16. Annual accounts
Public Limited Company
Commercial register: Antwerp no. 222.348
Enterprice no.: BE0220.324.117
Date of formation: 25/02/1980
Financial year: 1 April 2016 – 31 March 2017
Financial servicing: KBC Bank
Number of shares (31/03/2017): 25 426 672
The consolidated financial statements of Gimv NV at 31 March 2017 were approved for publication by the Board of Directors on 16 May 2017.
As a result of the exemption from compulsory consolidation for investment entities, approved by the European authorities on 20 November 2013, Gimv as an investment entity is no longer required to fully consolidate its majority shareholdings in the statutory consolidation. In accordance with IFRS 9 Financial Instruments, Gimv records these subsidiaries at fair value through profit and loss.
With the application of IFRS 10, Gimv has changed its valuation rules for assessing the control and consolidation of other entities. IFRS 10 introduces a new control model that applies to all entities. Among other things this requires Gimv to consolidate entities that it de facto controls. However, an exception is allowed if an entity meets the definition of an investment entity.
IFRS 10 (2012) defines an investment entity as an entity that:
- obtains funds from one or more investors for the purpose of providing these investors with investment management services;
- commits to its investor(s) to achieve capital gains or other investment income or a combination of both (corporate purpose);
- measures and evaluates the performance of substantially all of its investments on a fair value
As a publicly listed investment company Gimv obtains its funds from a wide variety of investors (who are shareholders of the listed company). In addition to a number of institutional investors, there are also a large number of (mainly Belgian) retail investors who through their shares in Gimv gain access to a portfolio of unlisted growth companies.
Gimv also carries out investments in the form of co-investment partnerships, using funds provided by external parties.
Gimv’s stated aim is to ‘achieve double-digit returns and implement an attractive dividend policy through the performances of our portfolio companies and through successful exits’. Gimv invests in companies with a view to a achieving a financial return on exit, and not to developing products and services in cooperation with the investee companies.
It strives first of all to build strongly performing companies, with the potential to grow on the basis of, among other things, competitive advantage, dominant market position, strong management and potential scalability in other markets. Starting from carefully selected macro trends, Gimv's vision for the future is translated into four investment platforms, each with a specific investment approach: Connected Consumer, Health & Care, Smart Industries en Sustainable Cities.
Gimv management assesses the performance of the investments on the basis of fair value.
The results of the portfolio valuation (by reference to fair value) are explained in detail in the external financial communication to investors, analysts and the press.
Impact of new or amended standards applicable after 1 April 2016
The Group has applied certain new and amended standards and interpretations for the first time. The Group has not applied in advance other new or amended standards and interpretations that are already published but are not yet in force.
Although these new and amended standards and interpretations were first applied in 2016, they did not materially affect the consolidated financial statements. The nature and effect of the new and amended standards and interpretations are explained below:
- Amendments to IFRS 10, IFRS 12 and IAS 28 - Investment entities: Application of the consolidation exemption, effective 1 January 2016
- Amendments to IFRS 11 Joint Arrangements - Recognition of the acquisition of interests in joint operations, effective 1 January 2016
- Amendments to IAS 1 Presentation of the Financial Statements - Initiative on disclosures, effective 1 January 2016
- Annual improvements to IFRSs 2012-2014 cycle (published in September 2014), effective 1 January 2016
Amendments to IFRS 10, IFRS 12 and IAS 28 - Investment entities: Application of the consolidated exemption
The amendments relate to issues arising from the application of the investment entities exemption in IFRS 10 Consolidated Financial Statements. The amendments to IFRS 10 clarify that the consolidation exemption for intermediate parents (IFRS 10.4) also applies to an intermediate parent that is the subsidiary of an investment entity that measures its subsidiaries at fair value.
The amendment to IAS 28 Investments in Associates and Joint Ventures clarifies that an investor can apply the fair values as used by the investment entity in measuring the interests in its subsidiaries. This applies when using the equity method for measuring an interest in the investment entity in which this investor has significant influence ('associate'). The amendments apply to financial periods beginning on or after 1 January 2016).
Amendments to IFRS 11 Joint Arrangements - Recognition of the acquisition of interests in joint operations
The amendments provide that the relevant principles, including the disclosure requirements, of IFRS 3 Business Combinations, are applied in recognizing the acquisition of an interest in a joint operation with a 'business' and in the formation of a joint operation if - and only if - an existing 'business' is brought into this joint operation. The changes have no effect on the Group as no interest in a joint operation was acquired during the reporting period.
Amendments to IAS 1 Presentation of the Financial Statements - Initiative on disclosures
The amendments clarify the existing requirements of IAS 1 and do not lead to a significant change. The amendments clarify that:
- specific items in the profit and loss account, the statement of comprehensive income and the balance sheet may be disaggregated;
- flexibility is permitted in the order of presentation of notes in the financial statements; and
- the share of the unrealised results of associates and joint ventures included in the statement of comprehensive income and which is recognized by the equity method must be presented in the statement of comprehensive income as a single item. A distinction must be made here between items that will in future be reclassified through profit and loss and those that will not.
The improvements also clarify the requirements that apply when additional subtotals are presented in the balance sheet, income statement and statement of comprehensive income, and the requirements with respect to materiality. The amendments apply to financial periods beginning on or after 1 January 2016.
Annual improvements to IFRSs 2012-2014 cycle (published in September 2014)
The '2012-2014 cycle' with improvements to standards and interpretations aims to remove inconsistencies and clarify texts. These improvements are:
- IFRS 5 Assets classified as held for sale and discontinued operations. Assets (or groups of assets) are generally disposed of by sale or by payment to owners. The improvement clarifies that a switch from one disposal method to another is not viewed as a new disposal plan, but as a continuation of the original plan.
- IFRS 7 Financial instruments: Provision of information
- Service contracts: The improvement clarifies that a service contract incorporating a compensation may be indicative of continued involvement in a financial asset.
- Information requirements for offsetting and for interim condensed financial statements: The improvement clarifies that the disclosure requirements for offsetting do not apply to interim condensed financial statements unless the information provided is an important adjustment compared to the information contained in the most recent annual report.
- IAS 19 Employee Benefits : The improvement clarifies that the market depth for high-quality corporate bonds is assessed based on the currency in which the pension obligation is expressed and not based on the country where the pension obligation exists. If there is no deep market for high-quality corporate bonds in that currency, government bonds must be used as a starting point. This improvement is applied prospectively.
The improvements have no effect on the Group.
Standards that have been published but are not yet in effect
The new and amended standards and interpretations published on the date of publication of the Group's financial statements but not yet effective are explained below. The Group intends to apply these new and amended standards and interpretations as from their effective dates.
- Amendments to IAS 7 Statement of Cash Flows - Disclosure initiative, effective 1 January 2017
- Amendments to IAS 12 Profit taxes - Recognition of deferred tax assets for unrealised losses, effective 1 January 2017
- Amendments to IFRS 2 Share-based Payment - Classification and measurement of share-based payment transactions (1), effective 1 January 2018
- Amendments to IFRS 4 Insurance Contracts - Application of IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts, effective 1 January 2018
- IFRS 9 Financial Instruments, effective 1 January 2018
- IFRS 15 Revenue from Contracts with Customers, (including Amendments to IFRS 15: Effective date of IFRS 15 and Clarifications of IFRS 15 (2), effective 1 January 2018
- IFRS 16 Leases, effective 1 January 2019
- IFRIC 22 Foreign Currency Transactions and Advance Consideration, effective 1 January 2018
- Annual improvements - 2014-2016 cycle
1. Not yet adopted by the EU as of 31 March 2017
2. IFRS 15, including 'Amendments to IFRS 15: Effective date of IFRS 15', has been adopted by the EU. The 'Clarification of IFRS 15', has not yet been adopted by the EU as of 30 March 2017.
Amendments to IAS 7 Statement of Cash Flows- Disclosure Initiative
The amendments require that information be provided on changes in financing obligations, whether or not arising from cash flows. Comparative information is not required when applying the amendments for the first first time. The changes will not significantly affect the Group.
Amendments to IAS 12 Profit taxes - Recognition of deferred tax assets for unrealised losses
The changes clarify that it is necessary to assess whether tax legislation limits sources of tax profit that can be offset against timing differences. The application of the amendments does not affect on the Group's financial position and results, as the Group does not have offsettable timing differences or assets falling within the scope of the changes. The changes will not significantly affect the Group.
Amendments to IFRS 2 Share-based Payment - Classification and measurement of share-based payment transactions
The amendments clarify:
- the effects of the conditions for unconditional commitment on the measurement of a share-based payment transaction settled in cash;
- the classification of a share-based payment transaction that is settled net after deduction of withholding tax; and
- the processing of a share-based payment transaction where, owing to a change in terms, settlement take places in equity instruments rather than in cash.
These changes are applied prospectively. Retrospective application is allowed where this is applied to all changes and other criteria are met. The amendments are effective for financial periods beginning on or after 1 January 2018. Advance application is permitted. The Group is busy assessing the possible impact of the changes on the consolidated financial statements.
Amendments to IFRS 4 Insurance Contracts - Application of IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
These changes are not relevant to the Group because no insurance contracts are issued.
IFRS 9 Financial instruments:
The final version of IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 brings together all three aspects of the project relating to the processing of financial instruments: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for financial periods beginning on or after 1 January 2018. Early application is permitted. Retrospective application is mandatory, except for hedge accounting. Comparative information does not need to be provided. Hedge accounting is generally applied prospectively, with a limited number of exceptions.
IFRS 15 Revenue from contracts with customers
IFRS 15 introduces a five-step model for recognizing revenue from contracts with customers. Under IFRS 15, revenue from delivery of goods or services is recognized in the amount of compensation that the company expects to be entitled to. IFRS 15 is effective for financial periods beginning on or after 1 January 2018. Full retrospective application or a modified retrospective application is required. The changes will not significantly affect the Group.
IFRS 16 Leases
IFRS 16 sets out the principles for the recognition, measurement, presentation and explanation of leases. Lessees recognize all leases, under a single model, in the balance sheet. The changes will not significantly affect the Group.
IFRIC 22 Foreign Currency Transactions and Advance Consideration
IFRIC 22 refers to the exchange rate to be used when recognizing advance payments received or made in foreign currency. The interpretation is effective for financial periods beginning on or after 1 January 2018. The interpretation will not affect the Group.
Annual improvements - 2014-2016 cycle:
The '2014-2016 cycle' with improvements to standards and interpretations aims to remove inconsistencies and clarify texts. These improvements are:
- IAS 28 Investments in associates and joint ventures : The improvements clarify that the choice to measure investments at fair value with changes in value through profit and loss can be made per individual investment. The amendments are effective for financial periods beginning on or after 1 January 2018.
- IFRS 12 Disclosure of interests in other entities : Improvements to IFRS 12 Disclosure of interests in other entities -The improvements clarify that the disclosure requirements in IFRS 12, except those in paragraphs B10-B16, apply to interests in subsidiaries, joint ventures and associates (or part of an investment in joint ventures and associates) classified as (or included in a group of assets classified as) held for sale. The amendments are effective for financial periods beginning on or after 1 January 2017.
The improvements are not expected to affect the Group.
Significant judgements and estimates
In putting together the balance sheet and income statement, estimates or assumptions are often made that influence the assets or liabilities reported at balance sheet closing date and the income and charges for the reporting period. Although such estimates are made in a rational fashion, based on management’s knowledge of the business, it is possible that actual figures will differ from the estimated figures. The largest risk of material adaptations relates to the estimates made in determining the fair value of the financial assets and loans to companies in the investment portfolio (done in accordance with the valuation rules described in section 16.1.5.)