Annual Report for the year
ended 31 January 2022
02. Chairman’s Statement
04. Board of Directors
05. Board Committees
05. The Farsons Foundation
05. Senior Management Board
06. The Brewhouse – an Icon Returns
08. A New Experience for Visitors
10. Group Chief Executive’s Review
35. Financial Statements
36. Directors’ Report
40. Statement by the Directors on
Non-Financial Information
47. Corporate Governance Statement
54. Remuneration Report
58. Statements of Financial Position
60. Income Statements
61. Statements of Comprehensive Income
62. Statements of Changes in Equity
64. Statements of Cash Flows
65. Notes to the Consolidated Financial Statements
96. Shareholder Information
97. Five Year Summarised Group Results
CONTENTS
1
ANNUAL REPORT
2021/22
It is my pleasure to present the 75th Annual Report of
Simonds Farsons Cisk plc for the year ending 31st January
2022 (FY 2022). Last year, if you recall, we reported on
the diculties we faced when confronted with the global
outbreak of COVID-19 and the measures which both
the authorities and we were forced to take to mitigate
the impact of the pandemic on our business and the
community. We reported how it aected our markets right
across our various business units and how our trading
performance was adversely impacted; Group turnover
fell by 29% and profits before taxation by 64% year on
year. Nonetheless, thanks to the early implementation of
remedial actions we still managed to report what was in
the circumstances a small but respectable profit for FY
2021. Cost cutting, strict inventory, receivables and capital
expenditure controls, as well as the government supported
job protection scheme all contributed towards managing
the COVID-19 induced impact on our business.
This year I am pleased to inform you that trading during the
year under review has much improved. Details of our sales
performance are well documented in the report by our Chief
Executive Ocer, Norman Aquilina. Group Turnover reached
€91.8 million, an increase of 26% over the €73 million
reported last year. Operating Profit increased by 137% to
€13.4 million (2021: €5.7 million), whilst Profit before Taxation
rose to €12.2 million from €4.4 million, an increase of 175%.
Trading during FY 2022 was clearly aected by the
measures taken to close bars and restaurants for the
months of January through to May 2021, and the additional
restrictions re-imposed in the latter part of the year. At
968,000 tourist arrivals in calendar 2021 were down by
65% over the peak year of 2019 when 2.7 million arrivals
were recorded. Whilst the tourist sector has clearly not
yet fully recovered, the beverage market was particularly
strong in the autumn months as infection numbers reduced
in response to the eective vaccine programmes. At the
time of writing this report, there are clear signs that the bars
and restaurant sector is back in business and most of the
restrictions have now been removed.
During the year much investment has been directed at
completing the redevelopment of the old brewhouse. I
remind you that the investment consists of converting
this iconic industrial complex into a visitor experience, a
brand store, a casual dining outlet, a brewpub, a ‘CISK’ Tap
bar, a microbrewery, oce space for rental, a board room
facility and events space for hire. It has been a particularly
complex restoration operation involving complicated
structural alterations. This project is being coordinated with
the Trident Park development being carried out by Trident
Estates plc and is to be named ‘The Brewhouse’.
A separate Board of Directors, which I chair, has been
appointed to oversee the management of The Brewhouse
operations. A programme of openings is currently being
finalised and all units will be opened over the course of
2022. We anticipate that this new subsidiary company
will be financially profitable in the short to medium term.
Moreover, we believe that The Brewhouse and its activities
will make a very positive contribution towards enhancing
the image of the Farson’s beer brands through the
stunning displays at the Farsons Visitor Experience and
the compelling story of our history and heritage and the
evolution of our very own iconic local brands.
Our CEO’s comprehensive report outlines the performance
of our various business sectors. All our units markedly
improved both turnover and profitability. Turnover of our
CHAIRMAN’S
STATEMENT
2
SIMONDS FARSONS CISK PLC
Brewing and Beverage production sector increased from
€43.1 million in FY 2021 to €51.3 million (+18.8%) in the year
under review, whilst the segment’s profit more than doubled
from €4.9 million to €9.9 million (+103.7%). The Importation
of food and beverages sector increased from €26 million to
€31.9 million (+22.5%), again with profit from the segment
up substantially from a loss of €366,000 to a profit of €1.9
million (+631%). Turnover of our franchised food retailing
operations increased from €11.7 million to €15.7 million
(+34.4%) whilst the profit increased from €1.2 million to €1.6
million (+35.2%).
These are indeed impressive numbers. Furthermore,
EBITDA for the year reached pre-2019 levels at €22.7
million - up from €14.9 million in FY 2021. Net borrowings
at the balance sheet date are down to record low levels at
€10.3 million. In fact, our gearing percentage is at 50 year
all-time low of 12.6%. Given this all-round improvement in
performance your Board is pleased to propose a net final
dividend this year of €4 million payable in June of this year.
You will note that the Board of Directors is also proposing a
bonus issue to shareholders (on a pro rata basis) of 1 (new)
share for every 5 shares held. This bonus issue will be subject
to the approval of the shareholders at the forthcoming
Annual General Meeting. 6 million new shares of €0.30
each (fully paid up) will be created and will be funded by
the capitalization of €1.8 million from retained profits. A
resolution will also be brought before the Annual General
Meeting to increase the authorized capital of the Company.
Having fought our way through the severe immediate
impact of COVID, we are now facing the economic
aftermath. These global challenges have been gravely
exacerbated by the outbreak of war between Russia and
Ukraine. Business confidence is taking a hit from growing
inflationary pressures and significant supply chain issues.
Once again – but for dierent reasons - we are facing an
uncertain future. However, we are encouraged by the
resilience that our business has demonstrated when tested,
the strong revival of the on-premise sector and the growth
in tourist numbers being forecast.
We have plans to grow our restaurant business by opening
four new outlets in the coming months, and we are also
planning to build a new state of the art logistics centre for
our food business. Exports of our beverages reached record
levels last year and we aim to continue to grow this segment
in the years to come. Clearly, we shall continue to look at
market opportunities both in Malta and overseas.
It has been a challenging 24-months in facing the diculties
of COVID-19 and its impact on business confidence. As
always, I am very thankful to all the workforce for their
continued loyalty, hard work and commitment.
On 25 November 2021 we learnt of the shocking news of
the sudden passing away of our dear colleague Director, the
Baroness Christiane Ramsay Pergola.
She had attended a meeting of the Board two days before her
death and news of her death was even more poignant and sad.
She served on our Board for more than six years and was an
important representative of the Scicluna family who have
been a loyal and steadfast shareholder for nearly 75 years.
We shall miss her presence and engaging personality.
We are pleased to welcome her daughter, Baroness
Justine Pergola, on to the Board of Directors. We extend
our deepest sympathy to her for her tragic loss and look
forward to her participation for the years to come.
Our sincere thanks also go to the management team
ably led by Norman Aquilina. They have worked well and
with great determination under dicult and challenging
circumstances and have produced much improved results.
I am also most grateful to my fellow Directors who have
always shown their commitment to the tasks and issues that
the Company has had to face.
And finally, a word of thanks to our legal advisors and
auditors, Messrs Mamo TCV and PWC respectively.
Louis A. Farrugia
Chairman
25 May 2022
3
ANNUAL REPORT
2021/22
Baroness Christiane
Ramsay Pergola
up to 25 November 2021
Ms Antoinette Caruana
Company Secretary
Marquis Marcus John
Scicluna Marshall
Ms Marina Hogg
Baroness
Justine Pergola
from 13 January 2022
Dr Max Ganado
Mr Michael Farrugia
Mr Roderick
Chalmers
Mr Marcantonio
Stagno d’Alcontres
Vice–Chairman
Mr Louis A. Farrugia
Chairman
BOARD OF
DIRECTORS
4
SIMONDS FARSONS CISK PLC
BOARD
COMMITTEES
THE FARSONS
FOUNDATION
SENIOR MANAGEMENT BOARD
Corporate Governance Committee
Mr Roderick Chalmers – Chairman
Mr Michael Farrugia
Dr Max Ganado
Ms Marina Hogg
Baroness Christiane Ramsay Pergola up to 25 November 2021
Related Party Transactions Committee
Dr Max Ganado – Chairman
Ms Marina Hogg
Baroness Justine Pergola from 30 March 2022
Baroness Christiane Ramsay Pergola up to 25 November 2021
Mr Marcantonio Stagno D’Alcontres
Remuneration Committee
Mr Marcantonio Stagno d’Alcontres – Chairman
Mr Roderick Chalmers
Marquis M. Scicluna Marshall
Audit and Risk Committee
Mr Roderick Chalmers – Chairman
Ms Marina Hogg
Marquis M. Scicluna Marshall
Board of Administrators
Mr Louis A. Farrugia – Acting Chairman
Ms Antoinette Caruana
Mr Michael Farrugia
Mr Franco Masini
Mr Mark Miceli-Farrugia
Mr Arthur Muscat
Mr Norman Aquilina
– Chairman
Mr John Bonello Ghio – Group Head of Food Business - up to 16 January 2022
Mr Chris Borg Cardona – Head of Logistics & EcoPure Limited
Ms Antoinette Caruana – Company Secretary and Group HR Manager
Mr Eugenio Caruana – Chief Operating Ocer
Mr Michael Farrugia – Executive Director - Operations & Business Development
Mr Philip Farrugia – Head of IT and Business Services
Mr Gordon Naudi – General Manager Food Chain Limited - from 7 February 2022
Mr Sean Portelli – General Manager Quintano Food Limited - from 1 February 2022
Mr Pierre Stafrace – General Manager FBIC
Ms Anne Marie Tabone – Group Chief Financial Ocer
Ms Susan Weenink Camilleri – Head of Sales & Marketing
5
ANNUAL REPORT
2021/22
AN
ICON
RETURNS
After almost a decade of careful planning and preparation,
The Brewhouse is finally set to reopen its doors to the
public. Covering over 7,000 square metres of Grade 2
listed, industrial space, its restoration and rehabilitation
has been an epic undertaking, which will see one of Malta’s
most iconic and much-loved buildings transformed into
an exceptional mixed-use destination. From the launch of
the very first Cisk Bar, to the opening of a Farsons Brewery
Visitor Experience and Brand Store, a Microbrewery and
Brewpub, a Café, Bar and Bistro, multiple event spaces
and a range of unique industrial oce workplaces, The
Brewhouse is a landmark regeneration project, unlike
anything seen to date in Malta.
Designed by internationally renowned Ian Ritchie Architects
and taking cue from some of Europe’s leading industrial
conversions, the design philosophy has been to provide a
game changing perspective for industrial heritage in Malta,
which pays tribute to the pioneering vision and legacy
of the brewery and brands. As one of the first and finest
examples of a concrete reinforced building, great care has
been taken to sensitively retain the inherent high aesthetic
qualities and fabric of the Art Deco building, while in site
brewing machinery and equipment will provide a thematic
backdrop throughout the spaces, which have been flooded
with natural light from two large skylights and atriums
that now penetrate the building. Moreover, as part of the
redesign, large and colourful geometric shapes have been
introduced at every floor, providing a playful touch to the
ambience, as well as added light and cross ventilation.
Core to this redevelopment has been the conversion of
circa 2,000 square metres to house a range of unique
industrial workspaces for third party leasing. From the
conversion of the former malt stores and cellars to the
transformation of the former open fermentation vats,
a portion of which will be allocated to hot desk leasing,
The Brewhouse together with its neighbour Trident Park,
concurrently being developed by Trident Estates plc, will
oer an inspiring, campus type lifestyle. With a selection of
tenants already signed up and operating on site, a range of
amenities and event spaces for large and small workshops,
seminars and conferences will only add to the overall
outstanding environment and ambience.
Artist's Impression – The Brewhouse exterior Artist’s Impressions – The Brewhouse interior
6
SIMONDS FARSONS CISK PLC
Given the significance of this €20 million investment and
scale of the operation, which is to be almost exclusively
operated by a newly recruited team of Farsons personnel,
a new subsidiary in the form of The Brewhouse Company
Limited has been established together with a new Board,
which has been tasked to oversee the overall business
and multi-faceted operation. With the main contracts now
coming to an imminent close and the fit out of the various
spaces and outlets at an advanced stage, The Brewhouse
is expected to be fully operational by September 2022.
Just as the opening of the brewery in June 1950 marked
an important turning point in the industrialisation of post
war Malta, so too is the reopening of The Brewhouse
expected to be not only another major milestone in the
proud history of Farsons, but also a significant moment
in the modernisation and upgrade of the wider Central
Business District.
The Brewhouse - a range of unique industrial oce workplaces
7
ANNUAL REPORT
2021/22
As the only remaining brewery on the island with over
90 years of rich heritage and history, the Brewery Visitor
Experience is a key attraction within The Brewhouse,
which aims to celebrate the building, brewery, and brands.
Featuring an extensive range of restored items, audio visual
displays, sculptural exhibits and memorabilia, visitors will be
provided with an architectural, immersive, and educational
experience that notably includes a visit to the fully restored
Coppers Brew Hall, before heading up to the stunning Cisk
Tap Bar. Located on the top floor of the brewery tower,
visitors here will be able to indulge in a freshly brewed Cisk
Frisk, while enjoying 360-degree panoramic views of the
island.
A NEW
EXPERIENCE
FOR VISITORS
Artist's Impression – The Brewhouse cross section.
8
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
As part of the overall experience and marking another
important first for the Company, a large Farsons Brand
store will oer an extensive, premium range of branded
merchandise.
Of special importance to this development will be Farsons’
entry into the craft beer segment, following our investment in
a start-of-the-art Microbrewery and Chapels Gastrobrewpub.
Intended not only as a major family friendly public attraction,
but also as a key platform for brewing innovation and
experimentation, the Microbrewery will provide considerable
flexibility and opportunity for the Farsons Brewing Team to
create new and exciting brews. Featuring two beautifully
converted ‘Chapel’ like spaces, the Gastrobrewpub will also
have a very large outdoor beer garden and terrace, which
will be fully setup for a variety of events. While the plan is to
The Brewery Visitor Experience – a key attraction
brew and serve craft beer directly on site, the Microbrewery
will also have the capability to keg and bottle beers for 3rd
parties and special events.
9
ANNUAL REPORT
2021/22
GROUP CHIEF
EXECUTIVE’S
REVIEW
GROUP PROFITABILITY BEFORE TAX GROUP EBITDA
€4,427
€12,164
FY–JAN 18 FY–JAN 19 FY–JAN 20 FY–JAN 21
€13,455
FY–JAN 22
€
€2,000
€4,000
€6,000
€8,000
€10,000
€12,000
€14,000
€16,000
€000’s
€14,095
€12,320
€
€20,000
FY–JAN 18 FY–JAN 19 FY–JAN 20 FY–JAN 21 FY–JAN 22
€15,000
€10,000
€5,000
€25,000
€000’s
€22,735
€14,949
€22,697
€22,111
€23,222
A YEAR OF RESILIENCE AND RECOVERY
Our performance during the year under review (Financial
year ended 31 January 2022) rearmed the strength of our
brand portfolio and resilience of our business – our people,
our operations, our financial strength.
While this has certainly been a highly challenging year, it has
made us a stronger business, better prepared for a fast-
changing world. There has been a slew of challenges over
the year, from continued market uncertainty, fueled by new
COVID variants together with the overall spillover eect of
the pandemic, growing inflationary pressures, supply and
demand issues along with pressing labour shortages.
This year can best be described as a year of resilience and
recovery during which we have delivered a good set of
results in very challenging times. Indeed, it is satisfying to
note that we are heading towards pre-pandemic profitable
growth, even if comprehensively not quite there yet. This
was attainable thanks to a strong focus on execution and
a step-up in productivity, a pro-active approach to pricing
and the disciplined implementation of alleviating our
expenditure. The Group also maintained a dynamic and
selective resource allocation.
Overall turnover increased across all areas of our Group’s
business and we also registered significant improvements in
results across all segments.
We registered an increase in Group turnover of 25.7%,
reaching €91.8 million, which represents 88.7% of that
generated by the Group during the year preceding COVID
(January 2020). Notable is the improvement in our gross
margin from 35.6% to 37.5%. We also managed to contain
our selling, distribution and administration expenses at
€21 million, which translates into a reduction from 27.9% to
22.8% of revenue.
After a major hit in profitability the previous year (€4.4
million), it is gratifying to report an almost pre-COVID level
of profitability, registering a Group profit before tax of
€12.2 million, compared to €12.3 million for financial year
January 2020.
From the outset, I need to express my appreciation for the
hard work and ongoing supportive spirit put in by everyone
within the Group, whom collectively have delivered such
results, despite the unprecedented and challenging
circumstances.
10
SIMONDS FARSONS CISK PLC
GROUP TURNOVER
KEY GROUP PERFORMANCE HIGHLIGHTS
ACTUAL VS LAST YEAR VS FIVE YEAR COMPARATIVES
FY Jan 2022
€’000
Movement vs
FY Jan 2021
Movement vs
FY Jan 2018
Turnover €91,768 26% -4%
Operating Profit €13,446 137% -6%
Pre–tax Profit €12,164 175% -10%
Post–tax Profit €12,428 273% -10%
EBITDA €22,697 52% 3%
Earnings per
Ordinary share €0.414 273% -10%
Return on
Average Capital
Employed 9.7% 5.8pp 0.1pp
Gearing 12.6% -4.3pp -16.3pp
FY–JAN 21
€73,016
€50,000
€55,000
€85,000
FY–JAN 18 FY–JAN 19 FY–JAN 20
€60,000
€65,000
€70,000
€75,000
€80,000
€90,000
FY–JAN 22
€95,000
€95,331
€103,491
€100,000
€105,000
€000’s
€99,798
€91,768
MARKET TRENDS AND DEVELOPMENTS
For the third year running, we are reviewing our performance
against a dicult backdrop of global uncertainty. For the
past two years it has been the COVID-19 pandemic which
has taken up our time, attention, and resources, as we
focused on keeping safe, keeping our business going and
taking the necessary measures to safeguard our future, to
the extent that we could. But all this now almost seems pale
in comparison to the horrors unfolding in Ukraine, and the
possibility of even wider escalation beyond. The damage,
destruction and loss of life puts things into perspective and
are certainly a reality check for the world.
In this review, it is worth recalling the principal social,
economic and commercial factors which prevailed during
the year, and to indicate how these could have influenced
our results.
At the start of 2021, Malta, together with the rest of the
world, was in the thick of what was then the ‘3rd wave’ of
the COVID-19 pandemic. Many COVID-19 measures were at
a peak, including the restrictions on the hospitality sector
in Malta and Gozo. Night clubs, bars and pubs, social clubs
(każini) and restaurants remained closed to the public for
much of the first half of 2021, with restaurants reopening in
May and bars and pubs following a few weeks later, albeit
with continued COVID-related measures. Tourist arrivals
were minimal, and mass events, including village festi were
not permitted. For the second year in a row, the Farsons
Beer Festival was cancelled.
The eects of the pandemic continue to linger, impacting
how we are choosing to live our lives. Many communities
and individuals are adapting to an altered normality, and it
is becoming increasingly clear that such global pandemics
do not come to an end abruptly – rather we gradually adapt
and realign priorities, how we spend our time, how we spend
our money and how we make important choices. As a result,
there has been a shift in concerns, priorities and needs –
shifting from concern for our health, to a concern for our
economies and now to a concern for the mental health of
core groups in many societies.
Understanding core consumer groups remains central
to success in our business. In recent years, the key focus
was on Gen Z, those born between 1996 and 2010 with
this group being the target audience of many campaigns
from key brands and businesses the world over. But the
marketing world is now focussing on a group referred to as
‘Centennials’, born in the early years of the 21st century and
now heading towards adulthood. This generation has never
known the world without the internet. They will influence and
possibly determine the success or failure of many brands
and industries and will undoubtedly reshape the future as
they take on key roles in society. Their lifestyles have been
significantly aected by the pandemic and they are now
keen to get back to the way of life that they have been
missing, but with their realities shaken, they also want to do
things better, and with a greater sense of purpose, than they
did before. Those organisations and brands that recognise
these shifts in key consumer groups are more likely to gain
or retain their loyal custom than those who try to regain
momentum assuming a ‘business as usual’ approach.
Two main trends which we had already highlighted in last
year’s report continued to evolve – namely a continued
shift in consumption from the relatively risky outdoors to
the safety of our homes, together with an increase in online
purchases. Categories as diverse as clothes, cosmetics,
appliances or daily meals and snacks, as well as weekly
supermarket groceries are now purchased online, at any
time we choose.
The increase in supermarket sales maintained a steady
momentum, and with our portfolio of well-known brands
enjoying wide retail distribution, we were able to maximise
potential sales in this channel, thereby osetting some of the
declining sales in other market segments.
"WE HAVE DELIVERED
A GOOD SET OF
RESULTS IN VERY
CHALLENGING TIMES"
11
ANNUAL REPORT
2021/22
Quality audits remain a priority as we promote a broader
food safety culture.
Meanwhile, the continued growth in e-commerce is
redefining and reshaping retail, not only amongst the more
IT-savvy younger consumer groups, as online purchasing
is also now widespread across a broad sector of the
population. Online competition is, however, equally fierce,
and such rapid growth needs to be matched and supported
by an improved holistic customer experience through to
the destination website, prompting a purchase and more
importantly, repeat visits.
OPERATIONS
Following the successful commissioning in 2020 of
additional beer mixing capability on the Beer Mixer, we
initiated various trials for a Spritz Aperitivo drink, utilizing
the Kinnie essence as the base product to satisfy the ever-
increasing demand for adult soft drinks.
Following numerous laboratory trials and tasting sessions to
identify the ideal product taste profile for this niche market,
a 4% alcoholic strength Aperitivo – Kinnie Spritz – was made
by blending Kinnie essence syrup, Prosecco wine and an
Amaro liquor. The first full production trial took place in
March 2021, and the product was launched in a bespoke 25
centilitre one way glass bottle, dressed in a metallised label
livery, and sold in a 4-pack wrap-around multipack, ideal for
the take-home market segment.
Being a new product category in our product portfolio,
the finished product was subjected to numerous stringent
laboratory tests to ascertain that the full integrity of the
beverage remained unchanged for the entire duration of the
shelf-life period.
The launch of Kinnie Spritz required the implementation of
various new change parts on our labelling and packaging
line. Technical assistance on this project was provided
by Krones and GPI technicians, who supported our Beer
Packaging team with this successful implementation. The
product was released for sale in April 2021 with a very good
reception from the local market.
In view of the increased international and local interest in
non-alcoholic beers, a decision was taken in early 2019 to
develop a non-alcoholic beer with a similar aroma profile
as Cisk Lager. The product development process for this
new beer was carried out over a two-year period, during
which time, numerous trial brews were brewed, processed,
dealcoholised, and evaluated for a taste profile matching
with Cisk Lager. The first crucial step in this long product
development process was the careful selection of the best
plant for the gentle removal of alcohol, this was installed and
successfully commissioned in the summer of 2019 and the
development of Cisk 0.0% started immediately.
The dealcoholising process essentially involved an initial
degassing step followed by alcohol removal. The use of
vacuum evaporation for the removal of alcohol, guarantees
minimal thermal impact and helps preserve the beer’s
character in a process which yields a beer with an alcohol
level below 0.05%.
At the end of this long testing and optimisation process, an
award-winning non-alcoholic beer, Cisk 0.0% was launched
in March 2021 in 25 centilitre returnable glass bottles and 33
centilitre cans.
In consultation with PepsiCo, we have for some time been
considering converting the 1.5 litre PET bottles from Carolina
"UNDERSTANDING CORE
CONSUMER GROUPS
REMAINS CENTRAL
TO SUCCESS IN OUR
BUSINESS"
12
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
to the newer and more attractive AXL and Ripple bottle
profiles. The AXL bottle is exclusively used for Pepsi and
Pepsi Max, whilst the Ripple Bottle is used for 7-Up, 7-Up
Free and Mirinda. Following technical consultations, it was
decided to launch the new bottles in Q2 of 2021.
Following the successful market roll-out of these new 1.5 litre
bottles, the decision was taken to launch the same AXL and
Ripple bottle profiles in the 0.5 litre range in April 2022.
Two new Standby Power Generators were installed in Q4
in our Engine Room, and commissioned towards the end
of 2021. They supply a number of key areas, namely, beer
packaging, keg plant, the critical fire pumps, The Brewhouse,
the energy centre and other essential loads in operational
areas such as beer processing and our PET line.
LOGISTICS
Our Logistics Department has adapted to the new norm
that the pandemic has brought about. The health and safety
of our personnel remain a priority, whilst also adapting
to increasingly fluctuating sales volumes, with clients
demanding more fragmented, frequent, and last-minute
orders, which puts a strain on distribution routes.
To address a shortage of drivers, we embarked on a
recruitment drive for both Maltese and foreign drivers.
Today almost a third of our drivers are foreigners, who have
integrated very well with their Maltese colleagues and are
key to our operation.
The COVID-19 pandemic has also brought diculty in
supply-chain operations, with suppliers delaying shipments,
straining the overall procurement system. This has led to
increased warehouse occupancy rates due to stocking up;
we were well able to cope with this, on the back of our recent
investment in extending warehousing capacity.
We continued investing in modern material handling
equipment throughout the year. A new fleet of forklift
trucks have replaced an older fleet, significantly improving
productivity, whilst reducing maintenance and energy costs.
Moreover, delivery trucks have been equipped with battery
powered pallet trucks to facilitate unloading, improving
health and safety whilst significantly increasing productivity.
Looking ahead, our logistics will be as adaptable and flexible
as possible adjusting to meet customer demand, whilst
minimising physical contacts, managing labour shortages,
and improving eciencies to make products available at
the right place at the right time. Our planned investments in
digitisation and automation will help us to achieve this. One
such investment is the introduction of a new Routing and
Scheduling Software System that will provide full visibility
of the distribution process, reduce delivery route planning
time, optimise vehicle and driver utilization, reduce carbon
emissions, whilst reducing cost and meeting customer
delivery requirements.
To further reduce our carbon footprint, we will be installing
over 2,000 square metres of solar panels on top of our
Logistics Centre canopy and are looking into extending
more panels in other locations. Moreover, together with the
Foundation for Transport and other local partners, we are
participating in a pilot project to evaluate the introduction of
electric commercial vehicles. Trials, using an electric delivery
vehicle, and comparing this to traditional combustion engine
13
ANNUAL REPORT
2021/22
vehicles, will shortly be carried out. The outcomes of this
pilot project will initiate our transformation to a greener
distribution model.
INFORMATION TECHNOLOGY
Our IT function continued to work on various corporate
initiatives for better and more ecient ways of working,
increasing value-added business processes using the latest
technologies in line with current industry trends and best
practices.
Technical support ensured secure, ecient, and flexible
smart working practices across the Group, also incorporating
fully online workflows that are integrated within existing IT
systems and across all platforms.
More initiatives were conducted to further leverage
functionality of the Group’s comprehensive Enterprise
Resource Planning and Warehouse Management System,
while also embarking on a major retune of the corporate
Customer Relationship Management system. We also
continue to invest in IT cybersecurity layers for our critical
infrastructure, in line with the sector’s best practices and
latest technology while continuing to upgrade network
services and related infrastructure across our Group.
Our IT function was also actively involved in The Brewhouse
project, to ensure comprehensive state of the art services
whilst also supporting all systems and the dedicated portal
related to the FarsonsDirect outlet.
OUR PEOPLE
Yet again, our workforce met the unprecedented challenges
caused by the pandemic with great commitment and
continued collaboration, enabling the Group to achieve
the best possible results, despite this dicult time. The
true strength of our workforce is evidenced by ongoing
improvements in the way we do things, and by our
willingness to continue to innovate our product range.
More importantly, our resilience can be seen in the way
we continue to challenge old and familiar practices
and introduce more ecient and eective alternative
approaches which bring real benefit to the Group and its
stakeholders.
During the year we focused on several actions to maintain
business continuity at all times despite the scarcity of
manpower in a tight labour market and significant upheaval
experienced in the ever competitive and uncertain markets
in which we operate. To enable this, we ensure that our
employees remain committed, healthy, and motivated for
their own benefit as well as to continue making a long-term
contribution to the Farsons Group. It is widely recognized
that people are the very backbone of the Farsons Group.
Our Board continued to monitor the impact of the
pandemic on our workforce, supporting as necessary and
taking critical decisions. No jobs were lost, and employees
continued to remain reassured of their employment with
the Group. Wellbeing measures also continued to be an
important consideration, with programmes related to mental
and emotional well-being run throughout the year. Health
and safety measures also remained a priority to avoid the
spread of the virus at the workplace. Our annual recognition
programmes, including our Cause for Applause programme,
our Suggestion Scheme awards and our Long Service and
Retirement Awards, all continued albeit with a dierence.
The Farsons Group has always believed that recognizing
the performance and commitment of our people is not only
good practice but essential for the continued motivation and
engagement of our entire workforce.
INITIATIVES AND MITIGATING MEASURES
The HR function continued to seek ways of better
understanding what motivates our teams as they become
more diverse and more intergenerational, identifying
emerging issues and introducing proactive solutions to
manage these in a more agile and results-driven manner. Our
14
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
employee engagement workshops attended by well over
500 employees, were once again held on-line, enabling our
teams to better understand recent developments but more
importantly to be more aware and engaged in our ambitious
plans for the forthcoming financial year and beyond.
Throughout the year, we have striven to raise awareness
about the importance of reducing cost, eliminating waste,
and focusing on environmental considerations whilst taking
advantage of opportunities presented by the pandemic and
applying strong governance in all we do.
We successfully introduced a new payroll system in
Q2, and on the back of this continue to prepare for the
implementation of new HR related information systems
which will enable management and employees to access
real-time data via an integrated platform that incorporates
a number of functions. This is expected to lead to improved
data analytics and HR reporting, leading to enhanced
decision making. Two four-year collective agreements
between the General Workers’ Union and FDS Ltd and
Quintano Foods Ltd were finalised during the year. These
agreements enhanced the compensation and benefits
package for the FDS and Quintano teams, and generally
provided for more favourable working conditions as well as
more ecient ways of working – aimed to better motivate
the teams and to improve productivity levels.
We also continue to prepare to support the launch of our
much-anticipated The Brewhouse. Expert committed teams
have been introduced to set up and run this milestone
project in a manner which reflects both the dynamic vision
of the Farsons Group as well as its deeply rooted values and
remarkable heritage.
We are also pleased to announce that in December 2021
we were awarded the ‘Most Inclusive Workplace Award’
presented by the President of the Malta Chamber during
the ‘Premju Socjeta’ Gusta’ ceremony, where Farsons was
recognised as a Company that “appreciates the strength of
workforce diversity and commits to enhancing belonging at
the workplace amongst all employees”.
Looking ahead, we have embarked on a critical succession
programme for our management team and are working to
introduce a technical vocation programme together with
MCAST in 2022, to ensure that the Farsons Group is well placed
to implement the vision of our Board of Directors to continue to
move forward with determination and a sense of purpose.
"OUR WORKFORCE MET
THE UNPRECEDENTED
CHALLENGES CAUSED
BY THE PANDEMIC WITH
GREAT COMMITMENT
AND CONTINUED
COLLABORATION,
ENABLING THE GROUP
TO ACHIEVE THE BEST
POSSIBLE RESULTS"
15
ANNUAL REPORT
2021/22
Cisk Excel Low-Carbohydrate
Lager Beer is now available
in a convenient 8x50cl cans
Fridge Pack.
THE BEER MARKET
For the second year in a row, the consumption of our beers
was more heavily impacted by COVID-19 and prevailing
related measures than the non-alcoholic beverages in our
portfolio. With the main bars, pubs and night clubs closed
for almost all the first half of the year, with festi and mass
events cancelled for yet another summer, with tourism
barely reaching 40% of pre-COVID levels, recovery was
slower than ideal. It was however reassuring to witness
the recovery of the hospitality segment as the summer
progressed, and even more satisfactory to see our flagship
brand - Cisk Lager - once again taking pole position and
asserting its leadership as the brand of choice amongst
locals and visitors alike.
To celebrate the reopening of the hospitality sector, the
more cautious advertising campaign adopted for the Cisk
portfolio the previous year was stepped up somewhat;
Cisk and Cisk Excel consumers were encouraged to
‘Start with a Cheers’ once they were able to revisit their
favourite bar or pub. Playing on the locally popular phrase
‘Agħmillu Cisk’, equivalent to ‘Pour him a pint’ in English,
the campaign continued across multiple touch points
throughout the summer season, and was also extended to
an ‘On Pack’ promotion, whereby consumers were oered
the opportunity of enjoying a free pint with every Cisk Lager
8-pack purchased at retail outlets for a limited time.
Cisk Excel, to date the only local low-
carbohydrate lager available on the market,
continues to be the fastest growing brand
on the local beer market, firmly positioning
itself as the favourite beer of choice
amongst the younger beer drinker who has
clearly recognised the benefits that this
award-winning lager oers.
THE INTERNATIONAL
BREWING AWARDS
THE INTERNATIONAL
BREWING AWARDS
2021
2021
TROPHY WINNER
TROPHY WINNER
THE INTERNATIONAL
NON & LOW ALCOHOL
COMPETITION
THE INTERNATIONAL
NON & LOW ALCOHOL
COMPETITION
THE INTERNATIONAL
BREWING AWARDS
THE INTERNATIONAL
BREWING AWARDS
20212021
The Cisk Chill variants, now comprising three flavours –
the ever-popular Lemon, the tangy Berry and the more
recently introduced zingy Ginger & Lime – kept their
annual appointment. Widely available in both bottles and
cans across the market in the peak summer weeks, they
oer consumers a tasty and thirst-quenching drinking
experience, particularly on hot and sticky summer days.
The highlight of 2021 for the Cisk portfolio was surely the
launch of the long-awaited alcohol-free variant – Cisk 0.0%,
an alcohol-free lager targeted at the growing base of beer
consumers who wish to limit their alcohol consumption
but are still after a refreshing and great-tasting beer. With
a tagline ‘The Cisk You Can Drink Anytime’, an extensive
campaign was launched across many touch points, with
social media playing a key role in quickly establishing this
new addition as a favourite for many. The launch of Cisk
0.0% followed a long period of research and development.
This was carried out both by our dedicated team of
brewers, who ensured that the result was nothing short of
perfect in terms of the all-important taste profile and beer
characteristics, as well as by our sales and marketing teams
who conducted research amongst both end consumers
and, equally importantly, loyal trade clients, to ensure that
the launch was well-planned and targeted, and rolled out
The culmination of our eorts in
developing and launching Cisk 0.0%
was the awarding of a gold medal
in the Non & Low Alcohol Beer –
Class 1 Category at the International
Brewing and Cider Awards 2021
held in Burton-on Trent, UK.
16
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
THE INTERNATIONAL
BREWING AWARDS
THE INTERNATIONAL
BREWING AWARDS
2021
2021
TROPHY WINNER
TROPHY WINNER
THE INTERNATIONAL
NON & LOW ALCOHOL
COMPETITION
THE INTERNATIONAL
NON & LOW ALCOHOL
COMPETITION
THE INTERNATIONAL
BREWING AWARDS
THE INTERNATIONAL
BREWING AWARDS
20212021
17
ANNUAL REPORT
2021/22
with precision and focus. All this hard work came to fruition
and was well-rewarded; we are proud to be able to report
that Cisk 0.0% non-alcoholic lager was awarded a gold
medal in the Non & Low Alcohol Beer – Class 1 Category
at the International Brewing and Cider Awards 2021 held
in Burton-on Trent, UK. Cisk 0.0% was also named Overall
Trophy Winner of the Gold winners of the three classes
of the same category, that included zero alcohol, low
alcohol, and ultra-low alcohol. This prestigious competition,
regarded as the ‘ultimate challenge’ in the brewing
industry, is technically unrivalled as judging is by working
professionals in the industry from across the globe.
Budweiser – Calling on soccer friends to
honour the Kings of the Game.
Cisk 0.0% Award Presentation – From left, Mr Paul Hegarty,
Honorary Secretary of the All-Party Parliamentary Beer Group
who sponsored the International Non & Low trophy award, Mr
Michael Farrugia, Executive Director – Operations & Business
Development and Mr Eugenio Caruana, Chief Operations Ocer.
Green Hop IPA –
True Hoppiness
in a glass.
Carlsberg – Better
shared with friends.
Probably.
International brands Carlsberg and Budweiser, together
with local favourites Blue Label, Farsons Double Red
and the newly launched Farsons Green Hop IPA from the
Classic Brews portfolio, remain brands of choice for many
beer consumers. Our focus with such brands is to ensure
availability and visibility in all leading supermarkets and
retail outlets, supported by ongoing promotions and oers
aimed at oering value and quality as consumption shifted
from bars and pubs to within our homes.
18
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
19
ANNUAL REPORT
2021/22
"THE SOFT DRINKS
MARKET CONTINUED
TO BENEFIT FROM
THE INCREASE IN
SUPERMARKET
SALES, THE
SWITCH TO HOME
ENTERTAINMENT,
AND SHIFTING
LIFESTYLES"
SOFT DRINKS
For the second year running, the soft drinks market
continued to benefit from the increase in supermarket sales,
the switch to home entertainment, and shifting lifestyles, as
families and individuals endeavoured to maintain a balance
and adjust to new realities. With the proliferation of working
from home and remote working, the traditional boundaries
between work and family life have become less defined,
and whilst this has allowed many employees to retain
employment and incomes, it has also resulted in conflating
previously separate parts of the day, allowing families the
opportunity to spend more time together, rediscovering
activities, hobbies, and relaxation pastimes.
Overall, all brands within our soft-drinks portfolio benefited
from this status. The focus on health and wellness
accelerated in 2021 and this was evident in the accelerated
switch to no/low sugar variants. In fact, no sugar is at the
centre of many New Product Development programmes
and is driving growth in the non-alcoholic category,
growing ahead of the curve. Research has indicated that the
resistance to artificial sweeteners has flattened with many
consumers now more educated and informed and therefore
not so easily swayed by media sensationalism. In keeping
with this developing trend, all low/no-sugar brand variants
– which include Diet Kinnie, Kinnie Zest, Pepsi Max and 7-Up
Free, registered a higher growth rate over previous year
than the full-sugar variants – this is in line with trends in
many other markets in the developed world.
2021 was a very eventful and successful year for our flagship
brand Kinnie – clearly retaining its spot as ‘Malta’s own
favourite Soft Drink’. With the tagline ‘The Mediterranean
Classic Since 1952’, a series of vibrant and uplifting advertising
and promotional campaigns were implemented back-to-back
throughout the year, playing on the strong and striking visual
identity of this unique market-leading brand. Kinnie is widely
available in numerous package type and formats across the
market, including the now popular and sought after bespoke
25 centilitre glass bottle which is reminiscent of the very first
glass bottle launched almost 70 years ago in June 1952. In fact,
Kinnie will this year be celebrating its 70th birthday, and this
will be accompanied by a number of initiatives, promotions,
and specially designed vibrant and eye-catching limited-
edition packaging.
Specially designed Kinnie 33cl can to
celebrate Kinnie’s 70th Anniversary.
20
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
21
ANNUAL REPORT
2021/22
The collaboration of Kinnie with the global phenomenon
X Factor, for the 3rd edition of this popular talent show
in Malta, was an opportunity for our brand to continue to
support Maltese talent in a very tangible manner, whilst
at the same time enjoying high levels of visibility at peak
television viewing times and during the live shows held in
the final stages of this ever-popular show.
Another innovative and successful collaboration involved
Kinnie teaming up with a popular and quirky online and
retail outlet, Souvenirs That Don’t Suck, which creates well-
designed and innovative souvenirs inspired by all things
Maltese. A number of carefully curated and designed items
were available for sale, for a limited time only, and were very
eagerly taken up.
"THE HIGHLIGHT
OF THE YEAR
FOR KINNIE WAS
SU RELY TH E
LAUNCH OF THE
INNOVATIVE
KINNIE SPRITZ"
Kinnie Spritz a refreshingly light
alcoholic aperitivo, with 4% alcohol
by volume – now available in 25cl
bespoke bottles.
"Kinnie souvenirs that
don't suck" a welcomed
novelty for Kinnie fans.
Kinnie enjoying high levels of visibility as sponsor of X Factor Malta.
The highlight of the year for Kinnie was surely the launch of
the innovative Kinnie Spritz – a refreshingly light alcoholic
aperitivo, with 4% alcohol by volume. Building on Kinnie’s
inherent mixability and versatility and seeking to tap into
the ready-to-rink segment and global spritz phenomenon,
Kinnie Spritz was launched in striking bespoke 25 centilitre
glass bottle in April 2021, mainly in supermarkets since bars
and pubs were still closed at the time. The response to this
innovative product launch was nothing short of phenomenal
and take up by consumers so strong that initial stocks were
quickly taken up, leading to a short out-of-stock period until
supplies were replenished. Strong sales of Kinnie Spritz
continued throughout the peak summer months with the
new brand variant by then also available in bars and cafes
having established itself as an increasingly popular go-to
aperitivo. This is a highly seasonal refreshment, and we are
currently preparing for the second season’s supplies which
will shortly be widely available to meet consumer demand.
22
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
Pepsi-Cola, 7-Up and Mirinda, including the sugar-free
variants Pepsi Max and 7-Up Free, together with global
brand favourites Lipton Ice Tea and market leader sports
isotonic drink Gatorade, make up the Pepsico portfolio at
Farsons. Sporting a new-look striking bespoke bottle shape
launched in May 2021, all Pepsico soft drink brands enjoyed
a strong recovery from the previous year, particularly in the
on-trade sector, despite on-going COVID related measures;
from performance indicators to date, the current year will be
another strong one for these market leading products, with
the no sugar variants taking the lead in a number of sectors,
as referred to earlier.
23
ANNUAL REPORT
2021/22
INTERNATIONALISATION
It is highly encouraging to note that 2021 was a good year
for Farsons exports.
Given relatively subdued 2020 export results, our
performance during 2021 was especially notable, with
several positive developments contributing to a significant
turnaround.
Sustained growth in our beer sales, registered in the Middle
East region, are of particular significance, and sales of
Cisk Excel and Cisk Strong, as well as Cisk Super Strong,
continue to show encouraging resilience and further growth
potential. Positioned as a light and low carb beer, Cisk Excel
is proving to be a very good fit for the Bahraini market,
where light beers are long established and widely consumed
within both the hospitality sector and retail segment.
Available in both kegged and canned packages, Cisk Excel,
supported by strong marketing and promotions carried by a
well-established importer and distributor, continues to build
brand awareness in this market.
Equally of note is the continued export of Cisk Strong and
Cisk Super Strong, the latter specifically developed for this
market, where a large and competitive strong beer segment
exists within the retail sector. Available in 50 centilitre
canned package, both Cisk Strong products are playing
an increasingly central role in our export strategy, as is the
latest award-winning Cisk Non-Alcoholic 0.0%, which has
already generated a high level of interest and response in
this region and beyond.
Export business in Australia remained buoyant during 2021,
notwithstanding the negative impact of pandemic-related
measures within this market. Kinnie production and sales
remained stable as did exports of beer, which have been
sustained through mainstream online retailers. Plans to
further develop this market through the greater allocation
of focus and resources are also underway, while exports
to Asia and more specifically South Korea and Japan also
remained stable with new markets such as Taiwan being
considered, with an eye on the strong beer segment.
Following a significant contraction in export business to
the Italian market in 2020, sales to Italy in 2021 did show a
marked improvement even if not yet recovering to previous
levels. Given the pandemic’s significant impact on the Italian
hospitality segment, which is where our business is focused,
it will take time before we fully regain lost ground within
this segment. While all importers remain active, we have
streamlined our General Sales Agent set-up, and now have
a single representative to oversee the whole Italian market.
With approximately 20 importers and distributors in place
covering mainly central and southern Italy, the Company
remains committed to the market with an immediate view to
contain costs and improve overall profitability.
In a similar vein, we opted to review our sales arrangements
for the United Kingdom. Although online sales remained
robust in 2021, with the bulk of sales being driven via
Amazon UK, our plans to grow in the hospitality sector
were understandably disrupted by COVID, which led to a
cessation of kegged beer exports and on trade presence.
"GIVEN RELATIVELY
SUBDUED 2020
EXPORT RESULTS,
OUR PERFORMANCE
DURING 2021
WAS ESPECIALLY
NOTABLE, WITH
SEVERAL POSITIVE
DEVELOPMENTS
CONTRIBUTING
TO A SIGNIFICANT
TURNAROUND"
24
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
In line with this drive to capitalise on new leads and
opportunities, we have focused increasingly on West and
East African markets, where attractive opportunities for
both strong and non-alcoholic beers exist. Greater attention
is also being given to Kinnie’s potential for growth in this
region, where consumers already have a strong preference
for herbal, bittersweet products, similar in flavour profile to
Kinnie. Franchise opportunities are being actively pursued
on this front, following consistent interest over the years.
Whilst the pace with which these markets will be developed
rests on how quickly they can return to normal and the
pandemic is brought under control, the prospects of such
large markets remain promising.
Meanwhile, we continue to nurture our Duty Free and ship
chandler business, which performed strongly throughout
2021, while also servicing a growing list of distributors
located in Germany, Czech Republic, Latvia, Poland,
Libya, Israel, and Canada. New leads are relentlessly being
explored, and we actively participate in leading food and
beverage fairs such as SIAL, Anuga and Gulf Food, in
line with the Group’s internationalisation strategy. Going
forward, and despite considerable inflationary pressures
and supply disruptions being faced, we intend to keep
building on the solid momentum generated during 2021,
with an ambitious view to achieving another record set of
results for Farsons exports.
25
ANNUAL REPORT
2021/22
FARSONS BEVERAGE IMPORTS CO. (FBIC)
The year under review has been very challenging for our
FBIC business, with COVID-19 pandemic measures continuing
to impact the whole market as well as our own operation.
Nevertheless, we are pleased to report that our results
were significantly better than the previous year thanks to
coordinated sales and marketing eorts throughout the
whole year which have largely been successful.
With bars, hotels, restaurants, and clubs closed from
October 2020 until the end of May 2021, our sales in the on-
trade sector were inevitably drastically aected. Similarly,
the sustained ban on mass events impinged on our sales of
beers and spirits. Tourism numbers also influenced sales;
travel was practically closed until May and although figures
picked up from June onwards, they were still much lower
than 2019.
However, the reopening of bars and restaurants in June saw
a surge in business with local consumers. Still not keen to
travel overseas, many residents enjoyed their holiday times
in Malta and Gozo, leading to a strong pick-up in sales.
To make up for the sales drop in the on-trade sector during
the first half of the year, we extended our eorts to expand
sales in the o-trade, widening our sales and distribution to
smaller retail shops and running promotions and activations
in retail outlets.
The COVID pandemic also had some unexpected eects on
global supply chains. Shortage of sta due to infection or
quarantine, coupled with a slowdown of production levels,
left some of our suppliers unprepared for the resurgence
in demand once
summer arrived
and restrictions
started to be lifted
in many countries.
This unfortunately
led to some out-
of-stock situations,
with a few of
our top brands.
The situation
was further
exacerbated by
delays in shipping,
an ongoing issue
which is expected
to carry on through
2022.
BEST SERVED WITH
FRIENDS OLD & NEW.
3
PROSECCO
2
APEROL
1
SODA
PARTS
PARTS
PART
Scan to view how to prepare
the perfect Aperol Spritz.
With the uncertainty aecting the market throughout
the whole year, the environment was not ideal for the
introduction of new products and our primary focus was on
the consolidation of our portfolio. We did, however, manage
to launch two new brands.
London Essence oers a range of innovative premium
tonics and mixers, which was very well-received, and which
26
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
"RESULTS WERE
SIGNIFICANTLY BETTER
THAN THE PREVIOUS
YEAR THANKS TO
COORDINATED SALES
AND MARKETING
EFFORTS"
BEST SERVED WITH
FRIENDS OLD & NEW.
has been listed in a number of top outlets all over the island.
London Essence perfectly complements the extensive
range of premium gins in our portfolio. In 2021, we were
also very proud to extend our representation of Gruppo
Campari, which entrusted us with Wild Turkey, a historic
bourbon brand from Kentucky.
We re-launched the premium water Vittel, which had been
missing from our shelves for a few years due to shortage of
supply. Having invested in their production processes, Vittel
was once again made available for export to Malta.
We also introduced special limited editions of two of our
main brands. Perrier had an exclusive packaging designed
by the globally renowned Japanese artist Takashi Murakami,
who has worked with fashion houses, such as Louis Vuitton,
and famous musicians, including Kanye West.
Despite the dicult circumstances, we also continued to
strengthen our standing as reputable wine merchants.
We are very proud to have received representation of
two incredible wineries: Domaine de L’Ile, a prestigious
estate on the exclusive island of Porquerolles owned by the
luxury goods company Chanel, which also owns the iconic
Bordeaux Châteaux Rauzan-Sègla, Canon and Berliquet;
and Shafer Vineyards, the pioneering Napa Valley winery,
which helped establish the international reputation of Napa
as a top wine-producing region back in the ‘70s.
The year also gave us the opportunity of building up some
new products we had launched during a very challenging
2020. We extended the availability of the San Benedetto
waters and ice teas and had very good promotions with
Perrier & Juice. Hophouse 13, the double-hopped lager
from the legendary St. James’s Gate brewery in Dublin, is
now also present in a wider range of outlets.
Chanel’s excellent rosé wine from the Côte de Provence. Red Bull Full Moon Street Sport Series.
27
ANNUAL REPORT
2021/22
FARSONSDIRECT
Farsonsdirect also registered a positive year. Sales to
private clients who regularly visit our outlet to browse
through the wide range of products on our shelves
registered an increase. With the reopening of the on-trade
sector in the second half of the year, our sales to business-
to-business customers grew too.
We also saw a significant increase in e-commerce and
invested in the upgrading of our website to better
respond to sales in this sector. This was matched with
an improvement in the eciency of our delivery service.
We also increased our digital marketing eorts on social
media platforms such as Facebook and Instagram to
continue directing people to the e-commerce portal and
increase sales.
"INCREASED OUR
DIGITAL MARKETING
EFFORTS ON SOCIAL
MEDIA PLATFORMS TO
CONTINUE DIRECTING
PEOPLE TO THE
E-COMMERCE PORTAL"
Farsonsdirect – fully equiped to oer online shopping
complemented with a home delivery service.
28
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
ECOPURE
Despite another year of disruptions due to the pandemic,
EcoPure recorded an improvement in performance.
We delivered increased revenues, which were above
expectations, as well as improved profitability levels.
As COVID-19 measures eased during the year, sales of our
EcoPure water to the worst hit customer segments, such as
the hotel, restaurant, and entertainment industries, improved
significantly compared to the previous year. Furthermore,
employees within the business sector, which constitutes our
largest customer base, who had previously been working
from home, started returning to their oces, increasing
consumption practically to pre-pandemic levels. Our strong
results were achieved notwithstanding the last COVID surge
in December 2021 and in January 2022, during which time
many employees returned to remote working patterns.
To counter this shortfall, our sales and marketing eorts
were focused on retail and domestic sectors, with
campaigns on a mix of media channels that helped us
achieve new clients in the domestic sector as well as a
higher uptake in supermarkets, thus minimising the loss
in sales of other impacted sectors and contributing to an
overall improved sales performance. Management also
introduced several cost containment measures, which also
contributed significantly to our bottom-line performance.
With the introduction of the Beverage Container Refund
Scheme (BCRS) in 2022, sales will be focused primarily on
the retail and domestic sectors, as it is expected that more
consumers would shift to other alternatives to bottled water
whilst opting for a more environmentally friendly San Michel
EcoPure re-usable bottles that can be either delivered to
one’s doorstep or purchased directly from supermarkets.
Our 11 litre returnable bottles will be a key focus for the
retail sector, as this package has been identified as a more
convenient for shoppers to handle.
The results which we have achieved during the year
under review, as well as the sales outlook, are of course
encouraging, though we remain mindful of ongoing
challenges such as substantial increases in shipping, services
and raw material costs, which could have a significant
impact on profitability. We will, therefore, focus our eorts
on cost savings and on further enhancing our productivity.
The current shortage of truck drivers is also of concern, as
this could negatively aect our service, we shall therefore
continue to focus on maintaining a motivated workforce,
whilst attracting skilled and customer-oriented delivery
employees.
29
ANNUAL REPORT
2021/22
QUINTANO FOODS
Quintano Foods registered a positive performance and
achieved encouraging growth in both sales and profitability
over the previous year, notwithstanding the various
challenges brought about not only by the pandemic, but
also by Brexit, and a number of supply shortages that
resulted from sudden spikes in demand from larger markets.
Retail sales remained strong since home consumption was
still high because of the continued restrictive COVID-19
measures. On-line grocery purchases remained high, albeit
not at the same levels registered during the peak of the
pandemic in the previous year.
Recognising the potential growth in the food sector, the
Company has been given the green lights to invest in
the development of a site owned by the Company into a
dedicated food distribution centre which will also house the
administration of both Quintano Foods and Food Chain.
Planning and preliminary works are already underway and
construction is expected to start before the end of 2022.
"WE ARE WORKING
RELENTLESSLY TO
FURTHER GROW
THIS BUSINESS
WHILST CONTINUING
TO STRENGTHEN
OUR OVERALL
PORTFOLIO"
30
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
The pandemic brought about an overall economic
slowdown, accompanied by increased costs which directly
impacted consumers’ disposable income. This fuelled an
increased drive by consumers to opt for economy pack
formats and cost-saving special oers. Being aware of
this shift in consumer behaviour, and from the market
experience we gained from the previous year, we channelled
most of our marketing investment in below-the-line
activities, focussing on consumer special oers, economy
packs and an increased brand presence on digital marketing
platforms.
Brands such as Danone Actimel, Walkers, Lays, Doritos and
Calvé which remained relevant to the reality of the pandemic
lifestyle, did particularly well. Consumers sought ways to
boost their immune system, whilst simultaneously increasing
their demand for snacking as they were spending more time
at home. All this, coupled with the additional sales achieved
through brands which we added to our portfolio, such as De
Cecco and Evian all contributed to our results.
Although still well below pre-pandemic levels, sales to
the hospitality sector and to Food Chain franchise outlets
also experienced an overall improved performance. These
sectors contribute almost a third of this subsidiary’s
turnover. Rapidly evolving travel restrictions and health
measures continued to impact tourism levels and led to
reduced business for restaurants and catering. Quintano
Foods took over representation of the KraftHeinz
Foodservice portfolio and this, to some degree, mitigated
the eects experienced in this hard-hit sector.
Quintano’s outlook for the year ahead remains positive, and
we are working relentlessly to further grow this business
whilst continuing to strengthen our overall portfolio of
quality products.
31
ANNUAL REPORT
2021/22
FOOD CHAIN
We are pleased to report that our Food Chain business
registered strong sales growth over the previous year, and
this despite another very challenging year for the entire
hospitality sector. Undeterred, we continued to strive to take
advantage of every opportunity to drive sales and increase
footfall across all ordering platforms, whilst keeping a close
eye on all costs and ensuring an ecient and eective
operation.
Following the coming into eect of new COVID-19
restrictions in March 2021, we were once again compelled to
close all our dine-in lobbies and were only able to oer take-
away and delivery services. Three of our restaurants, namely
Pizza Hut Sliema and Valletta and Burger King Valletta were
shut down for a nine-week period, to re-open though with
drastically reduced seating capacity in May 2021.
Moreover, just as business was starting to pick up, the
authorities ordered the abrupt closure of all English
language schools, and new travel related restrictions were
introduced just before the summer peak. This, coupled with
the cancellation of mass events throughout the year, had a
negative impact on sales across most of our restaurants.
Sta recruitment during 2021 was a struggle and we
encountered diculties in attracting new employees at all
levels, particularly because of travel restrictions on third
"WE CONTINUED
TO STRIVE TO TAKE
ADVANTAGE OF
EVERY OPPORTUNITY
TO DRIVE SALES
AND INCREASE
FOOTFALL ACROSS
ALL ORDERING
PLATFORMS"
country nationals as well as a high demand for employees,
once these restrictions were eased, from all hotels and retail
stores which were all competing to recruit new personnel.
During the year, for Pizza Hut we continued to focus on
improving our delivery service, particularly because this
sales channel has become an essential and crucial part of
our business. We have invested in enhancing our delivery
channels, with a new delivery fleet of motorbikes and new IT
technologies to oer our clients a better experience.
32
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
To address the continuous changes in digital trends, a
mobile app for Burger King that informs customers of new
products, coupons and promotions via push notifications
was also launched. The presence and sales through two
aggregators, Wolt and Bolt, who have complemented our
delivery system and oered deliveries of the three brands,
remained very strong. Sales trends show that customers
have become accustomed to this service.
Given the change in consumer habits brought about
by the pandemic, our marketing strategies have also
been reviewed and tweaked to reach customers better.
Various combo deals were oered following the issue of
Government vouchers to entice customers to redeem their
coupons at our stores. Aggressive back-to-back limited time
oers were launched together with value campaigns and
cross-promotions throughout the year. The premium limited
oers remained a popular option and the introduction of
plant-based products being oered at Burger King was also
well received.
In May 2021, we opened the doors of our new Burger King
Drive-Thru restaurant in Paola; displaying Burger King’s new
visual identity and livery, this brings the number of Drive-
Thru restaurants to three the other two being Burger King
Qormi and KFC Mosta. Our new Paola restaurant boasts
a comfortable drive lane that could stack a high capacity
of cars awaiting their order, together with a comfortable
dine-in area equipped with a children’s play area and a new
kitchen management system that will ensure an enhanced
guest experience. The feedback and performance have
been excellent, and BK Paola became one of our top-
performing outlets.
In 2022, our Food Chain business shall be extending
our franchise portfolio by launching Boost Juice, one of
Australia’s most famous and loved juice and smoothie
brands. This is quickly spreading across the globe, with over
580 stores across 13 dierent countries.
Our first outlets will shortly open adjacent to our restaurants
in Sliema, Gzira and Msida, with others following in 2023.
33
ANNUAL REPORT
2021/22
Before signing o my twelfth year as Group Chief
Executive, I need once again to express my gratitude to
all Farsons Group Management and employees who have
delivered these results in unprecedented and challenging
circumstances. Gratitude is also due to our Board,
particularly our chairman, Louis A. Farrugia, for his ongoing
support, sound advice and confidence.
I take much pride in saying that all the workforce within
the Farsons Group, from Management to all employees,
have shown exemplary levels of team spirit, dedication
and camaraderie. These distinctive qualities have certainly
served us well in achieving the results presented here.
Resilient and resourceful, we remain determined to push
forward with our Group ambitions for further profitable
growth, whilst always balancing profit with purpose.
Norman Aquilina
Group Chief Executive
25 May 2022
RETURNING TO A GROWTH MINDSET
Summing up, it has certainly been another very eventful,
yet largely successful year for our Group, even if we remain
mindful of the broader context we live in.
The forthcoming financial year is likely to be characterized
by a variety of challenges. We can expect continued supply
chain disruptions, significant increases in the cost of raw
material and imported products, compounded with similar
increases in shipping costs, set against the backdrop of
inflation and economic turmoil caused by two years of the
COVID-19 pandemic. All this notwithstanding, we need to
brace ourselves and continue to push forward. In addition,
we also need to consider the evolving situation of the Russia
– Ukraine conflict, which puts additional pressure on costs
of raw material, energy and shipping, and leads to instability
of supply.
There is also the inescapable reality of what some are
referring to as a ‘Global Climate Catastrophe,’ requiring
that sustainability is put back on the top of the agenda
for many governments, businesses, enterprises, and
communities across the globe. The younger generations are
now much more informed and opinionated and are being
extremely vocal and taking the lead – both by example
but also by their choices and preferences. With multiple
stakeholders pushing for action – consumers, regulators,
companies, pressure groups – the necessity to move from
words to action has never been so urgent. As sustainability
increasingly drives brand choice, so too will it drive brand
equity; producers and brand owners need to adapt rapidly
and innovate accordingly.
Though the outlook remains challenging, the Group’s
strategic direction is to return to a growth mindset, and
our results for the year under review encourage us to do
precisely this.
We need to formulate a more distinctive food and beverage
business, seeking further innovation and accelerating
our digitalization process, better responding to our
sustainability responsibilities, ensuring successful business
continuity through leadership talent and succession
planning. This will drive our productivity and enhance our
overall competitiveness going forward.
"THOUGH THE
OUTLOOK REMAINS
CHALLENGING,
THE GROUP’S
STRATEGIC
DIRECTION IS TO
RETURN TO A
GROWTH MINDSET"
34
SIMONDS FARSONS CISK PLC
GROUP CHIEF EXECUTIVE’S REVIEW continued
FINANCIAL
STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
35
ANNUAL REPORT
2021/22
The Board of Directors present their annual report and the audited
consolidated financial statements for the year ended 31 January 2022.
Principal activities
Review of the business
TRADING PERFORMANCE
The Board of Directors hereby announce the Farsons Group’s
financial results for the year ended 31 January 2022 (FY 2022).
FY 2022 saw the beginning of a somewhat bumpy economic
recovery from the eects of the COVID-19 pandemic as the
eective roll out of the vaccination campaigns took hold. However,
some uncertainty and instability prevailed, as periodic spikes in
infection levels caused travel related and other social restrictions
to be reimposed from time to time. The restrictions impacted the
re-opening of bars, restaurants and clubs – and limitations on social
gatherings and mass events – all important market segments for the
Farsons Group. Tourist arrivals improved from 660,000 in calendar
2020 to 968,000 in 2021 – but remained well below the pre-
pandemic peak of 2.7 million.
Over the year under review the Board of Directors together with
Management have maintained their vigilance on cash conservation
measures and on the levels of operational expenditure across
the Group. Eective operational and cost eciencies have been
implemented whilst at the same time maintaining the Group’s full
workforce complement throughout the long pandemic period.
Capital expenditure has been subject to stringent review as have the
controls over Group receivables. As noted below, these measures
have resulted in a marked improvement in the Group’s indebtedness
and gearing levels.
Group turnover for FY 2022 amounted to €91.8 million – an increase
of close to 26% over the turnover of €73 million registered in FY 2021.
The recovery in turnover was registered across all the segments
of the Group’s businesses, with the higher rates of recovery being
experienced in the food and beverages importation operations (plus
23%) and the franchised food retailing establishments (plus 34%).
These were the two sectors most severely impacted by the stringent
COVID-related restrictions imposed throughout much of FY 2021.
Group profit before tax for the year amounted to €12.2 million
(2021: €4.4 million). This significantly improved result compares well
with the profit of €12.3 million in FY 2020, the last pre-pandemic
reporting period. The marked improvement in profitability resulted
from increases in both revenues and gross margins as well as cost
eciencies achieved. Net movement on provisions (including lower
net provisions against trade and other receivables arising from the
proactive management of trade credit) have also contributed to
the result to the extent of €1.5 million on a year to year comparative
basis, with part of the precautionary COVID induced provisions
established in FY 2021 being released during the year under review.
Earnings before interest, tax, depreciation and amortisation (EBITDA)
rebounded back to pre-COVID levels and amounted to €22.7 million
for the year as compared to €14.9 million in FY 2021. This increase
of 52% reflects the improved profits reported for the year and is
evidence of the cash generation capacity of the Group’s businesses.
The Group’s net borrowings as at 31 January 2022 amounted to
€10.3 million – representing a decrease of €8.3 million from a year
earlier. Gearing at the year-end stood at 12.6% as compared with
16.8% at the end of FY 2021. The reduction in indebtedness resulted
from the strong focus on trade collections together with the VAT
and Tax payment deferral schemes that remained in place during the
year. Payment of these deferred liabilities are due to take place over
a 30-month period starting in June 2022 leading to an increase in net
indebtedness and gearing to more “normalized” levels at the end of
such period. Finance costs for the year of €1.3 million include a €0.3
million charge under IFRS 16 (leasehold properties). The decrease
in the gearing results from the overall reduction in indebtedness
together with the higher level of Shareholders’ funds as a result of
the improved profitability. Total equity of the Group at the year-end
amounted to €129.2 million (2021: €119.7 million).
INVESTMENTS
Notwithstanding the focus on cash conservation measures referred to
above, the Group has continued with investing for the future. During
FY 2022 the Group pursued further investments in its plant and
machinery and logistics operations, with a focus on environmentally
friendly “green” technology being increasingly deployed.
The major investment currently being undertaken by Farsons is
the restoration of the Farsons Old Brewhouse. With a cumulative
investment to date of €14.5 million, it is planned that all facilities
should be opened over the course of the current year. This historical
industrial rehabilitation project will comprise a Farsons Brewery
DIRECTORS’
REPORT
36
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
representing trade and industry have been actively engaged at
governmental level in seeking to address the acute labour shortages
being experienced across all business sectors.
In the marketplace competition both locally and in the export sector
remains fierce – and it is vital that the Group continues to sharpen
its competitive edge with the highest quality products, ongoing
innovation and ecient logistics and distribution services. Whereas
FY 2023 has got o to a good start in terms of turnover, challenges
are foreseen for later in the year as increases in input prices are
necessarily reflected in higher selling prices – and this at a time
when growing inflationary pressures are likely to negatively impact
consumer sentiment and purchasing power.
The Board of Directors together with management constantly
monitor the rapidly shifting economic and geo-political
environments. The speed of change in terms of emerging challenges
means that agility of response is critical to ensure that the business is
protected and continues to grow and develop. The financial strength
of the Farsons Group with shareholders’ equity of €129 million
remains an important element in terms of enabling the Group to
weather the latest economic scenarios.
The Farsons Group will continue to manage its operations and
finances in a diligent manner so as to be able to generate sustainable
levels of turnover and profitability in the forthcoming financial year.
FINANCIAL RISK MANAGEMENT
The Group and Company are exposed to a variety of financial risks,
including market risk (including currency risk, fair value interest rate
risk and cash flow interest rate risk), credit risk and liquidity risk.
Refer to Note 2 in these financial statements.
DIVIDENDS AND BONUS SHARES
The income statements and statement of financial position are set
out on pages 58 to 60. As at 31 January 2022, retained earnings
amounted to €70.9 million (2021: €61.5 million).
In last year’s Directors’ Report, the Board stated that due to the then
prevailing uncertainties it did not feel able to recommend a final
dividend for FY 2021. However, the Board also undertook to keep
developments under review in terms of the pace of the economic
recovery and the re-opening of the tourist market, and that the
Board would certainly consider the payment of an interim dividend
immediately it was judged prudent to do so.
In the event and as evidenced by this Report, the anticipated
recovery was forthcoming and the Board felt able to declare
interim dividends of €1.5 million each on 29 September 2021 and 9
December 2021 respectively, thus restoring dividend payments to
shareholders after a 24-month suspension due to the economic crisis
that was caused by the pandemic.
The Board of Directors, encouraged by the results achieved in FY
2022, will be recommending to the forthcoming Annual General
Meeting (AGM) the declaration of a net final dividend for the year
under review amounting to €4 million. If approved at the AGM, this
dividend will be paid to shareholders on the 24 June 2022.
37
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
DIRECTORS’ REP
ORT continued
Visitor experience, a Microbrewery, a Brewpub, a Cisk bar, a
restaurant, a retail brand store and multiple indoor and outdoor
event areas for both business and leisure activities. The management
of this investment will be entrusted to a newly incorporated
subsidiary, The Brewhouse Company Limited.
In our franchised food retailing businesses ongoing capital
investment was allocated for the development of additional outlets
earmarked for opening during 2022, together with the launch of the
new “Boost” Juice Bar franchise which will commence operations
during the second half of the current year.
OUTLOOK FOR FINANCIAL YEAR ENDING 31 JANUARY 2023
The principal business challenges brought on by the COVID
pandemic resulted from the precipitous fall in sales as travel
restrictions were imposed, social events cancelled and bars,
restaurants and clubs obliged to close their doors. As we gradually
emerge from the economic shadow cast by COVID, we are now
faced with a new set of extraordinary challenges – this time
concentrated on the supply side of our businesses. Rarely has the
resilience of executive management teams been so challenged over
such a concentrated period of time.
This new set of unwelcome challenges have resulted from a
combination of the economic aftershocks of COVID, the war in
Ukraine as well as the impact of China’s “zero COVID” policies.
The strong surge in demand as economies recovered collided with
shortages in supply occasioned by disrupted supply chains, key
component and labour shortages as well as spiralling shipping costs.
The combination of a surge in demand and shortage of supply has
fuelled inflationary pressures to levels not seen for over 40 years.
The war in Ukraine (first and foremost a terrible human tragedy)
has served to cause additional serious economic consequences to
emerge - including surging energy prices, the further disruption of
supply chains and shortages in certain key commodities and product
categories (including oil and gas, grains, vegetable oils and fertilizer).
These shortages are further stoking already high inflation levels and
are adversely aecting business confidence, with the World Bank
significantly downgrading growth forecasts for 2022 and 2023. In an
eort to combat inflation Central Banks are starting to hike interest
rates – further dampening business confidence.
These emerging realities present very real and significant challenges
to the Group, particularly but not limited to our raw material costs
for (among other categories) malt, sugar and packaging materials.
Shortages of labour is a widespread post-pandemic phenomenon
but is particularly acute in Malta where the economy has over recent
years come to rely more heavily on imported non-Maltese workers.
The exceedingly tight local labour market presents yet another
significant challenge across the Group, one which will almost certainly
result in a higher wage bill as well as the lack of the necessary
manpower required to deliver the high level of service expected by
our customers.
The Group is actively seeking to mitigate these new set of challenges
and risk through enhanced procurement planning, higher inventory
levels and forward price commitments whenever available.
Increased investment in automation and “smart” working practices
are also being implemented. In the meantime, constituted bodies
Furthermore, and in the light of representations made by a
number of shareholders in the recent past, the Board will also be
recommending the distribution of a bonus issue to shareholders (on
a pro rata basis) of 1 share for every 5 shares held. This proposed
bonus issue of 6 million shares of €0.30 each (fully paid up) will be
funded by the capitalization of €1.8 million from retained profits.
The distribution of the bonus issue of shares to shareholders will
be subject to the approval of the shareholders at the forthcoming
Annual General Meeting. The date for the allotment of the bonus
shares to eligible members will be announced via the issuance of
a Company Announcement following the Annual General Meeting
and an application being made for the listing of the bonus issue on
the M a lt a Stock Exchange. The bonus issue will rank pari passu in all
respects with the existing listed share capital of the Company.
DIRECTORS
The Directors who held oce during the year were:
Mr Louis A. Farrugia F.C.A. - Chairman
Mr Marcantonio Stagno d’Alcontres - Vice-Chairman
Baroness Christiane Ramsay Pergola (until 25 November 2021)
Marquis Marcus John Scicluna Marshall
Dr Max Ganado LL.D., LLM (Dal)
Mr Roderick Chalmers M.A. Div. (Edin.) F.C.A., A.T.I.I., F.C.P.A., M.I.A.
Ms Marina Hogg
Mr Michael Farrugia M.A. (Edin.), MBA (Warwick)
Baroness Justine Pergola (appointed 13 January 2022)
Mr Roderick Chalmers, and Dr Max Ganado whose terms of appointment
expire, retire from the Board and are eligible for re-election.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES FOR THE
FINANCIAL STATEMENTS
The Directors are required by the Maltese Companies Act, 1995 to
prepare financial statements which give a true and fair view of the
state of aairs of the Group and the parent Company as at the end of
each reporting period and of the profit or loss for that period.
In preparing the financial statements, the Directors are responsible for:
• ensuring that the financial statements have been drawn up in
accordance with International Financial Reporting Standards as
adopted by the EU;
• selecting and applying appropriate accounting policies;
• making accounting estimates that are reasonable in the
circumstances;
• ensuring that the financial statements are prepared on the going
concern basis unless it is inappropriate to presume that the
Group and the parent Company will continue in business as a
going concern.
The Directors are also responsible for designing, implementing and
maintaining internal control as necessary to enable the preparation
of financial statements that are free from material misstatement,
whether due to fraud or error, and that comply with the Maltese
Companies Act, 1995. They are also responsible for safeguarding the
assets of the Group and the parent Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
The financial statements of Si m on ds Far so ns C is k pl c for the
year ended 31 January 2022 are included in the Annual Report
2022, which is published on the parent Company’s website. The
Directors are responsible for the maintenance and integrity of
the Annual Report on the website in view of their responsibility
for the controls over, and the security of, the website. Access to
information published on the parent Company’s website is available
in other countries and jurisdictions, where legislation governing the
preparation and dissemination of financial statements may dier
from requirements or practice in Malta.
The Directors confirm that, to the best of their knowledge:
• the financial statements give a true and fair view of the financial
position of the Group and the parent Company as at 31 January
2022, and of the financial performance and the cash flows for
the year then ended in accordance with International Financial
Reporting Standards as adopted by the EU; and
•
the annual report includes a fair review of the development and
performance of the business and the position of the Group and the
parent Company, together with a description of the principal risks
and uncertainties that the Group and the parent Company face.
GOING CONCERN BASIS
After making enquiries, the Directors, at the time of approving the
financial statements, have determined that there is reasonable
expectation that the Group and the parent Company have adequate
resources to continue operating for the foreseeable future. For
this reason, the Directors have adopted the going concern basis in
preparing the financial statements.
SHAREHOLDER REGISTER INFORMATION PURSUANT TO
CAPITAL MARKETS RULE 5.64
Share capital information of the Company is disclosed in Note 12 of
the financial statements.
The issued share capital consists of one class of ordinary shares with
equal voting rights attached and freely transferable.
The list of shareholders holding 5% or more of the equity share
capital is disclosed in this Annual Report.
Every shareholder owning twelve and a half per cent (12.5%) of
the ordinary issued share capital of the Company or more shall be
entitled to appoint one Director for each and every twelve and a
half per cent (12.5%) of the ordinary share capital owned by such
shareholder and such shareholder may remove, withdraw or replace
such Director at any time. Any appointment, removal, withdrawal
or replacement of a Director to or from the Board of Directors shall
take eect upon receipt by the Board of Directors or the Company
secretary of a notice in writing to that eect from the shareholder
owning twelve and a half per cent (12.5%) of the ordinary issued
share capital of the Company or more. Any remaining fractions will
be disregarded in the appointment of the said Directors but may
be used in the election of further Directors at an Annual General
Meeting. The chairman is appointed by the Directors from amongst
the Directors appointed or elected to the Board.
38
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
DIRECTORS’ REPORT continued
The rules governing the appointment, election or removal of
Directors are contained in the Company’s Articles of Association,
Articles 93 to 101. An extraordinary resolution approved by the
shareholders in the general meeting is required to amend the Articles
of Association.
The powers and duties of Directors are outlined in Articles 84 to 91
of the Company’s Articles of Association. In terms of Article 12 of
the said Articles of Association, the Company may, subject to the
provisions of the Maltese Companies Act, 1995 acquire or hold any of
its shares.
The Collective Agreement regulates redundancies, early retirement,
resignation or termination of employment of employees. No
employment contracts are in place between the Company and its
Directors, except as disclosed in the Remuneration report.
It is hereby declared that, as at 31 January 2022, the Company is not
party to any significant agreement pursuant to Capital Markets Rule
5.64.10.
Furthermore, the Board declares that the information required under
Capital Markets Rules 5.64.5 and 5.64.7 are not applicable to the
Company.
REMUNERATION REPORT
The Remuneration Report is set out on pages 54 to 57 of this
Annual Report and sets out details of the terms of reference and
membership of the Remuneration Committee and the Remuneration
strategy and policy of the Farsons Group. The Remuneration
Report also sets out the required details of the remuneration paid to
Directors and the Group Chief Executive and of Senior Management.
In accordance with Capital Markets Rules 12.26L and 12.26M, the
Remuneration Report will be subject to an advisory vote by the
Shareholders at the forthcoming Annual General Meeting (AGM)
and will be made available on the Company's website for a period of
10 years thereafter. The contents of the Remuneration Report have
been reviewed by the external auditors to ensure that it confirms
with the requirements of the Capital Markets Rules.
AUDITORS
The auditors, PricewaterhouseCoopers, have indicated their
willingness to continue in oce, and a resolution for their re-
appointment will be proposed at the Annual General Meeting.
Signed on behalf of the Company’s Board of Directors on 25 May
2022 by Louis A. Farrugia (Chairman) and Marcantonio Stagno
d’Alcontres (Vice-Chairman) as per the Directors Declaration on
ESEF Annual Financial Report submitted in conjunction with the
Annual Report 2021/2.
Registered address:
Telephone (+356) 2381 4172
Antoinette Caruana
Company Secretary
25 May 2022
39
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
DIRECTORS’ REPORT continued
This statement is being made by Simonds Farsons Cisk plc (SFC or
Farsons) pursuant to Article 177 of the Companies Act (Cap. 386).
In terms of the Sixth Schedule to the Act, SFC is obliged to prepare
a report containing information to the extent necessary for an
understanding of the Group’s development, performance, position
and the impact of its activities. For the purposes of the Act, SFC is
hereby reporting on the impact of its activities on environmental,
social and employee matters, respect for human rights, anti–
corruption and bribery matters.
Our Business Model
The Farsons Group is located in Ma lt a and traces its origins to 1928.
The Group comprises SFC as the holding Company and which is
also engaged in the manufacture of branded beers and beverages
including the award–winning Cisk range of beers, Blue Label Ale,
the Kinnie range of soft drinks and San Michel table water among
others. All the Group’s subsidiaries are wholly owned. Both SFC and
its subsidiaries represent a number of international market leaders in
the food and beverage industry through long–standing relationships.
Farsons Beverage Imports Company Limited is active in the
importation, distribution and retail of wines and spirits, Quintano
Foods Limited operates a food importation and distribution business
whilst EcoPure Limited distributes dispensed bottled water. Food
Chain Limited operates a number of franchised food outlets across
the island. A newly incorporated subsidiary, “The Brewhouse
Company Limited” was set up in October 2021 to manage the
operations of the Brewhouse upon completion of the regeneration
capital works programme, whilst also supporting the Farsons Group
in promoting its heritage and products. The Group’s culture is one of
total commitment to securing the highest standards of products and
services and to sustain its reputation for quality and excellence.
SFC is a p ub li c Co mp any with its registered address at The Brewery,
Mdina Road, Zone 2, Central Business District, CBD 2010, Birkirkara,
Malta. The Company’s issued share capital is made up of 30,000,000
ordinary shares of €0.30 each in nominal value. All shares carry
equal voting rights and are listed on the Malta Stock Exchange. As
at the year-end 79.3% of the issued shares were owned by the three
major shareholders, with the balance being held by general public
shareholders.
A description of the corporate governance structure deployed across
the Group, including matters relating to the role and responsibilities
of the Board are set out in the Corporate Governance Statement
which forms part of this Annual Report.
Inter-alia, the Board assumes responsibility for identifying the principal
business risks for the Group and overseeing the implementation and
monitoring of appropriate risk management systems. The principal
risks would include those that could cause a materially adverse
impact to the Farsons Group’s operations, products, reputation and
business performance, its business relationships and/or the safety
and well–being of its customers and employees. A comprehensive
risk management review is conducted on a yearly basis, with the
assistance of external consultants. This exercise undertakes a review
of previously identified risks and the controls in place while identifying
emerging risks, following which enhanced risk management protocols
are put in place. The outbreak of the COVID–19 Pandemic was an acute
reminder of the reality of unexpected external risk – and the Group
responded with speed and agility in seeking to address the immediate
consequences of the public health and business crisis stemming
therefrom. Currently the impact of inflation, product shortages, supply
chain disruption and the consequences of the war in Ukraine are all
receiving particular attention.
The Group generated a turnover of €91.8 million during the year
ended 31 January 2022 and employed an average of 802 (full time
equivalent) employees during the year under review.
At Farsons, we have always recognised our corporate responsibility
towards all stakeholders and the wider community.
We seek to engage in teamwork, we foster respect and exercise
integrity whilst promoting dynamism and striving for excellence.
We are committed to upholding the highest standards of corporate
ethics and behaviour and as a public listed Company, we remain
transparent in our dealings and are guided by a strong sense of
values where trust is central to all that we do.
Our Commitment to the Environment
Management is increasingly aware that environmental sustainability
apart from being intrinsically a valued objective, would in the long term
benefit the Farsons Group. It is for this reason that a strong focus on
the performance of the business from an environmental perspective is
maintained and business decisions draw on all relevant environmental
considerations. This is a culture which is fast gaining acceptance
across all levels of management, so much so that water usage, energy
eciency, emissions and packaging waste management all represent
important key performance indicators for the Group.
Notwithstanding that economic and other market conditions remain
influenced by the persistent COVID pandemic, inflationary and
supply chain pressures, we remain focused on our long-term and
STATEMENT BY
THE DIRECTORS
ON NON–FINANCIAL
INFORMATION
40
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
wider plan to ensure we continue strengthening our environmental
credentials. We remain firmly focused on this key corporate
initiative, not only through the introduction of internal and tangible
Group related measures, procedures and protocols, but also
through increasing overall Group awareness. Furthermore, in an
eort to adopt industry wide best practices, we also seek eective
collaboration with our peers and various external partners to tap
into new and innovative technology for their possible application in
various environmental related areas.
POLICIES AND RISKS
The risk to which our environment is exposed cannot be
underestimated and represents an increasing area of focus on a
global basis. Extreme weather events, natural disasters and water
shortages are all in part a consequence of global warming and the
failure of climate-change mitigation measures. Increasing attention
is also being given to the indiscriminate use and disposal of plastic.
As with beverage companies generally, Farsons is exposed to
environmental risks by way of its agricultural supply chains and its
significant water consumption. Responsible disposal of packaging
waste is also an obligation that has been an area of increasing policy
focus and commitment at the Farsons Group for a number of years,
as have water conservation and energy eciency.
In its bid to counter the impact of environmental risks, continuing
eorts are made to increase coordination with supply chain partners
on an ongoing basis. The Group also continues to deploy significant
resources and new investment towards the better management
of water, energy emissions and packaging waste. The Group is
consistently seeking new and innovative ways to secure sustainable
use of limited natural resources.
WATER
The Farsons Group is aware that water is not only a prime raw
material in our beverages but more so it is a scarce resource,
particularly in Malta. The ecient use of water and the recovery of
water are responsibilities which are seen to on a daily basis and every
eort is made to improve our processes as part of a programme of
water resource management.
All the water used in all the SFC finished products is sourced
from Water Services Corporation. This water portion represents
approximately 97% of the water used in our production processes
with the remaining 3% being supplied as recycled water and water
sourced from our water capture and storage capabilities. These
in-house water sources are typically reserved for the production of
water used for washing purposes. Irrespective of the source and the
intended use, the water used in our products and processes goes
through an extensive filtering, purification and treatment regime so
as to meet the strict product water specifications necessary to meet
the Group’s premium quality standards.
The Group also recovers water from a number of processes including
the Can Rinser. Another important aspect of water management
at Farsons relates to the recovery of condensate water generated
during production and use of steam in its various processes. This is in
turn re-used to generate more steam.
Additionally, the consumption of the dierent water types in all our
processes as well as for all product types is being monitored on a
weekly basis. The water indices for each product type is calculated
and discussed during the monthly Performance Review Meeting.
This continues to prove the commitment by Farsons to eectively
manage this valuable resource whilst utilising the most sustainable
practices.
ENERGY USE AND GREENHOUSE GAS EMISSIONS
Farsons recognises the impact of emissions on our environment
and is committed to reduce its carbon footprint. Existing
operations are monitored for both their impact on energy use and
that on greenhouse gas emissions and improvements are being
implemented on an ongoing basis. Investment decisions on new
projects unfailingly take into account the environmental implications
as well as other commercial considerations. The policy is focused
on reducing our carbon footprint and on countering air pollution
by favouring on-site energy generation from renewable sources
to the extent possible. Improvements have been recorded in the
greenhouse gas emissions and energy intensity over a number of
years and continuing eorts are underway in these areas.
0
10
20
30
40
50
60
70
80
90
100
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
percentage
Financial Year
Specific Energy Consumption Index as compared to 2009
Water Consumption as compared to 2009
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ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
STATEMENT BY THE DIRECTORS ON NON–FINANCIAL INFORMATION continued
In its eort to improve energy eciency and water conservation,
Farsons installed a new feedwater boiler tank at the Energy Centre.
Three generators were replaced by two 750kVA generators which
serve the operations of the Brewhouse Building, which technology
utilises high pressure injection exceeding the latest European
standards and further increase fuel eciency.
Farsons plans to decommission its oldest refrigeration chiller, which
was installed in the early 90s, following the successful installation
of two larger refrigeration chillers. An additional installation of two
photovoltaic panels of 430kWp and 220kWp are planned to be
installed in 2022. These are estimated to generate in excess of 1
million units (kWh) per year and reduce CO2 emissions by around
378 Tons per year.
Two new Air Compressors are also planned to replace an older, larger
unit which was installed back in 2010. The older unit, having a power
of 132 KW, delivered 21 m3/min of compressed air. The newer units
have a combined input power of 145 KW and will deliver 26m3/min.
This makes them over 20% more ecient.
Fuel consumption increased by 19% during the year under review,
mainly due to an increase in volume sales, as the economy gradually
recovered from the eects of the pandemic. The pandemic also
caused clients to require more fragmented and frequent orders in
view of the market uncertainties that prevailed. During the current
year, whilst still maintaining a high level of customer service, the
Group is looking to optimising distribution routes so as to reverse this
trend and reduce fuel consumption.
Whilst 67% of the Group’s trucks are in line with the latest euro
6 emissions standard, the process of phasing out older models
was delayed this year. This was not only due to the economic
uncertainties, but also due to extended delivery times causing
vehicle manufacturers to struggle in keeping up with demand. The
Group has also upgraded the sales car fleet with seven electrical
passenger vehicles. These vehicles performed well, and the initial high
investment was partially subsidised through Government Grants.
Furthermore, following an evaluation with the Foundation for
Transport and other local partners on the impact of the introduction
of electric commercial vehicles, the Group plans on using the
outcome of this pilot project as the blueprint to initiate our own
transformation to a greener distribution model.
PACKAGING WASTE
The policy adopted by Farsons over the years is directed at
continuing to increase the incidence of reuse, recycle and recovery
of packaging waste placed on the market. The Group is committed
towards a responsible and sustainable approach in this regard. We
remained actively committed to the introduction of the Beverage
Container Refund Scheme (BCRS) which is expected to come into
operation during the first half of 2022 and are fully engaged with all
relevant stakeholders in this respect.
Through our various contributions to this scheme, we will work
to ensure the success of BCRS given its status as a key national
environmental initiative and one milestone in the drive to improving
national waste recycling indicators for the longer term.
In the meantime, Farsons continues to promote the use of returnable
(and reusable) glass bottles and kegs despite consumer preferences
for one-way cans and plastic (PET) bottles across certain product
categories.
Eorts to recycle packaging waste remain ongoing and have also
intensified. We continue to fulfil our obligations for the recovery
and separation of packaging waste through our participation in
the licensed waste recovery scheme and through various specific
internal measures for all recyclable streams, while also enhancing
awareness and education in this area for all Group employees. We
are determined to ensure that we exploit all recyclable opportunities
with the ongoing adoption of Circular Economy principles.
Our other eorts towards recycling continue. All spent grains
which are a by-product of our brewing processes are recycled in an
environmentally friendly way and likewise, all waste oils are collected for
recuperation and regeneration through authorised service providers.
OTHER WASTE STREAMS
The drive to drastically minimise and eventually eliminate “black
bag/landfill” waste is one of our main objectives, thus improving on
our ambitious targets to increase the recycling rates on all fronts. In
this sense, we are constantly seeking innovative and new ways for
managing our waste more eectively.
Our membership with GreenPak Coop, as our authorised waste
recovery partner, has once again been renewed for the financial year
under review.
Furthermore, over the past year, we have also focused further
attention on our franchise restaurants to increase the recycling rates
of cardboard/paper and other packaging materials, through new
standard procedures and measures that have been implemented.
Collection of any Waste Electrical and Electronic Equipment (WEEE)
remains ongoing across all Group functions where recycling rates
have increased for items that fall within this scheme.
Overall, we continue with our group-wide structured approach
toward measuring separately our varied waste streams and respective
recovery and recycling rates while introducing new measures as
required to ensure we attain and surpass established targets.
EFFECTIVE CIRCULAR ECONOMY
We remain committed to minimising all waste destined to the
landfill while adopting circular economy principles to ensure waste
can be transformed to a resource wherever possible and practical.
Internally, such practices are being applied to our raw materials and
the manufacturing and packaging processes amongst others in a
manner to streamline resource usage.
We continue focusing and investing in our refillable and returnable
glass bottle range and kegs. This initiative is completely aligned
with the circular economy principles. We expect that this initiative
will be supported by evolving consumer trends that are increasingly
recognising the relevance and importance of the circular economy.
42
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
STATEMENT BY THE DIRECTORS ON NON–FINANCIAL INFORMATION continued
Our Commitment to our People
POLICIES AND RISKS
The Board is committed to enhance the quality of life of its employees
and their families and of the community and society at large. The maxim
“together each achieves more” is adopted by the Group to emphasise
the importance of adopting a team approach and of working together
as stakeholders to reach our respective objectives together.
TRAINING AND EDUCATION
The Group is committed to investing in the learning and development
of its employees and teams. The fast pace of change in the world of
work today requires continuous learning to ensure that employees
are regularly upskilled and reskilled to work eectively in a digitalised
and automated manufacturing environment. Training programmes
across Farsons Group are organised to meet the requirements of
each job and enhance the capabilities of employees. The Group
believes that a trained and educated workforce is a resource which
enhances its competitivity on the market.
Challenges arising from the pandemic in the organisation of
training were still prevalent in the Financial Year 2021-2022, but
the commitment to build on our human resources capabilities was
undiminished with programmes organised addressing technical,
transversal, management and leadership skills. During this financial
year, a total of 6,883 hours of training were delivered across all
employee categories, for 1,893 participants. This includes all Group
employees but excludes Food Chain crew who carry out training
requirements as per international franchise guidelines.
The Group continued to sponsor employees seeking to engage
in accredited learning programmes that lead to recognised
qualifications. Paid educational leave is also provided for employees
by the organisation as part of its learning and development strategy.
EVALUATION AND APPRAISAL
Managing performance of our people and teams is critical for the success
of the Farsons Group. All employees are included in the Performance
Management Programme which is a periodic appraisal initiative based
on objective setting and regular feedback on performance. Each
employee, regardless of gender or employee category, is included and
a regular review held with assigned reviewers to discuss set objectives,
the employee’s competences and skills, learning and development needs
within a career development framework. Employees and reviewers are
involved in ongoing discussions and evaluation of the above aspects
of the programme. Training sessions held for reviewers enable them to
develop the right skills and competences to drive the performance review
of their team members.
DIVERSITY, INCLUSION AND EQUALITY
SFC is certified with the Equality Mark issued by the National
Commission for the Promotion of Equality. This is based on the
Company’s commitment to implement the relevant policies and
practices related to gender equality and family friendly measures
at the workplace and in access to goods and services. The Group
continues with its commitment to implement and sustain its relevant
policies and practices related to gender equality and family friendly
measures at the workplace and on access to goods and services. The
Board believes that diverse experiences and perspectives allow for a
stronger business, and this is brought about by fostering an inclusive
environment, ensuring equal opportunities for all our employees and
guaranteeing equal pay for equal work.
2021/22
2021/22
2021/22
2021/22
75%
25%
MALES
FEMALES
Governance of the Farsons Group by gender
Employees of the Farsons Group by gender
Employees of the Farsons Group by nationality
Employees of the Farsons Group by type of engagement
70%
30%
MALES
FEMALES
72%
28%
MALTESE
NON-MALTESE
64%
36%
FULL-TIMERS
PART-TIMERS
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ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
STATEMENT BY THE DIRECTORS ON NON–FINANCIAL INFORMATION continued
WORKPLACE SAFETY
The COVID-19 pandemic impacted the world of work for the second
consecutive year. It has continued to impact workers and workplaces,
including at Farsons. It has changed the workplace environment
and increased workers' concerns about economic insecurity, mental
health and physical well-being, isolation, and the challenges of
working remotely before safely returning to the workplace.
However, equipped with the experience gained from the previous
year, we were better prepared to anticipate the risk and react quickly
and in time to control the spread of new cases. The commitment
from the Senior Management and the cooperation from the vast
majority of the workforce, most of whom are vaccinated, ensured
that the situation remained under control.
Among the many lessons learned from this crisis was the need for
workplaces to have a sound and resilient OHS management system.
A system can build the capacity to face future emergencies and
protect workers' safety and health while supporting survival and
business continuity.
Providentially Farsons was already in the course of developing
such a management system based on reputable, tried and tested
international standards. As a result, Farsons continued addressing
the pandemic's emerging needs without losing the focus on
the other equally important aspects of health and safety at the
workplace. We managed to reduce the number of total incidents at
the workplace by almost 13% and the number of lost days by over
30%. When taking into account that the past year was significantly
busier in terms of activity than the former, the statistics are even
more encouraging.
This success in terms of significantly fewer incidents and lost
working days is no coincidence. This is attributed to the continuous
improvement strategy adopted by the Group. The regular reviews
of proactive risk assessments, frequent workplace inspections,
quick and detailed investigations of accidents followed by
recommendations to avoid recurrence, the continuous multi-
directional communication with all parties concerned, and the solid
training platform are the foundations we continue to build on.
Our commitment to the Wider Society
REDUCING SUGAR CONSUMPTION
Our pledge to reduce the added sugar in our soft drinks portfolio
by 10% by 2020 as part of a European objective was accomplished
during the year.
Farsons remains committed and is well-positioned to satisfy the
increasing demand for low or no sugar variants by continuing to
develop its portfolio oering a vast range of products and packages
which allow consumers to select those that are relevant and best-
suited to their own needs and requirements.
RESPONSIBLE DRINKING
The Farsons Group has a long-standing reputation for high–quality
standards in its world–class range of beers and alcoholic beverages.
A high-quality standard is a pledge which is made to all customers
with every Farsons product and the importance that these products
are enjoyed responsibly cannot be overemphasised.
We strongly believe that moderate consumption and the prevention
of drink driving benefits consumers and society, and we pledge to
market our products in a responsible manner. In 1997, Farsons was
a founding member together with other like minded organisations
of The Sense Group which was established with a view to promote
responsible drinking and to foster drink awareness on an ongoing
basis and particularly during the festive season. It is a Farsons
commitment which is as strong today as it was in 1997.
PRODUCT SAFETY
Our production facilities are designed to assure a premium standard
of product safety performance. Products are invariably tested
by qualified personnel and over the years significant investment
was made in our fully equipped laboratory. Product safety is an
uncompromising attitude which has distinguished the Farsons Group
since its inception.
COMMUNITY ENGAGEMENT
Despite the continued social and economic uncertainties brought
about by COVID-19 and notwithstanding the toll in terms of an
uncertain and volatile market, Farsons’ engagement with the
community remained as strong during the pandemic as it was
during better days. We maintained our pledged contributions to
Hospice Malta and supported a host of national organisations in their
worthy initiatives including those engaged in the preservation of
Maltese heritage both on a national and on a local level. Additional
funds were raised particularly towards organisations operating in
the mental health sector to alleviate the stress which the pandemic
has brought on society on so many levels. The Group also runs an
Employee Assistance Programme for employees and their families
with the support of The Richmond Foundation.
THE FARSONS FOUNDATION
The Farsons Foundation was established on 22 March 1995 on the
initiative of the Board of Directors of Simonds Farsons Cisk plc. It
was set up with the main objectives of promoting, diusing, and
safeguarding of Maltese culture, heritage, and social solidarity.
Farsons’ commitment towards corporate social responsibility is
witnessed through initiatives undertaken over the past decades
2021/22
Management of the Farsons Group by gender
73%
27%
MALES
FEMALES
44
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
STATEMENT BY THE DIRECTORS ON NON–FINANCIAL INFORMATION continued
and intended to benefit our society in various ways. The Board has
recognised that this support is even more crucial during the times of
a pandemic, and that the Company’s contribution should not be in
any way scaled down notwithstanding the negative financial impact
of COVID-19. The Farsons Foundation remained active throughout
the year and the support of Malta’s culture, heritage, industrial
traditions and of deserving causes of a philanthropic nature proved
invaluable especially where alternative sources of funding were at
best reduced and at worst completely wiped out.
During this financial year, the Farsons Foundation met various
requests for sponsorship besides the significant support it pledged
to Hospice Malta over a three-year period towards their St Michael
Hospice Project and also the recognition it provided to a number
of university students through the University of Malta – Farsons
Collaboration Agreement. Over the financial year, 39% of the
requests met by the Farsons Foundation were related to Social
Solidarity, 48% were cultural and historical focussed initiatives, and
13% related to educational initiatives and projects.
Respect for Human Rights, Anti–Corruption
and Bribery Matters
POLICIES AND RISKS
The Board rearms its belief in human rights and its commitment
to uphold and advance the respect of human rights. It is recognised
that human rights allow people to grow and realise their potential.
Beyond the reputational risk associated with any inattention towards
human rights, anti–corruption and bribery matters, we recognise
that we have a responsibility towards society on each count. We
therefore strive to uphold such principles and to set a positive
example respecting and promoting human rights and adopting an
anti–corruption and bribery stance throughout our business conduct.
RESPECT FOR HUMAN RIGHTS
The Farsons Group is committed to respecting human rights
encompassing the rights of our employees and of workers in our
supply chain alike. The Board is vigilant to ensure that the Group’s
operations reflect this commitment and every eort is made to
benchmark our performance against the highest standards and
expectations.
A professional report was drawn by external advisors and a specific
human rights policy document was adopted by the Board to spell
out the Company’s commitment to respecting human rights. The
policy is featured on the worldwide web (www.farsons.com). Any
possible violations or grievances over human rights can be reported
to management through the Speak Up Policy and whilst anyone
initiating such a report in good faith is protected against retaliation,
all reports are investigated and action plans developed to mitigate or
eliminate such concerns where these are found to be justified.
ANTI–CORRUPTION AND BRIBERY
The Group has a zero–tolerance approach to bribery and corruption.
Our Code of Conduct is our road map to acting ethically and in
compliance with all applicable laws. It applies equally to all Farsons
Group employees and members of the respective Boards of
Directors. Under the Code everyone has an obligation to report
suspected violations of the Code, our policies or applicable laws
through the grievance procedure and/or through the established
Speak Up Policy. New recruits are made aware of the Code at the
on–boarding stage, and the Group intranet which is accessible to all
employees provides a constant reminder of the Code of Conduct and
the obligations arising therefrom.
The Farsons Group takes pride in the fact that against the backdrop
of a heightened public awareness, the Group has at no time been
involved or implicated in corruption or bribery allegations as reported
or confirmed. In terms of the Code of Conduct, business decisions
of the Farsons Group will never be influenced by corruption and any
unethical business practices, including money laundering, are not
tolerated. In dealing with public ocials, other corporations and
private citizens, we subscribe to ethical business practices. We will not
seek to influence others, either directly or indirectly, by paying bribes
or kickbacks in any form, or by any other measure that is unethical or
that will tarnish our reputation for honesty and integrity.
We mitigate corruption risks and monitor compliance with our Code
through systems, procedures and controls including:
• Training on the Code of Conduct with specific focus on anti–
corruption and bribery;
• The possibility to report suspected corruption and bribery
through our Speak Up Reporting Ocers; and
• Investigation of all suspected corruption and bribery
allegations in connection with an incident management
process and escalation procedure.
COMPLIANCE WITH INTERNATIONAL SANCTIONS
Following the start of the Russia – Ukraine conflict and the
subsequent imposition of sanctions in this regard, the Group is
committed to full compliance with EU, UN and national sanctions.
In order to secure full compliance, the Group will implement the
appropriate on-going screening tools as well as such ad hoc controls
as are required when dealing with customers and suppliers. An anti-
financial crime policy is also being implemented across to Group.
TAXONOMY ELIGIBILITY
In order to achieve the targets established by the European Union of
reaching net zero greenhouse gas (‘GHG’) emissions by 2050, with an
interim target of reducing GHG emissions by 55%, compared to 1990
levels, by 2030, the European Commission (‘EC’) has developed a
taxonomy classification system, by virtue of EU Regulation 2020/852,
(‘the Taxonomy Regulation’ or ‘the EU Taxonomy’), which establishes
the criteria for determining whether an economic activity qualifies as
environmentally sustainable.
The EU Taxonomy establishes criteria in terms of six environmental
objectives against which entities will be able to assess whether
economic activities qualify as environmentally sustainable. In order to
qualify as such, an economic activity must be assessed to substantially
contribute to one of these environmental objectives, whilst doing no
significant harm to the remaining objectives by reference to technical
screening criteria established in delegated acts. The economic activity
45
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
STATEMENT BY THE DIRECTORS ON NON–FINANCIAL INFORMATION continued
is also required to meet minimum safeguards established in the
taxonomy regulation. The six environmental objectives considered by
the EU Taxonomy are the following:
Climate change mitigation;
Climate change adaptation;
Sustainable use and protection of water and marine resources;
Transition to a circular economy;
Pollution prevention and control; and
Protection and restoration of biodiversity and ecosystems.
The EC subsequently adopted the Delegated Act supplementing
Article 8 of the Taxonomy Regulation (‘the Disclosures Delegated
Act’) in 2021, which establishes the disclosure requirements of entities
within the scope of the Taxonomy Regulation. At this stage, this
solely comprises entities subject to an obligation to publish non-
financial information pursuant to Article 19a or Article 29a of Directive
2013/34/EU (being those entities subject to the Non-Financial
Reporting Directive, ‘NFRD’).
The Disclosures Delegated Act became applicable for the first time
on 1 January 2022, with respect to financial reporting periods ended
after the 31 December 2021, adopting a phased-in approach to the
disclosure requirements of key performance indicators. In the first
year of its adoption, non-financial undertakings are only required to
disclose their proportion of turnover derived from taxonomy-eligible
and non-eligible activities, and the proportion of capital and operating
expenditure related to assets which qualify as taxonomy eligible or
non-eligible.
Identifying taxonomy-eligible economic activities will serve as a basis
for eventually determining taxonomy-alignment of such economic
activities with reference to the technical screening criteria established
in the Climate Delegated Act and eventually the Environmental
Delegated Act to the Taxonomy Regulation.
The following information was prepared in accordance with the
disclosure requirement established in the Disclosures Delegated
Act. Accordingly, for the purposes of classifying activities as either
taxonomy-eligible or non-eligible, the Group has only considered
the first two environmental objectives established in the Taxonomy
Regulation (being climate change mitigation and climate change
adaptation), with reference to the Climate Delegated Act. Taxonomy-
eligible activities are considered to be those activities for which
technical screening criteria have been established in the Climate
Delegated Act. The remaining four environmental objectives will
be considered from 1 January 2023, following the adoption of
the Environmental Delegated Act, which will establish the list of
taxonomy-eligible economic activities (along with the technical
screening criteria to determine taxonomy alignment) with respect to
the remaining objectives.
Turnover constitutes the revenue generated by the Group from all of
its business activities, which for the financial year ended 31 January
2022 relate to the manufacturing, importation and selling of food and
beverages together with operation of franchised restaurants, for which
currently no technical screening criteria have been established in the
Climate Delegated Act. Consequently, at present, such economic
activities are not considered as Taxonomy-eligible. As a result, the
Taxonomy eligible turnover for the year is zero.
However, draft technical screening criteria for “manufacturing of
food products and beverages” have been developed by the platform
of sustainable finance for inclusion in the Environmental Delegated
Act. Therefore, should this activity be retained in the Environmental
Delegated Act when adopted, then the KPI for Taxonomy-eligible
turnover will increase in the coming year.
CapEx consists of additions to property, plant and equipment
and intangible assets during the financial year ended 31 January
2022 considered before depreciation, amortisation and any re-
measurements (including those resulting from revaluations and
impairments, if applicable). When determining taxonomy eligibility,
the Group has identified economic activity ‘7.7 Acquisition and
ownership of buildings’ that falls within the scope of the Taxonomy
Regulation in the real estate sector. This results from the investment
being carried out on the regeneration of the old brewhouse building
which will encompass the leasing of commercial property with the
activity classified under NACE Code L68. During the financial year
ended 31 January 2022, the Group invested €5.9 million in renovating
this building. As a result, the Taxonomy eligible CapEx ratio for the
year amounts to 47%.
OpEx constitutes of direct non-capitalised costs incurred during the
financial year ended 31 January 2022 that relate to the day-to-day
servicing of assets of property, plant and equipment (including also
intangible assets) that are necessary to ensure the continued and
eective functioning of such assets. The Taxonomy eligible OpEx of
the Group for the year is zero.
COMMITMENT TO THE ENVIRONMENT, SOCIAL AND
GOVERNANCE MATTERS
In line with its vision and values and as noted extensively in this
report, the Group is committed to contributing to matters relating to
climate change, the environment and the well-being of our society. To
ensure transparency and consistent reporting, the Board commits to
introduce a new committee to ensure timely, accurate and transparent
reporting on all such matters. The Group’s aim is to drive cultural
change and to adjust to a sustainable yet profitable business model.
Conclusion
The success of Farsons is built on its brands but this success is
entirely dependent on our people. It is for this reason that their
wellbeing remains a foremost priority for the Group and our support
during the pandemic was unwavering. The Board’s commitment
towards the protection of the environment, the welfare of society
and respect for human rights remained intact notwithstanding
the challenges posed by the pandemic and other more recent
developments. It is this resolve in dicult times which continues to
inspire management to strive for higher standards in much the same
way which has distinguished Farsons ever since its foundation in the
late 1920s.
Signed by Louis A. Farrugia, Chairman and Marcantonio Stagno
D’Alcontres, Vice Chairman on 25 May 2022.
46
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
STATEMENT BY THE DIRECTORS ON NON–FINANCIAL INFORMATION continued
Introduction
This statement is being made by Simonds Farsons Cisk plc (SFC)
pursuant to the Capital Markets Rules which require that SFC, as a
Company whose equity securities are listed on a regulated market,
should endeavour to adopt the Code of Principles of Good Corporate
Governance (the Code) contained in Appendix 5.1 to Chapter 5 of the
Capital Markets Rules. In terms of Capital Markets Rule 5.94, SFC is
obliged to prepare a report explaining how it has complied with the
Code. For the purposes of the Capital Markets Rules, SFC is hereby
reporting on the extent of its adoption of the Code.
SFC acknowledges that the Code does not prescribe mandatory
rules but recommends principles so as to provide proper incentives
for the Board of Directors (the Board) and SFC’s management to
pursue objectives that are in the interests of the Company and its
shareholders. Since its establishment, SFC has always adhered
to generally accepted standards of good corporate governance
encompassing the requirements for transparency, proper
accountability and the fair treatment of shareholders. The Board of
Directors has therefore endorsed and adopted the Code of Principles.
As demonstrated by the information set out in this statement,
together with the information contained in the Remuneration Report,
SFC believes that, it has save as indicated in the section entitled
Non-compliance with the Code, throughout the accounting period
under review, applied the principles and complied with the provisions
of the Code. In the Non-compliance section, the Board indicates and
explains the instances where it has departed from or where it has not
applied the Code, as allowed by the Code.
Compliance with the Code
PRINCIPLE 1: THE BOARD
The Board’s role and responsibility is to provide the necessary
leadership, to set strategy and to exercise good oversight and
stewardship. In terms of the Memorandum of Association of SFC, the
aairs of the Company are managed and administered by a Board
composed of eight Directors.
The Board is in regular contact with the Group Chief Executive
through the Chairman in order to ensure that the Board is in receipt
of timely and appropriate information in relation to the business
of SFC and management performance. This enables the Board to
contribute eectively to the decision-making process, whilst at the
same time exercising prudent and eective controls.
Prior to each meeting Directors are provided with the necessary
information and explanatory data as may be required by the
particular item on the agenda. Comprehensive financial statements
together with a comprehensive analysis of financial and business
performance are also provided to the Board every month. The
Company has its own legal advisors, both internal and external. The
Directors are entitled to seek independent professional advice at
any time at the Company’s expense where necessary for the proper
performance of their duties and responsibilities.
The Board delegates specific responsibilities to a number of
committees, notably the Nominations and Corporate Governance
Committee, the Related Party Transactions Committee, the Audit and
Risk Committee and the Remuneration Committee, each of which
operates under formal terms of reference approved by the Board.
Further detail in relation to the committees and the responsibilities of
the Board is found in Principles 4 and 5 of this statement.
PRINCIPLE 2: CHAIRMAN AND CHIEF EXECUTIVE
The statute of SFC provides for the Board to appoint from
amongst its Directors a Chairman and a Vice–Chairman. The
Chairman is responsible to lead the Board and set its agenda,
ensure that the Directors of the Board receive precise, timely
and objective information so that they can take sound decisions
and eectively monitor the performance of the Company, ensure
eective communication with shareholders, and encourage active
engagement by all members of the Board for discussion of complex
or contentious issues.
The role of the Senior Management Board (SMB) is to ensure
eective overall management and control of Group business and
proper co–ordination of the diverse activities undertaken by the
various business units and subsidiaries which make up the Group.
The SMB is, inter alia, responsible:
1. for the formulation and implementation of policies as approved
by the Board;
2. to achieve the objectives of the Group as determined by the
Board and accordingly;
3. to devise and put into eect such plans and to organise,
manage, direct and utilise the human resources available and
all physical and other assets of the Group so as to achieve the
most economically ecient use of all resources and highest
possible profitability in the interest of the shareholders and all
other stakeholders.
All members of the SMB itself are senior SFC executives with
experience of the Group’s business and with proven professional
ability, and each has a particular sphere of interest within their
competence. The Company’s current organisational structure provides
CORPORATE
GOVERNANCE
STATEMENT
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FINANCIAL STATEMENTS continued
for the Group Chief Executive to chair the SMB. The Group Chief
Executive reports regularly to the Board on the business and aairs of
the Group and the commercial, economic and other challenges facing
it. He is also responsible to ensure that all submissions made to the
Board are timely, give a true and correct picture of the issue or issues
under consideration, and are of high professional standards as may be
required by the subject matter concerned.
The Company has an Operations Board which discusses operational
issues on a monthly basis, a Group Receivables Review Board which
monitors the collection of receivables, and a Quality Board which
monitors quality levels and controls. These Boards are composed
of executive managers of the Group. Each subsidiary has its own
management structure and accounting systems and internal controls,
and is governed by its own Board, whose members, are appointed
by the Company and predominately, comprise SFC Directors and/or
representatives of the SMB, and/or Senior Management of SFC.
The above arrangements provide sucient delegation of powers to
achieve eective management. The organisational structure ensures
that decision-making powers are spread widely enough to allow
proper control and reporting systems to be in place and maintained
in such a way that no one individual or small group of individuals
actually has unfettered powers of decision.
PRINCIPLE 3: COMPOSITION OF THE BOARD
Each member of the Board oers core skills, attributions and
experience that are relevant to the successful operation of the
Company. Although relevance of skills is key, a balance between
skills represented is sought through the work of the Nominations
and Corporate Governance Committee to ensure that there
is an appropriate mix of members with diverse backgrounds.
The shareholders are aware of the importance at Board level of
diversity with regard to age, gender, educational and professional
backgrounds among others, and although there is no formal diversity
policy, every eort is made as and whenever possible to promote
enhanced diversity whilst ensuring that the Board continues to meet
its role and responsibility in the best possible way.
The Board is composed of a Chairman, one Executive Director, a Non–
Executive Vice–Chairman and five other Non–Executive Directors.
Executive Directors
Mr Louis A. Farrugia F.C.A. – Chairman
Mr Michael Farrugia M.A. (Edin.), MBA (Warwick) – Executive Director
(Operations & Business Development)
Non-Executive Directors
Mr Marcantonio Stagno d’Alcontres – Vice-Chairman
Marquis Marcus John Scicluna Marshall
Dr Max Ganado LL.D, LLM (Dal)
Mr Roderick Chalmers M.A. Div. (Edin.) F.C.A., A.T.I.I., F.C.P.A., M.I.A.
Ms Marina Hogg
Baroness Christiane Ramsay Pergola (deceased 25th November 2021)
Baroness Justine Pergola (appointed 13 January 2022)
The Group Chief Executive attends all Board meetings, albeit without
a vote, in order to ensure his full understanding and appreciation of
the Board’s policy and strategy, and so that he can provide direct
input to the Board’s deliberations. The Board considers that the size
of the Board, whilst not being large as to be unwieldy, is appropriate,
taking into account the size of the Company and its operations. The
combined and varied knowledge, experience and skills of the Board
members provide a balance of competences that are required and add
value to the functioning of the Board and its direction to the Company.
It is in the interest of each of the three major shareholders (who are
the original promoters of the Company) to nominate as Directors
knowledgeable, experienced and diligent persons. Apart from
this, informal arrangements, which do not infringe on their rights
as shareholders, exist for consultation prior to any changes in the
membership of the Board, as well as to assist in the identification
of suitable persons who can be nominated for election by the
other shareholders at general meetings, and who can bring
in an independent viewpoint and particular knowledge to the
deliberations of the Board.
Family relationships among Directors, the Directors’ interest in
the share capital of the Company as disclosed in the Shareholder
Information and the commonality of Directors with Trident Estates
plc with which the Company maintains contractual relationships,
represent potential conflicts of interest. This notwithstanding, all
Directors except for the Chairman and for Mr. Michael Farrugia,
are considered to be independent in that they do not hold any
relationship with the Company, a controlling shareholder or their
management which creates a conflict of interest such as to impair
their judgement. This has been ensured through the implementation
of the following measures:
a. Disclosure and Exclusion: a Director is obliged to disclose
any matter that may give rise to a potential or actual conflict.
Following this, the respective Director is excluded from any
deliberations and voting in respect of such matter;
b. Related Party Transactions Committee: with regards to any
transactions which may be determined to be related party
transactions, such transactions are referred to and dealt by
the Related Party Transactions Committee (the “Committee”).
Similar to the situation at Board level, any Director who is a
related party with respect to a particular transaction is not
permitted to participate in the Committee’s deliberation and
decision on the transaction concerned. Furthermore, due to the
fact that the most common of matters in which a related party
transaction may arise would be in relation to a transaction with
Trident Estates plc, the Committee in session is made up of
Directors who are not common Directors on the Boards of both
Trident Estates plc and the Company;
c. Continuing Conflict: any Director having a continuing material
interest that conflicts with the interests of the Company
is obliged to take eective steps to eliminate the grounds
for conflict and should this not be possible, said Director is
encouraged to consider resigning;
d. Separation of Family Interests: there are no ties or relationships
between management and the Directors. The Board has taken
the view that the length of service on the Board does not
undermine any of the Directors’ ability to consider appropriately
the issues which are brought before the Board. Apart from
possessing valuable experience and wide knowledge of the
48
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FINANCIAL STATEMENTS continued
CORPORATE GOVERNANCE STATEMENT continued
Company and its operations, the Board feels that the Directors
in question are able to exercise independent judgement and
are free from any relationship which can hinder their objectivity.
Although, the Board believes that by definition, employment
with the Company renders a Director non–independent from
the institution, this should not however, in any manner, detract
from the non–independent Directors’ ability to maintain
independence of analysis, decision and action.
PRINCIPLES 4 AND 5: THE RESPONSIBILITIES OF THE BOARD
AND BOARD MEETINGS
The Board meets regularly every month apart from other occasions
as may be needed. Individual Directors, apart from attendance
at formal Board meetings, participate in other ad hoc meetings
during the year as may be required, and are also active in Board
sub–committees as mentioned further below, either to assure good
corporate governance, or to contribute more eectively to the
decision making process.
Meetings held: 13
Members attended:
Mr Louis A. Farrugia 12
Mr Marcantonio Stagno d’Alcontres 13
Marquis Marcus John Scicluna Marshall 13
Dr Max Ganado 11
Mr Roderick Chalmers 13
Ms Marina Hogg 13
Mr Michael Farrugia 12
Baroness Christiane Ramsay Pergola 4
(deceased 25th November 2021)
Baroness Justine Pergola 1
(appointed 13th January 2022)
The Board, in fulfilling this mandate within the terms of the
Company’s Memorandum and Articles of Association, and
discharging its duty of stewardship of the Company and the Group,
assumes responsibility for the following:
• reviewing and approving the business plan and targets that are
submitted by management, and working with management in
the implementation of the business plan;
• identifying the principal business risks for the Group and
overseeing the implementation and monitoring of appropriate
risk management systems;
• ensuring that eective internal control and management
information systems for the Group are in place;
• assessing the performance of the Group’s executive ocers,
including monitoring the establishment of appropriate systems
for succession planning and for approving the compensation
levels of such executive ocers; and
• ensuring that the Group has in place a policy to enable it to
communicate eectively with shareholders, other stakeholders
and the public generally.
The Board is ultimately responsible for the Company’s system of
internal controls and for reviewing its eectiveness. Such a system
is designed to manage rather than eliminate risk to achieve business
objectives, and can provide only reasonable, and not absolute,
assurance against material error, losses or fraud. Through the Audit
and Risk Committee, the Board reviews the eectiveness of the
Company’s system of internal controls, which are monitored by the
Internal Audit Department.
In fulfilling its responsibilities, the Board regularly reviews and
approves various management reports as well as annual financial
plans, including capital budgets. The strategy, processes and
policies adopted for implementation are regularly reviewed by the
Board using key performance indicators. To assist it in fulfilling its
obligations, the Board has delegated responsibility to the Chairman
of the Senior Management Board.
Board Committees
The Board has set up the following sub–committees to assist it in the
decision–making process and for the purposes of good corporate
governance. The actual composition of these committees is given in
the Annual Financial Report, but as stated earlier, each of the three
major shareholders and the public shareholders are represented as
far as possible.
The Corporate Governance Committee, the Nomination Committee
and the Board Performance Evaluation Committee were merged into
a Nominations and Corporate Governance Committee as of 1 May
2021. The New Ventures / Acquisitions / Mergers Committee was
discontinued as part of the re-organisation of the Board committees
on the understanding that the Board will appoint an ad hoc
committee to review any potential new ventures, acquisitions and/or
merger transactions as and when necessary.
As noted above, the role of the Nomination Committee was merged
into that of the Nominations and Corporate Governance Committee,
chaired by a Non-Executive Director and is entrusted with leading the
process for Board appointments and to make recommendations to it.
Any proposal for the appointment of a Director whether by the three
major shareholders or by the general meeting of shareholders should
be accompanied by a recommendation from the Board, based on the
advice of the Nominations and Corporate Governance Committee
The terms of reference of the Nominations and Corporate
Governance Committee include monitoring and reviewing best
corporate governance practices and reporting thereon to the Board.
Directors and senior ocers who wish to deal in the Company’s
listed securities are obliged to give advance notice to the Board
through the Chairman (or in his absence to the Secretary of the
Board) and records are kept accordingly.
The Related Party Transactions Committee is presided over by a
Non–Executive Director and deals with and reports to the Board on
all transactions with related parties. In the case of any Director who is
a related party with respect to a particular transaction, such Director
does not participate in the committee’s deliberation and decision on
the transaction concerned.
Control mechanisms relevant to the reporting of related party
transactions are in place to ensure that information is vetted and
collated on a timely basis, before reporting to the Related Party
Transactions Committee for independent and final review of the
transactions concerned.
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FINANCIAL STATEMENTS continued
CORPORATE GOVERNANCE STATEMENT continued
The Audit and Risk Committee’s primary objective is to protect the
interests of the Company’s shareholders and assist the Directors in
conducting their role eectively so that the Company’s decision–
making capability and the accuracy of its reporting and financial
results are maintained at a high level at all times.
The Audit and Risk Committee is composed of the following Non–
Executive Directors:
• Mr Roderick Chalmers – Chairman
• Ms Marina Hogg
• Marquis Marcus John Scicluna Marshall
The majority of the Directors on the Audit and Risk Committee are
independent, Non-Executive Directors and, in the opinion of the Board,
are free from any significant business, family or other relationship with
the Company, its shareholders or its management that would create a
conflict of interest such as to impair their judgement.
Roderick Chalmers is a professional qualified accountant with
competence in matters relating to accounting and auditing. The
Audit and Risk Committee as a whole has extensive experience in
matters relating to the Company’s area of operations, and therefore
has the relevant competence required under the Capital Markets
Rule 5.118.
The Audit and Risk Committee also reviews and approves the internal
audit plan prior to the commencement of every financial year. The
Audit and Risk Committee oversees the conduct of the internal and
external audits and acts to facilitate communication between the Board,
management, the external auditors and the Group internal auditor.
During the year ended 31 January 2022, the Audit and Risk
Committee held six meetings. Audit and Risk Committee meetings
are held mainly to discuss formal reports remitted by the Group
internal auditor but also to consider the external auditors’ audit plan,
the six-monthly financial results and the annual financial statements.
The Group internal auditor, who also acts as secretary to the Audit and
Risk Committee, is present at Audit and Risk Committee meetings.
The external auditors are invited to attend specific meetings of the
Audit and Risk Committee and are also entitled to convene a meeting
of the committee if they consider that it is necessary. The Chairman
of the Senior Management Board and the Chief Finance Ocer are
also invited to attend Audit and Risk Committee meetings. Members
of management may be asked to attend specific meetings at the
discretion of the Audit and Risk Committee.
Apart from these formal meetings, the Audit and Risk Committee
Chairman and the Group internal auditor meet informally on a regular
basis to discuss ongoing issues.
The Group internal audit department has an independent status
within the Group. In fact, the Group internal auditor reports directly
to the Audit and Risk Committee and has right of direct access to the
Chairman of the committee at all times.
The Group internal auditor works on the basis of an audit plan
which focuses on areas of greatest risk as determined by a risk
management approach. The audit plan is approved by the Audit
and Risk Committee at the beginning of the financial year, and
subsequent revisions to this plan in view of any ad hoc assignments
arising throughout the year, would have to be approved by the Audit
and Risk Committee Chairman.
The Remuneration Committee is dealt with under the Remuneration
Report, which also includes the Remuneration statement in terms of
Code Provisions 8.A.3 and 8.A.4.
PRINCIPLE 6: INFORMATION AND PROFESSIONAL
DEVELOPMENT
The Group Chief Executive is appointed by the Board and enjoys the
full confidence of the Board. The Group Chief Executive, although
responsible for the recruitment and selection of Senior Management,
consults with the Board on the appointment of, and on a succession
plan for, Senior Management.
Training (both internal and external) of management and employees
is a priority, coordinated through the Company’s Human Resources
Department. On joining the Board, a Director is provided with
briefings by the Chairman and the Group Chief Executive on the
activities of the Company’s business areas. Furthermore, all new
Directors are oered a tailored induction programme. Directors
may, where they judge it necessary to discharge their duties as
Directors, take independent professional advice on any matter at the
Company’s expense.
Under the direction of the Chairman, the Company Secretary’s
responsibilities include ensuring good information flows within
the Board and its Committees and between Senior Management
and Non-Executive Directors, as well as facilitating induction and
assisting with professional development as required. Directors have
access to the advice and services of the Company Secretary, who is
responsible for ensuring adherence to Board procedures, as well as
good information flows within the Board and its Committees.
The Chairman ensures that Board members continually update their
skills and the knowledge and familiarity with the Company required
to fulfil their role both on the Board and on Board Committees. The
Company provides the necessary resources for developing and
updating its Directors’ knowledge and capabilities. The Company
Secretary is also responsible for advising the Board through the
Chairman on all governance matters.
PRINCIPLE 7: EVALUATION OF THE BOARD’S PERFORMANCE
With eect from 1 May 2021, the role of the Board Performance
Evaluation Committee was merged into that of the Nominations
and Corporate Governance Committee chaired by a Non–Executive
Director. The committee is to deal with the Board’s performance
evaluation and identify ways how to improve the Board’s eectiveness.
The evaluation exercise is conducted annually through a Board
Eectiveness Questionnaire prepared by the Company Secretary in
liaison with the Chairman of the Committee. The Company Secretary
discusses the results with the Chairman of the Committee who then
presents the same to the Board together with initiatives undertaken to
improve the Board’s performance. The latest review has not resulted
in any material changes in the Company’s internal organisation or in its
governance structures. The Non–Executive Directors are responsible
for the evaluation of the Chairman of the Board.
50
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CISK PLC
FINANCIAL STATEMENTS continued
CORPORATE GOVERNANCE STATEMENT continued
PRINCIPLE 8: COMMITTEES
See the section above dealing with Principles 4 and 5 for details
relating to Board Committees.
PRINCIPLES 9 AND 10: RELATIONS WITH SHAREHOLDERS AND
WITH THE MARKET, AND INSTITUTIONAL SHAREHOLDERS
Every shareholder owning twelve and a half percent (12.5%) of the
ordinary issued share capital or more, is entitled to appoint and
replace a Director for each and every twelve and a half percent
(12.5%) of such shares, and the remaining ordinary shares not so
utilised are entitled to fill the remaining unfilled posts of Directors.
Thus, each of the three major shareholders who are named and
whose holdings are listed in Note 34 to the financial statements,
normally each appoint two Directors for a total of six, the remaining
two Directors then being elected by the general public shareholders.
Accordingly, no individual or small group of individuals will be in a
position to dominate the Board. The interests of the Directors in the
shares of the Company are disclosed in the Shareholders’ information
section of this Annual Financial Report.
The Company recognises the importance of maintaining a dialogue
with its shareholders and of keeping the market informed to ensure
that its strategies and performance are well understood. The Board is
of the view that during the period under review the Company has
communicated eectively with the market through a number of
Company announcements and press releases.
The Board endeavours to protect and enhance the interests of both
the Company and its shareholders, present and future. The Chairman
ensures that the views of shareholders are communicated to the
Board as a whole.
The Board always ensures that all holders of each class of capital
are treated fairly and equally. The Board also acts in the context
that its shareholders are constantly changing and, consequently,
decisions take into account the interests of future shareholders as
well. Shareholders also appreciate the significance of participation in
the general meetings of the Company and particularly in the election
of Directors. They hold Directors to account for their actions, their
stewardship of the Company’s assets and the performance of the
Company.
The agenda for general meetings of shareholders and the conduct
of such meetings is arranged in such a manner to encourage valid
discussion and decision-taking. The Chairman and the Group Chief
Executive also ensure that sucient contact is maintained with major
shareholders to understand issues and concerns.
The Company also communicates with its shareholders through the
Company’s Annual General Meeting (AGM) (further detail is provided
under the section entitled General Meetings). The Chairman makes
arrangements for the Chairmen of the Audit and Risk Committee and
the Remuneration Committee to be available to answer questions, if
necessary.
Apart from the AGM, SFC communicates with its shareholders by
way of the Annual Financial Report and by publishing its results on
an annual basis. The Company’s website (www.farsons.com) also
contains information about the Company and its business, including
an Investor Relations section. In addition, the Company holds a
meeting for stockbrokers and financial intermediaries once a year to
coincide with the publication of its Annual Financial Report.
The Company Secretary maintains two-way communication
between the Company and its investors. Individual shareholders can
raise matters relating to their shareholdings and the business of the
Group at any time throughout the year and are given the opportunity
to ask questions at the AGM or submit written questions in advance.
In terms of Article 51 of the Articles of Association of the Company
and Article 129 of the Maltese Companies Act, 1995, the Board
may call an extraordinary general meeting on the requisition of
shareholders holding not less than one tenth (1/10) of the paid-up
share capital of the Company. Minority shareholders are allowed to
formally present an issue to the Board of Directors.
In the event of conflicts arising between minority shareholders and
the three major shareholders, who are also the original promoters of
the Company, every eort shall be made to seek mediation.
PRINCIPLE 11: CONFLICTS OF INTEREST
The Directors are strongly aware of their responsibility to act at all
times in the interest of the Company and its shareholders as a whole
and of their obligation to avoid conflicts of interest. Should any such
conflicts of interest be perceived to arise:
• Director is obliged to make full and frank disclosure with
respect to any matter where there is a potential or actual
conflict, whether such conflict arises from personal interests
or the interests of the companies in which such person is a
Director or ocer;
• the said Director is excused from the meeting and accordingly
is not involved in the Company’s Board discussion on the
matter; and
• the said Director does not vote on any such matter.
A Director having a continuing material interest that conflicts with the
interests of the Company, is obliged to take eective steps to eliminate
the grounds for conflict. In the event that such steps do not eliminate
the grounds for conflict then the Director should consider resigning.
On joining the Board and regularly thereafter, the Directors are
informed of their obligations on dealing in securities of the Company
within the parameters of law, including the Capital Markets Rules.
The Directors’ interests in the share capital of the Company as
at 31 January 2022 and as at 30 April 2022 are disclosed in the
Shareholder Information section of this Annual Financial Report.
PRINCIPLE 12: CORPORATE SOCIAL RESPONSIBILITY
The principal objective of the Company’s commitment to Corporate
Social Responsibility (CSR) is to provide support where possible
in aspects that include social, occupational, financial, cultural and
historical values. Tracing its origins since 1928, the Company is very
much rooted in local culture and as a Company it endeavours to
meet the expectations of the community by engaging among a host
of other initiatives in the following:
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CORPORATE GOVERNANCE STATEMENT continued
• Encouraging moderate drinking and responsible alcohol
consumption;
• Corporate Social Responsibility (CSR) Day initiative – Together
with other sponsoring companies, employees volunteer to carry
out turnkey projects involving one day’s work during a public
holiday;
• Sponsorships of major charitable events on a national level;
• Promoting the industrial heritage of the Maltese Islands;
• Co–operating with the University of Malta particularly in the
areas of engineering, the built environment and history;
• Participation in recognised national student–exchange
programmes for the benefit of local and foreign students;
• Assisting with environmental projects;
• Waste and energy conservation initiatives and policies;
• Liaising with NGOs and the provision of employment opportunity
for groups of people with a disability on a yearly basis;
• Assisting employees encountering medical problems with
obtaining overseas medical treatment;
• Supporting employees with a home loan interest subsidy scheme;
• Employee Assistance Programmes for employees needing
support, rehabilitation, counselling and advice;
• The Farsons Foundation promotes and supports local initiatives
and considers requests from a social, cultural and historical
perspective at no commercial gain for the Company. The
Foundation is entirely funded by subventions authorised by the
SFC Board. The aims of the Foundation are to:
– promote and assist the development and public manifestation of
Maltese culture especially in the fields of art, music, literature and
drama;
– contribute research projects and assist in the publication of studies
undertaken by any duly qualified person or persons, regarding
Maltese disciplines relating to art, music and drama;
– provide assistance to talented Maltese to enable them to obtain
higher professional standard than those that can be obtained locally
in disciplines relating to art, music and drama;
– contribute by means of financial assistance towards the work of
any private, voluntary and non–profit organisation or religious body
engaged principally in fostering social solidarity.
Non–compliance with the Code
PRINCIPLE 4 (CODE PROVISION 4.2.7):
This Code Provision recommends “the development of a succession
policy for the future composition of the Board of Directors and
particularly the executive component thereof, for which the
Chairman should hold key responsibility”.
The Memorandum and Articles of Association of the Company
provide for the appointment of Directors as being a matter reserved
exclusively to SFC’s shareholders (except where the need arises to
fill a casual vacancy) as explained under Principle 3 in Section B.
However, in recognition of evolving standards of good corporate
governance, the Corporate Governance Committee has initiated
discussions concerning the composition of the Board and succession
policies in relation thereto. An active succession policy is however in
place for senior executive positions in the Company including that of
the Group Chief Executive.
Internal controls
Internal control
The key features of the Group’s system of internal control are as follows:
Organisation:
The Group operates through Boards of Directors of subsidiaries with
clear reporting lines and delegation of powers.
Control Environment:
The Group is committed to the highest standards of business
conduct and seeks to maintain these standards across all of its
operations. Group policies and employee procedures are in place
for the reporting and resolution of fraudulent activities. The Group
has an appropriate organisational structure for planning, executing,
controlling and monitoring business operations in order to achieve
Group objectives.
Risk Identification:
Group management is responsible together with each subsidiary’s
management, for the identification, evaluation, control and reporting
of major risks applicable to their areas of business.
Reporting:
The Group has implemented control procedures designed to ensure
complete and accurate accounting for financial transactions and to
limit the potential exposure to loss of assets or fraud. Measures taken
include physical controls, segregation of duties, reviews by
management and internal audit.
On a monthly basis the Board receives a comprehensive analysis of
financial and business performance, including reports comparing actual
performance with budgets as well as the analysis of any variances.
Cybersecurity
As part of its eort to combat cybersecurity, SFC have implemented,
and continue to implement and upgrade on an ongoing basis, a
series of cyber-defense technical layers in place across all systems,
also through specialised cybersecurity technical partners that are
based on the identified risks, established and new technology trends
and recognized industry best practices, with all processes that are
also further fine-tuned in response to varied and new cybersecurity
related threats as they emerge and are identified accordingly. Besides
the many purely technical measures, SFC also ensures adequate
user awareness on cybersecurity matters that includes informing,
educating and testing employees to help protect the business against
forms of cybercrimes, including phishing and other social-engineering
related threats. Moreover, SFC also liaises as required with local and
international related authorities such as the National Cyber Security
Committee to keep updated on related matters and to enhance
awareness on specific local cyber risks and threats.
To complement all the above, SFC have engaged a highly specialised
organisation focused solely on cybersecurity to conduct a
cybersecurity assessment for the Group, so as to further reinforce
this critical area while also acting as a reference point for any
cybersecurity related advice and action.
For business continuity purposes, the IT function has implemented
a series of redundancy measures and plans at various system,
network and hardware levels that include, but are not limited to,
52
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
CORPORATE GOVERNANCE STATEMENT continued
provision of internet service (on which many systems depend) at
both physical hardware access levels within our network and outside
besides also ensuring varied other internet service provider links for
continuity of service, data storage, server and backup management,
communication links and others. We continuously test our
redundant measures while implementing new measures in line with
the IT plan and the Group’s expanding and evolving business model.
Code of conduct
The existing Code of Conduct for SFC employees was updated in
January 2015 to replace an earlier version that had been approved
by the Board of Directors in September 1997. Nevertheless, its basic
principles remained unchanged and reinforced the SFC’s values of
Success, Teamwork, Respect, Integrity, Dynamism and Excellence
which are abbreviated by the acronym S.T.R.I.D.E.
SFC’s reputation depends on how each of its employees conduct
themselves both individually and collectively as a Company.
Therefore, the Code of Conduct is intended to serve as general
guidance for all employees who are expected to “do the right thing”
and to ensure the highest standards of integrity, mutual respect and
cordiality contributing to an ethical and professional environment.
The full version of the Code of Conduct is accessible to all employees
on the Company’s intranet whilst an abridged version is included
on the Employee Handbook which is distributed in hard copy to all
employees. The Group Human Resources Department promotes
and ensure awareness of this document, inter alia by providing all
new recruits with adequate training as well as refresher courses for
existing employees.
The Code of Conduct makes it clear that the Board condemns any
form of bribery and corruption, improper payments as well as money-
laundering and has a zero-tolerance attitude to fraud malpractice and
wrongdoing, and a commitment to ethics and best practice.
SFC employees have a responsibility to voice their concerns when
they suspect/know that their superiors/colleagues are involved in
something improper, unethical or inappropriate or have potentially
infringed the Code of Conduct. The Speak-Up policy which was
approved by the Board of Directors in April 2014 was established
to ensure that all cases of suspected wrongdoing are reported and
managed in a timely and appropriate manner. This policy sets out the
channels which will be put in place to help employees and anyone
who works for or with SFC to share any concerns they may have.
General meetings
The manner in which the general meeting is conducted is outlined in
Articles 49 to 52 of the Company’s Articles of Association, subject
to the provisions of the Maltese Companies Act, 1995. Save for the
exceptional circumstances arising out of the legally sanctioned
delays allowed in times of the current pandemic, within seven
months of the end of the financial year, an Annual General Meeting
of shareholders is convened to consider the annual consolidated
financial statements, the Directors’ and Auditor’s report for the year,
to decide on dividends recommended by the Board, and to elect the
Directors and appoint the Auditors of the Company. With eect from
financial year ended 31 January 2021, the Remuneration Report will
be subjected to an advisory vote of the shareholders at each Annual
General Meeting. Prior to the commencement of the Annual General
Meeting, a presentation is made to shareholders on the progress
made and strategies adopted during the year in the light of prevailing
market and economic conditions and the objectives set by the
Board, and an assessment on future prospects is given. The Group’s
presence on the worldwide web (www.farsons.com) contains a
corporate information section.
Apart from the above, the Group publishes its financial results every
six months and from time-to-time issues Company Announcements
or other public notices regarding matters which may be of general
interest or of material importance to shareholders and the market in
general, or which may concern price sensitive issues.
At the time of the Annual General Meeting, the publication of
the six–monthly report or significant events aecting the Group,
public meetings are held to which institutional investors, financial
intermediaries and inventory brokers are invited to attend. Press
releases are also issued regularly on the business activities of the Group.
All shareholders registered in the Shareholders’ Register on the
Record Date as defined in the Capital Markets Rules, have the right
to attend, participate and vote in the general meeting. A shareholder
or shareholders holding not less than 5% of the voting issued share
capital may request the Company to include items on the agenda of
a general meeting and/or table draft resolutions for items included in
the agenda of a general meeting. Such requests are to be received by
the Company at least forty–six (46) days before the date set for the
relative general meeting.
A shareholder who cannot participate in the general meeting can
appoint a proxy by written or electronic notification to the Company.
Every shareholder represented in person or by proxy is entitled to ask
questions which are pertinent and related to items on the agenda of the
general meeting and to have such questions answered by the Directors
or such persons as the Directors may delegate for that purpose.
Signed by Louis A. Farrugia (Chairman) and Marcantonio Stagno
d’Alcontres (Vice-Chairman) on 25 May 2022.
53
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
CORPORATE GOVERNANCE STATEMENT continued
1. Terms of Reference and Membership
The Remuneration Committee is composed of three independent
non-executive Directors. During the financial year ended 31 January
2022 (FY 2022), the Remuneration Committee was composed of
Marcantonio Stagno d’Alcontres (Chairman), Roderick Chalmers and
Marcus John Scicluna Marshall. The Committee met twice during the
year with all members in attendance.
In terms of the Remuneration Policy of the Group, the Remuneration
Committee is responsible for reviewing and approving all
remuneration packages of Executive Directors, Non-Executive
Directors and Senior Management. The Remuneration Policy was
approved by Shareholders at the 73rd Annual General Meeting held on
8 October 2020 with 25,154,915 votes in favour and 1,167 votes against
and can be found on the Group’s website www.farsons.com. Any
material amendment to the Remuneration Policy shall be submitted to
a vote by the Annual General Meeting before adoption and shall in any
event be subject to confirmation at least every four years.
As provided in the Remuneration Policy, the recommendations
of the Remuneration Committee are submitted to the full
Board for consideration and final approval. Individual Executive
Directors recuse themselves from any participation in Board
discussions concerning their own remuneration as appropriate. The
Remuneration Committee is also responsible for drawing up and
proposing to the Company’s Board of Directors any amendments
thought necessary to the Remuneration Policy for consideration and
approval. Any amendments to the Remuneration Policy will require
the approval of Shareholders in General Meeting.
2. Remuneration strategy and policy
The strategy of the Farsons Group is founded on creating and
nurturing world class brands which inspire the trust and loyalty
of consumers; championing customer relationships and building
meaningful partnerships; engaging talent and empowering
employees to deliver sustainable and quality driven operations;
connecting with the community and embracing our social
and environmental responsibilities; providing a fair return to
shareholders so as to ensure long-term investment and profitable
growth. It is believed that it is through the implementation and
observance of the above principles that the Group will accomplish
the vision of growing its local and international business within the
food and beverage sector.
In order to achieve the above strategic outcomes, it is necessary
that the Farsons Group attracts, retains and motivates the best
available talent at all levels – from the most recently recruited
trainee to members of the Board of Directors.
In order to be successful in this quest of attracting, retaining and
motivating best in class talent, it is essential that the Group’s
Remuneration Policy provides market-competitive salaries and
related benefits by reference to those provided by other entities
operating in relevant and comparative market sectors in what
is becoming an increasingly competitive environment. There
is therefore a clear synthesis in the pay structures of the wider
workforce and executives across the Group, and the Board believes
that this approach serves the best long-term interests of all
stakeholders.
The above principles apply equally to Remuneration Policy insofar
as Directors are concerned. However, there is a need to distinguish
between Executive and Non-Executive Directors, and further
details are provided below.
3. Remuneration Policy – Executive Directors
Executive Directors are members of the Board who also have an
executive role in the day-to-day management of the Company and
the Group. Apart from Mr Louis A. Farrugia and Mr Michael Farrugia,
for the purposes of this Remuneration Report and pursuant to
Capital Markets Rule 12.2A, the Group Chief Executive Ocer is
considered to be an Executive Director of the Company.
Insofar as Executive Directors are concerned, remuneration is made
up of the following components:
a Fixed Pay – Fixed or Base salary (including statutory bonus)
– these are established by reference to the role, skills and
experience of the individual concerned and appropriate market
comparatives.
b Variable Pay – which is made up of two components as follows:
i. Performance bonus – a variable component established by
reference to the attainment or otherwise of pre-established
quantitative targets. Quantitative goals could include pre-set
profit, EBITDA and/or sales targets.
REMUNERATION
REPORT
54
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
ii. Discretionary bonus – also a variable component, established
by reference to the evaluation of qualitative goals which are
reviewed from time to time. Typically, targets are directed
towards the long-term interest and sustainability of the
Group, and could include the eective implementation
of specific business initiatives and capital expenditure
programmes, environmental and other CSR/ESG goals and
sta retention initiatives.
The variable components to the remuneration awarded to Executive
Directors are established from year to year and the quantitative
and qualitative targets included therein would change from time to
time depending on the circumstances of the business and the then
prevailing commercial environment.
There are no pre-set fixed relationships between fixed and variable
remuneration – and these would vary between Executive Directors
(and indeed Senior Management). Whereas quantitative awards are
usually formulaic in their calculation, discretionary and qualitative
awards necessarily involve the application of subjective judgement.
Other provisions that form part of the Directors’ Remuneration Policy
include the following:
• Claw Backs – there are no claw back provisions in place in
respect of variable salary awards.
• Benefits – which would comprise those benefits normally
available to senior executives comprising principally (a) the
provision of a suitable (taxed and insured) Company car, (b)
standard executive health insurance and life assurance cover,
(c) mobile phone and allowance (d) other incidental benefits.
Executive Directors also receive an expense allowance in
reimbursement of certain expenses incurred in the execution of
their respective roles and duties.
• Fees - Executive Directors are also entitled to receive the
fixed Director’s fee payable to all Directors in their capacity as
members of the Board (see below). This component is payable
from the aggregate amount of emoluments approved by the
Shareholders in General Meeting.
• Share Option schemes – to date it has not been the policy of the
Group to introduce any form of share option scheme or other
executive share awards.
The Board believes that the above components of Executive Director
remuneration serve to contribute to the realization of the Group’s
long-term strategy and interest – and also serve to secure alignment
between the interests of the Executive Directors and that of the
Shareholders.
Members of the Board of Directors appointed under the provisions
of Article 95 retire from oce at least once every three years but
remain eligible for re-appointment. Those members of the Board
elected under the provisions of Article 96 shall retire from oce at
the end of the next Annual General Meeting following their election,
and also remain eligible for re-election. With the exception of the
Group Chief Executive (GCE), Executive Directors are all engaged
without fixed term contracts. In terms of current labour regulations
all are regarded as employees on indefinite contracts. Subject to
satisfactory performance, the GCE is engaged on a (renewable)
three-year contract.
With the exception of the Executive Chairman, no long-term pension
plans are in place. Insofar as the Executive Chairman is concerned,
in view of his 40+ years of service to the Group, the Board has (on
the recommendation of the Remuneration Committee) approved
arrangements whereby his wife would receive a deferred lifetime
annuity in the sum of approximately €60,000 per annum in the event
that the Chairman pre-deceases her.
4. Remuneration policy – Non-Executive
Directors
Non-Executive Directors are those members of the Board who do
not have a role in the day-to-day executive management of the
Company and the Group. Remuneration for Non-Executive Directors
is determined by the Board of Directors as a whole and takes into
account the skills required and those levels prevailing in the market
for entities of a similar size and complexity.
The aggregate remuneration payable to Non-Executive Directors is
approved by Shareholders in General Meeting pursuant to Article
81(1) of the Articles of Association of the Company and has two
components:
• A fixed or base Director’s fee which is established by reference
to those levels prevailing in the market for entities of a similar size
and complexity.
• A Board Committee fee for membership of the various
established Board Committees. These Board Committee fees
vary between Committees depending upon the relative workload
and time commitment involved, and the skill sets, experience and
professional knowledge required for the particular Committee
concerned.
• From time-to-time circumstances arise whereby the Board of
Directors (or members thereof) are faced in a particular year
with significantly higher and complex workloads than would
be the norm. Board members have in the past been awarded
an additional fixed fee on an exceptional basis in recognition of
these circumstances. Such additional awards would fall to be
within the aggregate amount approved by the Shareholders
in general meeting in terms of Article 81(1) of the Articles of
Association of the Company.
Non-Executive Directors are not entitled to any contractual pension,
termination or retirement benefits. However, they may be reimbursed
certain expenses incurred in the discharge of their responsibilities
and receive a fixed ‘use of car’ allowance.
55
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
REMUNERATION REPORT continued
Board &
Committee
Fees Other Fixed Pay
Variable
Pay
Benefits &
Allowances Aggregate
€ € € € € €
Directors’ Emoluments -
Year ended 31 January 2021
Louis A Farrugia Executive Chairman 26,000 71,865 56,000 45,000
* *
198,865
Norman Aquilina Group Chief Executive 155,526 101,000 11,000
* *
267,526
Michael Farrugia Executive – Operations &
Business Development
*
31,000 83,098 11,500 20,000
* *
145,598
Marcantonio Stagno
D'Alcontres
Vice-Chairman –
Non-Executive
30,000 12,500 42,500
Roderick Chalmers Non-Executive 31,000 24,000 6,000 61,000
Max Ganado Non-Executive 31,000
* *
31,000
Christiane Ramsay
Pergola
Non-Executive 25,000
* *
25,000
Marina Hogg Non-Executive 28,000 6,000 34,000
Marcus John Scicluna
Marshall
Non-Executive
*
35,000 6,000 41,000
*includes subsidiary Board fees **Company car provided
(a) the above table includes the remuneration and related benefits awarded to members of the Board of Directors and of the Group Chief Executive (GCE). Board related emoluments included in the
above table requiring Shareholder approval under Article 81 total €311,500 (approved limit = €750,000). (b) During the year members of the Board and the GCE voluntarily waived the total sum of
€28,443 due to them as part of the response to the business challenges arising from the COVID-19 pandemic. The amounts stated above are before deduction of these waived emoluments.
Board &
Committee
Fees Other Fixed Pay
Variable
Pay
Benefits &
Allowances Aggregate
€ € € € € €
Directors’ Emoluments -
Year ended 31 January 2022
Louis A Farrugia Executive Chairman 26,000 71,957 67,000 45,000
* *
209,957
Norman Aquilina Group Chief Executive 160,520 133,000 11,000 304,520
Michael Farrugia Executive – Operation &
Business Development
*
31,000 85,575 29,500 20,000
* *
166,075
Marcantonio Stagno
D'Alcontres
Vice-Chairman –
Non-Executive
30,000 10,000 12,500 52,500
Roderick Chalmers Non-Executive 31,000 40,000 6,000 77,000
Max Ganado Non-Executive 31,000 10,000
* *
41,000
Christiane Ramsay
Pergola
Non-Executive
(deceased 25.11.2021)
18,750
* *
18,750
Marina Hogg Non-Executive 28,000 10,000 6,000 44,000
Marcus John Scicluna
Marshall
Non-Executive
*
35,000 10,000 6,000 51,000
Justine Pergola Non-Executive
(appointed 13.01.2022)
1,600
* *
1,600
*includes subsidiary Board fees **Company car provided
(a) the above table includes the remuneration and related benefits awarded to members of the Board of Directors and of the Group Chief Executive (GCE). Board related emoluments included in the
above table requiring Shareholder approval under Article 81 total €322,850 (approved limit = €750,000.)
5. Remuneration – Directors and Group Chief Executive
The following tables provide a summary of the remuneration for the years ended 31 January 2022 and 2021 for each individual Director and for
the Group Chief Executive.
Change vs 2021
Directors and Group Chief Executive 14%
Average employee remuneration 10%
Performance of the Company – EBITDA 64%
In terms of the requirements within Appendix 12.1 of the Capital Markets Rules, the annual change of remuneration over the two most recent
financial years were as follows:
56
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
REMUNERATION REPORT continued
Fixed Pay
Variable
Pay
Benefits &
Allowances Aggregate
€ € € €
Senior Management Remuneration – year to 31 January 2022
Senior Management Remuneration 721,094 285,720 105,727 1,112,541
(a) The above table includes the remuneration and related benefits awarded to the members of the Group Senior Management Board (SMB).
Fixed Pay
Variable
Pay
Benefits &
Allowances Aggregate
€ € € €
Senior Management Remuneration – year to 31 January 2021
Senior Management Remuneration 701,846 197,900 105,727 1,005,473
(a) The above table includes the remuneration and related benefits awarded to the members of the Group Senior Management Board (SMB). (b) During the year members of the SMB voluntarily
waived the sum of €37,392 due to them as part of the response to the business challenges arising from the COVID-19 pandemic. The amounts stated above are before deduction of the sum waived.
6. Shareholder involvement
Pursuant to Article 81 of the Memorandum and Articles of
Association of the Company, remuneration (emoluments) payable to
Directors with regard to their membership of the Board of Directors
is always subject to the maximum aggregate limit approved by
the Shareholders in General Meeting. This amount was fixed at an
aggregate sum of €750,000 per annum at the 69th Annual General
Meeting held on 28 June 2016.
Whereas remuneration paid to Executive Directors by virtue of their
executive oce (as opposed to membership of the Board) is not
subject to the maximum aggregate limit stipulated under Article 81
as described above, with eect from FY 2022 and pursuant to the
requirements of Capital Markets Rules, the Remuneration Report of
the Company shall form part of the Annual Report and shall provide
full details of remuneration paid to all Directors. In accordance
with Capital Markets Rule 12.26L and 12.26M, the Remuneration
Report will be subjected to an advisory vote by the Shareholders
at each Annual General Meeting and shall be made available on the
Company’s website for a period of 10 years following the meeting.
7. Senior Management Remuneration
For the purposes of this Remuneration Report, “Senior Management”
shall mean all members of the Group Senior Management Board
as disclosed in this Annual Report. The Group’s Human Resources
department is responsible (apart from normal sta administration
and training and upgrading of proficiency of technical and
managerial personnel and workforce in general), for carrying out
regular reviews of the compensation structure pertaining to Senior
Management in the light of the Group’s performance, economic
situation and market trends. One of the main objectives is to recruit
and retain executives of high professional standards and competence
who can enhance the Group’s performance and assure the best
operational and administrative practices.
The Group’s Human Resources manager reports and makes
recommendations periodically to the Board and the Remuneration
Committee on the remuneration packages, including bonus
arrangements, for achieving pre–determined targets.
The Remuneration Committee is required to evaluate, recommend
and report on any proposals made by the Group Human Resources
manager relating to management remuneration and conditions
of service. The Committee considers that the current executive
management remuneration packages are based upon the
appropriate local market equivalents and are fair and reasonable
for the responsibilities involved. The Committee also believes that
the remuneration packages are such as to enable the Company to
attract, retain and motivate executives having the appropriate skills
and qualities to ensure the proper management of the organisation.
The Committee is also charged with considering and determining
any recommendations from management on requests for early
retirement.
The terms and conditions of employment of senior executives
are set out in their respective contracts of employment with the
Company. As a general rule such contracts do not contain provisions
for termination payments and/or other payments linked to early
termination.
Senior management is eligible for an annual performance
bonus which is linked to agreed performance targets and their
achievement. The Remuneration Committee is of the view that
the relationship between fixed and variable remuneration and
performance bonus are reasonable and appropriate. There are no
claw-back provisions in respect of variable salary awards.
There are no executive profit sharing, share options or pension
benefit arrangements in place. Non–cash benefits to which Senior
Management are entitled comprise those normally available to senior
executives including the provision of a suitable taxed and insured
company car, standard executive health and life assurance cover, a
mobile phone package and other incidental corporate benefits.
The total emoluments relating to the Group Senior Management
Board members were as follows:
8. Contents of the Remuneration Report
The contents of the Remuneration Report have been reviewed by the
external Auditors to ensure that it conforms with the requirements of
Appendix 12.1 to Chapter 12 of the Capital Markets Rules.
57
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
REMUNERATION REPORT continued
STATEMENTS
OF FINANCIAL
POSITION
ASSETS
As at 31 January
Group Company
2022 2021 2022 2021
Notes €’000 €’000 €’000 €’000
Non–current assets
Property, plant and equipment 5 126,939 121,944 118,448 113,863
Right–of–use assets 6 8,254 5,526 185 187
Intangible assets 7 2,352 604 1,729 –
Investments in subsidiaries 8 - – 9,702 9,202
Deferred tax assets 20 7,486 7,565 8,398 8,455
Trade and other receivables 10 696 865 696 865
Total non–current assets 145,727 136,504 139,158 132,572
Current assets
Inventories 9 16,341 13,752 8,351 8,263
Trade and other receivables 10 23,139 19,630 22,282 24,827
Current tax assets 5 5 - –
Cash and cash equivalents 11 15,720 17,148 3,057 2,664
Total current assets 55,205 50,535 33,690 35,754
Total assets 200,932 187,039 172,848 168,326
58
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
EQUITY AND
LIABILITIES
As at 31 January
Group Company
2022 2021 2022 2021
Notes €’000 €’000 €’000 €’000
C apital and reserves attributable to owners
of the Company
Share capital 12 9,000 9,000 9,000 9,000
Revaluation and other reserves 14, 15 49,409 49,409 46,137 46,137
Hedging reserve 16 (100 ) (206 ) (100 ) (206 )
Retained earnings 70,879 61,451 66,564 59,493
Total equity 129,188 119,654 121,601 114,424
Non-current liabilities
Trade and other payables 22 2,648 2,802 2,648 2,802
Lease liabilities 19 6,811 4,394 191 349
Derivative financial instruments 17 45 156 45 156
Borrowings 18 24,081 33,328 24,081 33,328
Provisions for other liabilities and charges 21 2 25 2 25
Total non-current liabilities 33,587 40,705 26,967 36,660
Current liabilities
Trade and other payables 22 32,905 21,940 22,462 14,517
Lease liabilities 19 1,479 1,253 149 142
Current tax liabilities 1,751 904 - –
Derivative financial instruments 17 110 161 110 161
Borrowings 18 1,903 2,411 1,550 2,411
Provisions for other liabilities and charges 21 9 11 9 11
Total current liabilities 38,157 26,680 24,280 17,242
Total liabilities 71,744 67,385 51,247 53,902
Total equity and liabilities 200,932 187,039 172,848 168,326
The notes on pages 65 to 95 are an integral part of these consolidated financial statements.
The financial statements on pages 58 to 95 were approved and authorised for issue by the Board of Directors on 25 May 2022. The financial
statements were signed on behalf of the Company’s Board of Directors by Louis A Farrugia (Chairman), Marcantonio Stagno d’Alcontres
(Vice-Chairman) and Norman Aquilina (CEO) as per the Directors’ Declaration on ESEF Annual Financial Report submitted in conjunction
with the Annual Financial Report 2022.
59
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
STATEMENTS OF FINANCIAL POSITION continued
Year ended 31 January
Group Company
2022 2021 2022 2021
Notes €’000 €’000 €’000 €’000
Revenue 4 91,768 73,016 49,321 41,391
Cost of sales 23 (57,359 ) (47,004 ) (26,591 ) (23,028 )
Gross profit 34,409 26,012 22,730 18,363
Selling and distribution costs 23 (10,655 ) (8,912 ) (7,497 ) (6,689 )
Administrative expenses 23 (10,308 ) (11,427 ) (5,740 ) (6,910 )
Operating profit 13,446 5,673 9,493 4,764
Finance income 26 - – 35 25
Finance costs 27 (1,282 ) (1,246 ) (957 ) (975 )
Profit before tax 12,164 4,427 8,571 3,814
Tax income/(expense) 28 264 (1,094 ) 1,500 (934 )
Profit for the year 12,428 3,333 10,071 2,880
Basic and diluted earnings per share for
the year attributable to shareholders 30 €0.4143 €0.1111
INCOME
STATEMENTS
60
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
Year ended 31 January
Group Company
2022 2021 2022 2021
Note €’000 €’000 €’000 €’000
Profit for the year 12,428 3,333 10,071 2,880
Other comprehensive income:
I tems that may be subsequently reclassified
to profit or loss:
Cash flow hedges net of deferred tax 16 106 98 106 98
Other comprehensive income for the year 106 98 106 98
Total comprehensive income for the year
attributable to equity shareholders 12,534 3,431 10,177 2,978
The notes on pages 65 to 95 are an integral part of these consolidated financial statements.
STATEMENTS OF
COMPREHENSIVE
INCOME
61
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
STATEMENTS
OF CHANGES
IN EQUITY
Share
capital
Hedging
reserve
Revaluation
and other
reserves
Retained
earnings
Total
equity
Notes €’000 €’000 €’000 €’000 €’000
Balance at 1 February 2020 9,000 (304 ) 49,409 58,118 116,223
Comprehensive income
Profit for the year – – – 3,333 3,333
Other comprehensive income:
Cash flow hedges net of deferred tax 16 – 98 – – 98
Total other comprehensive income – 98 – – 98
Total comprehensive income – 98 – 3,333 3,431
Balance at 31 January 2021 9,000 (206 ) 49,409 61,451 119,654
Balance at 1 February 2021 9,000 (206 ) 49,409 61,451 119,654
Comprehensive income
Profit for the year – – – 12,428 12,428
Other comprehensive income:
Cash flow hedges net of deferred tax 16 – 106 – – 106
Total other comprehensive income – 106 – – 106
Total comprehensive income – 106 – 12,428 12,534
Transactions with owners
Dividends paid 13 – – – (3,000 ) (3,000 )
Total transactions with owners – – – (3,000 ) (3,000 )
Balance at 31 January 2022 9,000 (100 ) 49,409 70,879 129,188
GROUP
62
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
Share
capital
Hedging
reserve
Revaluation
and other
reserves
Retained
earnings
Total
equity
Notes €’000 €’000 €’000 €’000 €’000
Balance at 1 February 2020 9,000 (304 ) 46,137 56,613 111,446
Comprehensive income
Profit for the year – – – 2,880 2,880
Other comprehensive income:
Cash flow hedges net of deferred tax 16 – 98 – – 98
Total other comprehensive income – 98 – – 98
Total comprehensive income – 98 – 2,880 2,978
Balance at 31 January 2021 9,000 (206 ) 46,137 59,493 114,424
Balance at 1 February 2021 9,000 (206 ) 46,137 59,493 114,424
Comprehensive income
Profit for the year – – – 10,071 10,071
Other comprehensive income:
Cash flow hedges net of deferred tax 16 – 106 – – 106
Total other comprehensive income – 106 – – 106
Total comprehensive income – 106 – 10,071 10,177
Transactions with owners
Dividends paid
13
Total transactions with owners – – – (3,000 ) (3,000 )
Balance at 31 January 2022 9,000 (100 ) 46,137 66,564 121,601
The notes on pages 65 to 95 are an integral part of these consolidated financial statements.
COMPANY
63
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
STATEMENTS OF CHANGES IN EQUITY continued
STATEMENTS
OF CASH
FLOWS
Year ended 31 January
Group Company
2022 2021 2022 2021
Notes €’000 €’000 €’000 €’000
Cash flows from operating activities
Cash generated from operations 31 27,534 26,408 26,613 10,738
Interest received – – 35 3
Interest paid on lease liabilities (269 ) (224 ) (11 ) (7 )
Interest paid on borrowings (1,013 ) (1,022 ) (946 ) (944 )
Income tax paid (369 ) (618 ) – –
Net cash generated from operating activities 25,883 24,544 25,691 9,790
Cash flows from investing activities
Purchase of property, plant and equipment (12,678 ) (10,138 ) (11,026 ) (9,008 )
P roceeds from disposal of property,
plant and equipment 75 155 61 120
Additions to investments in subsidiaries - - (500 ) -
Institutional investment grants received - 2,500 - 2,500
Additions to intangibles (557 ) (33 ) (500 ) –
Net cash used in investing activities (13,160 ) (7,516 ) (11,965 ) (6,388 )
Cash flows from financing activities
Proceeds from borrowings - 2,700 - 2,700
Payments of current and non-current borrowings (10,183 ) (2,997 ) (10,183 ) (2,997 )
Principal payments of lease liabilities (1,321 ) (1,379 ) (150 ) (144 )
Dividends paid (3,000 ) – (3,000 ) –
Net cash used in financing activities (14,504 ) (1,676 ) (13,333 ) (441 )
Net movement in cash and cash equivalents (1,781 ) 15,352 393 2,961
Cash and cash equivalents at beginning of year 17,148 1,796 2,664 (297 )
Cash and cash equivalents at end of year 11 15,367 17,148 3,057 2,664
The notes on pages 65 to 95 are an integral part of these consolidated financial statements.
64
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE
CONSOLIDATED
FINANCIAL STATEMENTS
The principal accounting policies applied in the preparation of these consolidated financial statements are set
out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Basis of preparation
These consolidated financial statements include the financial statements of Simonds Farsons Cisk plc and
its subsidiaries. The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the EU and the requirements of the Maltese Companies
Act, 1995. They have been prepared under the historical cost convention, as modified by the fair valuation of the
non-current asset category of property, plant and equipment and except as disclosed in the accounting policies
below. Unless otherwise stated, all financial information presented has been rounded to the nearest thousand.
The preparation of financial statements in conformity with IFRSs as adopted by the EU requires the use of certain
accounting estimates. It also requires Directors to exercise their judgement in the process of applying the
Group’s accounting policies (Note 3 - Critical accounting estimates and judgements)
.
Standards, interpretations and amendments to published standards eective in 2022
In 2022, the Group and Company adopted amendments to existing standards that are mandatory for the
Group and Company’s accounting period beginning on 1 February 2021. The adoption of these revisions to the
requirements of IFRSs as adopted by the EU did not result in changes to the Group and Company’s accounting
policies impacting the financial performance and position. Furthermore, the Group has adopted amendments
to IFRS 16 issued in May 2020 in relation to COVID-19 related rent concessions. The impact of adoption of this
amendment is further explained in Note 19.
Standards, interpretations and amendments to published standards that are not yet eective
Certain new standards, amendments and interpretations to existing standards have been published by the
date of authorisation for issue of these financial statements but are mandatory for the Group’s accounting
periods beginning after 1 February 2021. The Group has not early adopted these revisions to the requirements
of IFRSs as adopted by the EU and the Directors are of the opinion that there are no requirements that will
have a possible significant impact on the Group’s financial statements in the period of initial application.
1.2 Consolidation
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies
generally accompanying a shareholding of more than one half of the voting rights. The existence and eect of
potential voting rights that are currently exercisable or convertible are considered when assessing whether the
Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred
and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition
basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and
the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s
share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net
assets of the subsidiary acquired in the case of a bargain purchase, the dierence is recognised directly in
profit or loss.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment
of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
A listing of the subsidiaries is set out in Note 38 to the financial statements.
1.3 Foreign currency translation
a. Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The consolidated
financial statements are presented in euro which is the Company’s functional currency and the Group’s
presentation currency.
1. Summary
of significant
accounting
policies
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ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
b. Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of
such transactions and from the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in profit or loss.
All foreign exchange gains and losses are presented in the income statements within ‘cost of sales’ and
‘administrative expenses’.
1.4 Property, plant and equipment
All property, plant and equipment is initially recorded at historical cost. Land and buildings are subsequently
shown at fair value based on periodic valuations by external independent valuers, less subsequent
depreciation for buildings. Valuations are carried out on a regular basis, but at least every five years, unless the
Directors consider it appropriate to have an earlier revaluation, such that the carrying amount of property does
not dier materially from that which would be determined using fair values at the end of the reporting period.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount
of the asset, and the net amount is restated to the revalued amount of the asset. All other property, plant
and equipment is stated at historical cost less depreciation and impairment losses. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. Borrowing costs which are incurred for
the purpose of acquiring or constructing a qualifying asset are capitalised as part of its cost. Borrowing costs
are capitalised while acquisition or construction is actively underway. Capitalisation of borrowing costs is
ceased once the asset is substantially complete and is suspended if the development of the asset is suspended.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only 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. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in
which they are incurred.
Increases in the carrying amount arising on revaluation of land and buildings are credited to other
comprehensive income and shown as a revaluation reserve in shareholders’ equity. Decreases that oset
previous increases of the same asset are charged in other comprehensive income and debited against the
revaluation reserve directly in equity; all other decreases are charged to profit or loss. Each year the dierence
between depreciation based on the revalued carrying amount of the asset charged to profit or loss and
depreciation based on the asset’s original cost is transferred from the revaluation reserve to retained earnings.
Freehold land and assets in the course of construction are not depreciated. Leased properties are depreciated
over the period of the lease. Depreciation on other assets is calculated using the straight-line method to
allocate their cost or revalued amounts to their residual values over their estimated useful lives, as follows:
• Buildings 0.67% – 2.00%
• Plant, machinery and equipment 5.00% – 33.33%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 1.6).
Gains and losses on disposals are determined by comparing the proceeds with carrying amount and are
recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve
relating to the assets are transferred to retained earnings.
1.5 Intangible assets
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the
net identifiable assets of the acquired subsidiary/jointly-controlled entity or business concern at the date
of acquisition. Goodwill on acquisitions of subsidiaries/business concerns is included in intangible assets.
Goodwill on acquisitions of jointly-controlled entities is included in investments in jointly-controlled entities.
Goodwill is recognised separately within intangible assets and is tested annually for impairment and carried at
cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on
the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to
those cash-generating units or groups of cash-generating units that are expected to benefit from the business
combination in which the goodwill arose, identified according to operating segment. A cash-generating unit
to which goodwill has been allocated is tested for impairment annually, and whenever there is an indication
that the unit may be impaired by comparing the carrying amount of the unit, including the goodwill, with the
recoverable amount of the unit. The recoverable amount is the higher of fair value less costs to sell and value
in use.
Franchises and intellectual knowhow are initially shown at historical cost. The useful life of the franchises
and intellectual knowhow are periodically assessed and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method to allocate the cost of franchises and intellectual
knowhow over their estimated useful lives (5 to 25 years).
1.6 Impairment of non–financial assets
Assets (including goodwill) that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment. Assets that are subject to amortisation or depreciation are reviewed 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 carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suered an
impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
66
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1.3 FOREIGN CURRENCY TRANSLATION continued
1.7 Investments in subsidiaries and jointly–controlled entities
In the Company’s separate financial statements, investments in subsidiaries and jointly-controlled entities are
accounted for by the cost method of accounting, that is, at cost less impairment. Provisions are recorded
where, in the opinion of the Directors, there is an impairment in value. Where there has been an impairment in
the value of an investment, it is recognised as an expense in the period in which the diminution is identified. The
Company gathers objective evidence that an investment is impaired using the same process disclosed in Note
1.8. The results of associates are reflected in the Company’s separate financial statements only to the extent of
dividends receivable. On disposal of an investment, the dierence between the net disposal proceeds and the
carrying amount is charged or credited to profit or loss.
Loans for which settlement is neither planned nor likely to occur in the foreseeable future are, in substance,
an extension of the Company's investment in that subsidiary. These are accounted for in accordance with the
requirements of IAS 27. Loans to subsidiaries for which settlement is planned are classified as loans and/or
receivables in accordance with the requirements of IFRS 9.
1.8 Financial assets
Classification
The Group classifies its financial assets as financial assets measured at amortised costs. The classification
depends on the entity’s business model for managing the financial assets and the contractual terms of the cash
flows. The Group classifies its financial assets at amortised cost only if both the following criteria are met:
• The asset is held within a business model whose objective is to collect the contractual cash flows, and
• The contractual terms give rise to cash flows that are solely payments of principal and interest.
Assessment whether contractual cash flows are solely payments of principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial
recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated
with the principal amount outstanding during a particular period of time and for other basic lending risks and
costs (e.g. liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group
considers the contractual terms of the instrument. This includes assessing whether the financial asset contains
a contractual term that could change the timing or amount of contractual cash flows such that it would not
meet this condition.
Recognition and measurement
Regular way purchases and sales of financial assets are recognised on the trade date, which is the date on
which the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights
to receive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition
of the financial asset.
Interest income on debt instruments measured at amortised cost from these financial assets is included in
finance income using the eective interest rate method. Any gain or loss arising on derecognition of these
instruments is recognised directly in profit or loss and presented in other gains/(losses) together with foreign
exchange gains and losses. Impairment losses are presented within operating profit in the consolidated
statement of profit or loss.
Impairment
The Group assesses on a forward-looking basis the expected credit losses (ECL) associated with its debt
instruments carried at amortised cost. The impairment methodology applied depends on whether there has
been a significant increase in credit risk. The Group’s financial assets are subject to the expected credit loss
model.
Expected credit loss model
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are
measured at 12-month ECLs:
• debt securities that are determined to have low credit risk at the reporting date; and
• other debt securities and bank balances for which credit risk has not increased significantly since initial
recognition.
When determining whether the credit risk of a financial asset has increased significantly since initial
recognition and when estimating ECLs, the Group considers reasonable and supportable information that is
relevant and available without undue cost or eort. The Group assumes that the credit risk on a financial asset
has increased significantly if it is more than 30 days past due, and it considers a financial asset to be in default
when the borrower is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to
actions such as realising security (if any is held); or the financial asset is more than 90 days past due.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial
instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within
the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than
12 months). The maximum period considered when estimating ECLs is the maximum contractual period over
which the Group is exposed to credit risk.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of
all cash shortfalls. ECLs are discounted at the eective interest rate of the financial asset.
At each reporting date, the Group assesses whether financial assets carried at amortised cost are credit-
impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on
the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-
impaired includes observable data such as significant financial diculty of the borrower or issuer, or a breach
of contract such as a default or being more than 90 days past due.
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount
of the assets.
67
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
Simplified approach model
For trade receivables, the Group applies the simplified approach required by IFRS 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables.
The expected loss rates are based on the payment profiles of sales over a period of up to 60 months before
the reported period end, and the corresponding historical credit losses experienced within this period. The
historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors
aecting the liability of the customers to settle the receivable. Trade receivables are written o when there is
no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include,
among others, the probability of insolvency or significant financial diculties of the debtor. Impaired debts are
derecognised when they are assessed as uncollectible.
1.9 Inventories
Inventories are stated at the lower of cost and net realisable value. Inventories of raw materials are determined
using the first-in first-out method and those of spare parts on a weighted average basis. The cost of raw
materials comprises the cost of direct materials and includes transport and handling charges. The cost of
finished goods comprises raw materials, other direct costs and related production overheads. Net realisable
value is the estimate of the selling price in the ordinary course of business, less the costs of completion and
selling expenses. In the case of bottles, cases and kegs, the net realisable value is arrived at after providing for
an annual charge calculated to write down the costs over their estimated useful lives.
1.10 Trade and other receivables
Trade receivables comprise amounts due from clients and customers for goods and services delivered and
performed in the ordinary course of business. If collection is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as current assets. If not, they are presented as
non-current assets.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
eective interest method, less expected credit loss allowances.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognised at fair value. The Group holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently
at amortised cost using the eective interest method.
1.11 Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in the income statements
except to the extent that it relates to items recognised directly in other comprehensive income. In this case the
tax is also recognised in other comprehensive income.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognised using the liability method, on temporary dierences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities
are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction aects neither accounting nor taxable profit or loss. Deferred tax is determined
using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period
and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Under this method the Group is required to make a provision for deferred taxes on the revaluation of
certain non-current assets and derivative contracts. Such deferred tax is charged or credited directly to the
revaluation reserve and hedging reserve. Deferred tax on the dierence between the actual depreciation on
the property and the equivalent depreciation based on the historical cost of the property is realised through
the income statements.
Deferred tax assets are recognised only to the extent that it is probable that future taxable profits will be
available against which the unutilised tax credits, tax losses and unabsorbed capital allowances can be utilised.
Deferred tax is provided on temporary dierences arising on investments in subsidiaries, except for deferred
income tax where the timing of the reversal of the temporary dierence is controlled by the Group and it is
probable that the temporary dierence will not reverse in the foreseeable future.
Deferred tax assets and liabilities are oset when there is a legally enforceable right to oset current tax assets
against current tax liabilities and when the deferred tax assets and liabilities relate to income tax levied by
the same taxation authority on either the same taxable entity or dierent taxable entities where there is an
intention to settle the balances on a net basis.
1.12 Cash and cash equivalents
Cash and cash equivalents are carried in the statements of financial position at face value. In the statements
of cash flows, cash and cash equivalents includes cash in hand, deposits held at call with banks and bank
overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the statements of financial
position.
1.13 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the
issue of new shares or for the acquisition of a business, are included in the cost of acquisition as part of the
purchase consideration.
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial
statements in the period in which the dividends are approved by the Company’s shareholders.
1.14 Borrowings
Borrowings are recognised initially at the fair value of proceeds received, net of transaction costs incurred.
Borrowings are subsequently carried at amortised cost; any dierence between the proceeds (net of transaction
costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the
eective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least twelve months after the end of the reporting period.
68
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1.8 FINANCIAL ASSETS continued
1.15 Provisions
Provisions (including restructuring costs) are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
Restructuring provisions principally comprise termination benefits.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost.
1.16 Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement
date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group
recognises termination benefits when it is demonstrably committed to either: terminating the employment
of current employees according to a detailed formal plan without possibility of withdrawal; or providing
termination benefits as a result of an oer made to encourage voluntary redundancy. Benefits falling due after
more than twelve months after the end of the reporting period are discounted to present value.
1.17 Trade and other payables
Trade payables comprise obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Accounts payable are classified as current liabilities if payment is due within
one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-
current liabilities.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost
using the eective interest method.
1.18 Financial liabilities
The Group recognises a financial liability in its statement of financial position when it becomes a party to the
contractual provisions of the instrument. The Group’s financial liabilities, other than derivative contracts, are
classified as financial liabilities measured at amortised cost, i.e. not at fair value through profit or loss under
IFRS 9. Financial liabilities not at fair value through profit or loss are recognised initially at fair value, being the
fair value of consideration received, net of transaction costs that are directly attributable to the acquisition or
the issue of the financial liability. These liabilities are subsequently measured at amortised cost. The Group
derecognises a financial liability from its statement of financial position when the obligation specified in the
contract or arrangement is discharged, is cancelled or expires.
1.19 Osetting financial instruments
Financial assets and liabilities are oset and the net amount reported in the statements of financial position
when there is a legally enforceable right to set o the recognised amounts and there is an intention to settle on
a net basis, or realise the asset and settle the liability simultaneously.
1.20 Revenue recognition
Revenues include all revenues from the ordinary business activities of the Group. Ordinary activities do not
only refer to the core business but also to other recurring sales of goods or rendering of services. Revenues
are recorded net of value added tax. The Group’s business includes the brewing, production and sale of
branded beers and beverages, the importation, wholesale and retail of food and beverages, including wines
and spirits and the operation of franchised food retailing establishments.
a. Sale of goods and services
Revenues are recognised in accordance with the provision of goods or services, provided that collectability of
the consideration is probable.
IFRS 15 requires that at contract inception the goods or services promised in a contract with a customer are
assessed and each promise to transfer to the customer the good or service is identified as a performance
obligation. Promises in a contract can be explicit or implicit if the promises create a valid expectation
to provide a good or service based on the customary business practices, published policies, or specific
statements.
A contract asset must be recognised if the Group’s recorded revenue for fulfilment of a contractual
performance obligation before the customer paid consideration or before – irrespective of when payment is
due – the requirements for billing and thus the recognition of a receivable exist. The Group classifies a contract
asset as accrued income.
A contract liability must be recognised when the customer paid consideration or a receivable from the
customer is due before the Group fulfilled a contractual performance obligation and thus recognised revenue.
The Group classifies the contract liabilities as advanced deposits or deferred income.
IFRS 15 provides more detailed guidance on how to account for contract modifications. Changes must be
accounted for either as a retrospective change (creating either a catch up or deferral of previously recorded
revenues), prospectively with a reallocation of revenues amongst identified performance obligations, or
prospectively as separate contracts which will not require any reallocation.
Sales of goods – wholesale
The Group brews, produces and imports a wide range of branded beers and food and beverages including
wines and spirits to the wholesale market.
Sales are recognised when control of the products has transferred, being when the products are delivered to
the wholesaler, the wholesaler has full discretion over the channel and price to sell the products, and there is no
unfulfilled obligation that could aect the wholesaler’s acceptance of the products. Delivery occurs when the
products have been shipped to the specific location, the risks of obsolescence and loss have been transferred
to the wholesaler, and either the wholesaler has accepted the products in accordance with the sales contract,
the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance
have been satisfied.
69
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
The Group’s products are sometimes sold with retrospective volume discounts based on aggregate sales over
a 12 month period. Revenue from these sales is recognised based on the price specified in the contract, net of
the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts,
using the expected value method, and revenue is only recognised to the extent that it is highly probable that a
significant reversal will not occur.
A liability (included in trade and other payables) is recognised for expected volume discounts payable to
customers in relation to sales made until the end of the reporting period. No element of financing is deemed
present as the sales are made with a credit term of less than one year, which is consistent with market practice.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due.
Branded beers, beverages and food products are often sold with a right of return. Right to the returned goods
are recognised for the products expected to be returned. Accumulated experience is used to estimate such
returns at the time of sale at a portfolio level (expected value method). Because the number of products
returned has been steady for years, it is highly probable that a significant reversal in the cumulative revenue
recognised will not occur. The validity of this assumption and the estimated amount of returns are reassessed
at each reporting date.
Sales of goods – retail
The Group operates a dedicated retail outlet showcasing its wide range of manufactured and imported
branded beers and beverages including wines and spirits. It also operates a number of franchised food
retailing establishments. Revenue from the sale of goods is recognised when a Group entity sells a product to
the customer.
Payment of the transaction price is due immediately when the customer purchases the product and takes
delivery in store. It is the Group’s policy to sell its products to the end customer with a right of return.
Therefore, a refund liability and a right to the returned goods are recognised for the products expected to
be returned. Accumulated experience is used to estimate such returns at the time of sale at a portfolio level
(expected value method). Because the number of products returned has been steady for years, it is highly
probable that a significant reversal in the cumulative revenue recognised will not occur. The validity of this
assumption and the estimated amount of returns are reassessed at each reporting date.
Sales of services
Sales of services are recognised in the accounting period in which the services are rendered, by reference to
completion of the specific transaction assessed on the basis of the actual service provided as a proportion of
the total services to be provided.
Financing
The Group does not expect to have any contracts where the period between the transfer of the promised
goods or services to the customer and payment by the customer exceeds one year. As a consequence, the
Group does not adjust any of the transaction prices for the time value of money.
b. Property related income
Rentals and short-term lets receivable on immovable property are recognised in the period when the property
is occupied.
c. Finance income
Finance income is recognised on a time-proportion basis using the eective interest method. When a
receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the
estimated future cash flows discounted at the original eective interest rate of the instrument, and continues
unwinding the discount as finance income.
d. Dividend income
Dividend income is recognised when the right to receive payment is established.
1.21 Leases
The Group and Company are the lessee
The Group leases various oces, warehouses and catering outlets. The Company leases warehouses. Rental
lease and ground rent contracts are typically made for fixed periods of 4 years to 150 years but may have
extension options as described below. Lease terms are negotiated on an individual basis and contain a wide
range of dierent terms and conditions. The lease agreements do not impose any covenants. Leased assets
may or may not be used as security for borrowing purposes.
At inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
With eect from 1 February 2019, leases are recognised as a right-of-use asset and a corresponding liability at
the date at which the leased asset is available for use by the Group and the Company.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include
the net present value of the following lease payments:
a. fixed payments (including in-substance fixed payments), less any lease incentives receivable;
b. variable lease payments that are based on an index or a rate, initially measured using the index or rate as
at the commencement date;
Lease payments to be made under reasonably certain extension options are also included in the measurement
of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group and the Company, the lessee’s incremental
borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds
necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with
similar terms, security and conditions.
70
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1.20 REVENUE RECOGNITION continued
To determine the incremental borrowing rate, the Group and Company:
a. where possible, uses recent third-party financing received by the lessee as a starting point, adjusted to
reflect changes in financing conditions since third party financing was received;
b. uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by
the Group and Company, where there is no third-party financing; and
c. makes adjustments specific to the lease.
The Group and Company are exposed to potential future increases in variable lease payments based on an
index or rate, which are not included in the lease liability until they take eect. When adjustments to lease
payments based on an index or rate take eect, the lease liability is reassessed and adjusted against the right-
of-use asset. Lease payments are allocated between principal and finance cost. The finance cost is charged
to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining
balance of the liability for each period.
Right–of–use assets are measured at cost comprising the following:
a. the amount of the initial measurement of lease liability;
b. any lease payments made at or before the commencement date less any lease incentives received; and
c. any initial direct costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a
straight-line basis.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term
of 12 months or less.
Variable lease payments
Some Group property leases contain variable payment terms that are linked to sales generated from the
outlet. For individual outlets, up to 100% of lease payments are on the basis of variable payment terms with
percentages ranging from 6.5% to 8.5% of sales. Variable lease payments that depend on sales are recognised
in profit or loss in the period in which the condition that triggers those payments occurs. A 10% increase in
sales across all outlets in the Group with such variable lease contracts would increase total lease payments by
approximately €101,000 (2021: €65,000).
Extension and termination options
Extension and termination options are included in a number of property leases across the Group. These are
used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The
majority of extension and termination options held are exercisable only by the Group and not by the respective
lessor.
In determining the lease term, Management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods
after termination options) are only included in the lease term if the lease is reasonably certain to be extended
(or not terminated).
For leases of properties, the following factors are normally the most relevant:
a. If there are significant penalties to terminate (or not extend), the Group is typically reasonably certain to
extend (or not terminate);
b. If any leasehold improvements are expected to have a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate);
c. Otherwise, the Group considers other factors including historical lease durations and the costs and
business disruption required to replace the leased asset.
As at 31 January 2022, potential future cash outflows of €3,885,000 (2021: €8,020,000) (undiscounted) on
Group leases have not been included in the lease liability because it is not reasonably certain that the leases
will be extended (or not terminated).
The lease term is reassessed if an option is actually exercised (or not exercised) or the Group becomes obliged
to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a
significant change in circumstances occurs, which aects this assessment, and that is within the control of the
lessee.
1.22 Borrowing costs
Borrowing costs which are incurred for the purpose of acquiring or constructing qualifying property, plant
and equipment or investment property are capitalised as part of its cost. Borrowing costs are capitalised
while acquisition or construction is actively underway, during the period of time that is required to complete
and prepare the asset for its intended use. Capitalisation of borrowing costs is ceased once the asset is
substantially complete and is suspended if the development of the asset is suspended. All other borrowing
costs are expensed. Borrowing costs are recognised for all interest-bearing instruments on an accrual basis
using the eective interest method. Interest costs include the eect of amortising any dierence between
initial net proceeds and redemption value in respect of the Group’s interest-bearing borrowings.
1.23 Earnings per share
The Group presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by
dividing the consolidated profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding at the end of the period.
71
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
1.21 LEASES continued
1.24 Segment reporting
The Group determines and presents operating segments based on the information that internally is provided
to the Board of Directors, which is the Group’s chief operating decision maker in accordance with the
requirements of IFRS 8 ‘Operating Segments’.
An operating segment is a component of the Group that engages in business activities from which it may
earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components, and for which discrete financial information is available. An operating segment’s
operating results are reviewed regularly by the Board of Directors to make decisions about resources to be
allocated to the segment and to assess its performance executing the function of the chief operating decision
maker.
1.25 Derivative financial instruments
Derivative financial instruments, including interest rate swap agreements and forward foreign exchange
contracts are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently remeasured at their fair value.
The Group has elected to continue applying the IAS 39 hedge accounting rules. The method of recognising
the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so,
the nature of the item being hedged. The Group designates certain derivatives as either: (1) hedges of the
fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or (2) hedges of highly
probable forecast transactions (cash flow hedges).
The fair value of forward foreign exchange contracts is determined using forward exchange market rates at
the reporting date. The fair value of interest rate swaps is mainly based on the present value of the estimated
future cash flows.
All derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative. The
full fair value of hedging derivatives is classified as a non-current asset or liability when the remaining maturity
of the hedged item is more than twelve months, and as a current asset or liability when the remaining maturity
of the hedged item is less than twelve months. Trading derivatives are classified as a current asset or liability.
On the date a derivative contract is entered into, the Group designates certain derivatives as a hedge of a
future cash flow attributable to a recognised asset or liability or a forecast transaction (cash flow hedge).
Hedge accounting is used for derivatives designated in this way provided certain criteria are met. In
accordance with the requirements of IAS 39, the criteria for a derivative instrument to be accounted for as a
cash flow hedge include:
• formal documentation of the hedging instrument, hedged item, hedging objective, strategy and
relationship is prepared before hedge accounting is applied;
• the hedge is documented showing that it is expected to be highly eective in osetting the risk in the
hedged item throughout the reporting period; and
• the hedge is eective on an ongoing basis.
Accordingly, the Group documents at the inception of the transaction the relationship between hedging
instruments and hedged items, as well as its risk management objective and strategy for undertaking various
hedge transactions. The Group also documents its assessment, both at hedge inception and on an ongoing
basis, of whether the derivatives that are used in hedging transactions are highly eective in osetting
changes in fair values or cash flows of hedged items.
a. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in
the statements of comprehensive income, together with any changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk.
b. Cash flow hedge
The eective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges are recognised in equity. The gain or loss relating to the ineective portion is recognised immediately
in the income statements.
Amounts accumulated in equity are recycled in the income statements in the periods when the hedged item
will aect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a
non-financial asset or a liability, the gains and losses previously deferred in equity are transferred from equity
and included in the initial measurement of the cost of the asset or liability.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when
the forecast transaction is ultimately recognised in the income statements. When a forecast transaction is no
longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to
the income statements.
1.26 Institutional grants
Grants that compensate the Group for expenses incurred are recognised in the income statement on a
systematic basis in the same reporting periods in which the expenses are incurred. This compensation is
disclosed in the same reporting line as the related expense.
Institutional grants are recognised in the statement of financial position initially as deferred income when there
is reasonable assurance that they will be received and that the Group will comply with the conditions attaching
to them.
Grants that compensate the Group for the cost of an asset are recognised in the income statement on a
systematic basis over the useful life of the asset to match the depreciation charge. Capital grants are recorded
as deferred income and released to the income statement over the estimated useful life of the related assets.
72
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
2.1 Financial risk factors
The Group’s activities potentially expose it to a variety of financial risks: market risk (including currency risk,
fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall
risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse
eects on the Group’s financial performance. From time to time, the Group enters into foreign exchange
contracts and interest rate swap agreements to hedge certain risk exposures during the current and preceding
financial years. Risk management is carried out by a central treasury department (Group treasury) under
policies approved by the Board of Directors.
a. Market risk
i. Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
which are denominated in a currency that is not the respective Group entity’s functional currency. The
Group is exposed to foreign exchange risk arising primarily from the Group’s purchases, a part of which are
denominated in the US dollar and the GB pound.
Management does not consider foreign exchange risk attributable to recognised liabilities arising from
purchase transactions to be significant since balances are settled within very short periods in accordance
with the negotiated credit terms. Periodically, the Group enters into forward contracts on specific
transactions to manage its exposure to fluctuations in foreign currency exchange rates. The Group’s and
Company’s loans and receivables, cash and cash equivalents and borrowings are denominated in euro.
Accordingly, a sensitivity analysis for foreign exchange risk disclosing how profit or loss and equity would
have been aected by changes in foreign exchange rates that were reasonably possible at the end of
reporting year is not deemed necessary.
ii. Cash flow and fair value interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest
rates. The Group’s interest rate risk arises from borrowings. Borrowings issued at variable rates, comprising
bank borrowings (Note 18), expose the Group to cash flow interest rate risk. The Group’s borrowings are
subject to an interest rate that varies according to revisions made to the Bank’s Base Rate. Management
monitors the level of floating rate borrowings as a measure of cash flow risk taken on. Interest rates on
these financial instruments are linked with the Central Intervention Rate issued by the European Central
Bank. Borrowings issued at fixed rates, consist primarily of unsecured bonds which are carried at amortised
cost (Note 18), and therefore do not expose the Group to cash flow and fair value interest rate risk.
The Group entered into interest-rate swap agreements, with respect to loans which have significant
exposure to cash flow interest rate risk arises in respect of interest payments relating to borrowings
amounting to €5,813,000 (2021: €7,400,000) that are subject to interest at floating rates linked to Euribor.
These swap agreements provide a cash flow hedging relationship in respect of variability of future floating
interest payments. These agreements cover interest payments on the total amount of these borrowings.
Accordingly, this hedging instrument has been designated as cash flow hedges on the interest rate risk,
that is, volatility in floating interest amounts. Up to the reporting date, the Group did not have any hedging
arrangements with respect to the exposure of interest rate risk on other interest-bearing liabilities.
Based on the above, management considers the potential impact on profit or loss of a defined interest rate
shift that is reasonably possible at the end of the reporting period to be immaterial.
b. Credit risk
Credit risk principally arises from cash and cash equivalents comprising deposits with financial institutions,
and other receivables, as well as credit exposures to wholesale and retail customers, including outstanding
receivables and committed transactions. The Group’s and the Company’s principal exposures to credit risk as
at the end of the reporting period are analysed as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Financial assets measured at amortised cost
Trade and other receivables 20,747 16,162 21,376 22,233
Cash at bank and in hand (Note 11) 15,720 17,148 3,057 2,664
36,467 33,310 24,433 24,897
The maximum exposure to credit risk at the end of the reporting period in respect of the financial assets
mentioned above is equivalent to their carrying amount as disclosed in the respective notes to the financial
statements. The figures disclosed in the table above in respect of trade and other receivables exclude
prepayments.
Security
For trade and other receivables amounting to €2,200,000 (2021: €1,700,000), the Group may obtain
security in the form of guarantees and deeds of undertaking or letters of credit which can be called on if the
counterparty is in default under the terms of the agreement.
Trade and other receivables
The Group assesses the credit quality of its trade customers, the majority of which are unrated, taking into
account financial position, past experience and other factors. The Group’s exposure to credit risk is influenced
mainly by the individual characteristics of each customer. It has policies in place to ensure that sales of goods
and services are transacted with customers with an appropriate credit history. Standard credit terms are in
place for individual clients, however, wherever possible, new corporate customers are analysed individually
for creditworthiness before the Group’s standard payment and product delivery terms and conditions are
oered. The creditworthiness analysis for new customers includes a review through external creditworthiness
databases when available. The Group monitors the performance of its trade and other receivables on a regular
basis to identify incurred collection losses, which are inherent in the Group’s debtors, taking into account
historical experience in collection of accounts receivable.
2. Financial risk
management
73
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
In view of the nature of the Group’s activities and the market in which it operates, a limited number of
customers account for a certain percentage of the Group’s trade and other receivables. Whilst no individual
customer or group of dependent clients is considered by management as a significant concentration of credit
risk with respect to contractual debts, these material exposures are monitored and reported more frequently
and rigorously. These customers trade frequently with the respective Group entities and are deemed by
management to have good credit standing, usually taking cognisance of the performance history without
defaults.
The Group manages credit limits and exposures actively in a practicable manner such that past due amounts
receivable from clients are within controlled parameters. The Group’s trade and other receivables, which
are not credit impaired financial assets, are principally debts in respect of transactions with customers for
whom there is no recent history of default. Management does not expect any significant losses from non-
performance by these customers.
Impairment of trade receivables
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on
shared credit risk characteristics and the days past due. Contract assets have substantially the same risk
characteristics as the trade receivables for the same types of contracts.
The expected loss rates are based on the payment profiles of sales over a period of time before the reporting
date and the corresponding historical credit losses experienced within this period. The historical loss rates are
adjusted to reflect current and forward-looking information on macroeconomic factors aecting the ability of
the customers to settle the receivables. The Group adjusts the historical loss rates based on expected changes
in these factors. The Group has in this respect taken a view of a worsened forward-looking loss rate compared
to historical loss rates in its evaluation of the uncertainty generated by COVID-19 pandemic on the economic
reality of the Group’s receivables.
On that basis, the loss allowance for the Group as at 31 January was determined by applying:
• An expected loss rate ranging from 0.09% to 1.80% (2021: ranging from 0.09% to 3.18%) on all credit sales
generated in the preceding 24-months prior to 31 January resulting in a loss allowance of €747,000 (2021:
€2,189,000) for the Group and €463,000 (2021: €1,508,000) for the Company.
• An expected loss rate of 100% on all outstanding dues generated before the preceding 24-months prior to
31 January (i.e. all trade receivables exceeding two years) resulting in a loss allowance of €2,170,000 (2021:
€1,777,000) for the Group and €1,475,000 (2021: €787,000) for the Company.
Impairment of other receivables
The Group applies the general model to measuring expected credit losses for all trade loan dues.
To measure the expected credit losses, trade loans have been grouped based on shared credit risk
characteristics and the days past due. The Group assesses the credit quality of these loans taking into account
financial position, repayment patterns, past experience and other factors including history of default from
the credit terms issued. Trade loans are categorised into stages for IFRS 9 purposes based on the factors
highlighted above.
On that basis, the loss allowance for the Group and the Company as at 31 January was determined by applying:
• An expected loss rate averaging at 2.3% (2021: 3.2%) on all trade loans granted within contract terms
classified under stages 1 and 2 resulting in a loss allowance of €1,385,000 (2021: €1,370,000).
• An expected loss rate of 100% on all outstanding dues on trade loans that exceeded the credit terms
granted by the Group and Company and hence classified under stage 3 resulting in a loss allowance of
€676,000 (2021: €930,000).
Credit loss allowances include specific provisions against credit impaired individual exposures with the amount
of the provisions being equivalent to the balances attributable to credit impaired receivables. The closing loss
allowances for trade and other receivables as at 31 January reconcile to the opening loss allowances as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Expected
loss
model
Expected
loss
model
Expected
loss
model
Expected
loss
model
Trade receivables
Balance at 1 February 3,966 3,322 2,295 1,756
Movement in loss allowance recognised
in profit or loss during the year (1,050) 644 (357) 539
Balance at 31 January 2,916 3,966 1,938 2,295
Other receivables
Balance at 1 February 2,300 1,157 2,300 1,157
Movement in loss allowance recognised
in profit or loss during the year (238) 1,143 (238) 1,143
Balance at 31 January 2,062 2,300 2,062 2,300
Total loss allowance as at year end 4,978 6,266 4,000 4,595
The Group established an allowance for impairment that represented its estimate of expected credit losses
in respect of trade and other receivables. The individually credit impaired trade receivables mainly relate to
a number of independent customers which are in unexpectedly dicult economic situations and which are
accordingly not meeting repayment obligations. Hence, provisions for impairment in respect of credit impaired
balances with corporate trade customers relate to entities which are in adverse trading and operational
circumstances.
74
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
2.1 FINANCIAL RISK FACTORS continued
Trade and other receivables are written o when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to honour
a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 36
months past due.
Impairment losses on trade receivables and contract assets are presented as net impairment losses within
operating profit. Subsequent recoveries of amounts written o are credited against the same line item.
As at 31 January 2022, outstanding Group trade receivables of less than two years amounting to €17,670,000
(2021: €18,360,000) have an allocated loss allowance of €747,000 (2021: €2,189,000). Outstanding Group
trade receivables of more than two years amounting to €2,170,000 (2021: €1,777,000) were fully provided.
As at 31 January 2022, outstanding Company trade receivables of less than two years amounting to
€10,000,000 (2021: €9,670,000) have an allocated loss allowance of €460,000 (2021: €1,508,000).
Outstanding Company trade receivables of more than two years amounting to €1,475,000 (2021: €787,000)
were fully provided.
As at 31 January 2022, outstanding trade loan receivables not overdue amounting to €3,500,000 (2021:
€3,203,000) have an allocated loss allowance of €1,385,000 (2021: €1,370,000). Outstanding trade loan
receivables overdue amounting to €676,000 (2021: €930,000) were fully provided.
Cash and cash equivalents
The Group and the Company principally banks with local and European financial institutions with high-quality
standing or rating. While cash and cash equivalents are also subject to the impairment requirements of IFRS 9,
the identified impairment loss is insignificant.
Amounts due from subsidiaries
The Company’s receivables include receivables from subsidiaries. The Company monitors intra-group credit
exposures at individual entity level on a regular basis and ensures timely performance of these assets in the
context of overall Group liquidity management. The Company assesses the credit quality of these related
parties taking into account financial position, performance and other factors. The Company takes cognisance
of the related party relationship with these entities and management does not expect any significant losses
from non-performance or default.
Since amounts due from subsidiaries are repayable on demand, expected credit losses are based on the
assumption that repayment of the balance is demanded at the reporting date. Accordingly, the expected
credit loss allowance attributable to such balances is insignificant.
Derivative financial instruments
Credit risk arising from derivative financial instruments lies in the insolvency of the contracting party and
as a consequence, in the amount of the sum, on balance, of positive market values vis-à-vis the respective
derivative counterparties. Derivative transactions are concluded with first rate local banking institutions.
c. Liquidity risk
The Group is exposed to liquidity risk in relation to meeting future obligations associated with its financial
liabilities, which comprise principally borrowings and trade and other payables (Notes 18 and 22). Prudent
liquidity risk management includes maintaining sucient cash and committed credit lines to ensure the
availability of an adequate amount of funding to meet the Group’s obligations.
Management monitors liquidity risk by means of cash flow forecasts on the basis of expected cash flows over
a twelve-month period and ensures that adequate financing facilities are in place for the coming year. The
carrying amounts of the Group’s assets and liabilities are analysed into relevant maturity groupings based on
the remaining period at the end of the reporting period to the contractual maturity date in the respective notes
to the financial statements.
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based
on the remaining period at the end of the reporting period to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows. Balances due within twelve months equal
their carrying amounts, as the impact of discounting is not significant.
Carrying amount
Contractual cash
flows
Within
one year
One to
five years
Over
five years
€’000 €’000 €’000 €’000 €’000
GROUP
31 January 2022
Borrowings 25,984 30,816 2,806 7,310 20,700
Lease liabilities 8,290 10,453 1,618 5,972 2,863
Trade and other payables 35,553 35,553 32,905 2,648 –
69,827 76,822 37,329 15,930 23,563
31 January 2021
Borrowings 35,739 41,706 3,519 14,097 24,090
Lease liabilities 5,647 7,644 1,436 3,080 3,128
Trade and other payables 24,742 24,742 21,940 2,802 –
66,128 74,092 26,895 19,979 27,218
75
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
2.1 FINANCIAL RISK FACTORS continued
Carrying amount
Contractual cash
flows
Within
one year
One to
five years
Over
five years
€’000 €’000 €’000 €’000 €’000
COMPANY
31 January 2022
Borrowings 25,631 30,463 2,453 7,310 20,700
Lease liabilities 340 792 7 30 755
Trade and other payables 25,110 25,110 22,462 2,648 –
51,081 56,365 24,922 9,988 21,455
31 January 2021
Borrowings 35,739 41,706 3,519 14,097 24,090
Lease liabilities 491 1,108 161 184 763
Trade and other payables 17,319 17,319 14,517 2,802 –
53,549 60,133 18,197 17,083 24,853
The table below analyses the Group’s principal derivative financial liabilities that will be settled on a net
basis into relevant maturity groupings based on the remaining period at the end of the reporting period to
the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted
cash flows.
Within
one year
One to
five years Total
€’000 €’000 €’000
Group and Company
31 January 2022
Interest rate derivative
– Interest-rate swap 110 45 155
31 January 2021
Interest rate derivative
– Interest-rate swap 161 156 317
2.2 Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an
optimal capital structure to reduce the cost of capital.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as total net borrowings
(including lease liabilities) divided by total capital. The Group and Company consider total capital to be equity
and total net borrowings.
Total borrowings include unsecured bonds issued by the Company. The gearing ratios at 31 January 2022 and
2021 were as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Total borrowings (Notes 18 and 19) 34,274 41,386 25,971 36,230
Less cash at bank and in hand (Note 11) (15,720) (17,148) (3,057) (2,664)
18,554 24,238 22,914 33,566
Total equity 129,188 119,654 121,601 114,424
Total equity and net borrowings 147,742 143,892 144,515 147,990
Gearing 12.56% 16.84% 15.86% 22.68%
2.3 Fair values
Fair values of instruments not carried at fair value
At 31 January 2022 and 2021 the carrying amounts of cash at bank, trade and other receivables, trade and
other payables and current borrowings reflected in the financial statements are reasonable estimates of fair
value in view of the nature of these instruments or the relatively short period of time between the origination
of the instruments and their expected realisation. The fair value of amounts owed by subsidiaries which are
current or repayable on demand is equivalent to their carrying amount.
The fair value of non-current financial instruments for disclosure purposes is estimated by discounting the
future contractual cash flows at the current market interest rate that is available to the Group for similar
financial instruments. The fair value of the Group’s non-current floating interest rate bank borrowings at the
end of the reporting period is not significantly dierent from the carrying amounts.
76
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
2.1 FINANCIAL RISK FACTORS continued
Fair values estimation in relation to financial instruments carried at fair value
The Group’s financial instruments which are carried at fair value include derivative financial instruments
designated as hedging instruments (Note 16).
The Group is required to disclose fair value measurements by level of the following fair value measurement
hierarchy for financial instruments that are measured in the statement of financial position at fair value:
• Quoted prices (unadjusted) in active markets for identical assets (level 1);
• Inputs other than quoted prices included within level 1 that are observable for the asset either directly, that
is, as prices, or indirectly, that is, derived from prices (level 2);
• Inputs for the asset that are not based on observable market data, that is, unobservable inputs (level 3).
2022
Level 2
2021
Level 2
€’000 €’000
Group and Company
Liabilities
Interest rate derivative
– Interest-rate swap (Note 17) 155 317
Estimates and judgements are continually evaluated and based on historical experience and other factors
including expectations of future events that are believed to be reasonable under the circumstances.
In the opinion of the Company Directors, the accounting estimates and judgements made in the course of
preparing these financial statements, except as disclosed in Notes 5, 17 and 20 and accounting policy 1.21 are
not dicult, subjective or complex to a degree which would warrant their description as critical in terms of the
requirements of IAS 1.
Management has determined the operating segments based on the reports reviewed by the Board of Directors
that are used to make strategic decisions.
The Board of Directors considers the Group’s business mainly from a productive and commercial perspective
as geographically operations are carried out, predominantly, on the local market.
The Group does not have any particular major customer, as it largely derives revenue from a significant number
of consumers availing of its products and services. Accordingly, the Group has not identified any relevant
disclosures in respect of reliance on major customers.
The Group’s productive and commercial operations are segregated primarily into brewing, production and sale
of branded beers and beverages, the importation, wholesale and retail of food and beverages, including wines
and spirits and the operation of franchised food retailing establishments.
The Board of Directors assesses the performance of the operating segments based on operating results
adjusted for centralised costs. Interest income and expenditure are not allocated to segments, as this type of
activity is driven by the central treasury function, which manages the cash position of the Group. Since the
Board of Directors reviews adjusted operating results, the results of discontinued operations are not included
in the measure of adjusted operating results.
Sales between segments are carried out at arm’s length. The revenue from external parties reported to the
Board of Directors is measured in a manner consistent with that in the income statements.
The amounts provided to the Board of Directors with respect to total assets are measured in a manner
consistent with that of the financial statements. These assets are allocated based on the operations of the
segment and the physical location of the asset. Segment assets consist primarily of land and buildings, plant,
machinery and equipment, intangible assets, inventories, loans, trade and other receivables and cash and
cash equivalents. Taxation and leases are not considered to be segment assets but rather is managed by the
treasury function.
The amounts provided to the Board of Directors with respect to total liabilities are measured in a manner
consistent with that of the financial statements. These liabilities are allocated based on the operations of the
segment. Segment liabilities comprise trade and other payables and exclude tax, leases and borrowings. The
Group’s interest-bearing liabilities and taxation are not considered to be segment liabilities but rather are
managed by the treasury function.
3. Critical
accounting
estimates and
judgements
4. Segment
information
77
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
2.3 FAIR VALUES continued
Brewing, production
& sale of branded
beers & beverages
Importation,
wholesale & retail of
food & beverages,
including wines
& spirits
Operation of
franchised
food retailing
establishments Group
€’000 €’000 €’000 €’000
2022
Revenue 51,252 31,850 15,745 98,847
Less: inter–segmental sales (1,726) (5,353) – (7,079)
49,526 26,497 15,745 91,768
Segment results 9,927 1,943 1,576 13,446
Net finance costs (1,282)
Profit before tax 12,164
Tax income 264
Profit for the year 12,428
Segment assets 150,309 23,952 10,926 185,187
Unallocated assets 15,745
Total assets 200,932
Segment liabilities 25,796 5,103 4,821 35,720
Unallocated liabilities 36,024
Total liabilities 71,744
Additions to non–current assets 11,041 238 1,399 12,678
Depreciation 6,507 308 824 7,6 39
Amortisation 44 – 26 70
Depreciation on right-of-use assets – – – 1,415
I mpairment provision for trade
receivables (595) (693) – (1,288)
Brewing, production
& sale of branded
beers & beverages
Importation,
wholesale & retail of
food & beverages,
including wines
& spirits
Operation of
franchised
food retailing
establishments Group
€’000 €’000 €’000 €’000
2021
Revenue 43,128 25,990 11,716 80,834
Less: inter–segmental sales (1,569) (6,249) – (7,818)
41,559 19,741 11,716 73,016
Segment results 4,873 (366) 1,166 5,673
Net finance costs (1,246)
Profit before tax 4,427
Tax expense (1,094)
Profit for the year 3,333
Segment assets 142,434 22,111 9,398 173,943
Unallocated assets 13,096
Total assets 187,039
Segment liabilities 18,459 3,273 3,363 25,095
Unallocated liabilities 42,290
Total liabilities 67,385
Additions to non–current assets 9,208 259 671 10,138
Depreciation 6,804 292 718 7,814
Amortisation 32 – 41 73
Depreciation on right-of-use assets – – – 1,405
I mpairment provision for trade
receivables 1,682 105 – 1,787
78
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
4. SEGMENT INFORMATION continued
Land & buildings
Assets in course of
construction
Plant, machinery
& equipment Total
€’000 €’000 €’000 €’000
GROUP
At 1 February 2020
Cost or valuation 92,113 3,861 136,375 232,349
Accumulated depreciation and impairment (11,684) - (101,039) (112,723)
Net book value 80,429 3,861 35,336 119,626
Year ended 31 January 2021
Opening net book value 80,429 3,861 35,336 119,626
Additions and commissioned assets 1,007 5,516 3,615 10,138
Disposals - - (663) (663)
Depreciation (1,473) - (6,341) (7,814)
Depreciation released on disposals - - 657 657
Closing net book value 79,963 9,377 32,604 121,944
At 1 February 2021
Cost or valuation 93,120 9,377 139,327 241,824
Accumulated depreciation and impairment (13,157) - (106,723) (119,880)
Net book value 79,963 9,377 32,604 121,944
Year ended 31 January 2022
Opening net book value 79,963 9,377 32,604 121,944
Additions and commissioned assets 1,230 7,406 4,042 12,678
Disposals - - (309) (309)
Depreciation (1,434) - (6,205) (7,639)
Depreciation released on disposals - - 265 265
Closing net book value 79,759 16,783 30,397 126,939
At 31 January 2022
Cost or valuation 94,350 16,783 143,060 254,193
Accumulated depreciation and impairment (14,591) - (112,663) (127,254)
Net book value 79,759 16,783 30,397 126,939
Land & buildings
Assets in course of
construction
Plant, machinery
& equipment Total
€’000 €’000 €’000 €’000
COMPANY
At 1 February 2020
Cost or valuation 85,076 3,855 127,344 216,275
Accumulated depreciation and impairment (10,084) - (94,632) (104,716)
Net book value 74,992 3,855 32,712 111,559
Year ended 31 January 2021
Opening net book value 74,992 3,855 32,712 111,559
Additions and commissioned assets 1,003 4,990 3,015 9,008
Disposals - - (427) (427)
Depreciation (1,239) - (5,462) (6,701)
Depreciation released on disposals - - 424 424
Closing net book value 74,756 8,845 30,262 113,863
At 1 February 2021
Cost or valuation 86,079 8,845 129,932 224,856
Accumulated depreciation and impairment (11,323) - (99,670) (110,993)
Net book value 74,756 8,845 30,262 113,863
Year ended 31 January 2022
Opening net book value 74,756 8,845 30,262 113,863
Additions and commissioned assets 286 7,774 2,966 11,026
Disposals - - (251) (251)
Depreciation (1,199) - (5,198) (6,397)
Depreciation released on disposals - - 207 207
Closing net book value 73,843 16,619 27,986 118,448
At 31 January 2022
Cost or valuation 86,365 16,619 132,647 235,631
Accumulated depreciation and impairment (12,522) - (104,661) (117,183)
Net book value 73,843 16,619 27,986 118,448
5. Property, plant
and equipment
79
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
Assets in course of construction mainly relate to works carried out during the financial years 2021 and 2022 on
the old brewhouse project and other minor manufacturing related projects.
Bank borrowings are secured by the Group’s and Company’s property, plant and equipment (Note 18).
Fair value of property
The Group is required to analyse non-financial assets carried at fair value by level of the fair value hierarchy
within which the recurring fair value measurements are categorised in their entirety (level 1, 2 or 3). The
dierent levels of the fair value hierarchy have been defined in Note 2 to the financial statements.
As at 31 January 2022, the Group’s land and buildings within property, plant and equipment, comprise
properties including the Company’s brewery and related operational and warehousing facilities, commercial
property and property earmarked to compliment the Group’s operational activity.
The property valuations as at 31 January 2022 are based on the Directors' value assessment performed using
a variety of methods, including the adjusted sales comparison approach, the discounted projected cash
flows approach, and capitalised rentals approach. Each property was valued by taking into consideration the
external valuations prepared by independent chartered architectural firms as at 31 January 2017 and using
the method considered by the external valuers to be the most appropriate valuation method for that type of
property. The Directors are of the opinion that the carrying amount of property, plant and equipment as at
31 January 2022, does not dier materially from that which would be determined using fair values that take
account of the above considerations.
All the recurring property fair value measurements at 31 January 2022 use significant unobservable inputs
and are accordingly categorised within level 3 of the fair valuation hierarchy. The Group’s policy is to recognise
transfers into and out of fair value hierarchy levels as of the beginning of the reporting period. There were no
transfers between dierent levels of the fair value hierarchy during the year ended 31 January 2022.
A reconciliation from the opening balance to the closing balance of land and buildings for recurring fair value
measurements categorised within level 3 of the value hierarchy, is reflected in the table above. The only
movements in land and buildings classified as property, plant and equipment reflect additions, disposals and
depreciation charge for the year.
Valuation processes
The valuations of the properties are performed regularly on the basis of valuation reports prepared by
independent and qualified valuers. These reports are based on both:
• information provided by the Group which is derived from the Group’s financial systems and is subject to the
Group’s overall control environment; and
• assumptions and valuation models used by the valuers – the assumptions are typically market related.
These are based on professional judgement and market observation.
The information provided to the valuers, together with the assumptions and the valuation models used by the
valuers, are reviewed by the Chief Financial Ocer (CFO). This includes a review of fair value movements over
the period (if any). When the CFO considers that the valuation report is appropriate, the valuation report is
recommended to the Board of Directors. The Board of Directors considers the valuation report as part of its
overall responsibilities.
Valuation techniques
The external valuations of the level 3 property have been performed using a variety of methods, including
an adjusted sales comparison approach, capitalised rentals and the discounted cash flow approach. Each
property was valued using the method considered by the external valuers to be the most appropriate valuation
method for that type of property; the method, together with the fair value measurements, was approved by
the Board of Directors as described above.
In view of the limited number of sales of similar properties in the local market, the valuations have been
performed using unobservable inputs. The significant input to the sales comparison approach is generally
a sales price per cubic meter related to transactions in comparable properties located in proximity to the
Group’s property, with significant adjustments for dierences in the size, age, exact location and condition of
the property.
In the case of the capitalised rentals approach, the significant unobservable inputs include a rental rate per
square meter (also in respect of comparable properties as described in the case of the sales comparison
approach) and a capitalisation rate (applied at 5-6.6%).
The value of properties used as business, manufacturing and operational premises by the Group including
factories and warehouses, currently classified under property, plant and equipment is based on a value-in-
use assessment using capitalisation of cash flows. The valuers applied a capitalisation rate to an assessed
maintainable level of free cash flows based on the average earnings over the past five years. Following this
assessment, no c ha ng e s t o the current value attributable to this Group of properties was deemed necessary.
Information about fair value measurements using significant unobservable inputs (level 3)
Description by class Fair value Valuation technique
Significant
unobservable input
Range of
unobservable inputs
€’000 €
As at 31 January 2022
Current use as
manufacturing
or related premises 74,989
Discounted cash
flow approach Discount rate 8%
Current use as commercial
premises 1,570
Discounted cash
flow approach
Rental rate per
square metre 150 – 400
Developable land for mixed
use/commercial use 3,200
Sales
comparison
approach
Sales price per
cubic metre 175 – 250
80
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
5. PROPERTY, PLANT AND EQUIPMENT continued
As at 31 January 2021
Current use as
manufacturing
or related premises 75,193
Discounted cash
flow approach Discount rate 8%
Current use as commercial
premises 1,570
Discounted cash
flow approach
Rental rate per
square metre 150 – 400
Developable land for mixed
use/commercial use 3,200
Sales
comparison
approach
Sales price per
cubic metre 175 – 250
In the case of the sales comparison approach and the capitalised rentals approach, the higher the sales price
per square metre or the rental rate per square metre, the higher the resultant fair valuation. Conversely, the
lower the required development cost per square metre or the rental capitalisation rate, the higher the resultant
fair valuation.
In respect of the discounted cashflow approach, the higher the annualized net cash inflows, and growth rate,
the higher the fair value. Conversely, the lower the discount rate, the estimated development costs, and
capitalisation rate used in calculating the annualized net cash inflows, the higher the fair value.
The highest and best use of properties which are developable land for mixed use/commercial use diers from
their current use. These assets mainly comprise properties which are currently partly used by the Group or
which are currently vacant, and which would require development or refurbishment in order to access the
maximum potential cash flows that may be generated from the properties’ highest and best use.
As at 31 January 2022, the carrying amount of land and buildings would have been €40,996,000 (2021:
€41,200,000) had these assets been included in the financial statements at historical cost less depreciation.
The charge for depreciation and impairment charges as disclosed in Note 23 are included in the income
statements as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Cost of sales 4,922 5,046 4,042 4,269
Selling and distribution costs 1,566 1,498 1,386 1,356
Administration expenses 1,151 1,270 969 1,076
7,639 7,814 6,397 6,701
The statement of financial position reflects the following assets relating to leases:
Group
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Land & Buildings
Opening net book value 5,526 6,159
Additions 4,143 772
Depreciation charge (1,415) (1,405)
Closing net book value 8,254 5,526
Company
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Land & Buildings
Opening net book value 187 188
Depreciation charge (2) (1)
Closing net book value 185 187
6. Right–of–use
assets
81
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
5. PROPERTY, PLANT AND EQUIPMENT continued
Goodwill
Franchises &
intellectual knowhow Total
€’000 €’000 €’000
GROUP
At 1 February 2020
Cost 1,058 5,107 6,165
Accumulated amortisation and impairment (775) (4,778) (5,553)
Net book amount 283 329 612
Year ended 31 January 2021
Opening net book amount 283 329 612
Additions - 33 33
Amortisation - (41) (41)
Closing net book amount 283 321 604
At 1 February 2021
Cost 1,058 5,140 6,198
Accumulated amortisation and impairment (775) (4,819) (5,594)
Net book amount 283 321 604
Year ended 31 January 2022
Opening net book amount 283 321 604
Additions - 1,798 1,798
Amortisation - (50) (50)
Closing net book amount 283 2,069 2,352
At 31 January 2022
Cost 1,058 6,938 7,996
Accumulated amortisation and impairment (775) (4,869) (5,644)
Net book amount 283 2,069 2,352
Closing net book value of the Company's Franchises and intellectual knowhow as at 31 January 2022
amounted to €1,729,000 (2021: nil) represented by additions of €1,741,000 less amortisation of €12,000.
The Group tests annually whether goodwill has suered any impairment, in accordance with the accounting
policy stated in Note 1.6. The recoverable amounts of cash-generating units have been determined based on
value-in-use calculations. These calculations require the use of estimates.
Amortisation is included in cost of sales within the income statements.
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units identified according to business segment. A
segment-level summary of the goodwill allocation is presented below:
2022 2021
€’000 €’000
Brewing, production and sale of branded beers & beverages 192 192
Importation, wholesale and retail of food & beverages 91 91
Net book amount 283 283
The recoverable amount of a cash-generating unit is determined based on value in use calculations and is
assessed annually. As at 31 January 2022, the Directors reviewed the goodwill, and based on the current
period’s results and plans for the foreseeable future, they are confident that the recoverable amount of
goodwill is not materially dierent from the carrying amount.
7. Intangible assets
82
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
Company
2022 2021
€’000 €’000
Year ended 31 January
Opening net book amount 9,202 9,202
Additions 500 –
Write–o of investment - –
Closing net book amount 9,702 9,202
At 31 January
Cost 13,783 13,283
Impairment provision for investments (4,081) (4,081)
Net book amount 9,702 9,202
The principal subsidiaries at 31 January 2022 all of which are unlisted, are disclosed in Note 38 to these
financial statements.
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Raw materials and consumables 2,936 2,941 2,607 2,647
Finished goods and goods for resale 9,839 7,137 2,558 2,246
Containers and other stocks 3,566 3,674 3,186 3,370
16,341 13,752 8,351 8,263
The amount of inventory write-downs recognised in the income statements categories is as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Cost of sales 436 502 264 239
Selling, distribution and administrative expenses 173 118 173 118
609 620 437 357
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Non–current
Other receivables 696 865 696 865
Current
Trade receivables 15,155 12,543 8,410 6,692
Amounts due from subsidiaries – – 8,454 12,989
Indirect taxation 100 98 – –
Other receivables and advanced deposits 7,055 6,164 4,698 4,381
Prepayments and accrued income 829 825 720 765
23,139 19,630 22,282 24,827
Total trade and other receivables 23,835 20,495 22,978 25,692
Trade and other receivables are stated net of impairment provision as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Trade and other receivables 4,978 6,266 4,000 4,595
The impairment provision for trade and other receivables is disclosed in Note 23 and is included under
administrative expenses in the income statements. Bad debts written o against provision in the Group
amounted to €623,000 in the year ended 31 January 2022 (Company €123,000). No write-os were done
in the year ended 31 January 2021.
Included in other receivables are advanced deposits on non-current assets not yet commissioned as at
year end amounting to €1,426,000 (2021: €2,809,000).
Amounts due to the Company by subsidiaries are unsecured and repayable on demand. Included in these
balances are year-end amounts of €665,000 (2021: €654,000) which are subject to an average interest
rate of 3.5% (2021: 3.5%). Other balances within amounts due from subsidiaries are interest free.
The Group’s and Company’s exposure to credit and currency risks and impairment losses relating to trade
and other receivables are disclosed in Note 2. The other classes within receivables do not contain impaired
assets.
8. Investments in
subsidiaries
9. Inventories
10. Trade and
other receivables
83
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
For the purposes of the statements of cash flows, the cash and cash equivalents at the end of the reporting
period comprise the following:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Cash at bank and in hand 15,720 17,148 3,057 2,664
Bank overdrafts (Note 18) (353) – – –
15,367 17,148 3,057 2,664
Company
2022 2021
€’000 €’000
Authorised:
30,000,000 ordinary shares of €0.30 each 9,000 9,000
21,000,000 preference shares of €1.00 each 21,000 21,000
30,000 30,000
Issued and fully paid:
30,000,000 ordinary shares of €0.30 each 9,000 9,000
Company
2022 2021
€’000 €’000
Interim dividends 3,000 –
Dividends paid in cash 3,000 –
Total net dividend 3,000 –
Euro per share (net) 0.10 –
A first net interim dividend of €1,500,000 (€0.05 per share) was paid on 20 October 2021. A second net interim
dividend of €1,500,000 (€0.05 per share) was paid on 21 December 2021. No interim dividend was paid during
the previous financial year. Interim dividends were paid out of tax-exempt profits.
At the forthcoming annual general meeting, a final net dividend of €4,000,000 (€0.1333 per share) in respect of
financial year ended 31 January 2022 is to be proposed.
These financial statements do not reflect this proposed dividend which will be accounted for in shareholders’
equity as an appropriation of retained earnings in the year ending 31 January 2023.
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Revaluation on property, plant and equipment
At beginning of year, before deferred tax 38,763 38,763 37,933 37,933
Deferred taxation (Note 20) (4,917) (4,917) (4,062) (4,062)
At 31 January 33,846 33,846 33,871 33,871
The revaluation reserve was created upon the revaluation of the Group’s and Company’s properties classified
within non-current assets. Related deferred tax was debited to this reserve. The revaluation reserve is a non-
distributable reserve.
Share premium
Other unrealised
reserve
Incentives and
benefits reserve
Capital redemption
reserve Total
€’000 €’000 €’000 €’000 €’000
GROUP
At 31 January 2021 and
31 January 2022 2,078 3,507 2,515 7,463 15,563
COMPANY
At 31 January 2021 and
31 January 2022 2,078 210 2,515 7,463 12,266
The share premium is principally related to a rights issue approved in 2003 for 1,714,286 shares with a nominal
value of €0.30 which were successfully oered to the existing shareholders at a price of €1.40.
14. Revaluation
reserve
15. Other reserves
11. Cash and cash
equivalents
12. Share capital
13. Dividends paid
84
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
The incentives and benefits reserve represents profits set aside for re-investment in terms of Sections 6(1)
and 36(2) of the Business Promotion Act. Amounts included in this reserve can only be distributed by way of
capitalisation of profits.
The capital redemption reserve represents amounts set aside as a result of the redemption of cumulative
redeemable preference shares. In accordance with the Maltese Companies Act, 1995, this reserve is only
available for distribution to ordinary shareholders by way of a bonus share issue.
The changes in fair values of hedging instruments qualifying as cash flow hedges are recorded in a separate
category of equity in the hedging reserve as shown below:
Interest rate swap
€’000
GROUP AND COMPANY
At 31 January 2020
Gross amounts of losses 468
Deferred taxes (Note 20) (164)
304
Movement for the year ended 31 January 2021
Losses from changes in fair value 25
Deferred taxes (Note 20) (9)
16
Transferred to statement of comprehensive income (Notes 25 and 27) (175)
Deferred taxes (Note 20) 62
(113)
At 31 January 2021
Gross amounts of losses 318
Deferred taxes (Note 20) (112)
206
Movement for the year ended 31 January 2022
Losses from changes in fair value 31
Deferred taxes (Note 20) (11)
20
Transferred to statement of comprehensive income (Notes 25 and 27) (194)
Deferred taxes (Note 20) 68
(126)
At 31 January 2022
Gross amounts of losses 155
Deferred taxes (Note 20) (55)
100
The net fair value losses recognised in equity at 31 January 2022 on the interest-rate swap contracts will be
transferred from the hedging reserve to the income statements during the remaining term of the contracts
up to 2024. As at the reporting period date, these contracts are designated as hedging anticipated variable
interest payments which will also accrue over the term of the derivative contract.
The fair values of derivative financial instruments held for hedging at the end of the reporting period are as
follows:
Group and
Company
€’000
FAIR VALUES LIABILITIES
At 31 January 2022
Interest rate derivative – interest–rate swap 155
Total recognised derivative liabilities 155
At 31 January 2021
Interest rate derivative – interest–rate swap 317
Total recognised derivative liabilities 317
The above are included in the statements of financial position under the following classifications:
2022 2021
€’000 €’000
DERIVATIVES FINANCIAL LIABILITIES
Non-current 45 156
Current 110 161
155 317
16. Hedging reserve
17. Derivative
financial
instruments
85
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
15. OTHER RESERVES continued
(a) Interest rate derivatives
During the financial year ended 31 January 2015, the Company entered into a receive floating, pay fixed
interest rate swap arrangement with a notional amount of €12,400,000 matching the principal amount of
an equal value specific bank loan. As at the end of the reporting period date, this contract is designated as
hedging anticipated variable interest payments which will also accrue over the term of the derivative contract.
Under the interest rate swap arrangement, the Company will at three monthly intervals exchange fixed interest
amounts payable determined at the fixed interest rate of 1.82% with variable interest amounts receivable based
on the 3-month floating Euribor rate. The derivative expires in 2024, thus matching with the terms of the loan.
Gains and losses recognised in the hedging reserve in equity (Note 16) on the interest rate swap contracts as of
31 January 2022 will be released to the income statements over the period until maturity of the contracts.
The Company has designated these derivative contracts as hedging instruments in a cash flow hedge with
the hedged risk being the Company’s exposure to cash flow interest rate risk arising on the variable interest
amounts payable with respect to these loans. Fair value changes arising on these instruments are recognised in
other comprehensive income directly in the cash flow hedging reserve.
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Non–current
Bonds 19,818 19,785 19,818 19,785
Bank loans 4,263 13,543 4,263 13,543
24,081 33,328 24,081 33,328
Current
Bank overdrafts 353 – – –
Bank loans 1,550 2,411 1,550 2,411
1,903 2,411 1,550 2,411
Total borrowings 25,984 35,739 25,631 35,739
The bonds are disclosed at the value of the proceeds less the net book amount of the issue costs as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Face value of bonds
3.5% Bonds 2017 – 2027 20,000 20,000 20,000 20,000
20,000 20,000 20,000 20,000
Issue costs 305 305 305 305
Accumulated amortisation (123) (90) (123) (90)
Net book amount 182 215 182 215
Amortised cost 19,818 19,785 19,818 19,785
By virtue of an oering memorandum dated 31 July 2017, the Company issued €20,000,000 Bonds (2017-
2027), having a nominal value of €100 each, bearing interest at the rate of 3.5% per annum.
These bonds are unsecured pursuant and subject to the terms and conditions in the prospectus dated 31 July
2017. The quoted market price as at 31 January 2022 for the 3.5% Bonds 2017-2027 was €103.
The Group’s and the Company’s banking facilities as at 31 January 2022 and 2021 amounted to €22,144,000
and €41,285,000 for the Group, and €13,812,500 and €32,954,000 for the Company respectively.
The bank overdrafts and loans are secured by special and general hypothecs over the Group’s assets and
pledges over the Group’s merchandise.
Interest rate exposure:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
At floating rates 6,166 15,954 5,813 15,954
At fixed rates 19,818 19,785 19,818 19,785
Total borrowings 25,984 35,739 25,631 35,739
Certain borrowings at floating rates which interest rate is computed using a margin over the 3-month Euribor
rate, are hedged through interest rate swap agreements (Note 17).
The weighted average eective interest rates at the end of the reporting period were as follows:
Group Company
2022 2021 2022 2021
% % % %
Bank loans 2.00 1.35 2.00 1.35
Bonds 3.50 3.50 3.50 3.50
This note provides information about the contractual terms of the Group’s and the Company’s loans and
borrowings. For more information about the Group’s and the Company’s exposure to interest rate and liquidity
risk, refer to Note 2.
18. Borrowings
86
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
17. DERIVATIVE FINANCIAL INSTRUMENTS continued
Group
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Non–current
Land & Buildings 6,791 4,227
Plant, machinery & equipment 20 167
6,811 4,394
Current
Land & Buildings 1,345 1,121
Plant, machinery & equipment 134 132
1,479 1,253
Total lease liabilities 8,290 5,647
Company
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Non–current
Land & Buildings 171 182
Plant, machinery & equipment 20 167
191 349
Current
Land & Buildings 15 8
Plant, machinery & equipment 134 134
149 142
Total lease liabilities 340 491
Group
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Land & buildings
At beginning of the year 5,346 5,947
Additions 4,143 772
Interest payments 263 214
Principal payments (1,434) (1,447)
Other movements (182) (140)
At end of year 8,136 5,346
Company
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Land & buildings
At beginning of the year 189 190
Interest payments 5 7
Principal payments (8) (8)
At end of year 186 189
19. Lease liabilities
87
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
18. BORROWINGS continued
Group and Company
As at
31 January
As at
31 January
2022 2021
€’000 €’000
Plant, machinery & equipment
At beginning of the year 301 444
Interest payments 6 10
Principal payments (153) (153)
At end of year 154 301
Included in the lease liabilities for land & buildings of the Group are amounts of €3,863,000 (2021: €400,000)
which are attributable arrangements with a related party.
The contractual undiscounted cash flows attributable to lease liabilities as at 31 January are analysed in Note
2.1(c).
As a result of the COVID-19 pandemic, rent concessions have been granted to lessees. Such concessions
might take a variety of forms, including payment holidays and deferral of lease payments. In May 2020, the
IASB made an amendment to IFRS 16 - Leases which provides lessees with an option to treat qualifying rent
concessions in the same way as they would if they were not lease modifications. The Group has applied this
practical expedient for all qualifying lease concessions and, as a result, has accounted for such concessions as
variable lease payments in the period in which they are granted.
The incremental borrowing rates at the end of the reporting period were as follows:
Group Company
2022 2021 2022 2021
% % % %
Land & buildings 4 4 4 4
Plant & machinery 2.3 2.3 2.3 2.3
The movement in the deferred tax account is as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
At beginning of year (7,565) (8,195) (8,455) (9,442)
Debited to income statements (Note 28) 22 577 – 934
Net tax eect of re–measurement of derivatives 57 53 57 53
At end of year (7,486) (7,565) (8,398) (8,455)
Deferred taxes are calculated on all temporary dierences under the liability method and are measured 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 (and tax laws) that have been enacted by the end of the reporting period. The principal tax rate used
is 35% (2021: 35%), with the exception of deferred taxation on the fair valuation of non-depreciable property
which is computed on the basis applicable to disposals of immovable property, that is, tax eect of 8% or 10%
(2021: 8% or 10%) of the transfer value.
The manufacturing arm of the Group has been availing itself of investment aid under the various investment
tax credit schemes that were applicable until 30 June 2014. In view of the fact that the investment tax credit
schemes have become more restrictive in respect of large undertakings, the Group and Company have
reviewed the extent to which the related deferred tax may be utilised in the foreseeable future. No further
recognition of deferred tax credits on investment aid were made during the current year (2021: De-recognition
of €1,825,000).
This assessment has been based on projected taxable profits. If the actual chargeable income diered by 10%
from management’s estimates, the Group and Company would need to increase/decrease the deferred tax
asset by €1,330,000 (2021: €1,330,000).
20. Deferred
taxation
88
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
19. LEASE LIABILITIES continued
The movements in the deferred taxation elements and the balance at 31 January represent:
Fixed assets
Investment
tax credits
Fair value
(gain)/loss Net tax losses
Revaluation
surplus
Provisions
on assets Total
€’000 €’000 €’000 €’000 €’000 €’000 €’000
(Assets)/Liabilities
GROUP
At 1 February 2020 3,385 (15,185) 314 1 4,917 (1,627) (8,195)
Income statements (502) 1,825 – (130) – (616) 577
Equity – – 53 – – – 53
At 31 January 2021 2,883 (13,360) 367 (129) 4,917 (2,243) (7,565)
At 1 February 2021 2,883 (13,360) 367 (129) 4,917 (2,243) (7,565)
Income statements (197) – – – – 219 22
Equity – – 57 – – – 57
At 31 January 2022 2,686 (13,360) 424 (129) 4,917 (2,024) (7,486)
COMPANY
At 1 February 2020 3,361 (15,185) (165) – 4,062 (1,515) (9,442)
Income statements (320) 1,825 – – – (571) 934
Equity – – 53 – – – 53
At 31 January 2021 3,041 (13,360) (112) – 4,062 (2,086) (8,455)
At 1 February 2021 3,041 (13,360) (112) – 4,062 (2,086) (8,455)
Income statements (151) – – – – 151 –
Equity – – 57 – – – 57
At 31 January 2022 2,890 (13,360) (55) – 4,062 (1,935) (8,398)
Deferred taxation is principally composed of deferred tax assets and liabilities which are to be recovered and
settled after more than twelve months.
At 31 January 2022, the Group and the Company had unrecognised deferred tax assets consisting of unutilised
tax credits arising from:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Unutilised tax credits 23,322 26,222 23,322 26,222
Whereas tax losses have no expiry date, unabsorbed capital allowances and other tax credits are forfeited
upon cessation of trade. The Group and the Company have unrecognised tax credits in the form of investment
tax credits of €23,351,000 (2021: €26,222,000). The unrecognised investment tax credits of €23,322,000 as
at 31 January 2022, have no expiry date.
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Termination benefit provisions
At 1 February 36 86 36 86
Charged to profit and loss 17 13 17 13
Utilised during the year (42) (63) (42) (63)
At 31 January 11 36 11 36
The Group and Company have oered early retirement in exchange for a termination benefit to selected
employees. This has been communicated to the selected employees, together with the amounts payable.
The sta restructuring and termination costs charged for 2022 total €17,000 while for 2021 total €13,000
(Note 23). It is anticipated that €9,000 (2021: €11,000) of the provision will be paid during the financial
year ending 31 January 2023.
21. Provisions for
other liabilities and
charges
89
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
20. DEFERRED TAXATION continued
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Non–current
Capital and other payables 2,648 2,802 2,648 2,802
Current
Trade payables 6,077 5,307 2,523 1,657
Capital and other payables 3,196 2,840 3,176 2,820
Amounts due to subsidiaries – – 672 300
Amounts owed to related parties – – – –
Indirect taxes and social security 12,181 5,601 8,863 3,860
Accruals and deferred income 11,451 8,192 7,228 5,880
32,905 21,940 22,462 14,517
Total trade and other payables 35,553 24,742 25,110 17,319
The Group’s and Company’s exposure to currency and liquidity risk related to trade and other payables is
disclosed in Note 2.
As at 31 January 2022, capital and other payables include institutional grants amounting to €2,802,000 (2021:
€2,956,000) relating to funds advanced directly by the Government of Malta or other institutions to the
Group, co-financing its capital expenditure on certain items of property, plant and equipment. The non-current
portion of deferred institutional grants amounted to €2,648,000 (2021: €2,802,000). Such funds are treated
as deferred income and are credited to profit or loss on a systematic basis over the useful lives of the assets.
From time to time, claims and contestations arise the eventual outcome of which cannot be fully established.
As at 31 January 2022, accruals and deferred income include an amount of €1,800,000 (2021: €1,300,000) in
respect of past and present operations which may give rise to future cash outflows. This amount is an estimate
of the potential outcome based on a best assessment of known risks together with the uncertainty of the
timing of any eventual cash outflows (Note 33).
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Depreciation of property, plant and equipment (Note 5) 7, 639 7,814 6,397 6,701
Depreciation of right–of–use assets (Note 6) 1,415 1,405 2 1
Profit on disposal of property, plant and
equipment (Note 5) (31) (149) (16) (120)
Employee benefit expense (Note 24) 17,366 15,323 10,095 8,984
Termination benefits (Note 24) 17 13 17 13
Directors' emoluments (Note 29) 792 651 792 651
Raw materials, imported goods and consumables 43,485 33,361 11,536 10,067
Movement in inventory levels of finished goods and work
in progress (Note 9) 2,702 (2,166) 314 (419)
Increase/(Decrease)
in loss allowances (Note 10) (666) 1,787 (472) 1,682
Amortisation of intangible assets (Note 7) 50 41 12 –
Other expenses 5,553 9,263 11,151 9,067
T otal cost of sales, selling and distribution costs
and administrative expenses 78,322 67,343 39,828 36,627
Operating profit is stated after crediting deferred institutional grants amounting to €154,000 (2021:
€154,000), which are included in ‘Cost of sales’.
Auditor’s fees
Fees charged by the auditor for services rendered during the financial periods ended 31 January 2022 and
2021 relate to the following:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Annual statutory audit 170 157 100 87
Other assurance services 11 8 9 8
Tax advisory and compliance services 13 18 10 13
Other non–assurance services 2 14 2 13
196 197 121 121
22. Trade and
other payables
23. Expenses
by nature
90
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
24. Employee
benefit expense
25. Net exchange
dierences
26. Finance income
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Wages and salaries 15,971 13,994 10,714 9,583
Social security costs 1,338 1,277 822 816
Other employee related costs 57 52 57 52
17,366 15,323 11,593 10,451
Recharged to subsidiaries - – (1,498) (1,467)
17,366 15,323 10,095 8,984
Termination benefits 17 13 17 13
17,383 15,336 10,112 8,997
The average number of full time equivalents employed during the year:
Group Company
2022 2021 2022 2021
Brewing, production and sale of branded beers
and beverages 455 467 437 449
Importation, wholesale and retail of food
and beverages, including wines and spirits 99 95 – –
Operation of franchised food retailing establishments 248 228 – –
802 790 437 449
Employee benefit expense for financial year 2022 above amounting to €17,366,000 (Company €10,095,000)
is stated net of the COVID-19 wage supplement paid by the Government of Malta to the Group to support the
payment of employees’ wages and salaries amounting to €2,900,000 (Company €1,200,000).
Employee benefit expense for financial year 2021 above amounting to €15,323,000 (Company €8,984,000)
is stated net of COVID-19 wage supplement paid by the Government of Malta to the Group to support the
payment of employees' wages and salaries amounting to €3,200,000 (Company €1,500,000).
The net exchange dierences charged and credited to the income statements include:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Foreign exchange dierences 25 27 10 (11)
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Interest on amounts owed by subsidiaries – – 35 25
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Interest on bank loans and overdrafts 186 361 151 293
Interest rate subsidy (102) (237) (102) (237)
Lease interest 269 224 14 17
Interest on bonds 700 700 700 700
Fair value loss on derivative financial instruments 194 175 194 175
Other finance costs 35 23 - 27
1,282 1,246 957 975
During the year ended 31 January 2022, the Company was granted net interest subsidy amounting to
€102,000 (2021: €237,000) from Malta Enterprise related to approved investment loans of €5,812,000 (2021:
€7,400,000). A net eective interest rate of 2.21% (2021: 0.84%) was applied, representing the borrowing cost
of the loans utilised to finance capital projects. This rate is net of the interest rate subsidy provided by Malta
Enterprise.
27. Finance costs
91
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Current tax expense 1,214 517 – –
Deferred tax charge (Note 20) 22 577 – 934
Redemption of unrecognised conversion tax credits (1,500) – (1,500) –
Tax (income)/expense (264) 1,094 (1,500) 934
The tax on the Group’s and Company’s profit before tax diers from the theoretical amount that would arise
using the basic tax rate as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Profit before tax 12,164 4,427 8,571 3,814
Tax on profit at 35% 4,257 1,549 3,000 1,335
Tax eect of:
Benefits available under the Business Promotion Act,
comprising tax credits and allowances – – – –
Movement in unrecognised deferred tax assets/
conversion tax credits (4,419) (28,312) (4,419) (28,312)
Tax eect of expired unrecognised conversion tax credits – 28,038 – 28,038
Over provision in unrecognised and recognised deferred
tax related to prior years – (83) – –
Non–taxable income or allowable expenses (102) (98) (81) (127)
Tax (income)/expense (264) 1,094 (1,500) 934
The movement in unrecognised deferred tax assets shown above arose from the expiry of certain conversion
tax credits on 31 December (FY 2021). Refer to Note 20.
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Amounts paid
Fees 232 237 232 237
Salaries 157 155 157 155
Other emoluments 403 259 403 259
Total Directors' remuneration 792 651 792 651
A number of Directors availed themselves of an allowance for the use of Company cars during the year. The
estimated value of this benefit has been included within the Directors’ emoluments, which also includes other
allowances.
Earnings per share is based on the profit for the financial year attributable to the shareholders of Simonds
Farsons Cisk plc divided by the weighted average number of ordinary shares in issue during the year and
ranking for dividend.
Group
2022 2021
Profit attributable to shareholders (€’000) 12,428 3,333
Weighted average number of ordinary shares in issue (thousands) 30,000 30,000
Basic and diluted earnings per share for the year attributable
to shareholders €0.4143 €0.1111
The Company does not have any dilutive contracts on own shares in issue.
30. Earnings
per share
28. Tax (income)
/expense
29. Directors’
emoluments
92
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
32. Commitments
Reconciliation of operating profit to cash generated from operations:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Operating profit 13,446 5,673 9,493 4,764
Adjustments for:
Depreciation of property, plant and equipment (Note 5) 7, 639 7,814 6,397 6,701
Depreciation of right–of–use assets (Note 6) 1,415 1,405 2 1
Profit on disposal of property, plant and equipment
(Note 23) (31) (149) (16) (120)
Rent rebates (177) (138) – –
Amortisation of intangible assets (Note 7) 50 41 12 –
Amortisation of institutional grant (Note 23) (154) (154) (154) (154)
Amortisation of bond issue costs (Note 18) 33 32 33 32
(Decrease)/Increase in provision for impairment of trade
and other receivables (Note 10) (666) 1,787 (472) 1,682
Provision for termination benefits (Note 21) 17 13 17 13
21,572 16,324 15,312 12,919
Changes in working capital:
Inventories (2,588) 3,020 (90) 1,162
Trade and other receivables (2,340) 5,882 3,520 (4,675)
Trade and other payables 10,890 1,182 7,871 1,332
Cash generated from operations 27,534 26,408 26,613 10,738
Net debt reconciliation
All the movements in the Company’s net debt (bank and bond borrowings net of cash and cash equivalents)
related only to cash flow movements and disclosed as part of the financing activities in the statement of cash
flows on page 64.
Capital commitments
Commitments for capital expenditure with respect to property, plant and equipment not provided for in these
financial statements are as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Authorised but not contracted 1,640 6,278 – 4,693
Contracted but not provided for 4,492 12,706 4,492 12,132
6,132 18,984 4,492 16,825
Investment commitment
The Group has entered into a commitment to invest an amount of €2,900,000 in a circular economy initiative.
This investment is expected to be eected within the forthcoming 18 months with BCRS Malta Ltd which has
been entrusted with the operation of the beverage container refund scheme in Malta.
Operating lease commitments – where a Group Company is a lessor
These leases principally relate to property rentals. The future minimum lease payments receivable under non-
cancellable operating leases are as follows:
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Not later than 1 year – 56 – –
At 31 January 2022, the Group and the Company had contingent liabilities amounting to €866,000 (2021:
€779,000) and €88,000 (2021: €83,000) respectively, with regards to guarantees mainly in favour of the
Comptroller of Customs issued by the bank on behalf of the Group and Company in the ordinary course of
business and capital expenditure.
The Company has been made aware of preliminary enquiries between third parties which could potentially
result in a claim being made against the Company. At this stage the Company is not a party to the enquiries,
the eventual outcome of which remains uncertain (Note 22).
33. Contingent
liabilities
31. Cash generated
from operations
93
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
The following companies (and their respective subsidiaries and jointly–controlled entities) are related parties by
virtue of their shareholding in the Company:
Percentage of
shares held
2022 2021
Farrugia Investments Limited 26.50 26.50
M.S.M. Investments Limited 26.50 26.50
Sciclunas Estates Limited 26.32 26.32
The remaining 20.68% (2021: 20.68%) of the shares are widely held. The transactions set out below were
carried out with related parties. The Directors make particular reference to the fact that Trident Estates plc and
its subsidiaries are considered to be related parties due to common Directors and the common shareholding.
Group Company
2022 2021 2022 2021
€’000 €’000 €’000 €’000
Income from goods and services
– Sales of goods to subsidiaries – – 1,666 1,457
– Sales of goods to related parties 175 266 88 217
– Recharge of costs to subsidiaries – – 1,083 1,160
– Recharge of payroll costs to subsidiaries – – 1,974 2,252
– Recharge of payroll costs to a related party 96 135 96 95
– Finance income on loans to subsidiaries – – 22 25
271 401 4,929 5,206
Expenditure for goods and services
– Purchases of goods from subsidiaries – – 1,213 947
– Purchases of goods and services from related parties 697 645 651 610
– Rental expenses from related parties 787 703 – –
– Finance costs on loans from subsidiaries – – 1 30
1,484 1,348 1,865 1,587
Key management personnel compensation, consisting of Directors’ and Senior Management remuneration,
is disclosed as follows:
Group
2022 2021
€’000 €’000
Directors (Note 29) 792 651
Senior Management 1,113 968
1,905 1,619
The Company has no profit sharing, share options or pension benefits arrangements with key management
personnel.
Amounts due from/to subsidiaries, in connection with sales and purchases and treasury transactions, are
disclosed in Notes 10 and 22 of these financial statements.
The geopolitical situation in Eastern Europe intensified in February 2022 following Russia’s invasion of Ukraine.
This, together with the economic aftermath of COVID and the impact of China's "zero COVID" policies are
resulting in product and commodity shortages, disrupted supply chains, soaring shipping costs and surging
inflationary pressures, the latter raising the prospects of increases in interest rates. As a result of the above,
business confidence globally is being adversely aected and the World Bank has downgraded economic
growth forecasts for 2022 and 2023. The potential impact of these evolving market factors and conditions
cannot be quantified at the time of the approval of these financial statements.
Simonds Farsons Cisk plc is a public limited company and is incorporated in Malta.
Comparative figures disclosed in the main components of these financial statements have been reclassified to
conform with the current year’s disclosure format for the purpose of fairer presentation.
37. Comparative
information
36. Statutory
information
35. Events after the
reporting period
34. Related party
transactions
94
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
38. Subsidiaries
The principal subsidiaries at 31 January 2022 are shown below:
Percentage of shares held
Registered oce Principal activities 2022 2021
EcoPure Limited The Brewery, Mdina
Road, Zone 2, Central
Business District,
Birkirkara
Sale and distribution of
bottled water
100 100
Farsons Distribution
Services Limited
The Brewery, Mdina
Road, Zone 2, Central
Business District,
Birkirkara
Non–operating 100 100
Farsons Beverage
Imports Company
Limited
The Brewery, Mdina
Road, Zone 2, Central
Business District,
Birkirkara
Importation and
wholesale of beverages,
wines and spirits
100 100
Food Chain Limited 303, Qormi Road,
Marsa
Operation of franchised
food retailing
establishments
100 100
Portanier Warehouses
Limited
The Brewery, Mdina
Road, Zone 2, Central
Business District,
Birkirkara
Property leasing 100 100
Quintano Foods Limited 303, Qormi Road,
Marsa
Importation and
wholesale of food
products
100 100
The Brewhouse
Company Limited
The Brewery, Mdina
Road, Zone 2, Central
Business District,
Birkirkara
Operation of brand
visitor’s attraction, retail
stores, food retailing
establishment and oce
space
100 –
95
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued
Directors’ interests in the share capital of the Company
Ordinary shares held
as at 31 January 2022
Ordinary shares held
as at 30 April 2022
Louis A. Farrugia 30,223 30,223
Michael Farrugia 5,552 5,552
Marina Hogg 12,698 12,698
Baroness Christiane Ramsay Pergola (deceased 25 November 2021) 54,140 54,140
Marquis Marcus John Scicluna Marshall 27,456 27,456
Marcantonio Stagno d’Alcontres 3,430 3,430
Dr Max Ganado 1,500 1,500
Directors’ interests listed above are inclusive of shares held in the name of the relative spouse and minor
children as applicable.
Mr Marcantonio Stagno d’Alcontres and Ms Marina Hogg have a beneficial interest in M.S.M. Investments
Limited. Mr Louis A. Farrugia has a beneficial interest represented by 1 share in Farrugia Investments Limited.
Mr Louis A. Farrugia and Mr Michael Farrugia respectively have a beneficial interest in 25% and in 12.5% of
the shares in Farrugia Holdings Limited which holds the rest of the shares in Farrugia Investments Limited
apart from directly holding 42,916 shares in Simonds Farsons Cisk plc. Baroness Christiane Ramsay Pergola
has a beneficial interest in Sciclunas Estates Limited. There has been no movement in the above stated
shareholdings during the period from 31 January 2022 to 30 April 2022.
Shareholders holding 5% or more of the equity share capital
as at 30 April 2022
Ordinary shares
Number of shares Percentage holding
Farrugia Investments Limited 7,948,862 26.50
M.S.M. Investments Limited 7,948,862 26.50
Sciclunas Estates Limited 7,896,164 26.32
General public shareholding 6,206,112 20.68
Shareholding details
As at 30 April 2022, the Company’s issued share capital was held by the following shareholders:
Number of
shareholders
Ordinary shares of €0.30 each 1,994
The holders of the Ordinary shares have equal voting rights.
Number of shareholders as at 30 April 2022
Number of
shareholders Number of shares Percentage holding
Ordinary shares of €0.30 each
Up to 500 shares 759 172,698 0.58%
501 – 1,000 399 290,597 0.97%
1,001 – 5,000 646 1,382,947 4.61%
More than 5,000 190 28,153,758 93.84%
1,994 30,000,000 100.00%
Antoinette Caruana
Company Secretary
The Brewery, Mdina Road, Zone 2, Central Business District, Birkirkara CBD 2010, Malta
Telephone: (+356) 2381 4172
SHAREHOLDER
INFORMATION
96
SIMONDS FARSONS
CISK PLC
FINANCIAL STATEMENTS continued
FIVE YEAR
SUMMARISED
GROUP RESULTS
2022 2021 2020 2019 2018
€’000 €’000 €’000 €’000 €’000
Revenue 91,768 73,016 103,491 99,798 95,331
Operating costs (78,322) (67,343) (89,801) (84,464) (81,005)
Operating profit 13,446 5,673 13,690 15,334 14,326
Changes in fair value of
investment property – – – – (89)
Share of results of associate – – – – –
Net finance costs (1,282) (1,246) (1,370) (1,239) (1,207)
Profit/(loss) before taxation
arising from:
– continuing operations 12,164 4,427 12,320 14,095 13,455
– discontinued operations – – – – (425)
Tax 264 (1,094) (451) 1,036 732
Profit attributable to
Ordinary shareholders 12,428 3,333 11,869 15,131 13,762
Net dividends paid on
Ordinary shares 3,000 – 4,000 3,600 40,611
Shareholders’ funds 129,188 119,654 116,223 108,273 96,632
Lease liabilities 8,290 5,647 6,391 – –
Borrowings (net of cash
and cash equivalents) 10,264 18,591 34,146 33,117 39,114
Total capital employed
(adjusted) 147,742 143,892 156,760 141,390 135,746
Fixed Assets 137,545 128,074 126,397 117,254 118,049
Non-current Assets 8,182 8,430 9,890 10,300 9,051
Current Assets (excluding
cash and cash equivalents) 39,485 33,387 43,246 35,864 32,708
Assets held for sale – – – – –
Liabilities (excluding cash
borrowings and lease liabilities) (37,470) (25,999) (22,773) (22,028) (24,062)
T otal assets less liabilities
(excluding net borrowings) 147,742 143,892 156,760 141,390 135,746
Shares in issue during the
financial year:
– Ordinary shares
’000 30,000 30,000 30,000 30,000 30,000
Number of Ordinary
shareholders at year end 1,997 1,991 1,922 1,886 1,887
Earnings per Ordinary share
(Note 30) € 0.414 € 0.111 € 0.396 € 0.504 € 0.459
Return on average capital
employed
percentage 9.7 3.9 9.4 11.1 9.8
Dividend cover
times 4.14 – 2.97 4.20 4.05
Dividends per Ordinary share
(net of tax) € 0.10 – € 0.133 € 0.120 € 0.113
Net asset value per Ordinary share € 4.31 € 3.99 € 3.87 € 3.61 € 3.22
Gearing
percentage 12.56 16.84 25.86 23.42 28.81
Revenue and operating costs include those from discontinued operations up to financial year ended
31 January 2018.
Ordinary shares are equivalent to the weighted average number of shares in issue during the financial year.
Return on average capital employed is calculated by dividing operating profit from continuing operations by
the average of the opening and closing total capital employed for the relevant year.
Dividend cover is calculated by dividing the profit attributable to the ordinary shareholders by the total net
dividends paid in cash during the year.
Net asset value per ordinary share is calculated by dividing shareholders’ funds attributable to the ordinary
shareholders by the number of ordinary shares in issue at the end of the year.
Gearing is calculated by dividing net borrowings by the sum of total equity and net borrowings.
97
ANNUAL REPORT
2021/22
FINANCIAL STATEMENTS continued
Independent auditor’s report
To the Shareholders of Simonds Farsons Cisk plc
Report on the audit of the financial statements
Our opinion
In our opinion:
● The Group financial statements and Parent Company financial statements (the “financial statements”) give a true and fair view of the Group and the Parent Company’s financial position of Simonds Farsons Cisk plc as at 31 January 2022, and of the Group’s and the Parent Company’s financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted by the EU; and
● The financial statements have been prepared in accordance with the requirements of the Maltese Companies Act (Cap. 386).
Our opinion is consistent with our additional report to the Audit Committee.
What we have audited
Simonds Farsons Cisk plc’s financial statements comprise:
● the Consolidated and Parent Company statements of financial position as at 31 January 2022;
● the Consolidated and Parent Company income statements and statements of comprehensive income for the year then ended;
● the Consolidated and Parent Company statements of changes in equity for the year then ended;
● the Consolidated and Parent Company statements of cash flows for the year then ended; and
● the notes to the financial statements, which include significant accounting policies and other explanatory information.
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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group and the Parent Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for 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 Codes.
To the best of our knowledge and belief, we declare that non-audit services that we have provided to the parent company and its subsidiaries are in accordance with the applicable law and regulations in Malta and that we have not provided non-audit services that are prohibited under Article 18A of the Accountancy Profession Act (Cap. 281).
The non-audit services that we have provided to the parent company and its subsidiaries, in the period from 1 February 2021 to 31 January 2022, are disclosed in Note 23 to the financial statements.
Our audit approach
Overview
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● Overall group materiality: €608,200, which represents 5% of profit before tax. |
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● The Group is composed of 8 reporting units all located in Malta. ● The Group engagement team carried out the audit of the financial statements of the Parent Company as well as the audit of the financial statements of all the subsidiaries of the Company.
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● Recognition of deferred tax asset arising from tax credits relating to the Group and Company.
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As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where the directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
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Overall group materiality |
€608,200 |
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How we determined it |
5% of profit before tax |
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Rationale for the materiality benchmark applied |
We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is within the range of quantitative materiality thresholds that we consider acceptable. |
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above €30,410 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
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. 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.
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Key audit matter |
How our audit addressed the Key audit matter |
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Recognition of deferred tax asset arising from tax credits relating to the Group and Company Refer to note 20
The Group and Company have recorded a deferred tax asset attributable to unutilised tax credits amounting to €13.4 million to the extent that it is probable that future taxable profits arising from the operations of the manufacturing arm of the Group will be available to allow the deferred tax asset to be recovered.
We focused on this area because of the level of judgement that is applied in quantifying the appropriate tax credits to be utilised and therefore determining assumptions about future profit streams and investment decisions.
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We obtained the detailed tax computation and tested the balance of unutilised tax credits carried forward.
We evaluated and challenged the Group’s budgets, business plans, future investment strategy and assumptions used to determine an estimate of that portion of unutilised tax credits to be used in the foreseeable future and therefore recognised as a deferred tax asset.
We were provided with explanations that suggest that there are no indications that the amounts recognised are not recoverable.
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How we tailored our group audit scope
The Group is composed of 8 reporting units all located in Malta. We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.
The Group audit team performed all of this work by applying the overall group materiality, together with additional procedures performed on the consolidation. This gave us sufficient appropriate audit evidence for our opinion on the Group financial statements as a whole.
Other information
The directors are responsible for the other information. The other information comprises all of the information in the Annual Financial 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 and we do not express any form of assurance conclusion thereon except as explicitly stated within the Report on other legal and regulatory requirements.
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.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
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 IFRSs as adopted by the EU and the requirements of the Maltese Companies Act (Cap. 386), 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 Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Those charged with governance are responsible for overseeing 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 ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent Company’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
● Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Parent Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group or the Parent Company to cease to continue as a going concern.
● Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
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 benefits 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 Annual Financial Report of Simonds Farsons Cisk plc for the year ended 31 January 2022, entirely prepared in a single electronic reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the 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 Annual Financial Report, including the 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:
● Obtaining an understanding of the entity's financial reporting process, including the preparation of the Annual Financial Report, in accordance with the requirements of the ESEF RTS.
● Obtaining the Annual Financial Report and performing validations to determine whether the Annual Financial Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.
● Examining the information in the Annual Financial Report to determine whether all the required taggings therein have been applied and whether, in all material respects, they are in accordance with the requirements of the ESEF RTS.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 January 2022 has been prepared, in all material respects, in accordance with the requirements of the ESEF RTS.
Other reporting requirements
The Annual Financial Report 2022 contains other areas required by legislation or regulation on which we are required to report. The Directors are responsible for these other areas.
The table below sets out these areas presented within the Annual Financial Report, our related responsibilities and reporting, in addition to our responsibilities and reporting reflected in the Other information section of our report. Except as outlined in the table, we have not provided an audit opinion or any form of assurance.
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Area of the Annual Financial Report 2022 and the related Directors’ responsibilities |
Our responsibilities |
Our reporting |
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Directors’ report and Statement by the directors on non-financial information The Maltese Companies Act (Cap. 386) requires the directors to prepare a Directors’ report, which includes the contents required by Article 177 of the Act and the Sixth Schedule to the Act. |
We are required to consider whether the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements.
We are also required to express an opinion as to whether the Directors’ report has been prepared in accordance with the applicable legal requirements.
In addition, we are required to state whether, in the light of the knowledge and understanding of the Company and its environment obtained in the course of our audit, we have identified any material misstatements in the Directors’ report, and if so to give an indication of the nature of any such misstatements.
With respect to the information required by paragraphs 8 and 11 of the Sixth Schedule to the Act, our responsibility is limited to ensuring that such information has been provided. |
In our opinion: ● the information given in the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ● the Directors’ report has been prepared in accordance with the Maltese Companies Act (Cap. 386).
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section.
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Corporate Governance Statement The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare and include in the Annual Financial Report a Statement of Compliance with the Code of Principles of Good Corporate Governance within Appendix 5.1 to Chapter 5 of the Capital Markets Rules. The Statement’s required minimum contents are determined by reference to Capital Markets Rule 5.97. The Statement provides explanations as to how the Company has complied with the provisions of the Code, presenting the extent to which the Company has adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the accounting period with those Principles.
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We are required to report on the Statement of Compliance by expressing an opinion as to whether, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have identified any material misstatements with respect to the information referred to in Capital Markets Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatements.
We are also required to assess whether the Statement of Compliance includes all the other information required to be presented as per Capital Markets Rule 5.97.
We are not required to, and we do not, consider whether the Board’s statements on internal control included in the Statement of Compliance 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 Statement of Compliance has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority.
We have nothing to report to you in respect of the other responsibilities, as explicitly stated within the Other information section. |
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Remuneration report The Capital Markets Rules issued by the Malta Financial Services Authority require the directors to prepare a Remuneration report, including the contents listed in Appendix 12.1 to Chapter 12 of the Capital Markets Rules. |
We are required to consider whether the information that should be provided within the Remuneration report, as required in terms of Appendix 12.1 to Chapter 12 of the Capital Markets Rules, has been included. |
In our opinion, the Remuneration report has been properly prepared in accordance with the requirements of the Capital Markets Rules issued by the Malta Financial Services Authority. |
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Other matters on which we are required to report by exception We also have responsibilities under the Maltese Companies Act (Cap. 386) to report to you if, in our opinion: ● adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us. ● the financial statements are not in agreement with the accounting records and returns. ● we have not received all the information and explanations which, to the best of our knowledge and belief, we require for our audit.
We also have responsibilities under the Capital Markets Rules to review the statement made by the directors that the business is a going concern together with supporting assumptions or qualifications as necessary. |
We have nothing to report to you in respect of these responsibilities. |
Other matter – use of this report
Our report, including the opinions, has been prepared for and only for the Parent Company’s shareholders as a body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
Appointment
We were first appointed as auditors of the Company for the period ended 31 March 1948. Our appointment has been renewed annually by shareholder resolution representing a total period of uninterrupted engagement appointment of 74 years. The Company became listed on a regulated market on 20 December 1995.
PricewaterhouseCoopers
78, Mill Street
Zone 5, Central Business District
Qormi
Malta
Stefan Bonello
Partner
25 May 2022