AB Linas Agro Group – Annual report – 30 June 2023
Industry: agriculture
Consolidated and Company‘s Financial Statements of AB Linas Agro Group for the financial year 2022/23 ended 30 June 2023 (all amounts are in thousand euros unless otherwise stated)
2.27. USE OF SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS (extract)
Significant accounting estimates (extract)
Accounting estimates regarding war in Ukraine
Group operations in Belarus and Russian markets
During previous financial year and until the end of September of this financial year the Group had operations in the Russian market (Wholesale of products for crop growing veterinary products, premixes, and seeds for gardening). Also, the Company has operations in the Belarussian market (Wholesale of products for crop growing veterinary products, premixes, and seeds for gardening). As at the date of these financial statements, the Group had no significant positions of assets or liabilities in these markets.
Revenue from contracts with customers from Russia only represent revenue by companies that are registered in Russia and Belarus (OOO VitOMEK (entity code 1117746107291), OOO VitOMEK (entity code 1157746009398), IOOO Belfidagro (feed additives trading) until full loss of control during 2022-2023 2st quarter).
Revenue from contracts with customers from Russia for financial year ended 30 June 2023 were EUR 16,221 thousand, from which EUR 16,221 thousand are revenue of subsidiaries registered in Russia and Belarus.
Revenue from contracts with customers from Belarus mainly represent revenue by two companies that are registered in Belarus (until one of these full loss of control during 2022-2023 2nd quarter).
Revenue from contracts with customers from Belarus for the period ended 30 June 2023 were EUR 12,249 thousand, from which EUR 12,162 thousand are revenue of subsidiaries registered in Russia and Belarus.
Subsidiaries registered in Russia and Belarus controlled by the Group
The Group had operations in Russian and Belarusian markets through subsidiaries OOO VitOMEK (entity code 1117746107291), OOO VitOMEK (entity code 1157746009398), IOOO Belfidagro (feed additives trading) and OOO KLM (feed materials and feed additives trading, supply of seeds, plant care products, fertilizers, provision of veterinary pharmaceutical services and trade in products). During the first quarter of 2022 Group‘s Management made a decision to dispose of these entities in 12 month period (at the date of the financial statements, three companies were sold (Notes 3 and 12). The agreements for the sale of the companies were signed on 25 August 2022, and the Group lost ownership and control from 1 September 2022 – OOO VitOMEK (inc. no. 1117746107291), from 27 September 2022 – OOO VitOMEK (inc. no. 1157746009398) and from 9 November 2022 – IOOO Belfidagro. OOO KLM is not sold yet as at 30 June 2023 (Note 12).
Subsidiaries registered in Ukraine controlled by the Group and Group‘s operations in Ukrainian market
The Group conducts operations in the Ukrainian market through its subsidiary, TOV LINAS AGRO UKRAINA (representative office). In February 2022, following the recognition of self-proclaimed republics of Donetsk and Lugansk by the Russian Federation and its subsequent invasion of Ukraine, the military conflict escalated and spread to other regions of that country. As at the date these consolidated financial statements were authorised for issue, the situation in Ukraine is extremely volatile and inherently uncertain.
As at 30 June 2023 Group‘s property, plant and equipment, machinery, inventory, trade and other receivables, other assets, trade, and other liabilities, related to subsidiary operating in Ukraine were not significant. Revenue from contracts with customers during this year ended 30 June 2023 of Group‘s subsidiary, operating in Ukraine was not significant.
The Group‘s revenue from contracts with customers from Ukraine this year ended 30 June 2023 were EUR 8,986 thousand. (30 June 2022 the Group’s revenues from the contracts with the customers were EUR 2,880 thousand).
The Group’s Management has evaluated the following key areas which could be affected by uncertainties caused by the war in Ukraine: going concern, impairment, residual value and useful life of property, plant and equipment, assessment of expected credit losses, impairment of goodwill, net realizable value of inventory, classification of financial instruments as current and non-current, lease contracts. Based on the assessment of the Group’s the effect of the war in Ukraine on financial statements was not significant; however, due to dynamics and volatility of the military operations in Ukraine it is difficult to reliably measure the ultimate financial impact.
12. NON-CURRENT ASSETS HELD FOR SALE
Non-current assets held for sale comprised as follows:
On 28 January 2023 Belarusian government issued the list of companies whose shareholders are prohibited from transferring their shares. Due to the tightened legislation, the sale of the company OOO KLM operating in Belarus is not likely in the next 12 months, the company’s assets and liabilities from 28 January 2023 are no longer classified as intended for sale (30 June 2022 within the line item of the disposal group the Group recognized assets of subsidiaries IOOO Belfidagro, OOO KLM, OOO VitOMEK (entity code 111774610729) and OOO VitOMEK (entity code 1157746009398) – EUR 22,958 thousand).
As at 30 June 2023 loss of EUR 313 thousand from the sale of companies operating in Russia and Belarus was recognized in the profit or loss and other comprehensive income statements. In the financial year ending 30 June 2022 an impairment loss of non-current assets held for sale of EUR 2,800 thousand was recognized in profit or loss and other comprehensive income statements and foreign currency translation reserve related to a foreign operation disposal recognized in other comprehensive income of EUR 3,104 thousand on 30 June 2023 was reclassified to profit or loss statement. Total amount of losses from the sale of companies, IOOO Belfidagro, OOO VitOMEK (entity code 111774610729) and OOO VitOMEK (entity code 1157746009398), recognized in the profit or loss and other comprehensive statement were as follow. As at 30 June 2023 were EUR 3,417 thousand (30 June 2022 – EUR 2,800 thousand), and the loss of two years over the sales of the Companies amounted to EUR 6,216 thousand.
Accounts examples 