Notes to the financial statements
31 December 2023
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
certain property, plant and equipment 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 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.
Material 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 twenty 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:
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Amortised
cost;
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Fair value
through profit or loss (FVTPL); or
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Fair value through
other comprehensive income (FVOCI).
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In the periods
presented the Group does not have any financial assets categorised
as FVTPL.
The classification is
determined by both:
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The entity’s
business model for managing the financial asset; and
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The contractual cash
flow characteristics of the financial asset.
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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):
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they are held within a
business model whose objective is to hold the financial assets and
collect its contractual cash flows; and
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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.
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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, loans and receivables, trade and most other
receivables and other financial assets 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:
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they are held
under a business model whose objective is “hold to
collect” the associated cash flows and sell, and
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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.
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Any gains or
losses recognised in other comprehensive income (OCI) will be
recycled upon derecognition of the asset. The Group’s
local and foreign 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:
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financial instruments
that have not deteriorated significantly in credit quality since
initial recognition or that have low credit risk (‘Stage
1’) and
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financial instruments
that have deteriorated significantly in credit quality since
initial recognition and whose credit risk is not low (‘Stage
2’).
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‘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.
Receivables
The Group makes use of
a simplified approach in accounting for loans and receivables and
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 loans, trade receivables and other 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.
(v)
Classification and measurement of financial
liabilities
The Group’s
financial liabilities include debt securities in issue, bank
borrowings, trade and other payables, lease liabilities, derivative
financial instruments and other financial
liabilities.
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.
(vi) 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.
Customer loyalty
programme
The Group’s
subsidiaries operate a customer loyalty incentive programme. For
each one Euro or one Romanian Lei spent, customers obtain ten
loyalty points which they can redeem to receive discounts or free
items on future purchases. Loyalty points are considered to
be a separate performance obligation as they provide customers with
a material right they would not have received otherwise. Unused
points expire if not used within six months.
The Group allocates the
transaction price between the material right and other performance
obligations identified in a contract on a relative stand-alone
selling price basis. The amount allocated to the material
right is initially recorded as a contract liability and is later
recognised in revenue when the points are redeemed by the
customer. The Group’s experience is that a portion of
the loyalty points will expire without being used
(‘breakage’). The Group recognises revenue from
expected breakage in proportion to the points redeemed and trues-up
this estimate when points expire. The Group has assessed it
is highly improbable a significant reversal of revenue will arise
if actual experience differs from expectations and therefore no
further revenue constraint is needed.
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:
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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;
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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. Short-term employee benefits,
including holiday entitlement, are current liabilities, measured at
the undiscounted amount the Group expects to pay as a result of the
unused entitlement.
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.
Significant management judgement in applying
accounting policies and estimation uncertainty
Significant management
judgements
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.
Impairment of
financial assets and goodwill
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 subsidiaries (or
operations). The value in use calculation requires the
directors to estimate the future cash flows expected to arise from
the subsidiary (or operation) and a suitable discount rate in order
to calculate present value.
Goodwill arising on a
business combination is allocated, to the subsidiary or operation
that is expected to benefit from that business
combination.
Reconciliation of
reported goodwill is presented below:
|
|
|
|
|
Group
|
|
|
|
|
|
Eur
|
|
Cost
|
|
|
|
|
|
At
01.01.2022
|
|
|
|
24,931,687
|
|
Difference on exchange
on foreign operations
|
|
|
1,180
|
|
At
31.12.2022
|
|
|
|
24,932,867
|
|
Difference on exchange
on foreign operations
|
|
|
(45,606)
|
|
At
31.12.2023
|
|
|
|
24,887,261
|
|
|
|
|
|
|
The carrying amount of
goodwill as at 31 December 2023 amounting to Eur
24,887,261 (2022 -
Eur 24,932,867
) is allocated
Eur16,591,999 (2022 - Eur16,591,999 ) to the Malta
operations and Eur8,295,262 (2022 - Eur8,340,868 ) to
the Romania operations. Since goodwill for Romania operations
is denominated in Romanian Lei, movement in foreign exchange
differences impacted the carrying amount of the goodwill by
Eur (45,606)
( 2022 –
Eur 1,180
).
The recoverable amounts
of the Malta and Romania operations 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 operations. 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.
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 2.0% (2022 –
2.1% ); and
·
use of 9.3% (pre-tax) (2022 –
9.2% (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.
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 2.0% (2022 –
2.1% ) and
·
use of 11.2% (pre-tax) (2022 –
11.4% (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 2023 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
2023.
Other Standards and
amendments that are effective for the first time in 2023 and could
be applicable to the Group are:
-
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction (Amendments to IAS 12)
-
Disclosure of Accounting Policies (Amendments to
IAS 1 and IFRS Practice Statement 2)
-
Definition of Accounting Estimates (Amendments
to IAS 8)
-
International Tax Reform—Pillar Two Model
Rules (Amendments to IAS 12)
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 or IFRIC.
None of these Standards, amendments to existing Standards have been
adopted early by the Group and no Interpretations have been issued
that are applicable and need to be taken into consideration by the
Group.
Other Standards and
amendments that are not yet effective and have not been adopted
early by the Group include:
-
Classification of Liabilities as Current or
Non-current (Amendments to IAS 1)
-
Lease Liability in a Sale and Leaseback
(Amendments to IFRS 16)
-
Supplier Finance Arrangements (Amendments to IAS
7 and IFRS 7)
-
Non-current Liabilities with Covenants
(Amendments to IAS 1)
-
Lack of Exchangeability (Amendments to IAS
21)
These amendments
are not expected to have a significant impact on the financial
statements in the period of initial application and therefore no
disclosures have been made.
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
not adopted in the current year 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 Eur
1,124,924 (2022 -
Eur1,092,000 ) relates to consultancy, professional 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 Eur 2,439,431 (2022 –
Eur 3,049,307 ) 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
|
|
|
2023
|
2022
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
Total profit for
reportable segments
|
|
59,878,514
|
53,719,914
|
|
Elimination of inter
segment profits
|
|
(53,580,134)
|
(20,317,000)
|
|
Unallocated
amounts:
|
|
|
|
|
Revenue
|
|
1,124,924
|
1,092,000
|
|
Administrative
expenses
|
|
(8,769,645)
|
(8,072,369)
|
|
Investment
Income
|
|
55,161,711
|
21,135,520
|
|
Finance
costs
|
|
(3,169,790)
|
(3,077,923)
|
|
|
|
50,645,580
|
44,480,142
|
|
|
|
|
|
Assets
|
|
|
2023
|
2022
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
Total assets for
reportable segments
|
|
367,992,878
|
317,120,797
|
|
Elimination of inter
segment receivables
|
|
-
|
(4,597)
|
|
Unallocated
amounts:
|
|
|
|
|
Goodwill
|
|
24,887,261
|
24,932,867
|
|
Intangible
assets
|
|
2,685,325
|
3,049,307
|
|
Financial assets at
fair value through
|
|
|
|
|
other comprehensive
income
|
|
16,753,990
|
15,672,842
|
|
Loans and
receivables
|
|
18,491,636
|
12,348,788
|
|
Trade and other
receivables
|
|
461,730
|
629,723
|
|
Current tax
asset
|
|
2,031,514
|
130,358
|
|
Cash and cash
equivalents
|
|
1,872,481
|
2,601,528
|
|
Other unallocated
amounts
|
|
(10,032,620)
|
(6,445,050)
|
|
|
|
425,144,195
|
370,036,563
|
|
|
|
|
|
Liabilities
|
|
|
2023
|
2022
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
Total liabilities for
reportable segments
|
|
223,752,882
|
186,061,856
|
|
Elimination of inter
segment payables
|
|
-
|
-
|
|
Unallocated
amounts:
|
|
|
|
|
Trade and other
payables
|
|
2,605,678
|
2,136,758
|
|
Other financial
liabilities
|
|
482,831
|
1,253,998
|
|
Bank
borrowings
|
|
29,768,650
|
14,144,443
|
|
Debt securities in
issue
|
|
64,726,830
|
64,633,172
|
|
Deferred tax
liabilities
|
|
672,721
|
904,947
|
|
Other unallocated
amounts
|
|
137,974
|
128,236
|
|
|
|
322,147,566
|
269,263,410
|
|
|
|
|
|
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
|
|
|
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
2023
|
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
40,155,994
|
102,392,722
|
44,066,736
|
64,553,820
|
44,788,139
|
349,608,010
|
645,565,421
|
-
|
-
|
645,565,421
|
|
Profit before
tax
|
|
3,671,107
|
4,285,608
|
5,154,475
|
10,855,242
|
4,529,252
|
31,382,830
|
59,878,514
|
44,347,200
|
(53,580,134)
|
50,645,580
|
|
Depreciation
and
|
|
|
|
|
|
|
|
|
|
|
|
|
amortisation
|
|
1,217,881
|
6,715,637
|
2,200,385
|
2,502,663
|
2,539,045
|
14,381,451
|
29,557,062
|
701,769
|
8,475
|
30,267,306
|
|
Segment
assets
|
|
14,380,094
|
78,016,782
|
33,620,540
|
37,958,590
|
19,137,169
|
184,879,703
|
367,992,878
|
57,151,317
|
-
|
425,144,195
|
|
Right-of-use
assets
|
|
3,430,246
|
40,683,416
|
16,369,979
|
16,854,389
|
8,565,399
|
53,609,683
|
139,513,112
|
299,686
|
-
|
139,812,798
|
|
Property, plant
and
|
|
|
|
|
|
|
|
|
|
|
|
|
equipment
|
|
4,687,874
|
24,281,830
|
6,360,486
|
8,838,903
|
4,509,315
|
91,718,856
|
140,397,264
|
22,288
|
(280,359)
|
140,139,193
|
|
Intangible
assets
|
|
80,137
|
520,034
|
321,111
|
390,531
|
229,510
|
961,891
|
2,503,214
|
2,685,325
|
33,925
|
5,222,464
|
|
Capital
expenditure
|
|
819,737
|
8,178,888
|
1,573,451
|
1,363,424
|
1,511,767
|
20,623,240
|
34,070,507
|
287,724
|
-
|
34,358,231
|
|
Segment
liabilities
|
|
7,977,746
|
59,691,792
|
25,092,985
|
24,379,615
|
15,920,794
|
90,689,950
|
223,752,882
|
98,394,684
|
-
|
322,147,566
|
|
Lease
liabilities
|
|
3,623,468
|
43,434,059
|
17,448,522
|
18,087,951
|
9,331,908
|
55,615,569
|
147,541,477
|
323,791
|
-
|
147,865,268
|
|
Income tax
expense
|
|
347,633
|
899,441
|
864,210
|
1,736,415
|
1,635,198
|
4,747,940
|
10,230,837
|
1,211,280
|
(1,561,538)
|
9,880,579
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eliminations
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
Estonia
|
Greece
|
Latvia
|
Lithuania
|
Malta
|
Romania
|
Total
|
Unallocated
|
adjustments
|
Consolidated
|
|
|
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
2022
|
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Continuing
operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
31,869,809
|
81,497,822
|
37,440,652
|
51,502,157
|
34,464,507
|
296,830,008
|
533,604,955
|
-
|
-
|
533,604,955
|
|
Profit before
tax
|
|
2,602,183
|
3,614,452
|
3,529,581
|
6,409,782
|
2,360,361
|
35,203,555
|
53,719,914
|
11,077,228
|
(20,317,000)
|
44,480,142
|
|
Depreciation
and
|
|
|
|
|
|
|
|
|
|
|
|
|
amortisation
|
|
997,536
|
5,647,803
|
2,091,280
|
2,409,209
|
2,454,792
|
11,966,406
|
25,567,026
|
665,088
|
8,475
|
26,240,589
|
|
Segment
assets
|
|
12,567,250
|
66,689,486
|
27,738,000
|
29,925,903
|
18,665,816
|
161,534,342
|
317,120,797
|
52,920,363
|
(4,597)
|
370,036,563
|
|
Right-of-use
assets
|
|
3,718,590
|
36,864,515
|
11,681,768
|
15,359,310
|
9,653,711
|
42,085,161
|
119,363,055
|
334,323
|
-
|
119,697,378
|
|
Property, plant
and
|
|
|
|
|
|
|
|
|
|
|
|
|
equipment
|
|
4,720,259
|
19,762,857
|
5,837,591
|
8,851,180
|
4,206,360
|
81,636,996
|
125,015,243
|
23,136
|
(280,359)
|
124,758,020
|
|
Intangible
assets
|
|
49,367
|
449,881
|
305,650
|
437,538
|
267,127
|
1,159,868
|
2,669,431
|
3,049,307
|
42,400
|
5,761,138
|
|
Capital
expenditure
|
|
2,176,527
|
6,925,335
|
1,405,680
|
1,549,406
|
2,257,099
|
16,000,585
|
30,314,632
|
14,085
|
-
|
30,328,717
|
|
Segment
liabilities
|
|
7,352,916
|
52,960,714
|
20,252,670
|
20,017,386
|
15,443,498
|
70,034,672
|
186,061,856
|
83,201,554
|
-
|
269,263,410
|
|
Lease
liabilities
|
|
3,874,954
|
38,703,833
|
12,592,963
|
16,335,705
|
10,313,254
|
45,173,680
|
126,994,389
|
355,947
|
-
|
127,350,336
|
|
Income tax
expense
|
|
466,723
|
754,272
|
281,541
|
961,413
|
872,212
|
787,763
|
4,123,924
|
(161,168)
|
(269,231)
|
3,693,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.
Investment income
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Interest income on bank
deposits
|
434,622
|
317,738
|
|
-
|
219
|
|
Interest income from
subsidiaries
|
-
|
-
|
|
1,938
|
60,022
|
|
Interest income from
ultimate parent
|
706,457
|
676,718
|
|
706,457
|
642,718
|
|
Interest income from
other related parties
|
-
|
6,500
|
|
-
|
6,500
|
|
Gain on derivative
financial instrument
|
14,458
|
184,673
|
|
-
|
-
|
|
Other interest
income
|
848,403
|
91,697
|
|
848,403
|
91,697
|
|
Dividends from
financial assets at fair value through
|
|
|
|
|
|
|
other comprehensive
income
|
24,779
|
17,364
|
|
24,779
|
17,364
|
|
Dividends from
investments in subsidiaries
|
-
|
-
|
|
53,580,134
|
20,317,000
|
|
|
2,028,719
|
1,294,690
|
|
55,161,711
|
21,135,520
|
|
|
|
|
|
|
|
7.
Finance costs
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Interest on bank
borrowings
|
1,379,209
|
816,537
|
|
-
|
-
|
|
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
|
-
|
-
|
|
395,661
|
418,446
|
|
Interest expense for
leasing arrangements
|
5,598,029
|
4,603,627
|
|
13,343
|
13,829
|
|
Loss on financial
assets at fair value
|
|
|
|
|
|
|
through other
comprehensive income
|
396,325
|
-
|
|
142,780
|
-
|
|
Other finance
costs
|
305,573
|
244,187
|
|
86,848
|
114,490
|
|
|
10,210,294
|
8,195,509
|
|
3,169,790
|
3,077,923
|
|
|
|
|
|
|
|
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
|
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Raw materials and
consumables used
|
215,095,033
|
183,084,236
|
|
-
|
-
|
|
Changes in inventories
of raw materials
|
|
|
|
|
|
|
and consumables
used
|
(351,691)
|
(2,335,549)
|
|
-
|
-
|
|
Advertising, promotion
and other
|
|
|
|
|
|
|
distribution
costs
|
60,682,344
|
48,500,211
|
|
-
|
-
|
|
Amortisation of
intangible
|
|
|
|
|
|
|
assets (note
13)
|
1,270,162
|
1,402,444
|
|
642,430
|
609,876
|
|
Depreciation of
property, plant and
|
|
|
|
|
|
|
equipment (note
14)
|
16,585,332
|
13,881,407
|
|
8,541
|
9,866
|
|
Depreciation of
right-of-use assets (note 15)
|
12,411,812
|
10,956,738
|
|
50,798
|
45,346
|
|
Legal and professional
fees
|
976,263
|
887,238
|
|
145,857
|
195,745
|
|
Management fees payable
to
|
|
|
|
|
|
|
ultimate
parent
|
1,000,000
|
1,000,000
|
|
1,000,000
|
1,000,000
|
|
Operating lease rentals
(note 32)
|
698,160
|
698,160
|
|
698,160
|
698,160
|
|
Variable rental lease
payments
|
9,945,758
|
8,148,745
|
|
-
|
-
|
|
Operating
supplies
|
17,152,578
|
14,296,957
|
|
-
|
-
|
|
Royalties
|
49,362,928
|
37,765,297
|
|
-
|
-
|
|
Maintenance and
repairs
|
8,284,259
|
7,187,063
|
|
-
|
-
|
|
Travelling
expenses
|
5,796,274
|
4,876,638
|
|
3,203,683
|
2,927,068
|
|
Utilities and telephone
expenses
|
18,318,311
|
16,995,708
|
|
21,518
|
20,561
|
|
Directors
emoluments
|
1,035,547
|
953,122
|
|
1,035,547
|
953,122
|
|
Wages and salaries
(note 10)
|
154,621,133
|
126,506,399
|
|
1,740,002
|
1,416,957
|
|
Bank charges
|
2,577,046
|
1,652,671
|
|
-
|
-
|
|
Office and general
expenses
|
4,206,412
|
4,185,535
|
|
138,309
|
85,128
|
|
Other
expenses
|
4,233,747
|
2,611,875
|
|
72,637
|
(24,198)
|
|
Total
|
583,901,408
|
483,254,895
|
|
8,757,482
|
7,937,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit/(loss) is stated after charging/(crediting) the
following:
|
|
Group
|
|
Holding
Company
|
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Net exchange
differences
|
369,188
|
(270,698)
|
|
15,121
|
(82,025)
|
|
Loss on disposal of
property, plant
|
|
|
|
|
|
|
and
equipment
|
879,248
|
206,648
|
|
215
|
1,210
|
|
Revaluation loss on
property, plant
|
|
|
|
|
|
|
and
equipment
|
-
|
364,069
|
|
-
|
-
|
|
Impairment loss on
property, plant
|
|
|
|
|
|
|
and
equipment
|
141,216
|
187,618
|
|
-
|
-
|
|
Reversal of impairment
loss
|
|
|
|
|
|
|
on property, plant and
equipment
|
(275,514)
|
(67,536)
|
|
-
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Eur
53,586 (2022
– Eur 50,290
) 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
Eur 249,248 (2022 – Eur 159,709 ). Other fees
payable to the parent company’s auditors for tax services
amounted to Eur 1,575
(2022 – Eur 2,275 ).
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 Eur 29,000
( 2022 –
Eur 28,150
). Other fees payable to the parent
company’s auditors for tax services amounted to
Eur 850
( 2022 –
Eur 775
).
9.
Key management personnel compensation
|
|
|
Group and Holding
Company
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
Directors' compensation:
|
|
|
|
|
|
Short term
benefits:
|
|
|
|
|
|
Directors'
remuneration
|
|
|
1,035,547
|
953,122
|
|
|
|
|
|
|
|
Other
key management personnel compensation:
|
|
|
|
|
|
Short term
benefits:
|
|
|
|
|
|
Salaries and social
security contribution
|
|
|
816,026
|
834,673
|
|
|
|
|
1,851,573
|
1,787,795
|
|
|
|
|
|
|
10.
Staff costs and employee information
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
Staff
costs:
|
|
|
|
|
|
|
Wages and
salaries
|
141,293,615
|
116,020,561
|
|
1,645,195
|
1,378,196
|
|
Social security
costs
|
13,327,518
|
10,485,838
|
|
26,292
|
26,707
|
|
|
154,621,133
|
126,506,399
|
|
1,671,487
|
1,404,903
|
|
Recharged from
subsidiaries
|
-
|
-
|
|
68,515
|
12,054
|
|
|
154,621,133
|
126,506,399
|
|
1,740,002
|
1,416,957
|
|
|
|
|
|
|
|
The above staff costs are
exclusive of the directors’ emoluments.
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
|
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Number
|
Number
|
|
Number
|
Number
|
|
|
|
|
|
|
|
|
Operations
|
11,103
|
9,854
|
|
-
|
-
|
|
Administration
|
215
|
189
|
|
15
|
15
|
|
|
11,318
|
10,043
|
|
15
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11.
Income tax expense/(credit)
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Current tax
expense
|
9,463,780
|
4,225,416
|
|
1,443,506
|
57,590
|
|
Deferred tax
credit
|
416,799
|
(531,891)
|
|
(232,226)
|
(218,757)
|
|
|
9,880,579
|
3,693,525
|
|
1,211,280
|
(161,167)
|
|
|
|
|
|
|
|
Tax applying the
statutory domestic income tax rate and the income tax expense for
the year are reconciled as follows:
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Profit before
tax
|
50,645,580
|
44,480,142
|
|
44,359,363
|
11,211,966
|
|
|
|
|
|
|
|
|
Tax at the applicable
rate of 35%
|
17,725,953
|
15,568,050
|
|
15,525,777
|
3,924,188
|
|
|
|
|
|
|
|
|
Tax effect
of:
|
|
|
|
|
|
|
Non-deductibility of
depreciation and amortisation
|
91,735
|
94,294
|
|
-
|
-
|
|
Effect of write off
foreign tax
|
-
|
(12,807)
|
|
-
|
(12,807)
|
|
Effect of deferred tax
recognition
|
1,164,711
|
-
|
|
-
|
-
|
|
Disallowable
expenses
|
3,154,035
|
2,853,716
|
|
3,013,292
|
2,776,536
|
|
Effect of different tax
rates of subsidiaries
|
(11,779,868)
|
(10,586,626)
|
|
-
|
-
|
|
Effect of flat rate
foreign tax credit
|
(136,281)
|
(7,365)
|
|
(136,281)
|
(7,365)
|
|
Untaxed
dividends
|
-
|
-
|
|
(17,191,508)
|
(6,841,719)
|
|
Profits not chargeable
to tax and tax exemptions
|
(391,603)
|
(4,504,672)
|
|
-
|
-
|
|
Prior year under
provided tax
|
-
|
(78,038)
|
|
-
|
-
|
|
Other permanent
differences
|
51,897
|
366,973
|
|
-
|
-
|
|
Income tax
expense/(credit) for the year
|
9,880,579
|
3,693,525
|
|
1,211,280
|
(161,167)
|
|
|
|
|
|
|
|
The tax rate used for
the 2023 and 2022 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 Eur
39,000,000 (
Eur115.81c per ordinary share) (2022 –
Eur19,000,000 (Eur56.42c per ordinary share) ) was declared
to the ordinary shareholders of the Holding Company.
Dividends of Eur40,000,000 (2022 –
Eur18,000,000 ) were settled during the year. There
was no balance that remained unpaid as at end of year (2022 –
Eur1,000,000 ).
Furthermore,
dividends amounting to Eur 53,580,134 ( Eur159.11c
per ordinary share) (2022 – Eur 20,317,000 (Eur60.33c per
ordinary share ) were paid during the year by the direct subsidiaries to the
Holding Company.
13.
Intangible assets
Group
|
|
|
Support
|
|
Acquired
|
|
|
|
|
|
services
|
Computer
|
rights
and
|
Other
|
|
|
|
|
licence
|
software
|
franchise
fee
|
intangibles
|
Total
|
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Cost
|
|
|
|
|
|
|
|
At 01.01.2022
|
|
12,366,964
|
3,193,107
|
4,364,078
|
7,026
|
19,931,175
|
|
Additions
|
|
-
|
237,045
|
106,501
|
-
|
343,546
|
|
Disposals
|
|
-
|
(268,653)
|
(22,657)
|
-
|
(291,310)
|
|
Transfers
|
|
-
|
(7,960)
|
-
|
-
|
(7,960)
|
|
Exchange
differences
|
|
-
|
540
|
340
|
2
|
882
|
|
At 01.01.2023
|
|
12,366,964
|
3,154,079
|
4,448,262
|
7,028
|
19,976,333
|
|
Additions
|
|
-
|
620,280
|
133,709
|
-
|
753,989
|
|
Disposals
|
|
-
|
(142,919)
|
-
|
-
|
(142,919)
|
|
Transfers
|
|
-
|
215
|
-
|
-
|
215
|
|
Exchange
differences
|
|
-
|
(8,685)
|
(13,147)
|
(66)
|
(21,898)
|
|
At
31.12.2023
|
|
12,366,964
|
3,622,970
|
4,568,824
|
6,962
|
20,565,720
|
|
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
|
|
At 01.01.2022
|
|
8,656,905
|
2,121,963
|
2,329,863
|
929
|
13,109,660
|
|
Amortisation for the
year
|
|
618,351
|
475,629
|
308,213
|
251
|
1,402,444
|
|
Released on
disposal
|
|
-
|
(266,979)
|
(22,657)
|
-
|
(289,636)
|
|
Transfers
|
|
-
|
(6,861)
|
-
|
-
|
(6,861)
|
|
Exchange
differences
|
|
-
|
100
|
(512)
|
-
|
(412)
|
|
At 01.01.2023
|
|
9,275,256
|
2,323,852
|
2,614,907
|
1,180
|
14,215,195
|
|
Amortisation for the
year
|
|
618,351
|
522,083
|
129,482
|
246
|
1,270,162
|
|
Released on
disposal
|
|
-
|
(125,684)
|
-
|
-
|
(125,684)
|
|
Transfers
|
|
-
|
215
|
-
|
-
|
215
|
|
Exchange
differences
|
|
-
|
(7,852)
|
(8,744)
|
(36)
|
(16,632)
|
|
At
31.12.2023
|
|
9,893,607
|
2,712,614
|
2,735,645
|
1,390
|
15,343,256
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
|
|
|
|
|
|
At 31.12.2022
|
|
3,091,708
|
830,227
|
1,833,355
|
5,848
|
5,761,138
|
|
|
|
|
|
|
|
|
|
At
31.12.2023
|
|
2,473,357
|
910,356
|
1,833,179
|
5,572
|
5,222,464
|
|
|
|
|
|
|
|
|
Holding
Company
|
|
|
Support
|
|
|
|
|
|
services
|
Computer
|
|
|
|
|
licence
|
Software
|
Total
|
|
|
|
Eur
|
Eur
|
Eur
|
|
Cost
|
|
|
|
|
|
At 01.01.2022 /
01.01.2023
|
|
12,197,438
|
190,939
|
12,388,377
|
|
Additions
|
|
-
|
278,448
|
278,448
|
|
At
31.12.2023
|
|
12,197,438
|
469,387
|
12,666,825
|
|
|
|
|
|
|
|
Amortisation
|
|
|
|
|
|
At
01.01.2022
|
|
8,538,255
|
190,939
|
8,729,194
|
|
Amortisation for the
year
|
|
609,876
|
-
|
609,876
|
|
At
01.01.2023
|
|
9,148,131
|
190,939
|
9,339,070
|
|
Amortisation for the
year
|
|
609,876
|
32,554
|
642,430
|
|
At
31.12.2023
|
|
9,758,007
|
223,493
|
9,981,500
|
|
|
|
|
|
|
|
Carrying
amount
|
|
|
|
|
|
At
31.12.2022
|
|
3,049,307
|
-
|
3,049,307
|
|
|
|
|
|
|
|
At
31.12.2023
|
|
2,439,431
|
245,894
|
2,685,325
|
|
|
|
|
|
|
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
Eur 1,833,179
(2022 –
Eur 1,833,355
) are amortised over the term of the franchise
agreements in place with McDonalds’s Corporation to operate
the McDonald’s brand in all markets. Generally, amortisation
period is twenty years.
Computer software for the
Group with a carrying amount of Eur 910,356 (2022
– Eur 830,227
) 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 Eur 2,439,431 (2022 –
Eur 3,049,307
) will be fully amortised within eight
years, and relates to the licence paid to McDonald’s
Corporation to operate the McDonald’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
01.01.2022
|
59,723,697
|
36,645,438
|
882,301
|
66,470,721
|
20,664,465
|
184,386,622
|
|
Additions
|
2,887,198
|
8,473,051
|
641,946
|
14,859,847
|
3,123,129
|
29,985,171
|
|
Disposals
|
(194,754)
|
(1,289,097)
|
(612,391)
|
(2,733,653)
|
(1,127,379)
|
(5,957,274)
|
|
Revaluation
|
10,804,506
|
-
|
-
|
-
|
-
|
10,804,506
|
|
Transfers
|
609,665
|
(105,057)
|
85,738
|
-
|
(582,386)
|
7,960
|
|
Exchange
differences
|
(16,160)
|
(521)
|
701
|
(20,132)
|
76
|
(36,036)
|
|
At
01.01.2023
|
73,814,152
|
43,723,814
|
998,295
|
78,576,783
|
22,077,905
|
219,190,949
|
|
Additions
|
5,693,829
|
10,562,739
|
260,321
|
15,559,112
|
1,528,241
|
33,604,242
|
|
Disposals
|
(594,794)
|
(751,898)
|
(684,761)
|
(3,871,584)
|
(338,325)
|
(6,241,362)
|
|
Transfers
|
(277,864)
|
(1,421,060)
|
144,769
|
835,409
|
379,140
|
(339,606)
|
|
Exchange
differences
|
(273,135)
|
(87,096)
|
(3,505)
|
(278,402)
|
(2,953)
|
(645,091)
|
|
At
31.12.2023
|
78,362,188
|
52,026,499
|
715,119
|
90,821,318
|
23,644,008
|
245,569,132
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
|
|
|
|
|
At
01.01.2022
|
23,320,797
|
13,308,028
|
501,297
|
34,389,816
|
14,109,393
|
85,629,331
|
|
Charge for the
year
|
2,389,067
|
2,879,013
|
168,928
|
6,839,552
|
1,604,847
|
13,881,407
|
|
Released on
disposal
|
(74,216)
|
(1,235,768)
|
(175,408)
|
(2,598,039)
|
(1,503,026)
|
(5,586,457)
|
|
Transfers
|
-
|
-
|
-
|
-
|
6,861
|
6,861
|
|
Revaluation
|
364,069
|
-
|
-
|
-
|
-
|
364,069
|
|
Impairment
|
-
|
-
|
-
|
187,618
|
-
|
187,618
|
|
Reversal of
impairment
|
-
|
(29,035)
|
-
|
(38,501)
|
-
|
(67,536)
|
|
Exchange
differences
|
16,150
|
5,411
|
65
|
(4,042)
|
52
|
17,636
|
|
At
01.01.2023
|
26,015,867
|
14,927,649
|
494,882
|
38,776,404
|
14,218,127
|
94,432,929
|
|
Charge for the
year
|
3,200,477
|
3,119,346
|
708,763
|
8,100,635
|
1,456,111
|
16,585,332
|
|
Released on
disposal
|
(145,169)
|
(613,724)
|
(628,955)
|
(3,539,396)
|
(324,839)
|
(5,252,083)
|
|
Transfers
|
-
|
-
|
(215)
|
(181)
|
181
|
(215)
|
|
Impairment
|
-
|
78,178
|
-
|
63,038
|
-
|
141,216
|
|
Reversal of
impairment
|
-
|
(72,954)
|
-
|
(202,560)
|
-
|
(275,514)
|
|
Exchange
differences
|
(24,113)
|
(6,279)
|
(3,223)
|
(166,115)
|
(1,996)
|
(201,726)
|
|
At
31.12.2023
|
29,047,062
|
17,432,216
|
571,252
|
43,031,825
|
15,347,584
|
105,429,939
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
|
|
|
|
|
|
At
31.12.2022
|
47,798,285
|
28,796,165
|
503,413
|
39,800,379
|
7,859,778
|
124,758,020
|
|
|
|
|
|
|
|
|
|
At
31.12.2023
|
49,315,126
|
34,594,283
|
143,867
|
47,789,493
|
8,296,424
|
140,139,193
|
|
|
|
|
|
|
|
|
No interest has
been capitalised by the Group during 2023 and 2022. The
Group’s property, plant and equipment with a carrying amount
of Eur47m (2022 – Eur47m ) are held as security
in connection with bank borrowings.
Revaluation on
property, plant and equipment
At 31 December
2022, the group performed revaluation assessments of all its land
and buildings. Romania reported a revaluation gain on land
and buildings of Eur10,804,506 , which was recognised in
other comprehensive income and a revaluation loss of
Eur 364,069
which was recognised within administrative
expenses.
Impairment
losses on property, plant and equipment
The impairment
losses on property, plant and equipment recognised within
administrative expenses in profit or loss during 2023 amounted to
Eur 141,216
(2022 - Eur 187,618 ). In addition,
certain property, plant and equipment in Romania which were
previously impaired, have been re-utilised during 2023. As a
result, an impairment amount of Eur275,514
(2022 - Eur 67,536 ) was reversed and
included within administrative expenses.
|
|
|
18.
Financial assets
(a) Financial assets at fair value through other comprehensive
income
Group
|
|
|
Local
listed
|
Local
listed
|
Foreign
listed
|
Foreign
listed
|
Foreign
listed
|
Foreign
listed
|
|
|
|
|
|
debt
|
equity
|
debt
|
equity
|
derivative
|
money
market
|
Other
|
|
|
|
|
instruments
|
instruments
|
instruments
|
instruments
|
instruments
|
instruments
|
instruments
|
Total
|
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
At
01.01.2022
|
|
701,892
|
347,623
|
-
|
-
|
-
|
-
|
-
|
1,049,515
|
|
Additions
|
|
-
|
-
|
2,984,831
|
5,200,979
|
541,000
|
3,000,000
|
3,638,570
|
15,365,380
|
|
Disposals
|
|
-
|
-
|
-
|
(150,000)
|
(220,500)
|
-
|
-
|
(370,500)
|
|
Increase / (decrease)
in fair value
|
(20,802)
|
(11,353)
|
(18,733)
|
(201,570)
|
173
|
-
|
-
|
(252,285)
|
|
Exchange
differences
|
|
-
|
-
|
(9,794)
|
(109,474)
|
-
|
-
|
-
|
(119,268)
|
|
At
01.01.2023
|
|
681,090
|
336,270
|
2,956,304
|
4,739,935
|
320,673
|
3,000,000
|
3,638,570
|
15,672,842
|
|
Additions
|
|
-
|
-
|
4,882,727
|
11,416,468
|
-
|
2,487,303
|
(17,839,421)
|
947,077
|
|
Disposals
|
|
-
|
-
|
(1,996,090)
|
(5,957,188)
|
(320,500)
|
(5,487,303)
|
13,761,081
|
-
|
|
Increase / (decrease)
in fair value
|
(278)
|
23,581
|
119,013
|
496,670
|
-
|
-
|
-
|
638,986
|
|
Reversal in fair
value
|
|
-
|
-
|
19,924
|
72,399
|
(173)
|
-
|
-
|
92,150
|
|
Income
|
|
-
|
-
|
-
|
-
|
-
|
-
|
605,798
|
605,798
|
|
Expenditure
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(97,268)
|
(97,268)
|
|
Exchange
differences
|
|
-
|
-
|
9,794
|
40,872
|
-
|
-
|
-
|
50,666
|
|
At
31.12.2023
|
|
680,812
|
359,851
|
5,991,672
|
10,809,156
|
-
|
-
|
68,760
|
17,910,251
|
|
|
|
|
|
|
|
|
|
|
|
Holding
Company
|
|
|
Local
listed
|
Local
listed
|
Foreign
listed
|
Foreign
listed
|
Foreign
listed
|
Foreign
listed
|
|
|
|
|
|
debt
|
equity
|
debt
|
equity
|
derivative
|
money
market
|
Other
|
|
|
|
|
instruments
|
instruments
|
instruments
|
instruments
|
instruments
|
instruments
|
instruments
|
Total
|
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Fair
value
|
|
|
|
|
|
|
|
|
|
|
At
01.01.2022
|
|
701,892
|
347,623
|
-
|
-
|
-
|
-
|
-
|
1,049,515
|
|
Additions
|
|
-
|
-
|
2,984,831
|
5,200,979
|
541,000
|
3,000,000
|
3,638,570
|
15,365,380
|
|
Disposals
|
|
-
|
-
|
-
|
(150,000)
|
(220,500)
|
-
|
-
|
(370,500)
|
|
Increase / (decrease)
in fair value
|
(20,802)
|
(11,353)
|
(18,733)
|
(201,570)
|
173
|
-
|
-
|
(252,285)
|
|
Exchange
differences
|
|
-
|
-
|
(9,794)
|
(109,474)
|
-
|
-
|
-
|
(119,268)
|
|
At
01.01.2023
|
|
681,090
|
336,270
|
2,956,304
|
4,739,935
|
320,673
|
3,000,000
|
3,638,570
|
15,672,842
|
|
Additions
|
|
-
|
-
|
4,882,727
|
10,469,391
|
-
|
2,487,303
|
(17,839,421)
|
-
|
|
Disposals
|
|
-
|
-
|
(1,996,090)
|
(5,957,188)
|
(320,500)
|
(5,487,303)
|
13,761,081
|
-
|
|
Increase / (decrease)
in fair value
|
(278)
|
23,581
|
119,013
|
279,871
|
-
|
-
|
-
|
422,187
|
|
Reversal in fair
value
|
|
-
|
-
|
19,924
|
72,399
|
(173)
|
-
|
-
|
92,150
|
|
Income
|
|
-
|
-
|
-
|
-
|
-
|
-
|
605,798
|
605,798
|
|
Expenditure
|
|
-
|
-
|
-
|
-
|
-
|
-
|
(97,268)
|
(97,268)
|
|
Exchange
differences
|
|
-
|
-
|
9,794
|
48,487
|
-
|
-
|
-
|
58,281
|
|
At
31.12.2023
|
|
680,812
|
359,851
|
5,991,672
|
9,652,895
|
-
|
-
|
68,760
|
16,753,990
|
|
|
|
|
|
|
|
|
|
|
|
The carrying amount of
financial assets amounting to Eur1,040,663 (2022 –
Eur1,017,360 ) represents investments amounting to
Eur 680,812
(2022 – Eur681,090 ) in 4% -
5.5% local-listed corporate bonds and investments amounting to
Eur 359,851
(2022 - Eur336,270 ) in local-listed
equity instruments. Increase in fair value recognised through
other comprehensive income as at 31 December 2023 amounted to
Eur23,303 (2022 – decrease of Eur32,155 )
.
During 2022,
the Group and Holding Company acquired a portfolio of
foreign-listed instruments which at the end of the reporting period
amounted to Eur15,713,327 (2022 - Eur14,655,482
). This represents investments of E ur
5,991,672 (2022 -
Eur2,956,304) in 0% - 10% ( 2022 - 0% - 3% )
foreign-listed bonds and Eur 9,652,895 (2022 -
Eur4,739,935 ) in foreign-listed equity
instruments. The Eur320,673 in 1% - 4% foreign
derivative instruments and the Eur3,000,000 in foreign
listed fiduciary deposits were liquidated during 2023 to invest in
other financial instruments. Fiduciary deposits
earned interest at 2.06% - 2.09%
.
Liquidity
balance on portfolio of Eur3,635,870 was fully utilised
together with various disposals of foreign-listed instruments held
on portfolio amounting to Eur13,761,081 to acquire
foreign-listed financial instruments amounting to
Eur17,839,421 . At the end of the reporting period,
liquidity balance amounted to Eur68,760 . Investment
income earned on portfolio amounted to Eur605,798 and fees
charged amount to Eur97,268 .
During the
year, a subsidiary of the group acquired foreign-listed equity
instruments which at the end of the period amounted to
Eur1,156,251.
As at 31
December 2023, the Group recognised an increase in fair value
through other comprehensive income of Eur615,683 (2022
– decrease of Eur220,130 ). Exchange differences
arising on translation of foreign investments also recognised
through other comprehensive income amounted to Eur50,666
(2022 – ( Eur119,268) ).
As at 31
December 2023, the Holding Company recognised an increase in fair
value through other comprehensive income of Eur398,884 (2022
– decrease of Eur220,130 ). Exchange differences
arising on translation of foreign investments also recognised
through other comprehensive income amounted to Eur58,281
(2022 – ( Eur119,268) ).
Both the Group
and Holding Company recognised reversal of fair value through other
comprehensive income on disposal of investments amounted to
Eur92,150 .
(b) Other
financial assets
Derivative financial
instruments amounting to Eur166,857 (2022 –
Eur371,193 ) comprise of interest rate swap whereby a
subsidiary of the Group (Premier Restaurants Romania SRL) entered
into a contract to swap the floating rate on bank borrowings (note
24) to a fixed rate. The interest rate swap is stated at fair
value and is classified as financial assets at FVTPL. The
amount of Eur166,857 (2022 – Eur371,193) is classified
with non-current assets.
The notional principal
amount of the outstanding interest rate swap at the end of the
reporting period for Premier Restaurants Romania SRL amounted to
Eur4,146,062 (2022 - Eur5,280,551 ) and
matures on 03 July 2025. At the end of the reporting period,
the fixed interest rate on interest rate swap for Premier
Restaurants Romania SRL amounted to 2.55% (2022 –
2.55% ) with the floating rate being three-month
ROBOR and settlement on a quarterly basis. The subsidiary
settles the difference between the fixed and floating interest
rates on a net basis.
(c) Loans and receivables
|
|
|
|
Group
|
|
|
|
Holding
Company
|
|
|
Loans
to
|
|
|
|
|
Loans
to
|
|
|
|
|
other
|
Loans
to
|
|
|
|
other
|
Loans
to
|
|
|
|
related
|
ultimate
|
|
|
Loan
to
|
related
|
ultimate
|
|
|
|
parties
|
parent
|
Total
|
|
subsidiaries
|
parties
|
parent
|
Total
|
|
|
Eur
|
Eur
|
Eur
|
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Amortised
cost
|
|
|
|
|
|
|
|
|
|
At
01.01.2022
|
478,647
|
31,564,793
|
32,043,440
|
|
4,499,629
|
528,760
|
27,548,293
|
32,576,682
|
|
Increase
|
1,140,888
|
637,085
|
1,777,973
|
|
8,661,345
|
16,729
|
603,085
|
9,281,159
|
|
Set-off of
balances
|
-
|
-
|
-
|
|
(6,093,750)
|
-
|
-
|
(6,093,750)
|
|
Repayments
|
(1,619,535)
|
(20,812,886)
|
(22,432,421)
|
|
(6,109,702)
|
(545,489)
|
(16,762,386)
|
(23,417,577)
|
|
Exchange
differences
|
-
|
-
|
-
|
|
2,274
|
-
|
-
|
2,274
|
|
At
01.01.2023
|
-
|
11,388,992
|
11,388,992
|
|
959,796
|
-
|
11,388,992
|
12,348,788
|
|
Increase
|
-
|
7,710,042
|
7,710,042
|
|
19,447,042
|
-
|
7,710,042
|
27,157,084
|
|
Set-off of
balances
|
-
|
-
|
-
|
|
(500,000)
|
-
|
-
|
(500,000)
|
|
Repayments
|
-
|
(683,289)
|
(683,289)
|
|
(19,830,947)
|
-
|
(683,289)
|
(20,514,236)
|
|
At
31.12.2023
|
-
|
18,415,745
|
18,415,745
|
|
75,891
|
-
|
18,415,745
|
18,491,636
|
|
|
|
|
|
|
|
|
|
|
|
Carrying
amount
|
|
|
|
|
|
|
|
|
|
At
31.12.2022
|
-
|
11,388,992
|
11,388,992
|
|
959,796
|
-
|
11,388,992
|
12,348,788
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amount
expected
|
|
|
|
|
|
|
|
|
|
to be settled
within
|
|
|
|
|
|
|
|
|
|
12 months
(shown
|
|
|
|
|
|
|
|
|
|
under current
assets)
|
-
|
(43,362)
|
(43,362)
|
|
(959,796)
|
-
|
(43,362)
|
(1,003,158)
|
|
Amount expected to
be
|
|
|
|
|
|
|
|
|
|
settled after 12
months
|
-
|
11,345,630
|
11,345,630
|
|
-
|
-
|
11,345,630
|
11,345,630
|
|
|
|
|
|
|
|
|
|
|
|
At
31.12.2023
|
-
|
18,415,745
|
18,415,745
|
|
75,891
|
-
|
18,415,745
|
18,491,636
|
|
|
|
|
|
|
|
|
|
|
|
Less: Amount
expected
|
|
|
|
|
|
|
|
|
|
to be settled within
12
|
|
|
|
|
|
|
|
|
|
months (shown
under
|
|
|
|
|
|
|
|
|
|
current
assets)
|
-
|
(70,115)
|
(70,115)
|
|
(75,891)
|
-
|
(70,115)
|
(146,006)
|
|
Amount expected to
be
|
|
|
|
|
|
|
|
|
|
settled after 12
months
|
-
|
18,345,630
|
18,345,630
|
|
-
|
-
|
18,345,630
|
18,345,630
|
|
|
|
|
|
|
|
|
|
|
Loans to
subsidiaries - Holding Company
Interest bearing loans
to subsidiaries carrying interest at the rate of 4.5% per
annum were fully repaid at year end (2022 – Eur500,000
) whereas Eur75,891 (2022 – Eur459,796 ) are
interest free and repayable on demand. Eur75,891 (2022
– Eur959,796) are expected to be settled within 12
months from the end of the reporting period. All the loans to
subsidiaries are unsecured.
The increase of
Eur19,447,042 (2022 – Eur8,661,345 )
includes dividends receivable (net of tax) from subsidiaries of
Eur17,888,492 (2022 – Eur5,680,958 ).
During 2023, dividend receivable from subsidiaries amounting to
Eur53,580,134 (2022 – Eur20,317,000) (note 6),
out of which Eur52,018,596 (net of tax) (2022 -
Eur20,017,000 ) were settled during the year.
No balance is expected to be settled within twelve months
(2022 - Eur300,000 ).
In 2023, the
Holding Company set off short term loan balances due to
subsidiaries of Eur500,000 (2022 - Eur6,093,750 )
against receivables from same subsidiaries.
Loans to
ultimate parent and other related parties
Group
All loans to
ultimate parent and other related parties are unsecured.
Loans amounting to Eur18,345,630 (2022 –
Eur11,345,630 ) bear interest at the rate of 4.5% per
annum, whereas receivables amounting to Eur70,115 (2022
– Eur43,362 ) are interest free. Loans and
receivables amounting to Eur70,115 (2022 –
Eur43,362 ) are expected to be settled within 12 months from
the end of the reporting period, whilst Eur18,345,630 (2022
– Eur11,345,630) are repayable after more than 12
months.
Holding Company
Loans to ultimate
parent and other related parties amounting to Eur18,345,630
(2022 – Eur11,345,630 ) bear interest at the rate of
4.5% per annum whereas Eur70,115 (2022 –
Eur43,362 ) are interest free. During 2022, the
increase of Eur17,718,847 includes loan advances to ultimate
parent of Eur16,750,000 out of which Eur16,000,000
were repaid in March 2022. During 2023, the increase of
Eur7,710,042 includes loan advances to ultimate parent of
Eur7,000,000.
Loans amounting to
Eur18,345,630 (2022 – Eur11,345,630 ) are not
expected to be settled within 12 months from the end of the
reporting period whilst Eur70,115 (2022 –
Eur43,362 ) are expected to be settled within 12
months. All the loans to other related parties are
unsecured.
19.
Prepayments
These relate
mainly to guarantee deposits made by the Holding Company and the
Group’s subsidiaries. As at the end of the reporting
period, the Group long term prepayments amount to
Eur 2,338,683 (
2022 – Eur2,303,931) after having
recorded such prepayments within a twelve month period of
Eur 226,327 (2022 –
Eur189,556 ) as current assets. The
Holding Company long term prepayments amount to Eur
757,581 (2022
– Eur514,085 ), none of which has been recorded within
a twelve month period.
20.
Inventories
|
|
|
Group
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
Raw materials and
consumables
|
|
|
10,061,086
|
9,709,395
|
|
|
|
|
|
|
The amount of
inventories recognised as an expense during the year amounted to
Eur214,743,342 (2022 – Eur180,748,687
).
21.
Trade and other receivables
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Trade
receivables
|
4,969,182
|
5,282,814
|
|
-
|
-
|
|
Other
receivables
|
2,561,157
|
2,434,842
|
|
147,784
|
392,417
|
|
Amounts due from
related parties
|
22,759
|
39,022
|
|
406
|
24,657
|
|
Prepayments and accrued
income
|
4,320,347
|
1,744,283
|
|
313,540
|
212,649
|
|
|
11,873,445
|
9,500,961
|
|
461,730
|
629,723
|
|
|
|
|
|
|
|
No interest is
charged on trade and other receivables. The Group’s
amounts due from related parties and the Holding Company’s
amounts due from subsidiaries are unsecured, interest-free and are
repayable on demand.
22.
Trade and other payables
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Trade
payables
|
30,096,094
|
24,378,130
|
|
328,295
|
281,536
|
|
Other
payables
|
8,184,894
|
8,678,218
|
|
87,050
|
67,406
|
|
Social security
liabilities
|
5,447,923
|
5,775,913
|
|
24,143
|
19,936
|
|
VAT and other
liabilities
|
5,508,339
|
4,433,503
|
|
-
|
-
|
|
Accruals and deferred
income
|
23,987,423
|
15,993,346
|
|
2,166,190
|
1,767,880
|
|
|
73,224,673
|
59,259,110
|
|
2,605,678
|
2,136,758
|
|
|
|
|
|
|
|
No interest is
charged on trade and other payables. The carrying amount of
trade and other payables is considered a reasonable approximation
of fair value.
23.
Other financial liabilities
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Amounts due to ultimate
parent
|
290,300
|
1,106,119
|
|
290,300
|
1,023,206
|
|
Amounts due to other
related parties
|
192,531
|
147,879
|
|
6,715
|
3,077
|
|
Amounts due to
subsidiaries
|
-
|
-
|
|
10,957,582
|
7,175,070
|
|
|
482,831
|
1,253,998
|
|
11,254,597
|
8,201,353
|
|
Less: Amount due
for
|
|
|
|
|
|
|
settlement within 12
months
|
|
|
|
|
|
|
(shown under current
liabilities)
|
(482,831)
|
(1,253,998)
|
|
(11,254,597)
|
(8,201,353)
|
|
Amount due for
settlement after 12 months
|
-
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
Other financial liabilities are
repayable as follows:
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
On demand or within one
year
|
482,831
|
1,253,998
|
|
11,254,597
|
8,201,353
|
|
Less: Amount due
for
|
|
|
|
|
|
|
settlement within 12
months
|
|
|
|
|
|
|
(shown under current
liabilities)
|
(482,831)
|
(1,253,998)
|
|
(11,254,597)
|
(8,201,353)
|
|
Amount due for
settlement after 12 months
|
-
|
-
|
|
-
|
-
|
|
|
|
|
|
|
|
The Group’s amounts
due to ultimate parent and to other related parties are unsecured,
interest free and repayable on demand.
The Holding
Company’s amounts due to subsidiaries amounting to
Eur9,610,058 (2022 - Eur5,630,058 ) bear interest at
the rate of 4.5% per annum and are expected to be settled
within twelve months. The remaining balance of amounts owed
to subsidiaries amounting to Eur1,347,524 (2022–
Eur1,545,012 ) are interest free and repayable on
demand. All the amounts owed to subsidiaries are
unsecured.
24.
Bank borrowings
|
|
|
Group
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
Bank
overdrafts
|
|
|
2,000,000
|
-
|
|
Bank
borrowings
|
|
|
27,768,650
|
14,144,443
|
|
|
|
|
29,768,650
|
14,144,443
|
|
|
|
|
|
|
Bank borrowings are
repayable as follows:
|
|
|
Group
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
On demand or within one
year
|
|
|
7,667,411
|
3,356,710
|
|
In the second
year
|
|
|
6,833,200
|
3,356,710
|
|
In the third
year
|
|
|
6,183,260
|
3,206,710
|
|
In the fourth
year
|
|
|
5,295,305
|
2,556,770
|
|
In the fifth
year
|
|
|
3,131,579
|
1,667,543
|
|
After five
years
|
|
|
657,895
|
-
|
|
|
|
|
29,768,650
|
14,144,443
|
|
Less: amount due
for settlement
|
|
|
|
|
|
within 12 months (shown
under
|
|
|
|
|
|
current
liabilities)
|
|
|
(7,667,411)
|
(3,356,710)
|
|
Amounts due for
settlement
|
|
|
|
|
|
after 12
months
|
|
|
22,101,239
|
10,787,733
|
|
|
|
|
|
|
As at 31 December
2023, the Group has been granted bank facilities in Romania
amounting to Eur20,818,630 (2022 –
Eur10,561,103 ) and in Greece amounting to
Eur8,950,020 (2022 – Eur3,583,340 ).
Bank borrowings -
Romania
The facility has
been granted by BRD-SG to Premier Restaurants Romania SRL in
tranches. The loan balance as at 31 December 2022 amounting
to Eur10,561,103 has been partially refinanced during
2023. As at year end, the refinanced portion has a loan
balance of Eur4,172,568 and bears an interest rate of
3-month Euribor +1.85% per annum. The remaining loan
balance of Eur4,146,062 still bears an interest rate of
3-month ROBOR +1.4% per annum. Facility term of this
tranche remains unchanged at seven years.
In March 2023,
another tranche from the same facility was drawdown for an amount
of Eur12,500,000
. The loan bears interest of 3-month
Euribor +1.85% per annum and has a term of six years.
The loan facility
is secured by a pledge over the entity’s immovable and
movable property.
Bank borrowings -
Greece
Premier Capital
Hellas S.A. has been granted five loan facilities for the financing
of working capital and capital expenditure requirements.
As at 31 December
2023, the balance of the loan facilities amounted to
Eur6,950,020 (2022 – Eur3,583,340 ). All
facilities have a term of five years and bear interest at 3-month
Euribor +2.2% - +3.85% (2022 - +2.2% - +3.85% ) per
annum. Eighty percent of the nominal value of two facilities
are guaranteed by the Greek State, another facility is secured by a
letter of comfort issued by the subsidiary whilst the remaining
facilities are secured by a pledge over the subsidiary immovable
property.
In March 2023,
Premier Capital Hellas S.A. was granted a Eur5,000,000 loan
facility by Eurobank S.A. for working capital and capital
expenditure requirements. As at 31 December 2023, loan balance
amounted to Eur4,500,00. The facility has a term of
five years and bears interest at 3-month Euribor +3.10% per
annum. The loan is secured by a pledge over the subsidiary
immovable property.
Other bank
borrowings
Premier
Restaurants Malta Limited, a subsidiary of the Group, has an
unutilised overdraft facility with a limit of Eur1,000,000
(2022 – Eur1,000,000 ) and bearing interest at 250
basis point over the bank’s base rate, presently 2.35%
(2022 - 2.35%) per annum.
In December 2023,
Premier Capital Hellas S.A. utilised an overdraft facility with a
limit of Eur2,000,000 and bearing an interest rate of
3-month Euribor +1.90% per annum. Facility has been
fully repaid in February 2024.
25.
Lease liabilities
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Lease liability
(current)
|
11,143,870
|
9,600,747
|
|
50,947
|
46,966
|
|
Lease liability
(non-current)
|
136,721,398
|
117,749,589
|
|
272,843
|
308,980
|
|
|
147,865,268
|
127,350,336
|
|
323,790
|
355,946
|
|
|
|
|
|
|
|
The Group and the
Holding Company has leases for its buildings and motor
vehicles. With the exception of short-term leases and leases
of low value assets, each lease is included in the statement of
financial position as a right-of-use asset and a lease
liability. Variable lease payments which do not depend on an
index or a rate (such as lease payments based on a percentage of
company sales) are excluded from the initial measurement of the
lease liability and asset. The Group and Holding Company
classifies its right-of-use assets in a consistent manner to its
property, plant and equipment (see note 15).
Each lease generally
imposes a restriction that, unless there is a contractual right for
the Group and the Holding Company to sublet the asset to another
party, the right-of-use asset can only be used by the Group and the
Holding Company. The majority of the lease agreements entitle
the Group’s subsidiaries to have the right of first refusal
when such leases come up for renewal. None of the lease
agreements gives rights to the Group’s subsidiaries’ to
any purchase or escalation options, however restricting the same
subsidiaries to further lease the properties to third
parties. For leases over office buildings the Group and the
Holding Company must keep those properties in a good state of
repair and return the properties in their original condition at the
end of the lease. Further, the Group and the Holding Company
must insure items of property, plant and equipment and incur
maintenance fees on such items in accordance with the lease
contracts.
The lease liabilities
are secured by the related underlying assets. Future minimum
lease payments at 31 December 2023 were as follows:
Group
|
|
Minimum lease
payments due
|
|
|
Within
|
Within
|
|
After
|
|
|
|
1
year
|
2 - 5
years
|
|
5
years
|
Total
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
At 31 December
2023
|
|
|
|
|
|
|
Lease
payments
|
17,227,181
|
60,873,458
|
|
133,924,994
|
212,025,633
|
|
Finance
charges
|
(6,083,311)
|
(20,264,865)
|
|
(37,812,189)
|
(64,160,365)
|
|
Net present
values
|
11,143,870
|
40,608,593
|
|
96,112,805
|
147,865,268
|
|
|
|
|
|
|
|
|
At 31 December
2022
|
|
|
|
|
|
|
Lease
payments
|
14,515,339
|
62,415,267
|
|
96,872,591
|
173,803,197
|
|
Finance
charges
|
(4,914,592)
|
(12,017,068)
|
|
(29,521,201)
|
(46,452,861)
|
|
Net present
values
|
9,600,747
|
50,398,199
|
|
67,351,390
|
127,350,336
|
|
|
|
|
|
|
|
Holding
Company
|
|
Minimum lease
payments due
|
|
|
Within
|
Within
|
|
After
|
|
|
|
1
year
|
2 - 5
years
|
|
5
years
|
Total
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
At 31 December
2023
|
|
|
|
|
|
|
Lease
payments
|
62,556
|
229,336
|
|
71,472
|
363,364
|
|
Finance
charges
|
(11,609)
|
(26,241)
|
|
(1,724)
|
(39,574)
|
|
Net present
values
|
50,947
|
203,095
|
|
69,748
|
323,790
|
|
|
|
|
|
|
|
|
At 31 December
2022
|
|
|
|
|
|
|
Lease
payments
|
59,916
|
227,728
|
|
118,917
|
406,561
|
|
Finance
charges
|
(12,950)
|
(32,588)
|
|
(5,077)
|
(50,615)
|
|
Net present
values
|
46,966
|
195,140
|
|
113,840
|
355,946
|
|
|
|
|
|
|
|
Lease payments not
recognised as a liability
The Group and the
Holding Company have elected not to recognise a lease liability for
short term leases (leases with an expected term of 12 months or
less) or for leases of low value assets. Payments made under
such leases are expensed on a straight-line basis. In
addition, certain variable lease payments are not permitted to be
recognised as lease liabilities and are expensed as
incurred.
The expense
relating to payments not included in the measurement of the lease
liability is as follows:
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Leases of low value
assets
|
1,939
|
3,754
|
|
-
|
-
|
|
Variable lease
payments
|
9,943,819
|
8,144,991
|
|
-
|
2,621
|
|
|
9,945,758
|
8,148,745
|
|
-
|
2,621
|
|
|
|
|
|
|
|
Variable lease
payments expensed on the basis that they are not recognised as a
lease liability comprise rentals of stores in each market whereby
the Group is committed to pay monthly payments to lessors based on
the revenues of each particular store. Such variable lease
payments are not permitted to be recognised as a right-of-use asset
and lease liability and are therefore expensed in the period they
are incurred.
In 2017, the
Holding Company entered into a lease agreement for the provision of
an aircraft for a fixed number of annual flights. As per the
lease arrangement, the Holding Company has no control over the
leased aircraft and hence any lease payments do not give rise to a
lease liability and an underlying right of use asset. Such
lease payments are recognised within administrative expenses (refer
to note 32).
At the reporting
date presented, the company had committed to leases which had not
yet commenced. The total future cash outflows for leases that
had not yet commenced were in relation to buildings for an amount
of EurNil (2022 –
Eur1,380,132).
Total cash outflow
for leases for the year ended 31 December 2023 by the Group was
Eur17,260,638 (2022 - Eur14,072,582 ) and for the
Holding Company Eur61,660 (2022 - Eur55,093 )
.
26.
Debt securities in issue
|
|
|
Group and Holding
Company
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
3.75% unsecured bonds
redeemable 2026
|
|
64,726,830
|
64,633,172
|
|
|
|
|
|
|
In November 2016,
the Holding Company issued 650,000 3.75% unsecured bonds of
a nominal value of Eur100 per bond. The bonds are
redeemable at their nominal value on 23 November 2026.
Interest on the
bonds is due and payable annually on 23 November of each
year.
The bonds are
listed on the Official List of the Malta Stock Exchange. The
carrying amount of the 3.75% bonds is net of direct issue
costs of Eur273,170 (2022 – Eur366,828 )
which are being amortised over the life of the bonds.
The market value of debt securities on the last trading day before
the statement of financial position date was Eur63,700,000
(2022 - Eur63,050,000 ).
27.
Share capital
|
|
|
2023
|
|
|
2022
|
|
|
Authorised
|
Issued
and
|
|
Authorised
|
Issued and
|
|
|
|
called
up
|
|
|
called up
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
400,000 ordinary shares
of Eur100 each,
|
|
|
|
|
|
|
of which 336,747
have been issued
|
|
|
|
|
|
|
and called
up
|
40,000,000
|
33,674,700
|
|
40,000,000
|
33,674,700
|
|
|
|
|
|
|
|
Save for the selection
of directors in terms of Clause 55 of the Articles of Association
of the Holding Company, ordinary shares in the Holding Company,
irrespective of the class to which they belong, shall have equal
rights as regards dividends and in all other respects each
shareholder shall be entitled to one vote in general meetings for
each of such shares held.
28.
Other reserves
Group
|
|
Legal
|
Revaluation
|
Other
|
|
|
|
reserve
|
reserve
|
reserve
|
Total
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
|
|
|
|
|
|
|
Balance at 1 January
2022
|
4,392,027
|
6,052,306
|
(10,542,259)
|
(97,926)
|
|
Transfer from retained
earnings
|
-
|
-
|
112,830
|
112,830
|
|
Revaluation of
property, plant and equipment
|
-
|
10,804,506
|
-
|
10,804,506
|
|
Balance at 1 January
2023
|
4,392,027
|
16,856,812
|
(10,429,429)
|
10,819,410
|
|
Transfer from retained
earnings
|
5,396
|
(166,887)
|
168,285
|
6,794
|
|
Balance at 31
December 2023
|
4,397,423
|
16,689,925
|
(10,261,144)
|
10,826,204
|
|
|
|
|
|
|
The legal reserve
represents reserves created by the subsidiaries in Estonia,
Lithuania, Greece and Romania pursuant to the legal requirements in
these jurisdictions.
The revaluation reserve
was created from an increase in revaluation of property, plant and
equipment. In 2016, the land which was acquired on
acquisition of the Romania operating segment was revalued and
resulted in an increase in revaluation of Eur44,568 .
In 2019, the Group performed a revaluation assessment on the
Group’s property, plant and equipment. This gave rise
to an increase in the revaluation of land and buildings situated in
Romania of Eur6,007,738 of which Eur5,406,964 was
allocated to the Group and Eur600,774 was allocated to
non-controlling interest. In 2020, the Group acquired the
non-controlling interest which resulted in reversals in equity of
previously allocated reserves to the non-controlling interest
amounting to Eur8,955,498 – this included the
reversal of Eur600,774 allocated to revaluation reserve and
movement in other reserve of Eur9,556,272 . In 2022,
the Group performed another revaluation assessment of its property,
plant and equipment which gave rise to an increase in the
revaluation of the land and buildings in Romania of
Eur10,804,506 .
The other reserve
represents a cash capital contribution made by the parent company
to one of its subsidiaries attributable to non-controlling
interests amounting to Eur370,825 , a loss offset reserve of
Eur212,351 , and the effect of acquisition of part of a
non-controlling interests amounting to Eur1,360,079 .
In 2015, the Group gained full control in the subsidiary Premier
Restaurants Malta Limited resulting in a movement in the other
reserve of Eur455,878 .
Holding
Company
The other reserve
represents a loss offset reserve amounting to Eur212,351 for
the purpose of offsetting any losses that may be incurred by the
Holding Company from time to time and was created by a reduction of
share capital in 2010. Included in other reserve is the
adjustment on merger by acquisition of Premier Capital B.V. to the
Holding Company (refer to note 17(b)).
|
|
|
|
|
Other
|
|
|
|
|
|
reserve
|
|
|
|
|
|
Eur
|
|
|
|
|
|
|
|
Balance at 1 January
2022 / 31 December 2022 / 31 December 2023
|
|
|
186,267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29.
Cash and cash equivalents
Cash and cash
equivalents included in the statement of cash flows comprise the
following amounts in the statement of financial
position:
|
|
Group
|
|
Holding
Company
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Cash at bank and on
hand
|
49,929,561
|
43,973,988
|
|
1,872,481
|
2,601,528
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents in the
|
|
|
|
|
|
|
statements of
financial position
|
49,929,561
|
43,973,988
|
|
1,872,481
|
2,601,528
|
|
Bank overdrafts (note
24)
|
(2,000,000)
|
-
|
|
-
|
-
|
|
Cash and cash
equivalents in the
|
|
|
|
|
|
|
statements of cash
flows
|
47,929,561
|
43,973,988
|
|
1,872,481
|
2,601,528
|
|
|
|
|
|
|
|
Cash at bank earns
interest at floating rates based on bank deposit rates. The
interest rate on the cash at bank in 2023 was 0% - 2.175% (2022
– 0% - 2.50% ).
30.
Significant non-cash transactions
During
2023 , the Holding Company set off short
term loan balances due to subsidiaries of Eur500,000 (2022 -
Eur6,093,750 ) against receivables from same subsidiaries
(refer to note 18(c)).
31.
Related party disclosures
Premier Capital p.l.c. is
the parent company of the undertakings highlighted in note
17a.
The ultimate parent
company of Premier Capital p.l.c. is Hili Ventures Limited which is
incorporated in Malta, having registered address Nineteen
Twenty-Three, Valletta Road, Marsa, and which produces consolidated
financial statements available for public use. The
consolidated financial statements of Premier Capital p.l.c. and
Hili Ventures Limited are available from Malta Business Registry
and their respective websites.
The directors consider the
ultimate controlling party to be Carmelo ( sive) Melo Hili,
who is the indirect owner of more than 50% of the issued
share capital of Hili Ventures Limited .
During the year, the Group
and the Holding Company entered into transactions with related
parties, as set out below.
Group
|
|
|
2023
|
|
|
|
2022
|
|
|
|
Related
|
|
|
|
Related
|
|
|
|
|
party
|
Total
|
|
|
party
|
Total
|
|
|
|
activity
|
activity
|
|
|
activity
|
activity
|
|
|
|
Eur
|
Eur
|
%
|
|
Eur
|
Eur
|
%
|
|
|
|
|
|
|
|
|
|
|
Cost of
sales:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Related
parties
|
2,788,663
|
505,383,641
|
1
|
|
2,293,167
|
419,720,541
|
1
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Ultimate
parent
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
Related
parties
|
159,313
|
|
|
|
73,241
|
|
|
|
Key management
personnel
|
1,851,573
|
|
|
|
1,787,795
|
|
|
|
|
3,010,886
|
35,812,007
|
8
|
|
2,861,036
|
29,709,471
|
10
|
|
|
|
|
|
|
|
|
|
|
Investment
income:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Ultimate
parent
|
706,457
|
|
|
|
676,718
|
|
|
|
Related
parties
|
1,334
|
|
|
|
19,838
|
|
|
|
|
707,791
|
2,028,719
|
35
|
|
696,556
|
1,294,690
|
54
|
|
|
|
|
|
|
|
|
|
|
Finance
costs:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Related
parties
|
819,902
|
|
|
|
793,019
|
|
|
|
|
819,902
|
10,210,294
|
8
|
|
793,019
|
8,195,509
|
10
|
|
|
|
|
|
|
|
|
|
Holding
Company
|
|
|
2023
|
|
|
|
2022
|
|
|
|
Related
|
|
|
|
Related
|
|
|
|
|
party
|
Total
|
|
|
party
|
Total
|
|
|
|
activity
|
activity
|
|
|
activity
|
activity
|
|
|
|
Eur
|
Eur
|
%
|
|
Eur
|
Eur
|
%
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Subsidiaries
|
1,124,924
|
1,124,924
|
100
|
|
1,092,000
|
1,092,000
|
100
|
|
|
|
|
|
|
|
|
|
|
Administrative
expenses:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Subsidiaries
|
69,332
|
|
|
|
12,054
|
|
|
|
Ultimate
parent
|
1,000,000
|
|
|
|
1,000,000
|
|
|
|
Other related
parties
|
106,267
|
|
|
|
63,226
|
|
|
|
Key management
personnel
|
1,851,573
|
|
|
|
1,787,795
|
|
|
|
|
3,027,172
|
8,757,482
|
35
|
|
2,863,075
|
7,937,631
|
36
|
|
|
|
|
|
|
|
|
|
|
Investment
income:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Subsidiaries
|
53,582,072
|
|
|
|
20,377,022
|
|
|
|
Ultimate
parent
|
706,457
|
|
|
|
642,718
|
|
|
|
Other related
parties
|
1,334
|
|
|
|
19,838
|
|
|
|
|
54,289,863
|
55,161,711
|
98
|
|
21,039,578
|
21,135,520
|
100
|
|
|
|
|
|
|
|
|
|
|
Finance
costs:
|
|
|
|
|
|
|
|
|
Related party
transactions with:
|
|
|
|
|
|
|
|
|
Subsidiaries
|
395,661
|
|
|
|
418,446
|
|
|
|
Other related
parties
|
12,311
|
|
|
|
13,421
|
|
|
|
|
407,972
|
3,169,790
|
13
|
|
431,867
|
3,077,923
|
14
|
|
|
|
|
|
|
|
|
|
No expense has been
recognised during the year arising from doubtful debts in respect
of amounts due by related parties.
The amounts due from/to
related parties at year-end are disclosed in notes 12, 18, 21 and
23. Other related party transactions are disclosed in note 28
and 30. Other than as disclosed in the respective notes, no
guarantees have been given or received. The terms and
conditions in respect of the related party balances do not specify
the nature of the consideration to be provided in
settlement.
Other related parties
consist of related parties other than parent, entities with joint
control or significant influence over the Holding Company,
subsidiaries, associates, joint ventures in which the Holding
Company is a venture and key management personnel of the Holding
Company or its parent.
32.
Operating leases
|
|
|
|
|
Group and Holding
Company
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
Operating leases
recognised as expense during the year
|
|
|
|
|
Minimum lease payments
under
|
|
|
|
|
|
operating
leases
|
|
|
698,160
|
698,160
|
|
|
|
|
|
|
Expenses included in
the above relate to agreements that do not meet the definition of a
lease under IFRS 16.
In 2017, the Holding
Company entered into an operating lease for the provision of an
aircraft for a fixed number of annual flight hours. This is
included in the minimum lease payments in the above
disclosure. This lease was renewed in 2023.
At the end of the
reporting period, the Group and the Holding Company had outstanding
commitments under non-cancellable operating leases, which fall due
as follows:
|
|
|
|
|
Group and Holding
Company
|
|
|
|
|
2023
|
2022
|
|
|
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
Within one
year
|
|
|
1,280,400
|
698,160
|
|
Between two to five
years
|
|
|
5,121,600
|
698,160
|
|
|
|
|
6,402,000
|
1,396,320
|
|
|
|
|
|
|
33.
Commitments
|
(i)
|
The subsidiaries
operate under franchise agreements (‘the Agreement’)
entered into with McDonald’s International Property Company
or McDonald’s Corporation (‘the
Franchisor’). The franchise agreements are for a period
of 20 years which allows the respective subsidiary to use the
McDonald’s system in the restaurants. These franchise
agreements stipulate certain financial and non-financial
obligations, including but not necessarily limited to, maintaining
certain financial ratios, performing marketing and other
activities. The subsidiaries are obliged to pay a royalty fee
based on their annual net sales of the respective company on an
annual basis.
|
|
(ii)
|
Upon the expiration of
these Agreements, the Franchisor shall have the right to purchase
all of the equity interest in the Franchisee’s
McDonald’s Restaurant Business (“FMRB”). If
the Franchisor elects to exercise its right to purchase FMRB, the
Purchase price shall be equal to the Fair Market Value, as defined
in the Agreement. In the event that the Franchisor does not
exercise its right to purchase FMRB, it shall have the right to
lease or sublease or purchase, as the case may be, the premises
associated with the Restaurants from Franchisee at fair market
rental or fair market price, as the case may be.
|
34.
Contingent liabilities
Certain subsidiaries of
the Group have guaranteed the amount of Eur10,951,403 (2022
– Eur12,521,824 ) in favour of related companies in
connection with bank facilities of the respective related
company.
35.
Fair value of financial assets and financial
liabilities
At 31 December 2023 and
2022 the carrying amounts of financial assets and financial
liabilities classified with current assets and current liabilities
respectively approximated their fair values due to the short-term
maturities of these assets and liabilities.
The fair values of
non-current financial assets and non-current financial liabilities
that are not measured at fair value, other than the shares in
subsidiary companies that are carried at cost, and the debt
securities in issue (where fair value is disclosed in note 26), are
not materially different from their carrying amounts due to the
fact that the interest rates are considered to represent market
rates at the year end.
The following table
provides an analysis of financial instruments that are measured
subsequent to initial recognition at fair value, grouped into
Levels 1 to 3.
Group
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Financial
assets
|
|
|
|
|
|
Local listed debt and
equity instruments
|
1,017,360
|
-
|
-
|
1,017,360
|
|
Foreign listed debt and
equity instruments
|
7,696,239
|
320,673
|
6,638,570
|
14,655,482
|
|
Derivative financial
instruments
|
-
|
371,193
|
-
|
371,193
|
|
As at
31.12.2022
|
8,713,599
|
691,866
|
6,638,570
|
16,044,035
|
|
|
|
|
|
|
|
Local listed debt and
equity instruments
|
1,040,663
|
-
|
-
|
1,040,663
|
|
Foreign listed debt and
equity instruments
|
16,800,828
|
-
|
68,760
|
16,869,588
|
|
Derivative financial
instruments
|
-
|
166,857
|
-
|
166,857
|
|
As at
31.12.2023
|
17,841,491
|
166,857
|
68,760
|
18,077,108
|
|
|
|
|
|
|
Holding
Company
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Financial
assets
|
|
|
|
|
|
Local listed debt and
equity instruments
|
1,017,360
|
-
|
-
|
1,017,360
|
|
Foreign listed debt and
equity instruments
|
7,696,239
|
320,673
|
6,638,570
|
14,655,482
|
|
As at
31.12.2022
|
8,713,599
|
320,673
|
6,638,570
|
15,672,842
|
|
|
|
|
|
|
|
Local listed debt
instruments
|
1,040,663
|
-
|
-
|
1,040,663
|
|
Foreign listed debt and
equity instruments
|
15,644,567
|
-
|
68,760
|
15,713,327
|
|
As at
31.12.2023
|
16,685,230
|
-
|
68,760
|
16,753,990
|
|
|
|
|
|
|
The fair values of
financial assets with standard terms and conditions and traded on
active liquid markets are determined with reference to quoted
market prices.
The fair value of the
derivative financial instruments is established by using a
valuation technique. Valuation techniques comprise discounted
cash flow analysis. The valuation technique is consistent
with generally accepted economic methodologies for pricing
financial instruments. The fair value of interest rate swaps
at the end of the reporting period is determined by discounting the
future cash flows using appropriate rates at end of the reporting
period.
The following table
provides an analysis of financial instruments that are not measured
subsequent to initial recognition at fair value, other than those
with carrying amounts that are reasonable approximations of fair
value and other than shares in subsidiary companies, grouped into
Levels 1 to 3.
Group
|
|
Fair value
measurement at end of reporting period using:
|
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Carrying
|
|
|
|
|
|
|
amount
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Financial
assets
|
|
|
|
|
|
|
Financial assets at
amortised cost
|
|
|
|
|
|
|
Trade and other
receivables
|
-
|
7,717,656
|
-
|
7,717,656
|
7,717,656
|
|
Receivables from other
related parties
|
-
|
39,022
|
-
|
39,022
|
39,022
|
|
Receivables from
ultimate parent
|
-
|
43,362
|
11,345,630
|
11,388,992
|
11,388,992
|
|
Cash and cash
equivalents
|
-
|
43,973,988
|
-
|
43,973,988
|
43,973,988
|
|
As at
31.12.2022
|
-
|
51,774,028
|
11,345,630
|
63,119,658
|
63,119,658
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
-
|
7,530,339
|
-
|
7,530,339
|
7,530,339
|
|
Receivables from other
related parties
|
-
|
22,759
|
-
|
22,759
|
22,759
|
|
Receivables from
ultimate parent
|
-
|
70,115
|
18,345,630
|
18,415,745
|
18,415,745
|
|
Cash and cash
equivalents
|
-
|
49,929,561
|
-
|
49,929,561
|
49,929,561
|
|
As at
31.12.2023
|
-
|
57,552,774
|
18,345,630
|
75,898,404
|
75,898,404
|
|
|
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
|
|
|
Financial
liabilities at amortised cost
|
|
|
|
|
|
|
Trade and other
payables
|
-
|
49,049,694
|
-
|
49,049,694
|
49,049,694
|
|
Amounts due to other
related parties
|
-
|
147,879
|
-
|
147,879
|
147,879
|
|
Amounts due to ultimate
parent
|
-
|
1,106,119
|
-
|
1,106,119
|
1,106,119
|
|
Lease
liabilities
|
-
|
127,350,336
|
-
|
127,350,336
|
127,350,336
|
|
Bank
borrowings
|
-
|
14,144,443
|
-
|
14,144,443
|
14,144,443
|
|
Debt
securities
|
63,050,000
|
-
|
-
|
63,050,000
|
64,633,172
|
|
As at
31.12.2022
|
63,050,000
|
191,798,471
|
-
|
254,848,471
|
256,431,643
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
-
|
62,268,411
|
-
|
62,268,411
|
62,268,411
|
|
Amounts due to other
related parties
|
-
|
192,531
|
-
|
192,531
|
192,531
|
|
Amounts due to ultimate
parent
|
-
|
290,300
|
-
|
290,300
|
290,300
|
|
Lease
liabilities
|
-
|
147,865,268
|
-
|
147,865,268
|
147,865,268
|
|
Bank
borrowings
|
-
|
27,768,650
|
-
|
27,768,650
|
27,768,650
|
|
Debt
securities
|
63,700,000
|
-
|
-
|
63,700,000
|
64,726,830
|
|
As at
31.12.2023
|
63,700,000
|
238,385,160
|
-
|
302,085,160
|
303,111,990
|
|
|
|
|
|
|
|
The fair values of the
financial assets and liabilities included in level 2 and level 3
categories above have been determined in accordance with generally
accepted pricing models based on a discounted cash flow analysis,
with the most significant inputs being the discount rate that
reflects the market interest rate at year end and the credit risk
of counterparties.
Holding
Company
|
|
Fair value
measurement at end of reporting period using:
|
|
|
Level
1
|
Level
2
|
Level
3
|
Total
|
Carrying
|
|
|
|
|
|
|
amount
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
Financial
assets
|
|
|
|
|
|
|
Financial assets at
amortised cost
|
|
|
|
|
|
|
Trade and other
receivables
|
-
|
392,417
|
-
|
392,417
|
392,417
|
|
Receivables from
subsidiaries
|
-
|
959,796
|
-
|
959,796
|
959,796
|
|
Receivables from
ultimate parent
|
-
|
43,362
|
11,345,630
|
11,388,992
|
11,388,992
|
|
Cash and cash
equivalents
|
-
|
2,601,528
|
-
|
2,601,528
|
2,601,528
|
|
As at
31.12.2022
|
-
|
3,997,103
|
11,345,630
|
15,342,733
|
15,342,733
|
|
|
|
|
|
|
|
|
Trade and other
receivables
|
-
|
147,784
|
-
|
147,784
|
147,784
|
|
Receivables from
subsidiaries
|
-
|
75,891
|
-
|
75,891
|
75,891
|
|
Receivables from
ultimate parent
|
-
|
70,115
|
18,345,630
|
18,415,745
|
18,415,745
|
|
Cash and cash
equivalents
|
-
|
1,872,481
|
-
|
1,872,481
|
1,872,481
|
|
As at
31.12.2023
|
-
|
2,166,271
|
18,345,630
|
20,511,901
|
20,511,901
|
|
|
|
|
|
|
|
|
Financial
liabilities
|
|
|
|
|
|
|
Financial
liabilities at amortised cost
|
|
|
|
|
|
|
Trade and other
payables
|
-
|
2,116,822
|
-
|
2,116,822
|
2,116,822
|
|
Amounts due to other
related parties
|
-
|
3,077
|
-
|
3,077
|
3,077
|
|
Amounts due to ultimate
parent
|
-
|
1,023,206
|
-
|
1,023,206
|
1,023,206
|
|
Amounts due to
subsidiaries
|
-
|
7,175,070
|
-
|
7,175,070
|
7,175,070
|
|
Lease
liabilities
|
-
|
355,946
|
-
|
355,946
|
355,946
|
|
Debt
securities
|
63,050,000
|
-
|
-
|
63,050,000
|
64,633,172
|
|
As at
31.12.2022
|
63,050,000
|
10,674,121
|
-
|
73,724,121
|
75,307,293
|
|
|
|
|
|
|
|
|
Trade and other
payables
|
-
|
2,581,535
|
-
|
2,581,535
|
2,581,535
|
|
Amounts due to other
related parties
|
-
|
6,715
|
-
|
6,715
|
6,715
|
|
Amounts due to ultimate
parent
|
-
|
290,300
|
-
|
290,300
|
290,300
|
|
Amounts due to
subsidiaries
|
-
|
10,957,582
|
-
|
10,957,582
|
10,957,582
|
|
Lease
liabilities
|
-
|
323,790
|
-
|
323,790
|
323,790
|
|
Debt
securities
|
63,700,000
|
-
|
-
|
63,700,000
|
64,726,830
|
|
As at
31.12.2023
|
63,700,000
|
14,159,922
|
-
|
77,859,922
|
78,886,752
|
|
|
|
|
|
|
|
36.
Financial risk management
The exposures to
risk and the way risks arise, together with the Group’s
objectives, policies and processes for managing and measuring these
risks are disclosed in more detail below.
The objectives,
policies and processes for managing financial risks and the methods
used to measure such risks are subject to continual improvement and
development. Where applicable, any significant changes in the
Group’s exposure to financial risks or the manner in which
the Group manages and measures these risks are disclosed
below.
Where possible, the
Group aims to reduce and control risk concentrations.
Concentrations of financial risk arise when financial instruments
with similar characteristics are influenced in the same way by
changes in economic or other factors. The amount of the risk
exposure associated with financial instruments sharing similar
characteristics is disclosed in more detail in the notes to the
financial statements.
Credit
risk
Financial assets which
potentially subject the Group to concentrations of credit risk,
consist principally of trade receivables, loans and receivables,
debt securities held, financial assets at fair value through other
comprehensive income and cash at bank. Trade receivables and
loan and receivables are presented net of an allowance for doubtful
debts. An allowance for doubtful debts is made where there is
an identified loss event which, based on previous experience, is
evidence of a reduction in the recoverability of the cash
flows. Cash at bank are placed with reliable financial
institutions with a credit rating of A+ - BBB+ at year end (2022
– A+ - BBB).
Credit risk with
respect to trade receivables is limited due to the nature of the
Group’s operations. Loans and receivables comprise
amounts due from related parties. The Group’s and the
Holding Company’s concentration to credit risk arising from
these receivables are considered limited as there were no
indications that these counterparties are unable to meet their
obligations. Management considers these to be of good credit
quality. Management does not consider loans and receivables
to have deteriorated in credit quality and the effect of
management’s estimate of the 12-month credit loss has been
determined to be insignificant to the results of the Group and
Holding Company.
The carrying amount of
financial assets recorded in the financial statements, which is net
of impairment losses, represents the Group’s maximum exposure
to credit risk without taking account of the value of any
collateral obtained. Any guarantees are disclosed in note
34.
Quoted investments are
acquired after assessing the quality of the related
investments.
Currency
risk
Foreign currency
transactions arise when the Group buys or sells goods or services
whose price is denominated in foreign currency, borrows or lends
funds when the amounts payable or receivable are denominated in a
foreign currency or acquires or disposes of assets, or incurs or
settles liabilities, denominated in foreign currency.
The risk arising from
foreign currency transactions is managed by regular monitoring of
the relevant exchange rates and management’s reaction to
material movements thereto.
The functional currency of
all the subsidiaries, except the Romanian entities, was the Euro
both in the current year and in the prior year. Furthermore,
the translation of the Romania entity, which has the Romanian Lei
as its functional currency is recognised in the Group’s other
comprehensive income in accordance with the Group’s
accounting policies.
Interest rate
risk
The Group has taken out
bank borrowings and debt securities to finance its operations as
disclosed in notes 24 and 26. The interest rates thereon and
the terms of such borrowings are disclosed accordingly. The
effective interest rate on loans and receivables, other financial
liabilities, bank borrowings, debt securities in issue and cash at
bank are disclosed in notes 18, 23, 24, 26 and 29
respectively.
The Group is exposed to
cash flow interest rate risk on borrowings and debt instruments
carrying a floating interest rate and to fair value interest rate
risk on borrowings and debt instruments carrying a fixed interest
rate to the extent that these are measured at fair value.
Investments in equity instruments are not exposed to interest rate
risk.
Management monitors the
movement in interest rates and, where possible, reacts to material
movements in such rates by adjusting its selling prices or by
restructuring its financing structure. The Group entered into
interest rate swaps to hedge its exposure arising from floating
interest rates on certain bank borrowings.
The carrying amounts of the
Group’s financial instruments carrying a rate of interest at
the reporting date are disclosed in the notes to the financial
statements.
Sensitivity
analysis
The Group has used a
sensitivity analysis technique that measures the change in cash
flows of the Group’s bank borrowings, net of cash at bank and
on hand, and derivative financial instruments at the end of the
reporting period for hypothetical changes in the relevant market
risk variables. The sensitivity due to changes in the
relevant risk variables is set out below.
The amounts generated from
the sensitivity analysis are forward-looking estimates of market
risk assuming certain market conditions. Actual results in
the future may differ materially from those projected results due
to the inherent uncertainty of global financial markets. The
sensitivity analysis is for illustrative purposes only, as in
practice market rates rarely change in isolation and are likely to
be interdependent.
The estimated change in
cash flows for changes in market interest rates are based on an
instantaneous increase or decrease of 50 basis points at the end of
the reporting period, with all other variables remaining
constant.
The sensitivity of the
relevant risk variables is as follows:
|
|
Group
|
|
Holding
Company
|
|
|
Profit or loss
sensitivity
|
|
Profit or loss
sensitivity
|
|
|
2023
|
2022
|
|
2023
|
2022
|
|
|
Eur
|
Eur
|
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
Market interest
rates
|
+/-
112k
|
+/-
176k
|
|
+/-
9k
|
+/-
13k
|
|
|
|
|
|
|
|
The sensitivity on profit
or loss in respect of market interest rates for the Group is mainly
attributable to cash and cash equivalents, bank borrowings and
derivative financial instruments. The sensitivity on profit
or loss in respect of market interest rates for the Holding Company
is attributable only to cash and cash equivalents.
Liquidity
risk
The Group and the Holding
Company monitor and manage their risk to a shortage of funds by
maintaining sufficient cash, by matching the maturity of both their
financial assets and financial liabilities and by monitoring the
availability of raising funds to meet financial
obligations.
Funds are transferred
within the Group as and when the need arises. Management
monitors liquidity risk by means of cash flow forecasts on the
basis of expected cash flows over a twelve-month period, which is
adjusted monthly and monitored on a weekly basis, to ensure that
any additional financing requirements are addressed in a timely
manner.
The Group and the Holding
Company are exposed to liquidity risk in relation to meeting the
future obligations associated with their financial liabilities,
which comprise principally trade and other payables, other
financial liabilities, lease liabilities and interest-bearing
borrowings (refer to notes 22, 23, 24, 25 and 26). Prudent
liquidity risk management includes maintaining sufficient cash and
committed credit lines to ensure the availability of an adequate
amount of funding to meet the Holding Company’s and
Group’s obligations.
At the end of the reporting
period, the Group reported a net current liability position of
Eur21,652,178 ( 2022 – Eur11,571,539). In
2019, the Group first time adopted IFRS16 Leases. The
Standard required the Group to recognise leases on the statement of
financial position which will reflect the right-of-use asset for a
period of time and the associated liability for payments.
Right-of-use assets and non-current lease liabilities did not
impact the net current position of the Group. However, the
current lease liabilities negatively impacted the net current
position of the Group by Eur11,143,870 (2022 –
Eur9,600,747). In 2023, the Group first-time adopted
Customer Loyalty Program provisions in line with IFRS 15
Revenue Recognition . This also impacted
current accrual provisions by Eur2,798,290.
The Group continued to
finance capital expenditure from working capital. In 2023,
the Group has invested a total of Eur34,358,231 (2022
– Eur30,328,717 ) in property, plant and
equipment.
As detailed in note 24, the
Group continued to leverage by means of bank loans which at the end
of the reporting period amounted to Eur27,768,650 (2022
– Eur14,144,443 ). These include new financing
granted during the year to Romania operations of
Eur12,500,000 and to Greece operations of
Eur5,000,000 . The current portion of these new loan
facilities together with the overdraft facility utilised
temporarily by Greece amounted to Eur4,310,701 .
The Holding Company has a
portfolio of investments with a carrying amount of
Eur15,713,327 (2022 - Eur14,655,482 ) .
The intention of the Group is to maximise return on headroom until
the need to deploy on capital or recurring expenditure.
The directors have reviewed
cash flow projections that have been prepared for the next 12
months. The Group budgets and cash flow forecasts assume that
the Group continues to operate within its current credit limits
afforded by third party creditors and also a strategy to continue
to invest in capital expenditure as far as possible from working
capital for at least the next 12 months. Based on continued
operating profitability, the directors are confident that the Group
will have no difficulty to continue to meet its commitments as and
when they fall due.
The following maturity
analysis for financial liabilities shows the remaining contractual
maturities using the contractual undiscounted cash flows on the
basis of the earliest date on which the Group can be required to
pay. The analysis includes both interest and principal cash
flows.
Group
|
|
On
demand
|
|
|
|
|
|
or
within
|
Within
|
After
|
|
|
|
1
year
|
2 - 5
years
|
5
years
|
Total
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
|
2023
|
|
|
|
|
|
Non-derivative
|
|
|
|
|
|
financial liabilities
|
|
|
|
|
|
Non-interest
bearing
|
73,707,504
|
-
|
-
|
73,707,504
|
|
Variable rate
instruments
|
8,966,948
|
23,928,401
|
664,421
|
33,559,770
|
|
Fixed rate
instruments
|
2,437,500
|
69,621,233
|
-
|
72,058,733
|
|
|
85,111,952
|
93,549,634
|
664,421
|
179,326,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022
|
|
|
|
|
|
Non-derivative
|
|
|
|
|
|
financial liabilities
|
|
|
|
|
|
Non-interest
bearing
|
60,513,108
|
-
|
-
|
60,513,108
|
|
Variable rate
instruments
|
3,751,681
|
11,387,897
|
-
|
15,139,578
|
|
Fixed rate
instruments
|
2,437,500
|
72,058,733
|
-
|
74,496,233
|
|
|
66,702,289
|
83,446,630
|
-
|
150,148,919
|
|
|
|
|
|
|
Holding
Company
|
|
On
demand
|
|
|
|
|
|
or
within
|
Within
|
After
|
|
|
|
1
year
|
2 - 5
years
|
5
years
|
Total
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
|
2023
|
|
|
|
|
|
Non-derivative
|
|
|
|
|
|
financial liabilities
|
|
|
|
|
|
Non-interest
bearing
|
4,250,217
|
-
|
-
|
4,250,217
|
|
Fixed rate
instruments
|
12,480,011
|
69,621,233
|
-
|
82,101,244
|
|
|
16,730,228
|
69,621,233
|
-
|
86,351,461
|
|
|
|
|
|
|
|
2022
|
|
|
|
|
|
Non-derivative
|
|
|
|
|
|
financial liabilities
|
|
|
|
|
|
Non-interest
bearing
|
4,708,053
|
-
|
-
|
4,708,053
|
|
Fixed rate
instruments
|
8,320,911
|
72,058,733
|
-
|
80,379,644
|
|
|
13,028,964
|
72,058,733
|
-
|
85,087,697
|
|
|
|
|
|
|
The table below details
changes in the Group and the Holding Company’s liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are
those for which cash flows were, or future cash flows will be,
classified in the Statement of Cash Flows as cash flows from
financing activities.
Group
|
|
Opening balance as
at 01.01.2023
|
Cash
flows
|
Non-cash
changes
|
Closing balance as
at 31.12.2023
|
|
|
Foreign exchange
movements
|
Assignment of
debts
|
Other
changes
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
|
Debt securities in
issue
|
64,633,172
|
-
|
-
|
-
|
93,658
|
64,726,830
|
|
Lease
liabilities
|
127,350,336
|
(17,260,638)
|
(307,427)
|
-
|
38,082,997
|
147,865,268
|
|
Bank
borrowings
|
14,144,443
|
13,781,890
|
(157,683)
|
-
|
-
|
27,768,650
|
|
Amounts due to ultimate
parent
|
1,106,119
|
(815,819)
|
-
|
-
|
-
|
290,300
|
|
Amounts due to related
parties
|
147,879
|
44,652
|
-
|
-
|
-
|
192,531
|
|
|
|
|
|
|
|
|
|
|
Opening balance as at
01.01.2022
|
Cash flows
|
Non-cash
changes
|
Closing balance as at
31.12.2022
|
|
|
Foreign exchange
movements
|
Assignment of
debts
|
Other
changes
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
|
Debt securities in
issue
|
64,539,514
|
-
|
-
|
-
|
93,658
|
64,633,172
|
|
Lease
liabilities
|
111,873,675
|
(14,072,582)
|
2,397
|
-
|
29,546,846
|
127,350,336
|
|
Bank
borrowings
|
25,091,524
|
(10,958,418)
|
11,337
|
-
|
-
|
14,144,443
|
|
Amounts due to ultimate
parent
|
30,301
|
75,818
|
-
|
-
|
1,000,000
|
1,106,119
|
|
Amounts due to related
parties
|
33,724
|
114,155
|
-
|
-
|
-
|
147,879
|
Holding
Company
|
|
Opening
balance as at 01.01.2023
|
Non-cash
changes
|
Closing balance as
at 31.12.2023
|
|
|
Cash
flows
|
Foreign
exchange movements
|
Assignment of
debts
|
Other
changes
|
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
|
Debt securities in
issue
|
64,633,172
|
-
|
-
|
-
|
93,658
|
64,726,830
|
|
Lease
liabilities
|
355,946
|
(61,660)
|
-
|
-
|
29,504
|
323,790
|
|
Amounts due to ultimate
parent
|
1,023,206
|
(732,906)
|
-
|
-
|
-
|
290,300
|
|
Amounts due to related
parties
|
3,077
|
3,638
|
-
|
-
|
-
|
6,715
|
|
Amounts due to
subsidiaries
|
7,175,070
|
3,405,038
|
-
|
-
|
377,474
|
10,957,582
|
|
|
|
|
|
|
|
|
|
Opening balance
as at 01.01.2022
|
Cash flows
|
Non-cash
changes
|
Closing balance as at
31.12.2022
|
|
|
Foreign exchange
movements
|
Assignment of
debts
|
Other
changes
|
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
Eur
|
|
|
|
|
|
|
|
|
|
Debt securities in
issue
|
64,539,514
|
-
|
-
|
-
|
93,658
|
64,633,172
|
|
Lease
liabilities
|
364,049
|
(55,093)
|
-
|
-
|
46,990
|
355,946
|
|
Amounts due to ultimate
parent
|
30,301
|
(7,095)
|
-
|
-
|
1,000,000
|
1,023,206
|
|
Amounts due to related
parties
|
-
|
3,077
|
-
|
-
|
-
|
3,077
|
|
Amounts due to
subsidiaries
|
10,934,684
|
(4,027,392)
|
-
|
-
|
267,778
|
7,175,070
|
Derivative financial
instruments
The Group does not use
derivative financial instruments for speculative
purposes.
The Group uses interest
rate swaps to convert a proportion of its floating rate debt to
fixed rates.
During the year under
review and during the prior year, the Holding Company did not
designate any of its derivative financial instruments in a hedging
relationship for accounting purposes.
37.
Capital risk management
The Holding Company’s
objectives when managing capital are to safeguard its ability to
continue as a going concern and to maximise the return to
stakeholders through the optimisation of the debt and equity
balance.
The capital structure of
the Group consists of items presented within equity in the
statement of financial position, bank borrowings and debt
securities as disclosed in notes 24 and 26 and cash and cash
equivalents as disclosed in note 29.
The Holding Company’s
directors manage the capital structure and make adjustments to it,
in light of changes in economic conditions. The capital
structure is reviewed on an on-going basis. Based on
recommendations of the directors, the Holding Company balances its
overall capital structure through payments of dividends (subject to
bank approval when required), new share issues as well as the issue
of new debt or the redemption of existing debt.
The Group’s overall
strategy remains unchanged from the prior year.
38.
Events after reporting period
No adjusting or significant
non-adjusting events have occurred between 31 December 2023 and the
date of authorisation.
Independent auditor’s report
To the shareholders of Premier Capital
p.l.c.
Report on the
audit of the financial statements
Opinion
We have audited the
financial statements of Premier Capital p.l.c. (the
“Company”) and of the Group of which it is the parent,
which comprise the statements of financial position as at 31
December 2023, and the statements of profit or loss and other
comprehensive income, statements of changes in equity and
statements of cash flows for the year then ended, and notes to the
financial statements, including the material accounting policies
and other
explanatory information.
In our opinion, the
accompanying financial statements give a true and fair view of the
financial position of the Company and the Group as at 31 December
2023, and of their financial performance and cash flows for the
year then ended in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union (EU),
and have been properly prepared in accordance with the requirements
of the Companies Act, Cap. 386 (the “Act”).
Our opinion is
consistent with our additional report to the audit
committee.
Basis for
opinion
We conducted our audit in accordance
with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company
and the Group in accordance with the International Ethics Standards
Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code) together with the ethical requirements of
the Accountancy Profession (Code of Ethics for Warrant Holders)
Directive issued in terms of the Accountancy Profession Act, Cap.
281 that are relevant to our audit of the financial statements in
Malta. We have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion. In conducting our audit we have remained
independent of the Company and the Group and have not provided any
of the non-audit services prohibited by article 18A of the
Accountancy Profession Act, Cap. 281. The non-audit services that
we have provided to the Company and the Group during the year ended
31 December 2023 are disclosed in note 8 to the financial
statements.
Key audit
matters
Key audit matters are those matters
that, in our professional judgement, were of most significance in
our audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Impairment testing of goodwill in the
consolidated financial statements
Key audit
matter
Management is required by International
Accounting Standard (IAS) 36, Impairment of Assets, to carry out an
annual assessment to establish whether the Group’s goodwill
is carried at no more than its recoverable amount.
On the basis of its assessment for the
current year, management concluded that the carrying amount of the
Group’s goodwill amounting to € 24.89 million, €
16.59 million of which is allocated to the operations in Malta and
€ 8.30 million allocated to the operations in Romania, was not
impaired.
We focussed on this area because of the
significance of the amount and because impairment testing involves
complex and subjective judgements by the Directors about the future
results of the relevant parts of the business. In addition,
management’s assessment process is based on significant
assumptions, specifically the determination of the discount rate
and cash flows projections used in determining the value-in-use of
the cash-generating units over which the goodwill was
allocated. The assumptions used by management are generally
affected by expected future market and economic conditions.
How the key audit
matter was addressed in our audit
We evaluated the suitability and
appropriateness of the impairment methodology applied by management
and engaged our internal valuation specialist resources to assess
the reliability of the directors’ forecasts and to challenge
the methodology used and the underlying assumptions. We concluded
that the parameters utilised were reasonable.
We communicated with management and
those charged with governance and noted that they were able to
provide satisfactory responses to our questions. We also assessed
the adequacy of the disclosures made in note 3 of the financial
statements relating to goodwill including those regarding the key
assumptions used in assessing its carrying amount. Those
disclosures specifically explain that the directors have assessed
the carrying amount of goodwill as at 31 December 2023 to be
recoverable and that there is no impairment in the value of the
goodwill.
Revenue recognition in the consolidated
financial statements
Key audit
matter
The Group recognises revenue from
restaurant sales when services are rendered, that is, when food and
beverage products purchased by customers have been delivered and
accepted by the customers.
We considered revenue recognition as key
audit matter since it involves a significant volume of
transactions, requires proper observation of cut-off procedures,
and directly impacts the Group’s profitability.
The Group’s disclosures on its
revenue recognition policy is presented in note 2 to the financial
statements.
How the key audit
matter was addressed in our audit
Our audit procedures to address the risk
of material misstatement relating to revenue recognition included,
among others, testing the design and operating effectiveness of the
Group’s internal controls over recognition of revenues;
performing substantive analytical review procedures over revenues
such as, but not limited to, yearly and monthly analyses of sales
per product/brand and location, and sales mix composition based on
our expectations and following up variances from our expectations;
and, verifying that the underlying information used in the analyses
are valid.
Impairment testing of investment in
subsidiaries recognised in the financial statements of the
Company
Key audit
matter
The management is also required by IAS
36, Impairment of Assets, to carry out a review for any indication
that the carrying amount of the investment in subsidiaries is not
impaired.
On the basis of its review for the
current year, management concluded that the carrying amount of the
investment in subsidiaries amounting to € 78.21 million, was
not impaired.
We considered impairment test of
investment in subsidiaries as key audit matter because the amount
is material to the Company’s financial statements.
How the key audit
matter was addressed in our audit
We evaluated the suitability and
appropriateness of the impairment methodology applied by management
and engaged our internal valuation specialist resources to assess
the reliability of the directors’ forecasts and to challenge
the methodology used and the underlying assumptions. We concluded
that the parameters utilised were reasonable.
We communicated with management and
those charged with governance and noted that they were able to
provide satisfactory responses to our questions. We also assessed
the adequacy of the disclosures made in note 17 of the financial
statements relating to investments including those regarding the
key assumptions used in assessing its carrying amount. Those
disclosures specifically explain that the directors have assessed
the carrying amount of investments as at 31 December 2023 to be
recoverable and that there is no impairment in the value of the
investments.
Other
information
The directors are responsible for the
other information. The other information comprises (i) the
Directors, officer and other information, (ii) the Directors’
report, (iii) Statement of directors’ responsibilities and
(iv) the Corporate governance statement which we obtained prior to
the date of this auditor’s report, but does not include the
financial statements and our auditor’s report thereon.
Our opinion on the financial statements
does not cover the other information, including the
Directors’ report.
In connection with our audit of the
financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the
other information is materially inconsistent with the financial
statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
With respect to the Directors’
report, we also considered whether the Directors’ report
includes the disclosures required by Article 177 of the Act.
Based on the work we
have performed, in our opinion:
|
•
|
Non-financial statement
in the Directors’ report:
|
•
|
The Directors’ report
includes non-financial information in line with the requirements of
paragraphs 8 and 11 of the Sixth Schedule to the Act. The proviso
to sub-article 179(3) of the Act requires us to check whether such
information is provided, but not to express any comment
thereon.
|
|
|
•
|
Information in the
Directors’ report other than the non-financial
statement:
|
•
|
The information given
in the Directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial
statements, and the Directors’ report has been prepared in
accordance with the Act.
|
|
In addition, and in
light of the knowledge and understanding of the Company and the
Group and their environment obtained in the course of the audit, we
are required to report if we have identified material misstatements
in the Directors’ report and other information that we
obtained prior to the date of this auditor’s report. We have
nothing to report in this regard.
Responsibilities
of the directors and those charged with governance for the
financial statements
The directors are responsible for the
preparation of financial statements that give a true and fair view
in accordance with IFRS as adopted by the EU and are properly
prepared in accordance with the provisions of the Act, and for 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.
In preparing the financial statements,
the directors are responsible for assessing the Company’s and
the Group’s ability to continue as a going concern,
disclosing, as applicable, matters relating to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the Company or to cease operations, or
have no realistic alternative but to do so. The directors are
responsible for overseeing the Company’s and the
Group’s financial reporting process.
Auditor’s
responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable
assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will
always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected
to influence the economic decisions of users taken on the basis of
these financial statements.
In terms of article 179A(4) of the Act,
the scope of our audit does not include assurance on the future
viability if the audited entity or on the efficiency or
effectiveness with which the directors have conducted or will
conduct the affairs of the entity.
As part of an audit in accordance with
the ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
|
-
|
Identify and assess the risks of
material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override
of internal control.
|
|
-
|
Obtain an understanding of internal
control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s and Group’s internal control.
|
|
-
|
Evaluate the appropriateness of
accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
|
|
-
|
Conclude on the appropriateness of
management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast
significant doubt on the Company’s and Group’s ability
to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However future events
or conditions may cause the Company or the Group to cease to
continue as a going concern.
|
|
-
|
Evaluate the overall presentation,
structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair
presentation.
|
|
-
|
Obtain sufficient appropriate evidence
regarding the financial information of the entities or business
activities within the Group to express and opinion on the
consolidated financial statements. We are responsible for the
direction, supervision and performance of the group audit. We
remain solely responsible for our audit opinion.
|
We communicate with those charged with
governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with
governance with a statement that we have complied with the relevant
ethical requirements regarding independence, and to communicate
with them all relationships and other matters that may reasonably
be thought to bear on our independence, and where applicable,
related safeguards.
From the matters communicated with those
charged with governance, we determine those matters that were of
most significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public
interest benefit of such communication.
Report on other
legal and regulatory requirements
Report on compliance with the
requirements of the European Single Electronic Format Regulatory
Technical Standard (the “ESEF RTS”), by reference to
Capital Markets Rule 5.55.6
We have undertaken a reasonable
assurance engagement in accordance with the requirements of
Directive 6 issued by the Accountancy Board in terms of the
Accountancy Profession Act (Cap. 281) - the Accountancy Profession
(European Single Electronic Format) Assurance Directive (the
“ESEF Directive 6”) on the Report and Consolidated
Financial Statements of Premier Capital p.l.c. for the year ended
31 December 2023, entirely prepared in a single electronic
reporting format.
Responsibilities of
the directors
The directors are responsible for the
preparation of the Report and Consolidated Financial Statements and
the relevant mark-up requirements therein, by reference to Capital
Markets Rule 5.56A, in accordance with the requirements of the ESEF
RTS.
Our
responsibilities
Our responsibility is to obtain
reasonable assurance about whether the Report and Consolidated
Financial Statements and the relevant electronic tagging therein,
complies in all material respects with the ESEF RTS based on the
evidence we have obtained. We conducted our reasonable assurance
engagement in accordance with the requirements of ESEF Directive
6.
Our procedures
included:
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Obtaining an understanding of the
entity's financial reporting process, including the preparation of
the Report and Consolidated Financial Statements, in accordance
with the requirements of the ESEF RTS.
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Obtaining the Report and
Consolidated Financial Statements and performing validations to
determine whether the Report and Consolidated Financial Statements
have been prepared in accordance with the requirements of the
technical specifications of the ESEF RTS.
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Examining the information in the
Report and Consolidated Financial Statements to determine whether
all the required taggings therein have been applied and whether, in
all material respects, they are in accordance with the requirements
of the ESEF RTS.
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We believe that the evidence we
have obtained is sufficient and appropriate to provide a basis for
our opinion.
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Opinion
In our opinion, the Report and
Consolidated Financial Statements for the year ended 31 December
2023 has been prepared, in all material respects, in accordance
with the requirements of the ESEF RTS.
Report on Corporate
governance statement
The Capital Markets Rules issued by the
Malta Financial Services Authority (MFSA) require the directors to
prepare and include in their Annual Report a Corporate governance
statement providing an explanation of the extent to which they have
adopted the Code of Principles of Good Corporate Governance and the
effective measures that they have taken to ensure compliance
throughout the accounting period with those Principles.
The Capital Markets Rules also require
us, as the auditor of the Company, to include a report on the
Statement of Compliance prepared by the directors.
We read the Corporate governance
statement and consider the implications for our report if we become
aware of any apparent misstatements or material inconsistencies
with the financial statements included in the Annual Report. Our
responsibilities do not extend to considering whether this
statement is consistent with any other information included in the
Annual Report.
We are not required to, and we do not,
consider whether the Board’s statements on internal control
included in the Corporate governance statement cover all risks and
controls, or form an opinion on the effectiveness of the
Company’s corporate governance procedures or its risk and
control procedures.
In our opinion, the Corporate governance
statement has been properly prepared in accordance with the
requirements of the Capital Markets Rules.
Other matters on
which we are required to report by exception
We also have responsibilities
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under the Companies Act, Cap 386 to
report to you if, in our opinion:
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adequate accounting records have not been
kept, or that returns adequate for our audit have not been received
from branches not visited by us
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the financial statements are not in agreement
with the accounting records and returns
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we have not received all the information and
explanations we require for our audit
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certain disclosures of directors’
remuneration specified by law are not made in the financial
statements, giving the required particulars in our report.
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in terms of Capital Markets Rules to review
the statement made by the Directors that the business is a going
concern together with supporting assumptions or qualifications as
necessary.
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We have nothing to report to you in
respect of these responsibilities.
Auditor
tenure
We were first appointed as auditors of
the Company and the Group on 9 October 2018 and therefore
represents an engagement appointment of six years.
The engagement partner on the audit
resulting in this independent auditor’s report is Mark
Bugeja.
Grant
Thornton
Fort Business Centre, Level 2
Triq L-Intornjatur
Central Business District
Birkirkara CBD 1050
Malta
26 April 2024
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