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Report and financial statements
31 December 2024
Contents
Directors, officer and other information
Statements of directors’ responsibilities
Corporate governance statement
Statements of profit or loss and other comprehensive income
Statements of financial position
Statements of changes in equity
Notes to the financial statements
Directors, officer and other information
Directors: Carmelo Hili Massimiliano Eugenio Lupica Karen Pace Valentin-Alexandru Truta Dorian Desira Claudine Cassar
Secretary: Adrian Mercieca
Registered office: Nineteen Twenty-Three, Valletta Road, Marsa MRS 3000
Country of incorporation: Malta
Company registration number: C 36522
Auditor: Grant Thornton Fort Business Centre Triq L-Intornjatur, Zone 1 Central Business District Birkirkara CBD1050 Malta
Principal bankers: BRD – Groupe Societe Generale S.A., 1-7 Ion Mihalache Boulevard, Sector 1, Bucharest 011171, Romania
EUROBANK S.A. 8 Othonos str, 105 57 Athens
HSBC Bank Malta Plc Mill Street, Qormi QRM 3101 Malta
Directors’ reportYear ended 31 December 2024
The directors present their report and the audited financial statements of the Group and Holding Company for the year ended 31 December 2024.
The Group is engaged in the operations of McDonald’s restaurants in Estonia, Greece, Latvia, Lithuania, Malta and Romania.
The Holding Company acts as an investment company and service provider to its subsidiary undertakings.
2024 was a positive year for the Group, having served over 90 million customers across its six markets (2023: 85 million). Group revenue reached Eur 714,667,106 compared to Eur 645,565,421 in 2023, an increase of 10.7% . Revenue growth was recorded across all markets with the most significant relative growth recorded in Romania ( +15% year-on-year), followed by Malta ( +7.7%) and Latvia ( +7.2% ) This was primarily achieved through the Group’s expansion strategy, which saw it open eleven new restaurants in the year under review , including seven in Romania, three in Greece and one in Lithuania. Three restaurants in Romania were shut at the end of their lease term, resulting in a net increase of eight restaurants and taking the total to 193 (2023: 185 ).
Revenue share by market and number of operating restaurants:
Apart from new openings, the Group continued to invest heavily in its existing restaurants, with a combined total of Eur39,733,462 invested in new restaurants and the refurbishment of existing ones. A significant portion of this investment was allocated to energy-efficient equipment for better environmental performance and renewable energy generation.
Investing in people and technology to ensure operational excellence and innovation, is one of the Group’s top priorities and in 2024, significant progress was made to leverage business intelligence for strategic decision making and provide group-level oversight of marketing activities to optimize resources.
In line with this investment, the Group undertook marketing expenditure of Eur 35,894,178 (2023: Eur32,496,694) , strengthening each subsidiary’s market position, driving loyalty and maintaining the brand’s image and trust. The Group also celebrated 30-year anniversary for McDonald’s in Latvia, with similar milestone expected to be marked by Estonia, Romania and Malta in 2025.
With labour shortages affecting the Quick Service Restaurant industry, the Group continued to strongly promote its employer brand across all markets, driving initiatives to attract fresh talent and improve employee satisfaction and retention, while ensuring responsible recruitment. These efforts include offering fair and sustainable wages and benefits to its 10,355 strong workforce and performance reviews, professional development programmes and employee well-being initiatives.
Financial Performance
The Group registered an operating profit of Eur 69,750,004 increasing from Eur 58,827,155 in 2023. After accounting for investment income and finance costs, the Group registered a pre-tax profit of Eur 61,949,885 when compared to Eur 50,645,580 in the previous year. Gross profit margins saw a significant improvement in 2024, primarily due to better management of food costs by the Group. Food inflation in the EU had peaked at over 19% in 2023, but it stabilized in 2024.
The Group’s net assets as at 31 December 2024 amounted to Eur 97,993,361 (2023 –Eur 102,996,629 ).
In 2024, the Holding Company registered an operating loss of Eur 7,061,841 ( 2023 –Eur 7,632,558 ). After accounting for investment income and finance costs, the Holding Company registered a pre-tax profit of Eur 56,418,025 (2023 – Eur 44,359,363 ) .
The net assets of the Holding Company at the end of the financial year amounted to Eur 42,195,051 ( 2023 – Eur 41,998,327 ).
The Group measures the achievement of its financial objectives using the following key performance indicators:
The Group calculates the level of its free cash flow through its net cash generated from operating activities, less capital expenditure. This amounted to Eur 54,363,611 compared to Eur 53,677,608 at the end of 2023. This metric shows the Group’s ability to turn profit into cash through the management of working capital and a disciplined approach to capital expenditure.
EBITDA also increased to Eur 103,123,491 from Eur 89,094,461 , with the Group’s EBITDA margin increasing from 13.8% to 14.4% .
As a direct consequence of the increase in EBITDA margin, the interest cover of the Group increased from 8.73 times to 9.57 times. The gearing ratio deteriorated from 30.2% to 39.0% due to additional bank borrowings drawndown along the year.
Non-financial Performance
Customer and employee satisfaction is essential in operational success. The Group consistently monitors feedback received through various channels and maintains high engagement rates with both customers and employees.
Additionally, the Group’s commitment to good governance, climate action, protecting resources, and positively impacting the communities it operates in, is underlined in its initiatives.
Market Performance
Despite continued pressures from competition in the respective markets, the Group maintained and increased guest counts in every market and remained a leader in market share.
Business Model
The Group operates McDonald’s restaurants through a development licence, which brand is considered to be the largest quick-service-restaurant chain in the world. The business model and its “three-legged stool” of operators, suppliers and employees form its foundations, and the balance of interests among the three groups is essential to the Group’s success. The strength in the alignment of the subsidiaries within the Group, its suppliers, and employees has been key to the Group’s success. This business model enables it to consistently deliver locally relevant restaurant experiences to customers and be an integral part of the communities it serves. In addition, it facilitates its ability to identify, implement and scale innovative ideas that meet customer’s changing needs and preferences. The Group adopts McDonald’s operational principles, which are designed to assure consistency and high quality at every restaurant.
Review of the Business and Outlook Future Outlook
Geo-political uncertainty brought about by the ongoing trade war between the United States and the rest of the world, together with the political turmoil in the Middle East and Ukraine have heightened instability in the current economic climate. As a Board, we continue to monitor these global developments, remaining vigilant of any repercussions on the markets in which the Group operates.
Notwithstanding this, we believe that the success of the business rests in the principle of running good restaurants and the Group is projecting to continue to expand the number of restaurants it operates, invest in people and technology and further its efforts in the environmental initiatives described further below.
The directors consider the going concern assumption, in the preparation of these financial statements, as appropriate as at the date of authorisation and believes that no material uncertainty that may cast significant doubt about the Holding Company's and the Group’s ability to continue as a going concern exists as at that date.
Principal risks and uncertainties
The responsibility for risk management rests with the Holding Company’s directors, who evaluate risk appetite and formulate policies for identifying and managing such risks. The Board then communicates its decisions and goals through subsidiary Boards which meet regularly and are tasked with the oversight of the markets’ performance. The responsibility to plan the necessary resources, drive and implement the strategic requirements to achieve the intended outcomes rests with the Group’s management team across its markets.
The principal risks and uncertainties facing the Group are included below:
(a) Market and competition The Group operates in a highly competitive environment and faces competition from various other entities. Technological developments also have the ability to create new forms of quickly evolving competition. An effective, coherent and consistent strategy to respond to competitors and changing market enables the Group to sustain its market share and its profitability. The Group continues to focus on service quality and performance in managing this risk.
(b) Legislative risks The Group is subject to several laws and regulations covering a wide range of matters in all the jurisdictions in which it operates. Failure to comply with such obligations could have significant financial or reputational consequences which could materially affect the Group’s ability to operate. The Group has embedded operating policies and procedures to ensure compliance with all existing legislation and adequate preparation for new legislation that will impact the Group in the coming year.
(c) Talent and skills Failure to engage and develop the Group’s existing employees or to attract and retain talented employees could hamper the Group’s ability to deliver the best service to its customers in the future. The Group invests continuously in training its employees and undertakes regular reviews of the Group’s resource requirements.
(d) Economic and market environment Economic conditions have been and remain challenging in recent years across the markets in which the Group operates. A significant economic decline in the informal eating out segment could impact the Group’s ability to continue to attract and retain customers. Demand for the Group’s products can be adversely affected by weakness in the wider economy which are beyond the Group’s control. This risk is evaluated as part of the Group’s annual strategy process covering the key areas of investment and development and updated regularly throughout the year. The Group continues to make significant investment in innovation. The Group regularly reviews its pricing structures to ensure that its products are appropriately placed within the markets in which it operates.
(e) Brand and reputation risk Damage to the Group’s reputation could ultimately impede the Group’s ability to execute its corporate strategy. To mitigate this risk, the Group strives continually to build its reputation through a commitment to sustainability, transparency, effective communication and best practices. The Group works to develop and maintain its brand value.
(f) Technology and business interruption The Group relies on information technology in all aspects of its business. In addition, the services that the Group offers to its customers are reliant on complex technical infrastructure. A failure in the operation of the Group’s key systems or infrastructure could cause a failure of service to its customers, thus negatively impacting its brand, and increased costs. The Group makes significant investment in technology infrastructure to enable it to continue to support the growth of its business and has a robust selection and monitoring process of third-party service providers.
(g) Supply chain Supply chain relies on a number of McDonald’s approved suppliers for the provision of its supplies. A significant disruption in terms of timing and/or pricing within the supply chain could adversely affect the Group’s ability to deliver products and services to its customers. A robust supplier selection process is in place and operated by McDonald’s globally, with appropriate ongoing management and monitoring of key suppliers.
(h) Customer service The Group’s revenues are at risk if it does not continue to provide the level of service expected by its customers. The Group’s commitment to customers is embedded in its values. The relevant employees undertake intensive training programmes to ensure that they are aware of, and abide by, the levels of service that are required by the Group’s customers.
(i) Political risk The Group operates in many countries with differing economic, social and political conditions, which could include political unrest, strikes and other forms of instability. Changes in these conditions may adversely affect the Group’s business, results of operations, financial conditions or prospects. The Group adapts to such risks by incorporating this risk into its business strategy.
(j) Significant judgements and estimates Note 3 to the financial statements provides details in connection with the inherent uncertainties that surround the preparation of the financial statements and which require significant estimates and judgements.
(k) Contingent liabilities Note 34 to the financial statements provides details in connection with the Group’s contingent liabilities.
(l) ESG risks The Group employs a Director of ESG who is tasked with overseeing and leading an aligned ESG strategy, assessing risks and opportunities, while developing policies which ensure that the business grows in tune with the Board’s ESG goals and objectives. An internal ESG committee with representatives from each market was also incepted in December 2023.
Note 36 to the financial statements provides details in connection with the Group’s use of financial instruments, its financial risk management objectives and policies and the financial risks to which it is exposed.
Scope and purpose of the Non-Financial Statement The scope of this statement is to describe the Holding Company’s key sustainability efforts over the course of 2024. Through its subsidiaries’ operations, the Holding Company aims to continuously assess and improve awareness of its most relevant Environmental, Social, and Governance (ESG) impacts, risks, and opportunities. This report, as a result, will provide its key stakeholders with transparent and comprehensive information covering the Group’s ESG performance.
Key Definitions
Board of Directors
Carmelo Hili Chairman & Chief Executive Officer Melo is leading Premier Capital plc as Chairman and was appointed Chief Executive Officer in 2023, having joined the family business in 1988. He started out at Motherwell Bridge, then a joint venture with Motherwell Bridge Group of Scotland, where he served as managing director for twenty years. He was named Developmental Licensee for McDonald’s in Malta in 2005 and went on to expand across Europe, obtaining licenses for Estonia, Latvia and Lithuania in 2007, Greece in 2011 and Romania in 2016. As CEO of Hili Ventures, the parent company of Premier Capital plc, Melo steers the international group which is present in 10 markets and employs over 12,800 people.
Valentin Truta Executive Director Valentin was appointed Managing Director of Premier Restaurants Romania in 2023. His journey with Hili Ventures, the parent company, began in 2016 when he joined as General Counsel. Before his tenure with Hili Ventures, he spent six years at McDonald’s Romania, fostering extensive business expertise and establishing a strong connection with McDonald’s Corporation. Mr Truta graduated from Nicolae Titulescu University in Bucharest and holds a Master’s degree in Business Law. Additionally, he completed an Executive Management Programme at the WHU – Otto Beisheim School of Management in Germany.
Dorian Desira Non-Executive Director Dorian joined the Hili family business in 1997 as an accounts clerk and in 2009, Dorian joined Premier Restaurants Malta as Finance Manager. He was later appointed General Manager for Malta, overseeing the McDonald’s operation of nine restaurants, and eventually became the Chief Financial Officer for Premier Capital in 2014. He was appointed Chief Financial Officer for Hili Ventures in 2021. He holds a CPA warrant and is a fellow of the Malta Institute of Accountants and the Association of Chartered Certified Accountants.
Karen Pace Non-Executive Director Karen is a Certified Public Accountant and holds a Practising Certificate in Auditing in Malta. She graduated as an Accountant in Malta in 2001 and practised in the audit function within the Deloitte network in Malta, Luxembourg and New York over a span of 16 years, specializing in internal controls within the financial services industry. She transitioned to an advisory role with a Maltese corporate services provider, handling regulatory matters for licensed investment managers and investment funds. Karen was appointed to the Board and Audit Committee of Premier Capital plc in 2018 and also holds board positions for other regulated entities in Malta.
Massimiliano Eugenio Lupica Independent Non-Executive Director Massimiliano (Max) Eugenio Lupica has been part of the McDonald’s family since 1990, when he started his career as a Trainee Manager, going on to lead restaurant teams in Rome, Bergamo and Milan as Store Manager. He has held several roles including Business Consultant, Director of Field Service for central and south Italy, and Regional Director for southern Italy leading the training, finance, operations and development teams of the region. In 2012, Mr Lupica became a McDonald’s franchisee and opened three restaurants in Italy. He completed programmes at the Hamburger University at both the Chicago and London campuses, and also studied at SDA Bocconi in Milan. Mr Lupica is the Chairman of the Audit Committee of Premier Capital plc.
Claudine Cassar Independent Non-Executive Director Claudine is a technology entrepreneur with more than 23 years’ strategic and management experience who has delivered digital transformation projects internationally. She founded Alert Communications, a long-time leading player in the Maltese technology sector, which was acquired by Deloitte in 2016. Ms Cassar was appointed Partner and Consulting Function Lead at Deloitte between 2016 and late 2020 and she also served as director of the Malta Council for Science and Technology and of JobsPlus in the same period. She is founder and current Chair of the Blossom Foundation which undertakes projects to support children from disadvantaged backgrounds.
Adrian Mercieca Company Secretary Adrian joined Hili Ventures, Premier Capital’s parent company, as Company Secretary and holds this position for most of its subsidiaries. He previously served as Director and Head of the Company Administration Department at a leading corporate service provider, where he was responsible for corporate, compliance, and banking matters for international clients, while also acting as Director and Company Secretary for several Maltese-registered companies. He holds an MBA from the University of Derby and an Advanced Diploma in Strategic Management & Leadership from Pearson.
Our Commitment to sustainability
Our organisation aligns with McDonald’s vision and is committed to measuring and communicating its material impacts across its markets. We manage our environmental and social footprint in line with the brand’s best-practices while tailoring our strategy to reflect market-specific variations.
Our commitment to sustainability extends beyond legal requirements, embracing broader values under four key pillars:
1. Our Planet 2. Food Quality & Sourcing 3. Job, Inclusion & Empowerment 4. Community Connections
Material Topics
In preparation for the requirements introduced under the Corporate Sustainability Reporting Directive (CSRD), Premier Capital has conducted a thorough assessment of its ESG risks, impacts, and opportunities. Over the past year, we have worked closely with our auditors, adopting available guidance for the food industry published by the European Financial Reporting Advisory Group (EFRAG) and the Sustainability Accounting Standard Board (SASB) to ensure a robust and comprehensive evaluation of our material impacts.
In upholding this responsibility, in 2024 we engaged with key stakeholders through structured dialogues to appropriately assess our material impacts, in order to map and maintain ongoing engagement to ensure the long-term effectiveness of our sustainability strategy.
We categorise stakeholders into two main groups:
- Affected stakeholders: Those directly impacted by our operations and processes. - Interested stakeholders: Those who, while not directly affected, have an interest in our sustainability performance.
Our Planet
We recognise the impact the food industry has on our planet. From resource consumption to emissions, every stage of food production affects the environment. In our restaurants, we are committed to optimising operations while maintaining strong sustainability principles. We continuously refine our processes, prioritising sustainability along our journey and contributing to a better future for generations to come.
Environmental Responsibility As a responsible operator, the Group is dedicated to respecting the environment and focusing efforts in areas where it can make a significant impact, including climate change, resource conservation, and waste management.
The Group dedicates its resources to:
Additionally, the Group collaborates with stakeholders to raise awareness and promote responsible practices, engaging employees, customers and local communities in initiatives such as waste separation, community clean-ups, and participation in recycling programs.
Climate Action In 2024, Premier Capital invested in a tailored solution to accurately present its carbon emissions and gain a deeper understanding of its carbon footprint, with the aim of developing a comprehensive climate action strategy.
This project marks a key milestone in our sustainability journey, laying the foundations for the development of a net-zero strategy which is aligned with McDonald’s Science Based Targets initiative (SBTi).
McDonald’s has submitted science-based targets for validation under the SBTi, in line with the 1.5°C target and the FLAG framework introduced in 2022. Additionally, in 2023, McDonald’s adjusted its 2030 targets (from a 2018 baseline) to reflect the latest SBTi guidance. Our contribution to the overall carbon emissions of McDonald’s globally is taken in consideration and accounted for target purposes. As such it is our responsibility to collaborate with the brand’s dedicated team to deploy our own decarbonization strategy and enable our brand to achieve its intended goals.
Through the new platform, we will be able to monitor key performance indicators (KPIs), enabling better informed decision-making with real-time, illustrated, and technical data on the Group’s carbon emissions, including:
Together with our new partner, supporting us in the calculation of the carbon emissions, and our brand we are working to define a decarbonization plan.
The below table represent our carbon emissions for 2024, in Tons of CO₂ equivalent.
*Please note that for the region of the Baltics, part of the Scope 3 carbon emissions are shared amongst its markets. *NB: The Baltic region is managed through a head-office in Latvia. Hence, some of the scope 3 carbon emissions are shared amongst each of its markets.
Energy, Water & Fuel Consumption Premier Capital follows McDonald’s guidelines on energy conservation, renewable energy use, and water conservation. These initiatives include, but are not limited to:
The table below presents the total energy, water, and fuel consumption for each market during 2024.
* Energy consumption includes consumption of electricity, natural gas, and purchased heat.
In 2024, Premier Restaurants Hellas, our McDonald’s operation in Greece, obtained ISO 50001:2018 certification, joining our subsidiaries in the Baltics and marking our fourth market to achieve this accreditation. ISO 50001:2018 is an international standard for energy management systems, designed to enhance performance and efficiency through a structured approach to monitoring and reducing energy and water consumption. One of Group’s targets includes the achievement of this standard across all its markets.
In the meantime, our subsidiaries in Romania and Malta continue to comply with legal requirements and conduct energy and water audits to identify opportunities for improving resource consumption.
Waste Management We remain committed to adopting solutions that reduce waste while transitioning to more sustainable packaging and toy materials. This supports our mission to keep communities clean and protect the planet for future generations.
The top priority in this area is our packaging and packaging waste transformation – a journey we have been on since 2019. Our primary guest packaging target is to use 100% recycled, renewable, and/or reusable materials by the end of 2025. In collaboration with McDonald’s Corporation and its approved suppliers, we are very close to achieving this goal, through the use of fibre-based packaging materials specifically designed for our products.
Below is a chart summarising our progress since 2019 in replacing plastic packaging with certified fibre-based alternative packaging.
Effectively managing customer waste remains one the largest challenges in the food industry, as it requires active customer participation in waste management and separation. Recognising this, we proactively seek and implement innovative solutions to aide our customers in appropriately disposing of their waste. Some of the initiatives include providing clearly labelled waste separation bins, offering illustrative guides, manning restaurant bins at peak times to ensure proper separation and delivering comprehensive training to our employees. Local teams also participate in regular clean-ups of restaurant surrounding areas to reduce littering and contribute to neighbourhood cleanliness.
In 2023, seven of our restaurants in Greece achieved the Zero Waste to Landfill goal, in collaboration with a specialist partner in this area. Unfortunately, due to operational constraints from the designated partner, this programme had to be put on hold. Our goal is to restart this initiative in the near future with a new partner and gradually increase the number of restaurants operating on a Zero Waste to Landfill basis.
Food, quality and sourcing
Food Safety We support the McDonald’s belief that product traceability – from farms to fork – is a key component in food safety protocol. The brand adheres to rigorous standards, including the Good Agricultural Practices (GAP) certification, the Supplier Quality Management System (SQMS) and Distributor Quality Management Process (DQMP).
To this end, our dedicated teams are responsible for planning, monitoring, and effectively managing food safety processes in compliance with local legislation, best practices, and McDonald’s standards. Multiple audits are conducted throughout the year, comprehensively assessing every aspect of the process, from food sourcing to distribution and the restaurant operation itself.
We embrace McDonald’s goals as our own in this area and believe in being:
- Customer Obsessed: Food safety is non-negotiable and a top priority. - Better Together: Food safety systems and standards are science-based and validated by external third parties. - Committed to Lead: Advancing food safety from farm to fork while implementing proactive risk mitigating processes.
In 2024, all our restaurants and distribution centres successfully undertook unannounced food safety audits conducted by independent third-party auditors, achieving full compliance with all relevant legislation and Brand standards. Additionally, as stipulated by the System, stringent food safety requirements for our suppliers are implemented and regularly audited. Carefully selected third-party experts trained in McDonald’s Food Safety Guidelines, ensures consistency, quality, and adherence to the highest safety standards across the supply chain.
Responsible Sourcing McDonald’s leverages its scale and influence to drive positive change for the environment, animal welfare, and the people within its supply chain, with a particular emphasis on ingredients which have the most significant impact, including beef, soy for chicken feed, fibre, palm oil, fish, and coffee.
In line with this goal, the Group continues to implement the McDonald’s Supplier Workplace Accountability (SWA) programme , a framework designed to help franchisees and developmental licences manage their suppliers effectively. The SWA programme ensures suppliers understand their responsibilities, comply with McDonald’s expectations, and work towards continuous improvement through the following steps:
- Annual commitment to the McDonald’s Supplier Code of Conduct. - Completion of an annual Self-Assessment Questionnaire (SAQ). - Completion of third-party onsite audit (where / when required). - Completion of Corrective and Preventative Action Plan(s) (CAPA) designed to address any matter of non-compliance.
McDonald’s Self-Assessment Questionnaire and third-party onsite audits cover both social and environmental performance of suppliers, including:
- Human Rights - Business Integrity - Workplace Environment - Environmental Management - Management Systems/Grievance Mechanisms
Together with McDonald’s, Premier Capital plc has measured its Scope 3 emissions, considering the impact of its entire value chain. In alignment with the Brand’s collective efforts, we are developing a responsible sourcing strategy to minimise our value chain’s environmental footprint .
Job, Inclusion & Empowerment
Our strategy is centred on our people and the McDonald’s experience. Millions of customers across its six markets trust the brand, leading to strong customer loyalty and repeat visits. This trust is built on reliable service, safe and delicious high-quality food, with employees consistently upholding the principles of quality, service, cleanliness, and value (QSC&V).
The table below presents the number of customers in each of our markets:
The Group provides opportunities, nurtures talent, develops leaders and rewards achievement. It values a diverse team of individuals with distinct backgrounds and experiences, working together in an environment that fosters respect and drives high levels of engagement. This is key to its continued business success. Performance evaluation systems are employed across the Group, using multistage training systems to monitor individual development and identify training requirements.
We are committed to conducting our business ethically and in full compliance with regulations. This commitment is reflected in the Brand’s values which it embraces as its own:
- Serve - We put our customers and people first. - Inclusion - We open our doors to everyone. - Integrity - We do the right thing. - Community - We are good neighbours. - Family - We get better together.
These values define our ethical standards, showing how we operate as a truthful and dependable company. They serve as a guide to making the right decision every time and conducting business ethically.
Premier Capital plc has successfully adopted and communicated the following policies to its employees across all its markets:
- Anti-Discrimination Policy - Anti-Harassment Policy - Reporting of Grievance and Breach of Policies - Social Media Policy - Code of Business Conduct and Ethics Policy - Anti-Bribery & Anti-Corruption Policy - Responsible Recruitment Policy
People Statistics The table below features key metrics of the Group’s employees by market.
The table below presents the male-female pay gap, calculated as “the difference between average gross hourly earnings of male paid employees and of female paid employees, expressed as a percentage of average gross hourly earnings of male paid employees”. This calculation aligns with the ESRS standards.
For accuracy, only operations employees were considered for this KPI, as they represent approximately 98% of the Group’s workforce.
These results indicate that the overall gender pay gap for employees in operation is minimal, underscoring Premier Capital plc's commitment to equal pay - a standard it intends to maintain.
The following tables show the average annual training hours across all markets, categorised by level of employee in the Group, in accordance with the ESRS standards.
*NB: The Baltic region is managed through a head-office in Latvia. Hence, no executives are employed in Estonia and Lithuania.
Whistleblowing Policy The Group has retained a Whistleblowing Reporting Officer and a Whistleblower Policy for several years. The policy aligns with the EU Directive 2019/1937 and was revised in 2024 and communicated to all employees.
This policy, which is accessible to all the Group’s employees, allows for the disclosure of actual or potential improper practices, without fear of retaliation. Reports are treated with strict confidentially and promptly investigated by a Whistleblowing Evaluation Committee, which then reports its findings through the Whistleblowing Reporting Officer. This reinforces a culture of fairness, transparency, and accountability, while ensuring internal controls to prevent inappropriate conduct.
To maintain awareness, employees receive regular training on how to use this channel to report suspected misconduct or irregularities.
In 2024, one case was reported to the Whistleblowing Reporting Officer across the entire Group, emerging from the Latvian market. The case was promptly investigated and the findings were delivered to the Chairman, as defined in the policy. Throughout the process, the Whistleblower was kept informed at every stage and was notified of the final outcome when the investigation was concluded.
Anti-bribery and Anti-Corruption The Group has implemented an Anti-Bribery and Anti-Corruption policy that defines potential misconduct and outlines the appropriate response when faced with corrupt practices, to ensure the Group remains compliant with the law and retains its good-standing with all its stakeholders. It strictly enforces a zero-tolerance policy towards bribery and corruption and fosters a culture which is professional and fair in all its transactions.
To strengthen its efforts and ensure consistency across the Group, all administration employees and restaurant managers received anti-bribery and anti-corruption training in 2024.
Code of Business Conduct and Ethics Policy The Group recognises that maintaining its good conduct and ethical standards is fundamental to its reputation, as it influences client relationships, employee morale, and investor perception. Employees are expected to adhere to the Group’s Code of Business Conduct and Ethics Policy, seeking guidance when faced with challenging situations.
The Group prioritises integrity over expediency, encouraging employees to consult policies and seek assistance when in doubt. As representatives of the Group, every employee is encouraged to play a vital role in preserving it's integrity and reputation.
Diversity, Equality and Inclusion Policy Premier Capital plc values the diversity of its employees, customers, and business partners, ensuring equal treatment and employment opportunities regardless of race, colour, religion, age, national origin, disability, sexual orientation, gender identity, or any other characteristic protected by law.
The Group believes that each of its employees and customers deserve to be treated with fairness, respect and dignity. Employees have the right to work in an environment free from harassment, violence, intimidation, or abuse – whether physical, verbal, or sexual. Premier Capital embraces diversity and equal opportunities for everyone, respecting the unique attributes and perspectives of every employee. By embracing this culture, the Group strengthens its relationships with customers and business partners.
Well-Being and Health & Safety McDonald’s creates a safe working environment for all restaurant and office employees and ensures safe and enjoyable experiences for its valued guests across its six markets.
McDonald’s has implemented restaurant-level health and safety standards, including a market-level safety assessment process to evaluate these standards. Annual health and safety assessments are conducted across all McDonald’s restaurants to reinforce a culture of safety.
These standards align with industry expectations and have been paired with processes to ensure compliance with European and local legislation in each of our markets. All our restaurants are overseen by trained consultants who regularly revise and update risk assessments, integrating local legislation, McDonald’s Global standards and best practices to continually improve the safety of our customers and employees.
Premier Capital’s alignment with the Brand ensures that all employees are covered by a health and safety management system and receive training on relevant operating procedures, with a strong focus on safety requirements.
In 2024, Premier Capital managed to fully transition to a centralised HR management system for all its employees for enhanced data management, ensuring appropriate reporting, compliance, and communication. Looking ahead, the Group is keen to continue improving its Health & Safety Management framework and is now in the process of evaluating the adoption of a specialised software for incident management and logging.
Community Connections
Premier Capital plc fully embraces the brand’s focus on community and supports Ronald McDonald House Charities and other organizations that positively impact local communities.
Across our teams in Latvia, Malta, Greece and Romania, the Group is a key supporter of local Ronald McDonald House Charities (RMHC) Chapters, contributing to global programmes that aid millions of children and families.
In 2024 numerous activities were carried out by each Chapter, following we will list only some examples. Further information can be found on the official Ronald McDonald House Charities Latvia/Malta/Romania/Greece Newsletter 2024:
Premier Capital has dedicated resources and allocated funds to support these communities for over a decade, in 2024 a total amount of Eur910,822 were donated to RMHC Latvia, Malta, Greece and Romania.
The table below presents the funds raised by the Group in 2024 across its he respective markets:
*Funds donated in local currency and presented here at an exchange rate of 0.2.
The following table presents the number of families assisted in Ronald McDonald Houses for each market in 2024.
Customer and Community Engagements Premier Capital actively listens to feedback and values the opinion and experience of its customers and communities. Customers can share their thoughts, complaints and suggestions through a variety of channels online and in restaurants, which are available in English and local languages in each market.
To efficiently and effectively plan initiatives, campaigns and events, surveys and other feedback is evaluated and recorded on a dedicated platform. This allows local teams to analyse the results and trends to inform business decisions.
Among the various surveys conducted:
Our dedicated teams, along with executives and organizational boards, analyse these survey results to develop an impact plan each year. These plans are reviewed alongside brand experts to ensure efforts are aligned with McDonald’s values and objectives while addressing customer expectations.
Awards With the collaboration of our teams across our six markets, we are proud to annex a list of the awards received during the year 2024 as an acknowledgment of our efforts towards our values “Serve, Inclusion, Integrity, Community, and Family”.
1. Retail Store award, awarded at the Retail Business Awards 2023 (specifically for McDonald's Plakentias); Greece
2. Business of the Year , awarded at the ‘Kaunas for Everyone’ awards; Lithuania
3. Great Place to Work Certified ; Greece
4. Equal Pay Award 2024 in the Large Companies category, awarded by Figure Baltic Advisory; Lithuania
Conclusion
We believe that sustainability is an ongoing journey of responsibility, innovation, and collaboration. This report outlines the steps taken in 2024 on environmental, social, and governance matters, reinforcing our commitment to responsible growth.
Guided by McDonald’s values and standards and informed by active stakeholder engagement, we are developing a strategy that balances the needs of our customers, employees, suppliers, communities, and the planet. Whether through our climate action initiatives, responsible sourcing practices, or people-focused policies, we aim to lead by example and drive positive change across all our markets.
Looking ahead, we remain committed to enhancing transparency, advancing our sustainability objectives, and aligning with evolving global frameworks such as the CSRD and ESRS.
Together, with our employees, partners, and communities, we look forward to building a sustainable future, one where integrity, inclusion, and responsibility guide every decision we make.
EU Taxonomy
The EU Taxonomy is supplemented by delegated acts which establish ‘technical screening criteria’. These criteria define the specific requirements and thresholds for an activity to be considered as “significantly contributing” to a sustainability objective and “does not significantly harm” the other objectives. At present, the EU regulation is effective for objectives related to climate change mitigation and climate change adaptation, with further delegated acts to be published at a later stage to cover the remaining four objectives.
Accounting Policy for Taxonomy Disclosures – Eligibility In order to identify the business activities covered by the EU Taxonomy, the Group relied on the Climate Delegated Act 2021/2139, specifically, Annex I and II to this Act. In light of the fact that the Group is a non-diversified group operating restaurants in 6 different markets, the entire Group’s activity is classified under one NACE code (56.10: Restaurants and mobile food service). According to the EU Taxonomy, this is a ‘non-eligible activity’ in terms of the EU Climate Delegated Act. The evaluation of the eligibility of the Group’s economic activities has been conducted on the basis of the EU Taxonomy and Disclosure Delegated Act (Annex I – KPIs of non-financial undertakings) and its definition of the denominator and nominator of the three required KPIs (turnover, CapEx and OpEx). It was furthermore assessed whether any goods or services linked to eligible or aligned activities were purchased. For the 2024 reporting period a re-assessment of the eligible spend from eligible activities has been carried out and the results are shown in the below tables with respect to turnover and CapEx. Whilst spend on qualifying areas was immaterial in relation to the total OpEx (less than 5%) thus this not taken into account for eligibility purposes.
Key Performance Indicators The Group is required to report on three KPIs: Turnover, CapEx and OpEx. KPIs are provided at the level of the Group based on consolidated financial statements.
. Based on the above considerations and methodology, the tables below show the actual KPIs related to the EU Taxonomy, including comparatives.
Accounting Policy for Taxonomy Disclosures – Alignment For the 2024 reporting period, some of the economic activities of the Group have been considered to be eligible, and spend on qualifying areas were reported in relation to the total Turnover and CapEx. |
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1. Company information and basis of preparation
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:
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 Holding Company 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 and the Holding Company become 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:
In the periods presented the Group and the Holding Company does not have any financial assets categorised as FVTPL.
The classification is determined by both:
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):
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 and Holding Company’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 and the Holding Company account for financial assets at FVOCI if the assets meet the following conditions:
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset. The Group’s and Holding Company’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 and the Holding Company consider 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:
‘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 and the Holding Company are 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:
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 and the Holding Company consider 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 and the Holding Company assesses whether the contract meets three key evaluations which are whether:
At lease commencement date, the Group and the Holding Company 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 and the Holding Company, 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 and the Holding Company depreciate 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 and the Holding Company also assess the right-of-use asset for impairment when such indicators exist.
At lease commencement date, the Group and the Holding Company measure 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 and Holding Company’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 and the Holding Company have 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 and the Holding Company have 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 and the Holding Company 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 and the Holding Company have 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 and the Holding Company contribute towards the state pension in accordance with local legislation. The only obligation of the Group and the Holding Company 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 and the Holding Company expect 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 and Holding Company’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.
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:
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 and the Holding Company review 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:
The carrying amount of goodwill as at 31 December 2024 amounting to Eur 24,888,095 (2023 - Eur 24,887,261 ) is allocated Eur16,591,999 (2023 - Eur16,591,999 ) to the Malta operations and Eur8,296,096 (2023 - Eur8,295,262 ) 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 834 ( 2023 – Eur (45,606) ).
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:
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% (2023 – 2.0% ) and · use of 14.07% (pre-tax) (2023 – 11.2% (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.
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 and the Holding Company as lessee
The Group and the Holding Company determine 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 and the Holding Company have lease contracts that include extension and termination options. The Group and the Holding Company apply 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 and the Holding Company reassess 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 and the Holding Company
Some accounting pronouncements which have become effective from 1 January 2024 and have therefore been adopted do not have a significant impact on the Group’s and the Holding Company’s financial results or position. Accordingly, the Group and the Holding Company have made no changes to its accounting policies in 2024.
Other Standards and amendments that are effective for the first time in 2024 and could be applicable to the Group and the Holding Company are:
- 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)
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 and the Holding Company
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 the Holding Company and no Interpretations have been issued that are applicable and need to be taken into consideration by the Group and the Holding Company.
Other Standards and amendments that are not yet effective and have not been adopted early by the Group include:
- Lack of Exchangeability (Amendments to IAS 21) - Amendments to the Classification and Measurement of Financial Instruments (Amendments to IFRS 9 and 7) - IFRS 18 ‘Presentation and Disclosure in Financial Statements’ - IFRS 19 ‘Subsidiaries without Public Accountability: Disclosures’
None of these Standards or amendments to existing Standards have been adopted early by the Group and the Holding Company. Management anticipates that all relevant pronouncements will be adopted for the first period beginning on or after the effective date of the pronouncement.
With the exception of IFRS 18, 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. The Group and the Holding Company will assess the impact on disclosures from the initial adoption of IFRS 18. IFRS 18 will be effective for annual reporting periods beginning on or after 1 January 2027. The Group and the Holding Company is not expected to early adopt this new standard.
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 1,138,002 (2023 - Eur 1,124,924 ) 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.
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 1,829,555 (2023 – Eur 2,439,431 ) 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
Assets
Liabilities
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.
6. Investment income
7. Finance costs
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.
Operating profit/(loss) is stated after charging/(crediting) the following:
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 67,210 (2023 – Eur 53,586 ) 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 275,538 (2023 – Eur 249,248 ). Other fees payable to the parent company’s auditors for tax services amounted to Eur 1,650 (2023 – Eur 1,575 ).
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 42,700 ( 2023 – Eur 29,000 ). Other fees payable to the parent company’s auditors for tax services amounted to Eur 850 ( 2023 – Eur 850 ).
9. Key management personnel compensation
10. Staff costs and employee information
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:
11. Income tax expense/(credit)
Tax applying the statutory domestic income tax rate and the income tax expense for the year are reconciled as follows:
The tax rate used for the 2024 and 2023 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
Furthermore, dividends amounting to Eur 64,315,754 ( Eur190.99c per ordinary share) (2023 – Eur 53,580,134 (Eur159.11c per ordinary share ) were paid during the year by the direct subsidiaries to the Holding Company.
13. Intangible assets
Group
Holding Company
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 Eu r 1,784,013 (2023 – E ur 1,833,179 ) 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 992,416 (2023 – Eur 910,356 ) mainly relates to a new ERP system invested into by the Romania segment 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 1,829,555 (2023 – Eur 2,439,431 ) 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
No interest has been capitalised by the Group during 2024 and 2023. The Group’s property, plant and equipment with a carrying amount of Eur56m (2023 – Eur47m ) are held as security in connection with bank borrowings.
Impairment losses on property, plant and equipment
The impairment losses on property, plant and equipment recognised within administrative expenses in profit or loss during 2024 amounted to Eur 425,742 (2023 - Eur 141,216 ). In addition, certain property, plant and equipment in Romania which were previously impaired, have been re-utilised during 2024. As a result, an impairment amount of Eur 352,622 (2023 - Eur 275,514 ) was reversed and included within administrative expenses.
Holding Company
15. Right-of-use assets
Group
Holding Company
The amortisation on right-of-use assets is included within cost of sales and administrative expenses.
The Group and the Holding Company have elected to disclose right-of-use assets separately in these financial statements. The information pertaining to the gross carrying amount, amortisation recognised during the year and other movements in right-of-use assets is included in the above table. Information pertaining to lease liabilities and their corresponding maturities are disclosed separately in note 25. Information about the accounting policy for the measurement and recognition of leases is disclosed in note 2.
The weighted average incremental borrowing rate applied to lease liabilities recognised under IFRS 16 was 3.93%. Additions to right-of-use assets during the current reporting period have been recognised using a rate between 2.58% and 5.16% (2023 - 3.93% and 5.89%). The incremental borrowing rate will be re-assessed every time a new lease is entered into by the Group and Holding Company and the corresponding right-of-use asset recognised. New leases are assessed on a case-by-case basis.
16. Deferred taxation
Deferred tax assets have been recognised for all unused tax losses to the extent that it is probable that taxable profits will be available against which the losses can be utilised. The majority of the deferred tax asset arising on unutilised tax losses reverses when dividends are declared from the subsidiaries. The aggregate amount of temporary differences associated with investments in subsidiaries for which deferred tax liabilities have not been recognised amounts to Eur9,411,390 (2023 – Eur7,613,739 ).
Holding Company
17. Non-financial assets
Investments in subsidiaries
Details of the share capital, reserves and profit for the year for the Holding Company’s direct subsidiaries are as follows:
Details of the holding company’s subsidiaries at 31 December 2024 and 2023 are as follows:
18. Financial assets
(a) Financial assets at fair value through other comprehensive income
Group
Holding Company
The carrying amount of financial assets amounting to Eur985,696 (2023 – Eur1,040,663 ) represents investments amounting to Eur 643,200 (2023 – Eur 680,812 ) in 4% - 5.5% local-listed corporate bonds and investments amounting to Eur 342,496 (2023 - Eur 359,851) in local-listed equity instruments. Decrease in fair value recognised through other comprehensive income as at 31 December 2024 amounted to Eur4,842 (2023 – increase of Eur23,303 ) .
The Group and Holding Company hold a portfolio of foreign-listed instruments which at the end of the reporting period amounted to Eur17,195,882 (2023 - Eur15,713,327 ). This represents investments of Eur 4,448,220 (2023 - Eur 5,991,672 ) in 0% - 7.875% ( 2023 - 0% - 10%) foreign-listed bonds and Eur 12,684,731 (2023 - Eur 9,652,895 ) 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. During 2024, foreign listed fiduciary deposits of Eur 2,462,426 were liquidated to invest in other financial instruments. Fiduciary deposits earned interest at 2.55% - 4.60% (2023 - 2.06% - 2.09% ).
During the year, various disposals of foreign-listed instruments held on portfolio amounting to Eur19,583,140 (2023 - Eur13,761,081) were utilised to acquire foreign-listed financial instruments amounting to Eur20,459,176 (2023 - Eur17,839,421 ). At the end of the reporting period, liquidity balance amounted to Eur(10,222 ) (2023 - Eur68,760 ). Investment income earned on portfolio amounted to Eur908,655 (2023 - Eur605,798 ) and fees charged amount to Eur85,170 (2023 - Eur97,268 ).
During 2023, a subsidiary of the group acquired foreign-listed equity instruments which at the end of the period amounted to Eur1,117,530 (2023 - Eur1,156,251 ).
As at 31 December 2024, the Group recognised an increase in fair value through other comprehensive income of Eur477,532 (2023 - Eur615,683 ). Exchange differences arising on translation of foreign investments also recognised through other comprehensive income amounted to Eur 179,208 (2023 – Eur50,666 ).
As at 31 December 2024, the Holding Company recognised an increase in fair value through other comprehensive income of Eur516,357 (2023 – Eur398,884 ). Exchange differences arising on translation of foreign investments also recognised through other comprehensive income amounted to Eur 179,114 (2023 – Eur58,281 ).
Both the Group and the Holding Company recognised reversal of fair value through other comprehensive income on disposal of investments amounted to Eur 1,001,650 (2023 - Eur92,150 ), out of which Eur 507,410 was transferred to retained earnings.
(b) Other financial assets
Derivative financial instruments amounting to Eur 116,009 (2023 – Eur 166,857 ) 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 Eur 116,009 (2023 – Eur 166,857 ) 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 Eur 3,040,751 (2023 - Eur4,146,062 ) 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% (2023 – 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
Loans to subsidiaries - Holding Company
Loans to subsidiaries amounting to Eur2,092,005 (2023 – Eur75,891 ) are interest free and repayable on demand. Eur92,005 (2023 – Eur75,891) 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 Eur 22,146,042 (2023 – Eur19,447,042 ) includes dividends receivable (net of tax) from subsidiaries of Eur18,591,107 (2023 – Eur17,888,492 ). During 2024, dividend receivable from subsidiaries amounting to Eur 64,315,754 (2023 – Eur53,580,134) (note 6), out of which Eur62,700,369 (net of tax) (2023 - Eur52,018,596 (net of tax) ) were settled during the year.
In 2023, the Holding Company set off short term loan balances due to subsidiaries of Eur500,000 against receivables from same subsidiaries.
Loans to ultimate parent
Group and Holding Company
All loans to ultimate parent are unsecured. Loans amounting to Eur18,345,630 (2023 – Eur18,345,630) bear interest at the rate of 4.5% per annum, whereas receivables amounting to Eur69,924 (2023 – Eur70,115 ) are interest free. Loans and receivables amounting to Eur69,924 (2023 – Eur70,115 ) are expected to be settled within 12 months from the end of the reporting period, whilst Eur18,345,630 (2023 – Eur18,345,630) are repayable after more than 12 months. During 2023, the increase of Eur7,710,042 includes loan advances to ultimate parent of Eur7,000,000.
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 2,579,753 ( 2023 – Eu r 2,338,683 ) after having recorded such prepayments within a twelve month period of E ur 328,718 (2023 – Eur 226,327 ) as current assets. The Holding Company long term prepayments amount to Eur 810,232 (2023 – Eur 757,581 ), none of which has been recorded within a twelve month period.
20. Inventories
The amount of inventories recognised as an expense during the year amounted to Eur229,088,183 (2023 – Eur214,743,342 ).
21. Trade and other receivables
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
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
Other financial liabilities are repayable as follows:
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 (2023 - Eur9,610,058 ) 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 Eur1,789,930 (2023– Eur1,347,524 ) are interest free and repayable on demand. All the amounts owed to subsidiaries are unsecured.
24. Bank borrowings
Bank borrowings are repayable as follows:
As at 31 December 2024, the Group has been granted bank facilities in Romania amounting to Eur 28,469,056 (2023 – Eur20,818,630 ) and in Greece amounting to Eur 9,059,740 (2023 – Eur8,950,020 ). The Holding Company has also been granted a bank overdraft facility of Eur2,000,000, out of which Eur1,843,671 were utilised by the end of the reporting period.
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 2023 amounting to Eur10,561,103 has been partially refinanced during 2023. As at year end, the refinanced portion has a loan balance of Eur3,059,883 (2023 - Eur4,172,568) and bears an interest rate of 3-month Euribor +1.85% per annum. The remaining loan balance of Eur3,040,751 (2023 - 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 and in December 2024, another two tranches from the same facility were drawdown for an amount of Eur12,500,000 respectively. As at the end of the reporting period, the loan balance amounted to Eur22,368,422. The loan bears interest of 3-month Euribor +1.70% 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. In June 2024, all loan facilities were refinanced into one loan facility with a balance of Eur9,833,360 bearing an interest rate of +4.47% . The loan balance as at the end of the reporting period amounted to Eur9,059,740 . The loan is secured by a letter of comfort issued by the subsidiary.
As at 31 December 2023, the balance of the loan facilities amounted to Eur6,950,020 . All facilities had a term of five years and bore interest at 3-month Euribor +2.2% - +3.85% per annum. Eighty percent of the nominal value of two facilities were guaranteed by the Greek State, another facility was secured by a letter of comfort issued by the subsidiary whilst the remaining facilities were 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 had a term of five years and bore interest at 3-month Euribor +3.10% per annum. The loan was secured by a pledge over the subsidiary immovable property.
Other bank borrowings
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.
In December 2024, the Holding Company utilised an overdraft facility with a limit of Eur2,000,000 and bearing an interest rate of 2.5% over bank base rate presently standing at 2.35% .
25. Lease liabilities
The Group and the Holding Company have 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 2024 were as follows:
Group
Holding Company
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:
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).
Total cash outflow for leases for the year ended 31 December 2024 by the Group was Eur18,579,835 (2023 - Eur17,260,638 ) and for the Holding Company Eur72,818 (2023 - Eur61,660 ) .
26. Debt securities in issue
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 Eur179,512 (2023 – Eur273,170 ) 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 Eur64,350,000 (2023 - Eur63,700,000 ).
27. Share capital
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
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)).
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:
Cash at bank earns interest at floating rates based on bank deposit rates. The interest rate on the cash at bank in 2024 was 0% - 5.25% (2023 – 0% - 2.175%).
30. Significant non-cash transactions
During 2023 , the Holding Company set off short term loan balances due to subsidiaries of Eur500,000 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 17(a).
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
Holding Company
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
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. Lease was renewed in 2023. This is included in the minimum lease payments in the above disclosure.
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:
33. Commitments
34. Contingent liabilities
Certain subsidiaries of the Group have guaranteed the amount of Eur10,630,982 (2023 – Eur10,951,403 ) 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 2024 and 2023 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
Holding Company
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
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
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 AA- - BBB+ at year end (2023 – 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:
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 Eur 45,715,770 ( 2023 – Eur21,652,178). 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 E ur 12,475,782 (2023 – Eur11,143,870). 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 Eur2,344,962 (2023 - Eur2,798,290).
The Group continued to finance capital expenditure from working capital. In 2024, the Group has invested a total of Eur 39,733,462 (2023 – Eur34,358,231 ) 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 Eur 37,528,796 (2023 – Eur27,768,650 ). These include new financing granted during the year to Romania operations of Eur12,500,000 . The Holding Company also utilised an overdraft facility amounting to Eur 1,843,671.
The Holding Company has a portfolio of investments with a carrying amount of Eur17,195,882 (2023 - Eur15,713,327 ) . 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
Holding Company
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
Holding Company
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 2024 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 2024, 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 2024, 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 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 2024 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 focused 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 2024 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 2024 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:
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.
As part of an audit in accordance with the ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
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 2024, 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:
Opinion In our opinion, the Report and Consolidated Financial Statements for the year ended 31 December 2024 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
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 seven years.
The Principal on the audit resulting in this independent auditor’s report is Mark Bugeja.
Mark Bugeja (Principal) for and on behalf of GRANT THORNTON Certified Public Accountants
Fort Business Centre Triq L-Intornjatur, Zone 1 Central Business District Birkirkara CBD 1050 Malta
23 April 2025
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