| Property, Plant and Equipment | Property, Plant and Equipment Accounting Policy Owned Assets Property, plant and equipment is measured at cost, net of accumulated depreciation and any impairment losses. Cost includes expenditures that are directly attributable to the asset acquisition. The cost of self-constructed assets includes the cost of materials, direct labor, other costs directly attributable to make the asset available for its intended use, as well as relevant borrowing costs on qualifying assets as further described below. During their construction, property, plant and equipment are classified as construction in progress (“CIP”) and are not subject to depreciation. When the asset is available for use, it is transferred from CIP to the relevant category of property, plant and equipment and depreciation commences. Where particular parts of an asset are significant, discrete and have distinct useful lives, the Company may allocate the associated costs between the various components, which are then separately depreciated over the estimated useful lives of each respective component. Depreciation is calculated on a straight-line basis over the following estimated useful lives: Computer software and equipment 3 - 5 years Production equipment 5 - 10 years Furniture and fixtures 5 years Building and improvements 10 - 30 years Residual values, useful lives and depreciation methods are reviewed annually and changes are accounted for prospectively. Gains and losses on asset disposals are determined by deducting the carrying value from the sale proceeds and are recognized in profit or loss. The Company capitalizes borrowing costs on qualifying capital construction projects. Upon the asset becoming available for use, capitalization of borrowing costs ceases and depreciation commences on a straight-line basis over the estimated useful life of the related asset. Right-of-use leased assets Right-of-use assets are measured at cost, which is calculated as the amount of the initial measurement of lease liability plus any lease payments made at or before the commencement date, any initial direct costs and related restoration costs. The right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the useful life of the underlying asset. The depreciation is recognized from the commencement date of the lease. If the right-of-use asset is subsequently leased to a third party (a “sublease”), the Company will assess the classification of the sublease as to whether it is a finance or operating lease. Subleases that are classified as an operating lease will recognize lease income while a finance lease will recognize a lease receivable and derecognize the carrying value of the right-of-use asset, with the difference recorded in profit of loss. Impairment of property, plant and equipment The Company assesses impairment of property, plant and equipment when an impairment indicator arises (e.g. change in use or discontinued use, obsolescence or physical damage). When the asset does not generate cash inflows that are largely independent of those from other assets or group of assets, the asset is tested at the cash generating unit (“CGU”) level. In assessing impairment, the Company compares the carrying amount of the asset or CGU to the recoverable amount, which is determined as the higher of the asset or CGU’s fair value less costs of disposal and its value-in-use. Value-in-use is assessed based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects applicable market and economic conditions, the time value of money and the risks specific to the asset. An impairment loss is recognized whenever the carrying amount of the asset or CGU exceeds its recoverable amount and is recorded in the consolidated statements of loss and comprehensive loss. The following summarizes the carrying values of property, plant and equipment for the periods reflected: March 31, 2024 March 31, 2023 Cost Accumulated depreciation Impairment Net book value Cost Accumulated depreciation Impairment Net book value Owned assets Land 43,914 — — 43,914 52,077 — (1,820) 50,257 Buildings 242,052 (97,885) (300) 143,867 239,353 (83,888) (3,842) 151,623 Construction in progress 26,330 — (645) 25,685 37,563 — (11,945) 25,618 Computer software & equipment 31,333 (30,135) — 1,198 31,313 (29,570) (20) 1,723 Furniture & fixtures 7,900 (6,444) — 1,456 7,434 (5,596) (42) 1,796 Production & other equipment 154,042 (106,370) (202) 47,470 146,960 (87,425) (1,686) 57,849 Total owned assets 505,571 (240,834) (1,147) 263,590 514,700 (206,479) (19,355) 288,866 Right-of-use leased assets Land 13,890 (1,601) — 12,289 14,859 (1,345) (969) 12,545 Buildings 37,252 (16,640) (2,512) 18,100 36,789 (15,836) — 20,953 Production & other equipment 5,290 (4,945) — 345 5,343 (4,738) — 605 Total right-of-use lease assets 56,432 (23,186) (2,512) 30,734 56,991 (21,919) (969) 34,103 Total property, plant and equipment 562,003 (264,020) (3,659) 294,324 571,691 (228,398) (20,324) 322,969 The following summarizes the changes in the net book values of property, plant and equipment for the periods presented: Balance, March 31, 2023 Additions Additions from business combinations Disposals Other (1) Depreciation Impairment Foreign currency translation Balance, March 31, 2024 Owned assets Land 50,257 — 1,497 — (7,779) — — (61) 43,914 Buildings 151,623 1,168 — (212) 3,435 (12,397) (300) 550 143,867 Construction in progress 25,618 10,239 — (2,137) (7,760) (145) (645) 515 25,685 Computer software & equipment 1,723 313 — (26) (12) (797) — (3) 1,198 Furniture & fixtures 1,796 407 — (11) 159 (883) — (12) 1,456 Production & other equipment 57,849 3,026 — (1,232) 4,340 (16,325) (202) 14 47,470 Total owned assets 288,866 15,153 1,497 (3,618) (7,617) (30,547) (1,147) 1,003 263,590 Right-of-use leased assets Land 12,545 — — — — (255) — (1) 12,289 Buildings 20,953 5,232 298 (2,355) (388) (3,098) (2,512) (30) 18,100 Production & other equipment 605 87 — (68) — (277) — (2) 345 Total right-of-use lease assets 34,103 5,319 298 (2,423) (388) (3,630) (2,512) (33) 30,734 Total property, plant and equipment 322,969 20,472 1,795 (6,041) (8,005) (34,177) (3,659) 970 294,324 (1) Includes reclassification of construction in progress cost when associated projects are complete and transfers to assets held for sale (Note 11). Balance, June 30, 2022 Additions Additions from business combinations Disposals Other (1) Depreciation Impairment Foreign currency translation Balance, March 31, 2023 Owned assets Land 13,127 — 21,770 — 16,609 — (1,820) 571 50,257 Real estate 96,804 840 52,350 — 15,467 (9,774) (3,842) (222) 151,623 Construction in progress 25,092 5,322 1,134 (36) 5,135 — (11,945) 916 25,618 Computer software & equipment 3,161 710 — — (867) (1,284) (20) 23 1,723 Furniture & fixtures 2,681 37 — — (874) (46) (42) 40 1,796 Production & other equipment 60,462 1,662 17,633 (1,989) (1,808) (16,942) (1,686) 517 57,849 Total owned assets 201,327 8,571 92,887 (2,025) 33,662 (28,046) (19,355) 1,845 288,866 Right-of-use leased assets Land 6,251 — — (29) 7,580 (291) (969) 3 12,545 Real estate 25,044 57 — (6,553) 5,363 (3,155) — 197 20,953 Production & other equipment 843 498 — (182) (72) (495) — 13 605 Total right-of-use lease assets 32,138 555 — (6,764) 12,871 (3,941) (969) 213 34,103 Total property, plant and equipment 233,465 9,126 92,887 (8,789) 46,533 (31,987) (20,324) 2,058 322,969 (1) Includes reclassification of construction in progress cost when associated projects are complete and transfers to assets held for sale (Note 11). Depreciation relating to manufacturing equipment and production facilities for owned and right-of-use leased assets is capitalized to inventory and is expensed to cost of sales upon the sale of goods. During the year ended March 31, 2024, the Company recognized $34.2 million (nine months ended March 31, 2023 – $31.6 million) of depreciation expense of which $20.1 million (nine months ended March 31, 2023 – $14.5 million) was reflected in cost of sales. On July 21, 2023, the Company entered into an agreement to sell its Aurora Sun facility in Medicine Hat, Alberta and related assets and liabilities to Bevo through the sale of one of the Company’s wholly-owned subsidiaries (the “Aurora Sun Transaction”). Up to $15.0 million could be payable over time by Bevo to the Company in connection with the Aurora Sun Transaction, based on Bevo successfully achieving certain financial milestones at the Aurora Sun Facility. If certain other operational and financial milestones are met, up to an additional $1.0 million could be payable by Bevo to Aurora. The Company recognized the transfer of net assets to Bevo at cost and recorded an increase in non-controlling interest equal to the non-controlling interest’s proportionate share of the carrying value of the net assets transferred at $12.2 million with a corresponding decrease to deficit on the consolidated statements of financial position. Impairments The Company reviews the carrying value of its property, plant and equipment at each reporting period for indicators of impairment. During the year ended March 31, 2024, Management noted indicators of impairment at the asset specific level, the cash generating unit (“CGU”) level and the operating segment level which are discussed below. (a) Asset Specific Impairments Year Ended March 31, 2024 During the year ended March 31, 2024, the Company recorded an impairment loss of $1.4 million during the transfer of certain assets to assets held for sale ( Note 11 ). The impairment loss was recorded as impairment to property, plant and equipment in the consolidated statements of loss and comprehensive loss and allocated to the cannabis operating segment (Note 27). Nine Months Ended March 31, 2023 During the year ended June 30, 2022, the Company entered into a share purchase agreement (the “Agreement”) to sell 2105657 Alberta Ltd., a wholly-owned subsidiary which owns the Aurora Sun facility located in Alberta. The assets and liabilities of the subsidiary were reclassified to assets and liabilities held for sale (Note 12) following the execution of the Agreement. The closing of the transaction was subject to certain standard closing conditions for both parties. During the nine months ended March 31, 2023, the Company gave notice to terminate the agreement due to the prospective buyer’s failure to fulfill closing conditions and subsequently sold the facility to Bevo. The net book value of the facility while classified as held for sale was $34.4 million, the fair value of the facility based on FVLCD at the time of reclassification to property, plant, and equipment (Note 10) was $29.1 million. The reduction of $5.3 million was recognized as an impairment of property, plant and equipment in the consolidated statements of loss and comprehensive loss. The impairment loss was allocated to the former Canadian cannabis operating segment (Note 27), now cannabis operating segment. During the nine months ended March 31, 2023, the Company recorded an impairment loss of $2.9 million for its Aurora Nordic facility located in Denmark, due to a number of operational and regulatory challenges, which are indicators of impairment as at March 31, 2023. The impairment loss was based on FVLCD of nil as at March 31, 2023. In addition, there were impairments to related ROU assets in the amount of $1.0 million recognized as impairment to property, plant and equipment in the consolidated statements of loss and comprehensive loss. The impairment loss was allocated to the European cannabis operating segment (Note 27). On May 24, 2023, the Company formally made the decision to close its Aurora Nordic facility. During the nine months ended March 31, 2023, the Company recorded an impairment loss of $4.3 million for its Growery facility located in the Netherlands, due to regulatory and financial uncertainty and other commercial factors which are indicators of impairment as at March 31, 2023. The impairment loss was based on FVLCD of $6.5 million as at March 31, 2023 and allocated the European cannabis operating segment (Note 27). The fair value of the facility was determined based on a third-party appraisal. On June 13, 2023, the Company formally made the decision to exit the agreement with Growery. During the nine months ended March 31, 2023, the Company recorded an impairment loss of $2.5 million for its R&D facility located in the Netherlands, due to regulatory and financial uncertainty and other commercial factors which are indicators of impairment as at March 31, 2023. The impairment loss was based on FVLCD of $2.3 million as at March 31, 2023 and allocated the European cannabis operating segment (Note 27). Additionally, there were other individually immaterial specific asset impairment losses identified totaling $2.5 million, recognized in impairment of property, plant and equipment in the consolidated statements of loss and comprehensive loss. As at March 31, 2023, the fair value less costs to dispose of these assets were determined to be nil. (b) CGU and Operating Segment Impairments Year Ended March 31, 2024 During the year ended March 31, 2024, the Company recognized impairment losses within its cannabis operating segment and Canadian CGU, and allocated impairment losses of $2.8 million to property, plant and equipment based on their recoverable amounts valued at FVLCD. Nine Months Ended March 31, 2023 |
