AB Linas Agro Group – Annual report – 30 June 2019
29.Financial assets and liabilities and risk management (extract)
For capital management purposes the Group’s capital is equal to total equity in the statement of financial position amounting to EUR 170,070 thousand as at 30 June 2019 (EUR 177,074 thousand as at 30 June 2018).
The primary objective of the Group’s capital management is to ensure that it maintains a strong creditworthiness and healthy capital ratios in order to support its business and maximise shareholder value. The Group holds high capital for possible future expansion and further development of the Group.
The Group manages its capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of its activities. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the years ended 30 June 2019 and 30 June 2018.
The Company and the Group’s subsidiaries registered in Lithuania and Estonia are obliged to keep its equity at no less than 50% of its share capital, as imposed by the Laws on Companies of the Republic of Lithuania and the Republic of Estonia. The Company and the Group’s subsidiaries registered in Lithuania comply with this requirement. The Group subsidiary registered in Estonia doesn’t comply with this requirement. The Group’s subsidiaries registered in Latvia are obliged to keep their equity at no less than 0, as imposed by the Law on Companies of the Republic of Latvia. The Group’s subsidiaries registered in Latvia comply with this requirement, except for SIA Dotnuva Baltic as at 30 June 2019, SIA PFK TRADER and SIA Erfolg Group as at 30 June 2018. The Group’s management does not expect any negative consequences to the Group and is planning to take actions to mitigate these non-compliances.
The Group and the Company manages capital using a leverage ratio, which is 1 minus total equity divided by total assets of the Group and the Company. The Group’s policy is to keep the leverage ratio below 75%.