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                 Premier Capital Plc

Report and financial statements

 

31 December 2021

 

Contents

 

                                                                                                                                                                    

Directors, officer and other information

 

Directors’ report

 

Statements of directors’ responsibilities

 

Corporate governance statement

 

Statements of profit or loss and other comprehensive income

 

Statement of financial position

 

Statements of changes in equity

 

Statements of cash flows

 

Notes to the financial statements

 

Independent auditor’s report

 

Directors, officer and other information

 

 

Directors:                                                         Carmelo ( sive ) Melo Hili

                                                                           Massimiliano Eugenio Lupica

                                                                           Karen Pace

                                                                           Victor Tedesco

                                                                           Valentin-Alexandru Truta

                                                                           Dorian Desira

                                                                           Claudine Cassar

                                                                          

Secretary:                                                         Geoffrey Camilleri

 

Registered office:                                            Nineteen Twenty Three,

                                                                           Valletta Road,

                                                                           Marsa MRS 3000,

                                                                           Malta

 

Country of incorporation:                             Malta

 

Company registration

number:                                                            C 36522

 

Auditor:                                                             Grant Thornton

                                                                           Triq l-Intornjatur, Zone 1

                                                                           Central Business District

                                                                           Birkirkara CBD1050

                                                                           Malta

 

Principal bankers:                                          BRD – Groupe Societe Generale S.A.,

                                                                           1-7 Ion Mihalache Boulevard,

                                                                           Sector 1, Bucharest 011171,

                                                                           Romania

 

                                                                           Luminor Bank AS

                                                                           12 Skanstes Street,

                                                                           Riga LV-1013

                                                                           Republic of Latvia

 

                                                                           EUROBANK S.A.

                                                                           8 Othonos str, 105 57

                                                                           Athens

 

 

Directors’ report

Year ended 31 December 2021

 

The directors present their report and the audited financial statements of the Group and Holding Company for the year ended 31 December 2021.

 

Principal activities

 

The Group is engaged in the operations of McDonald’s restaurants in Estonia, Greece, Latvia, Lithuania, Malta and Romania.

 

The Holding Company acts as an investment company and service provider to its subsidiary undertakings.

 

Performance review

 

The Group registered an increase in revenue from Eur318,955,348 in 2020 to Eur405,408,430 or an increase of 27.1% over prior year.  The first months of 2021 still kicked off in an environment of uncertainty and volatility.  Along the year, Management kept managing the downside and upside elements of risk posed by the changes in landscape along the year.  The Group maintained a commitment towards its investment strategy and along the year increased its footprint by 7 restaurants.

 

During the year under review, the Group registered an operating profit of Eur44,402,748 increasing from Eur25,979,044 in 2020.  After accounting for investment income and finance costs, the Group registered a pre-tax profit of Eur38,509,633 as opposed to Eur19,003,883 in prior year. 

 

The Group’s net assets as at 31 December 2021 amounted to Eur68,709,889 (2020 – Eur53,003,419 ) .

 

During the year under review, the Holding Company registered an operating loss of Eur5,105,516 (2020 – Eur4,080,828).   After accounting for investment income and finance costs, the Holding Company registered a pre-tax profit of Eur18,067,946 (2020 – Eur14,737,872 ). 

 

The net assets of the Holding Company at the end of the year under review amounted to Eur44,196,423 (2020 – Eur 43,899,557 ).

 

The Group measures the achievement of its objectives through the use of the following other key performance indicators:

 

Financial Performance

 

The Group’s current ratio (current assets divided by current liabilities), has increased from 95.0% at the end of 2020 to 108.4% at the end of 2021.  The Group uses this indicator as a measure of liquidity. 

 

The Group calculates the level of its free cash flow by reference to the net cash generated from operating activities less capital expenditure.  The Group’s free cash flow at year end amounted to Eur49,487,478 as opposed to a free cash flow of Eur28,275,599 at the end of the preceding year.  This indicator measures how well the Group turns profit into cash through the management of working capital and a disciplined approach to capital expenditure.

 

The Group measures its performance based on EBITDA.  EBITDA is defined as the Group profit before net investment income and finance costs, taxation, depreciation and amortisation.  During the year under review, EBITDA increased by 33.8% to Eur68,954,183 from Eur51,536,922 , whereas the Group’s EBITDA margin increased from 16.2% to 17.0% .

 

During the year under review, the interest cover of the Group decreased from 6.69 times to  9.00 times. The interest cover represents the EBITDA divided by the net interest costs.

 

The debt to equity ratio of the Group is monitored on a continuous basis.  This ratio decreased to  1.30 times at the end of the year as opposed to 1.82 times in 2020.  This indicator is computed by dividing the total interest-bearing debt excluding bank overdrafts by the total equity of the Group.

 

The gearing ratio of the Group decreased to 56.6% at the end of the year as opposed to 64.7% in 2020.

 

Non-financial Performance

 

Customer satisfaction is monitored throughout the year via customer feedback portal that the Group operates in all the markets, whereby results are available online and reviewed regularly by management at the market level.

 

The average number of employees increased from 8,726 to 9,211 during the year.  The Group runs a number of employee surveys to monitor employee satisfaction and commitment. Having high quality teams in place is essential to attain the Holding Company’s business objectives.

 

Market Performance

 

Overall Group revenue increased by 27.1% compared to 2020, with all markets within the Group experiencing very significant improvement following the business disruption in 2020.  The market reporting the highest impact was Greece which registered a relative increase of 38%.  Romania was the second territory which increased by 30% while Baltics and Malta both registered a 19% increment.

 

Review of the Business and Outlook

 

Restaurants Portfolio

 

During the year under review, the Group continued to grow its portfolio, bringing up the total number of restaurants it operates to 166 by the end of the year (2020 – 159 ). Of these restaurants, 92 are operated in Romania, 40 in the Baltic States, 25 in Greece and 9 in Malta.

 

Future Outlook

 

Though the severity of the impact of the COVID-19 pandemic is expected to be lower in 2022 than what it was in 2020 and 2021, the directors keep monitoring the situation and have now tried and tested back-up plans for immediate action to safeguard the interests of the Group and its stakeholders.

 

Though the conflict and the resulting humanitarian crisis in Ukraine has heightened the level of instability in the current economic climate, the directors consider the going concern assumption in the preparation of these financial statements as appropriate as at the date of authorisation and believes that no material uncertainty that may cast significant doubt about the company's and the Group’s ability to continue as a going concern exists as at that date.

 

In June 2021, the intergovernmental Financial Action Task Force (FATF) placed Malta on its so-called grey list of jurisdictions under increased monitoring.  Though this has not led to any immediate and direct impact on the Group, the directors keep monitoring the situation to be able to act immediate in order to safeguard the interest of the Group and its stakeholders.

 

Principal risks and uncertainties

 

The successful management of risk is essential to enable the Group to achieve its objectives. The ultimate responsibility for risk management rests with the Group’s directors, who evaluate the Group’s risk appetite and formulate policies for identifying and managing such risks.  The principal risks and uncertainties facing the Group are included below:

 

(a) Market and competition        

The Group operates in a highly competitive environment and faces competition from various other entities.  Technological developments also have the ability to create new forms of quickly evolving competition. An effective, coherent and consistent strategy to respond to competitors and changing market enables the Group to sustain its market share and its profitability.  The Group continues to focus on service quality and performance in managing this risk.

 

(b) Legislative risks         

The Group is subject to numerous laws and regulations covering a wide range of matters.  Failure to comply could have financial or reputational implications and could materially affect the Group’s ability to operate.  The Group has embedded operating policies and procedures to ensure compliance with existing legislation.       

 

(c) Talent and skills         

Failure to engage and develop the Group’s existing employees or to attract and retain talented employees could hamper the Group’s ability to deliver in the future.  The Group invests continuously in training its employees and undertakes regular reviews of the Group’s resource requirements.           

 

(d) Economic and market environment    

Economic conditions have been, and still remain, challenging in recent years across the markets in which the Group operates.  A significant economic decline in the informal eating out segment could impact the Group’s ability to continue to attract and retain customers.  Demand for the Group’s products can be adversely affected by weakness in the wider economy which are beyond the Group’s control.  This risk is evaluated as part of the Group’s annual strategy process covering the key areas of investment and development and updated regularly throughout the year.  The Group continues to make significant investment in innovation. The Group regularly reviews its pricing structures to ensure that its products are appropriately placed within the markets in which it operates.        

 

(e) Brand and reputation risk      

Damage to the Group’s reputation could ultimately impede the Group’s ability to execute its corporate strategy.  To mitigate this risk, the Group strives continually to build its reputation through a commitment to sustainability, transparency, effective communication and best practices.  The Group works to develop and maintain its brand value.              

 

(f) Technology and business interruption

The Group relies on information technology in all aspects of its business. In addition, the services that the Group offers to its customers are reliant on complex technical infrastructure.  A failure in the operation of the Group’s key systems or infrastructure could cause a failure of service to its customers, thus negatively impacting its brand, and increased costs.  The Group makes significant investment in technology infrastructure to enable it to continue to support the growth of its business and has a robust selection and monitoring process of third-party providers.     

 

(g) Supply chain

Supply chain relies on a number of McDonald’s approved suppliers for the provision of its supplies.  A significant disruption in terms of timing and/or pricing within the supply chain could adversely affect the Group’s ability to deliver products and services to its customers.  A robust supplier selection process is in place and operated by McDonald’s globally, with appropriate ongoing management and monitoring of key suppliers.     

 

(h) Customer service      

The Group’s revenues are at risk if it does not continue to provide the level of service expected by its customers.  The Group’s commitment to customers is embedded in its values.  The relevant employees undertake intensive training programmes to ensure that they are aware of, and abide by, the levels of service that are required by the Group’s customers.

 

(i) Political risk

The Group operates in many countries with differing economic, social and political conditions, which could include political unrest, strikes and other forms of instability.  Changes in these conditions may adversely affect the Group’s business, results of operations, financial conditions or prospects.  The Group adapts to such risks by incorporating this risk into its business strategy.

 

(j) Significant judgements and estimates

Note 3 to the financial statements provides details in connection with the inherent uncertainties that surround the preparation of the financial statements and which require significant estimates and judgements.

 

(k) Contingent liabilities 

Note 34 to the financial statements provides details in connection with the Group’s contingent liabilities.

 

Financial risk management

 

Note 36 to the financial statements provides details in connection with the Group’s use of financial instruments, its financial risk management objectives and policies and the financial risks to which it is exposed.   

 

Non-Financial Statement

 

Environmental matters

The Group is committed to environmental responsibility, and all subsidiaries within the Group has a role to play in living up to that commitment.  Efforts are put on areas where the Group can have significant impact on critical environmental issues, including climate change, natural resource conservation and waste management.  The Group invests in innovations that can improve our environmental footprint, besides collaborating with other organizations to raise environmental awareness and work with key suppliers to promote environmentally responsible practices in their operations.

 

The Group feels that it is its duty to operate as part of the local community in order to keep the countries, where we operate, tidy.  Initiatives taken up by the Group companies include placing bins outside all of our restaurants and encourage customers to use them, and collaboration with local communities in taking part in various cleaning activities in the cities and towns we are located.  Subsidiaries within the Group are enrolled in local programmes for waste collection, separation and recycling of waste and also collection of used oil which is then recycled into biodiesel.

 

In terms of energy efficiency, the Group’s strategy is to implement innovative solutions while driving improvements on a continuous basis. This involves implementing modern technology in most of the Group’s new and remodelled restaurants, with the installation of energy management systems and the use of energy efficient equipment and LED lighting.

 

McDonald’s suppliers are also responsible for managing, measuring and minimizing the environmental impact of their facilities, with specific focus on air emissions, waste reduction, recovery and management, water use and disposal, and greenhouse gas emissions.  By the year 2025, McDonald’s is committed that all of its restaurants will provide options for recycling or sorting of guest packaging and 100% of consumer packaging will come from renewable, recycled, and certified sources.

 

Employee matters

The Group provides opportunity, nurtures talent, develops leaders and rewards achievement.  The Group believes that a team of individuals with diverse backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement, is essential to its continuing business success.  Performance evaluation systems are employed across the Group, using multistage training systems to monitor individual’s development and set training requirements.

 

Each of the Group’s employees deserves to be treated with fairness, respect and dignity, providing equal opportunity for employees and applicants.  All of the Group’s employees have the right to work in a place that is free from harassment, intimidation or abuse, sexual or otherwise, or acts or threats of physical violence.  It is committed to diversity and equal opportunities for everyone, respecting the unique attributes and perspectives of every employee, and rely on these diverse perspectives to help the Group build and improve the relationships with customers and business partners.  The Group embraces the diversity of its employees, customers and business partners, and work hard to make sure everyone within the Group feels welcome.

 

The Group provides equal treatment and equal employment opportunity without regard to race, colour, religion, sex, age, national origin, disability, sexual orientation, gender identity or any other basis protected by law.  In addition, it is committed to providing a safe and healthful working environment for its employees, requiring all employees to abide by safety rules and practices and to take the necessary precautions to protect themselves and their fellow employees.  For everyone’s safety, employees must immediately report accidents and unsafe practices or conditions to their immediate supervisors.

 

Social Matters

McDonald’s has a long, proud tradition of giving back to local communities.  As one of the leaders in social responsibility, the Group has a positive influence on its neighbourhoods, people and environment.  The Group donate thousands of euros to charitable organizations in the markets it operates, particularly those that address the needs of children.  The local chapters of the Ronald McDonald House Charities (RMHC) have a special place in the Group’s philanthropy.  Each year, the restaurants within the Group raise thousands of euros for RMHC and other children’s causes to help defray RMHC’s general and administrative costs and certain other costs it would otherwise incur to raise funds and deliver program services.

 

Respect for human rights

The Group conducts its activities in a manner that respects human rights, taking the responsibility seriously to act with due diligence to avoid infringing on the human rights of others and addressing any impact on human rights if they occur.  The Group’s commitment to respect human rights is defined in the code of business conduct, which applies to all employees of the Group, and within the McDonald’s supplier code of conduct applying to all McDonald’s suppliers globally.

 

The Group is committed to provide a safe work environment that fosters respect, fairness and dignity.  Group employees are trained annually on the standard of business conduct.

 

Within the McDonald’s system, suppliers are expected to conduct their activities in a manner that respects fundamental rights for all people.  They should employ workers who are legally authorized to work in their location and facility.  Suppliers do not use any form of slave, forced, bonded, indentured or involuntary prison labour, do not engage in human trafficking or exploitation, nor import goods tainted by slavery or human trafficking. 

 

Anti-corruption and bribery matters

The Group’s employees must comply with the Group Code of Conduct and Whistle-blower Policy to ensure that all employees are discouraged from any corrupt practices or bribery as well as are incentivized to report any such activities in a direct line with the responsible Group supervisor, without fearing reprisals.  Every employee is introduced to these policies upon employment and are mandatory to be adhered to it.

 

The Group prohibits all forms of bribery or kickbacks as detailed in the Code of Conduct.  All employees, representatives and business partners must fully comply with anti-bribery legislation.  To comply with the Group policy and anti-bribery laws, no employee should ever offer, directly or indirectly, any form of gift, entertainment or anything of value to any government official or his or her representatives.

 

The Group is committed to complying with the applicable laws in all countries where it does business.  It adopts a Global Anti-Corruption Policy which sets forth its commitment to ensuring that it carries out business in an ethical manner and abides by all applicable anti-bribery and anti-corruption laws in the countries in which it operates by, among other things, prohibiting the giving or receiving of improper payments in the conduct of McDonald’s business, and by discouraging such behaviour by its business partners.

 

Business Model

 

The Group operates the McDonald’s brand, which is considered as the largest quick-service-restaurant chain in the world.  The business model, depicted in the “three-legged stool” of operators, suppliers and employees, is its foundations, and the balance of interest among the three groups is essential to the Group’s success.  The strength of the alignment among the companies within the Group, its suppliers, and employees has been key to the Group’s success.  This business model enables the Group to consistently deliver locally relevant restaurant experiences to customers and be an integral part of the communities it serves.  In addition, it facilitates its ability to identify, implement and scale innovative ideas that meet customer’s changing needs and preferences.  The Group adopts McDonald’s operations principles, which are designed to assure consistency and high quality at every restaurant.

 

Results and dividends

 

The results for the year ended 31 December 2021 are shown in the statements of comprehensive income.  The Group’s profit for the year after taxation was Eur34,303,476 (2020 – Eur17,657,988 ), whilst the Holding Company’s profit for the year after taxation was Eur18,152,252 (2020 Eur14,905,094).  During the year, the directors declared an interim dividend of Eur17,850,000.   The directors do not recommend the payment of a final dividend.

 

Events after the end of the reporting period

 

The Board of Directors of Premier Capital plc is actively following the conflict and the resulting humanitarian crisis in Ukraine.  While the Group has no direct interest vested in the country, it is monitoring the effects of the situation on its operations in neighbouring countries Romania and the Baltics.  Inflationary pressures, supply chain disruption and heightened utility costs are presently being experienced by certain operations within the Group.  It is challenging to quantify and differentiate what extent of such pressures emanate from the unrest in Ukraine and the concurrent Covid-induced events but the compounded effect on the footprint of managed restaurants is potentially material.  The Group’s projections continue to show stable performance despite the uncertainty of the current state of affairs on its operations and it remains vigilant in monitoring restrictions on the conduct of business with sanctioned entities and individuals.

 

After reporting date, the following material transactions materialised:

 

             i.      Repayment from parent company of short-term loan of Eur16,000,000

            ii.      Repayment of bank borrowings at Baltics level of Eur6,612,146

 

Likely future business developments

 

While remaining cautiously optimistic in view of the post-balance sheet events explained above, the directors consider the Group is well placed to sustain a satisfactory level of activity in the foreseeable future .

 

Directors

 

The directors who served during the period were:

 

Carmelo ( sive ) Melo Hili (Chairman)

Dorian Desira (appointed on 4 th January 2021)

Claudine Cassar (appointed on 6 th August 2021)

Massimiliano Eugenio Lupica

Karen Pace

Victor Tedesco

Valentin-Alexandru Truta

 

In accordance with the Holding Company’s articles of association all the directors are to remain in office.

 

Going Concern

 

After reviewing the Group’s and Holding Company’s budget for the next financial year, and other longer term plans, the directors are satisfied that, at the time of approving the financial statements, it is appropriate to adopt the going concern basis in preparing the financial statements.

 

Auditors

 

A resolution to reappoint Grant Thornton as auditor of the company will be proposed at the forthcoming Annual General Meeting.

 

 

Signed on behalf of the Group's Board of Directors on 28 April 2022 by Carmelo (sive) Melo Hili (Chairman) and Victor Tedesco (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Group Financial Statements 2021.

 

 

Statement of directors’ responsibilities

Year ended 31 December 2021

 

The directors are required by the Companies Act (Cap. 386) to prepare financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (EU), which give a true and fair view of the state of affairs of the Holding Company and its Group at the end of each financial year and of the profit or loss of the Holding Company and its Group for the year then ended.  In preparing the financial statements, the directors should:

 

§   adopt the going concern basis unless it is inappropriate to presume that the Holding Company and the Group will continue in business;

§   select suitable accounting policies and then apply them consistently;

§   make judgements and estimates that are reasonable and prudent;

§   account for income and charges relating to the accounting period on the accruals basis;

§   value separately the components of asset and liability items; and

§   report comparative figures corresponding to those of the preceding accounting period.

 

The directors are responsible for ensuring that proper accounting records are kept which disclose with reasonable accuracy at any time the financial position of the Holding Company and the Group and which enable the directors to ensure that the financial statements comply with the Companies Act (Cap. 386).  This responsibility includes designing, implementing and maintaining such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.  The directors are also responsible for safeguarding the assets of the Holding Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Statement of responsibility pursuant to the Capital Markets Rules issued by the Malta Financial Services Authority (MFSA)

 

We confirm that to the best of our knowledge:

 

a.

In accordance with the Capital Markets Rules, the financial statements give a true and fair view of the financial position of the Holding Company and its Group as at 31 December 2021 and of their financial performance and cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the EU; and

 

b.

In accordance with the Capital Markets Rules, the Directors’ report includes a fair review of the performance of the business and the position of the Issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

 

 

Signed on behalf of the Group's Board of Directors on 28 April 2022 by Carmelo (sive) Melo Hili (Chairman) and Victor Tedesco (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Group Financial Statements 2021.

 

 

Corporate governance statement

 

Introduction

 

Pursuant to the Capital Markets Rules as issued by the Malta Financial Services Authority (MFSA), Premier Capital p.l.c (the ‘Company’) is hereby reporting on the extent of its adoption of the Code of Principles of Good Corporate Governance (the ‘Code’) contained in Appendix 5.1 of the Capital Markets Rules.

 

The Board acknowledges that the Code does not dictate or prescribe mandatory rules but recommends principles of good practice.  Nonetheless, the Board strongly believes that the Code is in the best interest of the shareholders and other stakeholders since it ensures that the Directors, Management and employees of the Group adhere to internationally recognised high standards of corporate governance.

 

The Group currently has a corporate decision-making and supervisory structure that is tailored to suit the Group’s requirements and designed to ensure the existence of adequate checks and balances within the Group, whilst retaining an element of flexibility, particularly in view of the size of the Group and the nature of the its business.  The Group adheres to the Code, except for those instances where there exist particular circumstances that warrant non-adherence thereto, or at least postponement for the time being.

 

Additionally, the Board recognises that, by virtue of Listing Rule 5.101, the Company is exempt from making available the information required in terms of Capital Markets Rules 5.97.1 to 5.97.3; 5.97.6 and 5.97.8.

 

The Board of Directors

 

The Board of Directors of the Company is responsible for the overall long-term direction of the Group, in particular in being actively involved in overseeing the systems of control and financial reporting and that the Group communicates effectively with the market.

 

The Board of Directors meets regularly and is currently composed of six members, two of which are completely independent from the Company or any other related companies.

 

Executive Directors

Mr. Victor Tedesco

 

Non-Executive Directors

Mr. Carmelo ( sive ) Melo Hili (Chairman)

Ms. Karen Pace

Mr. Valentin - Alexandru Truta

Mr. Dorian Desira

 

Independent Non-Executive Directors

Ms. Claudine Cassar

Mr. Massimiliano Eugenio Lupica

 

The Board Meetings are attended by the Chief Financial Officer of the Group in order for the Board to have direct access to the financial operation of the Group.  This is intended to, inter alia, ensure that the policies and strategies adopted by the Board are effectively implemented.

 

The remuneration of the Board is reviewed periodically by the shareholders of the Company.

 

The Company ensures that it provides directors with relevant information to enable them to effectively contribute to board decisions.

 

The directors are fully aware of their duties and obligations, and whenever a conflict of interest in decision making arises, they refrain from participating in such decisions.

 

Audit Committee

 

The Terms of Reference of the Audit Committee, which were approved by the Malta Financial Services Authority (MFSA), are modelled on the principles set out in the Capital Markets Rules.  The Audit Committee assists the Board in fulfilling its supervisory and monitoring responsibility by reviewing the Group financial statements and disclosures, monitoring the system of internal control established by management as well as the audit processes.

 

The Board of Directors established the Audit Committee, which meets regularly and is currently composed of the following individuals:

 

Mr Massimiliano Lupica (Chairman)

Ms. Claudine Cassar

Ms. Karen Pace

 

This satisfies the requirement established by the Capital Markets Rules that the Audit Committee is composed of non-executive directors, the majority of which being independent.

 

The Board considers Ms. Karen Pace, to be competent in accounting and/or auditing in terms of the Capital Markets Rules.  Furthermore, the Board considers that the Audit Committee, as a whole, to have relevant competence in the sector the Company is operating.

 

The Audit Committee met six times during the year 2021.  Communication with and between the company secretary, top level management and the Committee is ongoing and considerations that required the Committee’s attention are acted upon between meetings and decided by the members (where necessary) through electronic circulation and correspondence.

 

Internal Control

 

While the Board is ultimately responsible for the Group’s internal controls as well as their effectiveness, the executive responsibility for the running of the Company’s business is vested in the Chief Executive Officer who reports directly to the Board.

 

The Group’s system of internal controls is designed to manage all the risks in the most appropriate manner.  However, such controls cannot provide an absolute elimination of all business risks or losses.  Therefore, the Board, inter alia, reviews the effectiveness of the Group’s system of internal controls in the following manner:

 

Reviewing the Group’s strategy on an on-going basis as well as setting the appropriate business objectives in order to enhance value for all stakeholders;

 

Implementing an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve Group objectives;

 

Appointing and monitoring the Chief Executive Officer whose function is to manage the operations of the Group;

 

Identifying and ensuring that significant risks are managed satisfactorily; and

 

Company policies are being observed.

 

 

 

Corporate Social Responsibility

 

The Board is mindful of and seeks to adhere to sound principles of Corporate Social Responsibility in daily management practices, which is also extended throughout the Company’s subsidiaries.  There is continuing and consistent commitment to operate the business ethically at all times, while contributing to economic development and improving the quality of life of staff and their families with the local community and society at large.

 

The subsidiary companies in Estonia, Latvia, Lithuania, Malta and Romania organise an annual ‘McHappy Day’ programme of events held over one month to fundraise for charity.  In Latvia, Malta and Romania, proceeds from McHappy Day go to the Ronald McDonald House Charities Chapters (of which the subsidiaries are founding mission partners).  In Estonia and Lithuania, funds are donated to children’s and family charities.  Throughout the year, a nominal amount is also donated from every ‘Happy’ meal to the same causes.  The total proceeds collected in 2021 in the five markets during McHappy Day was Eur494,015 .  In Greece, a number of corporate responsibility and charitable initiatives take place each year, including donations to children’s residential homes and support of environmental projects.

 

The Latvia chapter of RMHC operates a state-of-the-art Mobile Care clinic which tours the country providing medical services to children in poorly served areas.  It provides a range of medical services including ophthalmology, treatment for asthma and neurology in partnership with a team of more than 30 medical professionals.  Working closely with the Children’s Clinical University Hospital of Latvia, the Ministry of Health and the Latvian Union of Municipalities, the mobile clinic travels the Latvian countryside daily.  In total, 4,457 medical consultations were carried out in 2021 in 40 locations and since 2010, the charity has provided free medical exams to more than 47,000 Latvian children.

 

In Malta, RMHC operates a 360-square metre Learning Centre with a mission to safeguard the well-being of children or young people in need of education support.  The centre features training rooms, activity areas and a learning kitchen for children and teens with learning or social challenges, as well as their families. More than 145 children and young people benefitted from programmes while 214 sessions and activities were held at the premises in 2021, for a total of 809 session hours.  RMHC has made the Learning Centre available to 16 small partner charities and NGOs which do not operate premises of their own.  RMHC’s partners include the Autism Parents Association, ADHD Malta, anti-bullying charity bBrave, the Service Dogs Foundation, Caritas Malta, mental health charity Richmond Foundation, Smiling with Jerome (a cancer patient support organisation), the National Literacy Agency, and the University of Malta’s Department of Counselling.

 

RMHC in Romania operates two Ronald McDonald Houses offering free accommodation to families of children receiving hospital treatment.  The 16-room RMHC House in Bucharest accommodates the families of young patients treated at theGrigore Alexandrescu Hospital.  The RMHC House in Timisoara has the capacity to host 26 families of children hospitalised at the Louis Turcanu Hospital.  In 2021, the RMHC Houses accommodated 300 families and children with more than 5,447 nights of free accommodation.  The Houses also provided families with 13,000 free hot meals and more than 900 packages of personal care products, protective clothing, materials and equipment during the pandemic.  In June 2021, RMHC Romania began the construction of its third House, on the grounds of the St Mary’s Emergency Clinical Hospital for Children in Iasi.  The house, being developed in collaboration with BorgWarner Inc, will feature 19 rooms, kitchen, living room and other spaces, including a playground, where families will be able to socialize and receive support and counselling.  The RMHC House in Iasi will give priority to parents living outside the city and nursing mothers and is expected to open in May 2022.  RMHC also supports numerous children’s hospitals with the purchase of much needed equipment for the paediatric wards.

 

These three RMHC Chapters are part of the Ronald McDonald House Charities global non-profit network which delivers programmes and services in more than 62 countries and regions, benefitting the lives of millions of children and their families.  McDonald’s has been the RMHC’s mission partner since the first RMHC House was established in the US in 1974.

 

In addition to their support of the RMHC Chapters, all subsidiary companies donated more than 10,000 products, hot drinks and meals to frontline workers, including emergency responders and teachers, across their communities as the crisis caused by the pandemic continued in 2021.

 

In carrying on its business, the Group is fully aware of its obligation to preserving the environment and has put in place a number of policies aimed at respecting the environment and reducing waste.

 

Relations with the market

 

The market is kept up to date with all relevant information, and the Company regularly publishes such information on its website to ensure consistent relations with the market.

 

Non-compliance with the Code

 

Principle 7: Evaluation of the board’s performance

Under the present circumstances, the board does not consider it necessary to appoint a committee to carry out a performance evaluation of its role as the board’s performance is always under scrutiny of the shareholders of the Company.

 

Principle 8: Committees

Under the present circumstances the board does not consider it necessary to appoint a remuneration committee and a nomination committee as decisions on these matters are taken at shareholder level.

 

Principle 10: Institutional shareholders ,

This principle is not applicable since the Company has no institutional shareholders.

 

 

Signed on behalf of the Group's Board of Directors on 28 April 2022 by Carmelo (sive) Melo Hili (Chairman) and Victor Tedesco (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Group Financial Statements 2021.

 

 

 

Statements of profit or loss and other comprehensive income

Year ended 31 December 2021

 

 

 

 

Group

 

Holding Company

 

Notes

2021

2020

 

2021

2020

 

 

Eur

Eur

 

Eur

Eur

 

 

 

 

 

 

 

Revenue

5

405,408,430

318,955,348

 

1,092,000

  1,092,000

Cost of sales

8

(312,960,013)

(253,071,780)

 

-

-

Gross profit

 

92,448,417

65,883,568

 

1,092,000

  1,092,000

Other operating income

 

858,380

978,971

 

 9,566

46,793

Selling expenses

8

(25,830,848)

(19,909,596)

 

-

-

Administrative expenses

8

(23,073,201)

(20,973,899)

 

 (6,207,082)

(5,219,621)

Operating profit/(loss)

 

44,402,748

25,979,044

 

 (5,105,516)

(4,080,828)

Investment income

6

1,769,445

733,967

 

 26,152,722

21,720,595

Finance costs

7

(7,662,560)

(7,709,178)

 

 (2,979,260)

(2,901,895)

Profit before tax

8

38,509,633

19,003,833

 

 18,067,946

14,737,872

Income tax (expense)/credit

11

(4,206,157)

(1,345,845)

 

84,306

167,222

Profit for the year

 

34,303,476

17,657,988

 

 18,152,252

14,905,094

 

 

 

 

 

 

 

Other comprehensive income / (expense)

 

 

 

 

 

 

Items that will not be reclassified

 

 

 

 

 

 

subsequently to profit or loss:

 

 

 

 

 

 

Decrease in fair value of financial assets

 

 

 

 

 

 

at fair value through other comprehensive

 

 

 

 

 

 

income

18

(10,546)

(15,225)

 

(10,546)

(15,225)

 

 

 

 

 

 

 

Items that may be reclassified

 

 

 

 

 

 

subsequently to profit or loss:

 

 

 

 

 

 

Decrease in fair value of financial assets

 

 

 

 

 

 

at fair value through other comprehensive

 

 

 

 

 

 

income

18

5,160

(10,118)

 

 5,160

(10,118)

Exchange differences on translation of

 

 

 

 

 

 

foreign operations

 

(741,620)

(862,070)

 

-

-

 

 

(736,460)

(872,188)

 

 5,160

(10,118)

 

 

 

 

 

 

 

Total other comprehensive expense

(747,006)

(887,413)

 

(5,386)

(25,343)

 

 

 

 

 

 

 

Total comprehensive income for the year

 

33,556,470

16,770,575

 

 18,146,866

14,879,751

 

 

 

 

 

 

 

Profit attributable to:

 

 

 

 

 

 

Owners of the holding company

 

34,303,476

17,446,079

 

 

 

Non-controlling interests

17

-

211,909

 

 

 

 

 

34,303,476

17,657,988

 

 

 

 

 

 

 

 

 

 

Total comprehensive income

 

 

 

 

 

 

attributable to:

 

 

 

 

 

 

Owners of the holding company

 

33,556,470

16,558,254

 

 

 

Non-controlling interests

17

  - 

212,321

 

 

 

 

 

33,556,470

16,770,575

 

 

 

 

 

 

 

 

 

 

 

 

 

Statements of financial position

31 December 2021

 

 

 

 

Group

 

Holding Company

 

Notes

2021

2020

 

2021

2020

 

 

Eur

Eur

 

Eur

Eur

 

 

 

 

 

 

 

ASSETS AND LIABILITIES

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Goodwill

3

24,931,687

25,066,474

 

 -

 -

Intangible assets

13

6,821,515

7,748,417

 

3,659,183

4,269,059

Property, plant and equipment

14

98,757,291

93,883,322

 

21,338

20,023

Right-of-use assets

15

105,720,367

87,886,979

 

346,508

 324,565

Other financial assets

18

152,621

-

 

-

-

Financial assets at fair value through

 

 

 

 

 

 

other comprehensive income

18

1,049,515

1,054,901

 

1,049,515

1,054,901

Investment in subsidiaries

17

-

-

 

 56,375,780

56,375,780

Loans and receivables

18

11,345,630

11,000,000

 

 16,173,125

36,688,243

Deferred tax assets

16

1,464,408

1,286,214

 

-

-

Prepayments

19

2,285,165

1,841,969

 

513,250

 513,250

 

 

252,528,199

229,768,276

 

 78,138,699

99,245,821

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventories

20

7,373,846

6,063,520

 

-

-

Loans and receivables

18

20,697,810

6,823,006

 

 39,063,998

11,397,873

Trade and other receivables

21

7,681,929

6,349,438

 

3,083,621

2,956,350

Current tax asset

 

1,015,686

1,013,102

 

852,397

 942,120

Cash and cash equivalents

29

28,377,151

28,741,915

 

6,268,348

1,600,399

 

 

65,146,422

48,990,981

 

 49,268,364

16,896,742

 

 

 

 

 

 

 

Total assets

 

317,674,621

278,759,257

 

127,407,063

116,142,563

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

22

44,557,707

34,124,181

 

1,972,265

1,339,525

Other financial liabilities

23

64,754

32,737

 

 15,211,108

4,778,527

Bank borrowings

24

5,589,352

8,801,357

 

-

-

Lease liabilities

25

8,663,431

8,245,917

 

38,741

31,315

Current tax liabilities

 

1,242,688

351,304

 

-

-

 

 

60,117,932

51,555,496

 

 17,222,114

6,149,367

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Bank borrowings

24

19,502,172

23,816,716

 

-

-

Debt securities in issue

26

64,539,514

64,445,856

 

 64,539,514

64,445,856

Other financial liabilities

23

75,307

349,358

 

-

-

Lease liabilities

25

103,210,244

83,939,809

 

325,308

 305,350

Provisions

 

395,859

306,170

 

-

-

Deferred tax liabilities

16

1,123,704

1,342,433

 

1,123,704

1,342,433

 

 

188,846,800

174,200,342

 

 65,988,526

66,093,639

 

 

 

 

 

 

 

Total liabilities

 

248,964,732

225,755,838

 

 83,210,640

72,243,006

 

 

 

 

 

 

 

Net assets

 

68,709,889

53,003,419

 

 44,196,423

43,899,557

 

 

 

 

 

 

 

EQUITY

 

 

 

 

 

 

Share capital

27

33,674,700

33,674,700

 

 33,674,700

33,674,700

Exchange translation reserves

 

(4,050,287)

(3,308,667)

 

 -

 -

Fair value reserve

 

(100,154)

(94,768)

 

(100,154)

 (94,768)

Other reserves

28

(97,926)

(174,614)

 

212,351

 212,351

Retained earnings

 

39,283,556

22,906,768

 

 10,409,526

10,107,274

Total equity

 

68,709,889

53,003,419

 

 44,196,423

43,899,557

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signed on behalf of the Group's Board of Directors on 28 April 2022 by Carmelo (sive) Melo Hili (Chairman) and Victor Tedesco (Director) as per the Directors' Declaration on ESEF Annual Financial Report submitted in conjunction with the Annual Report and Group Financial Statements 2021.

 

 

 

Statement of changes in equity

Year ended 31 December 2021

 

Group

 

 

Share capital

Exchange translation reserve

Fair value reserve

Other reserves

Retained earnings

Attributable to owners of the holding company

Non-controlling interests

Total

 

Eur

Eur

Eur

Eur

Eur

Eur

Eur

Eur

 

 

 

 

 

 

 

 

 

Balance at 1 January 2020

33,674,700

(2,130,285)

(69,425)

8,780,884

12,131,089

52,386,963

4,694,881

57,081,844

 

 

 

 

 

 

 

 

 

Dividends (Note 12)

-

-

-

-

(9,360,000)

(9,360,000)

-

(9,360,000)

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

17,446,079

17,446,079

211,909

17,657,988

Other comprehensive expense for the year

-

(862,482)

(25,343)

-

-

(887,825)

412

(887,413)

Total comprehensive income for the year

-

(862,482)

(25,343)

-

17,446,079

16,558,254

212,321

16,770,575

 

 

 

 

 

 

 

 

 

Acquisition of non-controlling interest (Notes 17 and 28 )

-

(315,900)

-

(8,955,498)

2,689,600

(6,581,798)

(4,907,202)

(11,489,000)

Balance at 1 January 2021

33,674,700

(3,308,667)

(94,768)

(174,614)

22,906,768

53,003,419

-

53,003,419

 

 

 

 

 

 

 

 

 

Dividends (Note 12)

-

-

-

-

(17,850,000)

(17,850,000)

-

(17,850,000)

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

34,303,476

34,303,476

-

34,303,476

Other comprehensive expense for the year

-

(741,620)

(5,386)

-

-

(747,006)

-

(747,006)

Total comprehensive income for the year

-

(741,620)

(5,386)

-

34,303,476

33,556,470

-

33,556,470

 

 

 

 

 

 

 

 

 

Movement in other reserves (Note 28 )

-

-

-

76,688

(76,688)

-

-

-

 

 

 

 

 

 

 

 

 

Balance at 31 December 2021

33,674,700

(4,050,287)

(100,154)

(97,926)

39,283,556

68,709,889

-

68,709,889

 

 

 

 

 

 

 

 

 

 

 

Statement of changes in equity

Year ended 31 December 2021

 

Holding Company

 

 

 

Share

Fair value

Other

Retained

 

 

capital

reserve

reserve

earnings

Total

 

Eur

Eur

Eur

Eur

Eur

 

 

 

 

 

 

Balance at 1 January 2020

33,674,700

(69,425)

212,351

4,562,180

38,379,806

 

 

 

 

 

 

Dividends (Note 12)

 -

-

 -

(9,360,000)

(9,360,000)

 

 

 

 

 

 

Profit for the year

 -

-

 -

14,905,094

14,905,094

Other comprehensive expense for the year

 -

(25,343)

 -

-

(25,343)

Total comprehensive income for the year

 -

(25,343)

 -

14,905,094

14,879,751

 

 

 

 

 

 

Balance at 1 January 2021

33,674,700

(94,768)

212,351

10,107,274

43,899,557

 

 

 

 

 

 

Dividends (Note 12)

 -

-

 -

(17,850,000)

(17,850,000)

 

 

 

 

 

 

Profit for the year

 -

 

 -

18,152,252

18,152,252

Other comprehensive expense for the year

 -

(5,386)

 -

-

(5,386)

Total comprehensive income for the year

 -

(5,386)

 -

18,152,252

18,146,866

 

 

 

 

 

 

Balance at 31 December 2021

33,674,700

(100,154)

212,351

10,409,526

44,196,423

 

 

 

 

 

 

 

 

 

Statements of cash flows

Year ended 31 December 2021

 

 

 

Group

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

Cash flows from operating activities

 

 

 

 

 

Profit before tax

38,509,633

19,003,833

 

18,067,946

14,737,872

Adjustments for:

 

 

 

 

 

Depreciation and amortisation

24,551,435

25,557,878

 

665,488

660,400

Interest expense

7,568,902

7,615,520

 

2,885,602

2,808,237

Interest income

(1,322,569)

(713,062)

 

(2,116,065)

(1,705,120)

Amortisation of bond issue expenses

93,658

93,658

 

93,658

93,658

Gain on derivative financial instrument

(430,870)

(5,430)

 

 -

 -

Loss on disposal of property, plant and

 

 

 

 

 

equipment and intangible assets

280,730

177,186

 

 -

310

Dividend income from financial assets at fair

 

 

 

 

 

value through other comprehensive income

(16,006)

(15,475)

 

(16,006)

(15,475)

Dividend income from subsidiaries

 -

 -

 

(24,020,651)

(20,000,000)

Net impairment on property, plant and

 

 

 

 

 

equipment

45,902

 -

 

 -

 -

Operating profit/(loss) before working capital

 

 

 

 

 

movement

69,280,815

51,714,108

 

(4,440,028)

(3,420,118)

Movement in inventories

(1,310,326)

(851,160)

 

 -

 -

Movement in trade and other receivables

(1,775,687)

(795,312)

 

(127,271)

(1,141,894)

Movement in trade and other payables

10,523,215

(265,246)

 

632,740

40,646

Cash flows from operations

76,718,017

49,802,390

 

(3,934,559)

(4,521,366)

Interest paid

(3,746,205)

(3,835,648)

 

(2,667,064)

(2,544,032)

Income tax paid

(3,714,280)

(3,582,846)

 

(44,700)

(27,622)

Net cash flows from / (used in) operating activities

69,257,532

42,383,896

 

(6,646,323)

(7,093,020)

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant and equipment

(19,287,013)

(13,548,705)

 

(13,672)

(5,584)

Proceeds from sale of property, plant and equipment

70,390

141,065

 

2,830

 -

Purchase of intangible assets

(483,041)

(559,592)

 

 -

 -

Purchase of financial assets at fair value

 

 

 

 

 

through other comprehensive income

 -

(260,100)

 

 -

(260,100)

Acquisition of non-controlling interest

 -

(11,489,000)

 

 -

 -

Advances to subsidiaries

 -

 -

 

(2,377,128)

(1,574,208)

Settlement from subsidiaries

 -

 -

 

26,452,197

28,081,396

Advances to related parties

(1,476,770)

(8,523,226)

 

(462,559)

(7,440,196)

Settlement from related parties

8,182,093

1,850,885

 

7,145,740

228,743

Advances to ultimate parent

(21,272,788)

(4,267,404)

 

(17,256,288)

(4,267,404)

Settlement from ultimate parent

347,031

250,592

 

347,031

250,592

Dividends received from financial assets at fair

 

 

 

 

 

value through other comprehensive income

16,006

15,475

 

16,006

15,475

Dividends received from subsidiary

 -

 -

 

2,020,651

2,200,000

Interest received

1,322,569

718,492

 

2,116,065

1,705,120

Net cash flows (used in) / from investing activities

(32,581,523)

(35,671,518)

 

17,990,873

18,933,834

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Repayment of bank borrowings

(8,852,152)

(6,289,379)

 

 -

 -

Drawdowns from bank facilities

1,500,000

19,762,192

 

 -

 -

Repayment from lease liabilities

(8,220,164)

(8,334,470)

 

(40,644)

(34,699)

Interest from lease liabilities

(3,822,697)

(3,648,751)

 

(14,007)

(13,817)

Dividends paid to ultimate parent

(17,850,000)

(11,360,000)

 

(17,850,000)

(11,360,000)

Movement in other financial liabilities

31,288

(1,349,401)

 

11,228,050

6,875

Net cash flows used in financing activities

(37,213,725)

(11,219,809)

 

(6,676,601)

(11,401,641)

 

 

 

 

 

 

Net movement in cash and cash equivalents

(537,716)

(4,507,431)

 

4,667,949

439,173

 

 

 

 

 

 

Cash and cash equivalents at the

 

 

 

 

 

beginning of the year

28,341,915

32,497,681

 

1,600,399

1,161,226

 

 

 

 

 

 

Exchange differences on translation of

 

 

 

 

 

foreign operations

572,952

351,665

 

 -

 -

 

 

 

 

 

 

Cash and cash equivalents at the

 

 

 

 

 

end of the year (note 29 )

28,377,151

28,341,915

 

6,268,348

1,600,399

 

 

 

 

 

 

 

 

Notes to the financial statements

31 December 2021

 

 

1.            Company information and basis of preparation

 

Premier Capital plc is a public limited company incorporated in Malta with registration number C36522.  The registered address of the Holding Company is Nineteen Twenty Three, Valletta Road, Marsa, MRS 3000.  As disclosed in note 26, it has issued bonds which are listed on the Malta Stock Exchange.

 

The financial statements of the Holding Company and consolidated financial statements of the Group have been prepared on the historical cost basis except for financial instruments at fair value through profit or loss and financial assets at fair value through other comprehensive income which are stated at their fair values and in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU).  They have been prepared under the assumption that the Group operates on a going concern basis.  

 

The significant accounting policies adopted are set out below.

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  For financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

 

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability.

 

For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the Holding Company determines when transfers are deemed to have occurred between Levels in the hierarchy at the end of each reporting period.

 

 

2.        Significant accounting policies

 

Basis of consolidation

 

The consolidated financial statements incorporate the financial statements of the Holding Company and entities controlled by the Holding Company (its subsidiaries).  A subsidiary is an entity that is controlled by the Holding Company.  The Holding Company controls an investee when the Holding Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.  

 

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, in preparing these consolidated financial statements, appropriate adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with those used by the group entities.

 

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

 

Non-controlling interests in the net assets or liabilities of consolidated subsidiaries are identified separately from the Group’s equity therein.  Non-controlling interests consists of the amount of those interests at the date of the original business combination and the non-controlling interests share of changes in equity since the date of the combination.  Total comprehensive income is attributable to non-controlling interests even if this results in the non-controlling interests having a deficit balance.

 

Business combinations

 

Acquisitions of businesses are accounted for using the acquisition method.  The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree.  Acquisition-related costs are generally recognised in profit or loss as incurred.

 

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value, except where the exceptions to the recognition or measurement principles apply.

 

Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed.  If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

 

Non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets.  The choice of measurement basis is made on a transaction-by-transaction basis.  Other types of non-controlling interests are measured at fair value or, when applicable, on the basis specified in another IFRS.

 

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity are remeasured to fair value at the acquisition date and the resulting gain or loss, if any, is recognised in profit or loss.  Amounts previously recognised in other comprehensive income in relation to the acquiree are accounted for in the same manner as would be required if the interest were disposed of.

 

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.  In such circumstances, the carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary.  Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Holding Company.

 

Where the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill) and liabilities of the subsidiary and any non-controlling interests.  Amounts previously recognised in other comprehensive income in relation to the subsidiary are accounted for in the same manner as would be required if the relevant assets or liabilities were disposed of.  The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments or, when applicable, the cost on initial recognition of an investment in an associate or jointly controlled entity.

 

Goodwill

 

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

 

For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units (or groups of cash-generating units) that is expected to benefit from the synergies of the combination.

 

A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro rata based on the carrying amount of each asset in the unit.  Any impairment loss for goodwill is recognised directly in profit or loss in the consolidated statement of comprehensive income.  An impairment loss recognised for goodwill is not reversed in subsequent periods.

 

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

 

Investment in subsidiaries

 

A subsidiary is an entity that is controlled by the Holding Company.  The Holding Company controls an investee when the Holding Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

 

Investments in subsidiaries, in the Holding Company’s financial statements are stated at cost less any accumulated impairment losses. Dividends from the investments are recognised in profit or loss.

 

At each reporting date, the Holding Company reviews the carrying amount of its investments in subsidiaries to determine whether there is any indication of impairment and, if any such indication exists, the recoverable amount of the investment is estimated.  An impairment loss is the amount by which the carrying amount of an investment exceeds its recoverable amount.  The recoverable amount is the higher of fair value less costs to sell and value in use.  An impairment loss that has been previously recognised is reversed if the carrying amount of the investment exceeds its recoverable amount.  An impairment loss is reversed only to the extent that the carrying amount of the investment does not exceed the carrying amount that would have been determined if no impairment loss had been previously recognised.  Impairment losses and reversals are recognised immediately in profit or loss.

 

Property, plant and equipment

 

The Group’s property, plant and equipment are classified into the following classes – land and buildings, improvement to premises, motor vehicles, plant and equipment and other equipment.  The Holding Company’s property, plant and equipment are classified into furniture, fixtures and other equipment.

 

Property, plant and equipment are initially measured at acquisition cost, including any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by the Group’s management.  Subsequent costs are included in the asset’s carrying amount when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.  Expenditure on repairs and maintenance of property, plant and equipment is recognised as an expense when incurred.

 

Land and buildings are held for use in the production or supply of goods or services or for administrative purposes.  Subsequent to initial recognition, land and buildings are stated at cost less any accumulated depreciation and any accumulated impairment losses.  Land and buildings are measured at fair value based on periodic, but at least triennial, valuations by external independent valuers, less subsequent depreciation for buildings.  A revaluation surplus is credited to other reserves in shareholders equity.

 

Improvements to premises incorporate all costs incurred, including acquisition costs and other costs attributable to bring the leased premises to the design, specifications and conditions requested by McDonalds.  Subsequent to initial recognition, improvements to premises are stated at cost less any accumulated depreciation and any accumulated impairment losses.

 

Other tangible assets are stated at cost less any accumulated depreciation and any accumulated impairment losses.

 

Property, plant and equipment are derecognised when no future economic benefits are expected from their use or upon disposal.  Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount, and are included in profit or loss within administrative expenses in the period of derecognition.

 

Depreciation

 

Depreciation commences when the depreciable assets are available for use and is charged to profit or loss so as to write off the cost, less any estimated residual value, over their estimated useful lives, using the straight-line method, on the following bases:

 

Buildings

-

2.5% - 5% per annum

Improvements to premises

-

5% - 20% per annum

 

 

in line with lease expiry

Motor vehicles

-

12.5% - 33.3% per annum

Plant and equipment

-

10% - 50% per annum

Furniture, fixtures and other equipment

-

10% - 25% per annum

 

No depreciation is charged on land.

 

The depreciation method applied, the residual value and the useful life are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

In the case of right-of-use assets, expected useful lives are determined by reference to comparable owned assets or the lease term, if shorter.  Material residual value estimates and estimates of useful life are updated as required, but at least annually.

 

Intangible assets

 

An intangible asset is recognised if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and the cost of the asset can be measured reliably.

 

Intangible assets are initially measured at cost, being the fair value at the acquisition date for intangible assets acquired in a business combination.  Expenditure on an intangible asset is recognised as an expense in the period when it is incurred unless it forms part of the cost of the asset that meets the recognition criteria or the item is acquired in a business combination and cannot be recognised as an intangible asset, in which case it forms part of goodwill at the acquisition date.

 

The useful life of intangible assets is assessed to determine whether it is finite or indefinite.  Intangible assets with a finite useful life are amortised.  Amortisation is charged to profit or loss so as to write off the cost of intangible assets less any estimated residual value, over the estimated useful lives.  The amortisation method applied, the residual value and the useful life are reviewed, and adjusted if appropriate, at the end of each reporting period.

 

Intangibles are derecognised when no future economic benefits are expected from their use or upon disposal.  Gains or losses arising from derecognition represent the difference between the net disposal proceeds, if any, and the carrying amount, and are included in profit or loss within administrative expenses in the period of derecognition.

 

(i)           Support services licence

 

After initial recognition, support services licence is carried at cost less any accumulated amortisation and any accumulated impairment losses.  Support services licence is written off to profit or loss by equal instalments over the term of the support services agreement with the subsidiaries, being 20 years.

 

(ii)          Computer software

 

In determining the classification of an asset that incorporates both intangible and tangible elements, judgement is used in assessing which element is more significant.  Computer software which is an integral part of the related hardware is classified as property, plant and equipment and accounted for in accordance with the Group’s accounting policy on property, plant and equipment.  Where the software is not an integral part of the related hardware, this is classified as an intangible asset and carried at cost less any accumulated amortisation and any accumulated impairment losses.  Computer software classified as an intangible asset is amortised on a straight-line basis over three to five years.

 

(iii)      Acquired rights

 

Acquired rights are classified as intangible assets.  After initial recognition, acquired rights are carried at cost less any accumulated amortisation and any accumulated impairment losses.  Acquired rights are amortised on a straight-line basis over thirty-five to forty years.

 

(iv)        Franchise fees

 

After initial recognition, franchise fees are carried at cost less any accumulated amortisation and any accumulated impairment losses.  Franchise fees are written off to profit or loss by equal instalments over the term of the franchise agreement.

 

Financial instruments

 

(i)        Recognition and derecognition

 

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

 

Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.  A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.

 

(ii)       Classification and initial measurement of financial assets

 

Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).

 

Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:

 

- Amortised cost;

 

- Fair value through profit or loss (FVTPL); or

 

- Fair value through other comprehensive income (FVOCI).

 

In the periods presented the Group does not have any financial assets categorised as FVTPL.

 

The classification is determined by both:

 

- The entity’s business model for managing the financial asset; and

 

- The contractual cash flow characteristics of the financial asset.

 

All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, investment income or other financial items, except for impairment of trade receivables which is presented within administrative expenses.

 

(iii)      Subsequent measurement of financial assets

 

Financial assets at amortised cost

 

Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):

 

- they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and

 

- the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

After initial recognition, these are measured at amortised cost using the effective interest method.  Discounting is omitted where the effect of discounting is immaterial.  The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments.

 

Financial assets at fair value through other comprehensive income (FVOCI)

 

The Group accounts for financial assets at FVOCI if the assets meet the following conditions:

 

- they are held under a business model whose objective is “hold to collect” the associated cash flows and sell, and

 

- the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset.  The Group’s local listed debt and equity instruments fall into this category of financial instruments.

 

(iv)     Impairment of financial assets

 

IFRS 9’s impairment requirements use forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’.  Instruments within the scope of the requirements include loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.

 

The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.

 

In applying this forward-looking approach, a distinction is made between:

 

- financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and

 

- financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).

 

‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.

 

‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.

 

Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.

 

Trade and other receivables

 

The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the loss allowance as lifetime expected credit losses.  These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument.  In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.

 

The Group assess impairment of trade receivables on a collective basis as they possess shared credit risk characteristics.  As at the end of the reporting period, the Group’s receivables have been assessed for impairment and are not significantly impaired to disclose within these financial statements.

 

(iv)      Classification and measurement of financial liabilities

 

The Group’s financial liabilities include borrowings, trade and other payables, lease liabilities and derivative financial instruments.

 

Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair value through profit or loss.

 

Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss.

 

All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance income.

 

(v)       Derivative financial instruments

 

Derivative financial instruments are accounted for at FVTPL unless they are designated as effective hedging instruments. During the year under review and during the prior year, the Group did not designate any of its derivative financial instruments in a hedging relationship for accounting purposes. After initial recognition, derivative financial instruments are measured at their fair value. Gains and losses arising from a change in fair value are recognised in profit or loss in the period in which they arise.

 

Inventories

 

Inventories are stated at the lower of cost and net realisable value.  The Group considers the nature and use of the inventory when calculating the cost of inventories.

 

Cost is calculated using the weighted average method and comprises expenditure incurred in acquiring the inventories and other costs incurred in bringing inventories to their present location and condition.  Net realisable value represents the estimated selling price in the ordinary course of business less the costs to be incurred in marketing, selling and distribution.

 

Provisions, contingent assets and contingent liabilities

 

Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.  Provisions are measured at the directors’ best estimate of the expenditure required to settle the present obligation at the end of the reporting period.  If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.  Provisions are not recognised for future operating losses.

 

Any reimbursement that the Group is virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset.  However, this asset may not exceed the amount of the related provision.

 

No liability is recognised if an outflow of economic resources as a result of present obligations is not probable.  Such situations are disclosed as contingent liabilities unless the outflow of resources is remote.

 

Impairment testing of goodwill, other intangible assets, property, plant and equipment and long-term prepayments

 

For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units).  As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.  Goodwill is allocated to those cash-generating units that are expected to benefit from synergies of a related business combination and represent the lowest level within the Group at which management monitors goodwill.

 

Cash-generating units to which goodwill has been allocated (determined by the Group’s management as equivalent to its operating segments) are tested for impairment at least annually.  All other individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

 

An impairment loss is recognised for the amount by which the asset’s (or cash-generating unit’s) carrying amount exceeds its recoverable amount, which is the higher of fair value less costs of disposal and value-in-use.  To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable discount rate in order to calculate the present value of those cash flows.  The data used for impairment testing procedures are directly linked to the Group’s latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and asset enhancements.  Discount factors are determined individually for each cash-generating unit and reflect current market assessments of the time value of money and asset-specific risk factors.

 

Impairment losses for cash-generating units reduce first the carrying amount of any goodwill allocated to that cash-generating unit.  Any remaining impairment loss is charged pro rata to the other assets in the cash-generating unit.

 

With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist.  An impairment loss is reversed if the asset’s or cash-generating unit’s recoverable amount exceeds its carrying amount.

 

Impairment losses are recognised immediately in profit or loss.

 

In the case of other assets tested for impairment, an impairment loss recognised in a prior year is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised.

 

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years.

 

An impairment loss recognised for goodwill is not reversed in a subsequent period. Impairment reversals are recognised immediately in profit or loss.

 

Revenue recognition

 

To determine whether to recognise revenue, the Group follows a 5-step process:

 

1.      Identifying the contract with a customer

2.      Identifying the performance obligations

3.      Determining the transaction price

4.      Allocating the transaction price to the performance obligations

5.      Recognising revenue when/as performance obligation(s) are satisfied.

 

The Holding Company often enters into transactions involving a range of services.  In all cases, the total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices.  The transaction price for a contract excludes any amounts collected on behalf of third parties, VAT and trade discounts.

 

Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers. The following specific criteria must also be met:

 

Sale of goods

 

Revenue from the sale of goods is recognised on the transfer of the risks and rewards of ownership, which generally coincides with the time of delivery, when the costs incurred or to be incurred in respect of the transaction can be measured reliably and when the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

 

Provision of services

 

Revenue from the provision of services is recognised in the period in which the services are rendered.  For practical purposes, when services are performed by an indeterminate number of acts over a specified period of time, revenue is recognised on a straight-line basis over the specified period unless there is evidence that some other method better represents the stage of completion.

 

Interest income

 

Interest income is accrued on a timely basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to the assets net carrying amount.

 

Dividend income

 

Dividend income is recognised when the shareholder’s right to receive payment has been established and provided that it is probable that the economic benefits will flow to the Group and the amount of income can be measured reliably.

 

Operating expenses

 

Operating expenses are recognised in profit or loss upon utilisation of the service or as incurred.

 

Borrowing costs

 

Borrowing costs include the costs incurred in obtaining external financing.  Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised from the time that expenditure for these assets and borrowing costs are being incurred and activities that are necessary to prepare these assets for their intended use or sale are in progress.  Borrowing costs are capitalised until such time as the assets are substantially ready for their intended use or sale .   Borrowing costs are suspended during extended periods in which active development is interrupted.  All other borrowing costs are recognised as an expense in profit or loss in the period in which they are incurred.

 

Leases

 

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership to the lessee.

 

The Group considers whether a contract is, or contains a lease at the inception of the contract.  A lease is defined as a contract, or part of a contract, that coveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration.  To apply this definition the Group assesses whether the contract meets three key evaluations which are whether:

 

-

the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group

 

-

the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract

 

-

the Group has the right to direct the use of the identified asset throughout the period of use. The Group assess whether it has the right to direct how and for what purpose the asset is used throughout the period of use.

 

 

At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the statement of financial position.  The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any incentives received).

 

The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the earlier of the end of the useful life of the right-of-use of asset or the end of the lease term.  The Group also assess the right-of-use asset for impairment when such indicators exist.

 

At lease commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the Group’s incremental borrowing rate.

 

Lease payments included in the measurement of the lease liability are made up of fixed payments (including in substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual value guarantee and payments arising from options reasonably certain to be exercised.

 

Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.

 

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit and loss if the right-of-use asset is already reduced to zero.

 

The Group has elected to account for short-term leases and leases of low-value assets using the practical expedients.  Instead of recognising a right-of-use asset and lease liability, the payments in relation to these are recognised as an expense in profit or loss on a straight-line basis over the lease term.

 

On the statement of financial position, the Group has opted to disclose right-of-use assets and lease liabilities as separate financial statement line items.

 

Taxation

 

Current and deferred tax is recognised in profit or loss, except when it relates to items recognised in other comprehensive income or directly to equity, in which case the current or deferred tax is also dealt with in other comprehensive income or equity.

 

Current tax is based on the taxable result for the period. The taxable result for the period differs from the result as reported in profit or loss because it excludes items which are non-assessable or disallowed and it further excludes items that are taxable or deductible in other periods.  It is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

 

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

 

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets, including deferred tax assets for the carry forward of unused tax losses, are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

 

Deferred tax liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill.  Deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither accounting profit nor taxable profit.

 

Deferred tax liabilities are not recognised for taxable temporary differences arising on investments in subsidiaries where the Holding Company is able to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.  Deferred tax assets are recognised for deductible temporary differences arising on investments in subsidiaries where it is probable that taxable profit will be available against which the temporary difference can be utilised and it is probable that the temporary difference will reverse in the foreseeable future.

 

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be utilised.

 

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the reporting period.

 

Current tax assets and liabilities are offset when the Group has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

 

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to set off its current tax assets and liabilities and the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.

 

Employee benefits

 

The Group contributes towards the state pension in accordance with local legislation.  The only obligation of the Group is to make the required contributions.  Costs are expensed in the period in which they are incurred.

 

Foreign currency translation

 

The financial statements of the Holding Company and the consolidated financial statements of the Group are presented in its functional currency, the Euro, being the currency of the primary economic environment in which the Holding Company operates.  In preparing the financial statements of each individual group entity, transactions in currency other than the respective entities’ functional currency are recognised at the rate of exchange prevailing at the date of transaction.

 

Transactions denominated in currencies other than the functional currency are translated at the exchange rates ruling on the date of transaction.  Monetary assets and liabilities denominated in currencies other than the functional currency are re-translated to the functional currency at the exchange rate ruling at year-end.  Exchange differences arising on the settlement and on the re-translation of monetary items are dealt with in profit or loss.   Non-monetary assets and liabilities denominated in currencies other than the functional currency that are measured at fair value are re-translated using the exchange rate ruling on the date the fair value was measured.

 

Non-monetary assets and liabilities denominated in currencies other than the functional currency that are measured in terms of historical cost are not re-translated.  Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period, except for differences arising on the re-translation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

 

Foreign exchange gains and losses are included within operating profit, except in the case of significant exchange differences arising on investing or financing activities, which are classified within investment income, investment losses or finance costs as appropriate.

 

For the purpose of presenting consolidated financial statements, income and expenses of the Group’s foreign operations are translated to Euro at the average exchange rates.  Assets and liabilities of the Group’s foreign operations are translated to Euro at the exchange rate ruling at the date of the statement of financial position.  Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of the foreign entity and translated into Euro at the closing rate.  Exchange differences are recognised in other comprehensive income and accumulated in a separate component of equity.  Such differences are reclassified from equity to profit or loss in the period in which the foreign operation is disposed of.

 

Cash and cash equivalents

 

Cash and cash equivalents comprise cash on hand and demand deposits.  Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash equivalents for the purposes of the statement of cash flows and are presented in current liabilities in the statement of financial position.

 

Prepayments

 

Long term prepayments represent guarantee deposits made by the Group in order to secure the lease on rented premises on which the McDonalds’ restaurants are situated.  Once the lease on the rented premises is terminated, the guarantee deposit is released, and it is no longer recognised within long term prepayments in the statement of financial position.  Long term prepayment for the Holding Company mainly represents a guarantee deposit made for the provision of a leased aircraft (refer to note 25).

 

Equity, reserves and dividend payments

 

Share capital represents the nominal (par) value of shares that have been issued.  Other components of equity include the following:

 

(i)

Exchange translation reserves comprises foreign currency translation differences arising from the translation of transactions and balances of the Group’s foreign entities into Euros;

 

(ii)

Fair value reserve comprises movement in fair value of financial assets measured at fair value through other comprehensive income; and

 

(iii)

Other reserves - refer to note 28.

 

 

Retained earnings includes all current and prior period retained profits.  All transactions with owners of the parent are recorded separately within equity.

 

Dividends to holders of equity instruments are recognised as liabilities in the period in which they are declared.

 

Dividends to holders of equity instruments, or of the equity component of a financial instrument issued by the Holding Company, are recognised directly in equity.  Dividends relating to a financial liability, or to a component that is a financial liability, are recognised as an expense in profit or loss and are presented in the statement of profit or loss and other comprehensive income with finance costs.

 

 

3.            Judgements in applying accounting policies and key sources of estimation uncertainty

 

Other than as disclosed below, in the process of applying the Group’s accounting policies, management has made no judgements which can significantly affect the amounts recognised in the financial statements and, at the end of the reporting period, there were no key assumptions concerning the future, or any other key sources of estimation uncertainty, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

 

The Group reviews property, plant and equipment, intangible assets, right-of-use assets and loans and receivables to evaluate whether events or changes in circumstances indicate that the carrying amounts may not be recoverable.  The Holding Company reviews intangible assets, right-of-use assets, investments in subsidiaries and loans and receivables to evaluate whether events or changes in circumstances indicate that the carrying amounts may not be recoverable.  At the year-end there was no objective evidence of impairment in this respect.

 

In addition, the Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired.  Determining whether the carrying amounts of these assets can be realised requires an estimation of the value in use of the cash-generating units.  The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

 

Goodwill arising on a business combination is allocated, to the cash-generating units (“CGUs”) that are expected to benefit from that business combination.

 

Reconciliation of reported goodwill is presented below:

 

 

 

 

 

 

Group

 

 

 

 

 

 Eur

Cost

 

 

 

 

 

At 01.01.2020

 

 

 

  25,226,236

Difference on exchange on foreign operations

 (159,762)

At 31.12.2020

 

 

 

  25,066,474

Difference on exchange on foreign operations

 (134,787)

At 31.12.2021

 

 

 

  24,931,687

 

 

 

 

 

 

The carrying amount of goodwill as at 31 December 2021 amounting to Eur24,931,687 (2020 - Eur25,066,474) is allocated Eur16,591,999 (2020 - Eur16,591,999 ) to the Malta operations and Eur8,339,688 (2020 - Eur8,474,475 ) to the Romania operations.  Since goodwill for Romania operations is denominated in Romanian Lei, movement in foreign exchange differences negatively impacted the carrying amount of the goodwill by Eur134,787 (2020 – Eur159,762 ) .

 

The recoverable amounts of the CGUs are determined from value in use calculations.  The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period.  The directors estimate discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs.  The growth rates are based on industry growth forecasts.  Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

 

CGUs for Malta operations

 

The assessment of recoverability of the carrying amount of goodwill includes:

 

forecasted projected cash flows for the next 5 years and projection of terminal value using the perpetuity method;

 

growth rate of 3.0% (2020 – 0.1% ); and

 

use of 7.4% (pre-tax) (2020 – 13.3% (pre-tax)) to discount the projected cash flows to net present values.

 

 

Based on the above assessment, the directors expect the carrying amount of goodwill to be recoverable and there is no impairment in value of the goodwill.

 

CGUs for Romania operations

 

The assessment of recoverability of the carrying amount of goodwill includes:

 

forecasted projected cash flows for the next 5 years and projection of terminal value using the perpetuity method;

 

growth rate of 3.0% (2020 – 0.1%) and

 

use of 9.2% (pre-tax) (2020 – 9.7% (pre-tax) ) to discount the projected cash flows to net present values.

 

 

Based on the above assessment, the directors expect the carrying amount of goodwill to be recoverable and there is no impairment in value of the goodwill.

 

Recognition of deferred tax assets

 

The extent to which deferred tax assets can be recognised is based on an assessment of the probability that future taxable income will be available against which the deductible temporary differences and tax loss carry-forwards can be utilised.  In addition, significant judgement is required in assessing the impact of any legal or economic limits or uncertainties in various tax jurisdictions.

 

Determining the lease term of contracts with renewal and termination options – Group as lessee

 

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

 

The Group has lease contracts that include extension and termination options. The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease.  That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination.  After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to renew or to terminate.

 

Estimation uncertainty

 

Useful lives of depreciable assets

Management reviews its estimate of the useful lives of depreciable assets at each reporting date, based on the expected utility of the assets.  Uncertainties in these estimates relate to technological obsolescence that may change the utility of certain software and IT equipment.

 

Inventories

Management estimates the net realisable values of inventories, taking into account the most reliable evidence available at each reporting date.  

 

Leases - Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities.  The IBR is the rate of interest that the lessor company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.  The IBR therefore reflects what the lessor company ‘would have to pay’, which requires estimation when no observable rates are available or when they need to be adjusted to reflect the terms and conditions of the lease.  The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the Group’s stand-alone credit rating).

 

 

4.             New or revised Standards or Interpretations

 

Standards, amendments and Interpretations to existing Standards that have been adopted by the Group

 

Some accounting pronouncements which have become effective from 1 January 2021 and have therefore been adopted do not have a significant impact on the Group’s financial results or position.  Accordingly, the Group has made no changes to its accounting policies in 2021.

 

Other Standards and amendments that are effective for the first time in 2021 and could be applicable to the Group are:

 

-            COVID-19-related rent concessions beyond 30 June 2021 (Amendments to IFRS 16)

-           Interest Rate Benchmark Reform Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)

 

These amendments do not have a significant impact on these financial statements and therefore no additional disclosures have been made.

 

Standards, amendments and Interpretations to existing Standards that are not yet effective and have not been adopted early by the Group

 

At the date of authorisation of these financial statements, several new, but not yet effective Standards, amendments to existing Standards and Interpretations have been published by the IASB.  None of these Standards, amendments or Interpretations have been adopted early by the Group.

 

Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement.  New Standards, amendments and Interpretations neither adopted nor listed below have not been disclosed as they are not expected to have a material impact on the Group’s financial statements.

 

 

5.             Segment information

 

The Group operates one business activity which is the operation of the McDonald’s restaurant business which activities are licensed under the terms of the franchise agreements awarded for each geographical location.  The main line of activities are reported according to the geographical location.  Each of these operating segments is managed separately as each of these lines requires local resources.  All inter segment transfers for management services are carried out on a cost basis.

 

The accounting policy for identifying segments is based on internal management reporting information that is regularly reviewed by the chief operating decision maker.

 

Revenue reported below represents revenue generated from external customers.  Revenue earned by the Holding Company amounting to Eur1,092,000 (2020 - Eur1,092,000 ) relates to consultancy and support fees charged to subsidiaries.  There were no inter-segment sales in both years presented.  The Group's reportable segments under IFRS 8 Operating Segments are direct sales attributable to each country where it operates as a McDonald’s development licensee.

 

The Group operates in six principal geographical areas - Malta (country of domicile), Estonia, Greece, Latvia, Lithuania and Romania.

 

Measurement of operating segment profit or loss, assets and liabilities

 

Segment profit represents the profit earned by each segment after allocation of central administration costs.  This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

 

The unallocated amounts in the intangible assets line include the support services licence amounting to Eur3,659,183 (2020 – Eur4,269,059) which relates to the Baltic market as disclosed in note 13.  It is not possible to split this amount between the operating segments of Latvia, Lithuania and Estonia as this was acquired originally for the market as a whole.

 

The accounting policies of the reportable segments are the same as the Group's accounting policies described in note 2. 

 

Reconciliations of reportable segment revenues, profit or loss, assets and liabilities to consolidated totals are reported below:

 

Profit or loss before tax

 

 

 

2021

2020

 

 

 Eur

 Eur

 

 

 

 

Total profit for reportable segments

 

  45,372,766

25,941,204

Elimination of inter segment profits

 

(23,902,003)

(19,917,241)

Unallocated amounts:

 

 

 

Revenue

 

1,092,000

  1,092,000

Administrative expenses

 

  (6,517,662)

(5,760,766)

Investment Income

 

  26,343,087

21,720,595

Finance costs

 

  (3,885,596)

(4,116,186)

Other unallocated amounts

 

  7,041

44,227

 

 

  38,509,633

19,003,833

 

 

 

 

 

Assets

 

 

2021

2020

 

 

 Eur

 Eur

 

 

 

 

Total assets for reportable segments

 

261,221,629

  232,303,501

Elimination of inter segment receivables

 

(36,865,110)

  (33,895,104)

Unallocated amounts:

 

 

 

Goodwill

 

  24,931,687

25,066,474

Intangible assets

 

3,659,183

  4,269,059

Financial assets at fair value through

 

 

 

other comprehensive income

 

1,049,515

  1,054,901

Loans and receivables

 

  55,237,123

48,086,116

Trade and other receivables

 

3,083,621

  2,956,350

Current tax asset

 

   852,397

 942,120

Cash and cash equivalents

 

6,268,348

  1,600,399

Other unallocated amounts

 

  (1,763,772)

(3,624,559)

 

 

317,674,621

  278,759,257

 

 

 

 

 

Liabilities

 

 

2021

2020

 

 

 Eur

 Eur

 

 

 

 

Total liabilities for reportable segments

 

   155,905,781

 125,776,997

Elimination of inter segment payables

 

   (118,442)

184,365

Unallocated amounts:

 

 

 

Trade and other payables

 

  1,972,265

1,339,525

Other financial liabilities

 

  64,025

32,737

Bank borrowings

 

25,091,524

32,218,073

Debt securities in issue

 

64,539,514

64,445,856

Deferred tax liabilities

 

  1,123,704

1,342,433

Other unallocated amounts

 

386,361

415,852

 

 

   248,964,732

 225,755,838

 

 

 

 

 

The Group's revenue and results from continuing operations from external customers and information about its assets and liabilities by reportable segment are detailed below.

 

 

 

 

 

 

 

 

 

 

 

 Eliminations

 

 

 

 

 

 

 

 

 

 

 

 and

 

 

 

 Estonia

 Greece

 Latvia

 Lithuania

 Malta

 Romania

 Total

 Unallocated

 adjustments

Consolidated

 

 

 2021

 2021

 2021

 2021

 2021

 2021

 2021

 2021

 2021

 2021

 

 

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

Eur

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

26,475,712

51,882,716

28,669,249

40,482,398

26,417,496

231,480,859

405,408,430

-

-

405,408,430

Profit before tax

 

3,155,904

3,123,746

2,668,831

4,691,129

2,032,027

29,701,129

45,372,766

17,038,870

(23,902,003)

38,509,633

Depreciation and

 

 

 

 

 

 

 

 

 

 

 

amortisation

 

1,021,093

4,885,679

2,246,803

2,554,665

2,394,268

10,774,964

23,877,472

665,488

 8,475

24,551,435

Segment assets

 

10,901,627

49,739,323

30,098,226

28,155,618

20,716,978

121,609,857

261,221,629

93,318,102

(36,865,110)

317,674,621

Right-of-use assets

 

2,380,434

27,795,676

12,287,029

15,139,276

10,192,658

37,578,786

105,373,859

346,508

-

105,720,367

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

equipment

 

3,208,319

15,840,434

5,401,124

8,788,819

3,077,587

62,594,670

98,910,953

21,338

(175,000)

98,757,291

Intangible assets

 

55,649

466,036

368,621

422,442

309,623

1,489,086

3,111,457

3,659,183

50,875

6,821,515

Capital expenditure

 

552,939

4,775,020

615,435

790,270

1,020,340

12,002,378

19,756,382

13,672

-

19,770,054

Segment liabilities

 

5,009,084

37,904,074

18,131,680

19,631,626

14,870,110

60,359,207

155,905,781

93,177,393

(118,442)

248,964,732

Lease liabilities

 

2,514,607

29,001,082

13,040,648

15,957,209

10,718,395

40,277,685

111,509,626

364,049

-

111,873,675

Income tax expense

 

342,235

659,972

1,044,021

627,285

740,737

876,214

4,290,464

(84,307)

-

4,206,157

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Eliminations

 

 

 

 

 

 

 

 

 

 

 

 and

 

 

 

 Estonia

 Greece

 Latvia

 Lithuania

 Malta

 Romania

 Total

Unallocated

adjustments

Consolidated

 

 

 2020

 2020

 2020

 2020

 2020

 2020

 2020

 2020

 2020

 2020

 

 

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

 Eur

Eur

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

23,949,742

37,506,859

26,371,752

30,268,693

22,227,310

178,630,992

318,955,348

-

-

318,955,348

Profit before tax

 

2,198,506

(320,079)

2,122,304

 2,313,371

 1,305,355

18,321,747

25,941,204

12,979,870

(19,917,241)

19,003,833

Depreciation and

 

 

 

 

 

 

 

 

 

 

 

amortisation

 

1,181,695

4,631,773

2,460,026

 2,517,145

 2,513,850

11,584,514

24,889,003

660,400

 8,475

25,557,878

Segment assets

 

10,453,405

33,079,180

32,934,387

26,292,784

19,653,445

109,890,300

232,303,501

80,350,860

(33,895,104)

278,759,257

Right-of-use assets

 

2,716,447

17,944,010

11,523,378

14,186,924

11,505,130

29,686,525

87,562,414

324,565

-

87,886,979

Property, plant and

 

 

 

 

 

 

 

 

 

 

 

equipment

 

3,387,754

13,637,704

6,072,875

 9,562,399

 3,132,372

58,245,195

94,038,299

20,023

(175,000)

93,883,322

Intangible assets

 

33,787

442,247

323,751

423,685

325,101

 1,871,437

 3,420,008

 4,269,059

59,350

7,748,417

Capital expenditure

 

273,172

3,781,580

338,847

 2,715,186

470,718

 6,523,210

14,102,713

 5,584

-

14,108,297

Segment liabilities

 

5,389,618

24,907,704

17,211,465

18,745,533

15,097,867

44,424,810

125,776,997

99,794,476

184,365

225,755,838

Lease liabilities

 

2,816,980

18,860,852

12,031,074

14,730,589

11,774,632

31,634,934

91,849,061

336,665

-

92,185,726

Income tax expense

 

418,200

(153,142)

129,922

308,588

488,949

320,550

 1,513,067

(167,222)

-

1,345,845

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.             Investment income

 

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

Interest income on bank deposits

141,092

145,222

 

-

-

Interest income from subsidiaries

-

-

 

951,088

 1,149,760

Interest income from ultimate parent

704,169

285,005

 

687,669

285,005

Interest income from other related parties

447,113

252,676

 

447,113

240,196

Gain on derivative financial instrument

430,870

5,430

 

-

-

Other interest income

30,195

30,159

 

30,195

30,159

Dividends from financial assets at fair value

 

 

 

 

through other comprehensive income

16,006

15,475

 

16,006

15,475

Dividends from investments in subsidiaries

 -

-

 

24,020,651

20,000,000

 

 1,769,445

733,967

 

26,152,722

21,720,595

 

 

 

 

 

 

 

 

7.             Finance costs

 

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

 

Interest on bank borrowings

957,287

901,623

 

-

-

Interest on bonds

 2,437,500

 2,437,500

 

 2,437,500

 2,437,500

Amortisation of bond issue expenses

93,658

93,658

 

93,658

93,658

Interest on amounts payable to subsidiaries

-

-

 

330,028

250,388

Interest on amounts payable to ultimate parent

9,792

-

 

9,792

-

Interest expense for leasing arrangements

 3,822,697

 3,648,751

 

14,007

13,817

Bank commissions

12,687

11,176

 

-

-

Loss on derivate financial instrument

-

216,198

 

-

-

Other finance costs

328,939

400,272

 

94,275

106,532

 

 7,662,560

 7,709,178

 

 2,979,260

 2,901,895

 

 

 

 

 

 

 

 

8.             Profit before tax

 

A list of expenses by nature making up the cost of sales, selling expenses and administrative expenses of the Group and the Holding Company is set out below.

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

 

Raw materials and consumables used

128,159,338

103,732,460

 

-

-

Changes in inventories of raw materials

 

 

 

 

 

and consumables used

(1,310,326)

(851,160)

 

-

-

Advertising, promotion and other

 

 

 

 

 

distribution costs

39,666,525

28,191,165

 

 -

 -

Amortisation of intangible

 

 

 

 

 

assets (note 13)

1,385,079

1,330,692

 

609,876

609,876

Depreciation of property, plant and

 

 

 

 

 

equipment (note 14)

13,056,904

14,326,733

 

9,527

10,439

Depreciation of right-of-use assets (note 15)

10,109,452

9,900,453

 

46,085

40,085

Legal and professional fees

1,471,364

1,342,705

 

91,654

107,133

Management fees payable to

 

 

 

 

 

ultimate parent

1,000,000

1,000,000

 

1,000,000

 1,000,000

Operating lease rentals (note 3 2 )

698,160

698,160

 

698,160

698,160

Variable rental lease payments

3,622,397

2,217,176

 

 -

-

Operating supplies

11,706,444

10,068,725

 

 -

-

Royalties

27,069,615

19,064,488

 

 -

-

Maintenance and repairs

5,572,324

4,556,326

 

 -

-

Travelling expenses

2,115,175

1,737,533

 

1,297,224

927,006

Utilities and telephone expenses

11,035,798

8,627,926

 

(4,986)

44,312

Directors emoluments

581,523

756,557

 

581,523

756,557

Wages and salaries (note 10)

100,495,868

81,356,812

 

1,655,722

901,084

Staff training

1,448

1,569

 

1,448

1,569

Office and general expenses

3,064,581

3,737,699

 

84,376

15,461

Other expenses

2,362,393

2,159,256

 

136,473

107,939

Total

361,864,062

293,955,275

 

6,207,082

 5,219,621

 

 

 

 

 

 

 

Operating profit/(loss) is stated after charging/(crediting) the following:

 

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

 

Net exchange differences

624,331

638,450

 

-

-

Loss on disposal of property, plant

 

 

 

 

 

and equipment

280,730

177,186

 

-

310

Impairment loss on property, plant

 

 

 

 

 

and equipment

196,757

-

 

-

-

Reversal of impairment loss

 

 

 

 

 

on property, plant and equipment

(150,855)

-

 

-

-

 

 

 

 

 

 

 

The analysis of the amounts that are payable to the auditors and that are required to be disclosed are as follows:

 

Group

 

Total remuneration payable to the parent company’s auditors in respect of the audit of the financial statements and the undertakings included in the consolidated financial statements amounted to Eur49,272 (2020 – Eur47,760 ) and the remuneration payable to the other auditors in respect of the audits of the undertakings included in the consolidated financial statements amounted t o Eur162,259 (2020 – Eur158,760 ).  Other fees payable to the parent company’s auditors for tax services amounted to Eur3,628 (2020 – Eur3,205).

 

Holding Company

 

Total remuneration payable to the parent company’s auditors for the audit of the Holding Company and the Group’s financial statements amounted to Eur27,300 ( 2020 – Eur26,500 ).  Other fees payable to the parent company’s auditors for tax services amounted to Eur798 ( 2020 – Eur775).

 

9.             Key management personnel compensation

 

 

Group and Holding Company

 

 

 

2021

2020

 

 

 

 Eur

 Eur

Directors' compensation:

 

 

 

 

Short term benefits:

 

 

 

 

Directors' remuneration

 

 

581,523

756,557

 

 

 

 

 

Other key management personnel compensation:

 

 

 

 

Short term benefits:

 

 

 

 

Salaries and social security contribution

 

 

694,673

773,782

 

 

 

 1,276,196

 1,530,339

 

 

 

 

 

 

 

10.      Staff costs and employee information

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

Staff costs:

 

 

 

 

 

Wages and salaries

 91,878,102

 73,564,197

 

 1,627,703

949,669

Social security costs

8,617,766

7,792,615

 

28,019

21,693

 

100,495,868

 81,356,812

 

 1,655,722

971,362

Recharged to subsidiaries

-

-

 

-

(70,278)

 

100,495,868

 81,356,812

 

 1,655,722

901,084

 

 

 

 

 

 

 

The above staff costs are exclusive of the directors’ emoluments.

 

Included within wages and salaries are the COVID-19 relief on wages received by the Group amounting to Eur1,424,916 (2020 - Eur5,290,086 ).  An amount of Eur923,171 (2020 - Eur5,101,196) is deducted in cost of sales and Eur501,745 (2020 - Eur188,890) is deducted in administrative expenses.

 

The average number of persons employed during the year by the Group and the Holding Company excluding executive directors, was made up as follows:

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Number

 Number

 

 Number

 Number

 

 

 

 

 

 

Operations

 9,032

 8,545

 

-

-

Administration

179

181

 

15

12

 

 9,211

 8,726

 

15

12

 

 

 

 

 

 

 

 

11.      Income tax expense/(credit)

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

 

Current tax expense

4,603,080

 1,983,363

 

134,423

51,881

Deferred tax credit

(396,923)

(637,518)

 

(218,729)

(219,103)

 

4,206,157

 1,345,845

 

(84,306)

(167,222)

 

 

 

 

 

 

 

Tax applying the statutory domestic income tax rate and the income tax expense for the year are reconciled as follows:

 

Group

 

Holding Company

 

2021

2020

 

2021

2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

 

Profit before tax

38,509,633

19,003,833

 

18,067,946

14,737,872

 

 

 

 

 

 

Tax at the applicable rate of 35%

13,478,372

 6,651,342

 

 6,323,781

 5,158,255

 

 

 

 

 

 

Tax effect of:

 

 

 

 

 

Non-deductibility of depreciation and amortisation

44,195

  95,340

 

-

-

Effect of write off foreign tax

 9,623

  14,434

 

9,623

  14,434

Disallowable expenses

2,210,604

 1,876,179

 

 2,122,318

 1,769,396

Effect of different tax rates of subsidiaries

(5,017,915)

(2,250,268)

 

-

-

Effect of flat rate foreign tax credit

(132,800)

  (109,307)

 

  (132,800)

  (109,307)

Untaxed dividends

(8,407,228)

(7,000,000)

 

(8,407,228)

(7,000,000)

Effect of reduction in foreign tax rates

91,359

-

 

-

-

Profits not chargeable to tax and tax exemptions

1,662,456

 2,189,186

 

-

-

Prior year under provided tax

(149,576)

  (109,123)

 

-

-

Other permanent differences

 417,067

(11,938)

 

-

-

Income tax expense/(credit) for the year

4,206,157

 1,345,845

 

(84,306)

  (167,222)

 

 

 

 

 

 

The tax rate used for the 2021 and 2020 reconciliations is the corporate tax rate of 35% payable by corporate entities in Malta on taxable profits under tax law in Malta.

 

 

12.      Dividends

 

           Group and Holding Company

 

In respect of the current year, a net interim dividend of Eur17,850,000 ( Eur53.01c per ordinary share) (2020 – Eur9,360,000 ( Eur27.80c per ordinary share ) ) was declared to the ordinary shareholders of the Holding Company.

 

Furthermore, dividends amounting to Eur24,020,651 ( Eur71.33c per ordinary share) (2020 – Eur20,000,000 (Eur59.39c per ordinary share ) ) were paid by the direct subsidiaries, none of which were attributable to non-controlling interests. During 2020, the Group acquired the non-controlling interest (note 17b) before any dividends were distributed by the indirect subsidiary and therefore no dividends were attributed to the non-controlling interest.

 

 

13.      Intangible assets

 

Group

 

 

Support

 

Acquired

 

 

 

services

Computer

rights and

Other

 

 

licence

software

franchise fee

intangibles

Total

 

 

Eur

Eur

Eur

Eur

Eur

Cost

 

 

 

 

 

At 01.01.2020

 

12,366,964

2,484,496

4,387,528

7,453

19,246,441

Additions

 

-

408,857

131,235

 19,500

559,592

Disposals

 

-

(56,714)

 (147,907)

-

 (204,621)

Exchange differences

 

-

(29,157)

(46,056)

(232)

(75,445)

At 01.01.2021

 

12,366,964

2,807,482

4,324,800

 26,721

19,525,967

Additions

 

-

404,907

 78,134

-

483,041

Disposals

 

-

(16,885)

-

-

(16,885)

Transfers

 

-

 23,316

-

(19,500)

3,816

Exchange differences

 

-

(25,713)

(38,856)

(195)

(64,764)

At 31.12.2021

 

12,366,964

3,193,107

4,364,078

7,026

19,931,175

 

 

 

 

 

 

 

Amortisation

 

 

 

 

 

 

At 01.01.2020

 

7,420,203

1,350,712

1,915,828

876

10,687,619

Amortisation for the year

 

618,351

412,281

300,056

4

1,330,692

Released on disposal

 

-

(56,714)

 (147,906)

-

 (204,620)

Exchange differences

 

-

(16,310)

(19,721)

(110)

(36,141)

At 01.01.2021

 

8,038,554

1,689,969

2,048,257

770

11,777,550

Amortisation for the year

 

618,351

464,762

301,714

252

1,385,079

Released on disposal

 

-

(16,885)

-

-

(16,885)

Transfers

 

-

904

-

-

904

Exchange differences

 

-

(16,787)

(20,108)

(93)

(36,988)

At 31.12.2021

 

8,656,905

2,121,963

2,329,863

929

13,109,660

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

At 31.12.2020

 

4,328,410

1,117,513

2,276,543

 25,951

7,748,417

 

 

 

 

 

 

 

At 31.12.2021

 

3,710,059

1,071,144

2,034,215

6,097

6,821,515

 

 

 

 

 

 

 

 

Holding Company

 

 

 

 

 

 

 

 

Support

 

 

 

 

services

Computer

 

 

 

licence

Software

Total

 

 

 Eur

 Eur

Eur

Cost

 

 

 

 

At 01.01.2020 / 31.12.2021

 

12,197,438

190,939

12,388,377

 

 

 

 

 

Amortisation

 

 

 

 

At 01.01.2020

 

 7,318,503

190,939

7,509,442

Amortisation for the year

 

609,876

-

 609,876

At 01.01.2021

 

 7,928,379

190,939

8,119,318

Amortisation for the year

 

609,876

-

 609,876

At 31.12.2021

 

 8,538,255

190,939

8,729,194

 

 

 

 

 

Carrying amount

 

 

 

 

At 31.12.2020

 

 4,269,059

-

4,269,059

 

 

 

 

 

At 31.12.2021

 

 3,659,183

-

3,659,183

 

 

 

 

 

 

The amortisation expense on intangible assets has been included in the line item ‘Administrative expenses’ in the statement of profit or loss and other comprehensive income.  

 

The acquired rights and franchise fees in relation to the Group with a carrying amount of Eur2,034,215 (2020 – Eur2,276,543 ) are amortised over the term of the franchise agreements in place with Mc Donalds’s Corporation to operate the Mc Donald’s brand in all markets.  Generally, amortisation period is twenty years.

 

Computer software for the Group with a carrying amount of Eur1,071,144 (2020 – Eur1,117,513 ) mainly relates to a new ERP system invested into by the Romania segment during 2019 to improve the business operations and obtain efficiencies in reporting. The amortisation period is over five years.

 

The support services licence owned by the Group and the Holding Company with a carrying amount of Eur3,659,183 (2020 – Eur4,269,059 ) will be fully amortised within eight years, and relates to the licence paid to Mc Donald’s Corporation to operate the Mc Donald’s brand in the Baltic countries.

 

 

14.      Property, plant and equipment

 

Group

 

 

Land and

Improvements

Motor

Plant and

Other

 

 

buildings

to premises

vehicles

equipment

equipment

Total

 

Eur

Eur

Eur

Eur

Eur

Eur

Cost

 

 

 

 

 

 

At 01.01.2020

61,527,309

26,344,653

1,185,861

60,333,117

13,383,582

162,774,522

Additions

490,838

5,228,451

165,698

6,339,198

1,324,520

13,548,705

Disposals

(53,688)

(1,272,693)

(269,572)

(1,488,337)

(498,528)

(3,582,818)

Transfers

4,595

(9,482)

6,689

82,528

(84,330)

 -

Exchange differences

(685,445)

(128,267)

(25,239)

(782,909)

(9,969)

(1,631,829)

At 01.01.2021

61,283,609

30,162,662

1,063,437

64,483,597

14,115,275

171,108,580

Additions

2,306,251

5,925,509

1,975

10,043,420

1,009,858

19,287,013

Disposals

(38,173)

(403,962)

(178,301)

(3,300,476)

(602,232)

(4,523,144)

Reclassification between asset categories

(3,233,332)

1,681,383

14,598

(4,305,918)

5,843,269

 -

Transfers

 -

(576,165)

 -

265,325

307,024

(3,816)

Exchange differences

(594,658)

(143,989)

(19,408)

(715,227)

(8,729)

(1,482,011)

At 31.12.2021

59,723,697

36,645,438

882,301

66,470,721

20,664,465

184,386,622

 

 

 

 

 

 

 

Accumulated depreciation

 

 

 

 

 

 

At 01.01.2020

17,759,240

10,631,985

414,518

27,382,948

10,494,423

66,683,114

Charge for the year

3,324,975

1,978,542

247,156

6,063,597

2,712,463

14,326,733

Released on disposal

(5,126)

(1,229,913)

(186,542)

(1,369,028)

(473,958)

(3,264,567)

Exchange differences

(48,156)

(4,870)

(11,896)

(448,302)

(6,798)

(520,022)

At 01.01.2021

21,030,933

11,375,744

463,236

31,629,215

12,726,130

77,225,258

Charge for the year

2,386,451

2,269,781

213,048

6,223,103

1,964,521

13,056,904

Released on disposal

(16,202)

(384,124)

(164,007)

(3,043,903)

(563,789)

(4,172,025)

Transfers

 -

 -

 -

10,663

(11,567)

(904)

Impairment

 -

63,275

 -

133,482

 -

196,757

Reversal of impairment

 -

 -

 -

(150,855)

 -

(150,855)

Exchange differences

(80,385)

(16,648)

(10,980)

(411,889)

(5,902)

(525,804)

At 31.12.2021

23,320,797

13,308,028

501,297

34,389,816

14,109,393

85,629,331

 

 

 

 

 

 

 

Carrying amount

 

 

 

 

 

 

At 31.12.2020

40,252,676

18,786,918

600,201

32,854,382

1,389,145

93,883,322

 

 

 

 

 

 

 

At 31.12.2021

36,402,900

23,337,410

381,004

32,080,905

6,555,072

98,757,291

 

 

 

 

 

 

 

 

 

No interest has been capitalised by the Group during 2021 and 2020.  The Group’s property, plant and equipment with a carrying amount of Eur40m (2020 – Eur44m ) are held as security in connection with bank borrowings.

 

Impairment losses on property, plant and equipment

 

The impairment losses on property, plant and equipment recognised within administrative expenses in profit or loss during 2021 amounted to Eur196,757 .  In addition, certain property, plant and equipment in Romania which were previously impaired, have been re-utilised during 2021. As a result, an impairment amount of Eur150,855 was reversed and included within administrative expenses. During 2020, there were no impairment gains or losses on property, plant and equipment recognised in profit or loss.

 

Holding Company

 

 

 

 Furniture,

 

 

 fixtures

 

 

 and other

 

 

equipment

 

 

 Eur

Cost

 

 

At 01.01.2020

 

   185,364

Additions

 

   5,584

Disposals

 

 (4,411)

At 01.01.2021

 

   186,537

Additions

 

 13,672

Disposals

 

 (3,634)

At 31.12.2021

 

   196,575

 

 

 

Accumulated depreciation

 

 

At 01.01.2020

 

   160,176

Charge for the year

 

 10,439

Released on disposal

 

 (4,101)

At 01.01.2021

 

   166,514

Charge for the year

 

   9,527

Released on disposal

 

    (804)

At 31.12.2021

 

   175,237

 

 

 

Carrying amount

 

 

At 31.12.2020

 

 20,023

 

 

 

At 31.12.2021

 

 21,338

 

 

 

15.      Right-of-use assets

 

Group

 

 

 

Motor

 

 

Buildings

vehicles

Total

 

 

Eur

Eur

Eur

Cost

 

 

 

At 01.01.2020

 

  96,685,694

  536,260

  97,221,954

Additions

 

9,547,983

  160,850

9,708,833

Disposals

 

(306,553)

  (18,488)

(325,041)

Remeasurement

 

  341,421

-

  341,421

Exchange differences

 

(649,524)

-

(649,524)

At 01.01.2021

 

105,619,021

  678,622

106,297,643

Additions

 

  28,062,843

  267,533

  28,330,376

Disposals

 

  (3,570,924)

  (32,618)

  (3,603,542)

Remeasurement

 

  530,388

-

  530,388

Exchange differences

 

(647,515)

  (904)

(648,419)

At 31.12.2021

 

129,993,813

  912,633

130,906,446

 

 

 

 

 

Amortisation

 

 

 

 

At 01.01.2020

 

8,745,113

  175,442

8,920,555

Amortisation for the year

 

9,716,656

  183,797

9,900,453

Released on disposal

 

(306,553)

  (18,488)

(325,041)

Exchange differences

 

  (85,303)

-

  (85,303)

At 01.01.2021

 

  18,069,913

  340,751

  18,410,664

Amortisation for the year

 

9,903,835

  205,617

  10,109,452

Released on disposal

 

  (3,297,961)

  (32,618)

  (3,330,579)

Impairment

 

  125,535

-

  125,535

Exchange differences

 

(128,914)

(79)

(128,993)

At 31.12.2021

 

  24,672,408

  513,671

  25,186,079

 

 

 

 

 

Carrying amount

 

 

 

 

At 31.12.2020

 

  87,549,108

  337,871

  87,886,979

 

 

 

 

 

At 31.12.2021

 

105,321,405

  398,962

105,720,367

 

 

 

 

 

 

 

 

 

 

Holding company

 

 

 

 

 

Motor

 

 

Buildings

vehicles

Total

 

 

Eur

Eur

Eur

Cost

 

 

 

At 01.01.2020 / 31.12.2020

 

393,021

 11,709

404,730

Additions

 

 60,956

7,072

 68,028

At 31.12.2021

 

453,977

 18,781

472,758

 

 

 

 

 

Amortisation

 

 

 

 

At 01.01.2020

 

 34,680

5,400

 40,080

Amortisation for the year

 

 34,680

5,405

 40,085

At 01.01.2021

 

 69,360

 10,805

 80,165

Amortisation for the year

 

 39,291

6,794

 46,085

At 31.12.2021

 

108,651

 17,599

126,250

 

 

 

 

 

Carrying amount

 

 

 

 

At 31.12.2020

 

323,661

904

324,565

 

 

 

 

 

At 31.12.2021

 

345,326

1,182

346,508

 

 

 

 

 

 

 

 

 

 

 

The amortisaton on right-of-use assets is included within cost of sales and administrative expenses.

 

The Group and the Holding Company has elected to disclose right-of-use assets separately in these financial statements.  The information pertaining to the gross carrying amount, amortisaton recognised during the year and other movements in right-of-use assets is included in the above table. Information pertaining to lease liabilities and their corresponding maturities are disclosed separately in note 25. Information about the accounting policy for the measurement and recognition of leases is disclosed in note 2.

 

The weighted average incremental borrowing rate applied to lease liabilities recognised under IFRS 16 was 3.93% .  Additions to right-of-use assets during the current reporting period have been recognised using a rate between 1.43% and 6.38% (2020 - 1.73% and 7.96% ). The incremental borrowing rate will be re-assessed every time a new lease is entered into by the Group and Holding Company and the corresponding right-of-use asset recognised. New leases are assessed on a case-by-case basis.

 

 

16.      Deferred taxation

 

Group

 

 

 

Opening

Recognised in

Closing

 

 

balance

profit and loss

 balance

 

 

Eur

Eur

Eur

Deferred tax assets

 

 

 

 

2020

 

 

 

 

Arising on:

 

 

 

 

Temporary differences on

 

 

 

 

property, plant and equipment

 

612,219

347,974

960,193

Other temporary differences

 

255,580

  70,441

326,021

 

 

867,799

418,415

 1,286,214

2021

 

 

 

 

Arising on:

 

 

 

 

Temporary differences on

 

 

 

 

property, plant and equipment

 

960,193

136,137

 1,096,330

Other temporary differences

 

326,021

  42,057

368,078

 

 

1,286,214

178,194

 1,464,408

 

 

 

 

 

Deferred tax liabilities

 

 

 

 

2020

 

 

 

 

Arising on:

 

 

 

 

Temporary differences on

 

 

 

 

 - intangible assets

 

1,561,536

  (219,103)

 1,342,433

 

 

 

 

 

2021

 

 

 

 

Arising on:

 

 

 

 

Temporary differences on

 

 

 

 

 - intangible assets

 

1,342,433

  (218,729)

 1,123,704

 

 

 

 

 

 

Deferred tax assets have been recognised for all unused tax losses to the extent that it is probable that taxable profits will be available against which the losses can be utilised.  The majority of the deferred tax asset arising on unutilised tax losses reverses when dividends are declared from the subsidiaries.  The aggregate amount of temporary differences associated with investments in subsidiaries for which deferred tax liabilities have not been recognised amounts to Eur3,930,779 (2020 – Eur5,605,841 ).

 

Holding Company

 

 

Opening

Recognised in

Closing

 

 

balance

profit and loss

 balance

 

 

Eur

Eur

Eur

Deferred tax liabilities

 

 

 

 

2020

 

 

 

 

Arising on:

 

 

 

 

Temporary differences on

 

 

 

 

intangible assets

 

1,561,536

(219,103)

 1,342,433

2021

 

 

 

 

Arising on:

 

 

 

 

Temporary differences on

 

 

 

 

intangible assets

 

1,342,433

(218,729)

 1,123,704

 

 

 

 

 

 

 

17.      Non-financial assets

 

(a)      Investments in subsidiaries

 

 

 

 

 

Holding Company

 

 

 

 

 

Investments

 

 

 

 

 

in subsidiaries

 

 

 

 

 

 Eur

Cost

 

 

 

 

 

At 31.12.2020 / 31.12.2021

 

 

 

 

56,375,780

 

 

 

 

 

 

 

Details of the share capital, reserves and profit for the year for the Holding Company’s direct subsidiaries are as follows:

 

 Share capital

 Profit for the

 

 Share capital

 Profit for the

Name of subsidiary

 and reserves

 year

 

 and reserves

 year

 

 2021

 2021

 

 2020

 2020

 

 Eur

 Eur

 

 Eur

 Eur

 

 

 

 

 

 

Premier Capital B.V.

38,068,073

21,350,530

 

40,738,194

26,046,373

 

 

 

 

 

 

Premier Restaurants Malta Limited

 5,220,693

 1,249,275

 

 3,971,418

990,103

 

 

 

 

 

 

 

 

 

Proportion of ownership interests and voting rights held by owners of the Holding Company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name of subsidiary

Registered address

Holding

Principal activity

 

 

2021

2020

 

 

 

 

%

%

 

 

 

 

 

 

Arcades Limited

Nineteen Twenty Three,

 

Operates McDonald’s

 

Valletta Road, Marsa, Malta

100

100

Indirect

restaurants in Malta

 

 

 

 

AS Premier Restaurants Eesti

Tartu mnt 13, Kesklinna district,

 

 

 

Tallinn city, Harju county,

 

Operates McDonald's

 

 10145, Estonia

99.99

99.99

Indirect

restaurants in Estonia

 

 

 

 

Premier Arcades Limited

Nineteen Twenty Three,

 

 

 

Valletta Road, Marsa, Malta

100

100

Indirect

Holding Company

 

 

 

 

Premier Capital B.V.

Herikerbergweg 88,

 

 

 

Jupiter Building 2nd Floor,

 

 

 

1101CM , Amsterdam

 

 

 

The Netherlands

99.99

99.99

Direct

Holding Company

 

 

 

 

Premier Capital Delaware Inc

2711 Centerville Road, Suite 400,

 

 

 

Wilmington, Delaware 19808,

 

Holding Company -

 

United States

-

99.99

Indirect

dissolved in 2021

 

 

 

 

Premier Capital Hellas S.A.

59, Al. Panagouli Street,

 

 

 

15343 Agia Paraskevi, Athens

 

Operates McDonald's

 

Greece

99.99

99.99

Indirect

restaurants in Greece

 

 

 

 

Premier Capital SRL

4-8 Nicolae Titulescu Avenue,

 

 

 

 America House Building,

 

 

 

West Wing, 5th Floor,

 

 

 

011141 Bucharest, Romania

99.99

99.99

Indirect

Holding Company

 

 

 

 

Premier Restaurants Malta Limited

Nineteen Twenty Three,

 

Operates McDonald’s

 

Valletta Road, Marsa, Malta

100

100

Direct

restaurants in Malta

 

 

 

 

Premier Restaurants Romania SRL

4-8 Nicolae Titulescu Avenue,

 

 

 

 America House Building,

 

 

 

West Wing, 5th Floor,

 

Operates McDonald's

 

011141 Bucharest, Romania

99.99

99.99

Indirect

restaurants in Romania

 

 

 

 

Premier Restaurants, UAB

Tilto g. 1, Vilnius

 

Operates McDonald's

 

LT-01101, Lithuania

99.99

99.99

Indirect

restaurants in Lithuania

 

 

 

 

"Premier Restaurants Latvia" SIA

6, Duntes Street, Riga

 

Operates McDonald's

 

LV-1013, Latvia

99.99

99.99

Indirect

restaurants in Latvia

 

 

(b)    Non-controlling interests

 

The table below shows details of non-wholly owned subsidiaries of the Group that have material non-controlling interests.

 

 

Details of the Holding Company’s subsidiaries at 31 December 2021 and 2020 are as follows:

 

 

 

Proportion of ownership interests and voting rights held by non-controlling interests

Profit / (loss) allocated to non-controlling interests

Accumulated non-controlling interests

 

 

 

 

 

 

Name of subsidiary

Registered address

 

 

2021

2020

2021

2020

2021

2020

 

 

%

%

Eur

Eur

Eur

Eur

 

 

 

 

 

 

 

 

Premier Capital SRL

4-8 Nicolae Titulescu Avenue,

 

 

 

 

 

 

 

 America House Building,

 

 

 

 

 

 

 

West Wing, 5th Floor,

 

 

 

 

 

 

 

011141 Bucharest, Romania

-

-

-

(7,956)

-

-

 

 

 

 

 

 

 

 

Premier Restaurants Romania SRL

4-8 Nicolae Titulescu Avenue,

 

 

 

 

 

 

 

 America House Building,

 

 

 

 

 

 

 

West Wing, 5th Floor,

 

 

 

 

 

 

 

011141 Bucharest, Romania

-

-

-

219,822

-

-

 

 

 

 

 

 

 

 

Premier Capital Delaware Inc

2711 Centerville Road, Suite 400,

 

 

 

 

 

 

 

Wilmington, Delaware 19808,

 

 

 

 

 

 

 

United States

-

-

-

43

-

-

 

 

 

 

 

 

 

 

Individually immaterial subsidiaries with non-controlling interests

-

-

(66,394)

(66,394)

Total

 

 

 

-

211,909

(66,394)

(66,394)

 

 

 

 

 

 

 

 

 

During 2020, the Group acquired the 10% non-controlling interest for an amount of Eur11,489,000 . Accumulated non-controlling interest and movement in reserves allocated to non-controlling interest up to acquisition date, were reversed in equity.  Summarised financial information in respect of each of the Group's subsidiaries that has material non-controlling interests up to acquisition date is set out below.  The summarised financial information below represents amounts before intragroup eliminations.

 

Premier Capital SRL

 

 

 

 

 

31 May 2020

 

 

 

 

 

Eur

 

 

 

 

 

 

Current assets

 

 

 

 

9,396,572

 

 

 

 

 

 

Non-current assets

 

 

 

 

 63,772,955

 

 

 

 

 

 

Current liabilities

 

 

 

 

(14,880,367)

 

 

 

 

 

 

Equity attributable to owners of the Company

 

 

 

 61,247,039

 

 

 

 

 

 

Non-controlling interests

 

 

 

 

 (2,957,879)

 

 

 

 

 

 

 

 

 

 

 

31 May 2020

 

 

 

 

 

Eur

 

 

 

 

 

 

Expenses