2 Basis of preparation and changes to accounting policies
2.1 Basis of preparation
These 2024 condensed consolidated interim accounts as at June 30, 2024 have been prepared in accordance with IAS 34 of the International Financial Reporting Standards (IFRS), as endorsed by the EU.
The accounting policies, presentation and methods of computation are consistent with those applied in the preparation of FMO’s condensed consolidated interim financial statements for the year ended December 31, 2023, except for the new accounting policy described in 2.8. The consolidated interim accounts do not include all of the information required in a complete set of financial statements prepared in line with IFRS as endorsed by the EU. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in FMO's financial position and performance since the last annual financial statements. These consolidated interim accounts should be read in conjunction with FMO’s consolidated annual accounts as at December 31, 2023.
2.2 Group accounting and consolidation
The company accounts of FMO and the company accounts of the subsidiaries Asia Participations B.V., FMO Investment Management B.V. and FMO Representative Office LAC Limitada are consolidated in these interim accounts. The consolidation of this entity does not have a material impact on FMO's balance sheet or FMO's current business activities.
Asia Participations B.V. and Equis DFI Feeder L.P. provide equity capital to companies in developing economies. FMO Investment Management B.V. carries out portfolio management activities for third party investment funds, which are invested in FMO’s transactions in emerging markets and developing economies. FMO has a 63% equity stake in Equis DFI Feeder L.P.. All other subsidiaries, except FMO Ventures Program, are 100 percent owned by FMO.
The FMO Ventures Program is a program involving FMO, the Dutch State and European Commission that facilitates investments in young startups and scale ups. The FMO Ventures Program is a structured entity that has been designed so that voting or similar rights are not a dominant factor in deciding who controls the entity and relevant activities are directed by means of contractual arrangements. For the FMO Ventures Program, FMO has control over direct relevant investment decisions and returns. The State Funds’ share of the program is not used by FMO to generate returns.
2.3 Foreign currency translation
The condensed interim accounts are stated in euros, which is the presentation and functional currency of FMO. All amounts are denominated in thousands of euros unless stated otherwise. In accordance with IAS 21, foreign currency transactions are translated to euro at the exchange rate prevailing on the date of the transaction. At the statement of financial position date, monetary assets and liabilities are reported using the closing exchange rate. Non-monetary assets that are not measured at cost denominated in foreign currencies are reported using the exchange rate that existed when fair values were determined.
2.4 Adoption of new standards, interpretations and amendments
There are no new standards, interpretations or amendments adopted by the EU that have an impact on FMO.
2.5 Standards issued but not yet effective
The International Accounting Standards Board issued the following new standards and amendments to existing standards. These standards and amendments are still in the process of being endorsed by the EU and FMO does not early adopt. The new standards and amendments are:
IFRS 18 Presentation and Disclosure in Financial Statements (issued on 9 April 2024, effective from 1 January 2027)
IFRS 19 Subsidiaries without Public Accountability: Disclosures (issued on 9 May 2024, effective from 1 January 2027)
Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and IFRS 7) (issued on 30 May 2024, effective from 1 January 2026)
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (issued on 15 August 2023, effective from 1 January 2025)
FMO will conduct and disclose an impact assessment as appropriate upon confirmation of EU's endorsement of these new standards and amendments.
2.6 Estimates and assumptions
In preparing the condensed consolidated interim accounts in conformity with IAS 34, management is required to make estimates and assumptions affected reported income, expenses, assets, liabilities and disclosure of contingent assets and liabilities. The same methods for making estimates and assumptions have been followed in the condensed consolidated interim accounts as were applied in the preparation of FMO’s consolidated annual accounts as at December 31, 2023.
2.7 Segment Reporting
The operating segments are reported in a manner consistent with internal reporting to FMO’s chief operating decision maker. The chief operating decision maker who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Management Board. FMO presents its operating segments based on servicing unit. Reference is made to the Segment Information note for more details on operating segments.
2.8 Interest bearing securities
During the current period FMO acquired new interest bearing securities. Interest rate swaps are entered into to manage the risk associated with the securities and these swaps are measured at fair value through profit and loss. Therefore, to eliminate a possible accounting mismatch, the interest bearing securities are designated at fair value through profit and loss. The interest bearing securities are initially measured at fair value and subsequent changes in fair value are recognized immediately in profit and loss.