Exhibit 99.2

 

		KPMG Auditores, S.L. Edificio Iruña Park Arcadio M. Larraona, 1 31008 Pamplona

Independent Auditors’ Report

To the Shareholders and to the Directors of Soluciones Técnicas Integrales Norland, S.L. (Sociedad Unipersonal)

Qualified Opinion    

We have audited the consolidated financial statements of Soluciones Técnicas Integrales Norland, S.L.U., and its subsidiaries (the Company) which comprise the consolidated balance sheet as of 31 December 2021, and the consolidated income statement, statement of changes in consolidated net equity and statement of consolidated cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, except for the omission of the comparative financial information as described in the Basis for Qualified Opinion section of our report, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and the results of its operations and its cash flows for the year then ended in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010 and subsequent amendments.

Basis for Qualified Opinion    

As more fully disclosed in Note 2.4 and 2.1 to the consolidated financial statements, the Spanish General Chart of Accounts approved by Royal Decree 1514/2007 requires that consolidated financial statements be presented with comparative financial information. These consolidated financial statements as of and for the year ended 31 December 2021 have been prepared solely for the inclusion in the U.S. Securities and Exchange Commission filings of Array Technologies Inc. Accordingly, no comparative financial information is presented.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

 

Emphasis of Matter     

We draw attention to the explanatory note 23 in which the Directors state that the accounting principles and criteria used in the preparation of the accompanying consolidated financial statements, differ in certain material respects from generally accepted accounting principles in the United States of America. Information with regard to the nature and effect of these differences on consolidated results for the year and the consolidated balance sheet as of 31 December 2021 is presented in note 23 to the accompanying consolidated financial statements. Our opinion is not modified in respect of this matter.

Responsibilities of the Directors for the Consolidated Financial Statements    

The Directors are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010 and subsequent amendments, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements    

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements.

In performing an audit in accordance with US GAAS, we:

 

•

Exercise professional judgment and maintain professional skepticism throughout the audit.

 

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

 

		2

 

•

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.

 

•

Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements.

 

•

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control related matters that we identified during the audit.

KPMG Auditores, S.L.

 

Pamplona, Spain

21 March 2022

 

		3

 

SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

Consolidated Financial Statements

for the year ended 31 December 2021

 

 

SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET FOR THE

YEAR ENDED 31 DECEMBER 2021

 

ASSETS		Notes				31/12/2021
A) NON-CURRENT ASSETS							3.567.245
I. Intangible assets			4				480.891
1. Consolidated Goodwill							148.646
2. Other Intangible assets							332.245
II. Property, plant and equipment			5				2.885.475
1. Land and Constructions							769.594
2. Technical installations and other property, plant and equipment							2.060.350
3. Under construction and advances							55.531
V. Long-term financial investments			7.1				29.479
VI. Deferred tax assets			14.3				171.400
B) CURRENT ASSETS							189.450.837
II. Inventory			12				54.411.945
III. Commercial debtors and other accounts receivable							102.724.181
1. Trade receivables for sales and services			7.1				95.062.741
3. Current tax assets			14.2				88.770
4. Other receivables			7.1 - 14.2				7.572.670
V. Short-term financial investments			7.1				107.305
VI. Prepayments for current assets							286.034
VII. Cash and cash equivalents			7.1				31.921.372
TOTAL ASSETS							193.018.082

 

NET EQUITY AND LIABILITIES		Notes		31/12/2021
A) NET EQUITY					59.191.908
A-1) Equity					52.808.803
I. Capital		10.1			275.000
1. Registered capital					275.000
III. Reserves		10.2			28.937.535
VI. Result attributed to parent company					23.596.268
1. Consolidated profit and loss					28.772.636
2. (Profit and loss non-controlling interests)					-5.176.368
VII. Interim dividend					0
A-2) Adjustments for change in value		11			-2.119.973
I. Conversion difference					-2.119.973
A-3) Grants, donations and bequests received		20			22.401
A-4) Non-controlling interests		10.5			8.480.677
B) NON-CURRENT LIABILITIES					14.361.176
I. Long-term provisions		16			3.977.282
II. Long-term debt		8.1			10.108.995
2. Debts with financial institutions					10.000.000
4. Other financial liabilities					108.995
IV. Deferred tax liabilities		14.3			274.899
C) CURRENT LIABILITIES					119.464.998
II. Short-term provisions					118.449
III. Short-term debt		8.1			30.792.418
2. Debts with financial institutions					30.792.418
4. Other financial liabilities					0
V. Commercial creditors and other accounts payable					88.335.862
1. Suppliers		8.1			60.968.236
3. Current tax liabilities		14.2			5.372.728
4. Other payables		8.1 - 14.2			21.994.898
VI. Short-term accruals					218.269
TOTAL NET EQUITY AND LIABILITIES					193.018.082

 

The accompanying notes form an integral part of the consolidated balance sheet for the year ended 31 December 2021.

 

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT FOR THE

YEAR ENDED 31 DECEMBER 2021

 

CONSOLIDATED INCOME STATEMENT		Notes		31/12/2021
A) CONTINUING OPERATIONS
1. Net turnover		15			224.461.953
a) Sales					210.025.613
b) Services rendered					14.436.340
2. Changes in inventories of finished goods and work in progress		15			29.104.396
4. Supplies		15			-190.834.077
b) Consumption of raw materials and other consumables					-172.440.855
c) Work carried out by other companies					-18.393.222
5. Other operating income					57.726
b) Operating grants taken to income		20			57.726
6. Staff expenses					-12.484.287
a) Wages, salaries and related items					-9.748.076
b) Social charges		15			-2.736.211
7. Other operating expenses					-10.668.390
a) Losses, impairment and changes in trade provisions					-623.452
b) Other current management expenses					-10.044.938
8. Amortisation and depreciation					-540.838
9. Non-financial and other capital grants		20			32.912
11. Impairment and result on disposal of fixed assets					-2.883
b) Result for disposal and others					-2.883
14. Other results					132.889
A.1) OPERATING INCOME					39.259.401
15. Financial income					688.765
b) Marketable securities and other financial instruments					688.765
16. Financial expenses					-1.946.342
17. Variation in fair value of financial instruments					-271.192
18. Exchange differences		13			454.080
b) Other exchange differences					454.080
A.2) FINANCIAL RESULTS					-1.074.689
A.3) RESULT BEFORE TAX					38.184.712
23. Income tax		14.1			-9.412.076
A.4) RESULT FOR THE YEAR FROM CONTINUING OPERATIONS					28.772.636
B) DISCONTINUED OPERATIONS
A.5) RESULT FOR THE YEAR					28.772.636
Result attributed to parent company					23.596.268
Result attributed to non-controlling interests					5.176.368

The accompanying notes form an integral part of the consolidated income statement for the year ended 31 December 2021.

 

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SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2021

A) STATEMENT OF RECOGNIZED CONSOLIDATED INCOME AND EXPENSES FOR THE

YEAR ENDED 31 DECEMBER 2021

 

		Notes				31/12/2021
A) Consolidated result for the year							28.772.636
Income and expenses directly attributable to net equity
I. by valuation of financial instruments							0
II. By cash flow hedges							0
III. Grants, donations and bequests received							23.751
IV. By actuarial profit and loss and other adjustments							0
V. Conversion difference			14.1				390.963
VI. Tax effect							-6.650
B) Total income and expenses allocated directly to consolidated net equity							408.064
Transfers to the consolidated income statement
VII. by valuation of financial instruments							0
VIII. By cash flow hedges							0
IX. Grants, donations and bequests received			20				-32.912
X. Conversion difference							0
XI. Tax effect			20				9.215
C) Total of transfers to the consolidated income statement							-23.697
TOTAL OF CONSOLIDATED RECOGNIZED INCOME AND EXPENSES (A + B + C)							29.157.003
Total income and expenses attributed to the parent company							23.980.635
Total income and expenses attributed to external partners							5.176.368

The accompanying notes form an integral part of the statement recognized consolidated income and expenses for the year ended 31 December 2021.

 

3

 

SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2021

STATEMENT OF CHANGES IN CONSOLIDATED NET EQUITY FOR THE

YEAR ENDED 31 DECEMBER 2021

 

		Capital				Reserves and results from previous years				Other partner contributions				result attributed to parent company				Interim dividend				Adjustments for change in value				Grants, donations and bequests received				Non-controlling interests				TOTAL
		Registered
		Note 10.1				Note 10.2				Note 10.2												Notes 11 and 13				Note 20				Note 10.5
C) BALANCE AT THE END OF YEAR 2020			275.000				11.971.732				1.616.495				25.029.340				-8.000.000				-3.836.335				28.997				2.949.675				30.034.904
I. Adjustments for changes in criteria from 2020
II. Adjustments for errors in 2020
D) ADJUSTED BALANCE AT THE START OF YEAR 2021			275.000				11.971.732				1.616.495				25.029.340				-8.000.000				-3.836.335				28.997				2.949.675				30.034.904
I. Total recognized consolidated income and expenses															23.596.268								390.963				-6.596				5.176.368				29.157.003
II. Transactions with partners or owners			0				15.349.308				0				-25.029.340				8.000.000				1.325.399				0				354.634				1
3. (-) Dividend distribution
7. Other transactions with partners or owners							15.349.308								-25.029.340				8.000.000				1.325.399								354.634				1
III. Other variations in net equity																																			0
E) BALANCE AT THE END OF YEAR 2021			275.000				27.321.040				1.616.495				23.596.268				0				-2.119.973				22.401				8.480.677				59.191.908

The accompanying notes form an integral part of the statement of changes in consolidated net equity for the year ended 31 December 2021.

 

4

 

SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS FOR THE

YEAR ENDED 31 DECEMBER 2021

 

				Notes				31/12/2021
A) CASH FLOWS FROM OPERATING ACTIVITIES
1. result before tax									38.184.712
2. Adjustments to result									2.869.858
( + )		a) Amortisation and depriciation							540.838
( + / - )		c) Change in provisions							981.702
( - )		d) Grants recognised in the income statement							-32.912
( + / - )		e) Profit / loss on the disposal of fixed assets							2.883
( - )		g) Financial income							-688.765
( + )		h) Financial expenses							1.946.342
( + / - )		i) Exchange differences							390.962
( + / - )		j) Variation in fair value of financial instruments							-271.192
3. Changes in current capital									-67.816.291
( + / - )		a) Inventory							-39.399.862
( + / - )		b) Trade receivables for sales and services							-81.378.102
( + / - )		c) Other current assets							-41.629
( + / - )		d) Creditors and other accounts payable							54.637.184
( + / - )		e) Other current liabilities							-1.633.882
( + / - )		f) Other non-current assets and liabilities							0
4. Other cash flows from operating activities									-10.141.735
( - )		a) Interest payments							-1.946.342
( + )		c) Interest collection							688.765
( + / - )		d) Income tax collection/payment							-8.884.158
5. Cash flows from operating activities									-36.903.456
B) CASH FLOWS FROM INVESTMENT ACTIVITIES
6. Investment payments									-1.406.793
( - )		d) Intangible assets							-146.094
( - )		e) Property, plant and equipment							-1.260.699
( - )		g) Other financial assets							0
7. Payments received for divestitures									430.399
( + )		d) Intangible assets							132.428
( + )		e) Property, plant and equipment							99.995
( + )		g) Other financial assets							197.976
8. Cash flows from investment activities									-976.394
C) CASH FLOWS FROM FINANCING ACTIVITIES
10. Collection and payment for financial liability instruments									27.256.999
		a) Issue							35.147.862
( + )		2. Debts with financial institutions							35.124.111
( + )		3. Other debt							0
( + )		4. Grants, donations and bequests received							23.751
		b) Return and amortization of							-7.890.863
( - )		2. Debts with financial institutions							-7.760.065
( - )		3. Other debt							-130.798
11. Payments for dividends and remuneration of other equity instruments.									0
( - )		a) Dividends							0
12. Cash flows from financing activities									27.256.999
D) EFFECT OF VARIATIONS IN THE EXCHANGE RATE									0
E) NET INCREASE/REDUCTION IN CASH AND CASH EQUIVALENTS									-10.622.851
Cash or equivalent at the beginning of the year									42.544.223
Cash or equivalent at the end of the year									31.921.372

The accompanying notes form an integral part of the statement of consolidated cash flows for the year ended 31 December 2021.

 

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR

THE YEAR ENDED 31 DECEMBER 2021

 

1.	GROUP COMPANIES

 

1.1.

PARENT COMPANY

SOLUCIONES TÉCNICAS INTEGRALES NORLAND, S.L. (hereinafter STI Norland S.L. or the Parent Company) was incorporated as a Limited Company on 2 April 1996 and has not changed its name since. Its current head office is at Avenida de Sancho el Fuerte, 26, Oficina 1, Pamplona (Spain).

The Parent Company’s corporate purpose, according to its incorporation documents, include:

 

•

Industrial, commercial, managerial and technical office consultancy work;

 

•

Construction (including contracting), rehabilitation, promotion, management, purchase and sale of buildings;

 

•

Production of renewable energy (solar and photovoltaic) and the implementation, assembly, repairs and maintenance of electrical installation in general (both low and medium voltage)

The Parent Company’s current activity consists in manufacturing and selling solar trackers and providing services related to installation of the solar trackers.

The Parent Company’s year runs from 1 January to 31 December.

The Parent Company’s functional currency is the euro.

For all foreign companies in the STI Norland Group whose functional currency is not the euro, their functional currency is the local currency of the foreign jurisdiction.

The financial information presented in these consolidated financial statements are expressed in euros.

 

1.2.

SUBSIDIARIES

Soluciones Técnicas Integrales Norland, S.L. together with its subsidiaries forms the STI Norland Group (the Group).

It is understood that a company forms part of the Group when both are connected by a control relationship, direct or indirect, similar to that set out in article 42 of the Spanish Commercial Code, or when companies are controlled by any means by one or several legal entities that act jointly or are under sole management using statutory agreements or clauses.

 

6

 

The Subsidiaries included in the scope of consolidation are the following:

 

Entity		2021 - % participation		Head office		Location		Functional currency
STI SOLAR, SpA.		100%		Padre Mariano, 82 – office 1102		Providencial, Santiago (Chile)		Chilean peso (CLP)
STINORLAND ISRAEL, LTD.		100%		78 Rothschild Bv., 6578605		Tel-Aviv (Israel)		Israeli Shekel (ILS)
STINORLAND USA, INC.		100%		2804 Gateway Oaks Dr #100, Sacramento		California (USA)		American dollar (USD)
STINORLAND SOUTH AFRICA PTY LTD		100%		48 Main Road, Walmer, 6065		Port Elizabeth - Gqeberha (South Africa)		South African rand (ZAR)
STINORLAND BRASIL, LTDA.		80%		Quadra 1112 Sul, Alameda 11 Lote 02 a 06, Plano Diretor Sul, CEP 77024-182		Palmas, Estado do Tocantins (Brazil)		Brazilian real (BRL)
STINORLAND MEXICO, S.A. DE C.V.		99%		Calle Darwin 74, Interior 301, Col. Anzures, 11590		Miguel Hidalgo, Ciudad de México (Mexico)		Mexican peso (MXN)
STINORLAND INDIA PRIVATE LIMITED		100%		39 NGEF Lane, 2nd Floor, Suite No. 985, Indiranagar,		Bangalore, Karnataka (India)		Indian rupee (INR)
KTRSOLAR TECH, S.L.		80%		Plaza Mayor, 17 - 1º A 31621		Sarriguren, Navarre (Spain)		Euro (EUR)
STINORLAND AUSTRALIA PTY LTD		100%		14 Hastings St. McKinnon 3204		Victoria (Australia)		Australian dollar (AUD)

None of the Group companies are listed on a stock exchange or in any other market.

During the 2021 year the only dividend distribution approved was the following:

 

Entity		Date of approval		Amount of dividend approved		Amount in euros
STINORLAND ISRAEL, LTD.		01/07/2021		170,000 euros		170,000 euros

 

7

 

The operating activities of the Group companies is the design, engineering, assembly and supply of structures and solar trackers for developing renewable energy, particularly photovoltaic energy.

No subsidiaries have been excluded from the scope of consolidation.

In 2021 the Group has incorporated a new company, STY NORLAND AUSTRALIA PTY LTD, a 100% subsidiary to manage the Group operations in Australia.

 

2.	BASIS OF PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

 

2.1.

FAIR PRESENTATION

On 10 November 2021 Array Technologies, Inc, a US company, entered into a purchase agreement with the shareholders of the Parent Company pursuant to which, Array agreed to acquire all of the outstanding equity interests of the Parent Company. The closing of this agreement is dated 11 January 2022. The Board of Directors is preparing these consolidated financial statements as of and for the year ending 31 December 2021 to be used during the acquisition process and to be filed as part of the 8 K filing of Array Technologies, Inc. These Consolidated Financial Statements are prepared in accordance with accounting rules in Spain and include a separate note with a reconciliation to generally accepted accounting principles in the United States of America (US GAAP). These Consolidated Financial Statements comprise the Consolidated Balance Sheet, Consolidated Income Statement, Statement of Changes in Consolidated Net Equity, Statement of Consolidated Cash Flows and Notes (the Consolidated Financial Statements).

As mention above, these Consolidated Financial Statements have not been prepared to comply with statutory legal requirements.

The accompanying Consolidated Financial Statements have been prepared on the basis of the accounting records of the Parent Company and its subsidiaries. The Consolidated Financial Statements for the year ended 31 December 2021 have been prepared in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, the Standards for the Preparation of Consolidated Annual Accounts approved by Royal Decree 1159/2010, and its subsequent amendments, to give a true and fair view of the consolidated equity and consolidated financial position at 31 December 2021 and consolidated results of operations, changes in consolidated equity, and consolidated cash flows for the year then ended.

There are no exceptional reasons why the legal provisions for accounting matters have not been applied in order to present an accurate picture.

The end of the year for the financial statements in all the consolidated companies is 31 December 2021, and coincides with that of the Parent Company, except for the subsidiary STINORLAND INDIA PRIVATE LIMITED, whose year ends on 31 March 2022, as established in local legislation. However, the financial information used to prepare the Consolidated Financial Statements corresponds to 31 December 2021.

 

8

 

2.2.

ACCOUNTING PRINCIPLES

The accounting principles and criteria applied in preparing these Consolidated Financial Statements are those summarized in Note 3 of this report. The mandatory accounting principles that have a significant effect on these Consolidated Financial Statements have been applied. Non-mandatory accounting principles have not been applied.

 

2.3.

CRITICAL ISSUES REGARDING THE MEASUREMENT AND ESTIMATION OF UNCERTAINTIES

The information contained in these Consolidated Financial Statements is the responsibility of the Parent Company’s Board of Directors. In preparing these Consolidated Financial Statements, the Board has made judgements and estimates that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Specifically, estimates have been used relating to:

 

•

The useful life of intangible assets and property, plant and equipment (Notes 4 and 5)

 

•

Provisions for responsibilities (Note 16)

Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised prospectively.

 

2.4.

COMPARATIVE INFORMATION

The consolidated balance sheet, consolidated income statement, statement of changes in consolidated net equity, statement of consolidated cash flows and the notes thereto for 2021 do not include comparative figures for 2020.

These Consolidated Financial Statements have been prepared solely for the purpose of meeting the requirements of US Securities and Exchange Commission (“SEC”) Rule 3-05 of Regulation S-X, following the acquisition by Array Technologies (see note 2.1). These Consolidated Financial Statements have been prepared in accordance with the Spanish General Chart of Accounts approved by Royal Decree 1514/2007, which have been applied consistently except that no comparative information has been presented in these Consolidated Financial Statements, as no comparatives are required under SEC Rule 3-05 of Regulation S-X. Nonetheless, this is a departure from accounting rules in Spain, as comparative figures are required to be presented.

 

2.5.

AGGREGATION OF ITEMS

These Consolidated Financial Statements are presented consistently with the Spanish chart of accounts and do not contain any items that have been aggregated into one caption.

 

2.6.

ITEMS DISCLOSED UNDER SEVERAL LINE ITEMS

There are no elements of a similar nature included in different items on the balance sheet.

 

2.7.

CHANGES TO ACCOUNTING POLICIES

Royal Decree 1/2021 was published on 30 January 2021 amending the Spanish General Chart of Accounts. Consequently, the recognition and measurement standards 14 Revenue from sales and services and 9 Financial instruments have been amended in 2021.

 

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2.8.

RELATIVE IMPORTANCE

When determining the information to be disclosed in these Consolidated Financial Statements, on the different items of the Consolidated Financial Statements or other matters, the Group, in accordance with the Conceptual Accounting Framework, has taken into account relative importance in relation to the 2021 Consolidated Financial Statements.

 

3.	RECOGNITION AND MEASUREMENT STANDARDS

The principal standards of recording and measurement applied in preparing the attached Consolidated Financial Statements, in accordance with the General Accounting Plan, were the following:

 

3.1.

CONSOLIDATION METHOD

The attached Consolidated Financial Statements have been prepared in accordance with the global integration method for all the Subsidiaries over which the Parent Company has effective control: STI SOLAR, SpA., STINORLAND ISRAEL, LTD., STINORLAND SOUTH AFRICA (PTY), LTD., STINORLAND USA, INC., STINORLAND BRASIL, LTDA., STINORLAND MÉXICO, S.A. DE C.V., STINORLAND INDIA PRIVATE LIMITED, KTRSOLAR TECH, S.L. and STINORLAND AUSTRALIA PTY LTD.

For companies consolidated by the global integration method (full consolidation), 100% of the items on the balance sheet and income statement are incorporated, recognizing, if applicable, the value of the participation of non-controlling interest in net equity and in the consolidated income statement in the corresponding proportion.

In the investment-net equity elimination in the consolidation process, the offsetting of the book values representing the Parent Company’s equity instruments with the proportional part of the net equity items of the above-mentioned subsidiaries, has been carried out on the basis of values obtained from applying the acquisition method. If the date of first consolidation is later than the acquisition date, the figures resulting from applying the global integration method have been referred to the acquisition date.

 

3.2.

TRANSACTIONS BETWEEN CONSOLIDATED COMPANIES

Results of internal transactions in the scope of consolidation have been eliminated, provided that their amount is relevant, being deferred until they are carried out with third parties outside the Group. If there are works carried out by the Group for its own fixed assets, the intra-group results are eliminated, arising at the rate of amortization of the affected items or when sold to third parties.

Intra-group balances and transactions, and any unrealised income and expenses (except for foreign currency transaction gains or losses) arising from intra-group transactions, are eliminated

 

3.3.

HOMOGENISATION

Consolidation of the companies that make up the scope of consolidation has been carried out using their individual financial statements that are prepared in accordance with Royal Decree 1514/2007 for the Parent Company headquartered in Spain, and their own local legislation for foreign companies. All the necessary standardization operations have been carried out in the Group’s companies to unify the measurement criteria and structure of the consolidated annual reports with those used by the Parent Company in its financial statements.

 

10

 

3.4.

CONVERSION OF FINANCIAL RESULTS IN CURRENCY OTHER THAN THE EURO

Financial results in a currency other than the euro of foreign companies have been converted to euros using the exchange rate at balance sheet date. In this way the goods, rights and obligations have been converted at the exchange rate current at the close date, equity at historic exchange rate and items on the income statement at the average exchange rate for the year. The differences in conversion arising from the application of this method will be shown, where applicable, in the caption “Adjustments for change in value” in the section on equity on the consolidated balance sheet, the part that corresponds to non-controlling interest being deducted. During the year 2021 the conversion differences amounted to -2,119,973 euros.

 

3.5.

INTANGIBLE ASSETS

As a general rule, intangible assets are initially measured at cost, whether this be acquisition price or production cost. The cost of intangible assets acquired through combinations of business is its fair value on the date of acquisition.

After initial recognition, intangible assets are measured at cost, minus accumulated depreciation and, if applicable, the accumulated amount of recorded impairment corrections.

Intangible assets are assets of a defined useful life and are amortized systematically in accordance with their estimated useful life and residual value. The methods and periods of amortization applied are revised at the end of each year and adjusted prospectively, if need be.

At least annually, indicators of impairment are evaluated, in which case the recoverable amounts are estimated, to the extent that the carrying value exceeds the recoverable amounts, an impairment is recorded for the difference.

For accounting, the Group recognizes any loss that may have occurred in the recorded value of these assets due to impairment, using the heading “Impairment and result on disposal of fixed assets”. The criteria for recognizing losses due to impairment is similar to the one described in section 3.6. Property, plant and Equipment.

3.5.1. IT APPLICATIONS

These are valued at acquisition price or production cost. The useful life of these items is estimated at 4 years, being amortized on a straight-line basis during this period.

3.5.2. CONCESSIONS

The costs incurred to obtain the concession of two parking places for the Group are amortized on a straight-line basis in the 75-year concession period. If the circumstances of non-compliance with conditions meant the rights derived from this concession are lost, the recorded value for it would be adjusted in its entirety to cancel its net book value.

 

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3.6.

PROPERTY, PLANT AND EQUIPMENT

These are valued at acquisition price or production cost that includes, besides the amount billed after deducting any discount or rebate in the price, all the additional and directly related expenses arising up to its commissioning, such as costs of earthworks and demolition, transport, insurance, installation, assembly and the like.

In the cost of property, plant and equipment that needs a period of more than one year before it is ready for use, exploitation or sale, the Group includes the financial expenses related to specific or generic financing, directly attributable to acquisition, construction or production. In 2021 no financial expenses have been capitalized in property, plant and equipment.

The initial estimate of the actual value of the obligations assumed derived from decommissioning or retirement and other associated obligations is also included in the value of property, plant and equipment. Other obligations associated with the asset include the costs of restoration when these give rise to recording of provisions.

The Group does not have any commitments for decommissioning, retirement or restoration of its fixed assets. Therefore, under assets, no values have been booked for hedging such obligations in the future.

The Parent Company’s Board of Directors considers that the accounting value of the assets does not exceed their recoverable value.

An impairment loss in the value of an item of property, plant and equipment arises when its net book value exceeds its recoverable amount, this being understood as the higher amount between its fair value minus costs to sell and its value in use.

Expenditure during the year due to repairs and maintenance carried out by the Group will be charged to the corresponding expenditure accounts. Expansion or improvement costs that give rise to an increase in production capacity or extension of the useful life of goods are incorporated into the asset as the higher value of that asset.

The property, plant and equipment accounts in progress are debited by the amount of those expenses, with a credit to the income item that includes the works carried out by the Group for itself.

Amortization of property, plant and equipment commences from the moment the assets are available for commissioning, on a straight-line basis during their estimated useful life, with an estimated residual value of zero. The periods of estimated useful life translate into the following annual depreciation ratios:

 

Construction			4-5	%
Other installations			15	%
Machinery			15	%
Tools			25	%
Transport items			20	%
Furniture			15	%
Information processing equipment			25	%

 

3.7.

LEASES

Whether to classify a lease as operating or financial depends on the circumstances of each of the contracting parties, since they can be classified differently as lessor or lessee.

 

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The Group classifies as a financing lease, any lease provided that its conditions infer that the risks and benefits inherent in the ownership of the asset that is the object of the contract have been substantially transferred to the lessee. The assumptions for transferring risks and benefits established in the PGC (General Accounting Plan) are assumed by the companies.

Other leases are classified as operating leases. In these ownerships of the leased good and, substantially all the risks and benefits that are devolved to the good, remains with the lessor.

When the Group acts as lessor, the leasing expenses are charged on a straight-line basis to the income statement according to the agreements and life of the contract.

 

3.8.

FINANCIAL INSTRUMENTS

3.8.1. RECOGNITION AND CLASSIFICATION OF FINANCIAL INSTRUMENTS

Since 1 January 2021 the Group has applied the new recognition and measurement standard 9 Financial instruments in accordance with Royal Decree 1/2021 amending the Spanish General Chart of Accounts.

No significant differences in the valuation of financial instruments existing in the Group at 1 January 2021 have been identified as a result of applying the new recognition and measurement standard

9. Consequently, the Group has applied the new recognition and measurement standard retroactively. This note on valuation only includes the Group’s policies in relation to the new standard.

The Company classifies financial instruments on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the economic substance of the contractual arrangement and the definitions of a financial asset, a financial liability and an equity instrument.

The Company recognises a financial instrument when it becomes party to the contract or legal transaction, in accordance with the terms set out therein, either as the issuer or holder or acquirer thereof.

For measurement purposes, the Company classifies financial instruments into the following categories: financial assets and financial liabilities at fair value through profit or loss, showing separately those designated as such upon initial recognition from those that are held for trading and those mandatorily measured at fair value through profit or loss; financial assets and financial liabilities measured at amortised cost; financial assets measured at fair value through equity, showing separately equity instruments designated as such from other financial assets; and financial assets measured at cost. The Company classifies financial assets at amortised cost and at fair value through equity, except for equity instruments designated as such, according to the business model and the contractual cash flow characteristics. The Company classifies financial liabilities as measured at amortised cost, except those designated as at fair value through profit or loss and those held for trading.

 

13

 

The Company classifies a financial asset or liability as held for trading when:

 

•

It is originated, acquired or issued or assumed principally for the purpose of selling or repurchasing it in the near term;

 

•

On initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of recent actions in pursuit of short-term profit-taking;

 

•

It is a derivative financial instrument, provided that it is not a financial guarantee contract or it has not been designated as a hedging instrument or

 

•

It is an obligation that the Company has in a short position to deliver financial assets that it has been loaned.

The Company classifies a financial asset at amortised cost, even if it is admitted to trading, if it is held within a business model whose objective is to hold the investment in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI).

The Company classifies a financial asset at fair value through equity if it is held within a business model whose objective involves collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest (SPPI).

The business model is determined by key personnel of the Company and at a level that reflects how groups of financial assets are managed together to achieve a particular business objective. The Company’s business model represents the manner in which it manages its financial assets to generate cash flows.

The Company classifies other financial liabilities as financial liabilities at amortised cost, except for financial guarantee contracts, commitments to provide a loan at a below-market interest rate or financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies.

3.8.2. OFFSET PRINCIPLES

A financial asset and a financial liability are offset only when the Company currently has the legally enforceable right to offset the recognised amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

3.8.3. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS

The Company recognises financial assets and financial liabilities at fair value through profit or loss initially at fair value. Transaction costs directly attributable to the acquisition or issue are recognised as an expense when incurred.

 

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3.8.4. FINANCIAL ASSETS AND FINANCIAL LIABILITIES AT AMORTISED COST

Financial assets and financial liabilities at amortised cost are initially recognised at fair value, plus or minus transaction costs, and are subsequently measured at amortised cost using the effective interest method. The effective interest rate is the discount rate that equates the carrying amount of a financial instrument to the estimated cash flows expected over the life of the instrument based on the contractual terms and for the financial assets, excluding future losses due to credit risk.

3.8.5. INTEREST AND DIVIDENDS

The Company recognises interest and dividends accrued on financial assets after acquisition as income in the income statement.

3.8.6. IMPAIRMENT OF FINANCIAL ASSETS

A financial asset or a group of financial assets is impaired and impairment losses are incurred if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset and the event or events have an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated

 

•

Impairment of financial assets carried at amortised cost

The amount of the impairment loss of financial assets carried at amortised cost is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. For floating-rate financial assets, the effective interest rate corresponding to the measurement date under the contractual conditions is used. Nevertheless, the Company uses their market value, provided this is sufficiently reliable to be considered representative of the recoverable amount

3.8.7. DERECOGNITION OF FINANCIAL ASSETS AND LIABILITIES

Financial assets are derecognized when the rights to receive related cash flows have expired o have been transferred and the Group has substantially transferred the risks and benefits derived from their ownership.

Financial liabilities are derecognized when the obligations that generated them have ended.

3.8.8. REVERSE FACTORING

The Group has contracted reverse factoring facilities with various financial institutions to manage payments to suppliers. Trade payables settled under the management of financial institutions are recognised under trade and other payables in the consolidated balance sheet until they are settled, repaid or have expired.

Payables to financial entities as a result of the transfer of trade liabilities are recognised as trade payables advanced by banks under trade and other payables in the consolidated balance sheet.

 

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When the Group requests a deferral of the initial payment term of trade payables, these debts are derecognised within the original maturity period and a financial liability is recognised under loans and borrowings in the consolidated balance sheet.

The Group presents the net amount of collections and payments relating to reverse factoring in the statement of cash flows, as these collections and payments have a high turnover, as established in the applicable standards

 

3.9.

INVENTORY

Goods included in Inventory are measured at their production cost, which is determined by adding the costs directly attributable to the product to the purchase price of raw materials and other consumables. To this is also added the part that reasonably corresponds to the indirectly attributable costs of the products, to the extent that such costs correspond to the period of manufacturing, processing or construction, which may have been incurred in placing them for sale and are based on the level of utilization of the normal working capacity of the means of production.

Indirect taxes on inventory are only incorporated into the acquisition price or production cost when they are not directly recoverable from the tax authorities.

Advances to suppliers on account for future inventory supplies are measured at cost.

The measurement of obsolete, defective or slow-moving products is reduced to their potential realization value.

 

3.10.

TRANSACTIONS IN FOREIGN CURRENCY

Transactions carried out in foreign currency are recorded at the exchange rates current at the time of the transaction. During the year, the differences between the booked exchange rate and the one that is current at the time of receiving or paying are recorded as financial results in the income statement. The Parent Company has not changed the functional currency during the year, which is the euro.

Likewise, on 31 December of each year the conversion of balances receivable or payable originating in a foreign currency is made with the closing exchange rate. The resulting differences in measurement are recorded as financial results in the income statement.

 

3.11.

INCOME TAX

The current tax expense is determined by adding the current tax expense and the deferred tax. The current tax expense is determined by applying the current tax rate to the financial profit for the year and reducing the result thus obtained by the amount of allowances and general deductions applied during the year.

Deferred tax assets and liabilities come from temporary differences defined as the amounts expected to be payable or recoverable in the future and that derive from the difference between the book value of assets and liabilities and their tax base. Those amounts are recorded by applying the tax rate at which they are expected to be recovered or settled to the temporary difference.

Deferred tax assets also arise as a result of negative tax bases pending compensation and from the credits for tax deductions generated and not applied.

 

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The corresponding deferred tax liability is recognized for all the temporary tax differences, unless the temporary difference is derived from the initial recognition of goodwill or initial recognition (except in a business combination) of other assets and liabilities in a transaction that, at the time it is carried out, affects neither the tax nor accounting result.

On the other hand, deferred tax assets, identified with deductible temporary differences, are only recognized in the event that it is probable that the Group will have sufficient future financial earnings against which they can be made effective and do not come from initial recognition (except in a business combination) of other assets and liabilities in a transaction that affects neither the financial nor the accounting result. The remaining deferred tax assets (tax loss carryforwards and deductions pending compensation) are only recognized in the event that it is probable that the Group will have sufficient future financial earnings against which they can be made effective.

At each accounting close, recorded deferred taxes are reviewed (both assets and liabilities) with the aim of checking that they are still recoverable, making appropriate adjustments to them, in accordance with the results of the analyses carried out.

The deferred tax expense or income corresponds to the recognition and cancellation of deferred tax liabilities and assets, as well as, where appropriate, by recognizing and allocating to the income statement, the income directly attributable to net equity that may result from accounting for those deductions and other financial benefits that have the economic nature of grants.

 

3.12.

INCOME AND EXPENSES

Income and expenses are allocated in accordance with the accrual criterion, regardless of the time when the monetary or financial flow derived from them occurs.

Since 1 January 2021 the Group has applied the new recognition and measurement standard 14 Revenue from sales and services in accordance with Royal Decree 1/2021 amending the Spanish General Chart of Accounts.

The effect of applying the new recognition and measurement standard 14 to 2020 revenues and its related trade receivables is not significant.

(i) Sale of goods

The Company manufactures and sells parts and components that are installable in solar panel tracking systems in energy parks. The installable parts and components are designed and manufactured exclusively for the customers; the level of customisation is not significant and they have alternative uses for the Company. Consequently, the revenue is recognised when control of these parts and components is transferred and not over time.

The Company sells the parts on F.O.B or delivery to the customer’s warehouse terms, therefore the revenue is recognised when the customer receives the products at the agreed point. The Company records these sales at the nominal amount, without considering the financial effect thereof, because this effect is not significant.

The Company grants customers a standard product warranty that is recognised in accordance with the indications of the accounting policy for provisions.

 

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(ii) Rendering of services

The Company performs the service of installing the parts and components that it sells to some of its customers. Installation is not complex or specialised and a high level of integration is not required, therefore the goods and installation are considered separate obligations.

Revenues from this service are recognised over time because the Company’s performance creates an asset controlled by the customers and it has no alternative use for the Company, which has an enforceable right to payment for performance completed up to the reporting date.

Each month the Company invoices the actual stage of completion of the project, measured in units installed in each period, so that at the end of each period the revenue is recognised for the service effectually carried at any time.

 

3.13.

PROVISIONS AND CONTINGENCIES

The Consolidated Financial Statements include all provisions with respect to which it is estimated that the probability that the obligation will have to be met is greater than the converse situation. Contingent liabilities are not recognized in the consolidated Balance sheet, but information on them is given in the notes, to the extent that they are not considered remote.

Where appropriate, provisions are valued at the actual value of the best possible estimate of the amount necessary to cancel or transfer the obligation, taking into account the information available about the event and its consequences, and recording adjustments that arise from updating of those provisions as a financial expense as it accrues.

 

3.14.

ENVIRONMENTAL INFORMATION

The costs incurred, where appropriate, from systems, equipment and installations whose purpose is to minimize the environmental impact whilst carrying out the activity, and/or the protection and improvement of the environment are recorded as investments in property, plant and equipment.

The remaining expenses related to the environment, other than the above, are expensed as incurred. The calculation of potential environmental provisions that may arise, is made according to the best estimate of the provision at the time they are known, and under the assumption that insurance policies will not cover any damage caused.

 

3.15.

CRITERIA USED FOR RECORDING AND VALUING EMPLOYEE EXPENSES

Employee expenses include all salaries and mandatory or voluntary social obligations accrued at all times, recognizing obligations for extra payments, holidays or variable salaries and their associated expenses.

Except for justifiable cause, companies are obliged to compensate their employees when their services cease.

In the absence of any foreseeable need for irregular termination of employment and given that those employees who retire or voluntarily end their services, do not receive severance payments, severance payments, when they arise, are booked to expenses at the time the decision is taken to terminate the employment.

 

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3.16.

GRANTS, DONATIONS AND BEQUESTS RECEIVED

Non-refundable capital grants are valued at the amount granted, initially being recognized as income directly attributable to net equity and attributable to the results during the period in the proportion of depreciation experienced by the assets financed by those grants, unless it is a question of non-depreciable assets, in which case they will be attributed to the income for the year in which they are sold or derecognized from the inventory.

While they have the features of repayable grants, they are booked as debts that can be converted into grants.

When grants are granted to finance specific expenses, they are booked as income in the year in which the expenses they are financing occur.

 

3.17.

CRITERIA USED IN TRANSACTIONS BETWEEN RELATED PARTIES

If they exist, transactions between companies in the same Group, regardless of the degree of connection, are accounted for in line with the general rules. The items that are the subject of the transactions carried out will be booked at their fair value initially. Subsequent measurement is made in accordance with the specific rules that may apply.

 

3.18.

CLASSIFICATION BETWEEN CURRENT AND NON-CURRENT BALANCES

In the attached consolidated balance sheet, balances with a maturity of less than one year from the date of the balance sheet are classed as current, those with a maturity of more than a year are considered non-current.

 

4.	INTANGIBLE ASSETS

The detail of the items under this heading and transactions throughout the 2021 year is the following:

2021 YEAR

 

		Initial balance				Additions				Disposals				Transfers				Final Balance
COST
IT applications			368,388				79,792				-15,926				102,300				534,554
Other Intangible assets			530,273				0				-503,829				0				26,444
Consolidated Goodwill			185,807				0				0				0				185,807
TOTAL COST			1,084,468				79,792				-519,755				102,300				746,805
AMORTIZATIONS
IT applications			-181,632				-84,936				15,926				0				-250,642
Other Intangible assets			-92,770				-353				88,882				0				-4,241
Consolidated Goodwill			-18,581				-18,580				0				0				-37,161
TOTAL AMORTIZATIONS			-292,983				-103,869				104,808				0				-292,044
Advances paid to suppliers			62,128				66,302				0				-102,300				26,130
NET TOTAL			853,613				42,225				-414,947				0				480,891

The cost of intangible assets totally amortized is 96,713 euros at the end of the 2021 year.

The Group has not made any impairment adjustments to intangible assets.

 

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4.1.

CONSOLIDATED GOODWILL

The balance included under this heading corresponds to net goodwill arising from the acquisition of KTRSolar Tech S.L. carried out on 31 January 2020.

Transactions under this heading of the consolidated balance sheet in the 2021 year, were as follows:

2021 YEAR

 

		Initial balance				Additions				Amortization				Final Balance
KTR Solar Tech, S.L.			167,226				0				-18,581				148,645
TOTAL			167,226				0				-18,581				148,645

 

5.	PROPERTY, PLANT AND EQUIPMENT

Transactions made under this heading of the consolidated balance sheet in the years 2021, as well as the most significant information that affects this heading, were the following:

2021 YEAR

 

		Initial balance				Additions				Disposals				Transfers				Final Balance
COST
Land and Constructions			1,590,448				0				-252,768				0				1,337,680
Technical Installations and Machinery			950,216				754,348				-58,742				19,734				1,665,556
Other Installations, Tools and Furniture			1,982,031				258,990				-25,268				0				2,215,753
Other assets			845,841				186,917				-134,907				0				897,851
TOTAL COST			5,368,536				1,200,255				-471,685				19,734				6,116,840
DEPRECIATION
Constructions			-607,812				-57,502				97,228				0				-568,086
Technical Installations and Machinery			-255,403				-157,591				971				0				-412,023
Other Installations, Tools and Furniture			-1,799,325				-52,795				25,268				0				-1,826,852
Other assets			-466,999				-125,868				112,932				0				-479,935
TOTAL DEPRECIATION			-3,129,539				-393,756				236,399				0				-3,286,896
under construction and advances			14,821				60,444				0				-19,734				55,531
NET TOTAL			2,253,818				866,943				-235,286				0				2,885,475

The principal additions for 2021 correspond to the elements acquired to cover the needs associated with the Group’s growth.

There has been no circumstance that has meant a significant impact affecting the current year or future years and that may affect cost estimates for decommissioning, retirement or restoration, useful life and depreciation methods.

The grants received for financing various investment projects relating to property, plant and equipment, are explained in Note 20.

 

20

 

The cost of property, plant and equipment completely depreciated in the 2021 year is detailed as follows:

 

Item		2021
Machinery			59,408
Tools			42,396
Other installations			1,595,246
Furniture			62,330
Information processing equipment			87,828
Transport items			179,793
TOTALS			2,027,001

Group policy is to take out insurance policies to cover potential risks that the different elements of property, plant and equipment are subject to. The Parent’s Company Board of Directors reviews on an annual basis, or when an event makes it necessary, the coverage and risks covered. Amounts that must be reasonably covered for the following year are also agreed.

The Group has not made any impairment adjustments to property, plant and equipment.

The details of property, plant and equipment items located abroad at 31 December is as follows:

 

		Balance at 31/12/2021
COST
Technical Installations and Machinery			1,022,481
Other Installations, Tools and Furniture			387,004
Other assets			365,717
TOTAL COST			1,775,202
DEPRECIATION
Technical Installations and Machinery			-149,445
Other Installations, Tools and Furniture			-49,045
Other assets			-92,126
TOTAL AMORTIZATIONS			-290,616
NET TOTAL			1,484,586

 

6.	LEASES AND OTHER OPERATIONS OF A SIMILAR NATURE

 

6.1.

OPERATING LEASES

The Group has been granted the use of various assets under operating leases, the most significant information is the following:

 

		2021 year
Lease payments recognized as expenses for the period			385,012

The minimum payments amount for operating leases mainly relates to the leasing of both offices and industrial premises where the Group companies carry out their daily activity and the leasing of furniture, equipment and vehicles to cover the needs of different projects. The Group also makes payments to lease apartments in other countries such as Mexico, India, South Africa and China, due to the different projects carried out by the Group in those countries.

 

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Details of the minimum payments for leasing, broken down by time period are as follows:

 

		2021
Up to a year			452,380
Between one and five years			731,017
More than five years			0
TOTAL			1,183,397

 

7.	FINANCIAL ASSETS

 

7.1.

CATEGORIES OF FINANCIAL ASSETS

Information of long-term financial investments as shown in the consolidated balance sheet is not itemized as it is not material, as it relates mainly to security deposits and amounts to 29,479 euros for 2021.

Information of short-term financial assets on the consolidated balance sheet, classified by category, is shown below:

YEAR 2021

 

		CLASSES
CATEGORY		Security deposits				Term deposits				Short-term credits, derivatives and others				TOTAL
Financial assets at amortised cost			107,305				0				95,071,074				95,178,379
- Other financial assets			107,305				0				95,071,074				95,178,379
Cash and cash equivalents			0				25,192,953				6,728,419				31,921,372
TOTAL			107,305				25,192,953				101,799,493				127,099,751

The breakdown of the section “Other financial assets” is as follows:

 

Item		2021
Trade receivables for sales and services			95,062,741
Other debtors			8,333
TOTAL			95,071,074

 

7.2.

RECLASSIFICATIONS

There were no reclassifications among the different categories of financial assets.

 

22

 

7.3.

CLASSIFICATION BY MATURITIES

Classification by maturity of the Group’s financial assets of the amounts that mature in each of the years following the end of the year until their final maturity are shown in the following table:

2021 YEAR

 

Maturity in years
		2022				2023				2024				2025				2026 and beyond				TOTAL
Financial investments
Others			107,305				808				0				0				28,671				136,784
Commercial debtors and other accounts receivable
Net Trade receivables for sales and services			95,062,741				0				0				0				0				95,062,741
Other debtors			8,333				0				0				0				0				8,333
Cash and cash equivalents
Treasury			31,921,372				0				0				0				0				31,921,372
TOTAL			127,099,751				808				0				0				28,671				127,129,230

 

7.4.

ASSETS ASSIGNED AND ACCEPTED AS COLLATERAL

In 2021 the Group does not have, nor has had financial assets delivered as collateral.

In 2021 the Group does not have third-party assets as collateral although it does have bank guarantees in its favour from suppliers in the amount of 1.289.539,59 euros that expire in the years 2022, 2023, 2024 and 2025.

 

7.5.

IMPAIRMENT OF VALUE ARISING FROM CREDIT RISK

The following is the analysis of transactions of corrective accounts by asset class, representing impairment losses caused by credit risk in the years 2021:

 

Asset class		Credits, derivatives and others (1)
		Short-term
Impairment loss at the end of the 2020 year			687
(+) Measurement adjustment for impairment			0
(-) Impairment reversal			-687
(-) Disposals and reductions			0
Impairment loss at the end of the 2021 year			0

 

(1)	Includes impairment adjustments arising from credit risk in “Commercial debtors and other receivables”

During the 2021 year the Group has considered the impairment registered in 2019 as definitive. Consequently, impairment has been applied to the corresponding account balance.

 

7.6.

NON-PAYMENT OR NON-COMPLIANCE WITH CONTRACTUAL CONDITIONS

During the year there was no contractual non-compliance which would have granted the lender the right to claim early repayment of its loans.

 

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8.	FINANCIAL LIABILITIES

 

8.1.

CATEGORIES OF FINANCIAL LIABILITIES

Long-term financial liabilities on the consolidated balance sheet, classified by category, are shown below:

YEAR 2021

 

		CLASSES
		Debts with financial institutions				Long-term derivatives and others				TOTAL
Financial liabilities at amortised cost			10,000,000				108,995				10,108,995
TOTAL			10,000,000				108,995				10,108,995

Under the heading “Debts with financial institutions” it is included the long term loans obtained during 2021 (see 8.3).

Included under the heading “Long-term derivatives and others” and amounting 108,995 euros is an advance payment received by the Parent Company during the 2019 year relating to a loan granted by the Centre for Industrial Technology Development, the payment of which was earmarked for the year 2020, but which has been delayed until 2022, once the applicable documentation had been provided. Total loan granted amounts to euros 332 thousand. This loan includes a non-repayable allowance (euros 33 thousand), and its maturity extends to 2027.

Information on the short-term financial liabilities on the consolidated balance sheet, classified by category, is shown below:

YEAR 2021

 

		CLASSES
		Debts with financial institutions				Short-term derivatives and others				TOTAL
Debts and payables			30,792,418				82,103,763				112,896,181
TOTAL			30,792,418				82,103,763				112,896,181

The breakdown of the “Short-term derivatives and others” section is as follows:

 

Item		2021
Suppliers			60,968,236
Creditors			2,330,209
Staff			1,083,913
Customer advances			17,721,405
TOTAL			82,103,763

 

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8.2.

CLASSIFICATION BY MATURITIES

Classification by maturity of the Group’s financial liabilities of the amounts that mature in each of the years following the end of the year until their final maturity are shown in the following table:

2021 YEAR

 

Maturity in years
Debts		2022				2023				2024				2025				2026 and beyond				TOTAL
Debts with financial institutions			30,792,418				5,000,000				5,000,000				0				0				40,792,418
Other financial liabilities			0				9,506				19,012				19,012				61,465				108,995
Commercial creditors and other accounts receivable
Suppliers			60,968,236				0				0				0				0				60,968,236
Creditors			2,330,209				0				0				0				0				2,330,209
Staff			1,083,913				0				0				0				0				1,083,913
Customer advances			17,721,405				0				0				0				0				17,721,405
TOTAL			112,896,181				5,009,506				5,019,012				19,012				61,465				123,005,176

 

8.3.

OTHER INFORMATION

Other significant facts that affect financial liabilities are the following:

 

•

Insurance: the Group has contracted, and paid for the premiums at maturity, current civil liability insurance that reasonably covers the risks inherent in its activity, as well as at least a significant part of the net book value or, where appropriate, inventory and non-current assets.

 

•

At the date of preparing these Consolidated Financial Statements no significant disputes that could affect them are known. The credit policy and lines of credit limits are as follows:

 

Financial entities 2021		Limit granted				Arranged				Available
Total of lines of credit and guarantees			98,839,745				58,942,886				39,896,859
Total lines of confirming			23,900,000				6,986,551				16,913,449
Total multiproduct lines			35,539,008				22,792,329				12,746,679
TOTAL RISK LINES			158,278,753				88,721,766				69,556,987

During the 2021 year the Parent Company received seven loans from financial institutions for a total amount of 15,000,000 euros and 6,500,000 USD (5,732,428 euros). All these loans in euros were agreed with a maturity of three years with annual amortization. The ones in USD were agreed with a maturity of one year, so they all expire during the 2022 year.

During the year there has been a repayment of the principal of loans granted in previous years for the amount of 13,831,992 euros.

 

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