The Auditor's Report of Valoe
Valoe Corporation
Stock Exchange
Release 27 April
2023 at 19.30 Finnish time
Valoe Corporation's Auditor has given the
following Report for the company’s Financial Statements for 2022 on
27 April 2020. The Auditor’s report includes so called emphasis of
matter relating to the material uncertainty related to going
concern basis.
This document is an English translation
of the Finnish auditor’s report. Only the Finnish version of the
report is legally binding.
Auditor’s Report
To the Annual General Meeting of Valoe Oyj
Report on the Audit of the Financial
Statements
Opinion
We have audited the financial statements of
Valoe Oyj (business identity code 0749606-1) for the financial year
1 January – 31 December 2022. The financial statements comprise the
consolidated balance sheet, statement of comprehensive income,
statement of changes in equity, statement of cash flows and notes,
including a summary of significant accounting policies, as well as
the parent company’s balance sheet, income statement, statement of
cash flows and notes.
In our opinion
- the consolidated
financial statements give a true and fair view of the group’s
financial performance, financial position and cash flows in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU.
- the financial
statements give a true and fair view of the parent company’s
financial performance and financial position in accordance with the
laws and regulations governing the preparation of financial
statements in Finland and comply with statutory requirements.
Our opinion is consistent with the additional report submitted
to the Board of Directors.
Basis for Opinion
We conducted our audit in accordance with good
auditing practice in Finland. Our responsibilities under good
auditing practice are further described in the Auditor’s
Responsibilities for the Audit of the Financial Statements section
of our report.
We are independent of the parent company and of
the group companies in accordance with the ethical requirements
that are applicable in Finland and are relevant to our audit, and
we have fulfilled our other ethical responsibilities in accordance
with these requirements.
In our best knowledge and understanding, the
non-audit services that we have provided to the parent company and
group companies are in compliance with laws and regulations
applicable in Finland regarding these services, and we have not
provided any prohibited non-audit services referred to in Article
5(1) of regulation (EU) 537/2014. We have not performed any other
services than auditing to the parent company or to any Group
companies.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Material uncertainty related to going
concern basis
We would like to draw attention to the section
Accounting Principles for consolidated financial statements - The
going concern assumption where the company’s management has
presented the main issues to assess the risks related to the going
concern assumption. The Group’s profit for the period was EUR -7.7
million and the company's liquidity was weak. The above-mentioned
events and conditions together with other matters disclosed in the
notes, indicate a degree of material uncertainty that may cast
significant doubt on the company's ability to continue as a going
concern. Our opinion has not been qualified by the matters
described above.
Key
audit
matters
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. The risks of material
misstatement referred to in the EU Regulation No 537/2014 point (c)
of Article 10(2) are included in the description of key audit
matters below.
We have also addressed the risk of management
override of internal controls. This includes a risk of whether
there was evidence of management bias that represented a risk of
material misstatement due to fraud.
|
THE KEY AUDIT MATTER |
HOW THE MATTER WAS ADDRESSED IN THE AUDIT |
|
Going Concern |
|
During the financial year 2022, the parent company’s and the
Group’s operating income has not developed as expected and the
liquidity was still low at the end of the financial year.
The consolidated cash flow from operating activities was negative
in the financial years 2021 and 2022.
Based on the assessment presented in the Financial
Statements and Directors’ Report, management of the company and the
Board of Directors believe that the going concern basis is
appropriate in preparing the financial statements. In the
notes to the financial statements and in the Report of the Board of
Directors, the management and the Board of Directors have
highlighted facts and circumstances to assess the going concern
risk. |
Our audit
procedures comprised evaluation of the company’s cash flow
forecast, order book and sufficiency of the financing. In addition,
we evaluated with company representatives about the future
development and outlook of the company’s operations. The
company’s ability to continue as a going concern is dependent on
the development of its operations and cash flows and on the
company’s ability to secure new funding. At the beginning of
2023, the company secured a financing facility that provides
additional funding also for 2023. The company has also been
negotiating new financing arrangements and commercial agreements
during the spring of 2023. In the opinion of the company's
management, these ensure the continuity of operations. Going
concern is a risk of material misstatement under Article 10(2)(c)
of EU Regulation 537/2014. |
|
Capitalised development costs,
EUR 1.8
million (refer to Accounting Principles
for consolidated financial statements and notes 6 and 12)
(refer to Accounting, measurement and accrual principles
for the parent company financial statements and note
12) |
|
At the balance sheet date of 31 December 2022, the capitalised
development costs were carried at EUR 1.8 million, which accounted
for 12 per cent of the consolidated total assets. The capitalized
development costs of the parent company totaled EUR 2.1 million,
representing 12 per cent of the parent company’s total assets. As
part of the accounting for development costs, management is
required to exercise judgment and make assumptions that affect
carrying values and amortisation methods. Development costs
have been tested for possible impairment. Valoe determines the
recoverable amounts in impairment testing based on value in use.
Value in use is calculated on discounted cash flow forecasts.
Determination of key assumptions underlying the forecasts requires
management’s judgement. The consideration is related to, e.g.,
income expectations, the market interest rate used for discounting
and the interest rate on borrowings. Due to management's judgment
related to the used forecasts, uncertainty estimation, and the
significance of balance sheet values, capitalized development costs
are a key consideration in the audit. |
We assessed the composition of development costs and the
capitalization criteria applied, original project plans and
discussed the changes in plans with the company’s management. Our
audit procedures also included agreeing the non- current asset
register to the general ledger, assessing the appropriateness of
the amortisation methods and testing amortisation accounting.
In addition, we discussed with company
representatives how development costs are monitored and accounted
for, assessed amortization and its timing. We analysed management
estimates and assumptions, upon which future cash flow forecasts
are based. The valuation of development costs is significantly
affected by the discount rate used by management in its
calculations and the future development of the business. We
performed audit procedures to examine the technical accuracy of the
calculations. Furthermore, we considered the appropriateness of the
disclosures provided in respect of developments costs and
impairment testing. Valuation of development expenditure is a risk
of material misstatement under Article 10(2)(c) of EU Regulation
537/2014. |
|
The measurement of the assets relating to the Lithuanian
factory, EUR
7.0
million (refer to the
Notes 14 and 15 to the Parent Company Income
Statement) |
|
At the balance sheet date of 31 December 2022, the the parent
company’s balance sheet included EUR 5.1 investment in the shares
of UAB Valoe Cells, the parent company’s subsidiary. In addition,
the parent company’s balance sheet included a total of EUR 1.9
million receivables in the non-current and current receivables.
Together, these assets represent 40% of the parent company's
balance sheet. The company has made financially and
commercially significant investments to establish cell production
at the Lithuanian plant. As the company's Board of Directors has
pointed out in the item "Risks related to financial position and
financing " of the Directors’ report, general global economic
uncertainty and international shortages of materials and components
have delayed the start-up of the Lithuanian plant. These
risks related to the business environment and the general
development of the global economy may continue to affect the
production and profitability of the Lithuanian plant in the
future. |
We assessed the management’s plans and forecasts relating to the
Lithuanian plant. In addition, we have reviewed the processes,
financial situation and controls related to the operations of the
Lithuanian plant and subsidiary. According to management's
assessment, demand for solar cell production capacity is expected
to remain high in the future, which will reduce the impairment risk
on these balance sheet items. The valuation of balance sheet items
related to the Lithuanian factory is a risk of material
misstatement under Article 10(2)(c) of EU Regulation 537/2014. |
Responsibilities of the Board of
Directors and the President and CEO for the Financial
Statements
The Board of Directors and the President and CEO
are responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the EU, and of financial statements that give a true and fair view
in accordance with the laws and regulations governing the
preparation of financial statements in Finland and comply with
statutory requirements. The Board of Directors and the President
and CEO are also responsible for such internal control as they
determine 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, the Board
of Directors and the President and CEO are responsible for
assessing the parent company’s and the group’s ability to continue
as going concern, disclosing, as applicable, matters relating to
going concern and using the going concern basis of accounting. The
financial statements are prepared using the going concern basis of
accounting unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no realistic
alternative but to do so.
Auditor’s Responsibilities for the Audit
of Financial Statements
Our objectives are to obtain reasonable
assurance on 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 good auditing practice will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of the
financial statements.
As part of an audit in accordance with good
auditing practice, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the financial statements, whether due to fraud or
error, design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. 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.
• 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 parent company’s
or the group’s internal control.
• Evaluate the appropriateness of accounting
policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of the Board
of Directors’ and the President and CEO’s use of the going concern
basis of accounting and based on the audit evidence obtained,
whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the parent company’s
or the group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures
in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However,
future events or conditions may cause the parent company or the
group to cease to continue as a going concern.
• Evaluate the overall presentation, structure
and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying
transactions and events so that the financial statements give a
true and fair view.
• Obtain sufficient appropriate audit evidence
regarding the financial information of the entities or business
activities within the group to express an opinion on the
consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
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 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 financial statements of the
current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation
precludes public disclosure about the matter or when, in extremely
rare circum-stances, 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.
OTHER REPORTING
REQUIREMENTS
Information on our audit
engagement
We were first appointed as auditors by the
Annual General Meeting on 17 February 2020, and our appointment
represents a total period of uninterrupted engagement of three
years.
Other Information
The Board of Directors and the President and CEO
are responsible for the other information. The other information
comprises the report of the Board of Directors and the information
included in the Annual Report, but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not
cover the other information.
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. With respect to the report of the Board of
Directors, our responsibility also includes considering whether the
report of the Board of Directors has been prepared in accordance
with the applicable laws and regulations.
In our opinion, the information in the report of
the Board of Directors is consistent with the information in the
financial statements and the report of the Board of Directors has
been prepared in accordance with the applicable laws and
regulations.
If, based on the work we have performed, 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.
In Hämeenlinna 27 April 2023
AUDITUS TILINTARKASTUS OYPublic Accountants
Mikko Riihenmäki
Authorised Public Accountant, KHT
In Mikkeli 27 April 2023
Valoe Corporation
Board of Directors
For more information:
Iikka Savisalo, President and CEO, Valoe Corporation Tel. +358
40 521 6082email: iikka.savisalo@valoe.com
Distribution:NASDAQ OMX, Helsinki Main media www.valoe.com
Valoe Corporation specializes in the clean energy, especially in
photovoltaic solutions. Valoe provides automated production
technology for solar modules based on the company’s own technology;
production lines for modules; solar modules and special components
for solar modules. Valoe's head office is located in Mikkeli,
Finland.
Grafico Azioni Valoe Oyj (LSE:0JQK)
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