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← Microloan Foundation

2023-12-31-accounts

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Annual Report and Financial Statements 2023

Registered charity number: 1104287 (England and Wales); SC041941 (Scotland) Company limited by guarantee registered company number: 04828558 (England and Wales)

MicroLoan Foundation’s vision is a world where all those living in poverty have the opportunity to build better lives for themselves and their families.

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2 MicroLoan Foundation

~~Contents~~

Leadership introduction
How we work
Expanding horizon~~s~~
Social impact 2023
Operations in Malawi
Operations in Zambia
Operations in Zimbabwe
Fundraising overview
Group fnancial review
Risk management
Governance
Statement of Trustees’ responsibilities
Independent auditor’s report
Financial statements
MicroLoan Foundation’s companies and advisors		 Leadership introduction
How we work
Expanding horizon~~s~~
Social impact 2023
Operations in Malawi
Operations in Zambia
Operations in Zimbabwe
Fundraising overview
Group fnancial review
Risk management
Governance
Statement of Trustees’ responsibilities
Independent auditor’s report
Financial statements
MicroLoan Foundation’s companies and advisors		 Leadership introduction
How we work
Expanding horizon~~s~~
Social impact 2023
Operations in Malawi
Operations in Zambia
Operations in Zimbabwe
Fundraising overview
Group fnancial review
Risk management
Governance
Statement of Trustees’ responsibilities
Independent auditor’s report
Financial statements
MicroLoan Foundation’s companies and advisors		 Leadership introduction
How we work
Expanding horizon~~s~~
Social impact 2023
Operations in Malawi
Operations in Zambia
Operations in Zimbabwe
Fundraising overview
Group fnancial review
Risk management
Governance
Statement of Trustees’ responsibilities
Independent auditor’s report
Financial statements
MicroLoan Foundation’s companies and advisors		 Leadership introduction
How we work
Expanding horizon~~s~~
Social impact 2023
Operations in Malawi
Operations in Zambia
Operations in Zimbabwe
Fundraising overview
Group fnancial review
Risk management
Governance
Statement of Trustees’ responsibilities
Independent auditor’s report
Financial statements
MicroLoan Foundation’s companies and advisors

3

Annual Report and Financial Statements 2023

~~Leadership introduction~~

4 MicroLoan Foundation

Welcome to MicroLoan Foundation's Annual Report 2023, which will delve into a year of innovation, impact and growth. MicroLoan Foundation remains steadfast in its mission to provide the poorest women in sub-Saharan Africa with the tools and skills to enable them to work their own way out of poverty.

We saw significant growth in our financial performance, with total portfolio increasing by 11% compared to the previous year. It is heartening to see, that despite the challenging local and global context, all three subsidiaries recorded full operational sustainability in the year. Prudent financial management and swift operational interventions at times of crises, ensured resources were carefully managed, maximising progress towards our core mission.

MicroLoan Foundation supported 144,943 women entrepreneurs in 2023. These entrepreneurs are the driving force behind local economic development, agricultural production and poverty alleviation.

Our model and impact were celebrated internationally. MicroLoan Zambia was ranked the most impactful financial service provider in the country. It was also ranked fourth most impactful worldwide in the 60 Decibels Microfinance Index. MicroLoan Malawi was recognised for its contribution to food security for rural communities by the European Microfinance Award.

Adapting to the evolving needs of our clients and the volatile external environment is central to our approach. Through mobile banking and digital solutions, we enhanced efficiency and increased our service offer to remote communities untouched by traditional financial institutions.

mission. However, we view these challenges as opportunities for innovation and collaboration. As we forge partnerships, leverage technology and continuously listen to our clients, we are better equipped to navigate the challenges ahead.

We are excited to announce the upcoming launch of a new operation in South Africa in 2024, subject to the attainment of an operating license. This initiative will further our mission and extend our impact on even more lives, thereby solidifying our position as a leading social microfinance provider in Southern Africa.

We are grateful to our partners, donors, investors, staff, volunteers and Board members who have joined us on our journey to bring opportunities to women in sub-Saharan Africa.

Last but not least, we want to thank the ambitious, hard-working and entrepreneurial women who we serve. The impact of our work is down to their drive to build better lives for their children and families.

While we celebrate our achievements, we acknowledge the challenges that lie ahead. Economic uncertainty, political instability, and climate change pose obstacles to our

Dr Mick Jackson Chairman

Medha Wilson Group Chief Executive Officer

5

Annual Report and Financial Statements 2023

~~How we work~~

MicroLoan operates a social microfinance model. We provide loans, savings facilities, training and ongoing business support to women in Malawi, Zambia and Zimbabwe, giving them the opportunity to kickstart their own income generating activities.

The model and methodology have been developed specifically for women living in rural communities where poverty is often more prevalent and severe. We continuously refine the approach by listening to our clients and addressing their changing needs.

Loan & Training Officers travel into rural villages to meet with the traditional authorities to introduce our work. At community meetings, women interested in starting or growing an income generating activity are encouraged to come together and form groups of five. The group has a collective responsibility for loan repayments and will support each other both socially and financially. The group will also join a centre. A typical centre has three elected centre leaders who assist between 25 to 50 women divided into groups of five.

Before accessing their loans, the group completes seven training modules to develop financial literacy skills and learn about their rights and responsibilities.

MicroLoan’s centre model is based on community group engagement for learning, support and risk management. Guided by their elected leaders and facilitated by MicroLoan staff, monthly centre meetings are held, providing a platform for women to exchange experiences and participate in advanced business training.

MicroLoan is different to traditional charities as our model aims to achieve Operational Self Sufficiency, where interest income from the loan book covers direct operational costs (excluding loan book growth and capital expenditure). We want to create a sustainable institution that is not reliant on charitable donations for its day to day running costs. The loan repayment rate is consistently above 97%. When this revolving loan book is combined with operational interest income and social impact investments, charitable donations can be focussed on improving our services and growing our outreach to support more women year on year.

Our model maximises the social impact of every donation.

Women receive their loans via mobile money or cash. Once they have received their loans, they invest in their own small businesses such as farms, grocery stores or hairdressing salons.

6 MicroLoan Foundation

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Women have MicroLoan
the option to apply staff meet
for further loans communities
Transport
HR IT
MicroLoan staff Women form
collect repayments groups and
Social
and provide receive training
mentoring assessments
Women receive
credit to set up
their own business
$
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The training incorporates visual aids, song, dance and role play, to make it accessible for women with limited literacy.

7

Annual Report and Financial Statements 2023 Annual Report and Financial Statements 2019

~~Expanding horizons~~

In 2023, MicroLoan achieved a remarkable 12% growth in its active client base and broadened its geographical reach across all three operational countries. Building on this momentum, MicroLoan plans to expand into South Africa in the coming year. This strategic move aims to maximise our impact on women in the region, diversify risks, and capitalise on economies of scale.

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SOUTH
AFRICA
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South Africa presents a significant opportunity for MicroLoan to make a meaningful difference.

Despite being one of the more advanced economies in sub-Saharan Africa, South Africa is also one of the most unequal, with

18.2 million people

living in extreme poverty, predominantly in rural areas.

macroeconomic stability will diversify risk and support sustainable growth.

By expanding into South Africa, MicroLoan will solidify its position as the leading financial service provider for rural women living in poverty in the Southern African region. This expansion will enhance our ability to deliver impactful, sustainable change for some of the world’s most disadvantaged communities.

The need for financial services among the rural poor, particularly women, is extensive.

MicroLoan’s mission is to bridge this gap, and we are well positioned to do so. Our team has extensive experience and knowledge of the South African microfinance market. The geographical proximity to our existing operations allows for smoother logistics and integration. Additionally, the relative

MicroLoan is in the process of securing an operating license. The first branch will be established in the western part of KwaZulu Natal in 2024. Building on our proven model from Malawi, Zambia and Zimbabwe, we will tailor our approach to fit South Africa's unique needs. With a careful and responsible growth plan we envision reaching Operational Self Sufficiency with 7,800 active clients spread across three branches, by the end of 2028.

8 MicroLoan Foundation

q2 Annual Repo 'a¥Statements 202S

~~Social impact 2023~~

A total of 144,943 women in Malawi, Zambia, and Zimbabwe accessed financial literacy, business training and small affordable loans in 2023. Over 600,000 children and vulnerable adults in their care have improved food security, access to healthcare, better housing and are more likely to go to school. At the end of the year 93,908 female entrepreneurs were actively running a business with MicroLoan.

MicroLoan measures its impact carefully. Social Performance Management is a range of processes and activities we use to ensure we are achieving our aim of helping the poorest women transform their lives. This includes defining and monitoring social goals, developing client centric, products and services, treating clients and employees responsibly, and balancing social and financial performance. Our Social Performance Management model is often cited as an example of best practice and MicroLoan Zambia was ranked the fourth most impactful financial service provider in the world in the 2023 Microfinance Index.

Poverty alleviation

Poverty is complex and needs to be measured through a multidimensional and long-term perspective. Data is collected using the Poverty Probability Index®. This innovative measurement tool determines the likelihood of a household living below the poverty line. MicroLoan has been utilising this tool since 2012 to assess if we are reaching the poorest segment of the population, and if their poverty status is improving over time.

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Over 17% of client who have been with MicroLoan for more than one year are moving out of extreme poverty. In addition to poverty reduction, the women report a range of positive changes in their lives. As they invest in income generating activities, their household income increases and their whole family benefits. Our data shows the impact on the women and their families after joining MicroLoan.

10 MicroLoan Foundation

In 2023, 79% of all new clients were living below the global $2.50 per day poverty line and 50% were living in extreme poverty, meaning they were struggling to survive on less than $1.25 per day.

79% 50%

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----- Start of picture text -----
LESS THAN
$2.50
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LESS THAN $1.25

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20%

of women have increased asset ownership (such as livestock, a bicycle or land)

96%

of families have food security compared to 87% before joining MicroLoan

9%

of women have one or more paid employees

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96%

of clients and their families can seek medical treatment when required, compared to the 91% baseline

Women report a

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377%

average increase in business profits after joining MicroLoan

77%

of clients in Malawi are able to send all their female children to school compared to 58% before

11

Annual Report and Financial Statements 2023

111 Ll 12 MicroLoan Foundation

Over 17% of our clients who have been with MicroLoan for more than one year are moving out of extreme poverty. This is a significant achievement considering many of these families have been living in extreme poverty for generations.

13

Annual Report and Financial Statements 2023

Food security and the intersection with climate change

Women play a vital role in the food system on a national, local and household level. Our clients are market vendors, restaurateurs, bakers, traders, farmers and consumers.

Over 84% of clients report that they are more food secure after joining MicroLoan. This is a result of increased household income from their small businesses and greater harvests as they can access quality seed, fertiliser and conservation farming techniques. In 2023, MicroLoan Malawi was recognised by the European Microfinance Award for its contribution to inclusive finance for food security and nutrition. With 90% of MicroLoan clients engaging in smallholder farming for consumption or income generation, they are vulnerable to the impact of changing weather patterns and natural disasters. Our data shows how MicroLoan’s model is effective in helping clients adapt to climate change and create a safety net. This comes in the form of having a diversified source of income beyond farming, access to savings, access to additional capital, and support from a loan group and who will step up when crises hit.

As clients grow their income, they prioritise nutritious food for their family first, followed by education for their children. They also prioritise making structural improvements to their homes to withstand natural disasters and adverse weather conditions.

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8870% 97%
of clients were able to make of clients in Zambia have improved
savings in 2023 resilience to face emergencies
70%
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70% of clients report increased spending on housing and household assets

14 MicroLoan Foundation

•X.; 2023

Gender equity

MicroLoan works with women to create a more equitable society and maximise social impact. Generating an independent income promotes gender equality and changes women’s attitudes towards taking risks and learning new skills. Financial independence and asset ownership contribute to a greater acceptance of women’s rights to legal and economic freedoms.

98% of MicroLoan clients report an increase in confidence after joining MicroLoan. The same percentage point reported an improvement in their quality of life after joining MicroLoan. The main reason was ability to provide for their children.

By investing in women, we are creating impact that will echo for generations.

The United Nations Sustainable Development Goals are the blueprint for achieving a better and more sustainable future for all. Our work contributes directly to the goals No Poverty, Zero Hunger and Gender Equality.

The impact of our work also addresses the goals on Quality Education, Decent Work and Economic Growth, Climate Action, Life on Land and Partnerships for the Goals.

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16 MicroLoan Foundation

98% of clients report an improvement in their quality of life.

17

Annual Report and Financial Statements 2023

~~Operations in Malawi~~

ZAMBIA

ZIMBABWE

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Total loans, active clients & outstanding loan book

Repayment rate, PAR30 & write-offs

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10% 100%
100,000 4,000,000 9% 99%
90,000 3,500,000 8% 98%
80,000 7% 97%
3,000,000
70,000 6% 96%
2,500,000
60,000
5% 95%
50,000 2,000,000
4% 94%
40,000 1,500,000
3% 93%
30,000
1,000,000 2% 92%
20,000
10,000 500,000 1% 91%
- - 0% 90%
2021 2022 2023 2021 2022 2023
Total loans Active clients Loan book (GBP) Repayment rate PAR30 Write-off ratio
Loan book (GBP) Repayment rate (%)
PAR30, write-off ratio (%)
Total loans, active clients
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18 MicroLoan Foundation

2021 2021 2022 2023
Total loans made
6
Active clients
2
Loan book (GBP)
1,8
Average loan
size(GBP)
PAR30
1
Repayment rate

Operational Self
Sufciency

Portfolio yield

Portfolio yield, Operating Expense Ratio
& Operational Self Sufciency
Operational Self Sufciency
Portfolio yield
2022
2021
2023
125%
100%
75%
50%
25%
0%
9,768
95,078
80,861
Active clients
2		 9,276
40,813
37,177
Loan book (GBP)
1,8		 86,753 3,740,293 2,051,243
Average loan
size(GBP)		 80
102
85
PAR30
1		 .7%
3.2%
8.8%
Repayment rate
 97%
99%
96%
Operational Self
Sufciency
 92%
104%
103%
Portfolio yield
 81%
70%
67%
Operating Expense Ratio

MicroLoan remains the leading social microfinance institutions in Malawi focussed solely on women. The success comes from our high touch model and extensive experience of developing services and products specifically tailored for rural women living below the poverty line.

Malawi’s macroeconomic environment remains challenging, with a Gross Domestic Product (GDP) growth of only 1.6% in 2023. The country was impacted by a number of weather related events including Cyclone Freddy, the most deadly tropical cycle in the country for decades. It devastated homes and ruined livelihoods and crops. The Malawian Kwacha depreciated against most of its major trading currencies, mainly due to a shortage of foreign exchange emanating from weak export proceeds and reduced foreign direct investment inflows. The annual inflation rate increased to 28.7% for 2023, compared to 21% in the previous year, largely attributed to the high food inflation rate. A number of stabilisation measures were introduced during the year, and in November 2023 the Reserve Bank of Malawi devalued the Malawian Kwacha by 44%.

In local currency the loan portfolio reduced by 4.5% and closed the year at MWK4.4 billion as compared to the MWK4.6 billion registered at the end of 2022. This was attributable to macroeconomic challenges and write-offs related to customers whose businesses were severely impacted by the natural disaster. To refocus efforts on improving the portfolio quality, there was a deliberate slowdown of disbursements and number of active clients at year end reduced by 8.9% from 40,813 in 2022 to 37,177 in 2023. Portfolio at Risk (PAR) is an indicator of loan portfolio quality and PAR30 indicates the ratio of loan book overdue by more than 30 days. PAR30 closed the year at 8.8%.

AnA n nual Report and Financial Statements 2023ual Report and Financial Statements 2023 19

Despite significant challenges that impacted our operations and the livelihoods of our clients, we were able to record favourable outcomes in many of our key performance indicators.

Considerable productivity improvements and increased demand, particularly in the latter quarter of the year, meant that we were able to expand the volume of disbursements by 2.8%, whilst simultaneously improving on our loan collections by 32%.

The institution achieved operational sustainability for the second year in a row, with an Operational Self Suff ency ratio of 103%.

In 2023, MicroLoan Malawi earned a prestigious recognition by the European Microfinance Award.

MicroLoan Malawi was commended for its innovative approaches in addressing the challenges faced by small scale farmers.

By equipping farmers with the necessary knowledge and skills, we help them build resilience to overcome obstacles such as climate change and market fluctuations. Our efforts have resulted in significant improvements in food security and nutrition in Malawi. Being recognised by the European Microfinance Award 2023 inspires us to continue our mission and encourages others in the microfinance sector to adopt inclusive approaches to address global challenges.

In 2024, MicroLoan Malawi’s key focus will be on portfolio quality and fine-tuning the centre model methodology, which is already in operation across its branches.

We are mindful of the need to evolve our product suite to ensure that we are able to both attract and retain clients with products and services that are relevant to their life cycle needs. We will be piloting a new Environmental, Social and Governance compliant loan product for our agricultural clients. This includes upscaling of climate friendly, energy and water efficient innovations for our clients for a more productive and ecological food production. MicroLoan Malawi has also embarked on a project under the Smallholder Safety Net Upscaling Programme, which it will continue to implement in 2024. The project will develop crop specific agricultural loans for its farming clients, develop an agriculture credit scoring system and increase digitisation across the loan processes.

During the year, we welcomed a new Chief Financial Officer and appointed a new Chief Operations Officer. They bring extensive operational experience and skills, and this enhancement to the leadership team will enable the organisation to successfully deliver on its strategic goals in the years to come.

20 MicroLoan Foundation

AnA n ual Report and Financial Statements 2023nual Report and Financial Statements 2023 21

~~Operations in Zambia~~

MALAWI

ZIMBABWE

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Total loans, active clients & outstanding loan book

Repayment rate, PAR30 & write-offs

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----- Start of picture text -----
120,000 4,000,000
3,500,000
100,000
3,000,000
80,000
2,500,000
60,000 2,000,000
1,500,000
40,000
1,000,000
20,000
500,000
- -
2021 2022 2023
Total loans Active clients Loan book (GBP)
Loan book (GBP)
Total loans, active clients
----- End of picture text -----

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----- Start of picture text -----
8% 100%
99%
7%
98%
6%
97%
5%
96%
4% 95%
3% 94%
93%
2%
92%
1%
91%
0% 90%
2021 2022 2023
Repayment rate PAR30 Write-off ratio
Repayment rate (%)
PAR30, write-off ratio (%)
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22 MicroLoan Foundation

2021 2022 2023
Portfolio yield, Operating Expense Ratio
& Operational Self Sufciency
Operational Self Sufciency
Portfolio yield
Operating Expense Ratio
140%
120%
100%
80%
60%
40%
20%
-
2022
2021
2023		 Portfolio yield, Operating Expense Ratio
& Operational Self Sufciency
Operational Self Sufciency
Portfolio yield
Operating Expense Ratio
140%
120%
100%
80%
60%
40%
20%
-
2022
2021
2023		 Total loans made
64,221
88,367
108,790
Active clients
28,877
42,063
54,526
Loan book (GBP)
1,713,968 3,401,247 2,956,743
Average loan
size(GBP)
68
105
95
PAR30
1.6%
1.5%
7.1%
Repayment rate
99%
99%
97%
Operational Self
Sufciency
118%
117%
103%
Portfolio yield
109%
92%
84%

In 2023, MicroLoan Zambia was globally recognised as one of the most impactful financial service providers in the world. The institution continues to lead the way in digital solutions to address financial exclusion in Zambia.

The Zambian economy is volatile but it is slowly recovering from multiple crises. With protracted debt restructuring and low mining productivity, real GDP grew by 4.7% in 2023. The annual inflation increased to 13.1% at the end of the year compared to 9.9% in December 2022. The underlying factors include prevailing high maize grain and fuel prices and persistent depreciation of the local currency. The Zambian Kwacha depreciated by 41.8% against the US Dollar during the year.

MicroLoan Zambia recorded outstanding performance across key performance and financial indicators in 2023. Active number of clients increased by 30%, from 42,063 to 54,526. The portfolio value grew in local currency terms by 33% from ZMW73.9 million in 2022 to ZMW98.4 million in 2023. The growth is attributed to continued efficiency improvements on the centre model, digital solutions, increased caseloads for Loan & Training Officers, and increased average loan sizes for clients.

MicroLoan Zambia saw a drop in the portfolio quality at the end of the year, with a PAR30 of 7.1%. This was linked to a combination of factors including farmers being affected by erratic weather patterns, macroeconomic challenges, and high staff turnover due to mass government recruitment. The agriculture loans have balloon payments and therefore has a material impact on the portfolio at risk.

Annual Report and Financial Statements 2023 23

MicroLoan Zambia ended the year with a healthy operational surplus and an Operational Self Sufficiency ratio of 103%.

MicroLoan Zambia continues to be at the forefront of digital innovation with 100% of disbursements made via mobile money. The institution launched a digital savings project to develop the technology to allow financially excluded communities to create a digital financial footprint. By using our free savings platform, women will build a savings behaviour history. This will open up the opportunity to access formal financial services in remote rural areas.

In the 60 Decibels Microfinance Index Report 2023, MicroLoan was Zambia ranked the second most impactful financial service provider in Africa and the fourth most impactful provider in the world. MicroLoan Zambia also won the 60 Decibels Top Impact Award. The ranking is based on interviews with clients from 115 institutions.

MicroLoan Zambia was a top performer in a wide range of indicators in the Microfinance Index Report relating to clients’ well-being including:

Quality and Quantity of Meals Unexpected Fee Repayment Burden Financial Stress Households' Food Consumption Financial Management

During the year we saw strong performance by the leadership team and Board of Directors. It is with great sadness we report on the passing of MicroLoan Zambia’s Board member Mr Kennedy Kanenga. Kennedy joined MicroLoan Zambia in 2009 as one of the founding members of the Board and served previously as the Chair of the Audit and Finance committee and was an active member of the Credit and Risk committee.

The operational and financial plans for the coming year are taking anticipated headwinds into account, in particular, expected effects of climate related weather events, continued inflationary pressure, depreciation of the local currency against hard currencies, and high fuel and food prices.

In 2024, MicroLoan Zambia will open two new branches to continue its expansion, continue its digital innovation and product development, and focus on maintaining a strong portfolio quality. MicroLoan Zambia is looking to build on existing partnerships and forge new ones to continue delivering its social mission.

24 MicroLoan Foundation

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Annual Report and Financial Statements 2023 25
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~~Operations in Zimbabwe~~

MALAWI

ZAMBIA

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Total loans, active clients & outstanding loan book

Repayment rate, PAR30 & write-offs

==> picture [249 x 161] intentionally omitted <==

----- Start of picture text -----
6,000 250,000
5,000
200,000
4,000
150,000
3,000
100,000
2,000
50,000
1,000
- -
2021 2022 2023
Total loans Active clients Loan book (GBP)
Loan book (GBP)
Total loans, active clients
----- End of picture text -----

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----- Start of picture text -----
10% 100%
9% 99%
8% 98%
7% 97%
6% 96%
5% 95%
4% 94%
3% 93%
2% 92%
1% 91%
0% 90%
2021 2022 2023
Repayment rate PAR30 Write-off ratio
Repayment rate (%)
PAR30, write-off ratio (%)
----- End of picture text -----

26 MicroLoan Foundation

Portfolio yield, Operating Expense Ratio
& Operational Self Sufciency
Operational Self Sufciency
Portfolio yield
Operating Expense Ratio
800%
700%
600%
500%
400%
300%
200%
100%
-
2022
2021
2023		 2021 2022 2023
Total loans made
1,303
1,082
5,660
Active clients
562
234
2,205
Loan book (GBP)
24,979
8,715
233,891
Average loan
size(GBP)
84
73
150
PAR30
0.55%
0.60%
0%
Repayment rate
100%
100%
100%
Operational Self
Sufciency
45%
29%
133%
Portfolio yield
307%
162%
236%

After many years of an extremely difficult economic climate, MicroLoan Zimbabwe has seen a year of great success. For the first time in its history, the institution recorded full Operational Self Sufficiency.

Economic development continues to be challenging in Zimbabwe. The real GDP grew by an estimated 5.5% in 2023, following a 6.5% growth in 2022. Expansion in agriculture, mining and remittances-induced services growth have aided the growth in real GDP, however, macroeconomic instability and exchange rate distortions, continued to hamper the economy’s ability to realise its full potential.

Fiscal pressures mounted in 2023 ahead of national elections and the transfer of the Reserve Bank of Zimbabwe’s (RBZ) external liabilities to the treasury. The government raised civil servants’ salaries in both foreign and local currencies. The Treasury assumed responsibility for servicing $1.8 billion in external liabilities previously held by the RBZ. The current account surplus narrowed in 2023 due to a decline in remittances from non-governmental organisations. Following, the national elections, Zimbabwean President Emmerson Mnangagwa announced a decision to extend the use of foreign currencies until 2030 for domestic transactions. This declaration was made through a Statutory Instrument gazetted in October 2023 which superseded an earlier regulation that had set the end of the multi-currency system for 2025.

Annual Report and Financial Statements 2023 27

18 MicroLoan Foundation

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Multiple devaluations of the local currency Zimbabwean Dollar, led to surging prices, with inflation being recorded at 172%, the highest inflation in Africa as of 2023.

MicroLoan Zimbabwe recorded strong performance in all key performance indicators. The number of active entrepreneurs served increased tenfold, from 234 at the end of 2022 to 2,205 at the end of 2023. The loan book grew by 2262% from $10,545 to $291,216. This success is, to a large extent, based on being granted permission by the RBZ to provide loans in US Dollars rather than the rapidly depreciating local currency. The impact of being able to lend in US Dollars has meant that our clients can borrow and trade in a stable currency, essential to create sustainable livelihoods. Moreover, the value of the loan book is preserved and can be recycled and reused.

The adoption of US Dollar lending in Zimbabwe has brought great benefits, but it also presents some challenges. Currently, we are unable to utilize mobile money, which impacts efficiency for both our field and head office teams. As a result, disbursements are conducted in cash, causing delays during centre meetings with clients. Additionally, group leaders must deposit repayments into bank accounts, leading to increased reconciliation work compared to the streamlined process of mobile money. However, we are excited to announce a collaborative project with our Zambian IT team aimed at enhancing efficiency, especially in the areas of repayments and reconciliations. This initiative is progressing smoothly, and we anticipate entering the testing phase in the first quarter of 2024.

As clients were impacted by the surge in the cost of living, the average loan size was increased to match their needs. This was made possible by the generous support of donors providing grant funding to feed into the loan book. The quality of the loan book remained impeccable with a PAR30 at 0%.

MicroLoan Zimbabwe achieved a healthy Operational Self Sufficiency ratio of 133%. This is a significant milestone and sets the institution up for continued growth. We will see the expansion into new areas from both existing and new branches in 2024.

29

Annual Report and Financial Statements 2023

~~Fundraising overview~~

In 2023 MicroLoan Foundation grew its voluntary income by 25% and raised £1,178,454 (2022: £946,085). This includes donated resources and gifts in kind to a total value of £55,643 (2022: £50,722). Our donors include trusts, foundations and corporate partners, as well as individuals who support us through personal donations or through fundraising events, challenges and community engagements.

Our top donors in 2023 include WildHearts Group and Foundation, Whole Planet Foundation, The Paul Foundation, The Allan & Nesta Ferguson Charitable Settlement, Rita and David Slowe Charitable Trust, The MacDaibhidh Charitable Trust. We were also granted a significant legacy gift of £151,060 during the year.

The organisation received Technical Assistance grants from Swiss Capacity Building Fund, GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), Grameen Credit Agricole, and Social Performance Task Force.

In addition, we received generous donations from a number of private individuals and organisations who wish to remain anonymous.

informed about the impact of their support. We are a member of the Fundraising Regulator and adhere to the UK Code of Fundraising Practice.

MicroLoan has an increased focus on strategic funding partnerships from institutions providing Technical Assistance grants paired with social impact investment. In 2023 MicroLoan Foundation received investments in the form of debt facilities from ADA Microfinance, FDH Bank, FEFISOL (Fonds Européen de Financement Solidaire pour l'Afrique), Global Partnerships, Grameen Credit Agricole, KIVA, LendwithCare, Oikocredit, SIDI (International Solidarity for Development and Investment), Symbiotics, and The World Bank via the FInES (Financial Inclusion and Entrepreneurship Scaling) project.

MicroLoan has a dedicated fundraising team in London which manages relationships with donors in the UK and internationally. The UK office liaises with our affiliates in the USA and Australia and the operational teams in subSaharan Africa to develop innovative projects and ensure that our donors are regularly

It is thanks to our generous supporters and partners that we are able to serve the very poorest women and their families. With your help we are able to continue expand our work to give more families the opportunity to find a way out of poverty.

Fundraising income 2023

Individuals and events Trusts and institutions Corporates Donated services and facilities

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3% [3%]
39%
55%
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MicroLoan Foundation

~~Group fnancial review~~

The group’s financial performance for 2023 is set out in the Consolidated and Charity Statement of Financial Activities, the Balance Sheets and the Consolidated Statement of Cashflows on pages 52 to 57. The group result includes that of MicroLoan Foundation and our subsidiaries in Malawi, Zambia and Zimbabwe.

Results in overview

Despite the substantial macroeconomic challenges in Malawi and Zambia, MicroLoan Foundation continued to make positive progress against its strategic plan during 2023 and achieved simultaneous Operational Self Sufficiency across all three subsidiaries for the first time in its history. £17.3m of loans were disbursed during the year and the loan book at year end (net of provisions) was £5.3m (2022: £7.2m).

The Group reported an overall reduction in funds of £354,249 (2022: £496,328 increase). This result was significantly impacted by the adverse foreign currency movements in Malawi and Zambia. These contributed to total exchange losses on retranslation of brought forward reserves of £924,119 (2022: £68,007). In line with the charity’s risk management strategy, the principal liabilities of the group’s subsidiaries in these countries were denominated in local currency. This mitigated the effect of the devaluation of assets and the resulting impact on operations.

At the year end, total group funds amounted to £1,793,791 (2022: £2,148,040) of which £41,804 (2022: £35,913) were restricted and £1,751,987 (2022: £2,112,127) were unrestricted. Of these, £1,558,090 (2022: £1,388,808) related to MicroLoan Foundation as the charitable parent, with £41,804 (2022: £35,912) restricted and £1,516,286 (2022: £1,352,896) unrestricted.

Annual Report and Financial Statements 2023 31

Income and expenditure

Total income grew by 15% to £6,140,987 (2022: £5,327,658) with a corresponding increase of 18% in total expenditure to £5,621,792 (2022: £4,763,323). This resulted in net income generated in the year of £519,195 (2022: £564,335) before a gain on revaluation of fixed assets of £50,675 (2022: £nil) and the exchange losses explained above.

Most of the Group’s income comes from interest received on our microloan portfolio. In 2023, this income increased by 12% to £4,895,759 (compared to £4,371,653 in 2022). Although there was a reduction in loans disbursed in Malawi, growth in both Zambia and Zimbabwe, along with the full-year impact of 2022 loan book movements, contributed to this positive trend.

Voluntary income generated during the year totalled £1,178,454 (2022: £946,085) which represented a rise of 25% compared to 2022. The key drivers of this variance were a large legacy receipt and technical assistance grants secured for key projects in Malawi and Zambia.

Investment income, comprising bank interest received and rental income from a property in Malawi, was £66,774 (2022: £9,920).

Staff costs continue to be the single largest expense of the Group. Employee numbers grew 5% compared to 2022, with Zambia’s rising by almost 30% due to the growth in active clients in the country. This was somewhat offset by a reduction in Malawi’s headcount, achieved through operational efficiencies. Despite the growth in overall numbers, changes in the staff mix meant total staff costs remained relatively static at £1,962,286 (2022: £1,986,382).

The interest paid on our borrowings in 2023 totalled £1,051,482, an increase of £399,333

(61%). This was mainly due to additional debt the Group took on in 2022 to boost our loan book growth. The volatility of the Malawian Kwacha and Zambian Kwacha also meant higher interest rates on new borrowings, and this further contributed to the increase in cost. Nevertheless, these rises are matched by an equivalent increase in income from our loan book.

The deteriorations in PAR 30 experienced in Malawi and Zambia required an increased level of provisioning at year-end. As a result, the loan provisions and write-offs expense rose by £347,931 (189%) to £532,492. Most of this amount relates to provisions rather than write-offs and efforts are ongoing post year-end to bring down loan arrears.

The Group also incurred significant operating exchange losses of £247,070 due to the currency devaluations in Malawi and Zambia.

Cost containment measures across other overhead categories helped to partly offset the large increases experienced in relation to the above.

Use of funds

In total, the UK charity injected £314,820 of funding into its subsidiaries during 2023 to support expansion of our mission and impact. This comprised £294,534 of equity investment and £20,286 in the form of further revenue grants. Our UK fundraising team also helped secure a further £217,677 of support that was received directly into Africa through a combination of revenue grants and technical assistance support.

Despite these injections and the Operational Self Sufficiency of the subsidiaries in 2023, there were reductions in our key lending metrics. This was due to the collapse in value of the Malawian

32 MicroLoan Foundation

Kwacha and Zambian Kwacha and a deliberate slowdown in our lending activity in the second half of the year to address portfolio quality issues.

The British Pound value of the year end loan book decreased by £1,963,672 (27%) to £5,267,141 (2022: £7,230,813). The total value of all loans disbursed decreased by 7% to £17,329,189 (2022: £18,626,172). The number of clients we supported during the year fell by 11% to 144,943 (2022: 162,812), with an average loan size of £89 (2022: £101).

In addition to investment advanced to the subsidiaries, the UK parent also ringfenced a further £300,000 towards startup capital for geographical expansion into South Africa that is planned for 2024.

Key Financial Performance Indicators

The key financial performance indicators that are monitored by management are principally as set out in the reviews of operations above. In addition, the efficiency of our fundraising function and the proportion of total income that the charity reinvests in fundraising activities are also closely monitored:

Fundraising efciency ratio Fundraising efciency ratio Fundraising efciency ratio
2021 2022 2023
Donations
and legacies
received
£1,100,124
£946,085
£1,178,454
Cost of
fundraising
function
£277,259
£322,623
£344,318
Ratio
4.0
2.9
3.4

Fundraising expenditure

2021 2022 2023
Total
expenditure
£3,152,739
£4,763,323
£5,621,792
Expenditure
on
fundraising
£277,259
£322,623
£344,318
Percentage
8.8%
6.8%
6.1%

Reserves policy and management

In the UK

Reserves are maintained at a level that enables the charity to manage financial risk and ensure the charity can sustain its activities over the long term. As a fundraising charity, we are subject to the effects of short-term volatility in income whereas our cost base is relatively fixed and the demand for funds to support our loan book growth is ongoing.

We use a single reserves measure in respect of our UK operations. This measure mandates that MicroLoan Foundation should hold a minimum level of free reserves to ensure that the charity is able to meet its financial commitments as they fall due, with any excess then available to grow loan book.

‘Free reserves’ is defined by the Board as unrestricted and undesignated net current assets. It excludes tangible fixed assets (which are not readily convertible to cash), long term borrowings and any funds that have already been committed or advanced to our projects in Africa through grants, investment or lending. Such advances do not represent an available source of funds to meet UK financial commitments.

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Annual Report and Financial Statements 2023

The Board has agreed that ‘free reserves’ should exceed a minimum of six months but are not expected to exceed nine months forecast cash outflows, calculated on an annualised basis. At 31 December 2023, the free reserves position was £391,227, equivalent to 8.0 months.

MicroLoan Foundation has made significant investment over the last few years to strengthen its management team across all countries and to continue to build its reputation within the sector as a responsible, well-managed and mission-focussed microfinance organisation. This has enabled it to forge very strong relationships with several specialist microfinance investors and develop a healthy pipeline of available loan capital that the charity can use to leverage donor-funded investment that continues to be made by the UK. Our operation in Malawi has also continued to benefit from a targeted debt facility from the World Bank originally secured in 2022.

Management nevertheless recognises the importance of ensuring a responsible approach to the amount of debt taken on relative to the level of reserves. Accordingly, it is vital that the charity continues to manage and grow other reserves as part of ensuring there are sufficient funds available to support and scale our activities in line with the Group’s five-year strategic plan.

In Africa

As regulated microfinance institutions, our subsidiaries in Malawi, Zambia and Zimbabwe must meet stringent capital adequacy rules mandated by the local Reserve Banks. In addition, the environments that they operate in make these entities more susceptible to macroeconomic shocks caused by natural disasters such as floods, famine or changes in government policy. Accordingly, reserves

policy is delegated to local Boards which each include Senior Management representation from MicroLoan Foundation in the UK. Generally, a prudent approach is taken to reserves management and gearing within our microfinance subsidiaries, with all of them operating well within the mandated capital requirements set out by local statute.

Investment policy and objectives

The charity’s investment policy is to seek to maximise the number of lives positively impacted whilst managing risk. The Board is very conscious of its responsibility to utilise charitable funds in a highly effective and efficient way and the need to ensure that this same ethos cascades across the wider group and local Boards. All investment decisions are therefore made with these considerations in mind.

Each subsidiary is expected to work towards a position of Operational Self Sufficiency where it is able to independently generate sufficient income to sustain its core operations and, where necessary, utilise its reserves responsibly to manage unexpected, temporary fluctuations in income and costs.

As the parent charitable organisation, MicroLoan Foundation makes targeted cash advances to our operations in Malawi, Zambia and Zimbabwe to fund sustainable, responsible growth in the loan books and thereby increase the number of clients served.

An important part of the Board’s strategy to manage investment risk over the long term is to seek to diversify operations through geographical expansion. As part of this strategy, an unusually large cash balance is currently being

34 MicroLoan Foundation

held in the UK within a designated reserve. This cash is intended to finance the initial capital requirements for a greenfield launch in South Africa during the second half of 2024. It is anticipated that the majority of the ringfenced cash will be required in 2025. Accordingly, the Board approved a revision to investment policy that permits investment into the COIF Charities Deposit Fund. This fund is categorised as a short-term, Low Volatility Net Asset Value Money Market Fund and is designed to provide a high level of capital security whilst providing a competitive yield.

Going concern

The Group continues to make steady progress against its strategic plan, building resilience within its microfinance subsidiaries through sustained, responsible growth and ensuring liquidity by developing a strong network of engaged and mission-aligned investors that supplement fundraising activities undertaken by the UK.

Despite significant currency challenges, our operations in Malawi, Zambia and Zimbabwe were all operationally self-sufficient in 2023 and are expected to remain so in 2024 and beyond.

In the UK, our donor pipeline remains healthy and the charity anticipates additional cash inflows in 2024 from two significant legacies, one of which is included in accrued income at year-end. These will supplement cash generated from normal fundraising activities. The parent charity has no external debt commitments to service and continues to rigorously manage its cost base to ensure it is operating as leanly as possible. The Board also continues to adopt a prudent approach to reserves cover to ensure that short-term fluctuations in income levels can be adequately managed.

After having reviewed forward projections and making appropriate enquiries, the trustees have a reasonable expectation that the charity has adequate resources to continue in operational existence for the foreseeable future. Accordingly, these financial statements have been prepared on a going concern basis.

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Annual Report and Financial Statements 2023 35
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~~Risk management~~

The trustees have assessed the principal risks across the group as being:

The measures taken by the charity to mitigate these risks are as follows:

Fundraising risk

This is the risk that the level or mix of unrestricted and restricted income and social investment is insufficient to maintain or expand our social mission.

Donor funding presently remains a key part of MicroLoan Foundation’s income stream, however the Board is very conscious of the shifting fundraising landscape and the changing needs of the microfinance operations as they mature and seek to scale.

Sustainability risk

This is the risk that the expenses from our charitable activities in respect of microfinance exceed the associated income and therefore reduces our ability to provide services and maintain or grow our impact.

Our objective remains that all our operations in Africa are operationally self-sufficient. Achieving this simultaneously across our subsidiaries in Malawi, Zambia and Zimbabwe for the first time in 2023 is vindication of a long-term strategy of targeted investment to build mission-focussed institutions that can be resilient to the effects of short-term volatility and macro-economic shocks.

Our strategy will continue to be one of responsible investment into each country through a combination of donations and social investment to reach more beneficiaries, whilst at the same time benefiting from the economies of scale associated with growth. The Group also continues to critically evaluate the cost base and working practices to identify more efficient ways to operate. Digitisation is key to this and our operations in Malawi and Zambia have both benefited from technical assistance in recent years to upskill personnel and accelerate implementation of system enhancements. We aspire to be a high-tech organisation whilst maintaining the core principals of our hightouch service model for clients.

Liquidity and funding risk

Gross income streams can be volatile whereas

36 MicroLoan Foundation

the underlying UK cost base, which is principally staff and associated costs, is relatively stable and recurring.

The Board seeks to maintain a prudent level of free reserve cover to cope with fluctuations in income and thereby ensure running costs can be met and that charitable activities can continue to be delivered without disruption. The partnership between MicroLoan Foundation and WildHearts Foundation is also a key part of the strategy to manage volatility in income streams since it provides cost synergies as well as complimentary income streams within the wider group.

Credit risk

This is the risk of significant levels of default across our microfinance portfolio.

Although we operate in some of the poorest areas of sub-Saharan Africa, our credit risk history shows that our methodology works. Loan repayment rates typically average over 97% and our sector-leading Management Information System allows us to identify problems early and work with clients to resolve them.

Foreign exchange risk

This risk arises on conversion of receipts or payments from one currency to another or revaluation and translation of local currency loans, borrowings or investments into Sterling. We operate where currency rates are volatile and can fluctuate significantly, as demonstrated by the significant devaluations of both the Malawian Kwacha and Zambian Kwacha during 2023.

To mitigate currency risks, we match our assets and liabilities by currency whenever possible and use foreign currency hedging where it is cost effective and feasible to do so. We also encourage social investors to lend to us in local currencies.

Operational risk

The charitable group has more than 250 staff working across four countries and therefore we have the logistical risks associated with operating over large distances, in rural areas with poor infrastructure and stretched communication networks. This increases the risk of internal failures of controls or systems, including fraud, as well as external disruption.

To manage this risk, operational performance is monitored closely on an ongoing basis at both local and group levels. There are well established daily, weekly and monthly reporting routines that include variance analysis against budgets and Key Performance Indicators.

We continually seek ways to improve our operational framework, including upskilling our people and local Boards and investing in strengthening our internal audit function. We also regularly review and upgrade our IT infrastructure and computer equipment to ensure it remains fit for purpose.

There are mechanisms in place that allow knowledge sharing and collaboration across our different countries of operation, helping management identify examples of best practice and also areas of risk.

Safeguarding risk

MicroLoan works with communities and individuals who are vulnerable. We have a responsibility to ensure that our employees, volunteers, partners and programmes do no harm to children and vulnerable adults. Any concerns the organisation has about the safety of children and vulnerable adults within the communities in which we work, are dealt with and reported to the appropriate authorities. It is also the responsibility of the organisation to protect its employees and volunteers when they are vulnerable, for example, when ill or at risk of harm.

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Annual Report and Financial Statements 2023

Our microfinance operations have strong client protection and safeguarding policies in place. All staff undergo a rigorous interview and assessment process prior to appointment and receive comprehensive training on client protection and ethical conduct. We maintain a whistleblowing hotline in Africa and provide multiple feedback mechanisms for both clients and staff. Our Social Performance Management department regularly conducts client interviews, serving as a direct link to local head offices.

Reputational risk

This is the risk of an event or allegation adversely impacting the reputation of the charity and, consequently, jeopardising its ability to fulfil its charitable objectives.

MicroLoan Foundation mitigates reputational risk by maintaining transparency, ethical lending practices, careful social impact monitoring and a robust governance framework. We conduct thorough due diligence on borrowers, ensure clear communication, and foster strong community relationships. There are a variety of measures embedded across our group to ensure that the charity operates to the highest professional standards and to safeguard future activities. Examples include a rigorous interview and assessment process prior to all staff appointments, robust HR procedures and whistleblowing hotlines. Our effective Social Performance Management system ensures that we are achieving our social mission and balancing social and financial performance.

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38 MicroLoan Foundation

nnu nd Financial Statements 2rt3

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~~Governance~~

Nature of governing document

The charity is governed by its Memorandum and Articles of Association (last amended 10 December 2018).

Organisation structure

The directors of the UK charitable company are its trustees for the purpose of charity law and throughout this report are collectively referred to as the trustees. The appointment, removal, power and duties of the trustees are set out in the charity’s Memorandum and Articles of Association.

The Board of Trustees meets at least quarterly and presently consists of four individuals, all of whom act in a Non-Executive capacity. The trustees that served during the year and since the year end were as follows:

Bernice Dunsmuir Michael Jackson Steven Marshall Steve Stolliday

Day to day running of the Foundation in the UK is delegated to a Senior Management Team, which comprises the Group Chief Executive Officer, the Chief Financial Officer and the Director of Fundraising.

40 MicroLoan Foundation

The operations in Africa each have their own locally appointed Board of Directors that oversee the activities in their country.

These Boards all include at least one member of the UK Senior Management Team who serve as the link between the UK parent charity and the African microfinance subsidiaries. Together, the UK and Africa Boards implement the group strategy in a way that is appropriate to local conditions.

Each local Board has directors with a variety of local and international experience and include both executive and non-executive members.

The organisational structure and Board composition is reviewed on an on-going basis as part of normal risk management processes.

Recruitment and appointment of trustees

MicroLoan Foundation’s Memorandum and Articles of Association permit any person who is willing to act to be appointed as a trustee by an ordinary resolution. There are no provisions that require or permit any external body to appoint a member to the Board. In practice, trustees are appointed based on their backgrounds, professional networks and passion for the group’s vision.

Board members are provided with a detailed induction on appointment and in advance of each scheduled meeting to ensure that their knowledge of the charity's activities and regulatory environment remains current.

Induction and training of trustees

It is expected that all trustees and other senior personnel, both in the UK and in Africa, undertake appropriate personal and professional development activities relevant to their position. Opportunities for formal training, including seminars and conferences, are offered periodically. The charity is also fortunate to have attracted several experienced professionals from a variety of backgrounds who provide ongoing support, advice and mentoring. This network enables the charity and the trustees to harness the best and most creative minds in their respective disciplines to support our social mission.

Arrangements for setting remuneration of key management personnel

Our microfinance operations are large, complex and highly regulated financial institutions operating in countries with very challenging and often unstable economic and political environments. The Board therefore believes that it is imperative that remuneration levels are set at rates that are competitive and allow the group to attract and retain senior personnel of the right calibre to ensure all areas of activity remain compliant and are delivered in the most efficient and effective way possible. Remuneration levels of key management personnel are benchmarked annually against market rates or if a change in circumstances warrants review (for example, a revision to roles and responsibilities). KPIs are closely monitored to assess value-added and progress against operational and strategic priorities. These form part of the performance evaluations which feed into pay reviews.

None of the trustees were remunerated by the charity during 2023.

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Annual Report and Financial Statements 2023

~~Statement~~

~~of Trustees’ responsibilities~~

Public benefit

The trustees are responsible for confirming that the activities of the UK charity are consistent with its charitable objectives as set out in this annual report and financial statement.

Financial statements

The trustees (who are also directors of MicroLoan Foundation for the purposes of company law) are responsible for preparing the trustees’ annual report including the strategic report and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires the trustees to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the charitable company and group, and of the incoming resources and application of resources, including income and expenditure, of the charitable company or group for that period. In preparing these financial statements, the trustees are required to:

The trustees are responsible for keeping adequate accounting records that disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006, the Charities and Trustee Investment (Scotland) Act 2005 and the Charities Accounts (Scotland) Regulations 2006 (as amended).

42 MicroLoan Foundation

They are also responsible for safeguarding the assets of the charitable company and group, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The trustees confirm that so far as they are aware:

In the interests of transparency and accountability to our donors and supporters we publish the annual report on our website. The trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charitable company’s website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Signed on behalf of the Board on 22 July 2024

Dr Mick Jackson Chairman

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Annual Report and Financial Statements 2023

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~~Independent auditor’s report~~

Opinion

We have audited the financial statements of MicroLoan Foundation (the ‘parent charitable company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2023 which comprise the consolidated statement of financial activities, the group and parent charitable company balance sheets, the consolidated statement of cash flows and the notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

44 MicroLoan Foundation

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the trustees' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on MicroLoan Foundation's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Other information

The other information comprises the information included in the trustees’ annual report, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other

information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

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Annual Report and Financial Statements 2023

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees’ annual report:

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 and Charities Accounts (Scotland) Regulations 2006 (as amended) requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the statement of trustees’ responsibilities set out in the trustees’ annual report, the trustees (who are also the directors of the parent charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group’s and the parent charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the group or the parent charitable company or to cease operations, or have no realistic alternative but to do so.

46 MicroLoan Foundation

Annual Report and Financial Statements 2023 47

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and under the Companies Act 2006 and report in accordance with regulations made under those Acts.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud are set out below.

Capability of the audit in detecting irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, our procedures included the following:

48 MicroLoan Foundation

relationships that may indicate risks of material misstatement due to fraud.

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditors responsibilities. This description forms part of our auditor’s report.

Annual Report and Financial Statements 2023 49

We want to create a sustainable institution that is not reliant on charitable donations for its day to day running costs.

5050 MicroLoan Foundation

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Use of our report

This report is made solely to the charitable company's members as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005. Our audit work has been undertaken so that we might state to the charitable company's members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charitable company and the charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Jonathan Orchard

Senior Statutory Auditor 17 August 2024

For and on behalf of: Sayer Vincent LLP, Statutory Auditor

110 Golden Lane, London, EC1Y 0TL

Sayer Vincent LLP is eligible to act as auditor in terms of section 1212 of the Companies Act 2006

51

Annual Report and Financial Statements 2023

~~Financial~~

~~statements~~

MicroLoan Foundation

MicroLoan Foundation

Consolidated Statement of Financial Activities

(including Consolidated Income and Expenditure Account) for the year ended 31 December 2023

5252 MicroLoan Foundation

Unrestricted
Restricted
Unrestricted
Restricted
Note
Income from:
Charitable activities
• Malawi
• Zambia
• Zimbabwe
Donations
and legacies
2
Investment income
3
Total income
Expenditure on:
Charitable activities
• Malawi
5
• Zambia
5
• Zimbabwe
5
Raising funds
5
Total expenditure
Net income
Other recognised
gains / (losses):
Gain on revalued
fxed assets
8
Exchange losses
18
Net movement
in funds
Reconciliation
of funds:
Total funds
brought forward
18
Total funds
carried forward		 funds
2023
£
funds
2023
£
Total
2023
£
funds
2022
£
funds
2022
£
Total
2022
£
1,900,138
-
1,900,138
1,998,072
-
1,998,072
2,709,044
-
2,709,044
2,346,229
-
2,346,229
286,577
-
286,577
27,352
-
27,352
4,895,759
-
4,895,759
4,371,653
-
4,371,653
641,069
537,385
1,178,454
597,845
348,240
946,085
66,774
-
66,774
9,920
-
9,920
5,603,602
537,385
6,140,987
4,979,418
348,240
5,327,658
(1,947,224)
(201,429)
(2,148,653)
(1,860,055)
(194,176)
(2,054,231)
(2,697,869)
(124,188)
(2,822,057)
(2,154,732)
(4,567)
(2,159,299)
(101,907)
(204,857)
(306,764)
(84,976)
(142,194)
(227,170)
(4,747,000)
(530,474)
(5,277,474)
(4,099,763)
(340,937)
(4,440,700)
(343,298)
(1,020)
(344,318)
(319,053)
(3,570)
(322,623)
(5,090,298)
(531,494)
(5,621,792)
(4,418,816)
(344,507)
(4,763,323)
513,304
5,891
519,195
560,602
3,733
564,335
50,675
-
50,675
-
-
-
(924,119)
-
(924,119)
(68,007)
-
(68,007)
(360,140)
5,891
(354,249)
492,595
3,733
496,328
2,112,127
35,913
2,148,040
1,619,532
32,180
1,651,712
1,751,987
41,804
1,793,791
2,112,127
35,913
2,148,040

The Statement of Financial Activities includes all recognised gains and losses in both the current and prior year. All amounts related to continuing operations.

The notes on pages 58 to 84 form part of these financial statements.

53

Annual Report and Financial Statements 2023

Charity Statement of Financial Activities (including Income and Expenditure Account) for the year ended 31 December 2023

Unrestricted
Restricted
Unrestricted
Restricted		 Unrestricted
Restricted
Unrestricted
Restricted
Note
Income from:
Charitable
activities
Donations
and legacies
Total income
Expenditure on:
Charitable activities
Raising funds
Total expenditure
Net income
Transfers
between funds
Net movement
in funds
Reconciliation
of funds:
Total funds
brought forward
Total funds
carried forward		 funds
2023
£
funds
2023
£
Total
2023
£
funds
2022
£
funds
2022
£
128,745
-
128,745
93,531
-
641,069
319,708
960,777
597,845
274,908		 Total
2022
£
93,531
872,753
769,814
319,708
1,089,522
691,376
274,908		 966,284
(555,636)
(20,286)
(575,922)
(180,018)
(142,195)
(343,298)
(1,020)
(344,318)
(319,053)
(3,570)		 (322,213)
(322,623)
(898,934)
(21,306)
(920,240)
(499,071)
(145,765)		 (644,836)
(129,120)
298,402
169,282
192,305
129,143		 321,448
292,511
(292,511)
-		 112,722
(112,722)		 -
163,391
5,891
169,282
305,027
16,421
1,352,895
35,913
1,388,808
1,047,869
19,491		 321,448
1,067,360
1,516,286
41,804
1,558,090
1,352,896
35,912		 1,388,808

The Statement of Financial Activities includes all recognised gains and losses in both the current and prior year. All amounts related to continuing operations.

The notes on pages 58 to 84 form part of these financial statements.

54 MicroLoan Foundation

Annual Report and Financial Statements 2023 55

Balance sheets as at 31 December 2023

Company registration number: 04828558

The group
The charity
Note
Fixed assets
Tangible assets
8
Investments
9
Current assets
Stock
10
Debtors
11
Investments
12
Cash at bank and in hand
Creditors: Amounts falling
due within one year
13
Net current assets /
(liabilities)
Total assets less
current liabilities
Creditors: Amounts
falling due after one year
143
Provisions for liabilities
15
Total net assets
Funds of the charity:
Unrestricted funds
18
Designated funds
18
Restricted funds
18
Total funds		 2023
£
2022
£
2023
£
2022
£
587,677
738,649
-
-
-
-
1,825,060
1,845,527
587,677
738,649
1,825,060
1,845,527
6,309
7,379
-
-
5,608,645
7,382,467
354,481
217,465
250,000
-
250,000
-
1,391,187
768,214
277,413
482,930
7,256,141
8,158,060
881,894
700,395
(2,047,932)
(2,999,146)
(48,864)
(57,114)
5,208,209
5,158,914
833,030
643,281
5,795,886
5,897,563
2,658,090
2,488,808
(4,001,536)
(3,713,512)
(1,100,000)
(1,100,000)
(559)
(36,011)
-
-
1,793,791
2,148,040
1,558,090
1,388,808
407,349
369,519
391,227
620,886
1,344,638
1,742,608
1,125,059
732,010
41,804
35,913
41,804
35,912
1,793,791
2,148,040
1,558,090
1,388,808

The financial statements were approved by the Board and authorised for issue on 22nd July 2024 and signed on their behalf by:

Mick Jackson

Trustee

The notes on pages 58 to 84 form part of these financial statements.

56 MicroLoan Foundation

Consolidated Statement of Cash Flows as at 31 December 2023

The group
Cash fows from operating activities
Net income per Statement
of Financial Activities
Depreciation charges
Investment income receivable
Interest on borrowings
Gain / (loss) on disposal of tangible fxed assets
Increase in stock
Increase in debtors
(Decrease) / increase in creditors
Decrease in deferred tax provision
Net cash fows from operating activities
Cash fows from investing activities
Interest receivable and similar income
Other investment income
Purchase of tangible fxed assets
Proceeds from sale of tangible fxed assets		 2023
£
519,195
145,466
(66,774)
1,051,482
(98)
(2,632)
(1,169,839)
(121,530)
(35,452)		 2023
£		 2022
£
564,335
160,167
(9,920)
652,149
649
(1,874)
(3,839,324)
293,606
(8,845)		 2022
£
319,818 (2,189,057)
3,410
63,364
(249,288)
3,465		 (179,049) 9,920
-
(435,439)
16,992		 (408,527)
Net cash fows from investing activities
Cash fows from fnancing activities
New loans obtained during the period
Loans repaid during the period
Interest paid on borrowings
Net cash fows from fnancing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January 2023
Exchange loss on cash and cash equivalents
Cash and cash equivalents at 31 December 2023
3,519,411
(1,633,918)
(1,051,482)		 834,011 4,566,048
(1,205,402)
(652,149)		 2,708,497
974,780
768,214
(101,807)		 110,913
674,005
(16,704)
1,641,187 768,214

All of the cash flows are derived from continuing operations during the current and prior year.

The notes on pages 58 to 84 form part of these financial statements.

57

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

1 Accounting policies

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.

Basis of preparation and statement of compliance

MicroLoan Foundation is a private company limited by guarantee (incorporated in England under the Companies Act) and a charity registered with the Charity Commission for England & Wales and the Office of the Scottish Charity Regulator. The charitable company's registered office address is 1-2 Paris Garden, London, SE1 8ND.

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) - (Charities SORP FRS 102), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Companies Act 2006.

MicroLoan Foundation meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised at historical cost or transaction value unless otherwise stated in the relevant accounting policy notes.

These financial statements consolidate the results of the charitable company and its wholly-owned subsidiaries on a line by line basis. The subsidiaries are MicroLoan Foundation Malawi (Registration Number 12509), MicroLoan Foundation Zambia (Registration Number 70587), and, in Zimbabwe, MicroLoan Trust Zimbabwe (Registration Number MA0000738/2016) and MicroLoan Foundation (Private) Limited (Registration Number 851/2016). All are incorporated locally in their respective country of operation.

Transactions and balances between the charitable company and its subsidiaries have been eliminated from the consolidated financial statements. Balances between the companies are disclosed in the notes to the charitable company's balance sheet.

The presentational currency used in these financial statements is Pound Sterling. Amounts have been rounded to the nearest Pound.

Going concern

The financial statements have been prepared on a going concern basis.

As part of their assessment as to whether the use of the going concern basis is appropriate, the trustees assess whether there are any material uncertainties related to events or conditions that may cast significant doubt on the ability of the Charity to continue as a going concern. The trustees make this assessment in respect of a period of at least one year from the date of approval of the financial statements.

Key sources of estimation uncertainty

Estimation uncertainty exists in respect of the recoverable amount of the charity's microfinance loan portfolio. In determining whether impairment is required, the trustees consider factors such as the contractual terms of the underlying loan agreements, historic rates of loan default in the territory and applicable local macroeconomic factors that could impact the ability to recover amounts advanced. The carrying value of the loan portfolio at the year-end was £5,267,141 (2022: £7,230,813).

58 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

Summary of disclosure exemptions

The charity has taken advantage of the exemption conferred by Section 33.1A of FRS 102 not to separately disclose transactions between members of the charitable group headed by WildHearts Foundation.

Income

Income is recognised when the charity has entitlement to the income, it is probable that the income will be received and the amount can be measured with sufficient reliability.

Donations and legacies

Income from donations and legacies is recognised on an accruals basis at the point at which the requirements of entitlement, probability and reliability of measurement are fully satisfied.

Where the donor specifies that the donation must be used in future accounting periods or imposes other conditions which must be fulfilled before the charity becomes entitled to use such income, the income is deferred and not recognised until the pre-conditions have been met.

Grants receivable

Grant income is also recognised on an accruals basis at the point at which the requirements of entitlement, probability and reliability of measurement are fully satisfied.

Where the grant agreement contains performance or other pre-conditions which must be met before the charity becomes entitled to the funding, the grant income is deferred and released to income in the reporting period in which the conditions limiting recognition are met.

Donated resources and services

The activities of MicroLoan Foundation are supported by resources and services provided on a pro bono or discounted basis. In accordance with the Charities SORP (FRS 102), an amount is recognised within the Statement of Financial Activities as income when received, with a corresponding expense, where the benefit of these services is reasonably quantifiable and measurable.

Each year, the trustees undertake a comprehensive exercise in order to calculate on a consistent and systematic basis the value of in kind support received in the form of donated services and facilities. This value is determined by calculating the gross open market cost of undertaking each activity and then deducting amounts directly incurred by the charity. For the purposes of this calculation, no allowance has been made for irrecoverable VAT that could potentially have been incurred in respect of donated amounts in the open market. The trustees do not consider it practical to accurately determine the latter figure due to uncertainty over when VAT would or would not be applied.

Income from charitable activities

Income from charitable activities comprises of interest charged in respect of the microloans that we provide to our beneficiaries in order to make our lending activities sustainable. It is recognised on an accruals basis net of provision for bad debt.

Other trading activities

Income generated from fundraising events is recognised at the point of receipt.

59

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

Investment income

Investment income is included on an accruals basis and is stated gross of any taxation recoverable.

Expenditure

All expenditure is recognised once there is a legal or constructive obligation to that expenditure, it is probable that settlement is required and the amount can be measured reliably. All costs are allocated to the applicable expenditure heading that aggregate similar costs to that category. Where costs cannot be directly attributed to particular headings, they have been allocated on a basis consistent with the use of the resources.

Raising funds

Costs of raising funds represent amounts incurred in undertaking fundraising events and in attracting other voluntary income.

Charitable activities

Charitable expenditure comprises those costs incurred by the charity in the delivery of its activities and services for its beneficiaries. It includes both costs that can be allocated directly to such activities and those costs of an indirect nature that are necessary to support them.

Grant expenditure

Grants and donations made are included in the Statement of Financial Activities at the point there is sufficient evidence that a contractual or constructive obligation exists. In practice, this is usually a legal agreement or formal written offer issued by the charity to the recipient.

In circumstances where the charity makes a grant award that contains performance conditions, expenditure is recognised in the period in which each performance milestone is met. Where there are other conditions associated with the grant, expenditure is recognised to the extent that the future payment is probable.

Support costs

Support costs include central functions and have been allocated to activity cost categories on a basis consistent with the use of resources, as shown in Note 5.

Governance costs

Governance costs are those costs which are directly attributable to the governance arrangements of the charity and its strategic management.

Irrecoverable VAT

Irrecoverable VAT is charged against the category of resources expended for which it was incurred.

Taxation

The charity is considered to pass the tests set out in Paragraph 1 Schedule 6 of the Finance Act 2010 and therefore it meets the definition of a charitable company for UK corporation tax purposes. Accordingly, the charity is potentially exempt from taxation in respect of income or capital gains received within categories covered by Chapter 3 Part 11 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

60 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

Trading subsidiaries are subject to corporation tax in the countries that they operate in. Tax is recognised in the Statement of Financial Activities.

Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:

Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.

Tangible fixed assets

Tangible fixed assets are initially capitalised at cost and depreciated from the point at which they come into use. Depreciation costs are allocated to activities on the basis of the use of the related assets in those activities. Assets are reviewed for impairment if circumstances indicate their carrying value may exceed their net realisable value and value in use.

Where fixed assets have been revalued, any excess between the revalued amount and the historic cost of the asset will be included as a revaluation reserve within charitable funds.

Depreciation is provided at rates calculated to write down the cost of each asset to its estimated residual value on a straight line basis over its expected useful life. The depreciation rates in use are as follows:

Buildings 2-8%
Ofce equipment 10-25%
Computer equipment 20-25%
Motor Vehicles 20%
Work in progress nil

Investments

Programme related investments, which includes investments in the Charity's subsidiaries, are made in furtherance of the Charity's objectives and any investment return is secondary to the charitable purpose supported by the investment. Such investments are included at their cost less provision for impairment except for listed investments which are included at fair value (bid price). Any loss or impairment arising from such investments is charged as part of charitable activities within the Statement of Financial Activities.

Investments made by the charity which represent concessionary loans are measured at cost less provision for impairment.

Other investments are measured at fair value through income and expenditure unless fair value cannot be measured reliably. In such circumstances, investments are measured at cost less impairment.

Stocks

Stock is held at fair value. In respect of donated items held for distribution or resale, this is the amount the charity would have been willing to pay for the items on the open market.

61

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

Microcredit loans

Microcredit loans that we advance to our beneficiaries are typically short term and carry a fixed, market rate of interest. They are therefore treated as basic financial instruments and initially measured at transaction cost then subsequently assessed potential impairment. The balance is reported net of impairment provisions made.

Trade and other debtors

Trade and other debtors are recognised at the settlement amount due after any trade discount offered. Prepayments are valued at the amount prepaid net of any trade discounts due.

Trade creditors

Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade creditors are classified as current liabilities if the charity does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.

Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.

Borrowings

Borrowings that are interest free or at a rate below prevailing market rates are treated as concessionary loans. Such loans are initially recorded at the amount received, with the carrying value subsequently adjusted to reflect repayments and any accrued interest.

Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Such borrowings are subsequently carried at amortised cost, with the difference between the proceeds (net of transaction costs) and the amount due on redemption being recognised as a charge to the Statement of Financial Activities over the period of the relevant borrowing. The interest expense is recognised on the basis of the effective interest method.

Borrowings are classified as current liabilities unless the Charity has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.

Holiday pay accrual

A liability is recognised to the extent of any unused holiday pay entitlement which has accrued at the balance sheet date and carried forward to future periods. This is measured at the undiscounted salary cost of the future holiday entitlement so accrued at the balance sheet date.

Pension and other post retirement obligations

Contributions to defined contribution pension schemes are charged to the Statement of Financial Activities in the period in which they become payable.

Foreign exchange

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date unless there is a matching forward currency contract in place. In such circumstances, the contracted rate of exchange is used.

62 MicroLoan Foundation

Annual Report and Financial Statements 2023 63

Notes to the Financial Statements for the year ended 31 December 2023

Exchange differences are recognised in the Statement of Financial Activities in the period in which they arise.

The Charity's overseas subsidiaries have different functional currencies from that of their parent. On consolidation, assets and liabilities of these subsidiaries are translated using the applicable exchange rate as at the balance sheet date. Transactions included within the Statement of Financial Activities are translated using the average exchange rate across the period. Foreign currency gains or losses arising in respect of the translation of overseas subsidiaries are reflected in the Statement of Financial Activities as other operating gains or losses.

Fund accounting

Reserves which can be used at the discretion of the trustees are classified as unrestricted funds.

Designated funds, which are also unrestricted, represent amounts ringfenced or committed by the charity for specific charitable activities.

Restricted funds are to be used for specific purposes as laid down, either implicitly or explicitly, by the donor. Expenditure which meets the criteria is allocated to the appropriate fund, together with a fair allocation of overhead support cost.

Financial instruments

Classification

Financial assets and financial liabilities are recognised when the charity becomes a party to the contractual provisions of the instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Charity after deducting all of its liabilities.

Recognition and measurement

All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through the Statement of Financial Activities. These are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Financial assets and liabilities are only offset in the statement of financial position when, and only when, there exists a legally enforceable right to set off the recognised amounts and the Charity intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

Financial assets are derecognised when, and only when:

(a) the contractual rights to the cash flows from the financial asset expire or are settled

(b) the Charity transfers to another party substantially all the risks and rewards of ownership of the financial asset, or

(c) the Charity, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party.

Financial liabilities are derecognised only when the contractual obligation is discharged, cancelled or expires.

64 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

Debt instruments

Debt instruments which meet the following conditions are subsequently measured at amortised cost using the effective interest method:

Debt instruments that are classified as payable or receivable within one year on initial recognition and which meet the above conditions are measured at the undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment.

With the exception of concessionary loans and some hedging instruments, other debt instruments not meeting these conditions are measured at fair value through the Statement of Financial Activities.

Commitments to make and receive loans which meet the conditions mentioned above are measured at cost (which may be nil) less impairment.

Annual Report and Financial Statements 2023 65

Notes to the Financial Statements for the year ended 31 December 2023

Derivative financial instruments

From time to time, the charity uses derivative financial instruments to reduce exposure to foreign exchange risk. The charity does not hold or issue derivative financial instruments for speculative purposes.

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in the Statement of Financial Activities immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the Statement of Financial Activities depends on the nature of the hedge relationship.

Fair value measurement

The best evidence of fair value is a quoted price for an identical asset in an active market. When quoted prices are unavailable, the price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If the market is not active and recent transactions of an identical asset on their own are not a good estimate of fair value, the fair value is estimated by using a valuation technique.

Hedge accounting

The Charity designates certain derivatives as hedging instruments in fair value hedges.

At the inception of the hedge relationship, the entity documents the economic relationship between the hedging instrument and the hedged item, along with its risk management objectives and clear identification of the risk in the hedged item that is being hedged by the hedging instrument. Furthermore, at the inception of the hedge the charity determines and documents causes for hedge ineffectiveness.

Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in the Statement of Financial Activities immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged risk are recognised in the line related to the hedged item.

Hedge accounting is discontinued when the charity revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. The fair value adjustment to the carrying amount of the hedged item arising from the hedged risk is amortised to the Statement of Financial activities from that date.

66 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

2 Income from donations and legacies

Unrestricted
Restricted
Unrestricted
Restricted
Individuals and events
Trusts and institutions
Corporates
Donated services
and facilities		 funds
2023
£
funds
2023
£
Total
2023
£
funds
2022
£
funds
2022
£
Total
2022
£
458,295
31,860
490,155
403,072
105,647
508,719
118,120
505,525
623,645
111,709
242,593
354,302
9,011
-
9,011
32,342
-
32,342
55,643
-
55,643
50,722
-
50,722
641,069
537,385
1,178,454
597,845
348,240
946,085

3 Investment income

Unrestricted
Restricted
Unrestricted
Restricted
Interest receivable
Other investment
income		 funds
2023
£
funds
2023
£
Total
2023
£
funds
2022
£
funds
2022
£
Total
2022
£
3,410
-
3,410
3,487
-
3,487
63,364
-
63,364
6,433
-
6,433
66,774
-
66,774
9,920
-
9,920

4 Net income / (expenditure) for the year

2023 2022
£ £
This is stated after charging:
Depreciation 145,466 160,167
Auditor's remuneration
- audit		 13,375 12,500
Operating lease
expenses - property		 114,906 121,518

67

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023 Notes to the Financial Statements for the year ended 31 December 2023 Notes to the Financial Statements for the year ended 31 December 2023 Notes to the Financial Statements for the year ended 31 December 2023 Notes to the Financial Statements for the year ended 31 December 2023 Notes to the Financial Statements for the year ended 31 December 2023 Notes to the Financial Statements for the year ended 31 December 2023
5 Expenditure analysis
Charitable activities
Malawi Zambia Zimbabwe Subtotal Cost of Governance Support Total Total
raising funds costs costs
2023 2023 2023 2023 2023 2023 2023 2023 2022
£ £ £ £ £ £ £ £ £
Staf costs 733,597 892,121 116,262 1,741,980 216,638 239 3,429 1,962,286 1,986,382
Travel and
subsistence		 128,751 162,755 31,766 323,272 3,148 735 12 327,167 322,251
Premises costs 98,935 48,812 5,273 153,020 26,610 - - 179,630 184,740
Legal and
professional fees		 72,111 33,739 29,783 135,633 - 20,004 6,335 161,972 180,309
Interest costs 232,329 819,125 28 1,051,482 - - - 1,051, 482 652,149
Bank charges 80,090 98,750 26,439 205,279 2,621 - 706 208,606 154,438
Depreciation 54,836 87,637 2,993 145,466 - - - 145,466 160,167
Exchange (gains) /
losses		 83,490 97,057 60,576 241,123 - - 5,947 247,070 192,697
Loan provisions and
write-of		 259,587 272,408 497 532,492 - - - 532,492 184,561
IT and
telecommunications		 32,671 27,189 1,023 60,883 9,617 - 886 71,386 88,115
Other costs 361,342 266,549 31,483 659,374 16,341 - 2,877 678,592 606,792
2,137,739 2,806,142 306,123 5,250,004 274,975 20,978 20,192 5,566,149 4,712,601
In kind support 400 495 17 912 19,863 8,531 26,337 55,643 50,722
Support costs - - - - 46,529 - (46,529) - -
Governance costs 10,514 15,420 624 26,558 2,951 (29,509) - - -
Total expenditure 2,148,653 2,822,057 306,764 5,277,474 344,318 - - 5,621,792 4,763,323
2022 expenditure
analysis		 2,054,231 2,159,299 227,170 4,440,700 322,623 - - - 4,763,323
68
MicroLoan		 Foundation

Annual Report and Financial Statements 2023 69

.'4up l¥ans Jnd sivln ,¥1 .4t Mic Lo Foundation

Notes to the Financial Statements for the year ended 31 December 2023

5 Expenditure analysis (continued)

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Charitable activities
MLF MLF MLF Subtotal Cost of Governance Support Total
Malawi Zambia Zimbabwe raising funds costs costs
2022 2022 2022 2022 2022 2022 2022 2022
£ £ £ £ £ £ £ £
Staff costs 863,337 858,822 52,517 1,774,676 203,410 474 7,822 1,986,382
Travel and
161,829 138,564 14,026 314,419 5.052 1,395 1,395 322,251
subsistence
Premises costs 107,297 46,225 5,894 159,416 25,324 - - 184,740
Legal and 112,718 38,917 12,026 163,661 - 16,613 35 180,309
professional fees
Interest costs 162,882 489,267 - 652,149 - - - 652,149
Bank charges 64,549 78,920 5,494 148,963 4,870 - 605 154,438
Depreciation 74,882 84,833 452 160,167 - - - 160,167
Exchange (gains) /
losses 44,423 23,810 124,968 193,201 - - (504) 192,697
Loan provisions and
write-off 83,867 100,434 260 184,561 - - - 184,561
IT and
telecommunications 43,697 31,860 2,073 77,630 9,946 - 539 88,115
Other costs 322,936 255,470 9,392 587,798 17,972 - 1,022 606,792
2,042,417 2,147,122 227,102 4,416,641 266,574 18,472 10,914 4,712,601
In kind support 448 462 3 913 20,080 7,246 22,483 50,722
Support costs - - - - 33,397 - (33,397) -
Governance costs 11,366 11,715 65 23,146 2,572 (25,718) - -
Total expenditure 2,054,231 2,159,299 227,170 4,440,700 322,623 - - 4,763,323
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71

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

6 Staff costs

The aggregate payroll costs were as follows:
Wages and salaries
Social security costs
Pension costs		 2023
£
2022
£
1,752,737
1,777,108
36,761
28,936
98,666
102,442
1,888,164
1,908,486

The number of employees receiving emoluments of more than £60,000 was as follows:

£150,000 - £159,999
£90,000 - £99,999
£60,000 - £69,999		 2023
£
2022
£
1
-
1
2
1
1
3
3

Pension contributions made on behalf of these employees totalled £15,100 (2022: £7,400).

The trustees consider key management personnel during 2023 to comprise the Board of Trustees, the Group's Chief Executive Officer, the Chief Executive Officers of the African subsidiaries, the UK Director of Fundraising and the UK Chief Financial Officer. Emoluments totalling £482,134 (2022: £423,827) were paid to these individuals inclusive of Employer's National Insurance and pension contributions. None of the trustees were remunerated in the current year.

The average number of persons employed by the charity during the year was as follows:

Malawi
Zambia
Zimbabwe
Raising funds
Governance and administration		 2023
No.
2022
No.
120
134
128
99
13
14
6
6
1
2
268
255

72 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

7 Trustee remuneration and expenses

Trustees' emoluments

No trustees, nor any persons connected with them, received any remuneration from the charity during the current or prior year. Expenses totalling £376 (2022: £18) were reimbursed to two (2022: one) trustees during the year.

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Annual Report and Financial Statements 2023
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73

Notes to the Financial Statements for the year ended 31 December 2023

8 Tangible Fixed Assets

The group
Cost or valuation
At 1 January 2023
Forex adjustment
Additions
Disposals
Revaluations
At 31 December 2023
Depreciation
At 1 January 2023
Forex adjustment
Charge for the year
On disposals
Revaluations
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022		 Buildings
£
Ofce
equipment
£
Computer
equipment
£
Motor
vehicles
£
Work in
progress
£
Total
£
110,060
260,711
166,615
845,924
-
1,383,310
(46,858)
(91,844)
(70,935)
(314,747)
-
(524,384)
-
30,138
8,715
159,913
7,131
205,897
-
(2,833)
(115)
(10,053)
-
(13,001)
63,436
-
-
-
-
63,436
126,638
196,172
104,280
681,037
7,131
1,115,258
(15,596)
(123,022)
(97,591)
(408,452)
-
(644,661)
6,640
41,166
41,549
154,053
-
243,408
-
(26,603)
(14,636)
(104,227)
-
(145,466)
-
2,363
49
7,700
-
10,182
8,956
-
-
-
-
8,956
-
(106,096)
(70,629)
(350,856)
-
(527,581)
126,638
90,076
33,651
330,181
7,131
587,677
94,464
137,689
69,024
437,472
-
738,649

The revaluation of buildings is reflected in the Statement of Financial Activities as an other recognised gain. Realisation of the gain would result in local taxation being payable and, accordingly, the gain is reported in the Statement of Financial Activities net of associated deferred tax of £21,717.

74 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

9 Investments


Notes to the Financial Statements for the year ended 31 December 2023
9 Investments The charity
Cost
At 1 January 2023
Additions
At 31 December 2023
Provision
At 1 January 2023
Charge for the year
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022		 Investments in
subsidiaries
£
1,902,887
294,533
2,197,420
(57,360)
(315,00)
(372,360)
1,825,060
1,845,527

Additions to investments represent new capital injected into the three wholly owned subsidiaries through a combination of cash advances and conversion of intercompany debt. This is done as part of an ongoing strategy to fund their expansion.

A summary of the results and the aggregate of share capital and reserves of the subsidiaries, converted into Pound Sterling, is shown below.

MLF Malawi
MLF Zambia
MLF Zimbabwe		 Income
£
Expenditure
£
Result for
the year
£
Aggregate of
share capital
and reserves
£
1,990,553
(1,963,442)
27,111
874,880
2,717,951
(2,666,942)
51,009
956,060
286,577
(246,645)
39,932
78,670
4,995,081
(4,877,029)
118,052
1,909,610

The activities of the above have been consolidated and therefore are included in the Group result. A description of their activities is included in the annual report.

75

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

10 Stock

The group
The charity
Consumables held 2023
£
2021
£
2023
£
2021
£
6,309
7,379
-
-

11 Debtors

11 Debtors
The group
The charity
Trade debtors
Amounts due from group undertakings
Microcredit loans
Other debtors and prepayments		 2023
£
2022
£
2023
£
2022
£
-
1,750
-
1,750
-
-
198,303
194,213
5,267,141
7,230,813
-
-
341,504
149,904
156,178
21,502
5,608,645
7,382,467
354,481
217,465

Two large legacies were notified to MicroLoan Foundation during the year to 31 December 2023. An interim distribution of £151,000 for one of the legacies has been notified post year end and recognised in other debtors and prepayments. Further distributions from either legacy have not been recognised in 2023 due to uncertainty over the amounts due.

12 Current asset investments

The group The charity
2023 2022 2023 2022
£ £ £ £
Short term deposits 250,000 - 250,000 -

Investments in short term deposits represent amounts held in the COIF Charities Deposit Fund which comprises a diversified portfolio of sterling denominated money market deposits and other instruments. The fund is instant access. The annualised yield on the fund in 2023 was 5.27% (2022: N/A).

76 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

13 Creditors: amounts falling due within one year

The group
The charity
Trade creditors
Taxation and social security
Other creditors and accruals
Loans		 2023
£
2022
£
2023
£
2022
£
8,257
15,645
4,146
2,944
136,193
161,618
9,856
7,664
134,373
373,371
34,862
46,506
1,769,109
2,448,512
-
-
2,047,932
2,999,146
48,864
57,114

Further information in respect of loans outstanding is provided at note 14.

14 Creditors: amounts falling due after one year

The group
The charity
Loan repayments due:
In 1 - 2 years
In 2 - 5 years		 2023
£
2022
£
2023
£
2022
£
2,784,375
2,050,663
-
-
1,217,161
1,662,849
1,100,000
1,100,000
4,001,536
3,713,512
1,100,000
1,100,000

Loans represent amounts borrowed by various MLF entities to fund activities. Details of the loan providers, the entity the loan is with, the currency in which the loan is denominated and the applicable interest rate are set out on the next page.

77

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

Loan provider
WildHearts Foundation
Grameen Credit Agricole Microfnance
Foundation
Grameen Credit Agricole Microfnance
Foundation
Grameen Credit Agricole Microfnance
Foundation
Lend with Care
Lend with Care
Paul Foundation
ADA Microfnance
Global Partnerships
Global Partnerships
Global Partnerships
Global Partnerships
Global Partnerships
Symbiotics
Symbiotics
Oikocredit
FEFISOL II
SIDI
Reserve Bank of Malawi FinES		 Outstanding £
Borrower
Currency
Interest rate
1,100,000
UK
GBP
Nil
257,386
Malawi
MWK
31.53%
122,610
Zambia
ZMW
25.81%
392,669
Zambia
ZMW
26.00%
104,063
Malawi
MWK
Nil
141,187
Zambia
ZMW
Nil
39,370
Zimbabwe
USD
5.00%
112,113
Zambia
ZMW
30.00%
30,499
Malawi
MWK
16.83%
125,176
Zambia
ZMW
24.69%
116,892
Zambia
ZMW
28.35%
293,819
Zambia
ZMW
23.89%
361,332
Zambia
ZMW
22.93%
318,859
Zambia
ZMW
26.50%
307,870
Zambia
ZMW
25.00%
202,950
Zambia
ZMW
26.00%
136,526
Zambia
ZMW
28.63%
83,976
Malawi
MWK
22.00%
1,523,348
Malawi
MWK
3.00%
5,770,645

78 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

15 Provisions for liabilities

The group
The charity
Deferred Tax
Amounts payable to the
Malawi Revenue Authorities
Amounts payable to the
Zambian Revenue Authorities		 2023
£
2022
£
2023
£
2022
£
-
36,011
-
-
559
-
-
-
559
36,011
-
-

At 31 December 2023, the group also had unrecognised deferred tax assets of £6,579 (2022: £nil) in respect of Malawi, £44,542 (2022: £7,260) in respect of Zambia, and £nil (2022: £7,768) in respect of Zimbabwe.

16 Pension and other schemes

The charity makes contributions to various defined contribution pension schemes. The pension cost charge for the year represents contributions payable by the charity to the schemes and amounted to £98,666 (2022: £102,442).

17 Analysis of group net assets between funds

Unrestricted
Restricted
Unrestricted
Restricted
Tangible fxed assets
Net current assets
Long term liabilities
Deferred tax liability		 2023
£
2023
£
Total
2023
£
2022
£
2022
£
Total
2022
£
587,677
-
587,677
738,649
-
738,649
5,166,405
41,804
5,208,209
5,123,001
35,913
5,158,914
(4,001,536)
-
(4,001,536)
(3,713,512)
-
(3,713,512)
(559)
-
(559)
(36,011)
-
(36,011)
1,751,987
41,804
1,793,791
2,112,127
35,913
2,148,040

79

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

18 Funds

2023 movements

Unrestricted funds
General fund
Designated funds:
- Africa Investment
- Africa Expansion
- Zimbabwe Growth
Restricted funds
Malawi
Zambia
Zimbabwe
Africa general
UK infrastructure
Total funds		 Balance at
1 January
2023
Income
Expenditure
Other
recognised
gains/
(losses)
Transfers
Balance at
31 December
2023
£
£
£
£
£
£
369,519
5,603,602
(5,090,298)
(873,444)
397,970
407,349
1,492,608
-
-
-
(547,970)
944,638
100,000
-
-
-
300,000
400,000
150,000
-
-
-
(150,000)
-
2,112,127
5,603,602
(5,090,298)
(873,444)
-
1,751,987
-
202,029
(201,429)
-
-
600
23,400
100,788
(124,188)
-
-
-
12,513
208,124
(179,433)
-
-
41,204
-
25,424
(25,424)
-
-
-
-
1,020
(1,020)
-
-
-
35,913
537,385
(531,494)
-
-
41,804
2,148,040
6,140,987
(5,621,792)
(873,444)
-
1,793,791

80 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

2022 movements

Unrestricted funds
General fund
Designated funds
- Africa Investment
-Zimbabwe Growth
Restricted funds
Malawi
Zambia
Zimbabwe
Africa general
UK infrastructure
Total funds		 Balance at
1 January
2022
Income
Expenditure
Other
recognised
gains/
(losses)
Transfers
Balance at
31 December
2022
£
£
£
£
£
£
274,529
3,312,829
(2,641,914)
101,140
(732,010)
314,574
572,948
-
-
-
582,010
1,154,958
-
-
-
-
150,000
150,000
847,477
3,312,829
(2,641,914)
101,140
-
1,619,532
36,900
187,003
(197,103)
-
-
26,800
6,040
126,511
(132,551)
-
-
-
4,257
108,489
(107,366)
-
-
5,380
20,750
41,594
(62,344)
-
-
-
-
11,461
(11,461)
-
-
-
67,947
475,058
(510,825)
-
-
32,180
915,424
3,787,887
(3,152,739)
101,140
-
1,651,712

The designated 'Africa investment' fund reflects the book value of UK assets that have been committed or already advanced to our projects in Africa through either grants, equity or intergroup loans. It is calculated net of any long term borrowings that have been used to finance this investment. This fund is shown separately from the General fund because it does not represent liquid resources that are available to meet UK financial commitments as they fall due. The fund balance includes a total of £102,840 (2022: £101,284) relating to a revaluation reserve created in respect of land and buildings owned in Malawi.

A key part of the charity's medium term strategy is to seek to expand its operations into a new African country by 2025. A significant amount of research and planning has been undertaken in respect of this project and the intention is to open a green-field operation in South Africa in the latter half of 2024. The designated 'Africa expansion' fund represents unrestricted funds that have been ringfenced to provide part of the initial start up capital required to fund this expansion.

81

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

The designated 'Zimbabwe growth' fund represented unrestricted funds that had been ringfenced to facilitate the ongoing recapitalisation of Zimbabwe in 2023. This was achieved during the year through a combination of the brought forward designated funds and new restricted income received. The increase in Zimbabwe's net asset value as a result of the recapitalisation forms part of the net movement in the designated Africa investment fund. Restricted funds represent the total of individual fund balances received for activities within the charity's countries of operation, as indicated by the fund name. The 'Africa general' fund comprises of amounts where the donors have stipulated that the funds should be applied directly to our projects within Africa but have not specified a particular country. The trustees do not consider there to be any individually material amounts within each aggregated fund balance that would require separate disclosure.

19 Financial Instruments

Categorisation of financial instruments
Financial assets measured at fair value through income and expenditure
Financial assets that are debt instruments measured at amortised costs
Financial liabilities measured at amortised cost
Loan commitments measured at cost less impairment		 2023
£
2022
£
-
-
7,249,832
8,150,681
7,249,832
8,150,681
142,630
389,016
5,770,645
6,162,024
5,913,275
6,551,040

Financial assets measured at fair value

There are no financial assets measured at fair value.

Financial assets that are debt instruments measured at amortised cost

This comprises of microcredit loans, trade debtors, other debtors, cash and cash equivalents (as applicable).

Financial liabilities measured at historic cost

This comprises of trade creditors, other creditors and accruals.

Loan commitments measured at cost less impairment

This comprises of loans.

82 MicroLoan Foundation

Notes to the Financial Statements for the year ended 31 December 2023

Items of income, expense, gains or losses
2022
Financial assets measured at fair value through income
and expenditure
Financial assets that are debt instruments measured at
amortised cost
2021
Financial assets measured at fair value through income
and expenditure
Financial assets that are debt instruments measured at
amortised cost		 Income
£
Expense
£
Net gains
£
Net losses
£
-
-
-
-
4,962,533
-
-
-
4,962,533
-
-
-
-
-
-
-
4,381,573
-
-
-
4,381,573
-
-
-

The total interest income for financial assets not measured at fair value through income and expenditure is £4,962,533 (2022: £4,381,573)

Impairment

Microcredit loans

The amount of the impairment loss during the year is £532,492 (2022: £184,561). Impairment loss is included in expenditure on charitable activities. The amount of reversal of impairment recognised in the current year and prior period, which is also included in expenditure on charitable activities, is £nil. The overall net impairment loss during the year is £532,492 (2022: £184,561).

Fair Value Hedges

Currency forwards - contracts to buy

The group is exposed to foreign currency risk when it borrows in currencies other than the functional currency. The Charity's policy is to seek to hedge this risk wherever it is practical and affordable using forward foreign currency contracts.

Interest rate swaps

From time to time, the group may also enter into interest rate swaps in respect of foreign currency borrowings in order to reduce exposure to foreign currency risk in respect of scheduled interest payments.

There were no financial instruments designated as hedging instruments at the end of either the current or prior financial year and therefore their fair value was £nil (31 December 2022: £nil).

The amount of the change in fair value of hedged items recognised in income and expenditure for the year is £nil (2022: £nil).

83

Annual Report and Financial Statements 2023

Notes to the Financial Statements for the year ended 31 December 2023

20 Analysis of cash and cash equivalents and of net debt

Cash at bank and in hand
Cash at bank and in hand
Total cash and cash equivalents
Loans falling due within one year
Loans falling due after more than one year
Total		 At 1 January
2023
£
Cash fows
£
Other
non-cash
changes
£
At 31
December
2023
£
768,214
724,780
(101,807)
1,391,187
-
250,000
-
250,000
768,214
974,780
(101,807)
1,641,187
(2,448,512)
(1,633,918)
(954,515)
(1,769,109)
(3,713,512)
(3,519,411)
3,231,387
(4,001,536)
(5,393,810)
(910,713)
2,175,065
(4,129, 458)

The large non-cash movements in both cash and net debt are due to the significant devaluation of the Malawian Kwacha and Zambian Kwacha during 2023.

21 Charity status

The charity is a company limited by guarantee and consequently does not have share capital. The member is liable to contribute an amount not exceeding £1 towards the assets of the charity in the event of liquidation.

22 Ultimate controlling party

The company's ultimate parent undertaking and controlling party is WildHearts Foundation Limited, a registered Scottish charity (SC037072) and a company limited by guarantee (SC290665). Copies of its consolidated financial statements are available from Companies House.

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84 MicroLoan Foundation
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~~MicroLoan Foundation’s companies and advisors~~

MicroLoan Foundation Companies

MicroLoan Foundation UK

Registered Office 1-2 Paris Garden London SE1 8ND

MicroLoan Foundation Malawi

Registered Office P.O. Box 2292, Area 6 Lilongwe

Affiliates

MicroLoan Foundation USA

237 Bonad Road Chestnut Hill MA 02467

MicroLoan Foundation Australia

101 John Lund Drive Hope Island Queensland 4212

Group Auditors

Sayer Vincent

MicroLoan Foundation Zambia

Registered Office P.O. Box 310082 Plot 346, 4th Street Chelstone Green Salama Park Lusaka

MicroLoan Foundation Zimbabwe

Registered Office c/o Scanlen & Holderness, 13th Floor Cabs Centre 74 Jason Moyo Avenue Harare

Sayer Vincent LLP 110 Golden Lane London EC1Y 0TG

UK Bankers

Barclays

Barclays Bank Plc Leicester LE87 2BB

85

Annual Report and Financial Statements 2023

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~~Contact us~~

MicroLoan Foundation UK 1-2 Paris Garden London SE1 8ND +44 (0)20 8827 1688 contact@mlf.org.uk microloanfoundation.org.uk

Facebook: @microloanfoundation Linkedin: @microloanfoundation Instagram: @microloanfoundation X: @MicroLoan