CMI Annual Report 2009

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Report from the board

A challenging and successful year

Targeted financial management, especially during the moving process, and skilled and competent staff, secured a surplus and increased project revenues.

- Rights, Democracy and Development
- Peace, Conflict and the State
- Poverty Reduction
- Public Sector Reform

During the strategy period 2006-2010, CMI conducts research and provides knowledge-based advice that informs public policy and measures to reduce poverty, promotes human rights and strengthen peace. In so doing, CMI maintains its position and role as a leading research community in Norway in the field of development policy. CMI research projects generate knowledge that promotes development and social justice, human rights and the peaceful resolution of conflict. Through its research activity, CMI seeks to inform and influence policy decisions and contribute to the public debate on international development issues. CMI research is particularly focused on Africa, Asia, the Middle East and Latin America with an emphasis on countries important to Norway’s development policy efforts. Through close cooperation with researchers in the South, CMI research aims to advance the perspective of developing ­countries.
CMI receives basic funding allocations from the Research Council of Norway which is used to fund basic research and the Institute’s research programmes. In 2009, CMI had one Strategic Institute Programme (SIP) entitled “Global Health and Development”. Strategic institute programmes must be approved by the Research Council. In addition, CMI had six other ­institute programmes. CMI has since 1982 received separate funding from the Ministry of Education and Research for a Human Rights Programme. In 2009, the Ministry untied this allocation, yet, the CMI management decided to continue to earmark these funds for the Human Rights Programme in 2009.
In 2009, CMI moved from Fantoft to a new building in the centre of Bergen. CMI is now co-located with development researchers from the University of Bergen (UiB). The new building in Jekteviksbakken 31 houses some 100 researchers from the Faculty of Law, Uni Global, Centre for Middle Eastern and Islamic Studies and CMI. CMI has, in collaboration with UiB, established Bergen Resource Centre for International Development in the heart of the building. The Resource Centre hosts several open meetings every week. The opening week, called “Five days in Bergen – one world in development” had 25 different activities such as meetings, conferences, book salons, film-screenings and debates. The relocation and establishment of the Resource Centre has strengthened the cooperation with UiB and made Bergen a national and international competence centre for development research.
The number of Master’s and PhD students at the institute is the same as in previous years. This is also the case for the number of CMI staff teaching at UiB and the number of university professors affiliated with CMI in adjunct positions. Several new and ongoing research programmes, which also include research groups at UiB, have been strengthened during the autumn of 2009 through new allocations from the Research Council. The CMI-UiB coordinating committee and a five-year collaboration fund will enhance the relationship between these two research communities.
High priority is given to communication and dissemination to CMI’s main target groups. 2009 was a record year for publications with 60 UHR-points compared to an annual average of 25-30 UHR points. CMI researchers published two monographs and a total of 32 articles in UHR2 and UHR1-journals compared to 13 in 2008. CMI continues to maintain a high profile and visibility in the media and participates in the public debate in newspapers, and on radio and TV. CMI’s commissioned research activity generated 30 reports in 2009.

The Institute’s performance
Income from commissioned assignments continues to increase, and increased from NOK 61 million in 2008 to NOK 66.7 million in 2009. The 9% increase is due to increased basic funding, higher average fees and higher operating revenues. There is also a small increase in the number of full-time equivalents.
In 2009, CMI carried out 180 externally funded research projects and consultancy assignments for a total of NOK 50.6 million, a 10% increase.
Norwegian government administration (the Ministry of Foreign Affairs (MFA) and the Norwegian Agency for Development Cooperation (Norad)) continue to be the Institute’s most important clients, but their relative share is decreasing. The most important change is that the funding from the MFA and the funding from Norad is now equal, comprising NOK 8.7 million and NOK 8.5 million totalling NOK 17.2 million. The MFA share has increased from 13% to 17%, while the Norad share has decreased from 30% to 17%. The MFA increase is mainly due to projects being funded by Norwegian embassies abroad.
Projects with funding from the Research Council of Norway represented 34% of the total project portfolio. The increase from 2008 to 2009 is 6%. Thus, the trend from last year continues. The largest increase, however, was from 2007 to 2008. The last ten years, income from international sources has varied between 20 and 30% of the Institute’s total turnover. In 2008, international sources accounted for 19%. In 2009, the percentage has increased to 29%. This is mostly due to a major increase in the international funding of U4, CMI’s anti-corruption centre. The percentage of international project income is substantial compared to other social science institutes in Norway.

Result and continued operation
CMI had an operating profit of NOK 894 211 in 2009, and an annual profit of NOK 296 115. Adjusted for the gains of the sale of the Fantoft property, which CMI recorded in 2008, the operating profit is almost NOK 500 000 higher than last year. The annual result is slightly below the estimate presented in the interim report, but NOK 1.8 million above the budgeted estimate at the start of 2009. 2009 has been a year of transition with the Institute moving to a new location. It has been a challenging year, but cost-efficiencies in every part of the moving process and maintenance of a high level of earnings have resulted in a small surplus. Targeted financial management combined with skilled and competent staff members provide a solid basis for continuing the Institute’s positive financial trend in 2010. In accordance with the Accounting Act § 3-3a, the board confirms that the requirements for continued operations are fulfilled.

Cash flow, investments, finances and liquidity
The total cash flow from operational activities at the Institute was NOK 12.4 million. This is identical with 2008. The Institute’s liquidity reserves were NOK 29.3 million as of 31 December 2009.
The Institute’s short-term debt increased with NOK 5.52 million from 2008 to 2009, and now constitutes 47 % of the total debt. The increase is mainly due to allocations for the final settlement of the new building in Jekteviksbakken 31. Adjusted for this, the debt increase is negligible. Liquidity is satisfactory. 75 % of the short-term debt may be repaid in its entirety through liquidity reserves. As mentioned in Note 12 to the annual account, CMI has received a notice of possible tax liability. This may lead to payments in 2010.
Accounts receivable from customers were reduced with about NOK 600 000, mainly due to tighter follow-up and higher invoicing. The risk of loss is minimal as income comes mostly from Norwegian and international development cooperation authorities and from the multilateral development cooperation system, with the exception of foreign exchange losses. NOK 180 000 has been allocated for future losses on outstanding claims.
At year-end 2009, total capital was NOK 93 million, compared to NOK 111 million in 2008. NOK 29 million of last year’s total capital was short-term claims associated with debt that was settled at the turn of the year. The equity rate as of December 2009 was 17 % compared to 14 % as of December 2008.
In the view of the board, the annual accounts provide an accurate picture of the Institute’s assets and debt, financial position, and result.

Market and financial risks
The Institute is somewhat exposed to fluctuations in exchange rates. The Institute entered an exchange rate profit of NOK 0.2 million and an exchange rate loss of NOK 0.55 million in 2008. This constitutes an exchange rate loss of NOK 0.35 million compared to an exchange rate profit of NOK 0.7 million in 2009. Roughly 20 % of the Institute’s income is paid in foreign currency. So far the institute has not entered into futures contracts or other contracts to reduce the Institute’s currency risk and the operations-related market risk. CMI is in an ongoing dialogue with the bank regarding this matter. Interest costs have decreased thanks to the Institute’s use of floating interest rates.
CMI disposed of all its shares and mutual funds in 2009 in order to finance the new building. This is in accordance with the board’s decision to finance as little as possible of its working capital with debt.

Working environment and personnel
The sickness absence rate was 2.54% in 2009, compared to 2.82% in 2008. No occupational injuries or accidents were reported in 2009.
In 2009 the Institute moved into the new building. This involved interim working spaces during the summer months. After moving to the new building, no extraordinary measures have been taken in relation to the working environment. As of now, no working environment surveys have been conducted. Feedback from the Institute’s employees indicates that the working environment is good.

Gender equality
Of the Institute’s 72 employees, 36 are women. 50% of the board members are women, and 3 of 8 persons on the management team are women. The Institute has established a wage system and welfare schemes designed to provide equal opportunity for wage and career development. Traditionally, the Institute has recruited from arenas with an equal representation of men and women, and therefore has not introduced quotas to achieve gender equality.

Discrimination
CMI seeks through recruitments both nationally and internationally to ensure equal opportunities and rights, and to prevent discrimination based on ethnicity, national origin, colour, language, religion or belief system.
CMI seeks to ensure that working conditions allow all individuals regardless of disability to have equal work opportunities at the Institute.

Environmental report
The Institute’s activities are not regulated by licenses or directives, and do not have a direct impact on the external environment. It should be noted, however, that extensive travel contributes to greenhouse gas emissions.

Annual profit/loss and allocations
The annual result of NOK 296 115 was added to exisiting equity. The Institute has NOK 566 474 in unrestricted equity as of 31 December 2009.

Bergen, 15 March 2010

Jan Fridthjof Bernt
Chair
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Einar Hope
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Siri Gloppen
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Ruth Haug
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Inge Tvedten
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Inger Johanne Sundby
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Ivar Kolstad
Deputy
(sign)

Gunnar M. Sørbø
Director
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© Chr. Michelsen Institute 2010