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Transcript of THE MISSION AVIATION FELLOWSHIP - mafint.org · of the Companies Act, ... preparing their accounts...
MISSION AVIATION FELLOWSHIP INTERNATIONAL
(Company limited by guarantee and not having a share capital)
Company Number 3144199
Registered Charity Number 1058226
Financial Statements for the year ended 31 December 2016
MISSION AVIATION FELLOWSHIP INTERNATIONAL CONTENTS OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016
TRUSTEES, OFFICERS AND ADVISORS
1
REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT
2
INDEPENDENT AUDITOR’S REPORT
13
CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES
14
CONSOLIDATED AND CHARITY ONLY BALANCE SHEET
15
CONSOLIDATED CASH FLOW STATEMENT
16
NOTES TO THE FINANCIAL STATEMENTS
17
MISSION AVIATION FELLOWSHIP INTERNATIONAL TRUSTEES, OFFICERS AND ADVISORS OF THE CHARITY FOR THE YEAR ENDED 31 DECEMBER 2016
1
Trustees
Jan Ivar Andresen Norway Peter Curtis Australia Alastair Ralph Gunn South Africa Ndaba Mazabane Appointed 17 September 2016 South Africa Leighton Pittendrigh-Smith, BTMan Australia John Quin, OBE, FCMA (Chairman) UK Ann Saunders, BA Hons Oxon, FCIPD UK William Watson Appointed 30 March 2016 Canada Company Secretary Anna C Beck, ACA Appointed 30 January 2017 C Janet Busk, ACA Resigned 30 January 2017 Executive Leadership Team
Annie M Bailey, FCIPD International HR Manager C Janet Busk, ACA Resigned 31 December 2016 Chief Finance Officer Stephen L Charlesworth, BEng, BMin Regional Director, Asia Pacific Roger N Edwards International Recruitment Manager, MCIPD Bill A Harding, LLB MICD International Development Director & Legal Counsel Chris T Lukkien, MSc Resigned 30 April 2017 Chief Executive Henk-Jan Muusse Regional Director, Africa William B Nicol BMin Aviation Director
Registered office, and principal place of business in UK
Operations Centre, Henwood, Ashford, Kent, TN24 8DH Independent Auditor
Mazars LLP, Throwley Way, Sutton, Surrey, SM1 4JQ Principal Bankers
National Westminster Bank plc, Europa House, 49 Sandgate Road, Folkestone, Kent CT20 1RU Solicitors
Stone King LLP, 16 St John’s Lane, London EC1M 4BS
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT FOR THE YEAR ENDED 31 DECEMBER 2016
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The Trustees, who are also the directors of Mission Aviation Fellowship International (MAF International) for the purposes of the Companies Act, have pleasure in presenting their Report and Financial Statements for the year ended 31 December 2016. The financial statements comply with the requirements of the governing documents, with current statutory requirements and 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) (effective 1 January 2015). OBJECTIVES AND ACTIVITIES
MAF International is a Christian mission whose purpose is sharing God’s love through aviation and technology. This develops into MAF’s vision - “Isolated people physically and spiritually transformed in Christ’s name”. The principal activity has continued as providing a subsidised aviation service in parts of the world where surface travel is impossible or very difficult. Flight training, aircraft maintenance, logistics services and other communication services are also provided. MAF International’s services are provided by dedicated staff (many of whom are seconded to MAF International by appropriate agencies) who use their skills in aviation, and other fields, to work inter alia with national churches, relief and development agencies, missions, hospitals and governments to meet the most pressing of human needs. MAF International has been funded by MAF groups around the world, most of whom are its members, and by fares charged to those who use the aircraft. MAF International reaches the unreached in some of the world’s most remote and isolated areas, where people are cut off due to geographical barriers, conflict or the dangers of overland travel. During 2016, our flights continued to enable our partners to overcome these challenges, and bring help and hope to people in spiritual and physical need. Public Benefit
The trustees of MAF International confirm that they have complied with their duty laid out in the Charities Act 2011 to have due regard to the public benefit guidance published by the Charity Commission. MAF International aims to benefit those living in some of the most isolated parts of the world. In many places there are no roads at all, or they are impassable or slow going, for example due to flooding or security issues. Our fleet of light aircraft is able to take emergency teams, healthcare professionals, Christian workers and supplies into these remote areas more quickly and efficiently than by any other means. As a result our activities benefit two major groups: firstly the charities, churches and other organisations whose mission it is to reach these isolated communities, and secondly the communities themselves. STRATEGIC REPORT
ACHIEVEMENTS AND PERFORMANCE
During 2016 MAF International and its subsidiaries continued to operate in Chad, Kenya, Liberia, Madagascar, Mongolia, South Sudan, Tanzania, Uganda, Arnhem Land in North Australia, Bangladesh, Papua New Guinea and Timor-Leste. In addition a Flight Training Centre in Queensland, Australia and Christian Radio Missionary Fellowship in Papua New Guinea (known as MAF Technology Services) have continued to operate within the MAF International group. The work undertaken by each programme varies to reflect the needs of the country and the surrounding countries as well as the mix of churches, missions and NGOs. In order to review effectiveness MAF International undertakes a regular survey by country of the needs of its customers and how we are helping them in their ministries and work. The survey is based on savings in time, finances, the increase in security and safety for those whom we serve, and the Christian influence of our staff.
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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During the 2016 year MAF International’s operational flight statistics were:
Country Total
hours flown
Number of flight
legs
Unique* passengers
Distance (km)
Unique* cargo (kg)
Fleet size Destinations
Chad 549 266 814 127,736 7,234 2 33 Kenya 1,261 826 3,121 306,441 42,035 3 67 Liberia 498 471 2,172 119,886 15,882 1 13 Madagascar 988 808 2,522 224,129 17,375 3 52 Mongolia 361 184 662 96,221 300 1 30 South Sudan 1,519 1,589 4,532 368,337 181,933 5 55 Tanzania 347 789 947 64,805 640 3 51 Uganda 2,843 3,118 7,719 679,638 48,532 6 57 AFRICA REGION 8,366 8,051 22,489 1,987,193 313,931 24 358 Arnhem Land 5,187 10,094 19,029 893,707 5,360 13 52 Bangladesh 381 541 1,445 83,305 723 1 55 Papua New Guinea 5,254 10,757 30,151 977,286 2,729,112 13 212 Timor-Leste 536 1,023 2,294 91,309 30 2 9 Mareeba (Training) 1,186 1,186 n/a 237,113 n/a 8 n/a ASIA PACIFIC REGION 12,544 23,601 52,919 2,282,720 2,735,225 37 328
TOTAL 20,910 31,652 75,408 4,269,913 3,049,156 61 686
* Unique is defined as passengers or cargo per flight (not per flight leg) Responding to Disasters and Emergencies MAF is ideally placed to respond swiftly when crises occur. MAF’s extensive experience of emergency situations, combined with its knowledge of local language and culture, enables MAF to make a significant contribution in times of disaster. When renewed fighting erupted in Juba, MAF lifelines in South Sudan, Kenya and Uganda worked to co-ordinate the large number of requests for emergency evacuations in a country we’ve served since 1950. We also delivered essential supplies for areas cut off from regular flights. Amid the sadness of rekindled conflict in South Sudan, we were glad to support many of our partners there and to help coordinate and share evacuation efforts. In Papua New Guinea (PNG), MAF aircraft continued to transport food supplies to famine-hit communities suffering from the drought and frost that decimated PNG’s hard-to-reach food growing highland areas in 2015. Our aircraft also helped meet what Pilot Josh Plett described as ‘the devastating needs that exist’ in southern Madagascar, where Josh delivered food to areas where people were suffering from starvation owing to drought. We also provided essential supplies to a remote homeland in hot, humid and physically demanding Arnhem Land, when food and water ran out. Supporting Medical and Healthcare Needs MAF uses its aircraft to fly into remote locations where people’s poverty is compounded by their isolation. When ill health or accidents occur we seek to provide the quick transportation needed. Evidence of this is demonstrated by the following examples: Flights in Liberia, our newest lifeline, enabled Water Missions International (WMI) to improve the water supply in various health centres. WMI’s International Project Director thanked MAF, saying, ‘The organisation is professional, yet very personal. The pilots began with a brief prayer for a safe flight and then we were off. Without MAF’s support, the clean water project would not have been possible due to the rainy season and the nearly inaccessible roads.’ In Madagascar, when Norozara’s leg was broken by a cow landing on him after the cow was struck by a fast-moving truck, he was flown to a mission hospital where the doctors operated on his leg and shared the Gospel. Three weeks before we flew him back to his village, Norozara was baptised. ‘To know he was going home,’ said MAF Pilot Josh Plett, ‘brought such joy. To know he was going home after being born again was priceless!’
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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In Timor-Leste, we helped people to receive physical (as well as spiritual) sight – our aircraft enabling a team of optometrists to carry out cataract operations, provide eye examinations and train local eye-care workers. Andrew, one of the sight-saving team, said, ‘Every day we help people to regain their sight, and see lives changed through this. That’s why I love MAF.’ Deaths were prevented in Fiyawena, PNG. When 4 women and their 13 children were accused of being witches and causing people to die during an outbreak of measles, we flew a Lutheran missionary and a team of Christian peacemakers to prevent the innocent villagers being killed. Thanks to MAF flights, the missionary and a courageous schoolgirl called Nes, the villagers eventually agreed to stop killing people falsely accused of witchcraft. They renounced sorcery, murder and intimidation, accepted a copy of God’s Word, and prayed for God’s mercy. Bringing God’s Word and Spreading the Good News MAF is committed to strengthening and supporting the worldwide Church through our staff and by partnering with other Christian missions in the countries where we serve. In war-torn South Sudan where conflict between the government and opposition forces continued to rage, and some 46 million people faced severe food insecurity, our pilots helped Christian NGO Across to distribute over 1,330 Bibles to Zande-speaking areas such as Maridi, Ibba, Nzara, Yambio and Juba that were too dangerous to reach by road. Sila, one of the women who received a copy of God’s Word in her own language, said, ‘I’m so happy. I know that the moment I read the Bible, my life will change!’ Bibles were also distributed to isolated areas such as Busilmin in PNG, where Pilots Dallas Patten and Michael Vogel provided the spiritually hungry villagers with 18 Tok Pisin Bibles, 4 audio Bibles, 1 English NIV, and a Bible commentary. Staff from MAF’s Technology Services team also helped people to share the Gospel in areas such as Oro Province, and equipped pastors and church leaders by providing them with computer training. For Pilot Jarkko Korhonen, our medical and evangelistic safari to remote Dabia in Tanzania – a country which has seen huge improvements in infrastructure over the last ten years – was particularly memorable. While the medics made their routine baby and prenatal assessments, a pastor with the Anglican Church in Dodoma baptised six children. Because Jarkko had made such a good impression leading baptism and Communion services there, one of the mothers officially named her son Jarkko Festo Laban in honour of the MAF pilot. Lois Semanision was part of a 4-strong MAF team that visited the 360 inmates of a prison in Mount Hagen, PNG. Lois spoke to the prisoners in Tok Pisin, shared Bible verses, and prayed with some women. The team later visited another prison where Lois said they ‘shared the wonderful news that Jesus loves them and they can find forgiveness through acceptance of His death and resurrection.’ She prayed with the prisoners and says most of them ‘repeated the sinner’s prayer with Pastor Tomas’. Supporting our Partners MAF works in partnership with isolated communities and those seeking to assist them by enabling access to people and places our partners would otherwise struggle to reach. In Bangladesh, where millions of people live in one of the poorest, most densely populated and geographically unstable regions on the planet, our floatplane helped provide 70 vulnerable women and children from the nomadic islands on the Brahmaputra River with life-changing medical treatment. At the end of the seven-day visit, the team leader of one of Friendship’s three floating hospitals said that, because travel was so difficult and time-consuming, she ‘wouldn’t have considered leading the team if it hadn’t been for MAF.’ In beautiful but cyclone-battered Madagascar, our aircraft helped medical assessment teams to examine prospective patients in hard-to-reach villages and cities that had little access to healthcare – flying staff and patients to Mercy Ships’ well-equipped floating hospital. One patient we flew from Bekodoka to the Mercy Ships hospital couldn’t talk or smile until surgeons operated on her cleft lip. When we flew Rosella and her mother back after successful surgery, her father was delighted to see his little girl’s lip restored. Thanks to MAF, Medical Aid International was able to evaluate the needs at Sambava, Madagascar. A journey that would have taken three days on dangerous roads took only an hour and enabled Tim to see which bits of hospital equipment needed to be repaired or replaced. ‘These quick and efficient flights,’ Tim said, ‘meant I was able to do more with my time.’ We also enabled a community health worker with Nazarene Health Ministries to access villages in PNG. ‘Without MAF,’ Matthew said, ‘it would be really difficult to reach out to isolated jungle areas.’ His frequent MAF flights made it possible for him to teach villagers about hygiene and the need for clean drinking water and nutritious food – allowing him to explain to the hard-to-reach Hewa people that ‘it’s not witchcraft or evil spirits that kill people, but bacteria, viruses and fungi.’
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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Reaching Remote Places Throughout 2016, our ability to land on rugged mountainside airstrips, lakes and rivers, deserts, roads and basic landing strips, saved some of the world’s most forgotten people from having to spend days walking through dense jungle or traversing treacherous roads to receive practical help, spiritual hope and physical healing. Because personnel from humanitarian agencies in Uganda’s Karamoja region find it hard to access people in a country plagued by lawlessness, rebel activity and insecurity, our flights enabled organisations such as African Leadership and Reconciliation Ministries to tackle the causes of poverty and provide Biblically based peacebuilding initiatives without having to risk dangerous overland travel. Their Country Director said, ‘The reliability and professionalism of MAF is incredible. You play a big role in enabling God’s love to reach the Karamoja people.’ In Mongolia, a team of medical workers from Reaching the Light (RTL) was flown to Mandalgovi so they could provide therapy for children with disabilities and educate parents on how best to help them. The RTL team assessed the physical and mental needs of 80 youngsters and arranged for MAF to fly 10 children to Ulaanbaatar to receive an intensive 2-week treatment programme at RTL’s centre. We also flew a team from Nurses Heart to Heart around Mongolia to teach medics how to perform CPR using mannequins. At the end of the training, each participant was offered a Mongolian Bible. Before the team left each province, they donated several CPR mannequins and some basic medical supplies to the hospitals so staff could practise their skills and teach them to others. Most of the medics, Pilot Dallas Derksen reported, ‘were happy to walk away with the Bible offered’. In Liberia, our aircraft enabled MAF partner Innovative Education Liberia to build and open a learning centre in Greenville – our regular flights converting their seven-hour journey by road across precariously rugged and often waterlogged terrain to just under an hour. In a country whose health service struggles with fewer than 50 doctors, our flights proved exceptionally popular with the many enthusiastic MAF partners serving a nation where roughly 1 in 100 women perish during childbirth. Other Activities MAF Technology Services, formerly known as Christian Radio Missionary Fellowship, provides a reliable means of HF radio communication and IT and technical expertise in Papua New Guinea. This enables national Churches, Mission organisations, hospitals, schools and remote communities to have access to the outside world. The work also includes the provision of Scripture in audio format for oral societies and access to theological training and discipleship material for remote communities. Other activities include the provision of light aircraft maintenance from many of our bases. Where appropriate MAF International also has provided e-mail services, vehicle maintenance and logistics services helping other serving in the more remote areas with their connectivity, purchasing visas etc. Developments during the Year In 2016, we celebrated some significant milestones such as 65 years of MAF service in Papua New Guinea, 50 years in Chad and 15 years in Mongolia – – our aircraft and personnel continuing to bring restoration after conflict, healing to the broken and food for the hungry. We are grateful that after so many years we remain able to provide physical and spiritual transformation to remote and isolated people. We accomplished this by enabling medical teams to bring healing, pastors to provide pastoral care and spiritual support, and by transporting equipment and resources to aid community development and ensure self-sufficiency. Emergency patients were airlifted, Bible translators flown to remote areas, and clean water, food and medical supplies delivered to areas affected by disaster or disease. Highlights during the year included seeing our Myanmar team continue to build relationships with local partners, survey potential MAF airstrips and make progress that, until recently, was only a distant dream. In South Sudan, there was renewed fighting both within the capital, Juba and in other districts in July 2016 which resulted in the decision to evacuate most of our international staff team. Since then some have returned, and others are preparing for service there. If the security situation remains manageable, the potential for the programme to grow remains significant. The Juba-based fleet needs to grow further to meet the increasing need for its services, with a focus on partnering with the African Church. To do that we need to establish the necessary support resources, such as residential accommodation for staff members, a maintenance facility, increased office space, airport facilities, and the ongoing recruitment and retention of sufficiently qualified staff members. In 2016, in spite of the security situation, we saw the completion of seven residential houses on our new compound there together with a generator, workshop building and associated infrastructure. The final touches and fit-out of these houses is being completed in the first few months of 2017.
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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In Chad, we temporarily suspended flight operations in October 2016 as a result of ongoing complex negotiations with the Chadian tax authorities regarding MAF’s tax status and liabilities. While our flight operations were suspended, we used this time to do necessary technical upgrades and maintenance on our aircraft and our pilots took the opportunity for essential licensing and refresher pilot training. Whilst discussions with the authorities and our lawyers are still ongoing we are pleased to have resumed flight operations in April 2017. There have been continuing developments in Asian resourcing groups during the year. In Singapore various promotional and fund-raising events were held, partner church relationships developed and the professionalism of the board has been enhanced. Volunteers from a Singaporean church contributed to airstrip surveying in Myanmar. A digital media strategy for broad contact in a wider church network is planned for 2017. In the Philippines there was a significant change of board members and they are now seeking a marketing specialist in a part-time role to work on promotional events and a major donor strategy. We continued with the identification, assessment, preparation and deployment of additional Asian staff. In 2015 we reported three Indian International Staff were accepted for service and a further two joined us in 2016 and other applications are under way. Promotional events were held in India and Malaysia, and digital and other publicity was developed along with relationships with church and mission leaders. In recent years we have reported that we had identified recruitment as a key strategic initiative, together with being more agile in transferring existing staff to the places of greatest need. While much progress has been made, overall international staff recruitment fell to 23 (2015- 36), whilst 25 staff have left (2015-19). It will continue to be a major focus in 2017 as critical staff vacancies continue to exist in several programmes in both regions. In 2016 we further enhanced our fleet with the purchase of a C172 for training in Mareeba, and with a brand new Cessna Caravan (C208) for our PNG operations. Towards the end of the year, we also bought a second Cessna 182 for Madagascar, which requires some maintenance work before being used operationally. Towards the end of the year the Chief Executive, Chris Lukkien, after serving in MAF for almost 20 years, gave notice of his intention to leave the organisation. We would like to thank Chris for his huge commitment and contribution over many years and also thank Chris’s wife Annet and their children for their unstinting support. A subsequent recruitment process has been successful and in September 2017 we expect to welcome a new Chief Executive. In the mean-time we are grateful that Bill Harding, International Development Director, will assume the responsibility. In the past two years we have reported that we had undertaken a review of the operations in South Africa, and following discussions with the national MAF group, agreed that in future the high impact flying would be undertaken by its subsidiary “Flying For Life” by chartering third party aircraft. Under this arrangement, supported by a grant from MAF International, MAF South Africa have continued to serve the isolated Venda people in the Limpopo province by flying 181passengers in 70 flights during the year. Grants Grants made are set out in note 6 to the financial statements. MAF International received $733,000 in the year (2015 $1,194,000) from the European Commission's Humanitarian aid and Civil Protection department (ECHO), restricted for the work carried out in Central Asia by a subsidiary of MAF USA. Many people in that part of Central Asia live in remote communities, with little or no access to basic humanitarian services. Whilst assistance is available from a number of NGOs working there, the delivery of the aid is in reality severely restricted by security issues and inadequate transport and infrastructure. In addition, many roads and mountain passes are closed by snow blockages during the winter months, which is when the aid is most urgently needed. There are significant challenges associated with air travel in that area, and only certain types of aircraft are suitable to safely operate in the environment. MAF operates 4 airplanes well-suited for these conditions and provides an aviation service which enables NGO and qualifying aid organisation staff to deliver urgent assistance to beneficiaries in remote areas which would be inaccessible using land-based transport. During the year $708,000 (2015- $1,153,000) was passed on to MAF USA to enable them to carry out this important work. In 2015 we reported that MAF responded to the earthquakes in Nepal by co-ordinating a response facility that enabled aid to be delivered to the hard-to-reach areas. From 1st October 2015 the work in Nepal was officially transferred to MAF USA and during 2016 the work has continued. In the year MAF International received $706,000 from the UK’s Department for International Development (DfID), of which $690,000 was transferred to MAF USA. The Mission Aviation Training Centre in the Netherlands is set up as an international flying school to train pilots and specifically future MAF pilots. Training is given by former MAF pilots who understand from first-hand experience the high quality, specialised training required to operate in some of the most challenging places in the world. MAF International gave a grant in the year of $ 55,000 (2015 $42,000) to assist with the development of this training provider.
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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In Bangladesh, a grant of $10,000 was given to Grace School, in line with contributions from other stakeholders, after it was reported that they were facing short term cash difficulties following terrorist attacks in Dhaka and the consequential loss of pupils. Other grants have been made from designated funds to certain MAF groups in accordance with specific arrangements with them. Future Plans In 2015 a new Strategic Plan for the years to 2019 was drawn up. This plan introduces three new key themes which tie together the different strategic initiatives. These three themes are: •From doing to enabling
o Developing strategic international and local partnerships o Facilitating local capacity building and supporting local initiatives o Encouraging and equipping staff for effective discipleship o Emphasising training and development of national staff
•Becoming more international
o Accelerating Asia development o Encouraging national staff to become missionaries with MAF o Leadership development o Increasing diversity at every level within the organisation
•Increasing agility
o Improving the mobility of people and aircraft to become more responsive to changing partners’ needs o Increasing operational effectiveness and efficiency o Shortening recruitment time o Balancing prescriptive and principle-based approach
We continued working closely with the other MAF groups whose main function is to resource the operations and are delighted to report that we had sufficient funds to carry out all the planned activities for the year. We are very grateful for all the funds received and people working with us. Mission Aviation Fellowship UK continued to be the largest contributor of funds and Mission Aviation Fellowship in Australia the largest provider of field staff during the year. FINANCIAL REVIEW The Consolidated Statement of Financial Activities for MAF International for the year are set out on page 14. Total incoming resources for the year were $36,952,000 (2015 $39,309,000) of which 35% (2015 35%) was generated by services provided and 63% (2015 63%) was voluntary income including restricted gifts and intangible income (the value attributed to international staff seconded from resourcing groups). The net movement in resources for the year before other gains and losses was a surplus of $741,000 (2015 $2,952,000). The net gain in revaluation reserve was $426,000 (2015 $775,000), and the movement on the defined benefits pension scheme was a loss of $595,000 (2015 gain of $234,000). These movements together with other gains and losses, predominantly on foreign exchange transactions, resulted in a net movement in funds for the year of a deficit of $735,000 (2015 surplus $2,725,000). This comprises a deficit of $1,580,000 on unrestricted General Funds, a deficit on unrestricted Designated Funds of $424,000 and a surplus on Restricted Funds of $1,269,000. There was also a transfer of $703,000 from Restricted Funds to unrestricted Designated Funds following a review of previously restricted assets in accordance with the accounting policy 1b on page 16. Details of the unrestricted Designated Funds are set out in the Notes to the Financial Statements (note 22), which includes a note of how the funds are expected to be used. MAF International keeps its financial records in, and reports in, US dollars. As a result, there are unrealised gains and losses on currency translation which arise primarily on the translation of the Papua New Guinean accounts, as well as some on our £ sterling, Australian $ and Euro deposits. Analyses of incoming resources and of resources expended are given in the Notes to the Financial Statements (notes 3 to 10).
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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Reporting of pension provision MAF International provided for pensions for UK based employees through "The MAF Europe UK Pension Scheme". The trustees have included pensions information on this scheme in the format required by the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS102) (effective 1 January 2015).
Note 25 shows that, comparing the present value of the scheme future liabilities with the current value of the investments, there was a net liability of $591,000 (2015 asset - $240,000). The scheme’s assets and liabilities are recorded in pounds sterling and have been translated into US$ for these statements. The net pensions liability before translation is £479,000 (2015 asset - £163,000). The value of the scheme's future liabilities depends on the retirement dates of the members and on the assumptions made, which are quoted in the note. The method of calculation used by the Scheme Actuary is as laid down in FRS102. The actuarial review as at 1 January 2016, disclosed a shortfall in the funding due of £557,000 ($687,000 at the December 2016 exchange rate) on assets of £3,501,000 at that date. The trustees agreed a recovery plan of additional transfers at a rate of £99,000 per annum until December 2021. A second charge on the office premises in Ashford remains in place. The scheme was closed to future service accrual at 29 February 2008. The scheme has 23 “deferred” members who will receive their pension, based on service up until that date, at their normal retirement date, together with 7 pensioner members. The next actuarial review for the scheme is due in 2019. In addition to the defined benefit scheme MAF International makes contributions to defined contributions schemes on behalf of its employees in the UK. For those employed elsewhere, contributions are made in accordance with normal practice or legal requirements in each country.
Financial position and reserves policy The assets and liabilities of MAF International are set out in the Balance Sheet. All of the assets were used to further the objects of the charity. The balance carried forward on unrestricted funds totals $46,204,000 being $673,000 of general funds and $45,531,000 of designated funds. The charity’s base reserve is $1,264,000 which is comprised of the general funds before deducting the pension provision of $591,000. It is the board’s policy to reserve sufficient funds to ensure the ongoing operations of MAF International. These include a base reserve of 30 to 90 days overhead expenditure in order to withstand peaks and troughs in cash flows. Additionally, other designated funds may be created by the Board to help ensure MAFI’s effectiveness. As a regular part of the Board’s work all risks and reserves were reviewed and any recommended changes have been implemented. Details of all the designated funds are set out in note 22. At 31 December 2016 the base reserve balance represents 28 days of overhead expenditure. Although this falls slightly outside the current policy, the board are comfortable with the current base reserve in the light of the total unrestricted funds of $46,204,000. Principal Risks and Uncertainties The Trustees have a formal risk management process to assess risks and implement risk management strategies. This involves each programme and support department quarterly reporting on the risks that they have identified affecting their area of responsibility. A risk status is identified for each hazard by charting the probability of the event against the severity of its outcomes. The results of the risk assessment determine the level of action or mitigating measures that must be taken. The risks are classified into the following groupings: • Governance & Management Risks • Operational Risks • Finance Risks • Environmental & External Risks • Legal & Compliance Risks
Further, a complete review of risk and uncertainty to which MAF International is exposed together with the protective action being planned and implemented is compiled. This is discussed annually by the Trustees.
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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The principal risks identified through the process outlined above, together with the control measures being taken to manage these risks were:
Risks Control Measures
Unable to fill key vacancies with suitable staff
• Internal and external recruitment and planning • Appointing short-term staff if necessary • Ongoing discussion with MAF resourcing groups • Having organisational standards and internal controls in place • Providing oversight and support from regional support offices
Significant devaluation of relevant currencies
• Monitoring exchange rates • Hedging when appropriate • Taking professional advice
The principal uncertainties relating to overseas activities are also addressed by the risk management process the Board has adopted. In addition to the above, MAF International’s operational activities are exposed to inflation of global fuel prices, which is mitigated through continual monitoring of prices, inclusion of inflation factors in the annual budgets and advance purchasing of fuel where practicable. MAF International has also adopted a range of risk management policies including Anti-bribery and Fraud and Whistleblowing policies. These policies are available on the charity’s intranet and available for all staff in every location. STRUCTURE, GOVERNANCE AND MANAGEMENT MAF International, a company limited by guarantee (number 3144199), registered in England and Wales, is registered as a charity (number 1058226). MAF International’s initial memorandum and articles of association were dated 23 December 1995 following which the memorandum of association was revised on each of 30 March 2001 and 27 June 2009 and the articles of association were revised on 5 June 2004. After receiving recommendations and close consultation with members, the memorandum and articles of association were replaced, and at a General Meeting of members on 10 September 2011 revised articles of association were adopted. This was revised by some further amendments on each of the Annual General meetings held on 27 September 2014 and 17 September 2016. Subsidiaries and connected charities Details of MAF International’s subsidiaries and connected charities are set out in Notes 27 and 28 to the Financial Statements respectively. Members The members and associate members are the various MAF groups that provide resources to MAF International. Members are based in 13 countries and associate members are based in 2 countries. Related parties As mentioned above there are a number of MAF groups in various nations that are members and associate members. Apart from the natural transactions with these other MAF groups, there were no related party transactions. Trustees The trustees are appointed by the members. The name of the trustees and of MAF International’s principal officers and advisors are set out at the end of this report. The board, which met as a group three times during 2016 (2015 – 3 times), was assisted by three subcommittees: a Safety Committee, a Finance and Audit Committee and a Human Resources Committee. The members of these subcommittees are made up from board members and outside experts where appropriate.
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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Management The Chief Executive, together with an Executive Leadership Team is responsible for the day–to-day management of MAF International’s affairs and for implementing the policies set by the board. The board maintains a Governance Manual which, inter alia, sets financial and operational parameters within which the Chief Executive and Executive Leadership Team must manage the operations of MAF International. Remuneration of Executive Leadership The Chief Executive’s salary is set by the trustees having taken into account his role and responsibilities, the size and nature of the charity, and comparisons with the salaries of others in the same sector in the UK. The salaries of the other members of the Executive Leadership Team are set by the Chief Executive, in consultation with the trustees, also taking into account the country of residence of each. All the Senior Executives receive the cost of living rises as the organisation’s other staff in their respective countries of service. Volunteers MAF International has a small number of volunteers who assist in charitable activities overseas. The Trustees and Executive Leadership Team are grateful for the time and effort these individuals contribute to MAF’s ministry. The time spent by such volunteers is not considered to be material in comparison to the total staff time and therefore no additional disclosure has been made. Trustee Induction and Training In the Trustee induction programme, new Trustees are provided with a copy of the Governance Manual as well as a copy of CC3 The Essential Trustee. They are required to attend a series of meetings and discussions with the Chief Executive and others to learn more about the work and how MAF International operates. From time to time, the Board invites specialists such as the auditors to make a presentation to the Board on matters of interest, such as good governance, to ensure that the Trustees are kept abreast of best practice. Internal Control and Risk Management The Trustees have overall responsibility for ensuring that the charity has an appropriate system of internal controls, financial and otherwise. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities, and to provide reasonable assurance that: • the charity is operating efficiently and effectively • its assets are safeguarded against unauthorised use or disposition • proper records are maintained and financial information used within the charity or for publication is reliable • the charity complies with relevant laws and regulations
The systems of internal control are designed to provide reasonable, but not absolute, assurance against material misstatement or loss. They include: • a strategic plan and an annual budget approved by the Trustees • regular consideration by the Trustees of financial results, variances from budgets and non-financial performance
indicators • delegation of authority and segregation of duties • identification and management of risks • minimum financial internal controls required are documented in a finance manual that is regularly reviewed and
updated
In addition, there is a financial internal audit function. It includes a schedule of audit visits to programmes on a rotational basis and four programmes were visited for internal audit purposes during the year.
MISSION AVIATION FELLOWSHIP INTERNATIONAL REPORT OF THE TRUSTEES, INCLUDING THE STRATEGIC REPORT (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
11
Standards, Quality and Flight Safety MAF International operates an Aviation Safety Programme and a Quality Assurance Programme. The aviation standards in the aviation manuals, for all our operations are International Civil Aviation Organisation (ICAO) and/or local national authority (NAA) compliant. The purpose of the quality assurance programme in relation to aviation is to monitor achievement and continued compliance with the requirements of the local aviation authority and of MAF International and to ensure adequate procedures for the safe operation of airworthy aircraft. In addition to local quality managers, MAF International also operates a central audit system where each programme’s operations and maintenance compliance is monitored annually. The Trustees have a sub-committee to regularly review safety issues throughout the organization and to give oversight to the Aviation Safety Programme. We are pleased to report that during the year there were no flight accidents. Employment of Disabled People MAF International’s policy and practice is to ensure equal opportunities in the recruitment training and career development of disabled people on the basis of their aptitude and abilities required in their job role. The organisation also works toward the retention and retraining of employees who have become disabled. Statement of Trustees’ Responsibilities Company law requires the Trustees to prepare financial statements for each financial year. Under that law the Trustees have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charity and of the surplus or deficit of the group and charity for that period. In preparing these financial statements, the Trustees are required to: • select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards, including FRS 102, have been followed, subject to any material departures disclosed and explained in the financial statements;
• state whether a Statement of Recommended Practice (SORP) applies and has been followed, subject to any material departures which are explained in the financial statements and
• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business.
The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charity’s transactions and disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the charity and ensuring that the assets are properly applied in accordance with charity law hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Financial statements are published on the charity’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the group's website is the responsibility of the Trustees. The Trustees’ responsibility also extends to the on-going integrity of the financial statements contained therein.
MISSION AVIATION FELLOWSHIP INTERNATIONAL CONSOLIDATED STATEMENT OF FINANCIAL ACTIVITIES (INCLUDING INCOME AND EXPENDITURE ACCOUNT) FOR THE YEAR ENDED 31 DECEMBER 2016
14
2016 2015
Unrestricted funds Restricted
Unrestricted funds Restricted General Designated funds Total General Designated funds Total Note US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
Incoming resources arising from
Donations 3 7,288 - 15,990 23,278
7,062 - 17,484 24,546
Charitable activities 4 12,626 412 - 13,038
13,516 327 - 13,843
Other 586 31 19 636
436 467 17 920
Total incoming resources 20,500 443 16,009 36,952
21,014 794 17,501 39,309
Resources expended on
Raising funds 5 339 - - 339
385 - - 385
Grants 6 742 309 1,414 2,465
870 145 1,932 2,947
Charitable activities 7 16,160 4,167 13,080 33,407
15,364 3,414 14,247 33,025
Total resources expended 17,241 4,476 14,494 36,211
16,619 3,559 16,179 36,357 Net incoming/(outgoing) resources before transfers 9 3,259 (4,033) 1,515 741
4,395 (2,765) 1,322 2,952
Transfers between funds 22,23 (3,034) 3,256 (222) -
(3,701) 5,362 (1,661) -
Net incoming resources before other recognised gains and losses 225 (777) 1,293 741
694 2,597 (339) 2,952
Increase/(decrease) in revaluation on defined benefits pension scheme 25 (595) - - (595) 234 - - 234
Net movement in revaluation reserves 22,23 - 446 (20) 426 - 326 449 775
Other losses (1,210) (93) (4) (1,307)
(952) (276) (8) (1,236)
Net movement in funds (1,580) (424) 1,269 (735)
(24) 2,647 102 2,725
Balances brought forward 2,253 45,955 15,585 63,793
2,277 43,308 15,483 61,068
Balances carried forward 673 45,531 16,854 63,058 2,253 45,955 15,585 63,793
There were no recognised gains or losses in either year other than those included in the Statement of Financial Activities.
All incoming resources and resources expended derive from continuing activities in both years.
The notes on pages 17 to 36 form an integral part of these financial statements.
MISSION AVIATION FELLOWSHIP INTERNATIONAL CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2016
16
2016
2015
Note US$,000
US$,000
Net cash generated from operating activities 29 3,978
3,966
Cash flow from investing activities
Purchase of tangible assets (4,462)
(1,723)
Proceeds from disposals of tangible assets 28
838
Interest received 110
104
Net cash used in investing activities (4,324)
(781)
Cash flow from financing activities
Interest paid -
(1)
Net cash used in financing activities -
(1)
Effect of exchange rates on cash and cash equivalents (1,248)
(1,396)
Net (decrease)/increase in cash and cash equivalents (1,594)
1,788
Cash and cash equivalents at start of year 17,742
15,954
Cash and cash equivalents at the end of the year 16,148
17,742
The notes on pages 17 to 36 form an integral part of these financial statements.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2016
17
1. ACCOUNTING POLICIES
Mission Aviation Fellowship International is a charitable company limited by guarantee and registered in England and Wales, registration number 3144199, and a registered charity number 1058226. The registered office is Operations Centre, Henwood, Ashford, Kent TN24 8DH. 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) (effective 1 January 2015), Charities SORP (FRS 102) and the Companies Act 2006.
MAF International meets the definition of a public benefit entity under FRS102.
The principal accounting policies adopted in the preparation of the financial statements are set out below.
a Basis of accounting The financial statements have been prepared on a going concern basis, under the historical cost convention, as
modified by the recognition of aircraft which are measured at fair value in accordance with the policy i below. The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.
b Going concern
MAF International has $16,148,000 (2015 - $17,742,000) held in immediately accessible cash or short term investments at 31 December 2016. Of this $3,919,000 (2015 - $3,805,000) is held for restricted purposes and the remaining cash is for use at the directors’ discretion which is sufficient to cover the group’s liabilities as they fall due for the foreseeable future. In light of this, these financial statements have been prepared on the basis that the charity is a going concern.
c Consolidation
The Consolidated Statement of Financial Activities and the Consolidated Balance Sheet have been prepared by combining the data of MAF International, all of its subsidiary undertakings (note 27), together with Rapid Relief Wing (note 28). The charity has taken exemption from presenting its unconsolidated profit and loss account under Section 408 of the Companies Act 2006. The result for the charity for the year was a loss of $3,032,000 (2015 – $2,868,000).
d Foreign currencies
The functional and presentation currency of MAF International is US dollars as the primary currency used in the aircraft industry. However, income and costs also arise in other currencies due to operating jurisdictions. Other currencies have been translated to US dollars as follows:
Current assets and liabilities – closing rate at 31 December 2016 Other amounts - rate at date of transaction The key exchange rates used to translate to US$ were:
31 December 2016
2016 Average
31 December 2015
2015 Average
£ Sterling 1.2340 1.3615 1.4743 1.5291 Australian Dollar 0.7204 0.7429 0.7302 0.7519 Papua New Guinean Kina 0.3148 0.3181 0.3325 0.3635
c Incoming resources
(i) Donations are recognised when the charity has entitlement to the funds, any performance conditions attached to the income have been met, it is probable that the income will be received, and the amount can be measured reliably.
(ii) Donated services income comprises the estimated value to MAF International of the staff seconded for international service. The costs are borne by the seconding groups. An equal and opposite charge is recognised in charitable expenditure. In accordance with the Charities SORP (FRS 102), the time donated to MAF International by volunteers is not recognised.
(iii) Income arising from charitable activities is measured at the fair value of the consideration received or receivable and represents the amount receivable for goods supplied or services rendered, net of credits and discounts allowed and value added taxes.
(iv) Interest on funds held on deposit is included when receivable and can be measured reliably.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
18
1. ACCOUNTING POLICIES (CONTINUED) d Resources expended
(i) Raising funds comprises a proportion of central overhead costs arising from staff and other costs attributable to this activity.
(ii) Grants made comprises payments made to other MAF groups and similar organisations either in accordance with donor restrictions placed on the funds, or to support their development, or to enable them to fully finance the seconding of individual staff to our operations.
(iii) Charitable activities comprise actual costs relating to the aircraft and other services together with local (overseas) overheads.
(iv) Support costs include functions that directly support the operations such as flight training, engineering, operations support and quality, safety and security. Support costs also include back office costs, finance, personnel, payroll and governance costs which support the charitable activities. These costs have been allocated between cost of raising funds, grants made and charitable expenditure. The basis on which support costs have been allocated is set out in note 8.
e Employee benefits
(i) Leave benefits, including holiday pay are recognised as an expense in the period in which the service is rendered.
(ii) Pension payments to defined contribution pension schemes are recognised as an expense when they fall due.
(iii) MAF international holds a defined benefit pension scheme which is closed to new members and further accrual since 2008. The amount recognised in the balance sheet at 31 December 2016 is $ 591,000 (2015 – $Nil). This represents the present value of the defined benefit obligation less the fair value of the plan assets at the reporting date.
Annually, an independent actuary is engaged to calculate the obligation arising under the scheme. The present value is determined by discounting the estimated future payments using market yields on high quality corporate bonds that are denominated in sterling and that have terms approximating the estimated period of the future payments (‘discount rate’).
The fair value of plan assets is measured in accordance with the FRS 102 fair value. This includes the use of appropriate valuation techniques. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to other comprehensive income.
The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is recognised in profit or loss.
f Operating leases
Operating lease rentals are charged to the Statement of Financial Activities in accordance with the term of the lease.
g Deferred tax
Local legislation requires MAF to be registered as a commercial company in Papua New Guinea, which potentially gives rise to taxation on operating activities. Any taxation liabilities arising from these activities are provided at rates ruling in the relevant accounting period and deferred taxation is provided where it is predicted that a liability may arise in the foreseeable future.
h Intangible fixed assets
Purchased and internally developed computer software which costs $2,000 or more is capitalised at cost and amortised over its estimated useful life, 5 to 10 years.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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1. ACCOUNTING POLICIES (CONTINUED)
i Tangible fixed assets Individual fixed assets costing $2,000 or more are capitalised at cost. Depreciation is calculated as follows:
(i) Aircraft
Aircraft, where externally insured, are included at their insurance values. Other aircraft are valued at directors’ valuation. Depreciation is charged to write off expenditure over an estimated useful life of 40 years.
Any increases in the net value are credited to resources expended to the extent that the aircraft has been previously impaired; the remaining gain is credited to the revaluation reserve within other comprehensive income. Any decreases are debited to the portion of the revaluation reserve associated to that aircraft until it is fully depleted and the remaining decrease is charged to resources expended.
When it is planned that an aircraft will be sold the net value of that aircraft is reduced to the expected sale proceeds.
(ii) Property
Depreciation is charged to write off expenditure on leasehold property equally over the length of the lease. Depreciation on other buildings is charged so as to write off the cost to their residual values over their expected economic lives. This is assessed country by country and ranges from 3 to 50 years. Depreciation on leasehold land is charged to write off the expenditure over the life of the lease. For assets in the course of construction depreciation is charged from the date which that facility becomes operational.
(iii) Equipment and vehicles
Depreciation is charged to write off the expenditure over an estimated useful life of 5 to 10 years. j Stocks Stocks and work in progress are valued at the lower of cost and net realisable value.
k Cash
Cash at bank and cash in hand includes cash and short term highly liquid investments.
l Creditors and provisions
Creditors and provisions are recognised where the charity has a present obligation resulting from a past event that will probably result in the transfer of funds to a third party and the amount due to settle the obligation can be measured or estimated reliably. Creditors and provisions are recognised at their settlement amount value.
m Financial instruments
MAF International only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.
n Funds
Unrestricted Funds – General comprise net accumulated surpluses. They are available for use to further the charitable objectives of the charity. Unrestricted Funds – Designated are amounts that have been set aside by the directors for specific objectives. Restricted Funds are funds and assets subject to specific conditions imposed by donors. When assets are purchased with restricted funds the restriction is deemed to be satisfied after reporting to the donor on the use of those assets ceases. Such assets are then transferred to unrestricted designated funds.
o Related parties
In the opinion of the directors the group has no related parties.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
20
2. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATION UNCERTAINTY
The directors evaluate estimates and judgements incorporated into the financial statements. Estimates are based on historical information, assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the group: a Donated services
The value of donated services are determined by applying the average cost of a member of seconded staff to all those staff whose services have been donated to the group during the year. The average cost is calculated from the actual staff cost data of three member groups who supplied the highest number of seconded staff during the year.
b Overhaul
Funds are set aside into a designated fund for each hour flown for future overhaul of aircraft engines, propellers and the aircraft themselves. Actual expenditure is charged to the designated fund. For aircraft leased from third parties, these funds are included as a liability on the balance sheet.
c Aircraft valuations
The group values aircraft by reference to the “Blue Book value” (the aviation industry’s standard indication of the expected recoverable amount on the open market). Adjustments are made for enhancements to the aircraft not accounted for in the Blue Book value. Annually, every aircraft is revalued and reviewed for impairment. The valuations are approved by the directors.
d Estimation of useful lives of assets
The group determines the estimated useful lives and related amortisation and depreciation charges for intangible and tangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The amortisation or depreciation charge will increase where the useful lives are less than previously estimated lives. Technically obsolete assets that have been abandoned or sold are written off or written down.
e Impairment
MAF International assesses impairment of intangible and tangible assets at the end of each reporting period by evaluating conditions and events specific to the organisation that may be indicative of impairment trigger.
f Tax accruals
The group has a number of outstanding tax issues at the end of the financial year. The expected liabilities are accrued in the financial statements. Each accrual is calculated in accordance with communication from the tax authorities, local legislation and other external factors such as exchange rates. These accruals are reviewed annually and recalculated as necessary.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
21
3. INCOMING RESOURCES FROM DONATIONS Voluntary income comprises the amounts transferred mainly from the MAF groups, who are members of MAF International, together with other gift income. Restricted gifts may have been transferred directly to MAF International by a donor agency, under the direction of the national group.
2016 2015
Unrestricted Restricted Total Unrestricted Restricted Total
US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
Donated services - 4,298 4,298 - 3,956 3,956
European Commission - 733 733 - 1,194 1,194
Income for housing 586 - 586 582 - 582
MAF Australia - 1,745 1,745 - 1,541 1,541
MAF Canada - 115 115 - 137 137
MAF Denmark 117 72 189 58 125 183
MAF Finland 115 37 152 27 136 163
MAF France - 3 3 - 3 3
MAF Germany - 69 69 - 146 146
MAF Italy - 11 11 - 11 11
MAF Netherlands - 1,925 1,925 - 1,677 1,677
MAF New Zealand - 473 473 1 442 443
MAF Norway 442 228 670 340 517 857
MAF South Africa - - - - 2 2
MAF Sweden - 173 173 - 176 176
MAF Switzerland 51 495 546 - 751 751
MAF UK 5,957 4,957 10,914 6,006 6,419 12,425
MAF USA 20 124 144 48 70 118
Mission Eine Welt - 405 405 - 28 28
Other donors - 127 127 - 153 153
7,288 15,990 23,278 7,062 17,484 24,546 The majority of the International Staff serving in the Africa region are paid by the MAF group or another mission agency which then seconds them to the charity. The cost of these staff are therefore borne by those groups and as a result the staff support received is generally not passed to the charity. In contrast in Asia Pacific region the majority of the International Staff are paid by the charity. As a partial contribution towards this cost, restricted income is received by the charity from their relevant sending MAF groups. The total of staff support received by the charity and included in restricted income above was as follows:
2016 2015
US$,000 US$,000
MAF Australia 1,311 1,198
MAF Canada 30 30
MAF Germany 50 14
MAF Netherlands 95 100
MAF New Zealand 397 411
MAF Switzerland 266 125
MAF UK 602 498
MAF USA 105 61
Mission Eine Welt 24 28
Other donors 105 82
2,985 2,547 MAF International additionally collected $281,000 (2015 - $110,000) donations income and $263,000 (2015 - $289,000) staff support income on behalf of other MAF member groups or associated members. In these situations, MAF International forwards the income onto the relevant group directly and consequently the income has not been recognised in the financial statements.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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4. INCOMING RESOURCES FROM CHARITABLE ACTIVITIES The users of MAF International aircraft make a contribution to the costs of MAF. Similarly, MAF International seeks contributions towards its costs when providing other services, such as the logistics. In Australia, we additionally provide management services to a 3rd party airline and have an aircraft engineering base which serves both our programmes in the regions as well as 3rd party customers. MAF Technology Services in PNG provides radio and other communication technology services. Some programmes are also able to help 3rd party organisations with aircraft or vehicle maintenance.
2016
2015
General Designated Total General Designated Total
US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
Contributions for
Aviation services 11,450 - 11,450 11,801 - 11,801
Maintenance services 461 - 461 1,049 - 1,049
Other technologies - 412 412 - 327 327
Other services 715 - 715 666 - 666
12,626 412 13,038 13,516 327 13,843
MAF International acts as an agent for flights operated by MAF USA. During the year, the group collected and passed on $203,000 (2014 - $82,000) which has not been recognised in these financial statements.
5. RESOURCES EXPENDED ON RAISING FUNDS
2016
2015)
US$,000
US$,000
Allocation of support staff and other costs 339
385
6. RESOURCES EXPENDED ON GRANTS MADE
Grants were made from restricted and unrestricted funds in 2016 as follows:
For international staff support
For development of their activities
For programme
costs Allocation of
support costs Total
General General Designated Restricted General
US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
Grace School, Bangladesh - - 10 - 1 11
MAF Australia - 211 150 - 27 388
MAF Canada 184 - - - 14 198
MAF Finland - - 53 - 4 57
MAF Philippines - - 14 16 2 32
MAF Singapore - - 27 - 2 29
MAF South Africa 20 44 - - 5 69
MAF Sweden 60 - - - 5 65
MAF Switzerland 52 - - - 4 56
MAF USA for work in Central Asia - - - 708 52 760
MAF USA for work in Nepal - - - 690 51 741
Mission Aviation Training Centre - - 55 - 4 59
316 255 309 1,414 171 2,465
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
23
6. RESOURCES EXPENDED ON GRANTS MADE (CONTINUED) Grants were made from restricted and unrestricted funds in 2015 as follows:
For international staff support
For development of their activities
For programme
costs Allocation of
support costs Total
General General Designated Restricted General
US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
Juba Christian Academy - - - 52 4 56
MAF Australia - 277 - - 23 300
MAF Canada 106 - - - 9 115
MAF Finland - - 55 - 5 60
MAF Norway - 139 - - 12 151
MAF Singapore - - 48 - 4 52
MAF South Africa 30 75 - - 9 114
MAF Sweden 58 - - - 5 63
MAF USA for work in Central Asia - - - 1,153 64 1,217
MAF USA for work in Nepal - - - 727 41 768
Mission Aviation Training Centre - - 42 - 3 45
199 491 145 1,932 180 2,947
7. RESOURCES EXPENDED ON CHARITABLE ACTIVITIES
Direct costs of services provided comprise the direct cost of aviation (fuel, maintenance and insurance, for example) as well as the direct costs of the maintenance services, other technologies and the direct costs of running the operations and maintenance departments, excluding staff costs. The direct costs of providing other services are charged within other local overhead expenditure, and are not a material part of the total. The method of allocation of direct support costs is shown in note 8. Charitable activities for 2016 were as follows:
Programme costs Allocation of
support costs Total
General Designated Restricted Unrestricted
US$,000 US$,000 US$,000 US$,000 US$,000
Direct costs of services 4,284 2,095 4,952 1,998 13,329
Cost of donated services - - 4,298 554 4,852
Staff costs 5,216 139 3,123 720 9,198
Other local overhead expenditure 1,638 656 350 1,719 4,363 Depreciation, amortisation and impairment - 1,277 357 31 1,665
11,138 4,167 13,080 5,022 33,407
Charitable activities for 2015 were as follows:
Programme costs Allocation of
support costs Total
General Designated Restricted
Unrestricted
US$,000 US$,000 US$,000 US$,000 US$,000
Direct costs of services 3,371 1,623 6,744 2,119 13,857
Cost of donated services - - 3,956 560 4,516
Staff costs 5,222 140 2,756 725 8,843
Other local overhead expenditure 1,730 278 461 1,606 4,075 Depreciation, amortisation and impairment - 1,373 330 31 1,734
10,323 3,414 14,247 5,041 33,025
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
24
8. SUPPORT COSTS
Support costs have been collated according to function, which includes all staff directly attributed to that department and other associated costs. These functions are allocated to the main expenditure functions in accordance with time spent supporting that aspect of MAF International’s operations.
Unrestricted general support costs for 2016 were as follows:
Raising funds Grants
Direct costs of operations Total
US$,000 US$,000 US$,000 US$,000
Chief Executive and Regional Directors offices 164 87 562 813
Aviation Services including quality and safety departments - - 1,805 1,805
Finance 98 49 837 984
Human Resources - 35 669 704
Information technology and communications 77 - 602 679
Support office costs - - 516 516
Depreciation of fixed assets used for support - - 31 31
339 171 5,022 5,532
Unrestricted general support costs for 2015 were as follows:
Raising funds Grants
Direct costs of operations Total
US$,000 US$,000 US$,000 US$,000
Chief Executive and Regional Directors Offices 194 69 543 806
Aviation Services including quality and safety departments - - 1,887 1,887
Finance 102 77 837 1,016
Human Resources - 34 651 685
Information technology and communications 89 - 705 794
Support office costs - - 387 387
Depreciation of fixed assets used for support - - 31 31
385 180 5,041 5,606
9. NET INCOMING RESOURCES BEFORE TRANSFERS
The net incoming resources before transfers between funds is stated after charging:
2016 2015
US$,000 US$,000
Auditors remuneration
Audit fees
123 148
Other services
- -
Realised net loss/(gain) on currency exchange
17 (15)
Bank Interest paid
- 1
Amortisation of intangible fixed assets (note 11) - 8
Depreciation, of both Restricted and Assets Fund assets (note 12)
1,705 1,764
Impairment of both Restricted and Assets Fund assets (note 12)
(40) (39)
Net (gain) on disposal of fixed assets
(7) (432)
Charges under operating leases
829 905
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
25
10. STAFF EXPENDITURE AND STAFF NUMBERS
2016 2015
US$,000 US$,000
Staff Costs
Wages and salaries, including intangible expenditure
14,198 13,459
Social security costs
263 261
Retirement and death-in-service benefits costs
1,108 1,051
15,569 14,771
Total salaries and benefits paid to Executive Leadership team during the year 665 671
Number Number
Employees receiving remuneration at a rate of:
£70,000 to £79,999
1 1
Average number of employees - support offices
62 60
Average number of employees - field
409 400
Average number of seconded staff
62 64
533 524
No remuneration is paid to the directors for their services as Trustees of the Group, although expenses incurred personally in the course of their duties are reimbursed. Expenses waived by the directors for their services as Trustees are negligible.
2015 2015
US$,000 US$,000
Travel and communications expenses reimbursed to 5 directors (2015-6). 14 18
11. INTANGIBLE ASSETS
Group and Charity
Software
US$,000
COST as at 1 January 2016 and 31 December 2016
119
AMORTISATION as at 1 January 2016 and 31 December 2016
119
NET BOOK VALUE as at 31 December 2015 and 31 December 2016
-
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
26
12. TANGIBLE FIXED ASSETS Analysis for the Group:
Land & Equipment Aircraft Property & Vehicles Total US$,000 US$,000 US$,000 US$,000
COST OR VALUATION
At 1 January 2016 35,153 14,119 4,492 53,764
Additions 2,194 1,548 720 4,462
Disposals 0 (28) (277) (305)
Revaluation Reserve (414) - - (414)
Foreign Exchange adjustment - (127) (43) (170)
At 31 December 2016 36,933 15,512 4,892 57,337
DEPRECIATION
At 1 January 2016 - 5,180 3,310 8,490
Charge in year 880 444 381 1,705
Net Impairment credit (40) - - (40)
Depreciation on disposals - (9) (276) (285)
Revaluation Reserve write back (840) - - (840)
Foreign Exchange adjustment - (76) (31) (107)
At 31 December 2016 - 5,539 3,384 8,923
NET BOOK VALUE
At 31 December 2015 35,153 8,939 1,182 45,274
At 31 December 2016 36,933 9,973 1,508 48,414
Analysis of value between:
Used for direct charitable purposes 36,933 9,142 1,456 47,531
Used for support of field programmes, management and administration 831 52 883
The titles of land and buildings in Kenya is held by a corporate body, Missionary Aviation Fellowship (Kenya) Registered Trustees, on behalf of MAF International. Included within the cost of ‘Land & Property’ is $1,880,000 relating to a housing compound under construction in Juba, South Sudan (2015 - $916,000). Of the net value of ‘Land & Property’ $2,770,000 (2015 - $2,856,000) relates to freehold or the local equivalent and $2,489,000 (2015 - $2,769,000) relates to leases in excess of 50 years.
The land and building at Ashford, Kent are secured by a first legal charge with National Westminster Bank plc and with a second legal charge in favour of the Trustees of “The MAF Europe UK Pension Scheme”. The historical cost of purchasing the aircraft was $39,260,000 (2015 - $36,845,000).
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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12. TANGIBLE FIXED ASSETS (CONTINUED) Analysis of the Charity only:
Land & Equipment Aircraft Property & Vehicles Total US$,000 US$,000 US$,000 US$,000
COST OR VALUATION
At 1 January 2016 17,011 7,942 2,670 27,623
Additions 11 1,475 454 1,940
Disposals - - (103) (103)
Revaluation (206) - - (206)
At 31 December 2016 16,816 9,417 3,021 29,254
DEPRECIATION
At 1 January 2016 - 2,293 2,005 4,298
Charge in year 425 274 240 939
Impairment (34) - - (34)
Disposals - - (103) (103)
Revaluation write back (391) - - (391)
At 31 December 2016 - 2,567 2,142 4,709
NET BOOK VALUE
At 31 December 2015 17,011 5,649 665 23,325
At 31 December 2016 16,816 6,850 879 24,545 13. STOCKS
Group Charity 2016 2015 2016 2015
US$,000 US$,000 US$,000 US$,000
Aircraft spare parts 1,833 2,570 1,024 964
Fuel and other stocks 758 952 51 65
Work in progress 328 78 - -
2,919 3,028 1,075 1,029
14. DEBTORS
Debtors due after more than one year
Central Aviation Services, Tanzania 99 132 99 132
Group Charity 2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Current Debtors
Trade and sundry debtors 2,806 3,665 2,075 3,085
Amount recoverable from subsidiary undertakings - - 268 6
Other debtors 449 566 142 212
Prepayments 619 1,346 395 386
3,874 5,577 2,880 3,689
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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15. SHORT TERM DEPOSITS Group Charity
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Bank deposits 2,853 3,953 1,200 3,738
16. CASH AND CASH EQUIVALENTS Group Charity
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Cash and cash equivalents – Support offices 11,024 11,553 10,190 11,294
Cash and cash equivalents - Programmes 2,271 2,236 883 694
13,295 13,789 11,073 11,988
17. CREDITORS Group Charity
2016 2015 2016 2015
US$,000 US$,000 US$,000 US$,000
Bank loan (secured) - 13 - 13
Trade and other creditors 3,386 3,698 2,700 2,332
Taxation and social security 872 820 741 125
Amounts due to subsidiary undertakings - - 212 941
Accrued expenses 2,624 2,509 352 1,407
6,882 7,040 4,005 4,593
The bank loan (in sterling) is secured as a first charge on the land and building at Ashford, Kent. It was repayable by equal instalments over 15 years from April 2001. Interest was charged at 1¾% above the bank's base rate. The loan was fully repaid during the year. Included with accrued expenses is a restricted grant payable to MAF USA for their work in Nepal for $Nil (2015 - $614,000). 18. CREDITORS DUE AFTER MORE THAN ONE YEAR Group Charity
2016 2015 2016 2015
US$,000 US$,000 US$,000 US$,000
Staff resettlement allowances 159 152 - -
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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19. DEFERRED TAX LIABILITY Group Charity 2016 2015 2016 2015
US$,000 US$,000 US$,000 US$,000
Provision at 1 January 768 894 - -
Movement in the year (4) (126) - -
Provision at 31 December 764 768 - -
20. FINANCIAL COMMITMENTS
At 31 December 2016 the organisation was committed to making the following payments under non-cancellable operating leases:
Property Other
Property Other
2016 2016
2015 2015
US$,000 US$,000
US$,000 US$,000
Payable in 1 year 290 4
326 4
Payable in 2-5 years 352 6
408 11
Payable in over 5 years 65 -
54 -
707 10
788 15
21. CAPITAL COMMITMENTS
At 31 December 2016, the organisation had the following capital commitment: MAF International had entered a contractual agreement with Elite Simulation Solutions to purchase a flight simulator for the Mission Aviation Training Centre in the Netherlands. At 31 December 2016, the group were committed to make payments of €90,000 (US$95,000).
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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22. UNRESTRICTED DESIGNATED FUNDS
Balances 1 January 2016
Incoming Resources
Transfers
Net tangible Revaluation
Unrealised exchange Balances 31
resources expended
assets
(loss)/gain December 2016
US$,000
US$,000 US$,000
US$,000
US$,000 US$,000 US$,000 US$,000
Aircraft overhauls fund 5,781
- (1,795)
1,355
(2,005) - - 3,336
Assets fund 26,269
7 (1,307)
749
2,168 - (63) 27,823
Revaluation Reserves 7,210
- -
-
- 446 - 7,656
Development fund 495 (484) 650 661
Future assets fund 2,698
- (309)
(287)
(68) - - 2,034
MAF Technology Services (PNG) 559
436 (426)
(2)
- - (30) 537
Self-insurance fund 2,844
- (24)
583
- - - 3,403
Tactical investment fund 99
- (131)
208
(95) - - 81
45,955
443 (4,476)
3,256
- 446 (93) 45,531
Designated funds – Charity only 22,607 7 (2,067) 2,490 - 221 - 23,258
The Assets fund represents amounts set aside equivalent to the value of the aircraft, properties, equipment and vehicles used by MAF International (less relevant loans) and provision for the future replacement of some assets, both of which have been financed with transfers from unrestricted general funds.
The Revaluation Reserves represent the increase in value of aircraft over their original cost to carrying values where appropriate.
The Self-insurance fund is available for the repair or replacement of damaged or stolen vehicles and aircraft, other than those which are externally insured. It is also used to cover other items that have not been able to be insured in some countries or where the premiums have been prohibitive. It is intended that the fund continue to be built up to be able to meet losses arising by transferring in the premiums that would have been paid to external insurers.
The Aircraft overhauls fund is used to overhaul the engines, propellers and airframes of the aircraft. Engines and propellers must be overhauled after set numbers of hours – most commonly 1,700 hours for a piston engine and up to 5,000 hours for a turbine engine. Funds are transferred from general funds to this designated fund for each hour flown by every aircraft.
The Tactical investment fund is used to cover the cost essential capital or revenue expenditure, for which project funding is unlikely to be available within operational time limits.
The Development fund is used for the development of MAF Groups to enhance their fund raising and recruitment activities as well as to cover the cost of agreed new ventures, such as setting up operations or organisations to assist in resourcing the charity in new countries.
The Future assets fund was created to cover the cost of specific capital assets, including aircraft, that are essential to the operations and for which no other funding has been received, or is expected.
MAF Technology Services (PNG) represents the net assets of that entity (formerly “CRMF”), which will be used solely for the activities of that ministry in Papua New Guinea.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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23. RESTRICTED FUNDS
Restricted Funds comprise the following unexpended balances of gifts and grants made for specific purposes and the net value of tangible assets bought from Restricted Funds. Movement and unexpended balances for projects are shown below.
Balances 1
Incoming Resources Transfers Net
tangible Revaluation Unrealised
exchange Balances 31 January 2016 resources expended assets (loss)/ gain December 2016 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 Additional and replacement aircraft 830 528 (68) 66 (189) - - 1,167 Arnhem Land, Northern Territories 149 29 (107) - - - - 71 Bangladesh - 38 (38) - - - - - Central Asia - 733 (733) - - - - - Chad 4 57 (47) (3) (4) - - 7 Disaster relief 166 5 - - - - - 171 Fuel - 222 (222) - - - - - Kenya 11 42 (69) 20 - - - 4 Liberia 147 298 (276) - (13) - 156 Madagascar 57 205 (246) (8) (5) - - 3 MAF Technology services PNG 228 108 (108) - - - (1) 227 Mongolia 15 25 (38) 4 (6) - - - Myanmar - 11 (11) - - Nepal 82 727 (760) - - - - 49 Papua New Guinea 531 829 (614) 6 (109) - (3) 640 Philippines 18 - (18) - - - - - South Sudan 470 2,999 (1,231) 93 (1,794) - - 537 Staff costs 105 7,405 (7,371) - - - - 139 Tanzania 56 289 (311) 6 - - - 40 Timor-Leste 2 88 (88) - - - - 2 Uganda 34 159 (134) 3 (39) - - 23 Other aviation projects 897 929 (1,553) 297 (75) - - 495 Other locations and sundry projects 3 283 (95) (3) - - - 188
3,805
16,009 (14,138) 481 (2,234) - (4)
3,919
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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23. RESTRICTED FUNDS (CONTINUED)
Balances 1
Incoming Resources
Transfers
Net tangible Revaluation
Unrealised exchange
Balances 31
January 2016 resources expended assets (loss)/gain December 2016 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
Net value of tangible assets:
Aircraft 10,253 - (249) - 189 (20) - 10,173 Land and buildings 1,228 - (11) (376) 1,548 - 1 2,390 Equipment and vehicles 299 - (96) (327) 497 - (1) 372
11,780 - (356) (703) 2,234 (20) -
12,935
Total Restricted Funds 15,585 16,009 (14,494) (222) - (20) (4)
16,854
Restricted Funds - Charity only 11,995 10,341 (8,920) (94) - (36) -
13,286
Following a review of previously restricted assets and in accordance with the accounting policy 1n on page 19, assets with a net book value of $703,000 (2015: $1,842,000) have been transferred from Restricted Funds to unrestricted Designated Funds.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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24. NET ASSETS
Unrestricted funds Restricted Total Total General Designated Funds 2016 2015
US$,000 US$,000 US$,000 US$,000 US$,000
Intangible fixed assets - - - - -
Tangible fixed assets - 35,479 12,935 48,414 45,274
Current assets 8,970 10,052 3,919 22,941 26,347
Long term assets 99 - - 99 132
Current liabilities (6,882) - - (6,882) (7,040)
Long term liabilities (159) - - (159) (152)
Pension scheme liability (591) - - (591) -
Deferred tax liability (764) - - (764) (768)
673 45,531 16,854 63,058 63,793
25. DEATH-IN-SERVICE AND RETIREMENT BENEFITS
Defined benefit pension scheme MAF International provided for pensions for UK based employees through "The MAF Europe UK Pension Scheme". This is an insured scheme, which is invested with "Scottish Widows". It is a defined benefit scheme based on 1/60 of final salary for each year of service and was open to all employees. The scheme commenced on 1 January 2000. The last (triennial) actuarial report was prepared as at 1 January 2016. The scheme was closed to new members in December 2007 and closed for future accrual with effect from 29 February 2008. A comprehensive actuarial valuation of the scheme was carried out at 31 December 2016 by the scheme's actuary. Adjustments to the valuation have been made based on the following assumptions:
2016
2015
Discount rate 2.6%
4.1%
Retail price inflation 3.7%
3.5%
Salary increase rate n/a
n/a
Limited Price Indexation 3.5%
3.2%
Deferred pension revaluation 3.7%
3.5% The mortality assumptions used were:
2016
2015
For a male aged 65 now 22.8
24.5
At 65 for a male member aged 45 now 24.6
26.5
For a female aged 65 now 25.1
26.9
At 65 for a female member aged 45 now 27.0
28.8
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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25. DEATH-IN-SERVICE AND RETIREMENT BENEFITS (CONTINUED) Reconciliation of scheme assets and liabilities:
2016 2016 2016 2015 2015 2015
Assets Liabilities Total Assets Liabilities Total
US$,000 US$,000 US$,000 US$,000 US$,000 US$,000
At 1 January 4,683 (4,443) 240 4,663 (4,891) (228)
Interest income/(expense) 171 (158) 13 163 (169) (6)
Assets (losses)/gains (348)
(348) (280) - (280)
Actuarial gains/(losses)
(667) (667) - 568 568
Contributions 171
171 186 - 186
Benefits paid (357) 357 0 (49) 49 -
At 31 December 4,320 (4,911) (591) 4,683 (4,443) 240 In 2015 the scheme net asset of $240,000 (£163,000) was not recognised in the financial statements in accordance with FRS102, as the directors believed it unlikely that the asset be recovered either through repayments to the Company or reduced future contributions to the Scheme. Total recognised in the Statement of Financial Activities:
2016
2015
US$,000 US$,000
Net interest (income)/cost (4) 6 The fair value of the plan assets is as follows:
2016
2015
US$,000 US$,000
Equities 2,200 2,795
Bonds 1,207 894
Insured pensions 903 979
Cash 10 15
Total 4,320 4,683
Non-contributory money purchase arrangements MAF International makes contributions of 10% of annual salary to pension providers of choice for all UK based employees. During the year these pension contributions to individual non-contributory pension arrangements totalled $194,000 (2015- $188,000). MAF International in Asia Pacific makes contributions of 10% of annual salary for superannuation for all Australia-based employees totalling $419,000 (2015 - $391,000). Pension and superannuation contributions for staff in other fields overseas totalled $266,000 (2015 - $256,000). 26. TRUSTEES LIABILITY INSURANCE
MAF International has arranged liability insurance for its Trustees and staff at a cost for the year of $6,020 (2015 - $7,118) excluding responsibilities regarding Asia Pacific region. MAF International Asia Pacific has arranged liability insurance for its Trustees and staff at a cost for the year of $2,913 (2015 - $5,062). Both are authorised in the respective Memorandum and Articles of Association.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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27. SUBSIDIARY UNDERTAKINGS The charity has a number of subsidiaries as follows: Mission Aviation Fellowship Limited is a company registered in England and Wales, company number 02474571, whose shares are owned by MAF International. It held the title to land in Tanzania, which was sold during 2015 and is now dormant. Blue Sky Aviation Company Limited (BSA), is a company registered in Mongolia, number 9019010030. 95% of the shares are held by MAF International and the remainder by Exodus Way Company Limited. MAF International has invested in BSA with the construction of an aircraft hangar in Mongolia and has provided various items of equipment and vehicles. These assets have been registered with the Foreign Investment Board in Mongolia and form MAF International's investment in BSA. The cost of these items is included in Tangible Fixed Assets (note 12). Aviation Communication and Logistics Services Limited is a company registered in Uganda, whose shares are held by nominees of MAF International. It holds the titles to parcels of land in Uganda which it has leased to MAF International for 99 years. These parcels of land constitute the airfield at Kajjansi, near Kampala. The cost of the leases is included within land & property in tangible fixed assets (note 12). Although Mission Aviation Fellowship International is referred to as MAF International in these accounts, there is an Australian charitable company, MAF International, with registration number A.B.N. 32 004 260 860, referred to below as MAF International (in Australia). This company is 100% controlled by virtue that Mission Aviation Fellowship International is the sole member of MAF International. Its principal activity is the provision of air services to the Church and remote communities. This company has two subsidiaries, MAF Aviation Services Pty Ltd and MAF PNG Holding Ltd. MAF PNG Holding Ltd also has one subsidiary, MAF Papua New Guinea Ltd.
• MAF Aviation Services Pty Ltd is an Australian company, A.C.N. 004 545 108. The company’s shares are wholly owned by MAF International. MAF Aviation Services Pty Ltd has made a long term loan to MAF PNG Holding Ltd, secured on the latter's assets. It has no other activities.
• MAF PNG Holding Ltd is a company registered in Papua New Guinea (PNG), registration number 1-22887. The company is
wholly owned by MAF International. MAF PNG Holding Ltd acts as the holding company for MAF Papua New Guinea Ltd, a wholly owned subsidiary, and as such it owns and manages all the aircraft, land and buildings and other fixed assets for operations in PNG.
• MAF Papua New Guinea Ltd is also a company registered in PNG, registration number 1-17085, and is wholly owned by MAF
PNG Holding Ltd. This entity carries out the charity’s objectives in that country through aviation. Christian Radio Missionary Fellowship Inc (known as MAF Technology Services), is a not-for-profit association incorporated in Papua New Guinea, association number 5-903. It is controlled by virtue of a Memorandum of Understanding that grants responsibility for control and governance to Mission Aviation Fellowship International. Its ministry focus is in communications technology and services. The following is a summary of the results and of the net assets of the main entities within the group.
MAF International (*)
MAF International (in Australia) (*)
MAF PNG Holding Ltd and MAF Papua
New Guinea Ltd
CRMF Inc.
2016 Total
US$,000 US$,000 US$,000 US$,000 US$,000
Income 26,026 4,844 5,543 540 36,953
Expenditure (19,581) (8,807) (7,276) (547) (36,211)
Other (1,594) (168) 321 (36) (1,477) Net movement in funds 4,851 (4,131) (1,412) (43) (735) Net Assets/ (Liabilities) 36,070 20,826 5,532 630
63,058
(*) MAF International includes Blue Sky Aviation Company Ltd, Rapid Relief Wing and Mission Aviation Fellowship Limited and MAF International (in Australia) includes MAF Aviation Services Pty Ltd.
MISSION AVIATION FELLOWSHIP INTERNATIONAL NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) FOR THE YEAR ENDED 31 DECEMBER 2016
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27. SUBSIDIARY UNDERTAKINGS (CONTINUED) The comparative results for 2015 are:
MAF International (*)
MAF International (in Australia) (*)
MAF PNG Holding Ltd and MAF Papua
New Guinea Ltd
CRMF Inc.
2016 Total
US$,000 US$,000 US$,000 US$,000 US$,000
Income 24,275 8,942 5,625 467 39,309
Expenditure (21,138) (8,730) (5,986) (503) (36,357)
Other (1,952) 286 1,548 (109) (227) Net movement in funds 1,185 498 1,187 (145) 2,725 Net Assets/ (Liabilities) 36,992 19,342 6,786 673
63,793
(*) MAF International includes Blue Sky Aviation Company Ltd, Rapid Relief Wing and Mission Aviation Fellowship Limited and MAF International (in Australia) includes MAF Aviation Services Pty Ltd. 28. CONNECTED CHARITIES
Rapid Relief Wing is a company limited by guarantee and a registered charity. It acts as an agent for MAF International in leasing equipment. All material transactions which affected MAF International, are included within these financial statements. MAF-Sweden Air Support is a Swedish foundation, whose purposes are complimentary to the charitable objects of MAF International. Since 1 January 2002 MAF International has been operating the flying programme in Bangladesh on behalf of MAF-Sweden Air Support. 29. NOTES TO THE CASH FLOW STATEMENT
2016
2015
US$,000
US$,000
Net incoming resources before other recognised gains and losses 741
2,952
Net interest income (110)
(103)
Non-cash pension interest (4)
7
Operating surplus 627
2,856
Amortisation of intangible assets -
8
Depreciation of tangible assets 1,705
1,764
Impairment of tangible assets (40)
(39)
Profit on disposal of tangible assets (7)
(432)
Working capital movements
Decrease in stocks 110
572
Decrease/(increase) in current and long term debtors 1,735
(940)
(Decrease)/increase in current and long term creditors (152)
177
Cash flow from operating activities 3,978
3,966