KENYA CLIMATE INNOVATION CENTER (A companiy linited by guarantee) REPORT AND FINANCIAI. STATENIENTS FOR TIIE YEAR ENDED 30 .JUNE 2019 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantec) FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Table of contents Pages Directors and statUtorv iIlormation Report of the directors 24 Statement of dircetors responsibilities Report of the independent auditor 6 - 8 Consolidated statement of icome and expenditure 9 Company. statement ofincomei and expenditure 10 Consolidated staternent of financial position I1 Company statement of financial position 12 Consolidaled statement of changes in fund balance 13 Company stalement of changes in fund balance 14 Consolidated statement of cash flow vs Company stalement of cash Ilows 16 Notes to the flinancial statements 17 57 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantec) DIRECTORS ANI) STATUTORY INFORMATION DIRECTORS Prof. Izacl Percira Da Silva Chairman Arthur S. Onyuka Anne Nyaboke Angwenyi Job Kinani KihuIIba Susan Otieno 1,ydiah Kiburn Salimn iohamied Julic Wawcru SECRETARY Azali CPS 11L (,Appointed 1 August 2018) Adif Plaza, 4 Floor Ring Road, Kilimani PO0 Box 62 19 - 00200 Nairobi A U 1)ITOR1 KPMG Kenya Certified Public Accountants S' Floor, ABC Towers Waivaki WVay PO Box 40162 - 00100 Nairobi GPO SUBSIDliARY Kenya Climatc Ventures Limited REGISTERED OFFICE Kaplan & Stratton Williamson 1 ouse. 4th \ong Av enue PO0 Blox 40111 - 00100 Nairobi PRINCIPAL PLACE OF BUSINESS Strathimorc Business School Ole Sangale Road Madaraka PO Box 59857 - 00200 Nairobi BANKERS NIC Bank Kenya Plc KCH ink Kenya Liited ICEA 1ion C'cntre-Riv erside Park KENC( M H luse. Moi Ax enite PO fox 44599 00100 PO. Box 48400 00100 Nairobi Nairobi LAWYERS Mulhoro & (itonga Associates NIMuthithi Place, 1V Floor, Mluthithi HOuse PO Box 5 1090 - 00100 Nairobi Page 1 KENYA CLI11ATE INNOVATION CENTER (A company limited by guarantee) REPORT OF TilE lDIRECTORS FOR THE YEAR END'ED 30 JUNE 2019 Ite Directors submit their report together wx ith the audited consolidated and separate financial statements for the year ended 30 June 2019. The report discloses the state of affairs of the Group and Company 1. Principal activities The principal activities of the Company and its subsidiary are to support the arowth and development of innovative climate technology (clean tech) business models and tecnologies for commercial markets. The Group's objective is to support green growth through strengthened domestic capacity and financing for the transfer, development and deployment of innovative climate solutions. 2. Results The results for the year are set out on page 9 and 10 for the Group and Company respecti vely. 3. Directors The Directors who served during the year and up to the date of this report are set out on page 1. 4. Business review The KCIC provides incubation, acceleration and fiancing services to Kenyan entrepreneurs and new ventures that are developing innovative solutions in energy, water and agrrihusinCss to address climate change challenges. Core Services include Advisorv services. Access to finance, Enabling environment. Access to intOrmation and Access to thcilities. KCIC has been in the forefront in creating awareness on climate chane mitigation. KCIC has since inception incubated 236 SMEs which have created over 9.600 green direct jobs. lie analysis of actual expenditure over budgeted in the year is highlighted below: I July 2018 to 30 June 2019 Budgeted Actual Variance KShs KShs KShs Gross grant receipts before deferred income 284,256,341 282,862,008 1,394,333 Expenditure as per aUdited accounts (excluding KCVF project expenses) 253,522,682 245,488,657 8.034.025 Principal risk and uncertainties theing the Group and Compwan KCIC is committed to managing both its strategic and operational risks across all areas of operations. The Group recoginize that risk management is an integral part of the management process and therefore ensure this becomes part of the cLIlture of the or-anization. On a quarterly basis the risks are documented reviewed by management. presented to the board and deliberations documented through minutes. The management presents in the next quarter actions taken as per board reconmendation to mutigate the risks. PagC 2 KENYA CLIATE INNOVATION CENTER (A company limited by guarantee) REPORT OF THE DIRECTORS FOR THE PERIOD YEAR ENDED 30 JUNE 2019 (CONTINTED) KCIC senior management will work closely with its Board of Directors and specilically Audit and Risk Committee to ensure that collaborative risk management arrangements are in place. Risk Mitigation 1. Investient risk KCIC in vear ended June 2019 continued offerinn Early Stage Financing 11echanism facilities to its clients (simla to yea 201 S Most of these businesses are at growth stage. They may be Considered risky ha ever the> have potential of creating impact such as 'ob creation, poverty reduction and climate change mitigation. Proper due diligence is conducted before investment. 2. Reputational risk- KCIC has entered into partnerships with institutions that it leverages for the credentials. Proper due diligence is done beforc engaging in any partnership to ensure only reputable organisations partner with KCIC. - KCIC has a monitoring and cvaluation department which conducts an evaluation of servicing to clients, assess the organizat ion performance, and collect information that will improve the operations. Political climate in the KCIC does not engage in political activitIcs but works with country leading to negative established government institutions in lobbying for policy perceptions and which may legislations relating to climate change and taxation affecting the impact on on-going climate businesses that wc support projects and potential - KCIC has built good working relationship with its donors: funding vithdrawal, - KCIC is compliant with donors' rules and regulations, Risk of support withdrawal not foreseeable in the near future InsuffiCient resources - Resources include both funding and people: labil -ty Management ensures that any potential risk is mitigated through: * Continuously eugaging in resource mobilisation. Exploration of alternative channels of securing financial resources * Partnerships' engagement * Improving team cohesion and ensuring comrpetitise remuneration. 5. Relevant audit information The Directors in office at the date of this report continni to the best of their knowledge, that: (i) There is no relevant audit infonnation of which the Company's auditor is unaware: and (ii) Ilach Director has taken all the steps that they ought to have taken as a director so as to be aware ofa any relevant audit inforiation and to establish that the (ompanV's auditor is aware of that information. 6. Auditor [lie Company's auditor. KPMG Kenya, continue in office in accordance with the Kenyan Companies Act. 2015. Page 3 KENYA CLIMATE INNOVATION CENTER (A conipans limited by guarantec) REPORT OF TIIE DIRECTORS FOR TIlE PERIOD YEAR ENDED 30 JUNE 2019 (CONTINUED) 7. Employ ces The directors are pleased to record their appreciation for the untiring efforts of all employees of tIle Group and Company. 8. Approval of the financial statenients The fina.cial slatemenis \ere approed and authorised for issuc at a meeting of the Directors held on \C C: ('i e\ä c < 2019. BY ORDER OF TIIE BOAR) Azali CPS LLP Cerlified Publ Secetaie of Kenya Secretarv Date: Page, 4 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantec) STATFMENT OF DIRECTORS' RESPONSIBILI1IES hIle Directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements of Kenya Climate Innovation Center (the Group and Company) set out on pages 9 to 57 which comprise the Consolidated and Company statement of financial position as at 30 June 2019. and the Consolidated and Company statement of inconie and expenditure, Consolidated and Company statement of changes in fund balances and Consolidated and Company statement of cash flows tor the year then ended, and notes to the financial statements inciluding a summarv of sinificanit accounting poli ce and other explanatory information. The Directors' responsibilities include: determining that the basis of accountin describcd in Note 2 is an acceptable basis Jr preparing and presenting the consolidated and separate financial statements in the cireumstanes. pieparation and presentation of consolidated and separate f-indcal statements in accordance x ith International Financial Reporting Standaids and in the manner rlequired by the Ken1van Companies Act. 2015 and for such internal control as the Directors determine is necessari to eiahle the preparation of financial statements that are f1ee flom niterial misstatements. v hether duc to fraud or errOr. Under the Kenyan Companies Act, 2015 the Directors are required to prepare financial statements for each financial vear wx hich give a true and fair view of the financial position of the Group and Company as at te end of the financial year and of the financial performance of the Group and Company for that year. It also requires the Directors to ensure the Group and Company keep proper accountini.g records which diselose with reasonable accuracy, the financial position of the Group and Company. The Directors accept responsibility for the Consolidated and separate financial statements, which have been prepared using appropriate accounting policies supported by reasonable and prudent judgements and estimates, in conformity with International Financial Reporting Standards and in the mani required by the Kenvan Companies Act. 2015. The Directors are of the opinion that the Consolidatcd and Separate financial statements giv a true and fair view of the financial position, financial perfomance and cash flows of the Group and Company. T he Direttors further accept responsihilitv for tle niaitenaCe ofaccountinu records ux huch mav be relied upon in the preparation of financial staterne:ts. as xve|l as adequaie s\sterns of interna[li nancial control. The Directors hav e made an assessment of the Company and its subsidiary's ability to continue as a going concern and have no reason to believe the Company and its subsidiarv will not be a going concern for at ]east the next twelx e moìniths frorn the date of this statenìent. Approval of the financial statements The financial statements. s indicated aboe. wxere approved and authorised for issue by the Board of D iretrs on \2019. zael Pertra Da Silva Edw ard Mungai 'ha f Bo ui-d o Dävt,rs (Oli i,1xt unilv OflLvti. Date: \2019. Pag,e5 KPMG Kenya Telephone +24 20 2806000 Certifled Pubtic Accountants Emad info@nmg :o.0 8th Floor, ABC Towers Webshte www kpmg comieastafrica Waiyakl Way PO Box 40612 00100 GPO Nairobi Kenya REPORT OF TIE INDEPENDENT AUDITOR TO THE DIRECTORS OF KENYA CLIMATE INNOVATION CENTER (A company finifted by guarantee) Report on thc audit of the consolidated and separate financial statements Opinion We have audited the consolidated and separate financial statements of Kenya Climate Innovation Center (the Group and Company), as set out on pages 9 to 57 which comprise the Consolidated and Company statement of financial position at 30 June 0 19, and the consolidated and Company statement of mcome and expenditure, the Consolidated and Company statenent of changes in lund balance and the consolidated and Company statement of cash flows for the vear then ended, and notes to the financial statements including a summary ot significant accountiIg policies and other explanatorv information, In our opinion, the accompanving consolidated and separate financial statements give a truc and fair vixew of the consolidated and separate financial position of Kenya Climate Innovation Center at 30 June 2019, and its consolidated and separate financial perfonnance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the Kenyan Companies Act. 2015. Bais for opition Wc conducted our audit in accordance witli International Standards on Audit(ing ISAs. Our responsibilities under those standards are further described in the Auditor s Resposibihitie for fhe A ud/it ojihe Consolidated and Separate Finania Sturements section of our report. We are indelpendent of the Group and Company in accordance with the International Ethics Standards Board for Accountantis' CoJe of Ethics for ProIsCSional ALcounmnts (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Kenya, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. W\e belie\ e that the audi evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other infrmation Thc Direectors are responsible for the other infonnation. The other information comprises the information included it the -Rcport and /uncia/ Staeents but does not include the consolidated and separate financial statements and our auditor's report thereon. Our opinion on the consolidated and separate tinancial statements does not cover the other infomation and we do not express an audit opinion or any form of assurance conclusion thereon. In connection x ith our audit of the consolidated and separate financial statements, our responsibility is to read the other infonnation and, in doing so, consider whether the other information is inaterially inconsistent with the consolidated and separate financial statenents or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Page 6 KPMG Kenya is registered pates ip nd m e the Partners EE Aio AM Mbai KPMG network of dependent member firms af zaed with Brtint 8c C-Suza JL Mwaura KPMG irtenae l acooperative KPMG Inernatoona s a JM Gathecha BM Ndungu Swiss entity J KarJk JM Ndunyu PI K ah a AW Pnnge' KPMG REPORT OF THE INDEPENDENT AUIIITOR TO iTE DIRECTORS OF KENYA CLIMATE INNOVATION CENTER (CONTINUED) (A company limited by guarantee) Report on the audit of the consolidated and separate financial statements (Continued) Direcrs' respolisibilities for the consolidated and separatefinancial statemtents The Directors are responsible for the preparation of the consolidated and separate financial statements that give a true and fair view in accordance with International Financial Reporting Standards and in the manner required by the Kenyan Companies Act, 2015 and for such internal control as the Directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free fromn material misstatenents. whether due to fraud or error. In prcparing the consolidated and separate financial statements, the Directors are responsible for assessing the Group and Company's ability to continue as a going concern, disclosing, as applicable, matters related to gonw concern and using the going concern basis of accounting unless the Directors either intend to liquidate the (Group and, or the Company or to cease operations. or have no realistic alternative but to do so. The Directors are responsible for ovcrseeing the Group's and Company's reporting process. Auditor's resjosibilities for the audit of the consolidated and separtefinancial statements Our objectives are to obtain reasonable assUIrance about whether the consolidated and separate financial statements as a whole are free fron material misstatement, wvhether due to fraud or error, and to issue al au1ditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee tlat alt audit conducted in accordance with ISAs wvill always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate. they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and scparate financial statements. As part of an audit in accordance with ISAs. we exercise professional judgment and maintain protessional skepticism throughout the audit. We also: - Identify and assess the risks of imaterial misstatement of the consolidated and separate financial statements, whether due to fraud or error. design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is Iigher than for one resulting from error, as fraud may involve collusion. forgery, inlentional omissions, misrepresentations. or the override of internal control. - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. but not for the purpose of expressing an opinion on the effectiveness of the Group's and Company's internal control. - E%aluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors. - Conclude on the appropriateness of the Directors' use of the going concern basis of accoLnting and. based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's and Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated and Separate financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. lowever. future events or conditions may cause the Group andior the CoMpanv to cease to continue as a going concern. Page 7 KPMG REPORT OF TIE INDEPENDENT AUDITOR TO TlIE DIRECTORS OF KENYA CLINIATE INNOVATION CENTER (CONTINU ED) (A conipany limited by guarantec) Report on the audit of tie consolidated and separate financial statements (Contiued) Auditor's responsibilities fjr the audit of the conisolidated and separate financial statements (continued) - Evaluiate the overall presentation, structure and content of the consolidated and separate financial statemenits. including the disclosures. and whether the consolidated and separate financial statemenits represent the underiving transactions and events in a manner that achieves fair presentation. We conminicate with the Directors regarding, amonu other imatters. the planned scope and timing of the audit and significant audit findings, including anv significant deficiencies in internal control that we identify during our audit. Report on other legal and regulatory requirenents As required by the Kenvan Companies Act. 2015, we report to you, based on our au.di. that: (a) In our opinion. the inforiation given in the directors' report for the year ended 30 June 2019 on pages 2 to 4 is consistent with the financial statements: and (b) Our report on the consolidated and separate financial statements is unucialified. Pe, s ining utne'r vsponslibe fr tie audit resuling in thi indlpende audiro 's repnrt is CiPA John Ndi(1n1.1 P2700 KPMG Kenya Cerified Public Accountants PO 14OX 40612 - 00100, GPO Nairobi Date: Pace 8 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) CONSOLIDATED STA IEMENT OF INCOME AND EXPENDIT URE FOR TIHE YEAR ENIDED 30 JUNE 2019 Note 2019 2018 KShs KShs INCOME Receipts from Royal Danish Embassy 6 225,937,101 190,222.078 Restricted income (KCVF project) 7 15,650.889 174,852.760 Other rcit Bank interest income 10,871,558 8,019,336 Other income 8 30.079,873 20 886,599 Total income 282.539,421 393,980,773 EX PENSES Client support services 133.459,257 116,691,629 KCV Ltd expenses 85,787,715 55.682,009 Impairment loss 51.860,068 Bnsiness ineubation and accelerator services 9 46.581.618 51,197,110 Access to finance services 22.121,096 21,948,170 Olther Project Funded expenses 16,528,413 14,853,354 Capital expenditure 121 39892 373.122 Sustainability initiative expenses 5.739.878 - Keny iIni Wind project expenses 4,032,752 794,339 Bank chiares 191,830 155.268 KCV proJect expenses 3,690 10.556 Forex ualn KCIC funds ( 24.414) ( 143,220) Forex gain on KC\T project funds (i ,00»91611) ( 1,503,238) Total expenses 377412.184 260,059,099 (Deficit)/surplus before tax ( 94,872,763) 133,921,674 Ineome tax expenlse 17(b) ( 9,292) ( _ 114,054) (Deficit)/surplus for the year ( 94,882.055) 133.807.620 Represented by: KCIC Company surplus 22 13,668,554 14,873,156 Restricted project surplus 17,406,808 176.345,442 KCV Ltd Surp[us (loss) (125,957.417) ( 57,410,978) ( 94.882.055) 133.807.620 The notes set out on pages 17 to 57 form an integral part of these financial tatenients. Page 9 KENYA CLI.1ATE INNOVATION CENTER (A company limited by guarantee) COMPANY STATEMENT OF INCOME AND EXPENDITURE FOR THE YEAR ENDED 30 JUNE 2019 Note 2019 2018 INCOMI KShs KShs Reccipts from Royal Danish Lmbassy 6 225,93710 1 190222,078 Resineted income (KCVF projeci) 7 15.650.889 174,852760 Otheur rewCip?ts Bank interest income 10.676,167 7,639,555 Other income 8 23,504,227 2,881,295 Total incone 275768,384 395,595,6 EXPENSES Celient support services 133.459.257 l 16,691.629 Business incuation and accelerator 9 46.581,618 51.197,110 services Access to finance services 22,121,096 21,948,170 Other projects funded expenses 16.528,413 14,853,354 Capital expenditure 2,139, 892 373-122 Sustainability Iiiii ative expenses 5,739.878 Impaient Oss 4,977,946 Kenya Mini Wind projeet expenses 4,032.752 794,339 Bank charues 191,830 155,268 KCVI project expenses 3.690 10.556 Forex gains on KCIC funds ( 24.414) ( 143,220) lForex gain on KiV F project funds ( ',009 611) ( 1,503.238) Total expenses 244,742,347 204,377,090 Surpius be-re tax 31.026.037 191.218.598 Income tax expense 17(b) _49,325 _ _ Surplus for the year 31.075362 1 218.598 Represented by: KCIC Company surplus 22 13,668,554 14.873,156 Restricted procmt surplus 1j7406808 176.345,442 31,075,362 191,218,598 The noes set out on pages 17 to 57 tbnn an integral part of these financial statements. Page 10 KENYA CLIMATE INNOVATION CENTER (A company linited by guarantee) )CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 .JUNE 2019 Note 2019 2018 ASSETS KSis KShs Non-current assets Propertv and equipment 1 19,734,002 15,462,470 Cormputcr softwarc 12 3,8 55.039 7,650,174 Loans and advances 13 75,083,861 106,052.703 98,672,902 129,165,347 Cuirrent assets Receivables and advances 15 17,988.,360 18.88,327 Cash and cash equivalents 14 297,833.471 296,650,848 315,821,831 315,539,175 TOT Al ASSE TS 414.494,733 444 742 IIABILTFIES AND FUND BALANCES Current liabilities Accounis pavable 16 153,663,271 98,135,933 Tax payable 17(a) 86.226 106,412 Deferrcd donor inc me 18(a) 93,407.755 68,418,515 )cferred income 18(b) _- 12,077.100 247,157,252 178,737,960 Fund balances Capital and surplus (pagc 13) Capital reserve account 1 9(a) 21.594.592 19,123,805 Restriiced project surplus 19(b) 276.582.208 259,175,400 General fund 19(c) (130.839.319) ( 12,332,643) 167,337,481 265,96 6,562 TOTAL LIABILITIES AND FUND BALANCES 414,494,733 444,04,522 The financia1 statcments set out on pages 9 to 16 were approNed ad authorised 60r Issuc by the Board on _-__- 20 29 and weie signed on thec chchlE by Iz Edx% ard Alingai Dimet<»Chi 1u T4 un OfUtiwc he notese out on pages 17 to 57 form an integral part of tlhes financial statenents. Page 11 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) COMPANY STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2019 Note 2019 2018 KShs KShs ASSETS Non-current assets Property and eCquinpment i 17.739,583 11,473,632 Coimputer software 12 3.855.039 7,650,174 Loans and advances 13 10,422,507 10,000,000 Amnount due from rclated pari- 20(d) 206,616.783 167,497,783 Investnent in subsidiary 21 100,000 100,000 238,733,912 196,721,589 Current assets Reccivablcs and advances 15 18,993,215 16,070,268 Cash and cash equivalents 14 296,825,344 278,630,831 315,818,559 294;701,09 TØTAL ASSETS 554,552,471 491,422,688 LIABILITIES AND FUND BALANCES Current liabilities Accounts payablc 16 110 954 , 282 93.483,463 Tax payable 17(a) - 49.325 Deferred donor inconme I 8(a) 93,407,755 68,418,515 Deferred income 18(b) - 12.077.100 204,362,037 174,028,403 Fund balances Capital and surplus (page 14) Capital reservc account 19(a) 21,594,592 19,1 23.805 Restrictcd project surplus 19(b) 276582,208 259,175.280 General fund 19(c) ~2.0 3,634 39,095,100 350,190,434 317,394,18--- TOTL A I IABILITIES AND FUND 554.552.471 491,422,688 BAIANCES The Iinancial statements sct out on pages 9 to 16 were approed and authorised for issue by the Board on \ ,> _i __ 19 and w ere signed on tli behalb: I ca e MNa Edvard Í\nltgai 1 >d Dircis j h F kivc (O 1he n"s,l et out on pages I7 to 5 form an i[tegtal part of these financial statements Page 12 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) CONSOLIDATED STATEMNT OF CIANGES IN FUND BAIANCES FOR TiIlE YEAR ENDED 30 ,1UNE 2019 Restricted General Capital 2019: project fund fund reserve Total KShs KShs KShs KShs Balance as at I July 2018 259,175,400 ( 12,332.643) 19,123.805 265,966,562 Adiustment on initial application of IFRS 9 (Note 25) _ - ( 6,217.813) - ( 6,217,813) Restated balance at I July 2018 259,175,400 ( 18,550,456) 19,123,805 259,748,749 Asset additions - 1 ,307,071 11 307.071 Depreciation ( 8,836,284) .836,284) Surplus for the year 17,406,808 (1 .288.863) - (_94382,055) Balance as at 30 June 2019 27ý82.208 (130,839,319) 21.594592 167337,481 2018: Balance as at I JuV 2017 82.829.958 24,221,924 19,607, 088 126,658,970 Asset additions - 9,448,877 9,44,877 Assets transfer to KCV Ltd - 1,886,505) ( 1,886,505) Depreciation - ( 8.045,655) ( 8,045,655) Surplus for the year 176,345.442 ( 36,554,567) - 139,790,875 Balance as at 30 June 2018 259.175.400 ( 12,332.643) 19.123,805 265.966-562 The notes set out on pages 17 to 57 form an integral part of these financial statemenis. Page 13 KENYA CLI\IATE INNOVATION CENTER (A company linited by guarantec) COMPANY STATEMENT OF CHANGES IN FUND BALANCES FOR THE YEAR ENDED 30 JUNE 2019 Restricted General Capital 2019: project fund fund reserve Total KSlis KShs KSls KShs Balance as at 1 Julv 2018 259,175.400 39,095,080 19,123,805 317,394,285 Adiustmiiet on initial application Of IFRS 9 (Note 25) - (750,000) - ( 750,000) Asset additions - - 11.307,071 11.307,071 )epreclition - - ( 8,836,284) ( 8,836,284) SurpILus for the year 17.406.808 1 3.3. - 31,075.36 Balance as at 30 Junc 2019 252,013,634 21.594.592 350190434 Restricted General Capital 2018: Project fund fund reserve Total KShs KSlis KSIs Kslis Balancc as at 1 July 2017 82 829,958 24,221,924 19.607,088 126,658_970 A,sse, additions - 9.448,877 9.448.877 Asset ransferred to KCV L - - (1,886505) ( 1,886,505) Depreciation -- ( 8.045,655) 8,045.655) Surplus for thc vear 1 76,345.442 14,873,156 - 19_121 598 Balance as at 30 June 2018 259,175,400 8 19,123,805 37,394,285 The notes set out on pages 17 to 57 form an integral part of these financial statements. Page 14 KENY`A CLINIAIE INNOVATION CENTER (A company liìited by guarantee) CONSOLIDATED STATEMENT OF CASII FLOWS FOR THIE YEAR ENDEI) 30 JUNE 2019 2019 2018 Note KShs KShs Cash flows froni operating activities (Deficit) surplus before income tax ( 94.872763) 133,921.674 AdjustImcntcs for: Depreciation 1,994,419 1,994,419 Convertible loans interest incole ( 11,940,181) ( 11,789,526) 3ank interest incoMe (_10,71.558) (4.922.489) Cash flows (used in)/generated fron operating activities (115,690,083) 119,204,078 Changes in: Receivables and advances 5,822,455 ( 11,732,161) Accounts payahles 5 5 527,309 30,634,513 - Delered donor incoie 11912,140 (_13,894,422) Cash (ouìtlows)/inflows fron operatinig expenses ( 41,428,179) 124,212,008 Tax paid 17 ( 29,479) ( 114,054) Convertible loans interest income 11.940,181 11,789.526 Bank interest income 10,871,558 4.922.489 Net cash (oitIlowNs)/generated froni operating activities (18,645,919) 140,809,969 Cash flows froni investing activities Investments 19,828.541 (10i,130,215) Net casi inflow/(outflow) fron investment activities 19,828,541 (101,130,215) Net increase in casi and cash equivalents 1.182.623 39,679,754 Cash and cash equivalcnts 1 July 296.650.848 256.971,094 Casli and cash equivalents at 30 June 14 297,833.471 The notes set out on pages 17 to 57 form an integral parl of tìese [Mancial statements. Page 15 KENYA CLIMATE INNOVATON CFNTER (A companY limited by guarantee) COMNIPANY STATEMENT OF CASII FLOWS FOR THE YEAR ENDED 30 JUNE 2019 2019 2018 Note KSis KShs Cash filows front operating activities SurpIls before income tax 31.026,037 19 1 8,598 Cash flow s (used in)/generated front operating activities 31,026,037 191,218,598 Changes in: -- Reccivables and advances 2,922,947) 3.959,445) AXccounts payables 17,470,790 31,803.8000 - Deferred inCome 12,912140 (_9.805,433) Cash generated from operating activities 58.486,020 199,257,520 Tax paid Net cash intlows from operating activities 86020 9,257, Cash flows front inv esting activities Investments (40 291 ,507) (1g77597,7S3) Net cash oiitflows fron investing activities (40291,507) (177,597,783) Net încreasc in cash and cash equivalents 18. 194.513 21,659,737 Cash and cash equivalcts at l Julv 2018 278,630,831 256,971,094 Cash and cash equivalents at 30 June 2019 14 29682 5344 278.63083J. The notes set out on pages 17 to 57 form an intei-al part of these financal statements. Page 16 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019 L REPORTING ENTITY Kenya Climate Innovation Center (KCIC) is incorporated as a company limited by guarantee under the Kenya Companies Act, and is domiciled in Kenya. The consolidated financial statemcnts comprise the company and its subsidiary (Kenva Climate Ventures Limited) (togcther referred to as "Group- or -consolidated" and individually referred to as "Group entities-) The address of its registercd office and principal place of business is as shown on page 1 2. BASIS OF PREPARATION (a) Statement of compliance The consolidated and separate financial statements have been prepared in accordance with international Financial Reporting Standards (IFRSs) as issued by the International Accounting Standards Board (IASB) and in the manner required by the Kcnyan Companies Act. 2015. Details of the Group's accounting policies are included in Note 3. I his is the first set of the Group's financial statemcnts in which IFRS 9 financial instruments have been applied. Changes to significant accounting policies arC described at Note 3. For Kenyan Companies Act. 2015 reporting purposes in these financial statements. the balance sheet is represented by the statement of financial position and the profit and loss account is presented in the statement of income and expenditure. (b) Basis of measurement The financial statements have been prepared on the historical cost basis. (c) Functional and presentation currency The consolidated and separate financial statements are presented in Kenya Shillings (KShs) which is the Company's functional currency, (d) Comparatives Where necessary comparative figures have been adjusted to conform to change in presentation in the current year. (e) Use of estimates and judigements The preparation of financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period, Pa, 17 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) NOTES TO THE FINANCIAL STATEllINTS FOR TIE YEAR ENDED 30 JUNE 2019 (CONTINUCED) 2. BASIS OF PREPARATION (Continued) (e) Use of estimates and judgements (continued) The estimates and assumptions arc based on the Directors best knowledge of current ents, actions, historical experience and various other factors that are believed to be reasonable under the circumstances. the results of which form the basis of making the judgnnents about the carrying values of assets and liabilities that are not readilv apparent froT other sources. Actual results may differ from these estimates. the estimates and underlving assumptions are reviexved on an ongoing basis. Revisions to the accounting estimates are recognised in the period in which the estimate is revised if the rexvision affects only that period or in the period of revision and future periods if the revision affects both current and future periods. In partiCUlar infornation about significant areas of estimations and critical j udgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in Note 4 - Critical accoutiti esWtimates5 andi judgemnicts. 3. SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies set out below have been applied consistently in the period presented in these financial statements: (a) Income recognition ReVenue represents the fair value of consideration received or receivable in the course of the company's actiities. It is recognised when it is probable that future economic benefits wx ill flow to the group and the amount of reVenUe can be measures reliably. KCIC receives income from various donors. Income is recognised wkhen expendit ire is itourred. Interest income is recognised when it is received. Effective interest rate Income from loans and advances to customers is recogniscd in profit or loss using the effective interest rate method. The 'effective interest rate' is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to: - [he cross carry inc amount of the financial asset: or - The amortised cost of the financial liability. When calculating the effective interest rate for tinancial instrUImeits other than purchased or originated credit-impaired assets. the Company estimates fuiture cash f1oxx considering all contractual terrns of' tlhe financial instrument, but not the expected credit loss (EL(.). For purchased or originated credit-impaired financial assets, a credit-adjusted effectix c interest rate is calculated using estimated future cash flows including FCl- ile calculation of the effective interest rate includes transaction costs and fees and points paid or receixed that are an integral part of the effective interest rate. Transaction costs include incremental costs that are directly attributable to the acquisition or issue of a financial asset or tinancial liability. Pace 18 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) NOTES TO TIlE FINANCIAL SATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (a) Income recognition (continued) Amortised cost and gross carrying amount The 'aniortised cost' of a financial asset is the amount at which the financial asset is measured on initial recognition minus the principal repayments, plus or minus the cumulative amortisation using the effective interest rate method of any difference between that initial amount and the maturity anmount and. for financial assets, adjusted for any [CL (or impairnent allowance before 1 January 2018). The 'gross carrying amount of a financial asset' is the amortised cost of a financial asset before adjusting for any expected credit loss allowance. Calculation of interest income The effective interest rate of a financial asset is calculated on initial recognition of a financial asset. In calculating interest income, the effective interest rate is applied to the eross carrving amount of the asset (when the asset is not credit-impaired). The effective interest rate is revised as a result of periodic re-estimation of cash flows of floating rate instrutnents to reflect movements in market rates of interest. For financial assets that were credit-impaired on initial recognition. purchased or, inat ed credit impaired (POCI) assets. interest income is calculated by applying the credit- adjusted effective interest rate to the amortised cost of the asset. Ihe calculation of interest income does not revert to a gross basis, even if the credit risk of the asset improves. For financial assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the amortised cost of the financial asset. If the asset is no longer credit-impaired, then the calculation of initercst income reverts to the cross basis. (b) Expenditure Expenditure is recognised when incurred. (c) Property, plant and equipment Fixed assets are stated at cost less accumulated depreciation and impairment loss. Fixed assets financed by projects funds are written off to the income and expenditure statement in the year of acquisition. Thereafter, the value of the assets is recoonized through the capital reserve. Depreciation is charged on straight-line basis over the estimated useful life of the assets and debited to the capital reserve at the folloxving rates: Buildings and land improx ement - 3% (33.33vears) Computers 333 " 13 y ears) - Computer software - 33 0 (3 - ears) ' Office furniture and equipment - 200 0 (5 years) Depreciation is apportioned in the year of acquisition. Page 19 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantec) NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (d) Translation of foreign currencies transactions Transactions in foreiin currencies during the year are converted into Kenya Shillings at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign cuirency at ihe reporting date are translatcd into Kenya shilling at the exchange rate ruling at that date, Resulting foreign exchange dillerences are recognised in surplus or deficit for the year. (e) Cash and cash equivalent For the purposes of the statement of cash flows, cash and cash equiv alents comprise cash in hand and cash at bank. (f) Financial instruments Financial instruments include balances with banks, trade and other receivables, balances due from and to related parties and trade and other payables. (i) Recognition and initial measurement Trade receivables and debt securities issued are initiallv recognised when they are originated. All other financial assets and financial liabilities are initiallv recognised wN hen the Company becomes a party to the contractual proVisions of the instrument. A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initial ly measured at tair v aluC plus, for an item not at IVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant tinancing component is initially measured at the transaction price. (ii) Classifcationi and subsequer inea.surement Financial assets - Policy applicable from I January 2018 A financial instrument is a contract that gives rise to both a tinancial asset tor one enterprise and a financial liability of another enterprise. Oni initial recognition, a financial asset is classified as measured at: amortised cost, FVOCI - debt iivestment: FVOCI - equity investment; or FVTPL Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day ofthe first reporting period following the change in the business model. A financial asset is me1aCSUred at amortised cost if it meets both of the tllowv ing conditions and is not designated as at FVTPI: - it is held within a bLisiness model whose objective is to hold assets to collect contractUal cash flows; and its contractual terms give rise on specified dates to cash flows that are solely paynents ot principal and interest on the principal amount outstanding. Page 2(0 KENYA CLA1ATE INNOVATION CENTER (\ company limited bv guarantec) NO fESTO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Financial instruments (continued) (ii) Classification and stubseqtuent measiremtentL - continued Financial assets - Business model assessment: Policy applicable from I January 2018 The Company makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed, and information is provided to management. The information considered includes: the stated policies and objectives for the portfolio and the operation of those policies in practice. TlIese include wxhether management's stratev 'OCLIses On earnm2 contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realising cash flows through the sale of the assets, how the performance of the portfolio is evaluated and reported to the Companys management; the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed. how managers of the business are compensated - e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and the frequency. Volume and timing of sales of financial assets in prior periods. the reasons for such sales and expectations about future sales activity. Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Company's continuig recognition of the assets. Financial assets that are held for trading or are managed and whose perfonnance is ev alIUated on a lair Value basis are measured at FVTPL Financial assets - Assessment whether contractual cash flows are solelv payments of principal and interest: Policy applicable from I January 2018 For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration fOr the time v alue of money and for the credit risk associated wvith the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. In assessing whether the contractual cash flows are solely payments of principal and interest, the Company considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the tiiinT or amount of contractual cash flows such that it xx ould not Illeet this condition. In making this assessment, the Company considers: - contingent events that Would Change the amount or timing of cash flows- - terms that may adjUst the contractual coupon rate, including variable-rate features, Page 21 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) NOTES TO THE FINANCIAL STA EI \ E 1S FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (t) Financial instruments (continued) (ii) Classification and subsequent imeasurement - continued Financial assets - Assessment 'whether contractual cash flows are solely payments of principal and interest: Policy applicable from I January 2018 - continued - prepayment and extension features; and - terns that limit the Company's claim to cash flows fron specificd assets (e.g. non-recourse features). A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstaudinig, which may include reasonable additional compensation for early ternination of the conract. Additionally, for a financial asset acquired at a discount or premiunm to its contractual par amount a feature that permits or rcqLires prepay ient at an amount that substantially represents the contractual par amount plus accrued (but unpaid) comitactual interest (which may also include reasonablc additional compensation for early teniination) is treated as consistent with this criterion if the fair value of the prepaymeut feature is insiOnificant at initial recognition. Financial assets - Subsequent measurement and gains and losses: Policy applicable from I January 2018 Financial These assets are subsequently nicasured at fair value. Net assets at gains and losses, including any interest or dividend iicoime, FNTPL are recogised in profit or loss. Financial These assets arc subsequently measUred at amortised cost assets at using the effective iuterest method The imortised cost is amortised cost reduced by impairmient losses. Interest income, foreign exchange ains and losses and impaiirient are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. Debt These assets are subsequently measured at fair value. Interest investments at income calculated using the effectiVe interest method, foreign tVOCI exchange cans and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCL On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. Equity These assets are subseCluCntlV measured at tair value. investments at Dividends are recognised as income in profit or loss unless FVOCI the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. Financial assets - Policy applicable before 1 January 2018 The company classificd its financial assets into one of the following categories: loans and receivables' - held to maturity, Pace 22 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) NOTES TO THE FINANCIAL STATE1M'NTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICAN r ACCOUN I ING POLICIES (Continued) (f) Financial instruments (continued) (ii) Classification and subsequent in easurement - continued Financial assets - Policy applicable before I January 2018 - continued - available for sale: and at FVTPL and within this category as: * held for trading; * derivative lecdingim instruments; " or - designated as at FVTPL Financial assets - Subsequent measurement and gains and losses: Policy applicable before I January 2018 Financ Measured at fair value and changes therein. including a I" ITP[ interest or dividend income, wrc recognised in profit oi Held-to-maturity Measured at amortised cost tisin the eftlcctie interest financial assets method. Loans and Measured at amortised cost using the effective interest receivables method. MLasured at fair value and changes therein, other than impairment losscs, interest income and foreign cur enc, A,,ailable-for-sale differences on debt instumcntS. were recognised in OC I financial assets and acCtumulated in the fi value resetc. HWhen these assets were derecognised, the gail or loss accumulated in equttV was rclawii1ed to piofit or loss Financial liabilities - C lassification, subsequent measurement and gains and losses Financial liabilities are classified as measured at amortised cost or FVTPL. A 1-inancial liability is classified as at FVTPL if it is classified as held-lor-tradin-, it is a derivative or it is designated as such on initial reconition. Financial liabilities at FVTPL are measured at fair value and net gains and losses. including anY interest expense. are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. (iii DJe-recogn,ition Financial assets Tihe Company derecognises a fnancial asset when the contractual rights to the cash flows from the financial asset expire. or it transfers the rights to receive the contractual cash floWs in a transaction in which subiantially ,ll of the risks and rewards of ownership ofthe financial asset are transferred or in which the Company neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. Page 23 KENYA CJMATE INNOVATION CENTER (A company linited by guarantee) NOTES IO THE FINANCIAL STATEIMNTS FOR TIIE YEAR ENDED 30 JUNE 2019 (CONTINULD) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (f) Financial instruments (continued) (iii) De-re'cognition - continued Financial assets - continued The Company enters into transactions whereby it transfers assets recognised in its statement of Ii nancial position but retains citlier all or substantially all of the risks and rewards of the transferred assets. In these cases. the transferred assets are not derecogrnised. Financial liabilities T he (ompany derecognises a financial liabiltyx when its contractUal obiligatl(nS ae discharged or cancelled. or expire. The oCompany also der ecognises a financial lihility when its terms are modified and the cash flos of the modified habilit are substantially different i which case a new financial iaih based on the modified terms is recognised at fair x aluc. Oin dereconition of a financial liabilit, the di ference between tc earrnin amount extimizuislhed and the consideraton paid (inckuding any non-cash aet, Iransferred or iabilities assumed) is recognised mn profit or loss. (iv) Of/ettin of financial (ss,iets and liabilities Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when the Company has an enforceable right to set off the anounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simiuhancously. (M Fair value f finuncial assets cind liabilitie Fair value of financial assets and financial iabilities is the price that would be received to sell an asset or paid to transter a liability respectively in an orderly transaetion between market participants at the measuremnent date. (g) Impairment (i) N\on-deriv,ative financial assets Policy applicable from 1 January 2018 Financiel 11i onltdon a ssets The Company recognises loss allowances for Expected Credit [,osses (ECLs) on financial assets measured at amortised cost. Fhe Company MeaSures loss allowances at an amount equal to lifetime ECLs, except for bank balances for which eredit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not inereased significanti since initial recognition. Loss allowances for trade rceceivables and contract assets are always measured at an amount equal to lifetime ECLs. Page 24 KENYA CIT RIATE IN AIOCETR (A company limited bv Otuarantee) NOTES TO Tl[!,- FINANCIAL STIATEINITS FOR TIIE YEAR ENI)FD 30 JUNE 2019 (CONTFINE) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (g) Inmpaiminiit (continued) t0 An-e-iatr ia m assetst- con tinted Policy applical)le from I January 2018 - continued V1HiLId/lci h1/ i7IIA'if (1/10 COWFWtJk& Z/SM F', cont/inucd W\hen determining whether the credit risk of a financial as~set has increased si-mificant1lv since initial reco(-nition1 anld wxhen estimating LCLs, the (iornpanx con1siders5 reasonable and SUpportable iit"fOrmation that is relex\ant and ax ailable xwitlhout undue cost or effort. T1his includes both quantitatixe and qual1 itaive information and analxysis, based on the Company's historical experien,c and informed credit assessment and inliIwI111. forwvard- look ino information. IThe Company assumes that the credit risk on a financial asset has increased si gnificeantly ii'it is more than 90 days past due, ['he Compan,, considers a financial asset to be InI default When:E ___the honrower IS Lin1likely to pay its credit obligtiost h omayi il without recourse bv the Company to actions Such as realiSing1 Security (it' ail, is held), or the financial asset is more than 90. day s past dueC. LiFetime [.CLs are the FC1-s that result from all possible default events oxver the expected life of a financial instrument. 1 2-monith E('I-s are the portion of' tI-CIs that result fr-om default cx cur,s that are possible wvithin the 12 months after the reportino (late (or a shorter period if the C.xpecied life of thle instrument is less than 12 months). Tlie maximumn period considered w%hen estimatimw ],,C! s is the maxiimUM Con1tractUal period over which the Company is exposed to credit risk. Measurement of ECILs LCILs aie a probability-xxeighted estimate of' credit losses. Credit losses are measured as the piesent xvalue of all cash Shortfalls (i.e. the differenee betwveen the caSh 11OWS dueI to thle enItity' in accordanee wxith the contract atid the cash flows that the (Company expects to receive). FCLs are diSCOunIted at the effective interest rate of the financial asset. At each reporting date, the Company assesses xwhether financial assets carried at amnortised cost andi debt securities at Fair Value Through Othier Comtprehiensixvc Income (FVOCI) are credit-impaired. A finiancial asset is 'rcclit-Impaired' xMien one or more cx ents that haxve a detrimental impact on the estimated future cashi flowxs of the financial asset haxve occurred. P~age 2 KENYA CLIMATE INNOVATION CENTER (A company limited by guarantee) NOTES O TOHE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINI ELD) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (g) Impairment (continued) (i) on-eriatie fnanialassets - continued Measurement of ECLs - continued E idence that a tinancial asset is credit-impaired incIudes the tolloxw ing observable data: significant financal difficultv of the borroxwver or issuer. a breach of contract such as a default or being more than 90 days past due: the restir ucturing of a loan or advance by the Company on terms that the Comupan would not consider otherwise: it is. probable that the borrover will enter bankruptcy or other financial reorganisation or the disappearance of an active market for a security because of financial difficulties. Presentation of allow auce for ECL in the statement of financial position Loss allowances for financial assets measured at amortised cost are deducted from the gross carrving, amount of the assets. For debt securities at FVOCIL the loss allowance is charged to profit or loss and is recognised in Other Comprehensive Incone (OCI). Write-off The gross carryInIg amount of a financial asset is written off xxwhen the Company has no reasonable expectations of recovcring a fiancial asset in its entirety or a portion thereof. For corporate customers. the C.ompann mdiv idually makes ai assessment with respect to the timing and amount of write-off based on whetlier there is a reasonable expectation of recovery. Ihe Company expects no significant recovery from the amount written off However, financial assets that are written off could still be subject to enforcement activities in order to comply xwith the Companv's procedures for recovery of amounts due Policy applicable before 1 January 2018 Non-derivative financial assets Finmncial assets not classified as at Fair Value ThrougIh Profit or Loss (F[VTL1,) were assessed at each reporting date to determine xhether there was objective evidence of impairmeit, Objective exidence that financial assets were impaired included: - default or delinquency by a debtor: - restructuring of an amount due to the Company on terms that the Company Would riot consider otherwise Page 26 KENYA CLL11ATE INNOVATION CENTER (A company limited by guarantee) NOTES TO I IE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINU)) 3. SIGN I FICANT ACCOUNTING POLICIES (Continued) (g) Impairment (continued) (i) .Non-derivative financial assets - continued Policy applicable before 1 January 2018 - continued Non-derivative financial assets - continued - indications that a debtor or issuer Would enter bankruptcy - adverse changes in the payment status of borrowers or issuerS; the disappearance of an active market for a security because of financial difficulties; or - observable data indicating that there was a measurable decrease in the expected cashflows from a group of financial assets. (h) Enployee benefits obligation The Company operates a defined contribution retirement benefits scheme and a gratuity scheme for its permanent employees. (i) Defined contibution plan The iroup contributes to a statutory defined contribUtioin pCnsion scheme, the National Social Security Fund (NSSF). Contributions are determined by local statute and are limited to KShs 200 per employee per month. The (roup's contributions to the abo\ e schemes are charged to surplus or deficit in the year to which they relate. (ii) Gratuir) 1:mploVeec Crtilemetus to gratuity are assessed using the pro ected unit credit method. Under this niethod the cost of providing gratuLitV is charged to profit or loss so as to spread the regular cost over the service lives of employees in accordance wk ith the adv ice of actuaries who carry out a full valuation of the plan eVery year. The gratuity obligation is measured as the present value of the estimated future cash outflows by applying the discount rate used to measure the obligation at the beginning of the anutial period to the then-net liabi lity, adj usted for any charges in the period. Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses. return on plan assets (excluding interest) and the effect of the asset ceiling (if any. excluding interest), are recognized immediately in other conmpreliensive income. Net interest expense and other expenses related to the gratuity arrangement are recognised in profit or loss. (iii) Other entitlements- short tern employee ben its Short term employee benefits are expensed as the related sei- rice is prov ided. A liability is recognised for the amount expected to be paid if the Giroup has a present legal or constructive obligation to pay this amount as a result of past service provided by the eiployee and the obligation can be estimated reliably. Page 27 _KENYA CLIDIATE INNOVATION_CENTER (A companY finited by guarantec) NOTES TO THE FINANCIAL STATFIENTS FOR THE YFAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (Continued) (i) Employee henefits obligation (continued) (iv) Leave pay accrual The inonetarv value of the unutilised leav e by staff as at year end is recognised as an expense in the year and carTied in the accruals as a payable. (v) Termination beefits Termination benetits are recognised as an expcnse at the carlier of the folloxwing dates: Wien the Group can no longer withdraw the offer; and When Ilie Group recognises costs for a restructuring that is wilhin the scope of IAS 37 and invol\ es the payment of termination benefits. (i) Travel advances to staff niembers Funds advanced to Group and Company statt as travel Iloats ftr official trax el mission are recorded as advances until thev are accounted fot with certiled expenditure reports and original snpporti tn documents. (j) Related party transactions The Group discloses the nature, volume and amounts outstanding al the end of each financial year from transactions with related parties. whiclh include transactions wvith the Directors, executive officers and related companies. (k) Taxation tIoic tax expense comprises cunrent and defened tax. It is recognised in prolit or loss except to the e\tent that it relates to a business coibination, or items recounised directly in equity or in other compiehensi e imcome. () Current tax Cunr ent income tax assets and liabilties tbr the eunrent period are nicasured at the amnount expected to be recovered from or paid to the taxation authorities on the taxable ineone or loss for the period and any adlustment to the tax paylable or recix able in respect of piev tous v'ears. T he tax rates and tax laws used to coMIpute the amount are those that are enacted or snbstantis elv enacted by the reporting date. Cut rent ineome tax relatin to items recoUnised directli in other Comprehensiv e income or equity is recognised ii other comprehensi e inome or equity and not in proit or loss. lanaement periodicall evaluates positions taken in the tax returns wvith respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate. Page 28 KENYA CLIMATE INNOVATION CENTER (A companv limited bv guarantec NOTES TO TIIE FINANCIAL STATEMENTS FOR T1EYEAR ENDED 30 JUNE 2019 (CONTINUED) 3. SIGNIFICANT ACCOUNTING POLICIES (Contiinued) (k) Taxation (continued) (ii) Deferred tax Deferred tax is provided in respect of temporary difterences at the reporting date betm celn the tax bases of assets and liabilties and their carrvina aiounts for financial reporting purposes. Defen-ed tax assets are recognised for all deductible temporalu di fferences. canmy Iorn ard oft unused tax eredits and unused tax osses, to the extent that it is probable that taxable profit will be available against xhich the deductible temporary di fluences and the carr forard of unused tax cedits and unused tax losses can be utlised. Deferred tax is recognized in respect of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recogwnised for: temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss; temporary differences related to investients in subsidiaries to the extent that it is probable that they will not rex erse in the foreseeable ftiture; and taxable temporary di fferenes arising on the initial recognition of goodxill. The Carrng, amnount of deferred tax asset is rexiew ed at cach reporing date and reduced to the extent that it is no loniger probable that suffiient taxable profit wi [l be available to allow al or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at cach reporing date and are recogm ised to the extent that it has become probable that future taxahle profits will allow the deferred tax asset to be recovered. Defened tax assets and liabilities are imeasured at the tax rates that are expected to apply in the year xwlen the asset is reahsed or the liabilitv is settled, based on tax rates (and tax laws) that have been enacted or substantivelv enacted at the reporting, date. Deferred tax relating to items recognised direetly in other comprehensive income or equity is recoage 38 KENYA CLIATE INNOVATION CENTER (A company linited by guarantec) NOTES TO TIlE FINANCIAL STAT.-E-MENTS FOR TIIE YFAR ENDED 30 JUNE 2019 (CONTINUED) 6. FINANCIA I, RISK MANAGEMENT OBJECTIVES (Continued) (d) Liquidity risk (contintued) Company: Upto1 1-3 4- 12 At 30 June 2019 monti months months Total KShs KShs KShs KSis Accounts payabies -1 4282 1 10954,282 Total financial lia bil ities -------- (110,954,282) (110,954,282) At 30 Junc 2018 Accounts payables 483 -3 _9& 463 _93_4_8 3.4 Total financial lia bilities = -93.483.43 93 483.63 (e) Market risk \Laket risk is the risk that the fair valuc or cash flous of a financial instrument w ilj fluctuate duc to chang!es in market related factors. Market risk ineludes interest rate risk. currency risk, and other price risks (i) Price risk Price risk is the risk that the companx will be adv-ersely affected by ehan(es in prices. such as in equity. The Group and Company does not hold any financial mnstrumcnts that are subjeet to price risk. (ii) In terest risk Interest risk is the risk that the fair valuc or future cash flows of a financial instrument vill fluctuate because of changes in market interest rates. Interest rate risk normally arises on interest-beariin financial instruments recognised in the statement of financial position. The company did not hold anv financial instruments that are subject to interest rate risk during the period unde review. (iii) Foreign curren cy risk The Group and company is exposed to forcign exchange risk arising primarily duc to the loan advances. Foreign exchange risk arises from future comniercial transactions, recognised assets and liabilities. To manage the foreign exchange risk, management monitors the market exchange rates and carries out toreign exehang transactions when the rate is reasonable Page 39 KENYA CL IMATE INNOVATION CENTER (A company limfited by guarantec) NOTES TO THE FINANCIAL STATEMENTS FOR TIIE YEAR ENDED 30 JUNE 2019 (CONTINUED) 6. FINANCIAL RISK MANAGEMENT OBJECTIVES (Continued) (e) Market risk (continue(d) (iii) F`oreign; currency risk - continued The following rates were applied for they ear: 2019 2018 Average Closing Average Closing rates rates rates rates Ls Dollar 100.50 102.2983 103.021 00 .5 Sensiiv ianlysis\ onI !uneign currency \ 5 percent weakeninge oftbc Kenya shilling aga:si tbc follokN imn currencies as at the financial reporting date kvould ha\ e mercased (decr ased) loan ad%ances by Ilie amoants shown belom, 1 his analvsis assu:ues that all other variaies, in particular interest rates, remains constant. The table below summarises the company's exposure to foreign currency risks: 2019 2018 USD USD KShs'000 KShs'000 NIonetary assets Loans and ad\ ances 463 4,538 (f) Fair value The fair values of financial assets and financial liabilities approximates to the carrving amounts as shown in te statenent of financial position. 7. RECEIPTS FROM DANIDA During the period under review a total of KShs 250,926,341 (2018 - KShs 173.270,000) was received from Royal Danisli Enhassv ftr the new Green (irowhf and Emplovment Pirogramime (GGEP) KShs 68,418,515 (2018 KShs 85.370,593 )was balance of unspent funds from previous financial year for Ilie extension of 3SPS 1l programine. However, KShs 225.937,10l (2018 KShs 190.222,078) was spent durint the year with unspent balance of KShs 93407,755 (2018 KShs 68.418,515) deferred to tbc next financial year for expenditure in subsequent financial period as per the 5 years grant agreement with the Embassy of Deniark: Group and company 2019 2018 Total amounm received from DANIDA KShs KShs GGEIP Programme 250,926.341 173,270.000 BSPS II balance hf 68,418.515 85,370,593 Total receipts from DANIDA 319,344,856 258,640,593 Balance of unspent ftnds (to be spent in subsequcnt financial period) (_93,407,755) 68,4 18,5 15) A mount recognized as income for the year 225,937,101 9 Page 40 KENYA CLIMATE INNOVATION CENTER (A conpany- limfited by guarantee) NOTES TO THE FINANCIAL STATEMENTS FOR TIHE YEAR EN)ED 30 JUNE 2019 (CONTINUED) 8. RESTRICTED INCOME, (KCVF PROJECT) During lie period. KCIC received disbursemeni of grant amounting to US dollars 146,040 (2018 US dollars 1,718,523) equivalent to KShs 14,716,772 (2018 - KShs 1 74,362,780) from the International Bank for Reconstruction and Ievelopiment (World Bank) relating to the implementation of Kenya Climate V'entures Facility. Group and company 2019 2019 2018 2018 USS KShs USS KShjs Receipts from World Bank (FY2018-19) 146,040 14.716,772 1718.523 174,36 2,780 Bank interest income (FY2018-19) _9.249 934,117 5,23 489,980 Total restrieted incone 155.289 15.65~89 L723 758 174.852,760 Page 41 �' � ыГ, И� +Г, !'- � � r ' � п ii � V" и r i и � f(� °'��7�' :. г�1 � .у. '� � = � .-� " м, � г, .r О �, � � � ц r� {` � r"` r' � t" `� r yf �г, r_ _ ;с � � _ �" �+ ^ r: ` С�� и° � 1 11 't {. � - ........ {,, . �. V � � у^� 1 ,-�. f -�--. ^ -- � �7 Г � _ 1' у' ,ч �7 Р�`: и 1 1 '� � J;'. �гУ w iгi *.. 1 д... 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J - � �; , .:� �,j �'� � V; ^� _ -:э ,. � �' ,I _ _ _' ....,� ° '- % � ^� :� и :;,г ^_i� г � _ � .J _ - ,� ,�' '� � ёГ � �! �. � , `J 4 "� �. г � гr, =, ,-�' � �' v , � ,.'� � � *', м. °. '� � гr , г г � ;г' mti -�- :а _ - G '•~.� �i :� :� � � С' � c.i � � � � � � � й ��•• ' ^ , :, ::С ..� r. �, � KENYA LINJATE I OVATION CFNTER (A Company linlited hy guarantec) NOTES TOTIJE FINANCIAL STATENIEN-I-S FOR TIIE YEAR ENDED 30 JUNE 2019 (CONTINULD) to. BUSINESS INCUBATION AND ACCELERATOR EXPENSES CI-olipand company. 2019 2018 Kshs Kslis Bilmness atid teclitiieal trainin-s i i l ý600 617,840 l ravel, events and exhibitions 4.207,679 5,718.781 Mentorship l 5,437,934 17,397,090 Cient brandin- materials, publications anfl media 5 9,426 -23,914 Serx ice provi sýon and KCIC internalsuppori 26,764,979 2 5. 8 3 1, 13 2 Proicct staffeosts and benefäs (iiieiibiitioli) - 1,47,753 Total 1ý,581,61 8 Paue 43 .,��. �.' л � I� � �" '"Л � U^� Г�! 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Г^`У ✓: U'� .; ы�. � Г^ 1 Г4+I � � :� � � �'�t м, ! 7С �"� '1'� Р- . �,1 '•.i `'7 `7 .� (`а � N � � � � I � �j �j �I у � �1 � .^-, '� �' � � � � � � � .-, - :�'" `� � � �° -� �= � ,-..� . '_' �°i N ai � е7 � ^ � � � �.' и �, � л' � т _ е! �. . '='-'' ~' С л "'� � '7С ry'" ц .. ^ "' r.�i " ';� г'% .: Г*1 ` ^ +. .= � = +. ' =1'� � .� N ^ ✓ '� п СУ �ч . = ..` "® U ,",' � "� :а г ^v г `,- +.' С ,� Г41 Ь.r ✓' � "�" � t,, � ® t.� С. �! : . � N_ G, ,� K E N-YA C l ý I NI A T E l N N 0 Ný, ý11 0 ýC EN ýT- IýZ (A cornpanv limited by guarantee) NOTESTOTIIE FINANCLX1- S'l"ATE.NIENTS FORTIIV YEAR ENDED 30 JUNE 2019 (CONTINUED) 12. COMPLITER SOF-111kVARE Group and company 2019 2018 KShs KSh-, Cost sat I july 11.445.397 10, 3 0 9-2 0 4 Addit10115 - I. 13 6.19 , As at 30 J u ne 11,445,397 397 Depreciation Aý at I Jul,,, 3,795,2123) 138,227) C1111-ge føl- the yCar (3.795.135) ý3,656,996) As at 30.lune 7.590,358) 3795,22-3) Net book value as at 30 June 13. LOANS AND ADVANCES Group Nontinal interest Ycar øl' Principal Interest lmpairment As at 30.June 2019 rate maturitv arnount amouffi anlount Total % KSIIS Kshs KShs KShs Klilfi Monnia I,tel 1ý I jý 40.729,720 9.620ý3 79 50. 1 ý0,099 Good I-al-Inlaud 8 0,2 1 34,912-500 3-" 52, 12 3 1,144,1)39 37.019,684 Hydi-olionies I-td il 2020 25,504,775 2,991,792 S5 4 ý 8 9 7 27,641,670 KinL- BiO Fuels 8 2021 5.000,000 405ý600 5A05",600 - Acaelý1 111110ýat1011 Ltd 10 4.397,818 17 5,243 137.192 4.435,869 Exolic 1-.'1)7 S 2020 3.220, 6 3 -2 3 7 9.5 -" 8 108.005 1,49-ý' I Rafode I-td 10 2024 ý628 38ý004 77,149 --2494,483 ý99ý3 16.862."9 5L077,881 As at 30 June 2018 Kilili Mor-mum I.td 1ý 40,729,7210 -3.483, 166 44.2 1 -1,886 Good Fat-1111,111d Mgt l ýtd 8 --1021 -1, 9 12. 0 0 459,123 - 3 5,3 71,6 " 3 f lydi-oponles Ltd il 20,10 l 5,487.995 980,199 - 16,468,194 Kings Bio Fuels 2()-)1 5.000,000 - - ý.000,000 Exotýx FIIZ 8 2020 ý'000.000 j9L1-3LýLS -4,9 ýLM 10 6, Ø'R,7 0- IIa-e 48 KEN A CJIAAE INNOVATION CENTER (A company limited by guarantec) .NOTS TO TIlE FINANCIAL STATEMENTS FOR TIE YEÄR ENDED 30 JUNE 2019 (CONTINUED) 13. LOANS AND ADVANCES (Continued) Conipany Noninal interest Year of Principal Interest lmpairnent As at 30 June 2019 rate maturity amount amount amount Total % KShs KShs KShs KShs Kings Bio [uels 8 2021 5,000.000 405.600 5.405,600 - Acacia Innovation Ltd 10 2022 4,397.818 175,243 137,192 4,435,869 Exoic EPZ 8 2020 3,220.632 379,528 108,005 3,492 155 Ratöde Ltd 10 2024 _'533628 8,004 77,149 2,494,483 15,152.078 998,375 57246 As at 30 .June 2018 Kings Bio Fuels 8 2021 5.000.000 - 5,000,000 Exotix EPZ 8 20 20 5,000,000 __ - 5000,000 14. CASII AND BANK BALANCES Group Group Company Company 2019 2018 2019 2018 KShs KShs Kshs Kslis KCIC Main Account (USD) 778,595 2.030,033 778,595 2. 030,033 KCIC Operational Account (KShs) 129.538,989 75,241,910 129,538,989 75,241.910 DANIDA GGEP Project account(KShs) 76,252,608 48 780,233 76.252.608 48,780,233 KCIC Sustainability project accounit(KShs) 1,087,251 1.001.258 1,087,25 1 1,001,258 KCIC Fixed Deposit account (KShs) - 60,000.000 - 60,000,000 KCVI World bank Project- Designated Account (USD) 86,155,556 88,601,038 86.155,556 88.661.038 KCVF World Bank Project account (KShs) 2,909,651 2,866,359 2,909,651 2.866,359 Pettv cash-Keiia CIC 11,784 50,000 11,784 50.)000 KCIC KCB New Account (KShs) 90.910 90.910 - Petty cash-KCVF 18,028 30.000 K(V LId-Investnient Account (KShs) 166,427 8,624.491 KCV Ltd-Operations account (KSis) 823,672 9,365526 - Total 297.833,471 296.650848 Z26;82,344 278.630.831 Page 49 KENYA CLINATE INNOVATION CENTER (A company flimited by guarantec) NOTES TO TII FINANCIAL STATEMENTS FOR TH E YEAR ENDED 30 JUNE 2019 (CONTINUED) 15. RECEIVABLES AND ADVANCFS Group Group CoMpany. Company 2019 2018 2019 2018 KShs KShs KSIs KShs Office rent deposit 5.492,689 5,492,689 5.492.689 5,492,689 Staff medical insurance KCIC 8,353.929 5,691,284 8,353,929 5.691,284 Stal medical insurance-KCV Ltd 602,595 1,585,155 - - KCV Ltd Prepay ments-rent 1,409,849 1.260.072 -- KCIC Loan and fixed deposit interest cecixable - 1,633.075 - 1,633.075 Other deposis 1,717,112 1.161,112 1,161,112 1-161,111 livercompany balance (Note 19 (c) - - 3,573,299 32, 169 KClC soäxware license - 1,949,767 - 1,949.767 Stat travel advanccs-KCIC 90,986 110,1 73 90,986 110,173 General staff advances 21 .200 - 1,200 - Staff trav el advance 300000 - 300,000- Staff travel advances-KCV Ltd - _ 5.00 17.988.360 18.888,27 18.993,215 10726 16. ACCOUNTS PAYAB.LE Group Group Company Company 2019 2018 2019 2018 Accrued expenses-KCIC 45.570,891 25,661,669 45,570,891 25.661,669 Staffcosts-KC IC 65,383,391 67. 821.794 65,383,391 6782 1,794 Accrued expenses KCV 40,833.629 - - - Staffcosts-KCV Ltd 1.875,360 465,70 52,47- 153.663.271 98,135.933 IPS0~54.282 93.483.463 17. TAXATION KCIC is now exeipted from paying income taxes by Kenya Revenue Authority. The exemptioni commenccd from 2 Septeiber 2016. (a) Tax payable Grou[) For KCV Ltd, the tax payable is computed as: Description 2019 2018 KSIIS KShs Balance at 1 Julv 57.087 - Bank iterest income withholding tax liable as per KRA 58,617 114,054 Withholding tax certificates Anlount oIf withholding tax dedlcited at source by NCBA Bank and remitted to KR.A ( 847) ( 5Y71 Balance at 30 Juine 29,139 57087 Tax paylable 86226 106412 Company KCIC tax payable _ 49, 25 Page 50 KENYA CLANIATE INNOVATION CENTER (A company linited by guarantec) NOITES TO THE FINANCIAL STATENIENTS FOR THE VEAR ENDED 30 JUNE 2019 (CONTINUED) 17. TAXA T ION (Continued) (b) Tax expense Group 2019 2018 KSlis KShs current tax 58,617 1 14.054 Prior year taxes (49.325) - 9,292 114.054 Comnipan y Prior vear taxes written off 4U25 18. DEFERRED INCON\E (a) Deferred donor inconie Group and company Source Details 2019 2018 KShs KShs Royal Danish Balance b f from FY201 7-18 68,418,5 1 5 85.370.593 Embassy of Grant for ~Costed Extension .of 13SPS 1 programme & Current five years GGEP programnie. Funds to be used in the subscquent financial period Funds balances from grant agreement signed GGIEP receipt for the current Financial Year 250,926,341 173,270,000 Total reccipt from DAN IDA 319,344,856 258,640,593 Spent during the vear (Note 6) (225,9371 l I (1 90 222 7) Deferred DANIDA incomC 9.4074755 6 8 hle delerred income balances represent unspent grants from DANIDA to be used bevond tbc reporting financial period 30 une 2019. Aniount duc to donors represents grant balances that are expected to be returned to the donor upon completion ot the respective prqects funded by the grant. Page 5 l _ENYA CLIMATE INNOVATION CENTER (A conpany linited by guarantec) NOTES TO TIO E FINANCIAL ST.VIEENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUED) 18. DEFERRED INCOME AND AIOUNT DUE TO DONORS (Continued) (h Deferred income Group and Companv 2019 2018 KShs KShs Balance of unspent funds as at 1 July 2018 12.077,100 Amount of grant transferred to KICC from - 14.930,454 3GF project for sustainability intiative Activities Amount spent on sustainability activities 12477,100) 2853 354) Balance of unspent funds as at 30 June 2019 _ 12,077.100 The amounts relate to deferred incorne from grant extended to KCIC by DANIDA 3(F pro ec balance T he deferred ncome balances represent unSent lrants from respective SOulcCs to be used bey ond the repotling tinancial period. 19. FUN) BAL ANCES 2019 2018 Group and Company KShs KShs (a) Capital reserve account 21.594.592 19.123.805 Capital reserves represent depreciated value of fixed and intangible assets as per the asset schedule on Note 10 and 11 to the financial statements. 1he reserv es- em-anate fromi the accoLnting treatment of assets using purehased with donor funds. 1 e assets are iniiallv expensed then capitalized as fixed asset hence creating a capital reserve account. At the end of the vear the assets are depreciated reducing the net book valuc of lthe assets and also the capital reserx es. 2019 2018 Group and Company KShs KShs (b) Restricted project surplus 276.582.208 259.175.400 The account relates to unspent grant income fron The World Bank grant for the KCVF investments. lThe amount will be spent in suibsequent financial period period for investment in KCV Ltd as subsidiary of KCIC through Loans to borrower enterprises. Group Group Company Conmpany 2019 2018 2019 2018 KShs KShs KShs KShs (c) General fund 130, 39319) ( 12.332,643) 52,013,634 1 5 10 The account relates to surplus fron income generated by the organisation (KCIC) fr-om otfher reventie generating projects and resource mobilization initiatives less amount spent. Page 52 KENYA CLIMATE INNOVATION CENTER (A conpany finited by guarantee) NOTES TO TIE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 (CONTINUIED) 20. RELATED PART Y TRANSACTIONS AND BALANCES KCIC Company registered a legal entity. Kenya Climate Ventures Company, on 14 July 2016. T1his was in compiIance with the provisions in the grant agreement with World Bank under the KCV 1Project. KCV Company is fully owned by KCIC (ompany. During the period, the Company had the followintg transactions and balances with related parties: (a) Keny a Climate Ventures Ltd has a lease agreement with Biz O ne Limnited where one of the KCIC directors is a director. b) KCIC Company received KShs 2,200,87() (2018 KShs 7,421,815) as income for providing back office support services to KCV Ltd. 2019 2018 KShjs KShs (e) Amounits duc from related parties (Note 14) 3, 57299 32,169 Amiount relates to expenses paid by KCIC on behalf of KCV Ltd to be reimbursed. (d) Amounts duc from KCV Ltd 2019 2018 KSIs KShs Funds transfer from KCIK' Company to KCV Ltd bank accon 199.593,500 160,474.500 KCV expenses paid by KCIC 5,999,173 5.999.1 73 Office rent 994,110 994.110 Petty casi float transfer to KCV Ltd _ 30,000 30,000 206.616,783 167.497.783 1his amoui represents funds received from the World Biank for KCVF project and invested in KCV Ltd b\ KCIC Company for investment in invr,estec companies and for operations. The amount recognized by KCIC as duc from KCV Ltd consist of funds transferred to KCIV Ltd bank account and amount paid by KCIC on behalf of KCV Ltd for the period July 2017 to June 2019. ie investment is expected to be recouped for a period extendin bevond one ear and mnore so from ear fix e Ihe m iestment is in lorm of equity which will be in form of shares issued at a premium. Thbe expenseS incuLTed on behalf of KCVF before commeneeneit of operaiton of KCV Ltd will be written-off as Build-Out expenses. [his amount xwas incurred in the last twko financial years and accounted in project special purpose financial statements. 21. INVESTIMENT IN SUBSIDIARY Compalny 2019 2018 Holding KShs KShs Kenya Cimate Ventures Limited (KCV Ltd) 1000 100,000 100,00 Page 53 KENYA CLIMATE INNOVATION CENTER (A cornpans limited bi guarantec) NOTES TO TIE FINANCIAL STATEMENTS FOR TIlE YEAR ENI)l 30 JUNE 2019 (CONTINUTED) 22. KCIC COMPANY SURPLUS Companv 2019 2018 KShs Kslis Other incoies as per income and expenditure statements (Note 8) 23 504,227 22,881.295 Bank interest incoine 10.676,167 7.639,55S Total incone 34,180,394 30,520,850 Less: Kenya Nlini Wind Project expenses ( 4 032,752 ( 794.339) Expenses funded from 3GF grant - (2,85 3355) Expenses funded fron KCIC internally generated income - Staff annual performance honus (16 .52 8,413) (12,000,000) Reversal o[prior year taxes (Note 16 (b)) 49, 325 Surplus as per income and expenditure statenent 13.668.554 14873,56 23. KCV LT) GOING CONCERN KCIC Ciompany reccived a grant of USS 4.9M fron the World Bank in carly June 2015 for the Kenya Clim-ate Ventures Facility project (KCVF Project). Ilie grant was split into Iwo categocries: USS1.7m for Goods, works, consulting services and other operational costs and USS3.2M for sub-financing beneficiary enterprises of the project (inv.estmtents). One of the objectives of the project was to establish KCVF as a legal entity, KCV Ltd. KCV Ltd incurred a net loss of KShs 125-.957,417 (2018 - KShs 51.427.721) during the year ended 30 June 2019. KCV Ltd management assessment is that the funding of USS0.37M fron the World Bank only sustained KCV Ltd operations up to Novenber 201 8. Following the restructuring plan and notification to World Bank to withhold the grant balance for the KCVF Project, the parent company, thirough a letter of support to KCV Ltd, has committed to support the operations and investients of KCV up to June 2020 mainily fron resources provided by Danida under KCIC Development Engagement Docuiment signed between KCIC and Danish Embassy in Nairobi KCV Ltd has prepared the financial statements on a going concern basis. The Directors are of the opinion that the use of the going concern assumption is appropriate in the preparation of these financial statements. 24. OPERATING L.EASE KCIC entered into a lease agreement for the office premises for 6 years cotinencing i November 2017. The old lease expired in October 20 17. Group Company 2019 2018 2019 2018 KShs KShs KShs KShs Not later than one ylear 11 .143,283 10,509,398 7,035. 168 6,121,056 More than one year and not later than live years 36.569,037 54. 303.503 27,82u932 32,36 ,792 47.712.320 64,812,901 38.482,848 Page 54 пз wL �� г� r; ^ � �; � ^, � � " �f' гг, п-а '� � � � �, `�" Г 1 .^, � ..� , I С, , if! Z � J'1 эо г�. r �г-> - - `� -� ::' г � �7 i +г� 1,гi , � .J ., � �"L' it-, ✓' г�', � г`- ,... �' � I � �, ,,, � �' �г гf, � � .� � , bG <„�j � �.: �У U^i ,.�. г �..� . •-- �^ -- �. ...�_ .r-, , � � { ь •7 � j $ . i � , � �. , � �..-, ;� � � � �� � �, .� - �.° � , � ^ � � М, ' -+ ^„ '� , ^ �� J , �[;. 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', n-i t j -, ,�� , .� 1 �т �4 � ,,,� �1 {�� Г ........ г' �� г '.. .^. � .-. ,I '_` ` i1 � . ,� j J � ^ ,,,� t. � ��=, � � С й "� � Q , = ^��э С � - , О � ;J -✓ С -� I :г.I � �.r v 1-._ . �Гi N KENYA CLINJATE INNOVATION CFNTE.R (-A companý limited by tauarantee) NOTES TO TIII" FINANCIAI, STATEMENTS FOR TIIE YEAR ENDED 30 JUNE 2019 (CONTINULD) 2 I-NIPACT OFINITIAL APPLICATION OF IFRS 9 (Continued) Inipact øf tran,,ition øf IFRS 9 oti retained cai-iiin<.Fs The IbIlowinýg iýiblýý sunimarises tlie mipact of transition to IFRS 9 on tlie openuýg balance ol' tlie retained, carnim-,,ý ind the statutory credit ris- reserveý There is no impaet, on otliet- Conipollents ofequitv. Impact øl' adopting IFRS 9 at I Jul N, 2018 Group Conipany KSlis KSIIS Retained carnings Clomii- halance under IAS 39 - - Reco.mition ofexpecied eredit losses mider IFRS 9 (L_2 i _7,8 13) 0) OPening balance under IURS 9 26. SUBSEQUENT EVENTS There kvere no material eveins after reporting date which need to he diselosed. 27. CONTINGIINT IJABILITIES At 30 linie 20 19, the (Iroup and Compam, had tie) cotil'111-ent liabilmes in respect of bank aiid other ýyuaranlees. Ilage ý7