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Savarin P.L.C.

 

Annual report

 

31 December 2021



 

 

 

DECLARATION OF THE STATUTORY BODY

 

 

The Companies Act, 1995 (Chapter 386, Laws of Malta) (the “Act”) requires the directors of Savarin P.L.C. (the “Company”) and its subsidiaries (together the Group) to prepare financial statements and consolidated financial statements for each reporting period which give a true and fair view of the financial position of the Company and the Group as at the end of the reporting period and of the profit or loss of the Company and the Group for that reporting period in accordance with the requirements of International Financial Reporting Standards as adopted by the EU.

 

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Company and the Group and to enable them to ensure that the financial statements have been properly prepared in accordance with the provisions of the Act.

 

The directors are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

The directors are responsible for ensuring that the companies in the Group establish and maintain internal control to provide reasonable assurance with regard to reliability of financial reporting, effectiveness and efficiency of operations and compliance with applicable laws and regulations.

 

The directors are also responsible for establishing a control environment and maintain policies and procedures to assist in achieving the objective of ensuring, as far as possible, the orderly and efficient conduct of the Group’s business. This responsibility includes establishing and maintaining controls pertaining to the Group’s objective of preparing financial statements as required by the Act and managing risks that may give rise to material misstatements in those financial statements. In determining which controls to implement to prevent and detect fraud, the directors consider the risks that the financial statements may be materially misstated as a result of fraud.

 

 

Prepared in Malta on 29 April 2022

 

 

 

 

 

 

Omar Koleilat image_f3adee36-44e6-4414-aadb-a5dd2d2a3b91

Director

 

 

image_3e38bc8a-2a8c-402a-8138-cf78b8aa969c

Kurt Risiott

for and on behalf of

FJV Management Limited

Director



 

Principal activities

 

Savarin P.L.C. (the Company) and its subsidiaries (together the Group) operate in real estate development with a portfolio in the Czech Republic. The Group is principally involved in rental of retail and office spaces (commercial buildings and shopping malls) and in commercial development.

 

The Company is a Public Limited Company incorporated on 03 July 2019 and domiciled in Malta. The address of its registered office is B2, Industry Street, Zone 5, Central Business District, Qormi CBD 5030, Malta. Contact details are telephone: +356 2299 3100 WEB: https://www.dluhopisy-savarin.com/

 

Directors

 

The following have served as directors of the Company during the period under review:

 

FJV Management Limited

Kurt Risiott (until 20.12.2021)

Omar Koleilat (since 12.8. 2021)

 

 

 

 

INFORMATION UNDER THE CAPITAL MARKETS BUSINESS ACT AND OTHER INFORMATION

 

 

Information on the financial situation, indicating important factors, risk and uncertainties

 

During the reporting period, the Group registered a profit for the year amounting to EUR 36,310 thousand. Shareholders’ equity amounted to EUR  37,621 thousand.

 

Details of the Group's financial position, including a statement of important factors, are set out in the notes to the consolidated financial statements which form an integral part of this Annual Report. A description of the potential risks and uncertainties is set out under Internal Controls and Risk Approaches.

 

 

Description of the rights and obligations attached to the Company´s shares

 

The Company's share capital is represented by 50 000 ordinary shares with a nominal value of 1 EUR.

 

 

           

31/12/2021

Authorised issued and fully paid-up

49,999 Ordinary A shares of EUR 1 each

50

1 Ordinary B share at EUR 1

--

50

 

The Company's shares carry rights and obligations under generally binding legislation and the Articles of Association. All ordinary shares in the Company, irrespective of the letter by which they are denominated shall rank equally in all respects subject that the B ordinary shares will not be entitled to a vote in the general meetings, shall not carry any dividend entitlements and shall not be entitled to any surplus of assets of the Company on a winding up but shall have a prior claim over the holder/s of the Ordinary A shares for the return of the nominal value of the said Ordinary B shares.

 

The ultimate parent and ultimate controlling party is Cali Global Investment Limited, intermediate company is Crestyl Holding Limited. The Company is therefore included in Cali Group and Crestyl Group.

Information on all monetary and nonmonetary income of persons with management authority over the Group 

 

Persons with management authority received EUR 9 thousand of directors fees. EUR 54 thousand was billed for another services by these persons in 2021.

 

Figures and information on the number of shares or similar securities representing an interest in the Group held by persons with management authority over Group

 

No members of the statutory bodies of Savarin P.L.C. are direct owners of Savarin P.L.C.

 

Principles of remuneration of persons with management authority over the Group

 

The members of the Board of Directors are not remunerated for the performance of their duties, except for directors’ fees as stated above.

 

Auditors of the Group

 

PricewaterhouseCoopers have been appointed as auditors of the Group.

 

Fees charged by auditors

 

Auditors' fees broken down by type of service.

 

Auditor

Period

Services

Amount  (TEUR)

PricewaterhouseCoopers

1.1.2021 – 31.12.2021  

Audit of annual reports

12

PricewaterhouseCoopers

1.1.2021 – 31.12.2021  

Other assurance services

0

PricewaterhouseCoopers

1.1.2021 – 31.12.2021  

Tax consultancy

0

PricewaterhouseCoopers

1.1.2021 – 31.12.2021  

Other non-audit services

0

 

Regulated markets on which the company's securities are traded

 

The bonds (ISIN CZ0000001300 – Savarin P.L.C.  0.00%, 2021 – 2026) are traded on the Prague stock-exchange (Rybná 14/682, Prague, Czech Republic). No rating was assigned.

 

INTERNAL CONTROLS AND APPROACHES TO RISK

 

The internal control policies and procedures and the Group´s risk appetite

 

The statutory body is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the EU (IFRS).

 

The system of internal control is an integral part of the day-to-day and regular operations and assists in achieving the Group's strategic and business objectives.

 

The internal control system consists of:

 

·     control by the Board of Directors in the performance of their management and work activities,

·     activities carried out by departments of the Company's parent company.

 

The internal control system also includes periodic physical checks of documents and reporting.

 

The accuracy of accounting and financial statements is checked in the preparation of monthly or quarterly control reports.

 

Financial risk factors

 

The Group´s activities expose it to a variety of financial risks: mainly liquidity risk. The Group's overall risk management programme focuses on the unpredictability of market conditions and therefore seeks to minimise potential adverse effects on the Group's financial performance. Risk management is carried out by the directors. The directors evaluate on a periodical basis, financial risk factors based on appropriate skills, experience and supervision.

 

Liquidity risk

 

The Company’s exposure to liquidity risk arises from its obligations to meet financial liabilities, which comprise other payables. Prudent liquidity risk management includes maintaining sufficient cash and committed credit facilities to ensure the availability of an adequate amount of funding to meet the Company’s obligations when they become due. For more information refer to Note 20  of consolidated financial statements.

 

Credit risk

 

Credit risk is the risk of financial loss to the Group if a counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s loans and interest receivables and other receivables, as well as cash at bank.

 

Generally, credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as credit exposures to debtors, including provided loans, outstanding receivables and committed transactions.

 

The Group has policies in place to ensure that loan contracts are concluded with debtors with an appropriate credit history and the credibility and business performance and expected business performance of the debtors is monitored on an ongoing basis. Bank transactions are limited to high-credit-quality financial institutions.

 

Credit risk is mitigated due to the fact, that the Group cooperates primarily with privately owned Czech banks that are under the supervision of the Czech National Bank. For more information refer to Note 20 of consolidated financial statements.

 

Currency risk

 

The Company is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which receivables and payables are denominated and the functional currency of the Company. Foreign currency exchange risk is limited and arises from recognised monetary assets and liabilities.

 

The Company uses foreign exchange swaps for risk management purposes to reduce the risk of debt exposed to foreign exchange fluctuations. The Company does not use foreign exchange derivatives for speculative purposes. The derivative financial instruments are not designated as used for hedging. For more information refer to Note 20 of consolidated financial statements.



Interest rate risks 

 

The Company takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest costs may increase as a result of such changes. They may reduce or create losses in the event that unexpected movements arise. For more information refer to Note 20 of consolidated financial statements.

 

Information on Corporate governance codes

 

The Group has a defined code of ethics, at the same time, the companies in the Group are governed by generally binding legal regulations based on Act No. 90/2012 Coll., on Business Corporations, Act No. 563/1991 Coll., on Accounting, Act No. 256/2004 Coll., on Capital Market Business, The Companies Act, 1995 and related and follow-up legal norms.

 

Code of Ethics

 

The Group has adopted a system of ethical and legal rules which shall apply throughout all the activities of the Group. Adhering to these rules ensures that all activities of the Group are realized within the respective legal and ethical boundaries. Such rules apply to members of the statutory body of the Company. The code of ethics is communicated to involved parties informally.



Compliance with Code of Ethics

 

The compliance with the ethical rules of the Company is secured by the Ethical Code being a binding internal directive for all the companies of the Crestyl Group.

 

Conflict of interest

 

The Board of Directors hereby declare that none of them has any conflict of interest.

 

Information on activities of persons with management authority carried out outside the company

 

During the period of calendar year 2021, persons with management authority of the Company and the Group - directors - served on the bodies of the following companies included in Cali Group as follows:

 

Name

Company

FJV Management Limited and Omar Koleilat

Cali Global Investments Limited

FJV Management Limited

CCI Czech Development Limited

FJV Management Limited

Crestyl Brno Properties Ltd

FJV Management Limited and Omar Koleilat

Crestyl Finco Development Limited

FJV Management Limited

Crestyl G Limited

FJV Management Limited and Omar Koleilat

Crestyl Holding Limited

FJV Management Limited and Omar Koleilat

Crestyl Holding PL Limited

FJV Management Limited and Omar Koleilat

Crestyl Investment Limited

FJV Management Limited

Crestyl Prime Residential Ltd

FJV Management Limited

Crestyl Residential Limited

FJV Management Limited and Omar Koleilat

Crestyl Retail Ltd

FJV Management Limited

Crestyl Savarin Ltd

FJV Management Limited and Omar Koleilat

River Avenue Limited

FJV Management Limited

Savarin HoldCo Limited

 

Contingencies and Litigations

 

There were no contingencies and litigations in 2021.

 

Dividends

 

No dividends are being declared. The directors do not recommend the payment of a dividend during the reporting period.

 

Description of the decision - making procedures and composition of the statutory and general meeting

 

Legal and judicial representation of the Company shall be exercised by the Class A Directors. The business and affairs of the Company shall be managed by a Board of Directors which may exercise such powers of the Company as are not, by the Act or by Articles, required to be exercised by the Company, in general meeting. Board of directors shall be composed of not less than 2 and not more than 10 directors, which shall at all times include 1 Class A director and 1 Class B director. The directors are appointed by the shareholders. An election of directors takes places every year.

 

The Company shall, in each year, hold a general meeting as its annual general meeting in addition to any other meetings that year. The board of the Company may, whenever it deems fit, convene an extraordinary general meeting. The general meeting of the Company exercises powers vested into it by law as well as by the memorandum of association. Resolutions of the general meeting are put to the vote of the Board and shall be decided by poll.

 

A description of the decision-making procedures and composition of the audit committee

 

The Audit Committee shall be a body of the Company which shall, without prejudice to the responsibilities of the members of the Board of Directors or the Supervisory Board of the Company, in particular the following activities:

 

·         monitor the process of preparing the financial statements submit recommendations to the Management Board or the Supervisory Board

·         to ensure the integrity of the accounting systems, 

·         monitors the process of drawing up the financial statements,

·         recommend to the General Meeting the statutory auditor and give proper reasons for this recommendation,

·         assess the independence of the statutory auditor,

·         monitor the statutory audit process,

·         inform the General Meeting of the outcome of the statutory audit,

·         express an opinion on the termination of the engagement under the statutory audit contract or the withdrawal from the statutory audit contract.

·         approve other non-audit services provided by statutory auditor   

·         ensure that significant risks are identified and adequately addressed

 

The members of the Audit Committee shall report the General Meeting of the Company and shall be obliged to inform the General Meeting of the results of their activities. 

 

The Audit Committee shall have at least three members, appointed and removed by the General Meeting and majority of them should be non-executive members.

 

The Audit Committee shall be able to hold a valid meeting if an absolute majority of all members are present at the meeting. A majority of all members shall be required for the adoption of a resolution, unless a qualified majority is required by law for a particular decision. Each member of the Committee shall have one vote. In the event of an equality of votes the Chairperson shall have a casting vote. 

 

The members of the Company's Audit Committee are as follows:

 

·         Karl Buttigieg - FJVA partner and head of accounts

·         Nicholas Warren - FJVA’s COO

·         Tomas Panko - Crestyl group operations finance

 

Information on expected developments

 

In 2022 the Group will continue being involved in rental of retail and office spaces (commercial buildings and shopping malls)  while the main focus will be on commercial development.

 

Organisational structure of the issuer

 

Companies in the Group do not have its own employees and conduct all business activities through contractors, both from the parent company group and external ones. The management of the Company and companies in the Group is directly performed by the members of the Board of Directors.

 

Research and development activities

 

The Group had no research and development expenditure in 2021. 

 

Information on the acquisition of the own shares or interests

 

The Group did not acquire any treasury shares or interests in 2021.

 

Environmental protection activities

 

The Group's operations do not have any material impact on the environment, therefore no specific activities are undertaken in this area. 

 

Labour relations activities

 

The Group did not enter into any employment relationships in 2021.

 

Information on foreign subsidiaries

 

The Group has foreign subsidiaries in the Czech Republic, no other  organisational units were established abroad.

 

Alternative performance indicators

 

The companies in the Group  do not use any alternative performance indicators in its activities.

 

Summary of significant contracts

 

On 10.08.2021 a construction loan from Trinity Bank a.s. was granted to Palace Savarin, s.r.o. in the amount of CZK 750,000,000, maturing no later than 31.05.2026.

 

On 30.07.2021, the 3rd amendment to the predevelopment loan from J&T Banka a,s. for Welvyn Company a.s. was signed. 3rd Amendment change re-payment of loan from 31.12.2024 to 30.6.2026.

 

Events after the reporting date and future developments

 

Continuing political tensions between Russia and Ukraine escalated into a conflict with Russia´s military invasion of Ukraine at the end of February 2022.The global response to Russia´s violations of international law and aggression against Ukraine has been the imposition of extensive sanctions and restrictions on business activity. The Group management considers this as non - adjusting subsequent event. The overall impact of recent developments has been reflected in increased volatility in financial and commodity markets and other implications for the economy. Business risks, including the adverse effects of economic sanctions on Russia, business disruptions (including supply chains), increased cyber - attacks, the risk of breaches of legal and regulatory rules and other factors are difficult to assess, and their overall impact and potential effects are currently unknown.

 

No securities issued by the issuer are excluded from trading on a regulated market as at the date of the issuance of this annual report.

 

 

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Savarin P.L.C.

 

ANNUAL CONSOLIDATED FINANCIAL STATEMENTS

 

31 December 2021

Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

 Consolidated statement of financial position

 As at 31 December 2021

Note

As at

31 December 2021

As at

31 December 2020

ASSETS

Non-current assets

Investment property

6

193,816

-

Intangible assets

14

-

Restricted cash

8

4,193

-

Prepayments

7

840

-

Total non-current assets

198,863

-

Current assets

Trade and other receivables

7

1,280

100

Prepayments

7

1,106

202

Cash and cash equivalents

8

4,912

-

Total current assets

7,298

302

Total assets

206,161

302

EQUITY

Capital attributable to the Company’s equity holders

Share capital

9

50

50

Translation reserve

1,375

-

Retained earnings

36,196

(114)

Total equity attributable to equity holders of the parent

37,621

(64)

Total equity

37,621

(64)

 

The accompanying notes are an integral part of these consolidated financial statements.



Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

Consolidated statement of financial position (continued)

As at 31 December 2021

Note

As at

31 December 2021

As at

31 December 2020

LIABILITIES

Non-current liabilities

Bank loans and borrowings

11

86,884

-

Bonds issued

10

65,725

-

Financial instruments - derivatives

20

3,118

-

Deferred income

12

380

-

Deferred tax liability

13

10,632

-

Total non-current liabilities

166,739

-

Current liabilities

Bank loans and borrowings

11

287

-

Trade payables and other liabilities

12

1,216

366

Deferred income

12

298

-

Total current liabilities

1,801

366

Total liabilities

168,540

366

Total liabilities and equity

206,161

302

The accompanying notes are an integral part of these consolidated financial statements.

The consolidated financial statements on pages 3 – 52 were approved and authorized for issue by the Board of Directors on 29 April 2022 and signed on its behalf by:

 

 

image_a4900a6d-d5f9-4ef7-9a5e-cebf5628c727

image_f33551dd-d50d-452f-b388-3986bc5c93dd



Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

Consolidated statement of comprehensive income

For the period ended 31 December 2021

For the year

ended

31 December 2021

For the period

from 3 July 2019

to 31 December 2020

Note

Rental revenue

14

1,964

-

Total revenues

1,964

-

Fair value gain on investment property

6

55,047

-

Impairment of loans and trade receivables

20

(261)

(2)

Other operating income

14

40

67

Other operating expenses

15

(2,237)

(179)

Operating profit

54,553

(114)

Interest and other finance income

16

3,843

-

Interest and other finance expense

16

(11,782)

-

Net finance expense

(7,939)

-

Profit before income tax

46,614

(114)

Income tax expense

17

(10,304)

-

Profit for the year / period

36,310

(114)

Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss

Foreign currency translation differences

1,375

-

Other comprehensive income for the year / period

1,375

-

Total comprehensive income for the year / period

37,685

(114)

Profit / (loss) for the year attributable to:

Owners of the Company

36,310

(114)

Total comprehensive income for the year / period attributable to:

Owners of the Company

37,685

(114)

The accompanying notes are an integral part of these consolidated financial statements.

Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

Consolidated statement of changes in equity

For the year ended 31 December 2021

Share capital

Translation reserve

Retained earnings

Total equity

Balance at 1 January 2021

50

-

(114)

(64)

Total comprehensive income for the year:

Profit / (Loss) for the year

-

-

36,310

36,310

Other comprehensive income for the year:

Foreign currency translation differences

-

1,375

-

1,375

Total other comprehensive income for the year

-

1,375

-

1,375

Total comprehensive income for the year

-

1,375

36,310

37,685

Balance at 31 December 2021

50

1,375

36,196

37,621

The accompanying notes are an integral part of these consolidated financial statements.



Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

Consolidated statement of changes in equity

 

For the period from 3 July 2019 to 31 December 2020

 

Share capital

Translation reserve

Retained earnings

Total equity

Balance at 3 July 2019

3

-

-

3

Total comprehensive income for the year:

Loss for the period

-

-

(114)

(114)

Other comprehensive income for the year:

Foreign currency translation differences

-

-

-

-

Total other comprehensive income for the year

-

-

-

-

Total comprehensive income for the year

-

-

(114)

(114)

Issue of share capital

47

-

-

47

Balance at 31 December 2020

50

-

(114)

(64)

 

The accompanying notes are an integral part of these consolidated financial statements.

Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

Consolidated statement of cash flows

For the year ended 31 December 2021

Note

For the year

ended

31 December 2021

For the period

from 3 July 2019

to 31 December 2020

Cash flows from operating activities:

Profit / (Loss) before taxation

46,614

(114)

Adjustments for:

Net fair value gain on investment property

6

(55,047)

-

Amortization of intangible assets

2

-

Impairment loss on trade and other receivables

20

262

1

(Reversal of impairment) / Impairment loss on other assets

(1)

1

Interest income

16

(10)

-

Interest expense

16

8,301

-

Change in fair value of derivates

20

3,118

-

Foreign exchange translation differences

(2,503)

-

Operating profit before changes in the working capital

736

(112)

Change in trade and other receivables and prepayments

(253)

(254)

Change in trade payables and other liabilities

(153)

366

Change in deferred revenues

(2)

-

Net cash generated from / (used in) operations activities

328

-

Income taxes paid

63

-

Net cash flows generated from / (used in) operating activities

391

-

Cash flows from investing activities:

Expenditure on investment property

6

(2,095)

-

Acquisition of subsidiaries through acquisition of group of assets and liabilities, net of cash acquired

5

(46,386)

-

Interest received

5

10

-

Net cash flows used in investing activities

(48,471)

-

Cash flows from financing activities:

Proceeds from loans and borrowings

11

16,791

-

Repayment of loans and borrowings

11

(17,685)

-

Proceeds from bonds issued

11

59,882

-

Change in cash held on restricted bank accounts

11

(3,154)

-

Interest paid

11

(1,258)

-

Payment of transaction cost related to issue of bonds

11

(1,584)

-

Net cash flows generated from financing activities

52,992

-



Savarin P.L.C. Consolidated Financial Statements

For the year ended 31 December 2021

 (all amounts in EUR thousand)

Consolidated statement of cash flows (continued)

For the year ended 31 December 2021

 

Note

For the year

ended

 31 December 2021

For the period

from 3 July 2019

to 31 December 2020

Net increase / (decrease) in cash and cash equivalents

4,912

-

Cash and cash equivalent at the beginning of the period **

-

-

Cash and cash equivalents at the end of the period **

8

4,912

-

** Cash and cash equivalents include bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management.

The accompanying notes are an integral part of these consolidated financial statements.

SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

Notes to the consolidated financial statements

1 General information and basis of preparation

1.1 General information

Savarin P.L.C. (the Company) and its subsidiaries (together the Group, see Note 22) operate in real estate development with a portfolio in the Czech Republic. The Group is principally involved in rental of retail and office spaces (commercial buildings and shopping malls) and in commercial development.

The Company is a Public Limited Company incorporated on 03 July 2019 and domiciled in Malta. The address of its registered office is B2, Industry Street, Zone 5, Central Business District, Qormi CBD 5030, Malta.

 

Ownership structure as at

31/12/2021

Number of shares as at 31/12/2021

31/12/2020

Number of shares as at 31/12/2020

Savarin Holdco Limited

99.998%

49,999

99.998%

49,999

Crestyl Finco Development Limited

0.002%

1

0.002%

1

50,000

50,000

 

Ultimate parent and ultimate controlling party is Cali Global Investments Limited. No members of the board of Savarin P.L.C. are direct owners of Savarin P.L.C. Savarin P.L.C. is indirectly owned by discretionary trusts and hence Mr. Francis J. Vassallo, Ms. Adriana Camilleri Vassallo, Dr. Ruth Agius Scicluna Buttigieg, Dr. Kurt Risiott, Mr. Karl Buttigieg as directors of FJV Management Ltd as corporate director of Savarin P.L.C. and Mr. Omar Koleilat as director of Savarin P.L.C. have been disclosed as controlling parties of Savarin P.L.C..

The Company is a subsidiary of Savarin HoldCo Limited, the registered office of which is situated at B2, Industry Street, Zone 5 Central Business District, Qormi, CBD5030, Malta. Savarin HoldCo Limited is the subsidiary of Crestyl Finco Development Limited, the registered office of which is situated at B2, Industry Street, Zone 5 Central Business District, Qormi, CBD5030, Malta. Crestyl Finco Development Limited is the subsidiary of Crestyl Holding Ltd., the registered office of which is situated at B2, Industry Street, Zone 5 Central Business District, Qormi, CBD5030, Malta. Crestyl Holding Limited is the subsidiary of Cali Global Investments (the ultimate parent company), the registered office of which is situated at B2, Industry Street, Zone 5 Central Business District, Qormi, CBD5030, Malta.

Both the ultimate parent Cali Global Investments and the intermediate company Crestyl Holding Limited prepare consolidated financial statements of the Group, of which the Company and its subsidiaries form part. The consolidated financial statements of the ultimate parent company are filed and will be available at the Malta Business Registry.

For the composition of share capital refer to Note 9.

Legal and judicial representation of the Company shall be exercised by the Class A Directors. The business and affairs of the Company shall be managed by a Board of Directors which shall be composed of not less than 2 and not more than 10 directors, which shall at all times include 1 Class A director and 1 Class B director.

Directors of the Company as at 31 December 2021:

·          FJV Management Limited (class A director)

·          Omar Koleilat (class B director)

1.2 Basis of preparation

1.2.1 Going Concern

As at 31 December 2021, the Group has a positive equity position of EUR 37,621 thousand, and current assets that exceeded its current liabilities by EUR 5,497 thousand. In preparing these financial statements on a going concern basis, management has continued to meet its day to day working capital requirements up to the date of approval of these consolidated financial statements. The directors believe that it is appropriate to prepare the financial statements on the going concern basis as at 31 December 2021 which assumes that the Group will continue in operational existence for the foreseeable future.

SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

1.2.2 Basis of consolidation

As disclosed in Note 5 to these consolidated financial statements, Savarin P.L.C acquired control in Savarin HoldCo s.r.o and Palace Savarin HoldCo s.r.o on 7 January 2021. While the transactions failed to meet the definition of a business acquisition in accordance with IFRS 3 'Business Combination' and was assessed by management to be considered as an acquisition of group of assets and liabilities, Savarin P.l.c is required to present consolidated financial statements as a parent in accordance with IFRS 10 'Consolidated Financial Statements'. Accordingly, this financial statements include the results of the subsidiaries from the date control was acquired and their assets and liabilities as at the reporting date. The comparative period presented in these consolidated financial statements relate to Savarin P.l.c as an individual undertaking. The Company separately prepares standalone financial statements of Savarin P.l.c as a company in accordance with IFRSs as adopted by the EU.

 

2  Significant accounting policies

2.1 Statement of compliance and basis of measurement

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”).

These consolidated financial statements have been prepared under the historical cost convention, except for investment property and derivative financial instruments that are measured at fair value, in accordance with those IFRS standards and IFRIC interpretations issued and effective as at 31 December 2021.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4 - Critical accounting estimates and judgments.

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. The accounting policies set out below have been applied consistently by Group entities.

2.2 Changes in significant accounting policies

New standards are effective from 1 January 2021, but they do not have a material effect on the Group’s financial statements.

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2 (issued on 27 August 2020; effective date 1 January 2021)

These amendments relate to changes to contractual cash flows, hedge accounting and disclosures as a result of the Interest Rate Benchmark Reform.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2 Summary of significant accounting policies (continued)

2.3 New standards, interpretations and amendments to published standards

The Group did not adopt any standard at earlier date. It plans to adopt at it its effective date.

Standards and interpretations that are not yet effective and are relevant for the Group’s financial statements, adopted by the EU

 

Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts - Cost of Fulfilling a Contract (applicable for annual periods beginning on or after 1 January 2022); adopted by the EU in July 2021

 

In determining costs of fulfilling a contract, the amendments require an entity to include all costs that relate directly to a contract.  Paragraph 68A clarifies that the cost of fulfilling a contract comprises both: the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts.

Amendments to IFRS 3 Business Combination – Reference not the Conceptual Framework (applicable for annual periods beginning on or after 1 January 2022); adopted by the EU in July 2021

The changes in the Amendments to IFRS 3 Reference to the Conceptual Framework:

·          update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Framework;

·          add to IFRS 3 a requirement that, for transactions and other events within the scope of IAS 37 or IFRIC 21, an acquirer applies IAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the liabilities it has assumed in a business combination; and

·          add to IFRS 3 an explicit statement that an acquirer does not recognise contingent assets acquired in a business combination.

Annual Improvements to IFRS Standards 2018–2020 (applicable for annual periods beginning on or after 1 January 2022); adopted by the EU in July 2021

Amendment to IFRS 9 Financial Instruments

The improvements clarify that, when assessing whether an exchange of debt instruments between an existing borrower and lender are on terms that are substantially different, the fees to include together with the discounted present value of the cash flows under the new terms include only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the other's behalf.

Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 (issued on 31 March 2021 and effective for annual periods beginning on or after 1 April 2021)

The amendments permit a lessee to apply the practical expedient related to COVID-19 related rent concessions to rent concessions for which any reductions in lease payments affects only payments originally due on or before 30 June 2022 (rather than only payments originally due on or before 30 June 2021).

Amendment to Illustrative Examples accompanying IFRS 16 Leases

The improvements remove from illustrative Example 13 accompanying IFRS 16 reference to a reimbursement by the lessor to the lessee for leasehold improvements as well as an explanation of a lessee’s accounting for such reimbursement.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2 Summary of significant accounting policies (continued)

2.3 New standards, interpretations and amendments to published standards (continued)

Standards and interpretations that are not yet effective and are relevant for the Group’s financial statements, adopted by the EU (continued)

Amendments to IAS 8 – Definition of Accounting Estimate (applicable for annual periods beginning on or after 1 January 2023); adopted by the EU in March 2022

Based on the amendment, the definition of a change in accounting estimates is replaced with a new definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”.

 

Entities develop accounting estimates if accounting policies require items in financial statements to be measured in a way that involves measurement uncertainty.

 

The Board clarifies that a change in accounting estimate that results from new information or new developments is not the correction of an error. In addition, the effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates if they do not result from the correction of prior period errors.

 

 A change in an accounting estimate may affect only the current period’s profit or loss, or the profit or loss of both the current period and future periods. The effect of the change relating to the current period is recognised as income or expense in the current period. The effect, if any, on future periods is recognised as income or expense in those future periods.

 

Amendments to IAS 1 and IFRS Practice Statement 2 (applicable for the annual periods beginning on or after 1 January 2023); adopted by the EU in March 2022

Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) amends IAS 1 in the following ways:

 

·          An entity is now required to disclose its material accounting policy information instead of its significant accounting policies;

·          several paragraphs are added to explain how an entity can identify material accounting policy information and to give examples of when accounting policy information is likely to be material;

·          the amendments clarify that accounting policy information may be material because of its nature, even if the related amounts are immaterial;

·          the amendments clarify that accounting policy information is material if users of an entity’s financial statements would need it to understand other material information in the financial statements;

·          the amendments clarify that if an entity discloses immaterial accounting policy information, such information shall not obscure material accounting policy information; and

·          In addition, IFRS Practice Statement 2 has been amended by adding guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ to accounting policy information in order to support the amendments to IAS 1.

 

None of these amendments is expected to have significant impact on Group´s consolidated financial statements except for possible formal changes in the presentation of consolidated financial statements connected to Amendment to IAS 1 and IFRS Practice Statement 2.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2 Summary of significant accounting policies (continued)

2.3 New standards, interpretations and amendments to published standards (continued)

Standards and interpretations that are not yet effective and are relevant for the Group’s financial statements, not adopted by the EU  (continued)

Amendments to IAS 1 Presentation of Financial Statements – Classification of Liabilities as Current or Non - current (Effective date January 2023)

The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statements of financial position, debt and other liabilities with an uncertain settlement date should be classified as current or non – current.

The Group is currently assessing potential impact of this amendment to its consolidated financial statements.

Amendment to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a single Transactions (Effective date January 2023)

The main change is the exemption from the initial recognition exemption in a transaction which is not a business combination and, at the time of a transaction, affect neither accounting profit nor taxable profit.

The Group is currently assessing potential impact of this amendment to its consolidated financial statements.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

(Effective date postponed indefinitely)

The amendments address an acknowledged inconsistency between the requirements in IFRS 10 and those in IAS 28, in dealing with the sale or contribution of assets between an investor and its associate or joint venture. The main consequence of the amendments is that a full gain or loss is recognised when a transaction involves a business (as defined in IFRS 3). A partial gain or loss is recognised when a transaction involves assets that do not constitute a business. In December 2015, the IASB postponed the effective date of this amendment indefinitely pending the outcome of its research project on the equity method of accounting.

The Group does not expect that the Interpretation, when initially applied, will have material impact on the financial statements for the Group.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.4  Basis of consolidation

Business combinations

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group.

The Group measures goodwill at the acquisition date as:

·          the fair value of the consideration transferred; plus

·          the recognised amount of any non-controlling interests in the acquiree; plus

·          if the business combination is achieved in stages, the fair value of the pre-existing equity interest in the acquiree; less

·          the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts generally are recognised in profit or loss.

Transaction cost, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent consideration is classified as equity, then it is not re-measured and settlement is accounted for within the equity. Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or loss.

The interest of non-controlling shareholders at the date of the business combination is recorded at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets, which are generally at fair value.

Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the accounting policies applied by the Group.

Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements

2.5  Foreign currency translation

Foreign currency transactions

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). Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate at the transaction date.

Monetary assets and liabilities denominated in foreign currencies are retranslated to the respective functional currencies of Group entities at the exchange rate valid at the reporting date; where the functional currency is Czech crowns, at the exchange rate of the Czech National Bank; otherwise at the exchange rate of European Central Bank. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated to the respective functional currencies of Group entities at the foreign exchange rate at the date of the transaction. Foreign currency differences are generally recognized in profit or loss and presented within finance costs.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.5  Foreign currency translation (continued)

A summary of the main foreign exchange rates applicable for the reporting period is presented in Note 20 – Financial Risk Management.

Functional and presentation currency

These financial statements are presented in Euro (EUR), which is the currency in which the Company’s share capital is denominated, in accordance with the provisions of article 187 of the Companies Act, and is also the Company’s functional currency. Functional currency is the Czech crown (CZK) for the majority of the project entities.

All financial information presented in EUR has been rounded to the nearest thousand except when otherwise indicated.

For the purpose of presenting these financial statements to Euro, the assets and liabilities, including goodwill and fair value adjustments arising on consolidation, are translated from functional currency into Euros at foreign exchange rate at the reporting date. The income and expenses are translated from the functional currency into Euros using an average foreign exchange rate.

Foreign exchange differences arising on translation of financial information of foreign subsidiaries are recognised in other comprehensive income and presented in the translation reserve in equity. The relevant proportion of the translation difference is allocated to non-controlling interests if applicable.

The exchange rates used for translating items from functional currency CZK (for entities with functional currency CZK) to the presentation currency EUR are as follows:

·          24.86 – Closing middle rate of exchange at 31 December 2021 for statement of financial position items

·          25.645 – Average middle rate of exchange for the year ended 31 December 2021 for statement of comprehensive income items

2.6  Significant accounting policies

Intangible assets other than goodwill

Software and other intangible assets

Software and intangible assets, other than goodwill, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses (refer to Note 2 – Impairment of non-financial assets).

Amortisation

Amortisation is recognised in profit or loss on a straight-line basis over the estimated useful lives of intangible assets, from the date the asset is available for use.

The estimated useful lives of intangible assets are as follows:

·          Software:                                   3 years

·          Other intangible assets:            2-5 years

Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if appropriate.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Investment property

Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is initially measured at cost and subsequently at fair value with any change therein recognised in profit or loss. Investment property includes assets under construction for future use as investment property.

Cost includes expenditure that is directly attributable to the acquisition of the investment property. The cost of self-constructed investment property includes the cost of materials and direct labour, any other costs directly attributable to bringing the investment property to a working condition for their intended use and capitalised borrowing costs.

Dual-use property is classified as investment property only if the portion of the property held for own use is insignificant. The assessment is carried out on property-by-property basis with reference to value and usable floor space.

The change in the fair value of investment property is recognized in the operating result section of the consolidated statement of comprehensive income.

External independent valuation companies, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, valued 100 % of investment property amount at the period end. Results of external valuation companies were further analysed by the Group’s valuation committee and based on its assessment included in these consolidated financial statements (refer to Note 4 - Critical accounting estimates and judgments).

Any gain or loss on disposal of an investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognised in profit or loss.

Leasing

The Group as a lessor

A lessor classifies each of its leases as either an operating lease or a finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership of the underlying asset. In other cases, it is an operating lease.

Operating leases

The Group recognises lease payments received and receivable under operating leases as income on a straight-line basis over the lease term. Incentives granted to the lessee in negotiation of a new or renewed operating lease are recognized as an integral part of the net consideration agreed for the use of the asset. They are recognized as a reduction of the rental income over the lease term on a straight- line basis.

Financial assets

On initial recognition, the Group classifies financial assets in the following measurement categories: financial assets measured at amortised cost; debt investments measured at fair value through other comprehensive income (FVOCI), equity investments measured at FVOCI based on the Group’s irrevocable election; or financial assets measured at fair value through profit and loss (FVTPL). The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows.

Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.

A financial asset is measured at amortised cost if it meets both of the following conditions:

·          it is held within a business model whose objective is to hold assets to collect contractual cash flows; and

·          its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

 

 



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Financial assets (continued)

A debt investment is measured at FVOCI if it meets both of the following conditions:

·          it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and

·          its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present subsequent changes in the investment´s fair value in OCI. This election is made on an investment-by-investment basis.

All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. On initial recognition, the Group may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as measured at FVTPL if doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.

Financial assets – Business model assessment

The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

·          the stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether management´s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial asset to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the asset;

·          how the performance of the portfolio is evaluated and reported to the Group´s management;

·          the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed;

·          how managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets managed or the contractual cash flows collected; and

·          the frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group´s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.

Financial assets – 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 the time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs) as well as 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. In making this assessment, the Group considers:

·          contingent events that would change the amount or timing of cash flows;

·          terms that may adjust the contractual coupon rate, including variable-rate features;

·          prepayment and extension features; and

·          terms that limit the Group´s claim to cash flows from specified assets (e.g. non-recourse features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition.

 

SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Financial assets (continued)

Recognition

Trade receivables are initially recognised in the statement of financial position when they are originated. All other financial assets are recognised when the Group becomes a party to the contractual provisions of the instrument.

Measurement

A financial asset (unless it is a trade receivable without a significant financing component) is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price in accordance with IFRS 15.

Financial assets at FVTPL are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at amortised cost are subsequently measured at amortised cost using effective interest rate method. The amortised cost of a financial asset or liability is the amount in which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortisation using the effective interest rate method of any difference between the initial amount recognised and the maturity amount, net of any impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Debt instruments at FVOCI are subsequently measured at fair value. Interest income calculated using the effective interest rate method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

Equity investments at FVOCI are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss.The accounting policy relating to fair value measurement is disclosed in Note 3 of these consolidated financial statements.

Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.

The Group enters into transactions whereby it transfers assets recognised in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised.

Offsetting

Financial assets and liabilities are off set and the net amount presented in the statement of financial position when there is a currently legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Income and expenses are presented on a net basis only when permitted by the accounting standards, or for gains and losses arising from a group of similar transactions.

Trade and other receivables

Trade receivables are recognised initially at the transaction price and are subsequently measured at amortised cost using the effective interest rate method. Trade and other receivables are stated after deducting the appropriate allowances for expected credit losses (refer to Note 2.6 Significant accounting policies - Impairment) of these consolidated financial statements.

Derivative financial instruments

The Group uses derivative financial instruments to manage its foreign exchange risk exposures.

Derivatives financial instruments are categorised as financial instruments classified as held for trading under the fair value through profit and loss category and are recognised initially at fair value. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are generally recognised in profit or loss within finance income/loss.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Cash and cash equivalents; restricted cash

Cash and cash equivalents include cash in hand, deposits held at call with banks, other current highly liquid investments with original maturities of three months or less.

The Group holds restricted bank accounts containing deposit for settlement of foreign exchange swap, specified rental payments and other deposits (Note 8) and these are presented on a separate line of the financial statements.

Share capital and reserves

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds, net of tax.

Ordinary shares

Ordinary shares are stated at their par value. Consideration received for the shares sold in excess over their par value is shown as share premium. Incremental external costs directly attributable to the issue of new shares are accounted for as a deduction from share premium.

Dividends

Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved. Any dividends declared after the reporting date and before the financial statements are authorised for issue are disclosed in the Subsequent events note.

Translation reserve

The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations to the presentation currency of the Group.

Financial liabilities

Loans and borrowings; bonds issued

Loans and borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest rate method.

Borrowing costs for financing the development projects are capitalized in the costs of investment property (Note 2 – Investment property). Other borrowing costs are expensed directly to the consolidated statement of comprehensive income as incurred.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Financial liabilities (continued)

Trade payables and other liabilities

Trade payables and other liabilities are recognised initially at fair value, net of transaction costs incurred. Trade payables and other liabilities are subsequently measured at amortised cost using the effective interest rate method.

Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest rate method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss.

The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group also derecognises a financial liability when it is replaced by another from the same lender on substantially different terms or its terms are substantially modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.

Impairment

Non-financial assets

Assets 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 inflows (cash-generating units).

The carrying amounts of the Group’s non-financial assets, other than deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and indefinite-lived intangible assets are tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or cash-generating unit (CGU) exceeds its recoverable amount.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset of CGU. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs. Subject to an operating segment ceiling test, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment testing is performed reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to CGU (group of CGUs), and then to reduce the carrying amounts of the other assets in the CGU (group of CGUs) on a pro-rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Impairment (continued)

Financial assets

Staging

The Group applies simplified approach for impairment of trade and lease receivable. The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on days past due. The expected loss rates are based on the payment profiles of customers over a period of 36 month before each balance sheet 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 affecting the ability of the customers to settle the receivables. Currently, due to a limited size of the trade receivables portfolio and its limited credit history, the loss rates are based on an expert judgment. The credit loss allowance for trade receivables is determined according to provision matrix presented in Note 7.

For other financial assets the Group applies a three-stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter (“12 Months ECL”). If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity, if any (“Lifetime ECL”). Refer below for a description of how the Group determines when a SICR has occurred. If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Group’s definition of credit-impaired assets and definition of default is explained below. The ECLs are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the counterparties to settle the receivables. The Group periodically reviews the development of major macroeconomic indicators (GDP growth, unemployment, property price index, default rates) and assesses the impact of the changes on the credit quality of receivables, e.g. in case the majority of monitored indicators shows an expectation of an economic downturn, the Group downshifts the implied credit ratings. For trade receivables, the Group generally expects forward-looking information will not have an impact on the credit quality due to generally short maturity.

Significant increase in credit risk

The assessment whether or not there has been a significant increase in credit risk (“SICR”) since initial recognition is performed on an individual basis by monitoring the triggers stated below. The presumption, being that there have been significant increases in credit risk since initial recognition when financial assets are more than 30 days past due, has not been rebutted.

Significant increase in credit risk is not assessed for financial assets whose credit risk is considered to be low, applying the low credit risk exemption for investment grade financial assets. These are mainly considered to be cash & cash equivalents and receivables from banks, since these assets represent short-term exposures towards investment grade-rated counterparties.

The Group considers a financial instrument to have experienced a SICR when one or more of the following quantitative, qualitative or backstop criteria have been met:

·          30 days past due;

·          Significant change in external or intercompany financing costs;

·          Available qualitative information, such as an assessment of the state of the underlying project of the financed entity, financial analysis and comparison of the project performance as at reporting date to the initial plan, suggests significant financial or operational difficulties of the borrower



SAVARIN P.L.C.

Notes to consolidated financial statements

As at and for the year ended 31 December 2021

In Euro thousand (TEUR) unless stated otherwise

2.6  Significant accounting policies (continued)

Impairment (continued)

The level of ECL that is recognised in these consolidated financial statements depends on whether the credit risk of the borrower has increased significantly since initial recognition. This is a three-stage model for ECL measurement. A financial instrument that is not credit-impaired on initial recognition and its credit risk has not increased significantly since initial recognition has a credit loss allowance based on 12-month ECLs (Stage 1). If a SICR since initial recognition is identified, the financial instrument is moved to Stage 2 but is not yet deemed to be credit-impaired and the loss allowance is based on lifetime ECLs. If a financial instrument is credit-impaired, the financial instrument is moved to Stage 3 and loss allowance is based on lifetime ECLs. The consequence of an asset being in Stage 3 is that the entity ceases to recognise interest income based on gross carrying value and applies the asset’s effective interest rate to the carrying amount, net of ECL, when calculating interest income.

If there is evidence that the SICR criteria are no longer met, the instrument is transferred back to Stage 1.

Credit-impaired financial assets and Default

The Group considers a financial asset to be credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired include observable data about the following events:

·          90 days past due;

·          significant financial difficulty of the counterparty;

·          a breach of contract, such as a default or past due event;

·          the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;

·          it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation;

·          the disappearance of an active market for that financial asset because of financial difficulties; or

·          the purchase or origination of a financial asset at a deep discount that reflects the incurred credit losses.

The Group considers a financial asset to be defaulted if at any point it fulfils the definition of being credit-impaired.

Credit risk grading system

For measuring credit risk and grading financial instruments by the amount of credit risk, the Group applies an approach based on risk grades estimated by external international rating agencies (Moody’s). External credit ratings are mapped on an internally defined master scale, implied by the borrowing rate and corresponding average yields of externally rated debt securities, with a specified range of probabilities of default as disclosed in the table below:

Master scale credit risk grade

Corresponding ratings of external international rating agencies (Moody’s)