23 July 2021
ASX Market Announcements Office
10 Bridge Street
SYDNEY NSW 2000
Via ASX Online
Dear Sir/ Madam
ANNOUNCEMENT FOR RELEASE VIA MARKET ANNOUNCEMENTS PLATFORM
Please find attached Collins Foods Limited’s 2021 Annual Report for release via the ASX Market
Announcements Platform.
For further information, please contact:
Drew O'Malley
Managing Director & CEO
P: +61-7 3352 0800
Ronn Bechler
Investor Relations - Market Eye
P: +61-400 009 774
E: ronn.bechler@marketeye.com.au
Tristan Everett
Media – Market Eye
P: +61-403 789 096
E: tristan.everett@marketeye.com.au
By Order of the Board
Frances Finucan
Company Secretary
2021
Annual
Report
COLLINS FOODS LIMITED ABN 13 151 420 781
We cr e a te
unmatched
experiences
for our customers and people.
B ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Contents
02 Our vision, mission and values
03 Our financial performance
04 Our year in review
06 Our positive impact
07 Our brands
08 Chairman’s message
09 Managing Director & CEO’s report
11 Financial report
13 Directors’ report
24
Letter from the Chair of the Remuneration
and Nomination Committee
25 Remuneration report
49 Auditor’s independence declaration
51 Consolidated income statement
52 Consolidated statement of comprehensive income
53 Consolidated balance sheet
54 Consolidated statement of cash flows
55 Consolidated statement of changes in equity
56 Notes to the consolidated financial statements
119 Directors’ declaration
120
Independent auditor’s report
125 Shareholder information
128 Corporate directory
Key dates
Full year 2021 results announcement Tuesday, 29 June 2021
Record date for final dividend Thursday, 8 July 2021
Final dividend payment Thursday, 22 July 2021
Annual General Meeting Friday, 27 August 2021
End of half year 2022 Sunday, 17 October 2021
Half year 2022 results announcement Tuesday, 30 November 2021
Record date for interim dividend Tuesday, 7 December 2021
Interim dividend payment Wednesday, 22 December 2021
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 1
Our VISION,
MISSION and values
2 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Our FINANCIAL
PERFORMANCE
Revenue
Statutory NPAT
(post-AASB 16)
Underlying EBITDA
(Continuing operations, pre-AASB 16)
12.4%
to $1.07b
5.4%
to $32.9m
12.4%
to $136.3m
(FY20: $948.1m)
(FY20: $31.3m)
(FY20: $121.2m)
Underlying NPAT
(Continuing operations, pre-AASB 16)
Total FY21 Fully
Franked Dividends
18.3%
to $56.9m
23.0CPS
(up 15%)
(FY20: $48.1m)
(FY20: 20.0cps)
Net Operating Cashflow
(post-AASB 16)
$148.0m
(FY20: $149.3m)
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 3
We are focused
on operational
excellence and the
highest of health
and safety standards
for our customers
and our people.
Our Year
in Review
We operate
319
restaurants
in Australia, Germany and
the Netherlands, and are
the franchisor of 64 in
Japan and Thailand.
The Company
employs over
15,000
people
in Australia, Germany,
and the Netherlands.
4 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
We'r e fa na tic a l a bout
driving
performance
and getting it right every time.
The Group has
continued to generate
strong earnings growth,
a testament to great
products, strong brands,
and the commitment of
our extraordinary team.
In FY21 we built and opened
18 new
restaurants
across the Group, 11 for
KFC Australia, 4 for Taco Bell
and 3 for KFC Europe.
Our continued
emphasis on operational
execution, people
development, and
excellence in restaurant
development will
underpin our pursuit
of sustainable growth.
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 5
S
R
A
L
L
I
P
R
U
O
S
L
A
O
G
Y
R
A
M
R
P
R
U
O
I
S
E
I
I
T
N
U
T
R
O
P
P
O
&
S
E
V
I
T
A
I
T
I
N
I
OUR positive impact
Cr e a ting
unmatched
PEOPLE
experiences
Ma king a
POSITIVE
IMPACT
Be ing
BRILLIANT
AT THE BASICS
People and
communities
Establish Collins Foods
Giving as a best-in-class
signature program
by 2026 with
75%+
enrolment
Planet
Governance
Reduce our carbon
footprint by achieving a
25% reduction
in greenhouse gas emissions
by 2026
Increase diversion of
waste from landfill by
25% by 2026
Commitment to
continuous
improvement
in best-practice
governance standards
in all our business
activities
• We expect our people and
those who conduct business
with us to act with integrity,
ethically and with openness,
honesty and fairness
• Food safety management
system underpins strong food
safety culture
• Safety management system that
underpins strong safety culture
FY21: LTIFR 14.20
• Renewable energy:
100+ additional solar panel
systems over the next year
• Collins Foods Giving employee
participation rate in FY21: 31%
• Collins Family Fund: new
program launched in 2020
• Equitable employee profile:
FY21: 50% female and 50% male
workforce, no GPG*
• Employing young Australians:
518 traineeships with
285 completed in FY21
• Expansion of participation
in food recovery programs
to include KFC restaurants in
Tasmania and Western Australia
• Reducing Scope 1 greenhouse
gases (GhG) despite increasing
restaurants: FY21: 471 CO2-e (tonnes)
• Reducing energy consumption of
restaurant network: FY21: 1,177GJ*
• Reduce waste to landfill by
diverting, reusing, recycling
or upcycling waste. FY21: total
waste 9,609 tonnes
• Opportunity: water management
* Gender Pay Gap
* gigajoules
6 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
OUR BRANDS
KFC
AUSTRALIA
KFC
EUROPE
KFC Australia enjoyed a step
change in sales thanks to
excellent operational execution,
high trust in the KFC brand,
and growth in e-commerce sales
and product innovation.
KFC Europe was significantly
impacted by COVID-19
restrictions and lockdowns.
Operational focus remained high
in both markets and the business
is well-positioned to improve
margins as restrictions are eased.
252
restaurants
$900.4m
Revenue
12.9%
Same Store
Sales growth
22.2%
EBITDA margin
(post-AASB 16)
(18.1% pre-AASB 16)
46
restaurants
$134.9m
Revenue
-0.6%
Same Store
Sales DECLINE
7.3%
EBITDA margin
(post-AASB 16)
(-0.7% pre-AASB 16)
TACO
BELL
Taco Bell firmly anchored
itself in the Quick Service
Restaurant segment, offering
great value price points
and focusing on driving
awareness and trial.
16
restaurants
$28.0m
Revenue
3.9%
Same Store
Sales growth*
0.7%
EBITDA margin
(post-AASB 16)
(-5.7% pre-AASB 16)
* Seven restaurants that have been
opened for a minimum of 18 months
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 7
CHAIRMAN'S
MESSAGE
FY21 marked an excellent year for Collins Foods,
delivering another record result reflecting robust
sales and earnings growth despite challenging global
operating conditions.
Brand strength driving growth
During this challenging year, we saw customers focus on what they trust.
The trust we have built in our restaurant operations by engaging with our
stakeholders and staying true to our values has paid off.
Eleven new Australian KFC restaurants were opened during FY21 bringing
the total number of KFC Australia restaurants we operate to 252.
KFC Australia continued to perform ahead of expectations, delivering
same store sales growth of 12.9%. The business capitalised on its brand
strength, focusing on signature, core and value menu items and best-in-
class guest experiences. Meanwhile, new digital and delivery initiatives
catered to increased consumer demand for digitally-enabled channels
and convenience. E-commerce now accounts for around 14% of total KFC
Australia sales, reflecting the evolution of consumer dining preferences.
Results in Europe were impacted by COVID-19, where ongoing lockdowns
and dining restrictions were far more significant than in Australia. The
safety of our people and customers were our primary focus, given the
health risk posed by the pandemic. Despite these challenges, Collins Foods
leveraged the operating environment to progress its strategic initiatives in
the Netherlands, signing a new Development Agreement and undertaking
three franchisee acquisitions. We now operate 17 restaurants in Germany
and 29 in the Netherlands.
Emerging brand Taco Bell showed strong sales growth of 57.4% during the
year, driven by a larger footprint of 16 restaurants and differentiated value
proposition. An additional nine to 12 new restaurants are planned for FY22.
Alongside brand awareness and trial initiatives, Taco Bell is expected to
benefit from increased consumer adoption of Mexican category products.
With a marketing mix reinforcing value and our core operational strengths
around convenience, we see a bright future for the brand.
Continued growth in dividend
Collins Foods delivered another record result in FY21, with revenue
increasing 12.4% to $1,065.9 million. Growth was driven by strong same store
sales growth and new restaurant openings.
An ongoing focus on front-of-house digitisation and back-of-house
operational excellence has flowed through to underlying EBITDA of
$136.3 million (continuing operations, pre-AASB 16), an increase of 12.4%
on FY20, and underlying NPAT of $56.9 million, up 18.3% (continuing
operations, pre-AASB 16).
Strong earnings and cash flow generation allowed further reduction in
net debt and the net leverage ratio, leaving the balance sheet in a strong
position to pursue future growth opportunities, and enabling growth in
the final dividend.
The Board was pleased to declare a final FY21 fully franked dividend of
12.5 cents per share, with the total dividend for FY21 being 23.0 cents per
share fully franked, up from 20.0 cents per share in FY20.
Positive Impact strategy
This year we are pleased to release our inaugural Positive Impact Report,
which provides us with an Environment, Social and Governance (ESG)
framework to report against. ESG practices have long been embedded
in Collins Foods’ operations and we are now focused on three key pillars —
people and communities, planet, and governance. We remain committed to
our Collins Foods Giving program, reducing our carbon footprint, diverting
waste from landfill by 25% over the next five years, and maintaining best
practice governance standards.
Positive outlook for continued growth
In FY22, Collins Foods is well-positioned to further grow its KFC Australia
operations, and build market share for KFC in Europe and Taco Bell in
Australia.
Our strong balance sheet provides the flexibility to take advantage of strategic
organic and acquisition opportunities across the Group over the coming year.
For KFC Australia, digital and delivery initiatives will be key to improving
customer experience alongside new back-of-house technology to drive
efficiency. KFC Europe is poised for recovery as COVID-19 restrictions ease,
and we are aiming to double our presence in this market by 2026. We will
continue to scale the Taco Bell brand in Australia, supported by a clear
restaurant rollout strategy and marketing support to drive awareness and trial.
Board changes
Less than a year after taking over as CEO, we were pleased to welcome
Drew O’Malley to the Board as Managing Director. Drew has made a
significant contribution to Collins Foods since he joined in 2017, particularly
over the past year where he successfully steered the business through the
COVID-19 pandemic. Drew’s appointment further increases the Board’s
operational expertise and we look forward to leveraging his global Quick
Service Restaurant (QSR) knowledge and experience.
As part of our Board succession plan, Newman Manion will retire as a
Non-executive Director of the Company at the conclusion of this year’s
Annual General Meeting. Over the past 10 years, Newman has been a
highly valued member of the Board, enabling Collins Foods to benefit
from his significant experience in the food franchise industry, obtained
over more than 38 years working in Yum! and the KFC brand globally.
He retires with sincere thanks from the Board and we all wish him well
in his future endeavours.
Thank you
On behalf of the Board, I would like to thank our 15,000+ employees for
their hard work and dedication during a challenging year. Our FY21 financial
results reflect the significant commitment of our people, who continued to
provide our customers with a best-in-class experience despite operational
volatility and the ongoing threat of COVID-19.
I would also like to take this opportunity to thank my fellow Directors for
their valued input and oversight.
Finally, thank you to you, our loyal shareholders for your ongoing support
over the past year.
We are confident in delivering on our sustainable growth strategy and are
well-placed for the year ahead, underpinned by strong brands, new delivery
and digital initiatives, and our ongoing operational excellence.
8 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Robert Kaye
Independent Non-executive Chairman
MANAGING DIRECTOR
& CEO’S REPORT
Operational performance
KFC AUSTRALIA
KFC Australia responded to uncertain macro conditions, by leveraging
its brand strength and investing in digital and delivery initiatives. These
innovations, combined with back-and front-of-house improvements,
saw us grow our customer base, gain market share, and deliver a
best-in-class customer experience.
Revenue increased 13.8% to $900.4 million, underpinned by strong same
store sales growth of 12.9% and the addition of 11 new restaurants opened
during the year. New store openings increased our footprint to 252
restaurants nationally.
Underlying EBITDA grew 21.6% to $161.4 million (pre-AASB 16), with
EBITDA margin expanding to a record 17.9%, on the back of the strong
revenue growth.
Investment in digital and delivery initiatives continued, with 202 restaurants
now offering delivery with three aggregators. Digital menu boards are
now in a third of our drive-thrus, while in-store kiosks are being trialled at
13 restaurants. Consumer demand for convenience is driving e-commerce
sales, which now accounts for 14% of total sales.
KFC EUROPE
Europe was a challenging environment for foodservice with COVID-19
lockdowns and dining restrictions in place for most of the year. While
revenue increased slightly to $134.9 million, up 0.6%, same store sales declined
0.6% and margins were impacted. Underlying EBITDA profitability was
maintained at $1.1 million (pre-AASB 16), though EBITDA margin contracted
to 0.8%.
Germany outperformed the Netherlands with same store sales growth of
4.2%, supported by effective marketing and relatively less restrictive trading
conditions. Drive-thru results were strong in both countries, with same store
sales growth of 12.6% and 9.5% in Germany and the Netherlands respectively,
a positive indicator of underlying demand.
FY21 was also a year of strategic execution in the Netherlands. A new
Development Agreement was signed with Yum! to 2025, which is structured
to incentivise growth. In addition, we acquired three franchisees, adding
eight net new restaurants to the network and an expanded geographic
presence.
Despite the ongoing impacts of COVID-19, the European business is well-
positioned to recover as restrictions ease. CEO Europe Hans Miete joined
the business early in the year and has built a strong team.
In my first full year as Managing Director & CEO, I am
pleased to report Collins Foods has delivered a strong
financial performance, despite the ongoing impacts
of COVID-19. Our focus on people and operations was
critical to this, as our teams did an exceptional job of
keeping our restaurants operating at a world-class level.
In FY21, we leveraged our brand strength and strong operational
foundations to drive same store sales growth and increase our restaurant
footprint — building and opening 18 new restaurants across the Group.
We did this through continuously validating new concepts and innovation
and then integrating them into our core operations so that we can bring
scale to our brands. This ensures we remain a leader in the industry as we
successfully navigate and harness accelerating industry trends.
KFC
KFC’s trusted brand status in Australia, combined with new e-commerce
initiatives, were key growth drivers for our KFC Australia business, delivering
strong same store sales growth over FY21.
Europe was a different operating environment with COVID-19 lockdowns
and restrictions in place for a large part of the year, which made trading
difficult given our higher inline and food court mix in the region. However,
weaker operating conditions created strategic acquisition opportunities,
with the acquisition of eight net new restaurants, and the execution of a
new Development Agreement in the Netherlands.
Taco Bell
After pausing new developments in the first half of FY21, we added
four new restaurants in the second half of the year as part of our brand
development strategy, bringing restaurant numbers to 16. New brand
awareness campaigns focused on taste, value and convenience show
positive brand adoption trends, supported by our differentiated offering
within the Mexican Quick Service Restaurant (QSR) category.
Financial performance —
another record year
FY21 delivered another year of strong revenue and earnings growth despite
the ever-present challenges of COVID-19. Revenue increased 12.4% to
$1,065.9 million with growth primarily driven by strong same stores sales
growth and new restaurants in our core KFC Australia business.
Statutory EBITDA increased 5.2% to $184.2 million (continuing operations,
post-AASB 16), and underlying EBITDA was up 12.4% to $136.3 million
(continuing operations, pre-AASB 16).
Statutory NPAT increased 5.4% to $32.9 million (post-AASB 16); with underlying
NPAT increasing 18.3% to $56.9 million (continuing operations, pre-AASB 16),
reflecting flow through from revenue and strong operational execution.
Cash generation remained strong with net operating cash flow of
$148.0 million1, which was used to fund expansion, further reduce
debt, and drive dividend growth. Net debt reduced by $25.8 million
to $177.4 million, with the net leverage ratio falling from 1.69 to 1.33
(pre-AASB 16).
1 FY21 statutory post-AASB 16. FY21 Statutory pre-AASB 16 Net Operating Cash Flow was $95.9 million.
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 9
Key priorities for FY22
In FY22, we will continue to pursue strategic organic and acquisition growth
opportunities across the group. Our strong KFC Australia core business will
continue to grow, and we will build and scale our Taco Bell and KFC Europe
brands.
Our focus on technology deployment and world-class customer experience
is expected to sustain positive same store sales growth and high margins
in KFC Australia in the year ahead. Digital and delivery initiatives are key
pillars of our growth strategy with further rollout of delivery, menu board
and kiosk instalments planned, in addition to back-of-house investment in
automation.
With COVID-19 restrictions easing in Europe, we see strong prospects
for improved financial performance from the existing network. In the
Netherlands, we continue to explore acquisition opportunities and are
fully committed to rolling out new stores under our new Development
Agreement. In Germany we will continue to engage customers with
effective marketing and will remain selective in deployment of
growth capital.
I would like to thank all our staff for their hard work and commitment
throughout the year. The record results achieved in FY21 would not have
been possible without the strong contribution from our employees,
particularly given the COVID-19 hurdles our people have overcome during
the year.
Lastly, I would like to thank you, our shareholders, for your support.
Our strong KFC Australia business is complemented by long-term growth
opportunities in KFC Europe and Taco Bell, and I look forward to
delivering sustainable growth in the year ahead.
Drew O’Malley
Managing Director & CEO
TACO BELL
We continue to build support for the emerging Taco Bell brand
with increased customer adoption through brand awareness and trial.
Our marketing strategy reinforces the brand’s differentiated QSR value
proposition and we are now ramping up new restaurant openings.
Revenue grew 57.4% to $28.0 million with the contribution of four new
restaurants opened in the second half of the year and the full year effect
of restaurants opened in FY20. Same store sales increased 3.9%, measured
on a subset of seven restaurants that have been trading for 18 months or
longer.
The brand is profitable at the store level, with EBITDA of $1.4 million
(pre-AASB 16) before general and administration costs and start-up costs.
EBITDA remains in a slight loss-making position of $1.6 million (pre-AASB 16)
but is expected to improve with scale.
Our clear brand and value proposition combined with consumer demand
for Mexican category products provide us with confidence in the long-term
prospects for the business.
SIZZLER ASIA
Sizzler Asia remained profitable despite royalty revenues being heavily
impacted by COVID-19 lockdowns in Thailand and Japan. Revenue of
$2.5 million was down 46.8% on FY20 and EBITDA was $1.6 million.
MAKING A POSITIVE IMPACT
I would like to echo the Chairman’s enthusiasm for the inaugural release of
our Positive Impact Report. At Collins Foods, we are passionate about our
people, communities and environment and want to ensure we continue to
operate in an ethical, sustainable and socially responsible manner.
The Positive Impact Report outlines our strategy to achieve 75%+
enrolment in Collins Food Giving program by 2026. In FY21, we had a 31%
participation rate and raised $587,000 for employees’ selected charities.
Our other key commitment to our people is a strong safety culture,
with the Lost Time Injury Frequency Rate (LTIFR) reducing to 14.20 during
the year.
We are committed to reducing our carbon footprint by achieving a 25%
reduction in greenhouse gas emissions and 25% increased diversion of
waste from landfill by 2026. In FY21, our restaurants emitted 471 CO2-e
tonnes of scope 1 greenhouse gases, an improvement from 531 CO2-e in
FY20, and diverted an average of 18.9% of waste per restaurant*.
Just as we strive for operational excellence across the business, we are
committed to continuous improvement in best practice governance
standards. As always, we expect our people and those we conduct business
with to act ethically and with integrity, openness, honesty and fairness.
* 230 KFC Australia and Taco Bell restaurants. Excludes food courts, restaurants serviced by the Sunshine Coast Council and Sizzler Australia.
10 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
2021
Financial
Report
FOR THE REPORTING PERIOD ENDED 2 MAY 2021
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 11
Contents
13
24
25
25
Directors’ Report
Letter from the Chair of the Remuneration and
Nomination Committee
Remuneration Report
Persons covered by this Remuneration Report
25 Overview of Remuneration Governance Framework
and Strategy
Company performance
Statutory remuneration disclosures for FY21
Performance outcomes for FY21 and FY20 including
STI and LTI assessment
Employment terms for KMP Executives
Non-executive Director fee rates and fee limit
Changes in KMP held equity
Group Securities Trading Policy
Securities Holding Policy
Remuneration consultant engagement policy
35
35
37
41
41
44
45
45
45
46 Other remuneration related matters
46 Most recent AGM — Remuneration Report
comments and voting
46
46
47
External remuneration consultant advice
Indemnification and insurance of officers
Proceedings on behalf of the Company
47 Non-audit services
49
51
52
53
54
55
Auditor’s independence declaration
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of cash flows
Consolidated statement of changes in equity
56 Notes to the consolidated financial statements
56
56
60
62
64
65
65
66
67
A/ Financial overview
A1/ Segment information
A2/ Business combinations
A3/ Revenue
A4/ Material profit or loss items from continuing operations
B/ Cash management
B1/ Cash and cash equivalents
B2/ Borrowings
B3/ Ratios
12 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
68
69
69
73
76
78
78
78
80
81
81
81
82
82
82
B4/ Dividends
C/ Financial risk management
C1/ Financial risk management
C2/ Recognised fair value measurements
C3/ Derivative financial instruments
D/ Reward and recognition
D1/ Key management personnel
D2/ Share based payments
D3/ Contributed equity
E/ Related parties
E1/ Investments accounted for using the
equity method
E2/ Related party transactions
F/ Discontinued operation
F1/ Sizzler Australia
F2/ Financial performance and cash flow information
84 G/ Other Items
84 G1/ Commitments for expenditure
84 G2/ Earnings per share
86 G3/ Receivables
87
G4/ Property, plant and equipment
89 G5/ Intangible assets
96 G6/ Leases
100 G7/ Trade and other payables
101 G8/ Provisions
102 G9/ Reserves
103 G10/ Tax
106 G11/ Auditor’s remuneration
107 G12/ Contingencies
108 H/ Group structure
108 H1/ Subsidiaries and Deed of Cross Guarantee
(Amended and Restated)
113 H2/ Parent entity financial information
114
114
116
116
118
118
I/ Basis of preparation and other accounting policies
I1/ Basis of preparation
I2/ Changes in accounting policies
I3/ Other accounting policies
J/ Events occurring after the reporting period
J1/ Subsequent events
119 Directors' declaration
120 Independent auditor’s report
125
Shareholder information
128 Corporate directory
Directors'
report
DIRECTORS' REPORT
Your Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of
Collins Foods Limited (the Company) and the entities it controlled at the end of, or during, the period ended 2
May 2021.
Directors
The names of the Directors of the Company during or since the end of the financial period are as follows:
Name
Date of appointment
Robert Kaye SC
Christine Holman
Newman Manion
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Graham Maxwell(1)
7 October 2014
12 December 2019
10 June 2011
10 June 2011
15 July 2011
10 June 2011
25 March 2015
(1) Former Managing Director and Chief Executive Officer from 29 September 2014 to 1 July 2020.
Principal activities during the period
During the period, the principal activity of the Group was the operation, management and administration of
restaurants in Australia, Europe and Asia, currently comprising three restaurant brands: KFC, Taco Bell and
Sizzler in Asia (the Australian Sizzler restaurants ceased operation during the period). The KFC and Taco Bell
brands are two of the world's largest restaurant chains and are owned globally by Yum!. In Australia, the
Group operates as the largest franchisee of KFC restaurants and is one of two franchisees operating Taco Bell
restaurants. The Group also operates KFC restaurants in the Netherlands and Germany.
Operating and financial review
GROUP OVERVIEW
The Group’s business is the operation, management and administration of restaurants, currently comprising
three restaurant brands: KFC, Taco Bell and Sizzler.
At the end of the period, the Group operated 251 franchised KFC restaurants in Australia, 17 franchised KFC
restaurants in Germany, 29 franchised restaurants in the Netherlands and 16 franchised Taco Bell restaurants in
Australia, which all compete in the quick service restaurant market. The Group owned and operated Sizzler
restaurants in Australia, which competed in the casual dining restaurant market until their closure on 15
November 2020. The Group continues as franchisor of the Sizzler brand in South East Asia with 64 franchised
restaurants in Thailand and Japan.
Coronavirus (COVID-19), was declared a world-wide pandemic by the World Health Organisation in March
2020. The number one priority for the Group has been and remains the health and wellbeing of our team
members and customers. The Group has worked closely with the Government, health bodies and our
franchisor, Yum! Brands, to implement all measures to safeguard our employees and customers at each and
every stage. COVID-19 had a significant impact on the operations and the financial performance of the
Group during the financial year. This is described in further detail in the Review of Underlying Operations on
page 15.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
1 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 13
Directors'
report
DIRECTORS' REPORT (CONTINUED)
Operating and financial review (continued)
GROUP FINANCIAL PERFORMANCE
Key statutory financial metrics in respect of the current financial period and the prior financial period are
summarised in the following table:
Statutory financial metrics
2021
$m
2020
$m
Change
$m
Total revenue from Continuing operations
1,065.9
948.1
117.8
Earnings before interest, tax, depreciation, amortisation and
impairment (EBITDA) from Continuing operations
Earnings before interest and tax (EBIT) from Continuing operations
Profit/(loss) before related income tax expense
Income tax (expense) from Continuing operations
Net profit attributable to members (NPAT)
Net assets
Net operating cash flow
Statutory financial metrics
184.2
90.6
61.2
(23.6)
32.9
362.9
148.0
175.1
86.6
54.9
(22.7)
31.3
357.8
149.3
9.1
4.0
6.3
(.9)
1.7
5.1
(1.3)
2021
cents per
share
2020
cents per
share
Change
cents per
share
Basic earnings per share from continuing operations (cents)
Total basic earnings per share attributable to members of Collins
Foods Limited
Total dividends paid/payable in relation to financial period *
32.26
28.26
23.00
27.61
26.82
20.00
4.65
1.44
3.00
* Dividends paid/payable is inclusive of dividends declared since the end of the relevant reporting period.
The Group’s total revenue increased by 12.4% to $1,066 million mainly due to exceptional same store sales
growth in KFC Australia of 12.9%.
Compared to the prior financial year, statutory EBITDA increased by $9.1 million, statutory EBIT by $3.9 million
and statutory NPAT increased by $1.7 million.
EBITDA, EBIT, NPAT and EPS were impacted by the following non-trading items:
Taco Bell impairment costs
KFC Europe impairment costs
KFC Europe provision for store closures
Netherlands development agreement fee
Netherlands acquisition costs
Marketing expenditure redirected to digital technology
Total non trading items - continuing operations
Sizzler Australia closure costs
Total non trading items
The consolidated NPAT effect of these non-trading items was $13.0 million.
EBITDA
$'000
38
-
669
1,282
1,401
(1,432)
1,958
2,630
4,588
EBIT
$'000
4,687
4,862
669
1,282
1,401
(1,432)
11,469
2,630
14,099
NPAT
$'000
3,281
4,862
669
1,282
1,401
(1,002)
10,493
2,547
13,040
14 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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DIRECTORS' REPORT (CONTINUED)
Operating and financial review (continued)
The statutory NPAT from continuing operations is $37.6 million which includes the impact of non-trading items
of $10.5 million as shown in the table above. Excluding these non-trading items of $10.5 million, the Group
achieved an underlying NPAT from continuing operations of $48.1 million.
Underlying financial metrics excluding non-trading items which occurred in the current period are as follows:
Underlying financial metrics from Continuing operations
2021
$m
2020
$m
Change
Total revenue
1,065.9
948.1
117.8
Earnings before interest, tax, depreciation, amortisation and
impairment (Underlying EBITDA)
Net profit attributable to members (Underlying NPAT)
Underlying financial metrics
186.1
48.1
171.9
41.9
14.2
6.2
2021
cents per
share
2020
cents per
share
Change
Earnings per share (Underlying EPS) basic from Continuing
operations
Total Earnings per share (Underlying EPS) basic
41.26
39.40
35.97
35.17
5.29
4.23
The improvement in the underlying financial metrics shown above is a reflection of the strong performance of
KFC Australia which converted the same store sales growth of 12.9% at good margins.
Management consider that adjusting the results for non-trading items allows the Group to more effectively
compare underlying performance against prior periods.
Review of underlying operations
KFC AUSTRALIA
The overall performance across the KFC business in Australia has been very positive. KFC Australia has
successfully responded to COVID-19 challenges by continuing to focus on providing customers with great
value, great tasting food and high levels of customer service in a contactless way where necessary.
This was achieved as well as growing its user base and re-engaging lapsed users by leveraging its digital
capability such as ‘click and collect’ via the KFC App. In addition, introducing further new aggregators has
extended delivery capability during the financial year. The Group currently has 178 restaurants supporting
delivery with at least one of the three aggregators (Deliveroo, Doordash and Menulog).
As a result, revenue in KFC Australia was up 13.8% on the prior corresponding period to $900.4 million, driven
by exceptional same store sales growth of 12.9% for the full year. KFC Australia underlying EBITDA grew by
17.6%, up from $168.7 million to $198.5 million, with an overall underlying EBITDA margin of 22.0%.
In order to support growth, $29 million was spent on new restaurants as well as on the remodelling and
maintenance program. This remains an important driver of traffic to our restaurants, in addition to supporting
KFC to meet its restaurant refurbishment obligations with Yum!.
KFC EUROPE
KFC Europe contributed revenue of $134.9 million and $12.0 million in underlying EBITDA. By the end of the
period, 46 restaurants were in operation, with 29 restaurants in the Netherlands and 17 in Germany. Underlying
EBITDA margin was 8.9%. Same store sales growth was -0.6%.
KFC Europe’s priority remains providing customers with great value, great tasting food in a safe and fast way.
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DIRECTORS' REPORT (CONTINUED)
Review of underlying operations (continued)
Both Germany and Netherlands were significantly impacted by COVID-19; to a much greater extent than
seen in Australia. The restrictions were more severe and applied for longer, indeed an effective lockdown was
in place for most of the second half of the financial year. During this period, drive-thru restaurants continued
to perform well but inline and foodcourt restaurants experienced a big drop in transactions. There are a higher
proportion of inline and foodcourt restaurants in the KFC Europe business than in the KFC Australia business.
The roll out of delivery was accelerated during the financial year such that 28 restaurants in both the
Netherlands and Germany now have one or more aggregators.
Restrictions started to ease towards the end of the financial year and sales have subsequently responded
well.
In order to support growth and meet restaurant refurbishment obligations with Yum!, $8.1 million was spent on
new restaurants, remodels and maintenance during the year.
TACO BELL
At the end of the period, 16 Taco Bell restaurants were in operation with 12 located in Queensland and 4
located in Victoria. Taco Bell contributed revenue of $28.0m and $0.2 million in underlying EBITDA.
Taco Bell is still a relatively new brand in Australia and the focus remains on driving awareness of the brand
and trial of the product. This is achieved by continuing to build new restaurants and enhance our marketing
capabilities particularly in the digital space consistent with where many of the brands customers spend their
time. More emphasis will be placed on great value core products such as tacos, burritos and crunchwraps in
the coming year.
The launch of delivery was accelerated as a result of COVID-19 and is available in 13 of the 16 restaurants,
through two aggregators (Menulog and Doordash), with all restaurants expected to offer delivery in time.
The brand continues to receive positive customer engagement and further restaurant openings are expected
in the upcoming financial year as the Group continues to invest in the Taco Bell brand.
SIZZLER
Sizzler franchise operations in Asia contributed $2.5m in revenue. The operations were significantly impacted
by dining restrictions as a result of COVID-19 resulting in a 46.8% decrease in revenue over the prior
corresponding period.
Strategy and future performance
GROUP
The Group’s strategy is to be renowned for running high quality restaurants, build new restaurants in all its
markets and with all its brands, and improve the economics of the KFC Europe and Taco Bell businesses. In
addition, the Group will continue to pursue KFC acquisition opportunities where available. Organisational
capability is continually being strengthened to support this growth.
KFC AUSTRALIA
The plan for the KFC Australia business is to continue to optimise operational systems, expand the digital and
delivery channels, elevate people capabilities, and deliver the targeted number of new builds.
KFC EUROPE
In Europe, the focus will be on driving sales growth and improve margins, particularly in the Netherlands,
building new restaurants and elevating organisational capability.
TACO BELL
Taco Bell will continue to drive sales growth through building more restaurants and enhancing its marketing
capabilities. The focus will remain on driving awareness and trial and improving the economic model.
16 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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DIRECTORS' REPORT (CONTINUED)
Key risks
The Group’s risk management program has been designed to establish a sound system of risk oversight,
management and internal controls by having a framework in place to identify, assess, monitor and manage
risk.
Since the start of the global COVID-19 crisis, Collins Foods further enhanced its procedures to ensure the
health and safety of its employees and customers while at the same time implementing measures to maximise
sales and tightly manage costs. We continue to monitor the impact of COVID-19 and business as usual activity
on our risk profile.
The key risks faced by the Group that have the potential to affect the financial prospects of the Group, as
disclosed above, and how the Group manages these risks, include:
• food safety - there is a risk that the health and safety of the public is compromised from food products.
We address this risk through robust internal food safety and sanitation practices, audit programs,
customer complaint processes, supplier partner selection protocols and communication policy and
protocols. International and national regulatory bodies maintain that there is no evidence that COVID-19
is transmitted through food. Re-enforcing stringent food safety and hygiene practices during this time is
the priority with the focus on illness exclusion policies, hand washing practices and hygiene and cleaning
standards;
• workplace health and safety - there is a risk that the Group does not provide a safe working environment
for its people, contractors and the community. We address this risk through robust internal work health
and safety practices, the implementation of initiatives and education programs with a focus on
preventative measures with enhanced dedicated support in high risk areas to ensure the wellbeing of our
key stakeholders. Since March 2020, there has been an increased focus on health, hygiene and social
distancing practices (front of and back of house) across all brands, with staff kept up to date on a regular
basis;
• culture and people - there is a risk that the Group’s culture and people are negatively impacted by new
acquisitions and growth and/or are not aligned or sustainable to support strategic priorities. We address
this risk through deploying contemporary people practices, reward and recognition programs, talent
management strategies and designation of appropriate human resources. As part of the COVID-19
response, the Group significantly increased the frequency of communications with both restaurant
employees and support centre employees. Feedback through employee surveys has confirmed that the
vast majority of our employees feel supported and well informed during this unprecedented and
challenging time;
• brand growth and diversification (non-KFC) - there is a risk that the Group does not successfully grow
emerging brands and/or acquire and integrate new brands. We address this risk through having an
experienced management team, robust project management processes involving trials and staged
rollouts and regular strategic reviews and driving sales and financial performance in Taco Bell;
• deterioration of KFC brand - there is a risk that the global KFC brand and reputation is damaged
impacting the brand’s performance in Australian and European markets. We address this risk through
maintaining a close working relationship with the franchisor, having our team members sit on relevant KFC
advisory groups and committees and monitoring compliance obligations. Metrics around brand health as
part of regular marketing tracking have continued to reflect KFC’s position as a strong, trusted brand in
the Australian market. Performance during the COVID-19 crisis has reflected this strength as external
research indicated that consumers gravitate toward trusted, safe brands in a time of crisis, and KFC’s
trading performance since the onset of the crisis is testament to the brand reputation being
well-regarded;
• supply chain disruption - there is a risk that the Group’s inability to source key food and consumable
products in an ethical manner, at the quality required, within the prescribed time frames. We address this
risk through use of multiple suppliers where possible with a diverse geographic base with multiple
distribution routes. During COVID-19, supply chain continuity has been maintained;
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DIRECTORS' REPORT (CONTINUED)
Key risks (continued)
• systems integrity and cyber security - there is a risk that key systems are not sufficiently stable, integrated
and/or secure to support business operations and decision making. We address this risk through the
increase of financial and human resources to the systems function and implementation of a systems and
cyber security plan. The outbreak of COVID-19 and the resultant “work from home” mobilisation has
increased this risk. We are managing this risk by increasing network monitoring, deploying multi-factor
authentication and increasing communication to employees to reduce the impact of potential phishing
attacks;
• inability to identify and react to consumer and competitive behaviour - during COVID-19, we have
responded to all government-imposed restrictions and the resultant changes in customer behaviour.
Collins Foods have concentrated efforts toward consumer shifts in behaviour during the COVID-19 crisis,
including quick and well-executed launches of delivery models and an expansion of cooperation with
delivery aggregators in all brands in Australia as well as KFC Europe; and
• inability to adapt, innovate and change - there is a risk that the Group’s inability to adapt, innovate and
manage change may negatively influence achievement of strategic and business priorities. We address
this risk through having an experienced management team, robust fit for purpose project and change
management practices involving pilots/trials and staged rollouts and regular strategic reviews. Since the
COVID-19 crisis evolved, significant changes have been put in place across restaurants and moving the
restaurant support centre to a fully functional work from home model within a short amount of time.
Teams have shown incredible resourcefulness and commitment to finding solutions. Both KFC and Taco
Bell have been able to rapidly respond to all government restrictions and provide great tasting, great
value food to customers in a contactless way. Both brands have increased the level of digital
communications with customers and the number of restaurants offering delivery.
Collins Foods works toward ensuring that risk management practices are embedded into all processes and
operations. Collins Foods is exposed to an element of climate related risks such as floods, drought and
bushfires. Collins Foods continuously seeks opportunities to reduce the environmental impact of its operations
across all its restaurants, whether they are owned and operated in a franchisor or franchisee capacity. In
2021, Collins Foods will release its inaugural sustainability report describing the environmental, social and
governance related initiatives and opportunities relevant to Collins Foods.
The first modern slavery statement for Collins Foods was published in calendar year 2020 and the second
modern slavery statement will be published in the second half of calendar year 2021.
In light of its partnership with the franchisor of its KFC Australia restaurants, it is suggested that the Collins Foods
modern slavery statement and sustainability report be read together with the KFC Australia modern slavery
statement and Social Impact report both available via its website: www.kfc.com.au.
DIVIDENDS
Dividends paid to members during the financial period were as follows:
Cents per
share
Total
amount
$000
Franked/
Unfranked
Date of payment
Final ordinary dividend for the financial period ended
3 May 2020
10.50
12,241
Franked
24 July 2020
Interim ordinary dividend for the financial period
ended 18 October 2020
Total
10.50
21.00
12,241
Franked 18 December 2020
24,482
In addition to the above dividends, since the end of the financial period the Directors of the Company have
declared the payment of a fully franked final dividend of 12.50 cents per ordinary share $14.6 million) to be
paid on 22 July 2021 (refer to Note B4 of the Financial Report).
18 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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DIRECTORS' REPORT (CONTINUED)
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD
On 17 March 2021, Collins Foods Netherlands Limited entered into a Share Purchase Agreement for €2,250,000
to buy 1 KFC restaurant from Kia Ora Holding B.V. The deal settled on 1 June 2021.
The Group is not aware of any other matters or circumstances that have arisen since the end of the financial
year which have significantly or may significantly affect the operations and results of the Group.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
The Group will continue to pursue the increase of profitability of its major business segments during the next
financial period. Additional comments on expected results of operations of the Group are included in the
operating and financial review section of this Report (refer above).
ENVIRONMENTAL REGULATIONS
The Group is subject to environmental regulation in respect of the operation of its restaurant sites. To the best
of the Directors’ knowledge, the Group complies with its obligations under environmental regulations and
holds all licences required to undertake its business activities.
Information on directors
Robert Kaye SC LLB, LLM
Experience and
expertise
Robert Kaye SC is a barrister, mediator and professional Non executive Director.
Recognised for his strategic and commercially focused advice, Robert has acted
for various commercial enterprises - both public and private - across media, retail,
FMCG, property development, mining and engineering sectors. Drawing on his
experience as a senior member of the NSW Bar, including serving on the
Professional Conduct Committee and Equal Opportunity Committee, Robert has a
strong emphasis on Board governance and is well versed in Board processes.
Robert has significant cross border experience, including corporate restructuring
and M&A across North America, Europe, Asia, and the Australia and New Zealand
region.
In addition to his role as Non executive Chairman of Collins Foods, Robert is a Non
executive Director of Magontec Limited.
He was formerly Non executive Chairman of Spicers Limited and the Chairman of
the Macular Disease Foundation Australia and Non executive Director of UGL
Limited, HT&E Limited, Blue Sky Alternative Investments Limited.
Other current listed
directorships
Former listed
directorships in last 3
years
Magontec Limited (2013 - current)
Blue Sky Alternative Investments Limited (Dec 2018 - May 2019)
HT&E Limited (Feb 2018 - Sep 2018)
Spicers Limited (Sep 2012 - Sep 2017)
UGL Limited (Aug 2015 - Jan 2017)
Special accountabilities Independent Non executive Chair
Audit and Risk Committee member
Remuneration and Nomination Committee member
Relevant interests in
share capital issued by
the Company at the
date of the report
52,872 shares
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DIRECTORS' REPORT (CONTINUED)
Information on directors (continued)
Christine Holman PGDipBA, MBA, GAICD
Experience and
expertise
Christine brings more than 20 years' of extensive commercial and Board experience
across a variety of areas including mergers and acquisitions, finance, sales,
technology, digital transformations, and marketing to Collins Foods. Currently,
Christine serves on the Board of ASX companies: CSR Ltd, Blackmores Limited and
Metcash Limited, and the Board of the Moorebank Intermodal Company (a
Federal Government Business Enterprise - GBE) as a Non-executive Director and
Chair of the Audit and Risk Committee.
In line with her passion for cricket and preserving the heritage and history of the
game and our nation, Christine sits on the Boards of the Bradman Foundation, the
ICC T20 World Cup and the State Library of NSW Foundation. Christine also serves
on the Board of the McGrath Foundation.
In her previous executive capacity, as both CFO & Commercial Director of Telstra
Broadcast Services, Christine brings a deep understanding of legacy and emerging
technologies supported by strategies related to growing businesses and digital
transformations. During her time in private investment management, Christine
assisted management and the Board of investee companies on strategy and
corporate development, mergers and acquisitions, financial restructures and
turnarounds, leading due diligence teams, managing large complex commercial
negotiations and developing growth opportunities.
Christine holds a Masters in Business Administration and a Post Graduate Diploma in
Management from Macquarie University and is a Graduate of the Australian
Institute of Company Directors’ Company Directors Course. Christine is member of
the Chief Executive Women (CEW) and the International Women’s Forum (IWF).
Other current listed
directorships
CSR Limited (Oct 2016 - current)
Blackmores Limited (Mar 2019 - current)
Metcash Limited (Oct 2020 - current)
Former listed
directorships in last 3
years
WiseTech Global Ltd (Dec 2018 - Oct 2019)
HT&E Ltd (Nov 2015 - Dec 2018)
Vocus Ltd (Aug 2017 - Nov 2017)
Special accountabilities Independent Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee member
Relevant interests in
share capital issued by
the Company at the
date of the report
14,000 shares
20 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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DIRECTORS' REPORT (CONTINUED)
Information on directors (continued)
Newman Manion
Experience and
expertise
Newman has significant experience in the food franchise industry, obtained over a
period of more than 38 years gained over various roles with Yum! (Franchisor of
KFC) since 1982. Previously, Newman served as a Board member of KFC Japan
(from 2005 to 2008), General Manager of KFC operations in Australia and New
Zealand (from 1995 to 2004), Development Director of PepsiCo restaurants
(including KFC) in Australia (from 1990 to 1995) and General Manager of KFC New
Zealand (from 1988 to 1990). Newman was previously Vice President, Operations for
Yum!’s Asian franchise business (from 2004 until 2010).
Newman is currently also a Retail Consultant to Acre Food Group (since October
2020).
Other current listed
directorships
Former listed
directorships in last 3
years
None other than Collins Foods Limited
None other than Collins Foods Limited
Special accountabilities Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee member
Relevant interests in
share capital issued by
the Company at the
date of the report
21,820 shares
Bronwyn Morris AM B. Com, FCA, FAICD
Experience and
expertise
Bronwyn has extensive experience as a Non-executive Director and Chair. She is a
Chartered Accountant and a former partner of KPMG. Bronwyn worked with the
firm and its predecessor firms in Brisbane, London and the Gold Coast.
Bronwyn has served on the Boards of a broad range of companies and brings
strong financial and commercial experience acquired from her professional
services background and various governance roles. She has a particular interest in
risk management and compliance, including in regulated entities. Bronwyn has
served as Chair of, or a member of, Audit and Risk Committees, Remuneration and
Nominations Committees with respect to both her Board roles and other
independent appointments.
Bronwyn is a director of Dalrymple Bay Infrastructure Limited, Royal Automobile
Club of Queensland Limited (previous President and Chair), its wholly-owned
subsidiaries RACQ Insurance Limited and RACQ Bank, and Menzies Health Institute
Queensland. She is Chair of Queensland Urban Utilities and the RACQ Foundation.
Bronwyn is a member of Chief Executive Women (CEW).
Dalrymple Bay Infrastructure Limited (Oct 2020 - current)
Watpac Limited (Feb 2015 - Sep 2018)
Other current listed
directorships
Former listed
directorships in last 3
years
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DIRECTORS' REPORT (CONTINUED)
Information on directors (continued)
Special accountabilities Independent Non-executive Director
Audit and Risk Committee Chair
Remuneration and Nomination Committee member
Relevant interests in
share capital issued by
the Company at the
date of the report
16,456 shares
Kevin Perkins
Experience and
expertise
Kevin is a highly experienced executive in the Quick Service Restaurant (QSR) and
casual dining segments of the Australian restaurant industry. He has had more than
40 years’ experience with the Collins Foods Group, having overseen its growth both
domestically and overseas over that time.
Kevin is the Non-executive Chairman of Sizzler USA Acquisition, Inc. He holds 100% of
the common stock in Sizzler USA Acquisition, Inc.
Sizzler USA Acquisition, Inc operates or franchises Sizzler restaurants across the United
States and Puerto Rico. The operations of Collins Foods and Sizzler USA Acquisition,
Inc are separate.
Other current listed
directorships
Former listed
directorships in last 3
years
None other than Collins Foods Limited
None other than Collins Foods Limited
Special accountabilities Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee member
Relevant interests in
share capital issued by
the Company at the
date of the report
7,221,484 shares
Russell Tate B. Com (Econ.)
Experience and
expertise
Russell has more than 33 years’ experience in senior executive and consulting roles
in marketing and media. He was CEO of ASX listed STW Group Limited, Australia’s
largest marketing communications group from 1997 to 2006, Executive Chair from
2006 to 2008, and Deputy Chair (Non executive) from 2008 to 2011.
He was Chair (Non executive) of Collins Foods Limited from its listing in 2011 until
March 2015 and remained Executive Chair of ASX listed Macquarie Radio Network
Limited (now Macquarie Media Limited) from 2009 until 2018 and Non-executive
Chair until November 2019. He is also a Director of One Big Switch Pty Ltd (since
2012).
None other than Collins Foods Limited
Macquarie Media Limited (2008 - Nov 2019: Executive Chair 2009 to 1 July 2018 &
Non-executive Chair from 1 July 2018 to Nov 2019)
Other listed current
directorships
Former listed
directorships in last 3
years
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DIRECTORS' REPORT (CONTINUED)
Information on directors (continued)
Special accountabilities Independent Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee Chair
Relevant interests in
share capital issued by
the Company at the
date of the report
21,820 shares
Graham Maxwell - Former Managing Director and Chief Executive Officer from September 2014 to 1 July
2020
Experience and
expertise
Graham is an experienced senior executive of corporate and franchise businesses,
predominantly in fast moving consumer goods and fast foods, both in Australia and
internationally. He is a commercially astute management professional with proven
success in leveraging and growing businesses through their brands.
Prior to his joining Collins Foods, Graham spent more than six years working for Yum!
Brands Inc (Yum!) in a number of capacities. His last position with Yum! was as
Managing Director for KFC Southern Africa.
Other current listed
directorships
Former listed
directorships in last 3
years
None other than Collins Foods Limited
None other than Collins Foods Limited
Special accountabilities Former Managing Director and CEO
Relevant interests in
share capital issued by
the Company at the
date of the report
100,000 shares and 142,241 performance rights
Company secretary
Frances Finucan LLB (Hons), BA (Modern Asian Studies), FGIA, MQLS, GAICD
The Company Secretary, Frances Finucan, was appointed to the role on 17 July 2013. Frances’ experience in
legal, commercial and corporate governance has been gained whilst working in legal, regulatory and
company secretarial roles in Australia over 18 years.
MEETING OF DIRECTORS
The numbers of meetings of the Company's board of Directors and of each board committee held during the
FY20 and FY21 years, and the numbers of meetings attended by each Director were:
BOARD
AUDIT AND RISK COMMITTEE
REMUNERATION AND NOMINATION COMMITTEE
FY21
meetings(1)
Meetings
attended
FY20
meetings(1)
Meetings
attended
FY21
meetings(1)
Meetings
attended
FY20
meetings(1)
Meetings
attended
FY21
meetings(1)
Meetings
attended
FY20
meetings(1)
Meetings
attended
Robert Kaye SC
Christine Holman
Newman Manion(2)
Bronwyn Morris AM
Kevin Perkins
Russell Tate
14
14
14
14
14
14
14
14
14
14
14
13
15
9
15
15
15
15
15
8
14
14
14
14
6
6
6
6
6
6
6
6
6
6
6
6
6
2
*
6
6
6
6
2
*
6
6
6
5
5
5
5
5
5
5
5
5
5
5
5
7
3
*
7
7
7
7
3
*
7
7
7
(1) FY21 and FY20 meetings represents the number of meetings held during the time the Director held office or membership of a Committee during the period.
(2)
Joined as member of Audit and Risk Committee and Remuneration and Nomination Committee from 21 April 2020.
* Not a member of the relevant Committee.
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DIRECTORS' REPORT (CONTINUED)
Directors'
report
Dear Shareholders
Like most Australian companies, virtually every aspect of Collins Foods’ operations in the 2021 financial year has
been to some extent disrupted by the COVID-19 pandemic. Throughout the entire year we suffered from varying
degrees of enforced restrictions on trading across all our brands and geographies, we were forced to shut down
our Sizzler Australia division which was based entirely on in-house dining, and we needed to very quickly change
our operating models and systems, and customer interfaces, across our entire network of KFC and Taco Bell
restaurants which had previously relied heavily on in-store sales.
But notwithstanding these COVID-related disruptions and the great challenges created for our European
operations and for our Taco Bell Australia division especially, the company achieved record earnings results for the
2021 financial year, thanks to a combination of an outstanding executive leadership team headed by CEO, Drew
O’Malley, the quality and dedication of our management and staff at every level, and the strength of our KFC
brand and the customer loyalty and trust it enjoys. The team’s focus on people and operations, in particular its
digital initiatives and rapid expansion of our delivery network in Australia provided the base for KFC Australia to be
the standout performer across all divisions and take full advantage of the opportunities created by COVID. KFC
Australia achieved revenue growth of 13.8% over prior year levels while still improving EBITDA margin.
The outstanding results achieved by KFC Australia and consequently for Collins Foods overall, meant that Short Term
Incentive payments were triggered for all Australian based KMP’s and over 100 of our management and support
teams. Some vesting of performance rights held by KMP under their Long Term Incentive plans was also triggered
for the 3 year performance period of financial years FY19, FY20 and FY21. Full details are contained in the
Remuneration Report.
Our Sizzler brand was hardest hit by the COVID-19 pandemic and the company took the difficult decision to shut it
down in November 2021. At that time, Sizzler employed 110 permanent and 492 casual staff. All were offered
redundancy packages and access to outplacement support, and we were able to re-deploy 96 of them into our
KFC and Taco Bell networks. Prior to the shut-down of Sizzler Australia, the company had received JobKeeper
payments but took the decision to bear the costs of all wages paid and returned all of the $1.8m of JobKeeper
payments received.
Collins Foods’ executive team was significantly strengthened during FY2021 by the appointments of Hans Miete
(CEO of KFC Europe) and Adam Thatcher (Chief Legal and Compliance Officer) and will be further strengthened in
the current financial year when Helen Moore joins the team in June 2021 as Chief Operating Officer of KFC
Australia.
For the 2022 financial year we have made some changes to the performance components of our Short Term and
Long Term Incentive Plans by introducing an additional performance measure to each – in the case of the Short
Term Plan that measure relates to defined environment, social and governance initiatives and for the Long Term
Plan it is a Relative Total Shareholder Return. We have also revised value entitlements for certain KMP’s in both
plans, and the payout table for EBITDA entitlements - full details of changes are contained in the Remuneration
Report.
Finally on behalf of the Board I would like to congratulate and thank everyone of our over 15,000 employees for
their contribution to our 2021 financial results.
Yours sincerely
Russell Tate
Independent Non-executive Director
Chair of the Remuneration and Nomination Committee
Collins Foods Limited
Collins Foods Limited ACN 151 420 781 I
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Remuneration report
Persons covered by this Remuneration Report
This Remuneration Report covers the remuneration of Non-executive Directors, the Former Managing Director
and CEO, current CEO and employees (KMP Executives) who have authority and accountability for planning,
directing and controlling the activities of the consolidated entity (collectively, KMP). Further biographical
information regarding KMP, is set out in either the “Director Information” section of the Director’s Report or
www.collinsfoods.com. The roles and individuals addressed in this report are set out below.
Name
Title and Role
Robert Kaye SC
Independent Non-executive Chair, Audit and Risk Committee member, Remuneration
and Nomination Committee member
Christine Holman
Independent Non-executive Director, Audit and Risk Committee member,
Remuneration and Nomination Committee member
Newman Manion
Non-executive Director, Audit and Risk Committee member and Remuneration and
Nomination Committee member
Bronwyn Morris AM
Independent Non-executive Director, Audit and Risk Committee Chair, Remuneration
and Nomination Committee member
Kevin Perkins
Non-executive Director, Audit and Risk Committee member, Remuneration and
Nomination Committee member
Russell Tate
Drew O’Malley(1)
Hans Miete(2)
Nigel Williams
Dawn Linaker
Graham Maxwell(3)
Mark van't Loo(4)
Independent Non-executive Director, Remuneration and Nomination Committee Chair,
Audit and Risk Committee member
Chief Executive Officer (CEO)
CEO – Collins Foods Europe Ltd (CEO – CF Europe)
Group Chief Financial Officer (Group CFO)
Chief People Officer (CPO)
Former Managing Director and CEO
Former CEO - Collins Foods Europe Ltd (CEO - CF Europe)
(1) Appointed as Chief Executive Officer - Collins Foods Limited effective 1 July 2020
(2) Appointed as Chief Executive Officer Europe effective 5 October 2020
(3) Managing Director and Chief Executive Officer from 29 September 2014 to 1 July 2020
(4) Chief Executive Officer Europe from 4 May 2020 until 18 September 2020
Overview of Remuneration Governance Framework and Strategy
The performance of the Group is contingent upon the calibre of its Directors and executives. The
Remuneration and Nomination Committee is accountable for making recommendations to the Board on the
Group’s remuneration framework.
The framework has been developed to support the following key principles:
• a policy that enables the Company to attract and retain capable and experienced Directors and
Executives who create value for shareholders;
• rewards the achievement of both annual and long-term performance objectives appropriate to the
Company's circumstances and goals;
• transparency;
• demonstrates a clear relationship between performance and remuneration;
• motivates the KMP Executives to pursue sustainable growth and innovation aligned with shareholder’s
interests;
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• has a key focus on prevailing market conditions; and
• alignment of reward at all levels of staff, reflecting both equity of treatment and fairness to shareholders.
In carrying out its accountabilities, the Remuneration and Nomination Committee is authorised to obtain
external professional advice as it determines necessary. As at the end of the reported period, the
Remuneration and Nomination Committee was comprised of Non-executive Directors only, with a majority
being independent. The role and accountabilities of the Committee are outlined in the Remuneration and
Nomination Committee Charter, available on the Company’s website together with other remuneration
governance policies.
The Board has ultimate accountability for signing off on remuneration policies, practices and outcomes.
The Remuneration and Nomination Committee operated in accordance with the aims and aspirations of the
ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (Principles
and Recommendations) and seeks input regarding remuneration governance from a wide range of sources.
These include shareholders, Remuneration and Nomination Committee members, stakeholder groups
including proxy advisors, external remuneration consultants, other experts and professionals such as tax
advisors and lawyers and Company management to understand roles and issues facing the Company.
EXECUTIVE REMUNERATION
The following outlines the policy that applies to KMP Executives whose remuneration is structured taking into
consideration the following factors:
• the Group’s key principles governing the remuneration framework and application;
• the level and structure of remuneration elements offered to executives of other publicly listed Australian
companies with similar financial and operational attributes;
• the position and accountabilities of each KMP Executive;
• market-based benchmarks reflecting the structure and level of reward and alignment to KMP
performance;
• the need to strike an appropriate balance between short term and long term incentives;
• internal relativities and external market factors that require consideration having regard to individual
contributions and shareholder expectations;
• that fixed remuneration policy guidelines be set with reference to relevant market practices;
• that remuneration should be reviewed annually and be made up of:
-
-
-
-
-
Base Salary (BS) being salary and superannuation;
Other Benefits being any cash benefits beyond Base Salary, allowances (such as car allowance),
any applicable non-cash fringe benefits (such as the payment of health insurance premiums on
behalf of the employee) and salary sacrifice arrangements, but excluding leave entitlements, short
term and long term incentive rewards as below;
Total Fixed Remuneration (TFR) the sum total of Base Salary and Other Benefits;
Short Term Incentive (STI) which provides a cash reward for performance outcomes compared to
agreed annual objectives;
Long Term Incentive (LTI) which provides an equity-based reward reflective of meeting shareholder
aligned reward by way of compound earnings per share growth over a three year performance
period (Compound EPS Growth). From FY22, growth in relative total shareholder returns (Relative
TSR) over the same three year performance period will be introduced as a second performance
metric. Annual awards under the LTI program are not linked to the annual incentive;
26 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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-
Total Reward (TR) which represents the sum of the above elements consisting of Total Fixed
Remuneration, an annual incentive (STI) and a long term incentive (LTI) having regard to market
practice, internal relativity and key drivers of shareholder returns;
• TR should be structured with reference to market practice and the setting in which the Company
operates in various regional and global markets, having regard to both short and longer term economic
and performance factors;
• TR will be managed within a range that allows for the recognition of both company and individual
performance while contributing to the organisation’s ability to retain and attract individuals with
appropriate skills and experience to meet the organisation’s goals;
• exceptions will be managed separately to ensure that individuals with particular expertise are retained in,
and where required, attracted to, the business;
• termination benefits will generally be limited to the default amount that may be provided for without
shareholder approval, as allowed for under the Corporations Act, and will be specified in employment
contracts.
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Remuneration report (continued)
REMUNERATION POLICY AND LINK TO PERFORMANCE
The executive remuneration framework components and their links to performance outcomes are outlined
below:
Remuneration
component
Total Fixed
Remuneration
STI
LTI
Purpose
Performance metrics
Potential value
Considerations for FY 22
To provide
competitive
market salary
including
superannuation
and Other
Benefits
Rewards for
annual
performance
Reward for
contribution to
creation of
shareholder
value over the
longer term
Nil
Positioned to reflect the
market rate and
individual attributes
Reviewed in line with market
positioning (comparison
undertaken by independent
third party)
• EBITDA (pre
AASB16)
performance
against a
pre-determined
target level and
award scale
• improvement to
Guest Experience
Survey (GES) results
against
pre-determined
target levels
• weighting
between the two
metrics is 80% EBITDA
performance and
20% GES
Three year compound
earnings per share
growth performance
CEO: 50% of Base
Salary for target
performance, with a
maximum opportunity
up to 75% of Base
Salary. Other KMP
Executives: 40-50% of
Base Salary for target
performance, with a
maximum opportunity
up to 60-75% of Base
Salary
CEO: 50% of Base
Salary for target
performance, with a
maximum opportunity
of 100% of Base Salary.
Other KMP Executives:
25% of Base Salary for
target performance,
with a maximum
opportunity of up to
50% of Base Salary
Introduction of a third
performance measure
relating to ESG initiatives.
Weighting for all KMP
Executives: EBITDA 70%; GES
15%; ESG 15%. STI target
eligibility no longer set at 95%
of EBITDA target. EBITDA
target must be at least equal
to prior reported period
actual EBITDA. Increase of
potential value for CPO to
50% of Base Salary for target
performance in line with
Other KMP Executives.
Achievement of the EBITDA
target is an overriding hurdle
to trigger any STI payments
Introduction of a second
performance measure being
Relative Total Shareholder
Return (TSR) against an
ASX200 index. TSR
performance measure and
current compound EPS
growth measure to each
determine 50% of LTIP
benefit. Refer below to “Long
Term Incentive Plan (LTIP)”
“FY22 offers”. No changes to
entitlement levels for Group
CEO. Entitlement levels for
other KMP Executives
increased to 40% of Base
Salary for target
performance, with a
maximum opportunity of up
to 80% of Base Salary
FIXED REMUNERATION
Total Fixed Remuneration consists of salary, superannuation contributions and Other Benefits. Fringe benefits
tax on these benefits where required is incorporated in Total Fixed Remuneration.
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The Group aims to position KMP Executives generally in the third quartile of benchmarked companies’
remuneration levels and above market average, with flexibility to take into account capability, experience,
and current and future value to the organisation.
Fixed remuneration for KMP Executives is reviewed annually or on promotion and is benchmarked against
market data for comparable roles in the market with entities of a similar size. There is no guaranteed increase
to fixed remuneration included in any KMP Executive’s contract.
VARIABLE REMUNERATION
SHORT TERM INCENTIVE PLAN (STIP)
Incentives under the Group’s STIP are at risk components of remuneration provided in the form of cash.
The STIP entitles KMP Executives to earn an annual cash reward payment if predefined targets are achieved.
The level of the incentive is set with reference to role accountabilities and Group performance.
The Group CEO was offered a target based STI opportunity equivalent to 50% of Base Salary for target
performance, with a maximum opportunity of up to 75% of Base Salary. Other KMP Executives were offered a
target based STI equivalent to between 40% and 50% of their Base Salary for target performance with a
maximum opportunity of up to 60%-75% of the Base Salary.
SHORT TERM INCENTIVE PERFORMANCE METRICS
FY21 and FY22 STIP
For FY21, two measures were used to determine awards under the Company’s Short Term Incentive Plan (STIP)
- EBITDA (Earnings Before Interest Tax Depreciation and Amortisation) and GES (Guest Experience Survey). An
overriding hurdle of greater than 95% of target EBITDA was required to trigger any STI payment. The Board has
determined that from FY22, the 95% threshold for STI payments will be removed and STI payments will be
triggered at EBITDA target level which must at least equal actual EBITDA achieved in the prior year.
EBITDA calculations for the purpose of calculating incentives payable under the STIP continue to be assessed
on a pre-AASB16 basis. The GES measure was introduced as a secondary measure in FY19 reflecting the
Group’s core belief that continued improvement in customer experiences with our brands and our people will
underpin our potential for future growth.
The Guest Experience Survey is the global KFC and Taco Bell measure of real customer experiences. It directly
relates to the customer feedback targeting executional areas such as food quality, speed of service,
hospitality, cleanliness and maintenance of facilities. The Guest Experience Survey program is the franchisor’s
global barometer of executional excellence and is administered by an independent third party provider on a
month by month basis.
The two measures, EBITDA and GES, are calculated separately and have different targets, thresholds and
award scales. The weighting between the two measures for FY21 was 80% EBITDA performance and 20% GES.
From FY22, a third performance measure will be introduced to the STIP. It will reward executives for
achievement of agreed ESG targets. The weighting between the three measures for FY22 will be 70% EBITDA
performance, 15% GES and 15% ESG. Achievement of the EBITDA target is an overriding hurdle to trigger any
STI payments.
Impact of non-financial performance
The Board has the discretion to withdraw in full or adjust downwards, STI and LTI outcomes, in the event of
mismanagement and or failures in governance, risk management, regulatory compliance, conduct and
behaviours that breach the Collins Foods Group Code of Conduct, which the Board deems may have a
deleterious effect on Collins’ brand, reputation, employees, customers and shareholder value. Examples of
failures include but are not limited to wage non-compliance, employee visa non-compliance, qualified
internal audit reports noting material control failures, food safety, employee and customer safety, taxation,
regulatory notices of non-compliance etc.
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Remuneration report (continued)
Maximum opportunity: EBITDA result
The FY21 award scale based upon the actual EBITDA result achieved is set out below:
STANDARD % PAYOUT TABLE
% EBITDA target achieved
% target bonus earned
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
0
20
40
60
80
100
105
110
115
120
125
130
135
140
145
150
The FY22 award scale based upon the actual EBITDA result achieved will be set out below:
STANDARD % PAYOUT TABLE
% EBITDA target achieved
% target bonus earned
100
101
102
103
104
105
106
107
108
109
110
100
108
115
123
128
133
138
143
145
148
150
Maximum opportunity: GES result
The FY21 award scale based upon the actual GES results achieved is set out below:
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STANDARD % PAYOUT TABLE
% GES target achieved
% target bonus earned
95
96
97
98
99
100
101
102
103
104
105
0
20
40
60
80
100
110
120
130
140
150
Maximum opportunity: GES and ESG results
The FY22 award scale based upon the actual GES (15%) and ESG (15%) results achieved will be as set out
below:
STANDARD % PAYOUT TABLE
% GES/ESG target achieved
% target bonus earned
100
101
102
103
104
105
100
110
120
130
140
150
Delivery method for STI
Calculations are performed and payments made following the end of the measurement period and the
external audit of the Group’s annual audited financial report. Payments are made with PAYG deducted.
Board discretion
While the Board has discretion to adjust remuneration outcomes up or down to prevent any inappropriate
award outcomes it chose not to exercise its discretion in respect of the 2021 financial year.
Forfeiture
STI is forfeited in the event of cessation of employment due to dismissal for cause, for reasons other than for
cause and where the employee terminates their employment prior to the actual payment of the STI, fraud,
defalcation or gross misconduct by the participant.
LONG TERM INCENTIVE PLAN (LTIP)
Currently, the LTIP is an annually offered at risk equity component of remuneration for KMP Executives and
nominated senior Executives ensuring that their interests in enhancing the mid to longer term growth potential
of the Company are aligned with the interests of shareholders.
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LONG TERM INCENTIVE PERFORMANCE METRICS
Form of equity
The LTIP is in the form of a performance rights plan. Rights awarded are subject to three year performance
hurdles and service vesting conditions. The performance rights confer the right (following valid conversion) to
the value of a share at the time, either settled in shares that may be issued or settled in the form of cash at the
discretion of the Board (a feature intended to ensure appropriate outcomes in the case of separation). There
is no entitlement to dividends during the measurement period.
LTI value
The Board retains discretion to determine the value of LTI to be offered each reporting period, subject to
shareholder approval in relation to Directors.
For performance rights to be granted in FY22 with a performance period including FY22, FY23 and FY24, the
number of performance rights granted will be based upon a dollar value divided by the VWAP five trading
days before and five trading days after the announcement of the Company’s FY21 audited financial results.
This VWAP basis of measurement is consistent with prior year.
In years previous to that, the number of performance rights granted was based upon a dollar value divided
by the VWAP for the five trading days prior to the date of offer which was typically after the AGM in
August/September. However a decision was made to change this basis of measurement from FY21 following
independent advice, consideration of prevailing market practice and closer alignment with release of the
Group financial results.
Measurement Period
The measurement period will include three reporting periods unless otherwise determined by the Board.
Measurement periods of three years combined with annual grants will produce overlapping cycles that will
promote a focus on producing long term sustainable performance/value improvement and mitigates the risk
of manipulation and short-termism.
The measurement period for FY21 offers commenced 4 May 2020 and ends 30 April 2023 for the performance
period of FY21, FY22 and FY23. The measurement period for FY22 offers commences on 3 May 2021 and ends
28 April 2024 for the performance period of FY22, FY23 and FY24.
Vesting conditions
The Board has discretion to set vesting conditions for each offer. Performance rights that do not vest will lapse.
FY21 and FY22 offers
As reported in FY20, to more appropriately reflect market conditions and hurdles adopted by others in similar
consumer businesses, an adjustment to the Stretch/ Maximum performance level was made for performance
rights offered in FY21 onwards. This change was made after a review of market practices undertaken with the
assistance of an independent remuneration consultant. The threshold and target EPS growth hurdles remain
unchanged from FY20.
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The following vesting scale applied to the performance rights offered in FY21 and will apply to performance
rights offered in FY22:
Performance Level
Annualised EPS growth (CAGR) % of max/ stretch/ grant vesting
Stretch/Maximum
Between Target and Stretch
Target
Between Threshold and Target
Threshold
Below Threshold
16.5%
>11%, <16.5%
11%
>5.5%, <11%
5.5%
<5.5%
100%
Pro-rata
50%
Pro-rata
25%
0%
EPS will be measured by calculating the compound growth in the Company’s underlying (pre AASB 16) basic
EPS over the performance period. The underlying (pre AASB 16) basic EPS is disclosed in the Operating and
Financial Review of the Directors Report within the Group’s annual audited financial reports.
The Board retains a discretion to adjust the EPS performance condition to ensure that participants are not
penalised nor provided with a windfall benefit arising from matters outside of management’s control that
affect EPS (for example, excluding one-off non-recurrent items or the impact of significant acquisitions or
disposals).
The Board has determined that from FY22, a second performance condition of Relative Total Shareholder
Return (TSR) will be introduced to the LTIP, based on a volume weighted average share price (VWAP)
benchmark of ten trading days either side of our 2021 results announcement on 29 June 2021. Measurement
will be against the VWAP benchmark ten days either side of the announcement of our financial results in late
June 2024. The Board will determine an appropriate ASX 200 index which is sufficiently broad to measure
relativity from the start of the performance period. Compound EPS growth will continue as a performance
condition weighted equally with Relative TSR.
Relative TSR performance will be tested at the same time as Compound EPS Growth in accordance with the
following vesting schedule:
Relative TSR of Collins Foods Limited
Proportion of performance rights to vest
Below the 50th percentile
At the 50th percentile
0%
25%
Between the 50th percentile and 75th percentile
3% for each 1% >50%, <75%
At or above the 75th percentile
100%
Retesting
The plan rules do not contemplate retesting and therefore retesting is not a feature of the Company’s current
LTI offers.
Amount payable for performance rights
No amount is payable for performance rights. The value of rights is included in assessments of remuneration
benchmarking and policy positioning.
Conversion of vested performance rights
Under the plan rules, the conversion of performance rights to shares occurs automatically upon vesting
conditions being declared by the Board as having been met, except where the Board exercises its discretion
to settle in the form of cash. Vesting is determined following receipt of the audited accounts for the relevant
performance periods.
No amount is payable by participants to exercise vested performance rights in respect of any grants.
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Disposal restrictions and other related matters
The Company may impose a mandatory holding lock on the shares or a participant may request they be
subject to a voluntary holding lock.
Performance rights are not entitled to receive a dividend. Any shares issued or transferred to a participant
upon vesting of performance rights are only entitled to dividends if they were issued on or before the relevant
dividend record date.
Shares issued or transferred under the LTIP rank equally in all respects with other shares on issue.
In the event of a capital reconstruction of the Company (consolidation, subdivision, reduction, cancellation or
return), the terms of any outstanding performance rights will be amended by the Board to the extent
necessary to comply with the listing rules at the time of reconstruction.
Any bonus issue of securities by way of capitalisation of profits, reserves or share capital account will confer on
each performance right, the right:
• to receive on exercise or vesting of those performance rights, not only an allotment of one share for each
of the performance rights exercised or vested but also an allotment of the additional shares and/or other
securities the employee would have received had the employee participated in that bonus issue as a
holder of shares of a number equal to the shares that would have been allotted to the employee had
they exercised those Incentives or the performance rights had vested immediately before the date of the
bonus issue; and
• to have profits, reserves or share premium account, as the case may be, applied in paying up in full those
additional shares and/or other securities.
Subject to a reconstruction or bonus issue, performance rights do not carry the right to participate in any new
issue of securities including pro-rata issues.
Performance rights will not be quoted on ASX. The Company will apply for quotation of any shares issued
under the LTIP.
Cessation of employment
In the event of cessation of employment within 12 months of the date of grant, unvested performance rights
are forfeited. In the event of cessation of employment after 12 months but before the conclusion of the
vesting period, unvested performance rights are considered forfeited, unless otherwise determined by the
Board, in which case any service condition will be deemed to have been fulfilled as at the testing date and
the performance rights remain subject to performance testing along with other participants. It is noted that
the Board has discretion to allow “Good Leavers” to retain their participation in the LTIP beyond the date of
cessation of employment when deemed appropriate to the circumstances.
Change of control of the Company
If in the opinion of the Board a change of control event has occurred, or is likely to occur, the Board may
declare a performance right to be free of any vesting conditions and, if so, the Company must issue or
transfer shares in accordance with the LTIP rules. In exercising its discretion, the Board will consider whether
measurement of the vesting conditions (on a pro-rata basis) up to the date of the change of control event is
appropriate in the circumstances.
MIX OF BASE SALARY AND INCENTIVES BASED REMUNERATION AND PROPORTIONALITY
The following table shows the anticipated range of remuneration mix that was offered for current KMP
Executives during FY21, for target performance.
Mix of remuneration (excludes Other
Benefits)
Base Salary
STI (at Target performance)
LTI (at Target performance)
Group CEO
Other KMP Executives
50%
25%
25%
57-61%
24-29%
14-15%
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Remuneration report (continued)
The Board reviewed the remuneration mix of Other KMP Executives as part of the review of the STIP and LTIP.
As a result, the mix of Base Salary, STI and LTI for FY22 will remain unchanged for the Group CEO but for Other
KMP Executives the current LTIP vesting rates of 25% for Target and 50% for Stretch performance will increase to
40% for Target and 80% for Stretch performance(1). Accordingly, the remuneration mix (in FY22) will be as
outlined below:
Mix of remuneration (excludes Other
Benefits)
Base Salary
STI (at Target performance)
LTI (at Target performance)
Group CEO
Other KMP Executives
50%
25%
25%
53%
26-27%
20-21%
(1) Not applied to newly appointed Chief Operating Officer – KFC Australia for FY22. The increase for LTIP Target and Stretch performance vesting rates will apply from FY23.
The Board considers that the adjustments to the remuneration mix for Other KMP Executives (Base Salary, STI
and LTI) result in appropriately weighted remuneration and will continue to:
• aligns executive remuneration practices with accepted market practices and current best-practices;
• motivates executives to continuously grow shareholder value by aligning their interests with those of
shareholders through equity ownership; and
• manages the risk of short-termism inherent in fixed remuneration and short-term incentives by exposing a
significant proportion of remuneration to the longer term consequences of decision making, through the
ownership position that is achieved when executives participate in equity plans.
Company performance
The Company’s performance during the reported period and the previous four reporting periods in
accordance with the requirements of the Corporations Act follow:
Short term change in shareholder
value over 1 year (SP increase +
dividends)
Long term (cumulative) 3 years
change in shareholder value
FY end
date
FY21
FY20
FY19
FY18
FY17
Revenue
$m
(2)
$1,065.90
$981.73
$901.22
$770.94
$633.56
Profit after
tax $m
$32.95
(3)
$31.26
(4)
$39.11
$32.49
$27.99
Share
price
$11.37
Change in
share price Dividends(1)
$0.210
$4.43
$6.94
$7.59
$5.35
$5.25
($0.65)
$2.24
$0.10
$1.23
$0.200
$0.180
$0.170
$0.160
Amount
$4.64
($0.450)
$2.420
$0.270
$1.390
%
67%
-6%
45%
5%
35%
Amount
$6.61
$2.24
$4.08
$3.37
$3.74
%
124%
43%
101%
138%
196%
(1) Dividends used are the cash amount (post franking).
(2) Excludes Sizzler Australia revenues
(3)
Includes the impact of AASB16.
(4) Excludes the impact of AASB16.
Statutory Remuneration disclosures for FY21
KMP EXECUTIVE REMUNERATION
The following table outlines the remuneration received by KMP Executives of the Company during FY21 and
FY20 prepared according to statutory disclosure requirements and applicable accounting standards.
KMP Executive remuneration for FY21 (with FY20 comparatives) is reported in four components being Base
Salary (including superannuation), Other Benefits, awarded values of STI and awarded values of LTI
remuneration.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 35
Directors'
report
DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
Name
Drew O'Malley(3)
Hans Miete(4) and (7)
Nigel Williams
Dawn Linaker
Graham Maxwell(5)
Mark van't
Loo(6) and (7)
Role(s)
CEO
COO Australia
CEO - CF Europe
Group CFO
Group CFO
CPO
CPO
Former
Managing
Director and
CEO
Former
Managing
Director and
CEO
Former CEO - CF
Europe
Former CEO - CF
Europe
STI
LTI(2)
Base Salary
(incl super)
$721,692
$564,654
$227,322
-
$567,695
$536,857
$432,398
$387,619
Year
2021
2020
2021
2020
2021
2020
2021
2020
Other
benefits
$46,902
$46,382
$20,363
-
$51,233
$48,655
$52,658
$45,971
Total Fixed
Remuneration
$768,594
$611,036
$247,685
-
$618,928
$585,512
$485,056
$433,590
Amount
$460,996
$320,170
$40,227
-
$347,184
$227,092
$211,502
$129,341
% of Total
Reward
31%
34%
14%
-
31%
28%
26%
23%
Amount
$239,378
$15
-
-
$160,140
$17
$115,106
$11
% of Total
Reward
16%
0%
-
-
14%
0%
14%
0%
Total Reward(8)
$1,468,968
$931,221
$287,912
-
$1,126,252
$812,621
$811,664
$562,942
Change in
accrued leave(1)
$46,717
$2,349
$13,059
-
$17,084
$3,093
$4,136
($1,359)
Termination
benefits
-
-
-
-
-
-
-
-
2021
$147,250
$12,973
$160,223
-
-
$163,821
51%
$324,044
($116,787)
$27,115
2020
$870,215
$80,541
$950,756
$352,526
27%
$58,876
2021
$224,871
2020
$514,665
-
-
$224,871
$514,665
-
-
-
-
-
$16
4%
-
0%
$1,362,158
$10,844
-
$224,871
($21,713)
$432,705
$514,681
$240
-
(1)
(2)
The change in accrued leave includes negative amounts during the prior corresponding period. The negative amounts reflect leave that has been taken or elapsed during the reporting period
measured in accordance with AASB 119 Employee Benefits.
The LTI value reported in this table is the amortised accounting charge of all grants that were not lapsed or vested at the start of the reporting period. Where a market based measure of
performance is used such as TSR, no adjustments can be made to reflect actual LTI vesting. However, in relation to non-market conditions, such as EPS, adjustments must be made to ensure the
accounting charge matches the vesting.
(3) Appointed as Chief Executive Officer - Collins Foods Limited effective 1 July 2020
(4) Appointed Chief Executive Officer - Collins Foods Europe effective 5 October 2020
(5) Former Managing Director and Chief Executive Officer from 29 September 2014 to 1 July 2020
(6) Former Chief Executive Officer Europe from 4 May 2020 until 18 September 2020
(7) FY21 salary converted at exchange rate of AUD $1: EURO €0.6215 (FY20: AUD $1: EURO €0.6088). Discretionary payment of €25,000 for outstanding performance in operating conditions rendering
incentive targets unreachable.
(8) Excludes change in accrued leave balance.
Both target and awarded values of STI and LTI remuneration are outlined in the relevant sections of the
Remuneration Report to assist shareholders to obtain a more complete understanding of remuneration as it
relates to KMP Executives.
KMP EXECUTIVE REMUNERATION OPPORTUNITY FOR FY21 (NON-STATUTORY DISCLOSURE)
The following table is provided to shareholders as an illustration of the remuneration that was offered to KMP
Executives for target performance during FY21. It should be noted that the table presents target incentive
opportunities for achieving a challenging but achievable target level of performance. In the case of STI, the
maximum incentive may be up to 50% higher (i.e. 75% of Base Salary). The maximum LTI is 100% of Base Salary
for the CEO and 50% of Base Salary for KMP Executives.
Name
Role (s)
Drew
O’Malley
(2)
Hans Miete
(3)
CEO
CEO - CF
Europe
Nigel Williams Group CFO
Dawn Linaker CPO
Base Salary
(incl
super)(1)
Base
Salary as
% of Total
Reward
$754,000
€265,000
$567,850
$432,414
48%
57%
54%
56%
(1) Base salary based on a 52 week period (FY20: 53 week period)
(2) Appointed as Chief Executive Officer effective 1 July 2020
(3) Appointed as Chief Executive Officer Europe effective 5 October 2020
STI opportunity
LTI opportunity
Target %
of Base
Salary
Target
STI
amount
STI % of
Total
Reward
Target %
of Base
Salary
Target LTI
amount
LTI as %
Total
Reward
Other
Benefits Total Reward
50% $377,000
24%
50% $377,000
24% $46,902
$1,554,902
50% €132,500
50% $283,925
40% $172,966
28%
27%
23%
25% €66,250
14%
€1,555
€465,305
25% $141,963
14% $51,233
$1,044,971
25% $108,104
14% $52,658
$766,142
36 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
Performance outcomes for FY21 and FY20 including STI and LTI
assessment
SHORT TERM INCENTIVES
The tables below set out details of STI and LTI performance outcomes for FY21 and FY20 when compared to
target.
FY21 Company level KPI Summary
Award outcomes
FY21 paid FY22
Name
Role (s)
Drew
O'Malley
(1)
CEO
Hans Miete
(2)
CEO - CF Europe
Nigel Williams Group CFO
Dawn Linaker CPO
KPI Summary
EBITDA
Weighting
80%
Average
GES target
EBITDA Target
$129,505,000
% of target
achieved
103.7%
Awarded
$357,396
Total STI award
(EBITDA and GES)
GES
EBITDA
GES
EBITDA
GES
EBITDA
GES
20%
80%
20%
80%
20%
80%
20%
64.3%
68.5%
64.3%
64.3%
-
$3,416,000
$129,505,000
-
$129,505,000
-
107.0%
-
115.3%
103.7%
107.0%
103.7%
107.0%
$103,600
$460,996
-
$269,161
$78,023
$163,971
$47,531
-
$347,184
$211,502
(1) Appointed as Chief Executive Officer effective 1 July 2020.
(2) Appointed as Chief Executive Officer Europe effective 5 October 2020.
For the purposes of the STI awarded in FY21, pre AASB 16 underlying EBITDA was adjusted for non-trading items
relating to KFC Europe provision for store closures, Digital menu board costs, Netherlands acquisition costs and
Netherlands developments agreement fee, totalling $2.0m, to calculate the pre underlying AASB 16 EBITDA
used to calculate STI performance outcomes.
FY20 Company level KPI Summary
Award outcomes
FY20 paid FY21
Name
Role (s)
Graham
Maxwell
Former Managing
Director and CEO
Mark van ‘t
Loo
Former CEO - CF
Europe
Nigel Williams Group CFO
Drew
O’Malley
COO Australia
Dawn Linaker CPO
KPI
Summary Weighting
80%
EBITDA
Average
GES target
-
EBITDA Target
$121,585,527
% of target
achieved
98.50%
Awarded
$239,780
Total STI award
(EBITDA and GES)
GES
EBITDA
GES
EBITDA
GES
EBITDA
GES
EBITDA
GES
20%
80%
20%
80%
20%
80%
20%
80%
20%
61%
-
103%
$112,746
$352,526
-
$10,118,260
-
67%
-
61%
-
$121,585,527
-
100%
98.50%
103%
-
-
$154,463
$72,629
-
$111,467,268
102%
$244,051
60%
-
61%
-
$121,585,527
-
104%
98.50%
103%
$76,119
$87,975
$41,366
-
$227,092
$320,170
$129,341
The Board is of the view that EBITDA is the primary driver of value creation for shareholders in the short term.
Collins Foods Limited ACN 151 420 781 I
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
LONG TERM INCENTIVES
During the 2019 financial year, grants under the long term incentive plan were made on 3 October 2018 and
16 October 2018 with a performance period of FY19, FY20 and FY21 (FY19 Grant). The performance period for
the FY19 Grants commenced on 30 April 2018 and ended on 2 May 2021 (Vesting Rights). Vesting rights for
FY19 Grants are determined by comparing underlying compound EPS growth over the FY19, FY20 and FY21
period to FY18 underlying EPS. It is the view of the Board that it is important for the Board to have the ability to
make adjustments, where appropriate, to Statutory NPAT results to ensure the alignment between Company
performance and KMP Executive reward and this is in the interests of all stakeholders including shareholders.
For the Vesting Rights, the Non-executive Directors have given detailed consideration to the method by which
vesting will be calculated.
The adjustments proposed for the FY21 year are:
NPAT Pre AASB 16
Adjustments:
Acquisition Costs
Sizzler Aust. Brand Closure
Digital Menu Boards
Adjusted NPAT Result for LTI
$'000,000
Comment
$45.6
$1.4
$2.5
($1.0)
$48.5
(Note (a) below)
(Note (b) below)
(Note (c) below)
Note (a) Legal and accounting advisory costs incurred in respect of acquiring nine restaurants in the
Netherlands. Due to timing of completion of acquisitions, only a small immaterial amount of NPAT from these
acquisitions can be attributed to FY21.
Note (b) Sizzler Australia closure costs.
Note (c) Franchisor allowed external Digital Menu Boards (DMB) to be funded from within marketing
contribution. As the DMB are capital, this provides a profit and loss benefit which is not a result of
management action.
Allowing for these adjustments, an EPS CAGR of 8.8% was achieved, resulting in 40% of the maximum long
term incentives eligible to vest following the reporting period being completed, becoming vested.
In exercising discretion, the Board considered adjustments to ensure that participants are not penalised, nor
provided with a windfall benefit arising from matters outside executives' control which affect EPS (for example,
one-off non-recurrent items or the impact of significant acquisitions or disposals).
In relation to the completion of the reporting period, previous grants of equity made under the LTI plan during
FY20 on 16 September 2019 with a performance period of FY20, FY21 and FY22 (FY20 Grant), will be eligible for
vesting during FY23 after the completion of FY22.
Name
Role(s)
Tranche
Weighting
Number of eligible
to vest in FY22 for
FY21 completion
% grant vested
Number
vested
Grant date
VWAP
$ Value of LTI
that vested
(as per grant
date VWAP)
Drew O’Malley
CEO
EPSG
Nigel Williams
Group CFO EPSG
Dawn Linaker
CPO
EPSG
100%
100%
100%
37,219
42,796
29,065
40% 14,887
$5.642187
40% 17,118
$5.642187
40% 11,626
$5.642187
$83,995
$96,583
$65,596
Former
Managing
Director and
CEO
Graham Maxwell
EPSG
100%
105,150
40% 42,060
$5.642187
$237,310
38 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
The table below sets out the annualised compound EPS growth hurdles applicable to the FY20 Grants:
Performance level
Annualised EPS growth (CAGR)
% of max/ stretch/grant vesting
Stretch/Maximum
Between target and stretch
Target
Below threshold and target
Threshold
Below Threshold
22%
>11%, <22%
11%
>5.5%, <11%
5.5%
<5.5%
100%
Pro-rata
50%
Pro-rata
25%
0%
VESTING RIGHTS FOR RETIRED MANAGING DIRECTOR AND CEO
At the 2019 AGM, shareholders approved the granting of performance rights to the then Managing Director
and CEO , Graham Maxwell, who had given 12 months’ notice of his intention to retire effective 1 July 2020. At
the time, the Board had reserved its rights in relation to how these performance rights would be treated post
Mr Maxwell’s employment in light of the fact that he would be working out the entire 12 months of his notice
period. The Board considered Mr Maxwell to be an extremely “good leaver” having continued to
demonstrate the highest levels of engagement and leadership through the entire 12 months of his notice
period and at the same time being of great assistance in the transitioning of his successor, Drew O’Malley, into
the CEO role. Noting also that Mr Maxwell would not be eligible for any termination payment beyond
accrued leave, the Board decided that he would retain a pro-rata portion of the currently unvested
performance rights he was previously granted. Those grants that remained on issue were:
•
•
•
137,931 performance rights granted in FY18 for the performance period of FY18, FY19 and FY20. The
threshold performance level for these rights was not achieved over the performance period and the
rights have expired;
146,042 performance rights granted in FY19 for the performance period of FY19, FY20 and FY21. These
rights are eligible for vesting in FY22 and Graham, having served as Managing Director and CEO for 26
months of the 36 months (72%) of the FY19-FY21 performance period retained rights to 72%, or 105,150,
performance rights (vesting above);
95,105 performance rights granted in FY20 for the performance period of FY20, FY21 and FY22. These
rights are eligible for vesting in FY23 and Graham, having served as Managing Director and CEO for 14
of the 36 months (39%) of the FY20 - FY22 performance period retains rights to 39%, or 37,091,
performance rights.
There is no acceleration to vesting of any of these rights. That is, in line with the position for all other holders of
the above performance rights, vesting would not occur until the performance period had been completed,
and only if vesting rights have been triggered. The Board also considered that in line with all other
performance rights holders, a voluntary lock would not be applied to any shares issued if any performance
rights were to vest in the future. Accordingly, in line with the vesting determination decision outlined for the
Vesting Rights above, 42,060 Vesting Rights held by Graham Maxwell will convert to fully paid ordinary shares.
OTHER PERFORMANCE RIGHTS INFORMATION
All performance rights, the vesting of which is subject to EPS growth over defined reporting periods ending in
2018 through to 2021, expire in July 2020 through to July 2023 as set out in the table below:
Reporting period ended
Expiry date
Exercise price
2 May 2021
3 May 2020
28 April 2019
29 April 2018
27 July 2023
26 July 2022
20 July 2021
24 July 2020
Nil
Nil
Nil
Nil
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 39
Directors'
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
There was one tranche of performance rights issued during the reporting period ended 2 May 2021. It should
be noted that the fair value used for accounting purposes was not used to determine LTI allocations which
adopt a volume weighted average price of the Company’s shares as described in the LTI summary above.
Tranche
Issue date
Fair value
Share price of
issuance at
grant date
Term Dividend yield
Risk free interest
rate
13
16 October
2020
$10.20
$10.78
3
1.86%
0.14%
The following outlines the vesting scale that was applicable to the performance rights issued to executives
during the current reported period and as part of remuneration for FY22:
Performance Level
Annualised EPS growth (CAGR)
% of max/ stretch/grant vesting
Stretch/Maximum
Between Target and Stretch
Target
Between Threshold and Target
Threshold
Below Threshold
16.5%
>11%, <16.5%
11%
>5.5%, <11%
5.5%
<5.5%
100%
Pro-rata
50%
Pro-rata
25%
0%
There were two tranches of performance rights issued during the reporting period ended 3 May 2020. The fair
value at issuance date was determined using a discounted cash flow model incorporating the assumptions
below.
Tranche
Issue date
Fair value
Share price of
issuance
Term Dividend yield
Risk free interest
rate
11
12
2 October
2019
02 October
2019
$8.65
$8.65
$9.32
$9.32
3
3
2.44%
2.44%
0.74%
0.74%
40 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
Employment terms for KMP Executives
SERVICE AGREEMENTS
A summary of contract terms in relation to KMP Executives is presented below:
Period of Notice(1)
Name
Drew
O’Malley(3)
Hans Miete
Position held at close of FY21
Duration of
contract
From
Company
From KMP
CEO
Open ended
12 months
12 months
CEO - CF Europe
Open ended
6 months
3 months
Nigel Williams Group CFO
Open ended
6 months
6 months
Dawn Linaker CPO
Open ended
6 months
6 months
Termination
Payments
Up to 12
months(2)
6 months(4)
Up to 12
months(2)
Up to 12
months(2)
(1) Provision is also made for the Group to be able to terminate these agreements on three months’ notice in certain circumstances of serious ill health or incapacity of the KMP Executive.
(2) Under the Corporations Act, the Termination Benefit Limit is 12 months average Salary (last 3 years) unless shareholder approval is obtained.
(3) Appointed Chief Executive Officer effective 1 July 2020. Upon appointment as CEO, notice period changes to 12 months’ notice from either party, from 3 months from both Company and KMP.
(4) Appointed Chief Executive Officer Europe effective 5 October 2020. Termination payment per contract.
The treatment of incentives in the case of termination is addressed in separate sections of this report that give
details of incentive design.
With regards to Mr O'Malley, Mr Williams and Mr Miete, there is a restraint of trade period of 12 months. On
appointment to the Board, all Non-executive Directors enter into a service agreement with the Company in
the form of a letter of appointment. The letter summarises the Board policies and terms, including
compensation relevant to the office of the director. Non-executive Directors are not eligible to receive
termination payments under the terms of the appointments.
Non-executive Director fee rates and fee limit
NON-EXECTIVE DIRECTOR REMUNERATION
The remuneration for Non-executive Directors is set taking into consideration factors including:
• the level of fees paid to Board members of other publicly listed Australian companies of similar size;
• operational and regulatory complexity; and
• the accountabilities and workload requirements of each Board member.
Non-executive Directors’ remuneration comprises the following components:
• board and committee fees; and
• superannuation (compulsory contributions).
Board fees are structured by having regard to the accountabilities of each role fulfilled by a Director within
the Board. The Company’s constitution allows for additional payments to be made to Directors where extra or
special services are provided.
Non-executive Director fees are managed within the current annual fees limit of $1,200,000 which was
approved by shareholders at the 2019 Annual General Meeting.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 41
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
During the period a review of fees was undertaken by the Board, with the assistance of an independent
remuneration consultant with a change in rates recommended. In consideration of the timing of the review
being part way through FY21, the Board considered it appropriate that the change occur in two stages with
half of the rate change applicable from 1 October 2020 and the second half of the rate change applicable
from the commencement of FY22. The following table outlines the Non-executive Director fee rates that were
applicable during the reported period:
Function
Role
Fee including super until
30 September 2020(1)
Main Board
Audit and Risk Committee;
Remuneration and Nomination
Committee
Chair (inclusive of committee memberships)
Member
Committee Chairs
Committee Members
$220,500
$105,000
$20,000
$10,000
Function
Role
Fee including super from 1
October 2020(1)
Main Board
Audit and Risk Committee
Remuneration and Nomination
Committee
(1) Fee is based on a 52 week period (FY2020: 53 weeks).
Chair (inclusive of committee memberships)
Member
Committee Chair
Committee Members
Committee Chair
Committee Members
$270,250
$116,200
$25,000
$12,250
$25,000
$11,250
As indicated above, the second half of the rate change was to become applicable from the
commencement of FY22. The fees to be applied from FY22 onwards are as disclosed below:
Function
Role
Fee including super from 3
May 2021
Main Board
Audit and Risk Committee
Remuneration and Nomination
Committee
Chair (inclusive of committee memberships)
Member
Committee Chair
Committee Members
Committee Chair
Committee Members
$320,000
$127,400
$30,000
$14,500
$30,000
$12,500
42 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
30 of 116
DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
Remuneration received by Non-executive Directors in FY21 and FY20 is disclosed below:
Name
Role(s)
Year
Committee fees Superannuation Other benefits
Board and
Termination
benefits
Total
(1)
Independent,
Non-executive
Chairman
Independent,
Non-executive
Chairman
Independent
Non-executive
Director
Independent
Non-executive
Director
Non-executive
Director
Executive Director,
Non-Executive
Director
Independent
Non-executive
Director
Independent
Non-executive
Director
Non-executive
Director
Non-executive
Director
Independent
Non-executive
Director
Independent
Non-executive
Director
(2)
Robert Kaye SC
Christine Holman
Newman Manion
Bronwyn Morris AM
Kevin Perkins
Russell Tate
2021
$249,749
2020
$224,750
-
-
2021
$122,011
$11,630
2020
2021
$45,196
$4,255
$122,004
$11,638
2020
$315,772
(3)
$8,872
2021
$132,656
$12,602
2020
2021
2020
$125,658
$11,937
$122,047
$11,594
$116,350
$11,053
2021
$145,847
2020
$137,596
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$249,749
$224,750
$133,641
$49,451
$133,642
$324,644
$145,258
$137,595
$133,641
$127,403
$145,847
$137,596
(1) Appointed effective 12 December 2019.
(2)
Transitioned to the role of Executive Director effective 14 June 2019. Returned to Non-executive Director role effective 21 April 2020.
(3)
Includes consulting fees of $216,910 converted at exchange rate of AUD $1: EURO €0.6088.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 43
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DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
Changes in KMP held equity
The following table outlines the changes in the amount of equity held by KMP Executives over the reporting
period:
Name
Security
Number held at
open 2021
Granted as
compensation
Performance
Rights forfeited Acquisition
Number held at
close 2021
Drew O' Malley(1)
Hans Miete(2)
Nigel Williams
Shares
Performance
Rights
Shares
Performance
Rights
Shares
Performance
Rights
Shares
Performance
Rights
Dawn Linaker
Total
(1) Appointed as Chief Executive Officer effective 1 July 2020.
-
-
20,000
20,000
104,057
-
-
20,283
108,739
15,017
77,995
326,091
82,274
-
(36,206)
-
-
-
-
-
30,981
-
23,591
136,846
-
-
-
2,000
(35,311)
-
-
-
(27,122)
(98,639)
-
22,000
150,125
-
-
22,283
104,409
15,017
74,464
386,298
(2) Appointed as Chief Executive Officer Europe effective 5 October 2020
The following table outlines the changes in the amount of equity held directly or indirectly by Non-executive
Directors over the reporting period:
Name
Robert Kaye, SC
Christine Holman
Newman Manion
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Total
Security
Number held at
open 2021
Additions
Disposals
Number held at
close 2021
Shares
Shares
Shares
Shares
Shares
Shares
31,605
-
21,820
13,456
7,621,484
21,820
7,710,185
21,267
14,000
-
3,000
-
-
38,267
-
-
-
-
(400,000)
-
(400,000)
52,872
14,000
21,820
16,456
7,221,484
21,820
7,348,452
44 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
32 of 116
DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
The maximum value of performance rights yet to vest has been determined as the amount of the grant date
fair value of the performance rights that is yet to be expensed:
2021 equity grants
FY in which rights may vest
Maximum value yet to vest
Name
Drew O'Malley
(1)
Role
CEO
Hans Miete
(2)
CEO - CF Europe
Nigel Williams
Group CFO
Dawn Linaker
CPO
(1) Appointed as Chief Executive Officer effective 1 July 2020.
(2) Appointed as Chief Executive Officer Europe effective 5 October 2020
Group Securities Trading Policy
2022
2023
2024
2022
2023
2024
2022
2023
2024
2022
2023
2024
($)
-
32,350
272,634
-
-
-
-
32,350
102,663
-
23,031
78,174
The Group Securities Trading Policy is available on the Company’s website. It contains the standard references
to insider trading restrictions that are a legal requirement under the Corporations Act, as well as conditions
associated with good corporate governance. The Group Securities Trading Policy follows the
recommendations set out in ASX Guidance Note 27, “Trading Policies”. The policy specifies “trading windows”
during which Directors and restricted employees of the Company may trade in the securities of the Company.
It requires Directors and restricted employees to obtain prior written clearance for any trading in the
Company’s securities and prohibits trading at all other times unless an exception is granted following an
assessment of the circumstances (for example financial hardship). Trading windows remain open for 30 days.
The first day of the trading window is the trading day after each of the following events:
• announcement to ASX of the Company’s full or half-year results;
• Annual General Meeting; or
• release of a disclosure document offering equity securities in the Company.
The Board may suspend all dealings in the Company’s securities at any time, should it be appropriate.
Securities Holding Policy
The Board currently sees a securities holding policy as unnecessary since executives receive a significant
component of remuneration in the form of equity. All of the Directors hold equity in the Company voluntarily.
The Company’s constitution states that Directors are not required to be a shareholder in order to be
appointed as a director. The Board continues to encourage executives to hold vested LTIs post vesting, to
support ongoing alignment.
Remuneration consultant engagement policy
The Company has adopted a remuneration consultant (RC) engagement policy which is intended to
manage the interactions between the Company and RCs. This is to support the independence of the
Remuneration and Nomination Committee and provide clarity regarding the extent of any interactions
between management and the RC. This policy enables the Board to state with confidence whether the
advice received has been independent, and why that view is held. The Policy states that RCs are to be
approved and engaged by the Board before any advice is received, and that such advice may only be
provided to an independent Non-executive Director. Any interactions between management and the RC
must be approved and overseen by the Remuneration and Nomination Committee.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
33 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 45
Directors'
report
DIRECTORS' REPORT (CONTINUED)
Remuneration report (continued)
Other remuneration related matters
There were no loans to Directors or other KMP at any time during the reporting period, and no relevant
material transactions involving KMP other than compensation and transactions concerning shares and
performance rights as discussed in this report.
Most recent AGM – Remuneration Report comments and voting
At the most recent AGM in 2020: 98.29% of votes cast at the meeting in favour of the adoption of the
Remuneration Report.
External remuneration consultant advice
During the reporting period, the Board approved and engaged an external remuneration consultant to
provide KMP remuneration recommendations and advice. The consultants and the amount payable for the
information and work that led to their recommendations are listed below:
Egan & Associates
Review of and advice on remuneration practices evident in the market for
key management personnel and non-executive directors
$16,000 (ex GST
and administration
fees)
So as to ensure that KMP remuneration recommendations were free from undue influence from the KMP to
whom they relate, the Company established policies and procedures governing engagements with external
remuneration consultants. The key aspects include:
• as legally required, KMP remuneration recommendations may only be received from consultants who
have been approved by the Board. Before such approval is given and before each engagement the
Board ensures that the consultant is independent of KMP;
• as required by law, KMP remuneration recommendations are only received by non-executive directors,
mainly, the Chair of the Remuneration and Nomination Committee;
• the policy seeks to ensure that the Board controls any engagement by management of Board approved
remuneration consultants to provide advice other than KMP remuneration recommendations and any
interactions between management and external remuneration consultants when undertaking work
leading to KMP remuneration recommendations.
The Board is satisfied that the KMP remuneration recommendations received were free from undue influence
from KMP to whom the recommendations related. The reasons the Board is satisfied include that it is confident
that the policy for engaging external remuneration consultants is being adhered to and operating as
intended. The Board has been closely involved in all dealings with the external remuneration consultants and
each KMP remuneration recommendation received during the reporting period was accompanied by a legal
declaration from the consultant to the effect that their advice was provided free from undue influence from
the KMP to whom the recommendations related.
Indemnification and insurance of officers
The Company’s Constitution provides that it must in the case of a person who is or has been a Director or
Secretary of the Group and may in the case of an officer of the Company, indemnify them against liabilities
incurred (whilst acting as such officers) and the legal costs of that person to the extent permitted by law.
During the period, the Company has entered into a Deed of Indemnity, Insurance and Access with each of
the Company’s Directors, executives and Company Secretary.
No Director or officer of the Company has received benefits under an indemnity from the Company during or
since the end of the period.
The Company has paid a premium for insurance for officers of the Group. The cover provided by the
insurance contract is customary for this type of insurance policy. Details of the nature of the liabilities covered
or the amount of the premium paid in respect of this insurance contract are not disclosed as such disclosure is
prohibited under the insurance contract.
46 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
34 of 116
DIRECTORS' REPORT (CONTINUED)
Proceedings on behalf of the company
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under
section 237 of the Corporations Act 2001.
Non-audit services
During the period, the Company’s Auditor (PricewaterhouseCoopers) performed other services in addition to
its audit responsibilities. Whilst their main role is to provide audit services to the Company, the Company does
employ their specialist advice where appropriate.
The board of Directors has considered the position and, in accordance with advice received from the audit
committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision
of non-audit services by the auditor, as set out below, did not compromise the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit and Risk committee to ensure they do not impact
the impartiality and objectivity of the auditor, and
• none of the services undermine the general principles relating to auditor independence, including not
reviewing or auditing the auditor’s own work, not acting in a management or a decision making
capacity for the Company, not acting as advocate for the Company, or not jointly sharing economic risk
or rewards.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
35 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 47
Directors'
report
DIRECTORS' REPORT (CONTINUED)
Non-audit services (continued)
During the period the following fees were paid or payable for non-audit services provided by the auditor of
the parent entity, its related practices and non-related audit firms:
AUDIT AND OTHER ASSURANCE SERVICES
Audit services:
PricewaterhouseCoopers Australian Firm
Audit and review of financial reports and other audit work under the
Corporations Act 2001
Audit and review of financial reports and other audit work for foreign subsidiary
Network firm of PricewaterhouseCoopers
Audit and review of financial reports and other audit work for foreign subsidiary
Other assurance services:
PricewaterhouseCoopers Australian firm
Store sales certificates
Agreed upon procedures for covenant calculations
Network firm of PricewaterhouseCoopers
Government subsidy audit
Whole Dollars
2021
$
2020
$
579,747
42,432
518,434
40,800
506,824
1,129,003
541,638
1,100,872
29,478
7,650
129,620
166,748
12,240
23,460
-
35,700
Total remuneration for assurance services
1,295,751
1,136,572
TAXATION SERVICES
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of tax returns and allowance claims
International tax consulting
Network firm of PricewaterhouseCoopers
Tax compliance services, including review of company tax returns
Total remuneration for taxation services
58,160
-
56,675
114,835
57,000
6,324
5,665
68,989
OTHER SERVICES
PricewaterhouseCoopers Australian firm
Acquisition related due diligence
Total remuneration for other services
276,787
276,787
-
-
TOTAL REMUNERATION FOR SERVICES
1,687,373
1,205,561
It is the Group’s policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit
duties where PricewaterhouseCoopers’ expertise and experience with the Group are important. These
assignments are principally tax advice, due diligence reporting on acquisitions and capital raisings, or where
PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Company’s policy to seek
competitive tenders for all major consulting projects.
48 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
36 of 116
DIRECTORS' REPORT (CONTINUED)
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act
2001 is set out on page 50.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to the 'rounding off' of
amounts in the Directors' Report. Amounts in the Directors' Report have been rounded off in accordance with
the instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar.
AUDITOR
PricewaterhouseCoopers continues in office in accordance with section 327 of the Corporations Act 2001. This
report is made in accordance with a resolution of Directors.
Robert Kaye SC
Chairman
Brisbane
29 June 2021
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 49
Auditor’s Independence Declaration
As lead auditor for the audit of Collins Foods Limited for the period 4 May 2020 to 2 May 2021, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
Auditor’s Independence Declaration
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Collins Foods Limited and the entities it controlled during the period.
As lead auditor for the audit of Collins Foods Limited for the period 4 May 2020 to 2 May 2021, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Collins Foods Limited and the entities it controlled during the period.
Michael Crowe
Partner
PricewaterhouseCoopers
Michael Crowe
Partner
PricewaterhouseCoopers
Brisbane
29 June 2021
Brisbane
29 June 2021
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
50 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
CONSOLIDATED
INCOME STATEMENT
CONSOLIDATED INCOME STATEMENT
For the reporting period ended 2 May 2021
Revenue
Cost of sales
Gross profit
Notes
2021(1)
$'000
A3
1,065,905
(505,996)
559,909
Restated
2020(1)(2)
$'000
948,088
(447,896)
500,192
Selling, marketing and royalty expenses
(228,164)
(201,609)
Occupancy expenses
Restaurant related expenses
Administrative expenses
Other expenses
Other income
Profit from continuing operations before finance income, finance costs
and income tax (EBIT)
Finance income
Finance costs
Share of net profit of associates and joint ventures accounted for using
the equity method
Profit from continuing operations before income tax
Income tax expense
Profit from continuing operations
Loss from discontinued operation (attributable to equity holders of the
Company)
Net profit attributable to members of Collins Foods Limited
(1)
The current reporting period is a 52-week period. The prior reporting period is a 53-week period.
(2) Comparative figures have been restated to present the impacts of the current period discontinued operations (as outlined in Note F).
Earnings per share attributable to members of Collins Foods Limited
Basic earnings per share from continuing operations (cents)
Basic earnings per share from discontinued operations (cents)
Diluted earnings per share from continuing operations (cents)
Diluted earnings per share from discontinued operations (cents)
A4
A4
E1
G10
F2
G2
G2
G2
G2
(77,158)
(90,083)
(63,339)
(11,306)
727
(72,931)
(82,058)
(53,228)
(7,656)
3,935
90,586
86,645
-
271
(29,391)
(32,209)
50
61,245
200
54,907
(23,633)
37,612
(22,716)
32,191
(4,663)
32,949
(928)
31,263
Cents
per share
Cents
per share
32.26
(4.00)
32.11
(3.98)
27.61
(0.79)
27.42
(0.79)
Shares
Shares
Weighted average basic ordinary shares outstanding
Weighted average diluted ordinary shares outstanding
G2
G2
116,581,244
116,569,052
117,141,933
117,407,285
The above Consolidated Income Statement should be read in conjunction with the accompanying Notes.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 51
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the reporting period ended 2 May 2021
Net profit attributable to members of Collins Foods Limited
Items that may be reclassified to profit or loss
Other comprehensive income / (expense):
Exchange differences on translation of foreign operations
Cash flow hedges
Income tax relating to components of other comprehensive income
Blank
Other comprehensive income/(expense) for the period, net of tax
Notes
2021
$'000
2020
$'000
32,949
31,263
G9
G9
G10
(5,891)
1,940
(582)
4,963
(1,327)
398
(4,533)
4,034
Total comprehensive income for the reporting period
28,416
35,297
Total comprehensive income for the period is attributable to:
Owners of the parent
28,416
35,297
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the
accompanying Notes.
52 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
40 of 116
CONSOLIDATED
balance Sheet
CONSOLIDATED BALANCE SHEET
As at 2 May 2021
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Deferred tax assets
Investments accounted for using the equity method
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Derivative financial instruments
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Deferred tax liabilities
Derivative financial instruments
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Total equity
Notes
2021
$'000
2020
$'000
B1
G3
G4
G5
G6
G10
G7
G6
C3
G8
B2
G6
G10
C3
G8
D3
G9
95,717
2,786
7,171
5,162
110,836
188,919
451,063
359,100
41,129
2,402
356
1,042,969
116,297
3,071
6,846
2,986
129,200
187,469
457,389
369,404
36,535
2,353
378
1,053,528
1,153,805
1,182,728
96,895
31,654
7,084
1,536
6,231
143,400
271,490
363,601
4,580
819
6,976
647,466
790,866
88,099
28,890
6,994
2,641
6,449
133,073
317,252
360,970
5,626
1,803
6,200
691,851
824,924
362,939
357,804
290,788
10,756
61,395
362,939
290,788
14,088
52,928
357,804
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 53
CONSOLIDATED STATEMENT
OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS
For the reporting period ended 2 May 2021
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Goods and services taxes (GST) paid
Interest received
Interest and other borrowing costs paid
Income tax paid
Net operating cash flows
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment
Payments for intangible assets
Net investing cash flows
Cash flows from financing activities
Refinance fees paid
Proceeds from borrowings - bank loan facilities
Repayment of borrowings and other obligations
Payments for lease principal
Interest paid on leases
Dividends paid
Net financing cash flows
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the reporting period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of reporting period
Notes(1)
2021
$'000
2020
$'000
1,174,773
(933,159)
(58,061)
1
(8,337)
(27,179)
148,038
1,078,142
(846,000)
(51,912)
312
(10,414)
(20,809)
149,319
(3,943)
(41,883)
267
(5,359)
(50,918)
-
4,673
(42,000)
(31,222)
(19,449)
(24,482)
(112,480)
(15,360)
116,297
(5,220)
95,717
-
(53,981)
479
(3,833)
(57,335)
(1,104)
21,219
-
(32,031)
(20,872)
(23,316)
(56,104)
35,880
79,791
626
116,297
B1
A2
B2
G6
G6
B4
B1
(1) Cash flows from the discontinued Sizzler Australia business are included above- refer to note F for separate breakdown of
cash flows relating to the discontinued operation.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying
Notes.
54 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
42 of 116
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the reporting period ended 2 May 2021
2021
Contributed
equity
$'000
Reserves
$'000
Retained
earnings
$'000
Total equity
$'000
Notes
Balance as at 3 May 2020
290,788
14,088
52,928
357,804
Profit for the reporting period
Other comprehensive income
Total comprehensive income for the reporting
period
Transactions with owners in their capacity as
owners:
Share based payments
Dividends provided for or paid
B4
Performance rights vested
End of the reporting period
-
-
-
-
-
-
-
32,949
(4,533)
-
32,949
(4,533)
(4,533)
32,949
28,416
1,201
-
1,201
-
-
(24,482)
(24,482)
-
-
290,788
10,756
61,395
362,939
2020
Notes
$'000
$'000
$'000
$'000
Balance as at 28 April 2019 as originally presented
Change in accounting policy (AASB 16)
Restated total equity at 29 April 2019
290,495
-
290,495
10,771
-
10,771
49,365
(4,384)
44,981
350,631
(4,384)
346,247
Profit for the reporting period
Other comprehensive income
Total comprehensive income for the reporting
period
Transactions with owners in their capacity as
owners:
Share based payments
Dividends provided for or paid
B4
-
-
-
-
-
-
31,263
4,034
-
31,263
4,034
4,034
31,263
35,297
(424)
-
(424)
-
(23,316)
(23,316)
Performance rights vested
End of the reporting period
293
(293)
-
-
290,788
14,088
52,928
357,804
The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying Notes.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 55
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A/ FINANCIAL OVERVIEW
This section provides information that is most relevant to explaining the Group’s performance during the
reporting period, and where relevant, the accounting policies that have been applied and significant
estimates and judgements made.
Note the current reporting period is a 52-week period. The prior reporting period is a 53-week period.
Comparative figures have been restated to present the impacts of the current period discontinued operations
(as outlined in Note F).
A1/ Segment information
A2/ Business combination
A3/ Revenue
A4/ Material profit or loss items from continuing operations
A1/ Segment information
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources and
assessing the performance of the operating segments, has been identified as the CEO.
DESCRIPTION OF SEGMENTS
Management has determined the operating segments based on the reports reviewed by the CEO that are
used to make strategic decisions. In the 2021 reporting period, the decision was made to report Taco Bell
Restaurants as a separate reportable segment as a result of the increase in relative size of its operations during
the year. Hence three reportable segments have been identified: KFC Restaurants Australia, KFC Restaurants
Europe and Taco Bell Restaurants, all competing in the quick service restaurant market.
Other includes Shared Services which performs a number of administrative and management functions for the
Group’s restaurants, as well as the operating segment of Sizzler Asia Restaurants. This segment is not separately
reportable due to its relative size in both the current and prior reporting periods.
56 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
44 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A1/ Segment information (continued)
SEGMENT INFORMATION PROVIDED TO THE CEO
The following is an analysis of the revenue and results by reportable operating segment for the periods under
review:
2021
Total segment revenue
Underlying EBITDA (2)
Depreciation, amortisation and
impairment (3)
Finance costs - net
Income tax expense
KFC
Restaurants
Australia
$'000
KFC
Restaurants
Europe
$'000
Taco Bell
Restaurants
$'000
900,411
198,531
134,907
11,955
58,718
-
-
(900,411)
22,226
527
-
(134,907)
28,039
233
9,348
-
-
(28,039)
Other (1)
$'000
Total
$'000
2,548
1,065,905
(24,589)
186,130
3,295
28,864
23,633
(2,548)
93,587
29,391
23,633
(1,065,905)
2020 Restated (4)
$'000
$'000
$'000
$'000
$'000
Total segment revenue
Underlying EBITDA (2)
Depreciation, amortisation and
impairment (3)
Finance costs - net
Income tax expense
791,496
168,751
55,694
-
134,112
19,406
26,710
209
17,813
(1,491)
4,667
(14,768)
948,088
171,898
2,640
-
3,444
31,729
88,488
31,938
-
($791,496.00) ($134,112.00)
-
-
($17,813.00)
22,716
22,716
($4,667.00) ($948,088.00)
(1) Other includes: Shared Services and Sizzler Asia Restaurants.
(2) Refer below for a description and reconciliation of Underlying EBITDA
(3) Refer below for a reconciliation of total depreciation, amortisation, and impairment of the Group. Refer to note G4 and G5 for information on impairment per asset class, per segment for the
reporting period.
(4) Comparative figures have been restated to exclude Sizzler Australia which was discontinued during the 2021 reporting period. Additionally, a decision was made during the current reporting
period to include the impact of AASB 16 Leases in the measurement of Underlying EBITDA. The 2020 Underlying EBITDA has been restated accordingly for comparability purposes.
LOCATION OF REVENUE AND NON-CURRENT ASSETS
2021
Revenue
Non-current assets (property, plant and equipment,
intangibles, and right-of-use assets)
2020 Restated (5)
Revenue
Australia
$'000
Europe
$'000
Asia
$'000
Total
$'000
928,450
134,907
2,548
1,065,905
815,705
173,710
Australia
$'000
Europe
$'000
9,666
Asia
$'000
999,082
Total
$'000
809,310
134,112
4,666
948,088
Non-current assets (property, plant and equipment,
intangibles, and right-of-use assets)
808,141
193,417
12,704
1,014,262
(5) Revenue comparative figures have been restated to exclude Sizzler Australia which was discontinued during the 2021 reporting period.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 57
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A1/ Segment information (continued)
OTHER SEGMENT INFORMATION
SEGMENT REVENUE FROM CONTINUING OPERATIONS
There are no sales between segments. The revenue from external parties reported to the Board is measured in
a manner consistent with that in the Consolidated Income Statement.
Revenue from external customers is derived from the sale of food and beverage in KFC and Taco Bell
Restaurants, and franchise fees and royalties from Sizzler Asia Restaurants.
UNDERLYING EBITDA FROM CONTINUING OPERATIONS
The Board assesses the performance of the operating segments based on a measure of Underlying EBITDA.
This measurement basis excludes the effects of costs associated with acquisitions (refer to Note A2). It also
excludes impairment of property, plant, equipment, franchise rights, brand assets, goodwill and leases to the
extent they are isolated non-recurring events plus any other non-recurring items. Net finance costs (including
the impact of derivative financial instruments) 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.
In the 2021 reporting period, the decision was made to include the impact of AASB 16 Leases in the
measurement of Underlying EBITDA. The 2020 Underlying EBITDA has been restated accordingly for
comparability purposes.
A reconciliation of Underlying EBITDA to profit from continuing operations before income tax is provided as
follows:
Underlying EBITDA
Finance costs
Cost of acquisitions expensed
Depreciation
Amortisation
Impairment of property, plant and equipment
Impairment of intangible assets
Impairment of right-of-use assets
Share of net profit of joint venture accounted for using the equity method
Net income from insurance claim - material damage
Fair value gain on debt modification
Other non-trading income
Other one-off costs
Profit before income tax from continuing operations
2021
$'000
2020
$'000
186,130
(29,391)
(1,400)
(80,489)
(3,587)
(4,476)
(232)
(4,803)
50
-
-
-
(557)
61,245
171,898
(31,938)
-
(75,063)
(3,425)
(5,204)
(270)
(4,526)
200
1,604
770
861
-
54,907
58 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
46 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A1/ Segment information (continued)
DEPRECIATION, AMORTISATION AND IMPAIRMENT FROM CONTINUING OPERATIONS
The results regularly reviewed by the Board include the depreciation, amortisation and impairment expenses
of Property, Plant and Equipment and Intangible Assets.
A reconciliation of depreciation, amortisation and impairment to total depreciation, amortisation and
impairment of the Group is provided as follows:
Depreciation, amortisation and impairment (1)
Depreciation of right-of-use assets (1)
Impairment of right-of-use assets
Total depreciation, amortisation, and impairment
Notes
A4
2021
$'000
47,669
41,115
4,803
93,587
2020
$'000
45,514
38,448
4,526
88,488
(1) Excludes depreciation of property, plant and equipment of $352,000 (2020:$418,000) and depreciation and impairment of right-of-use assets of $548,000 (2020:$1,228,000) relating to Sizzler
Australia, which was discontinued during the 2021 reporting period.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 59
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2/ Business combination
CURRENT PERIOD
KFC RESTAURANTS (EUROPE) - SUMMARY OF ACQUISITION
On 1 February 2021, Collins Foods Netherlands Limited, a wholly owned subsidiary of Collins Foods Limited,
entered into a Share Purchase Agreement to acquire the following 3 KFC restaurants from MAAS Holding B.V.
located in the Netherlands, Europe:
MAAS KFC Amersfoort B.V.
MAAS KFC Utrecht B.V.
MAAS KFC Veenendaal B.V.
The primary reason for the acquisition was to expand the Group's European operations in the quick service
restaurant market.
Details of the purchase consideration, the net assets acquired and goodwill are as follows:
Purchase consideration:
Cash paid
$'000
4,378
The provisional fair values of the assets and liabilities of the business acquired as at the date of acquisition are
as follows:
Cash
Trade receivables
Inventories
Property, plant and equipment
Trade and other payables
Net identifiable assets acquired
Goodwill
Net assets acquired
Fair value
$'000
435
613
50
971
(1,493)
576
3,802
4,378
The goodwill is attributable to the workforce, synergies with other restaurants and access to an established
market with opportunities for future expansion.
Acquisition-related costs
The acquisition related costs have been recognised in the Group's Consolidated Income Statement (other
expenses) and in operating cash flows in the Consolidated Statement of Cash Flows (payments to suppliers
and employees).
60 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
48 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2/ Business combination (continued)
Purchase consideration - cash flow
Cash consideration
Less balances acquired
Outflow of cash - investing activities
As at
acquisition
date
$'000
4,378
(435)
3,943
The acquired business contributed revenues of $1.9 million and Underlying EBITDA of $0.1 million to the Group
for the period the stores were owned, up to 2 May 2021.
If the acquisition had occurred on 3 May 2020, the contribution to the consolidated revenue and
consolidated Underlying EBITDA for the reporting period ended 2 May 2021 would have been $7.5 million and
$0.5 million respectively.
Pre COVID-19, Underlying EBITDA for the acquired business for the 12 month period ending 31 December 2019
was $1.0 million.
PRIOR PERIOD
In the 2020 reporting period, there were no business combinations or adjustments to prior period business
combinations.
ACCOUNTING POLICY
The acquisition method of accounting is used to account for all business combinations regardless of whether
equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given, shares
issued, or liabilities incurred or assumed at the date of exchange. Where equity instruments are issued in an
acquisition, the value of the instruments is their published market price as at the date of exchange unless
other valuation methods provide a more reliable measure of fair value. 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 identifiable assets. Transaction costs arising on the issue of
equity instruments are recognised directly in equity. Transaction costs arising from business combinations 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, irrespective of the extent of any non-controlling
interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of
the subsidiary acquired, the difference is recognised directly in the Consolidated Income Statement, but only
after a reassessment of the identification and measurement of the net assets acquired.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are
discounted to their present value as at the date of exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an
independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial
liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 61
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A3/ Revenue
Revenue is recognised when performance obligations under relevant customer contracts are completed.
Performance obligations may be completed at a point in time or over time.
In the following table revenue is disaggregated by type and by timing of revenue recognition.
No single customer amounts to 10% or more of the consolidated entity’s total external revenue.
REVENUE TYPE
2021
Sale of goods
Franchise revenue
2020 Restated (1)
Sale of goods
Franchise revenue
TIMING OF REVENUE RECOGNITION
2021
At a point in time
Over time
2020 Restated (1)
At a point in time
Over time
KFC
Restaurants
Australia
$'000
KFC
Restaurants
Europe
$'000
Taco Bell
Restaurants
$'000
Other
$'000
Total
$'000
900,411
-
900,411
134,907
-
134,907
28,039
-
28,039
-
1,063,357
2,548
2,548
2,548
1,065,905
$'000
$'000
$'000
$'000
$'000
791,496
-
791,496
134,112
-
134,112
17,813
-
17,813
-
4,667
4,667
943,421
4,667
948,088
KFC
Restaurants
Australia
$'000
KFC
Restaurants
Europe
$'000
Taco Bell
Restaurants
$'000
900,411
-
900,411
134,907
-
134,907
28,039
-
28,039
Other
$'000
2,453
95
2,548
Total
$'000
1,065,810
95
1,065,905
$'000
$'000
$'000
$'000
$'000
791,496
-
791,496
134,112
-
134,112
17,813
-
17,813
4,552
115
4,667
947,973
115
948,088
(1) Comparative figures have been restated to separately disclose Taco Bell which is now its own reportable segment, and exclude Sizzler
Australia which was discontinued during the 2021 reporting period.
ACCOUNTING POLICY
Sale of Goods
The Group operates a number of quick service and casual dining restaurants. The revenue from the sale of
food and beverages from these restaurants is recognised when the Group sells a product to the customer.
Payment of the transaction price is due immediately when the customer purchases the food and beverages.
62 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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Financial Report - for the reporting period ended 2 May 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A3/ Revenue (continued)
Sale of Goods - Customer Loyalty Program
The Taco Bell brand within the Group operates a loyalty program where retail customers accumulate points
for purchases made, which entitle them to discounts on future purchases. Revenue from the award points is
recognised when the points are redeemed or when they expire 12 months after the initial sale.
A contract liability is recognised until the points are redeemed or expire.
Critical judgements in allocating the transaction price
The points provide a material right to customers that they would not receive without entering into a contract.
Therefore, the promise to provide points to the customer is a separate performance obligation. The
transaction price is allocated to the product and the points on a relative stand-alone selling price basis.
Management estimates the stand-alone selling price per point on the basis of the discount granted when the
points are redeemed and on the likelihood of redemption, which is based on industry knowledge given there
is insufficient historical experience to draw upon at this stage of the brand in Australia.
Franchise Revenue
The Sizzler segment of the Group is the franchisor of the Sizzler brand in Asia. Franchise agreements are
entered into where the Group allocates the right to external parties to use the Sizzler name and associated
intellectual property. These contracts run for a 20-year period, with a right to renewal for an additional 20
years.
Franchise agreements entitle the Group to two streams of revenue:
• franchise fees: revenue relating to franchise fees is recognised over time. The transaction price allocated
to these services is recognised as a contract liability at the time of the commencement of the contract
and is released on a straight-line basis over the period of the contract; and
• sales-based royalties: revenue relating to sales-based royalties is recognised as the subsequent sale
occurs.
Accounting for Costs to Fulfil a Contract
Costs that relate directly to a contract with customers, generate resources used in satisfying the contract and
are expected to be recovered are capitalised as costs to fulfil a contract. The asset is amortised at a pattern
consistent with the recognition of the associated revenue.
Other Income
Interest income is recognised on a time proportion basis using the effective interest method and traineeship
income is recognised as revenue when the right to receive payment has been established.
Financing Components
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.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 63
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A4/ Material profit or loss items from continuing operations
The Group has identified a number of items which are material due to the significance of their nature and/or
amount. These are listed separately here to provide a better understanding of the financial performance of
the Group.
Depreciation, amortisation and impairment
Depreciation
Property, plant and equipment
Right-of-use assets
Total depreciation
Amortisation
Intangible assets
Total amortisation
Impairment
Property, plant and equipment
Intangible assets
Right-of-use assets
Total impairment
Notes
2021
$'000
2020
$'000
39,374
41,115
80,489
3,587
3,587
4,476
232
4,803
9,511
36,615
38,448
75,063
3,425
3,425
5,204
270
4,526
10,000
G5
Total depreciation, amortisation and impairment
93,587
88,488
Finance income and costs
Finance income
Finance costs
Net finance costs
Employee benefits expense
Wages and salaries
Defined contribution superannuation expense
Employee entitlements
Total employee benefits expense
Inventories recognised as an expense
Net (income)/expense on insurance claim: material damage
Fair value gain on debt modification
Performance rights
Costs of acquisitions expensed
Net (recognition)/derecognition of tax losses and change in tax rates
Net loss on disposal of property, plant and equipment
-
29,391
29,391
(271)
32,209
31,938
269,973
22,975
14,638
307,586
342,796
-
-
1,201
1,400
(459)
362
242,832
20,632
14,248
277,712
306,553
(1,604)
(770)
(424)
-
2,286
168
64 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
52 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B/ Cash Management
Collins Foods Limited has a focus on maintaining a strong balance sheet with the strategy incorporating the
Group’s expenditure, growth and acquisition requirements, and the desire to return dividends to shareholders.
B1/ Cash and cash equivalents
B2/ Borrowings
B3/ Ratios
B4/ Dividends
B1/ Cash and cash equivalents
Cash at bank and in hand (1)
2021
$'000
2020
$'000
95,717
116,297
(1)
Included in cash at bank is an amount of $2.0 million (2020: $2.0 million) that is held under lien by the bank as security for Europe lease agreements and are therefore not available to use by the
Group.
Reconciliation of profit after income tax to net cash inflow from operating activities
Profit for the period
Notes
2021
$'000
2020
$'000
32,949
31,263
Adjustments for non-cash income and expense items:
Depreciation, amortisation and impairment (excluding the impact of
AASB 16) (1)
Depreciation and impairment of right-of-use assets (1)
Franchise rights written off
(Gain) / loss on disposal of property, plant and equipment
(Gain) / loss on disposal of right-of-use assets
Fair value (gain) / loss on debt modification
Amortisation of borrowing costs
Non-cash employee benefits expense share based payments expense
Interest paid on leases classified as financing cash flows
Provision for inventory write offs
Provision for make good obligations
Provision for employee entitlements
A1
A1
G5
A4
Changes in assets and liabilities:
Receivables
Inventory
Prepayments and other assets
Share of profits of joint venture
Trade payables and accruals
Income tax payable
Deferred tax balances
Goods and services tax payable
Fringe benefits tax payable
Net operating cash flows
48,021
46,466
1,327
465
(193)
-
587
1,201
20,850
-
(381)
278
(98)
(273)
(655)
(50)
4,093
95
(5,169)
(1,787)
312
148,038
45,932
44,202
409
774
39
(770)
641
(424)
20,872
(30)
224
590
112
(494)
(1,318)
(200)
5,937
2,593
(1,667)
594
40
149,319
(1) Includes depreciation of property, plant and equipment of $352,000 (2020:$418,000) and depreciation and impairment of right-of-use assets of $548,000 (2020:$1,228,000)
relating to Sizzler Australia, which was discontinued during the 2021 reporting period.
Collins Foods Limited ACN 151 420 781 I
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 65
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B1/ Cash and cash equivalents (continued)
ACCOUNTING POLICY
For the purposes of the Consolidated Statement of Cash Flows, cash includes cash on hand, at call deposits
with banks or financial institutions, and other short-term, highly liquid investments in money market instruments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
B2/ Borrowings
AVAILABLE FINANCING FACILITIES
2021
2020
Working
Capital
Facility
$'000
10,190
25,386
35,576
Bank Loan
Facility
$'000
263,794
90,240
354,034
Working
Capital
Facility
$'000
10,859
26,116
36,975
Bank Loan
Facility
$'000
309,304
54,521
363,825
Used (1)
Unused
Total
(1) $845,000 (2020: $674,000) of the working capital facility has been used for bank guarantees rather than drawn down cash funding.
A subsidiary of the Company, CFG Finance Pty Limited, is the primary borrower under a Syndicated Facility
Agreement (Syndicated Facility) and a Working Capital Facility Agreement (Working Capital Facility). On 26
September 2019, the Group entered into a new Syndicated Facility Agreement for $265 million and €80 million,
including working capital facilities. The new term of the facility is a blend of maturities with $180 million and €50
million expiring on 31 October 2022 and the remaining $85 million and €30 million expiring on 31 October 2024.
Facilities
The Syndicated Facility and Working Capital Facility are subject to certain financial covenants and restrictions
such as net leverage ratios, interest coverage ratios and others which management believe are customary for
these types of loans. During the reporting period ended 2 May 2021, the Group maintained compliance with
the financial covenants and restrictions of these facilities. The Company and its subsidiaries (other than
subsidiaries outside of the Closed Group) were registered guarantors of all the obligations in respect of these
loan facilities.
Borrowings Reconciliation
This section sets out the movements in borrowings for each of the periods presented.
Beginning of the reporting period
Cash flows
Foreign exchange adjustments
End of the reporting period
For further information on the Group's borrowings refer to notes C1 and C2.
2021
$'000
2020
$'000
319,489
(37,327)
(9,022)
273,140
292,261
21,219
6,009
319,489
66 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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Financial Report - for the reporting period ended 2 May 2021
54 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B2/ Borrowings (continued)
ACCOUNTING POLICY
Bank loans are initially recognised 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 amount is recognised in the Consolidated Income Statement over the period of the borrowings
using the effective interest method. Fees paid on the establishment of loan facilities, which are not transaction
costs relating to the actual draw-down of the facility, are capitalised and amortised on a straight-line basis
over the term of the facility.
Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time
that is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are
expensed.
B3/ Ratios
CAPITAL MANAGEMENT
The Group manages its capital by maintaining a strong capital base. The Group assesses its capital base by
reference to its gearing ratio, which it defines as net debt divided by total capital. Net debt is calculated as
borrowings (excluding capitalised fees and lease liabilities) less cash and cash equivalents. Total capital is
calculated as total equity as shown in the balance sheet plus net debt. At balance date, the gearing ratio
was 33% (2020: 36%).
NET DEBT
General cash at bank and on hand
Borrowings
Net debt
NET LEVERAGE
Net debt
EBITDA per Syndicated Facility Agreement
Net leverage
Notes
2021
$'000
2020
$'000
95,717
(273,140)
(177,423)
116,297
(319,489)
(203,192)
2021
$'000
2020
$'000
(177,423)
(203,192)
133,172
120,562
1.33
1.69
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 67
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B4/ Dividends
DIVIDENDS
2021
$'000
2020
$'000
Dividends paid of $0.21 (2020: $0.20) per fully paid share
24,482
23,316
FRANKING CREDITS
2021
$'000
2020
$'000
Franking credits available for subsequent reporting periods based on a tax rate
of 30.0% (2020: 30.0%)
122,971
105,751
The above amounts are calculated from the balance of the franking account as at the end of the reporting
period, adjusted for:
• franking credits that will arise from the payment of income tax payable as at the end of the reporting
period;
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
and
• franking credits that may be prevented from being distributed in the subsequent reporting period.
The consolidated amounts include franking credits that would be available to the parent entity if distributable
profits of subsidiaries were paid as dividends.
Since the end of the reporting period, the Directors of the Company have declared the payment of a fully
franked final dividend of 12.50 cents per ordinary share (2020: 10.5 cents) to be paid on 22 July 2021. The
aggregate amount of the dividend to be paid on that date, but not recognised as a liability at the end of the
reporting period is $14,572,656 (2020: $12,241,031).
ACCOUNTING POLICY
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at
the discretion of the Company, on or before the end of the reporting period but not distributed at balance
date.
68 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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Financial Report - for the reporting period ended 2 May 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C/ Financial Risk Management
This section provides information relating to the Group’s exposure to financial risks, how they affect the
financial position and performance, and how the risks are managed.
C1/ Financial risk management
C2/ Recognised fair value measurements
C3/ Derivative financial instruments
C1/ Financial risk management
The Board of Directors has delegated specific authorities to the central finance department in relation to
financial risk management. The finance department identifies, evaluates and hedges financial risks in close
co-operation with the Group’s operating units. The Board has provided written policies covering the
management of interest rate risk and the use of derivative financial instruments. All significant decisions
relating to financial risk management require specific approval by the Board of Directors.
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest risk and
price risk), credit risk and liquidity risk. In addition, the Group manages its capital base. The Group's overall risk
management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the financial performance of the Group. The Group’s activities expose it primarily to the
financial risk of changes in interest rates and it utilises Swap Contracts to manage its interest rate risk exposure.
The use of financial instruments is governed by the Group’s policies approved by the Board of Directors and
are not entered into for speculative purposes.
MARKET RISK
Foreign Currency Risk
During 2021 and 2020, the financial instruments of the Group and the parent entity were denominated in
Australian dollars apart from certain bank accounts, trade receivables and trade payables in respect of the
Group’s Asian operations and European operations which were denominated in foreign currencies at the
Group level. In respect of its European operations the Group aims to reduce balance sheet translation
exposure by borrowing in the currency of its assets (Euro €) as far as practical (disclosed in Note B2).
Management has decided not to hedge the foreign currency risk exposure for Asia. The Group’s exposure to
foreign currency risk is disclosed in the tables below.
Hedge of net investment in foreign entity
As at 25 August 2017, €48.3 million of the Euro denominated loan of €48.5 million was designated as the
hedging instrument of a net investment hedge for the foreign currency risk exposure of €48.3 million of the
Euro equity invested in Collins Foods Europe Limited (and subsidiaries). As at inception, this hedge was
considered to be completely effective.
Cash flow and Interest Rate Risk
The Group’s main interest rate risk arises from long term borrowings. Borrowings issued at variable rates expose
the Group to cash flow interest rate risk while borrowings issued at fixed rates expose the Group to fair value
interest rate risk.
It is the policy of the Group to protect a designated portion of the loans from exposure to increasing interest
rates. Accordingly, the Group has entered into interest rate swap contracts (Swap Contracts) under which it is
obliged to receive interest at variable rates and to pay interest at fixed rates.
Information about the Group's variable rate borrowings, outstanding Swap Contracts and an analysis of
maturities at the reporting date is disclosed in Notes C1 and C3.
Price Risk
The Group manages commodity price risk by forward contracting prices on key commodities and by being
actively involved in relevant supply co-operatives.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 69
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C1/ Financial risk management (continued)
CREDIT RISK
Credit risk arises from cash and cash equivalents, derivative financial instruments, deposits with banks, other
trade receivables and receivables from related parties. The Group has adopted a policy of only dealing with
creditworthy counterparties and in the situation of no independent rating being available, will assess the
credit quality of the customer taking into account its financial position, past experience and other factors.
Trade receivables consist of a small number of customers and ongoing review of outstanding balances is
conducted on a periodic basis. The balance outstanding (disclosed in Note G3) is not past due, nor impaired
(2020: nil past due). The credit risk on liquid funds and derivative financial instruments is limited as the
counterparties are banks with high credit ratings assigned by international credit rating agencies.
Related party transactions are conducted on commercial terms and conditions. Recoverability of these
transactions are assessed on an ongoing basis.
Credit risk further arises in relation to financial guarantees given to certain parties (refer to Notes B2 and H1 for
details).
LIQUIDITY RISK
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve banking
facilities by continuously monitoring forecast and actual cash flows. This approach enables the Group to
manage short, medium and long term funding and liquidity management as reported in Note B2. Non-interest
bearing liabilities are due within six months. For maturities of interest bearing liabilities and Swap Contracts of
the Group, refer to Notes C1 and C3.
Maturities of financial liabilities
The tables below analyse the Group's financial liabilities into relevant maturity groupings based on their
contractual maturities for:
• all non-derivative financial liabilities; and
• net and gross settled derivative financial instruments for which the contractual maturities are essential for
an understanding of the timing of the cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12
months equal their carrying balances as the impact of discounting is not significant. For Swap Contracts the
cash flows have been estimated using forward interest rates applicable at the end of each reporting period.
70 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
58 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C1/ Financial risk management (continued)
2021
Non-derivatives
Trade payables
Borrowings (excluding finance leases)
Total non-derivatives
Derivatives
Net settled (Swap Contracts)
2020
Non-derivatives
Trade payables
Borrowings (excluding finance leases)
Total non-derivatives
Derivatives
Net settled (Swap Contracts)
Less than
1 year
$'000
Between
1 and 2
years
$'000
Between
2 and 5
years
$'000
Total
contractual
cash flows
$'000
Carrying
amount
(assets)/
liabilities
$'000
96,895
5,973
102,868
-
-
96,895
96,895
206,170
206,170
64,145
64,145
276,288
373,183
271,490
368,385
Note
G7
B2
C3
1,541
822
-
2,363
2,355
Note
$'000
$'000
$'000
$'000
$'000
G7
B2
88,099
11,184
99,283
-
-
88,099
88,099
12,879
12,879
319,746
319,746
343,809
431,908
317,252
405,351
C3
2,674
1,240
623
4,537
4,444
INTEREST RATE RISK AND FOREIGN CURRENCY RISK
The following table summarises the sensitivity of the Group’s financial assets and financial liabilities to interest
rate risk and foreign currency risk only, as the Group is not exposed to other market risks:
Interest rate risk
Foreign currency risk
2021
Financial assets
Financial liabilities
Total increase/
(decrease)
-1%
+1%
-1%
+1%
Carrying
amount
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
98,503
(670)
-
670
-
377,824
671
(1,846)
(671)
1,846
283
(325)
-
958
(283)
325
-
(958)
1
(1,846)
(1)
1,846
(42)
958
42
(958)
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
59 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 71
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C1/ Financial risk management (continued)
Interest rate risk
Foreign currency risk
-1%
+1%
-10%
+10%
Carrying
amount
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
Profit
$'000
Equity
$'000
119,368
416,789
(814)
-
814
-
989
(3,020)
(989)
3,020
403
(239)
-
993
(403)
239
-
(993)
175
(3,020)
(175)
3,020
164
993
(164)
(993)
2020
Financial assets
Financial liabilities
Total increase/
(decrease)
Interest Rate Risk Exposures - Non-Current Liabilities
The following table summarises interest rate risk for the Group, together with effective interest rates as at the
end of the reporting period.
Floating
interest rate
$'000
Fixed interest
maturing in: 5
years or less
$'000
Non-interest
bearing
$'000
Notes
Weighted
average
effective rate
%
Total
$000
2021
Trade and other payables
Borrowings - unhedged
Borrowings - hedged (1)
G7
B2
B2
-
95,794
-
95,794
-
-
168,000
168,000
96,895
-
-
96,895
96,895
95,794
168,000
360,689
-
1.3
1.0
2.3
Notes
$'000
$'000
$'000
$000
%
2020
Trade and other payables
Borrowings - unhedged
Borrowings - hedged (1)
G7
B2
B2
-
141,304
-
141,304
-
-
168,000
168,000
88,099
-
-
88,099
88,099
141,304
168,000
397,403
-
2.4
1.0
3.4
(1) Refer Note C3 for details of derivative financial instruments
Interest Rate Risk Exposures - Current Asset Receivables
The Group’s exposure to interest rate risk and the average interest rate by maturity period is set out in the
following table:
Trade and other receivables (non-interest bearing)
CREDIT RISK
2021
$'000
2020
$'000
2,786
3,071
There is no concentration of credit risk with respect to external current and non-current receivables.
72 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
60 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C2/ Recognised fair value measurements
FAIR VALUE HIERARCHY
Judgements and estimates are made in determining the fair values of assets and liabilities that are recognised
and measured at fair value in the financial statements. To provide an indication about the reliability of the
inputs used in determining fair value, the Group has classified such assets and liabilities into the three levels
prescribed under the accounting standards.
Financial instruments that are measured subsequent to initial recognition at fair value are grouped into Levels
1 to 3, based on the degree to which the fair value is observable. The different levels have been identified as
follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices); and
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable
inputs).
The Directors consider that the carrying amount of financial assets and financial liabilities recorded in the
financial statements approximate their fair values.
As at 2 May 2021, the Group has derivative financial instruments which are classified as Level 2 financial
instruments. There are no Level 1 or Level 3 financial instruments. As at 3 May 2020, the Group had Level 2
financial instruments. There were no Level 1 or Level 3 financial instruments.
LEVEL 2 FINANCIAL INSTRUMENTS
The fair values of derivative instruments are determined as the estimated amount that the Group and the
Company would receive or pay to terminate the interest rate swap at the end of the reporting period, taking
into account the current interest rate.
VALUATION PROCESS
The finance department of the Group engages a third party expert valuation firm to value the derivative
financial instruments that are required to be measured, recognised and disclosed in the financial statements,
at fair value. This includes Level 2 fair values. The finance department reports directly to the Group CFO and
the Audit and Risk Committee (ARC). Discussions of valuation processes and results are held between the
Group CFO, ARC and the finance department at least once every six months, in line with the Group's half-year
reporting periods.
The main Level 2 inputs used by the Group are derived and evaluated as follows:
• discount rates for financial assets and financial liabilities are determined using a capital asset pricing
model to calculate a pre-tax rate that reflects current market assessments of the time value of money
and the risk specific to the asset.
Changes in Level 2 and Level 3 fair values are analysed at the end of each reporting period during the
half-year valuation discussion between the Group CFO, ARC and finance department. As part of this
discussion the finance department presents a report that explains the reason for the fair value movements.
DISCLOSED FAIR VALUES
The Group also has assets and liabilities which are not measured at fair value, but for which fair values are
disclosed in the notes to the financial statements.
RECEIVABLES
Due to the short term nature of the current receivables, their carrying amount is assumed to be the same as
their fair value. For the majority of non-current receivables, the fair values are not materially different to their
carrying amounts, since the interest on those receivables is close to current market rates.
TRADE AND OTHER PAYABLES
Due to the short term nature of the trade and other payables, their carrying amount is assumed to be the
same as their fair value.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 73
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C2/ Recognised fair value measurements (continued)
BORROWINGS
The fair value of borrowings is as follows:
2021
2020
Carrying
value
$'000
Fair
value
$'000
Discount
rate
%
Carrying
amount
$'000
Fair
value
$000
Discount
rate
%
Bank Loan (net of borrowing costs)
271,490
250,670
4.1
317,252
276,473
6.9
The fair value of non-current borrowings is based on discounted cash flows using the rate disclosed in the
table above. They are classified as Level 3 values in the fair value hierarchy due to the use of unobservable
inputs, including the credit risk of the Group.
ACCOUNTING POLICY
FINANCIAL ASSETS
Classification and Measurement
The Group classifies its financial assets into the following categories: those to be measured subsequently at fair
value (either through other comprehensive income or through the income statement) and those to be held at
amortised cost. Further detail on each classification is outlined below.
Classification depends on the business model for managing the financial assets and the contractual terms of
the cash flows. Management determines the classification of financial assets at initial recognition. The Group’s
policy with regard to financial risk management is set out in Note C1. Generally, the Group does not acquire
financial assets for the purpose of selling in the short term. The Group’s business model is primarily that of ‘hold
to collect’ (where assets are held in order to collect contractual cash flows). When the Group enters into
derivative contracts, these transactions are designed to reduce exposures relating to assets and liabilities, firm
commitments or anticipated transactions.
(A)
Financial Assets Held at Amortised Cost
This classification applies to debt instruments which are held under a hold to collect business model and which
have cash flows that meet the ‘Solely payments of principal and interest’ (SPPI) criteria.
At initial recognition, trade receivables that do not have a significant financing component, are recognised
at their transaction price. Other financial assets are initially recognised at fair value plus related transaction
costs; they are subsequently measured at amortised cost using the effective interest method. Any gain or loss
on de-recognition or modification of a financial asset held at amortised cost is recognised in the income
statement.
(B)
Financial Assets Held at Fair Value Through Other Comprehensive Income (FVOCI)
This classification applies to the following financial assets:
• Debt instruments that are held under a business model where they are held for the collection of
contractual cash flows and also for sale (‘Collect and sell’) and which have cash flows that meet the SPPI
criteria.
All movements in the fair value of these financial assets are taken through other comprehensive income,
except for the recognition of impairment gains or losses, interest revenue (including transaction costs by
applying the effective interest method), gains or losses arising on derecognition and foreign exchange gains
and losses which are recognised in the income statement. When the financial asset is derecognised, the
cumulative fair value gain or loss previously recognised in other comprehensive income is reclassified to the
income statement.
• Equity investments where the Group has irrevocably elected to present fair value gains and losses on
revaluation in other comprehensive income. The election can be made for each individual investment
however it is not applicable to equity investments held for trading.
74 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
62 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C2/ Recognised fair value measurements (continued)
Fair value gains or losses on revaluation of such equity investments, including any foreign exchange
component, are recognised in other comprehensive income. When the equity investment is derecognised,
there is no reclassification of fair value gains or losses previously recognised in other comprehensive income to
the income statement. Dividends are recognised in the income statement when the right to receive payment
is established.
(C)
Financial Assets Held at Fair Value Through Profit or Loss (FVPL)
This classification applies to the following financial assets, and in all cases, transactions costs are immediately
expensed to the income statement:
• Debt instruments that do not meet the criteria of amortised cost or fair value through other
comprehensive income.
Subsequent fair value gains or losses are taken to the income statement.
• Equity Investments which are held for trading or where the FVOCI election has not been applied.
All fair value gains or losses and related dividend income are recognised in the income statement.
• Derivatives which are not designated as a hedging instrument.
All subsequent fair value gains or losses are recognised in the income statement.
Impairment of Financial Assets
A forward looking expected credit loss (ECL) review is required for; debt instruments measured at amortised
cost or held at fair value through other comprehensive income; loan commitments and financial guarantees
not measured at fair value through profit or loss; lease receivables and trade receivables that give rise to an
unconditional right to consideration.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 75
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C3/ Derivative financial instruments
Current liabilities
Interest rate swap contracts - cash flow hedges
Non-current liabilities
Interest rate swap contracts - cash flow hedges
INSTRUMENTS USED BY THE GROUP
2021
$'000
1,536
819
2020
$'000
2,641
1,803
The Group is party to derivative financial instruments in the normal course of business in order to hedge
exposure to fluctuations in interest rates in accordance with the Group’s financial risk management policies.
INTEREST RATE SWAP CONTRACTS - CASH FLOW HEDGES
During the reporting period ended 2 May 2021, the following Swap Contracts commenced to hedge a
designated portion of the interest rate exposure of the facility:
• $75.0 million commenced on 31 October 2020, with a maturity date of 31 October 2022; and
• $65.0 million commenced on 31 October 2020, with a maturity date of 31 October 2022.
Swap Contracts currently in place cover approximately 100% (2020: 80%) of the Australian dollar denominated
loan principal outstanding and are timed to expire as each loan repayment falls due. The variable rates are
BBSY which at balance date was 0.06% (2020: 0.29%). The notional principal amounts, periods of expiry and
fixed interest rates applicable to the Swap Contracts are as follows:
Less than 1 year
1-2 years
2-3 years
2021
2020
Weighted
average
fixed interest
rate %
-
1.0
-
1.0
$'000
-
168,000
-
168,000
Weighted
average
fixed interest
rate %
2.4
-
1.0
3.4
$'000
140,000
-
168,000
308,000
The Swap Contracts require settlement of net interest receivable or payable each month. The settlement
dates coincide with the dates on which interest is payable on the underlying debt. The Swap Contracts are
settled on a net basis. The derivative financial instruments were designated as cash flow hedges at inception.
CREDIT RISK EXPOSURES
At 2 May 2021, the Swap Contracts gave rise to payables for unrealised losses on derivative instruments of
$2.35 million (2020: $4.4 million) for the Group. Management has undertaken these contracts with the Australia
and New Zealand Banking Group Limited and National Australia Bank Limited which are AA rated financial
institutions.
76 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
64 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C3/ Derivative financial instruments (continued)
ACCOUNTING POLICY
The Group enters into derivative financial instruments to manage its exposure to interest rate and foreign
exchange rate risks, including interest rate swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are
subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is
recognised in profit or loss immediately unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge
relationship.
HEDGE ACCOUNTING
The Group designates certain derivatives as hedging instruments in respect of foreign currency risk and
interest rate risk in fair value hedges, cash flow hedges, or hedges of net investments in foreign operations as
appropriate. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.
At the inception of the hedge relationship, the Group documents the relationship between the hedging
instrument and the hedged item, along with its risk management objectives and its strategy for undertaking
various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is effective in offsetting changes in fair values or cash flows of the
hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the hedge
effectiveness requirements prescribed in AASB 9.
If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but
the risk management objective for that designated hedging relationship remains the same, the Group adjusts
the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria
again.
CASH FLOW HEDGES
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that
are designated and qualify as cash flow hedges is recognised in other comprehensive income and
accumulated under the heading of cash flow hedging reserve, limited to the cumulative change in fair value
of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is
recognised immediately in profit or loss.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to
meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated
or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other
comprehensive income and accumulated in equity at that time remains in equity and is recognised when the
forecast transaction is ultimately recognised in profit or loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.
HEDGES OF NET INVESTMENTS IN FOREIGN OPERATIONS
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or
loss on the hedging instrument relating to the effective portion of the hedge is recognised in other
comprehensive income and accumulated under the heading of foreign currency translation reserve. The gain
or loss relating to the ineffective portion is recognised immediately in profit or loss.
Gains and losses on the hedging instrument relating to the effective portion of the hedge accumulated in the
foreign currency translation reserve are reclassified to profit or loss on the disposal or partial disposal of the
foreign operation.
Derivatives are only used for economic hedging purposes and not as speculative investments. However,
where derivatives do not meet the hedge accounting criteria, they are classified as ‘held for trading’ for
accounting purposes and are accounted for at fair value through profit or loss. They are presented as current
assets or liabilities to the extent they are expected to be settled within 12 months after the end of the reporting
period.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 77
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
D/ Reward and Recognition
These programs also result in changes to the Group’s contributed equity.
D1/ Key management personnel
D2/ Share based payments
D3/ Contributed equity
D1/ Key management personnel
KMP COMPENSATION
Short term employee benefits
Long term employee benefits(1)
Post employment benefits
Long term incentives
Termination benefit
Total KMP compensation
Whole Dollars
2021
$
2020
$
4,417,193
4,969,845
(100,324)
132,673
678,445
459,821
17,664
153,778
58,935
-
5,587,808
5,200,222
(1) Long term employee benefits are negative in the current period due to reversal of Graham Maxwell's Long Service Leave accrual
following his retirement on 1 July 2020.
Detailed remuneration disclosures are provided in the Remuneration Report included in the Directors' Report.
D2/ Share based payments
LONG TERM INCENTIVE PLAN - PERFORMANCE RIGHTS
The Company has a Long Term Incentive Plan (LTIP) designed to provide long term incentives for certain
employees, including executive directors. Under the plan, participants are granted performance rights over
shares. The number of performance rights is calculated by dividing the dollar value of the participant’s long
term incentive by the ASX volume weighted average price of the shares for the five trading days prior and five
trading days after the release of audited financial results.
Unless otherwise determined by the Board in its discretion, performance rights are issued for nil consideration.
The amount of performance rights that will vest depends upon the achievement of certain vesting conditions,
including the satisfaction of a minimum 12 month term of employment and the achievement of earnings per
share (EPS) growth targets by the Company. In the event of cessation of employment within 12 months of the
date of grant, unvested rights are forfeited. In the event of cessation of employment after 12 months but
before the conclusion of the vesting period, unvested rights are considered forfeited, unless otherwise
determined by the Board, in which case any service condition will be deemed to have been fulfilled as at the
testing date and subject to performance testing along with other participants. It is noted that the Board has
discretion to allow “Good Leavers” to retain their Participation in the LTI plan beyond the date of cessation of
employment when deemed appropriate to the circumstances. The EPS growth targets must be achieved over
a three year performance period. Performance rights will automatically vest on the business day after the
Board determines the vesting conditions have all been satisfied (Vesting Determination Date).
The performance rights will automatically exercise on the Vesting Determination Date unless that date occurs
outside a trading window permitted under the Company’s Securities Trading Policy, in which case the
performance rights will exercise upon the first day of the next trading window. Upon exercise of the
performance rights, the Company must issue or procure the transfer of one share for each performance right,
or alternatively may in its discretion elect to pay the cash equivalent value to the participant.
Performance rights will lapse on the first to occur of:
• the expiry date;
78 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
66 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
D/ Reward and Recognition
These programs also result in changes to the Group’s contributed equity.
D1/ Key management personnel
D2/ Share based payments
D3/ Contributed equity
D1/ Key management personnel
KMP COMPENSATION
Short term employee benefits
Long term employee benefits(1)
Post employment benefits
Long term incentives
Termination benefit
Total KMP compensation
Whole Dollars
2021
$
2020
$
4,417,193
4,969,845
(100,324)
132,673
678,445
459,821
17,664
153,778
58,935
-
5,587,808
5,200,222
(1) Long term employee benefits are negative in the current period due to reversal of Graham Maxwell's Long Service Leave accrual
following his retirement on 1 July 2020.
Detailed remuneration disclosures are provided in the Remuneration Report included in the Directors' Report.
D2/ Share based payments
LONG TERM INCENTIVE PLAN - PERFORMANCE RIGHTS
The Company has a Long Term Incentive Plan (LTIP) designed to provide long term incentives for certain
employees, including executive directors. Under the plan, participants are granted performance rights over
shares. The number of performance rights is calculated by dividing the dollar value of the participant’s long
term incentive by the ASX volume weighted average price of the shares for the five trading days prior and five
trading days after the release of audited financial results.
Unless otherwise determined by the Board in its discretion, performance rights are issued for nil consideration.
The amount of performance rights that will vest depends upon the achievement of certain vesting conditions,
including the satisfaction of a minimum 12 month term of employment and the achievement of earnings per
share (EPS) growth targets by the Company. In the event of cessation of employment within 12 months of the
date of grant, unvested rights are forfeited. In the event of cessation of employment after 12 months but
before the conclusion of the vesting period, unvested rights are considered forfeited, unless otherwise
determined by the Board, in which case any service condition will be deemed to have been fulfilled as at the
testing date and subject to performance testing along with other participants. It is noted that the Board has
discretion to allow “Good Leavers” to retain their Participation in the LTI plan beyond the date of cessation of
employment when deemed appropriate to the circumstances. The EPS growth targets must be achieved over
a three year performance period. Performance rights will automatically vest on the business day after the
Board determines the vesting conditions have all been satisfied (Vesting Determination Date).
The performance rights will automatically exercise on the Vesting Determination Date unless that date occurs
outside a trading window permitted under the Company’s Securities Trading Policy, in which case the
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
performance rights will exercise upon the first day of the next trading window. Upon exercise of the
performance rights, the Company must issue or procure the transfer of one share for each performance right,
D2/ Share based payments (continued)
or alternatively may in its discretion elect to pay the cash equivalent value to the participant.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Performance rights will lapse on the first to occur of:
• the vesting conditions not being satisfied by the Vesting Determination Date;
D2/ Share based payments (continued)
• the expiry date;
• unless the Board otherwise determines, by the cessation of the employment of the employee to whom
the offer of performance rights was made. The Board determination will depend upon the reason for
• the vesting conditions not being satisfied by the Vesting Determination Date;
employment ceasing (resignation, dismissal for cause, death or illness).
• unless the Board otherwise determines, by the cessation of the employment of the employee to whom
Collins Foods Limited ACN 151 420 781 I
Performance rights when issued under the LTIP are not entitled to receive a dividend and carry no voting
the offer of performance rights was made. The Board determination will depend upon the reason for
rights.
employment ceasing (resignation, dismissal for cause, death or illness).
Financial Report - for the reporting period ended 2 May 2021
66 of 116
Set out below are summaries of performance rights issued under the LTIP:
Performance rights when issued under the LTIP are not entitled to receive a dividend and carry no voting
rights.
Set out below are summaries of performance rights issued under the LTIP:
Balance at the beginning of the reporting period
Vested and exercised
Issued during the reporting period
Balance at the beginning of the reporting period
Lapsed during the reporting period
Vested and exercised
Balance at the end of the reporting period
Issued during the reporting period
Lapsed during the reporting period
2021
2020
2021
926,998
-
204,207
926,998
(477,950)
-
653,255
204,207
(477,950)
2020
830,290
(69,589)
267,536
830,290
(101,239)
(69,589)
926,998
267,536
(101,239)
653,255
Balance at the end of the reporting period
During the 2018 financial year, grants under the long term incentive plan were made with a performance
period of FY18, FY19 and FY20 (FY18 Grant). Based upon the EPS growth achieved over the three year
performance period (FY18-FY20), no vesting was achieved for FY18 Grants for the performance rights with a
During the 2018 financial year, grants under the long term incentive plan were made with a performance
performance period commencing 1 May 2017 and ended on 3 May 2020 (Vesting Rights). An additional
period of FY18, FY19 and FY20 (FY18 Grant). Based upon the EPS growth achieved over the three year
164,623 performance rights were forfeited during the 2021 financial year in relation to FY19 and FY20 Grants,
performance period (FY18-FY20), no vesting was achieved for FY18 Grants for the performance rights with a
following the retirement and departure of Graham Maxwell and Mark van 't Loo respectively.
performance period commencing 1 May 2017 and ended on 3 May 2020 (Vesting Rights). An additional
All performance rights issued during the reporting period ended 2 May 2021 have an expiry date of 27 July
164,623 performance rights were forfeited during the 2021 financial year in relation to FY19 and FY20 Grants,
2023 and were issued with an exercise price of nil. All performance rights issued during the reporting period
following the retirement and departure of Graham Maxwell and Mark van 't Loo respectively.
ended 3 May 2020 have an expiry date of 26 July 2022 and were issued with an exercise price of nil.
All performance rights issued during the reporting period ended 2 May 2021 have an expiry date of 27 July
2023 and were issued with an exercise price of nil. All performance rights issued during the reporting period
FAIR VALUE OF PERFORMANCE RIGHTS ISSUED
ended 3 May 2020 have an expiry date of 26 July 2022 and were issued with an exercise price of nil.
926,998
There were two tranches of performance rights issued on the same date during the reporting period ended 2
May 2021:
FAIR VALUE OF PERFORMANCE RIGHTS ISSUED
• The assessed fair value of performance rights issued on 16 October 2020 was an average of $10.18. The
There were two tranches of performance rights issued on the same date during the reporting period ended 2
fair value at issuance date was determined using a discounted cash flow model incorporating the share
May 2021:
price at issuance date of $10.78, the term of the right, the expected dividend yield of 1.86% and the risk
• The assessed fair value of performance rights issued on 16 October 2020 was an average of $10.18. The
free interest rate for the term of the rights of 0.14%.
fair value at issuance date was determined using a discounted cash flow model incorporating the share
price at issuance date of $10.78, the term of the right, the expected dividend yield of 1.86% and the risk
free interest rate for the term of the rights of 0.14%.
There were two tranches of performance rights issued on the same date during the reporting period ended 3
May 2020:
• The assessed fair value of performance rights issued on 16 September 2019 was an average of $8.65. The
There were two tranches of performance rights issued on the same date during the reporting period ended 3
fair value at issuance date was determined using a discounted cash flow model incorporating the share
May 2020:
price at issuance date of $9.32, the term of the right, the expected dividend yield of 2.44% and the risk
• The assessed fair value of performance rights issued on 16 September 2019 was an average of $8.65. The
free interest rate for the term of the rights of 0.74%.
fair value at issuance date was determined using a discounted cash flow model incorporating the share
price at issuance date of $9.32, the term of the right, the expected dividend yield of 2.44% and the risk
free interest rate for the term of the rights of 0.74%.
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 79
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
67 of 116
67 of 116
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
D2/ Share based payments (continued)
ACCOUNTING POLICY
Equity settled share based payments are measured at the fair value of the equity instrument at the date of
grant. The fair value of performance rights granted is recognised as an employee benefit expense with a
corresponding increase in equity. The determination of fair value includes consideration of any market
performance conditions and the impact of any non-vesting conditions but excludes the impact of any service
and non-market performance vesting conditions.
Non-market vesting conditions are included in assumptions about the number of performance rights that are
expected to vest. The total expense is recognised over the vesting period, which is the period over which all of
the specified vesting conditions are to be satisfied. At the end of each period, the entity revises its estimates of
the number of performance rights that are expected to vest based on the non-market vesting conditions. It
recognises the impact of the revision to original estimates, if any, in profit and loss, with a corresponding
adjustment to equity.
D3/ Contributed equity
EQUITY OF PARENT COMPANY
Parent Entity
Number of
ordinary shares
- fully paid
116,581,244
Date
3 May 2020
Share capital
$000
290,788
Total equity
$000
290,788
2 May 2021
116,581,244
290,788
290,788
Balance
Balance
ORDINARY SHARES
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the
Company in proportion to the number of shares held. On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy is entitled to one vote. Upon a poll each share is entitled to one
vote. Ordinary shares have no par value and the Company does not have a limited amount of authorised
capital.
ACCOUNTING POLICY
Debt and equity instruments are classified as either liabilities or equity in accordance with the substance of
the contractual arrangement. Ordinary shares are classified as equity. Incremental costs directly attributable
to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.
80 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
68 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
E/ Related Parties
This section provides information relating to the Group’s related parties and the extent of related party
transactions within the Group and the impact they had on the Group’s financial performance and position.
E1/ Investments accounted for using the equity method
E2/ Related party transactions
E1/ Investments accounted for using the equity method
INTERESTS IN INDIVIDUALLY IMMATERIAL JOINT VENTURES
Name of entity
Place of
incorporation
Acronym
% of
ownership
interest
2021
%
2020
%
Sizzler China Pte Ltd
Singapore
SCP
50
50
Summarised Financial Information of Joint Ventures
2021
$'000
2020
$'000
Aggregate carrying amount of individually immaterial joint ventures
2,301
2,731
Aggregate amounts of the Group's share of:
Profit from continuing operations
Total comprehensive income
ACCOUNTING POLICY
50
50
200
200
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations
or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather
than the legal structure of the joint arrangement. The Group has two joint ventures. Investments in joint
ventures are accounted for using the equity method of accounting, after initially being recognised at cost in
the Consolidated Balance Sheet.
Under the equity method of accounting, the investments are initially recognised at cost and adjusted
thereafter to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss,
and the Group’s share of movements in other comprehensive income of the investee in other comprehensive
income. Dividends received or receivable from joint ventures are recognised as a reduction in the carrying
amount of the investment.
When the Group’s share of losses in an equity accounted investment equals or exceeds its interest in the
entity, including any other unsecured long term receivables, the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the
Group’s interest in the entities. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of equity accounted investees have been
changed where necessary to ensure consistency with the policies adopted by the Group.
E2/ Related party transactions
PARENT ENTITY
The parent entity and ultimate parent entity within the Group is Collins Foods Limited.
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 81
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
69 of 116
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
E2/ Related party transactions (continued)
KEY MANAGEMENT PERSONNEL
Disclosures relating to the compensation of KMP are included in Note D1 and in the Remuneration Report
included in the Directors' Report.
SUBSIDIARIES
The ownership interests in subsidiaries are set out in Note H1. Transactions between entities within the Group
during the reporting period consisted of loans advanced and repaid, interest charged and received,
operating expenses paid, non-current assets purchased and sold, and tax losses transferred. These
transactions were undertaken on commercial terms and conditions.
OUTSTANDING BALANCES ARISING FROM SALES/PURCHASES OF GOODS AND SERVICES
The following balances are outstanding at the end of the reporting period in relation to transactions with
related parties:
Current receivables
Key management personnel
TRANSACTIONS WITH RELATED PARTIES
2021
$
2020
$
-
47,911
All transactions with related parties are conducted on commercial terms and conditions.
Outstanding balances other than loans to key management personnel are unsecured and are repayable in
cash.
F/ Discontinued operation
F1/ SIZZLER AUSTRALIA
On 2 October 2020, the Group announced its intention to permanently close its remaining nine Sizzler
restaurants in Australia. The restaurants were formally closed on 15 November 2020.
F2/ FINANCIAL PERFORMANCE AND CASH FLOW INFORMATION
The financial performance and cash flow information presented are for the period ended 2 May 2021 and the
period ended 3 May 2020.
Revenue
Cost of Sales
Gross profit
Other Expenses
Marketing and royalty expenses
Occupancy expenses
Administration expenses
Restaurant related expenses
Other income
Loss from discontinued operations before finance income, finance costs and
income tax (EBIT)
Finance costs
Loss before Income tax
82 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
2021
$'000
9,573
(6,354)
3,219
(2,395)
(3,344)
(928)
(532)
(1,809)
39
(5,750)
(7)
(5,757)
2020
$'000
33,645
(17,318)
16,327
(608)
(6,941)
(3,518)
(2,093)
(4,401)
20
(1,214)
(43)
(1,257)
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
70 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
F/ Discontinued operation (continued)
Income tax benefit
Loss of discontinued operations
Expenses include closure costs of $2,630,000 in the 2021 reporting period (2020: $Nil).
Net cash inflow/(outflow) from operating activities
Net cash inflow/(outflow) from investing activities
Net cash inflow/(outflow) from financing activities
Net (decrease)/increase in cash generated by the discontinued operations
2021
$'000
1,094
(4,663)
2021
$'000
(3,374)
266
-
(3,108)
2020
$'000
329
(928)
2020
$'000
99
3
-
102
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
71 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 83
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G/ Other Items
G1/ Commitments for expenditure
G7/ Trade and other payables
G2/ Earnings per share
G3/ Receivables
G8/ Provisions
G9/ Reserves
G4/ Property, plant and equipment
G10/ Tax
G5/ Intangible assets
G11/ Auditor's remuneration
G6/ Leases
G12/ Contingencies
G1/ Commitments for expenditure
CAPITAL COMMITMENTS
Significant capital expenditure contracted for at the end of the reporting period but not recognised as
liabilities is as follows:
Right-of-use assets (1)
Property, plant and equipment
Land and buildings
Total commitments
2021
$'000
29,908
2,637
4,300
36,845
2020
$'000
15,284
1,235
-
16,519
(1)
This represents any agreements for leases the Group has signed before year end, that have not yet proceeded to an executed lease agreement. This is the value repayable over the primary term
of the lease. As there is not yet a commencement date, the values have not been discounted to present value.
G2/ Earnings per share
Earnings used in the calculation of basic and diluted earnings per share from
continuing operations ($000)
Net profit/(loss) from discontinued operation ($000)
Weighted average basic ordinary shares outstanding
Weighted average diluted ordinary shares outstanding
space
Basic earnings per share
Basic earnings per share from continuing operations (cents)
Basic earnings per share from discontinued operations (cents)
Total basic earnings per share attributable to members of Collins Foods Limited
Diluted earnings per share
Diluted earnings per share from continuing operations (cents)
Diluted earnings per share from discontinued operations (cents)
Total diluted earnings per share attributable to members of Collins Foods Limited
2021
2020
37,612
(4,663)
116,581,244
117,141,933
32,191
(928)
116,569,052
117,407,285
32.26
(4.00)
28.26
32.11
(3.98)
28.13
27.61
(0.79)
26.82
27.42
(0.79)
26.63
84 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
72 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G2/ Earnings per share (continued)
Weighted Average Number of Share Used As The Denominator
2021
Shares
2020
Shares
Weighted average number of ordinary shares used as the denominator in
calculating basic earnings per share
116,581,244
116,569,052
Adjustments for calculation of diluted earnings per share:
Performance rights
560,689
838,233
Weighted average number of ordinary and potential ordinary shares used as the
denominator in calculating diluted earnings per share
117,141,933
117,407,285
ACCOUNTING POLICY
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the
weighted average number of ordinary shares outstanding during the financial period. Diluted earnings per
share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares, and
the weighted average number of additional ordinary shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
73 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 85
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G3/ Receivables
Current Assets - Receivables
Trade receivables
Other receivables
ACCOUNTING POLICY
2021
$'000
2,786
-
2,786
2020
$'000
3,070
1
3,071
Trade receivables are amounts due for goods or services performed in the ordinary course of business. They
are generally due for settlement within 30 days and therefore are all classified as current. 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 effective interest method.
IMPAIRMENT OF TRADE RECEIVABLES
The Group applies the AASB 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 shared credit risk
characteristics and the days past due.
The expected loss rates are based on the payment profiles of receivables over a period of 36 months before 2
May 2021 or 3 May 2020 respectively 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. The Group has
identified the GDP and the unemployment rate of the countries in which it sells its goods and services to be
the most relevant factors, and accordingly adjusts the historical loss rates based on expected changes in
these factors.
86 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
74 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G4/ Property, plant and equipment
Land &
Buildings
$'000
Leasehold
improvements
$'000
Plant and
equipment
$'000
Construction
in progress
$'000
Total
$'000
At 4 May 2020
Cost or fair value
Accumulated depreciation
13,774
256,296
(606)
(142,272)
Net book amount at 4 May 2020
13,168
114,024
143,273
(90,074)
53,199
7,078
420,421
-
(232,952)
7,078
187,469
Additions
Acquisitions through controlled entity
purchased
Transfers
Depreciation charge (1)
Impairment charge (2)
Disposals
Exchange differences
Net book amount at 2 May 2021
At 2 May 2021
Cost or fair value
Accumulated depreciation
Net book amount at 2 May 2021
At 29 April 2019
Cost or fair value
Accumulated depreciation
Net book amount at 29 April 2019
Additions
Transfers
Depreciation charge (1)
Impairment charge (2)
Disposals
Exchange differences
Net book amount at 3 May 2020
At 3 May 2020
Cost or fair value
Accumulated depreciation
Net book amount at 3 May 2020
-
-
-
(362)
-
-
-
12,806
10,835
10,681
25,383
46,899
18
8,089
(21,172)
(3,322)
(23)
(1,871)
106,578
953
14,494
(18,192)
(1,154)
(251)
(178)
59,552
-
(22,087)
-
-
36
(427)
9,983
971
496
(39,726)
(4,476)
(238)
(2,476)
188,919
13,774
(968)
12,806
264,633
(158,055)
106,578
163,545
(103,993)
59,552
9,983
-
9,983
451,935
(263,016)
188,919
Land &
Buildings
$'000
Leasehold
improvements
$'000
Plant and
equipment
$'000
Construction
in progress
$'000
Total
$'000
14,024
(259)
13,765
-
-
(366)
-
(231)
-
13,168
226,644
(120,680)
105,964
130,336
(80,589)
49,747
7,228
-
7,228
378,232
(201,528)
176,704
2,764
29,247
3,253
15,871
(21,340)
(15,327)
(4,143)
(181)
1,713
114,024
(1,061)
(197)
913
53,199
45,707
(45,328)
-
-
(623)
94
7,078
51,724
(210)
(37,033)
(5,204)
(1,232)
2,720
187,469
13,774
(606)
13,168
256,296
(142,272)
114,024
143,273
(90,074)
53,199
7,078
-
7,078
420,421
(232,952)
187,469
(1)
Includes depreciation charge of $352,000 (2020: $418,000) relating to Sizzler Australia, which was discontinued during the current reporting period.
(2)
Included in Note G5 is the breakdown of impairments.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
75 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 87
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G4/ Property, plant and equipment (continued)
ACCOUNTING POLICY
All property, plant and equipment is recorded at historical cost less depreciation. Historical cost includes
expenditure that is directly attributable to the acquisition of the items. 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.
Property, plant and equipment, excluding freehold land, is depreciated at rates based upon the expected
useful economic life as follows:
Asset classes
Method
Buildings
Leasehold improvements:
Buildings
Other leasehold improvements
Plant and equipment
Motor vehicles
Straight Line
Straight Line
Straight Line
Straight Line
Straight Line
Average Life
20 years
20 years or term of the lease(1)
Primary term of lease(2)
8 years
4 years
(1) Estimated useful life is the shorter of 20 years or the full term of the lease including renewal periods that are intended to be exercised.
(2)
If primary term of the lease differs significantly from the estimated useful life of the asset, judgement is applied to the estimated useful life and an individual rate is applied.
The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet
date.
The Group reviews annually whether the triggers indicating a risk of impairment exist. The recoverable
amounts of cash generating units have been determined based on value-in-use calculations. These
calculations require the use of estimates (refer Note G5).
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.
The gain or loss on disposal of all non-current assets is determined as the difference between the carrying
amount of the asset at the time of disposal and the proceeds on disposal and is included in the Consolidated
Income Statement of the Group in the reporting period of disposal.
IMPAIRMENT OF ASSETS
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are
tested annually for impairment, or more frequently if events or changes in circumstances indicate that they
might be impaired. Other assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the
Consolidated Income Statement 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). If, in a subsequent period, the amount of the
impairment loss decreases and the decrease can be related objectively to an event occurring after the
impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the
Consolidated Income Statement.
88 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
76 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets
Goodwill
$'000
Franchise
rights
$'000
Brand
names
$'000
Software
$'000
Total
$'000
At 4 May 2020
Cost
Accumulated amortisation
Net book amount at 4 May 2020
459,231
(28,070)
431,161
17,819
(7,017)
10,802
33,585
(22,335)
11,250
8,157
(3,981)
4,176
518,792
(61,403)
457,389
Additions
-
3,379
Acquisitions through controlled entity
purchased
Transfers
Amortisation
Impairment charge
Disposals
Exchange differences
Net book amount at 2 May 2021
At 2 May 2021
Cost
Accumulated amortisation
Net book amount at 2 May 2021
At 29 April 2019
Cost
Accumulated amortisation
Net book amount at 29 April 2019
Additions
Transfers
Amortisation
Impairment charge
Disposals
Exchange differences
Net book amount at 3 May 2020
At 3 May 2020
Cost
Accumulated amortisation
Net book amount at 3 May 2020
3,802
-
-
-
-
(8,397)
426,566
-
-
(1,029)
(175)
(1,327)
(293)
11,357
-
-
-
(881)
-
-
(1,904)
8,465
2,974
6,353
-
(495)
(1,677)
(57)
-
(246)
4,675
3,802
(495)
(3,587)
(232)
(1,327)
(10,840)
451,063
454,636
(28,070)
426,566
19,577
(8,220)
11,357
29,648
(21,183)
8,465
10,185
(5,510)
4,675
514,046
(62,983)
451,063
Goodwill
$'000
Franchise
rights
$'000
Brand
names
$'000
Software
$'000
Total
$'000
452,455
(28,070)
424,385
-
-
-
-
-
6,776
431,161
16,425
(5,638)
10,787
1,757
77
(1,315)
(270)
(409)
175
10,802
29,058
(17,905)
11,153
-
-
(955)
-
-
1,052
11,250
6,047
(2,857)
3,190
2,078
133
(1,155)
-
(21)
(49)
503,985
(54,470)
449,515
3,835
210
(3,425)
(270)
(430)
7,954
4,176
457,389
459,231
(28,070)
431,161
17,819
(7,017)
10,802
33,585
(22,335)
11,250
8,157
(3,981)
4,176
518,792
(61,403)
457,389
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 89
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets (continued)
IMPAIRMENT TEST FOR GOODWILL
ALLOCATION OF GOODWILL
KFC Restaurants Australia
KFC Restaurants Europe
Sizzler Asia
Carrying value
2021
$'000
2020
$'000
327,005
98,364
1,197
426,566
327,005
102,707
1,449
431,161
Goodwill is tested for impairment at a cash generating unit level. The recoverable amount of a cash
generating unit is determined based on value-in-use calculations. Management recognises that there are
various reasons that the estimates used in the assumptions may vary. For the KFC and Sizzler Asia cash
generating units, there are no reasonable and likely changes in assumptions which would result in an
impairment.
During the reporting period ended 2 May 2021, the above cash generating units and the individual restaurant
assets were tested for impairment in accordance with AASB 136. In the event that the carrying value of these
assets was higher than the recoverable amount (measured as the higher of fair value less costs to sell and
value in use) an impairment charge was recognised in the Consolidated Income Statement as set out in the
table below.
KFC Restaurants
Australia
KFC Restaurants
Europe
Taco Bell
Total
2021
$'000
2020
$'000
2021
$'000
2020
$'000
2021
$'000
2020
$'000
2021
$'000
2020
$'000
Leasehold
improvements
Plant and
equipment
Franchise rights
Software
Right-of-use
assets
Total
-
-
-
-
-
-
-
-
-
-
-
-
1,224
4,143
2,098
1,154
82
57
2,346
4,863
1,061
270
-
-
93
-
4,526
10,000
2,457
4,648
-
-
-
-
-
-
3,322
4,143
1,154
175
57
4,803
9,511
1,061
270
-
4,526
10,000
90 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
78 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets (continued)
KEY ASSUMPTIONS USED FOR VALUE-IN-USE CALCULATIONS
Post-tax discount rate segment
Post-tax discount rate store
Growth rates
- Revenue for Yr 1 - Yr 5(1)
- Revenue for Yr 6 - Yr 20
- Annual growth for terminal value
KFC Australia
KFC Europe
Taco Bell
2021
7.5%
Store
specific
3.7%*
2.5%
2.5%
2020
10.3%
10.3%
2.5%
2.5%
1.5%
2021
7.1%
Store
specific
4.8%*
1.5%
1.5%
2020
6.9%
6.9%
2.5%
2.5%
1.5%
2021
8.0%
Store
specific
9.3%*
2.5%
2.5%
2020
10.3%
10.3%
4.2%*
2.5%
1.5%
(1) The Revenue Growth rates applied from Yr 1- Yr 5 relate specifically to restaurant assets where detailed
impairment models were prepared.
* Store specific plans with average annual growth rate
KFC AUSTRALIA RESTAURANTS
Value in use recoverable amount valuations were performed at the cash generating unit level and at the
individual store level for the purpose of testing goodwill and store specific assets, respectively. Store assets
include Property, Plant & Equipment and Right of Use assets. Accordingly, detailed impairment models were
prepared for the cash generating unit and for some of the KFC Australia stores where indicators of impairment
were identified. The impairment test did not result in any impairments for the KFC Australia restaurants.
The impairment models have been prepared as follows:
● The cash flow estimate for the cash generating unit has been prepared based on a period of five years.
● The cash flows estimates for the individual restaurant assets have been estimated after applying growth
rates from the commencement date of FY 2022 through to the end of 2041. The value in use calculations were
based on a 20 year-period due to the analysis required to conform with the AASB 16 Leasing standard.
● The annual growth rates applied average 2.5% (2020: 2.5%). The year one projections have been aligned to
the division's specific cash flows reflected in the 2022 budget.
Management believe that these growth percentages are reasonable considering the growth that has been
seen in this operating segment during the 2021, prior to COVID-19, in prior reporting periods, and in the weeks
since year-end.
● Cost of sales percentage is estimated to remain reasonably consistent over the cash flow period. Cost of
labour percentage is estimated to steadily decrease with the increase in sales volumes.
● An indefinite terminal cash flow calculation has been applied for cash flows beyond 2026 and 2041, for the
cash generating unit and the store assets, respectively. These projections used those years’ cash flows as a
base. The growth rate of 2.5% (2020: 1.5%) has been used in determining the terminal value, which does not
exceed the long-term average growth rate for the industry segment in which the restaurants operate.
● A post-tax discount rate of 7.5% has been calculated for the KFC Australia segment (2020: 10.3% post tax).
The reduction in the post-tax discount rate applied to store assets in the current year is the result of the
discount rates applied to each individual store being adjusted by the incremental borrowing rate (IBR)
applied to each AASB 16 lease. This has resulted in post-tax discount rates in the range of 5.5 - 8.5% for the
individual stores assessed for impairment.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 91
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets (continued)
Significant estimate: Impact of possible changes in key assumptions
Management recognises that a significant change in one of the assumptions applied to the discount rates or
growth rates could result in a material impairment of some of the Group’s KFC Australia store assets.
However, management has considered the likelihood of these possible changes and believe that strong
revenue growth achieved in the operating segment historically, during the current financial year and in the
weeks since year-end, supports the growth percentages applied in the cash flows and that the discount rates
applied are appropriate having been assessed against current market factors.
92 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
80 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets (continued)
KFC EUROPE RESTAURANTS
Value in use recoverable amount valuations were performed at the cash generating unit level and at the
individual store level for the purpose of testing goodwill and store specific assets, respectively. Store assets
include Property, Plant & Equipment and Right of Use assets. Management determined that the impacts of
the COVID-19 pandemic in Europe resulted in an impairment indicator across all the KFC Europe stores.
Accordingly, detailed impairment models were prepared for the cash generating unit and for each of the
KFC Europe stores, resulting in the full impairment of 4 stores, totalling $4.9m, of which 3 stores had previously
been partially impaired.
The impairment models have been prepared as follows:
● The cash flow estimate for the cash generating unit has been prepared based on a period of five years.
● The cash flows estimates for the individual restaurant assets have been estimated after applying growth
rates from the commencement date of FY 2022 through to the end of 2041. The value in use calculations were
based on a 20 year-period due to the analysis required to conform with the AASB 16 Leasing standard.
● The year one projections have been aligned to the division's specific cash flows reflected in the 2022
budget. In addition, the annual growth rates applied in the first 5 years are reflective of store specific plans
which assume a steady recovery in sales volumes to pre-COVID-19 levels, resulting in certain restaurants
having additional growth expectations (the average annual revenue growth is 4.8% in the first five years) due
to a number of transactions driving initiatives that have been launched across these restaurants.
Management believe that these growth percentages are reasonable considering the growth that has been
seen in this operating segment, prior to COVID-19 and in the weeks since year-end, together with initiatives
intended to improve operating margins.
● Cost of sales percentage is estimated to remain reasonably consistent over the cash flow period. Cost of
labour percentage is estimated to steadily decrease with the increase in sales volumes.
● Annual growth rates of 1.5% have been applied from year 6 onwards (2020: 2.5% applied across to the
20-year cash flow period).
● An indefinite terminal cash flow calculation has been applied for cash flows beyond 2026 and 2041, for the
cash generating unit and the store assets, respectively. These projections used those years’ cash flows as a
base. The growth rate of 1.5% (2020: 1.5%) has been used in determining the terminal value, which does not
exceed the long-term average growth rate for the industry segment in which the restaurants operate.
● A post-tax discount rate of 7.1% has been calculated for the KFC Europe segment (2020: 6.9% post tax). The
reduction in the post-tax discount rate applied to store assets in the current year is the result of the discount
rates applied to each individual store being adjusted by the IBR applied to each AASB 16 lease. This has
resulted in post-tax discount rates in the range of 5.5 - 7.8% for the individual stores assessed for impairment.
Significant estimate: Impact of possible changes in key assumptions
Management recognises that a change in one of the assumptions applied to the discount rates or growth
rates could result in further impairment of the Group’s KFC Europe store assets.
However, management has considered the likelihood of these possible changes and believe that strong
revenue growth achieved in this operating segment historically and prior to COVID-19 supports the growth
percentages applied in the cash flows and that the discount rates applied are appropriate having assessed
against current market factors.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
81 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 93
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets (continued)
TACO BELL
Value in use recoverable amount valuations were not performed at the Taco Bell cash generating unit level
as there is no goodwill or other indefinite life intangible assets for Taco Bell. However, each of the individual
stores represents a cash generating unit for the purpose of testing Property, Plant & Equipment, Right of Use
assets and other store specific assets. Accordingly, impairment models were prepared for all Taco Bell stores
where indicators of impairment were identified.
Management identified indicators of impairment amongst the Taco Bell stores network due to their financial
performance compared to the individual store forecasts. Detailed impairment models were prepared,
resulting in the full impairment of 2 stores, totalling $4.6m.
The store specific impairment models have been prepared as follows:
● The cash flows estimates for the individual restaurant assets have been estimated after applying growth
rates from the commencement date of FY 2022 through to the end of 2041. The value in use calculations were
based on a 20 year-period due to the analysis required to conform with the AASB 16 Leasing standard.
● The year one projections have been aligned to the division's specific cash flows reflected in the 2022
budget. Management believes that these growth percentages are reasonable considering the growth that
has been seen in existing restaurants since opening and the overall growth of QSR sector and the Mexican
category.
● The annual growth rates applied in the first 5 years are reflective of significant growth expected for the Taco
brand in Australia, with the opening of new stores and marketing-focused campaigns. 5-year store specific
plans have been developed for the Taco Bell restaurants based on the underlying drivers of expected sales in
each market and location, resulting in most stores having high average growth expectations during this period
(the average annual revenue growth is 9.3% in the first five years).
● Cost of sales percentage is estimated to remain reasonably consistent over the cash flow period. Cost of
labour percentage is estimated to steadily decrease with the increase in sales volumes.
● Annual growth rates of 2.5% have been applied from year 6 onwards (2020: store specific plans plus 2.5%
growth rates from year 6 onwards).
● An indefinite terminal cash flow calculation has been applied for cash flows beyond 2041, using that year’s
cash flow as a base. The growth rate of 2.5% (2020: 1.5%) has been used in determining the terminal value,
which does not exceed the long-term average growth rate for the industry segment in which the restaurants
operate.
● A post-tax discount rate of 8.0% has been calculated for the Taco Bell segment (2020: 10.3% post tax). The
reduction in the post-tax discount rate in the current year is the result of the discount rates applied to each
individual store being adjusted by the IBR applied to each AASB 16 lease. This has resulted in post-tax discount
rates in the range of 6.3 - 9.3% for the individual stores assessed for impairment.
Significant estimate: Impact of possible changes in key assumptions
The business is still in the growth phase, with a further 9-12 stores planned to open in FY 2022 and a significant
investment in marketing campaigns to increase brand awareness. Therefore, the revenue growth rates for
Years 1 - 5are the most significant assumptions underpinning the Taco Bell impairment analysis.
Management recognises that a change in this assumption could result in further impairment of the Group’s
Taco Bell store assets.
However, management has considered the likelihood of the assumed growth rates and believe that the
strong revenue growth is achievable based on the current strategy for the Taco Bell business, which includes
the increase in marketing efforts and continued introduction of new stores.
94 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
82 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5/ Intangible assets (continued)
SIZZLER ASIA
The cash flows for the Sizzler Asia cash generating unit have been estimated after applying growth rates from
the commencement of 2022 through to the end of the 2026 reporting period which average 3.0% (2020:
3.0%). The year one projections have been aligned to the cash flows reflected in the 2022 budget. The growth
rate of 3.0% (2020: 3.0%) has been used in determining the terminal rate, which does not exceed the
long-term average growth rate for the casual dining industry segment. An indefinite terminal cash flow
calculation has been applied for cash flows beyond 2026, using that year’s cash flow as a base.
A pre-tax discount rate of 14.0% (2020: 14.0%) has been applied to the cash flows.
Management believe that these growth percentages are reasonable considering the growth that has been
seen in this cash generating unit during the 2021, prior to COVID-19 and prior reporting periods.
ACCOUNTING POLICY
GOODWILL
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 at the date of acquisition. Goodwill is not amortised. Instead,
goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate
that it might be impaired and is carried at cost less accumulated impairment losses. Goodwill is allocated to
cash generating units for the purpose of impairment testing.
The Group determines whether goodwill with indefinite useful lives are impaired at least on an annual basis.
This requires an estimation of the recoverable amount of the cash generating units to which the goodwill with
indefinite useful lives relate.
FRANCHISE RIGHTS
Costs associated with franchise licences which provide a benefit for more than one reporting period are
amortised over the remaining term of the franchise licence. Capitalised costs associated with renewal options
for franchise licences are amortised over the renewal option period. The unamortised balance is reviewed
each balance date and charged to the Consolidated Income Statement to the extent that future benefits
are no longer probable.
SOFTWARE
Software consists of both externally acquired software programmes and capitalised development costs of
internally generated software. The Group amortises software using a straight-line method over 3-8 years. Costs
associated with maintaining software programmes are recognised as an expense as incurred. Development
costs that are directly attributable to the design and testing of identifiable and unique software products
controlled by the Group are recognised as intangible assets where the criteria within AASB 138 is met. Directly
attributable costs that are capitalised as part of the software include employee costs, installation costs and
associated expenditure. Capitalised development costs are recorded as intangible assets and amortised from
the point at which the asset is ready for use.
OTHER INTANGIBLES – SIZZLER BRAND
Sizzler brand intangibles which are owned and registered by the Group are considered to have a useful life of
20 years and are amortised accordingly. This brand is continued to be used by Sizzler Asia. These intangibles
will be tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. Sizzler brand intangibles are carried at amortised cost less impairment losses.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
83 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 95
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G6/ Leases
This note provides information for leases where the Group is a lessee.
AMOUNTS RECOGNISED IN THE BALANCE SHEET
The balance sheet shows the following amounts relating to leases:
Right-of-use assets
Property
Motor vehicles
Lease liabilities
Current
Non-current
2021
$'000
2020
$'000
358,388
712
359,100
368,167
1,237
369,404
31,654
363,601
395,255
28,890
360,970
389,860
Additions to the right-of-use assets during the 2021 financial period were $40,037,000 (2020: $55,746,000).
AMOUNTS RECOGNISED IN THE INCOME STATEMENT
The income statement shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
Property
Motor vehicles
Impairment charge of right-of-use assets
Properties
Notes
2021
$'000
2020
$'000
40,415
700
41,115
37,761
687
38,448
4,803
4,803
4,526
4,526
Interest expense (included in finance costs) (1)
Expense relating to short-term leases (included in selling marketing and
royalty, occupancy, and administrative expenses)
Expense relating to variable lease payments not included in lease liabilities
(included in occupancy expenses)
20,614
21,155
519
2,649
2,764
2,490
(1) Finance costs of $7,000 (2020:$43,000) in relation to Sizzler Australia have been excluded.
96 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
84 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G6/ Leases (continued)
Lease Liabilities Reconciliation
This section sets out the movements in lease liabilities for each of the periods presented.
Beginning of the reporting period
Lease additions and modifications
Interest for the period
Disposals
Cash flows
Foreign exchange adjustments
End of the reporting period
2021
$'000
2020
$'000
389,860
40,308
20,621
(238)
(50,671)
(4,624)
395,256
364,654
54,042
21,198
(867)
(52,903)
3,736
389,860
THE GROUP’S LEASING ACTIVITIES AND HOW THESE ARE ACCOUNTED FOR
The Group leases various restaurant sites, offices, and motor vehicles. Rental contracts, particularly for
restaurants, are typically made for fixed periods of 5 to 20 years, but may have extension options as described
further below.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the
contract to the lease and non-lease components based on their relative stand-alone prices.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and
conditions. The lease agreements do not impose any covenants other than the security interests in the leased
assets that are held by the lessor. Leased assets may not be used as security for borrowing purposes.
Until the 2020 financial period, leases of property, plant and equipment were classified as either finance leases
or operating leases. From 29 April 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.
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:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate, initially measured using the index or rate as
at the commencement date
• amounts expected to be payable by the Group under residual value guarantees
• the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
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, 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.
To determine the incremental borrowing rate, the Group:
• where possible, uses recent third-party financing received by the individual lessee as a starting point,
adjusted to reflect changes in financing conditions since third party financing was received
• uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by
the Group, which does not have recent third party financing, and
• makes adjustments specific to the lease, eg term, country, currency and security.
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 97
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
85 of 116
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G6/ Leases (continued)
If a readily observable amortising loan rate is available to the individual lessee (through recent financing or
market data) which has a similar payment profile to the lease, then the Group entities use that rate as a
starting point to determine the incremental borrowing rate.
In the current reporting period, the weighted average lessee’s incremental borrowing rate applied to the
Europe lease liabilities was 7.45%, the increase due to Covid stress on the market (2020: 5.45%). The rate
applied to the Australian lease liabilities was 2.19% (2020: 2.57%).
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:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
• any initial direct costs, and
• make good obligation 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. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life. While the Group revalues its land and buildings that are
presented within property, plant and equipment, it has chosen not to do so for the right-of-use buildings held
by the Group.
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. Low-value assets comprise IT equipment and small items of office furniture.
VARIABLE LEASE PAYMENTS
Some property leases contain variable payment terms that are linked to sales generated from a store. For
individual stores, up to 80% of lease payments are on the basis of variable payment terms with a wide range
of sales percentages applied. Variable payment terms are used for a variety of reasons, including minimising
the fixed costs base for newly established stores. 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.
EXTENSION AND TERMINATION OPTIONS
Extension and termination options are included in a number of 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.
Critical judgements in determining the lease term
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 restaurant sites, the following factors are normally the most relevant:
• If there are significant penalty payments to terminate (or not extend), the Group is typically reasonably
certain to extend (or not terminate).
• If any leasehold improvements are expected to have a significant remaining value, the Group is typically
reasonably certain to extend (or not terminate).
• Otherwise, the Group considers other factors including historical lease durations and the costs and
business disruption required to replace the leased asset.
Most extension options in offices and motor vehicles leases have not been included in the lease liability,
because the Group could replace the assets without significant cost or business disruption.
98 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
86 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G6/ Leases (continued)
More than 90% of the Group's leases are of stores or restaurant sites. These leases range in primary terms of 5 -
20 years, with multiple 5 - 10 year options available, anywhere up to a total available lease term of 50 years.
The Group has applied the below lease term assumptions to the store and restaurant lease portfolios of each
segment, as it is considered representative of the Group's reasonably certain position. Specific leases are
considered on a case-by-case basis when additional knowledge is available that would result in a different
lease term to these assumptions.
Segment
Lease Term Assumption
KFC Australia
KFC Europe
Taco Bell
Other
Primary term of the lease, plus options, to an upper limit of 20 years.
Primary term of the lease, plus next option term where renewal process has
commenced.
Primary term of the lease, plus next option term where renewal process has
commenced.
Primary term of the lease, plus next option term where renewal process has
commenced.
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 affects this assessment, and that is within the control of the
lessee.
MATURITIES OF LEASE LIABILITIES
The table below shows the Group's lease liabilities in relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows.
2021
Less than
1 year
$'000
Between
1 and 2
years
$'000
Between
2 and 5
years
$'000
Over 5
years
$'000
Total
contractual
cash flows
$'000
Carrying
amount
$'000
Lease liabilities
52,908
49,052
135,644
326,618
564,222
395,256
2020
Lease liabilities
Less than
1 year
$'000
Between
1 and 2
years
$'000
Between
2 and 5
years
$'000
Over 5
years
$'000
Total
contractual
cash flows
$'000
Carrying
amount
$'000
48,762
48,962
131,599
323,705
553,028
389,860
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
87 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 99
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G7/ Trade and other payables
Current liabilities
Trade payables and accruals - unsecured
Other payables
Total payables
ACCOUNTING POLICY
2021
$'000
2020
$'000
79,255
17,640
96,895
70,069
18,030
88,099
These amounts represent liabilities for goods and services provided prior to the end of the reporting period
and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
100 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
88 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G8/ Provisions
2021
Non-
current
$'000
4,292
2,684
-
6,976
Current
$'000
5,838
202
191
6,231
2020
Non-
current
$'000
3,682
2,518
-
6,200
Total
$'000
9,691
2,839
119
12,649
Total
$'000
Current
$'000
10,130
2,886
191
13,207
6,009
321
119
6,449
Employee entitlements
Make good provision
Other provisions
Total provisions
ACCOUNTING POLICY
Employee Entitlements
Provision has been made in the accounts for benefits accruing to employees up to balance date, such as
long service leave and incentives. The current portion of this liability includes the unconditional entitlements to
long service leave where employees have completed the required period of service. The provisions are
measured at their nominal amounts using the remuneration rates expected to apply at the time of settlement.
Long service leave provisions relating to employees who have not yet completed the required period of
service are classified as non-current. All other employee provisions are classified as a current liability.
All on-costs, including superannuation, payroll tax and workers’ compensation premiums are included in the
determination of provisions.
Make Good Provision
Provisions for legal claims and make good obligations 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 will be required to
settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future
operating losses.
The Group is required to restore the leased premises of certain retail stores to their original condition upon exit.
However, as leases are traditionally renewed, the Group only recognises a provision for those restaurants
where make good costs will result in a probable outflow of funds. An annual review of leased sites is
conducted to determine the present value of the estimated expenditure required to remove any leasehold
improvements and decommission the restaurant.
Onerous Contracts
Each reporting period, the Group assesses whether any of their contracts are considered to be onerous. The
present obligations arising under any onerous contracts identified are recognised and measured as provisions.
An onerous contract is considered to exist where the Group has a contract under which the unavoidable
costs of meeting the obligations under the contract exceed the economic benefits expected to be received
under it.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
89 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 101
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G9/ Reserves
Hedging - cash flow hedges
Share-based payments
Foreign currency translation
Movements:
Cash flow hedges
Opening balance
Revaluation - gross
Deferred tax
Transfer to net profit - gross
Deferred tax
Closing Balance
Share-based payments
Opening balance
Valuation of performance rights
Performance rights vested
Closing Balance
Foreign currency translation
Opening balance
Exchange fluctuations arising on net investment in hedge
Exchange fluctuations arising on net assets of foreign operations
Closing Balance
NATURE AND PURPOSE OF RESERVES
Hedging Reserve - Cash Flow Hedges
2021
$'000
(1,565)
1,493
10,828
10,756
2020
$'000
(2,923)
292
16,719
14,088
Notes
2021
$'000
2020
$'000
G10
G10
(2,923)
2,089
(627)
(149)
45
(1,565)
292
1,201
-
1,493
16,719
6,756
(12,647)
10,828
(1,994)
(1,531)
459
204
(61)
(2,923)
1,009
(424)
(293)
292
11,756
(5,602)
10,565
16,719
The hedging reserve is used to record gains or losses on a hedging instrument in a cash flow hedge that are
recognised in other comprehensive income. Amounts are recognised in profit and loss when the associated
hedged transaction affects profit and loss.
Share Based Payments Reserve - Performance Rights
The share based payments reserve is used to recognise the issuance date fair value of performance rights
issued to employees under the Long Term Incentive Plan but not yet vested.
Foreign Currency Translation Reserve
Exchange differences arising on translation and of a hedge of the net investment in foreign operations are
recognised in other comprehensive income and accumulated in a separate reserve within equity. Refer to
note C3 for details on the Group's accounting policy for hedge accounting.
102 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
90 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G10/ Tax
INCOME TAX EXPENSE
Income tax expense
Current tax
Deferred tax
(Over) / under provided in prior reporting periods
Income tax expense is attributable to:
Profit from continuing operations
Loss from discontinued operation
Aggregate income tax expense
Deferred income tax expense / (benefit) included in income tax expense
comprises:
Decrease / (increase) in deferred tax assets
(Decrease) / increase in deferred tax liabilities
Numerical reconciliation of income tax expense / (benefit) to prima facie tax
payable
Profit from continuing operations before income tax expense
Loss from discontinued operation before income tax expense
Tax at the Australian tax rate of 30.0% (2020: 30.0%)
Tax effect of amounts which are not deductible (taxable)
in calculating taxable income:
Other non-deductible expenses
Difference in foreign taxation rates
Provision transfers
Non-assessable income received
Changes in tax laws and / or tax rates
Derecognition of previously recognised carried forward tax losses
Current year tax losses for which no deferred income tax was recognised
Amounts (over) / under provided in prior reporting periods
Income tax expense
2021
$'000
2020
$'000
29,332
(6,234)
(559)
22,539
23,633
(1,094)
22,539
20,825
1,469
93
22,387
22,716
(329)
22,387
17
(6,251)
(6,234)
13,295
(11,826)
1,469
2021
$'000
61,245
(5,757)
55,488
16,646
2,770
1,635
-
100
(1,335)
876
2,406
23,098
(559)
22,539
2020
$'000
54,907
(1,257)
53,650
16,095
2,285
(58)
19
(81)
(190)
2,662
1,562
22,294
93
22,387
Tax expense relating to items of other comprehensive income
Cash flow hedges
G9
(582)
398
(78,027)
(76,037)
Notes
2021
$'000
2020
$'000
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
91 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 103
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G10/ Tax (continued)
Tax losses
Unused revenue tax losses for which no deferred tax asset has been recognised
Unused capital tax losses for which no deferred tax asset has been recognised
Potential tax benefit @ 30.0%
DEFERRED TAX BALANCES
Deferred tax assets (DTA)
The balance comprises temporary differences attributable to:
Depreciation
Employee benefits
Provisions
Lease liabilities
Carried forward revenue losses
Capitalised costs
Cash flow hedges
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
2021
$'000
2020
$'000
50,603
66,083
35,006
33,241
65,961
29,760
2021
$'000
2020
$'000
28,464
5,137
4,838
27,087
5,001
4,994
110,007
110,153
1,371
259
706
150,782
2,468
357
1,333
151,393
(109,653)
41,129
(114,858)
36,535
All movements in the DTA were recognised in the Consolidated Income Statement and the Consolidated
Statement of Comprehensive Income.
Deferred tax liabilities (DTL)
The balance comprises temporary differences attributable to:
Right-of-use assets
Inventories
Intangibles
Financial assets at fair value through profit or loss
Other
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
2021
$'000
2020
$'000
103,764
107,775
923
9,844
336
(634)
114,233
867
11,119
391
332
120,484
(109,653)
4,580
(114,858)
5,626
All movements in the DTL were recognised in the Consolidated Income Statement and the Consolidated
Statement of Comprehensive Income.
104 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
92 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G10/ Tax (continued)
ACCOUNTING POLICY
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income
based on the national income tax rate, adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the
financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply
when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or
substantively enacted in the respective jurisdiction.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in controlled entities where the parent entity is able to control the timing of the
reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable
future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets
and liabilities are offset where the entity has a legally enforceable right to offset and intends to settle on a net
basis.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity.
Tax Consolidation
The Company, as the head entity in the tax consolidated group and its wholly-owned Australian controlled
entities continue to account for their own current and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated group continues to be a stand-alone taxpayer in its own
right.
In addition to its own current and deferred tax amounts, the Company also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group. Assets or liabilities arising under the tax funding
agreement with the tax consolidated entities are recognised as amounts receivable from or payable to other
entities in the Group.
The entities in the Tax Consolidated Group entered into a tax sharing agreement which, in the opinion of the
directors, limits the joint and several liability of the wholly-owned entities within the Tax Consolidated Group in
the case of a default by the Company.
The entities in the Tax Consolidated Group have also entered into a Tax Funding Agreement under which the
wholly-owned entities of that group fully compensate the Company for any current tax payable assumed and
are compensated by the Company for any current tax receivable and deferred tax assets relating to unused
tax losses or unused tax credits that are transferred to the Company under the tax consolidation legislation.
The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’
financial statements.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
93 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 105
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G11/ Auditor’s remuneration
During the reporting period the following fees were paid or payable for services provided by the auditor of the
parent entity, its related practices and non-related audit firms:
AUDIT AND OTHER ASSURANCE SERVICES
Audit services:
PricewaterhouseCoopers Australian Firm
Audit and review of financial reports and other audit work under the
Corporations Act 2001
Audit and review of financial reports and other audit work for foreign subsidiary
Network firm of PricewaterhouseCoopers
Audit and review of financial reports and other audit work for foreign subsidiary
Other assurance services:
PricewaterhouseCoopers Australian firm
Store sales certificates
Agreed upon procedures for covenant calculations
Network firm of PricewaterhouseCoopers
Government subsidy audit
Whole Dollars
2021
$
2020
$
579,747
42,432
518,434
40,800
506,824
1,129,003
541,638
1,100,872
29,478
7,650
129,620
166,748
12,240
23,460
-
35,700
Total remuneration for assurance services
1,295,751
1,136,572
TAXATION SERVICES
PricewaterhouseCoopers Australian firm
Tax compliance services, including review of tax returns and allowance claims
International tax consulting
Network firm of PricewaterhouseCoopers
Tax compliance services, including review of company tax returns
Total remuneration for taxation services
58,160
-
56,675
114,835
57,000
6,324
5,665
68,989
OTHER SERVICES
PricewaterhouseCoopers Australian firm
Acquisition related due diligence
Total remuneration for other services
276,787
276,787
-
-
TOTAL REMUNERATION FOR SERVICES
1,687,373
1,205,561
It is the Group's policy to employ PricewaterhouseCoopers on assignments additional to their statutory audit
duties where PricewaterhouseCoopers's expertise and experience with the Group are important. These
assignments are principally tax advice, due diligence reporting on acquisitions and capital raising, or where
PricewaterhouseCoopers is awarded assignments on a competitive basis. It is the Company's policy to seek
competitive tenders for all major consulting projects.
106 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
94 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G12/ Contingencies
The parent entity and certain controlled entities, indicated in note H1, have entered into a Deed of Cross
Guarantee (Amended and Restated) under which the parent entity has guaranteed any deficiencies of
funds on winding up of the controlled entities which are party to the Deed. At the date of this statement there
are reasonable grounds to believe that the Company will be able to meet any obligations or liabilities to
which it is, or may become, subject by virtue of the Deed.
As described in note B2, CFG Finance Pty. Limited (a subsidiary) and several other related entities entered into
Syndicated and Working Capital credit facilities. As a consequence of this, the Company and its subsidiaries
(other than subsidiaries outside the Closed Group) became registered guarantors of all the obligations in
respect of these loan facilities.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
95 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 107
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H/ Group Structure
H1/ Subsidiaries and Deed of Cross Guarantee (Amended and Restated)
H2/ Parent entity financial information
H1/ Subsidiaries and Deed of Cross Guarantee (Amended and Restated)
The Consolidated Financial Statements at 2 May 2021 include the following subsidiaries. The reporting period
end of all subsidiaries is the same as that of the parent entity (a).
Name of entity
Notes
Place of business/
country of
incorporation
Acronym
% of shares held
2021
%
2020
%
CFG Finance Pty Limited
Collins Foods Holding Pty. Limited
Collins Foods Finance Pty. Limited
Collins Foods Group Pty. Ltd.
Collins Restaurants Queensland Pty.
Ltd.
Collins Restaurants NSW Pty. Ltd.
Collins Restaurants West Pty. Ltd.
Fiscal Nominees Company Pty. Ltd.
Sizzler Restaurants Group Pty. Ltd.
Collins Restaurants Management Pty.
Ltd.
Collins Restaurants South Pty. Ltd.
Collins Foods Subsidiary Pty Ltd
Snag Stand Leasing Pty Ltd
Snag Stand Corporate Pty Limited
Snag Stand Franchising Pty Ltd
Snag Stand International Pty Ltd
Snag Holdings Pty Ltd
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
Collins Property Development Pty. Ltd (b)
Club Sizzler Pty. Ltd.
Collins Foods Australia Pty. Ltd.
Collins Finance and Management Pty.
Ltd.
SingCo Trading Pte Ltd
Sizzler International Marks LLC
Sizzler Asia Holdings LLC
Sizzler South East Asia LLC
Sizzler New Zealand LLC
Sizzler Restaurant Services LLC
Collins Foods Europe Limited
(b)
(b)
(b)
(c)
(c)
(c)
(c) (d)
(c) (d)
(c) (d)
(c)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Singapore
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
United Kingdom
Collins Foods Europe Services Limited (c)
United Kingdom
Collins Foods Europe Finco Limited
Collins Foods Germany Limited
(c)
(c)
United Kingdom
United Kingdom
108 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
CFGF
CFH
CFF
CFG
CRQ
CRN
CRW
FNC
SRG
CRM
CRS
CFS
SSL
SSC
SSF
SSI
SNG
CPD
CSP
CFA
CFM
SingCo
SIM
SAH
SSEA
SNZ
SRS
CFEL
CFESL
CFEFL
CFGL
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
96 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1/ Subsidiaries and Deed of Cross Guarantee (Amended and Restated) (continued)
Name of entity
Notes
Place of business/
country of
incorporation
Acronym
% of shares held
Collins Foods Netherlands Limited
(c)
United Kingdom
CFNL
MAAS KFC Amersfoort B.V.
MAAS KFC Utrecht B.V.
MAAS KFC Veenendaal B.V.
(c) (e)
(c) (e)
(c) (e)
Netherlands
Netherlands
Netherlands
AMF
UTR
VDL
2021
%
100
100
100
100
2020
%
100
-
-
-
(a) Collins Foods Limited is incorporated and domiciled in Australia. The Registered office is located at Level 3, KSD1, 485 Kingsford Smith Drive, Hamilton Queensland 4007.
(b)
These companies have entered into a Deed of Cross Guarantee (Amended and Restated), dated 27 April 2017, with Collins Foods Limited which provides that all parties to the deed will
guarantee to each creditor payment in full of any debt of each company participating in the deed on winding up of that company. As a result of the new ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785 (ASIC Instrument 2016/785) which has replaced ASIC Class Order CO 98/1418, these companies are relieved from the requirement to prepare financial
statements.
(c)
These companies are not Australian registered companies and are not covered by the ASIC Instrument 2016/785.
(d) Originally incorporated in Nevada, upon conversion to a Limited Liability Company (LLC) became registered in Delaware.
(e) On 1 February 2021 Collins Foods Netherlands Limited acquired 3 KFC restaurants from MAAS Holdings B.V. located in the Netherlands, Europe.
The Consolidated Income Statement, Consolidated Statement of Comprehensive Income and Summary of
Movements in Consolidated Retained Earnings of the entities in the ASIC Instrument 2016/785 ‘Closed Group’
are as follows.
As there are no other parties to the Deed of Cross Guarantee (Amended and Restated), that are controlled
by Collins Foods Limited, the below also represents the ‘Extended Closed Group’.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 109
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1/ Subsidiaries and Deed of Cross Guarantee (Amended and Restated) (continued)
CONSOLIDATED INCOME STATEMENT
Sales revenue
Cost of sales
Gross profit
Closed Group
2021
$'000
2020
Restated*
$'000
928,450
(439,267)
489,183
809,310
(382,443)
426,867
Selling, marketing and royalty expenses
(199,925)
(175,362)
Occupancy expenses
Restaurant related expenses
Administration expenses
Other expenses
Other income
Finance income
Finance costs
Profit from continuing operations before income tax
Income tax expense
Profit from continuing operations
Loss from discontinued operation
Net profit attributable to the Closed Group
(59,938)
(70,393)
(50,428)
(6,776)
468
-
(26,084)
76,107
(23,544)
52,563
(52,466)
(64,443)
(40,430)
(6,217)
4,188
272
(28,995)
63,414
(19,746)
43,668
(4,663)
47,900
(928)
42,740
* Comparative figures have been restated to present the impacts of the current period discontinued
operations.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit from continuing operations
Other comprehensive income:
Cash flow hedges
Income tax relating to components of other comprehensive income
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Closed Group
47,900
42,740
1,940
(582)
1,358
49,258
(1,327)
398
(929)
41,811
Total comprehensive income for the reporting period is attributable to:
Owners of the parent
49,258
41,811
110 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
98 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1/ Subsidiaries and Deed of Cross Guarantee (Amended and Restated) (continued)
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED EARNINGS
Retained earnings at the beginning of the reporting period
Change in accounting policy – adoption of AASB 16
Profit for the period
Dividends provided for or paid
Retained earnings at the end of the reporting period
Closed Group
2021
$'000
2020
$'000
70,931
-
47,900
(16,444)
102,387
51,637
(130)
42,740
(23,316)
70,931
The Consolidated Balance Sheet of all entities in the ASIC Instrument 2016/785 ‘Closed Group’ as at the end of
the reporting period is as follows:
Current assets
Cash and cash equivalents
Receivables
Inventories
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right-of-use assets
Deferred tax assets
Other financial assets
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Derivative financial instruments
Provisions
Total current liabilities
Closed Group
2021
$'000
2020
$'000
68,684
9,141
6,082
2,159
86,066
155,043
340,818
319,196
41,130
134,244
990,431
78,305
745
5,792
1,288
86,130
150,452
339,476
318,215
36,453
134,244
978,840
1,076,497
1,064,970
81,866
20,846
7,077
1,536
6,141
117,466
74,442
20,396
6,994
2,641
6,409
110,882
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 111
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1/ Subsidiaries and Deed of Cross Guarantee (Amended and Restated) (continued)
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
Equity
Contributed equity
Reserves
Retained earnings
TOTAL EQUITY
Closed Group
2021
$'000
2020
$'000
241,895
321,509
819
6,139
570,362
290,092
308,958
1,803
5,366
606,219
687,828
717,101
388,669
347,869
290,788
(4,507)
102,388
388,669
290,788
(13,850)
70,931
347,869
112 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
100 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H2/ Parent entity financial information
SUMMARY FINANCIAL INFORMATION
The individual financial statements for the parent entity, show the following aggregate amounts:
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Issued capital (1)
Reserves
Retained earnings
Profit or loss for the period
Total comprehensive income
2021
$'000
2020
$'000
487,484
440,023
208
487,692
139,682
23
305
440,328
104,171
45
139,705
104,216
347,987
(347,987)
336,112
(336,112)
337,119
1,493
9,375
347,987
337,119
292
(1,299)
336,112
35,156
21,248
35,156
21,248
(1) Represents share capital of the parent entity. This differs from the share capital of the Group due to the capital reconstruction of the Group treated as a reverse acquisition in the 2012 reporting
period.
GUARANTEES ENTERED INTO BY THE PARENT ENTITY
The parent entity has provided unsecured financial guarantees in respect of bank loan facilities amounting to
$270 million and €60 million as stated in note B2. There are cross guarantees given by the parent entity as
described in note H1. All controlled entities will together be capable of meeting their obligations as and when
they fall due by virtue to the Deed of Cross Guarantee (Amended and Restated) dated 27 April 2017. The
parent entity has guaranteed to financially support a number of its international subsidiaries until July 2021. No
liability was recognised by the parent entity in relation to these guarantees, as their fair value is considered
immaterial.
CONTINGENT LIABILITIES OF THE PARENT ENTITY
Except as described above in relation to guarantees, the parent entity did not have any contingent liabilities
as at 2 May 2021 (2020: nil).
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
101 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 113
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I/ Basis of Preparation and Other Accounting Policies
I1/ Basis of preparation
I2/ Changes in accounting policies
I3/ Other accounting policies
I1/ Basis of preparation
COMPLIANCE
These financial statements have been prepared as a general purpose financial report in accordance with
Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001. Collins Foods Limited is a
for-profit entity for the purpose of preparing the financial statements.
The consolidated financial statements of the Group comply with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
MEASUREMENT
Collins Foods Limited is a for profit entity for the purpose of preparing the Consolidated Financial Statements.
The financial statements have also been prepared under the historical cost convention, as modified by the
revaluation of financial assets and liabilities (including derivative instruments).
GOING CONCERN
The financial report has been prepared on a going concern basis. The Directors are of the opinion that the
Group will be able to continue to operate as a going concern having regard to available non-current debt
facilities and the Group’s internally generated cash resources.
In the current reporting period, the Group has a net current liability position of $32.56 million. The predominant
reason for this net current liability position is the introduction of AASB 16 Leases in the prior reporting period,
with lease payments due in the next financial year now recognised as current liabilities. The Group does not
deem this to be a risk to its’ going concern, as without the introduction of AASB 16 the Group would be in a
net current liability position of $0.91 million with undrawn bank loan facilities of $90.24 million and undrawn
working capital facilities of $25.39 million due for repayment by 31 October 2022. The Group’s loan covenants
are based on results excluding the impact of AASB 16. The current covenant ratios have significant headroom
at current performance and there are sufficient undrawn facilities available, both within the Working Capital
Facility and Bank Loan Facility, should the Group require access to additional funds, all repayable beyond 12
months (refer to note B2).
CONSOLIDATION
The Consolidated Financial Statements include the financial statements of the parent entity, Collins Foods
Limited (the Company) and its subsidiaries (together referred to as the Group) (see Note H1 on subsidiaries).
All transactions and balances between companies in the Group are eliminated on consolidation. Subsidiaries
are all those entities over which the Company has the power to govern the financial and operating results
and policies and often accompanies a shareholding of more than one-half of the voting rights. The results of
subsidiaries acquired or disposed of during the reporting period are included in the Consolidated Statement
of Comprehensive Income from the effective date of acquisition or up to the effective date of disposal, as
appropriate. Consistent accounting policies are employed in the preparation and presentation of the
consolidated financial statements.
REPORTING PERIOD
The Group utilises a fifty-two, fifty-three week reporting period ending on the Sunday nearest to 30 April. The
2021 reporting period comprised the fifty-two weeks which ended on 2 May 2021 (2020 was a fifty-three week
reporting period which ended on 3 May 2020).
114 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
102 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I1/ Basis of preparation (continued)
FOREIGN CURRENCIES
Items included in the financial statements of each of the Group 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 Australian dollars, which is the functional and presentation currency of
the Company.
Transactions in foreign currencies are converted at the exchange rates in effect at the dates of each
transaction. Amounts payable to or by the Group in foreign currencies have been translated into Australian
currency at the exchange rates ruling on balance date. Gains and losses arising from fluctuations in
exchange rates on monetary assets and liabilities are included in the Consolidated Income Statement in the
period in which the exchange rates change, except when deferred in equity as qualifying cash flow hedges.
The foreign currency results and financial position of foreign operations are translated into Australian dollars as
follows:
• assets and liabilities at the exchange rate at the end of the reporting period;
• income and expenses at the average exchange rates for the reporting period; with
• all resulting exchange differences recognised in other comprehensive income and accumulated in
equity.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities,
and of borrowings and other financial instruments designated as hedges of such investments, are recognised
in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and
liabilities of the foreign operation and translated at the exchange rate at the end of the reporting period.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Estimates and judgements are continually evaluated and are based on historical experience and other
factors, including expectations of future events that may have a financial impact on the Group and that are
believed to be reasonable under the circumstances.
The carrying amounts of certain assets and liabilities are often determined based on estimates and
assumptions of future events. The key estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting
period are included in the following Notes:
• Note A2 Business combination;
• Note G4 Property, plant and equipment;
• Note G5 Intangible assets;
• Note G6 Leases; and
• Note G8 Provisions.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument
2016/191, issued by the Australian Securities and Investments Commission, relating to the 'rounding off' of
amounts in the financial report. Amounts in the financial report have been rounded off in accordance with
the instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.
COMPARATIVES AND RESTATEMENTS OF PRIOR YEAR BALANCES
Comparatives have been restated where appropriate to exclude the discontinued operations of Sizzler
Australia for comparability purposes.
NEW AND AMENDED STANDARDS ADOPTED BY THE GROUP
The Group has not applied any new standards or amendments for the first time for their annual reporting
period commencing 4 May 2020.
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 115
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
103 of 116
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I1/ Basis of preparation (continued)
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 2
May 2021 reporting periods and have not been early adopted by the Group. The Group's assessment of these
new standards and interpretations is that the impact to the Group is immaterial. At this stage the Group does
not intend to adopt any of the standards before the effective dates.
With reference to the final agenda decision issued by the IFRS Interpretations Committee (IFRIC) in April 2021
on Cloud computing arrangements, management have completed a preliminary assessment and does not
consider these to be material to the Group. A detailed assessment will be completed in the next 6 months.
I2/ Changes in accounting policies
The accounting policies adopted in this report have been consistently applied to each entity in the Group
and are consistent with those of the prior reporting period.
I3/ Other accounting policies
GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST) except:
• where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of an item of expense; or
• for receivables and payables which are recognised inclusive of GST.
The net amount of GST payable to the taxation authority is included as part of trade and other payables (see
Note G7).
Cash flows are included in the Consolidated Statement of Cash Flows on a gross basis. The GST component of
cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
COST OF SALES
For the purposes of the Consolidated Income Statement, cost of sales includes the carrying amount of
inventories sold during the reporting period and an estimated allocation of labour incurred in relation to
preparing those inventories for sale.
OCCUPANCY EXPENSES
Occupancy expenses include: fixed rentals, contingent rentals, land tax, outgoings and depreciation relating
to buildings and leasehold improvements.
RESTAURANT RELATED EXPENSES
Restaurant related expenses include: utilities, maintenance, labour and on-costs (except those allocated to
cost of sales), cleaning costs, depreciation of plant and equipment (owned and leased) located in
restaurants and amortisation of franchise rights.
INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Cost is assigned on a first-in first-out basis
and includes expenditure incurred in acquiring the stock and bringing it to the existing condition and location.
GOVERNMENT GRANTS
Grants from Australian and overseas governments are recognised at their fair value where there is a
reasonable assurance that the grant will be received and the Group will comply with all attached conditions.
Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to
match them with the costs that they are intended to compensate. The grant is recognised under the profit or
loss by deducting the value from the related expense the grant was received for.
Previously the Group recognised traineeship grants as other income. However management now consider
that grants are more appropriately accounted for as a reduction of the related expense and have been
treated accordingly in the financial statements.
116 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
104 of 116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I3/ Other accounting policies (continued)
Government grants were received by the Group in the current year for traineeships and support in relation to
the impacts of COVID-19, the latter being from both Australian and overseas governments, amounting to $6.3
million. Of the $6.3 million, $4.2 million was received in Australia by Sizzler Australia, with the total amount being
passed on to employees. $2.4 million was a direct pass through to employees (top up to the minimum
fortnightly wage of $1,500), with balance of $1.8 million covering wages for hours worked by employees. In
March 2021, the Group repaid the $1.8 million of JobKeeeper to the Australian Government. Net grant
receipts of $4.5 million have been offset against the expense to which they relate under the profit or loss.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
105 of 116
ANNUAL REPORT 2021 COLLINS FOODS LIMITED 117
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
J/ Events occurring after the reporting period
J1/ Subsequent Events
J1/ Subsequent Events
On 17 March 2021, Collins Foods Netherlands Limited entered into a Share Purchase Agreement for €2,250,000
to buy 1 KFC restaurant from Kia Ora Holding B.V. The deal settled on 1 June 2021.
The Group is not aware of any other matters or circumstances that have arisen since the end of the financial
year which have significantly or may significantly affect the operations and results of the Group.
118 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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DIRECTORS’
DECLARATION
DIRECTORS' DECLARATION
In the Directors' opinion:
•
the financial statements and notes set out on pages 51 to 118 are in accordance with the Corporations
Act 2001, including:
-
-
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements, and
giving a true and fair view of the consolidated entity's financial position as at 2 May 2021 and of its
performance for the financial period ended on that date, and
•
•
there are reasonable grounds to believe that Collins Foods Limited will be able to pay its debts as and
when they become due and payable; and
at the date of this declaration, there are reasonable grounds to believe that the members of the
extended closed group identified in Note H1 will be able to meet any obligations or liabilities to which
they are, or may become, subject by virtue of the Deed of Cross Guarantee (Amended and Restated)
described in Note H1.
Note I1 confirms that the financial statements also comply with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
The Directors have been given the declarations by the chief executive officer and chief financial officer
required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
This report is made in accordance with a resolution of the Directors.
Robert Kaye SC
Chairman
Brisbane
29 June 2021
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 119
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
Independent auditor’s report
Independent auditor’s report
To the members of Collins Foods Limited
To the members of Collins Foods Limited
Report on the audit of the financial report
Report on the audit of the financial report
Our opinion
Our opinion
In our opinion:
The accompanying financial report of Collins Foods Limited (the Company) and its controlled entities (together
In our opinion:
the Group) is in accordance with the Corporations Act 2001, including:
The accompanying financial report of Collins Foods Limited (the Company) and its controlled entities (together
the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 2 May 2021 and of its financial
performance for the period from 4 May 2020 to 2 May 2021 (the reporting period) then ended
(a) giving a true and fair view of the Group's financial position as at 2 May 2021 and of its financial
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
performance for the period from 4 May 2020 to 2 May 2021 (the reporting period) then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
the consolidated balance sheet as at 2 May 2021
What we have audited
The Group financial report comprises:
What we have audited
●
The Group financial report comprises:
●
●
●
●
●
●
●
●
●
●
the consolidated statement of changes in equity for the reporting period then ended
the consolidated balance sheet as at 2 May 2021
the consolidated statement of cash flows for the reporting period then ended
the consolidated statement of changes in equity for the reporting period then ended
the consolidated income statement for the reporting period then ended
the consolidated statement of cash flows for the reporting period then ended
the consolidated statement of comprehensive income for the reporting period then ended
the consolidated income statement for the reporting period then ended
the notes to the consolidated financial statements, which include significant accounting policies and other
the consolidated statement of comprehensive income for the reporting period then ended
explanatory information
the notes to the consolidated financial statements, which include significant accounting policies and other
the directors’ declaration.
explanatory information
●
●
●
Basis for opinion
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
report.
standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
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 in accordance with the auditor independence requirements of the Corporations
Independence
Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code
We are independent of the Group in accordance with the auditor independence requirements of the Corporations
of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code
audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our
with the Code.
audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
PricewaterhouseCoopers, ABN 52 780 433 757
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
480 Queen Street, BRISBANE QLD 4000, GPO Box 150, BRISBANE QLD 4001
T: +61 7 3257 5000, F: +61 7 3257 5999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Liability limited by a scheme approved under Professional Standards Legislation.
120 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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108 of 116
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
(CONTINUED)
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is 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
financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial report as a whole, taking into account the geographic and management structure of the Group, its
accounting processes and controls and the industry in which it operates.
Materiality
Audit scope
Key audit matters
●
Amongst other relevant topics, we
communicated the following key
audit matters to the Audit and Risk
Committee:
−
−
−
Assessment of the carrying
value of goodwill
Carrying value of non-current
assets
Accounting for AASB16
Leases
●
These are further described in the
Key audit matters section of our
report.
Our audit focused on where the
Group made subjective
judgements; for example,
significant accounting estimates
involving assumptions and
inherently uncertain future
events.
In establishing the overall
approach to the Group audit, we
determined the type of audit work
that needed to be performed. Full
scope audit procedures were
performed over the Australian,
Asian and the European
operations, assisted by local team
auditors in the Netherlands. Site
visits were conducted at selected
KFC and Taco Bell Restaurants in
Queensland.
●
For the purpose of our audit we
used overall Group materiality of
$3.5 million, which represents
approximately 5% of the Group’s
profit before tax from continuing
operations adjusted for the
impairment charge recognised in
the reporting period.
● We applied this threshold,
●
●
together with qualitative
considerations, to determine the
scope of our audit and the nature,
timing and extent of our audit
procedures and to evaluate the
effect of misstatements on the
financial report as a whole.
● We chose Group profit before tax
from continuing operations
because, in our view, it is the
benchmark against which the
performance of the Group is most
commonly measured. We
adjusted it for impairment as it is
an unusual or infrequently
occurring item impacting profit
and loss.
● We utilised a 5% threshold based
on our professional judgement,
noting it is within the range of
commonly acceptable thresholds.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
(CONTINUED)
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial report for the current period. The key audit matters were addressed in the context of our audit of the
financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Assessment of the carrying value of goodwill
Goodwill $426.6m (Refer to note G5)
Our procedures relating to impairment assessment of
goodwill included, amongst others:
Collins Foods Limited recognised goodwill of $426.6 million
as at 2 May 2021, allocated to KFC Restaurants Australia
($327.0m), KFC Restaurants Europe ($98.4m) and Sizzler
Asia ($1.2m).
As required by Australian Accounting Standards, as at 2 May
2021, the Group performed an impairment assessment over
the goodwill balance by estimating the value in use for each
cash generating unit (CGU) using a discounted cash flow
model. Refer to Note G5 for details of the impairment tests
and assumptions.
No impairment charge was recorded by the Group in respect
of Goodwill in the current reporting period.
We considered this a key audit matter given the significant
level of judgements and estimates involved in determining
the value in use calculation for each CGU as well as the
financial significance of the asset balances on the Group’s
Balance sheet.
●
●
●
●
●
●
Assessing the appropriateness of the Group’s
determination of CGUs, including the allocation of
assets to CGUs.
Testing the mathematical accuracy of the models.
Comparing the cash flow forecasts for FY2022 in the
models to the Board approved budget.
Comparing the FY2021 reporting period and FY2022
reporting period to date actual results with
corresponding reporting period forecasts to assess the
historical accuracy of the Group’s forecasting processes.
Evaluating the appropriateness of the discount rate,
short term and long term growth rate assumptions in
the models with the support of PwC valuation
specialists by comparing them to historical company
data and market observable inputs.
Evaluated the reasonableness of the disclosures made
in Note G5 to the financial report, in light of the
requirements of Australian Accounting Standards.
Carrying value of non-current assets
Property plant & Equipment $188.9m (Refer to note G4),
Franchise Rights $11.4m (Refer to note G5), and Right of
Use assets $359.1m (Refer to note G6)
The Group assesses impairment of store assets on a
restaurant-by-restaurant basis, by preparing models with
estimates of future cash flows discounted to their present
value.
Following the Group’s assessment, a pre-tax impairment of
$9.5m was recorded (mainly comprising $4.5m for Property
Plant & Equipment, $0.2m for Franchise Rights and $4.8m
for Right of Use Assets).
We considered this a key audit matter given the significant
level of judgements and estimates involved in determining
the value in use calculation for each restaurant with
indicators of impairment as well as the financial significance
of the asset balances on the Group’s Balance sheet.
We performed the following audit procedures in relation to
the Group’s review of each restaurant, amongst others:
●
●
●
●
●
Testing the mathematical accuracy of the underlying
calculations in the discounted cash flow valuation
models.
Comparing the cash flow forecasts for FY2022 in the
calculations to the Board approved budget.
Comparing the FY2021 reporting period and FY2022
reporting period to date actual results with
corresponding reporting period forecasts to assess the
historical accuracy of the Group’s forecasting processes.
Evaluating the appropriateness of the discount rate,
short term and long term growth rate assumptions in
the models with the support of PwC valuation
specialists by comparing them to historical company
data and market observable inputs.
Evaluated the reasonableness of the disclosures made
in Note G4, G5 and G6 to the financial report, in light of
the requirements of Australian Accounting Standards.
122 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
(CONTINUED)
Accounting for AASB 16 Leases
Right of Use assets $359.1m, Lease Liabilities $395.3m
(Refer to note G6)
We performed the following audit procedures, amongst
others:
The Group adopted Australian Accounting Standard AASB
16 Leases (AASB 16) in the prior period. As a result, Right of
Use assets and Lease Liabilities are recognised in the balance
sheet.
●
●
Assessed whether the Group’s accounting policies are in
accordance with the requirements of AASB 16.
Evaluated the adequacy of the disclosures made in Note
G6 in light of the requirements of Australian
Accounting Standards.
This was considered key audit matter due to the:
●
●
●
Financial significance of the balances included in the
financial report
The critical judgements used in determining the lease
term assumptions in the lease calculations
The significant amount of audit effort in auditing the
balances.
For a sample of lease agreements, we:
●
●
●
Evaluated the lease calculations against the terms of the
lease agreement and the requirements of Australian
Accounting Standard
Tested the mathematical accuracy of the lease
calculations
Assessed the evidence for critical judgements made,
including historical practices of the Group
around lease term option renewals.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report for the reporting period ended 2 May 2021, but does not include the financial report
and our auditor’s report thereon. Prior to the date of this auditor's report, the other information we obtained
included the Directors Report, Shareholder Information and Corporate Directory. We expect the remaining other
information to be made available to us after the date of this auditor's report.
Our opinion on the financial report does not cover the other information and we do not and will not express an
opinion or any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, 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.
When we read the other information not yet received, if we conclude that there is a material misstatement therein,
we are required to communicate the matter to the directors and use our professional judgement to determine the
appropriate action to take.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial report that gives a true
and fair view and is free from material misstatement, whether due to fraud or error.
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 123
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS
(CONTINUED)
In preparing the financial report, the directors are responsible for assessing the ability of the Group 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 to cease operations, or have no realistic
alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is 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 the Australian Auditing Standards 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 the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This
description forms part of our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 25 to 46 of the directors’ report for the reporting
period ended 2 May 2021.
In our opinion, the remuneration report of Collins Foods Limited for the period 4 May 2020 to 2 May 2021
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the remuneration report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.
PricewaterhouseCoopers
Michael Crowe
Partner
124 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
Brisbane
29 June 2021
112 of 116
SHAREHOLDER
INFORMATION
SHAREHOLDER INFORMATION
Shareholder information that has not been stated elsewhere in the Annual Report is set out below. The
shareholder information set out below was applicable as at the close of trading on 18 June 2021.
Distribution of equity securities
Analysis of the number of equity security holders by size of holding and the total percentage of securities in
that class held by the holders in each category:
Holding
1 - 1000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
TOTAL
TOTAL ORDINARY SHARES ON ISSUE
TOTAL UNQUOTED PERFORMANCE RIGHTS ON
ISSUE (1)
Number of
shareholders
of ordinary
shares
Percentage of
total ordinary
shares on issue
%
Number of
holders of
performance
rights
Percentage of
total
performance
rights on issue
%
4,780
3,319
634
403
45
9,181
-
-
1.79
6.78
3.94
7.87
79.62
100.00
.00
.00
1
7
13
3
3
27
-
-
.15
2.48
10.96
25.68
60.73
100.00
116,581,244
648,598
(1) Total performance rights on issue differs from note D2 due to the forfeit of rights by eligible holders after year end.
There were 249 holders of less than a marketable parcel of ordinary shares.
Equity security holders
The names of the 20 largest holders of the only class of quoted equity securities are listed below:
Name
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
National Nominees Limited
Mr Kevin Perkins
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited
Chrikim Pty Ltd
Mrs Heather Lynnette Grace
ORDINARY SHARES
Percentage
of
issued shares
%
Number held
22,338,735
22,287,941
13,042,260
11,855,135
6,850,574
4,623,173
3,011,241
1,123,825
732,610
429,801
19.16
19.12
11.19
10.17
5.88
3.97
2.58
0.96
0.63
0.37
Collins Foods Limited ACN 151 420 781 I
Financial Report - for the reporting period ended 2 May 2021
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 125
SHAREHOLDER
INFORMATION
SHAREHOLDER INFORMATION
(CONTINUED)
Equity security holders (continued)
Name
Chrikim Pty Ltd
Perkins Family Investment Corporation Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd DRP
BNP Paribas Nominees Pty Ltd Six Sis Ltd
Michael Kemp Pty Ltd
AMP Life Limited
Ms Deborah Lee Chow + Mr Edward Chow
Citicorp Nominees Pty Limited
Michele Taylor Pty Ltd
Adrian Mark Argent
TOTAL
Substantial holders
ORDINARY SHARES
Percentage
of
issued shares
%
Number held
369,421
327,273
323,981
319,313
300,910
280,913
272,703
270,008
261,819
260,000
89,281,636
0.32
0.28
0.28
0.27
0.26
0.24
0.23
0.23
0.22
0.22
76.58
Substantial holders (including associate holdings) in the Company, based on the most recent substantial
holder notices lodged with the Company and ASX, are set out below:
Kevin Perkins
Challenger Limited
Milford Asset Management Limited
Restricted Securities and share buy-backs
ORDINARY SHARES
Number held
Percentage
%
7,221,484
7,517,257
6,107,950
6.54
6.45
5.24
A voluntary holding lock will be applied to 23,591 fully paid ordinary shares for a period of 12 months, 29,065
fully ordinary shares for a period of 24 months, 21,808 fully paid ordinary shares for a period of 36 months and
24,221 fully paid ordinary shares for a period of 48 months, if they are issued, upon the vesting of 98,685
performance rights in accordance with the rules of the LTIP.
The Company is not currently conducting an on-market share buy-back.
Voting rights
FULLY PAID ORDINARY SHARES
On a show of hands every member present at a meeting in person or by proxy shall have one vote. Upon a
poll, each share shall have one vote.
126 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
Collins Foods Limited ACN 151 420 781 I
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SHAREHOLDER INFORMATION
(CONTINUED)
Voting rights (continued)
PERFORMANCE RIGHTS
The performance rights do not have any voting rights. The fully paid ordinary shares to be allotted on the
exercise of the performance rights will have the voting rights noted above for fully paid ordinary shares.
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Financial Report - for the reporting period ended 2 May 2021
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CORPORATE
DIRECTORY
CORPORATE DIRECTORY
Di
Directors
Company Secretary
Principal registered office in Australia
Share and debenture register
Auditor
Robert Kaye SC
Chairman
Drew O’Malley
Managing Director & CEO
Christine Holman
Newman Manion
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Frances Finucan
Level 3, KSD1, 485 Kingsford Smith Drive
Hamilton QLD 4007
++61 7 3352 080
Computershare Investor Services Pty Ltd
Level 1, 200 Mary Street
Brisbane QLD 4000
Telephone number: 1300 850 505
Outside Australia: +61 3 9415 4000
PricewaterhouseCoopers
480 Queen Street
Brisbane QLD 4000
Stock exchange listings
Collins Foods Limited shares are listed on the Australian
Securities Exchange. (ASX: CKF)
Website address
www.collinsfoods.com
The Collins Foods Corporate Governance Statement is located in the
Corporate Governance section on the Company's website.
128 ANNUAL REPORT 2021 COLLINS FOODS LIMITED
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ANNUAL REPORT 2021 COLLINS FOODS LIMITED 129