Annual Report 2016 Max Havelaar Foundation (Switzerland)

ANNUAL REPORT 2016

MAX HAVELAAR FOUNDATION (SWITZERLAND)

A SUCCESSFUL YEAR ON ALL SIDES Turnover in Fairtrade products saw a 21% increase in Switzerland in 2016, rising to 628 million Swiss francs.

This meant that, in addition to achieving a fair price for their goods, producers also received around 10 million dollars in Fairtrade Premiums.

The demand for sustainable consumer goods is flourishing in Switzerland, and the Swiss population has never been hungrier for Fairtrade products. The 628 million Swiss francs’ worth of goods represent a 20.7% increase on the previous year’s turnover. Every Swiss citizen spent an average of 75 francs on Fairtrade products during the year, despite the continued stagnating or perhaps even worsening market conditions.

Offering over 2,800 Fairtrade products between them, hundreds of licensed market partners, registered gastronomy partners, florists and goldsmiths have contributed towards this excellent result through their outstanding commitment to Fairtrade.

The turnover in cocoa, coffee and fruit juices saw substantial growth. This was in no small part due to significant conversions to Fairtrade in the retail sector for seasonal chocolate products, coffee capsules, exotic fruits and cane sugar products. Bananas, too, experienced a record high, although, for the first time ever, they were not the Fairtrade product with the highest turnover.

Composite products now have the highest turnover amongst Fairtrade categories, with the drivers of growth here being baked goods, ice-creams and other dairy products. The most frequently

used Fairtrade raw ingredients in these composite products are cane sugar, cocoa and fruit components.

For Max Havelaar, 2016 was also marked by the 15th anniversary of Fairtrade flowers, which continue to be one of the strongest Fairtrade categories, despite having suffered some declines in sales and turnover. The underlying reasons for this are mainly to be found in the phenomenon of shopping tourism abroad, and in the trend for buying seasonal flowers.

The range of Fairtrade gold products available on the market once again increased, and the new jewellery items and small gold bars were particularly popular during the Christmas trading period.

In spite of these many encouraging figures, there remains a great deal to be achieved. Many Fairtrade producers are still unable to sell satisfactory quantities of their products under Fairtrade.

Currently, only 40% of producer organisations are able to sell more than 40% of their yield on Fairtrade terms.

Long-term trading relationships based on cooperative partn­ er­ ships are at the heart of the Fairtrade concept. The Minimum Price offers producer families financial security, while the additional Fairtrade Premium provides opportunities for all-important investments. Thanks to the Fairtrade products sold in Switzerland alone, Fairtrade-certified producer organisations in Latin America, Africa and Asia received around 10 million dollars in Fairtrade Premiums in 2016. The small-scale farmers and workers invest this money in projects which benefit the community at large, such as the construction of schools and hospitals.

ANNUAL ACCOUNTS AND FINANCIAL STATEMENT 2016 With strong growth in volumes experienced on the one hand, and the economies of scale passed on to our business partners through a degressive pricing model on the other, the Max Havelaar Foundation’s 2016 financial statement shows a healthy bottom line.

The strategic orientation of the Max Havelaar Foundation over the past few years has allowed a continual lowering of the license fee, and since the beginning of 2016 in particular, the fee model has deliberately been more degressively structured. Income from license fees therefore fell by 6% from the previous year’s level, to around 7.5 million Swiss francs. However, the impact of this drop on the bottom line was less significant than expected, thanks to the strong growth in volumes.

Other operating income rose by around 83,000 Swiss francs to CHF 404,000. This position consists mainly of recharged services to the international Fairtrade system. With several key international roles formally being newly affiliated to the Max Havelaar Foundation in 2016, the income from recharging increased accordingly.

Expenditure for international cooperation fell by 21% to around 2.1 million Swiss francs, primarily due to the fact that the Max Havelaar Foundation had allocated an extra 290,000 francs the previous year to finance projects in the areas of coffee and gold.

In addition, accruals had been created in 2014 and 2015 to cover additional membership contribution charges by the Fairtrade International umbrella organisation, and these accruals were then reversed in 2016 on receipt of the final accounts for the two previous years, thereby reducing the expenditure for international cooperation by 204,000 Swiss francs.

Personnel costs increased by 6.8%, or 240,000 Swiss francs, to around 3.8 million francs. These costs included expenditure to the tune of 220,000 francs for new activities in respect of the international Fairtrade system. The accruals for employees’ overtime and holiday credits were reduced by CHF 31,000.

Efforts to reduce administration costs once again paid off, and these fell by 10.2% to 601,000 Swiss francs. The savings resulting from the amalgamation of the Basel and Zurich offices were in effect for the full year for the first time, while the relocation costs of the previous year were absent.

Expenditure on marketing and communications saw a small rise of 2% to 849,000 Swiss francs. Alongside the regular activities, as part of the celebrations for the 15th anniversary of Fairtrade flowers an event spanning several days was organised in Zurich’s main railway station to raise public awareness of Fairtrade.

Depreciation of property saw a marked decrease, falling by 44.6% to 102,000 Swiss francs. One-time depreciation costs had been entered for the previous year due to the office move.

The positive financial result primarily reflects gains on temporarilyheld foreign currencies. The ordinary earnings amounted to 512,000 Swiss francs, just below that of the previous year’s result. The Max Havelaar Foundation provisioned 408,000 francs in the organisational capital for programme work within the international Fairtrade network in the areas of coffee and business development. The year-end result therefore stands lower than that of the previous year, at 133,000 Swiss francs.

The Max Havelaar Foundation regards this year-end result as confirmation that it is charting a sustainable strategic course, and is confident of being able to further develop Fairtrade well into the future.

BALANCE SHEET Assets CHF

PROFIT AND LOSS ACCOUNT Note1 31.12.2016 31.12.2015

Note1 2016 2015

Current assets

License income from third parties

Liquid assets

Income from trade/services

4.1

3 844 758

3 961 666

Trade/services receivables

4.2

2 104 132

1 769 953

Other receivables from third parties

7 487 784

7 968 029

7 487 784

7 968 029

Income from earmarked donations

333

333

Income from donations 333 333 Other operating income

404 538

321 797

90 181

90 543

Losses from receivables

(1 685)

71 943

510 088

31 404

Total operating income 7 890 970

8 362 102

6 549 159

5 853 566

Personnel costs

(3 782 479)

(3 542 430)

Fixed assets

Administration costs

(601 533)

(669 500)

Property

Accrued income

4.3

4.4

261 302

351 227

International cooperation

(2 085 630)

(2 636 041)

261 302

351 227

Marketing and communication costs

(849 173)

(831 943)

Depreciation of property

4.4

(102 009)

(184 180)

Other operating costs

-

-

Equity and liabilities CHF

Operating expenditure (7 420 824)

(7 864 094)

Total assets

6 810 461

6 204 793

Note 31.12.2016 31.12.2015

Operating result 470 146 498 008 Short-term liabilities

Trade/services payables

5.1

421 817

274 817

Other

Financial income

51 672

187 229

Financial expenditure

(33 920)

(131 595)

17 752

55 634

payables

5.2

230 337

155 744

Financial result

7

Provisions

5.3

243 045

297 226

Deferred income

5.4

350 330

428 508

Withdrawals from long-term liabilities funds 24 888

1 245 529

1 156 295

Deposits in funds under long-term liabilities (333) 24 555

(333) (333)

Long-term liabilities

Fund result of earmarked funds

Earmarked donation funds

2 168

26 723

Ordinary result 512 453 553 309

2 168

26 723

Total liabilities 1 247 697 1 183 018

Extraordinary income

34 502

-

Extraordinary expenditure Organisational capital

(5 965)

-

Extraordinary result 28 537

-

Paid-up foundation capital

6

190 002

190 002

Result before change to

Earmarked capital for category development – coffee

327 833

-

540 990

553 309

Earmarked capital for innovation/business development

organisation capital

80 000

-

Allocation to earmarked capital

(407 833)

-

Acquired free capital

4 831 772

4 278 464

Withdrawal from earmarked capital

-

-

Annual result

133 157

553 309

Organisation capital - fund result

(407 833)

-

5 562 764

5 021 775

Total equity and liabilities 6 810 461

6 204 793

Year-end result 133 157 553 309

FINANCIAL REPORTING ACCORDING TO SWISS GAAP FER These annual accounts were comprehensively reviewed in an ordinary audit by PricewaterhouseCoopers (Basel) and issued with an unqualified audit opinion. They provide a true and fair view of the net assets, financial position and results of operations in accordance with Swiss GAAP FER and Swiss law, as well as the Deed of Foundation and Regulations.

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To see the full auditor’s report and annual accounts with performance report and appendices go to: www.maxhavelaar.ch/annualreport

COMMODITY AND MARKET DEVELOPMENTS IN 2016 Selected sales volumes

BANANAS 34 709 tonnes +5.9 % on prev. year

COCOA1 3 100 tonnes +37.9 % on prev. year

FLOWERS 71 488 734 stems -8.3 % on prev. year

TURNOVER PER PRODUCT CATEGORY Product

Sales (CHF)

MARKET SHARE

CANE SUGAR1 6 503 tonnes +108 % on prev. year

4

Cane sugar

89 %

Bananas

54 %

Pineapples

37 %

Fruit juices

36 %

Coffee

10 %

127 656 703

60.3 %

Bananas

109 404 755

6.8 %

Cocoa/chocolate

77 079 760

46.6 %

Flowers

69 226 958

-7.2 %

Fruit juices

68 844 748

8.3 %

Raw coffee

60 036 650

19.7 %

Other exotic fruits 3

28 790 388

44.4 %

Convenience fruits

20 755 375

31.3 %

Rice/quinoa

16 552 451

5.0 %

Dried fruits/nuts

15 696 527

38.7 %

Pineapples

7 918 586

-4.6 %

Cane sugar

6 998 465

90.3 %

Cotton products

4 346 684

-47.0 %

Honey

3 921 123

-6.3 %

Tea

3 449 485

4.7 %

Spices

3 412 607

-40.0 %

Gold

3 189 219

463.5 %

310 731

-19.7 %

Rice/quinoa

8 %

Honey

7 %

Cocoa/chocolate

6 %

Tea

5 % 0

10

20

ORGANIC PERCENTAGE

30

Wine

223 594

5.0 %

Plants

81 535

171.8 %

627 896 344

20.7 %

40

50

60

70

80

90

100

5

Cotton

92 %

Tea

72 %

Rice/quinoa

60 %

Bananas

58 %

Coffee

25 %

Cane sugar

21 %

Cocoa/chocolate

17 %

Pineapples

4 %

Honey

2 % 0 %

Fruit juices 0

10

20

30

1

40

50

60

70

80

90

including cocoa and sugar in composite products e.g. dairy products such as chilled and frozen desserts and yoghurts, and soft drinks such as lemonade, etc.

3 including mangos, avocados, passion fruits, oranges, limes, coconuts, physalis and papayas 4 estimated retail market share based on sales volumes Basis: AC Nielsen 5 organic share based on sales volumes 2

Total

COTTON 113 tonnes -59.1 % on prev. year

Change comp. to 2015

Composite products 2

Sports balls

RAW COFFEE 5 897 tonnes +12.5 % on prev. year

Max Havelaar Foundation (Switzerland) I Limmatstrasse 107 I 8005 Zurich +41 44 278 99 00 I info@maxhavelaar.ch I www.maxhavelaar.ch

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