Notes to the consolidated balance sheet: liabilities

13. Short-term credits

 

2019

2018

Collateral received (related to derivative financial instruments)

94,339

76,051

Balance at December 31

94,339

76,051

Short-term credits reflect the cash collateral received for derivative contracts we held with positive value. We also refer to the section 'Counterparty credit risk' in the Risk Management chapter.

14. Current accounts with State funds and other programs (liability)

 

2019

2018

Current account MASSIF

110

-

Current account Building Prospects

1,117

11

Current account Access to Energy Fund

-

89

Current account Development Accelarator

1,592

4,073

Current account DFCD

13

-

Balance at December 31

2,832

4,173

15. Debentures and notes

Debentures and notes includes issued debt instruments in various currencies under FMO's Debt Issuance Programmes. In addition, a subordinated note of €175 million is also included in the Debenture and Notes. Under IFRS this note is classified as financial liability, but for regulatory purposes it is considered as Tier 2 capital. This note was issued on December 8, 2015 with a maturity of five years. The note is issued at 99.28% of the aggregated nominal amount at a fixed coupon rate of 1.5%. The note is non-convertible and can be called on first call date or the call date can be extended for another five years.

The movements can be summarized as follows:

 

2019

2018

Balance at January 1

5,139,881

5,123,146

Amortization of premiums/discounts

4,923

6,208

Proceeds from issuance

1,704,123

984,758

Redemptions

-1,142,217

-1,006,646

Changes in fair value

46,375

6,099

Changes in accrued expense

18,007

4,352

Exchange rate differences

37,090

21,964

Balance at December 31

5,808,182

5,139,881

Line item 'changes in fair value' represents the fair value changes attributable to the hedge risk in connection with the debentures and notes used for hedge accounting purposes.

The following table summarizes the carrying value of the debentures and notes.

 

2019

2018

Debentures and notes under hedge accounting

3,773,180

2,697,095

Debentures and notes valued at AC

2,035,002

2,442,786

Balance at December 31

5,808,182

5,139,881

The nominal amounts of the debentures and notes are as follows:

 

2019

2018

Debentures and notes under hedge accounting

3,646,496

2,605,045

Debentures and notes valued at AC

2,011,031

2,451,277

Balance at December 31

5,657,527

5,056,322

16. Accrued liabilities

 

2019

2018

Other accrued liabilities

22,983

10,086

Balance at December 31

22,983

10,086

17. Other liabilities

 

2019

2018

Costs related to guarantees

279

322

Payments to third parties

14,774

-

Lease liabilities

23,509

-

Other liabilities

5,397

1,009

Total other liabilities

43,959

1,331

Lease liabilities arise from IFRS 16 implementation as per January 1, 2019. For a breakdown of the lease liabilities, reference is made to Note 'Property, Plant and Equipment'

18. Provisions

The amounts recognized in the balance sheet are as follows.

 

2019

2018

Pension schemes

39,588

45,876

Allowance for loan commitments

6,274

4,485

Allowance for guarantees

2,092

3,009

Other provisions

1,486

1,177

Balance at December 31

49,440

54,547

The movements in allowance for loan commitments and liabilities for guarantees are set out in 'Off - balance sheet information' section.

Pension schemes

FMO’s pension schemes cover all its employees. The pension schemes are defined benefit plans and are mostly based on average-pay-schemes. FMO has a contract with a well established insurer, in which all nominal pension obligations are guaranteed. 

The amounts recognized in the balance sheet are as follows:

 

2019

2018

Present value of funded defined benefit obligations

270,013

220,941

Fair value of plan assets

-230,425

-175,065

Liability in the balance sheet

39,588

45,876

The movements in the present value of the defined benefit obligations can be summarized as follows:

 

2019

2018

Present value at January 1

220,941

200,777

Service cost

13,287

11,333

Interest cost

4,882

4,017

Actuarial (gains)/losses due to changes in financial assumptions

39,740

-12,295

Actuarial (gains)/losses due to changes in demographic assumptions

-10,767

-2,914

Actuarial (gains)/losses due to experience assumptions

5,070

22,993

Benefits paid

-3,140

-2,970

Present value at December 31

270,013

220,941

The movements in the fair value of plan assets can be summarized as follows:

 

2019

2018

Fair value at January 1

-175,065

-154,464

Expected return on plan assets

-3,877

-3,104

Employer contribution

-10,540

-9,616

Plan participants’ contributions

-1,318

-1,143

Actuarial (gains)/losses due to changes in financial assumptions

-45,491

9,125

Actuarial (gains)/losses due to changes in demographic assumptions

-

3,592

Actuarial (gains)/losses due to experience assumptions

2,726

-22,425

Benefits paid

3,140

2,970

Fair value at December 31

-230,425

-175,065

The actuarial gain on the pension liability amounts to €8,722 (2018: €1,923 gain) and is mainly due to updated career merit rates, individual turn over rates and indexation assumptions.

As per 1 January 2017, FMO’s investment account with the pension insurer has been terminated. No direct asset allocation is held in relation to the new pension insurance contract. Therefore, the fair value of the plan assets can no longer be determined based on a certain asset allocation. Due to this, paragraph 115 of IAS 19 has been applied in estimating the fair value of plan assets based on accrued pension rights and actuarial rates.

The movement in the liability recognized in the balance sheet is as follows:

 

2019

2018

Balance at January 1

45,876

46,313

Annual expense

13,729

11,819

Contributions paid

-11,295

-10,333

Actuarial gains/losses

-8,722

-1,923

Balance at December 31

39,588

45,876

The amounts recognized in the profit and loss account as net periodic pension cost are as follows:

 

2019

2018

Current service cost

14,042

12,049

Net interest cost

1,005

913

Subtotal

15,047

12,962

Contribution by plan participants

-1,318

-1,023

Total annual expense

13,729

11,939

The principal assumptions used for the purpose of the actuarial valuations at year-end are as follows:

 

2019 (%)

2018 (%)

Discount rate

1.2

2.2

Expected pension indexation for active participants

1.3

1.7

Expected pension indexation for inactive participants

0.3

0.6

Wage inflation

1.5

1.5

Future salary growth

0.7-4.0

0.5-3.5

The assumption for future salary growth is a range of percentages which are based on the age of individual employees. The pension indexation is conditional.

Significant actuarial assumptions are the discount rate, indexation for active participants and (general) wage inflation. Reasonably possible changes to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

 

Increase (+0.5%)

Decrease (-0.5%)

Discount rate

-33,842

-39,739

Increase indexation for active participants

5,107

-4,410

Future salary growth

877

-953

Other provisions

The other provisions are provisions for legal expenses and severance arrangements. These provisions are determined using present value calculations.

 

2019

2018

Balance at January 1

1,177

275

Addition

1,486

1,177

Release

-

-

Paid out

-1,177

-275

Balance at December 31

1,486

1,177

19. Shareholders’ equity

Share capital

The authorized capital amounts to €45,380, consisting of A shares of €22.69 each, which are held by the Dutch State, and B shares of €22.69 each as well, which are for held by commercial banks and private investors. The Dutch State holds 51% of the total shares of FMO, while commercial banks and private investors hold the remaining 49%. The voting rights for A shares and B shares are equal. In addition, the equity of the company comprises of three reserves, which result from the Agreement State-FMO of November 16, 1998. These are the share premium reserve, the development fund and the contractual reserve. As long as the company continues its activities, these reserves are not available to the shareholders. Upon liquidation of FMO these reserves fall to the Dutch State, after settlement of the contractual return to the shareholders.

 

2019

2018

AUTHORIZED SHARE CAPITAL

  

1,020,000 A shares x €22.69

23,144

23,144

980,000 B shares x €22.69

22,236

22,236

Balance at December 31

45,380

45,380

   

ISSUED AND PAID-UP SHARE CAPITAL

  

204,000 A shares x €22.69

4,629

4,629

196,000 B shares x €22.69

4,447

4,447

Balance at December 31

9,076

9,076

Share premium reserve

Share premium reserve is sole contributed by Shareholders of A shares on the transfer to the company of investments administrated on behalf of the State at the time of the financial restructuring and amounts to €29,272 (2018: €29,272).

Contractual reserve

The addition relates to that part of the annual profit that FMO is obliged to reserve under the Agreement State-FMO of November 16, 1998 (see section ‘additional information’).

Development fund

This special purpose reserve contains the allocation of risk capital provided by the State to finance the portfolio of loans and equity investments. 

Fair value reserve

Total fair value reserve

  
 

2019

2018

Balance at January 1

17,773

18,074

Total other comprehensive income (net of tax)

15,309

-301

Balance at December 31

33,082

17,773

Actuarial result pensions

Actuarial gains/losses on defined benefit plans

  
 

2019

2018

Balance at January 1

-21,123

-21,369

Gains/losses during the period

7,149

246

Balance at December 31

-13,974

-21,123

Translation reserve

 

2019

2018

Balance at January 1

-6,758

-16,696

Change

4,016

9,938

Balance at December 31

-2,742

-6,758

Other reserves

Retained earnings

2019

2018

Balance at January 1

32,162

32,162

Dividend

-

-

Balance at December 31

32,162

32,162

Non-controlling interests

Equis DFI Feeder L.P.

2019

2018

Balance at January 1

161

7,071

Fair value changes

-99

-815

Changes in subsidiary

12

-6,407

Share in net profit

49

312

Balance at December 31

123

161