DEG Annual-Report 2017

Annual Report 2017
Financial Statements and Management Report

DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH
Contents
DEG at a glance 2
Report by the Supervisory Board 4
Corporate Governance Report 7
Management Report 2017 16
Corporate essentials
Sustainability
Economic report
Status report
Profitability
Financial position
Net worth position
Opportunity and risk report
Internal Control System (ICS)
Outlook
Annual Financial Statements 2017 37
Balance sheet
Profit and loss account
Appendix
Auditor’s report
Imprint Back
Annual Report 2017
Financial Statements and Management Report
DEG at a glance
EUR million 2017 2016

Finance
Total financial commitments in financial year 1,551 1,553
Portfolio (volume of commitment) at year end 8,228 8,633
Total investments of co-financed enterprises/new business 11,271 6,551
Consultancy and other services

Income from consultancy contracts, trust business and other services 17 16
Annual financial statements
Balance sheet total 5,328 5,820
Subscribed capital 750 750
of which paid in 750 750
Reserves 1,618 1,518
Operating result before provision for risk and valuation effects from currency 220 259
Taxes 10 15
Profit for the financial year after taxes 94 96
Write-back/withdrawal from purpose-tied reserve fund 0 4

Net income 94 100
Developmental impacts of DEG’s portfolio 2017

Tax paid annually by co-financed enterprises EUR 4 billion
Number of jobs in co-financed enterprises 1.5 million
Renewables/annual production 4,500 GWh
DEG Annual Report 2017 | DEG at a glance | 3

Report by the
Supervisory Board
Advice to and supervision of the ures and transactions of particular importance in DEG’s
Management Board financing business, held seven meetings over the course of
the past financial year.
The 2017 reporting period was shaped by the Supervisory
Board and DEG’s Management Board working together with In the period under review, the Supervisory Board focussed
a great deal of mutual trust. The Supervisory Board received strongly on setting a sustainable direction for DEG’s business.
prompt and comprehensive reports on all important develop- In the context of the company’s overall strategic policy, the
ments at DEG and was able to assure itself of the proper Supervisory Board discussed the business strategy for 2018,
conduct of the Management Board’s activities. The Supervis- the risk strategy for 2018, the IT strategy for 2018 and finan-
ory Board exercised regular supervision of the Management cial planning for 2018.
Board and conferred with it over its leadership of the busi-
ness. Whenever decisions were of crucial importance to DEG, The Supervisory Board expressly welcomes the high develop-
the Supervisory Board was involved, and, where necessary mental impacts of the investments financed by DEG and the
and following extensive consultation and scrutiny, gave its fact that its business model prioritises sustainability. A new
consent to specific business transactions. system of targets, which focusses on three strategic goals,
takes special account of the latter. The goals are: sustainable
DEG’s rules and regulations comply with the German Federal return, developmental impact and German business. In addi-
Public Corporate Governance Code PCGC (Public Corporate tion, the Supervisory Board also concentrated on DEG’s Devel-
Governance Kodex des Bundes) and meet modern governance opment Effectiveness Rating (DERa), a new measurement tool
standards. introduced during the past financial year. Its purpose is to
assess the developmental impact of DEG’s financing business.
The Supervisory Board welcomes its introduction, since it
Enlargement of the Supervisory Board allows the diverse developmental impacts of private-sector
involvement to be illustrated in their entirety, while taking the
Towards the end of 2016, DEG exceeded the limit of 500 Sustainable Development Goals into account. The tool also
employees within the meaning of the One-Third-Participation supports portfolio management geared to development man-
Act (Drittelbeteiligungsgesetz DrittelbG), and hence fulfilled agement. The results of the complete DERa portfolio survey,
the requirements of Article 1, Section 1, Clause 3 of the Act, completed in December 2017, highlight DEG’s high level of
under which one third of positions on the Supervisory Board developmental impact.
shall be taken by employees. On 20 March 2017, DEG’s Super-
visory Board, now mandatory and with 15 members, was The Supervisory Board would also like to acknowledge that
newly constituted. Under the provisions of the One-Third- the volume of new commitments for the 2017 financial year
Participation Act, five of those members are chosen by DEG’s was very similar to the level achieved in the 2016 financial
employees, while the other members are appointed by the year. Against a background of challenging global political
Shareholders’ Meeting. The German federal government has dynamics, with a significant influence on DEG’s business envir-
the right to propose four members. These are regularly drawn onment, this consistently high performance represents a
from the Federal Ministry for Economic Cooperation and remarkable achievement. Also noteworthy is German Desks –
Development, the Federal Ministry of Finance, the Federal For- Financial Support and Solutions, a joint initiative by DIHK and
eign Office and the Federal Ministry of Economic Affairs and DEG. It is setting up German-language contact points for Ger-
Energy. The selection of the remaining members of the Super- man corporates at local DEG customer banks in developing
visory Board is carried out in consultation with the German and emerging market countries. This capitalises on DEG’s
Federal Ministry for Economic Cooperation and Development. extensive network by promoting the global integration of the
Since the Supervisory Board was newly constituted in March German economy. The opening of the first German Desk, in
2017, it has comprised nine members appointed by the share- February in Peru, was followed over the course of the year by
holder and five chosen by the staff. The fifteenth place has further launches in Kenya, Nigeria and Indonesia. The fact
remained unfilled for the time being. that two of the German Desks were established in Africa
underlines the continent’s growing importance to the private
sector and DEG. It also underpins the German federal govern-
Meetings of the Supervisory Board ment’s development initiatives in relation to Africa.
During the past calendar year, the Supervisory Board held Every year since 2014, the Supervisory Board has carried out
four regular meetings. It was effectively assisted in carrying a self-evaluation, as well as an evaluation of DEG’s Manage-
out its work by the committees appointed by its members. ment Board. The Supervisory Board’s self-evaluation, based
These held 19 meetings in total. The Executive and Nomin- on structured questionnaires, was undertaken in the fourth
ation Committee, the Audit Committee and the Remuneration quarter of 2017. The survey showed that the work and effi-
Control Committee each met on four occasions. The Risk and ciency of both the board as a whole, and of its committees,
Credit Committee, which takes the final decisions on meas- were judged to be very good by the members of the Super-
DEG Annual Report 2017 | Report by the Supervisory Board | 5

visory Board. The self-evaluation also confirmed the construct- State Secretary Stephan Steinlein and Federal Minister
ive and trustful nature of the shared work on the Supervisory Brigitte Zypries as members of the Supervisory Board.
Board, which was enhanced by the skills contributed by the
five staff representatives. One member of each of the com- During the 2017 financial year, Dr Schröder was able to
mittees was chosen from among their number. The evaluation attend fewer than half the meetings of the Supervisory Board
of DEG’s Management Board, also based on structured ques- in full, due to illness. The fifteenth seat on the Supervisory
tionnaires, was carried out at the end of 2017. The very Board is to be filled in the first quarter of 2018.
favourable results of this survey testify to the high level of
satisfaction with the work of DEG’s Management Board
among members of the Supervisory Board. Thanks and appreciation
Special thanks are due to Dr Norbert Kloppenburg, who
Annual financial statements and stepped down from DEG’s Supervisory Board after many years
management report of membership. Dr Kloppenburg took on a leadership role in
which he decisively shaped both the internal organisation of
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft of Düs- the Supervisory Board and DEG’s successful development over
seldorf has audited both the annual financial statements, as recent years. Thanks for their dedicated service are also due
drawn up in accordance with statutory regulations, and the to Corinna Linner, State Secretary Stephan Steinlein and Fed-
management report. The report on the annual financial state- eral Minister Brigitte Zypries, the other members of the Super-
ments was awarded an unqualified audit certificate. visory Board who stepped down during the 2017 financial year.
Based on the auditor’s report, the Audit Committee appointed The Supervisory Board would also like to express its gratitude
by the Supervisory Board reviewed and discussed the annual and appreciation to the Management Board for its open and
financial statements along with the management report, and trustful cooperation.
recommended that they be approved by the members of the
Supervisory Board. During a final detailed review by the Super- Special thanks and appreciation are due to DEG’s staff. Their
visory Board, the board members agreed with the Audit Com- great dedication and high-level competence have made it
mittee’s recommendations and approved the findings of the possible to achieve an excellent result for DEG in challenging
auditor’s report and the annual financial statements, including conditions.
the management report.
Cologne, 19 March 2018
The Supervisory Board recommended that the Shareholders’
Meeting adopt the annual financial statements for 2017 and
discharge the Management Board from its liabilities.
Chairman of the Supervisory Board
Hans-Joachim Fuchtel
Changes in membership of the
Supervisory Board
Chairman of the newly constituted Supervisory Board is Par-
liamentary State Secretary Hans-Joachim Fuchtel, who also
chairs the Executive and Nomination Committee. Initially,
Dr Norbert Kloppenburg served as First Deputy Chairman
of the Supervisory Board, before being replaced by Prof.
Dr Joachim Nagel on 1 November 2017. Prof. Dr Nagel also
succeeded Dr Kloppenburg as Chairman of the Risk and Credit
Committee. The office of Second Deputy Chairwoman of the
Supervisory Board has been filled by Prof. Dr Christiane
Weiland, who also chairs the Audit Committee. In February
2017, she succeeded Corinna Linner when the latter stepped
down from the Supervisory Board. Further members of the
Supervisory Boards are Dr Amichia Biley, Eberhard Brandes,
Bertram Dreyer, Dr Patricia Flor, Dr Sabine Hepperle, Arndt
Kirchhoff, Caroline Kremer, Sarah Madew, Dorothea Miklo-
weit, Dr Ulrich Schröder and Parliamentary State Secretary
Dr Michael Meister, who chairs the Remuneration Control
Committee. In March 2017, Dr Flor and Dr Hepperle replaced
DEG Annual Report 2017 | Report by the Supervisory Board | 6

Corporate Governance Report
As a member of KfW Bankengruppe, DEG – Deutsche Investi- Board. This includes setting levels of remuneration and of
tions- und Entwicklungsgesellschaft mbH (DEG) has made a variable remuneration components, as well as dealing with
commitment to act responsibly and transparently, and open other remuneration issues.
up its actions to scrutiny. DEG’s Management Board and
Supervisory Board accept the principles of the German feder- In a departure from paragraph 4.3.2. PCGC, the performance
al government’s Public Corporate Governance Code (Public targets and parameters specified in the agreement on targets
Corporate Governance Kodex des Bundes PCGC) on behalf of for the Management Board may be subsequently changed by
DEG. A first Declaration of Conformity, detailing compliance consultation between the Shareholder and DEG.
with the PCGC’s recommendations, was made on 30 March
2011. Since then, any departures from the code have been Conflicts of interest
declared and elucidated annually. In departure from paragraph 4.4.3 PCGC, all members of the
Management Board must immediately declare any conflict of
DEG has operated as a non-profit limited company and a interest to the Shareholders’ Meeting rather than the Super-
legally independent, wholly owned subsidiary of KfW since visory Board.
19 June 2001. Its rules and regulations (articles of associ-
ation, rules of procedure for the Supervisory Board and its Delegation to committees
committees, and rules of procedure for the Management The Supervisory Board is relieved of a portion of its workload
Board) specify the basic features of the system via which by its committees, which benefit from greater familiarity with
it is managed and controlled by its corporate bodies. the issues and more flexibility of scheduling. In some cases,
the committees not only lay the groundwork for a decision by
the Supervisory Board, but, in a departure from paragraph
Declaration of Conformity 5.1.8 PCGC, take the final decision themselves. This is neces-
sary for reasons of practicality and efficiency.
The Management Board and Supervisory Board of DEG make
the following declaration: “Since the previous Declaration of In connection with DEG’s financing business, the Risk and
Conformity on 20 March 2017, the recommendations of the Credit Committee takes the final decision on measures
German Federal Government’s PCGC, as adopted on 1 July and transactions of special significance, on whether to initi-
2009, have been and are being complied with, excepting only ate legal disputes, to waive debts beyond the scope of settle-
the recommendations below”. ments, and agree settlements where such legal disputes,
waivers or settlements are of special significance. Having the
Deductible for D&O insurance Risk and Credit Committee make the final decision on such
KfW has entered into D&O insurance contracts which, as matters serves to speed up the process of finding a resolution.
group insurance, also extend protection to the members of
DEG’s Supervisory Boards. In a departure from paragraph
3.3.2 PCGC, these merely include the option to introduce a Cooperation of Management Board and
deductible during the period under review. Since 2017, the Supervisory Board
Management Board has decided to introduce a deductible
in the D&O insurance contracts for members of the Manage- The Management Board and the Supervisory Board work closely
ment Board which complies with the requirements of para- together for DEG’s benefit. The Management Board, especially
graph 3.3.2 PCGC. its Chairman, maintains regular contact with the Chairman of
the Supervisory Board. The Management Board discusses DEG’s
Allocation of responsibilities strategic direction with the Supervisory Board and reports, at
With the agreement of the Supervisory Board, and following appropriate intervals, on the extent to which that strategy has
a decision by the Shareholders’ Meeting, the Management been implemented. The Management Board informs the Chair-
Board has compiled a set of procedural rules to regulate co- man of the Supervisory Board of all events of vital importance
operation in managing the business. Under these rules, the to the assessment of DEG’s situation and development. The
Management Board itself allocates areas of responsibility in Chairman of the Supervisory Board subsequently informs the
a schedule of responsibilities, but – in a departure from para- other board members and, if necessary, calls an extraordinary
graph 4.2.2 PCGC – without the additional agreement of the meeting.
Supervisory Board and with the agreement of the Sharehold-
er’s Meeting. This ensures the necessary flexibility, and hence In the year under review, the Management Board reported to
an efficient division of labour, when changes are required. the Supervisory Board as per the provisions of Article 90 of the
German Stock Corporation Act (AktG) and provided comprehen-
Remuneration sive information on all relevant corporate issues related to plan-
In a departure from paragraph 4.3.1 PCGC, the remuneration ning, business development, risk situation, risk management and
system for members of the Management Board is drawn up compliance, as well as on any changes to the economic climate
by the Shareholders’ Meeting rather than the Supervisory of significance to the company.
DEG Annual Report 2017 | Corporate Governance Report | 8

Management Board Under DEG’s articles of association, the Supervisory Board
(now mandatory) consists of fifteen members as a general
The members of the Management Board conduct DEG’s busi- rule. Five of these are staff representatives elected under
ness with the care of a fit and proper business person in ac- DrittelbG provisions, while the other members are appointed
cordance with the law, the articles of association, the rules of by the Shareholders’ Meeting. The German federal govern-
procedure for the Management Board, and the decisions of ment has the right to propose four members, who represent
the Shareholders’ Meeting and the Supervisory Board. The al- the Federal Ministry for Economic Cooperation and Develop-
location of responsibilities among members of the Manage- ment, the Federal Ministry of Finance, the Federal Foreign Of-
ment Board is regulated by a schedule of responsibilities. fice and the Federal Ministry of Economic Affairs and Energy,
respectively. The remaining members of the Supervisory
In the year under review, responsibilities were allocated as Board are selected in consultation with the Federal Ministry
follows: for Economic Cooperation and Development.
Bruno Wenn as Chairman of the Management Board In the year under review, the Supervisory Board had fourteen
• Corporate Development Division members: five staff representatives, four representatives of
• Financial Institutions / Project Financing Division the federal government drawn from the above-mentioned
• Legal & Compliance Division ministries, two representatives of the Shareholder and three
• Human Resources Department further members. The unoccupied seat on the Supervisory
• Internal Audit Board is due to be filled in early 2018. The chairmanship of
the Supervisory Board in the year under review was held by
Philipp Kreutz Hans-Joachim Fuchtel, Parliamentary State Secretary under
• Finance / Risk Division the Federal Minister for Economic Cooperation and Develop-
• Credit Management / Analysis Division ment. The Supervisory Board had six female members during
• In-House Services Division the year in question. As a result, the board has now met the
target of 33% female membership, which it imposed on itself
Christiane Laibach on 19 June 2017.
• Corporates Division 1
• Corporates Division 2 The following are excluded from membership of the Super-
• Customer Solutions Division visory Board:
The members of the Management Board are committed to • any member of DEG’s Management Board,
DEG’s corporate interest, may not pursue any personal inter- • any former member of DEG’s Management Board, if
ests in their decision-making, and are subject to a compre- membership of the Supervisory Board already includes two
hensive non-competition clause during their employment with former members of the Management Board,
DEG. Members of the Management Board must immediately • anyone who serves as an executive officer in another
inform the Shareholder of any conflicts of interest arising. business and is, at the same time, a member of the
No such case occurred during the year under review. administrative or supervisory body of more than two
further corporates, and
• anyone who is a member of the administrative or
Supervisory Board supervisory body of more than four businesses.
The Supervisory Board monitors and advises the Management Every member of the Supervisory Board shall disclose con-
Board on leading the DEG. flicts of interest to the Supervisory Board. Where a conflict of
interest is assumed to exist, the board member in question
On 1 December 2016, the Management Board announced, by shall not be involved in discussing or deciding on that item on
publication of a notice in the German Federal Gazette, that in the agenda. Any conflicts of interest in the person of a mem-
its view, the composition of the Supervisory Board no longer ber of the Supervisory Board which are likely to prevent that
complied with the relevant statutory provisions, given that the member from meaningfully exercising his or her mandate
conditions of Article 1, Section 1, Clause 3 of the One-Third over a sustained and prolonged period of time shall result in
Participation Act (DrittelbG) had been met. Consequently, the termination of the mandate. No such instance occurred in
DEG’s articles of association were amended with effect from the year under review.
20 February 2017. New procedural rules for the Supervisory
Board and its committees, and separately for the Manage- In the year under review, Dr Ulrich Schröder attended fewer
ment Board, were issued on this basis and came into force on than half the meetings of the Supervisory Board in full.
20 March 2017.

Committees of the Supervisory Board income; establishing the sum available within the company
The Supervisory Board has set up the following four commit- for variable remuneration components; appointing and reliev-
tees from among its members to ensure the efficient per- ing members of the Supervisory Board; discharging members
formance of its duties in accordance with Article 25d of the of the Supervisory and Management Boards from their liabil-
Banking Act of the Federal Republic of Germany (KWG): ity; and appointing the auditor of the annual accounts. The
members of the Management Board require the prior agree-
The Executive and Nomination Committee deals with HR ment of the Shareholders’ Meeting to conduct any negoti-
issues and the principles of corporate governance. When ne- ations at CEO level that exceed the scope of the company’s
cessary, it prepares for meetings of the Supervisory Board. ordinary operations.
The responsibilities of the Executive and Nomination Commit-
tee include, amongst other things, discussing issues connected
with appointing and relieving members of the Management Supervision
Board.
DEG is a credit institution within the meaning of Article 1,
The Remuneration Control Committee handles remuner- Section 1 of the Banking Act of the Federal Republic of Ger-
ation issues. It specifically deals with drawing up appropriate many (KWG). The German Federal Financial Supervisory Au-
remuneration systems for members of the Management thority (BaFin) has issued revocable exemptions to DEG as per
Board and DEG staff. Article 2, Section 4 KWG, which partially exempt it from the
provisions of the act. Nevertheless, DEG does, on the whole,
The Risk and Credit Committee advises the Supervisory apply the relevant standards of the Banking Act mutatis
Board on issues related to risk, e.g. specifically, DEG’s overall mutandis, especially the minimum requirements for risk man-
risk tolerance and risk strategy. In connection with DEG’s agement (MaRisk).
financing business, it also acts on behalf of the Supervisory
Board by taking final decisions on measures and transactions
of special significance, on whether to initiate legal disputes, Public benefit
to waive debts beyond the scope of settlements, and on
whether to agree settlements where such legal disputes, DEG exclusively and directly serves the public benefit within
waivers or settlements are of special significance. the meaning of the “Tax-deductible purposes” article of the
German Fiscal Code (Abgabenordnung). The company’s pur-
The Audit Committee deals specifically with: monitoring the pose is to promote development cooperation. DEG is
financial reporting process; with the effectiveness of the risk non-profit-making.
management system, especially the Internal Control System
and the Internal Audit; with the audit of the annual financial
statements and with evaluating whether the auditor demon- Transparency
strates the required independence. It also sets priorities for
the audits and oversees the speedy elimination of any defi- DEG makes key information about the company and its annu-
ciencies uncovered by the auditor. al financial statements available on its website. Corporate
Communications also provides regular updates on current cor-
The committee chairmen or chairwomen report regularly to porate developments. The annual Corporate Governance Re-
the Supervisory Board. The Supervisory Board may disband ports, including the Declaration of Conformity in respect of
the committees, regulate their duties and reclaim their the Public Corporate Governance Code PCGC, are permanently
powers at any time. available on DEG’s and KfW’s websites. As of 1 January 2015,
DEG also publishes information on its website about the pro-
In its report, the Supervisory Board provides information jects and enterprises it finances.
about its own work and the work of its committees during the
year under review. A summary listing the members of the
Supervisory Board and its committees may be found on DEG’s Risk management
website.
Risk management and risk controlling are key management
tasks at DEG. The Management Board draws up the risk
Shareholder strategy, establishing the framework for business activities in
relation to risk tolerance and risk-bearing capacity. This en-
DEG’s sole Shareholder is KfW. The Shareholders’ Meeting is sures that DEG is able, sustainably and over the long term, to
responsible for all matters not assigned, by law or by the art- maintain an acceptable risk profile while fulfilling its specific
icles of association, to another body as its exclusive responsi- tasks. Monthly risk reports to the Management Board present
bility, and in particular for: approving the annual financial a comprehensive analysis of the DEG’s overall risk situation.
statements and the appropriation of the annual result or net The Supervisory Board is regularly given a detailed update on
the risk situation, at least once per quarter.

Compliance Efficiency review of the Supervisory Board
DEG’s success depends to a significant degree on the trust The Supervisory Board regularly reviews the efficiency of its
which the Shareholder, customers, business partners, staff activities. To that end, it carries out an annual evaluation of
members and the public place in its effectiveness and espe- the Supervisory Board and the Management Board.
cially its integrity. This trust is substantially rooted in its im-
plementation of, and compliance with, the relevant legal and
regulatory requirements and in-house rules, as well as other
applicable laws and regulations. DEG’s compliance organisa- REMUNERATION REPORT
tion includes, in particular, provisions to ensure that the regu-
latory requirements of the MaRisk compliance function are
met, and that data protection rules are followed. It further in- The remuneration report describes the basic structure of the
cludes provisions to guarantee securities compliance, to com- remuneration system for the Management Board and the
ply with the terms of financial sanctions, to prevent money Supervisory Board and discloses the individual remuneration
laundering, the financing of terrorism and other criminal ac- for members of both boards. The remuneration report is part
tivities, and to achieve a suitable level of information security, of the appendix to the annual financial statements.
appropriate business continuity management, the identifica-
tion of operational risks and the mapping of an internal con-
trol system. Accordingly, it has binding regulations and proced- Remuneration of the Management Board
ures that influence implemented values and corporate culture.
These are continuously updated to reflect the statutory frame- The remuneration system for DEG’s Management Board is
work and market requirements. Regular training on all aspects designed to provide appropriate compensation for board
of compliance is available to DEG employees in the form of members in accordance with their remit and areas of respon-
both e-learning programmes and classroom sessions. sibility, taking into account their performance and the compa-
ny’s success.
Accounting and annual audit

Remuneration components
On 13 December 2016, DEG’s Shareholder appointed
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (E&Y) On 20 March 2017, DEG’s Supervisory Board voted to retain,
as auditor for the 2017 financial year. The Supervisory Board without change, the remuneration system for DEG’s Manage-
subsequently issued the audit mandate to E&Y on 2 June 2017 ment Board agreed on 18 March 2010. This system meets
and established priorities for the audit with the auditor. It PCGC rules on variable remuneration components and includes
was agreed with the auditor that the Chairman of the Super- a balanced mix of short and medium-term incentives. For in-
visory Board would immediately be informed of any findings stance, only half of performance-related management bonus-
and circumstances of material significance to the duties of es, as measured by target fulfilment, is immediately disbursed
the Supervisory Board that might arise during the audit. It to the Management Board. The other half constitutes a provi-
was further agreed that the auditors should inform the Chair- sional claim only, and is paid from a “bonus account” in equal
man of the Supervisory Board or include a note in the audit instalments over the following three years, provided there is
if, while carrying out the audit, they ascertained facts that no significant decline in business performance. If the agreed
negated the accuracy of the Declaration of Conformity as per profitability target is not met in subsequent years, payments
the PCGC. from the bonus account shall be subject to a penalty.
The following summary shows total compensation for individ-

ual members of the Management Board, broken down by fixed
Remuneration for the Management Board and members of the Management Board
EUR k 2017 2016 Change

Management Board 1,292 1,288 4
Former members of the Management Board & surviving dependants 836 880 –44
Members of the Supervisory Board 66 24 371)
Total 2,194 2,197 –3
1)
The discrepancy arises mainly because of the increase in Supervisory Board membership as a result of compliance with the One-Third Participation Act (DrittelbG).

and variable components and benefits in kind, as well as trans- Contractual fringe benefits further include the cost of security
fers to pension provision and the balance of their bonus ac- measures at residential properties occupied by members of
counts. the Management Board. The provision of this security is ac-
counted for under operating charges rather than as benefits
in kind.
Responsibility
Where contractual fringe benefits cannot be granted on a
The Shareholder consults on the remuneration system for tax-free basis, they are subject to taxation as non-cash bene-
the Management Board, including contractual elements, and fits, with any tax being payable by the members of the Man-
reviews it regularly. The Shareholder agrees the remuneration agement Board.
system following consultation with the Supervisory Board.
The adequacy of the remuneration was last reviewed in In 2017, no member of the Management Board was in receipt
March 2017. of a loan from DEG or KfW.
In the past financial year, no member of the Management

Benefits in kind Board received benefits, or a pledge to that effect, from a
third party in respect of his or her activities as a member
Benefits in kind primarily include contractual fringe benefits. of DEG’s Management Board.
Members of the Management Board are entitled to a com-
pany car for both business and personal use. In keeping with
current tax regulations, any costs incurred due to personal use Entitlement to a retirement pension and
of the company car are met by the members of the Manage- other benefits in case of early retirement
ment Board. If a second residence is required for business pur-
poses, the costs of running the second household are reim- Under Article 5, Section 1 of DEG’s articles of association,
bursed as per tax regulations. the appointment of a member of the Management Board
shall not extend beyond the attainment of statutory retirement
Members of the Management Board are insured under a group age. After they reach the age of 65, or statutory retirement
accident insurance policy. Health insurance and long-term care age respectively, and following expiry of their contract of
insurance are subsidised. In respect of the risks associated employment as members of the Management Board, board
with their management activities on the governing body, mem- members are entitled to pension payments. This also applies
bers of the Management Board are insured under a policy that if their service ends due to invalidity.
covers liability for monetary damages (D&O insurance), and
a supplementary policy covering them for monetary damages In respect of contracts of employment for a term that began
and legal expenses. These insurance policies are arranged as in 2014 or earlier, members of the Management Board may,
group insurance. at their own request, take early retirement after they have
reached the age of 63. In the year under review, Bruno Wenn
Members of DEG’s Management Board are further covered in made use of this provision. He accordingly made a supple-
the exercise of their duties by a special group insurance policy mentary agreement with the Shareholder under which he will
for employees that meets any legal expenses incurred as a re- take early retirement from his position on the Management
sult of criminal prosecution. Board on 30 June 2018.
Like all senior executives, members of the Management If the board member’s employment is not extended before
Board are entitled to participate in the Deferred Compensa- reaching retirement age, and no important reason as per Art-
tion Scheme, a supplementary company pension plan via de- icle 626 of the German Civil Code (BGB) applies to the person
ferred compensation payments deducted from salary. Under of the member of the Management Board, he or she is en-
DEG’s general rules, they are also entitled to long service titled to agree a transitional allowance for the period until
awards. pension payments fall due.
Retirement pensions for former members of the Management Board or surviving dependants
Number 2017 EUR k 2017 Number 2016 EUR k 2016

Former members of the Management Board 5 503.6 6 620.0
Dependants 5 332.7 4 259.8
Total 10 836.3 10 879.7

Annual compensation of members of the Management Board and transfers to pension provision for 2016 and 20171)
Variable
compensa- Benefits in Bonus Transfer to pension
EUR k1) Salary tion* kind2) Total account provision
Bruno Wenn (Chairman) 2017 344.9 74.4 13.3 432.6 72.9 901.14)
2016 344.9 72.4 14.0 431.3 72.7 367.2
Dr Michael Bornmann 2017 - 28.03) 0.0 28.0 16.5 -
2016 - 44.53) 0.0 44.5 44.5 0.0
Philipp Kreutz 2017 344.9 74.7 11.5 431.1 73.8 111.1
2016 344.9 73.7 11.7 430.3 74.1 194.8
Christiane Laibach 2017 344.9 46.3 9.3 400.6 55.4 123.7
2016 344.9 27.1 9.2 381.3 27.1 94.3
Total 2017 1,034.8 223.4 34.1 1,292.2 218.6 1,135.9
2016 1,034.8 217.7 34.9 1,287.5 218.4 656.3
1)
For computational reasons, the table may contain discrepancies due to rounding.
2)
In a departure from the figures in the appendix, this table excludes the employer’s contribution as per the German Social Security Act. The total for 2017
was EUR 36.9 k (previous year; EUR 35.7 k).
3)
Dr Bornmann received variable compensation in respect of his activities as CEO.
4)
The high value of transfer to pension provision includes the retirement on 30 June 2018.
* In a departure from the figures in the appendix, this table includes the variable compensation actually paid as part of a phased system.
Pension commitments for members of the Management Pensions to former members of the Management Board and
Board and surviving dependants are based on the principles their surviving dependants amounted to EUR 879.7 k in 2016
governing the employment of board members at German fed- and EUR 836.3 k in 2017.
eral credit institutions (1992 version). PCGC provisions are
taken into account when drawing up contracts of employment No loans were provided to former members of the Manage-
for members of the Management Board. ment Board or their surviving dependants in the 2017 finan-
cial year.
Where members of the Management Board were appointed or
reappointed after 2011, their contracts of employment in-
clude a cap on any severance package in keeping with PCGC Compensation for the Supervisory Board
recommendations. Under the code, any payoff to a member
of the Management Board, due to early termination of his or Members of the Supervisory Board receive compensation at
her activities as a board member, is accordingly limited to a level set by the Shareholders’ Meeting as per Article 13 (1)
double the annual salary, or compensation due for the remain- of DEG’s articles of association and in keeping with the com-
ing period of his or her contract, including fringe benefits, pany’s character as an institution serving the public benefit.
whichever is lower. This only applies provided no important
cause as per Article 626 of the German Civil Code is present. In the year under review, compensation for ordinary members
amounted to EUR 5,000. Chairmanship of the Supervisory
In general, the full retirement pension entitlement is equiva- Board attracts compensation in the sum of EUR 9,000, while
lent to 49% of annual fixed remuneration. At initial appoint- the two Deputy Chairmen each receive EUR 8,000. With the
ment, the retirement pension entitlement routinely amounts exception of the Executive and Nomination Committee,
to 70% of the full entitlement and rises over a period of ten committee members each receive annual compensation of
years by 3% for every completed year of service. In departure EUR 500, while the committee chairs receive compensation
from this, the entitlement of Monika Beck, who is due to suc- in the amount of EUR 1,000 per annum.
ceed Bruno Wenn as member of DEG’s Management Board on
1 July 2018, will increase by 0.82% for every full year of ser- Where membership covers only part of a year, remuneration
vice, up to a pension entitlement of 46.6% when she receives is paid pro rata.
her pension upon retirement.
An attendance fee of EUR 500 per meeting is paid (excepting
If the employment contract of a member of the Management only meetings of the Executive and Nomination Committee),
Board is terminated or not renewed due to a significant rea- along with a daily allowance of EUR 12 per day of attend-
son as per Article 626 of the German Civil Code, any pension ance. Any travel expenses incurred and any value-added tax
entitlements are void in keeping with the principles developed payable are reimbursed.
by employment contract case law.

The following tables provide details of the Supervisory Board’s
remuneration for the 2016 and 2017 financial years. The sums
shown are EUR net and have all been paid. Travel expenses
and other miscellaneous expenses were reimbursed upon pres-
entation of receipts and are not included in the table.
There are no pension obligations towards members of the

Supervisory Board.
In the year under review, members of the Supervisory Board

received no remuneration for services provided in a personal
capacity.
In respect of the risks associated with their activities as

corporate officers on the Supervisory Board, board members
are insured under a policy that covers their liability for monet-
ary damages (D&O insurance). A supplementary policy covers
them for monetary damages and legal expenses. These insur-
ance policies are arranged as group insurance. Currently,
no deductible has been agreed. Members of the Supervisory
Board are also covered in the exercise of their duties by a
special group insurance policy for employees that meets any
legal expenses incurred as a result of criminal prosecution.
No loans were made to members of the Supervisory Board

during the year under review.
Cologne, 19 March 2017
The Management Board The Supervisory Board

Compensation of members of the Supervisory Board for the 2016 and 2017 financial years
EUR
Period of Supervisory
membership Board Committee Daily allowance &
No. Name 2017 membership membership attendance fee Total
1. Hans-Joachim Fuchtel1) 01.01–31.12 - - - -
2. Dr Norbert Kloppenburg1) 01.01–31.10 - - - -
3. Eberhard Brandes1) 01.01–31.12 - - - -
4. Arndt G. Kirchhoff 01.01–31.12 5,000 - 1,024 6,024
5. Corinna Linner 01.01–20.02 1,117 279 - 1,396
6. Dr Michael Meister1) 01.01–31.12 - - - -
7. Dr Ulrich Schröder1) 01.01–31.12 - - - -
8. Stephan Steinlein1) 01.01–20.02 - - - -
9. Brigitte Zypries1) 01.01–26.01 - - - -
10. Prof. Dr Joachim Nagel1) 01.11–31.12 - - - -
11. Prof. Dr Christiane Weiland 20.02–31.12 6,882 1,720 9,584 18,186
12. Dr Patricia Flor1) 20.03–31.12 - - - -
13. Dr Sabine Hepperle1) 20.03–31.12 - - - -
14. Dr Amichia Biley 20.02–31.12 4,301 - 2,036 6,337
15. Dorothea Mikloweit 20.02–31.12 4,301 430 4,048 8,779
16. Sarah Madew 20.02–31.12 4,301 430 4,572 9,303
17. Bertram Dreyer 20.02–31.12 4,301 - 2,536 6,837
18. Caroline Kremer 20.02–31.12 4,301 430 4,024 8,755
Total net amount 34,505 3,289 27,824 65,617
EUR
Period of Supervisory
membership Board Committee Daily allowance &
No. Name 2016 membership membership attendance fee Total
1. Hans-Joachim Fuchtel 1)
01.01–31.12 - - - -
2. Dr Norbert Kloppenburg 1)
01.01–31.12 - - - -
3. Eberhard Brandes 1)
01.01–31.12 5,000 - - 5,000
4. Arndt G. Kirchhoff 01.01–31.12 5,000 - 1,024 6,024
5. Corinna Linner 01.01–31.12 8,000 2,000 8,072 18,072
6. Dr Michael Meister 1)
01.01–31.12 - - - -
7. Dr Ulrich Schröder 1)
01.01–31.12 - - - -
8. Stephan Steinlein 1)
01.01–31.12 - - - -
9. Brigitte Zypries 1)
01.01–31.12 - - - -
Total net amount 18,000 2,000 9,096 29,096
1)
Remuneration not claimed.

Management Report 2017
CORPORATE ESSENTIALS As a development institution with a development policy man-
date, DEG operates on the subsidiarity principle. It provides
finance where the market fails to offer financing to enterprises
Business model at an adequate level, or indeed at all. As a pioneer investor DEG
becomes involved in IDA (International Development Associ-
DEG – Deutsche Investitions- and Entwicklungsgesellschaft ation) and post-conflict countries in Africa and other regions.
mbH, Cologne (DEG) – is mandated to promote the private It demonstrates that long-term entrepreneurial success is pos-
sector in developing and emerging market countries within sible even in difficult conditions, thus sending a signal to invest-
the context of entrepreneurial development cooperation. ors and businesses. By mobilising additional private-sector
In order to fulfil this development mandate, DEG has defined capital, it increases the leverage effect of its commitment.
a strategic system of goals in three dimensions. These com-
prise sustainable returns, a high level of developmental im- Within the scope of its activities, DEG thinks and operates like
pact, and the provision of financing and supportive advice an entrepreneur. That includes generating risk-appropriate
to German enterprises. earnings. Any surpluses DEG generates are used to expand its
equity capital base and strengthen its risk-bearing capacity.
Skilled work and an income are essential prerequisites, This forms the necessary foundation that enables DEG to pur-
if people’s living conditions are to be improved and poverty sue and grow its activities by drawing on its own resources.
overcome. Entrepreneurial initiative is the main driver, since
the vast majority of jobs are created in the private sector. As a specialist for the development of the private sector in
DEG finances economically and developmentally sustainable, developing and emerging market countries, DEG is one of the
socially and environmentally sound investment by private- mainstays of the KfW Group’s involvement in foreign coun-
sector enterprises with loans, guarantees, loans with equity tries. Together with KfW Entwicklungsbank and KfW IPEX-
features and participating interests. It addresses, in particular, Bank GmbH, it shapes KfW’s range of international financing.
medium-sized businesses (“Mittelstand”) and small and me-
dium-sized enterprises (SMEs) with its offerings. DEG’s aim is Comprehensive knowledge of the economic and political con-
to contribute to sustained success on the part of its custom- ditions in partner countries, close links to customers, and a
ers by providing reliable, long-term finance and advice. Only permanent presence on the ground are essential, if DEG’s
consistently successful enterprises create permanent jobs and development mandate is to be fulfilled effectively. To achieve
generate sustainable developmental impacts. Consequently, this, DEG maintains representative offices at thirteen loca-
DEG’s commitment supports the implementation of the Sus- tions in Africa, Asia, Latin America and Eastern Europe. It also
tainable Development Goals (SDG) contained in the United shares the use of the KfW Group’s approximately 80 interna-
Nations’ Agenda 2030. tional offices.
With their involvement in emerging markets and developing As one of the leading European development finance insti-
countries, German enterprises make important contributions tutions, DEG works closely with other development finance
to development. In doing so, they secure market share and providers. The joint aim is to enhance efficiency, achieve a
open up new markets in growth regions. That is why DEG pro- greater impact, and improve visibility. An important priority
vides financing and advice to medium-sized German enter- is cooperation with the members of the European Develop-
prises in emerging markets and developing countries, offering ment Finance Institutions (EDFI), especially with FMO of the
a range of services that are tailored to their specific require- Netherlands and PROPARCO of France, as well as with the
ments and constantly evolving. In 2017, DEG expanded its of- International Finance Corporation (IFC).
ferings to this group of customers. It joined forces with local
banks and German chambers of foreign trade to open “Ger-
man Desks – Financial Support and Solutions” in Peru, Kenya,
Nigeria and Indonesia. These are central points of contact
SUSTAINABILITY
for German enterprises and their local trading partners; they
offer financial services in cooperation with local banks. Developmental impact
In order to serve its customers’ individual needs, DEG add- DEG evaluates the impact of its commitments in relation to
itionally provides “Business Support Services” (BSS). Enter- the promotion of local development and contributions to the
prises can be supported in further boosting their business global sustainability agenda (SDG) by applying its newly de-
performance and enhancing the developmental impact of their vised Development Effectiveness Rating (DERa). This rating
schemes, usually by involving outside experts. DEG also offers takes advantage of international best practice approaches
promotional programmes to co-finance developmental effect- by using predominantly quantitative and harmonised indica-
ive measures by private-sector enterprises as, for example, tors. Since 2017, DERa has been applied to the portfolio as
feasibility studies or pilot projects. In such cases, DEG deploys a whole and to all new commitments. In alignment with the
its own or public funds to supplement the financial commit- SDGs, each customer’s contributions to development are as-
ment of the enterprises involved. sessed across five impact categories. These are: good and
DEG Annual Report 2017 | Management Report | 17

fair employment, local income, development of markets and conditions are being offered. Certain business activities are
sectors, environmentally sound operations, benefit to local excluded from financing by DEG altogether. These are sum-
communities. marised in an exclusion list. On its website, DEG publishes a
wide range of information about the standards and processes
For 2017, the complete portfolio survey applying DERa it applies.
demonstrates that DEG’s existing customers
For all the proposals to which DEG committed financing in
• employ approx. 1.5 million people, with some 320,000 of 2017, the enterprises concerned have, as in previous years,
those jobs having been newly created since financing was contractually undertaken to comply with national regulations,
provided by DEG, as well as with international environmental and social stand-
• generate EUR 67 billion in annual income locally, of ards. If necessary, DEG assists the enterprises in implement-
which EUR 4 billion relates to tax payments and a further ing the measures required to achieve standards. These in-
EUR 14 billion to wages and salaries. clude the IFC performance standards (in the current version,
revised following an extensive process which included input
The financial institutions and funds reach more than 2 million from DEG) as environmental, social and human rights stand-
small and medium-sized enterprises as existing customers. ards, as well as the core labour standards set up by the Inter-
national Labour Organization (ILO).
With its commitments, DEG contributes in particular to the
following SDGs: Goal 1 (No Poverty), Goal 7 (Affordable and In 2017, DEG was again able to play its part in creating
Clean Energy), Goal 8 (Decent Work and Economic Growth) even better conditions in co-financed enterprises, by agree-
and Goal 9 (Industry, Innovation and Infrastructure). ing environmental and social action plans for proposals with
a potentially higher environmental and social risk. DEG closely
With a DERa score of 76, DEG’s portfolio achieves good supports the enterprises for the entire duration of its com-
developmental quality (scale: ≤ 49 poor, 50–69 satisfactory, mitment and monitors implementation of the action plans.
70–84 good, 85–99 very good, ≥ 100 excellent). Should any issues arise, solutions are worked out jointly with
the enterprises concerned.
For each new commitment, a baseline is established by first
applying DERa before DEG makes an investment. A forecast is An evaluation study, published in 2017, provides evidence
made, outlining the anticipated developmental impacts of the of the positive impact of DEG’s support. The study examined
investment over a five-year period. The DERa baseline score environmental and social management at the banks and funds
for new commitments is 66; the aim over the coming years is in receipt of DEG finance. It showed that these DEG custom-
to increase that to 82. In addition, the 111 new commitments ers continuously broaden their management of environmental
for 2017 are expected to safeguard around 400,000 jobs over and social risks and improve its structure.
five years, of which some 127,000 will have been newly cre-
ated. The implementation of international environmental and In 2017, DEG’s customers also received targeted advice on
social standards, and targeted promotional programmes, e.g. the issue of corporate governance. Concrete measures de-
in the fields of environmental protection, education and train- signed to improve corporate governance were agreed. Over
ing, are additionally expected to improve the developmental the medium term, these should contribute to sustainable busi-
impact of the commitments. ness success. The evaluation of the corporate governance of
enterprises was further refined as part of DEG’s existing lend-
DEG provides information about the developmental impact of ing processes. Members of staff were trained accordingly.
its commitments, and its contribution to the global sustain-
ability goals, in an annual development report. Also in 2017, DEG again supported sustainability initiatives
in relevant sectors and regions. For example, its cooperation
with the Sri Lanka Banks’ Association (SLBA) was further ex-
Environmental and social management tended in 2017, with a focus on training for bank employees
and advisers, and the creation of an e-learning platform.
Environmentally and socially acceptable planning and action
are important prerequisites if development is to be success- DEG also acts in an environmentally responsible way in its
fully and sustainably organised. Investment in developing own operations. In addition to the health and safety of its
countries offer considerable opportunities to improve the en- staff, the sparing use of resources is a priority. All CO₂ emis-
vironmental and social situation on the ground, but there may sions generated by operating the buildings, and by business
also be significant inherent risks. That is why the evaluation travel, are offset by the purchase and retirement of emission
of environmental and social risks is part and parcel of DEG’s credits, as part of the KfW Group’s policy of carbon-neutral
overall risk evaluation. For every proposal, its Sustainability operations.
Department verifies whether actions are environmentally re-
sponsible, human rights are being respected and fair working

Personnel and staff outside such scales, the remuneration system pro-
vides for limited performance-related, variable remuneration
At the end of 2017, DEG retained 570 employees (2016: 539). components. Care has been taken to ensure that the variable
Of these, 396 were staff outside regular pay scales – includ- remuneration elements do not create dysfunctional incentives.
ing 48 senior executives – and 174 were staff on regular pay
scales, including 13 apprentices. Of the employees, 125 were With the introduction of job families in July 2017, the previous
employed part-time (2016: 116). A total of 308 members of Hay Job Evaluation system was removed and replaced by a
staff (54%) were women (2016: 52.5%). The average age was more up-to-date system.
43.7 years (2016: 43.6). The proportion of severely disabled
people was 3.7% (2016: 2.5%). A total of 20 members of staff Members of DEG’s Management Board receive a manage-
were employed in DEG’s representative offices along with 44 ment bonus that depends on achieving defined quantitative
local experts. and qualitative targets. Payment of this bonus is phased over
three years, provided the targets have been sustainably met.
The proportion of women in leadership roles in 2017 was
33.3%. This represents a further increase over the previous The summary below shows DEG’s remuneration structure.
year’s high level (2016: 30.8%).
DEG’s social benefits include a corporate pension scheme,
Members of staff at DEG retain access to a comprehensive group accident insurance, building loans, recuperation allow-
range of qualification measures within their own fields and ances, benefits in case of illness and emergencies, free passes
beyond. Some of these are carried out in cooperation with for travel on public transport, a childcare allowance and com-
KfW and EDFI. In the year under review, DEG invested a total prehensive occupational health management services.
of EUR 1.2 million (2016: EUR 1.1 million) in training, in pro-
fessional development for specialists and senior executives, Declaration on corporate governance pursuant to
and in talent management. Section 289a (4) of the German Commercial Code HGB
The “Law on Equal Participation of Women and Men in Lead-
For junior employees, DEG offers trainee programmes in the ership Positions in the Private and Public Sectors” of 24 April
fields of financing, risk management, financial controlling and 2015 obliged enterprises listed on the stock exchange, or with
IT. In 2017, it added a training programme for qualified bank worker co-determination, to establish targets for female rep-
clerks. resentation among their managing directors. This also applies
to the two executive levels below the Management Board as
DEG again provided scholarships for students at both Cologne well as to the Supervisory Board.
University and the University of Applied Sciences, Cologne
in 2017. As well as twelve national scholarships, it provides In order to fulfil these statutory obligations, the targets to be
three scholarships for disabled students and three for socially achieved by 2021 for female representation in leadership po-
disadvantaged students. sitions on the two management levels, as per Article 36 of the
Law on Limited Liability Companies (GmbH-Gesetz), were set
Staff remuneration is governed by the corporate agreement at 22% for the first management level (divisional heads) and
on “Salary determination and remuneration at DEG”. At the 30% for the second management level (department heads).
beginning of the new financial year, DEG enters into, among Both targets were met in 2017, with 22.2% being achieved at
other things, a personal goal agreement with each member of management level one, and 35.9% at level two.
staff, based on the corporate agreement on “appraisal inter-
views”. The specified goals are based on, among other things, On this basis, targets and fulfilment deadlines for the Man-
DEG’s business goals as agreed with KfW, its business strat- agement Board and the Supervisory Board were set at the
egy and its risk strategy. For both staff on regular pay scales 223rd meeting of the Supervisory Board on 19 June 2017.
Remuneration 2017
Number of employees 2016 management 2017 bonus (for

(number of recipients of Total fixed salaries bonus (for performance performance in 2016)
variable remuneration) (gross) in EUR million in 2016) in EUR million in EUR million
Staff on regular pay scale 1921) (129 recipients) 7.8 0.52)

Staff outside
regular pay scale 4061) (368 recipients) 32.9 5.5
Management Board 3 (3 recipients) 1.0 0.2
1)
The number of employees comprises all persons active in 2017, including any who left over the course of the year. Recipients takes into account all members of
staff who received variable remuneration in 2017, due to having achieved their agreed performance targets.
2)
Based on the corporate agreement, the bonus amount includes a guaranteed bonus of the one half of monthly salary plus a possible variable bonus.

For both bodies, the target is 33% and 1 June 2022 was cho- The Commonwealth of Independent States recorded economic
sen as the fulfilment deadline for both. The two targets were growth of 2.2% in 2017 (2016: 0.4%). This favourable devel-
met in 2017, when female representation on the Management opment was possible because Russia came out of recession,
Board and the Supervisory Board was 33.3% and 42.9%, re- thanks to higher levels of private consumption and a fall in
spectively. inflation. It grew by 1.8% in 2017.
The economy of Sub-Saharan Africa also recovered in 2017,

with GDP growth reaching 2.7% (2016: 1.4%). However, there
ECONOMIC REPORT are stark differences between individual countries. While the
23 countries that are exporters of raw materials – including
Business environment Nigeria, Angola and South Africa – were still struggling to
adapt to the drop in oil revenue and foreign exchange earn-
For the first time since its brief upturn in 2010, the world ings, some of the remaining 22 countries recorded good rates
economy was again in full-blown recovery mode in 2017. As of growth.
a result, global growth rose to 3.7% (2016: 3.2%). The unex-
pectedly strong upturn in the global economy is mainly due to The Middle East and North Africa region also recorded GDP
the fact that, from the point of view of market participants, growth of 2.5% in 2017. Economic development in the oil-ex-
several major risks have receded. For example, the Chinese porting countries continued to be determined by the relatively
government managed to prevent a significant slump. More- low oil prices, which occasionally dropped well below the level
over, the extensive protectionist measures announced by the required to fund government expenditure. While the region’s
US government have yet to materialise. oil importers benefited from the fall in import costs for oil,
they suffered from the reduction of capital flows from the oil-
The main contribution to the upturn in the global economy exporting countries.
came from the industrialised nations, with 2.3% growth (2016:
1.7%). Thanks to increased confidence and an improved credit The upturn in 2017 was the most wide-ranging of the last
supply, the recovery of the economy, especially in the euro- decade, taking in three quarters of the world economy. But
zone, was strong; it grew by 2.4% in 2017 (2016: 1.8%). In de- countries that export raw materials continued to struggle
veloping and emerging market countries, the picture in 2017 with the need to adapt to lower prices. Many countries in the
was mixed, although growth has spread to more countries Middle East, in North Africa, Sub-Saharan Africa and Latin
than in previous years. Overall, the economy of this group of America also suffered political unrest. These are frequently
countries grew by roughly 4.7% in 2017 (2016: 4.4%). the same countries that are most seriously affected by cli-
mate change.
Asian countries (without Japan) recorded GDP growth of 6.5%,
once again making them the fastest-growing group of coun- In keeping with its mandate as a development finance pro-
tries. While the Chinese economy grew by 6%, increased for- vider, DEG continued, in 2017 as in previous years, to operate
eign demand led to a more dynamic economic development in at a complementary level wherever long-term financing for
the other countries of the region. Only in India did the economy private-sector enterprises is unavailable in the market or in
weaken, a trend linked to the country-wide introduction of VAT. short supply.
In Latin America, the development of the economy improved

in 2017 compared to the previous year. Brazil managed to Business development
move out of its economic slump, with strong exports and vir-
tually stable domestic consumption enabling renewed eco- In 2017, the financing and advisory services offered by DEG
nomic growth in 2017 – for the first time after eight quarters were again in great demand. With new commitments of
of decline. In Argentina, too, there is evidence of a clear eco- EUR 1,551.4 million, it was able to build on the previous year’s
nomic upturn. The Mexican economy also produced unexpect- very high volume (2016: EUR 1,553.4 million). In 2017, most
edly positive results in 2017, since the feared slump in invest- DEG financing was again committed in USD, so the result is
ment due to the change in US policy did not materialise. The especially pleasing in the context of the US dollar’s weakness.
region as a whole grew by 1.3% in 2017 (2016: –0.7%).
In the year under review, DEG committed financing for
Growth in European countries outside the EU increased by 111 investment proposals (2016: 94). These commitments,
5.2% in 2017. This was mainly thanks to a stronger than ex- a key performance indicator, have enabled entrepreneurial
pected rise of 5.1% in Turkey’s economic performance. Key investments with an overall volume of EUR 11,271.3 million,
factors were a recovery in the tourism sector and monetary a significant increase over the previous year (2016:
easing, which had political support. EUR 6,550.7 million).

The volume of commitment (total of commitments paid out In total, EUR 556.2 million of new commitments in 2017
and new commitments on own account approved but not yet were for proposals that promoted protection of the climate
paid out) is another key performance indicator for DEG. In and the environment (2016: EUR 561.9 million). Investments
2017, it was EUR 7,246.7 million (2016: EUR 7,731.0 million). in climate protection accounted for EUR 436.5 million of
The fall is mainly caused by the continuing weakness of the this (2016: EUR 439.0 million). Proposals for the development
US dollar as well as, to a lesser extent, by early repayments. of renewables, especially solar energy, were prioritised.
The volume of commitment was spread across 672 involve- By continent, most financing in 2017 again went to Asia,
ments in 83 partner countries; it displayed a largely stable with an increase of around 18%. New commitments for Latin
risk structure. At EUR 1,167.5 million, disbursements (own America were at the same level as the previous year. In Africa,
business) in 2017 slightly exceeded the previous year’s figure DEG’s new business fell back in 2017. This was in part due to
of EUR 1,042.9 million. the ongoing effects of difficult investment conditions gener-
ally. In 2017, as in 2016, financing commitments were spread
By DEG customer cluster, financial institutions and project across 44 countries.
financing increased considerably in 2017 compared to the pre-
vious year. Financing for corporates was at a roughly average Of the new commitments, lendings accounted for EUR 1,076.0
level, whereas 2016 had seen a very large number of new million (2016: EUR 1,115.4 million), of which EUR 87.6 million
commitments. was arranged as loans with equity features (2016: EUR 32.0
million). Newly committed lendings in USD equated to EUR
German corporates are one of DEG’s main customer groups. 1,188.9 million (2016: EUR 1,148.2 million). EUR 475.4 million
In 2017, it reached more than 130 German corporates with of new commitments were equity participations (2016: EUR
its financing and promotional programmes. It made EUR 436.1 438.0 million).
million in equity finance available to them for proposals in
emerging market and developing countries (2016: EUR 252.5
million). As well as loans and participating interests for German Promotional programmes
direct investments, this also includes providing financing to and advisory services
local enterprises for the purchase of German components
either directly or via local banks. DEG provided a further With its promotional programmes, DEG supports mainly German
EUR 26.7 million to 98 German corporates via promotional and European enterprises with their involvements in developing
programmes (2016: EUR 15.7 million for 93 German cor- countries. In 2017, a total of approximately EUR 32.2 million
porates). was available for the promotional programmes carried out by
DEG (2016: EUR 30.2 million). New commitments were made
The proportion of newly committed financing for small and for 173 projects (2016: 180), of which 98 involved German cor-
medium-sized enterprises (SMEs) and medium-sized businesses porates.
(“Mittelstand”) came to an encouraging EUR 829.8 million in
2017 (2016: EUR 870.6 million). So more than half of all com- In 2017, a total of EUR 24.9 million was made available to
mitments went to this customer group. Commitments for risk co-finance measures under the programme “Development
capital financing – equity participations and loans with equity Partnerships with the Private Sector” operated by the Federal
features – amounted to EUR 563.0 million in 2017 (2016: Ministry for Economic Cooperation and Development (BMZ).
EUR 470.0 million). The money went to develoPPP.de, the special initiative
“develoPPP. One World, No Hunger” (SE-WOH), to feasibility
New commitments by customer cluster in EUR million

Financial
Year Corporates institutions Funds Project financing Total
2017 276.4 555.2 349.1 370.7 1,551.4
2016 578.8 433.1 310.1 231.4 1,553.4
New commitments by region in EUR million
Europe/ Supra-regional
Year Asia Latin America Africa Caucasus proposals Total
2017 600.6 501.8 264.9 85.3 98.8 1,551.4
2016 511.6 506.7 331.3 107.5 96.3 1,553.4

studies, Business Support Services, “Up-Scaling”, “German of EUR 1.28 billion in 2017 (2016: EUR 860.2 million). DEG’s
Desks” and the Agency for Business and Economic Development share of the financing came to EUR 441.8 million (2016:
(AWE). EUR 274.1 million).
The “Business Support Services” programme, devised by DEG, In 2017, in addition to deploying its own funds, DEG acted
offers tailor-made advisory solutions for customers. The aim is as “lead arranger” and actively mobilised EUR 247 million for
to improve the businesses’ performance, reduce financing risks 15 commitments with development banks and institutional
and boost developmental impacts. BSS advice services are an investors from the private sector. EUR 73 million of this came
integral part of DEG’s product range. from private investors.
The programme “Climate Partnerships with the Private Sector”,

operated on behalf of the Federal Ministry for the Environment,
Nature Conservation, Building and Nuclear Safety (BMUB),
STATUS REPORT
aims to develop climate-friendly technologies in developing
and emerging market countries. Profitability
In 2017, DEG achieved a positive pre-tax operating result of
Financing in cooperation with other EUR 103.6 million, slightly less than in the previous year. This
development finance institutions was mainly due to a fall in interest income and an increase
in administrative expenses. In part, this was offset by income
DEG also works with partners to finance entrepreneurial in- from the disposal of participating interests, which was higher
vestments. Since 2003, the co-financing vehicle “European than in the previous year, by a lower level of provision for risk
Financing Partners” (EFP), operated by the European Invest- and by a positive valuation effect from currency.
ment Bank (EIB), by DEG and by twelve other EDFI members,
has supported private-sector investments in countries in the The interest surplus in the financial year under review came
African, Caribbean and Pacific regions (ACP). Eleven EDFI to EUR 185.7 million (previous year: EUR 220.8 million). The
members, the European Investment Bank (EIB) and Agence fall is mainly due to USD exchange rate effects.
Française de Développement (AFD) are also partners in the
“Interact Climate Change Facility” (ICCF). This was founded in In 2016, exchange rate effects from interest were still being
2011 to finance private-sector proposals with a beneficial shown as interest income. However, as part of a change in
impact on the climate. Since they were set up, EFP and ICCF presentation, these effects will, in future, be accounted for
have jointly made funding for private-sector investments of under valuation effects from currency. This explains why the
almost EUR 2 billion available. previous year’s interest income was boosted by the sharp ap-
preciation of the USD in 2016, whereas the interest income
In the context of its close cooperation with Nederlandse Finan- for the financial year under review is shown as adjusted for
cierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO) of exchange rate effects.
the Netherlands and Société de Promotion et de Participation
pour la Coopération Economique (PROPARCO) of France, DEG Very little other interest and similar income accrued in the
entered into 38 commitments (2016: 22) with a total volume year under review.
Promotional programmes
DEG own funds 3.4 4.5
BMZ 24.9 21.7

of which develoPPP.de 15.6 15.2
BMUB 1.6 0.9
Gates Foundation 2.3 3.1
Total 32.2 30.2

The result from participating interests for 2017 was EUR sions was written back, mainly because of the statutory
146.5 million, a substantial rise compared to the previous adjustment of the applicable average interest rate. As a
year’s figure of EUR 125.8 million. While there was a slight result, a net allocation of EUR 8.8 million is shown for the
reduction of around EUR 2.5 million in income from dividends, year under review. This includes an effect of EUR 1.7 million
the increase resulted from the successful disposal of individ- resulting from adjustment of the salary trend, and an effect
ual participating interests in the amount of EUR 113.8 million. of EUR –2.0 million caused by a change in the calculation.
Of this, 49% relates to direct investments and 51% to funds.
To account for the risks arising from the economic climate,
Other operating income of EUR 20.0 million was lower than which remains difficult, the net transfer to risk provision
the previous year’s figure of EUR 26.5 million. This item is in the year under review was EUR 126.4 million (2016:
made up of income in the amount of EUR 9.3 million from EUR 136.8 million). Of this, EUR 28.6 million was allotted
commissions or fees on existing loans and receivables, and to the loans and receivables portfolio, EUR 11.0 million to
other earnings in the amount of EUR 10.7 million from the irrevocable credit commitments and EUR 86.8 million to the
provision of advisory services and reimbursements from trust participating interests portfolio. Resulting mainly from the
funds. The fall was mainly the result of a one-off extraordin- sharp depreciation of the USD, the net currency gain of
ary gain of EUR 5.9 million in 2016 from the sale of a conver- EUR 42.6 million from risk provision in respect of loans is
sion right. itemised under valuation effects from currency. The result
from currency conversion in respect of participating interests
Staff costs for the year under review amount to EUR 68.4 falls under the risk provision result.
million. The increase over the previous year’s figure (2016:
EUR 56.7 million) is mainly caused by the change in provisions In the loans business, the net transfer to risk provision
for pensions. In 2016, EUR 0.7 million of provision for pen- dropped considerably compared to the previous year. In the
German accounting standards P&L – economic presentation

Income from lendings 234.8 255.6
Other interest and similar income 0.8 8.4
of which income from interest rate hedging 0.0 6.2
Interest payable and similar charges –49.9 –43.3
Interest surplus 185.7 220.8
Income from disposals 1)
113.8 90.6
Income from dividends 2)
32.7 35.2
Result from participating interests 146.5 125.8
Remaining other operating income3) 20.0 26.5
Staff costs –68.4 –56.7

Non-staff costs 4)
–63.4 –57.2
Administrative costs –131.8 –113.9
Operating result before provision for risk and valuation effects from currency 220.4 259.2
Net provision for risk write-up (+)/write-back (–) –126.4 –136.8
Valuation effects from currency 5)
9.6 –11.1
Profit for financial year before tax 103.6 111.3
Taxes –9.8 –15.0
Transfer/withdrawal from purpose-tied reserve fund 0.0 3.5
Net income 93.8 99.8
1)
Itemised in P&L as “Other operating income”.
2)
Itemised in P&L as “Income from participating interests”.
3)
Itemised in P&L as “Sales revenue” and “Other operating income and/or charges” without income from the disposal of participating interests.
4)
Itemised in P&L as “Cost of services purchased”, “Depreciation of tangible assets” without valuation effects from currency, and “Other operating charges”.
5)
Itemised in P&L as “Other operating income and/or charges”.

year under review, there were fewer non-performing commit- GBP and CHF, on the dates specified by DEG and at KfW’s
ments. For some individual commitments, a sustained decline refinancing rate, plus an internal transfer price set by KfW.
in earnings development or earnings expectations, due to
oversupply or price erosion in the companies’ markets (some DEG was solvent at all times in 2017.
dependent on raw materials), led to risk provision being made
for the first time. Flawed entrepreneurial decisions and faulty
liquidity management on the part of companies also gave rise Net worth position
to a need for risk provision. A certain concentration of risk
provision for Asia was observed. As a result of continuing un- Taking into account the effects from currency conversion,
favourable economic developments, risk provision had to be accruals to investments in partner countries in 2017 amounted
increased for some commitments that were already non-per- to EUR 1,444.1 million in total. Disposals came to EUR 1,955.3.
forming. In some cases, the increase was considerable. How- At original cost, investments in partner countries fell by
ever, this was offset by write-backs of risk provision from EUR 1,511.3 million to EUR 5.473,6 million.
restructuring or winding up, so even in the portfolio of loans
already in default, a lower level of net provision was recorded DEG continued to invest mainly in developing its financial
overall. architecture to create an IFRS 9-compliant system, and in ex-
panding its office space in view of a need for extra capacity.
Transfers in the participating interests business were neces-
sitated by, in some cases, seriously adverse developments af- The rise in other assets is mainly due to excess prepayment
fecting individual commitments throughout the world. For these of corporate taxes, although there are also other counter-
commitments, lower earnings expectations, a downward trend vailing effects. The significant drop in other amounts owed,
in capital market development and delays in business devel- from EUR 103.5 million to EUR 71.8, arises from a change
opment led to risk provision. The devaluation of local curren- to the balancing item for accountancy purposes for the valu-
cies also had an influence on risk provision. ation of securities derivatives from the loans valuation unit.
On the one hand, the hedging volume was reduced by around
Despite the sharp devaluation of the USD, a positive valuation USD 200 million in 2017; on the other hand, the significant
effect from currency of EUR 9.6 million was achieved overall. USD devaluation in 2017 led to a reduction of the balancing
The reason for this was mainly the surplus of liabilities from item for accountancy purposes.
hedging derivatives in respect of the valuation unit used to
hedge the USD loan portfolio. A valuation unit established in Taking into account the profit for the financial year of
2017 to hedge the exchange rate risk for participating inter- EUR 93.8 million, equity increased to EUR 2,461.7 million.
ests in US dollars of USD 180 million displayed no significant
net effect. The remaining exchange rate effects from the Compared to the previous year, business volume (balance
participating interests portfolio are accounted for under the sheet total without trust business) fell by EUR 471.9 million
result from risk provision. As a matter of principle, DEG only to EUR 5,302.5 million.
includes the book values in the valuation units. In relation to
USD currency control, DEG has decided not to account for The equity radio (ratio of equity to business volume) rose
future interest or dividend payments in the valuation units. from 41.0% to 46.4%, a marked increase. The pre-tax return
on equity (ratio of annual net profit before tax to average
equity), a key performance indicator, was 4.3% in 2017,
Financial position placing it in the satisfactory range. As expected, this results
in a good three-year average for 2015–2017 of 4.6%.
In the past financial year, cash inflows from loan repayments
(EUR 1,145.0 million), disposals of participating interests
(EUR 140.9 million) and cash gains from the operating result
were used to make investments in partner countries and in
OPPORTUNITY AND RISK REPORT
bonds and notes under current fixed assets of EUR 1,167.5
million. The debt capital was repatriated. Opportunity management
Debt capital was raised solely from KfW in the form of bor- Against the backdrop of the global sustainability agenda
rowers’ notes and overnight loans. In 2017, EUR 1,987.9 2030 agreed by the United Nations, the promotion of the pri-
million in funds was raised in total and EUR 2,151.6 million vate sector is of major and growing significance in national
repaid. Debt capital is raised based on a refinancing agree- and international development cooperation. At the same
ment with KfW. time, there is increasing demand from private-sector enter-
prises for services that go beyond financing to include solu-
Under this refinancing agreement, KfW provides DEG with re- tions to environmental, governance and social issues. These
financing funds with a term of more than one year in USD, EUR, trends offer additional opportunities for DEG’s development

business. They go hand in hand with an increased input into Here, qualified portfolio management ensures that these op-
achieving the globally agreed sustainability goals. portunities are seized.
As a private-sector development finance institution, DEG

takes advantage of the opportunities that arise. It does Risk management
so within the regulatory framework, by offering businesses
specific financing and advice solutions, differentiated by Overall responsibility for risk management rests with the Man-
customer clusters. agement Board. It sets the risk strategy every year, taking into
account the goals and plans relating to the main business ac-
With this purpose in mind, DEG’s front office departments tivities, as laid out in the business strategy. The risk strategy
continuously identify and analyse suitable opportunities. is first presented to the Supervisory Board. On the Supervis-
These are taken up after coordinating with the Management ory Board’s recommendation, it is subsequently agreed by the
Board and the relevant bodies. Long-term opportunities are Shareholders’ Meeting before being adopted by the Manage-
worked up jointly with the Corporate Development Division, ment Board.
and included in DEG’s annual strategy review process. In this
connection, three goals have been defined: a sustainable The Supervisory Board advises and monitors DEG’s Manage-
return, a business that has an impact on development, and ment Board in its running of the business. In this, it is sup-
a comprehensive offering to the German economy. The overall ported by its committees. These are: the Risk and Credit Com-
aim is to strengthen DEG’s risk-bearing capacity in order to mittee (responsible for risk issues and the approval of credit
fulfil its development policy mandate over the long term. applications); the Executive and Nomination Committee (per-
sonnel issues and questions of principle); the Remuneration
With its expanded range of financing and advisory services, Control Committee (remuneration matters) and the Audit Com-
DEG is able to offer needs-based solutions to meet its cus- mittee (which deals with accounting issues, financial matters
tomers’ requirements, which vary by region, as in other ways. and risk management, and is also responsible for regular
DEG is an important provider of long-term loans, and increas- reporting by Internal Audit and the auditors). Measures and
ingly of risk capital, especially for enterprises in Africa and transactions of vital significance require the express agree-
in other IDA and (post-)conflict countries. Linked to this is its ment of either the Supervisory Board or the Risk and Credit
role in sending a signal and mobilising others. Committee.
Extra potential is also seen in supporting German business The Risk and Credit Committee and the Supervisory Board
abroad. The “German Desks” in selected partner countries are receive quarterly reports on DEG’s risk situation, while the
one way of providing this assistance. Given the global trends Shareholder is updated via monthly reports.
towards urbanisation and digitalisation, there are extra oppor-
tunities with regard to the Project Financing customer cluster In the year under review, DEG’s Internal Audit scrutinised,
in, e.g. the water supply, transport and communications sec- among other things, the processes and methods involved in its
tors. Additional business potential is also seen in the customer risk management system. The priorities were: to review the
segments Financial Institutions and Funds. For instance, there concept of risk-bearing capacity, the implementation of group-
are plans to expand the participating interests business with wide targets, processes involved in operational and organ-
special finance providers, and tap into new customer groups isational structure, validation planning, processes involved in
with innovative business models. DEG is also seeking to achieve preparing the business and risk strategies, stress testing and
greater regional diversification of the funds business, especially capital planning. Measures due in the year under review and
in Africa and Asia. any recommendations by Internal Audit were implemented.
Closely interlinked with financing, the promotional and advis- The Risk Management Committee (RMC), which meets at least
ory services, such as the “Business Support Services”, assist quarterly, is the main in-house body that discusses and decides
DEG customers in further improving their performance in re- on issues relevant to risk, or makes recommendations and
lation to business management as well as environmental and preparations which enable the Management Board to take the
governance matters. Additional developmental impacts may decisions. The RMC deals specifically with: basic issues relevant
also be achieved as a result. to risk, as embodied in the risk strategy; with risk culture, risk
inventory, risk-bearing capacity, stress testing and the intro-
The systematic switch to portfolio-oriented risk-return man- duction and/or evaluation of new products. The RMC addition-
agement is designed to ensure that opportunities are recog- ally deals with matters relating to the measurement, reporting
nised at an early stage. Special attention is paid to the poten- and management of: credit, market price, liquidity, operational
tial of follow-up business with existing customers. and other risks.
At individual transaction and portfolio levels, opportunities The Credit and Equity Risk Committee (CERC) is the main
also arise from restructuring in the non-performing section. joint body, involving both front and back office, which man-

ages DEG’s credit risk (from loans and participating interests). out under the Internal Control System (ICS) in order to miti-
CERC advises the front and back office departments that are gate risks, ensures compliance with the key requirements
responsible for new business and inventory management. It governing proper business activity, and identification of risks
also provides guidance on issues affecting credit risk and ad- inherent in the processes. It also ensures that the installed
vises the Management Board. The continuous refinement and controls are applied (ICS testing).
improvement of credit risk processes contributes to safeguard-
ing DEG’s earnings and net worth position.
Risk strategy
DEG is represented in the corporate bodies that deal with risk
management at KfW and hence integrated into the group’s co- Key types of risk are identified in an annual risk inventory.
ordination processes. The following distinct risk types are significant for DEG: credit
risk in the wider sense, market price risk, liquidity risk and op-
DEG is exempt from key requirements of the German Banking erational risk. Credit risks are top of the list, given DEG’s busi-
Act (KWG). However, in addition to subscribing to KfW’s basic ness model. Under the business model, financing is mainly
corporate risk principles, which apply across the group, it vol- provided in foreign currency, so foreign currency risk is an-
untarily complies with the standards of the Bank Supervision other significant factor in its risk profile.
Act, in particular the Minimum Requirements for Risk Manage-
ment (MaRisk). As part of DEG’s strategy process, the risk strategy is drawn
up to reflect the key risks that arise from its business strat-
In keeping with MaRisk provisions, the design of DEG’s organ- egy. The risk strategy covers management of the risks asso-
isational structure ensures that the Market and Trading front ciated with DEG’s main business activities, and lists measures
office divisions, up to and including Management Board level, to meet each risk target. It includes statements on risk ap-
are separate from the back office divisions or functions. petite and risk-bearing capacity, taking into account risk and
earnings concentrations, and establishes general conditions
Risk management requirements, as defined by risk controlling, for operational risk management. The risk strategy illustrates
are applied specifically in the front office Market and Trading the planned long-term approach by which the risk targets, as
divisions. In the context of their business activities, they not defined, are to be met.
only bear primary responsibility for risk and earnings, but also
for DEG’s customers and products. The aim of the risk strategy is to limit possible adverse devel-
opments affecting DEG. It is the result of strategic planning
The back office and non-market-dependent divisions are re- and covers a medium-term planning period. Quantitative re-
sponsible for, among other things, risk controlling (risk strat- quirements (budgets, limits) are defined for a one-year period.
egy, methodology, evaluation, reporting and market conform- Risk-bearing capacity is assessed over a period of several
ity review), credit management (allocation of responsibilities years and includes a scenario featuring an adverse develop-
in the credit business, preparation/approval of ratings, second ment (capital planning). Since the risk strategy is drawn up in
vote, ownership of intensive support methods and processes, conformity with KfW’s guidelines, DEG can be sure that both
non-performing loans (restructuring, disposal)) and transaction its risk strategy, and the risk management measures derived
management (processing of commercial transactions, payment from it, are consistently embedded within KfW’s group-wide
transactions and custody). risk strategy.
The compliance function is part of risk management as per The risk strategy is carried out by means of installed man-
MaRisk AT 4. Responsible entrepreneurial action is based on agement processes and instruments. Monitoring is performed
complying with rules and laws. DEG’s compliance manage- monthly in the course of risk reporting. Where deviations
ment is designed as integrated, process-oriented non-financial from the risk strategy occur, the causes are analysed and
risk management. It ensures risk transparency and risk miti- commented on, recommendations for action are derived and
gation by applying individual compliance sub-functions, which measures agreed and implemented.
monitor the propriety of business activity. These are specifi-
cally: MaRisk compliance as per MaRisk AT 4.4.2: prevention of DEG’s risk strategy goals are: to maintain its economic risk-
money laundering and fraud; monitoring the observance of fi- bearing capacity at the defined economic solvency level, and
nancial sanctions and protecting against the financing of ter- to meet the supervisory authority’s requirements for equity
rorism; data protection, information security, operational con- capital, as per the Capital Requirements Regulation (CRR) and
tinuity management and the monitoring of operational risks. KWG, with which DEG complies voluntarily. On this basis, and
taking into account the risk limits and qualitative requirements
The MaRisk compliance function identifies compliance risks specified in its risk strategy, DEG decides whether risks are to
that may result in endangerment of DEG’s assets, and evalu- be accepted, reduced, limited, avoided or transferred.
ates the associated implementation of appropriate and effect-
ive measures. The process-integrated monitoring, carried

Risk-bearing capacity For operational risks, DEG’s individual business activities in
defined business areas are weighted with special risk factors
DEG’s risk-bearing capacity is determined and monitored when calculating capital requirements, as required by BaFin
monthly under economic aspects (gone concern approach), in the standard approach under Basel II rules. DEG’s business
and quarterly under regulatory aspects. For both views, min- is currently held to fall under the regulatory business lines
imum equity capital requirements are defined and must be Corporate Banking and Corporate Finance/Advice.
observed. These requirements apply both in target date view,
as well as over the multi-year period involved in capital plan- The calculation of regulatory equity capital requirements,
ning (baseline and adverse scenario). The solvency level for using the standard approaches in accordance with the CRR,
economic risk-bearing capacity is defined as 99.96%. takes into account credit risk, foreign currency risk and oper-
ational risk.
Article 26 of Germany’s Capital Requirement Regulation
(CRR) defines regulatory risk coverage as the core capital, i.e. Compared to 2016, there was no significant change in risk
paid-up share capital including retained reserves, taking de- situation and risk-bearing capacity. The increase in foreign
ductible items into account. DEG takes the (as yet) unapproved currency risk is balanced out by a reduction in credit and
quarterly result or, if applicable, the profit for the financial interest rate risks.
year into consideration in risk coverage. Economic risk cover-
age comprises the whole of DEG’s core capital.
Stress tests
The economic capital requirement is established for all signifi-
cant, distinct types of risk, and compared to the risk coverage DEG carries out quarterly standard stress tests and deploys
for a gone concern approach. The future outlook is considered individual stress test scenarios, as warranted by events, in
by simulating risk-bearing capacity over a one-year period un- order to assess and analyse the impact on the risk-bearing
der downturn and stress conditions (going concern view). In capacity of potentially adverse overall economic conditions,
addition, risk-bearing capacity under ideal going concern con- taking risk concentrations into account.
ditions is calculated annually.
The stress tests cover different types of risks, specifically
The economic capital required for credit risks arising from credit risk, market price risk and operational risk. DEG per-
the financing business, as well as from the derivatives busi- forms calculations for two scenarios. For each one, it calcu-
ness and temporary investments (counterparty risks), is cal- lates the effect on P&L and the required economic and regu-
culated using a credit portfolio model (Internal Ratings Based latory capital, and arrives at the impact on risk-bearing
Approach (IRBA) formula), as per the CRR. The level of eco- capacity as a result. In the downturn scenario, the analysis
nomic capital depends on individual borrower ratings and is designed to show which recognisable risk potentials might
product-dependent loss ratios. Counterparty risks largely re- materialise in a slight economic downturn. The stress scen-
late to KfW. ario assumes a serious recession.
The economic capital requirement for market price risks In devising its stress scenarios, DEG draws on the results of
(interest rate and foreign currency risks) is measured and its measurement of risk concentrations and of its “Heat Map”.
managed using Value at Risk (variance/co-variance approach), In 2017, DEG selected the scenarios “US protectionism”,
with a solvency level of 99.96%. The risk rating is based on “Economic slowdown and rising credit defaults in China” and
the present value of any portfolio positions subject to interest “China: debt crisis in the regions” as event-based stress tests
rate and foreign currency risks. Present values are determined when it performed its calculations. In all scenarios, DEG was
daily. All cash flow components are considered for which an able to demonstrate a good level of risk-bearing capacity.
impairment, due to a change in market price, may lead to the
erosion of risk coverage. In risk measurement, the cash flows DEG additionally carries out reverse stress tests to analyse
are declared due on the next date on which the customer has which scenarios might lead to the total erosion of its unallo-
the option of terminating. This is in keeping with a group re- cated risk coverage. For this purpose, it is assumed that risk
quirement. The calculation of Value at Risk is additionally factors are subject to unlikely, but plausible changes and
based on the following model assumptions: 1) normal distri- shocks.
bution of profits and losses, 2) mean value of distributions is
zero, 3) linear dependence between present-value changes in The selection of scenarios and the results of stress test cal-
the portfolio and changes in risk factors, 4) correlations be- culations are discussed in the RMC. All the results are used to
tween interest rate and currency risks not taken into account, assess risk-bearing capacity and taken into account in me-
5) risk horizon for liquid currencies of two months (42 days) dium- to long-term planning.
and 6) one-year risk horizon for non-liquid currencies (252 days).

The analysis of risk-bearing capacity under stress conditions integrated into KfW’s corporate system of limits. Existing
showed that the risks undertaken by DEG were tenable, both limits must be observed, whether set by DEG or by the group.
on the effective date of 31 December 2017 and at all times Acute risks in countries and sectors are additionally limited
throughout the year. based on risk guidelines prescribed by the group. These use
a traffic light system to monitor and manage transactions in
the markets affected.
Types of risk
Breaches of the limits are analysed according to the rules
The following distinct risk types are rated as significant for laid down in the Risk Manual, reported to the Management
DEG’s business activities in its risk inventory: Board and listed in the risk report. When limits are breached,
possible actions are devised and measures implemented, or
Credit risk their implementation addressed. For most of its business,
Credit risk (in the wider sense) includes the risk of a possible DEG applies KfW’s corporate rating methods for banks, cor-
deterioration of creditworthiness, with default by the con- porates, equity funds and countries. These methods are val-
tractual partner as a special case. Counterparty default risk idated on a group-wide basis. For a smaller proportion of
(including counterparty risk, securities risk and country risk), its business, DEG applies its own rating methods, which are
the risk from operational participating interests, migration validated according to its own model validation policy.
risk and settlement risk are subsumed under credit risk in this
wider sense. For all commitments, a ratings review is carried out at regular
intervals, or if early warning indicators are present. As from
Because DEG’s business model is shaped by development pol- an M 16 rating, intensive support kicks in. This includes closer
icy, its portfolio mix – as it relates to the country and credit supervision of the commitment, as well as measures designed
risk classes of its commitments – displays a structurally high to safeguard the assets. In the loans portfolio, interest and
risk content. redemption payments are continuously monitored, in order to
extrapolate possible early warning indicators. Where serious
As the breakdown of the volume of commitment by region disruptions have occurred, the commitment moves on to be
and by industry shows, DEG’s risk policy positioning creates managed as a non-performing asset. Such disruptions include,
concentrations in its portfolio. Overall, the distribution by e.g. persistent payment arrears (more than 90 days), the well-
region is not critical in terms of risk. founded suspicion of criminal conduct on the part of borrow-
ers, or other circumstances leading to the expectation that
Distribution by industry displays concentrations mainly in the fulfilment of the contract by the partners is at risk. As required
financing of financial institutions (proportion of banks and by the regulator, management of a non-performing asset is
insurance companies: 31.22%; proportion of funds: 22.91%) carried out by specialist staff and is designed to stabilise or
and for enterprises in the energy sector. To restrict such wind up the commitment, though not necessarily the enter-
concentrations, DEG has defined limits at country level for prise. The department responsible reports at least quarterly
these industries. on the development of non-performing commitments and any
insights gained.
DEG has additionally defined limits at institutional level for
individual counterparties, groups of associated customers, and The non-performing obligo (volume of commitment with an
countries. The limits are defined according to DEG’s earnings M 19 or M 20 rating) fell in 2017, both in absolute and per-
and equity capital situation, and determine the scope for the centage terms. As at 31 December 2017, the non-performing
implementation of its business strategy. Beyond that, DEG is obligo amounted to EUR 593 million (8.2% of the portfolio),
Risk-bearing capacity
EUR million 31.12.2017 31.12.2016

Economic capital requirement 1,254 1,273
Credit risks 870 919
Market price risks 316 290
of which interest rate risks 29 76
of which foreign currency risks 287 214
Operational risks 68 64
Economic risk coverage 2,455 2,362
Unrestricted equity 1,201 1,089

a drop of EUR 83 million compared to the previous year risks. Key types of market price risk for DEG are interest rate
(31 December 2016: EUR 676 million; 8.7% of the portfolio). risk and foreign currency risk.
To measure the risk provision required in individual cases, and In the year under review, the risk values (Value at Risk) for
using the evaluation tools available, a determination is car- interest rate risk, supplied by KfW at the end of each month,
ried out at regular intervals and on an event-driven basis, e.g. were adopted by DEG and maintained unchanged for the entire
as soon as any depreciation has been identified. The aim is to month. DEG itself calculated the currency risk daily. The eco-
establish the need for specific loan loss provisions in respect nomic capital requirement for interest rate and foreign cur-
of amounts owed on loans and participating interests, or the rency risk is made up of a stop-loss buffer for cumulative
need to make individual provisions for probable losses from present-value losses over one year, and the possible present-
guarantees. Provision is also made in the form of a portfolio value loss that may additionally occur when a position is
value adjustment, based on the expected loss. Additional re- closed (Value at Risk).
marks describing the method of making risk provision can be
found in the appendix under Accounting/valuation criteria. Of primary relevance to risk management is economic
risk-bearing capacity, and hence the economic capital require-
If the economic outlook in its investment countries should de- ment per risk type. Where 90% of the stop-loss limit has been
teriorate, DEG would run the risk of a worsening outlook for reached, management of the position requires the express
restructuring or winding up. In that case, risk provision might consent of the Management Board. If the limit is breached,
prove inadequate. DEG’s Internal Audit and KfW must be informed.
Market price risk A daily risk report ensures that market price risks are con-
In DEG’s case, market price risks are confined to the asset tinuously monitored at DEG. This is supplemented by a more
book. Market price risk includes interest rate risks, foreign detailed monthly risk report and by an installed process for
currency risks, credit spread risks from securities and basis ad-hoc reporting when limits have been breached.
Volume of commitment by credit and country risk classes
Country or credit Credit risk Volume of commitment at 31.12.2017

risk classes
Country risk Credit risk
on the M scale
EUR k per cent EUR k per cent
M 1 to M 8 Investment grade 3,661,600 51% 261,959 4%
M 9 to M 15 Speculative grade 2,836,576 39% 5,393,977 74%
M 16 to M 18 Intensive support 748,562 10% 997,963 14%
M 19 and M 20 Default 0 0% 592,839 8%
Total 7,246,738 100% 7,246,738 100%
Regional distribution of industries by commitment volume
Latin and Previous

Share of portfolio in % Europe/ North year
(commitment volume at 31.12.2017) Africa Asia Caucasus America Total 31.12.2016
Financial institutions 11.50 15.28 10.75 16.60 54.13 51.89
Manufacturing 1.94 6.08 1.88 4.15 14.06 15.93
Energy & water supply 3.56 4.06 2.33 5.64 15.59 13.91
Transport, telecoms, infrastructure 1.48 1.25 0.46 1.36 4.54 4.98
Other services, tourism 1.01 2.06 1.91 2.78 7.76 9.33
Agriculture, forestry, fisheries 0.69 0.40 0.68 1.47 3.23 3.30
Mining, quarrying, non-metallic minerals 0.59 0.00 0.00 0.10 0.68 0.67
Total 20.76 29.12 18.02 32.10 100.00
Previous year, 31.12.2016 19.31 28.92 19.90 31.87 100

The economic capital requirement for interest and foreign hedging relationship is represented by a valuation unit as
currency risks at year end is presented below. per Article 254 of the German commercial code (HGB). Any
remaining foreign currency risks are limited by the stop-loss
a) Interest rate risk buffer and the economic capital (ECAP) budget.
Interest rate risk is defined as the risk of losses due to a
change in the interest rate structure unfavourable to DEG. Transactions in USD are largely hedged using a macro con-
In relation to DEG’s financing business, interest rate risk trol system, while other currencies that require hedging are
refers to the potential loss that results when a commitment hedged on a case-by-case basis. To achieve this, macro valu-
made to a customer on specific terms is not refinanced, or ation units (USD positions) and micro valuation units in local
only refinanced at a later date, after a rise in interest rates, currencies are formed – currently the Mexican peso, the Rus-
or on terms mismatched in some other way (period, method sian rouble, the South African rand and the Turkish lira.
of interest calculation).
Additional information on how the valuation units are ac-
By a limited exposure to open interest rate risk positions, counted for on the balance sheet can be found in the appen-
DEG generates income from maturity transformations. This dix under Accounting/valuation criteria.
strategic interest rate risk position is limited and managed
via the available economic capital budget and by means of To examine the effects on the current portfolio of extraordin-
a prescribed range, based on the Delta Present Value of one ary market fluctuations affecting foreign currencies, daily sce-
Basis Point (DPVBP). nario calculations are carried out. For foreign currency risk,
the calculations establish the change in present value for an
To examine the effects on the current portfolio of extraordinary ad-hoc exchange rate movement of 10%.
market fluctuations affecting interest rates, daily scenario
calculations are carried out for present values. These factor Liquidity risk
in an interest rate shift of +/– 200 basis points (supervisory Liquidity risk can be broken down into the following variants:
standard shock) across all currencies. The simulations are ap- “market liquidity risk”, “institutional liquidity risk” and “refi-
plied to all the positions in DEG’s asset book for which inter- nancing risk”. Market liquidity risk is the danger of losses (in
est rate risks come into play. value) if insufficient liquidity in the market means that DEG,
in an effort to procure liquidity, is unable to trade assets at
b) Foreign currency risk all, in a timely manner, fully or in sufficient number, or at fair
Foreign currency risk is the danger of losses due to an ex- market conditions. Since DEG does not trade financing funds
change rate movement that is unfavourable to DEG. In order or assets in order to procure liquidity, this type of risk is not
to fulfil its development mandate, DEG indirectly incurs relevant.
foreign currency risks as part of its loans and participating
interests business. Institutional liquidity risk is the danger that DEG is unable to
meet its payment obligations at all, on time or in full. This in-
Where feasible and appropriate, open foreign currency pos- solvency risk to DEG is significantly limited by the existing re-
itions from the loans business are closed by means of refi- financing commitment by KfW, which assures DEG of access
nancing or hedging transactions. The exceptions are transac- to liquidity via KfW. So any insolvency risk to DEG is directly
tions in non-liquid currencies, where trading in the financial linked to the group’s liquidity risk. KfW is supported by a fed-
markets is either very limited or not possible at all. eral guarantee, so despite a comparatively high liquidity re-
quirement (EUR 653.9 million, as per the 2017 risk inventory),
Cash flows from the participating interests business or divi- an institutional liquidity risk is virtually ruled out. So DEG is
dend payments are hedged, provided the likelihood of their only exposed to institutional liquidity risk to a very minor de-
occurring can be determined with sufficient certainty. In 2017, gree and rates the risk as not significant.
DEG also started hedging a portion of its participating inter-
ests portfolio against movements in the USD exchange rate. Refinancing risk is the danger of losses (in value) if DEG can-
According to German commercial accounting standards, the not obtain refinancing funds (liabilities side) at all, in full or
Economic capital requirement
EUR million 31.12.2017 31.12.2016

Market price risks 316 290
of which interest rate risks 29 76
of which currency risks 287 214

only at increased market rates. Here, there is a risk that refi- Behavioural risk describes the danger of losses due to the in-
nancing costs rise at short notice and can only be passed on appropriate provision of financial services; this includes cases
to customers in part or not at all. The possible effects from of deliberate or negligent misconduct. Situations under this
a rise in refinancing costs and the resulting dangers to DEG’s heading are, e.g. unsatisfactory behaviour on the part of DEG,
net worth, financial or earnings situation are comparatively its staff or its representatives, which may result in customers
minor (EUR 2.4 million impact on P&L according to the risk not receiving fair treatment or fair terms of business, or the
inventory). As a result, this risk is also rated as not significant. integrity of the financial markets or the wider financial sys-
tem being adversely affected. Strict auditing of commitments,
Since liquidity risk is, however, a significant risk type in prin- the redesign of the New Products Process, and regular train-
ciple according to MaRisk AT 2.2, DEG rates liquidity risk as ing for DEG staff and representatives in supervisory bodies
a significant risk type. make a major contribution to monitoring and mitigating this
type of risk.
Liquidity risk is countered by secure liquidity provision at an
appropriately high level, by careful management and planning Model risk is the possible loss an institution may suffer due to
of payment flows from the financing business and from refi- decisions being taken based mainly on the results of internal
nancing, and by careful liquidity planning. Liquidity risks are models, where the development, implementation or application
limited by an indicator to safeguard minimum liquidity. It re- of such models is faulty. DEG uses its own models as well as
mains unchanged compared to the previous year, at 10% of models developed and validated centrally by the group (e.g.
non-disbursed commitments. This safeguards one month’s rating processes). DEG is integrated into the development pro-
disbursements during normal business operations. The Man- cesses and plays an active part in the validations. The meth-
agement Board is immediately informed if DEG falls short of ods and processes DEG uses to determine risk-bearing capac-
the liquidity limit. ity are regularly validated, and refined as required. Models
with no immediate influence on capital requirement are evalu-
DEG ensures that liquidity costs are taken into account as ated as part of OpRisk management and the OpRisk evalua-
part of systemic pricing (preliminary costing). tion, which has to be carried out annually.
Operational risk Outsourcing risk is the danger of losses (in value) that may
Leaving aside typical banking sector risks, the management occur because of substandard or inadequate performance by
of operational risks (OpRisk) is significant. Operational risk the service provider, as well as due to a default on the pro-
is defined as the danger of losses incurred due to the unsuit- vider’s part (failure to perform). This is closely monitored by
ability or failure of internal processes, personnel or systems, integrating OpRisk management into the materiality evalua-
or because of external events. This definition includes con- tion and by subjecting the risk of outsourcing to an ongoing
sideration of the following risk sub-types: legal risks (incl. rating process.
compliance risks) behavioural risks, system & ICT risks, model
risks and outsourcing risks. Of these sub-types, system & ICT One of the main OpRisk instruments is the continuous iden-
risks and legal risks (incl. compliance risks) were rated as tification of loss events that have occurred. Provided they
significant in the risk inventory. are above a minimum level of EUR 1,000, these are recorded
in a group-wide OpRisk events database. In addition, annual
System and Information & Communication Technology (ICT) OpRisk assessments are carried out, based on external and in-
risks describe the danger of losses due to the unsuitability ternal loss data and expert appraisals. The purpose is to iden-
or failure of hardware and software and/or technical infra- tify, rate and manage further potential operational risks with
structure, which may adversely affect the availability, integ- a view to reducing them over the long term. DEG’s manage-
rity, confidentiality and security of that infrastructure or of ment receives a comprehensive report on OpRisk events, the
data. This also extends to cyber risks. This risk moved into results of the analysis and any risk mitigation measures de-
focus during the 2017 risk evaluation round, especially given rived from them.
current developments. It is being continuously monitored as
part of information security management. In order to comprehensively counter operational risks, DEG
has identified process-inherent risks, and defined controls to
Legal risks comprise the risk of losses arising due to a breach mitigate these as part of its process-integrated monitoring.
of, or failure to comply with, regulations, which subsequently Depending on the risk categories assigned to the processes,
results in legal disputes, or other actions designed to prevent a review of the correct application of the processes is carried
litigation. Legal risks play a key role for DEG, since its busi- out at least once a year (ICS testing). The results are reported
ness activities extend across many countries with a range of to the management. This is supplemented by the continuous
different legal systems. Any risks to DEG’s legal positions are development of DEG’s IT landscape and business processes.
countered by involving the legal department early on, and by
reviewing the formal and actual legal framework in invest- DEG’s operational processes for IT are defined according to
ment countries. ITIL standards. They are subject to regular in-house checks

and reviewed at least once a year by Internal Audit. IT strategy ations in results because of possible changes in the general
is in line with DEG’s corporate strategy and is updated annu- business climate. These include, e.g. market environment,
ally in coordination with the Management Board. To ensure customer behaviour and technological progress.
the management, control, protection and continuous optimisa- • Strategic risk: danger of losses (in value), or a deterioration
tion of information security, DEG has defined a comprehen- in the liquidity situation, caused by in-house decisions relat-
sive and integrated management system, including rules and ing to DEG’s fundamental strategic direction and the devel-
processes, based on international ISO/IEC 27001 standards. opment of its business operations; due to inadequate
Should unforeseeable external events occur, Business Con- supervision of the way strategies are being implemented.
tinuity Management (BCM) describes a holistic management • Pension risk: danger of the earnings, net worth or liquidity
process that covers all aspects required to maintain critical position coming under pressure due to rising pension obli-
business processes and reduce losses. BCM includes both pre- gations.
ventative and reactive components (contingency planning and • Real estate risk: danger of losses (in value), if real estate
emergency and crisis management, respectively). The emer- used by DEG or third parties, which is owned by DEG either
gency processes as defined are regularly subjected to a stress directly, or indirectly through real estate funds/companies,
test and further refined as part of a regular crisis manage- is affected by rent defaults, partial write-downs or other
ment team exercise. (disposal) losses.
• Project risk: danger of losses due to events or circum-
Concentration risk stances which arise specifically from unsubstantiated plan-
Concentration risk is understood to be the danger of serious ning assumptions and subsequently, during the implemen-
(asset) losses or a serious impairment of DEG’s liquidity situ- tation phase, affect the achievement of the project goal in
ation, caused by especially large individual risk positions or by terms of cost, time or quality.
increased correlations in DEG’s risk positions. A distinction is • Leverage risk: danger arising from DEG’s exposure due to
made between intra-risk and inter-risk concentrations. a debt possibly necessitating unforeseen corrections to the
business plan.
The effects of these superordinate risks are included in the • Derivatives risk: danger of losses (in value), or an impair-
measurement of all other risk types. Limits are set for ob- ment of DEG’s liquidity situation, associated with deriva-
served risk concentrations in industries or regions. tives transactions (swaps, options, forwards/futures) or
with embedded derivatives (borrowers’, issuers’ or debtors’
Regulatory risk voting rights).
Regulatory risk is the danger of pressures on DEG’s earnings,
net worth and liquidity situation, and of changes to its busi- These risks are managed depending the relevance of each in-
ness plan and/or business policy direction, due to new require- dividual risk type for DEG.
ments arising from regulations or commercial law.
In the 2017 risk inventory, which applies in the 2018 financial
In the course of its integration into the KfW Group, and in year, the following changes were made compared to the pre-
close consultation with KfW, DEG has implemented active vious year:
tracking of changes in its regulatory environment. This en-
sures the early identification of new requirements and the • Risk from strategic participating interests is no longer rele-
timely extrapolation of possible measures. Regulatory risk vant, since the only existing strategic participating interest
is countered by deploying a conservative traffic-light system has meanwhile been sold.
valid in all multi-year capital planning scenarios, as a man-
agement and early warning tool. In the period under review, both regulatory and economic
risk-bearing capacity were guaranteed at all times. The com-
Other risks pany has sufficient reserves at its disposal to take account
In its risk inventory, DEG reviews all risk types within a de- of any future adverse developments, and any other risks that
fined risk universe at least once a year for relevance and sig- might become significant. No risks or developments are iden-
nificance. In 2016, DEG included the following relevant, but tifiable which might have a material effect on the future per-
not significant risk types as a group under Other Risks: formance of the business.
• Reputation risk: danger of a longer-term deterioration in

the public perception of DEG in the view of relevant internal
and external interest groups, with adverse consequences
INTERNAL CONTROL SYSTEM (ICS)
for DEG.
• Risk from strategic participating interests: danger of losses DEG defines its Internal Control System as all the corporate
(in value) as a result of providing equity capital to third par- principles, processes and measures, which, given the type,
ties, provided these are strategic participating interests. complexity and risk content of its business activities, are
• Business risk: danger of losses due to unexpected fluctu- designed to ensure:

• the effectiveness and economic efficiency of its business The internal management system also includes all overall
operations, bank management regulations introduced to date. To ensure
• the correctness and reliability of its internal and external compliance with defined requirements for the management
financial reporting, of corporate activities, the implementation of the annual
• compliance with any statutory regulations that apply business and risk strategies is regularly monitored, and re-
to DEG, ports are submitted to the appropriate bodies.
• protection of the assets and substance of its financial
and net worth positions, The effectiveness of DEG’s Internal Control System is reviewed
• fulfilment of its public benefit mandate as per its articles by the second line function, which instructs outside experts
of association, and to monitor the proper application and implementation of con-
• fulfilment of the requirements for its exemption as per trols (ICS testing). This review is supplemented by a review,
Article 25a of the German Banking Act (KWG). carried out regularly by Internal Audit, of whether the ICS
has been suitably designed. The results of these reviews are
The KfW Group’s ICS is set up to comply with the require- reported to the Supervisory Board once a year. This report
ments of Germany’s laws on bank supervision, specifically the rounds off existing risk reporting. During the function and ef-
German Banking Act (KWG) and the Minimum Requirements fectiveness review for 2017, 161 key controls for risk classes
for Risk Management (MaRisk), as well as with market stand- II to IV (processes carrying medium risk and high risk, respect-
ards. In keeping with these requirements, DEG’s Internal Con- ively) were subject to testing. Based on this review, which was
trol System defines the provisions for rules on structure and supplemented by the results of rule verification to confirm the
process organisation, as well as risk management and risk suitability of its design, DEG’s ICS was judged to be funda-
control processes, including risk reporting and risk controlling. mentally effective.
The ICS approach takes in five components: control environ-
ment, risk evaluation, control activities, information/commu-
nication and monitoring. Taking its cue from KfW’s ICS frame-
work, DEG has formulated its own guidelines, which describe
OUTLOOK
the aims, structure and principles of its Internal Control Sys-
tem. It defines the quality standards and the measures em- World trade and world economic growth have displayed a
ployed by DEG to achieve its goals and identify, evaluate and distinct upturn since the end of 2016. More and more econ-
reduce risks. The ICS extends to all business units, including omies are being drawn in. As a result, world economic growth
representative offices, and applies to all corporate functions in 2018 is expected to increase by 3.9% (2017: 3.7%). The
and processes. ICS design and implementation fall within the main contribution is likely to come from the industrialised na-
remit of the Management Board and those senior DEG execu- tions, where economies are expected to grow by around 2.3%,
tives who have strategic and operational responsibility for the as in 2017. Economic growth of 4.9% (2017: 4.7%) is forecast
process. for developing and emerging market countries, though devel-
opment within this group of countries remains very heteroge-
The internal monitoring system is based on the written or- neous.
ganisational rules (Schriftlich Fixierte Ordnung SFO). It estab-
lishes the framework for a proper business organisation. Re- The business climate in developing and emerging market
sponsibility for implementing suitable controls rests primarily countries is expected to remain favourable in 2018. The in-
with the departments responsible for the respective pro- dustrialised nations are also likely to grow their economies
cesses. Risks and failure effects are analysed for each process further over the next year or two, driven by the rise in private
relevant to the risk, and appropriate control measures are consumption and corporate investments. It is also reasonable
specified. This includes assigning responsibility and undertak- to assume that most central banks in developing and emerg-
ing verification. Processes and the definitions of controls are ing market countries will ease rather than tighten monetary
regularly updated. policy. Prices of raw materials are expected to remain stable,
as is world trade.
Overall monitoring of the functional capacity of the ICS
across the institution is carried out as part of the “second China is an important driving force for the world economy as
line of defence”. Tasks are clearly allocated within the context a whole and specifically for developing and emerging market
of risk assessments, which serve to monitor the propriety of countries that export raw materials. In 2018, Chinese growth
business activity, specifically central ICS coordination, MaRisk is expected to slow from 6% in 2017 to 5%. This would not
compliance as per MaRisk AT 4.4.2, money laundering and put the recovery in developing and emerging market countries
fraud prevention, compliance with financial sanctions, protec- at risk.
tion from financing of terrorism, data protection, information
security, business continuity management and central coord- In Asia as a whole (without Japan), most countries benefit
ination for the purpose of monitoring operational risks. from the upturn in global development, on the one hand, and

a healthy domestic economy, on the other. In India, economic Finally, the loose monetary policy of the past decade has
development had slowed in the first half of 2017, but is likely increased the susceptibility of the global financial system to
to pick up again in 2018 (forecast: 6.5%; 2017: 6.0%). Overall, market and liquidity risks. Continuing to pursue this policy
the region is expected to continue to grow by 6.5% in 2018. would only increase these risks. If normalisation is not care-
fully managed, significant disruptions may occur if there is a
Compared to Asia, the outlook for Latin America is less posi- rapid increase in risks premiums and volatility.
tive, with forecast growth of 1.9%. However, this is better
than the previous year’s development. For example, despite
the political crisis, the Brazilian economy is expected to in- Corporate outlook
crease its rate of growth from 1% in 2017 to 2.8%. The out-
look for Mexico has also improved, while the recovery of Ar- In 2018, DEG expects to continue to operate in a challenging
gentina’s economy is expected to continue over the coming environment shaped by high levels of liquidity in its target
quarters. markets, by geopolitical risks and regulatory requirements.
At the same time, opportunities will emerge during the antici-
Growth of 4.0% is forecast in 2018 for European countries pated global economic upturn, especially in its target region
outside the EU (2017: 5.2%). Turkey’s economy is expected to of Africa, which is also the focus of such political initiatives
slow down in 2018 to 2.5% (2017: 5.5%). The Commonwealth as “Compact with Africa”.
of Independent States is likely to record a similar level of
growth (2.2%) in 2018 as in 2017. In Russia, the recovery is DEG’s strategic planning is based on a target portfolio, from
still at an early stage and may continue for some time, partly which guidelines for each year’s new business are derived.
due to the weak rouble. As a result, GDP growth of 2.5% is For 2018, DEG is aiming to achieve EUR 1.7 billion in new
forecast for 2018. commitments. In addition, DEG is planning to use its financing
to mobilise additional funds of EUR 350 million from other
The outlook for Sub-Saharan Africa has improved, with growth finance providers and institutional investors.
of 3.3% expected in 2018 (2017: 2.7%). However, the situation
of individual countries in Sub-Saharan Africa varies consid- The applications for financing received by the end of 2017
erably. For instance, given the continuing weakness of the oil reached EUR 1.5 billion in total, suggesting that demand from
price, the oil-exporting countries are likely to experience below- businesses for DEG’s services will continue in 2018.
average growth. By contrast, the group of West and Central
African countries should experience a much more favourable The volume of commitment is a key performance indicator for
development. Nigeria is expected to achieve moderate growth DEG’s business activities. Planning for 2018 assumes that the
of 3% (2017: 1.2%), while South Africa is likely to manage volume will grow by around 9%.
just 2% (2017: 1.5%), due to continuing political uncertainly
and a persistent lack of investor confidence. The forecast It should also prove possible in 2018 to maintain the good
for Sub-Saharan Africa includes substantial downside risks, developmental quality of the proposals co-financed by DEG.
specifically political and security risks.
DEG expects the earnings trend to be favourable in 2018.
In the Middle East and North Africa region, 2018 should see Key sources of revenue will again be specifically income from
the beginnings of a recovery. The forecast is for growth to participating interests – especially from disposals – and the
rise to 3.6%, following 2.5% in 2017. However, there are sev- interest surplus from the loans business. Staff and non-staff
eral factors curbing the recovery. The oil-exporting countries costs will display a moderate rise. This is due, among other
will need to cut their costs further in order to reduce their things, to transfers to pension provisions.
budget and current account deficits. The war in Syria is also
having an effect on the situation in neighbouring countries. Under current plans, and based on standard risk costs, net
In Algeria and Tunisia, the failure to implement reforms means risk provision in the 2018 financial year will remain virtually
that growth remains weak. On the other hand, a rise in growth unchanged at EUR 160 million. The profit for the financial
is expected for Morocco and Egypt. year after tax is expected to be approximately EUR 89 million,
slightly lower than in the 2017 financial year.
Overall, the relationship between opportunities and risks ap-
pears more balanced at the end of 2017 than it did a year DEG’s financial success is largely determined by the risk pro-
earlier. Possible risks to the world economy in 2018 are ris- vision it is required to make, and by the volatile income from
ing geopolitical tensions, protectionism and a possible slump participating interests, which is dependent on external market
in China. A drastic tightening of global financing terms could conditions. For 2018, DEG expects a pre-tax return on equity
have negative consequences for susceptible economies. The of 3.7%, resulting in a three-year average of 4.2%.
tax reforms in the United States may result in capital being
moved from developing and emerging market countries into
USD investments and lead to a revaluation of the USD.

Thanks and appreciation
The Management Board would like to thank all members of
staff who, with their wide-ranging expertise and great dedica-
tion, successfully helped to ensure that DEG was able to fulfil
its development mandate and achieve its business policy goals
in 2017. Thanks are also due to the employees’ representa-
tive bodies – the Staff Council and the Economic Committee
– as well as to the Senior Staff Council for their cooperation,
which has again proved loyal and most constructive.
Cologne, 7 February 2018

The Management Board

Annual Financial
Statements 2017
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
APPENDIX
BALANCE SHEET AT 31.12.2017
(with previous year’s figures for comparison)
ASSETS 31.12.2017 31.12.2016
A. Fixed assets EUR EUR EUR EUR k

I. Intangible assets
1. Purchased industrial property rights and

similar rights and assets, including licences
in such rights and assets 1,002,289 1,014
2. Payments in advance 6,216,646 4,606
7,218,935 5,620
II. Tangible assets
1. Land and buildings 72,058,703 44,481
2. Office equipment 4,928,387 3,303
3. Payments in advance 201,460 15,636
77,188,550 63,420
III. Financial fixed assets
1. Investments in partner countries
a) Participating interests 1,345,331,809 1,296,387
b) Lendings to enterprises in which DEG

has a participating interest 60,950,213 116,653
c) Other lendings 3,421,791,112 3,882,740
4,828,073,134 5,295,780
2. Other financial fixed assets
a) Bonds and notes under current fixed assets 22,203,725 76,003
b) Other lendings 4,034,625 3,504
26,238,350 79,507
4,854,311,484 5,375,287
Total A (I + II + III) 4,938,718,969 5,444,327
B. Current assets
I. Debtors and other assets
1. Amounts owed from investment activities 69,460,949 71,896
of which amounts owed by enterprises in which

DEG has a participating interest 2,816,704 9,509
2. Amounts owed from disposal of investments 18,627,101 8,615
3. Amounts owed from consultancy

and other services 85,780 374
4. Other assets 74,612,833 59,016
162,786,663 139,901
II. Bonds and notes 1,744,892 3,156
III. Cash in hand, balances with Deutsche Bundesbank
and with credit institutions 198,158,157 185,916
Total B (I + II + III) 362,689,712 328,973
C. Accruals and deferrals 1,231,224 1,089
D. Assets held under trust 25,820,179 45,706
Total assets 5,328,460,084 5,820,095
DEG Annual Report 2017 | Balance sheet | 38

LIABILITIES 31.12.2017 31.12.2016
A. Shareholder’s equity EUR EUR EUR EUR k

I. Subscribed capital
1. Subscribed capital 750,000,000 750,000
II. Appropriated surplus
1. Purpose-tied reserve fund
as at 1 January 0 3,471
Transfer from net income for previous year 0 –3,471
as at 31 December 0 0
2. Other appropriated surplus
as at 1 January 1,181,295,297 1,431,665
Transfer from net income for previous year 436,650,805 86,495
as at 31 December 1,617,946,102 1,617,946,102 1,518,160
III. Net profit 93,792,192 99,786

Total A (I + II + III) 2,461,738,294 2,367,946
B. Provisions for liabilities and charges
1. Provisions for pensions

and similar obligations 106,714,834 98,246
2. Provisions for taxes 473,649 478
3. Other provisions 51,062,554 39,854
Total B (1 + 2 + 3) 158,251,037 138,578
C. Creditors
1. Amounts owed for financing

investment activities 2,610,071,848 3,089,727
2. Trade creditors 751,816 2,787
3. Other creditors 71,826,910 175,351
of which tax payable 915,500 1,095

of which social security –53,732 40
Total C (1 + 2 + 3) 2,682,650,574 3,267,865
D. Liabilities for assets held under trust 25,820,179 45,706
Total liabilities 5,328,460,084 5,820,095
DEG Annual Report 2017 | Balance sheet | 39

PROFIT AND LOSS ACCOUNT FOR THE PERIOD FROM 01.01 TO 31.12.2017
(with previous year’s figures for comparison)
INCOME 01.01–31.12.2017 01.01–31.12.2016

1. Sales revenue EUR EUR k
a) from consultancy services 5,308,372 4,436
b) from trust transactions 289,585 659
c) from other services 10,940,377 10,795
16,538,334 15,890
of which from affiliated enterprises 51,560 47
2. Income from participating interests 32,710,457 35,191
3. Income from long-term lendings 234,751,971 255,569
of which from affiliated enterprises –10,389,059 –10,300

of which from negative interest rates 39,765 85
4. Other interest receivable and similar income 848,862 8,444
of which from affiliated enterprises –96,226 6,516
5. Income from write-ups and write-back of provisions in respect of
lending business and participating interests
a) Write-up of financial fixed assets 89,638,482 141,443
b) Write-up of amounts owed from investment business and
from disposal of investments 0 2,870
c) Write-back of provisions in respect of lendings business and
participating interests 25,000 450
89,663,482 144,763
6. Other operating income 191,129,727 147,263
Total income 565,642,833 607,120
CHARGES
7. Cost of services purchased 2,453,864 1,669
8. Depreciation, value adjustments and transfer to provisions in respect

of the lendings business and participating interests
a) Depreciation and value adjustments in respect of financial fixed assets 157,226,388 269,762
b) Depreciation and value adjustments in respect of amounts owed

from investment business and disposal of investments 46,981,856 11,818
c) Transfers to provisions in respect of lendings business and participating interests 11,044,831 0
d) Depreciation and value adjustments in respect of bonds and notes under current fixed assets 854,233 0
216,107,308 281,580
9. Interest payable and similar charges 49,866,760 43,260
of which to affiliated enterprises 40,825,263 37,984
of which from negative interest rates 244,705 75
10. Staff costs
a) Wages and salaries 51,337,424 49,850
b) Social security, pensions and other benefits 17,032,627 6,795
of which pensions 9,953,529 244
11. Depreciation and adjustments for impairment of intangible and tangible assets 2,908,835 3,298
12. Other operating charges 122,370,388 109,360
Total (7 + 8 + 9 + 10 + 11 + 12) 462,077,206 495,812
13. Tax on income and profit 9,742,756 14,865
14. Net earnings 93,822,871 96,443
15. Other taxes 30,679 128
16. Profit for the financial year 93,792,192 96,315
17. Withdrawal from purpose-tied reserve fund 0 3,471
18. Net profit 93,792,192 99,786
40 | DEG Annual Report 2017 | Profit and loss account

APPENDIX FOR THE 2017 FINANCIAL YEAR

Kämmergasse 22, 50676 Cologne
Registered office: Cologne, Commercial Register No.: HRB 1005 at Cologne Amtsgericht
General Notes on the annual financial statements

Form of annual financial statements
The balance sheet and the profit and loss account were laid out in compliance with the provisions for
large corporations in Articles 266 & 275 of the German Commercial Code (HGB).
Due to business conducted, the items on the balance sheet and the profit and loss account have been
supplemented or re-designated in accordance with Article 265 HGB.
Under Article 340 HGB and Article 1 of the Accounting Requirements for Financial Institutions and Finan-
cial Service Providers, DEG is exempt from the provisions relating to financial statement forms for credit
institutions.
In the 2017 financial year, income and charges from currency conversion have for the first time been
itemised in full as Other operating income and Other operating charges, respectively, as per Article 277,
Section 5, Clause 2 HGB. There is an exception for the result from foreign currency in the participating
interests portfolio, which is not offset as an element of a valuation unit. In the current financial year,
this income and these charges are still itemised as Income from write-ups and write-back of provisions
in respect of lendings business and participating interests, and, respectively, Depreciation, value adjust-
ments and transfers to provision in respect of the lendings business and participating interests.
Accounting/valuation criteria
Purchased intangible and tangible assets are activated at original costs and subject to straight-line
depreciation across their average useful life.
The choice to activate internally produced intangible assets under current fixed assets as per the provi-
sions of Article 248, Section 2 HGB was not exercised.
The choice under Article 67, Section 4, Clause 1 of the Introductory Act to the Commercial Code
(EGHGB), according to which lower valuations of assets, based on depreciation under Article 254 HGB
(version in force until 28 May 2009), may be retained, is exercised for the building in respect of the one-
off tax depreciation from the transfer of silent reserves as per Article 6b of German Income Tax Law
(EstG).
Low value assets are dealt with in accordance with Article 6, Section 2 EstG, i.e. where the value is less
than EUR 410, they are immediately recorded under Other operating charges.
Financial fixed assets are recognised at original cost or at fair value if lower, regardless of whether the
impairment is likely to be permanent.
To take account of counterparty default risk, DEG makes provision for risk for both identifiable and
latent default risks in its financing portfolio. The loan loss provisions are deducted in the respective
asset items.
The value of a participating interest is generally determined using the Discounted Cash Flow (DCF)
method or the Net Asset Value method (funds). When establishing the value of a participating interest,
embedded put and call options are taken into account, where the value is determined using a suitable
option price model. Incidental acquisition costs are activated as of the decision to purchase.
DEG Annual Report 2017 | Appendix | 41

Where market prices are available, e.g. stock market quotations, DEG will verify whether, after a critical
review of the assumptions underlying the valuation and pricing, the stock market price represents an
appropriate valuation and should replace the DCF method. If a firm offer to purchase the participating
interest has been received, the proposed purchase price replaces the DCF method as the basis for the
value of the participating interest. If the participating interest was acquired less than a year earlier,
DEG will generally fall back on the purchase price. However, if, after acquiring the participating interest,
DEG becomes aware of important factors affecting the value which did not enter into the determination
of the purchase price, the DCF method is used to determine the value of the participating interest even
during the first year, taking the new finding into account. Country risks are taken into account for par-
ticipating interests by an upward adjustment of the discount factors when the DCF method is applied.
If the value of the participating interest, calculated as described above, is lower than the purchase price
or the lower book value, a corresponding loan loss provision is made.
For lendings, bonds and notes under current fixed assets, the counterparty default risk of a commitment
is initially identified by using trigger events to assess whether provision for risk is required on those
grounds. If such a trigger event takes place, the level of provision for risk is estimated based on the pres-
ent value of expected future repayments on the loan in question.
For latent default risks, DEG also makes a portfolio value adjustment for lendings, bonds and notes
under current fixed assets where no specific loan loss provision has been made. Depending on the
rating, the portfolio value adjustment is calculated based on the standard risk cost approach and takes
into account both counterparty default risks and country risks.
Using the method outlined above, DEG also makes provision for latent default risks in respect of the
guarantees it issues in the course of its financing business and for commitments in respect of lendings
not yet disbursed on the balance sheet date.
The current financial year marks the first time blanket loan loss provision was made for commitments in
respect of lendings not yet disbursed on the balance sheet date. This is because of a change in the way
the commitments are assessed, according to which they are irrevocable in nature.
Amounts owed and other assets are recognised at their par value. Actual default risks are catered for by
loan loss provisions.
Under Article 246, Section 2, Clause 2 HGB, assets that are exempt from all creditor access and serve
only to settle debts from pension obligations under the deferred compensation scheme were offset
against those debts in the sum of EUR 1.5 million as at the balance sheet date. The original costs, and
the fair value of the assets respectively, amounted to EUR 1.5 million as at 31 December 2017.
Other bonds and notes under current assets are recognised at original cost, applying the strict lowest-
value principle and observing the value appreciation requirement.
Accruals and deferrals on the assets side are recorded as per Article 250, Section 1 HGB and comprise
expenditure prior to 31 December 2017, where this represents costs relating to a specific period after
that date.
Provisions for pensions and similar obligations are calculated at their going-concern value using the
Mortality Tables 2005 G (Richttafeln 2005 G) published by Dr Klaus Heubeck.
Other provisions were made at the level of the anticipated settlement value and take all actual risks
and contingent liabilities into account. Any provisions with a residual term of more than one year were
discounted in accordance with their residual terms at the average market rate across the past seven
years as published by Deutsche Bundesbank.
Amounts owed are recorded as liabilities with repayment amounts.

Deferred tax liabilities are offset against deferred tax assets. The choice not to activate deferred tax
liabilities that exceed deferred tax assets is exercised under the provisions of Article 274, Section 1,
Clause 2 HGB.
At the time of acquisition, all assets and debts currently or originally denominated in foreign currency
are converted into EUR at the rate of exchange current at the time of purchase.
In accordance with DEG’s risk strategy, an overall approach is taken to the USD currency risk from lend-
ings, bonds and notes under current fixed assets, overnight and time deposits, and the reverse changes
in value from refinancing. The resulting net positions are hedged with cross-currency interest rate
swaps and forward exchange transactions. In the current financial year, following an amendment to the
risk strategy, the USD currency risk from the participating interests portfolio has been hedged for the
first time. Forward exchange transactions in the amount of USD 180 million were closed for the pur-
pose. This equates to an approximately 20% hedge on the USD participating interests portfolio. On the
balance sheet, it is accounted for via a macro valuation unit in accordance with Article 254 HGB.
The prospective effectiveness of the macro valuation unit essentially results from matching currency
hedging. DEG uses the dollar offset method to show the retrospective effectiveness.
Other foreign currency risks, from local currencies used for lendings, were hedged with cross-currency
swaps. These are accounted for, along with the basic transactions, in micro valuation units.
For the micro valuation units, both prospective and retrospective effectiveness is assured as a result of
incoming and outgoing cash flows being identical for basic and hedging transactions.
Changes in value that balance out in respect of effectiveness are recorded in terms of gains or losses
(gross hedge presentation method). Where no effective hedge is present, basic and hedging transac-
tions are valued according to the imparity principle. The same applies to derivatives transactions that
are neither included in a valuation unit, nor serve to control interest rate risks.
Provision for contingent losses of EUR 16.8 million in total was made for the ineffective portion of the
macro valuation unit for the lendings business.
A statement by the German Institute of Certified Public Auditors (IDW) on financial reporting, specifically
“Individual issues relating to the loss-free valuation of interest-related transactions in the banking
book (interest book)” („Einzelfragen der verlustfreien Bewertung von zinsbezogenen Geschäften des Bank-
buchs (Zinsbuchs)“) (IDW RS BFA 3) proposes that where excess liability results from transactions involving
interest-based financial instruments of the banking book, provision for contingent losses must be made.
To calculate this possible excess liability, DEG compares the present values as per the banking book
with the book values as per the banking book as at the effective date in question, taking into account
future risk and administration costs. A calculation along these lines at the effective date of 31 Decem-
ber 2017 showed no excess liability, so no provision for contingent losses needed to be made.
NOTES ON ASSETS
Fixed assets
Please see the table “Movements in fixed asset balances” for details.

Movements in fixed asset balances
Original costs
Book
01.01.2017 Accruals transfers Disposals 31.12.2017
EUR EUR EUR EUR EUR
I. Intangible assets
1. Purchased industrial property rights

and similar rights and assets, including
licences in such rights and assets 7,118,992 368,418 0 1,550,953 5,936,457
2. Payments in advance 4,606,237 1,610,409 0 0 6,216,646
11,725,229 1,978,827 0 1,550,953 12,153,103
II. Tangible assets
1. Land and buildings 55,623,617 1,212 28,911,531 0 84,536,360
2. Office equipment 9,060,076 3,132,539 0 430,906 11,761,709

3. Payments in advance and assets
under construction 15,830,417 13,282,574 –28,911,531 0 201,460
80,514,110 16,416,325 0 430,906 96,499,529
Total (I + II) 92,239,339 18,395,152 0 1,981,859 108,652,632
III. Financial fixed assets
a) Participating interests 1,581,741,212 276,299,538 0 192,254,233 1,665,786,517

b) Lendings to enterprises in which
DEG has a participating interest 151,231,084 11,791,038 –4,428,250 79,418,866 79,175,006
c) Other lendings 4,251,907,930 1,156,063,837 4,428,250 1,683,750,009 3,728,650,008
Total 1 (a + b + c) 5,984,880,226 1,444,154,413 0 1,955,423,108 5,473,611,531
a) Bonds and notes under current fixed assets 77,082,778 23,547,282 0 77,997,566 22,632,494
b) Other lendings 3,503,568 1,030,816 0 499,759 4,034,625
80,586,346 24,578,098 0 78,497,325 26,667,119
Total III 6,065,466,572 1,468,732,511 0 2,033,920,433 5,500,278,650

Total (I + II + III) 6,157,705,911 1,487,127,663 0 2,035,902,292 5,608,931,282
1)
For fixed assets, this is equivalent to the utilisation of the risk provision.
2)
Of which EUR 63,185,208 hedged with third-party counter-guarantees (unfunded risk participation).
3)
Without accrued pro-rata interest.

Depreciation Book value
Book
01.01.2017 Accruals transfers Currency Consumption1) Disposals 31.12.2017 31.12.2017
EUR EUR EUR EUR EUR EUR EUR EUR
6,105,456 373,717 0 0 1,545,005 0 4,934,168 1,002,289
0 0 0 0 0 0 0 6,216,646
6,105,456 373,717 0 0 1,545,005 0 4,934,168 7,218,935
11,142,369 1,140,766 –194,523 0 0 0 12,477,658 72,058,702
5,757,102 1,394,351 0 0 318,131 0 6,833,322 4,928,387
194,523 0 194,523 0 0 0 0 201,460
17,093,994 2,535,117 0 0 318,131 0 19,310,980 77,188,549
23,199,450 2,908,834 0 0 1,863,136 0 24,245,148 84,407,484
285,354,120 108,500,061 0 0 51,433,557 21,965,916 320,454,708 1,345,331,809
34,578,159 3,631,830 –743,383 –1,059,055 12,800,037 5,382,721 18,224,793 60,950,213
369,167,720 84,833,756 743,383 –10,021,103 57,230,568 80,634,292 306,858,896 3,421,791,112
689,099,999 196,965,647 0 –11,080,158 121,464,162 107,982,929 645,538,397 4,828,073,1342)
2,996,904 996,885 0 –108,225 1,899,642 957,726 1,028,196 21,604,2983)
0 0 0 0 0 0 0 4,034,625
2,996,904 996,885 0 –108,225 1,899,642 957,726 1,028,196 25,638,923
692,096,903 197,962,532 0 –11,188,383 123,363,804 108,940,655 646,566,593 4,853,712,057

715,296,353 200,871,366 0 –11,188,383 125,226,940 108,940,655 670,811,741 4,938,119,541

Intangible assets
“Intangible assets” includes purchased licences in the amount of EUR 1.0 million, as well as payments in
advance of EUR 6.2 million for one purchased licence, which still needs to be rendered operational.
Tangible assets
“Tangible assets” shows land and buildings in the amount of EUR 72.1 million. The additional office build-
ing was completed in 2017. This item also includes office equipment in the amount of EUR 4.9 million, as
well as payments in advance and assets under construction of EUR 0.2 million.
Investments in partner countries

This item shows investments from funds on own account of EUR 4,828.1 million, which are made up of
participating interests and lendings.
Investments from funds on own account were made in 544 enterprises in 83 countries. These included
four enterprises where the investments were part-financed from German federal trust funds and by other
trustee lenders. In nine enterprises, third parties entered into risk sub-participations in the form of coun-
ter-guarantees.
Financial fixed assets with a residual term of up to one year
EUR million
a) Participating interests -
b) Lendings to enterprises in which DEG has a participating interest 7.1
c) Other lendings 593.4
a) Bonds and notes in current fixed assets 2.5
b) Other lendings 0.0
Total 603.0
Other financial fixed assets

The item “Bonds and notes” in current fixed assets (EUR 22.2 million) shows financing committed by
DEG that has been securitised. It comprises three bonds. Accrued interest at the balance sheet date was
EUR 0.6 million. The portfolio value adjustment was EUR 1.0 million.
The item also includes Other lendings comprising EUR 4.0 million in loans to staff members.
Amounts owed from investment activities

Amounts owed of EUR 59.2 million comprises mainly dividends and interest due (including accrued inter-
est and commitment fees pro rata, as well as other amounts owed, but not yet due), as well as various
reimbursement claims. This item also includes accrued interest from swap agreements (EUR 10.2 mil-
lion).
Amounts owed from disposal of investments

This item shows the purchase money proceeds from the sale or transfer of participating interests and
lendings, as well as amounts owed with respect to these (e.g. interest payable on purchase money pro-
ceeds).
Amounts owed from consultancy and other services

These are reimbursements from trust funds charged to the Federal Ministry for Economic Cooperation
and Development (BMZ) and to the Federal Ministry for the Environment, Nature Conservation, Building
and Reactor Safety (BMUB).

Other assets
“Other assets” largely consists of balancing items for accountancy purposes for foreign currency trans-
actions in respect of the foreign currency valuation units in MXN, ZAR, RUB and TRY (EUR 22.4 million),
amounts owed by the tax office (EUR 23.4 million), one receivable from the sale of a participating inter-
est (EUR 14.8 million) and amounts owed by consortium partners (EUR 11.3 million).
Residual maturity profile of receivables and other assets
in million EUR Residual maturity

more than more than
up to 3 months 1 year more than
3 months up to 1 year up to 5 years 5 years Total
Amounts owed from
1. investment activities 69.4 - - - 69.4*
2. disposal of investments 18.7 - - - 18.7
3. consultancy and other services 0.1 - - - 0.1
Other assets 74.6 - - - 74.6
Total 162.8 0.0 0.0 0.0 162.8
* Of which EUR 10.2 million (2016: EUR 11.4 million) owed by the Shareholder.
Other bonds and notes

This item contains a purchased security in the amount of EUR 1.7 million, used to hedge semi-retirement
programmes for older staff members.
Cash in hand, balances with Deutsche Bundesbank and with credit institutions
Balances with credit institutions covers investments in the money market of EUR 175.3 million invested
with the Shareholder KfW, as well as current account balances of EUR 22.7 million. These comprise cor-
porate funds temporarily awaiting investment in enterprises in partner countries.
Accruals and deferrals

Among other things, this item comprises expenditure on licences, and maintenance costs for hardware
and software, representing charges for financial years after 31 December 2017.
Assets held under trust

This item comprises investments in partner countries from trust funds in the form of participating inter-
ests of EUR 2.2 million and lendings of EUR 18.6 million.
Amounts owed on a trust basis of EUR 5.0 million are also shown here.
EUR 18.5 million of lendings is accounted for by the “Federal Republic of Germany’s Lending Programme
for Business Start-ups to Promote Start-ups of Small and Medium-sized Enterprises by Natural Persons
in Developing Countries”, based on special joint lending funds with partner countries or institutions.
Deferred tax assets

There are taxable temporary differences arising specifically from the transfer of hidden reserves as per
Article 6b EstG and from provision for risk, which have resulted in deferred tax liabilities of EUR 0.1 mil-
lion. These are offset by deductible temporary differences, specifically from provisions for risk and other
provisions, which have led to “Deferred tax assets” in the amount of EUR 19.8 million. The choice to re-
frain from taking the deferred tax asset surplus into consideration was exercised. The deferred tax liabili-
ties were calculated based on an overall tax rate of 32.45%.

NOTES ON LIABILITIES
Subscribed capital
Subscribed capital amounts to EUR 750.0 million.
As a subsidiary of Kreditanstalt für Wiederaufbau (KfW), based in Frankfurt am Main, DEG is included in
the group accounts. KfW prepares consolidated accounts, which are published in Germany in the Federal
Gazette (electronic version).
As a general rule under DEG’s articles of association, profits are not distributed, so the limitation of
profits distribution provided for by HGB Article 253, Section 6, and Article 268, Section 8 does not apply.
A proposal to allocate the profit for the financial year of EUR 93.8 million to the item “Other retained
earnings” has been submitted to the Shareholders’ Meeting.
Provisions for pensions and similar obligations

From 2016, an average market interest rate over ten years must be applied when discounting pension
obligations. This is due to a change in the law. The rate as at 31 December 2017 was 3.68%. The differ-
ence compared to the previous seven-year average market interest rate as at 31 December 2017 (2.80%)
is EUR 15.6 million. When calculating the required provisions, an annual salary increase of 2.2% and a
pension rise of 2% or 1%, respectively, were assumed, depending on remuneration or pension scheme.
In connection with DEG’s change of actuary, the approach to evaluating the pensions obligations has
been reviewed. This has resulted in changing the evaluation approach to the evaluation of a defined con-
tribution scheme. Under this approach, provision at the balance sheet date is defined as the present
value of the level of entitlement that has been reached (in other words, the accrued component sum).
This reflects the actual obligation much more accurately than the entitlement earned pro rata of a pro-
jected achievable benefit, as used in the past.
The salary trend of 2.8%, applied in the previous year, is no longer in line with the prospective develop-
ment of salaries at DEG. As a result, the salary trend was reduced from 2.8% to 2.2%. Based on the cur-
rent situation, an increase of the fluctuation rate from 0.0% to 1.5% was also required for the 2006 pen-
sion scheme.
In accordance with Article 253, Section 2, Clause 2 HGB, provisions for other long-term obligations were
discounted across the board at the average market interest rate resulting from an assumed residual ma-
turity of 15 years.
Provision for taxes

The item Provision for taxes relates to withholding taxes of EUR 0.5 million from the sale of two partici-
pating interests which will be accounted for in 2018.
Other provisions
In the 2017 financial year, provisions for contingent losses of EUR 17.2 million were made for the ineffect-
ive portion of the foreign currency valuation unit in EUR 16.8 million.
For obligations in respect of lendings not yet disbursed, a blanket value adjustment in the amount of
EUR 10.9 million was made in the form of other provisions.
The item also includes provisions for variable remuneration (EUR 6.5 million), for part-time work pro-
grammes for employees approaching retirement age (EUR 2.5 million), and for leave and compensation
for overtime (EUR 1.5 million). Provisions for legal risks amount to EUR 1.6 million.

Amounts owed for financing investment activities
Amounts owed here refers specifically to loans against borrowers’ notes in the amount of EUR 2,080.0
million placed with the Shareholder KfW (2016: EUR 2,700.8 million).
Other amounts owed

Other amounts owed includes EUR 47.1 million in balancing items for accountancy purposes relating to
foreign currency transactions in respect of the macro valuation unit in USD, and EUR 13.7 million owed
in respect of consortium partners and borrowers.
Liabilities for assets held under trust

The following were made available to DEG on a trust basis for the purpose of financing investments in
partner countries and for business start-up loans: EUR 24.7 million from BMZ, and EUR 1.1 million from
the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB).
Residual maturity profile of amounts owed
EUR million Residual maturity
up to more than more than more than

3 months 3 months 1 year 5 years Total
1. Amounts owed for financing investment

activities 692.3 439.5 1,407.4 70.9 2,610.1*
2. Amounts owed to trade creditors 0.7 - - - 0.7

3. Other amounts owed 70.7 - 1.2 - 71.9
Total 763.7 439.5 1,408.6 70.9 2,682.7
* Of which EUR 2,610.0 million (2016: EUR 3,089.4) to the Shareholder.
Deferred tax liabilities

Since deferred tax liabilities were balanced out against deferred tax assets, they are not shown.
NOTES ON INCOME
Sales revenue
Sales revenue comprises earnings from the provision of services in connection with the financing busi-
ness.
By region, sales revenue breaks down as follows:
Africa 5.0 5.6
America 3.9 3.7
Asia 5.1 4.0
Europe 2.0 1.5
Worldwide 0.6 1.1

Total 16.6 15.9

Income from participating interests and income from long-term lendings
Income from participating interests and from lendings in partner countries is largely made up of divi-
dends, interest on lendings, bonds and related hedging transactions, and commitment fees and commis-
sions on loans. The breakdown by region (excluding the results from hedging transactions of EUR –18.9
million) is as follows:

Africa 65.9 79.9
America 95.1 90.4
Asia 99.0 102.8
Europe 19.9 29.3
Worldwide 6.5 0.0

Total 286.4 302.4
Other interest receivable and similar income

This item includes specifically earnings of EUR 0.6 million from late subscriber interest with funds.
Other operating income

This item includes specifically income from the disposal of participating interests of EUR 113.8 million.
Additionally, a total of EUR 5.3 million of other operating income is from the write-back of provision for
contingent losses for the macro valuation unit (USD).
In addition, it includes gains realised from exchange rate movements of EUR 29.2 million and EUR 39.0
million in income from currency translation as per Article 256a HGB.
NOTES ON CHARGES
Cost of services purchased

At EUR 2.5 million, the cost of services purchased is at a level similar to the previous year’s (2016:
EUR 1.7 million).
Interest payable and similar charges

These charges were incurred largely on loans against borrowers’ notes (EUR 30.9 million); they also in-
clude the net result from derivatives hedging (EUR 13.6 million). For the 2017 financial year, the item
also includes interest charges from the compounding of interest on pension and other long-term staff-
related provisions in the sum of EUR 3.9 million (2016: EUR 3.9 million).
Staff costs
The charges for pensions and other benefits of EUR 10.0 million include transfers to provision for pen-
sions of EUR 8.7 million. This item also comprises contributions to the Pension Association of Publicly
Sponsored Companies (Versorgungsverband bundes- und landesgeförderter Unternehmen e.V. VBLU)
(EUR 1.2 million).
Depreciation and adjustments for impairment of intangible and tangible assets

In 2017, depreciation for impairment of tangible assets came to EUR 2.9 million in total (2016: EUR 3.3).
This includes depreciation on office equipment of EUR 1.4 million, on buildings of EUR 1.1 million, and
depreciation on hardware and software of EUR 0.4 million.
Depreciation on DEG’s building in Kämmergasse for the 2009 financial year included one-off tax depre-
ciation under HGB Article 254 (old version) of EUR 1.0 million from the transfer of silent reserves from
the proceeds of the sale of the land and buildings in Belvederestraße as per EstG Article 6b. As a conse-
quence, the 2017 annual result increased by the sum of EUR 20,000.

Other operating charges
This item comprises specifically administrative costs of EUR 57.3 million, including in particular costs of
EUR 32.4 million for experts and consultants, and travel costs of EUR 4.4 million.
This item further records realised charges in respect of exchange rate movements of EUR 39.7 million,
and EUR 20.5 million from foreign currency valuation as per HGB Article 256a.
Income and charges relating to other periods

Other income includes EUR 1.6 million in income relating to other periods from the write-back of other
provisions.
There were no charges relating to other periods in the 2017 financial year.
Statement of auditing fees as provided by Article 285, Clause 1, No. 17

In the 2017 financial year, the following auditing fees were taken into consideration:
2017 EUR
Auditing fee 581,211
Other certification services 91,760
Tax consultancy services 0

Total 672,971
Write-backs of provisions from 2016 of EUR 21,787 are offset in the statement of auditing fees.
The statement of fees for other certification services includes costs of EUR 41,760 for 2017 which were
not covered by provisions made in 2016.
Taxes on income and profit

Tax charges of EUR 9.7 million in total comprise tax on profits for the 2017 financial year of EUR 8.7 mil-
lion and foreign tax charges of EUR 2.0 million. These are offset by tax refunds for the 2016 financial
year of EUR 1.0 million.
PROFIT FOR THE FINANCIAL YEAR/NET INCOME
The net profit recognised amounts to EUR 93.8 million. As stipulated in the articles of partnership, it may
not be distributed.
Follow-up report
No events of vital importance to the net worth, financial or earnings situation occurred after the end of
the financial year.

Derivatives transactions
Volumes
Positive Negative
EUR million Nominal values* market values market values
31.12.2016 31.12.2017 31.12.2017 31.12.2017
Contracts with interest rate risks
Interest rate swaps 441.4 784.2 11.9 –0.7

Total interest rate risks 441.4 784.2 11.9 –0.7
Contracts with currency risks

Forward foreign exchange transactions, swaps 115.7 318.1 3.6 –0.2
Non-deliverable forwards 1.4 14.1 0.0 –0.2
Currency and cross-currency interest rate swaps 1,169.8 780.5 28.7 –67.7
Total currency risks 1,286.9 1,112.8 32.3 –68.1
Total 1,728.3 1,896.9 44.2 –68.7
Counterparties
Positive Negative
EUR million Nominal values* market values market values
31.12.2016 31.12.2017 31.12.2017 31.12.2017
OECD banks 1,728.3 1,896.9 44.2 –68.7
Total 1,728.3 1,896.9 44.2 –68.7
Maturities
Nominal values* EUR million Interest rate risks Currency risks

31.12.2016 31.12.2017 31.12.2016 31.12.2017
Residual maturities
up to 3 months 0.0 0.0 167.4 354.0
more than 3 months up to 1 year 299.0 20.0 225.3 135.6
more than 1 up to 5 years 142.4 611.1 610.2 424.2
more than 5 years 0.00 153.1 284.0 199.0
Total 441.4 784.2 1,286.9 1,112.8
* Nominal values are calculated as the sum of whichever nominal amount (input and output side) is higher on the effective date of the conversion.
NOTES ON DERIVATIVES TRANSACTIONS
In the context of risk management, DEG regularly engages in futures trading and makes use of deriva-
tives products. There is no trading on own account in the sense of a trading book. These instruments are
deployed primarily to hedge interest rate and currency risks in the asset book.
The market values of derivatives held in the portfolio represent current replacement costs. The positive
and negative market values recorded are largely calculated based on corporate models. The main deter-
minants of these in-house models are interest rate ratios and related rates of exchange.

MISCELLANEOUS
Liability/contingent liabilities
DEG stands surety to the value of EUR 1.6 million for three enterprises as collateral for borrowing.
Provision in the amount of EUR 0.1 million was made for latent risks.
At the balance sheet date, DEG’s shares in one participating interest with a book value of EUR 8.4 million
were pledged as collateral in respect of liabilities of the enterprises in question.
Given the enterprises’ credit rating, any liability/contingent liabilities incurred are not expected to exceed
the provision for risk made for this purpose as at the balance sheet date.
Other financial obligations

DEG is required to pay a total of EUR 0.4 million annually under tenancy agreements that run until 2022.
A total of EUR 0.1 million will be payable in fees on leasing contracts for the remaining term until 2020.
Obligations from undisbursed participating interests and lendings amount to EUR 1,699.6 million.
Provision of EUR 10.9 million was made for latent default risks from obligations deemed irrevocable
in respect of lendings not yet disbursed.
In individual cases, employees of DEG, or third parties instructed by DEG, undertake executive functions
in associated companies. The risks arising are generally covered by directors’ and officers’ liability insur-
ance (D&O insurance) taken out by the associated company in question.
AVERAGE NUMBER OF STAFF OVER THE YEAR
Staff not covered by regular pay scales and senior executives 385
Staff covered by regular pay scales 184
Total 569
Number of female staff 305

Number of male staff 264
Total 569
These figures include part-time staff (116) and temporary staff (32), but exclude members of the
Management Board, staff on parental leave, apprentices, interns and local staff in foreign countries.

REMUNERATION OF CORPORATE BODIES
Total charges for the Supervisory Board in the year under review came to EUR 121,650, of which
EUR 37,966 was annual remuneration for membership of the Supervisory Board and its committees.
Attendance fees, daily allowances and travel expenses accounted for EUR 39,899, while EUR 43,785
was for training for members of the Supervisory Board. No advances or loans were granted to members
of the Supervisory Board.
Management Board remuneration for the 2017 financial year came to EUR 1,292,424. Regular annual
salary components were set at a uniform rate for all members of the Management Board and amount to
EUR 1,034,835 in total. Overall remuneration further includes the sum of EUR 34,053 for benefits in kind
and other emoluments. The performance-related management bonus for 2017 was EUR 223,536 in total,
of which EUR 111,768 will be paid over several years. In 2017, phased payments totalling EUR 111,588
were made from the deferred management bonuses for the years 2014 to 2016. These included monies
for a former member of the Management Board of EUR 27,995.
No advances were provided to members of the Management Board or surviving dependants.
Phased payments of EUR 27,994.92 from the deferred management bonuses for the years 2014 to 2016
were made to one former member of the Management Board.
Total payments made to former members of the Management Board and surviving dependants amounted
to EUR 836,279. Provisions of EUR 10,936,465 were made for pension obligations towards these persons.
Information on DEG’s investment holdings at 31.12.2017 as per Article 285 No. 11 HGB
Rate EUR DEG Indirect DEG

Cur 1.00 holding in holding in Equity3) Result4)
No. P. No. Business name and registered office rency1) = CU2) per cent per cent in kCU5) in kCU5)
Banque Gabonaise de Développement (BGD),
1. 425 Libreville, Gabun XAF 655.9570 1.97 –76,599,353 –55,533,814
Latin American Agribusiness Development
2. 757 Corporation S.A., Panama City, Panama USD 1.1993 8.33 160,602 19,492
Banque Nationale de Développement
3. 1147 Agricole S.A., Bamako, Mali XOF 655.9570 21.43 36,615,743 40,021,696
Industrial Promotion Services (West Africa)
4. 1480 S.A., Abidjan, Ivory Coast XOF 655.9570 9.00 13,726,175 873,198
Fransabank S.A.L.,
5. 2172 Beirut, Lebanon LBP 1,807.8650 5.00 3,206,549,007 302,937,172
Lebanese Leasing Company S.A.L. LLC,
6. 2217 Beirut, Lebanon LBP 1,807.8650 12.50 20,550,644 1,561,343
TOO Knauf Gips Kaptschagaj,
7. 2562 Kaptschagaj, Kazakhstan EUR 1.0000 40.00 22,119 6,183
LHF – Latin Healthcare Fund L.P.,
8. 2615 Acton, USA USD 1.1993 10.09 7) 7)
Safety Centre International Ltd.,

9. 2728 Port Harcourt, Nigeria NGN 367.5650 8.00 7) 7)
Kyrgyz Investment and Credit Bank,

10. 2743 Bishkek, Kyrgyzstan USD 1.1993 12.00 59,630 1,659
The SEAF Central and Eastern Europe
Growth Fund (SEAFGF) LLC,
11. 2782 Washington D.C., USA USD 1.1993 23.90 3,425 –1,416
Benetex Industries Ltd.,
12. 2787 Dhaka, Bangladesh BDT 99.2228 28.30 7) 7)
P.T. Arpeni Pratama Ocean Line Tbk.,

13. 2846 Jakarta, Indonesia IDR 16,265.4000 3.00 –4,982,951,370 –527,960,421
Egyptian Direct Investment Fund Ltd.,
14. 2893 St. Peter Port, Guernsey USD 1.1993 14.58 2,070 –152


SEAF Sichuan SME Investment Fund LLC,
15. 2913 Washington D.C., USA USD 1.1993 13.33 19,814 –4,477
Accession Mezzanine Capital L.P.,
16. 2914 London, UK EUR 1.0000 8.72 417 –1,012
Turkish Private Equity Fund I L.P.,
17. 3030 St. Peter Port, Guernsey USD 1.1993 11.33 9,106 119
Penguen Gida Sanayi A.S.,
18. 3046 Bursa, Turkey TRY 4.5464 12.74 49,672 –10,645
Ethos Technology Fund I Partnership,
19. 3067 Johannesburg, Republic of South Africa ZAR 14.8054 9.25 57,617 –39,198
DBG Eastern Europe II L.P.,
20. 3109 St. Helier, Jersey EUR 1.0000 14.88 22,666 14,518
Industrial Promotion Services Kenya Ltd.,
21. 3117 Nairobi, Kenya KES 123.8350 13.22 4,604,932 –525,484
SEAVI Advent Equity IV Fund Ltd. Partnership,
22. 3230 George Town, Cayman Islands USD 1.1993 13.48 7) 7)
European Financing Partners S.A.,

23. 3344 Luxembourg EUR 1.0000 7.63 151 –9
Unibank Commercial Bank OJSC,
24. 3379 Baku, Azerbaijan AZN 2.0499 24.37 –87,287 –117,132
Nanchong City Commercial Bank,
25. 3436 Nanchong, People’s Republic of China CNY 7.8002 5.99 11,762,078 1,969,056
ePak Holdings Ltd.,
26. 3459 Hong Kong USD 1.1993 12.44 49,355 3,371
SEAF India International Growth Fund,
27. 3489 Port Louis, Mauritius USD 1.1993 6.57 4,732 –1,113
Advent Central & Eastern Europe III L.P.,
28. 3491 Boston, USA EUR 1.0000 5.35 16,162 4,212
Balkan Accession Fund C.V.,
29. 3498 Curacao EUR 1.0000 11.36 58,034 17,597
Open Joint Stock Company
(Center Invest Bank Group),
30. 3511 Rostov-On-Don, Russian Federation RUB 69.3920 16.14 11,511,233 1,003,971
LC Fund II,
31. 3541 George Town, Cayman Islands USD 1.1993 9.07 7) 7)
Latin Power III, L.P.,

32. 3543 George Town, Cayman Islands USD 1.1993 1.81 11,718 –3,195
TOO Isi Gips Inder,
33. 3665 Rayon Inderskij, Kazakhstan KZT 398.7500 40.00 1,115,640 123,632
Open Joint Stock Company Bank Respublika,
34. 3696 Baku, Azerbaijan AZN 2.0499 10.87 25,057 –44,318
Advent Latin American Private Equity Fund
35. 3765 III-B L.P., Wilmington, USA USD 1.1993 100.00 1,264 –155
Advent Latin American Private Equity Fund III,
36. 3765.1 Wilmington, USA USD 1.1993 3.47 7) 7)
CDH China Growth Capital Fund II L.P.,

37. 3766 George Town, Cayman Islands USD 1.1993 3.17 359,307 89,186
38. 3796 Russia Partners II, L.P., New York, USA USD 1.1993 3.88 153,617 –24,268
Ethos Private Equity Fund V,
39. 3810 Johannesburg, Republic of South Africa USD 1.1993 13.23 689 –8,894
Vantage Mezzanine Fund Trust,
40. 3825 Johannesburg, Republic of South Africa ZAR 14.8054 6.83 39,024 –11,472
Ace Power Embilipitiya Pvt Ltd.,
41. 3878 Colombo, Sri Lanka LKR 184.0235 26.00 3,093,310 1,113,511
Evonik Lanxing (Rizhao) Chemical Industrial
42. 3890 Co. Ltd., Rizhao, People’s Republic of China EUR 1.0000 10.00 42,352 3,451
43. 3921 Banco Finterra S.A., México D.F., México MXN 23.6215 14.94 745,000 –34,000


Orient Power Company (Private) Ltd.,
44. 3923 Lahore, Pakistan PKR 132.6740 17.96 9,575,882 1,763,240
45. 4004 InecoBank CJSC, Yerevan, Armenia AMD 580.2450 5.75 43,465,118 5,157,570
46. 4078 Banco Pine SA, São Paulo, Brazil BRL 3.9711 4.60 1,173,513 –28,514
Global Environment Emerging Markets Fund
47. 4083 III-A L.P., Alberta, Canada USD 1.1993 4.58 71,190 –1,222
DLJ SAP International, LLC,
48. 4090 New York, USA USD 1.1993 3.29 31,152 –575
Emerging Europe Leasing and Finance
49. 4095 (EELF) B.V., Amsterdam, Netherlands EUR 1.0000 25.00 4,021 580
Transkapitalbank PJSC,
50. 4149 Moscow, Russian Federation RUB 69.3920 9.04 23,679,736 4,529,793
51. 4193 OAO Bucharagips, Bukhara, Uzbekistan UZS 9,691.4300 24.89 19,592,898 7,852,917
Turkish Private Equity Fund II L.P.,
52. 4209 St. Peter Port, Guernsey EUR 1.0000 4.95 635,459 –80,280
53. 4210 The Kibo Fund LLC, Ebene, Mauritius EUR 1.0000 13.80 19,094 452
PCC-DEG Renewables GmbH,
54. 4216 Duisburg, Germany EUR 1.0000 40.00 18,527 555
Lombard Asia III L.P.,
55. 4226 George Town, Cayman Islands USD 1.1993 2.13 48,442 –289
CPFL Energias Renováveis S.A.,
56. 4244 São Paulo, Brazil BRL 3.9711 1.29 7,970,021 900,885
Global Credit Rating Company Ltd.,
57. 4300 Road Town, British Virgin Islands USD 1.1993 26.98 1,347 4,338
Nexxus Capital Private Equity Fund III,
58. 4323 México D.F., México USD 1.1993 10.26 58,091 –1,261
African Development Partners I, LLC,
59. 4420 Ebene, Mauritius EUR 1.0000 5.54 279,939 1,726
Banyan Tree Growth Capital, L.L.C.,
60. 4422 Port Louis, Mauritius USD 1.1993 27.00 65,595 4,779
Istmo Compania de Reaseguros, Inc.,
61. 4503 Panama City, Panama USD 1.1993 12.47 7) 7)
India Agri Business Fund Ltd.,

62. 4507 Ebene, Mauritius USD 1.1993 16.67 77,227 46
OJSC Tourism Promotion Services,
63. 4518 Dushanbe, Tajikistan TJS 10.5805 11.02 –676 –30,416
Kendall Court Mezzanine (Asia) Bristol Merit
64. 4534 Fund, L.P., George Town, Cayman Islands USD 1.1993 24.37 14,683 –14
Asia Insurance 1950 Public Company Ltd.,
65. 4538 Bangkok, Thailand THB 39.1005 24.62 492,118 53,458
Tolstoi Investimentos S.A.
66. 4557 São Paolo, Brazil BRL 3.9711 31.14 7) 7)
Acon Latin America Opportunities,

67. 4580 Toronto, Canada USD 1.1993 39.99 49,258 –4,625
The Africa Health Fund, LLC,
Renewable Energy Asia Fund, L.P.,
69. 4636 London, UK EUR 1.0000 11.58 99,334 2,905
OOO Gematek,
70. 4641 Saint Petersburg, Russian Federation EUR 1.0000 5.76 1,003,616 101,978
Komercijalna Banka a.d. Beograd,
71. 4650 Belgrade, Serbia RSD 118.3500 4.60 55,424,302 –8,063,183
PT Indonesia Infrastructure,
72. 4680 Jakarta, Indonesia IDR 16,265.4000 15.12 2,290,501,000 101,793,000


Emerging Europe Accession Fund,
73. 4684 Amsterdam, Netherlands EUR 1.0000 10.15 100,745 –891
GEF Africa Sustainable Forestry Fund,
74. 4765 Chevy Chase, USA USD 1.1993 12.96 130,682 –1,707
Asia Environmental Partners (PF1) L.P.,
75. 4799 Grand Cayman, Cayman Islands USD 1.1993 15.96 68,961 –839
Catalyst Fund 1 LLC,
Private Equity New Markets III K/S,
77. 4924 Hellerup, Denmark USD 1.1993 5.55 143,486 20,472
Africa Joint Investment Fund,
78. 4925 Ebene, Mauritius USD 1.1993 16.00 32,895 –1,962
Aureos South-East Asia Fund II, L.P.,
79. 4927 Toronto, Canada USD 1.1993 5.74 188,979 13,245
Interact Climate Change Facility S.A.,
80. 4934 Luxembourg EUR 1.0000 7.69 127 17
The CapAsia ASEAN Infrastructure
81. 4941 Fund III L.P., Grand Cayman, Cayman Islands USD 1.1993 13.17 65,731 8,539
EMX Capital Partners L.P.,
82. 4942 México D.F., México USD 1.1993 20.08 49,349 1,347
Knauf Gips Buchara OOO,
83. 4971 Bukhara, Uzbekistan UZS 9,691.4300 25.00 152,633,390 23,025,185
Deepak Fasteners Ltd.,
84. 4979 Ludhiana, India INR 76.6055 0.01 1,302,003 –336,544
Harmon Hall Holding S.A. de C.V.,
85. 4989 México D.F., México MXN 23.6215 12.76 276,278 56,867
Maghreb Private Equity Fund III,
86. 5050 Port Louis, Mauritius EUR 1.0000 9.78 153,565 –16,205
Lereko Metier Sustainable Capital Fund Trust,
87. 5062 Sandhurst, Republic of South Africa ZAR 14.8054 14.49 185,378 26,074
Mediterra Capital Partners I, L.P.,
88. 5068 St. Peter Port, Guernsey EUR 1.0000 6.09 103,055 29,658
Orient Investment Properties Ltd.,
89. 5084 Road Town, British Virgin Islands USD 1.1993 4.07 595,618 –2,669
Mongolia Opportunities Fund I L.P.,
90. 5085 Grand Cayman, Cayman Islands USD 1.1993 13.33 21,461 –1,276
Worldwide Group, Inc,
91. 5102 Charlestown, St. Kitts & Nevis USD 1.1993 32.28 22,740 758
Berkeley Energy Wind Mauritius Ltd.,
92. 5122 Ebene, Mauritius EUR 1.0000 25.83 100,619 3,576
EMF NEIF I (A) L.P.,
93. 5125 Southampton, UK USD 1.1993 28.08 35,716 10,342
VI (Vietnam Investments) Fund II, L.P.,
Fundo Mútuo de Investimentos
em Empresas Emergentes Stratus Fleet,
95. 5140 São Paulo, Brazil BRL 3.9711 39.69 35,087 9,206
Russia Partners Technology Fund, L.P.,
Teak Tree Investments,
Clean Energy Transition Fund L.P.,
98. 5203 St. Peter Port, Guernsey EUR 1.0000 15.38 59,812 20,560
99. 5216 Ambit Pragma Fund II, Mumbai, India INR 76.6055 10.68 1,709,094 –761,537


Equis Asia Fund L.P.,
Grassroots Business Investors Fund I L.P.,
Adenia Capital (III) LLC Ltd.,
102. 5264 Port Louis, Mauritius EUR 1.0000 10.44 93,556 3,915
Lereko Metier Solafrica Fund I Trust,
103. 5283 Johannesburg, Republic of South Africa ZAR 14.8054 47.50 191,069 51,449
104. 5295 UT Bank Ltd., Accra, Ghana GHS 5.4390 13.52 7) 7)
Latin Renewables Infrastructure Fund, L.P.,

105. 5300 Dover, USA USD 1.1993 14.06 23,899 –1,615
Victoria South American Partners II L.P.,
106. 5318 Toronto, Canada USD 1.1993 3.03 389,264 33,182
Adobe Social Mezzanine Fund I, L.P.,
107. 5321 Montreal, Canada USD 1.1993 24.75 9,857 –1,153
CoreCo Central America Fund I L.P.,
108. 5331 Wilmington, USA USD 1.1993 22.00 10,260 –64
Elbrus Capital Fund II, L.P.,
Armstrong S.E. Asia Clean Energy Fund L.P.,
110. 5378 Singapore USD 1.1993 7.54 130,960 –145
Archimedes Health Developments Ltd.,
111. 5386 Limassol, Cyprus USD 1.1993 19.23 7) 7)
BCR Investment Company Ltd.,

AGF Latin America L.P.,
113. 5388 London, UK USD 1.1993 19.72 56,639 15,969
ALAOF Brasil Infra Holdings Fundo
de Investimentos em Participacoes,
114. 5405 São Paulo, Brazil BRL 3.9711 15.65 112,644 –260
ZEP-RE (PTA Reinsurance Company),
115. 5413 Nairobi, Kenya USD 1.1993 5.96 199,931 19,297
Union Agriculture Group Corp.,
116. 5416 Tortola, British Virgin Islands USD 1.1993 2.80 319,950 –98,225
African Development Partners II L.P.,
117. 5434 St. Peter Port, Guernsey USD 1.1993 3.45 280,279 –17,306
Banyan Tree Growth Capital - II, LLC,
Altra Private Equity Fund II L.P.,
Falcon House Partners Indonesia Fund I,
Lombard Asia IV L.P.,
Schulze Global Ethiopia Growth
and Transformation Fund I, L.P.,
SAP I Brazil Aiv 3, L.P.,
VSAP II Brazil Aiv 2, L.P.,
Parque Eólico la Carabina I, S.A.P.I. de C.V.,
125. 5484 México D.F., México MXN 23.6215 17.86 –73,554 –73,481
Parque Eólico la Carabina II, S.A.P.I. de C.V.,


Parque Eólico el Mezquite, S.A.P.I.de C.V.,
Softlogic Life Insurance PLC,
128. 5492 Colombo, Sri Lanka LKR 184.0235 19.00 1,962,166 966,843
Paraguay Agricultural Corporation S.A.,
129. 5493 Luxembourg PYG 6,677.4000 15.83 610,581,789 –6,380,574
ADP Enterprises W.L.L.,
130. 5505 Manama, Bahrain BHD 0.4521 23.26 216,832 65,930
CGFT Capital Pooling GmbH & Co. KG,
131. 5506 Berlin, Germany EUR 1.0000 40.00 –69 –31
MGM Sustainable Energy Fund L.P.,
The Enterprise Expansion Fund, S.A.
133. 5532 SICAV-SIF, Luxembourg EUR 1.0000 10.31 6,274 –116
Takura II Feeder Fund Partnership,
134. 5533 Cape Town, Republic of South Africa USD 1.1993 24.75 28,508 6,086
Uttam Galva Metallics Ltd.,
135. 5537 Mumbai, India INR 76.6055 8.56 18,248,800 –1,833,800
Portland Caribbean Fund II, L.P.,
CapMan Russia II Fund L.P.,
137. 5573 St. Peter Port, Guernsey EUR 1.0000 12.57 14,306 –1,661
138. 5577 Oragroup S. A., Lome, Togo XOF 655.9570 3.19 106,988,000 15,150,000
ACON Latin America Opportunities Fund IV-A,
139. 5583 L.P., Toronto, Canada USD 1.1993 39.90 45,525 8,754
Navegar I, L.P.,
140. 5587 George Town, Cayman Islands USD 1.1993 13.23 88,252 260
Mediterrania Capital II (SICAV) P.L.C.,
141. 5597 Qormi, Malta EUR 1.0000 10.44 94,249 11,519
Quadria Capital Fund L.P.,
Bodesa S.A.P.I. de C.V.,
143. 5608 Villa De Alvarez, México MXN 23.6215 15.89 996,456 107,779
Lovcen Banka AD,
144. 5622 Podgorica, Montenegro EUR 1.0000 28.05 8,548 199
LeapFrog Financial Inclusion Fund II, L.P.,
145. 5627 Ebene, Mauritius USD 1.1993 5.00 222,165 7,716
Multi Financial Group Inc.,
146. 5631 Panama City, Panama PAB 1.1941 6.95 162,660 6,439
Berkeley Energy Netherlands Holding B.V.,
147. 5644 Amsterdam, Netherlands EUR 1.0000 15.00 7) 7)
AEP China Hydro, Ltd.,

Grassland Finance Ltd.,
149. 5661 Hong Kong HKD 9.3720 24.95 424,285 –24,709
Orilus Investment Holdings Pte. Ltd.,
150. 5713 Singapore USD 1.1993 32.98 67,684 –223
Frontier Bangladesh II L.P.,
151. 5715 Grand Cayman, Cayman Islands USD 1.1993 20.00 439 –2,830
Asia Environmental Partners II.L.P.,
152. 5718 Grand Cayman, Cayman Islands USD 1.1993 8.28 98,253 2,413
Kua Mex Foods, S. A. P. I. de C. V.,
153. 5720 México D.F., México MXN 23.6215 15.73 1,304,875 –41,948
Soleq Holdings,


Euromena III Ltd. Partnership,
155. 5734 London, UK USD 1.1993 9.00 54,796 –3,342
Lereko Metier REIPPP Fund Trust,
156. 5745 Sandhurst, Republic of South Africa ZAR 14.8054 32.28 94,097 17,186
Investec Africa Private Equity Fund 2 L.P.,
157. 5749 St. Peter Port, Guernsey USD 1.1993 8.48 123,555 4,190
Malacca Trust Pte. Ltd.,
158. 5770 Singapore IDR 16,265.4000 13.47 880,913,525 84,030,721
The Kibo Fund II LLC,
AfricInvest Fund III,
Energon Holdings,
162. 5837 Aavishkaar Frontier Fund, Ebene, Mauritius USD 1.1993 20.82 5,578 –1,261
163. 5847 ICE TopCo Ltd. S.A., Luxembourg EUR 1.0000 6.04 186,832 47,798
Abraaj North Africa Fund II L.P.,
164. 5860 London, UK USD 1.1993 4.27 193,075 31,267
Creed Healthcare Holdco Ltd.,
165. 5878 Valletta, Malta USD 1.1993 7.50 299,364 632
Gaja Capital Fund II Ltd.,
166. 5912 Port Louis, Mauritius USD 1.1993 7.89 –64 –4,823
167. 5935 Kibele B.V., Amsterdam, Netherlands USD 1.1993 22.25 4,517 –4,202
Emerald Sri Lanka Fund I Ltd.,
Metier Capital Growth Fund II Partnership,
169. 5979 Sandhurst, Republic of South Africa ZAR 14.8054 16.43 573,917 650
Tournai Investments S.L.,
170. 5998 Barcelona, Spain USD 1.1993 15.38 46,154 5,083
HydroChile Holdings,
171. 6014 George Town, Cayman Islands CLP 736.8950 10.40 153,406,603 –722,525
Kandeo Fund II (A) L.P.,
172. 6038 Toronto, Canada USD 1.1993 17.94 9,131 587
173. 6039 Surfline Communications Ltd., Accra, Ghana GHC 5.4372 4.25 –160,222 –182,045
AIIF2 Towers Mauritius Ltd.,
VI (Vietnam Investments) Fund III, L.P.,
Medisia Investment Holdings Pte Ltd.,
176. 6048 Singapore USD 1.1993 32.65 59,583 19,333
Abraaj Africa Fund III L.P.,
Equis Direct Investment Fund, L.P.,
Aqua Agro Fundo de Investimento em Partici-
179. 6086 pações, São Paulo, Brazil BRL 3.9711 29.90 101,903 –214
Americas Energy Fund II Clean Energy Ltd.
180. 6100 Partnership, Toronto, Canada USD 1.1993 17.14 29,294 –973
Navegar II (Netherlands) B.V.,
181. 6129 Amsterdam, Netherlands USD 1.1993 29.17 44,675 –2,794


Vantage Mezzanine III Pan African
Sub-Fund Partnership,
182. 6157 Johannesburg, Republic of South Africa USD 1.1993 6.53 24,283 1,086
Vantage Mezzanine III Southern African
Sub-Fund Partnership,
183. 6159 Johannesburg, Republic of South Africa ZAR 14.8054 11.33 888,374 112,534
184. 6173 ACON Retail MXD, L.P., Toronto, Canada USD 1.1993 100.00 14,066 –8,489
185. 6173.1 Grupo Vizion Lerma, S.A.P.I. de C.V. México MXN 23.6215 6.30 1,853,430 –433,891
Equis DFI Feeder, L.P.,
186. 6176 George Town, Cayman Islands USD 1.1993 37.00 8,899 125
187. 6200 Qalaa Holdings PLC, Cairo, Egypt EGP 21.3156 0.85 6,429,284 –2,003,322
Stratus Capital Partners B L.P.,
188. 6216 Edinburgh, UK USD 1.1993 73.31 9,098 3,968
Stratus Group – Stratus Capital Partners
189. 6216.1 (SCP), Edinburgh, UK USD 1.1993 15.66 68 67
Ashmore Andean Fund II, L.P.,
190. 6230 Bogotá, Colombia COP 3,578.0000 10.20 14,298 –2,631
Taxim Capital Partners I L.P.,
191. 6232 Jersey EUR 1.0000 8.58 23,058 –1,927
Cambodia-Laos-Myanmar Development Fund
192. 6238 II L.P., Singapore USD 1.1993 15.54 935 –2,444
Pembani Remgro Infrastructure Mauritius
193. 6240 Fund I L.P., Ebene, Mauritius USD 1.1993 10.35 91,886 2,224
Mobisol GmbH,
194. 6250 Berlin, Germany EUR 1.0000 12.30 19,251 –10,769
Falcon House Partners Fund II, L.P.,
Deep Catch Namibia Holdings (Proprietary)
196. 6317 Ltd., Windhoek, Namibia NAD 14.8358 30.00 111,300 346
Azure Power Global Ltd.,
ECP Africa Fund IV LLC,
Principle Capital Fund IV L.P.,
MC II Pasta Ltd.,
200. 6395 Qormi, Malta EUR 1.0000 36.14 15,985 –623
201. 6397 AFIG Fund II, L.P., Port Louis, Mauritius USD 1.1993 9.70 1,024 –1,391
Adenia Capital (IV) L.P.,
203. 6401 Apis Growth 2 Ltd., Ebene, Mauritius USD 1.1993 25.63 35,871 5,414
204. 6428 Africa Bovine Ltd., Ebene, Mauritius USD 1.1993 11.39 95,815 6,709
205. 6431 Whitlam Holding Pte. Ltd., Singapore USD 1.1993 38.74 28,938 1,410
Metier Retailability en commandite
206. 6449 Partnership, Sandhurst, South Africa ZAR 14.8054 23.75 564,057 –10,174
PT Bank Victoria International Tbk.,
207. 6450 Jakarta, Indonesia IDR 16,265.4000 9.00 2,646,640,652 118,837,398


Catalyst MENA Clean Energy Fund L.P.,
208. 6452 St. Peter Port, Guernsey USD 1.1993 19.44 1,139 –795
209. 6466 Catalyst Fund II LP, Port Louis, Mauritius USD 1.1993 7.77 0 –2,907
ADP II Holding 6 W.L.L.,
210. 6470 Manama, Bahrain BHD 0.4521 16.67 27,913 6,754
New Forests Company Holdings I Ltd.,
212. 6499 Phi Capital Trust, Chennai, India INR 76.6055 22.50 0 237,050
North Haven Thai Private Equity L.P.,
213. 6523 Grand Cayman, Cayman Islands USD 1.1993 8.73 6) 6)
KNAUF Gypsum Philippines Inc.,

214. 6528 Makati City, Philippines PHP 59.7950 25.05 205,180 –34,570
Maison Capital Fund L.P.,
215. 6529 Shenzhen, People’s Republic of China CNY 7.8002 11.50 6) 6)
Dolce M8 Holdco Ltd.,

African Infrastructure Investment Fund 3
Limited Partnership,
217. 6533 Cape Town, South Africa ZAR 14.8054 16.67 6) 6)
PT Verena Multi Finance Tbk,

218. 6564 Jakarta, Indonesia INR 76.6055 19.99 286,741 6,466
SSG Secured Lending Opportunities II L.P.,
219. 6568 Hong Kong HKD 9.3720 4.91 6) 6)
Emerging Europe Growth Fund III L.P.,

220. 6590 Wilmington, USA USD 1.1993 13.33 6) 6)
Abraaj Global Credit Fund, L.P.,

Mediterrania Capital III, L.P.,

222. 6601 Port Louis, Mauritius USD 1.1993 11.65 6) 6)
IAPEF 2 SJL Limited,

Bozano Investimentos Growth Capital Fund
224. 6638 I-B L.P., Brazil BRL 3.9711 31.25 6) 6)
Darby Latin American Private Debt Fund IIIA

225. 6641 L.P., Toronto, Canada USD 1.1993 74.96 6) 6)
Fortress Vietnam Investment Holdings Pte.

226. 6645 Ltd., Singapore USD 1.1993 11.58 6) 6)
Adobe Mezzanine Fund II Limited Partnership,

227. 6678 México City, México MXN 23.6215 23.70 6) 6)
Clearwater China Investments Limited,

229. 6730 Leiden PE II, L.P., Toronto, Canada USD 1.1993 27.03 8,290 –1,460
PAG Growth I LP,
GENBRIDGE Capital Fund I L.P.,

231. 6808 Beijing, People’s Republic of China CNY 7.8002 3.09 6) 6)
Denham International Power SCSp,

232. 6837 Luxembourg EUR 1.0000 14.68 6) 6)
1)
ISO currency code. 5)
kCU = 1,000 currency units in local currency.
2)
CU-currency unit in local currency. 6)
Enterprise in start-up phase, no annual statements of accounts available yet.
3)
Equity as per HGB Article 266, Sections 3 & 272. 7)
No current annual statements of accounts available.
4)
Result as per HGB Article 275, Sections 2 & 3.

CORPORATE BODIES
Supervisory Board
Hans-Joachim Fuchtel Eberhard Brandes Dr Michael Meister
Chairman CEO, WWF Germany, Berlin Parliamentary State Secretary
Parliamentary State Secretary Federal Ministry of Finance, Berlin
Federal Ministry for Economic Coopera- Bertram Dreyer
tion and Development, Berlin Senior Investment Manager, Depart- Dorothea Mikloweit
ment for Project Finance, Infrastructure Technical Coordinator, Department
Prof. Dr Joachim Nagel and Risk Capital for Transaction Management
First Deputy Chairman DEG, Cologne DEG, Cologne
Member of the Board of Managing (from 20.02.2017) (from 20.02.2017)
Directors, KfW, Frankfurt am Main
(from 01.11.2017) Dr Patricia Flor Dr Ulrich Schröder
Head of Division, International Order, Chairman of the Executive Board,
Dr Norbert Kloppenburg United Nations and Arms Control KfW, Frankfurt am Main
First Deputy Chairman Federal Foreign Office, Berlin
Member of the Board of Managing (from 10.03.2017) Stephan Steinlein
Directors, KfW, Frankfurt am Main State Secretary
(up to 31.10.2017) Dr Sabine Hepperle Federal Foreign Office, Berlin
Head of Division, Mittelstand Policy (up to 14.02.2017)
Prof. Dr Christiane Weiland Federal Ministry for Economic Affairs
Second Deputy Chairwoman and Energy, Berlin Brigitte Zypries
Head of Degree Programme, Business (from 10.03.2017) Federal Minister for Economic Affairs
Administration – Banking and Energy, Berlin
Baden-Württemberg Cooperative State Arndt G. Kirchhoff (up to 26.01.2017)
University, Karlsruhe Managing Partner
(from 20.02.2017) Kirchhof Automotive GmbH & Co. KG,
Attendorn Management Board
Corinna Linner
Second Deputy Chairwoman Caroline Kremer Philipp Kreutz
Auditor Vice Chair, DEG Works Council & Equal
(up to 14.02.2017) Opportunities Officer Christiane Laibach
DEG, Cologne
Dr Amichia Biley (from 20.02.2017) Bruno Wenn
Senior Investment Manager, Chairman
Department for Business Innovation Sarah Madew
and Syndication Senior Counsel, Legal Department
DEG, Cologne Africa/Latin America
(from 20.02.2017) DEG, Cologne
(from 20.02.2017)
Cologne, 7 February 2018
The Management Board
Laibach Kreutz Wenn

AUDITOR’S REPORT
“Independent auditor’s report Responsibility of the legal representatives and the Supervisory
Board for the annual financial statements and the Management
To Deutsche Investitions- und Entwicklungsgesellschaft mbH, Cologne Report
The legal representatives are responsible for drawing up the annual
Report on audit of annual financial statements and Management financial statements, which comply in all essential points with German
Report commercial law as it applies to corporations, and for ensuring that the
annual financial statements give a true and fair view of the net worth,
Audit opinion financial and earnings situation of the company in accordance with
German accounting principles, in order to enable the annual financial
We have audited the annual financial statements – consisting of statements to be drawn up free from – deliberate or unintentional
balance sheet as at 31 December 2017, the profit and loss account – misstatements.
for the financial year from 1 January 2017 to 31 December 2017,
and the appendix, which includes the valuation/accounting criteria – When compiling the annual financial statements, the legal representa-
of DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, tives have a responsibility to evaluate the company’s ability to con-
Cologne. We have additionally audited DEG’s Management Report tinue as a going concern. Furthermore, they have a responsibility to
for the financial year from 1 January 2017 to 31 December 2017. detail, where pertinent, issues connected to the continuation of cor-
In keeping with statutory provisions under German law, we have not porate activities. They also have a responsibility to account for the
verified as to substance the declaration on page 6 of the Management going-concern accounting principles, provided this is not prevented
Report on corporate management as per Article 289f, Section 4 HGB by actual or statutory conditions.
(information on quota of female staff).
The legal representatives are further responsible for drawing up a
In our judgment, based on the audit findings Management Report that conveys an accurate overall view of the
company’s situation, is consistent in all essential points with the
• the attached annual financial statements comply, in all significant annual financial statements, complies with German statutory require-
aspects, with German commercial law as it applies to corporations, ments, and gives an accurate picture of the opportunities and risks of
and give a true and fair view of the net worth and financial situation future development. Furthermore, the legal representatives are respon-
of the company as at 31 December 2017, and of its earnings situation sible for the arrangements and measures (systems) they have deemed
for the financial year from 1 January 2017 to 31 December 2017, in necessary to enable the compilation of a Management Report in
accordance with standard German accounting principles, and accordance with the applicable provisions under German law, and to
ensure that sufficient suitable evidence for the statements in the
• the attached Management Report as a whole conveys an accurate Management Report can be provided.
view of the company’s situation. This Management Report conforms
to the annual financial statements in all essential points. It complies The Supervisory Board is responsible for monitoring the company’s
with German statutory requirements and presents an accurate picture financial reporting process used to prepare the annual financial
of the opportunities and risks of future development. statements and the Management Report.
In accordance with Article 322, Section 3, Clause 1 HGB, we declare Other information
that our audit has not given rise to any objections in respect of the The Supervisory Board is responsible for the “Report of the Supervis-
correctness of the annual statements of accounts and the Manage- ory Board”. Otherwise, the responsibility for other information rests
ment Report. with the legal representatives.
Basis for the audit opinions Other information comprises the following sections of DEG’s 2017
We conducted our audit of the annual statements of accounts and annual report, which will presumably be made available to us after
the Management Report in accordance with Article 317 HGB and in this date: “DEG at a glance”, “Report by the Supervisory Board” and
compliance with the German standards for audits of financial state- “Corporate Governance Report 2017”.
ments established by Institut der Wirtschaftsprüfer (the German
Institute of Public Auditors IDW). Additional information on our respon- Our audit opinions on the annual financial statements and the Man-
sibility under these provisions and principles may be found in the agement Report do not extend to the other information. Hence, we
section “Auditor’s responsibility for the audit of the annual financial neither give an audit opinion, nor come to any other kind of audit
statements and the Management Report” of this report. In accordance conclusion in relation to them.
with German commercial law and provisions regulating the profes-
sion, we are independent of the company and have fulfilled our other In connection with our audit, we have a responsibility to read the other
professional duties under the German regulations in compliance with information provided and to recognise whether the other information
these requirements. We are of the opinion that the audit evidence we
have gathered is suitable and sufficient to serve as the basis of our • contains significant inconsistencies with the annual financial state-
audit opinions on the annual financial statements and the Manage- ments, the Management Report or the understanding we have
ment Report. gained in the course of our audit, or
• appears inaccurately presented in any other way.
DEG Annual Report 2017 | Auditor’s report | 64

If, based on the work we have carried out, we come to the conclusion statements be inappropriate, to modify our audit opinion. We base
that a significant misrepresentation of this other information is our conclusions on the audit evidence obtained by the date on which
present, we are obliged to report on this fact. We have nothing to our certificate is issued. Future events or circumstances may never-
report in this instance. theless result in the company not being able to continue as a going
concern;
Auditor’s responsibility for the audit of the annual financial
statements and the Management Report • evaluate the overall presentation, the organisation and the content
Our goal is to achieve sufficient certainty on whether the annual of the annual financial statements, including the data, and take a
financial statements as a whole are free from significant – deliberate view on whether the annual financial statements present the basic
or unintentional – misstatements; whether the Management Report as business transactions and events in a manner that gives a true and
a whole conveys an accurate picture of the company’s situation as fair view of the net worth, financial and earnings situation of the
well as being consistent in all essential respects with the annual company in accordance with German accounting principles;
financial statements and with the insights gained during the audit;
whether it complies with German statutory requirements and gives an • valuate the extent to which the Management Report is consistent
accurate view of the opportunities and risks of future development. with the annual financial statements and complies with the law,
Our goal is further to issue an audit certificate that comprises our while also evaluating the view of the company’s situation presented
audit opinions on the annual financial statements and the Manage- therein;
ment Report.
• carry out audit activities in relation to the outlook presented by the
Sufficient certainty is a high degree of certainty, but does not guaran- legal representatives in the Management Report. Drawing on
tee that an audit carried out in accordance with Article 317 HGB and sufficient, suitable audit evidence, we specifically examine the main
in compliance with the German standards for audits of financial assumptions on which the legal representatives have based their
statements established by Institut der Wirtschaftsprüfer (the German outlook and make a judgment as to whether the outlook has been
Institute of Public Auditors IDW) will always discover a material correctly derived from the assumptions. We do not give a separate
misstatement. Misstatements may arise from infringements or errors audit opinion on the outlook, or on the assumptions on which it is
and are regarded as significant if they, singly or as a whole, influence based. There is a substantial, unavoidable risk that future events will
the commercial decisions taken by recipients on the basis of these significantly diverge from the outlook.
annual financial statements and this Management Report.
We discuss, among other things, the proposed extent and scheduling
In the course of our audit, we exercise judgment, as duty bound, and of the audit as well as important audit findings with those responsible
maintain a critical attitude. We additionally for monitoring the process. This includes any flaws in the internal
control system which we may have uncovered in the course of our
audit.”
• identify and evaluate the risks of significant – deliberate or uninten-
tional – misstatements in the annual financial statements and the Düsseldorf, 7 February 2018
Management Report, plan and carry out audit activities in response
to these risks, and gather audit evidence that is sufficient and Ernst & Young GmbH
suitable to serve as the basis for our audit opinions. The risk that Wirtschaftsprüfungsgesellschaft
significant misstatements remain undiscovered is greater in regard
to infringements than in the case of errors, since infringements may
involve fraudulent collaboration, forgeries, deliberate deficiencies,
misleading representations and the suspension of internal control
systems;
Lösken Wirths
• gain an understanding of the internal control system relevant to the Auditor Auditor
auditing of the annual financial statements, and of the arrange-
ments and measures relevant to the auditing of the Management
Report. This enables us to plan audit activities that are appropriate
in the circumstances, albeit not with the aim of giving an audit
opinion on the effectiveness of these corporate systems;
• evaluate the appropriateness of the financial reporting methods

used by the legal representatives, as well as the extent to which the
estimated values and associated statements presented by the legal
representatives are justifiable;
• draw conclusions about the suitability of the going concern account-

ing principle applied by the legal representatives as well as come to
a view, based on the audit evidence received, on whether significant
uncertainty pertains in connection with events or circumstances that
might lead to significant doubt about the company’s ability to
continue as a going concern. Should we come to the conclusion that
significant uncertainty is present, we have an obligation to draw
attention to the relevant details in the annual financial statements
and the Management Report in our audit certificate, or, should such
DEG Annual Report 2017 | Auditor’s report | 65

Imprint
Published by:
DEG – Deutsche Investitions- und
Entwicklungsgesellschaft mbH
Kämmergasse 22
50676 Cologne, Germany
Box 100961, 50449 Cologne, Germany
Phone +49 221 4986-0
Fax +49 221 4986-1290
[email protected]
www.deginvest.de
Design and layout:

Werkstudio : Werbung und Design GmbH
Düsseldorf
Translation:
Delphine Lettau
London
Printed by:
Warlich Druck Meckenheim GmbH
Photo:
Getty Images International
ISSN: 1862-779X
The annual report with financial statements and

management report is also available in German. All CO₂ emissions generated during the implementation of this project have
been recorded and offset by a recognised climate protection project.
April 2018 For more information visit www.natureOffice.com

DEG Annual-Report 2017

Uploaded by

Copyright:

Available Formats

DEG Annual-Report 2017

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

DEG Annual-Report 2017

Uploaded by

Copyright:

Available Formats

Annual Report 2017

Financial Statements and Management Report

Report by the Supervisory Board 4

Corporate Governance Report 7

Management Report 2017  16

Annual Financial Statements 2017 37

EUR million 2017 2016

Consultancy and other services

Write-back/withdrawal from purpose-tied reserve fund 0 4

Developmental impacts of DEG’s portfolio 2017

DEG Annual Report 2017 | DEG at a glance | 3

DEG Annual Report 2017 | Report by the Supervisory Board | 5

DEG Annual Report 2017 | Report by the Supervisory Board | 6

DEG Annual Report 2017 | Corporate Governance Report | 8

DEG Annual Report 2017 | Corporate Governance Report | 9

DEG Annual Report 2017 | Corporate Governance Report | 10

Accounting and annual audit

The following summary shows total compensation for individ-

EUR k 2017 2016 Change

DEG Annual Report 2017 | Corporate Governance Report | 11

In the past financial year, no member of the Management

Number 2017 EUR k 2017 Number 2016 EUR k 2016

DEG Annual Report 2017 | Corporate Governance Report | 12

DEG Annual Report 2017 | Corporate Governance Report | 13

There are no pension obligations towards members of the

In the year under review, members of the Supervisory Board

In respect of the risks associated with their activities as

No loans were made to members of the Supervisory Board

Cologne, 19 March 2017

The Management Board The Supervisory Board

DEG Annual Report 2017 | Corporate Governance Report | 14

DEG Annual Report 2017 | Corporate Governance Report | 15

DEG Annual Report 2017 | Management Report | 17

DEG Annual Report 2017 | Management Report | 18

Number of employees 2016 management 2017 bonus (for

Staff on regular pay scale 1921) (129 recipients) 7.8 0.52)

DEG Annual Report 2017 | Management Report | 19

The economy of Sub-Saharan Africa also recovered in 2017,

In Latin America, the development of the economy improved

DEG Annual Report 2017 | Management Report | 20

New commitments by customer cluster in EUR million

New commitments by region in EUR million

DEG Annual Report 2017 | Management Report | 21

The programme “Climate Partnerships with the Private Sector”,

EUR million 2017 2016

DEG own funds 3.4 4.5

BMZ 24.9 21.7

BMUB 1.6 0.9

Gates Foundation 2.3 3.1

Total 32.2 30.2

DEG Annual Report 2017 | Management Report | 22

German accounting standards P&L – economic presentation

EUR million 2017 2016

Staff costs –68.4 –56.7

DEG Annual Report 2017 | Management Report | 23

DEG Annual Report 2017 | Management Report | 24

As a private-sector development finance institution, DEG

DEG Annual Report 2017 | Management Report | 25

Management Report 2017 16