TDR Financial report 2016-2017 and outlook 2018-2021

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TDR 2016-2017 FINANCIAL REPORT AND OUTLOOK 2018-2021 5

Table of contents

2016-2017 budget implementation ........................................................................ 7

2018-2019 Outlook ................................................................................................. 8

2020-2021 Outlook ................................................................................................. 9

Figures illustrating financial data ...........................................................................10

TDR certified financial statement for the year ended 31 December 2017 .............17

Table 1: Statement of financial performance 2016-2017 .............................................................. 19

Notes to the financial statement ............................................................................................... 20

Table 2: TDR revenue 2012-2017 ................................................................................................... 23

Figure 1: Revenue analysis 2016-2017: by source and contributor .......................................... 25

Table 3: Statement of comparison of budget and expenses for the biennium 2016-2017 .......... 26


2016-2017 budget implementation: US$ 39.7 million (94%) utilized

TDR began implementation of the US$ 45 million budget scenario for 2016-2017 in January 2016.

In June 2015, TDR’s Joint Coordinating Board (JCB) approved two budget scenarios for the biennium 2016-2017 at the levels of US$ 45 million (US$ 35 million undesignated; US$ 10 million designated funds) and US$ 55 million (US$ 38 million undesignated; US$ 17 million designated funds). The scenarios were to be implemented in a stepped approach as funds became available. In January 2016, TDR began implementation of the lower (US$ 45 million) scenario (Figure 1).

Revised planned costs endorsed by TDR’s Scientific and Technical Advisory Committee (STAC) and approved by JCB in 2017

Forecast revenue is reviewed on a continuous basis and estimated in a conservative way. It is based on historical data and ongoing discussions with donors. Potential exchange rate impact is taken into consideration on forecast revenue streams.

During 2016-17, a number of undesignated contributions were confirmed at a lower level than forecast. Adverse foreign exchange rates also impacted the level of non US dollar contributions.

Forecast undesignated revenue was revised in February 2017 to US$ 28.5 million. This brought total funds available to US$ 46.2 million including funds brought forward from 2014-2015 for delayed activities and designated funding. Planned costs were revised accordingly, endorsed by STAC and approved by JCB in 2017 (Figure 2).

Further revision of planned costs in line with forecast revenue

In October 2017 two undesignated contributors confirmed contributions at a level substantially less than forecast. As a result, the forecast undesignated revenue was further reduced to US$ 27.8 million and 2016-2017 planned costs were revised accordingly (Figure 3).

Additional funding (US$ 2.5 million) was received at the end of 2017 to secure the commitment to the seven universities supported by TDR to provide training grants in 2018-2019.

Effective financial implementation of the 2016-2017 revised planned costs (94% implementation) (Figures 4 and 5)

Financial implementation is monitored on a monthly basis against revised planned costs.

At 31 December 2017, US$ 39.7 million had been spent or committed through legal agreements, representing 94% of the planned costs revised in October 2017. This includes commitments of US$ 245 000.

This illustrates the operational capacity of the Programme to deliver the 2016-2017 workplan (US$ 25.2 million undesignated and US$ 8.3 million designated planned activities) whilst implementing the 2014-2015 project delays (US$ 6.2 million) during the first quarter of 2016.

8 TDR 2016-2017 FINANCIAL REPORT AND OUTLOOK 2018-2021

2018-2019 Outlook: US$ 40 million scenario financed and implementation started (figures 6-8)

Approved budget scenarios for 2018-2019

In June 2016, JCB approved two budget scenarios for 2018-2019 based on revenue forecast of US$ 45 million

o A lower scenario at US$ 40 million (US$ 30 million undesignated funds; US$ 10 million designated funds).

o A higher scenario at US$ 50 million (US$ 37 million undesignated funds; US$ 13 million designated funds).

The revenue forecast for 2018-2019 presented at JCB (2017) amounted to US$ 29.4 million (US$ 26.7 million undesignated funds; US$ 2.7 million designated funds).

US$ 10.6 million funding gap was identified in order to implement the US$ 40 million budget scenario (US$ 3.3 million undesignated funds; US$ 7.3 million designated funds)

Unexpected drop in undesignated contributions in October 2017

In October 2017, due to lower than expected contributions from two major contributors, the forecast revenue was adjusted to US$ 27.0 million This included US$ 25.0 million undesignated funds and US$ 2.0 million designated funds (ongoing projects only).

A US$ 13.0 million funding gap was identified to implement the US$ 40 million budget scenario (US$ 5.0 million undesignated funds and US$ 8.0 million designated funds).

Rigorous contingency plan and engagement of core donors in exploring solutions

In addition to strengthening fundraising efforts, TDR developed a rigorous contingency plan for 2018-2019 based on the latest level of forecast revenue.

The contingency plan 2018-2019 was at the level of US$ 27.0 million composed of US$ 25.0 million undesignated funds and US$ 2.0 million designated funds to align with the adjusted forecast revenue.

The contingency plan was presented to the TDR Standing Committee in November 2017 and discussed with key contributors.

The US$ 40 million budget scenario was financed and implementation began in January 2018

Following discussions, two main contributors confirmed they would increase their contributions to address the gap. Additional revenue of US$ 7 million was secured for the period 2017 to 2019. In addition, a number of new designated grants were confirmed, increasing the designated revenue forecast by US$ 6.7 million.

Total forecast revenue was increased to US$ 39.7 million (US$ 31.0 million undesignated; US$ 8.7 million designated) including the increased contributions received at the end of 2017.


Forecast revenue has been estimated within a range of probability to reflect uncertainty of contributions and possible impact of foreign exchange rates. The latest revenue forecast has been based on the low end of the range.

In January 2018, following an internal portfolio review, implementation of the lower US$ 40 million budget scenario was initiated.

Fundraising efforts are being strengthened and several proposals for additional designated funding are being discussed with potential new contributors.

2020-2021 Outlook: addressing US$ 6 million undesignated gap

Budget scenarios for 2020-2021 have been reviewed and endorsed by the Standing Committee (Figures 9 - 14)

The current level of revenue for 2020-2021 is estimated at US$ 34 million (US$ 24 million undesignated based on 80% of prior year contributions and current exchange rates; US$ 10 million designated).

An uncertainty range of US$ 30-41 million has been developed to take into account probability of contributions and foreign exchange fluctuations. o Upper limit includes US$30 million undesignated funds and US$ 11 million designated

funds (based on 100% of 2017 contribution levels and favourable foreign exchange rates) o Lower limit includes US$20 million undesignated funds and 10 million designated funds

(based on 80% of 2017 contribution levels and adverse foreign exchange rates)

Two budget scenarios are proposed for 2020-2021. In order to ensure efficiency of the current structure of TDR, a minimum of USD 40 million is required. o A lower scenario at US$ 40 million (US$ 30 million undesignated funds;

US$ 10 million designated funds). o A higher scenario at US$ 50 million (US$ 33 million undesignated funds;

US$ 17 million designated funds).

A funding gap of US$ 6 million has been identified to implement the US$ 40 million budget scenario (undesignated funds only).

Addressing the funding gap

Maintaining / enhancing revenue from existing undesignated contributors

Increasing undesignated revenue from new contributors

Obtaining additional designated funding o Additional designated revenue would reduce the level of staff and administration costs funded

by undesignated revenue by approximately US$ 300 000 for every US$ 1 million received. o TDR is currently in discussion with the United Kingdom Department of Health and Social Care,

Bill & Melinda Gates Foundation, Wellcome Trust, United Nations Development Programme (UNDP), United States Agency for International Development (USAID), the European and Developing Countries Clinical Trials Partnership (EDCTP), the World Bank, GAVI, Pennsylvania State University and the International Atomic Energy Agency (IAEA).


Figures illustrating financial data

Figure 1: 2016-2017 approved budget scenarios (JCB, June 2015)

Figure 2: 2016-2017 financial situation at JCB (June 2017)

UD 35.0 UD 38.0

DF 10.0

DF 17.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

45m approved budget(JCB 2015)

55m approved budget(JCB 2015)

45 55

US$ millions

US$ millions


Figure 3: 2016-2017 financial situation at October 2017

Figure 4: 2016-2017 financial situation at 31 December 2017

US$ millions

US$ millions


Figure 5: Funds utilized by work area with designated and undesignated funds split, as at 31 December 2017

Figure 6: 2018-2019 approved budget scenarios and funding gap

US$ millions


Figure 7: 2018-2019 budget scenarios / contingency plans based on forecast revenue

Figure 8: 2018-2019 forecast revenue at June 2016, June, September and December 2017

NB. Percentages reflect probability of revenue stream

US$ millions

40

27

US$ millions


Figure 9: Revenue trend

1 2020-2021 forecast based on 100% of the 2017 level of contributions 2 2020-2021 forecast based on 80% of the 2017 level of contributions Figure 10: Core revenue by donor over last three biennia (contributions greater than US$ 0.5 million per biennium)


Figure 11: Designated revenue by donor over last three biennia (contributions greater than US$ 0.5 million)

Figure 12: 2020-2021 planned costs and proposed budget scenarios

US$ millions


Figure 13: 2020-2021 proposed budget scenarios operations v. operations support

Figure 14: 2020-2021 estimated revenue gap

US$ millions

US$ millions


TDR certified financial statement for the year ended 31 December 2017

Certification of financial statement

The following tables numbered 1 and 2 and related notes have been reviewed and approved.

Beatrice Halpaap Portfolio and Programme

Manager UNICEF/UNDP/World Bank/WHO

Special Programme for Research and Training in Tropical Diseases

Nick Jeffreys Comptroller and Director of

Department of Finance World Health Organization

John Reeder Director UNICEF/UNDP/World Bank/WHO

Special Programme for Research and Training in Tropical Diseases

21 May 2018


Trust Fund for the UNICEF/UNDP/World Bank/WHO Special Programme for Research and Training in Tropical Diseases Table 1: Statement of financial performance 2016-2017

For the year ended 31 December 2017 (In thousands of US dollars)

Description Notes 2017 2016 2016-2017

Fund balance as at 1 January 18 472 20 989 20 989 REVENUE 3.1

Voluntary contributions 17 609 17 611 35 220

WHO Contributions 967 802 1 769

Other Funding from WHO 113 113

Interest income 301 157 458

Total revenue 18 990 18 570 37 560 EXPENSES 3.2

Staff costs 7 469 7 696 15 165

Contractual services, transfers and grants 9 463 10 397 19 860

Travel 1 156 1 528 2 684

General operating expenses 579 549 1 128

WHO administrative costs 885 917 1 802

Total expenses 19 552 21 087 40 639

Fund balance as at 31 December 3.3 17 910 18 472 17 910


Notes to the financial statement

1. Basis of preparation

The financial results of TDR are consolidated within the General Fund of the World Health Organization (WHO). Revenue and expenses for the TDR Trust Fund are recorded in a separate fund to allow for financial reporting. A separate balance sheet is not available for TDR as all balance sheet transactions are managed in one set of ledgers for WHO.

The TDR statement of financial performance has been extracted from WHO accounts and all transactions have been recorded in accordance with relevant WHO accounting policies in accordance with International Public Sector Accounting Standards (IPSAS).

2. Significant accounting policies

For a full set of accounting policies, please refer to the WHO Audited Financial Statements for the year ended 31 December 2017 (see document A71/29). The policies below support TDR’s statement of financial performance.

2.1 Revenue

Revenue is recognized following the established criteria of IPSAS 23 (Revenue from Non-Exchange Transactions).

Revenue from voluntary contributions is recorded when a binding agreement is signed by TDR and the contributor. When an agreement contains “subject to” clauses, WHO does not consider the agreement to be binding and does not record the revenue and amount receivable until the cash is received. Where there are no payment terms specified by the contributor or payment terms are in the current accounting year, revenue is recognized in the current period. Where payment terms specify payment after the year end, the amount is reported as deferred revenue.

Deferred revenue is reported on the WHO balance sheet as a liability and is released in the period in which it falls due.

2.2 Expenses

WHO recognizes expenses at the point where goods have been received or services rendered (delivery principle) and not when cash or its equivalent is paid.

2.3 Budget comparison

TDR’s budgets are prepared on a biennial basis. Refer to table 3 for budget comparison.

http://apps.who.int/gb/ebwha/pdf_files/WHA71/A71_29-en.pdf


3. Supporting information to the TDR statement of financial performance

3.1 Revenue

• Voluntary contributions

Voluntary contributions were US$ 17.6 million in 2017 (US$ 17.6 million in 2016). These contributions represent revenue recognized from governments, intergovernmental organizations, institutions and other United Nations organizations. For details of revenue by contributor, refer to table 2 and figure 1.

Deferred revenue represents multi-year agreements signed in 2017 or prior years but for which the revenue recognition has been deferred to future financial periods. As at 31 December 2017, deferred revenue amounted to US$ 12.3 million (US$ 9.3 million in 2016).

Deferred revenue by contributor 2017

US$ thousands

Sweden 11 168

United Kingdom of Great Britain and Northern Ireland 673

Bill & Melinda Gates Foundation 346

UNDP 86

Total deferred revenue 12 273

• WHO contributions:

Contributions from WHO are recognized on the basis of expenditure; US$ 1.0 million has been recognized in 2017 (US$ 0.8 million in 2016).

Other contributions from WHO relate to funds made available from the Global TB Programme.

• Interest allocation

Interest earned in 2017 was US$ 0.3 million (US$ 0.2 million in 2016). This represents income received from the investment of TDR funds by WHO.

3.2 Expenses

• Staff costs

US$ 7.5 million in 2017 (US$ 7.7 million in 2016) reflects the total cost of employing staff, including charges for base salary, post adjustment and other entitlements e.g. pension and insurance.


• Contractual services, transfers and grants

US$ 9.5 million in 2017 (US$ 10.4 million in 2016) represents expenses for service providers. The main components are:

o Letters of Agreement for research or capacity building grants issued to individuals and institutions.

o Agreements for Performance of Work, consulting contracts given to individuals to perform activities on behalf of TDR

o Technical Services Agreements that relate to collaborative research activities between TDR and various institutions, universities and laboratories

o Expenses for fellows supported by TDR. The main components include stipends, education allowance, travel and insurance. Expenses for training of grantees who are not fellows are also included.

• Travel

US$ 1.2 million in 2017 (US$ 1.5 million in 2016) reflects the cost of travel for TDR staff, non-staff participants in meetings, consultants and representatives of TDR’s governing and advisory bodies. Travel expenses include airfares, per diem and other travel-related costs. This amount does not include statutory travel for home leave or education grants that is accounted for within staff costs.

• General operating expenses

US$ 0.6 million in 2017 (US$ 0.5 million in 2016) reflects the cost of general operations to support the office. It includes rent, utilities, internet, global network expenses and telecommunications.

• WHO administrative costs

US$ 0.9 million in 2017 (US$ 0.9 million in 2016). WHO implemented a new methodology for apportioning administration and management costs in 2016. This had no significant impact on the 2016-2017 charge. TDR pays administrative costs in accordance with World Health Assembly resolution 34.17.

3.3 Fund balance at end of year

The end of year fund balance of US$ 17.9 million includes US$ 8 million working capital (set aside as personnel liability as recommended by WHO), US$ 2.3 million in legally binding commitments (items to be paid in 2018-2019) and the balance of US$ 7.6 million for implementation of planned activities in 2018-19.


Table 2: TDR revenue 2012-2017

CONTRIBUTORS 2012 2013 2014 2015 2016 2017Member StatesBelgium 1 857 1 289 2 038 2 038 1 115 721China 55 110 55 55 55Cuba 10 5 5 3 5 5Germany 1 091 1 073 814 817 666 901Ghana 45 75India 110 55 110Japan 300 270 270 200 280 280Luxembourg 1 676 1 617 1 337 1 176 1 134 1 074Malaysia 25 25 25 25 25 25Mexico 10 30 10Netherlands 400 400Nigeria 200 193 303Norway 2 475 2 564 2 200 1 177 952 379Panama 7 7 7 14Portugal 64Spain 95 200 42Sweden 5 210 4 848 5 181 5 221 4 031 5 650Switzerland 1 839 1 819 1 829 1 973 1 814 1 677Thailand 49 50 46 46 42 42Turkey 5 5 5 5 5 5United Kingdom of Great Britain and Northern Ireland 3 804 6 011 3 817 3 817 3 053 3 726United States of America 602 608 607 628 1 254Zambia 111Total - Member States 19 642 20 491 18 621 17 242 14 290 15 819


CONTRIBUTORS 2012 2013 2014 2015 2016 2017African Programme for Onchocerciasis Control (APOC) 400Bill & Melinda Gates Foundation 516 938 1 967 2 081 1 338Drugs for Neglected Diseases initiative (DNDi ) 624 96 371European Commission 2 215 671 1 956Foundation for Innovative New Diagnostics (FIND) 198Global Alliance for TB Drug Development 194 240 80International Development Research Centre (IDRC) 7 477 656International Union against Tuberculosis and Lung Disease (IUATLD) 340 100Medicines for Malaria Venture (MMV) 65Pfizer Inc (formerly Wyeth) 200 500Royal Tropical Institute (KIT), Netherlands 242 125 24United Nations Development Programme (UNDP) 650 565 475 1 195University of Heidelberg, Germany (funds from CEC) 345 521University of Oxford, United Kingdom 78 78World Bank 1 660 2 800 1 250Miscellaneous * ( 34) (2 383) 2 ( 530) ( 294) 352Refunds to donors ( 933) ( 9)Total - Voluntary contributions 32 479 24 200 23 178 20 428 17 611 17 609WHO Assessed Contribution 1 800 802 967WHO Other Funding 270 113Interest 58 82 175 157 301Grand total 32 749 24 258 23 260 22 404 18 570 18 990

*Negative amounts in ‘miscellaneous’ represent a decrease in the revenue recognized in a prior period due to changes in contractual terms or a reduction in amounts receivable.


Figure 1: Revenue analysis 2016-2017: by source and contributor

Member states 84%

Philanthropic Foundations

9%

United Nations Organizations

5%

Non Governmental Organizations

1%

Academic Institutions

1%


Table 3: Statement of comparison of budget and expenses for the biennium 2016-2017

Description

Programme budget ($45m)

2016-2017

Revised planned

costs 2016-2017

Expenses 2016-2017

Implementation (%)

Intervention and implementation research (IIR) Facilitate product innovation to support control programmes 205 254 229 90% Vulnerability of chemotherapy for helminths to resistance 560 717 609 85% Enhance surveillance for malaria drug resistance 15 Maximize use of available data for policy decisions 300 387 353 91% Optimize acquisition and analysis of new safety data for policy decisions 960 1 564 1 367 87% Structured Operational Research and Training Initiative (SORT-IT) 1 700 1 667 1 103 66% Strategies to accelerate research to policy translation (COSMIC) 40 69 69 100% Research on Dengue outbreak response 410 586 577 98% Research on elimination of VL in the Indian Sub-Continent 650 585 548 94% Research on management on febrile illnesses 30 447 444 99% Research on improved TB control 1 130 617 605 98% Sub-total IIR ( a ) 6 000 6 894 5 905 86% Vector, environment and society (VES) Vector-borne diseases and climate change in Africa 700 841 840 100% Control of vector-borne diseases in SE-Asia through environmental measures 1 100 232 238 103% Impact of insecticide resistance and residual malaria on malaria control 800 1 408 1 323 94% Prevention of vector-borne diseases and emerging fevers in fragile health systems in West Africa 400 Research on social innovation to enhance healthcare delivery 630 1 209 1 151 95% Urban health interventions for control of vector-borne diseases 300 282 292 104% Training course for gender data-analysis in vector-borne diseases 70 Evidence improved community access to health interventions in Africa 78 77 99% Implementation research in support of the WHO Global Strategy for Dengue Prevention and Control 170 128 75% Sub-total VES ( b ) 4 000 4 219 4 050 96%


Description

Programme budget ($45m)

2016-2017

Revised planned

costs 2016-2017

Expenses 2016-2017

Implementation (%)

Research capacity strengthening (RCS) and knowledge management (KM) TDR support to regional training centres 2 150 1 820 1 402 77% Regional office collaboration and small grants 1 300 978 930 95% Training grants (MSc, PhD) 4 850 3 589 3 554 99% IMPACT grants for strengthening research capacity in disease control 530 1 371 1 217 89% Career development fellowship grants 3 000 3 000 2 544 86% Shaping the research agenda 270 78 79 102% Capacity strengthening to bring research evidence into policy 400 174 174 100% Collaborative networks & engagement with global health initiatives 400 309 297 96% Sub-total RCS and KM ( c ) 12 900 11 318 10 199 90%

Strategic development fund (d) 1 150 808 797 99%

Sub-total Operations ( e = sum (a:d) ) 24 050 23 239 20 951 90% Operation support Programme Support 2 171 1 742 1 609 92% WHO Admin Charges 1 780 1 800 1 786 99% Sub-total Operation Support ( f ) 3 950 3 542 3 396 96%

Staff costs (g) 17 000 15 450 15 104 98% Total (h = sum (e:g) ) 45 000 42 231 39 451 93% Timing differences

Settlement of encumbrances on prior biennium workplans 1 189

Total expenses as per the Statement of Financial Performance (Statement I) 40 639

Note: Funds utilized in financial management report is US$ 39.7 million which includes encumbrances of US$ 0.2 million but excludes US$1.2 million expenses

on prior biennium workplans (timing differences).

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