13. Investment in associates
Movements in investments in associates
| in thousand EUR | 2022 | 2021 | ||
|---|---|---|---|---|
| At 1 January | 1 426 | 3 340 | ||
| Share of profit/(loss) of associates | –240 | –723 | ||
| Dividend earned | – | –531 | ||
| Change in consolidation scope - disposal | – | –660 | ||
| Currency effects | – | –0 | ||
| At 31 December | 1 186 | 1 426 |
There are no unrecognized share of losses relating to the above associates.
Proportion of ownership in investment in associates
| Associate | Country | 31 December 2022 | 31 December 2021 | |||
|---|---|---|---|---|---|---|
| MIL Energia Renovável Ltda. (ex BK Energia) 1 | Brazil | – | – | |||
| Compagnie des Placages de la Lowé S.A. | Gabon | 49% | 49% | |||
|
1 until 31 May 2021 40% investment; as of 1st June 2021 100% investment and fully consolidated subsidiary
|
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Compagnie des Placages de la Lowé S.A.
| in thousand EUR | 2022 | 2021 | ||
|---|---|---|---|---|
| At 1 January | 1 426 | 2 360 | ||
| Share of profit/(loss) of associates | –240 | –934 | ||
| At 31 December | 1 186 | 1 426 |
Precious Woods Tropical Gabon Industrie S.A., owned 100 % by Precious Woods Group, entered on 1st October 2020 into an arrangement with Compagnie des Placages de la Lowé S.A., (formerly called 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.
Precious Woods Group has no control or joint control over the investment but exercises significant influence.
Set out below is the summarized financial information for Compagnie des Placages de la Lowé S.A.:
| in thousand EUR | 31 December 2022 | 31 December 2021 | ||
|---|---|---|---|---|
| Current assets | 10 958 | 11 807 | ||
| Non-current assets | 6 430 | 4 174 | ||
| Current liabilities | 11 104 | 9 719 | ||
| Non-current liabilities | 4 028 | 4 028 | ||
| Equity 100% | 2 256 | 2 234 | ||
| Group's share in equity 49% | 1 105 | 1 095 | ||
| Goodwill | 677 | 677 | ||
| Elimination of unrealized profit on downstream sales | –596 | –346 | ||
| Group's carrying amount in the investment | 1 186 | 1 426 |
| in thousand EUR | 2022 | 2021 | ||
|---|---|---|---|---|
| Revenues | 17 270 | 15 035 | ||
| Cost of sales | –15 667 | –15 036 | ||
| Administration expenses | –922 | –532 | ||
| Financial result | –477 | –506 | ||
| Earnings before tax (EBT) | 204 | –1 039 | ||
| Income tax (expenses)/income | –182 | –161 | ||
| Net profit/(loss) 100% | 22 | –1 200 | ||
| Net profit/(loss) 49% | 11 | –588 | ||
| Elimination of unrealized profit on downstream sales | –251 | –346 | ||
| Group's share of profit/(loss) | –240 | –934 | ||
The associate had no contingent liabilities or capital commitments as at 31 December 2022 or 2021.
MIL Energia Renovável Ltda. (former BK Energia Itacoatiara Ltda.)
| in thousand EUR | 2021 | |||
|---|---|---|---|---|
| At 1 January | 980 | |||
| Share of profit/(loss) of associates | 211 | |||
| Dividend earned | –531 | |||
| Change in consolidation scope - disposal | –660 | |||
| Currency effects | –0 | |||
| At 31 December | – |
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 | Jan - May 2021 | |||
|---|---|---|---|---|
| Revenues | 1 301 | |||
| Cost of sales | –672 | |||
| Administration expenses | –79 | |||
| Financial result | 34 | |||
| Earnings before tax (EBT) | 584 | |||
| Income tax (expenses)/income | –56 | |||
| Net profit/(loss) for the period | 528 | |||
| Group's share of profit/(loss) for the year | 211 |
The associate had no contingent liabilities or capital commitments as at 31 May 2021.
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.