16. Annual accounts

General information

Gimv NV
Public Limited Company

Registered office
Karel Oomsstraat 37
2018 Antwerp
T +32 3 290 21 00
F +32 3 290 21 05
info@gimv.com
www.gimv.com

Commercial register: Antwerp no. 222.348
Enterprice no.: 0220.324.117
Date of formation: 25/02/1980
Financial year: 1 April 2015 – 31 March 2016
Financial servicing: KBC Bank
Number of shares (31/03/2016): 25 426 672

The consolidated financial statements of Gimv NV at 31 March 2016 were approved for publication by the Board of Directors on 17 May 2016.

Consolidation

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
    basis

Funding sources
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.

Corporate Objective
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.

Fair value
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.

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Impact of new or amended standards applicable after 31 March 2016

The Group has noted the following new, amended or improved standards. Certain of these were applied for the first time in the year ended 31 March 2016.

  • Improvements to IFRS 10, IFRS 12 and IAS 28 - Investment entities: implementation of the consolidation exception(1), effective 1 January 2016
  • Improvements to IFRS 11 Joint Arrangements - Recognition of the acquisition of interests in joint operations, effective 1 January 2016
  • Improvements to IAS 1 Presentation of Financial Statements - Initiative on disclosures, effective 1 January 2016
  • Improvements to IAS 16 Property, plant and equipment and IAS 38 Intangible assets:
  • Clarification of Acceptable Methods of Depreciation and Amortization, effective 1 January 2016
  • Improvement to IAS 16 Property, plant and equipment and IAS 41 Agriculture - Bearer plants, effective 1 January 2016
  • Improvements to IAS 19 Employee Benefits: DEfined benefit plans: Employee contributions, effective 1 February 2015
  • Improvements to IAS 27 Separate Financial Statements - Equity Method in Separate Financial Statements, effective 1 January 2016
  • Annual improvements to IFRSs 2010-2012 cycle (published in December 2013), effective 1 February 2015
  • Annual improvements to IFRSs 2012-2014 cycle (published in September 2014), effective 1 January 2016

The first time application of these new, amended or improved standards did not always affect the Group's consolidated balance sheet, the consolidated results, the consolidated cash flow statement and/or the notes to the financial statements.

(1) Not yet adopted by the EU as of 31 March 2016

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The nature and impact of these new, altered or improved standards is described below:

Improvements to IFRS 10, IFRS 12 and IAS 28 - Investment entities: Application of the consolidation exception.

The improvements are applied retrospectively and deal with issues arising from the application of the consolidation exception for investment entities under IFRS 10. The improvements to IFRS 10 clarify that the exemption from the requirement to present consolidated financial statements applies to a parent company which is a subsidiary of an investment entity when the investment entity already measures its subsidiaries at fair value. The improvements to IFRS 10 also clarify that only a subsidiary of an investment entity, which is in itself not a collective investment entity and which offers support activities to the investment entity is consolidated. All other subsidiaries of an investment entity are measured at fair value.

The improvements to IAS 28 allow an investor, whenever the equity method is applied by a participating interest of an investment entity or a joint venture, to maintain the fair value measurement of its share in the subsidiaries. The improvements are required to be applied to financial years starting from 1 January 2016, but may be applied earlier. These improvements have no significant impact on the presentation and disclosures in the Group's financial statements, as they were already implemented in a consistent fashion in previous years.

Improvements to IAS 1 - Presentation of Financial Statements

The improvements have to IAS 1 are intended to clarify, rather than significantly alter, the standard. The improvements clarify:

  • The materiality requirements of IAS 1;
  • That specific lines in the income statements and statement of comprehensive income may be displayed is a disaggregated manner;
  • That companies have flexibility in deciding in what order they show the notes to the financial statements;
  • The share of results in participating interests and joint ventures accounted for under the equity method should be shown aggregated as a single line in the statement of comprehensive income, and must be broken down into data that are or are not subsequently reclassified in the profit and loss accounts.

The improvements also clarify the requirements that apply when additional subtotals are presented in the balance sheet, income statement and statement of comprehensive income. The improvements must be applied in financial years starting from 1 January 2016.

These improvements have no significant impact on the disclosures in the Group's financial statements, as they were already implemented in a consistent fashion in earlier years in line with the clarifications to IAS.

Improvements to IAS 19 - Employee benefits - Defined benefit plan: Employee contributions

IAS 19 requires that a company take into account the contributions from employees or third parties to a defined benefit plan. Where those contributions are related to services, these should be allocated to the period of service as a negative contribution. These improvements clarify that, if the contribution amount is independent of length of service, a company may deduct these contributions from the 'service cost' in the period in which the service was provided and hence is not longer required to assign it to the period in which the service is provided. The amended standard is effective for financial years beginning on or after 1 February 2015.

This improvement had a limited impact on the Group, since none of the Group companies has a defined benefit plan with contributions by employees or third parties.

Standards that have been published but are not yet in effect

The following standards and interpretations are those that were already issued during the financial year, but are not yet in force.

  • IFRS 9 Financial Instruments(1), applicable from 1 January 2018
  • IFRS 15 Revenue from Contracts with Customers(1), effective 1 January 2016
  • Improvements to IAS 1 Presentation of Financial Statements - Initiative on disclosures 1, effective 1 January 2016
  • IFRS 16 Leases(1), effective 1 January 2019
  • Improvements to IAS 7 Statement of Cash Flows - Disclosure initiative(1), effective January 2017
  • Improvements to IAS 12 Income Taxes - Recognition of deferred taxes on unrealized losses(1), effective 1 January 1, 2017

The Group is currently analysing the impact of the amendments on its balance sheet and results.

(1) Not yet adopted by the EU as of 31 March 2016

The standards listed below are expected to potentially impact the Group.

IFRS 9 Financial instruments

The IASB published the final version of IFRS 9 which contains all phases of the project to replace IAS 39 Financial Instruments - Recognition and Measurement (the new classification and measurement requirements, impairments and hedge accounting).

This standard is effective for financial years beginning on or after 1 January 2018. Earlier application is permitted. With the exception of hedge accounting, retrospective application of these changes is mandatory, though with no obligation to provide comparative information.  With respect to financial instruments that are part of hedge accounting, the application of this standard is applied prospectively, in general, with some limited exceptions.

Improvements to IAS 7 Statement of Cash Flows - disclosure initiative.

The improvements require a reconciliation of all balance sheet items included in cash flows from financing activities. The improvements are effective for all financial years beginning on or after 1 January 2017. Earlier application is permitted.

Improvements to IAS 12 Income Taxes - Recognition of deferred taxes on unrealized losses

The narrow-scope amendments to IAS 12 clarify the processing of deferred tax for a debt instrument measured at fair value. These improvements are effective for all financial years beginning on or after 1 January 2017. Earlier application is permitted.

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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.

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