this is only the beginning; now we should approach the right customers and offer them good systems and impeccable service,” according to Peter de Wit.

28

8. FRES Guinea-Bissau

In short:

Guinea-Bissau has over 1,5 million* inhabitants and is one of the poorest countries in the world, being number 176 on the Human Development Index 2011 of UNDP**. Only 2,6% of the population has access to electricity.

Objective and results 2011

In 2010, FRES, in cooperation with local organization Da-ridibó, requested a subsidy with the EU for founding a FRES company in Guinea-Bissau. A subsidy of €2,5 million was awarded by the ACP EU Energy Facility Program. FRES promised to invest at least an additional €850.000.

In the fall, the subsidy contract was signed by Annemarie Goedmakers, with great interest from the government, UNDP, embassies and local media representatives. The company FRES Guinea-Bissau was founded. The office is located in the Gabú city in the province of Gabú in the east of Guinea-Bissau, bordering Senegal and Guinea.

FRES has visited Guinea-Bissau a few times in 2011 to nego-tiate with governments about founding a FRES company, to obtain exemption of import taxes and to obtain a license for the concession area. The goal is to achieve 3.500 cus-tomers in 2016.

* Source: www.unstats.un.org ** Source: www.hdr.undp.org

Gabú

Guinea-BissauGuinea-Bissau

Reinder Bouwmeester, General Manager of FRES Guinee-Bissau (as of 1-1-2012)

Reinder Bouwmeester: “The ge-neral theme of 2011 was preparing the start of a new FRES company in Guinea-Bissau. The largest suc-cess came with signing the contract with the EU in November. With that, all systems were go.” For the inhabi-tants of Guinea-Bissau, the first SHS cannot arrive soon enough. “People often ask the question why they had to wait so long for their Solar Home System. With the official founding of the company and the arrival and installation of the first SHS in August 2012, we will be able to meet their demand soon,” according to Reinder Bouwmeester.

29

9. New markets

Benin

Benin has over 9 million* inhabitants. 39% live below the poverty threshold. 22% have access to electricity. The country is number 167 on the Human Development Index 2011 of UNDP**.

Objective and results 2011

Objective was to found a new FRES company in 2011. FRES wanted to focus on the northern regions of Benin, le Borgou, l’Alibori, l’Atacora and la Donga, with SHS. The company was founded in 2011 in order to be able to lay claim to a concession area and exemption from taxes. Given the uncertainty about active (financial) support from the government of Benin and other parties involved, FRES has decided not to develop any activities in Benin for the time being.

* Bron: www.unstats.un.org ** Bron: www.hdr.undp.org

30

“Access to electricity offers so much more than a few lamps and wall sockets. For a household or small business, it means a connection to the modern world with all avai-lable sources of information, communication possibilities and trade opportunities. I believe this to be the most important component of our job at FRES,” says Caroline Nijland, Director Business Development of FRES. “The increasing trend in the number of customers in 2011 shows that we fulfill the needs of many inhabitants of Sub-Sahara Africa. All efforts from the past two years to professionalize and expand the FRES companies yielded results in 2011.

FRES was correct in believing in solar power stations. As one of the first organizations, FRES built a solar power station in Mali in 2010. Nowadays, FRES plays a leading role in this form of energy provision in West Africa with three working solar power stations in Mali. “I am proud we initiated the solar power stations and that vari-

ous financers, such as the World Bank and the Malian government, believed in us. Consequently, we can build another six solar power stations in the coming year so more households and entrepreneurs will get access to sustainable energy via small electricity networks. FRES also had the opportunity to work on achieving its objec-tives in Guinea-Bissau, thanks to an EU subsidy.”

“Thanks to the gained knowledge and expertise and our “track record”, we are increasingly a sparring partner and advisor for governments and donors with regard to issues surrounding electrification by means of de-cen-tralized solutions,” according to Caroline Nijland.

Caroline Nijland, Director Business Development

Part 3: Activities and results FRES in the Netherlands

The managers and employees of FRES in the Nether-lands support the FRES companies in achieving the objectives. Twelve managers were active at the end of 2011 and three people worked at the office in Am-sterdam, supported by a large number of volunteers.

31

10. Risk management

Signaling and managing risks is the responsibility of the FRES management. 23 potential risks have been identi-fied. Some of these received special attention in 2011; the remaining risks and the accompanying measures will be revisited in the business plans for the coming years.

1. Slow growth

These past years showed slow growth in the number of customers, causing FRES to run the risk of not achieving its objectives. The business plan and detailed execution plans of the local companies need to prevent this. Frequent meetings between the board and the local management created support and involvement. An extended monthly management report provided insight into the progress and warned of deviations from the plans, so we could res-pond in time. The addition of a Director of Operations to FRES will positively influence the sense of urgency at the FRES companies.

2. Financial independence

The FRES companies should build an independent financial existence by generating sufficient income in the medium and long term to cover the ongoing costs and replacement costs. When the number of customers grows too slowly, the companies run the risk of not achieving this independence. Therefore, especially Yeelen Kura and NuRa paid attention to cost reduction and/or income increasing activities in their business plans. Moreover, Yeelen Kura has divided the management into three products (SHS, mini-grid on diesel and mini-grid on solar energy) in order to obtain clear insight into the financial performances of each product. We kept a close eye on the progress via monthly reports.

3. Non-payment

NuRa has struggled with too many payment arrears of cus-tomers for some time - a threat to income and financial in-dependence. Furthermore, it is a bad example for the other countries in which FRES is active. NuRa has written up a plan of approach for structural improvement.

4. Fraud prevention

Unfortunately, FRES has to deal with incidents of fraud in the local companies every year. FRES actively attempts to prevent and fight fraud. This is the responsibility of the management and Boards of Commissioners of the compa-nies themselves, but it is strictly supervised by the board and the Supervisory board via the established manage-ment and supervision structure.

5. Transportation costs

A large part of the operating costs goes toward the trans-portation costs needed to perform the installation and maintenance activities. As expected, the oil price conti-nues to rise, causing transportation costs to further in-

crease. Therefore, the FRES companies aim for high reliabi-lity of the systems and optimizing the logistics, and opted for areas with a high concentration of customers.

6. Continuity reserve

The board has created a continuity reserve of €250.000 in case the activities of FRES, for any reason whatsoever, stop suddenly. This would especially have consequences for FRES in Amsterdam. With the reservation, we are able to properly complete the remaining activities.

7. Political stability

Developments in North Africa showed that political stabi-lity is a factor that needs to be taken into consideration. It is one of the screening criteria FRES employs before de-ciding to start working in a specific country. If any trouble arises, the safety of the employees of the FRES company is the highest priority.

32

11. Organization

On the basis of the plan “New method” that was drawn up in 2010, FRES worked on a clear division of tasks, good internal communication and better cooperation in 2011.

An extensive overview of managers and their additional functions and employees can be found in Appendix 2.

Board

In 2011, the board of FRES consisted of three members who were intensively involved in the business: Annemarie Goedmakers (CEO/chairman), Serge Leijten (CFO/treasu-rer) and Harry Droog (COO/board member). In accordance with the procedure for appointment and reappointment, the board has recommended Serge Leijten after his period in 2011 and he has been reappointed for a period of five years by the Supervisory Board, with retroactive effect.

The board members worked for FRES unpaid an average of two days a week. The board met 23 times. The following points were discussed, among other things:

• The progress of the FRES companies;• The results of market studies;• Evaluation reports from the companies;• Investment proposals;• The financial reports of the FRES companies;• The annual account and the yearly report;• Composition of the various Boards of Commissioners;• Organization analyses FRES;• The business plan 2011-2015;• Budget 2012.

In 2011, the expenses of the board amounted to a total of €2.716 spent on telephone and travel expenses in the Netherlands.

Supervisory Board

In 2011, the Supervisory Board consisted of Aad Veenman (chairman) and Peter Smink (secretary). In April, Pieter van Geel (member) became a board member. He has resigned as of December 2011 in connection with a possible conflict of interest with another function. The Supervisory Board met twice in 2011. The most important topics were:

• The business plan 2011-2015;• The annual plan 2011;• Developments around fixed subsidy from Directoraat-

generaal Internationale Samenwerking (DGIS);• Evaluation investment portfolio.

Management meetings

From 18 to 25 March, members from the management team of Yeelen Kura and NuRa came to the Netherlands to meet with the FRES board and their Commissioners to elaborate on their plans, exchange knowledge and expe-rience and hold strategy meetings.

In June, the FRES board and several Commissioners dis-cussed the organizational structure of FRES and the FRES companies. The following concerns were central:

• that FRES does not realize the customer objectives on time, partly because there is a lower “sense of urgen-cy” with the local companies for achieving the cus-tomer objectives and performing agreed-upon policy agreements;

• about the speed of arriving at durable management where the profit is sufficient to cover the expenditures of the management, including the future replacement investments under retention of a certain number of customers.

It was decided to reinforce the current management and supervision structure by attracting a Director of Operations who will work toward realizing agreed-upon targets and improving the functioning of the companies.

33

Employees of FRES

FRES strives to keep the operation costs in the Netherlands as low as possible by working with a small core of perma-nent (paid) employees and a large, flexible employable team of (unpaid) experts and supporters.

Paid employees

On 31-12-2011, FRES has three paid employees in the Netherlands:

Paid employees 31-12-10 31-12-11 Number of employees 6 3 Men/women ratio 1/5 0/3Contract definite / 6/0 3/0 indefiniteFulltime/part-time ratio 0/5 1/2 Number of FTE´s 4,4 2,4 Average age 36 38 Number of freelancers 1 1 Av. absence through illness 2% 5,2%

In Amsterdam in 2011, the permanent team worked with eight paid employees with various nationalities. The wor-king languages were Dutch, English and French. The team went through a few changes, partly for personal reasons and partly due to finding another job.

A variable reward system applied for definite functions. In 2011, €5.000 was available for training and education. €1.000 of this has been spent. In the fall, all employees have followed basic training from Asantys (supplier of solar sys-tems) about the most recent technological developments in solar-Photovoltaic.

Unpaid employees

In 2011, fourteen people worked for FRES unpaid. They gave advice and conducted research, including: market research Cameroon, market analysis of Sub-Sahara Africa, feasibility study into Micro Hydro Power, analysis of donors policy and research into central purchase of SHS.

In addition to the experts and students mentioned above, the board, Commissioners of FRES companies and the Su-pervisory Board (twelve people in total) also contributed unpaid.

Investment management

The results of the investment management are evaluated by comparing them to a suitable benchmark. The perfor-mance of the benchmark for the portfolio showed a slightly positive result of 0,43% at the end of 2011. The FRES port-folio did better with 2,1% compared to 2010. In 2010, the performance numbers for the portfolio were 8,8% versus that of the benchmark of 7,0%. It was estimated what the result would have been if the money had been transferred to the savings account completely; in that case, the total value would have been approximately €500.000 lower at the end of 2011.

Durability scan investment portfolio*

ING Durable Investment has performed two tests to evalu-ate the performances in the field of durability of stock mar-ket listed enterprises and issuing institutions. In the posi-tive test, it is investigated what enterprises do to prevent undesired company activity and undesired behavior. In case of a negative test, it is investigated to what extent en-terprises develop undesired activities or display undesired activities in the field of testing themes. On the basis of both tests, we find that no companies are lost in the portfolio.

*Source: FRES Investment portfolio, March 12 2012, ING

28-mrt-13 1-jan-14 1-jan-15 1-jan-16

Total 9.000.000 9.359.510 9.993.525

8.561.754

Liquidi-ties 9.000.000 2.225.000 356.824 4.487

Obliga-tions 4.734.510 6.105.398

5.575.661

Stocks .400.000 3.531.303

2.890.097

With-drawals 20.000 150.000

1.618.709

Summary durability scan

Name St Rural Energy Services

Depot number 11052482

Advisor C T J Buis

Date March 12 2012

Total number of titles 40

Drop-out on negative test 0

Drop-out on positive test (NFI - )

0

Total drop-out number 0

Admitted companies 40

34

12. Partners

It is very important for FRES to work with others. We do this in various forms of cooperation. Below is an over-view of partners in the order of the starting year of the cooperation.

2002 | The “Directorate of Minerals and Energy” (DME) of the South African Government signed a temporary agree-ment with NuRa in 2002. This contract was converted into a twenty-year concession agreement for 8.000 solar systems in 2004. A contract for 8.000 SHS was signed. The South African Government will take on 80% (€4,5 million) of the cost, FRES will pay the remaining 20% (€1,1 million). NuRa receives the amount when the systems have been installed.

2004 | In 2004, FRES was founded by Nuon. In 2006, a five-year agreement determined that we will receive an an-nual contribution of €75.000 and that Nuon will make an employee available free of charge. In 2008, Nuon has re-ceived an ACP-EU Energy Facility subsidy for our activities in Burkina Faso. On the basis of previous agreements, over €175.000 was available to FRES in 2008 for investments in Yeelen Kura and Yeelen Ba. In 2008, Nuon signed a public-private partnership with FRES to support the millennium objectives in Africa during the period 2008-2011. Nuon gave €9 million to FRES in 2008 and in 2009, Nuon became the main sponsor of FRES.

2006 | In 2006, the Government of Mali has signed an agreement with Yeelen Kura via AMADER to the worth of €2,3 million to advance rural electrification. This contract aims to expand from 1.500 to 5.000 customers and is still ongoing. In 2009, an agreement was signed for a €300.000 subsidy for the expansion of five mini-grids. In 2011, a sub-sidy agreement was signed with AMADER/World Bank for the construction of six solar power stations. The subsidy will come from the World Bank.

2006 | In 2006, we have begun to cooperate with the Van Sandick fund; they reimburse the travel and accommo-dation expenses of Dutch students who studied the area of solar energy in Africa. In 2010, this cooperation was renewed, with the fund financing the costs of the research into the batteries used by FRES.

2006 | Since 2006, PwC (PricewaterhouseCoopers Accounts N.V.) has been inspecting our annual account and the coherency of the annual account with the rest of the annual report for free each year. Additionally, the Tax & HRS department of PwC has supported us in our applica-tion for the ANBI-status at the Tax Authorities in 2008.

2007 | Via the European Union, and in cooperation with Nuon, Yeelen Kura and two local partners, EU financing was obtained in 2007 for founding an electricity company in Burkina Faso. It concerned a subsidy within the frame-work of the ACP-EU Energy Facility of over €2,1 million. This cooperation runs until the end of 2013. In December 2010, a commitment was made for a subsidy of €2,5 million for a new FRES company in Guinea-Bissau within the same program. This subsidy was requested in cooperation with the local organization Daridibó that supports us with its expertise in the local market circumstances in opening a new FRES company in Guinea-Bissau.

2008 | Dutch Government: Nuon and DGIS (Directoraat-generaal Internationale Samenwerking) have each com-mitted to €10 million to achieve our objectives to have connected 100.000 customers to sustainable energy in 2020. FRES realizes the plans. So far, DGIS has transferred €2,9 million. Currently, the subsidy is fixed and we are attempting to reach an agreement. Additionally, it has been agreed that the minister supports us in legal and managerial procedures in project countries and in finding additional financing with parties such as the World Bank.

2008 | Bijl, Partners in Public Relations, has been advising the (communication) employees of FRES in the field of communication for a number of years now.

2009 | We have been cooperating with The Resource in Amsterdam since 2009. This partner unites demand and offer in the fiscal labor market. Three specialists work for free one day a month to advise us in the field of partnership tax, VAT and wage tax.

2009 | In 2009, we received a subsidy of €200.000 from Hivos to found a FRES company in Uganda. Hivos strives for an honest, free and sustainable world.

2010 | The Government of Burkina Faso has been gran-ting exemptions from VAT and import rights for Yeelen Ba since 2010.

2010 | Various meetings with the Government of Guinea-Bissau have been held, for instance with the ministry of Energy, about starting a new company.

35

2010 | At the beginning of 2010, FRES submitted a concept note in cooperation with the Rural Electrification Agency of Benin ABERME and SNV within the framework of ACP EU Energy Facility Program. We applied for a subsidy of €2,5 million. This application was denied, and subsequently we decided to finance the project ourselves for the next two years. We strive for the Government of Benin to take on 60 to 80% of the costs the following eight years. We met with ABERME about the concession permit, the license and possible subsidy for SSD-FRES Benin. Given the uncertainty with regard to the active support of the government of Benin, FRES will not develop any activities in this country for the time being.

2010 | Various meetings with the World Bank took place in 2010. We have received over €2 million for both the new FRES company FRES Uganda and the construction of extra solar power stations in Mali.

2010 | We are looking at possibilities to work together with development organization SNV in Africa. The first develop-ment project will probably be a pilot in Benin in 2013.

2010 | In 2010 and 2011, international law firm Clifford Chance LLP has supported FRES in the realization of an agreement for the delivery, installation and maintenance of respectively two and another six solar power stations in Mali. Clifford Chance will again provide legal support for FRES in new projects.

2010 | International law firm Allen & Overy gave us legal advice with regard to the brand name FRES and our results in 2010 and 2011.

2010 | We have worked with Randstad since 2010. They support us in the field of HR, where an HR consultant ad-vises us in the field of HR management and administration.

2010 | We signed a cooperation agreement with REF (Rural Energy Foundation) in September. We work in the same field and exchange information on the results of desk studies. Additionally, we share information on finding local employees in Africa.

2010 | Water company Groningen donated 150 water filters to FRES in 2010. We have distributed these among the FRES companies, who used them as Christmas gift for the employees. In 2011, the employees filled in an evalua-tion to improve the functions of the water filters.

2011 | We applied for a concession permit and a license for the new FRES company with the Ugandan Government. In 2011, we obtained a license. Signing the subsidy agree-ment will follow in 2012.

2011 | PUM sends senior experts to companies and organi-zations in developing countries and upcoming markets who can use their expertise for two to three weeks. In 2011 and 2012, PUM executes eight assignments for the FRES companies. In 2011, this was standardizing an operational manual plan for all FRES companies.

2011 | Ever since August 2011, ING Bank has been helping FRES by not charging a fee for the money transfers, both national and international, which leads to significant cost reductions.

2011 | Stichting Doen granted a subsidy of €0,9 million for Uganda in 2011.

2011 | In 2011, FRES has made agreements with Alliander with regard to further cooperation by formalizing the avai-lability of expertise and knowledge and providing com-missioners for FRES companies in 2012. Further meetings concerning the takeover of agreements between FRES and Nuon still need to be held.

2011 | We entered into a cooperation with Foundation Chimbo.

36

13. Fund raising

Policy, strategy and objectives

FRES mainly focuses on obtaining subsidies from nationally operating fund raisers and governments and on building relationships with business donors. We are loo-king for parties that match us in terms of policy, objectives and task area. We only submit subsidy proposals when the subsidy conditions match our strategic choices to prevent we will start applying a subsidy-driven policy. Business do-nors and sponsors support us with money or in kind.

FRES is a non-profit foundation and seeks external finan-cing to achieve its goals. We attract this financing by wor-king closely with our main sponsor Nuon by reinforcing our lobbying activities and by building close relationships with governments. FRES opted not to employ an active private donor policy.

Objectives

In order to achieve 55,000 customers by 2016, an invest-ment of over €35 million (excluding replacement invest-ments of €7 million) in new systems is needed. Approxi-mately €20 million still needs to be acquired.

The following investments have been made in the past years:

ANBI, Institutions for general benefit

FRES has ANBI status since 2007. An ANBI marked as such by the Tax Authorities does not need to pay in-heritance tax or gift tax for received inheritances and gifts within the general benefit. Moreover, a donor can, dependent upon the form in which the gifts were made, deduct the gift from the income or partnership tax. This makes it more attractive to contribute to FRES financially.

Total investments 2001-2011 South Africa Mali Burkina Faso Uganda Total

ORET/MILIEV 760.000 760.000

PSOM 780.000 543.000 1.323.000

Government of South Africa 7.660.115 7.660.115

Government of Mali 2.300.000 2.300.000

EU 932.897 932.897

JV partners (Nuon, EDF, etc.) 2.415.000 1.282.895 310.965 4.008.860

Schokland Akkoord - part Nuon * 1.173.528 1.231.499 168.967 2.573.994

Schokland Akkoord - part DGIS * 1.116.401 898.848 320.053 319.838 2.655.140

Total 13.145.044 7.016.242 1.563.915 488.805 22.214.006

EUGovernment of MaliGovernment of South AfricaJV partners (Nuon, EDF, etc.)ORET/MILIEVPSOMSchokland Akkoord – part Nuon*Schokland Akkoord – part DGIS*

Total investments up to and including 2011 (€22 million)

37

*Within the PPP, a remaining amount of €340,000 from the DGIS-budget (€2,994,530 total) and an amount of €162,874 from the budget from Nuon (€2,736,868 total) were invested in new initiatives.

Results 2011

Subsidies

In 2011, we were granted or signed for subsidies for a total of €5,7 million. Unfortunately, the PPP agreement of FRES and Nuon with DGIS remained fixed in 2011. However, both sides did work hard to answer outstanding ques-tions. We signed a subsidy agreement for €1,9 million with AMADER/World Bank for the construction of six new solar power stations in Mali. We were granted €1,3 million for the new FRES company in Uganda. Furthermore, we signed a subsidy agreement with the EU for over €2,5 million for Guinea-Bissau.

Subsidies in 2011:

Overview of granted subsidies for the benefit of the FRES companies 2002-2011:

Fund FRES company in

Euros - in million

World Bank Uganda 0,4

Stichting DOEN Uganda 0,9

EU Energy Facility Guinea-Bissau 2,5

World Bank (Russia) Mali 1,9

Totaal 5,7

Business donations

In 2011, Nuon donated €75,000 for the fifth time to cover our office expenses. Nuon also paid the Payroll expenses of the Director Business Development (€102,552).

Private donations

€10,522 was donated by private donors. This includes the contribution of €3,596 via employees of Nuon who could choose to make a donation to FRES instead of receiving a Christmas gift, as was also the case in 2009.

The granted monies from 2010 were used for the FRES company in Uganda in 2011. Those of 2011 will be used for the FRES company in Guinea-Bissau in 2012.

In 2011, the existing policy with regard to private donors was investigated. Here, it was again established that FRES should not actively approach private persons itself, but can do this via the partners when these are open to this.

38

0

2000000

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8000000

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20112010200920082007200620052004

0

10000

20000

30000

40000

50000

20112010200920082007200620052004

0

1000000

2000000

3000000

4000000

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20112010200920082007200620052004

14. Communication

We do not merely focus on people in areas where we can found FRES companies, but also on stakeholders who make our work possible such as: volunteers, experts, sub-sidizers, donors and partners. We keep them informed of the effect of their contributions in knowledge, time and / or money.

Policy, strategy and objectives

In addition to the communication for fund raising, FRES communicated with stakeholders for other purposes: • Brand awareness;• Support and involvement in rural electrification and

FRES companies;• Knowledge transfer.

We distinguish various stakeholders, with whom we com-municate in various ways:

• Board members, partners and employees receive the digital Flash Report every month to keep them informed of the latest developments;

• Every year, two stakeholders meetings are held for board members, employees, commissioners, partners, experts, students and volunteers. The developments of and opportunities for the FRES company was central during these meetings;

• A new donor of FRES receives an enrollment confirma-tion and more information on the results of the past year and on the objectives of the new year;

• The media receives a press release in case of newswor-thy matters, which sometimes leads to an interview and/or article in the media;

• Every person who is interested can find more informa-tion on our website.

Treatment of complaints

When FRES receives a complaint, we handle this within one (work) day after receiving it. FRES calls the submitter of the complaint to offer a solution. In 2011, we did not receive any complaints.

Results 2011

The new website was launched at the beginning of 2011. This has been supplemented and maintained in the course of the year. FRES also started using the social media channels: LinkedIn, Facebook and Twitter.

Africa Interactive made a short movie about Yeelen Kura to promote innovative entrepreneurship in Africa. The movie is shown on the websites of Nu Zakelijk, OneWorld and RTLZ.nl.

FRES gave a presentation on how access to electricity con-tributes to the growth of the private sector in Africa during an Embassy Conference at the ministry of Foreign Affairs. The Dutch ambassadors in Africa and other representatives were also present.

In February, FRES was featured in an article in the brochure of organization advice agency Berenschot as an example of conducting business in Burkina Faso, which was distri-buted among Dutch companies.

Reporter Filip Polfliet visited Mali and Burkina Faso and wrote stories about customers of Yeelen Kura and Yeelen Ba.

The AOL Huffington placed an article on the website with the title: “Women in Power: Annemarie Goedmakers, The Woman Who Brings Light To The Darkest Corners Of Africa”. This online newspaper has over 35 million unique visitors a month. (www.huffingtonpost.com).

Various articles have been published: in Het Financiele Dagblad (“The de-central source of heat; the sun also costs money in Africa”), PV-magazine, SMA and Sun&Wind Energy Newsletter and various (international) websites. The Dutch CSR magazine P+ published an article on the website about the two new solar power stations in Mali (www.p-plus.nl). The publications contributed to greater brand awareness in various sectors.

On April 19 and October 24, the stakeholders meetings of FRES took place for all people involved in the Netherlands.

The annual report 2010 (on GRI level C) appeared in May 2011 in three languages (Dutch, English and French) and is distributed among our employees and partners. The report competed for the Transparent Prize, an initiative of PwC. We scored a 6.5, just like last year. The average score in our category, “Large”, was 5.9.

39

Part 4: Financial report 2011

40

41

15. Consolidated annual account and clarification of consolidated annual account

Consolidated balance as of December 31, 2011

(after result designation) December 31, 2011 December 31, 2010

€ € € €

ASSETS

1. Fixed Assets

1.1 Material fixed assets 3.428.976 1.435.237

1.2 Financial fixed assets - -

3.428.976 1.435.237

2. Current Assets

2.1 Claims and prepayment and accrued

income 826.359 218.506

2.2 Stocks and shares 8.557.266 9.636.701

2.3 Liquid means 383.390 1.744.216

9.767.015 11.599.423

Total 13.195.991 13.034.660

LIABILITIES

Reserves and Funds

3. Reserves

3.1 Continuity reserve FRES Netherlands 250.000 250.000

3.2 Reserve for future projects 3.881.696 4.138.882

3.3 Reserve financing assets 2.734 4.296

4. Funds

4.1 Fund Donation Nuon 5.375.262 7.380.376

4.2 Fund Hivos/Uganda 129.516 200.000

4.3 Fund EU Guinea-Bissau 264.847 -

5.769.625 7.580.376

9.904.055 11.973.554

5. Short-term debts and accruals and

deferred Income 3.291.936 1.061.106

Total 13.195.991 13.034.660

42

Consolidated state of income and expenditure 2011

6. Income and expenditure Actual Budgeted Actual

2011 2011 2010

6.1 Income

Income from own fund raising 1.081.977 756.388 437.988

• Income from own fund raising private per-sons 10.522 15.000 28.888

• Income from own fund raising companies 1.071.455 741.388 409.100

Subsidies 68.613 4.081.500 1.703.160

• Subsidies from governments 68.613 4.081.500 1.700.000

• Other subsidies - - 3.160

Profit from investments 243.557 300.000 911.472

Remaining income 676.440 - 544.077

• Income Yeelen Kura from regular company activities 669.834 - 544.077

• Income FRES Uganda Ltd. from regular company activities 6.606 - -

Sum of the income 2.070.587 5.137.888 3.596.697

6.2 Expenditure

Spent on objectives

Expenditures for regular management

Existing Companies 1.362.014 451.388 687.800

• Yeelen Kura 926.440 200.000 679.818

• NuRa 435.574 251.388 7.982

Expenses for Expansion Companies 2.250.113 4.737.500 2.770.788

• Yeelen Kura, Mali - Project solar power station 1.174.231 2.887.500 711.200

• NuRa, South Africa 532.820 600.000 1.135.360

• Yeelen Ba, Burkina Faso EU/Nuon project 292.342 750.000 574.325

• Yeelen Ba, Burkina Faso FRES project - - 129.303

• FRES Uganda Ltd., Uganda 250.720 500.000 220.600

Expenses for New initiatives 18.563 610.000 19.423

• Guinea-Bissau 14.222 200.000 1.650

• Benin 4.260 400.000 16.375

• New initiatives remaining countries 81 10.000 1.398

Transport 3.630.690 5.798.888 3.478.011

43

(1) The FRES service costs have been budgeted on a total of €550,000. The ascertainment of the 2011 budget mentioned above takes place with the actual hours of 2010. During 2011, more time was spent on the support for the expansion of the companies. This resulted in a higher ascertainment of costs.

(2) When determining the budget, an ascertainment of a number of subsidies was assumed. These were not received in 2011, causing us to use other reserves and funds.

Transport 3.630.690 5.798.888 3.478.011

Actual Budgeted Actual

2011 2011 2010

FRES service costs

Spent on objectives (1) 309.650 351.894 413.111

• Direct support Existing Companies 36.281 79.839 93.728

• Direct support Expansion Companies 242.211 64.240 75.415

• Direct support New Initiatives 31.158 207.816 243.968

Total spent on objectives 3.940.340 6.150.782 3.891.122

FRES service expenses

Management & administration 199.746 198.106 216.565

• Direct expenses 114.493 113.464 124.036

• Indirect expenses and investment expenses 85.253 84.642 92.529

Sum of expenditures 4.140.086 6.348.888 4.107.687

Result 2.069.499- 1.211.000- 510.990-

Result designation (2)

• Supplement continuity reserve FRES Netherlands - - 250.000

• Supplement designation for

future projects 257.186- 1.211.000- 861.754

• Withdrawal designation reserve financing assets 1.562- - 3.120-

• Withdrawal designation fund donation Nuon 2.005.114- - 1.619.624-

• Withdrawal designation fund Hivos 70.484- - -

• Supplement designation fund EU Guinea-Bissau 264.847 - -

2.069.499- 1.211.000- 510.990-

44

Consolidated overview of cash flow 2011

2011 2010

€ €

Income from private persons, companies,

institutions and government 2.290.131 1.125.431

Payments to suppliers and employees

and projects 2.174.703- 4.051.374-

Cash flow from activities 115.428 2.925.943-

Received interest, realized

result investments and

balance transfers and withdrawal investments 1.276.541 63.334

Cash flow from operational activities 1.391.969 2.862.609-

Investments in material fixed assets 2.265.445- 347.318-

Acquiring group companies - -

Cash flow from investment activities 2.265.445- 347.318-

Granted loans 487.350- -

Mutation account-deficit debt credit-

institution - -

487.350- -

Cash flow from financing activities

Net cash flow 1.360.826- 3.209.927-

Exchange and conversion differences on

financial means - -

Mutation financial means 1.360.826- 3.209.927-

Balance financial means January 1 1.744.216 4.954.143

Mutations financial means 1.360.826- 3.209.927-

Balance financial means December 31 383.390 1.744.216

Clarification of the consolidated annual account Comparison realization 2011-versus budget 2011 The statistical differences between realization and budget are analyzed and clarified below to provide an insight into the connection. Realization versus budgeted 2011 assets Assets from our own fund raising companies Payroll costs Nuon: The donation is higher because the complete payroll costs of the Director Business Develop-ment are included. When the budget was established, this had not been taken into account (by way of precaution).

Project financing Stichting Doen: We expect that the sub-sidy request of €900,000 will be completed and granted in the beginning of 2012. The first term payment of €300,000 will be received in March/April 2012. The remaining two terms of €300,000 will follow in 2013 and 2014.

PPP Nuon: The donation Nuon projects ad €400,388 is higher, partly due to the ascertainment of the Nuon part of the project Burkina Faso. The total asset of the Nuon pro-jects amounts to €919,514. Assets from obtained subsidies Project financing Burkina Faso (EU): The purchase of 2,000 SHS has been delayed from 2011 to 2012. The EU subsidy of €484,000 that was budgeted for 2011 has also been moved and we expect this will be received in 2012.

Project financing DGIS: The DGIS subsidy remained fixed in 2011; in the budget of 2011, we had assumed that DGIS would make an amount of €2,307,500 available.

Project financing World Bank Mali: Negotiations with sub-sidizers (World Bank and DGIS) took more time than we had originally planned. Consequently, the order of 6 solar power stations was delayed and therefore, the subsidy of the World Bank, that had been budgeted at €1,090,000 for 2011, as well. The subsidy amount to be received from the World Bank will be moved to 2012 completely.

Project financing Guinea-Bissau (EU): The subsidy has been granted in 2011 and the first payment has been received. The received amount was slightly larger than we budgeted; €264,847 versus €200,000. Realization versus budgeted 2011 spent on objectives Yeelen Kura: The difference between realized and budgeted is caused by the fact that the budget merely relates to FRES Netherlands. The realized expenditures also in-clude the expenditures of Yeelen Kura.

NuRa: The expenditures for normal management were higher than expected, as a result of extra expenditures for a

study into the causes of non-payment and the purchase of new batteries to replace the old. The expenses for expan-sion were lower than budgeted, because the costs for the purchase of new SHS systems were lower than budgeted.

Yeelen Ba: The expenses for expansion were lower as a re-sult of slow customer growth. In the fourth quarter of 2011, we decided to adjust the rate structure, lower the rates, which had a positive effect on the development off the number of customers in the next year.

FRES Uganda Ltd.: The difference between realized and budgeted is caused by the fact that the budget merely re-lates to FRES Netherlands. The realized expenditures also include the expenditures of FRES Uganda.

Guinea-Bissau: The start-up expenses of 2011 for the com-pany in Guinea-Bissau were lower than budgeted, because the contract with the new director was signed in Novem-ber 2011. The new director began on January 1, 2012.

Benin: In the course of 2011, the FRES board has decided not to develop any activities in Benin for the time being. General Activities FRES was founded in 2004 and is statutory situated in Am-sterdam. The activities of FRES and its group companies consist of realizing durable rural electrification in develo-ping countries, especially by placing and managing auton-omous solar energy systems.

Additionally, FRES aims to participate in and cooperate with the activities that benefit the goal of the foundation.

Group relations

There are three partnerships: Yeelen Kura, S.A., Société de Services Decentralisé FRES (SSD-FRES) and FRES Uganda Limited. FRES is 100% owner of all partnerships, direct or indirect.

Consolidation circle

The financial data of FRES is included in the consolidation, as well as the financial data of the group companies and other legal persons which they can influence or of which they are in charge. Group companies are legal persons FRES has decisive control over, directly or indirectly, be-cause they have the majority of the votes or can control the financial and operation activities in any other way. Here, the possible votes that can be used directly on balance date are also taken into account. The partnerships below are involved in the consolidation of FRES:

45

The participation in Yeelen Kura S.A. was obtained from EDF and Nuon at the end of 2008. FRES has taken over this legal person from the parties above for €2. 20% of the shares of SSD were obtained with this takeover. Consequently, we now possess 100% of the shares in this company.

As of December 31, 2011, the board of Yeelen Kura consists of Rob Costermans and Liliane de Jager. The management has been transferred from Amadou Diallo to Djibril Sémé-ga as of May 31, 2011. SSD-FRES does not have a separate board. SSD-FRES consists of the solar power station Kim-parana.

FRES Uganda Ltd. was founded in 2010 as 100% daughter of FRES. Peter de Wit is the General Manager. The commis-sioners as of 2011 are Marjolein Quené and André Kuiper.

SSD-FRES Benin was also founded in 2010 as a 100% daughter company of FRES. The company was officially founded this year to lay claim to a concession area and exemption of taxes.

FRES Guinea-Bissau was formally founded in 2011. Connected parties

FRES was founded in 2004 by n.v. Nuon as an independent foundation with its own board. Since July 2009, FRES and Nuon have a sponsor agreement which means that Nuon acts and is regarded as the main sponsor of FRES. This agreement also stipulates that Nuon will take part in the Supervisory Board.

Additionally, FRES (in)directly manages NuRa, located in South Africa as well as Yeelen Ba, located in Burkina Faso. The shareholder of these entities is N.V. Nuon Energy and are therefore not formally owned by FRES Netherlands.

General principles for drawing up the consolidated annual account

General principles

The annual account was drawn up on the basis of Guide-line 650 for fund raising institutions, as established by the Board for Annual Reporting. The goal of this guideline is to provide insight into the costs of the organization and usage of the monies in relation to the goal for which the means were assembled. The annual account is drawn up in Euros.

Conversion of foreign currency

Claims, debts and obligations in foreign currency is converted against the exchange rate as of the balance date. Transactions in foreign currency during the reporting period are included in the annual account against the ex-change rate that is valid on the transaction date. The rate differences arising from the conversion as of the balance date are included in the assets and expenditures.

We qualify the foreign group companies and non-conso-lidated participations as conducting business abroad with another functional currency than that of the foundation. For the conversion of the annual account of this business conduction abroad, the exchange rate on the balance date is employed for the balance funds and exchange rates on the transaction date for the posts of the assets and expen-ditures. The conversion differences that arise are used for the benefit or the … of the group capacity immediately.

Cash flow overview

The cash flow overview is drawn up in according to the direct method. The financial means in the cash flow over-view consist of liquid means. Cash flows in foreign curren-cies are converted against the estimated average exchange rate. Rate differences with regard to financial means are shown in the cash flow overview separately.

The price of obtained group companies is included in the cash flow from investment activities, for as far as payment in financial means has taken occurred. Principles for the appraisal of assets and liabilities Material fixed assets

The material fixed assets are appraised on purchase price, reduced with the cumulative deductions and, if applicable, with special value decreases. The deductions are based on the estimated economical lifespan and are calculated on the basis of a fixed percentage of the purchase price, taking into account a possible residual value. Withdrawals are made from the moment of commission.

Name Statutory seat

Share in the placed capital

Yeelen Kura S.A. Mali 100%

Société de Services Decentralisés (SSD) FRES

Mali 100% (of which 20% via Yeelen Kura)

FRES Uganda Limited Uganda 100%

SSD-FRES Benin Benin 100%

In addition to the partnerships mentioned above, FRES has interest in the entities below. Currently, these are not involved in the consolidation.

Name Statutory seat

Share in the placed capital

SSD-FRES Benin Benin 100%

FRES Guinee-Bissau Guinea-Bissau

100%

46

Financial fixed assets

The claims to loans in participations as well as the other claims are included against the real value and subsequent-ly valued against the amortized cost price, which is equal to the nominal value, with deduction of the necessary fa-cilities.

Claims and prepayments and accrued income

The claims will initially be included against the real value and subsequently valued against the amortized cost price, which is equal to the nominal value, with deduction of the necessary facilities and the risk of default.

Stocks

Stocks and obligations are initially included against the real value. Value changes are immediately processed in the assets and expenditures.

Liquid means

The liquid means are valued against nominal value and are, unless otherwise indicated, freely available to the founda-tion.

Reserves and funds

The reserves are destined to be spent on projects and, to a limited extent, on device expenses. The reserve financing assets matches the means of FRES Netherlands stipu-lated in material fixed assets. For a closer clarification of the background of the reserves and funds, we refer you to the clarification on our own capacity.

Other assets and/or liabilities

The other assets and liabilities are valued against the amor-tized cost price, usually equal to the nominal value.

Assets

The balance of the assets and expenditures is determined by reducing the assets from our own fundraising and the other assets with the expenses on the objectives. Gifts are accounted for in the year in which these are received. As-sets from inheritance are accounted for in the year in which the size has reliably been established.

Expenditures

Costs relating to the normal management for which a con-tribution in kind is received are accounted for in gross un-less and insofar these costs are quantifiable.

Taxes

The foundation is not obligated to pay neither the partner-ship tax nor the sales tax. The foundation has obtained the ANBI status in 2008.

47

The balance grounds and installations relates to the assets that have been obtained as part of the take-over of Yeelen Kura at the end of 2008, as well as the investments of Yeelen Kura after 2008. It concerns the solar power station in Mali, among other things. In 2011, Yeelen Kura has invested in buildings, installations, solar equipment, hardware, and office furniture.

Clarification on the differentiated funds of the consolidated balance

1. Fixed assets

1.1 Material fixed assets

Inventory Uganda

Grounds and buildings Yeelen Kura and SSD

Installations & ma-terials Yeelen Kura and SSD

Computers, software and office inventory

Total

Book value January 1 - 185.736 1.245.205 4.296 1.435.237 Mutations:Investments 67.542 59.593 2.137.760 550 2.265.445 Withdrawals 5.144 9.496 254.953 2.112 271.705 Total mutations 62.398 50.097 1.882.807 1.562- 1.993.740 Book value 31 Dec.Purchase value 67.542 271.981 3.833.456 18.706 4.191.685 Withdrawals 5.144 36.149 705.444 15.972 762.709 Total 62.398 235.832 3.128.012 2.734 3.428.976 Withdrawal percentage 10%-33% 0%-20% 20% 20%

1.2 Other clarifications

In 2011 and in previous years, loans were converted into gifts by the FRES board. An overview of this has been included below: Yeelen Kura, MaliGranted in:2009 247.240 2010 61.323 2011 1.806.444

2.115.007 The loans above have been granted for the purchase of solar plants, to replace batteries, prepaid meters and expanding the network.

Yeelen Ba, Burkina FasoGranted in:2008 24.179 2009 351.643

375.822 The loans above were granted for the start-up costs and purchases of Solar Home Systems, among other things. These loans were provided by Nuon.

NuRa, South AfricaGranted in: 2008 1.756.060 2010 930.000 2011 430.000

3.116.060 Loans above were granted to expand SHS, non-payment project and replacement of batteries, among other things.

FRES Guinee-Bissau, Guinae-BissauGranted in:2011 14.222

14.222The loans above were granted for the purpose of the start-up of the activities in Guinea-Bissau.

48

As of September 13, 2010, a 20-year loan was taken out with Nuon RAPS Utility (NuRa) for a maximum amount of €1,000,000 for its 20% share in the financing of 8000 new systems; the other 80% is granted as a subsidy by the DoE. At the end of 2011, €830,000 has been effectuated by FRES. Currently, NuRa can still lay claim to the remaining part of €170,000.

In principle, a yearly interest is due for this loan. This is cal-culated by means of the 12 month Euribor rate. On the ba-sis of the “Interest Waiver”, FRES decided not to charge the interest of the loan above in 2010.

As of December 31, 2010, it has been decided to convert the outstanding loan ad €400,000 into a gift to be spent on the objective of the foundation. As of December 31, 2011, it has been decided to convert the outstanding loan ad €430,000 into a gift to be spent on the objective of the foundation.

1.2 Financial fixed assets

Loan u/g NuRa, total facilties € 1,000,000

31-12-2011 31-12-2010

€ €

Book value as of 1 January - -

Mutations:

Granted loans 430.000 400.000

Withdrawal: conversion loans into gift 430.000 400.000

Book value as of 31 Dec. - -

2. Current assets

2.1 Claims and prepayments and accrued income

31-12-2011 31-12-2010

Total > 1 year Total > 1 year

Debtors - - 51.775 51.775

Claims of SSD and Yeelen Kura 187.607 123.117 106.928

Claims of FRES Uganda Ltd. 118.550

Costs paid in advance 2.689 4.069 -

Costs FRES Uganda Ltd. paid in advance 2.292

Bridge loan NuRa 497.350 -

Other claims 14.680 13.160 -

Prepayments and accrued assets 3.191 26.385 -

826.359 - 218.506 158.703

As of October 27, 2011, a short loan was agreed on be-tween Nuon RAPS Utility (NuRa) and FRES of €497,350. The loan has been paid back. No interest needed to be paid. The loan was granted to bridge the period between the payment from creditors and subsidies received from DoE.

The fund “other claims concerns”, among other things, amounts that Nuon has received as subsidy on behalf of FRES. At the end of 2011, the prepayments and accrued in-come concerns interest to be received over 2011. This has been received after the balance date.

2.2 Stocks

In 2009, the foundation has formulated an investment po-licy. The investment activities are executed by ING and are monitored by the Portfolio Management Committee. The return on the stocks amounted to 2.08% in 2011. The Port-folio Management Committee has evaluated the invest-ment policy and has advised the board not to alter it. This advice was followed by the board.

31-12-2011 31-12-2010

Stocks 2.981.604 3.531.303

Obligations 5.467.274 5.989.587

Increasing coupon interest obligations 108.388 115.811

Total 8.557.266 9.636.701

2.3 Liquid means

The liquid means are freely available. The liquid means are utilized for the management as well as for the foundation’s objective.

31-12-2011 31-12-2010

ING other accounts 124.555 1.400.592

ASN account 25.140 19.735

West African CFA Franc 218.100 323.735

Stanbic Bank Uganda Ltd 15.273 -

Cashbox 322 154

Total 383.390 1.744.216

49

Clarification of the reserves and funds

3. Reserves

3.1 Continuity reserve FRES Netherlands

This concerns a continuity reserve for FRES Netherlands. With this reserve, it is possible to take care of the costs of FRES Netherlands for six months.

3.2 Designation reserve for future projects

This designation reserve concerns a reserve on behalf of new projects that have not yet been approved as such.

3.3 Designation reserve financing assets

This reserve was formed on the basis of the Guideline Fund Raising Institutions. The balance is equal to the total book value of the material fixed assets needed for the manage-ment of FRES Netherlands. Since this guideline does not apply to Yeelen Kura and FRES Uganda Ltd., the balance of fixed assets of these legal persons cannot be included in the designation reserve.

31.12.2011 31.12.2010

Situation as of January 1 250.0000 -

Added: result financial year in conformity with result designation

- 250.000

Situation as of Dec. 31 250.000 250.000

31.12.2011 31.12.2010

Situation as of January 1 4.138.882 3.277.128


257.186- 861.754

Situation as of Dec. 31 3.881.696 4.138.882

31.12.2011 31.12.2010

Situation as of January 1 4.296 7.416


1.562- 3120-


4. Funds 4.1 Designation fund Donation Nuon On October 3, 2008, an agreement was made between FRES and the Ministry of Development cooperation and N.V. Nuon, based on the so-called agreement of Schok-land. For this purpose, a designation reserve has been created in which both N.V. Nuon and the Ministry of De-velopment cooperation each participate €10,000,000. The supplementing external financing is intended to finance a large number of projects. Given the subsidy-conditions established by the Ministry of Development cooperation, the ad €1,700,000 received in 2009 has been presented as advance subsidy under the short-term debts. This subsidy has been used completely in 2011. The remaining million of Nuon has been settled via the Nuon commitment and has been used completely.

The course of this reserve is as follows:

The withdrawals from this fund during 2011 relate to the expenses made for, among other things, NuRa and the expansion of Yeelen Kura. These costs are directly deduc-ted from this designation fund.

4.2 Designation fund Hivos/Uganda

This designation fund concerns the subsidy that was received from Hivos for the start-up of the FRES company in Uganda. The course of this reserve is as follows;

4.3 Designation fund EU/Guinea-Bissau This designation fund concerns the EU subsidy for FRES Guinee-Bissau. The course of this reserve is as follows;

31.12.2011 31.12.2010

Situation as of January 1 7.380.376 9.000.000

Added: addition 2.005.114- 1.619.624-


31.12.2011 31.12.2010

Situation as of January 1 200.000 200.000

Added: withdrawals 70.484- -


31.12.2011 31.12.2010

Situation as of January 1 - -

Added: addition 264.847 -

Situation as of Dec. 31 264.847 -

50

5. Short-term debts and accruals and deferred income

Monies Nuon, Nuon Commitment and Nuon EU/BF received in advance

In order to improve the clarity, we opted to split up the monies received in advance into the project concerned as of the start of the annual account 2011. The fund monies Nuon 2010 received in advance concerns both the monies from the commitment as well as the EU/BF project.

Rights and obligations that are not shown in the balance

There is a yearly rental obligation for the Amstel 49 in Am-sterdam of €9,600. The rent can be terminated every year.

Nuon has committed itself to FRES for an amount of €1,850,000 for the benefit of projects in South Africa, Mali and Burkina Faso. On December 31, 2011, €189,127 has not yet been used by FRES.

Uganda

In Uganda, the concession permit and subsidy agreement of the government of Uganda were received at the end of 2011 and at the beginning of 2012 respectively. Conse-quently, the company in Uganda could not start with con-necting the intended 250 customers sooner. Only the first 6 “example customers” were connected at the end of 2011.

Guinea-Bissau

In 2011, FRES received an EU subsidy for starting up a new company in Guinea-Bissau with the goal to connect 3,000 households and small companies within 4 years. The com-pany was founded at the end of 2011. The director started from January 1, 2012.

31.12.2011 31.12.2010

Creditors 19.106 27.365

Monies Nuon received in advance

- 396.548

Monies Nuon Commit-ment received in advance

494.616 -

Monies Nuon EU/BF received in advance

172.365 -

Remaining debts SSD and Yeelen Kura

5.555.140 437.803

Remaining debts of FRES Uganda Ltd,

6.872 -

Accruals and deferred income

43.837 199.390


51

Government subsidies

Profit from investments

Profit from investments The liquid means present in 2011 have been partly used for investments. The profits arising from this are accounted for under the financial assets and expenditures. The profit from investments to the amount of ad €243,557 includes an amount of € -/- 285,572 as unrealized result on the in-vestments.

Additionally, liquid means were kept on the current account and deposit account present at the bank. The resulting interest profits have been accounted for under the profit from investments.

Assets Yeelen Kura

31.12.2011 31.12.2010

Subsidy DGIS - 1.700.000

Subsidy EU project Burkina Faso 196.234- -

Subsidy Guinea-Bissau 264.874 -

Total 68.613 1.700.000

Remaining subsidies

Subsidy Sandick fund - 3.160

Total - 3.160

31.12.2011 31.12.2010

Interest Bank 11.057 29.395

Result interest obligations 197.159 -

Dividends 84.597 60.324

(Un)realized exchange result stocks 289.473- 366.201

(Un)realized exchange result obligations 240.217 455.552

Total 243.557 911.472

31.12.2010 31.12.2010

Sale of activities and services 514.690 436.004

Other profits 155.144 108.073

Total 669.834 544.077

53

Clarification of the differentiated posts of the consoli-dated assets and expenditures

General The donations concern expenditures from our own fund raising. Continuity of the activities The most important activities in 2011 were the realization of 2 new solar power stations at Yeelen Kura in Mali and the preparations for another 6 stations that will be realized in 2012. We invested in the purchase of 4,000 new SHS to con-nect new customers in South Africa, with the support of the local government. Additionally, FRES founded one new company; FRES Guinea-Bissau. The FRES board has decided not to develop any activities in Benin for the time being. 6. Assets and expenditures

6.1 Assets

Assets from our own fund raising companies The donations from companies can be divided as follows:

Objective to connect 3,000 households and small busi-nesses within 4 years. The company was founded at the end of 2011. The director has started working as of January 1, 2012.

31.12.2011 31.12.2010

Donation contribution Christmas gift employees Nuon 3.596 18.085

Donation contribution housing 3.600 3.600

Private donations 3.326 7.203

Total 10.522 28.888

31.12.2011 31.12.2010

Payroll costs Nuon for employment Director Business Development 102.552 96.783

Donation Nuon office expenses 50.000 75.000

Sponsoring - 500

Donation Nuon projects 918.903 62.145

Contribution EU/Nuon project Burkina Faso - 174.672

Total 1.071.455 409.100

6.2 Expenditures

Spent on objectives

Objective

Existing companies Expansion companies

Yeel

en K

ura

NuR

a

FRES

Uga

nda

Ltd.

Yeel

en K

ura,

Mal

i pro

ject

sol

ar p

ower

sta

tion

NuR

a, S

outh

Afr

ica

Yeel

en B

a, B

urki

na F

aso

EU/N

uon

Proj

ect

FRES

Uga

nda

Ltd.

€ € € € € € €

926.440 435.574 - 1.174.231 532.820 292.342 250.720

993 774 1.388 2.516 2.633 12.825 3.090

9.224 7.188 12.886 23.363 24.449 119.086 28.687

1.206 940 1.684 3.053 3.195 15.564 3.749

- - - - - - -

- - - - - - -

937.863 444.476 15.958 1.203.164 563.097 439.818 286.246

22,7% 10,7% 0,4% 29,1% 13,6% 10,6% 6,9%

54

Management and administration Total 2011 Budgeted 2011 Total 2010New initiatives

FRES

Gui

nea-

Biss

au

Beni

n

New

initi

ativ

es re

mai

ning

cou

ntrie

s

€ € € € € € €

14.222 4.260 81 3.630.690 5.798.888 3.478.011

- - -

- - -

- - -

- - -

1.494 705 511 - 26.929 66.246 31.218

13.869 6.544 4.748 54.157 304.197 133.227 436.802

1.813 855 621 7.078 39.758 6.980 43.134

- - - 60.336 60.336 148.428 34.734

- - - 78.175 78.175 195.119 83.788

- - -

31.397 12.364 5.961 199.746 4.140.086 6.348.888 4.107.687

0,8% 0,3% 0,1% 4,8% 100%

The ascertainment of the costs to the activities, as presented in the consolidated assets and expenditures, occurs via the time registration system.

55

6.3 Comparison realization versus budgeted Subsidies and contributions The subsidies and contributions contributed less than what was budgeted as a result of delays in projects in South Africa, Mali, Burkina Faso and Uganda. Personnel expenses coordination and support The implementation of the time registration system pro-vided more insight into the way the costs have been spent. In combination with the personnel expenses, the expenses were slightly higher than budgeted. The number of FTEs as of December 31, 201 was 2.4, lower than a year earlier, 4.4.In addition to the 2.4 FTE, one freelancer worked for FRES as of December 31, 2011. The number of FTEs including freelancer was 3.2 as of December 31, 2011.

The decrease in the personnel expenses in 2011 with regard to 2010 was directly caused by the decrease in the number of employees. During the year, three colleagues said goodbye and two colleagues went on pregnancy leave. One of these positions was filled with a temporary employee.

Costs management and administration The costs for management and administration amounted to 4.8%, in conformity with the budget. We refer you model C for this. 6.4 Remaining clarifications Percentage expenses on objectives In accordance with guideline 650 from the Board for Annual Reporting, a number of percentages is mentioned in the clarification below. Expenditure percentage The expenditure percentage amounted to 95% in 2011 (2010; 95%). The expenditure percentage are calculated as follows. The total amount spent on the objectives divided by the sum of expenditures. Assets percentage The assets percentage amounted to 182% in 2011 (2010: 108%).

The assets percentage is calculated as follows. The total amount spent on the objectives divided by the number of assets, received in 2011. These assets are excluding the withdrawals from reserves that were spent on activities in 2011.

Addition to funds Certain received subsidies are added to a designation fund, based on the subsidy conditions. The accountability for the utilization of these subsidies takes place via these designa-tion funds.

Balance designation funds

Number of employees As of December 2011, there were 2.4 paid FTEs (2010: 4.4 FTEs) at FRES.

Payment board members

The payment of the board members amounts to €0 (2010: €0 ). No loans, advances or guarantees were given to the board members.

31.12.2011 31.12.2010

Continuity reserve FRES Netherlands 250.000 250.000

Designation reserve for future projects 3.881.696 4.138.882

Designation fund financing assets 2.734 4.296

Designation fund donation Nuon 5.375.262 7.380.376

Designation fund Hivos 129.516 200.000

Designation fund EU Guinea-Bissau 264.847 -

Total 9.904.055 11.973.554

56

Single balance as of December 31, 2011

December 31 2011 December 31 2010

€ € € €

ASSETS

Fixed Assets

Material fixed assets 3.130.746 4.296

Financial fixed assets 191.640 -

3.322.386 4.296

Current Assets

Claims and prepayments and accrued income 517.910 95.389

Claims on Group companies 1.214.412 1.439.990

Stocks 8.557.266 9.636.701

Liquid means 150.017 1.420.481

10.439.605 12.592.561

Total 13.761.991 12.596.857

LIABILITIES

Reserves and Funds

Reserves

Continuity reserve FRES Netherlands 250.000 250.000

Designation reserve for future

projects 3.881.696 4.138.882

Designation reserve financing assets 2.734 4.296

Funds

Designation fund Donation Nuon 5.375.262 7.380.376

Designation fund Hivos/Uganda 129.516 200.000

Designation fund EU/Guinea-Bissau 264.847 -

9.904.055 11.973.554

Short-term debts and

Accruals and deferred income 729.924 623.303

Total 10.633.979 12.596.857

57

Single state of assets and expenditures of 2011

2011 Begroot 2011 2010

€ € €

Assets

Assets from our own fund raising 1.081.977 756.388 437.988

Subsidies 68.613 4.081.500 1.703.160

Sum of assets 1.150.590 4.837.888 2.141.148

Expenditures

Spent on objectives 2.919.999 5.798.888 2.802.958

FRES service costs spent on objectives:

Direct support Existing Companies 36.281 79.839 93.728

Direct support Expanding Companies 242.211 64.240 75.415

Direct support New Initiatives 31.158 207.816 243.968

FRES service costs management & administration:

Direct costs 114.493 113.464 124.036

Indirect costs and costs from investments 85.253 84.642 60.304

Sum of expenditures 3.429.395 6.348.888 3.400.409

Result 2.278.805- 1.511.000- 1.259.261-

Financial assets 243.557 300.000 879.247

Result participation Yeelen Kura 225.579- - 130.976-

Result participation FRES Uganda Ltd. 191.328

Result 2.069.499- 1.211.000- 510.990-

Clarification of the balance and state of assets and expenditures General principles for drawing up the annual account

General principles The single annual account was drawn up based on Guide-line 650 for fund raising institutions. The goal of this guide-line is to provide insight into the costs of the organization and use of the monies in relation to the goal for which the means were assembled. The annual account has been drawn up in Euros.

The principles of appraisal and of result determination for the single annual account and the consolidated annual account are equal.

For the principles of the appraisal of assets and liabilities and for the determination of the result, we refer you to the clarifications of the consolidated balance and state of assets and expenditures included on page 6 to 9.

Financial fixed assets Other claims The other claims mentioned under financial fixed assets include loans and obligations that will be kept until the expiration date. These claims are initially appraised against real value. Subsequently, these loans and obligations are appraised against the amortized cost price.

Special decreases of value are reduced on the amortized cost price and immediately accounted for in the state of assets and expenditure.

Participations The participations in the group companies are appraised on net capacity value as of the balance date. If this value is nil or negative, the participation is valued nil.

The claims on the participation are appraised against the nominal value.

If necessary, supplementing provisions are made, which are included under the provision participations.

58

Clarification of the differentiated funds of the balance

Financial fixed assets The course of the financial fixed assets during 2011 is as follows:

The participations in Yeelen Kura and SSD have been ap-praised at nil as of December 31 2011 and are therefore not separately visible in the balance financial fixed assets. Claims on group companies The claim on Yeelen Kura has been accounted for under the claims on group companies. Other clarifications of the single balance For the other clarifications, a reference to the clarification of the balance funds of the consolidated annual account 2011 suffices. Clarification of the state of assets and expenditure Other profits For the other clarifications of the state of assets and expenditure, we refer you to the clarification of the consoli-dated state of assets and expenditures 2011. Other information Statutory arrangement concerning the designation of the result No condition concerning the result designation has been included in the statutes of the foundation. Designation of the result of financial year 2011 The annual account 2011 was established in the board on April 27 2012. The board has established the designation of the result in conformity with the proposal. Proposal to designation of the result of financial year 2011 For the proposal of the division of the result of 2011, to the amount of €2,069,499 negative, we refer you to the over-view below.

This proposal has been included in the annual account.

Situation as of January 1, 2011 -

Added: Capital deposit 312

Added: Result participation 191.328

Situation as of December 31, 2011 191.640

Events after the balance date Uganda: In Uganda, the concession permits and subsidy agreement of government of Uganda were only received at the end of 2011 and the beginning of 2012. Consequent-ly, the company in Uganda could only start connecting the 250 customers intended for 2011 in 2012. At the end of 2011, only the first 6 “example customers” were connected.

Guinea-Bissau: In 2012, FRES obtained an EU subsidy for starting up a new company in Guinea-Bissau with the goal to connect 3,000 households and small companies within 4 years. The company was founded at the end of 2011. The director started as of January 1, 2012.

Currently, there is (political) unrest in Guinea-Bissau as the result of a coup. The consequences of the activities in Gui-nea-Bissau cannot be properly estimated yet. FRES keeps a close eye on the situation.

Mali: In 2012, FRES entered into an agreement for the deli-very of 6 solar power stations in Mali.

Currently, there is (political) unrest in Mali as the result of a coup. The consequences of the activities in Mali cannot be properly estimated yet. FRES keeps a close eye on the situation.

59

Situation as of Janu-ary 1, 2011

Result designa-tion 2011

Situation as of December 31, 2011

Continuity reserve FRES Netherlands 250.000 - 250.000

Designation reserve for future projects 4.138.882 257.186- 3.881.696

Designation reserve finan-cing assets 4.296 1.562- 2.734

Designation fund Donation Nuon 7.380.376 2.005.114- 5.375.262

Designation fund Hivos 200.000 70.484- 129.516

Designation fund EU/ Guinea-Bissau - 264.847 264.847

11.973.554 2.069.499- 9.904.055

Review declaration of an independent accountant

To: the board of the Stichting Rural Energy Services

We have reviewed the annual account 2011 of Stichting Rural Energy Services in Amsterdam included in this Annual report 2011 from page 40 up to page 59. This annual account consists of the consolidated and single balance as of December 31 2011 and the consolidated and single state of income and expenditures of 2011 and the clarification, which includes an overview of the underlying basis for financial reporting and other clarifications.

The board’s responsibilities

The board of the foundation is responsible for drawing up the annual account that should truthfully represent the property and the result in accordance with Guideline 650 for fund raising institutions of the Dutch Council for Annual Reporting. The board is also responsible for such an internal managements as is deemed necessary by the board for drawing up the annual account without deviations of material importance as a result of fraud or errors.

The accountant’s responsibility

Our responsibility is providing an evaluation of the annual account based on our review. We have performed our review in accordance with the Dutch law, including the Dutch standards for review. This requires that we meet the ethical regulations that apply for us and that we plan and perform our review in such a way that a reasonable extent of certainty is obtained that the annual account does not contain deviations of material importance.

A review includes performing activities to obtain review information with regard to the amounts and the clarification in the annual account. The selected activities dependent upon the form of evaluation applied by the accountant, including the estimation of the risk that the annual account contains a deviation of material importance as a result of fraud or errors.

When making this estimation, the accountant takes the internal management into consideration that is relevant to drawing up the annual account and to the truthful image of this, aimed at setting up review activities that are appropriate given the circumstances. However, the purpose of these risk estimations is not to judge the effectiveness of the internal management of the foundation. A review also includes an evaluation of the suitability of the used underlying basis for financial reporting and the reasonability of the estimations made by the board of the foundation, as well as an evaluation of the general image of the annual account.

We believe that the review information obtained by us suffices and is suitable to offer a substantiated evaluation.

Evaluation

In our opinion, the annual account gives a truthful image of the size and composition of the property of the Stichting Rural Energy Services as of December 31 2011 and of the result of 2011 in accordance with Guideline 650 for fund raising institutions of the Dutch Council for Annual Reporting.

Rotterdam, April 27 2012PricewaterhouseCoopers Accountants N.V.

Original signed by:

Drs. J. van Hoof RA

60

Part 5: Preview 2012 and beyond

FRES would like to provide over 55,000 households and small companies with electricity by 2016. In 2020, this number should be 100,000. The FRES companies in Mali and South Africa should be financially inde-pendent at the end of 2013. The FRES companies can offer a job to 250 people. The business plan 2012-2016 will be further interpreted via:

• Focusing on growth of existing companies;• Limiting customer dropout;• Expanding relationships with partners, such as

the World Bank and the EU;• Reducing non-payment at NuRa;• Using the technological development with

regard to batteries to reduce life cycle costs;• Finding a proper balance between rate increases

to realize financial durability and purchasing power of customers;

• Providing a good education for employees of FRES companies.

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In 2012 and the further future, all FRES companies strive for growth in number of customers, professionalizing the companies and the employees and further optimization of the systems, the maintenance and the service to cus-tomers.

In 2012, a study will be conducted into the impact of elec-trification on the local economy in rural areas.

Yeelen Kura in Mali

Yeelen Kura would like to realize 10,000 customers in 2016 by increasing both the number of customers for SHS and for mini-grids on solar power. We do this by cooperating with local governments via intensive marketing actions among the target groups. The company is working on financial independence. By separating the three products (SHS, mini-grids on solar power and mini-grids on diesel), clarity in terms of cost price of each product arises. Six new solar power stations will be built in 2012. We are starting a pilot project with prepayment meters to reduce the pay-ment arrears of customers.

NuRa in South Africa

In South Africa, NuRa works, via solid growth in the num-ber of customers, toward financial independence of the company. We are working on fighting non-payment and further professionalizing the company with an action plan that will affect the entire organization. In 2012, NuRa will install nearly 4,800 SHS. In 2016, NuRa would like to serve 29,000 customers.

Yeelen Ba in Burkina Faso

A quick rise in the number of customers is a main goal for Yeelen Ba in the coming period after having lowered the rate at the beginning of 2012. The goal is to provide 4,500 households and small business with electricity by 2016. Therefore, the company would like to grow from 468 to 1,500 in 2012. Yeelen Ba will grow through intensifying his marketing activities and expanding the area in which cus-tomers can be attracted.

16. Preview FRES companies

FRES Uganda Ltd. in Uganda

In Uganda, we will install 800 SHS in Mbarara in 2012 and we will expand with the first energy store in one of the other districts. We will focus on the customers, the quality and the service to realize the first growth. For employees, we are working on facilities such as health insurance and disability insurance. In 2016, 6,000 customers need to be connected in Uganda.

FRES Guinea-Bissau

In 2012, the new company will start a market study into what customers can spend on electricity. FRES Guinea-Bissau also investigates on which villages the company should focus to connect the first customers. A European tender will be written for the delivery of 1,000 SHS. 250 cus-tomers should be connected in 2012. In 2016, that number should be 3,500.

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Realized and expected growth in number of customers FRES companies 2000-2016

Realized and estimated growth in number of customers per FRES companies between 2010-2016

0

10000

20000

30000

40000

50000

60000

2016201520142013201220112010

New initiativesFRES Guinea-BissauFRES Uganda Ltd.Yeelen BaYeelen KuraNuRa

Number of customers

0

10000

20000

30000

40000

50000

60000

20162015201420132012201120102009200820072006200520042003200220012000

63

17. Preview FRES in the Netherlands

FRES contributes to realizing the objectives of the FRES companies with a small, alert organization in Amsterdam and a large number of volunteers, experts and suppor-ters.

Risk management

The board and the Supervisory Board employ a policy aimed at limiting the risks on a number of main issues: slow growth in the number of customers, financial indepen-dence of the FRES companies, non-payment issues and the transportation expenses.

Organization

We will continue to work with a small team of permanent employees and a larger team of (temporary) experts and supporters. The organization is reinforced by a Director of Operations in addition to the Director Business Develop-ment.

Partners

We further increase our network of partners, each with their own contribution in terms of money, time and/or knowledge, by good relationship management via board members, the Supervisory Board, Boards of Commissioners and employees.

Fund raising

For the investments in the period 2012-2016, an invest-ment of over €35 million is needed. We will unabatedly work to attract subsidies and business donations for the ambitions of 2016-2020. We hope to solve the impasse with DGIS.

We do not actively recruit private donors ourselves; we do this via our partners whenever possible.

Communication

Communication in 2011 was characterized by further sup-port reinforcement with (potential) experts, volunteers, stakeholders, partners and the interested public. We will again employ regular means such as the digital newslet-ter and stakeholders meetings for the communication. We will also use the website, our social media and the annual report again.

64

FRES has the following objectives for 2012:

FRES will invest an estimated €6.3 million in 2012. At the end of 2012, a total of 24,000 customers will be connected to electricity.

1. Expanding the FRES companies in South-Africa, Mali and Burkina Faso.

• NuRa, South Africa: At the end of 2012, the total num-ber of customers will amount to 15,500. We will install 4,792 SHS, but also expect to remove a few SHS from existing customers, resulting in a net growth of 2,980 customers in 2012.

• Yeelen Kura, Mali: At the end of 2012, the total num-ber of customers will amount to 6,128, a net growth of 2,304 customers in 2012. We will install six new solar power stations that will be operational in June 2012. We attracted 934 new SHS customers thanks to inten-sive market efforts.

• Yeelen Ba, Burkina Faso: We will connect over 1,000 new customers. This will bring the total number of customers of the company to 1,500 at the end of 2012.

2. FRES Uganda will attract 850 customers.

3. In Guinea-Bissau, the FRES company will connect its first 250 customers in 2012.

4. The financial performances of the existing FRES com-panies will be improved by customer growth and by im-proving the operational performance, such as reducing non-payment and improving customer retention.

• NuRa will implement the action plan that was esta-blished in 2011 to address the non-payment issues.

• Yeelen Kura looks for compensation for the mini-grids on diesel that generate loss and decreases the inde-pendence on diesel by installing six solar power sta-tions.

• NuRa and Yeelen Kura show that they are on track to become financially and economically durable in 2013.

5. Attracting extra professional expertise that works for FRES on a voluntary basis with various specialist know-ledge.

6. Attracting subsidies to the value of €4 million.

7. We will conduct a study into the impact of electrifica-tion in the rural areas FRES operates in.

18. Objectives 2012 and beyond

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19. Budget 2012

Budget 2012 (in Euros)

Assets 2011

Assets from own funds 2.491.879

Contribution service expenses 152.552

Sponsoring by companies and private persons in kind -

Private and business donations 10.522

Withdrawal from Designation reserve for future projects and other reserves 80.134

Withdrawal from Designation fund Dona-tion Nuon 2.005.114

Interest from own property 243.557

Project subsidies (committed*) 987.516

Yeelen Kura, Mali (World Bank) -

Yeelen Ba, Burkina Faso (EU) (196.234)

Yeelen Ba, Burkina Faso (Nuon)

Nuon PPP 918.903

FRES Guinea-Bissau, Guinea-Bissau (EU) 264.847

FRES Uganda Ltd., Uganda (Stichting Doen) -

FRES Uganda Ltd., Uganda (World Bank)

Project subsidies (non-committed*) -

NuRa, South Africa (DGIS) -

FRES Benin, Benin (DGIS) -

Total Assets

3.479.395

*This only applies to the budget of 2012

Clarification on assets

A part of the income goes via the balance. This income can only be viewed as asset if there are concrete expenses that can be accounted for with regard to this income. Assets from own fund Contribution service expenses

The agreement with Nuon, with an original duration of five years, concerning the contribution to service expenses ended in 2011. Currently, FRES is looking for a new party for the contribution in the service expenses. We are cur-rently speaking with Alliander. However, since there is no certainty with regard to this contribution at the moment, this has not been included in this budget.

Project subsidies (committed*)

• Yeelen Kura, Mali (World Bank): Currently, the formali-ties concerning receiving the subsidy from the World Bank have been completed and therefore, the subsidy has been granted. We expect to receive the complete subsidy before the end of September 2012.

• Yeelen Ba, Burkina Faso (EU): We expect that a request for an advance of €200,000 will be submitted at the EU in the course of 2012. We expect that the advance will be received in the fourth quarter of 2012.

• FRES Guinea-Bissau, Guinea-Bissau (EU): The subsidy has been granted. The first advance payment has been received. The second advance will be received in 2012.

• FRES Uganda Ltd., Uganda (Stichting Doen): The subsi-dy requests for FRES Uganda Ltd. with Stichting Doen and the Government of Uganda has been granted.

Project subsidies (non-committed*)

The DGIS-funds remained fixed in 2011. Commitments that were agreed upon for 2011 and for which DGIS-funds were expected, have been paid with our own means.

We expect that DGIS will provide decisive answers with regard to availability of the funds for 2012 in April 2012. When the decision is positive, the contribution from our own means will be lower than the budget states.

66

Clarification of expenditures

Active projects • Yeelen Ba, Burkina Faso (EU): The most important

activities in 2012 concern attracting customers for the remaining systems from the first tranche of 1,000 SHS that was purchased in 2010 and executing an EU ten-der of 2,000 SHS.

Companies (committed*)

• Yeelen Kura, Mali: In 2012, investments will be made for the purchase of prepayment meters (if the results from the pilot project are positive) and to replace parts of SHS.

• NuRa, South Africa: In 2012, investments will be made to replace and renew SHS.

• FRES Uganda Ltd., Uganda: The money is used for the daily management. No investment is needed to replace parts of the systems since the ordered systems from 2010 will be placed.

Expansion companies (committed*)

• Yeelen Kura, Mali: In 2012, six new solar power stations will become operational. The total investment amounts to €2,952,112. AMADER/the World Bank will be responsible for €1,901,649 of this and FRES will pre-finance €1,050,363 of the total amount and will expect to receive 100% of the contribution from AMA-DER in September 2012. Moreover, an investment of €200,000 is planned for a new SHS.

• NuRa, South Africa: NuRa will roll out the second tranche of 4,000 systems in 2012. FRES will contribute 20% (€600,000) in conformity with existing agree-ments. Because the monies were already committed, FRES will finance the amount from the PPP-budget (part Nuon).

• FRES Uganda Ltd., Uganda: Should the unfolding of the 600 purchased systems in 2012 be successful, FRES will purchase 1,000 new systems to secure con-tinuity with regard to connecting customers in 2013.

New initiatives (committed*)

• FRES Guinea-Bissau, Guinea-Bissau: The EU-subsidy contract has been signed. The company will be foun-ded in 2012 and start-up activities will take place. An order will be made for the purchase of 1,000 SHS via an EU tender.

• New initiatives: Various marketing studies will be con-ducted to investigate the potential of rural electrifica-tion in Cameroon and Somalia. This will be realized by volunteers and the expenses will be kept as low as possible.

New initiatives (non-committed*)

FRES Benin, Benin: We decided not to start a FRES company in Benin for the time being.

Budget 2012 (in Euros)

Expenditures 2011

FRES Service expenses 509.396

FRES Service expenses - spent on objectives 309.650

FRES Service expenses - management and administration 199.746

Active projects (committed*) 292.342

Yeelen Ba, Burkina Faso (EU) 292.342

Companies (committed*) 677.787

Yeleen Kura, Mali 81.027

NuRa, South Africa 435.574

FRES Uganda Ltd., Uganda 161.186

Expansion companies (committed*) 1.981.307

Yeelen Kura, Mali 1.174.231

NuRa, South Africa 532.820

FRES Uganda Ltd., Uganda 274.256

New initiatives (committed*) 14.303

Guinea -Bissau 14.222

New initiatieves other countries (Cameroon, Somalia) 81

New initiatives (non-committed*) 4.260

Benin 4.260

Total expenditures 3.479.395

*This only applies to the budget of 2012

67

Appendices

Appendix 1: Terminology

ANBI: An ANBI marked as such by the Tax Authorities does not have to pay inheritance tax or gift tax for received inheritances and gifts in the framework of the general ben-efit. Moreover, a donor can deduct the gift from the income and partnership tax, depending on the form in which the gifts were donated.

Business plan: a plan for starting a new FRES company or for the expansion of an existing FRES company. The plan contains the following elements: the partner choice, the expected number of customers, the target group of the company that is to be founded, the time schedule, the prognosis of the expenses and assets of the first years and a substantiated financing plan. We use the business plan for subsidy applications for the company concerned.

Concession area: the area the FRES company receives a permit for from the local government to provide its ser-vices.

DGIS: The Directoraat-generaal Internationale Samen-werking (DGIS) is part of the ministry of Foreign Affairs.

Fee-for-service: the customer pays a monthly fee for the access to electricity. The height of this fee is dependent upon the chosen service level. This guarantees the mainte-nance of the necessary technical system.

IOB: the Inspectie Ontwikkelingssamenwerking & Beleidsevaluaties (IOB, the Inspection Development cooperation & Policy evaluations) is the evaluation depart-ment of the ministry of Foreign Affairs.

Mini-grid: A small electricity network one village is con-nected to. The households are provided with power via an electricity cable that runs from house to house.

CSR: corporate social responsibility (CSR) is a form of en-terprising aimed at economic performance (profit), with respect for the social side (people), within the ecological boundary conditions (planet).

Non-payment: payment arrears of customers of at least two months for the system and/or the service they have requested.

Public-private partnership (PPP): A cooperation agree-ment between the government and business world. In 2008, FRES, Nuon and the ministry for Development Cooperation signed a PPP. The partnership resulted from the Agreement of Schokland, which is aimed at bringing the Millennium Development goals closer.

Board of Commissioners (BoC): supervisor of a FRES com-pany.

Supervisory Board (SB): supervisor of FRES.

Rural electrification: to give rural areas access to electri-city.

Service level: every FRES company offers various service levels, on which the amount of electricity that is delivered varies. The customer has access to a specific number of lamps and electric sockets per service level or he pays an amount per kWh in case of a higher use.

SHS (Solar Home System or Solar Home Systems): a stan-dard SHS consists of a battery, controller and a solar panel. This system delivers sufficient energy for several lamps and electric socket(s) for a radio, ventilator, cell phone charger or a TV for approximately 4-5 hours a day.

Stakeholder: a person or organization that is influenced (positively or negatively) by or influences FRES.

kWh: the average capacity that is used during one hour.

Watt peak (Wp): the nominal output capacity of a solar panel, tested in standard conditions (STC, Standard Test Conditions).

Solar power: electricity generated from solar power.

6868

Appendix 2: Clarification composition of the organization

Appendices

• President Goedmakers B.V.• Chair Foundation Chimbo• Chair Executive Committee Daridibó

• Freelance Management Consultant

• Chairman Southern Rowing Association• Industrial Advisor Stan Ackermann Institute

Composition management

Who (Additional) functions Role Period Reappointment possible?

Annemarie Goedmakers Chair 2009/2014 yes (CEO)

Serge Leijten Treasurer 2010/2015 yes (CFO)

Harry Droog Board member 2009/2014 yes (COO)

Composition Supervisory Board

Who (Additional) functions Role Period Reappointment possible? Aad Veenman Chairman 2009/ yes 2013

Peter Smink Secretary 2010/ yes(on behalf of Nuon) 2014

Pieter van Geel Member 2011 does not apply(July until December 2011)

• Chairman Board of Commissioners GVB• Chairman Board of Commissioners Wo-

ning Corporatie Woonbron Rotterdam• Chairman Board of Commissioners

Trans Link Systems• Chairman Board of Commissioners

TenneT BV• Member Supervisory Board Energy

Center Netherlands (ECN)

• Member Management Board, Chief Financial Officer, NV Nuon Energy

• Head of Group Finance Vattenfall, Chief Financial Officer Vattenfall AB

• Member Executive Committee, Amsterdam Partners

• Member Board of Commissioners, Yellow and Blue

• Chairman Supervisory Board Public broadcasting NTR

• Chairman Supervisory Board Ons Middelbaar Onderwijs (OMO)

• Chairman Supervisory Board Koninklijke Kentalis

• Chairman Supervisory Board Elkerliek hospital

• Member Board of Commissioners Air-traffic control Netherlands

• Member Board of Commissioners COVRA• Member Board of Commissioners

Goede Doelenloterij

6969

Employees in the Netherlands

Overview employees FRES Netherlands 2009-2011

Paid employees 31-12-2009 31-12-2010 31-12-2011 Number of employees 7 6 3Man/woman ratio 2/5 1/5 0/3Contract definite/indefinite 7/0 6/0 3/0 Fulltime/part-time-ratio 3/4 1/5 1/2 Number of FTE´s 6 4,4 2,4Av. absence through illness 7% 2% 5,2% Av. age 31 36 38 Inflow/outflow 2/1 1/2 0/3 Number of freelancers 2 1 1 Inflow/outflow freelancers 2/1 1/2 1/0

Paid employees

• Alex Earl – Business Developer (from 2009 to March 2011)• Caroline Nijland – Director Business Development (from 2007)* • Emmanuelle di Rito – Project Leader/Legal Counselor (from 2008 to April 2011)• Frederique Schlicher-Wijtenburg – Manager Administration (from 2010)* • Inge Vesters – Project Manager Communication & PR (from 2008 to November 2011)• Mattijs Jongmans – Business Developer (from April 2011 up to September 2011) • Merel van Hooft – Senior Business Analyst (from 2008)*• Sabah El Miloudi – Project Assistant (2011)

General Managers FRES companies• Yeelen Kura, Mali: Amadou Diallo (until June 2011), Djibril Séméga (as of July 2011)* • NuRa, South Africa: Sifiso Dlamini*• Yeelen Ba, Burkina Faso: Walter de Roo (until October 2011) and Emmanuel Sanou (temporary from October 2011)*• FRES Uganda Ltd., Uganda, Peter de Wit*

* In service on 31-12-2011

Unpaid employees

Board• Annemarie Goedmakers – Chief Executive Officer (CEO/chairman)• Serge Leijten – Chief Financial Officer (CFO/treasurer) • Harry Droog – Chief Operation Officer (COO/board member)

Board of Commissioners FRES companies

Yeelen Kura, Mali:• Rob Costermans – chairman• Liliane de Jager – member (as of May 2011)

NuRa, South Africa:• Bart Blokland – chairman • Coen de Ronde – member

(continued on next page)

Bijlagen

70

Yeelen Ba, Burkina Faso:• Rob Costermans – chairman• Liliane de Jager – member (as of May 2011)• Amadou Diallo – member (as of June 2011), on behalf of shareholder Yeelen Kura• Djibril Séméga – member (as of July 2011), on behalf of shareholder Yeelen Kura

FRES Uganda Ltd., Uganda:• André Kuiper – chairman • Marjolein Quené – member

Advisors and experts• Abdilaziz Musa – Research Somaliland • Albert Ansink – Advisor and designer financial model • Damon Dreke – Research Mozambique• Dennis de Jong – Research into central purchase of SHS in relation to quality control, cost reduction,

logistics improvement and flexibility • Frans Nieuwenhout – Advisor evaluation EU tenders (technical specifications)• Gieljan Beijen – GRI and annual report• Hamadou Tchiemogo – Research batteries and chargers• Hans Nillesen – Standard operational manual / PUM senior expert• Harry Reijngoud – Fleet management NuRa/PUM senior expert• Jan Boekelman – Advisor capacity management• Mukhtar Hassan – Research Somaliland• Nico van Basten – Feasibility study Micro Hydro Power• Rob Costermans – Advisor investments

Interns• Bob van den Engel – Master in Business Studies at the University of Amsterdam (UvA): desk research into the market in

Cameroon• Erik Groothuis – Master in Business Studies at the University of Amsterdam (UvA): market analysis of Sub-Sahara Africa• Sandra Groen – Education Communication employee B/Junior Advisor Van der Hilst Communication: analysis of donor

policy and donor plan

71

Appendix 3: Accountability declaration

FRES endorses the Code Proper Management for Charities (Code Wijffels) and acts in conformity with this code:

Principle 1: Separation between the functions supervising, managing and executing

FRES is a foundation with a clear separation between the functions supervising, managing and executing. The Supervisory Board supervises the way the board operates and whether this is done with the established policy con-ditions. The board manages FRES. The three board mem-bers function as the management, determine the policy and monitor the execution of the policy by the rest of the organization. Additionally, the board manages the work organization. At the local FRES companies in Africa, the Boards of Commissioners of every company are respon-sible for the supervisory tasks and the General Managers manage the employees in the companies.

External supervision is done by PwC (accountant’s review), ING (property management and durable investment port-folio) and our private and business donors and subsidizers (via stakeholders meetings, the annual report and repor-ting).

Principle 2: Optimal use of resources

We strive for an effectiveness-percentage of monies that is as high as possible. A multiple-year budget is part of this. On the basis of the multiple-year business plan, we esta-blish an annual plan and annual budget every year, which are evaluated and actualized at the end of each year.

Principle 3: Optimal relationships with interested parties

FRES cooperates closely with national and local govern-ments, subsidizers, volunteers, business relations and edu-cational institutions. A proper, open and honest commu-nication is highly important to us. We would like to create wide support for rural electrification. By means of various meetings and (online and offline) publications, we inform our stakeholders (stakeholders meetings, digital newslet-ter, website www.fres.nl, yearly report and social media). The annual report and the annual account can be request-ed and can be found on the website.

Deviations Code Wijffels

5.5.g The statutes do not yet stipulate specific rules for occurrences of conflicts of interest and how to handle such situations. We are working on this.

Bijlage 4: GRI-index

In connection with striving for a compact annual report, the GRI-index can be found on www.fres.nl.

72

Colophon

This is a publication of FRES, May 2012

(Final) editors: Donja Yzenbrandt (www.donjaenco.nl) and Rob Vooren

Photography: Archive FRES, Marion Bargès,Filip Polfliet

Design: Filip Polfliet ([email protected])

Translation:Textwerk - Zwolle (www.vertaalbureau-textwerk.nl)

Printing: Printer Macula - Waddinxveen (www.macula.nl)

This annual report is produced on FSC-certified, 100% chlorine free paper, made of sustainable wood that comes from sustainable plantations.

This annual report is digitally available on our website www.fres.nl, just like the previous annual reports.

Address information

FRES (Foundation Rural Energy Services)Amstel 491011 PW AmsterdamThe Netherlands

PO-Box 152471001 ME Amsterdam

Tel.: +31 (0)20 528 90 56Fax: +31 (0)20 528 67 16Email: [email protected]: www.fres.nl

FRES can also be followed via:

73

FRES (Foundation Rural Energy Services)

Amstel 491011 PW AmsterdamThe Netherlands

PO-Box 152471001 ME Amsterdam

+31 (0) 20 528 90 56+31 (0) 20 528 67 16

[email protected]

www.fres.nl

Nuon is main sponsor of FRES

fres annual report 2011

Documents

fres companies

fres uganda

local companies

south africa

companies nura

new fres company

number of new customers

number of customers