4. Summary of significant accounting policies
The following are principal accounting policies applied in the preparation of these financial statements. These policies have been
applied consistently to all the years presented, unless otherwise stated.
2. Accounting convention
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have
been applied consistently to all the years presented, unless otherwise stated, and the financial statements have been prepared on
a going concern basis.
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as
endorsed by the European Union and prepared in accordance with Book 2, Title 9 of the Dutch Civil Code. The financial
statements have been prepared under the historical cost convention, except that financial instruments are stated at fair value.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements are disclosed in note 3.
New and amended standards adopted by the Company
There are no IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January
2021 that would be expected to have a material impact on the Company.
Standards, amendments and interpretations to existing standards that are not yet effective
The directors have assessed the impact of standards, interpretations and amendments to existing standards that have been
published and are mandatory for the Company's accounting periods beginning on or after 1 January 2017 and concluded that the
following standards are relevant:
IFRS 9 ‘Financial instruments’ (“IFRS 9”) was issued by the International Accounting Standards Boards (“IASB”) in November
2009, amended in November 2013, and revised and reissued by the IASB in July 2014. The standard includes a logical model for
classification and measurement and a single, forward-looking ‘expected loss’ impairment model. The standard replaces the
existing guidance in IAS 39 'Financial Instruments: Recognition and Measurement' (“IAS 39”) and carries forward the guidance on
recognition and derecognition of financial instruments from IAS 39. IFRS 9 is applicable retrospectively, except where otherwise
prescribed by transitional provisions of the standard, and is effective for annual periods beginning on or after 1 January 2018. The
Firm is currently assessing and quantifying the impact of IFRS 9 on the financial statements.
‘IFRS 15 Revenue from Contracts with Customers’ (“IFRS 15”) was issued by the IASB in May 2014 for retrospective application
in annual periods beginning on or after 1 January 2018. IFRS 15 establishes a framework for determining whether, how much and
when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 ‘Revenue’. The Firm is currently
assessing and quantifying the impact of IFRS 15 on the financial statements.
There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on
the Company.
4. Summary of significant accounting policies (continued)
4.2 Foreign currency translation
Monetary assets and liabilities in foreign currencies are translated into United States ("U.S.") dollars at rates of exchange ruling
on the balance sheet date. Income and expense items denominated in foreign currencies are translated into U.S. dollars at
exchange rates prevailing at the date of the transactions. Any gains or losses arising on translation are taken directly to the
income statement.
Non-monetary items denominated in foreign currencies that are stated at historical cost are translated into U.S. dollars at the
date of the transaction.
4.1 Functional and presentation currency
Items included in the financial statements of the Company are measured using the currency of the primary economic
environment in which the entity operates ("the functional currency"). The financial statements are presented in U.S. dollars,
which is the Company's functional and presentation currency.
The U.S. dollar is the functional currency as this is the currency of the primary economic environment in which the Company
operates and generates net cash flows.
4.3 Financial instruments
The Company classifies its financial assets and financial liabilities in the following categories on initial recognition: financial
assets and financial liabilities held for trading and financial assets and financial liabilities designated at fair value through profit or
loss.
The Company recognises a financial asset or a financial liability on its balance sheet when it becomes party to the contractual
provisions of the instrument.
i. Financial assets and financial liabilities held for trading
The Company considers a financial asset or financial liability as held for trading if it is acquired or incurred principally for the
purpose of selling or re-purchasing it in the near term, or forms part of a portfolio of identified financial instruments that are
managed together and for which there is evidence of a recent actual pattern of short-term profit taking, or is a derivative.
Financial assets and financial liabilities held for trading are initially recognised on trade date at fair value in the balance sheet
with transaction costs being recorded in profit or loss and any gains or losses are taken directly to the income statement.
Subsequently, they are measured at fair value.
ii. Financial assets and financial liabilities designated at fair value through profit and loss
Financial assets and financial liabilities that the Company designates on initial recognition as being at fair value through profit or
loss are recognised at fair value, with transaction costs being recognised in profit or loss and are subsequently measured at fair
value. Gains and losses on financial assets and financial liabilities that are designated at fair value through profit or loss are
recognised in profit or loss as they arise. A financial instrument may only be designated at inception as held at fair value through
profit or loss and cannot subsequently be reclassified.
Financial assets or financial liabilities are designated as at fair value through profit or loss only if such designation (a) eliminates
or significantly reduces a measurement or recognition inconsistency; or (b) applies to a group of financial assets, financial
liabilities or both that the Company manages and evaluates on a fair value basis; or (c) relates to an instrument that contains an
embedded derivative unless the embedded derivative does not significantly modify the cash flows required by the contract or
when a similar hybrid instrument is considered that separation of the embedded derivative is prohibited.
iii. Derecognition of financial assets and financial liabilities
Financial assets are derecognised when the contractual right to receive cash flows from the asset has expired, or has been
transferred with either of the following conditions met:
a) the Company has transferred substantially all the risks and rewards of ownership of the asset; or
b) the Company has neither retained nor transferred substantially all of the risks and rewards; but has relinquished control of the
asset.
Financial liabilities are derecognised when they are extinguished, that is when the obligation is discharged, cancelled or expires.
4. Summary of significant accounting policies (continued)
4.4 Fair value
Financial instruments are initially recognised at fair value on the date of initial recognition. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date.
Fair values are determined by reference to observable market prices where available and reliable. Fair values of financial assets
and financial liabilities are based on quoted market prices or dealer price quotations for financial instruments traded in active
markets. Where market prices are unavailable, fair value is based on valuation models that consider relevant transaction
characteristics (such as maturity) and use as inputs observable or unobservable market parameters. Valuation adjustments may
be made to ensure that financial instruments are recorded at fair value.
For financial liabilities held at fair value, the carrying amount reflects the effect on fair value of changes in own credit spreads
making maximum use of observable market data. Most market parameters are either directly observable or are implied from
instrument prices. The model may perform numerical procedures in the pricing such as interpolation when input values do not
directly correspond to the most actively traded market trade parameters.
On initial recognition, it is presumed that the transaction price is the fair value unless there is observable information available in
an active market to the contrary. The best evidence of an instrument’s fair value on initial recognition is typically the transaction
price. However, if fair value can be evidenced by comparison with other observable current market transactions in the same
instrument, or is based on a valuation technique whose inputs included only data from observable markets then the instrument
should be recognised at the fair value derived from such observable market data.
The Company classifies its assets and liabilities according to a hierarchy that has been established under IFRS for disclosure of
fair value measurements. The fair value hierarchy is based on the transparency of inputs to the valuation of an asset or liability as
of the measurement date. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3 inputs).
A financial instrument’s categorisation within the fair value hierarchy is based on the lowest level of input that is significant to the
fair value measurement.
4.5 Fee and commission income and expense
Interest income and expense are recognised using the effective interest rate. Effective interest rate is the rate that exactly
discounts estimated future cash flows to the instrument's initial carrying amount. Calculation of the effective interest rate takes into
account fees income, that are an integral part of the instrument's yield, premiums or discounts on acquisition or issue, early
redemption fees and transaction costs. All contractual terms of a financial instrument are considered when estimating future cash
flows.
Fees and commissions are recognised when the underlying contract becomes legally binding or at the agreed due date if later.
Profits and losses resulting from the revaluation of financial instruments are recognised as trading gains or losses on a trade date
basis.
4.6 Cash and cash equivalents
Cash and cash equivalents in the cash flow statement represent cash in hand and balances with banks, other short term liquid
investments with original maturities of three months or less, and bank overdrafts.
4.7 Share capital
The share capital of the Company consists of ordinary shares, classified as equity.
2.9 Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
2.10 Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
4. Summary of significant accounting policies (continued)
2.11 Current and deferred income tax
Income tax expense on taxable profits (current tax) is recognised as an expense in the period in which the profits arise. Income
tax recoverable on tax allowable losses is recognised as a current tax asset only to the extent that it is regarded as recoverable
by offset against taxable profits arising in the current or prior period. Current tax is measured using tax rates and tax laws that
have been enacted or substantively enacted at the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising from the differences between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates
and legislation enacted or substantively enacted by the balance sheet date, which are expected to apply when the deferred tax
asset is realised or the deferred tax liability is settled. Deferred tax assets and liabilities are only offset when there is both a legal
right to set-off and an intention to settle on a net basis.