13. Investment in associates

Movements in investments in associates

in thousand EUR	2021	2020
At 1 January	3 340	1 066
Net additions	–	3 099
Share of profit/(loss) of associates	–723	–354
Dividend earned	–531	–138
Change in consolidation scope - disposal	–660	–
Currency effects	–0	–333
At 31 December	1 426	3 340

There are no unrecognized share of losses relating to the above associates.

Proportion of ownership in investment in associates

Associate	Country	31 December 2021	31 December 2020
MIL Energia Renovável Ltda. (ex BK Energia)¹	Brazil		40%
Compagnie des Placages de la Lowé S.A.²	Gabon	49%	49%
¹ until 31 May 2021; as of 1st June 2021 100% investment and fully consolidated subsidiary
² since 1st October 2020

MIL Energia Renovável Ltda. (former BK Energia Itacoatiara Ltda.)

in thousand EUR	2021	2020
At 1 January	980	1 066
Share of profit/(loss) of associates	211	385
Dividend earned	–531	–138
Change in consolidation scope - disposal	–660	–
Currency effects	–0	–333
At 31 December	–	980

On 31 May 2021 MIL Madeiras Preciosas Ltda., already owning 40 % of BK Energia Itacoatiara Ltda., acquired the remaining 60 % of the ordinary shares outstanding, and with this transaction, obtained 100 % ownership of the renewable power plant. BK Energia Itacoatiara Ltda. was renamed MIL Energia Renovável Ltda. afterwards. The details of this acquisition are further explained in Note 32.

Set out below is the summarized financial information for BK Energia Itacoatiara Ltda.:

in thousand EUR	31 December 2021	31 December 2020
Current assets	–	2 692
Non-current assets	–	72
Current liabilities	–	313
Equity	–	2 451
Group's share in equity	–	980
Group's carrying amount in the investment	–	980

in thousand EUR	Jan - May 2021	2020
Revenues	1 301	2 738
Cost of sales	–672	–1 374
Administration expenses	–79	–178
Financial result	34	72
Earnings before tax (EBT)	584	1 258
Income tax (expenses)/income	–56	–296
Net profit/(loss) for the period	528	962

Group's share of profit/(loss) for the year	211	385

The associate had no contingent liabilities or capital commitments as at 31 May 2021.

Compagnie des Placages de la Lowé S.A.

in thousand EUR	2021	2020
At 1 January	2 360	–
Net additions/(disposals)	–	3 099
Share of profit/(loss) of associates	–934	–739
At 31 December	1 426	2 360

Precious Woods Tropical Gabon Industrie S.A., owned 100 % by Precious Woods Group, entered into an arrangement with Placage Déroule du Gabon S.A., also a veneer producing company in Gabon, owned 100% by Arbor Group, France. Precious Woods Tropical Gabon Industrie S.A. acquired 49 % shares and voting rights in Placage Déroule du Gabon S.A. by contribution of net assets. The deal took place on 1^st October 2020. At the same time, Placage Déroule du Gabon S.A. was renamed to Compagnie des Placages de la Lowé S.A. The new company is located in Libreville.

Precious Woods Group has no control or joint control over the investment but exercises significant influence.

At the date of acquisition, the fair value of the investment in Compagnie des Placages de la Lowé S.A. amounted to EUR 4.4 million.

Set out below is the summarized financial information for Compagnie des Placages de la Lowé S.A.

in thousand EUR	31 December 2021	31 December 2020
Current assets	11 807	12 902
Non-current assets	4 174	3 438
Current liabilities	9 719	9 724
Non-current liabilities	4 028	3 182
Equity 100%	2 234	3 434
Group's share in equity 49%	1 095	1 683
Goodwill	677	677
Elimination of unrealized profit on downstream sales	–346
Group's carrying amount in the investment	1 426	2 360

in thousand EUR	2021	2020
Revenues	15 035	3 812
Cost of sales	–15 036	–4 437
Administration expenses	–532	–761
Financial result	–506	–81
Earnings before tax (EBT)	–1 039	–1 467
Income tax (expenses)/income	–161	–41
Net profit/(loss) 100%¹	–1 200	–1 508
Net profit/(loss) 49%	–588	–739
Elimination of unrealized profit on downstream sales	–346	–
Group's share of profit/(loss)¹	–934	–739
¹ In 2020, only October - December

The associate had no contingent liabilities or capital commitments as at 31 December 2021 or 2020.

Accounting policies

Associates are entities, over which the Group holds 20 to 50 percent of the voting rights and exercises significant influence. The Group does not exercise control over their financial and operational policy decisions. These associates are accounted for using the equity method. The Group’s share of profit of associate is classified within operating profit as these businesses form an integral part of the Group’s financial performance, reflecting its core business activities. Goodwill arising from an acquisition is included in the carrying amount of the investments in associated companies. Equity accounting is discontinued when the carrying amount of the investment together with any long-term interest in an associate reaches zero, unless the Group has either incurred or guaranteed additional obligations in respect of the associate.

The Group tests associates for impairment only when there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the investment. Objective evidence of impairment includes events such as significant financial difficulties of the associate or information about significant changes with an adverse effect that have taken place in the economic environment in which the associate operates, and indicates that the carrying amount of the associate may not be recovered.

An impairment loss is only recognized when the carrying amount of the associate exceeds its recoverable amount, being the higher of value in use and fair value less costs of disposal. The recoverable amount of an investment in an associate is assessed for each associate, unless the associate does not generate cash inflows from continuing use that are largely independent of those from other assets of the Group.

The financial statements of the associate are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.