Highlights of IFC's 2005 Annual Report Investing in Progress with Experience, Innovation, and Partnership The International Finance Corporation invests in private sector enterprises and provides Strategic Objectives technical assistance and advisory services, helping to reduce poverty and improve people's · Expanding access to finance. IFC works lives. In fiscal 2005, IFC played a key role in promoting a sustainable private sector in with financial institutions to broaden access developing and transition countries. The Corporation set a record in its profitability and to finance, with emphasis on smaller achieved measurable development impact. enterprises, housing finance, and leasing. IFC's advice and innovative products also This fiscal year... strengthen financial markets. · To support tsunami relief, IFC set up a matching grant program for partner companies · Increasing private participation in key in East and South Asia. IFC also established a tourism loan facility to support the recovery. sectors. In infrastructure and social · IFC established the Global Trade Finance Program, which helps banks deliver trade sectors, IFC promotes new approaches financing by providing risk coverage in difficult markets. that increase private participation in · With the World Bank, IFC continued to assess the investment climate of developing delivering crucial services. countries, including through the annual Doing Business report. · Helping successful enterprises grow. · Through structured finance and local currency financing, IFC arranged an increasing With many client companies poised to number of innovative transactions that build domestic financial markets. become competitive global players, IFC · IFC increased investments in renewable energies and helped develop the market provides long-term financing and global for carbon finance. experience to raise standards and · The Corporation advised governments on bringing private participation into improve performance. infrastructure, health care, and other public services, with 25 such transactions underway in FY05. · Focusing where needs are greatest. In · With donors, IFC sponsored financial markets technical assistance in more than high-risk and low-income countries, IFC 60 countries, with emphasis on access to finance for small businesses and on high-risk uses its capital and advice to demonstrate or low-income economies, particularly in Africa and the Middle East. the viability of private enterprises and to · IFC launched key initiatives to support women entrepreneurs and grassroots businesses; help governments improve the the Corporation also helped set up a regional association of African business schools and investment climate. assisted private companies in addressing HIV/AIDS. · Ensuring sustainability. IFC applies its · IFC reviewed its Safeguard Policies, Policy on Disclosure of Information, and expertise in corporate governance and Environmental, Health, and Safety Guidelines through broad consultation with environmental and social development to stakeholders, including governments, IFC clients and partners, and representatives strengthen clients' operations and to of civil society. improve practices throughout the project · Malta and Timor-Leste joined IFC, bringing membership to 178 countries. finance community. OPERATIONAL RESULTS SUMMARY, FY05 RESOURCES AND INCOME, FY05 New projects committed: 236, in 67 countries Operating income $1.95 billion Net income $2.02 billion Total financing committed: $6.45 billion Financing committed for IFC's own account: $5.37 billion Paid-in capital $2.4 billion Syndications mobilized from other financial institutions: $1.08 billion Retained earnings $7.4 billion Total committed portfolio: $19.3 billion* Borrowings for the fiscal year $2.0 billion Loans as a % of committed portfolio: 77% Net worth $9.8 billion Equity as a % of committed portfolio: 17% Guarantees as a % of committed portfolio: 5% Risk management products as a % of committed portfolio: 1% *For IFC's own account as of June 30, 2005. Highlights of FY05 Operations COURTESY OF NEWMONT IFC's operating income rose to a record $1.95 billion in FY05, At June 30, 2005, IFC's committed portfolio was $19.3 billion, from $982 million in FY04. The strong growth reflected an increase of 7.6 percent over the previous fiscal year. IFC also significant realized gains on sales of investments, robust dividend held and managed for participants $5.3 billion in syndicated income from the equity portfolio, greater loan portfolio income, loans. The committed portfolio included 1,314 companies in and the positive impact of a release of loss reserves. 119 countries. How What IFC offers a full range of investment products; the Corporation also IFC is active in all commercial sectors in its developing member countries. increasingly provides technical assistance and advisory services to Funding is often accompanied by assistance on industry best practice, private sector enterprises and related government agencies. corporate governance, environmental and social issues, and links with local small businesses. COMMITMENTS BY PRODUCT, FY05 COMMITMENTS BY SECTOR, FY05 Includes IFC's account and syndications (millions of U.S. dollars) Includes IFC's account and syndications (millions of U.S. dollars) Finance and insurance $2,227 34.5% TOTAL $6,449 Transportation and warehousing 561 8.7 Industrial and consumer products 552 8.6 Loan syndications 1,076 Primary metals 330 5.1 Risk management Pulp and paper 327 5.1 products 4 Utilities 322 5.0 Oil, gas, and mining 314 4.9 Guarantees 216 Agriculture and forestry 278 4.3 Chemicals 237 3.7 Equity** 612 Nonmetallic mineral product manufacturing 222 3.4 Accommodation and tourism services 203 3.1 Information 200 3.1 Collective investment vehicles 188 2.9 Loans* 4,541 Wholesale and retail trade 143 2.2 Food and beverages 139 2.2 Textiles, apparel, and leather 84 1.3 Plastics and rubber 41 0.6 Education services 39 0.6 Construction and real estate 23 0.3 * Includes loan-type quasi-equity products. Health care 20 0.3 ** Includes equity-type quasi-equity products. TOTAL COMMITMENTS $6,449 100% IFC also mobilized $1.1 billion through structured finance related to guarantees, loans, and equity investments. Where IFC invests in companies and financial institutions in all developing regions. The 2005 Annual Report provides a full list of investment commitments. (Projects involving more than one developing region are classified as "Global.") COMMITMENTS BY REGION, FY05 INVESTMENT PORTFOLIO BY REGION, FY05 Includes IFC's account and syndications (millions of U.S. dollars) For IFC's account (millions of U.S. dollars) TOTAL $6,449 TOTAL $19,274 Global Global Middle East and 95 Sub-Saharan Africa* 445 Middle East and 245 Sub-Saharan Africa* 1,698 North Africa* North Africa* 315 1,210 East Asia and East Asia and the Pacific the Pacific 811 2,940 Latin America South Asia Latin America and the Caribbean 643 and the Caribbean 1,783 6,125 South Asia 1,634 Europe and Europe and Central Asia* Central Asia* 2,357 5,423 *Some amounts include regional shares of investments that are officially classified as global projects. Regional Overview for FY05 See IFC's Annual Report for more information on the year's regional activities. Sub-Saharan Africa Europe and Central Asia Commitments: 30 projects in 14 countries Commitments: 67 projects in 15 countries Total financing: $445 million for IFC's account Total financing: $2.4 billion ($1.9 billion for IFC's account) ($419 million in syndications) IFC is working to address Africa's development through a combination of investment and technical assistance. IFC's new investments include In the region's financial sector, IFC continues to be active in restructuring a microfinance institution and a cement producer in Nigeria, a black and privatizing existing institutions and in promoting the development of economic empowerment transaction with a South African bank, and housing finance, leasing companies, and securitization. In infrastructure, the innovative funding for private schools in Ghana. Technical assistance Corporation is emphasizing investments in the energy and transportation is being delivered through the new Private Enterprise Partnership for sectors and helping privatize utilities in potential EU accession countries. Africa, a joint program with IDA at the World Bank, and other IFC is also expanding access to financing and business expertise for smaller initiatives; the focus includes leasing, export promotion, reforms of enterprises, targeting strategic industries through building supply chains and business regulation, and helping companies respond to the challenges access to markets, and working to improve the investment environment and of HIV/AIDS. IFC also initiated several infrastructure advisory strengthen corporate governance. Examples of investments in the region assignments this year and concluded a successful private concession include vehicle leasing operations, a household appliance manufacturer, for a port in Madagascar. discount retail outlets, a gas distribution company, and hospitals. East Asia and the Pacific Latin America and the Caribbean Commitments: 40 projects in 11 countries Commitments: 54 projects in 17 countries Total financing: $811 million ($740 million for IFC's account) Total financing: $1.8 billion ($1.4 billion for IFC's account) ($72 million in syndications) ($385 million in syndications) IFC's focus includes deepening and diversifying the region's financial IFC is emphasizing long-term financing to a wide range of corporates systems, strengthening corporate governance and environmental and investments with a broad impact on social and economic inclusion. performance, and improving the climate for private investments in This year IFC addressed underinvestment in infrastructure with projects infrastructure. The year saw financial sector investments that support in the energy and transportation sectors and continued to introduce housing finance, leasing, and increased lending to smaller enterprises; structured finance and other innovative financial products in local capital in Malaysia, IFC became the first supranational to undertake a bond markets. Committed projects ranged from major manufacturers, a wind issue using Islamic finance. Infrastructure investments include a power plant, and a university, to companies in the telecommunications, shipping firm in China and an electricity distributor in the Philippines airline, port, and logistics sectors. Technical assistance is a rapidly that combines hydroelectric and photovoltaic power. The technical growing component of IFC's work in the region, with a focus on assistance work of IFC's four regional facilities includes innovative privatization, streamlined business regulations, improved access to partnerships to establish more sustainable supply chains for industries markets, more socially responsible enterprises, and stronger in China and Indonesia. competitiveness for small businesses. South Asia Middle East and North Africa Commitments: 20 projects in 2 countries Commitments: 21 projects in 8 countries Total financing: $643 million ($443 million for IFC's account) Total financing: $315 million ($200 million in syndications) With the launch of the Private Enterprise Partnership for the Middle East IFC invested in manufacturing companies to help them become and North Africa, IFC increased its capacity to provide technical assistance internationally competitive, in tourism projects to help regional throughout the region in addition to financing. The new facility is helping companies recover from the tsunami, and in water, power, and train Iraqi bankers, surveying corporate governance at banks in Lebanon, telecommunications projects to help sustain economic growth and and promoting leasing in Afghanistan and Yemen. IFC's investment program improve the quality of life for communities. New investments include this year encompassed the financial sector, manufacturing, oil and gas, a port management company, a merchant hydropower plant, and education, agribusiness, and infrastructure. IFC is also providing infrastructure emerging companies in pharmaceuticals, biotechnology, and IT advisory services for irrigation in Morocco and an airport in Saudi Arabia. outsourcing. IFC's SouthAsia Enterprise Development Facility The Corporation provided its first-ever funding for a Murabaha facility, an continues its work to improve the business environment, strengthen Islamic finance product, and, as part of its own borrowings, launched a providers of business services, and increase access to financing for bond issue in Moroccan dirhams. smaller businesses. Development Impact KENJI YUHAKU IFC continues to show positive development impact, as environmental, social, health, and safety performance measured by the independent Operations Evaluation Group, have not improved in line with other outcomes. which evaluates mature projects in terms of project business · IFC has invested more, and achieved better outcomes, in performance, economic sustainability, environmental impacts, key sectors--financial markets, infrastructure, information and private sector development. This year's findings showed technology, and health and education--increasing their the following trends: share of total commitments to 55 percent in FY05. · Based on a synthesis of performance ratings for projects · The risk profile of recent commitments has improved. approved in 2001­2003, 59 percent of operations made · IFC has successfully steered resources toward poorer positive contributions to development. countries and regions where access to finance is · IFC project success rates are improving generally, but most difficult. How IFC Operations Help Reduce Poverty and Improve People's Lives INPUTS OUTPUTS OUTCOMES IMPACTS Investment Demonstration Operations Effects Poverty Reduction Sustainable Sustainable Economic Private Private Sector Growth Investment Development Improved Living Standards Technical Improved Assistance, Business Advisory Services Climate For IFC's Annual Report and information on products and services, please contact IFC Corporate Relations. 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