NOTES TO F I NANC I AL STATEMENTS 4.5. Impairment of financial assets The Company determines that financial assets are impaired when there has been a significant or prolonged decline in the fair value below its cost. This determination of what is significant or prolonged requires judgment. In making this judgment, the Company evaluates among other factors, the normal volatility in market price, the financial health of the investee, industry and sector performance, changes in technology, and operational and financing cash flow. Impairment may be appropriate when there is evidence of deterioration in the financial health of the investee, industry and sector performance, changes in technology, and financing and operational cash flows. If the investments are determined to be impaired, a loss is considered realized and charged to income in that period. Fair value through profit or loss debt securities and receivables are considered impaired when there is objective evidence of impairment as a result of a loss event that has an impact on the estimated future cash flows of the financial asset that can be reliably estimated. 4.6. Foreign currencies 4.6.1. Functional and presentational currency Items included in the financial statements are measured using the United States (“US”) Dollar currency (the “functional currency”). Accordingly, the financial statements are presented in United States (“US”) Dollars. 4.6.2. Transactions and balances Foreign currency transactions are translated into the Company’s functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at periodend exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Income. The Returnable Capital from KfW is denominated in US Dollars, however the FCDO Returnable Capital is denominated in a foreign currency, Great Britain Pounds (GBP). Therefore, in accordance with IAS 21, this foreign currency monetary item has been translated at the period end using the closing rate. 4.7. Investment income Investment income is comprised of interest and dividend income, which is accrued to the date of the Statement of Financial Position. 4.8. Other income Other income is comprised of grants/funding received or collectible from entities which does not give rise to debt or equity since it has not been received under any shareholder or participant agreement. 5. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS The preparation of financial statements required management to use judgment in applying its accounting policies and estimates and assumptions about the future. Estimates and judgments are continuously evaluated and are based on historical experience and other factors, including expectations about future events that are believed to be reasonable under the circumstances. The following discusses the most significant accounting judgments and estimates that the company has made in the preparation of the financial statements: 5.1. Insurance and reinsurance contracts 5.1.1. Reporting selection The IASB issued IFRS 17 Insurance contracts in May 2017 and on 25 June 2020, the IASB issued amendments to the standard. The effective date of IFRS 17 is for annual reporting periods beginning on or after 1 January 2023. The company adopted the standard on 1 January 2023 and restated comparative information. Comparative information has been restated as required by the transitional provisions of IFRS 17. The change in carrying amounts of insurance and reinsurance assets and liabilities at the date of transition, has been recognised in retained earnings at 1 January 2022. The comparison of current period to annual period was considered to be the most relevant and reliable method for measuring and presenting the insurance contracts in the financial statements, given the specific circumstances and characteristics of the Company’s operations. 103
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