Annual Report • Oct 31, 2022
Annual Report
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This is a translation in pdf format without the European Single Electronic Format (ESEF) markups of the digitally signed original which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/)
A/S "SAF TEHNIKA" CONSOLIDATED ANNUAL REPORT AND SEPARATE ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022
for the year ended 30 June 2022
(Translation from Latvian)
Content
| Page | |
|---|---|
| Management report | 3 – 4 |
| Statement of the Board's responsibility | 5 |
| Consolidated and separate financial statements: | |
| Consolidated and separate statement of financial position | 6 |
| Consolidated and separate statement of profit or loss and other comprehensive income | 7 |
| Consolidated and separate statement of changes in the shareholders' equity | 8 |
| Consolidated and separate statement of cash flows | 9 |
| Notes to the consolidated and separate financial statements | 10 – 38 |
SAF Tehnika JSC and its subsidiaries (hereinafter referred to as the Group) design, manufacture, and distribute digital microwave transmission equipment. The Group's activities can be divided into three categories:
The Group's accumulated experience and knowledge has allowed to develop a range of innovative products, including launching and developing a series of the world's smallest microwave spectrum analyzers Spectrum Compact, as well as creating the Aranet brand of wireless sensor network solutions.
The Group offers comprehensive and cost-effective solutions in both public and private sectors.
In the financial year (FY) 2021/2022, the Group's net turnover amounted to EUR 33.97 million, which is EUR 8.95 million or 36% more than in the previous financial year 2020/2021. The net turnover of the Parent company in FY 2021/2022 was EUR 29.14 million, which is EUR 8.15 million or 39% more than in the previous FY 2020/2021.
The turnover of the American region, which accounts for sales in both North, South and Central Americas, represented 55% of the Group's annual turnover and amounted to EUR 18.66 million, which is by 12% more than last year. The US subsidiary company SAF North America LLC provides marketing and sales of the Group's products in the USA and Canada, as well as product warehousing and logistics services. Sales in the European and CIS region exceeded the level of the previous year by EUR 4.9 million. Several successful projects have also been implemented in the AMEA (Asia, Middle East, Africa) region in the face of fierce competition in the market for wireless data transmission equipment.
During the reporting year, the Group kept developing new products, while continuing to work on modifications to existing products and innovative ideas. The product life cycle for microwave wireless data transmission equipment in the industry lasts for about 5 years, when obsolete products are replaced by newer generation devices. Transition between technologies is a gradual process and will happen over several years.
The Group also offers services related to its products and continues to develop specific customer-requested functionality for SAF Tehnika JSC products.
The market remains in demand for radio systems that provide enhanced data rates and which can be developed or updated to increase data transmission capacity. Consequently, the Group continues to explore the market and problematic issues, and is working on identifying customer needs to be able to offer the necessary product modifications and create prototypes for next generation technologies. At the same time, the Group develops solutions for the IoT segment in order to ensure stable diversification of SAF Tehnika product offering.
The Group's sales revenue in countries outside Latvia accounted for 98.59% (98.36% for the Parent company, respectively) of the total turnover and amounted to EUR 33.49 million (EUR 28.66 million for the Parent company). In the reporting year, the Group sold its products in 81 countries around the world.
In the CFIP product series, Phoenix and Integra products were in the greatest demand in the reporting year. There is an increasing demand for Aranet and Spectrum Compact series products. Sales of the Aranet4 indoor air quality sensor from the Aranet product line continue to grow, while demand exceeds previous forecasts.
In the face of a global pandemic, the Group followed epidemiological rules in the home country, ensuring compliance with the relevant norms. The Group's offices and the manufacturing facility operated in the usual / rearranged mode, paying special attention to ventilation and air quality, the company manufactured and shipped its products worldwide.
The Group's activities were affected by the worldwide shortage of various electronic components. Due to the war in Ukraine, supply chains are still in trouble – alternative transportation routes increase delivery times and costs. As in times of global pandemic, the company regularly reviews procurement volumes and deadlines, and continues to accumulate inventory in order to be able to fulfil most of the orders within normal lead times. This applies to all SAF product families – microwave links, Spectrum Compact and Aranet.
The Group's cash balance at the end of the year was EUR 2.78 million (EUR 1.16 million for the Parent company, respectively), which is EUR 4.91 million (EUR 5.34 million for the Parent company) less than at the end of the previous reporting year. In the reporting year, the Group paid dividends in the amount of EUR 1.99 million. The decrease in cash is also explained by the need to keep larger inventory balances, as explained above.
During the reporting year, the Group invested EUR 1.68 million in the acquisition of IT infrastructure, production and research equipment, software and licenses, product certification, as well as in the renovation of premises.
The Group completed the financial year 2021/2022 with a profit of EUR 6.09 million (the Parent company with EUR 5.75 million, respectively). The result of the Group's activities for the previous financial year was a profit of EUR 3.88 million (EUR 3.18 million for the Parent company, respectively). The overall increase in turnover ensured successful performance.
A success factor and a prerequisite for the Group's long-term existence is its ability to ensure continuous product development. During the reporting year, the development and improvement of the microwave wireless data transmission product line continued. Solutions were found to improve functionality and quality indicators, and to reduce production costs. The Group continued to design and develop the Aranet functionality within the IoT environmental monitoring solution, as well as kept working on the development of the Aranet Cloud service. Aranet is an industrial-grade wireless environmental monitoring solution that allows taking measurements of various environmental parameters over a wide area, including monitoring of temperature, humidity, and CO2. Spectrum Compact metering products are regularly supplemented with new functionalities and accessories. There are developments both for the release of new products, and for the improvement and refinement of existing ones. Technologically, SAF Tehnika products are interconnected. The development and existence of such products expands the range of Group's business offerings. During the reporting period, the Group's product development projects received co-financing in the amount of EUR 177 thousand from the Latvian electrical and optical equipment industry competence centre "LEO Pētījumu centrs" SIA.
SAF Tehnika JSC has an extensive experience and long-standing expertise in the development and production of microwave transmission equipment. The Company is able to supply excellent, high-quality products to the general market, as well as to successfully develop niche solutions. The Group's task is to further develop the next generation of data transmission equipment, continue to produce high-quality products for the microwave data communication market, looking for innovative ideas for microwave data transmission applications. It is planned to continue to offer not only standardized solutions, but also product modifications to meet specific customer needs. The goal is to stabilize the level of turnover, which provides a positive net result in the long term.
The Group will continue its established market strategy, focusing on strategic market niches for both products and regions.
Since the outbreak of hostilities in Ukraine by Russia, the overall uncertainty of the business environment has increased. Although its direct impact on the Group's operations is relatively limited, the Group carefully assesses possible cost growth forecasts and potential risks. We believe that changes in the microwave radio market are not expected in the near term. However, in the longer term, there may be certain customer segments that could reconsider the investment volumes in network construction. The Group regularly works with all clients to identify their needs in a timely manner and minimize potential impacts.
The Group looks positively at projections for future operational periods, however, remains cautious, and the Board of the Parent company refrains from making any statements about future sales and financial results.
During the period between the last day of the reporting year and the date on which these financial statements are signed, there have been no events that would significantly affect the financial situation of the Group and/or the Parent company as of June 30, 2022, and/or financial results and cash flows for the relevant reporting year.
The Board of the Parent company proposes to pay dividends of EUR 2 million.
The Corporate Governance Report for 2021/2022 is also being submitted to Nasdaq Riga AS together with these separate and consolidated Financial Statements for 2021/2022 by SAF Tehnika A/S.
On behalf of the Board, /digitally signed/
Normunds Bergs Chairman of the Board
The Board of SAF Tehnika A/S is responsible for preparing separate and consolidated annual reports of SAF Tehnika A/S.
The separate and consolidated annual reports set out on pages 6 to 38 and are prepared in accordance with the source documents and present fairly the financial position of SAF Tehnika A/S (Parent company) and SAF Tehnika A/S and its subsidiaries (the Group) as at 30 June 2022 and their results of financial performance and cash flows for the year ended on 30 June 2022.
The above-mentioned financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union on a going concern basis. Appropriate accounting policies have been applied on a consistent basis. Prudent and reasonable judgments and estimates have been made by the Board in the preparation of the financial statements.
The Board of SAF Tehnika A/S is responsible for the maintenance of proper accounting records, the safeguarding of the Group's and the Parent company's assets and the prevention and detection of fraud and other irregularities in the Group and the Parent company. The Board is also responsible for compliance with requirements of legal acts of the countries where Group companies and the Parent company operate.
On behalf of the Board,
/digitally signed/
Normunds Bergs Chairman of the Board
| Group | Parent company | |||||
|---|---|---|---|---|---|---|
| As at 30 June | As at 30 June | |||||
| Note | 2022 | 2021 | 2022 | 2021 | ||
| ASSETS | EUR | EUR | EUR | EUR | ||
| Long-term investments | ||||||
| Property, plant and equipment | 5 | 2 006 940 | 691 542 | 1 976 692 | 683 486 | |
| Intangible assets | 5 | 411 679 | 316 640 | 411 678 | 316 584 | |
| Right-to-use assets | 5 | 2 371 668 | 1 316 804 | 2 229 318 | 1 147 143 | |
| Investments in subsidiaries | 6 | - | - | 32 893 | 32 893 | |
| Investments in other companies | 6 | 7 146 | 7 146 | 7 146 | 7 146 | |
| Total long-term investments | 4 797 433 | 2 332 132 | 4 657 727 | 2 187 252 | ||
| Current assets | ||||||
| Inventories | 7 | 16 334 594 | 8 556 289 | 16 054 124 | 8 275 929 | |
| Trade receivables | 8 | 2 742 892 | 1 658 109 | 688 667 | 807 604 | |
| Due from related parties | 8, 24 | - | - | 264 976 | - | |
| Other debtors | 9 | 633 527 | 400 622 | 606 142 | 396 008 | |
| Corporate income tax | 192 552 | - | - | - | ||
| Deferred expenses | 151 785 | 131 111 | 118 278 | 92 845 | ||
| Cash and cash equivalents | 10 | 2 781 167 | 7 689 748 | 1 162 474 | 6 498 004 | |
| Deferred expenses | 22 836 517 | 18 435 879 | 18 894 661 | 16 070 390 | ||
| Cash and cash equivalents | 27 633 950 | 20 768 011 | 23 552 388 | 18 257 642 | ||
| Total current assets | ||||||
| Total assets | ||||||
| EQUITY AND LIABILITIES | 11 | 4 158 252 | 4 158 252 | 4 158 252 | 4 158 252 | |
| EQUITY | 2 851 726 | 2 851 726 | 2 851 726 | 2 851 726 | ||
| Other reserves | 8 530 | 8 530 | 8 530 | 8 530 | ||
| Foreign currency translation reserve | 145 805 | 10 324 | - | - | ||
| Retained earnings | 10 233 237 | 6 133 278 | 9 207 677 | 5 443 459 | ||
| Total shareholders' equity | 17 397 550 | 13 162 110 | 16 226 185 | 12 461 967 | ||
| LIABILITIES | ||||||
| Long-term liabilities | ||||||
| Lease liabilities | 13 | 2 013 978 | 1 004 539 | 1 918 656 | 876 985 | |
| Contract liabilities | 14 | 638 925 | 451 354 | 20 410 | 19 105 | |
| Total long-term liabilities | 2 652 903 | 1 455 893 | 1 939 066 | 896 090 | ||
| Current liabilities | ||||||
| Trade and other payables | 12 | 1 926 064 | 904 040 | 1 721 196 | 786 104 | |
| Contract liabilities | 14 | 2 028 976 | 1 773 892 | 925 447 | 1 270 646 | |
| Corporate income tax | - | 245 786 | - | - | ||
| Other liabilities | 12 | 3 237 550 | 2 910 889 | 2 320 202 | 1 891 459 | |
| Due to related parties | 24 | - | - | 81 149 | 681 220 | |
| Lease liabilities | 13 | 390 907 | 315 401 | 339 143 | 270 156 | |
| Total current liabilities | 7 583 497 | 6 150 008 | 5 387 137 | 4 899 585 | ||
| Total liabilities | 10 236 400 | 7 605 901 | 7 326 203 | 5 795 675 | ||
| Total equity and liabilities | 27 633 950 | 20 768 011 | 23 552 388 | 18 257 642 |
The accompanying notes on pages 10 to 38 form an integral part of these financial statements.
On behalf of the Board,
/digitally signed/ Normunds Bergs Chairman of the Board /digitally signed/ Dace Langada Chief accountant
| Group | Parent company | |||||
|---|---|---|---|---|---|---|
| For the year ended | For the year ended | |||||
| 30 June | 30 June | |||||
| Note | 2022 | 2021 | 2021 | |||
| EUR | EUR | EUR | EUR | |||
| Revenue from contracts with customers | 15 | 33 968 171 | 25 021 663 | 29 135 280 | 20 983 223 | |
| Cost of goods sold | 16 | (19 565 848) | (14 471 445) | (18 576 123) | (14 273 468) | |
| Gross profit | 14 402 323 | 10 550 218 | 10 559 157 | 6 709 755 | ||
| Sales and marketing expenses | 17 | (6 473 416) | (5 366 604) | (3 390 224) | (2 590 670) | |
| Administrative expenses | 18 | (2 215 927) | (1 620 844) | (1 876 917) | (1 541 906) | |
| Profit from operating activities | 5 712 980 | 3 562 770 | 5 292 016 | 2 577 179 | ||
| Other income | 19 | 390 565 | 728 416 | 385 865 | 728 341 | |
| Financial income | 20 | 214 134 | 554 | 170 363 | - | |
| Financial expenses | 21 | (49 374) | (128 319) | (44 908) | (128 873) | |
| Profit before tax | 6 268 305 | 4 163 421 | 5 803 336 | 3 176 647 | ||
| Corporate income tax | (178 325) | (287 245) | (49 097) | - | ||
| Profit of the reporting year | 6 089 980 | 3 876 176 | 5 754 239 | 3 176 647 | ||
| Other comprehensive income | ||||||
| Other comprehensive income that will be reclassified subsequently to profit or loss: |
||||||
| Foreign operations - currency translation differences |
135 481 | 1 621 | - | - | ||
| Total comprehensive income | 6 225 461 | 3 877 797 | 5 754 239 | 3 176 647 | ||
| Basic and diluted profit per share (EUR per share): |
22 | 2 .050 | 1.305 | 1 .937 | 1.070 |
The accompanying notes on pages 10 to 38 form an integral part of these financial statements.
On behalf of the Board,
/digitally signed/
Normunds Bergs Chairman of the Board /digitally signed/
Dace Langada Chief accountant
| Share capital |
Share premium |
Other reserves |
Foreign currency translation reserve |
Retained earnings |
Total | |
|---|---|---|---|---|---|---|
| EUR | EUR | EUR | EUR | EUR | EUR | |
| Balance as at 30 June 2020 | 4 158 252 | 2 851 726 | 8 530 | 8 703 | 2 880 840 | 9 908 051 |
| Transactions with shareholders | ||||||
| recognized in the equity | - | - | - | - | (623 738) | (623 738) |
| Dividends | - | - | - | - | (623 738) | (623 738) |
| Total comprehensive income | - | - | - | 1 621 | 3 876 176 | 3 877 797 |
| Profit for the reporting year | - | - | - | - | 3 876 176 | 3 876 176 |
| Other comprehensive income | - | - | - | 1 621 | - | 1 621 |
| Balance as at 30 June 2021 | 4 158 252 | 2 851 726 | 8 530 | 10 324 | 6 133 278 | 13 162 110 |
| Transactions with shareholders | ||||||
| recognized in the equity | - | - | - | - | (1 990 021) | (1 990 021) |
| Dividends | - | - | - | - | (1 990 021) | (1 990 021) |
| Total comprehensive income | - | - | - | 135 481 | 6 089 980 | 6 225 461 |
| Profit for the reporting year | - | - | - | - | 6 089 980 | 6 089 980 |
| Other comprehensive income | - | - | - | 135 481 | - | 135 481 |
| Balance as at 30 June 2022 | 4 158 252 | 2 851 726 | 8 530 | 145 805 | 10 233 237 | 17 397 550 |
| Share capital EUR |
Share premium EUR |
Other reserves EUR |
Retained earnings EUR |
Total EUR |
|
|---|---|---|---|---|---|
| Balance as at 30 June 2020 Transactions with |
4 158 252 | 2 851 726 | 8 530 | 2 890 550 | 9 909 058 |
| shareholders recognized in | - | - | - | ||
| the equity Dividends |
- | - | - | (623 738) (623 738) |
(623 738) (623 738) |
| Total comprehensive income | - | - | - | 3 176 647 | 3 176 647 |
| Profit for the reporting year | - | - | - | 3 176 647 | 3 176 647 |
| Balance as at 30 June 2021 | 4 158 252 | 2 851 726 | 8 530 | 5 443 459 | 12 461 967 |
| Transactions with | - | - | - | ||
| shareholders recognized in | |||||
| the equity | (1 990 021) | (1 990 021) | |||
| Dividends | - | - | - | (1 990 021) | (1 990 021) |
| Total comprehensive income | - | - | - | 5 754 239 | 5 754 239 |
| Profit for the reporting year | - | - | - | 5 754 239 | 5 754 239 |
| Balance as at 30 June 2022 | 4 158 252 | 2 851 726 | 8 530 | 9 207 677 | 16 226 185 |
The accompanying notes on pages 10 to 38 form an integral part of these financial statements.
On behalf of the Board,
/digitally signed/
Normunds Bergs Chairman of the Board /digitally signed/
Dace Langada Chief accountant
| Group For the year ended 30 June |
Parent company For the year ended 30 June |
|||||
|---|---|---|---|---|---|---|
| Note | 2022 EUR |
2021 EUR |
2022 EUR |
2021 EUR |
||
| Cash flows from operating activities Profit before taxes |
6 268 305 | 4 163 421 | 5 803 336 | 3 176 647 | ||
| Adjustments for: | ||||||
| - depreciation | 5 | 377 001 | 361 956 | 365 827 | 348 830 | |
| - amortization | 5 | 121 093 | 101 184 | 121 028 | 100 567 | |
| - amortization of right-to-use assets | 5 | 366 311 | 299 413 | 314 547 | 253 058 | |
| - change in valuation allowance for inventories - change in provisions for guarantees |
7 12 |
(31 420) - |
(407 295) 28 213 |
(31 420) - |
(407 295) 28 213 |
|
| - change in provisions for unused vacations | 12 | 119 218 | 194 166 | 119 217 | 194 166 | |
| - change in provision for expected credit losses | 8 | (202 592) | (359 388) | (191 733) | (371 896) | |
| - interest income | 20 | (432) | (378) | - | - | |
| - interest expenses on lease liabilities | 21 | 49 355 | 27 708 | 44 889 | 23 184 | |
| - cash exchange rate fluctuations | (378 867) | 51 751 | (207 110) | 95 017 | ||
| - government grants | 19 | (321 444) | (683 476) | (321 444) | (683 476) | |
| - gain on disposal of fixed assets | (50 720) | (32 334) | (50 720) | (32 334) | ||
| Operating profit before changes in working | ||||||
| capital | 6 315 808 | 3 744 941 | 5 966 417 | 2 724 681 | ||
| Increase in inventories Increase in receivables |
(7 746 490) (744 599) |
(1 302 201) (294 144) |
(7 746 380) (97 746) |
(1 304 695) (90 809) |
||
| 1 341 906 | 1 378 142 | 276 347 | 1 743 943 | |||
| Increase in payables Cash generated by/(used in) operating |
||||||
| activities | (833 375) | 3 526 738 | (1 601 362) | 3 073 120 | ||
| Government grants | 19 | 276 195 | 751 107 | 276 195 | 751 107 | |
| Corporate income tax paid | (747 698) | (75 042) | (71 669) | (100) | ||
| Net cash from operating activities | (1 304 878) | 4 202 803 | (1 396 836) | 3 824 127 | ||
| Cash flows from investing activities | ||||||
| Acquisition of property, plant and equipment Proceeds from sale of property, plant and |
5 | (1 692 699) | (382 257) | (1 660 358) | (378 030) | |
| equipment | 51 788 | 39 374 | 51 649 | 39 374 | ||
| Acquisition of intangible assets | 5 | (216 122) | (233 324) | (216 122) | (233 324) | |
| Loans repaid | - | 63 886 | - | 3 300 | ||
| Sale of investment in other company | 6 | - | 960 | - | 960 | |
| Interest received Net cash used in investing activities |
432 (1 856 601) |
378 (510 983) |
- (1 824 831) |
- (567 720) |
||
| Cash flows from financing activities | ||||||
| Proceeds from borrowings | - | (8 940) | - | (8 940) | ||
| Payment of lease liabilities | (311 775) | (299 413) | (286 063) | (253 058) | ||
| Interest paid on lease liabilities | (49 355) | (27 708) | (44 889) | (23 184) | ||
| Dividends | (1 990 021) | (623 738) | (1 990 021) | (623 738) | ||
| Net cash used in financing activities | (2 351 151) | (959 799) | (2 320 973) | (908 920) | ||
| Effect of movements in exchange rates on cash | ||||||
| held | 604 049 | (37 335) | 207 110 | (95 017) | ||
| Net change in cash and cash equivalents | (4 908 581) | 2 694 686 | (5 335 530) | 2 252 470 | ||
| Cash and cash equivalents at the beginning of | ||||||
| the year | 7 689 748 | 4 995 062 | 6 498 004 | 4 245 534 | ||
| Cash and cash equivalents at the end of the year |
10 | 2 781 167 | 7 689 748 | 1 642 474 | 6 498 004 |
The accompanying notes on pages 10 to 38 form an integral part of these financial statements.
On behalf of the Board,
/digitally signed/ Normunds Bergs Chairman of the Board
/digitally signed/ Dace Langada Chief accountant
A/S "SAF Tehnika" (hereinafter referred to as the Parent Company) was registered in Riga, Latvia, on 27 December 1999 with the registration number 40003474109. Registration in the Commercial Register was performed on 10 March 2004. The legal address is Ganību dambis 24a, Riga, Latvia. The Parent company is a public joint stock company, the shares of the Parent company are listed on the main list of A/S "Nasdaq Riga" Stock Exchange, Latvia.
The core business activity of the Parent company and its subsidiaries (together hereinafter referred to as the Group) is the design, production and distribution of microwave radio data transmission equipment thus offering an alternative to cable channels. The Group offers products to mobile network operators, data service providers (such as Internet service providers and telecommunications companies), as well as state institutions and private companies.
Promotion of the Parent company's products and services, marketing, market research, attraction of new clients and technical support in North America is provided by a 100% subsidiary "SAF North America" LLC. The said company is registered in the USA and operates in Aurora, Colorado.
In August 2012 another company began operations in North America – "SAF Services" LLC. The objective of establishing "SAF Services" LLC was to provide local clients with services related to the creation, long-term maintenance and management of data transmission networks. Currently, the development of this business direction is suspended.
These separate financial statements of A/S "SAF Tehnika" and consolidated financial statements of A/S "SAF Tehnika" and its subsidiaries (together – the Group) (hereinafter – financial statements) were approved by the Parent company's Board on 28 October 2022. The financial statements will be presented for approval to the shareholders' meeting. The shareholders have the power to reject the financial statements prepared and issued by management and the right to request that new financial statements be issued. Dace Langada, the Chief Accountant of A/S "SAF Tehnika", is in charge of the bookkeeping.
The auditor of the Group is SIA "Potapoviča un Andersone", License No. 99 and the responsible certified auditor is Lolita Čapkeviča, Certificate No. 120.
These financial statements are prepared using the accounting policies and valuation principles set out below. These policies have been applied consistently to all the years presented, unless otherwise stated.
These financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).
The financial statements have been prepared under the historical cost convention.
The financial statements are presented in euros (EUR). The financial statements cover the period from 1 July 2021 to 30 June 2022.
The Group (the Parent company) has applied the following new and amended standards and interpretations effective for annual periods beginning on or after January 1, 2021.
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 were issued in August 2020 and are applicable from 1 January 2021, with early application permitted. The amendments address the accounting issues that arise when financial instruments that reference an IBOR interest rate transition to an alternative benchmark rate. The amendments include a practical expedient for modifications required by the Interest Rate Benchmark Reform (the Reform), to be treated as changes to a floating interest rate. They also permit changes required by the Reform to be implemented in hedge designations and hedge documentation without the hedging relationship being discontinued. Adoption of the amendments does not have significant impact on the Company's financial position, results, cash flows or disclosures.
Adopted new or revised standards and interpretations that have been introduced during the reporting year have not had or have had an insignificant impact on the Group's (the Parent company's) financial position, results, cash flows or disclosures.
Several new or revised standards and interpretations have been issued that are mandatory for annual periods beginning on or after 1 January 2022 and which have not been early adopted by the Group (the Parent company):
A Accounting principles (continued)
Amendments to IFRS 4 – deferral of IFRS 9 (effective for annual periods beginning on or after 1 January 2023).
Classification of liabilities as current or non-current – Amendments to IAS 1 (effective for annual periods beginning on or after 1 January 2023, not yet adopted by the EU). These narrow scope amendments clarify that liabilities are classified as either current or noncurrent, depending on the rights that exist at the end of the reporting period. Liabilities are noncurrent if the entity has a substantive right, at the end of the reporting period, to defer settlement for at least twelve months. The guidance no longer requires such a right to be unconditional. Management's expectations whether they will subsequently exercise the right to defer settlement do not affect classification of liabilities. The right to defer only exists if the entity complies with any relevant conditions as of the end of the reporting period. A liability is classified as current if a condition is breached at or before the reporting date even if a waiver of that condition is obtained from the lender after the end of the reporting period. Conversely, a loan is classified as non-current if a loan covenant is breached only after the reporting date. In addition, the amendments include clarifying the classification requirements for debt a company might settle by converting it into equity. 'Settlement' is defined as the extinguishment of a liability with cash, other resources embodying economic benefits or an entity's own equity instruments. There is an exception for convertible instruments that might be converted into equity, but only for those instruments where the conversion option is classified as an equity instrument as a separate component of a compound financial instrument.
Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS9, IFRS16 and IAS 41 (effective for annual periods beginning on or after 1 January 2022). The amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees could be paid to either third parties or the lender. Under the amendment, costs or fees paid to third parties will not be included in the 10% test.
Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023). The amendment to IAS 1 on classification of liabilities as current or non-current was issued in January 2020 with an original effective date 1 January 2022. However, in response to the Covid-19 pandemic, the effective date was deferred by one year to provide companies with more time to implement classification changes resulting from the amended guidance.
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). IAS 1 was amended to require companies to disclose their material accounting policy information rather than their significant accounting policies. The amendment provided the definition of material accounting policy information. The amendment also clarified that accounting policy information is expected to be material if, without it, the users of the financial statements would be unable to understand other material information in the financial statements. The amendment provided illustrative examples of accounting policy information that is likely to be considered material to the entity's financial statements. Further, the amendment to IAS 1 clarified that immaterial accounting policy information need not be disclosed. However, if it is disclosed, it should not obscure material accounting policy information. To support this amendment, IFRS Practice Statement 2, 'Making Materiality Judgements' was also amended to provide guidance on how to apply the concept of materiality to accounting policy disclosures.
Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). The amendment to IAS 8 clarified how companies should distinguish changes in accounting policies from changes in accounting estimates.
The Group (Parent company) is currently assessing the impact of the amendments listed above on its financial statements.
Other new or amended IFRSs or interpretations issued and not yet adopted are not expected to have a significant impact on the Group's (the Parent company's) financial position, results, cash flows or disclosures.
At the time of signing this report there are no new or revised standards or interpretations that are not yet effective that are expected to have a material impact on the Parent company or the Group.
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. Subsidiaries of the Group were established by the parent company, therefore business combinations and resulting acquisition accounting does not apply to the Group.
Notes to the financial statements (continued)
Subsidiaries controlled by the Parent company:
| Name | Country of residence |
Share holding |
Equity of subsidiaries | Profit/ (loss) of subsidiaries |
||
|---|---|---|---|---|---|---|
| 30.06.2022 EUR |
30.06.2021 EUR |
2021/2022 EUR |
2020/2021 EUR |
|||
| "SAF North America" LLC | United | |||||
| States of America United |
100% | 1 204 258 | 733 903 | 364 584 | 703 001 | |
| "SAF Services" LLC | States of America |
100% | - | (5 182) | - | (855) |
The address of both subsidiaries is 3250 Quentin Street, Unit 128, Aurora, Colorado 80011, USA. At the end of the reporting year the operations of "SAF Services" LLC are dormant and it accounts for insignificant part of the Group As at June 2022 this subsidiary is liquidated.
The financial statements of the Group's subsidiaries have been prepared for the same reporting period as the parent company's financial statements, applying the same accounting policies. The accounting policies of subsidiaries are adjusted when necessary in order to ensure consistency with those of the Group.
Internal transactions, account balances and unrealized gains from transactions between the Group companies are eliminated. Unrealized loss is also eliminated unless objective evidence exists that the asset involved in the transaction has impaired.
In the separate financial statements of the Parent company investments in subsidiaries are accounted for using the cost method under IAS 27 "Separate Financial Statements". Subsequent to initial recognition, investments in subsidiaries are carried at cost less any accumulated impairment losses. At the end of each reporting year it is assessed whether there are indication that the investment may be impaired. If any such indication exists, the impairment test is performed. The parent calculates the impairment as the difference between the recoverable amount of the subsidiary and the carrying amount of the investment, recognising the loss in the statement of comprehensive income.
Dividends received from subsidiaries are recognised in the statement of comprehensive income in the period in which the right to receive the dividends arises.
The functional currency of the Group and the Parent company and the reporting currency is the official currency of the Republic of Latvia - euro (EUR).
Transactions in foreign currencies are translated into functional currency (EUR) of the Group (Parent company) at the reference exchange rate set by the European Central Bank as at the transaction date. Foreign monetary asset and liability items are revalued to functional currency of the Group (Parent company) according to closing rate published on the official website of the European Central Bank on the reporting date. The effects of changes in foreign exchange rates are recognized in the statement of profit or loss
| 30.06.2022 | 30.06.2021 | |
|---|---|---|
| 1 USD | 1.03870 | 1.18840 |
| 1 GBP | 0.85820 | 0.85805 |
The results of operations and the financial position of the Group companies (none of which are operating in hyperinflation economics) that operate with functional currencies other than the reporting currency are translated to the reporting currency as follows:
(i) Assets and liabilities are converted according to exchange rate as at the date of statement of financial position;
(ii) Transactions of the statement of profit and loss and other comprehensive income are revalued according to exchange rate as at the date of transaction; and
(iii) All resulting exchange differences are initially recognized in other comprehensive income and subsequently reclassified from equity to profit or loss when the Group disposes of the respective foreign operation.
Property, plant and equipment (PPE) are carried at cost less accumulated depreciation and impairment losses. Cost includes expenses directly related to acquisition of PPE. Such cost includes the cost of replacing part of such PPE item if the asset recognition criteria are met.
Leasehold improvements are capitalized and disclosed as PPE. Depreciation of these assets is calculated over the shorter of the leasehold period or the estimated useful life on a straight-line basis.
PPE consisting of significant items with different useful lives are treated as different items of PPE for which depreciation is calculated separately.
The cost of replacing part of an item of PPE is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group (Parent company) and its cost can be measured reliably. The costs of the day-to-day servicing of PPE is recognised in the profit or loss as incurred.
Current maintenance costs of tangible assets are recognized in the profit or loss as incurred.
Depreciation is calculated on a straight-line basis over the entire useful lives of the respective PPE item to write down each asset to its estimated residual value over its estimated useful life using the following rates
| % per year | |
|---|---|
| Technological equipment | 25 |
| Vehicles | 20 |
| Other equipment and machinery | 20 – 50 |
The assets' residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each reporting date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount exceeds its estimated recoverable amount (see Note H).
Gains and losses on disposals are determined by comparing proceeds with the respective carrying amount and included in the statement of profit or loss.
Effective January 1, 2019, the Group (the Parent company) has applied IFRS 16, Leases, which has resulted in the recognition of a right-of-use assets as a non-current assets. The accounting policy for leases is set out in section R of the accounting policies.
Trademarks and licenses have a definite useful life and are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is calculated on a straight-line basis to allocate the costs of trademarks and licenses over their estimated useful life, which usually is 3 years.
The acquired software licenses are capitalised on the basis of the purchase and installation costs. These costs are amortised over their estimated useful lives, usually of 4 years.
Research costs are recognized in statement of profit or loss as incurred. An intangible asset arising from the development expenditure on an individual project is recognized only when the Group (Parent company) can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intentions to complete and its ability to use or sell the asset, and when the Group (Parent company) can demonstrate how the asset will generate future economic benefits, the availability of resources to complete and the ability to measure reliably the expenditure during the development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and impairment losses. Any expenditure capitalized is amortized over the period of the expected future sales from the related project. An assessment is made at each reporting date to determine whether there is any indication that such an asset may be impaired.
All non-financial assets of the Group and the Parent Company have a definite useful life. The Group (Parent Company) assesses at each reporting date whether there is any indication that an item of property, plant and equipment, intangible assets, right-to-use assets and other non-current assets may be impaired. If any such indication exists, the asset's recoverable amount is estimated. Intangible assets that are not put into operation are not amortized and are reviewed annually.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset in relation to which the future cash flows have not been adjusted.
All Group's (Parent company's) assets are allocated to two cash generating units that are identified as Group's (Parent company's) operating segments (see Note 15). No impairment indicators have been noted.
In respect of non-current assets (excluding goodwill), impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Segments reportable in financial statements are business segments or aggregations of business segments that meet certain criteria and for which separate financial information is available that is regularly evaluated by the chief operating decision maker in making decisions about the allocation of resources and performance evaluation. Segment results that are reported to the Chief Executive Officer of the Group (Parent company) include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Group's (Parent company's) headquarters), head office expenses, and tax assets and liabilities. Information on the Group's (Parent company's) operating segments is disclosed in Note 15.
Government and international organisations grants are recognized where there is a reasonable assurance that the grant will be received and all attaching conditions will be complied with. Government grants are systematically recognized as income in the respective periods in order to balance them with compensated expenses thus recognizing receivables. Where the grant relates to non-current asset, the fair value is initially credited to a deferred income account and is released to the statement of profit or loss over the expected useful life of the relevant asset. Grants that are not intended to provide an incentive to incur specific expenses are recognized as income when the Group (Parent Company) becomes eligible for the grant.
In case the co-financing has been granted, however the cash is not yet received, respective receivables are recognized in Statement of Financial Position under Other receivables.
Since April 2019, the cooperation project "Competence Center of Latvian Electrical and Optical Equipment Industry" is being implemented within the framework of an agreement signed between A/S "SAF Tehnika" and "LEO Pētījumu centrs" SIA., regarding which SIA "LEO Pētījumu centrs" had signed a contract with "Centrālo finanšu un līgumu aģentūra", in order to obtain financing from the European Regional Development Fund as part of the above project. A/S "SAF Tehnika" conducts individual research activities to develop new products within the framework of the abovementioned project. For the implementation of this project activity co-financing to cover remuneration of project staff and other costs related to this project are provided. Co-financing received relates to expense items recognized in Statement of profit or loss and other comprehensive Income and thus was recognized as income in order to compensate the costs incurred.
Inventories are stated at the lower of cost or net realizable value. Cost is measured based on the first in – first out (FIFO) method. Costs of finished goods and work-in-progress include cost of materials, labour and depreciation.
Net realisable value is the estimated selling price in the ordinary course of Groups (Parent companys) business, less the estimated costs necessary to make the sale. Estimating the net sales value of inventory, the carrying amount is reduced in relation to the slow-moving inventory. Slow-moving inventory is the inventory whose movement in 12, 9 or 6-month period respectively has been less than 30% comparing with the amount at the beginning of period. Provisions for slow-moving inventory are made according to the following rates:
| The time interval where there has not been | Provision rate % | ||
|---|---|---|---|
| movement | |||
| 6 to 8 months | 20 | ||
| 9 to 11 months | 50 | ||
| 12 months and more | 100 | ||
The Group (the Parent company) classifies its financial assets in the following measurement categories:
• those subsequently measured at fair value (with revaluation in either profit or loss or other comprehensive income), and
• those to be measured at amortized cost. The classification and subsequent measurement depend on the Group's (Parent company's) business model for managing the related assets portfolio and the cash flow characteristics of the asset.
"Regular way" acquisitions and sales of financial assets are recorded at trade date, which is the date when the Group (the Parent company) commits to acquire or deliver a financial asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group (the Parent company) has transferred substantially all the risks and rewards of ownership.
At initial recognition, the Group (the Parent company) measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.
Subsequent measurement of debt instruments depends on the entity's business model for managing the asset and the cash flow characteristics of the asset. All debt instruments of the Group (the Parent company) are classified in an amortised cost valuation category.
Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortized cost. Interest income from these financial assets is included financial income based on effective interest rate method. Any gain or loss arising on derecognition is recognized directly in profit or loss and presented in other gains/ (losses) together with impairment losses and foreign exchange gains and losses. On 1 July 2021 and 30 June 2022, the Group's (the Parent company's) financial assets measured at amortized cost comprise: trade receivables and cash and cash equivalents.
The Groups (the Parent company's) investments in equity instruments are insignificant.
Derivative financial instruments are accounted for at fair values. All financial instruments are recognised as assets when fair value is positive and as liabilities when fair value is negative. Changes in values of derivative financial instruments are included in profit or loss statement. The Group (the Parent company) does not apply hedge accounting.
The Group (the Parent company) determines expected credit loss from its debt instruments accounted at amortised cost. Methods used for assessment of impairment depend on whether credit risk has increased significantly.
Expected credit loss is assessed based on:
• all the reasonable and supportable information about past events, current conditions and future forecasts available at the end of each reporting period without undue cost or efforts.
The Group (the Parent company) applies simplified approach to trade receivables and accrued income without significant financing component as allowed by IFRS 9, which requires accrual of lifetime expected credit losses for all trade receivables grouped on the basis of common credit characteristics and overdue payments. The rates of expected credit loss are based on the dynamics of payments (for sales) during the last 3 years, as well as historical credit losses in the respective historic period. The amount of historical loss is adjusted to reflect current and future information.
Cash and cash equivalents comprise current bank accounts balances and deposits, and short term highly liquid investments with an original maturity of three months or less.
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are charged against the share premium account.
Corporate income tax for the reporting period is included in the financial statements based on the management's calculations prepared in accordance with requirements of tax legislation of each company of the Group.
With respect to the Group's parent company in Latvia, corporate income tax is calculated on distributed profit (20/80 of the net amount payable to shareholders) as well as on conditionally distributed profit (20/80 of the calculated taxable base). Corporate tax on distributed profit is recognized when the Company's shareholders approve the distribution of profit.
The Company also calculates and pays corporate income tax on conditionally distributed profit, including statutory taxable items, such as non-operating expenses, amounts of other transactions if they meet the criteria set out in the Corporate Income Tax Law, as well as other expenses in excess of statutory deduction thresholds. Such tax is not an income tax in the context of IAS 12 because it is calculated on a gross rather than a net basis and is therefore recognized in the statement of profit or loss as other operating expense.
Salary liabilities, including non-monetary benefits, bonus plans, annual leave, are recognized for employee services until the end of the reporting period and measured at the amounts expected to be paid to settle the liability. The Group (Parent company) makes social insurance contributions under the State's health, retirement benefit and unemployment schemes at the statutory rates in force during the year, based on gross salary payments. The Group (Parent company) will have no legal or constructive obligations to pay further contributions if the statutory fund cannot settle their liabilities towards the employees. Social insurance and pension plan contributions are included in the expenditures in the same period as the related salary cost.
Provisions for unused annual leaves are estimated by multiplying the average daily earnings of employees for the last six months of the reporting year by the number of unused vacation days accrued at the end of the reporting year. These liabilities are shown as short-term accrued liabilities.
The Group is a designer, manufacturer and distributor of digital microwave transmission equipment. The Group provides end-to-end and cost-effective wireless backhaul solutions for digital voice and data transmission to mobile and fixed network operators and data service providers both in the public and private sectors as an alternative to cable networks. The Group operates in two separate segments: (1) operations with products developed by the Group and (2) operations with products acquired from other producers, including, sales of antennae, cables, rebranded (OEM-ed) and other side products.
Revenue is income generated on the course of the Group's (the Parent company's) ordinary operations. Revenue is recognised at transaction price. Transaction price is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, excluding amounts collected on behalf of third parties. The Group (the Parent company) recognises revenue at the moment of transfer of control over the goods or services to the client.
Revenue is recognised at the moment of delivery of goods to the wholesaler (buyer) together with full freedom of choice in respect of further sale and prices of those goods and a wholesaler (buyer) does not have any claims regarding fulfilment of contract liability that could affect acceptance of goods by the wholesaler (buyer).
Delivery takes place when products are delivered to a specified location, risks of expiry and loss transferred to the wholesaler (buyer) and the Group (the Parent company) has acquired objective proof that criteria for acceptance/transfer have been fulfilled. It is considered that no financing component is present when sales are performed with 30-45-day settlement period what corresponds to usual market practice. Trade receivable is recognised when goods are delivered, since at this point consideration becomes unconditional and the settlement depends only on time. If consideration depends on performance of additional obligations, a contract asset is recognised. If the Group (the Parent company) receives an advance payment, it recognises contract liability.
The Group (the Parent company) provides to customers early product replacement guarantees, as well as warranties, specific product development and configuration services, calibration of equipment and training services. Revenues from services are recognised over the time of delivery of the service.
Sales transaction can comprise certain future services, for instance, extended warranties. In this case transaction price of the goods and services granted is allocated on a stand-alone selling price basis of such components. In order to determine stand-alone selling prices observable prices are used, but when such are not available, "cost plus" method is applied. Extended warranties are initially recognised as contract liabilities in the balance sheet and are transferred to statement of profit or loss on a linear basis over the period of extended warranty. (See Note 14.)
At inception of a contract, the Group (the Parent company) assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Group (the Parent company) has elected to apply the practical expedient to account for each lease component and any non-lease components as a single lease component.
The Group (the Parent company) recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received. The assets are depreciated to the earlier of the end of the useful life of the right-of-use asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. Lease terms mostly range from 2 to 7 years for offices and warehouse but there may also be lease agreements concluded for a shorter term, for example 1 year.
In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's (the Parent company's) incremental borrowing rate. Generally, the Group (the Parent company) uses its incremental borrowing rate as the discount rate.
The lease liability is measured at amortized cost using the effective interest method.
The Group (the Parent Company reassess the lease liabilities (and adjusts the related right-of-use asset accordingly) whenever:
The Group (the Parent company) has elected to apply the practical expedient not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12 months or less and leases of low-value assets. The lease payments associated with these leases is recognized as an expense on a straight-line basis over the lease term.
Dividends payable to the shareholders are recognised as a liability in the financial statements in the period in which the dividends are approved by the shareholders.
Financial income and expenses comprise interest payable on borrowings and lease liabilities calculated using the effective interest rate method, interest receivable on funds invested and foreign exchange gains and losses. Interest income is recognised in the statement of profit or loss as it accrues, using the effective interest method. The interest expenses of lease liabilities are recognized in statement of profit or loss using the effective interest rate method.U
Related parties represent both legal entities and private individuals related to the Group and Parent company in accordance with the following rules.
Related party transaction - a transfer of resources, services or obligations between a reporting group entity and a related party, regardless of whether a price is charged.
The Group's activities expose it to a variety of financial risks:
The Group's overall risk management focuses on the unpredictability of financial markets and seeks to minimise its potential adverse effects on the Group's financial performance. The responsibility for risk management lies with the Finance Department. The Finance Department identifies and evaluates risks and seeks for solutions to avoid financial risks in close co-operation with other operating units of the Group. Financial risks are managed both on Parent company and consolidated level.
The Group operates in the international market and is subject to foreign currency risk arising primarily from USD fluctuations.
Foreign currency risk arises when future commercial transactions, recognised assets and liabilities are denominated in a currency different from the Group's functional currency. To manage the foreign currency risk arising from future commercial transactions and recognised assets and liabilities, the Group uses forward foreign currency contracts. The Finance Department analyses the net open position in each foreign currency. The Group might decide to enter to forward foreign currency contracts or to maintain borrowings (in form of credit line) in appropriate currency andamount. As at 30 June 2022 and 30 June 2021 the Group (including Parent company) had no open forward exchange contracts.
The following schedule summarises net open positions for currencies expressed in EUR as at 30 June 2022:
| Group | EUR | USD | Other currencies |
Total |
|---|---|---|---|---|
| Financial assets | ||||
| Trade receivables, gross | 604 663 | 2 159 217 | 463 | 2 764 343 |
| Cash and cash equivalents | 807 173 | 1 962 921 | 11 073 | 2 781 167 |
| Total | 1 411 836 | 4 122 138 | 11 536 | 5 545 510 |
| Financial liabilities | ||||
| Liabilities | (1 246 751) | (677 341) | (1 972) | (1 926 064) |
| Total | (1 246 751) | (677 341) | (1 972) | (1 926 064) |
| Net open positions | 165 085 | 3 444 797 | 9 564 | 3 619 446 |
| Parent company | EUR | USD | Other | Total |
| currencies | ||||
| Financial assets | ||||
| Trade receivables, gross | 604 663 | 349 567 | 463 | 954 693 |
| Cash and cash equivalents | 807 173 | 344 228 | 11 073 | 1 162 474 |
| Total | 1 411 836 | 693 795 | 11 536 | 2 117 167 |
| Financial liabilities | ||||
| Liabilities | (1 246 751) | (472 473) | (1 972) | (1 721 196) |
| Total | (1 246 751) | (472 473) | (1 972) | (1 721 196) |
| Net open positions | 165 085 | 221 322 | 9 564 | 395 971 |
The following schedule summarises net open positions for currencies expressed in EUR as at 30 June 2021:
| Group | EUR | USD | Other currencies |
Total |
|---|---|---|---|---|
| Financial assets | ||||
| Trade receivables, gross | 462 744 | 1 413 283 | 6 125 | 1 882 152 |
| Cash and cash equivalents | 942 057 | 6 746 716 | 975 | 7 689 748 |
| Total | 1 404 801 | 8 159 999 | 7 100 | 9 571 900 |
| Financial liabilities | ||||
| Liabilities | (500 128) | (396 146) | (7 766) | (904 040) |
| Total | (500 128) | (396 146) | (7 766) | (904 040) |
| Net open positions | 904 673 | 7 763 853 | (666) | 8 667 860 |
19 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
(1) Financial risk factors (continued)
| (a) | Foreign currency risk (continued) | ||
|---|---|---|---|
| Parent company | EUR | USD | Other currencies | Total |
|---|---|---|---|---|
| Financial assets | ||||
| Trade receivables, gross | ||||
| Loans | 462 744 | 531 518 | 6 125 | 1 000 387 |
| Cash and cash equivalents | 942 057 | 5 554 972 | 975 | 6 498 004 |
| Total | 1 404 801 | 6 086 490 | 7 100 | 7 498 391 |
| Financial liabilities | ||||
| Liabilities | (500 128) | (278 210) | (7 766) | (786 104) |
| Total | (500 128) | (278 210) | (7 766) | (786 104) |
| Net open positions | 904 673 | 5 808 280 | (666) | 6 712 287 |
The Group and the Parent company have assessed the impact on profit before tax of reasonably possible changes in the exchange rate of the US dollar against the euro, assuming that other variables, mainly interest rates, remain unchanged.
| Change in the USD exchange rate | Group | Parent company Effect as at 30 June |
|||
|---|---|---|---|---|---|
| Effect as at 30 June | |||||
| 2021/2022 | 2020/2021 | 2021/2022 | 2020/2021 | ||
| EUR | EUR | EUR | EUR | ||
| -10% | 344 480 | 776 385 | 22 132 | 580 828 | |
| - 5% | 172 240 | 388 193 | 11 066 | 290 414 | |
| +5% | (172 240) | (388 193) | (11 066) | (290 414) | |
| +10% | (344 480) | (776 385) | (22 132) | (580 828) |
The Group (including Parent company) has significant exposure of credit risk with its customers. The Group's policy is to ensure that wholesale of products is carried out with customers having appropriate credit history. If the customers are residing in countries with high credit risk, then Letters of Credit issued by reputable credit institutions are used as credit risk management instruments. In situations where no Letters of Credit can be obtained from reputable credit institutions, the prepayments from the customers are requested or State Export Guarantees purchased. Customers' financial position is monitored on regular basis and assigned credit limits has been changed based on customer's credit history and customer's paying behaviour.
As at 30 June 2022, the Group's largest customer's receivable balance accounted for approximately 41% of the total carrying amount of trade receivables, and the sales revenue from this largest customer (located in the United States) accounted for approximately 4% of the Group's revenues (at 30 June 2021: 24% and for 2020/2021 – 12%, respectively), as well as another receivable balance accounted for 13% of total trade receivables. In 2021/2022 income from the above-mentioned largest clients in the US 100% applies to CFIP, Integra, Spectrum Compact, Aranet segment (2020/2021 - 100% applies to CFIP, Integra, Spectrum Compact, Aranet segment). Trade receivable balances of the Group's other customers did not reach at least 10% of the total receivables. The Parent company's balance sheet as at 30 June 2021 included two trade receivables with the balance above 10% of the total of trade receivables, including receivables from related companies (30.06.2021: two debts). In the reporting year, the Parent company generated approximately 40% of the revenues from sales to subsidiary in the United States (2020/2021 - 44%). In 2021/2022 income from sales to the US subsidiary relate to the CFIP, Integra, Spectrum Compact, Aranet segment in the amount of 95% and the other segment 5% (in 2020/2021 to the CFIP, Integra, Spectrum Compact, Aranet segment - 94% and the other segment - 6%.)
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, the Group's exposure to credit risk arises from the default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments. The Group's maximum credit risk exposure as at 30.06.2022 amounts to EUR 6 739 718 or 24.39% of total assets (30.06.2021.: EUR 9 886 736 or 47.61% of total assets), and Parent company's maximum credit risk exposure as at 30.06.2022 amounts to – EUR 3 071 183 or 13.04% of total assets (30.06.2021: EUR 7 789 255 or 42.66% of total assets. For more information on the Group's and Parent company's exposure to credit risk please also refer to Note 8.
The Group follows a prudent liquidity risk management and hence maintain a sufficient quantity of liquid funds. The Group's current liquidity ratio (ratio between the current assets and total liabilities) is 2.23 (30.06.2021: 2.42), quick liquidity ratio (ratio between the current assets less inventory and total liabilities) is: 0.64 (30.06.2021: 1.30), and Parent company's current liquidity ratio is 2.58 (30.06.2021: 2.77), quick liquidity ratio is: 0.39 (30.06.2021: 1.34).
20 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
The Group's management monitors liquidity reserves for the operational forecasting, based on estimated cash flows. Most of the Group's liabilities are short term. Management believes that the Group will have sufficient liquidity to be generated from operating activities and does not see significant exposure to liquidity risk. For more information on the Group's and Parent company's exposure to liquidity risk, refer to Note 12 and Note 14.
The maturity structure of financial liabilities based on contractual undiscounted payments is as follows:
| Group 30/06/2022 |
Up to 3 months |
3 to 12 months |
2-5 years | Total | Balance sheet value |
|---|---|---|---|---|---|
| EUR | EUR | EUR | EUR | EUR | |
| Lease liabilities Trade payables, other |
100 971 | 302 913 | 2 282 512 | 2 686 396 | 2 404 885 |
| liabilities, accruals | 4 557 509 | 606 104 | - | 5 163 613 | 5 163 613 |
| Total | 4 658 480 | 909 017 | 2 282 512 | 7 850 009 | 7 568 498 |
| 30/06/2021 | |||||
| Lease liabilities Trade payables, other |
87 582 | 262 903 | 1 401 310 | 1 751 795 | 1 319 940 |
| liabilities, accruals | 3 268 887 | 546 042 | - | 3 814 929 | 3 814 929 |
| Total | 3 356 469 | 808 945 | 1 401 310 | 5 134 869 | 5 134 869 |
| Parent company 30/06/2022 |
Up to 3 months |
3 to 12 months |
2-5 years | Total | Balance sheet value |
| EUR | EUR | EUR | EUR | EUR | |
| Lease liabilities | 88 030 | 264 089 | 2 140 162 | 2 492 281 | 2 257 799 |
| Trade payables, other | |||||
| liabilities, accruals | 3 435 294 | 606 104 | - | 4 041 398 | 4 041 398 |
| Total | 3 523 324 | 870 193 | 2 140 162 | 6 533 679 | 6 299 197 |
| 30/06/2021 | |||||
| Lease liabilities Trade payables, other |
74 325 | 222 975 | 1 189 201 | 1 486 501 | 1 147 141 |
| liabilities, accruals | 2 131 521 | 546 042 | - | 2 677 563 | 2 677 563 |
| Total | 2 205 846 | 769 017 | 1 189 201 | 4 164 064 | 3 824 704 |
As the Group does not have significant interest-generating assets or interest-bearing liabilities, thus the Group's cash flows and net results are largely independent of changes in market interest rates. The Group's cash flows from interest bearing liabilities are dependent on current market interest rates; however, as the Group and Parent company mainly has short- term interest-bearing liabilities, the exposure is not significant.
Part of the Group's and the Parent company's revenue is derived from the sale of products outside the European Union, which creates exposure to geopolitical risk. The global electronics services market is primarily affected by the US-China "trade war", but it does not currently pose a threat to the Group's sales. Import duties on microwave equipment imported from the European Union remain unchanged. It is more likely that, in the event of sanctions being imposed on Chinese competitors, additional sales opportunities may appear on the US market. Since the start of military actions by Russia in Ukraine, the overall uncertainty of the business environment has increased. Although the direct impact on the Group's operations is relatively limited, the Group carefully evaluates potential cost increase forecasts and potential risks.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Group has access at that date. The fair value of liabilities represents default risk. When available, the Group measures the fair value of an instrument using quoted prices in an active market for that instrument. Fair value is classified in various levels in the fair value hierarchy according to data used in measurement methods:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes reclassification among fair value hierarchy levels in the end of the reporting period in which the reclassification was performed.
The Group and the Parent Company have no significant assets as at 30 June 2022 and 30 June 2021 that are to be measured at fair value.
The Group's and Parent company's financial assets and liabilities (trade receivables, other receivables, other financial assets, trade and other payables, lease liabilities and other financial liabilities) correspond to Level 3, except for cash and cash equivalents, which correspond to Level 2. These Group's financial assets and liabilities, except lease liabilities, generally have a maturity of up to six months, therefore the Group believes that the fair value of these financial assets and liabilities corresponds to their initial nominal value and carrying amount at any subsequent date. The majority of the lease liability were calculated at amortized cost during the reporting year as a result of lease modifications using a revised discount rate equal to the market interest rate for similar borrowings. Therefore the Group believes that the accounting value of lease liabilities is also approximately similar to their fair value on 30 June 2022.
The Group and the Parent company manages its capital to ensure that the Group and the Parent company will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance. The Group and the Parent company control the capital using the gearing ratio. This ratio is calculated by applying the total amount of liabilities less cash and cash equivalents to total equity.
The gearing ratios at the year-end was as follows:
| Group | Parent company | |||
|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | |
| EUR | EUR | EUR | EUR | |
| Liabilities | 10 236 400 | 7 605 901 | 7 326 203 | 5 795 675 |
| Cash and cash equivalents | (2 781 167) | (7 689 748) | (1 162 474) | (6 498 004) |
| Net debt/(assets) | 7 455 233 | (83 847) | 6 163 729 | (702 329) |
| Shareholders' equity | 17 397 550 | 13 162 110 | 16 226 185 | 12 461 967 |
| Debt to equity ratio | 59% | 58% | 45% | 47% |
| Net debt/(net asset) to equity ratio | 43% | (1)% | 38% | (6)% |
The change in the mentioned ratios can be explained by the increase in trade payables and a decrease in cash, which correlates with a significant increase in inventory balances, both in the case of the Parent company and the Group.
The management of the Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. Management has assessed the situation at the end of the reporting period and after the end of the reporting year and has determined that the spread of COVID-19 and resulting restrictions as well as military actions in Ukraine did not have a material adverse effect on the Group's and Parent company's operations and financial results, given the specifics of the products produced by the Group. The Group's operations were not significantly disrupted and management does not anticipate any significant disruptions in the future.
When the events and circumstances indicate a potential impairment, the Group performs impairment tests for items of PPE, intangible assets and right-to-use assets. Based to these tests, assets are written down to their recoverable amounts, if necessary. When carrying out impairment tests management uses various estimates for the cash flows arising from the use of the assets, sales, maintenance, and repairs of the assets, as well as in respect of the inflation and growth rates. If the situation changes in the future, either additional impairment could be recognised, or the previously recognised impairment could be partially or fully reversed. In view of the above considerations about impact of COVID-19 as well as hostilities in Ukraine, management has not identified any circumstances that could indicate that the Group's and the Parent company's long-term non-financial assets could be impaired. See also Note 2H.
The Group and the Parent company have closed the reporting year with a profit and a negative cash flow from operating activities mainly due to the necessity to maintain significantly larger inventory balances to ensure production continuity and order fulfilment. The Group will continue pursuing its strategy to develop competitive wireless data transmission products and solutions for new export markets, and maintain the current sound financial position and control over the production process with the aim to increase sales and profitability.
Management estimates the useful lives of individual PPE items in proportion to the expected duration of use of the asset based on historical experience with similar fixed assets and future plans. See also Note 2E and Note 2F.
The Group recognizes allowances for expected credit losses from loans and receivables. In order to determine the unrecoverable amount of receivables, management applies estimates as explained in Note 2L.
The Group (Parent company) makes provisions in for slow-moving inventories. Inventories at net realizable value are reported by reducing the cost of inventories by the amount of the established provisions in accordance with the principles described in the Note 2 K.
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required from the Group to settle the obligation, and the amount of obligation can be measured reasonably. If the Group foresees that the expenses required for recognizing an allowance will be partly or fully repaid, for example, within an insurance contract, the recovery of such expenses is recognized as a separate asset only when it is certain that such expenses will be recovered. Expenses connected with any provisions are recognized in the profit or loss statement less recovered amounts.
Due to the specifics of the operations, provisions for potential warranty expenses are recognized based on the management's assessment of the risk of expected warranty repairs relating to the concluded contracts. The standard warranty period is one to five years depending on product.
Accrued liabilities for unused vacations are calculated in accordance with the number of vacation days unused as at the end of reporting year and the average remuneration during the last six months of the reporting year. These liabilities are shown as short-term accrued liabilities.
The application of IFRS 16 Leases requires significant management assumptions regarding the identification of the lease, the determination of the lease term and the discount rate applied in calculations. The estimation of the right-touse asset and respective lease liability value in respect of production, sale and administration premises is based on the assumption that the lease of premises will be used for the next 7 years at a fixed monthly rental rate; discount rate of 2,54% (30.06.2021: 2,99%) was applied based on available data from the Bureau of Statistics for similar loans.
| 5. Group |
Property, plant and equipment, intangible assets and right-to-use assets Software and licenses |
Leasehold Improve ments |
Technolog ical equipment and |
Other PPE |
Under construc tion |
Right-to use assets (premises) |
Total |
|---|---|---|---|---|---|---|---|
| EUR | EUR | devices EUR |
EUR | EUR | EUR | EUR | |
| Reporting year ended 30 June 2021 | |||||||
| Opening balance | 184 540 | 10 512 | 512 585 | 156 774 | - | 1 322 235 | 2 186 646 |
| Acquisitions at cost Disposals at net book |
233 324 | 10 048 | 328 474 | 43 735 | - - |
300 284 | 915 865 |
| value Result of fluctuations in the foreign exchange |
- | - | (1 172) | (6 421) | - | - | (7 593) |
| rates Depreciation and |
(43) | - | (703) | (384) | (6 476) | (7 606) | |
| amortisation charge for | (101 181) | (3 530) | (259 252) | (99 124) | - | (299 239) | (762 326) |
| the period Closing balance |
316 640 | 17 030 | 579 932 | 94 580 | - | 1 316 804 | 2 324 986 |
| Reporting year ended 30 June 2022 | |||||||
| Opening balance | 316 640 | 17 030 | 579 932 | 94 580 | - | 1 316 804 | 2 324 986 |
| Acquisitions at cost | 216 122 | 254 716 | 936 330 | 271 006 | 230 647 | 1 396 722 | 3 305 543 |
| Disposals at net book value Result of fluctuations in |
- | - | (1 352) | (99) | - | - | (1 451) |
| the foreign exchange rates |
4 | - | 257 | 12 | - | 20 358 | 20 631 |
| Depreciation and amortisation charge for |
(121 087) | (18 414) | (295 554) | (62 151) | - | (362 216) | (859 422) |
| the period Closing balance |
411 679 | 253 332 | 1 219 613 | 303 348 | 230 647 | 2 371 668 | 4 790 287 |
| As at 30 June 2021: | |||||||
| Historical cost | 1 172 385 | 1 115 952 | 4 547 818 | 873 689 | - | 2 059 422 | 9 769 266 |
| Accumulated depreciation and |
(855 745) | (1 098 922) | (3 967 886) | (779 109) | - | (742 618) | (7 444 280) |
| amortisation Carrying amount |
316 640 | 17 030 | 579 932 | 94 580 | - | 1 316 804 | 2 324 986 |
| As at 30 June 2022: | |||||||
| Historical cost | 1 303 549 | 1 370 668 | 4 946 475 | 984 822 | 230 647 | 3 444 375 | 12 280 536 |
| Accumulated depreciation and |
(891 870) | (1 117 336) | (3 726 862) | (681 474) | - | (1 072 707) | (7 490 249) |
| amortisation Carrying amount |
411 679 | 253 332 | 1 219 613 | 303 348 | 230 647 | 2 371 668 | 4 790 287 |
Historical cost of disposals for the reporting year ended 30 June 2022 is EUR 798 400 and disposed accumulated depreciation is EUR 796 949 (2020/2021: EUR 245 865 and EUR 238 272, respectively).
Depreciation of EUR 505 558 is included in the statement of profit or loss within Cost of sales (2020/2021: EUR 413 401); depreciation of EUR 220 094 is included within Sales and marketing costs (2020/2020: EUR 239 360); depreciation of EUR 133 770 is included within Administrative expenses (2020/2021: EUR 109 567), including depreciation of EUR 6 145 under Other administrative expenses (2020/2021: EUR 5 403).
Cost of short term lease in the amount of EUR 23 011 is included in the statement of profit or loss within Cost of goods sold 2020/2021: EUR 0).
The acquisition costs of fully depreciated fixed assets that are still in use at the reporting date amounted to EUR 5 405 516 (30.06.2021.: EUR 5 842 746).
24 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
| Parent company | Software and licenses |
Leasehold improvements |
Technolo gical equipment and devices |
Other fixed assets |
Under construc tion |
Right-to use assets (premises) |
Total |
|---|---|---|---|---|---|---|---|
| EUR | EUR | EUR | EUR | EUR | EUR | EUR | |
| Reporting year ended 30 June 2021 | |||||||
| Opening balance | 183 827 | 10 512 | 500 979 | 150 386 | - | 1 172 240 | 2 017 944 |
| Acquisitions at cost | 233 324 | 10 048 | 324 248 | 43 735 | - | 227 961 | 839 316 |
| Disposals at net book value Depreciation and |
- | - | (1 172) | (6 421) | - | - | (7 593) |
| amortisation charge for | |||||||
| the period Closing balance |
(100 567) 316 584 |
(3 530) 17 030 |
(250 438) 573 617 |
(94 861) 92 839 |
- - |
(253 058) 1 147 143 |
(702 454) 2 147 213 |
| Reporting year ended 30 June 2022 | |||||||
| Opening balance | 316 584 | 17 030 | 573 617 | 92 839 | - | 1 147 143 | 2 147 213 |
| Acquisitions at cost | 216 122 | 254 716 | 917 457 | 257 539 | 230 647 | 1 396 722 | 3 273 203 |
| Disposals at net book value Depreciation and |
- | - | (1 225) | (99) | - | - | (1 324) |
| amortisation charge for the period |
(121 028) | (18 414) | (288 047) | (59 368) | - | (314 547) | (801 404) |
| Closing balance | 411 678 | 253 332 | 1 201 802 | 290 911 | 230 647 | 2 229 318 | 4 617 688 |
| As at 30 June 2021: | |||||||
| Historical cost Accumulated |
1 169 917 | 1 115 952 | 4 490 066 | 819 488 | - | 1 781 909 | 9 377 332 |
| depreciation and amortisation |
(853 333) | (1 098 922) | (3 916 449) | (726 649) | - | (634 766) | (7 230 119) |
| Carrying amount | 316 584 | 17 030 | 573 617 | 92 839 | - | 1 147 143 | 2 147 213 |
| As at 30 June 2022: | |||||||
| Historical cost Accumulated depreciation and |
1 300 726 | 1 370 668 | 4 863 123 | 915 237 | 230 647 | 3 178 630 | 11 859 031 |
| amortisation | (889 048) | (1 117 336) | (3 661 321) | (624 326) | - | (949 312) | (7 241 343) |
| Carrying amount | 411 678 | 253 332 | 1 201 802 | 290 911 | 230 647 | 2 229 318 | 4 617 688 |
Historical cost of disposals for the reporting year ended 30 June 2022 is EUR 791 502 and disposed accumulated depreciation is EUR 790 178 (2020/2021: EUR 243 854 and EUR 236 262, accordingly).
Depreciation of EUR 505 558 is included in the statement of profit or loss within Cost of sales (2020/2021: EUR 413 401); depreciation of EUR 162 076 is included within Sales and marketing costs (2020/2021: EUR 179 486); depreciation of EUR 133 770 is included within Administrative expenses (2020/2021: EUR 109 567), including depreciation of EUR 6 145 under Other administrative expenses (2020/2021: EUR 5 403).
Cost of short term lease in the amount of EUR 23 011 is included in the statement of profit or loss within Cost of goods sold 2020/2021: EUR 0).
The acquisition costs of fully depreciated fixed assets that are still in use at the reporting date amounted to EUR 5 286 725 (30.06.2021.: EUR 5 752 973).
Notes to the financial statements (continued)
| Name | Investment in equity % |
Carrying value of the investment |
||
|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | |
| Parent company: | % | % | EUR | EUR |
| "SAF North America" LLC | 100 | 100 | 32 893 | 32 893 |
| "SAF Services" LLC | - | 100 | - | 65 552 |
| Impairment | - | (65 552) | ||
| Investments in subsidiaries | 32 893 | 32 893 | ||
| Other investments: | ||||
| "LEITC" SIA | 17.98 | 17.98 | 6 435 | 6 435 |
| "LEO Pētījumu centrs" SIA | 10 | 10 | 711 | 711 |
| Investments in other companies | 7 146 | 7 146 | ||
| Total investments in subsidiaries and other companies | 40 039 | 40 039 |
"SAF North America" LLC is a 100% subsidiary of the Parent company that operates in Aurora, Colorado State in USA, that started active operations in the spring of 2012 and promotes the Group`s products and services, performs marketing, market research, attraction of new clients and provides technical support in North America. Since 1 October 2014 the subsidiary is engaged in the distribution of goods in the North American region. As at 30 June 2022 the equity of the subsidiary amounted to EUR 1 204 258 (30.06.2021.: EUR 733 903). 100% participation ensures absolute control of the subsidiary's assets and liabilities. In April 2015 the Parent company became the sole owner of "SAF Services" LLC. As at 30 June 2021 "SAF Services" LLC equity is negative, therefore the Parent company has made 100% provision for residual value impairment. In June 2022 the company was liquidated.
In August 2012, a joint of the Parent company, "SAF Services" LLC began operations in North America. The objective of establishing "SAF Services" LLC was to provide local clients with services connected with the creation, long-term maintenance and management of data transmission networks. In April 2015 the Parent company became the sole owner of "SAF Services" LLC As at 30 June 2021 "SAF Services" LLC equity was negative, therefore the Parent company made 100% provision for recoverable amount impairment. In June 2022, the company was liquidated.
In September 2012, the Parent company acquired the shares of "LEITC" SIA (Latvijas Elektronikas iekārtu testēšanas centrs) and became the owner of 16.75% shares through an investment of EUR 477. At the end of 2017, another 1.23% of the shares were acquired becoming the owner of 17.98% with an investment of EUR 6 435. The mission of LEITC is to support research of electromagnetic compatibility (EMC) and educational projects that aim to expand the knowledge base, the range of equipment and to set up a group of specialists capable of addressing today's and future EMC issues.
"LEO Pētījumu centrs" is a limited liability company established in 2010 by the members of the Latvian Electrical Engineering and Electronic Industry Association (LETERA) and the company's objective is to attract EU funding for research and development of new products in the sphere of electronics and electrical engineering. The Company has invested EUR 711 in its share capital and has become the owner of 10% of its shares.
| Group | Parent company | |||
|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | |
| EUR | EUR | EUR | EUR | |
| Raw materials | 6 921 845 | 3 437 033 | 6 921 845 | 3 437 033 |
| Work in progress | 3 253 116 | 2 390 548 | 3 253 116 | 2 390 548 |
| Finished goods | 6 159 633 | 2 728 708 | 5 879 163 | 2 448 348 |
| 16 334 594 | 8 556 289 | 16 054 124 | 8 275 929 |
In order to value inventories at the lower of cost and net realizable value, the Group makes provisions for impairment of inventories. As at 30 June 2022 total amount of respective provisions (the Group and the Parent company) amounted to EUR 1 060 515 (30.06.2021: EUR 1 017 180). During the reporting year provision was increased by EUR 43 335 (2020/2021: increase by EUR 433 991) and respective change was included in Cost of sales.
Finished goods include equipment sent to clients for trial with an option to buy or return the equipment and the equipment sent to substitute damaged equipment. As at 30 June 2022 the value of equipment sent due to the above reasons amounted to EUR 341 217 (30.06.2021.: EUR 293 350) for Group and EUR 101 392 (30.06.2021.: EUR 131 168) for Parent company.
Work in Progress and Finished goods include production overhead costs (salary expenses and social insurance of production units' employees, depreciation and amortization, amortization of right-to-use assets, expenses of equipment, lease, service and other costs of production process) in amount of EUR 645 646 (30.06.2021.: EUR 406 453). The Group maintains a certain level of raw materials and consumables, in order to be able to supply all the products currently included in the product portfolio of the Group within a competitive deadline. The market continues to display a tendency of increasing material production and delivery times and to continue to provide competitive and adequate production times the inventories raw materials are purchased with a reserve,
| Group | Parent company | |||
|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | |
| EUR | EUR | EUR | EUR | |
| Receivables from related companies Trade receivables Allowances for expected credit losses from |
- 2 764 343 |
- 1 882 152 |
264 976 689 717 |
- 1 000 387 |
| trade receivables | (21 451) | (224 043) | (1 050) | (192 783) |
| Total trade receivables | 2 742 892 | 1 658 109 | 953 643 | 807 604 |
Trade receivables are not secured with collateral.
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
|---|---|---|---|---|
| Group | Gross | Allowance | Gross | Allowance |
| EUR | EUR | EUR | EUR | |
| Not overdue | 2 420 831 | - | 1 348 418 | - |
| Overdue by 1 – 90 days | 322 061 | - | 309 691 | - |
| Overdue by 90 and more days | 21 451 | (21 451) | 224 043 | (224 043) |
| Total trade receivables | 2 764 343 | (21 451) | 1 882 152 | (224 043) |
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
| Parent company | Gross | Allowance | Gross | Allowance |
| EUR | EUR | EUR | EUR | |
| Not overdue | 770 166 | - | 686 991 | - |
| Overdue by 1 – 90 days | 183 477 | - | 120 613 | - |
| Overdue by 90 and more days | 1 050 | (1 050) | 192 783 | (192 783) |
| Total trade receivables | 954 693 | (1 050) | 1 000 387 | (192 783) |
| Group | Parent | ||
|---|---|---|---|
| company | |||
| EUR | EUR | ||
| As at 30 June 2020 | 583 431 | 564 678 | |
| Written-off | 12 507 | - | |
| Debts recovered | (371 895) | (371 895) | |
| As at 30 June 2021 | 224 043 | 192 783 | |
| Written-off | (4 213) | - | |
| Additional allowances | 183 | - | |
| Debts recovered | (198 562) | (191 733) | |
| As at 30 June 2022 | 21 451 | 1 050 |
Changes in allowances for expected credit losses are recognized in Statement of profit or loss within administration costs.
| Group | 30/06/2022 EUR |
30/06/2022 % |
30/06/2021 EUR |
30/06/2021 % |
|---|---|---|---|---|
| USD | 2 159 216 | 78.11 | 1 413 283 | 75.09 |
| EUR | 604 663 | 21.87 | 462 744 | 24.58 |
| GBP | 464 | 0.02 | 6 125 | 0.33 |
| Total trade receivables, gross | 2 764 343 | 100% | 1 882 152 | 100% |
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
| Parent company | EUR | % | EUR | % |
| USD | 349 566 | 36.61 | 531 518 | 53.13 |
| EUR | 604 663 | 63.33 | 462 744 | 46.26 |
| GBP | 464 | 0.06 | 6 125 | 0.61 |
| Total trade receivables, gross | 954 693 | 100% | 1 000 387 | 100% |
| Group | Parent company | |||
|---|---|---|---|---|
| 30/06/2022 EUR |
30/06/2021 EUR |
30/06/2022 EUR |
30/06/2021 EUR |
|
| Government grants* | 112 443 | 84 814 | 112 443 | 84 814 |
| Overpaid value added tax | 104 278 | 30 476 | 104 278 | 30 476 |
| Advance payments to suppliers | 127 196 | 210 682 | 109 751 | 210 682 |
| Other receivables Other receivables of subsidiaries (see |
289 610 | 74 650 | 279 670 | 64 829 |
| Note 24) | - | - | - | 5 207 |
| 633 527 | 400 622 | 606 142 | 396 008 |
* The government grants related to the employee training project, exhibition project and the development project, which are implemented with the "LEO Pētījumu centrs" SIA. Government grants in the amount of EUR 70 799 were received after the end of the financial year.
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | ||
| EUR | EUR | EUR | EUR | ||
| Cash in banks | 2 781 167 | 7 689 748 | 1 162 474 | 6 498 004 | |
| 2 781 167 | 7 689 748 | 1 162 474 | 6 498 004 |
28 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
Notes to the financial statements (continued)
| Breakdown of cash and cash equivalents by currency, expressed in EUR | ||||
|---|---|---|---|---|
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
| Group | EUR | % | EUR | % |
| USD | 1 962 922 | 70.58 | 6 746 716 | 87.74 |
| EUR | 807 173 | 29.02 | 942 057 | 12.25 |
| GBP | 11 072 | 0.40 | 975 | 0.01 |
| Cash and cash equivalents | 2 781 167 | 100% | 7 689 748 | 100% |
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
| Parent company | EUR | % | EUR | % |
| USD | 344 228 | 29.61 | 5 554 972 | 85.49 |
| EUR | 807 174 | 69.44 | 942 057 | 14.50 |
| GBP | 11 072 | 0.95 | 975 | 0.01 |
| Cash and cash equivalents | 1 162 474 | 100% | 6 498 004 | 100% |
| Moody's credit rating (short-term/ long-term) |
Group | Parent company | |||
|---|---|---|---|---|---|
| 30/06/2022 EUR |
30/06/2021 EUR |
30/06/2022 EUR |
30/06/2021 EUR |
||
| Swedbank AS | P-1 / Aa3 | 124 165 | 723 081 | 124 165 | 723 081 |
| LUMINOR Bank AS | P-1 / Baa3 | 887 841 | 5 706 637 | 887 841 | 5 706 637 |
| SEB Banka AS | P-1 / Aa2 | 31 757 | 20 971 | 31 757 | 20 971 |
| US Bank | P-1 / A1 | 1 618 693 | 1 166 969 | - | - |
| Other banks | n/a | 118 711 | 72 090 | 118 711 | 47 315 |
| 2 781 167 | 7 689 748 | 1 162 474 | 6 498 004 |
The Group's and the Parent company's estimated credit losses on cash held with banks are immaterial and have not been recognized based on Moody's rating information that was publicly available in 2022 and up to the date of these financial statements.
As at 30 June 2022, the registered and paid-up share capital of the Parent company is EUR 4 158 252 (30.06.2021.: EUR 4 158 252) and consists of 2 970 180 ordinary bearer shares (30.06.2020.: 2 970 180 shares) with unlimited voting rights. Nominal value per share is EUR 1,4.
The structure of the Company's shareholders is as follows (incl. shareholders holding more than 5% of the voting shares):
| Shares owned, % | ||||
|---|---|---|---|---|
| Shareholder | 30/06/2022 | 30/06/2021 | ||
| Didzis Liepkalns | 17.05% | 17.05% | ||
| Koka Zirgs SIA | 11.59% | 12.06% | ||
| Andrejs Grišāns | 10.03% | 10.03% | ||
| Normunds Bergs | 9.74% | 9.74% | ||
| Juris Ziema | 8.71% | 8.71% | ||
| Other shareholders | 42.88% | 42.41% |
| Group | Parent company | |||
|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | |
| EUR | EUR | EUR | EUR | |
| Trade accounts payable | 1 831 605 | 874 276 | 1 626 738 | 756 339 |
| Other accounts payable | 94 459 | 29 764 | 94 458 | 29 765 |
| Trade and other payables | 1 926 064 | 904 040 | 1 721 196 | 786 104 |
| Provisions for guarantees | 45 636 | 45 636 | 45 636 | 45 636 |
| Provisions | 45 636 | 45 636 | 45 636 | 45 636 |
| Accrued liabilities for unused vacations | 694 605 | 575 387 | 694 605 | 575 388 |
| Other taxes | 515 218 | 231 338 | 478 439 | 231 340 |
| Other liabilities | 1 982 091 | 2 058 528 | 1 101 522 | 1 039 095 |
| Other liabilities | 3 191 914 | 2 865 253 | 2 274 566 | 1 845 823 |
| Total | 5 163 613 | 3 814 929 | 4 041 398 | 2 677 563 |
During the reporting period the increase in accrued liabilities for unused vacation pay included in the statement of profit or loss amounted to EUR 119 217 (2020/2021: increase of EUR 194 166).
| Movement in provisions: | Group | Parent company | ||
|---|---|---|---|---|
| Warranties EUR |
Total EUR |
Warranties EUR |
Total EUR |
|
| Balance at 30.06.2020 | 17 423 | 17 423 | 17 423 | 17 423 |
| Provisions made | 28 213 | 28 213 | 28 213 | 28 213 |
| Balance at 30.06.2021 | 45 636 | 45 636 | 45 636 | 45 636 |
| Provisions made | - | - | - | - |
| Balance at 30.06.2022 | 45 636 | 45 636 | 45 636 | 45 636 |
During the reporting year no change has been made to the provisions for guarantees based on the estimate, according to which no increase in the volume of warranty repairs is expected.
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
|---|---|---|---|---|
| Group | EUR | % | EUR | % |
| USD | 677 340 | 35.17 | 396 147 | 43.82 |
| EUR | 1 246 752 | 64.73 | 500 128 | 55.32 |
| GBP | 1 972 | 0.10 | 7 765 | 0.86 |
| Trade and other payables | 1 926 064 | 100% | 904 040 | 100% |
| 30/06/2022 | 30/06/2022 | 30/06/2021 | 30/06/2021 | |
| Parent company | EUR | % | EUR | % |
| USD | 472 473 | 27.45 | 278 211 | 35.39 |
| EUR | 1 246 751 | 72.44 | 500 128 | 63.62 |
| GBP | 1 972 | 0.11 | 7 765 | 0.99 |
| Trade and other payables | 1 721 196 | 100% | 786 104 | 100% |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | ||
| EUR | EUR | EUR | EUR | ||
| Lease liabilities | 2 013 978 | 1 004 539 | 1 918 656 | 876 985 | |
| Long term liabilities | 2 013 978 | 1 004 539 | 1 918 656 | 876 985 | |
| Lease liabilities | 390 907 | 315 401 | 339 143 | 270 156 | |
| Short term liabilities | 390 907 | 315 401 | 339 143 | 270 156 | |
| Total | 2 404 885 | 1 319 940 | 2 257 799 | 1 147 141 |
30 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
The production of the Group's products is material-intensive, for the purchase of which customers often make prepayments. Advances paid by customers are settled when the products are sold, and this usually takes place within 1 year. There are also customers who, together with the goods, also purchase extended warranties, which are recognized in revenue over the warranty period (up to 5 years).
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 30/06/2022 | 30/06/2021 | 30/06/2022 | 30/06/2021 | ||
| EUR | EUR | EUR | EUR | ||
| Advances from customers | 1 677 390 | 1 535 832 | 888 574 | 1 254 331 | |
| Extended warranties | 990 511 | 689 414 | 57 283 | 35 420 | |
| Total | 2 667 901 | 2 225 246 | 945 857 | 1 289 751 | |
| incl. long term liabilities | 638 925 | 451 354 | 20 410 | 19 105 | |
| short term liabilities | 2 028 976 | 1 773 892 | 925 447 | 1 270 646 | |
| Movement of contract liabilities: | Group | Parent company | |||
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
||
| At the beginning of the year | 2 225 246 | 1 799 049 | 1 289 751 | 497 583 | |
| Received during the year | 17 537 868 | 17 496 228 | 12 075 117 | 10 207 311 | |
| Recognised in revenue Foreign exchange differences |
(17 539 244) 444 032 |
(16 994 905) (75 126) |
(12 419 011) - |
(9 415 143) - |
CFIP product line is represented by::
Lumina, Full Outdoor all-in-one radio with Gigabit Ethernet traffic interface;
Marathon, FIDU low frequency low capacity system for industrial applications, energy companies and rural telecom use.
All CFIP radios are offered in most widely used frequency bands from 1.4GHz to 38 GHz, thus enabling the use of CFIP radios all across the globe.
Integra – is a next generation radio system employing latest modem technology on the market as well as radio technology with a frequency from 6GHz to 86 GHz. Some integras models provide a data transmission speed of up to 10 Gbs.
Spectrum Compact – it is a measurement tool for field engineers for telecom, broadcasting and other industries using radio technologies. It comprises of a number of units covering several frequency bands and proving various functionality.
Aranet - the latest SAF product line for environmental monitoring, consisting of various wireless sensors, base stations and Aranet cloud solution for data collection, aggregation and analysis.
• operations related to sales of products purchased from other suppliers, like antennas, cables, SAF renamed (OEMed) products and different accessories - as the second unit.
| 15. | Segment information and revenue (continued) CFIP, Integra, Spectrum Compact, Aranet |
Other | Total | |||
|---|---|---|---|---|---|---|
| Group | 2021/2022 EUR |
2020/2021 EUR |
2021/2022 EUR |
2020/2021 EUR |
2021/2022 EUR |
2020/2021 EUR |
| Segment assets Unallocated assets |
20 118 730 | 10 662 999 | 1 154 249 | 1 361 272 | 21 272 979 6 360 971 |
12 024 271 8 743 740 |
| Total assets Segment liabilities Unallocated liabilities |
4 384 691 | 2 835 946 | 69 754 | 278 436 | 27 633 950 4 454 445 5 781 955 |
20 768 011 3 114 382 4 491 519 |
| Total liabilities Revenue |
31 963 722 | 24 214 355 | 2 004 449 | 807 308 | 10 236 400 33 968 171 |
7 605 901 25 021 663 |
| Segment result Unallocated expenses Profit from operating activities |
13 535 408 | 10 503 858 | 866 916 | 1 027 765 | 14 402 324 (8 689 344) 5 712 980 |
11 531 623 (7 968 853) 3 562 770 |
| Other income Financial income |
390 565 214 134 |
728 416 554 |
||||
| Financial expenses Profit before taxes |
(49 374) 6 268 305 |
(128 319) 4 163 421 |
||||
| Corporate income tax Profit after tax |
(178 325) 6 089 980 |
(287 245) 3 876 176 |
||||
| Foreign currency fluctuations Profit of the reporting year |
135 481 6 225 461 |
1 621 3 877 797 |
| CFIP, Integra, Spectrum Compact, Aranet 2021/202 |
Other | Total | ||||
|---|---|---|---|---|---|---|
| Group | 2 | 2020/2021 | 2021/2022 | 2020/2021 | 2021/2022 | 2020/2021 |
| EUR | EUR | EUR | EUR | EUR | EUR | |
| Additions of fixed and | ||||||
| intangible assets | 577 423 | 241 440 | - | - | 577 423 | 241 440 |
| Unallocated additions of fixed and intangible assets incl. initial recognition of | ||||||
| leasehold rights | 2 728 120 | 674 425 | ||||
| Total additions of fixed and intangible assets and leasehold rights recognized | 3 305 543 | 915 865 | ||||
| Depreciation and amortization | 625 945 | 413 401 | - | - | 625 945 | 403 978 |
| Unallocated depreciation and amortization | 233 477 | 336 162 | ||||
| Total depreciation and amortisation | 859 422 | 740 140 |
| CFIP, Integra, Spectrum Compact, Aranet |
Other | Total | ||||
|---|---|---|---|---|---|---|
| Parent company | 2021/2022 EUR |
2020/2021 EUR |
2021/2022 EUR |
2020/2021 EUR |
2021/2022 EUR |
2020/2021 EUR |
| Segment assets Unallocated assets Total assets |
18 289 884 | 9 755 717 | 879 867 | 1 081 670 | 19 169 751 4 382 637 23 552 388 |
10 837 387 7 420 255 18 257 642 |
| Segment liabilities Unallocated liabilities |
3 470 291 | 2 976 767 | 71 618 | 315 239 | 3 541 909 3 784 294 |
3 292 006 2 503 669 |
| Total liabilities Revenue |
27 778 345 | 19 385 679 | 1 356 935 | 1 597 544 | 7 326 203 29 135 280 |
5 795 675 20 983 223 |
| Segment result | 9 700 271 | 6 014 758 | 858 887 | 1 037 362 | 10 559 158 | 7 052 120 |
| Unallocated expenses | (5 267 142) | (4 474 941) | ||||
| Profit from operating activities | 5 292 016 | 2 577 179 | ||||
| Other income | 385 865 | 728 341 | ||||
| Financial income | 170 363 | - | ||||
| Financial expenses | (44 908) | (128 873) | ||||
| Profit before taxes | 5 803 336 | 3 176 647 | ||||
| Corporate income tax | (49 097) | - | ||||
| Profit of the reporting year |
5 754 239 | 3 176 647 |
32 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
| CFIP, Integra, Spectrum Compact, Aranet |
Other | Total | ||||
|---|---|---|---|---|---|---|
| Parent company | 2021/2022 | 2020/2021 | 2021/2022 | 2020/2021 | 2021/2022 | 2020/2021 |
| EUR | EUR | EUR | EUR | EUR | EUR | |
| Additions of fixed and intangible assets |
577 423 | 241 440 | - | - | 577 423 | 241 440 |
| Unallocated additions of fixed and intangible assets incl. initial recognition of leasehold rights |
2 695 780 | 597 876 | ||||
| Total additions of fixed and intangible assets and leasehold rights recognized | 3 273 203 | 839 316 | ||||
| Depreciation and amortization |
625 945 | 413 401 | - | - | 625 945 | 413 401 |
| Unallocated depreciation and amortization | 175 459 | 289 053 | ||||
| Total depreciation and amortisation | 801 404 | 702 454 |
As at 30.06.2022. PPE, intangible assets and right of use assets located in Latvia with the total balance sheet value in the amount of EUR 4 617 688 (30.06.2021. – EUR 2 147 213) make up 96% (30.06.2021. – 92%) of the Group's total assets. The rest of these assets are located in the United States.
b) This note provides information on division of the Group's and Parent company's revenue and assets by geographical segments (only trade receivables are allocated to regions based on customer residency, all other assets remain unallocated). Information about credit risk concentration to individual customers see in Note 3 (1b). All revenue is derived from the contracts with customers.
| Revenue | Assets | |||
|---|---|---|---|---|
| Group | 2021/ 2022 | 2020/ 2021 | 2021/ 2022 | 2020/ 2021 |
| EUR | EUR | EUR | EUR | |
| Latvia | 478 477 | 491 677 | 20 052 | 51 278 |
| Other regions: | ||||
| North and South America | 18 659 097 | 16 687 843 | 2 138 822 | 1 194 712 |
| Europe (excluding Latvia), CIS | 11 224 121 | 6 290 608 | 379 006 | 371 686 |
| Asia, Africa, Middle East | 3 606 476 | 1 551 535 | 205 012 | 40 433 |
| 33 968 171 | 25 021 663 | 2 742 892 | 1 658 109 | |
| Unallocated assets | - | - | 24 891 058 | 19 109 902 |
| 33 968 171 | 25 021 663 | 27 633 950 | 20 768 011 |
| Revenue | Assets | ||||
|---|---|---|---|---|---|
| Parent company | 2021/ 2022 | 2020/ 2021 | 2021/ 2022 | 2020/ 2021 | |
| EUR | EUR | EUR | EUR | ||
| Latvia | 478 477 | 491 677 | 20 052 | 51 278 | |
| Other regions: | |||||
| North and South America | 13 826 206 | 12 649 403 | 349 572 | 344 207 | |
| Europe (excluding Latvia), CIS | 11 224 121 | 6 290 608 | 379 006 | 371 686 | |
| Asia, Africa, Middle East | 3 606 476 | 1 551 535 | 205 012 | 40 433 | |
| 29 135 280 | 20 983 223 | 953 642 | 807 604 | ||
| Unallocated assets | - | - | 22 598 746 | 17 450 038 | |
| 29 135 280 | 20 983 223 | 23 552 388 | 18 257 642 |
33 This is translation of the Company's separate financial statements and Group's consolidated financial statements in pdf-format without European Single Electronic Format (ESEF) markups, from the digitally signed original, which was prepared in Latvian and submitted in machine-readable .xhtml format to the Nasdaq Riga Stock Exchange (link: https://nasdaqbaltic.com/).
Income of the Group and Parent company by main geographical markets and segments:
| CFIP, Integra, Spectrum Compact, Aranet |
Other | Total | ||||
|---|---|---|---|---|---|---|
| 2021/2022 | 2020/ 2021 | 2021/2022 | 2020/ 2021 | 2021/2022 | 2020/2021 | |
| Region | EUR | EUR | EUR | EUR | EUR | EUR |
| North and South | ||||||
| America | 17 271 309 | 16 586 917 | 1 387 788 | 100 926 | 18 659 097 | 16 687 843 |
| Europe | ||||||
| (including | ||||||
| Latvia), CIS | 11 241 805 | 6 412 678 | 460 793 | 369 607 | 11 702 598 | 6 782 285 |
| Asia, Africa, | ||||||
| Middle East | 3 450 608 | 1 214 760 | 155 868 | 336 775 | 3 606 476 | 1 551 535 |
| 31 963 722 | 24 214 355 | 2 004 449 | 807 308 | 33 968 171 | 25 021 663 |
| company: | ||||||
|---|---|---|---|---|---|---|
| CFIP, Integra, Spectrum Compact, Aranet |
Other | Total | ||||
| 2021/2022 | 2020/ 2021 | 2021/2022 | 2020/ 2021 | 2021/2022 | 2020/2021 | |
| Region | EUR | EUR | EUR | EUR | EUR | EUR |
| North and South | ||||||
| America | 13 085 932 | 11 758 241 | 740 274 | 891 162 | 13 826 206 | 12 649 403 |
| Europe | ||||||
| (including | ||||||
| Latvia), CIS | 11 241 805 | 6 412 678 | 460 793 | 369 607 | 11 702 598 | 6 782 285 |
| Asia, Africa, | ||||||
| Middle East | 3 450 608 | 1 214 760 | 155 868 | 336 775 | 3 606 476 | 1 551 535 |
| 27 778 345 | 19 385 679 | 1 356 935 | 1 597 544 | 29 135 280 | 20 983 223 |
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- | 01.07.2020- | 01.07.2021- | 01.07.2020- | |
| 30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | |
| EUR | EUR | EUR | EUR | |
| Purchases of components and | ||||
| subcontractors' services | 13 132 365 | 10 036 996 | 12 142 640 | 9 839 020 |
| Salary expenses* | 4 425 268 | 2 999 119 | 4 425 268 | 2 999 119 |
| Social insurance expenses* | 1 031 890 | 705 521 | 1 031 890 | 705 521 |
| Depreciation and amortization (See Note | ||||
| 5) | 505 558 | 413 401 | 505 558 | 413 401 |
| Public utilities | 187 927 | 121 910 | 187 927 | 121 910 |
| Transportation | 37 030 | 34 415 | 37 030 | 34 415 |
| Business trip expenses | 4 291 | - | 4 291 | - |
| Communication expenses | 7 333 | 10 028 | 7 333 | 10 028 |
| Low value articles | 6 977 | 5 651 | 6 977 | 5 651 |
| Other production costs | 227 209 | 144 404 | 227 209 | 144 403 |
| 19 565 848 | 14 471 445 | 18 576 123 | 14 273 468 |
* Including accrued liabilities for unused vacations.
Research and development related expenses of EUR 3 428 971 (2020/ 2021: EUR 2 065 019) are included in the statement of profit or loss within Purchases of components and subcontractors' services.
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
|
| Salary expenses * | 4 140 046 | 3 730 479 | 1 856 996 | 1 524 330 |
| Delivery costs | 662 918 | 456 112 | 482 907 | 357 332 |
| Social insurance expenses * | 573 395 | 483 788 | 435 184 | 362 170 |
| Advertisement and marketing expenses | 414 360 | 152 282 | 295 619 | 105 205 |
| Depreciation and amortization(See Note 5) | 220 094 | 239 360 | 162 076 | 179 486 |
| Business trip expenses | 191 089 | 10 188 | 79 881 | 109 |
| Other selling and distribution costs | 271 514 | 294 395 | 77 561 | 62 038 |
| 6 473 416 | 5 366 604 | 3 390 224 | 2 590 670 |
* Including accrued liabilities for unused vacations.
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 |
01.07.2020- 30.06.2021 |
01.07.2021- 30.06.2022 |
01.07.2020- 30.06.2021 |
|
| EUR | EUR | EUR | EUR | |
| Salary expenses* | 862 201 | 1 091 135 | 862 201 | 1 091 135 |
| Allowances for doubtful trade receivables | (201 670) | (358 337) | (187 520) | (371 876) |
| Social insurance expenses* | 203 231 | 255 507 | 203 231 | 255 507 |
| Depreciation and amortization (See Note 5) | 127 625 | 104 164 | 127 625 | 104 164 |
| Training | 171 540 | 37 301 | 86 459 | 29 769 |
| Public utilities | 109 092 | 57 427 | 109 092 | 57 427 |
| IT services | 71 803 | 49 792 | 71 803 | 49 792 |
| Insurance | 216 276 | 39 123 | 38 625 | 32 750 |
| Bank fees | 51 877 | 32 322 | 26 902 | 20 667 |
| Representation expenses | 16 267 | 6 837 | 5 379 | 6 124 |
| Business trip expenses | 17 566 | 41 | 17 566 | 41 |
| Office maintenance | 13 891 | 10 136 | 13 891 | 10 136 |
| Sponsorship | 117 164 | (838) | 111 500 | - |
| Communication expenses | 9 254 | 4 672 | 9 254 | 4 672 |
| Other administrative expenses** | 429 810 | 291 562 | 380 909 | 251 598 |
| 2 215 927 | 1 620 844 | 1 876 917 | 1 541 906 |
* Including accrued liabilities for unused vacations.
** Other administration costs include remuneration to the certified auditor company for the audit of the annual report in the amount of EUR 10 835 (2020/2021 - EUR 10 835). The certified audit company has not provided other services to the Group and the Parent Company.
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
|
| Government grants* | 321 444 | 683 476 | 321 444 | 683 476 |
| Other income | 69 121 | 44 940 | 64 421 | 44 865 |
| 390 565 | 728 416 | 385 865 | 728 341 |
* Government grants are received from LIAA and LETERA, and they relate to development project realized in cooperation with "LEO Pētījumu centrs" SIA. During the reporting year the Group (Parent company) has received a government grant of EUR 276 195 (2020/ 2021: EUR 751 107). Government grants that are approved by the end of the reporting year, but not yet received, are included in Other receivables (see Note 9).
Notes to the financial statements (continued)
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
|
| Interest income, calculated using the | ||||
| effective interest method | 763 | 554 | - | - |
| Net foreign exchange gain | 213 371 | - | 170 363 | - |
| 214 134 | 554 | 170 363 | - |
| Group | Parent company | ||||
|---|---|---|---|---|---|
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
||
| Interest expenses on lease liabilities, calculated using the effective interest |
|||||
| method | 49 374 | 27 708 | 44 908 | 23 184 | |
| Net foreign exchange loss | - | 100 611 | - | 105 689 | |
| 49 374 | 128 319 | 44 908 | 128 873 |
Basic earnings per share are calculated by dividing profit by the weighted average number of shares outstanding during the year.
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
|
| Profit of the reporting year (a) Weighted average number of shares |
6 089 980 | 3 876 176 | 5 754 239 | 3 176 647 |
| outstanding during the year (b) Basic and diluted earnings per share |
2 970 180 | 2 970 180 | 2 970 180 | 2 970 180 |
| for the reporting year (a / b) | 2.050 | 1.305 | 1.937 | 1.070 |
The Council of the Parent company consisting of 5 members is elected in a shareholders meeting for a term of 3 years. The Council is a supervisory body of the Group, which represents shareholder interests in meetings and supervises the Board in accordance with statutes of the Group. Decisions of the Council are made by a simple majority of members present. Only a meeting of shareholders has the right to make decisions on statute amendments of the Group, issue and conversion of securities, remuneration to the members of the Council. During the reporting year and the previous reporting year, the composition of neither the Board nor the Council members has changed.
Council members of the Parent company during the reporting year were:
Juris Ziema – Chairman of the Council (own 8.71% or 258 762 shares) Andrejs Grišāns – Deputy chairman of the Council (own 10.03% or 297 888 shares) Ivars Šenbergs – Member of the Council (own 0.00% or 2 shares) Aira Loite – Member of the Council (own 0.27% or 8 000 shares) Sanda Šalma – Member of the Board (owns no shares)
The Council appoints the Board consisting of 4 members for a term of 3 years. All members of the Board have the right of representation. The members of the Board represent the Company separately. Decisions of the Board are made by a simple majority of members present.
Board members of the Parent company during the reporting year were:
Normunds Bergs – Chairman of the Board (owns 9.74% or 289 377 shares) Didzis Liepkalns – Member of the Board (owns 17.05% or 506 460 shares) Zane Jozepa – Member of the Board (owns no shares)
Jānis Bergs – Member of the Board (owns no shares)
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
01.07.2021- 30.06.2022 EUR |
01.07.2020- 30.06.2021 EUR |
|
| Remuneration of the Board members: | ||||
| · salary | 892 789 | 490 407 | 246 911 | 234 635 |
| · social insurance contributions | 77 337 | 67 698 | 58 247 | 55 833 |
| Remuneration of the Council members: | ||||
| · salary | 192 758 | 109 888 | 192 758 | 109 888 |
| · social insurance contributions | 43 570 | 26 119 | 43 570 | 26 119 |
| Total | 1 206 544 | 694 112 | 541 486 | 426 475 |
| Parent company | Transactions for the year ended 30 June |
Balance as at 30 June | ||
|---|---|---|---|---|
| 2022 EUR |
2021 EUR |
2022 EUR |
2021 EUR |
|
| Sale of goods and services Subsidiaries |
11 610 150 | 9 156 349 | 264 976 | - |
| Purchase of goods and services Subsidiaries Other receivables from subsidiaries |
270 768 - |
326 174 - |
81 149 - |
681 220 5 207 |
In the consolidated financial statements of the Group the intercompany transactions and balances between Parent company and subsidiaries have been eliminated.
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- 30.06.2022 |
01.07.2020- 30.06.2021 |
01.07.2021- 30.06.2022 |
01.07.2020- 30.06.2021 |
|
| EUR | EUR | EUR | EUR | |
| Remuneration to staff | 9 427 515 | 7 820 733 | 7 144 465 | 5 614 584 |
| Social insurance contributions | 1 808 516 | 1 444 816 | 1 670 305 | 1 323 198 |
| Total | 11 236 031 | 9 265 549 | 8 814 770 | 6 937 782 |
| Group | Parent company | |||
|---|---|---|---|---|
| 01.07.2021- | 01.07.2020- | 01.07.2021- | 01.07.2020- | |
| 30.06.2022 | 30.06.2021 | 30.06.2022 | 30.06.2021 | |
| The average number of employees in the reporting year: |
241 | 221 | 226 | 207 |
As a result of regular operational activity the Group (Parent company) has issued performance guarantees to third parties in the amount of EUR 1 669 (30.06.2021: not issued).
The net profit of the Parent company, which arose after 31 December 2017, is EUR 9 207 677. The potential corporate income tax liability that will arise if the entire amount of the above profit is distributed as dividends is EUR 2 301 919 (20/80 of the net amount distributed to shareholders).
No significant subsequent events have occurred in the period from the year-end to the date of these financial statements that would have a material impact on the Group's and/or Parent company`s financial position as at 30 June 2022 or their performance and cash flows for the year then ended.
On 10 August 2022 the Company signed a credit line agreement with Luminor Bank AS to ensure liquidity for the total amount of EUR 4 950 000. According with the agreement a commercial pledge was registered on the property of the Parent Company in its totality at the time of pledging as well as for its subsequent components with a maximum claim amount of EUR 6 435 000. At the time of signing the report the mentioned credit line has not yet been used.
On behalf of the Board,
/digitally signed/
Normunds Bergs Chairman of the Board /digitally signed/
Dace Langada Chief accountant
The Annual Report is approved in the Board meeting on 28 October 2022 and the Board has authorised the Chairman of the Board to sign it on behalf of the Board.
Electronic signature of the Chairman of the Board relates to the Management Report on pages 3 to 4, Statement of the Board's Responsibility on page 5 and financial statements on pages 10 to 38. Electronic signature of the chief accountant Dace Langada relates to the financial statements on pages 10 to 38.
We have audited accompanying separate financial statements of AS "SAF Tehnika" ("the Company") and consolidated financial statements of AS "SAF Tehnika" and its subsidiaries (together - "the Group") contained in the digital file 48510000F6NVA4T63P67-2022-06-30-lv.zip (SHA-256-checksum:
B920045E3BD6B6AFC125EF0687F32EA714BCDAA6CBCD266A0E3041B73396839E).
Accompanying separate financial statements and consolidated financial statements (together – "Financial statements") comprise:
In our opinion, the accompanying separate and consolidated financial statements give a true and fair view of the separate financial position of the Company and consolidated financial position of the Group as at 30 June 2022, and of their separate and consolidated financial performance and their separate and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS).
Our opinion is consistent with our additional report to the Council (body equivalent to the Audit Committee) dated 28 October 2022.
In accordance with the Law on Audit Services of the Republic of Latvia we conducted our audit in accordance with International Standards on Auditing adopted in the Republic of Latvia (ISAs). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the Company and the Group in accordance with the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standards) and independence requirements included in the Law on Audit Services of the Republic of Latvia that are relevant to our audit of the financial statements in the Republic of Latvia. We have also fulfilled our other professional ethics responsibilities and objectivity requirements in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) and Law on Audit Services of the Republic of Latvia.
To the best of our knowledge and belief, we declare that we have not provided to the Company or its subsidiaries any non-audit services prohibited in accordance with Article 37.6 of the Law on Audit Services of the Republic of Latvia.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Translation note:
This independent auditor's report (translation of the Latvian original) should only be used with the original document submitted to the Riga Stock Exchange in machine-readable .xhtml format (https://nasdaqbaltic.com).
This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
Refer to Note 2 "Summary of accounting principles used" section K "Inventories" and Note 7 "Inventories" to the financial statements
We focused on this area because inventories represent a significant part of the Company's and Group's assets. The volume of inventories compared to the end of the previous reporting period has doubled, as the Company and the Group are creating reserves of raw materials and finished products in order to be able to successfully fulfill the orders received from customers and ensure the continuity of production. Given these factors as well as the rapid development of the technology industry, the valuation of inventories is of significant importance, including the determination of the obsolescence and net realizable value of inventories, which includes subjective estimates and may have a material effect on the Company's and the Group's financial performance.
In accordance with our professional judgment, based on our understanding and accumulated audit experience about the Company's and the Group's inventory valuation processes and internal control procedures, we did not identify inventory valuation as area of a significant risk in our audit. However, the audit of inventory area requires a significant amount of time and resources from the auditors, given its importance and magnitude. Thus, this area is considered a key audit matter.
As disclosed in Note 7 to the Financial statements, balance sheet value of inventories as at 30 June 2022 amount to EUR 16 054 124 (the Company) and EUR 16 334 594 (the Group). As at 30 June 2022 the estimated inventory impairment allowance constituted EUR 1 060 515 with regard to both the Company and the Group.
The process of determining the cost of inventories involves the use of certain management estimates for the allocation of overheads.
For each age category of inventories, a provision is made in accordance with the Group's provisioning policy for slow-moving inventories, by grouping the inventories according to the period during which they have not moved, and applying a percentage set by the management to determine the impairment allowance.
Key audit matter How our audit addressed the key audit matter
Our audit procedures, amidst others, included the following:
Management is responsible for the other information. The other information comprises:
This independent auditor's report (translation of the Latvian original) should only be used with the original document submitted to the Riga Stock Exchange in machine-readable .xhtml format (https://nasdaqbaltic.com).
This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
Our opinion on the financial statements does not cover the other information included in the Annual Report as described above, and we do not express any form of assurance conclusion thereon, except as described in the Other reporting responsibilities in accordance with the legislation of the Republic of Latvia section of our report.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed and in light of the knowledge and understanding of the entity and its environment obtained in the course of our audit, 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.
Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with IFRS as adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company's and Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company's and Group's financial reporting process.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will 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 financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
This independent auditor's report (translation of the Latvian original) should only be used with the original document submitted to the Riga Stock Exchange in machine-readable .xhtml format (https://nasdaqbaltic.com).
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence and objectivity, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the separate and consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
In addition, in accordance with the Law on Audit Services of the Republic of Latvia with respect to the Management Report, our responsibility is to consider whether the Management Report is prepared in accordance with the requirements of the Law On the Annual Reports and Consolidated Annual Reports' of the Republic of Latvia.
Based solely on the work required to be undertaken in the course of our audit, in our opinion:
In accordance with the Law on Audit Services of the Republic of Latvia with respect to the Statement of Corporate Governance, our responsibility is to consider whether the Statement of Corporate Governance includes the information referred to in Article 56.1 , section 1, clauses 3, 4, 6, 8 and 9, as well as Article 56.2 , section 2, clause 5 of the Financial Instruments Market Law and whether it includes the information stipulated in Article 56.2 , section 2, clauses 1, 2, 3, 4, 7 and 8 of the Financial Instruments Market Law.
In our opinion, the Statement of Corporate Governance includes, in all material aspects, the information required in accordance with Article 56.1 , section 1, clauses 3, 4, 6, 8 and 9, as well as Article 56.2 , section 2, clause 5 of the Financial Instruments Market Law and includes the information stipulated in Article 56.2 , section 2, clauses 1, 2, 3, 4, 7 and 8 of the Financial Instruments Market Law.
In accordance with the Law on Audit Services of the Republic of Latvia, our responsibility is to consider whether the Remuneration Report includes the information referred to in Article 59.4 of the Financial Instruments Market Law.
In our opinion, the Remuneration Report includes, in all material aspects, the information referred to in Article 59.4 of the Financial Instruments Market Law.
Based on our agreement we have been engaged by the management of the Group's parent company to conduct a reasonable assurance engagement for the verification of compliance of the Consolidated financial statements for the year ended 30 June 2022 contained in the digital file 48510000F6NVA4T63P67-2022-06-30-lv.zip (SHA-256 checksum: B920045E3BD6B6AFC125EF0687F32EA714BCDAA6CBCD266A0E3041B73396839E) with the applicable requirements of the European Single Electronic Reporting format (thereafter – ESEF).
The Single Electronic Reporting Format of the Consolidated financial statements has been applied by the management to comply with the requirements of art. 3 and 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a Single Electronic Reporting Format (thereafter - the ESEF Regulation). The applicable requirements regarding the Single Electronic Reporting Format of the Consolidated financial statements are contained in the ESEF Regulation.
The requirements described in the preceding paragraph determine the basis for application of the Single Electronic Reporting Format of the Consolidated financial statements and, in our view, these requirements constitute appropriate criteria to form a reasonable assurance conclusion.
This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
This independent auditor's report (translation of the Latvian original) should only be used with the original document submitted to the Riga Stock Exchange in machine-readable .xhtml format (https://nasdaqbaltic.com).
Management is responsible for the application of the Single Electronic Reporting Format of the Consolidated financial statements that complies with the requirements of the ESEF Regulation. This responsibility includes the selection and application of appropriate markups in iXBRL using ESEF taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of the Single Electronic Reporting Format of the Consolidated financial statements which is free from material non-compliance with the requirements of the ESEF Regulation.
Those charged with governance are responsible for overseeing the financial reporting process, which should also be understood as the preparation of Consolidated financial statements in accordance with the format resulting from the ESEF Regulation.
Our objective is to obtain reasonable assurance in order to express a conclusion on whether the Consolidated financial statements prepared in the Single Electronic Reporting Format comply with the ESEF regulation.
We conducted our engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) "Assurance Engagements other than Audits and Reviews of Historical Financial Information" (thereafter - the ISAE 3000 (R)). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Single Electronic Reporting Format of the Consolidated financial statements is prepared, in all material aspects, in accordance with the applicable requirements.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance ISAE 3000 (R) will always detect the existing material misstatement (significant noncompliance with the requirements).
We apply the provisions of the International Standard on Quality Control 1 (IAASB) and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
We comply with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.
Our planned and performed procedures were aimed at obtaining reasonable assurance that the Single Electronic Reporting Format of the Consolidated financial statements was applied, in all material aspects, in accordance with the applicable requirements and such application is free from material errors or omissions.
Our procedures include in particular:
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
In our opinion, the Single Electronic Reporting Format of the Consolidated financial statements for the year ended 30 June 2022 complies, in all material respects, with the ESEF Regulation.
This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
This independent auditor's report (translation of the Latvian original) should only be used with the original document submitted to the Riga Stock Exchange in machine-readable .xhtml format (https://nasdaqbaltic.com).
We were first appointed as auditors for the Company's and Group's financial statements for the year ended 30 June 2016. This is the seventh consecutive year of our appointment as auditors. Our appointment for the year ended 30 June 2022 was by resolution of general meeting of shareholders dated 8 December 2021.
The certified auditor-in-charge of the audit resulting in this independent auditor's report is Lolita Čapkeviča.
On behalf of SIA Potapoviča un Andersone, Ūdens street 12-45, Riga, LV-1007 Certified Auditors Company licence No. 99
/digitally signed/
Lolita Čapkeviča Certified Auditor-in-charge Certificate No. 120 Member of the Board
This version of our report is a translation from the original, which was prepared in Latvian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.
This independent auditor's report (translation of the Latvian original) should only be used with the original document submitted to the Riga Stock Exchange in machine-readable .xhtml format (https://nasdaqbaltic.com).
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