25 July 2022
ASX Market Announcements Office
10 Bridge Street
SYDNEY NSW 2000
Via ASX Online
Dear Sir/ Madam
COLLINS FOODS LIMITED (COLLINS FOODS) - ANNOUNCEMENT FOR RELEASE VIA MARKET
ANNOUNCEMENTS PLATFORM
Please find attached Collins Foods Limited’s 2022 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
~2022~
Annual
Report
COLLINS FOODS LIMITED ABN 13 151 420 781
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
10 Managing Director & CEO’s Report
12 Financial Report
14 Directors’ Report
22
Letter from the Chair of the Remuneration
and Nomination Committee
23 Remuneration Report
42 Auditor’s Independence Declaration
43 Consolidated Income Statement
44 Consolidated Statement of Comprehensive Income
45 Consolidated Balance Sheet
46 Consolidated Statement of Cash Flows
47 Consolidated Statement of Changes in Equity
48 Notes to the Consolidated Financial Statements
105 Directors’ Declaration
106 Independent Auditor’s Report
112 Shareholder Information
113 Corporate Directory
Key dates
Full year 2022 results announcement Tuesday 28 June 2022
Record date for final dividend Monday 11 July 2022
Final dividend payment Monday 1 August 2022
Annual General Meeting Friday 2 September 2022
End of half year 2023 Sunday 16 October 2022
Half year 2023 results announcement Tuesday 29 November 2022
Record date for interim dividend Tuesday 6 December 2022
Interim dividend payment Thursday 29 December 2022
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 1
Our vision, mission and values
2 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Our financial performance
Revenue
Statutory NPAT
(post-AASB 16)
Underlying EBITDA
(continuing operations, pre-AASB 16)
11.1%
to $1.18b
(FY21: $1.07b)
46.9%
to $54.8m
(FY21: $32.6m)
10.4%
to $150.0m
(FY21: $135.9m)
Underlying NPAT
(continuing operations, pre-AASB 16)
Total FY22 Fully
Franked Dividends
14.1%
to $64.6m
(FY21: $56.6m)
27.0CPS
(up 17.4%)
(FY21: 23.0cps)
Net Operating Cash Flow
(post-AASB 16)
Statutory EBITDA
(continuing operations, post-AASB 16)
$156.3m
(FY21: $128.2m)
12.5%
to $207.2m
(FY21: $183.8m)*
* The prior reporting period has been
restated as a result of a change in
accounting policy for the recognition
of cloud computing arrangements.
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 3
In FY22 we added a
RECORD
NUMBER OF new
restaurants
10 for KFC Australia,
16 for KFC Europe and
4 for Taco Bell.
Our year in review
We operate
343
restaurants
KFC and Taco Bell restaurants
in Australia, Germany, and the
Netherlands, and are the franchisor
of 66 in Japan and Thailand.
We employ over 17,000 people
in Australia, Germany and
the Netherlands.
We continued to
focus on innovation,
excellence and
building brand
strength to
drive sustainable
long-term growth.
4 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
CASE STUDY
Drones enabling faster food for KFC Australia
Collins Foods and KFC Australia partnered with Wing,
Australia’s first on-demand drone delivery service
to pilot food delivery via drones in an initial five
Brisbane suburbs.
This was an Australian-first initiative for KFC, allowing customers
to order via the Wing mobile app and receive their finger lickin’
good chicken with reduced average end-to-end delivery times
by more than half. KFC team members prepared food on-site
at Wing’s delivery base to ensure maximum freshness.
This innovative trial has allowed KFC to expand its delivery
service and reach even more customers in south-east
Queensland.
We think b ig a nd ta ke
BOLD MOVES
to make sure we are
better tomorrow than today.
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 5
Our positive impact
Cr e a ting
unmatched
PEOPLE
experiences
People and
Communities
Establish Collins Foods
Giving as a best-in-class
signature program
by 2026 with
75%+
Participation Rate
Ma king a
POSITIVE
IMPACT
Be ing
BRILLIANT
AT THE BASICS
Planet
Governance
Reduce our carbon
footprint by achieving a
25% reduction
in greenhouse gas emissions
by 2026 compared to FY21
Increase diversion of
waste from landfill by
by 2026 compared to FY2225%
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 FY22:
LTIFR 11.68 (FY21: 14.20)
• Collins Foods Giving employee
Participation Rate in FY22: 36%
(FY21^: 27%)
• Collins Family Fund: over $130,000
gifted
• Equitable employee profile: FY22:
49.2% female, 50.5% male, 0.3% non-
binary, intersex or preferred not to say
• Employing young Australians: 566
traineeships with 307 completed in
FY22 (FY21: 518 with 290 completed)
• Expansion of participation in Food
Recovery to include KFC restaurants
in Tasmania
• Extended wellbeing strategy to have
stronger focus on psychosocial hazards
•
Implemented an IT innovation program
to improve incident reporting and
safety analysis
• Renewable energy: 89 additional
solar panel systems installed this
year, entered power purchase
agreement
• Reducing Scope 1 and 2 GHG
despite increasing restaurants:
FY22: 65,926 tonnes CO2-e
(FY21^: 68,613 tonnes CO2-e)
• Reducing average energy
consumption per restaurant:
FY22: 1,192 GJ* (FY21^: 1,257 GJ)
• Reducing waste to landfill by
diverting, reusing, recycling or
upcycling waste. FY22: total
waste 12,626 tonnes and a
waste diversion rate of 18.3%
• Opportunity: water management
and other energy efficiencies
* gigajoules
^ FY21 restated
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
T
I
N
U
T
R
O
P
P
O
&
S
E
V
I
T
A
I
T
I
N
I
2
2
0
2
6 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Our brands
KFC
AUSTRALIA
KFC
EUROPE
TACO
BELL
KFC Australia continued
its growth trajectory,
thanks to its operational
excellence, focus on
innovation and high
consumer brand trust
and loyalty.
KFC Europe has seen
strong margin recovery,
following the lifting of
extended restrictions
and lockdowns due
to the COVID-19
pandemic.
Taco Bell, now in its
fifth year of operation
in Australia, has seen an
increase in popularity,
as it focuses on taste
and value to generate
positive momentum.
261
restaurants
$955.5m
Revenue
1.4%
Same Store
Sales growth
21.6%
EBITDA margin
(post-AASB 16)
(17.4% pre-AASB 16)
62
restaurants
$190.4m
Revenue
16.8%
Same Store
Sales growth
(and 11.2% growth on FY19)
14.5%
EBITDA margin
(post-AASB 16)
(6.5% pre-AASB 16)
20
restaurants
$35.8m
Revenue
8.1%
Same Store
Sales growth
(1.2)%
EBITDA margin
(post-AASB 16)
((8.4)% pre-AASB 16)
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 7
Chairman's message
FY22 was another successful
year for Collins Foods, with the
delivery of double-digit earnings
growth, underpinned by a
significant recovery in Europe.
KFC Europe the standout performer
Growth was achieved in all segments during the year, with KFC
Australia delivering 1.4% same store sales growth while cycling
extraordinary same store sales comparatives in the prior year.
Taco Bell returned positive same store sales in Q4 FY22. Both
of these businesses also saw continued store rollout ahead of
Development Agreement pace, and four new Taco Bell restaurants
opening despite COVID-19-related building delays in Melbourne.
KFC Europe was nonetheless the standout performer, both in
terms of FY22 results and execution against strategic objectives.
Europe saw a significant recovery with both same store sales and
EBITDA margins recovering to above pre-pandemic levels. While the
business was a natural beneficiary of the post-COVID-19 reopening
in the region, pleasingly sales remained strong across both drive-thru
and digital channels with the return of dine in. We also saw the
early benefits of changes Collins Foods has put in place under the
corporate franchise agreement (CFA).
Through the CFA, Collins Foods has effective control over the
Netherlands market. Marketing is a key area through which we have
seen immediate effect in driving a renewed focus on core and a
shift from ‘disruptive value’ to ‘everyday value’. We have also made
good progress on building a pipeline for future store developments
as we work towards our target of up to 130 net new restaurants in
the Netherlands market over the next 10 years. Collins Foods also
increased its share of the Netherlands market share to 55.0% of
stores through the acquisition of 15 restaurants.
Collins Foods’ focus on convenience and innovation across the
group was best captured in continued growth in ecommerce sales,
which represented 16.9% of sales in H2 FY22, with click and collect
ordering showing particularly strong growth of nearly 60.0%.
Collins Foods also drove Australia’s first KFC drone delivery pilot in
partnership with Wing and Yum! Brands.
Cash generation underpins dividend growth
Another record result was achieved for FY22, with revenue
increasing 11.1% to $1,184.5 million, reflecting both same store sales
and new restaurant openings.
Continued pursuit of operational excellence and a strong margin
recovery in Europe saw underlying EBITDA (continuing operations)
grow 12.6% to $209.2 million and underlying NPAT (continuing
operations) increase 25.0% to $59.7 million.
The company remained highly cash generative with $156.3 million
in cash flow from operating activities, which saw a reduction in
net debt to $174.9 million, notwithstanding reinvestment in growth
opportunities enabling an increase the final dividend.
The Board was pleased to declare a final FY22 fully franked dividend
of 15.0 cents per ordinary share, taking the total dividend for FY22
to 27.0 cents per share fully franked, up from 23.0 cents per share
in FY21.
Positive Impact Strategy
Now in its second year, Collins Foods’ separately published
Sustainability Report demonstrates our ongoing commitment
to environmental, social and governance (ESG) practices within
Australia. During FY22, Collins Foods focused on reviewing the
flow of data to improve awareness, educate employees, and
empower reporting on all aspects concerning environmental results,
energy usage, social progress, and governance updates and for
the first time, sought independent assurance over subject matter
summarised as follows:
• Average Scope 1 and Scope 2 Greenhouse Gas Emissions
for FY21 (257 tCO2-e per restaurant)
• Collins Foods Giving Participation Rate during Period 13
of FY21 (27%)
• Average Scope 1 and Scope 2 Greenhouse Gas Emissions
for FY22 (235 tCO2-e per restaurant)
• Collins Foods Giving Participation Rate during Period 13
of FY22 (36%)
• Average Waste Diversion from Landfill for FY22 (18.3%)
Inflation on the horizon for FY23
Australia and indeed the world faces unprecedented inflationary
pressure in FY23. With strong brand health and a menu pricing
advantage against QSR peers Collins Foods is well positioned
to manage inflation in the year ahead. In KFC Europe, margin
headwinds are expected to peak in the first half of FY23, albeit
some uncertainty remains over the medium term due to the war
in Ukraine.
Collins Foods continues to plan for long-term sustainable growth,
which will be supported by new restaurant developments in FY23,
with 17 to 24 new restaurant openings planned across the group.
8 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Board changes
On behalf of the Board, I would like to take the opportunity to
thank Bronwyn Morris AM for her significant contribution to the
Board over the past 11 years. Bronwyn is retiring from the Board at
the conclusion of the 2022 Annual General Meeting as part of our
succession plan. Her strong financial, commercial and governance
experience through her professional services background has
been invaluable, particularly in her role as Audit and Risk
Committee Chair. We wish her all the best for her future endeavours.
As announced earlier in July, and to support an orderly transition,
we welcome Christine Holman to the role of Chair of the Audit and
Risk Committee prior to Bronwyn's retirement in September.
During the year, we also welcomed Mark Hawthorne as an
independent non-executive director to the Board. Mark will stand
for election at the 2022 Annual General Meeting.
Thank you
The Board would like to acknowledge the considerable output of
our employees during the year. FY22 was not without its challenges
as we navigated lockdowns in Europe and the Omicron wave
in Australia, and our staff once again rose to the occasion and
delivered operational excellence. I would also like to extend my
gratitude to my fellow Directors for their guidance and counsel over
the course of the year.
Lastly, I would like to thank you, our shareholders, for your support.
Your company is well positioned to deliver attractive returns going
forward with the engine room in KFC Australia, supported by KFC
Europe entering its next phase of maturity and Taco Bell Australia
showing positive momentum.
Robert Kaye SC
Independent Non-executive Chairman
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 9
Managing Director & CEO’s report
I am delighted to report on
another year of strong financial
performance, where Collins
Foods leveraged brand strength,
took convenience and
innovation to new heights,
and lived up to its mantra of
‘Restaurants Done Better’.
Through laser focus on operational execution, 31 restaurants were
added across the group, including 16 new restaurant openings.
KFC
In the well-established Australian market, KFC brand metrics hit
record levels in FY22, including a seventh straight year of increase in
purchase intent, brand consideration reaching its highest level ever
and KFC now leading McDonalds on both taste and value scores.
This brand strength was central to KFC Australia delivering positive
same store sales growth in FY22 despite lapping three to four years’
of same store sales comparatives.
In Europe, the KFC brand showed its potential in FY22, with a strong
recovery in both revenue and margins to above pre-COVID-19
levels, which provided a strong platform as we embark on taking
the Netherlands market to scale through the corporate franchise
agreement (CFA).
Taco Bell
The focus for our emerging Taco Bell brand in Australia has been
on establishing its taste and value credentials, which began to show
positive results in the second half of FY22. Awareness is being
driven by a combination of additional media investment relative to
the brand’s early stages and restaurant rollout. Four new restaurants
were opened during the year despite COVID-19 related construction
impacts in Melbourne. Restaurant openings are set to accelerate in
FY23, with the business on track to achieve scale within three years.
Financial performance
Collins Foods delivered another record result in FY22. Growth was
achieved across all business units, with Europe driving a double
digit growth outcome for both revenue and earnings. Revenue
increased 11.1% to $1.18 billion, through a combination of same stores
sales growth and the contribution of new restaurant openings and
acquired restaurants.
Statutory EBITDA increased 12.7% (from FY21 – restated EBITDA of
$183.8m to $207.2 million), while underlying EBITDA (post-AASB 16)
from continuing operations grew 12.6% to $209.2 million, reflecting
the flow through from revenue growth and strong margin recovery
in Europe.
Statutory NPAT was up 47.2% to $54.8 million, with underlying NPAT
(post-AASB 16) from continuing operations increasing 25.0% to
$59.7 million.
Strong Net Operating Cash Flow of $156.3 million was reinvested
in growth initiatives, used to fund dividend growth and to further
strengthen the balance sheet. Net debt reduced to $174.9 million,
and the net leverage ratio reduced from 1.34* to 1.17 (pre-AASB 16).
Operational performance
KFC AUSTRALIA
Building on record brand strength, KFC Australia became even more
accessible to customers through new restaurant openings (ahead
of development agreement obligations) and an ongoing focus on
convenience and customer experience.
Revenue increased 6.1% to $955.5 million, through same store sales
growth and the contribution of 10 new restaurants, increasing KFC
Australia’s footprint to a total of 261 restaurants at year end.
Revenue growth was also supported by digital and delivery initiatives
with delivery and delivery-as-a-service (DaaS) extended to more than
200 restaurants, piloting of drone delivery, and strong growth in click
and collect ordering. E-commerce sales now represent 16.9% of KFC
Australia sales, up from 13.3% in the prior year.
Underlying EBITDA (post-AASB 16) increased 4.2% to $206.9 million,
with the EBITDA margin declining from 22.0% to 21.6% (pre-AASB 16:
from 17.9% to 17.4%), reflecting the impact of two annual minimum
wage increases in the period.
Inflation did not have a noticeable impact in FY22, though is
expected to see pre-AASB 16 EBITDA margins fall to the lower end
of the historical 16.0% to 17.0% range in FY23.
KFC EUROPE
KFC Europe recovered strongly as pandemic related dining
restrictions were relaxed to deliver results above pre-COVID-19 FY19
levels. Same store sales grew 16.8% and were 11.2% above FY19 levels.
Both the Netherlands and Germany achieved strong growth with
same stores sales growth of 18.8% in the Netherlands (up 7.1% on
FY19) and 11.7% in Germany (up 17.0% on FY19). Both regions saw
drive-thru, digital and delivery sustaining high sales levels following
market reopening.
Underlying EBITDA grew 130.7% to $27.6 million. On a post-AASB
16 basis the EBITDA margin expanded from 8.9% to 14.5%, noting
that the pre-AASB 16 EBITDA margin of 6.5% was above the 5.5%
achieved in FY19.
* The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements.
10 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
FY22 was also transformational in terms of Collins Foods’ position
in the Netherlands, with the acquisition of net 15 restaurants
increasing the Company’s franchisee share to 55% and the signing
and commencement of the CFA, which allows for up to 130 net
new restaurants in the Netherlands over the next 10 years. Collins
Foods now has primary operational control over the market which
includes marketing, control over pricing and management of the
market restaurant development pipeline.
TACO BELL
A test and learn strategy, combined with a focus on improving
value and the quality of the offering is starting to generate positive
momentum in Taco Bell performance, providing confidence in an
acceleration in store rollout in the year ahead.
Taco Bell saw revenue growth of 27.5% to $35.8 million. While same
store sales were down 8.1% for the year, improvement was evident
in the second half and the segment returned to positive growth in
the fourth quarter.
EBITDA profitability (post-AASB 16) at the restaurant level increased
25.0% to $4.0 million, while the segment was slightly loss making at
an EBITDA level with a $0.4m loss.
SIZZLER ASIA
Sizzler Asia delivered revenue growth of 10.8% to $2.8 million and
EBITDA growth of 4.3% to $1.7 million. In a year that was a tale of
two halves, with lockdowns and dining restrictions significantly
impacting the first half result, the markets of Japan and Thailand
experienced a strong recovery in the second half to deliver the
positive full year outcome.
Positive Impact Strategy
Our Positive Impact Strategy, now in its second year, highlights our
efforts in implementing visible, measurable changes across our
restaurants as part of our ongoing pursuit of sustainable growth.
A key highlight of the year was the installation of 89 additional solar
panel-based energy systems to 89 drive-thru restaurants. We are
proud to currently be the only known QSR company in Australia to
commit to this level of solar-power installation. Participation Rates
in the Collins Foods Giving Program increased to 36.0% from 27.0%.
We diverted 9,200kg of cooked chicken from landfill by donations
to food recovery programs, 2,305 tonnes of waste by recycling
2,229 tonnes of cardboard and 77 tonnes of commingled recycling.
Collins Foods waste diversion rate for FY22 was 18.3%.
We pride ourselves on the opportunities we provide to young
Australians to kick-start their careers and with 566 traineeships in
progress and 307 completed over FY22, we are excited to watch our
graduates grow within the industry.
We diverted from landfill:
9,200 KG
OF COOKED CHICKEN DONATED
TO FOOD RECOVERY PROGRAMS
2,229 TONNES
OF CARDBOARD RECYCLED
77 TONNES
OF COMMINGLED RECYCLING
Outlook
The global environment continues to exhibit unprecedented
challenges with inflationary pressures and supply chain shortages.
Our QSR brands are nonetheless in excellent shape to navigate this
landscape. Their proven track record of consumer appeal regardless
of economic conditions, combined with our relentless pursuit of
operational excellence, ensures we are well positioned to manage
through the current inflationary environment.
I would like to thank all of our employees at Collins Foods for their
tremendous contribution during the year. The results presented
in this report are an outcome of the positive engagement in the
business we see on a daily basis from our passionate team members.
Finally, thank you to our loyal shareholders for your ongoing
support. Notwithstanding inflationary pressures on the horizon,
we remain steadfast in our approach to driving long term
sustainable growth across our KFC and Taco Bell business units,
and I look forward to keeping you updated on our achievements
in the year ahead.
Drew O’Malley
Managing Director & CEO
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 11
~2022~
Financial
Report
12 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
COLLINS FOODS LIMITED ABN 13 151 420 781
FOR THE REPORTING PERIOD ENDED 1 MAY 2022
Contents
14 Directors’ Report
23 Remuneration Report
23
23
24
30
31
32
35
35
36
37
37
37
37
38
38
39
39
39
41
Persons covered by this
Remuneration Report
Overview of Remuneration
Governance Framework
and Strategy
Executive remuneration
Company performance
Statutory Remuneration
disclosures for FY22
Performance outcomes for
FY22 and FY21 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
Other remuneration related
matters
Most recent AGM –
Remuneration Report
comments and voting
External remuneration
consultant advice
Indemnification and insurance
of officers
Proceedings on behalf of the
Company
Non-audit services
Auditor's Independence
Declaration
42 Auditor’s Independence Declaration
43
44
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
45
46
47
48
Consolidated Balance Sheet
Consolidated Statement of
Cash Flows
Consolidated Statement of
Changes in Equity
Notes to the Consolidated
Financial Statements
48 A: FINANCIAL OVERVIEW
48 A1: Segment information
50 A2: Business combinations
55 A3: Revenue
57
A4: Material profit or loss items
from continuing operations
58 B: CASH MANAGEMENT
58 B1: Cash and cash equivalents
60 B2: Borrowings
60 B3: Ratios
61 B4: Dividends
62
C: FINANCIAL RISK
MANAGEMENT
62 C1: Financial risk management
65
C2: Recognised fair value
measurements
C3: Derivative financial
instruments
67
70
70
70
72
73
73
74
75
75
75
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
76
77
77
78
79
80
85
88
88
89
90
93
93
98
99
99
101
103
104
104
76 G: OTHER ITEMS
76
G1: Commitments for
expenditure
G2: Other gains/(losses) – net
G3: Earnings per share
G4: Receivables
G5: Property, plant and
equipment
G6: Intangible assets
G7: Impairment of assets
G8: Leases
G9: Trade and other payables
G10: Provisions
G11: Reserves
G12: Tax
G13: Auditor’s remuneration
G14: Contingencies
94 H: GROUP STRUCTURE
94
H1: Subsidiaries and Deed of
Cross Guarantee
H2: Parent entity financial
information
I: BASIS OF PREPARATION
AND OTHER ACCOUNTING
POLICIES
I1: Basis of preparation
I2: Changes in accounting
policies
I3: Other accounting policies
J: SUBSEQUENT EVENTS
J1: Subsequent events
105 Directors’ Declaration
106 Independent Auditor’s Report
112 Shareholder Information
113 Corporate Directory
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 13
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 1 May 2022.
Directors
The names of the Directors of the Company during or since the end of the financial period are as follows:
Name
Robert Kaye SC
Mark Hawthorne
Christine Holman
Newman Manion (1)
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Drew O’Malley
Date of appointment
7 October 2014
23 December 2021
12 December 2019
10 June 2011
10 June 2011
15 July 2011
10 June 2011
29 June 2021
(1) Resigned as Non-executive Director effective 27 August 2021.
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. There were no significant changes in the nature of the Group’s activities this financial year.
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 261 franchised KFC restaurants in Australia, 17 franchised KFC restaurants in
Germany, 45 franchised KFC restaurants in the Netherlands and 20 franchised Taco Bell restaurant in Australia, which all
compete in the quick service restaurant market. The Group is also a franchisor of the Sizzler brand in South East Asia, with
66 franchised restaurants predominantly in Thailand, but also in Japan.
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 is the largest franchisee of KFC restaurants.
During the current financial period, COVID-19 continued to have an impact on the operations and financial performance of our
business, in particular in-line Taco Bell restaurants in Victoria, KFC Australia foodcourts, and KFC Europe inline restaurants. The
Group has worked closely with various authorities and our franchisor, Yum! Brands to ensure we implemented all measures to
safeguard our employees and customers at each and every stage.
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
2022
(1) (2) (3) 2021
Change
Total revenue from Continuing operations
Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA)
from Continuing operations (1)
Earnings before interest and tax (EBIT) from Continuing operations (1)
Profit before related income tax expense (1)
Income tax (expense) from Continuing operations
Net profit attributable to members (NPAT) (1)
Net assets (1) (2)
Net operating cash flow (1) (3)
$m
1,184.5
207.2
110.9
80.7
(25.9)
54.8
393.5
156.3
$m
1,065.9
183.8
90.2
60.9
(23.6)
32.6
362.6
128.2
$m
118.6
23.4
20.7
19.8
(2.3)
22.2
30.9
28.1
(1)
(2)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
(3)
The prior reporting period has been restated as a result of interest paid on leases being reclassified to operating cash flows.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 1 of 101
14 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
DIRECTORS' REPORT (CONTINUED)
Statutory financial metrics
Basic earnings per share from Continuing operations (1)
Total basic earnings per share attributable to members of Collins Foods Limited (1)
Total dividends paid/payable in relation to financial period (2)
Directors’ report
2022
cents per
share
(1) 2021
cents per
share
Change
cents per
share
46.96
46.96
27.00
31.97
27.97
23.00
14.99
18.99
4.00
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
(2) Dividends paid/payable is inclusive of dividends declared since the end of the relevant reporting period.
The Group’s total revenue increased by 11.1% to $1,184.5 million mainly due to like-for-like sales growth, new restaurant openings
and Netherlands restaurant acquisitions.
This increase in total revenue combined with strong business controls flowed through to increased EBITDA for the reporting
period of $207.2 million, up 12.6% on the prior reporting period and significantly improved net operating cash flow of
$156.3 million, up 21.9%.
EBITDA, EBIT, NPAT and EPS were impacted by the following non-trading items:
Taco Bell impairment costs
Gain on sale and leaseback
KFC Europe provision for restaurant closures
KFC Europe acquisition costs
Fair value loss on debt modification
Other non-trading items
Total non-trading items - continuing operations
EBITDA
$000
31
(1,243)
110
2,932
945
(721)
2,054
EBIT
$000
3,195
(1,243)
110
2,932
945
(721)
5,218
NPAT
$000
2,237
(920)
110
2,932
759
(215)
4,903
The consolidated NPAT effect of these non-trading items was $4.9 million.
In summary, from the Statutory NPAT from Continuing operations results of $54.8 million, excluding the impact of the non-trading
items of $4.9 million (outlined in the table above), the Group achieved a result of Underlying NPAT of $59.7 million.
Underlying financial metrics excluding non-trading items which occurred in the current period are summarised as follows:
Underlying financial metrics from Continuing operations
Total revenue
Earnings before interest, tax, depreciation, amortisation and (Underlying
EBITDA) (1)
2022
$m
1,184.5
209.2
(1) 2021
$m
1,065.9
185.8
Net profit attributable to members (Underlying NPAT) (1)
59.7
47.8
Change
118.6
23.4
11.9
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Underlying financial metrics
Earnings per share (Underlying EPS) basic from Continuing operations
Total Earnings per share (Underlying EPS) basic
2022
cents per
share
51.16
51.16
(1) 2021
cents per
share
40.97
39.15
Change
cents per
share
10.19
12.01
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
The improvement in the underlying financial metrics shown above is a reflection of continued strong performance of KFC
Australia and a significant improvement in KFC Europe which recorded 16.8% same store sales growth.
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. Revenue in KFC Australia was up 6.1% on
the prior corresponding period to $955.5 million, driven by positive same store sales growth of 1.4% for the full year, cycling the
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 22 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 15
Directors’ report
DIRECTORS' REPORT (CONTINUED)
exceptional 12.9% same store sales growth in the prior year, together with the opening of 10 new restaurants. KFC Australia
underlying EBITDA grew by 4.2%, up from $198.5 million to $206.9 million, with an overall underlying EBITDA margin of 21.6%. At the
end of the financial period, 261 restaurants were in operation.
KFC Australia continues to focus on providing customers with great value, great tasting food and high levels of customer service.
Growth in digital and delivery channels remains strong with ecommerce sales accounting for 16.9% of total sales, up from 13.3%
during the prior period. The introduction of Australia’s first KFC drone delivery was also piloted in partnership with Wing and Yum!
Brands.
KFC EUROPE
KFC Europe contributed revenue of $190.4 million and $27.6 million in underlying EBITDA. By the end of the period, 62 restaurants
were in operation, with 45 restaurants in the Netherlands and 17 in Germany. Underlying EBITDA margin was 14.5%. Same store
sales growth was 16.8% on the prior corresponding period. This was driven by excellent brand building marketing campaigns
and good operational execution.
During the year, Collins Foods Netherlands’ footprint increased to 45 out of 82 restaurants, representing a 55% market share. This
was achieved through the acquisition of 15 restaurants across 4 separate acquisitions.
The Netherlands Corporate Franchise Agreement (or CFA) was entered into during the year and commenced 31 December
2021. The CFA ensures that Collins Foods Europe has primary operational control over the Netherlands market enabling
improved marketing campaigns, a return to a more “everyday value” menu, product innovation and the ability to control price.
Collins Foods Europe’s priority remains providing customers with great value and great tasting food at keen price points and
building and opening more restaurants.
TACO BELL
At the end of the period, 20 Taco Bell restaurants were in operation with 13 located in Queensland, 6 located in Victoria and 1
located in Western Australia. Taco Bell contributed revenue of $35.8m and ($0.4) million in underlying EBITDA. Same store sales
decline was 8.2% on the prior corresponding period.
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 marketing centred on establishing the brand’s taste and
value credentials. More emphasis will be placed on improving value and the quality of offering through menu changes to,
where appropriate, increase portion size and introduce new meal combinations at key price points.
Taco Bell continues to sell well through digital and delivery channels with opportunity for further growth and expansion in the
upcoming financial year.
Accelerated restaurant openings are expected in the upcoming financial year as the Group continues to invest in building the
Taco Bell brand.
SIZZLER
Sizzler franchise operations in Asia contributed $2.8 million in revenue. Operations improved significantly during the second half
in Japan and Thailand post easing of COVID-19 restrictions resulting in a 10.8% increase in revenue over the prior corresponding
period. Sizzler Asia EBITDA grew by 4.3%, up from $1.6 million to $1.7 million.
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 core 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. The expansion of delivery and digital is
expected to be significantly increased by the roll out of Uber Eats as an aggregator during the year, initially across most of the
restaurants in Queensland
KFC EUROPE
In Europe, the focus will be on driving sales growth through positive same store sales growth, opening significantly more new
restaurants and delivering on the Corporate Franchise Agreement obligations in the Netherlands.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 33 of 101
16 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
DIRECTORS' REPORT (CONTINUED)
TACO BELL
Taco Bell will continue to drive sales growth through an accelerated restaurant rollout plan. Marketing efforts are centred on
establishing the brand’s taste and value credentials. The focus will remain on driving awareness and trial and improving the
economic model.
Key risks
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;
• people - there is a risk that the Group is unable to maintain a culture that develops and attracts a sustainable workforce,
and the Group is in compliance with employment laws. We address this risk through deploying contemporary people
practices, reward and recognition programs, talent management strategies, employee value propositions and ongoing
compliance monitoring of employment laws;
• growth - there is a risk that the Group is unable to effectively identify, execute and expand as per our growth targets. 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 across our Brands. We
maintain a close working relationship with the franchisor, having our team members sit on relevant KFC advisory groups and
committees and monitoring compliance obligations;
•
•
•
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. Our European supply chain have
implemented additional measures as a result of the war in Ukraine and the increase in energy prices;
information security - there is a risk that confidential or sensitive information can be accessed and disclosed by unauthorised
parties. We address this risk through increasing our external assurance activities and the implementation of a 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 deploying a number of tactics including increasing software patching and network monitoring, deploying multi-
factor authentication and increasing communication to employees to reduce the impact of potential phishing attacks; and
regulatory changes – there is a risk that the Group is unable to identify and address material regulatory changes that impact
the business. We address this risk through deploying processes for managing regulatory changes and their impacts on the
group and obtaining advice from external lawyers where required.
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, cyclones 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 2022, Collins Foods released its second Sustainability Report
describing the environmental, social and governance related initiatives and opportunities relevant to Collins Foods.
The third modern slavery statement for Collins Foods will be published in the second half of calendar year 2022.
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:
Final ordinary dividend for the financial period ended 2 May 2021
12.5
14,573
Franked
22 July 2021
Interim ordinary dividend for the financial period ended
17 October 2021
Total
12.0
24.5
14,004
Franked
22 December 2021
28,577
Cents
per share
Total
amount
$000
Franked/
Unfranked
Date of
payment
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 44 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 17
Directors’ report
DIRECTORS' REPORT (CONTINUED)
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 15.0 cents per ordinary share ($17.5 million) to be paid on 1 August 2022 (refer to
Note B4 of the Financial Report).
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD
Subsequent to year-end, on 3 May 2022, Collins Restaurants South Pty Ltd, a wholly-owned subsidiary of the Group, entered into
a Business Sale Agreement to purchase the assets and assume the liabilities of a KFC restaurant located in Griffith, New South
Wales from Shayden Nominees Pty Ltd.
The consideration transferred amounted to $7.6 million, satisfied by $4.6 million in cash and $3.0 million in Collins Food Limited
(ASX Ticker: CKF) fully paid ordinary shares. This amounted to 284,091 shares based on a volume weighted average price of the
shares for the ten trading days to 2 May 2022 of $10.56.
The purchase price accounting will be finalised after the completion date and will be disclosed in the 2023 half-year interim
financial report.
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
DIRECTOR
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 and FAR Limited.
He was formerly Non-executive Chairman of Spicers Limited and Non-executive Director of UGL Limited, HT&E
Limited, Blue Sky Alternative Investments Limited and the Chairman of the Macular Disease Foundation Australia.
Other current listed
directorships
Magontec Limited (Jul 2013 – current)
FAR Limited (30 June 2021 - current)
Former listed directorships in
last 3 years
Nil
Special accountabilities
Independent Non-executive Chair
Audit and Risk Committee member
Remuneration and Nomination Committee member
DIRECTOR
Mark Hawthorne (B. Financial Administration, CA, GAICD)
Experience and expertise
Mark has extensive experience as an executive that has lead franchisee centric brands in different scenarios
including start up, founder led, large multi-national, private equity ownership in different countries and cultures
around the World. His more than 25 years’ of retail and franchising experience has been gained as the CEO &
Executive Director of Guzman y Gomez from 2015 to 2020 and prior to that, leading McDonalds in various
markets including the United Kingdom, New Zealand and the Middle East and Africa.
Mark achieved his Chartered Accountant qualification in 1997 and is a Graduate of the Australian Institute of
Company Directors’ Company Directors Course.
Other current listed
directorships
None other than Collins Foods Limited
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 55 of 101
18 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
DIRECTORS' REPORT (CONTINUED)
DIRECTOR
Mark Hawthorne (B. Financial Administration, CA, GAICD)
Former listed directorships in
last 3 years
None other than Collins Foods Limited
Special accountabilities
Independent Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee member
DIRECTOR
Christine Holman (PGDipBA, MBA, GAICD)
Experience and expertise
Christine brings more than 25 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 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. Christine was appointed to the Board of Australia Tower
Network Pty Ltd on the 17 May 2022.
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)
Metcash Limited (Oct 2020 – current)
Former listed directorships in
last 3 years
WiseTech Global Ltd (Dec 2018 – Oct 2019)
Blackmores Limited (Mar 2019 – July 2021)
Special accountabilities
Independent Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee member
DIRECTOR
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, River Festival Limited and Menzies Health Institute
Queensland. She is also Chair of Queensland Urban Utilities, the RACQ Foundation and a member of Chief
Executive Women (CEW). Bronwyn retired as a director of Royal Automobile Club of Queensland Limited
(previous President and Chair), and its wholly-owned subsidiaries, RACQ Insurance Limited and RACQ Bank, in
November 2021.
Other current listed
directorships
Dalrymple Bay Infrastructure Limited (Oct 2020 – current)
Former listed directorships in
last 3 years
None other than Collins Foods Limited
Special accountabilities
Independent Non-executive Director
Audit and Risk Committee Chair
Remuneration and Nomination Committee member
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 66 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 19
Directors’ report
DIRECTORS' REPORT (CONTINUED)
DIRECTOR
Drew O'Malley
Experience and expertise
An accomplished executive with over 20 years’ experience in the Quick Service Restaurants (QSR) industry,
Drew joined Collins Foods after serving nearly two decades as an executive team member with AmRest, during
which time it grew to become the largest independent restaurant company in Europe.
In his time there, Drew served in various senior roles, including Chief Operating Officer, Chief Digital Officer, and
Brand President KFC. Additionally, Drew served as President of the Central Europe Division, in which he was
responsible for over 500 restaurants across 4 brands (KFC, Pizza Hut, Starbucks and Burger King) and seven
countries.
Prior to his current role as Managing Director and CEO, Drew served three years at Collins Foods as the Chief
Operating Officer for Australia. He has also worked as a consultant with McKinsey & Company and holds an
MBA from the University of Michigan Business School.
Other current listed
directorships
None other than Collins Foods Limited
Former listed directorships in
last 3 years
None other than Collins Foods Limited
Special accountabilities
Managing Director & CEO
DIRECTOR
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
None other than Collins Foods Limited
Former listed directorships in
last 3 years
None other than Collins Foods Limited
Special accountabilities
Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee member
DIRECTOR
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 (renamed 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).
Other current listed
directorships
None other than Collins Foods Limited
Former listed directorships in
last 3 years
Macquarie Media Limited (2008 – Nov 2019: Executive Chair 2009 to 1 July 2018 & Non-executive Chair from 1
July 2018 to Nov 2019)
Special accountabilities
Independent Non-executive Director
Audit and Risk Committee member
Remuneration and Nomination Committee Chair
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 for
more than 15 years.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 77 of 101
20 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
DIRECTORS' REPORT (CONTINUED)
Meetings of Directors
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the FY22 and FY21
years, and the number of meetings attended by each Director, were:
Board
Audit and Risk Committee
Remuneration and Nomination
Committee
(1) FY22
meetings
Meetings
attended
(1) FY21
meetings
Meetings
attended
(1) FY22
meetings
Meetings
attended
(1) FY21
meetings
Meetings
attended
(1) FY22
meetings
Meetings
attended
(1) FY21
meetings
Meetings
attended
Robert Kaye SC
Mark Hawthorne (2)
Christine Holman
Newman Manion (3)
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Drew O’Malley (4)
18
4
18
6
18
18
18
14
18
4
18
6
18
18
17
14
14
–
14
14
14
14
14
–
14
–
14
14
14
14
13
–
6
2
6
2
6
6
6
6
2
6
2
6
6
6
6
–
6
6
6
6
6
6
–
6
6
6
6
6
7
3
7
3
7
7
7
7
3
7
3
7
7
7
5
–
5
5
5
5
5
5
–
5
5
5
5
5
–*
–*
–*
–*
–*
–*
–*
–*
(1)
FY22 and FY21 represents the number of meetings held during the time the Director held office or membership of a Committee during the period.
(2) Appointed Independent Non-executive Director, member of the Audit and Risk Committee and Remuneration and Nomination Committee effective 23 December 2021.
(3) Resigned as Non-executive Director effect 27 August 2021.
(4) Appointed Managing Director effective 29 June 2021.
*
Not a member of the relevant Committee.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 88 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 21
DIRECTORS' REPORT (CONTINUED)
LETTER FROM THE CHAIR OF THE REMUNERATION AND NOMINATION COMMITTEE
Directors’ report
Dear Shareholders
Following its record earnings results of last year, Collins Foods has achieved another record result for the 2022 financial year.
Underpinned by outstanding performances by KFC in both Australia and Europe, total group revenues increased by 11.1% to $1.185
million, pre AASB 16 underlying earnings before interest, tax and depreciation (EBITDA) increased by 10.4% to 150 million, and
pre AASB 16 underlying net profit after tax (NPAT) from continuing operations by 14.1% to $64.6 million.
Consequently, EBITDA targets set within our Short Term Incentive Plan (STIP) were exceeded at KFC Australia, KFC Europe and Total
Company levels, triggering STI payments for all Key Management Personnel (KMP), and over 100 of our management and support
teams.
The Group’s KMP during the FY22 year were:
Managing Director & CEO: Drew O’Malley
Group CFO: Nigel Williams
COO - KFC Aust: Helen Moore*
CEO - CF Europe: Hans Miete
CPO: Dawn Linaker
CMO: David Timm*
* Helen Moore’s appointment was effective June 2021, and David Timm’s was effective January 2022
Eligible KMP (Managing Director & CEO, Group CFO and CPO) were also rewarded through our Long Term Incentive plan (LTIP), and
are now able to vest, in FY23, 47% of the performance rights granted to them in FY20 for the performance period of FY20, FY21, and
FY22. Under the Plan rules, vesting levels are calculated against a table of annualised compound EPS growth hurdles across the
performance period.
Full details of STI and LTI plans are contained in the Remuneration Report.
Both STI and LTI Plans for FY22 introduced additional performance components to prior year plans. In the case of the STIP we set out to
add to the existing EBITDA and Guest Experience Survey (GES) components, a measure or measures “related to defined environment,
social and governance initiatives (ESG)”. Weightings of the FY22 STIP components were EBITDA (70%), GES (15%) and ESG measure
(15%). For the LTIP, applying to performance rights grants to be made from FY22 onwards, we added a Relative Total Shareholder
Return measure to stand beside the existing Compound EPS Growth measure, each determining 50% of performance outcomes.
In practice, the accommodation of quantifiable ESG measures and results within our STIP has proved to be challenging. Coming into
the year, and based on the Sustainability Report published with our FY21 Annual Report, three primary goals were established for FY22
and FY21 baselines set, against which progress would be reported. Those goals related to reduction in greenhouse gas emissions,
waste diverted from landfill, and participation rates in the “Collins Foods Giving” program. Whilst significant progress has been made
throughout the year in each of the three primary goal areas, unexpected challenges, confirmed by the limited assurance process
undertaken by the Company, have arisen in relation to their measurement.
After reviewing results achieved to date on ESG initiatives, progress towards reaching the 2026 targets set out in our FY21 Sustainability
Report, and the challenges associated with measurement of ESG metrics, the Board has considered it appropriate to exercise its
discretion to modify the percentage payable for the ESG component of FY22 STI to 50% of target level. Further, the Board has
determined that for FY23 STIP outcomes, EBITDA results measured against targets will determine 85%, GES results measured against
targets will determine 15%, and ESG performance, as assessed by the Board with the current primary goals unchanged, will serve as a
“modifier” whereby up to 15% of STI entitlements earned for EBITDA and GES performance will be at risk if satisfactory progress has not
been made towards reaching 2026 ESG targets.
This Remuneration Report necessarily focuses on our KMP, and their remuneration outcomes. Along with the rest of the Company’s
senior executive and support team, they obviously deserve praise and commensurate reward for the Company’s sustained revenue
and earnings growth. They are also the first to acknowledge that the rewards of their leadership can only be realised, if our over
15,000 field and restaurant staff share and “live” our stated vision of being “the world’s top restaurant operator”, our stated mission of
“raising the bar on what people think a restaurant experience should be – more human, more sustainable, more digital, more fun”,
and our stated “emphasis on operational execution, people development, and excellence in restaurant development (to) underpin
our pursuit of sustainable growth”.
In a year which again presented more than its share of challenges to our restaurant teams in all geographies, they have again
demonstrated that they are more than capable of “raising the bar” and delivering the operational excellence which will underpin
the Company’s continued growth.
Yours sincerely
Russell Tate
Independent Non-executive Director
Chair of the Remuneration and Nomination Committee
Collins Foods Limited
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 99 of 101
22 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
REMUNERATION REPORT
Persons covered by this Remuneration Report
This Remuneration Report covers the remuneration of Non-executive Directors, the Managing Director & 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
Robert Kaye SC
Independent Non-executive Chair, Audit and Risk Committee member, Remuneration and Nomination Committee member
Mark Hawthorne (1)
Independent Non-executive Director, 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 (2)
Non-executive Director, Audit and Risk Committee member, Remuneration and Nomination Committee member
Bronwyn Morris AM
Independent Non-executive Director, Audit and Risk Committee Chair, Remuneration and Nomination Committee member
Kevin Perkins
Russell Tate
Non-executive Director, Audit and Risk Committee member, Remuneration and Nomination Committee member
Independent Non-executive Director, Audit and Risk Committee member, Remuneration and Nomination Committee Chair
Drew O’Malley (3)
Managing Director & Chief Executive Office (Managing Director & CEO)
Hans Miete
Nigel Williams
Dawn Linaker
Helen Moore (4)
David Timm (5)
CEO – Collins Foods Europe Ltd (CEO – CF Europe)
Group Chief Financial Officer (Group CFO)
Chief People Officer (CPO)
Chief Operating Officer – KFC Australia (COO – KFC Australia)
Chief Marketing Officer (CMO)
(1) Appointed Independent Non-executive Director effective 23 December 2021.
(2) Resigned as Non-executive Director effective 27 August 2021.
(3) Appointed Managing Director & CEO effective 29 June 2021.
(4) Appointed Chief Operating Officer – KFC Australia effective 25 June 2021.
(5) Appointed Chief Marketing Officer effective 1 January 2022.
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:
• 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;
• has a key focus on prevailing market conditions; and
•
reward 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 reporting 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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 10 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 23
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
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;
fixed remuneration policy guidelines be set with reference to relevant market practices;
remuneration should be reviewed annually and be made up of:
o Base Salary (BS) being salary and superannuation;
o 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 BS and Other Benefits;
o
o Short Term Incentive (STI) which provides a cash reward for performance outcomes compared to agreed annual
objectives;
o
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) (50% of
the award) and growth in Relative Total Shareholder Returns (Relative TSR) over the same three year performance
period (50% of the award). Annual awards under the LTI program are not linked to the annual incentive;
o
Total Reward (TR) which represents the sum of the above elements consisting of TFR, 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.
REMUNERATION POLICY AND LINK TO PERFORMANCE
The executive remuneration framework components and their links to performance outcomes are outlined below:
Purpose
Performance metrics
Potential value
Considerations for FY23
Remuneration
component
Total Fixed
Remuneration
Nil
To provide
competitive
market salary
including
superannuation
and Other Benefits
STI
Rewards for
annual
performance
• EBITDA (pre AASB 16)
performance against a pre-
determined target level and
award scale
• Improvement to Guest
Experience Survey (GES) results
against pre-determined target
levels
• Australian ESG initiatives (ESG)
against pre-determined target
levels
Positioned to reflect the market
rate and individual attributes
Reviewed in line with market
positioning (comparison
undertaken by independent third
party)
• All KMP Executives: 50% of Base
Salary for target performance,
with a maximum opportunity of
up to 75% of Base Salary
• EBITDA target must be at least
equal to prior period reported
EBITDA
• Adjustment of weighting for all
KMP Executives: EBITDA 85%;
GES 15%
ESG will be applied as a
modifier to STI where up to 15%
of STI is at risk for non-
achievement of ESG related
activities
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1111 of 101
24 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Remuneration
component
Purpose
Performance metrics
Potential value
Considerations for FY23
• Weighting between the three
metrics is 70% EBITDA
performance, 15% GES and
15% ESG
• Achievement of the EBITDA
target is an overriding hurdle to
achieve any STI payment
The following remain unchanged
from FY22:
• EBITDA target must be at least
equal to prior reported period
actual EBITDA
• Achievement of EBITDA target is
an overriding hurdle to trigger
any STI payments
LTI
Reward for
contribution of
shareholder value
over the longer
term
• Three year compound earnings
per share growth performance
• Three year Relative Total
Shareholder Return against an
ASX200 index
• Weighting between the two
hurdles will be EPS 50% and
TSR 50%
• Managing Director & CEO:
• No changes in entitlement
levels for Managing Director &
CEO or other KMP Executives
expected for FY23
50% of Base Salary for target
performance, with a maximum
opportunity of 100% of Base
Salary
• Other KMP Executives: 40% of
Base Salary for target
performance, with a maximum
opportunity of up to 80% of
Base Salary
FIXED REMUNERATION
TFR consists of salary, superannuation contributions and other benefits. Fringe benefits tax on these benefits, where required, is
incorporated in TFR.
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 Managing Director & 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 50% of their Base Salary for target performance with a maximum opportunity of up to 75% of their Base Salary.
Short term incentive performance metrics
FY22 and FY23 STIP
The Board determined that, for FY22, three metrics were to be used to determine awards under the Company’s STIP – Earnings
Before Interest Tax Depreciation and Amortisation (EBITDA), Guest Experience Survey (GES) and Environmental Social
Governance (ESG). From FY22, the EBITDA target level for short term incentive must be at least the actual EBITDA achieved for
the prior reported financial period. That is, the 95% fixed threshold for target EBITDA from FY21 was removed and replaced with
an EBITDA threshold level that may be less than the budgeted EBITDA approved by the Board for the relevant financial year but
must be at least equal to the prior actual EBITDA achieved.
EBITDA calculations for the purpose of calculating incentives payable under the STIP continue to be assessed on a pre AASB 16
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 ESG
measure was introduced as a third measure in FY22 to reflect the importance of ESG activities to the Group and our
shareholders.
The GES 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
GES program is the franchisor’s global barometer of executional excellence and is administered by an independent third party
provider engaged by the Franchisor.
The three metrics, EBITDA, GES and ESG are calculated separately and have different targets, thresholds and award scales. The
weighting between these metrics for FY22 was 70% EBITDA performance, 15% GES and 15% ESG. Achievement of the EBITDA
target is an overriding hurdle to trigger any STI payments.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1122 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 25
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
In 2021, Collins Foods released its inaugural Sustainability Report setting out its Positive Impact Strategy that is structured around
three key pillars related to its Australian operations: People and Communities, Planet and Governance with three primary goals
to be achieved by 2026:
• establish Collins Foods Giving as best-in-class signature program with 75% plus enrolment;
•
•
reduce our carbon footprint by achieving a 25% reduction in greenhouse gas emissions compared to FY21;
increase diversion of waste from landfill by 25% compared to FY22.
In FY23 the weighting of the three STI metrics will be adjusted to 85% EBITDA performance, 15% GES with ESG used as a modifier
where up to 15% of STI will be at risk for non-achievement of ESG related activities.
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 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 had a deleterious effect on the Collins Foods 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.
Maximum opportunity: EBITDA result
The FY22 award scale based upon the actual EBITDA result achieved is 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 and ESG result
The FY22 award scale based upon the actual GES (15%) and ESG (15%) results achieved is set out below:
STANDARD % PAYOUT TABLE
% GES target achieved
% target bonus earned
% ESG target achieved
% target bonus earned
100
101
102
103
104
105
100
110
120
130
140
150
Delivery method for STI
100
101
102
103
104
105
100
110
120
130
140
150
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
The Board has discretion to adjust remuneration outcomes up or down to prevent any inappropriate award outcomes. In
respect of FY22 the Board exercised discretion in relation to the following matters.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1133 of 101
26 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
ESG
In FY22 the Company sought limited assurance over sustainability indicators disclosed in the FY22 Sustainability Report including
the baselines used to measure and report progress against the Three Primary Goals. The sustainability indicators selected for
limited assurance were:
Baseline subject matter (FY21)
• Average scope 1 and 2 greenhouse gas emissions for the year ended 2 May 2021 (tCO2-e per restaurant).
• Active participation rate of employees within the Collins Foods Giving program during period 13 of the year ended 2 May
2021.
FY22 subject matter
• Average scope 1 and 2 greenhouse gas emissions for the year ended 1 May 2022 (tCO2-e per restaurant).
• Active participation rate of employees within the Collins Foods Giving program during period 13 of the year ended 1 May
2022.
• Average waste diverted from landfill for the year ended 1 May 2022.
Unexpected challenges confirmed by the limited assurance process have arisen in relation to the measurement of each of the
Three Primary Goals. Additional detail is outlined below.
Waste diversion
In the last three months of FY21, Collins Foods changed waste collection providers. In data presented for the first nine months of
FY21, General Waste and recycling collection weights were estimates based on a standard Quick Service Restaurant (QSR)
industry weighted average for general waste services.
For the remaining three months of FY21 and during FY22, Collins Foods’ new waste service collector reports included waste
collection figures based upon actual weights for approximately 60% of Collins Foods’ services (the remainder was estimated
based on the number of bins collected and assumed densities of various waste streams).
In line with our waste collection providers upgrading their fleets to retrofit more trucks with measuring arms, diversion rates are
anticipated to become more accurate over time with a greater proportion of waste collections measured rather than
estimated. This will impact upon diversion rates and the ability to compare periods — no two periods will be on a true like-for-like
basis until 100 per cent of services are on an ‘actual weights’ basis.
This change to measurement means that comparison between FY21 and FY22 on a like-for-like basis will not be possible. Waste
diversion rates for FY22 were 18.3%.
Greenhouse Gas Emissions (GHG)
During the reported period, the Company entered into power purchase agreements for the purchase of 1,960 MWh of
renewable energy (equivalent to approximately 2.17% of total energy used). Eighty-nine solar power systems were also installed
on restaurants during the reported period. In FY22, the Scope 1 and Scope 2 GHG emissions for KFC Australia and Taco Bell
restaurants operated by Collins Foods were scope 1: 2,859 tonnes CO2-e and scope 2: 63,067 tonnes CO2-e. In FY22 it was
identified that some restaurants and additional sources of Scope 1 emissions had not been disclosed in the prior year.
Accordingly, FY22 reporting has been expanded to include Taco Bell restaurants, fleet and refrigerant emissions. To support
comparison on a like-for-like basis, FY21 has been restated on the same basis that FY22 is reported.
Collins Foods Giving
The Collins Foods Giving program was established in 2008.
Participation in the Collins Foods Giving program is and has always been on a voluntary basis. A voluntary, opt-in model is
especially important to Collins Foods considering the young age demographic and casual employment status of the majority of
its employees. The basis of measurement of participation in Collins Foods Giving has been refined to include only employees
enrolled and contributing during period 13 of the relevant reported period. To support like-for-like comparison, both FY21 and
FY22 enrolment rates are reported on this basis. The FY22 Participation Rate was 36% and the restated FY21 Participation Rate
was 27%.
Measurement of ESG performance for FY22 STI and FY23 STI
Having considered the challenges associated with measurement of the ESG metrics as described above and notwithstanding
management’s commitment to achieving the results outlined, the Board considered it appropriate to exercise a downward
discretion to modify the percentage eligible for payment of STI for FY22 associated with the achievement of ESG targets to 50%.
Further to this, in FY23 the weighting of the three STI metrics will be adjusted and weighted between two metrics: 85% EBITDA
performance and 15% GES with ESG used as a modifier where up to 15% of STI will be at risk for non-achievement of ESG related
activities.
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.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1144 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 27
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
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.
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 FY23 with a performance period including FY23, FY24 and FY25, 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 audited financial results. This VWAP basis of measurement is consistent with
prior year.
In previous years, 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 FY22 offers commenced 3 May 2021 and ends 28 April 2024 for the performance period of FY22,
FY23 and FY24. The measurement period for FY23 offers commences on 2 May 2022 and ends 27 April 2025 for the performance
period of FY23, FY24 and FY25.
Vesting conditions
The Board has discretion to set vesting conditions for each offer. Performance rights that do not vest will lapse.
FY22 and FY23 offers
As reported in FY21, a second performance condition of Relative TSR has been introduced for the FY22 grant under the LTIP.
Compound EPS growth 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 and will continue as a performance measure
under the LTIP. The weighting for the EPS hurdle is 50% of the total award.
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 threshold and target EPS growth hurdles remain unchanged from FY21. No changes to the LTIP measures or targets,
thresholds or award scales are intended for FY23.
The following vesting scale applied to the performance rights offered in FY22 and will apply to performance rights offered in FY23:
Annualised EPS growth (CAGR)
% of max/ stretch/ grant vesting
Performance Level
Stretch/Maximum
16.5%
Between Target and Stretch
>11%, <16.5%
Target
11%
Between Threshold and Target
>5.5%, <11%
Threshold
Below Threshold
5.5%
<5.5%
100%
Pro-rata
50%
Pro-rata
25%
0%
The TSR hurdle is based on a volume weighted average share price (VWAP) benchmark of ten trading days either side of the
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 has determined that the ASX 200 Index is sufficiently broad to
measure relativity from the start of the performance period (2 May 2021). The weighting for the TSR hurdle is 50% of the total
award.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1155 of 101
28 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Relative TSR performance will be tested at the same time as Compound EPS Growth in accordance with the following vesting
schedule:
Directors’ report
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 LTIP 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.
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.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1166 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 29
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
MIX OF BASE SALARY AND INCENTIVES BASED REMUNERATION AND PROPORTIONALITY
As reported in FY21, the Board reviewed the remuneration mix of the Managing Director & CEO and 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 remained unchanged for the
Managing Director & CEO, but other KMP Executives saw an increase in LTI vesting rates to 40% of Target and 80% for Stretch
performance. (1)
The following table shows the range of remuneration mix that was offered for current KMP Executives during FY22, for target
performance.
Mix of remuneration
(excludes Other Benefits)
Base Salary
STI (at Target performance)
LTI (at Target performance)
Managing Director & CEO
Other KMP Executives
50%
25%
25%
53%
26 - 27%
20 - 21%
(1)
The FY22 increase in LTI vesting rates was not applied to Helen Moore (COO – KFC Aust). The increase will apply from FY23.
The Board considers that the adjustments to the remuneration mix for other KMP Executives (Base Salary, STI and LTI) in FY22 result
in appropriately weighted remuneration and will continue to:
• align executive remuneration practices with accepted market practices and current best-practices;
• motivate executives to continuously grow shareholder value by aligning their interests with those of shareholders through
equity ownership; and
• manage 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.
The same mix of Base Salary, STI and LTI is anticipated for FY23 for the Managing Director & CEO and other KMP Executives.
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:
FY end date
Revenue
Profit after tax
Share price
FY22
FY21
FY20
FY19
FY18
($m)
$1,184.52
($m)
$54.80
(2) $1,065.90
(3) $32.61
$981.73
$901.22
$770.94
(4) $31.26
(5) $39.11
$32.49
$10.15
$11.37
$6.94
$7.59
$5.35
Change in
share price
($1.22)
$4.43
($0.65)
$2.24
$0.10
(1) Dividends used are the cash amount (post franking).
(2) Excludes Sizzler Australia revenues.
Short term change in
shareholder value over 1 year
(SP change + dividends)
Long term (cumulative)
3 years change in shareholder
value
(1) Dividends
Amount
%
Amount
%
$0.245
$0.210
$0.200
$0.180
$0.170
($0.975)
$4.64
($0.45)
$2.42
$0.27
(9%)
67%
(6%)
45%
5%
$3.22
$6.61
$2.24
$4.08
$3.37
42%
124%
43%
101%
138%
(3)
(4)
FY21 restated as a result of a change in accounting policy for the recognition of cloud computing arrangements.
Includes the impact of AASB 16.
(5) Excludes the impact of AASB 16.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1177 of 101
30 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Statutory Remuneration disclosures for FY22
KMP EXECUTIVE REMUNERATION
The following table outlines the remuneration received by KMP Executives of the Company during FY22 and FY21 prepared
according to statutory disclosure requirements and applicable accounting standards.
KMP Executive remuneration for FY22 (with FY21 comparatives) is reported in four components being Base Salary (including
superannuation), Other Benefits, awarded values of STI and awarded values of LTI remuneration.
Name
Role(s)
Year
Base salary
(incl. super)
Other
benefits
Total fixed
remun-
eration
Amount
% of
Total
Reward
Amount
% of
Total
Reward
(2) Total
Reward
(3) Change in
accrued
leave
Termination
benefits
Short Term Incentive
(1) Long Term Incentive
MD & CEO
2022
$858,537
$37,050
$895,587
$434,139
Drew
O'Malley (4)
CEO
Hans
Miete (5)
CEO - CF
Europe
Nigel
Williams
Dawn
Linaker
Group
CFO
CPO
Helen
Moore (6)
COO –
KFC Aust
David
Timm (7) (8)
CMO
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$721,692
$46,902
$768,594
$460,996
$404,014
$36,378
$440,392
$310,869
$227,322
$20,363
$247,685
$40,227
$595,954
$40,035
$635,989
$301,402
$567,695
$51,233
$618,928
$347,184
$453,751
$38,386
$492,137
$229,516
$432,398
$52,658
$485,056
$211,502
$419,871
$23,701
$443,572
$213,044
–
$147,236
–
–
–
–
–
–
$147,236
$71,377
32%
$7,166
–
–
–
–
26%
31%
38%
14%
27%
31%
27%
26%
30%
–
$357,304
22%
$1,687,030
($36,727)
$239,378
16%
$1,468,968
$46,717
$67,654
–
8%
–
$818,915
$24,094
$287,912
$13,059
$182,938
16%
$1,120,329
$568
$160,140
14%
$1,126,252
$17,084
$136,919
$115,106
$63,569
–
16%
14%
9%
–
3%
–
$858,572
$811,664
$720,185
–
$1,240
$4,136
$7,253
–
$225,779
$11,600
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1)
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 measured in accordance with
AASB 2 Share-based Payment. 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 number vested.
(2) Excludes change in accrued leave balance.
(3)
The change in accrued leave are measured in accordance with AASB 119 Employee Benefits.
(4) Appointed Managing Director & CEO effective 29 June 2021.
(5)
FY22 salary converted at exchange rate of AUD $1: EURO €0.6393 (FY21: AUD $1: EURO €0.6215).
(6) Appointed Chief Operating Officer – KFC Australia effective 25 June 2021.
(7) Appointed Chief Marketing Officer effective 1 January 2022.
(8)
FY22 salary converted at exchange rate of AUD $1: GBP £0.5501.
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 FY22 (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 FY22. 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 Managing Director & CEO and 80% of Base Salary for
KMP Executives.
Name
Role(s)
(1) Base
Salary
(incl.
super)
Base
Salary as a
% of Total
Reward
Short Term Incentive opportunity
Long Term Incentive opportunity
Target %
of Base
Salary
Target STI
amount
STI %
of Total
Reward
Target %
of Base
Salary
Target LTI
amount
LTI %
of Total
Reward
Other
benefits
Total
Reward
Drew O'Malley (2) MD & CEO
$858,825
Hans Miete
CEO - CF Europe
€265,000
Nigel Williams
Group CFO
$596,242
Dawn Linaker
CPO
$454,035
Helen Moore (3)
COO – KFC Aust.
$495,000
David Timm (4)
CMO
£225,000
52%
55%
55%
55%
54%
53%
50%
$429,413
50%
€132,500
50%
$298,121
50%
$227,018
50%
$247,500
50%
£112,500
24%
25%
25%
25%
26%
26%
50%
$429,412
40%
€106,000
40%
$238,497
40%
$181,614
37.5%
$185,625
40%
£90,000
24%
20%
20%
20%
20%
21%
$37,050
$1,754,700
€23,258
€526,758
$40,035
$1,172,895
$38,386
$901,053
$23,701
$951,826
–
£427,500
(1) Base salary based on a 52 week period (FY21: 52 week period).
(2) Appointed as Managing Director & CEO effective 29 June 2021.
(3) Appointed as Chief Operating Officer – KFC Australia effective 25 June 2021.
(4) Appointed as Chief Marketing Officer – effective 1 January 2022.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1188 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 31
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Performance outcomes for FY22 and FY21 including STI and LTI assessment
SHORT TERM INCENTIVES
The tables below set out details of STI and LTI performance outcomes for FY22 and FY21 when compared to target.
Directors’ report
FY22 Company level KPI Summary
Award outcomes
FY22 paid FY23
Average
weighting
Average
GES/ ESG
target
EBITDA
target
% of target
achieved
Awarded
Total STI award
(EBITDA, GES & ESG)
Name
Role(s)
KPI summary
Drew O'Malley (1)
Managing
Director & CEO
EBITDA
GES
ESG (Board discretion) (4)
Hans Miete
CEO - CF Europe EBITDA
GES
Nigel Williams
Group CFO
EBITDA
Dawn Linaker
CPO
GES
ESG (Board discretion) (4)
EBITDA
GES
ESG (Board discretion) (4)
Helen Moore (2)
COO – KFC Aust
EBITDA
David Timm (3)
CMO
GES
ESG (Board discretion) (4)
EBITDA (5)
GES (5)
(1) Appointed as Managing Director & CEO effective 29 June 2021.
(2) Appointed as Chief Operating Officer – KFC Australia effective 25 June 2021.
(3) Appointed as Chief Marketing Officer effective 1 January 2022.
70%
15%
15%
80%
20%
70%
15%
15%
70%
15%
15%
70%
15%
15%
80%
20%
–
$142,917,000
66.1%
0%
–
70.5%
–
–
$17,083,000
–
–
$142,917,000
66.1%
0%
–
–
–
$142,917,000
66.1%
0%
–
–
–
$163,961,000
65.5%
0%
–
67.0%
–
–
$7,955,000
110.8%
106.9%
50%
150.0%
150.0%
110.8%
106.9%
50%
110.8%
106.9%
50%
111.8%
100.2%
50%
150%
$333,053
$68,880
$32,206
$248,695
$62,174
$231,223
$47,820
$22,359
$176,075
$36,414
$17,027
$165,417
$31,767
$15,860
$61,180
$10,197
$434,139
$310,869
$301,402
$229,516
$213,044
$71,377
–
150.0%
(4)
The Board exercised a downward discretion to modify the percentage eligible for payment of a STI for FY22 associated with the ESG target to 50% of possible award.
(5) Award paid relates to the achievement of targets for KFC Netherlands only. Targets related to Taco Bell were not met.
For the purposes of the STI awarded in FY22, pre AASB 16 underlying EBITDA was adjusted for non-trading items relating to: the
gain on sale of land, FX movements on dividend received, fair value gain on debt modification, Netherlands acquisition costs
and KFC Europe provisions for restaurant closures, totalling $3.4 million, to calculate the STI performance outcomes.
FY21 Company level KPI Summary
Award outcomes
FY21 paid FY22
Name
Role(s)
KPI summary
Average
weighting
Average
GES target
EBITDA
target
% of target
achieved
Awarded
Total STI award
(EBITDA and GES)
Drew O'Malley (1) Managing Director
EBITDA
& CEO
Hans Miete (2)
CEO - CF Europe
Nigel Williams
Group CFO
Dawn Linaker
CPO
GES
EBITDA
GES
EBITDA
GES
EBITDA
GES
80%
20%
80%
20%
80%
20%
80%
20%
$129,505,000
103.7%
$357,396
64.3%
–
107.0%
$103,600
$460,996
$3,416,000
–
68.5%
–
115.3%
–
–
$129,505,000
103.7%
$269,161
–
64.3%
–
107.0%
$78,023
$347,184
$129,505,000
103.7%
$163,971
64.3%
–
107.0%
$47,531
$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 provisions for restaurant closures, digital menu board costs, Netherlands acquisition costs and Netherlands
development agreement fee, totalling $2.0 million, to calculate the STI performance outcomes.
LONG TERM INCENTIVES
During the 2020 financial year, grants under the long term incentive plan were made on 16 September 2019 with a performance
period of FY20, FY21 and FY22 (FY20 Grant). The performance period for the FY20 Grant commenced on 29 April 2019 and
ended on 1 May 2022 (Vesting Rights). It is the view of the Board that it is important for the Board to have the ability to make
adjustments, where appropriate, to ensure the alignment between Company performance and KMP Executive reward and this
is in the interests of all stakeholders including shareholders.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 1199 of 101
32 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
The adjustments proposed by management for the FY22 year accepted by the Board are:
Statutory NPAT Pre AASB 16
Adjustments:
Fair value loss on debt modification
Adjusted NPAT Result for LTI
$000,000
$61.2
$1.0
$62.2
Comment
(Note (a) below)
• Note (a) Fair value loss on debt modification resulting from refinancing of debt facilities conducted during the year.
Allowing for these adjustments, an EPS CAGR of 10.32% was achieved, resulting in 47% 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 executive’s control that affect EPS (for example, one-off non-recurrent items or the
impact of significant acquisitions or disposals).
Name
Role(s)
Tranche Weighting
Number of
eligible to vest in
FY23 for FY22
completion
% of max/
stretch/
grant vested
Number
vested
Grant date
VWAP
Drew O’Malley
Managing Director & CEO
EPSG
Nigel Williams
Group CFO
Dawn Linaker
CPO
EPSG
EPSG
100%
100%
100%
30,632
30,632
21,808
47%
47%
47%
14,366
14,366
10,227
$9.0426
$9.0426
$9.0426
$ Value of LTI
that vested
(as per grant
date VWAP)
$129,906
$129,906
$92,479
In relation to the completion of the reporting period, previous grants of equity made under the LTI plan during FY21 on
16 October 2020 with a performance period of FY21, FY22 and FY23 (FY21 Grant), these will be eligible for vesting during FY24
after the completion of FY23.
The table below sets out the annualised compound EPS growth hurdles applicable to the FY21 Grants:
Performance level
Stretch/Maximum
Between target and stretch
Target
Below threshold and target
Threshold
Below Threshold
Annualised EPS growth (CAGR)
% of max/ stretch/grant vesting
16.5%
>11%, <16.5%
11%
>5.5%, <11%
5.5%
<5.5%
100%
Pro-rata
50%
Pro-rata
25%
0%
VESTING RIGHTS FOR RETIRED MANAGING DIRECTOR & CEO
At the 2019 AGM, shareholders approved the granting of performance rights to the then Managing Director & 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 remain on issue were:
• 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 & CEO for 14 of the 36 months (39%) of the FY20 - FY22
performance period will retain rights to 39%, or 37,091, performance rights.
There was 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 had
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 17,395 Vesting Rights held by Graham Maxwell will convert to fully
paid ordinary shares.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2200 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 33
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
OTHER PERFORMANCE RIGHTS INFORMATION
All performance rights, the vesting of which are subject to EPS growth over defined reporting periods ending in 2019 through to
2022, expire in July 2021 through to July 2024 as set out in the table below:
Reporting period ended
1 May 2022
2 May 2021
3 May 2020
28 April 2019
Expiry date
24 July 2024
27 July 2023
26 July 2022
20 July 2021
Exercise price
Nil
Nil
Nil
Nil
There were two tranches of performance rights issued during the reporting period ended 1 May 2022. It should be noted that
the fair value used for accounting purposes is 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. The fair value at grant date for the EPS performance
condition grants was determined using a discounted cash flow model incorporating the assumptions below:
Assumption
Tranche
Fair value
Share price at Grant date
Term (years)
Dividend yield
Risk free interest rate
Grant date
14 September 2021
1 January 2022
14
$11.76
$12.45
3
1.85%
0.16%
14A
$12.69
$13.37
2.33
1.72%
0.75%
The fair value at grant date for the TSR performance condition grants was determined using a Monte-Carlo simulation model
incorporating the assumptions below:
Assumption
Tranche
Fair value
Expiry date
Share price at Grant date
Expected dividend yield
Risk free interest rate
Grant date
14 September 2021
1 January 2022
14
$7.54
24 July 2024
$12.45
1.91%
0.11%
14A
$8.62
24 July 2024
$13.37
1.91%
0.78%
The following outlines the vesting scales that are applicable to the performance rights issued to executives during the current
reported period and as part of remuneration for FY22:
Performance Level
Stretch/Maximum
Between Target and Stretch
Target
Between Threshold and Target
Threshold
Below Threshold
Annualised EPS growth (CAGR)
% of max/ stretch/grant vesting
16.5%
>11%, <16.5%
11%
>5.5%, <11%
5.5%
<5.5%
100%
Pro-rata
50%
Pro-rata
25%
0%
Relative TSR of Collins Foods Limited
Proportion of performance rights to vest
Below the 50th percentile
At the 50th percentile
Between the 50th percentile and 75th percentile
At or above the 75th percentile
0%
25%
3% for each 1% > 50%, < 75%
100%
There was one tranche of performance rights issued during the reporting period ended 2 May 2021. The fair value at grant date
was determined using a discounted cash flow model incorporating the assumptions below:
Assumption
Tranche
Fair value
Share price at Grant Date
Term (years)
Dividend Yield
Risk free interest rate
Grant date
16 October 2020
13
$10.20
$10.78
3
1.86%
0.14%
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2211 of 101
34 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Employment terms for KMP Executives
SERVICE AGREEMENTS
A summary of contract terms in relation to KMP Executives is presented below:
(1) Period of Notice
Name
Position Held at Close of FY22
Duration of Contract
From Company
From KMP
(2) Termination Payments
Drew O'Malley (3)
Managing Director & CEO
Open ended
12 months
12 months
Up to 12 months
Hans Miete
CEO - CF Europe
Nigel Williams
Group CFO
Dawn Linaker
CPO
Helen Moore (4)
COO – KFC Australia
David Timm (5)
CMO
Open ended
Open ended
Open ended
Open ended
Open ended
6 months
6 months
6 months
6 months
3 months
3 months
6 months
6 months
6 months
3 months
Up to 12 months
Up to 12 months
Up to 12 months
Up to 12 months
Up to 12 months
(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 three years) unless shareholder approval is obtained.
(3) Appointed Managing Director & CEO effective 29 June 2021.
(4) Appointed Chief Operating Officer – KFC Australia effective 25 June 2021.
(5) Appointed Chief Marketing Officer effective 1 January 2022.
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 Drew O'Malley, Hans Miete, Nigel Williams, Helen Moore and David Timm 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.
The following table outlines the Non-executive Director fee rates that were applicable during the reported period:
Function
Main Board
Chair (inclusive of committee memberships)
Member
Role
Fee including super from 3 May 2021
Audit and Risk Committee
Committee Chair
Committee Members
Remuneration and Nomination Committee
Committee Chair
Committee Members
$320,000
$127,400
$30,000
$14,500
$30,000
$12,500
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2222 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 35
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Remuneration received by Non-executive Directors in FY22 and FY21 is disclosed below:
Name
Role
Robert Kaye, SC
Independent, Non-executive Chairman
Independent, Non-executive Chairman
Mark Hawthorne (2)
Independent, Non-executive Director
Independent, Non-executive Director
Christine Holman
Independent, Non-executive Director
Independent, Non-executive Director
Newman Manion (3)
Non-executive Director
Non-executive Director
Bronwyn Morris AM
Independent, Non-executive Director
Independent, Non-executive Director
Kevin Perkins
Non-executive Director
Non-executive Director
Russell Tate
Independent, Non-executive Director
Independent, Non-executive Director
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Board and
Committee Fees
Super-
annuation
Other
benefits
Termination
benefits
(1) Total
$296,720
$23,280
$249,749
$49,744
–
$140,462
$122,011
$45,987
$122,004
$167,632
$132,656
$140,462
$122,047
$171,900
$145,847
–
$4,974
–
$13,938
$11,630
$4,490
$11,638
$2,268
$12,602
$13,938
$11,594
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
$320,000
$249,749
$54,718
–
$154,400
$133,641
$50,477
$133,642
$169,900
$145,258
$154,400
$133,641
$171,900
$145,847
(1) Change of rates part way through 2021. First stage of rate change commenced from 1 October 2020 with full rate applicable from 1 May 2022.
(2) Appointed Independent Non-executive Director effective 23 December 2021.
(3) Resigned as Non-executive Director effective 27 August 2021.
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 2022
Granted as
compensation
Performance
Rights forfeited
Drew O'Malley (1)
Shares
Performance Rights
Hans Miete
Shares
Performance Rights
Nigel Williams
Shares
Performance Rights
Dawn Linaker
Shares
Performance Rights
Helen Moore (2)
Shares
Performance Rights
David Timm (3)
Shares
Performance Rights
20,000
150,125
–
–
22,283
104,409
15,017
74,464
–
–
–
–
–
74,005
–
28,808
–
41,102
–
31,299
–
27,069
–
8,908
–
(22,332)
–
–
–
(25,678)
–
(17,439)
–
–
–
–
TOTAL
386,298
211,191
(65,449)
(1) Appointed as Managing Director & CEO effective 29 June 2021.
(2) Appointed Chief Operating Officer – KFC Australia effective 25 June 2021.
(3) Appointed Chief Marketing Officer effective 1 January 2022.
Received on
exercise of
Performance
Rights
14,887
(14,887)
–
–
17,118
(17,118)
11,626
(11,626)
–
–
–
–
-
Acquisition/
(Disposal)
Number held at
close 2022
5,113
–
–
–
–
–
1,816
–
416
–
–
–
40,000
186,911
–
28,808
39,401
102,715
28,459
76,698
416
27,069
–
8,908
7,345
539,385
The following table outlines the changes in the amount of equity held directly or indirectly by Non-executive Directors over the
reporting period:
Name
Security
Robert Kaye, SC
Shares
Mark Hawthorne (1)
Shares
Christine Holman
Shares
Newman Manion (2) Shares
Bronwyn Morris AM
Shares
Kevin Perkins
Russell Tate
Shares
Shares
Number held at
open 2022
Additions
Disposals
Other
Number held at
close 2022
52,872
–
14,000
21,820
16,456
7,221,484
21,820
7,348,452
2,941
3,000
3,000
–
3,000
–
–
11,941
TOTAL
–
–
–
–
–
–
–
–
–
–
–
(21,820)
–
–
–
(21,820)
55,813
3,000
17,000
–
19,456
7,221,484
21,820
7,338,573
(1) Appointed Independent Non-executive Director effective 23 December 2021.
(2) Resigned as Non-executive Director effective 27 August 2021. The number disclosed under Other represents number of shares held at resignation date.
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:
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2233 of 101
36 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Remuneration rport
REMUNERATION REPORT (CONTINUED)
2022 Equity Grants
Name
Role(s)
FY in which Rights may vest
Maximum value yet to vest ($)
Directors’ report
Drew O'Malley (1)
Managing Director & CEO
Hans Miete (2)
CEO - CF Europe
Nigel Williams
Group CFO
Dawn Linaker
CPO
Helen Moore (3)
COO – KFC Australia
David Timms (4)
CMO
(1) Appointed Managing Director & CEO effective 29 June 2021.
(2) Appointed CFO – Europe effective 5 October 2020.
(3) Appointed Chief Operating Officer – KFC Australia effective 25 June 2021.
(4) Appointed Chief Marketing Officer effective 1 January 2022.
Group Securities Trading Policy
2023
2024
2025
2023
2024
2025
2023
2024
2025
2023
2024
2025
2023
2024
2025
2023
2024
2025
–
135,837
347,591
–
–
135,307
–
51,150
193,050
–
38,949
147,007
–
–
127,139
–
–
62,702
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.
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.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2244 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 37
Directors’ report
Remuneration rport
REMUNERATION REPORT (CONTINUED)
Most recent AGM – Remuneration Report comments and voting
At the most recent AGM in 2021: 99.19% 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 Non-Executive directors and
executive key management personnel.
$11,800 (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.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2255 of 101
38 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
DIRECTORS' REPORT (CONTINUED)
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.
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 and Risk
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 | Financial Report - for the reporting period ended 1 May 2022
Page 26 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 39
DIRECTORS' REPORT (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:
Directors’ report
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 Australia:
Audit and review of financial reports and other audit work for foreign subsidiary
OTHER ASSURANCE SERVICES:
PricewaterhouseCoopers Australian firm:
Restaurant sales certificates
Agreed upon procedures for covenant calculations
ESG support
Network firm of PricewaterhouseCoopers Australia:
Government subsidy audit
Taxation advice
Total remuneration for audit and other assurance services
TAXATION SERVICES
PricewaterhouseCoopers Australian firm:
2022
Whole
dollars
$
2021
Whole
dollars
$
401,370
45,402
579,747
42,432
349,618
796,390
506,824
1,129,003
25,096
7,650
70,890
29,478
7,650
–
–
129,620
10,457
114,093
910,483
–
166,748
1,295,751
Tax compliance services, including review of tax returns and allowance claims
46,560
58,160
Network firm of PricewaterhouseCoopers Australia:
Tax compliance services, including review of company tax returns
Total remuneration for taxation services
OTHER SERVICES
PricewaterhouseCoopers Australian firm:
Acquisition related due diligence
Total remuneration for other services
TOTAL REMUNERATION FOR SERVICES
5,011
51,571
56,675
114,835
120,000
120,000
276,787
276,787
1,082,054
1,687,373
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.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2277 of 101
40 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Directors’ report
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 42.
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 that 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
Chair
Brisbane
28 June 2022
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 28 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 41
Auditor’s Independence Declaration
As lead auditor for the audit of Collins Foods Limited for the period 3 May 2021 to 1 May 2022,
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
Brisbane
28 June 2022
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.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 2299 of 101
42 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
CONSOLIDATED INCOME STATEMENT
For the reporting period ended 1 May 2022
Revenue
Cost of sales
Gross profit
Notes
A3
2022
$000
1,184,521
(562,358)
622,163
(1) 2021
$000
1,065,905
(505,996)
559,909
Selling, marketing and royalty expenses
(256,607)
(228,164)
Occupancy expenses
Restaurant related expenses
Administrative expenses (1)
Other expenses
Other income
Other gains/(losses) – net (2)
Profit from continuing operations before finance income, finance costs and
income tax (EBIT)
Finance costs
Share of net profit/(loss) 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
G2
A4
E1
G12
Loss from discontinued operation (attributable to equity holders of the Company)
F2
Net profit 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)
Weighted average basic ordinary shares outstanding
Weighted average diluted ordinary shares outstanding
Notes
G3
G3
G3
G3
Notes
G3
G3
(79,523)
(93,291)
(71,660)
(15,142)
1,588
3,373
110,901
(77,158)
(90,083)
(63,680)
(10,985)
727
(321)
90,245
(30,207)
(29,391)
(5)
50
80,689
60,904
(25,890)
54,799
–
54,799
(23,633)
37,271
(4,663)
32,608
2022
cents per
share
(1) 2021
cents per
share
46.96
–
46.75
–
31.97
(4.00)
31.82
(3.98)
2022
Shares
2021
Shares
116,696,110
116,581,244
117,223,628
117,141,933
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
(2) Certain items previously classified as Other expenses, such as Net foreign exchange gain, Net loss on disposal of property, plant and equipment and Net gain/(loss) on disposal of
leases, have been reclassified to Other gains/(losses) – net. The comparative values have been reclassified to reflect this change.
The above Consolidated Income Statement should be read in conjunction with the accompanying Notes.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 3300 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 43
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the reporting period ended 1 May 2022
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
Other comprehensive income/(expense) for the period, net of tax
Notes
G11
G11
G12
2022
$000
54,799
(511)
5,760
(1,728)
3,521
(1) 2021
$000
32,608
(5,891)
1,940
(582)
(4,533)
Total comprehensive income for the reporting period
58,320
28,075
Total comprehensive income for the period is attributable to:
Owners of the parent
58,320
28,075
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying Notes.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 3311 of 101
44 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
CONSOLIDATED BALANCE SHEET
As at 1 May 2022
ASSETS
Current assets:
Cash and cash equivalents
Receivables (2)
Inventories
Derivative financial instruments
Other assets
Total current assets
Non-current assets:
Property, plant and equipment
Intangible assets (1)(2)
Right-of-use assets (2)
Deferred tax assets
Investments accounted for using the equity method
Derivative financial instruments
Other assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities:
Trade and other payables (2)
Lease liabilities (2)
Current tax liabilities
Derivative financial instruments
Provisions (2)
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 (1)
TOTAL EQUITY
Notes
2022
$000
(1) (2) 2021
$000
B1
G4
C3
G5
G6
G8
G12
C3
G9
G8
C3
G10
B2
G8
G12
C3
G10
D3
G11
97,217
4,200
7,930
662
3,845
95,717
3,041
7,171
–
5,162
113,854
111,091
216,099
475,292
432,468
39,825
2,397
2,784
252
188,919
451,549
361,657
41,129
2,402
–
356
1,169,117
1,282,971
1,046,012
1,157,103
116,473
37,766
5,514
–
6,736
96,654
34,211
7,084
1,536
7,554
166,489
147,039
270,994
439,623
5,148
–
7,190
722,955
889,444
393,527
291,394
14,871
87,262
393,527
271,490
363,601
4,580
819
6,976
647,466
794,505
362,598
290,788
10,756
61,054
362,598
(1)
(2)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
The above Consolidated Balance Sheet should be read in conjunction with the accompanying Notes.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 3322 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 45
CONSOLIDATED STATEMENT OF CASH FLOWS
For the reporting period ended 1 May 2022
Cash flows from operating activities
Receipts from customers (inclusive of GST and VAT)
Payments to suppliers and employees (inclusive of GST and VAT) (2)
Goods and services taxes (GST) and Value added taxes (VAT) paid
Interest received
Interest and other borrowing costs paid
Interest paid on leases (3)
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 (2)
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
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
(1) Notes
2022
$000
(2) 2021
$000
1,313,864
(1,042,196)
(59,236)
–
(6,647)
(22,679)
(26,772)
156,334
(28,339)
(67,844)
4,246
(5,372)
(97,309)
(1,472)
32,581
(28,000)
(36,465)
(28,591)
(61,947)
(2,922)
95,717
4,422
97,217
B1
B1
A2
B1
B1
B1
B1
B4
B1
B1
1,174,773
(933,500)
(58,061)
1
(8,337)
(19,449)
(27,179)
128,248
(3,943)
(41,883)
267
(5,018)
(50,577)
–
4,673
(42,000)
(31,222)
(24,482)
(93,031)
(15,360)
116,297
(5,220)
95,717
(1)
(2)
(3)
For cash flows specific to Sizzler Australia, which was discontinued in the 2021 full year reporting period, refer to Note F1. No cash flows are attributable to Sizzler Australia for the 2022
reporting period.
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Interest paid on leases, including the prior year comparative, has been reclassified to operating cash flows.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying Notes.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 3333 of 101
46 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the reporting period ended 1 May 2022
Notes Contributed
equity
Reserves
Retained
earnings
2022
Balance as at 2 May 2021
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
Performance rights vested
End of the reporting period
2021
Balance as at 3 May 2020
Profit for the reporting period as previously reported
Expenses SaaS implementation costs previously
capitalised (1)
Profit for the reporting period (restated) (1)
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
End of the reporting period
$000
290,788
–
–
––
–
–
606
291,394
$000
290,788
–
–
–
–
–
–
–
G11
B4
G11
G11
B4
$000
10,756
–
3,521
3,521
$000
61,054
54,799
–
54,799
Total
equity
$000
362,598
54,799
3,521
58,320
1,200
–
1,200
–
(28,591)
(28,591)
(606)
14,871
$000
14,088
–
–
–
(4,533)
(4,533)
–
–
87,262
393,527
$000
52,928
32,949
(341)
32,608
–
32,608
$000
357,804
32,949
(341)
32,608
(4,533)
28,075
1,201
–
1,201
–
(24,482)
(24,482)
290,788
10,756
61,054
362,598
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying Notes.
CCoolllliinnss FFooooddss LLiimmiitteedd AACCNN 115511 442200 778811 | Financial Report - for the reporting period ended 1 May 2022
Page 3344 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 47
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.
A1: Segment information
A2: Business combinations
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 Managing Director & CEO.
DESCRIPTION OF SEGMENTS
Management has determined the operating segments based on the reports reviewed by the Managing Director & CEO that
are used to make strategic decisions. 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.
SEGMENT INFORMATION PROVIDED TO THE MANAGING DIRECTOR & CEO
The following is an analysis of the revenue and results by reportable operating segment for the periods under review:
2022
Total segment revenue
Underlying EBITDA (2)
Depreciation, amortisation, and impairment (3)
Finance costs - net
Income tax expense
2021 Restated
Total segment revenue
Underlying EBITDA (2) (4)
Depreciation, amortisation and impairment (3)
Finance costs - net (5)
Income tax expense
(1) Other includes: Shared Services and Sizzler Asia restaurants.
(2) Refer below for a description and reconciliation of Underlying EBITDA.
KFC
Australia
restaurants
KFC
Europe
restaurants
Taco Bell
restaurants
$000
955,508
206,867
63,510
18,242
–
$000
900,411
198,531
58,718
16,983
–
$000
190,439
27,577
19,998
4,110
–
$000
134,907
11,955
22,226
3,308
–
$000
35,752
(421)
8,371
925
–
$000
28,039
233
9,348
739
–
(1) Other
Total
$000
2,822
$000
1,184,521
(24,807)
209,216
4,379
6,930
25,890
(4) $000
96,258
30,207
25,890
$000
2,548
1,065,905
(24,930)
185,789
3,295
8,361
23,633
93,587
29,391
23,633
(3) Refer below for a reconciliation of total depreciation, amortisation, and impairment of the Group. Refer to Note G7 for information on impairment per asset class, per segment for
the reporting period.
(4)
(5)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Finance costs – net for the prior reporting period have been reclassified to allocate interest arising on leases to their specific operating segments.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 35 of 101
48 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A1: Segment information continued
LOCATION OF REVENUE AND NON-CURRENT ASSETS
2022
Revenue
Non-current assets (property, plant and equipment, intangibles, and
right-of-use assets)
2021 Restated
Revenue
Non-current assets (property, plant and equipment, intangibles, and
right-of-use assets) (1)
Australia
Europe
$000
$000
Asia
$000
Total
$000
991,260
878,834
190,439
234,960
2,822
1,184,521
10,065
1,123,859
$000
$000
928,450
815,364
134,907
177,094
$000
2,548
9,667
$000
1,065,905
1,002,125
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details)
and an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period (refer to Note A2 for further details).
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 in KFC and Taco Bell restaurants, franchise fees and royalties
from Sizzler Asia restaurants and service fees relating to the Corporate Franchise Agreement in Europe.
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.
A reconciliation of Underlying EBITDA to profit/(loss) from continuing operations before income tax is provided as follows:
Underlying EBITDA (1)
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
Fair value gain on debt modification
Gain on sale and leaseback
Other non-trading items
Profit before income tax from continuing operations
2022
$000
209,216
(30,207)
(2,932)
(88,531)
(4,564)
(1,523)
(31)
(1,609)
(5)
(945)
1,243
577
80,689
(1) 2021
$000
185,789
(29,391)
(1,400)
(80,489)
(3,587)
(4,476)
(232)
(4,803)
50
–
–
(557)
60,904
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 36 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 49
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2: Business combinations
CURRENT PERIOD
LELYSTAD – SUMMARY OF ACQUISITION
On 1 June 2021, Collins Foods Netherlands Limited, a wholly owned subsidiary of Collins Foods Limited, entered into a Share
Purchase Agreement to acquire 100% of the issued capital of KFC Taupo Lelystad restaurant from Kia Ora Holding B.V, obtaining
control of KFC Taupo Lelystad. The Group paid €2.2 million ($3.4 million) for the acquisition.
The primary reason for the acquisition was to expand the Group's European operations in the quick service restaurant market.
At 17 October 2021 (balance date of the interim financial report), the fair value of some assets and liabilities assumed were
recognised on a provisional basis. Since the balance date of the interim financial report, additional information came to light
that has adjusted the purchase consideration and fair value of the assets acquired and liabilities assumed. The amounts which
have been altered and the effect on the financial statements have been summarised below.
Details of the purchase consideration, including the amounts which have been altered, are as follows:
A2: Business combinations continued
DOORNBOS – SUMMARY OF ACQUISITION
On 1 July 2021, Collins Foods Netherlands Limited, a wholly owned subsidiary of Collins Foods Limited, entered into an Asset
Purchase Agreement to acquire five KFC restaurants located in the Netherlands. These restaurants have been purchased from
a local franchisee in the Netherlands region. The Group have paid €6.1 million ($9.6 million) for the acquisition of the assets and
assumed liabilities relating to the five restaurants, plus transaction costs, utilising the Group’s existing debt facility.
The primary reason for the acquisition was to expand the Group's European operations in the quick service restaurant market.
At 17 October 2021 (balance date of the interim financial report), the fair value of some assets and liabilities assumed were
recognised on a provisional basis. Since the balance date of the interim financial report, additional information came to light
that has adjusted the fair value of the assets acquired and liabilities assumed. The amounts which have been altered and the
effect on the financial statements have been summarised below.
Details of the purchase consideration are as follows:
Cash paid
Total purchase consideration
Provisional fair value
at 17 October 2021
Purchase price
adjustment
Revised fair value
at 1 May 2022
3,532
3,532
(114)
(114)
3,418
3,418
Cash paid
Total purchase consideration
The provisional fair values of the assets and liabilities of the business acquired as at the date of acquisition, including the
amounts which have been altered, are as follows:
Provisional fair value
at 17 October 2021
Purchase price
adjustment
Revised fair value
at 1 May 2022
The provisional fair values of the assets and liabilities of the business acquired as at the date of acquisition, including the
amounts which have been altered, are as follows:
Provisional fair value
at 17 October 2021
Purchase price
Revised fair value
adjustment
at 1 May 2022
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Right-of-use assets
Trade and other payables
Provisions
Lease liabilities
Net identifiable liabilities acquired
Goodwill
Net assets acquired
$000
53
46
29
44
34
3,590
(532)
(1,859)
(3,590)
(2,185)
5,717
3,532
$000
(17)
(5)
–
–
–
(767)
(135)
–
767
(157)
43
(114)
$000
36
41
29
44
34
2,823
(667)
(1,859)
(2,823)
(2,342)
5,760
3,418
The goodwill is attributable to the workforce 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).
The goodwill is attributable to the workforce and access to an established market with opportunities for future expansion.
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).
Purchase consideration – cash flow
Purchase consideration – cash flow
Cash consideration
Less: balances acquired
Outflow of cash – investing activities
Provisional fair value
at 17 October 2021
Purchase price
adjustment
Revised fair value
at 1 May 2022
$000
3,532
(53)
3,479
$000
(114)
17
(97)
$000
3,418
(36)
3,382
The fair value of assets acquired and liabilities assumed may continue to be amended during the measurement period,
however, management do not expect material differences from the amounts recognised in the reporting period to 1 May 2022.
The acquired business contributed revenues of $4.5 million and Underlying EBITDA (as defined in Note A1) of $0.8 million for the
period the restaurants were owned, up to 1 May 2022.
The fair value of assets acquired and liabilities assumed may continue to be amended during the measurement period,
however, management do not expect material differences from the amounts recognised in the reporting period to 1 May 2022.
The acquired business contributed revenues of $14.5 million and Underlying EBITDA (as defined in Note A1) of $1.5 million for the
period the restaurants were owned, up to 1 May 2022.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 37 of 101
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 38 of 101
50 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
$000
20
3
107
69
5,800
6,586
(169)
(1,509)
(6,586)
4,321
5,294
9,615
$000
–
–
–
–
–
–
(2,216)
(572)
(1,023)
(3,811)
3,811
–
$000
9,615
9,615
$000
20
3
107
69
3,584
6,014
(169)
(1,509)
(7,609)
510
9,105
9,615
As at acquisition date
$000
9,615
(20)
9,595
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Right-of-use assets
Trade and other payables
Provisions
Lease liabilities
Net identifiable assets acquired
Goodwill
Net assets acquired
Acquisition - related costs
Cash consideration
Less: balances acquired
Outflow of cash - investing activities
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2: Business combinations continued
DOORNBOS – SUMMARY OF ACQUISITION
On 1 July 2021, Collins Foods Netherlands Limited, a wholly owned subsidiary of Collins Foods Limited, entered into an Asset
Purchase Agreement to acquire five KFC restaurants located in the Netherlands. These restaurants have been purchased from
a local franchisee in the Netherlands region. The Group have paid €6.1 million ($9.6 million) for the acquisition of the assets and
assumed liabilities relating to the five restaurants, plus transaction costs, utilising the Group’s existing debt facility.
The primary reason for the acquisition was to expand the Group's European operations in the quick service restaurant market.
At 17 October 2021 (balance date of the interim financial report), the fair value of some assets and liabilities assumed were
recognised on a provisional basis. Since the balance date of the interim financial report, additional information came to light
that has adjusted the fair value of the assets acquired and liabilities assumed. The amounts which have been altered and the
effect on the financial statements have been summarised below.
Details of the purchase consideration are as follows:
Cash paid
Total purchase consideration
$000
9,615
9,615
The provisional fair values of the assets and liabilities of the business acquired as at the date of acquisition, including the
amounts which have been altered, are as follows:
Provisional fair value
at 17 October 2021
Purchase price
adjustment
Revised fair value
at 1 May 2022
Cash and cash equivalents
Trade and other receivables
Inventories
Prepayments
Property, plant and equipment
Right-of-use assets
Trade and other payables
Provisions
Lease liabilities
Net identifiable assets acquired
Goodwill
Net assets acquired
$000
20
3
107
69
5,800
6,586
(169)
(1,509)
(6,586)
4,321
5,294
9,615
$000
–
–
–
–
(2,216)
(572)
–
–
(1,023)
(3,811)
3,811
–
$000
20
3
107
69
3,584
6,014
(169)
(1,509)
(7,609)
510
9,105
9,615
The goodwill is attributable to the workforce 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).
Purchase consideration – cash flow
Cash consideration
Less: balances acquired
Outflow of cash - investing activities
As at acquisition date
$000
9,615
(20)
9,595
The fair value of assets acquired and liabilities assumed may continue to be amended during the measurement period,
however, management do not expect material differences from the amounts recognised in the reporting period to 1 May 2022.
The acquired business contributed revenues of $14.5 million and Underlying EBITDA (as defined in Note A1) of $1.5 million for the
period the restaurants were owned, up to 1 May 2022.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 38 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 51
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2: Business combinations continued
CORPORATE FRANCHISE AGREEMENT – SUMMARY OF ACQUISITION
On 31 December 2021, Collins Foods Netherlands Management B.V., a wholly owned subsidiary of Collins Foods Limited,
entered into a Framework Agreement to acquire the business assets and assumed liabilities from KFC Europe SARL. The Group
have paid €0.4 million ($0.6 million) for the acquisition.
The primary reason for the acquisition was to support the Group's operations as Corporate Franchisor in Europe.
Details of the purchase consideration are as follows:
Cash paid
Total purchase consideration
$000
581
581
The provisional fair values of the assets and liabilities of the business acquired as at the date of acquisition are as follows:
Prepayments
Property, plant and equipment
Intangibles
Trade and other payables
Provisions
Net identifiable assets acquired
Goodwill
Net assets acquired
Fair Value
$000
21
617
152
(81)
(128)
581
–
581
The goodwill is attributable to the workforce 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).
Purchase consideration – cash flow
Cash consideration
Less: balances acquired
Outflow of cash - investing activities
As at acquisition date
$000
581
–
581
The fair value of assets acquired and liabilities assumed may be amended during the measurement period, however,
management do not expect material differences from the amounts recognised in the reporting period to 1 May 2022.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 39 of 101
52 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2: Business combinations continued
DE KOK– SUMMARY OF ACQUISITION
On 1 February 2022, Collins Foods Netherlands Operations B.V., a wholly owned subsidiary of Collins Foods Limited, entered into
a Share Purchase Agreement to acquire nine KFC restaurants located in the Netherlands. These restaurants have been
purchased from a local franchisee in the Netherlands region. The Group paid €9.7 million ($15.4 million) for the acquisition of the
assets and assumed liabilities relating to the acquisition of the nine restaurants, plus transaction costs.
The nine restaurants are:
• KFC Barendrecht
• KFC Alexandrium
• KFC Binnenwegplein
• KFC Groene Hilledijk
• KFC Stadion-Boulevard
• KFC Bergweg
• KFC Zudplein
• KFC Kruiskade
• KFC Spijkenisse
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 are as follows:
Cash paid
Total purchase consideration
The provisional fair values of the assets and liabilities of the business acquired as at the date of acquisition are as follows:
$000
15,405
15,405
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Right-of-use assets
Trade and other payables
Lease liabilities
Net identifiable liabilities acquired
Goodwill
Net assets acquired
Fair Value
$000
369
2,244
121
4,486
10,367
(6,181)
(11,567)
(161)
15,566
15,405
The goodwill is attributable to the workforce 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).
Purchase consideration – cash flow
Cash consideration
Less: balances acquired
Outflow of cash - investing activities
As at acquisition date
$000
15,405
(369)
15,036
The fair value of assets acquired and liabilities assumed may be amended during the measurement period, however,
management do not expect material differences from the amounts recognised in the reporting period to 1 May 2022.
The acquired business contributed revenues of $6.2 million and Underlying EBITDA (as defined in Note A1) of $0.5 million for the
period the restaurants were owned, up to 1 May 2022.
The underlying EBITDA is somewhat impacted by seasonality due to the quieter Winter trading period and a higher mix of in-line
restaurants.
If all acquisitions this financial year had occurred on 3 May 2021, the consolidated revenue and consolidated Underlying EBITDA
for the reporting period ended 1 May 2022 would have been $1,204.8 million and $211.2 million respectively. The revenue and
consolidated EBITDA for all acquisitions since completion date are already reflected in the Financial Statements.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 40 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 53
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A2: Business combinations continued
PRIOR PERIOD
KFC EUROPE RESTAURANTS – SUMMARY OF ACQUISITION
In the 2021 financial year, three KFC restaurants were acquired through a Share Purchase Agreement. Details of this business
combination were disclosed in Note A2 of the Group’s 2021 Annual Report.
At 2 May 2021, the fair value of some assets and liabilities assumed were recognised on a provisional basis. In the current
reporting period, additional information came to light that has adjusted the purchase value and fair value of the assets
acquired and liabilities assumed. The amounts which have been altered and the effect on the financial statements have been
summarised below:
Provisional fair value
at 2 May 2021
Purchase price
adjustment
Final fair value at
2 May 2021
Goodwill arising on acquisition
Purchase consideration
Less: fair value of net identifiable assets
Goodwill on acquisition
Net identifiable assets
Cash
Receivables
Inventories
Property, plant and equipment
Right-of-use assets
Trade and other payables
Provisions
Lease liabilities
Net identifiable assets acquired
ACCOUNTING POLICY
$000
4,378
(576)
3,802
$000
435
613
50
971
–
(1,493)
–
–
576
$000
(255)
1,082
827
$000
–
–
–
–
2,556
241
(1,323)
(2,556)
(1,082)
$000
4,123
506
4,629
$000
435
613
50
971
2,556
(1,252)
(1,323)
(2,556)
(506)
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 | Financial Report - for the reporting period ended 1 May 2022
Page 41 of 101
54 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
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
2022
Sale of goods
Franchise revenue
Corporate Franchise Agreement revenue
2021
Sale of goods
Franchise revenue
TIMING OF REVENUE RECOGNITION
2022
At a point in time
Over time
2021
At a point in time
Over time
ACCOUNTING POLICY
Sale of goods
KFC
Australia
restaurants
KFC
Europe
restaurants
Taco Bell
restaurants
$000
$000
955,508
186,867
–
–
–
3,572
955,508
190,439
$000
$000
900,411
134,907
–
–
$000
35,752
–
–
35,752
$000
28,039
–
900,411
134,907
28,039
KFC
Australia
restaurants
KFC
Europe
restaurants
Taco Bell
restaurants
$000
$000
955,508
187,952
–
2,487
955,508
190,439
$000
$000
900,411
134,907
–
–
$000
35,752
–
35,752
$000
28,039
–
Other
Total
$000
$000
–
1,178,127
2,822
–
2,822
$000
2,822
3,572
1,184,521
$000
–
1,063,357
2,548
2,548
2,548
1,065,905
Other
Total
$000
2,775
$000
1,181,987
47
2,534
2,822
$000
1,184,521
$000
2,453
1,065,810
95
95
900,411
134,907
28,039
2,548
1,065,905
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.
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 42 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 55
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
A3: Revenue continued
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.
Corporate Franchise Agreement revenue
Corporate Franchise Agreement (CFA) revenue entitles the Group to five streams of revenue:
• Management service fee revenue: revenue relating to the satisfaction of performance obligations under the CFA. This is
recognised over time as the respective services are delivered.
• Marketing fee revenue: revenue related to advertising contributions received for the marketing of the business in the
Netherlands. This is recognised at a point in time as the respective services are delivered.
• Supply chain revenue: fees due for the management of the Netherlands Supply Chain services. This is recognised over time
as the respective services are delivered.
• Digital and eCommerce fee revenue: fees due for the management of the Digital and eCommerce services. This is
recognised over time as the respective services are delivered.
•
Learning zone fee revenue: fees due for the provision of Learning and Development services. This is recognised over time as
the respective services are delivered.
All CFA revenue arises in Europe.
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 | Financial Report - for the reporting period ended 1 May 2022
Page 43 of 101
56 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
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
2022
$000
2021
$000
G5
G8
G6
G5
G6
G8
G7
43,500
45,031
88,531
4,564
4,564
1,523
31
1,609
3,163
39,374
41,115
80,489
3,587
3,587
4,476
232
4,803
9,511
Total depreciation, amortisation and impairment
96,258
93,587
Employee benefits expense:
Wages and salaries
Defined contribution superannuation expense
Employee entitlements
Total employee benefits expense
Finance costs
Inventories recognised as an expense
Fair value loss on debt modification
Performance rights
Costs of acquisitions expensed
Net recognition of tax losses and change in tax rates
Net loss on disposal of property, plant and equipment
Net gain on disposal of leases
Gain on sale and leaseback
295,472
26,313
17,402
339,187
30,207
373,821
945
1,200
2,932
–
217
(2,684)
(1,238)
269,973
22,975
14,638
307,586
29,391
342,796
–
1,201
1,400
(459)
207
(155)
–
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 44 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 57
Notes to the Consolidated Financial Statements
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 on hand (1)
2022
$000
97,217
2021
$000
95,717
(1)
Included in cash at bank is an amount of $2.0 million (2021: $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. The amount is denominated in Euro at an amount of €1.3 million (2021: €1.3 million).
RECONCILIATION OF PROFIT FROM CONTINUING OPERATIONS TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Profit for the period (1)
Adjustments for non-cash income and expense items:
Depreciation, amortisation and impairment (excluding right-of-use assets) (2)
Depreciation and impairment of right-of-use assets (2)
Franchise rights written off
(Gain)/loss on disposal of property, plant and equipment
Gain on disposal of leases
(Gain)/loss on foreign exchange
Gain on sale and leaseback
Fair value loss on debt modification
Amortisation of borrowing costs
Notes
A4
A4
G6
A4
A4
G2
A4
A4
Non-cash employee benefits expense share based payments expense
G11
Provision for make good obligations
Provision for employee entitlements
Changes in assets and liabilities:
Receivables
Inventories
Prepayments and other assets
Share of profits of joint venture
Trade payables and accruals (1)
Income tax payable
Deferred tax balances
Goods and services tax payable
Fringe benefits tax payable
Net operating cash flows
2022
$000
54,799
49,618
46,640
–
217
(2,684)
(613)
(1,238)
945
1,099
1,200
58
(267)
874
(1,084)
212
5
8,292
(1,570)
225
2
(396)
(1) 2021
$000
32,608
48,021
46,466
1,327
424
(193)
41
–
–
587
1,201
(381)
278
(98)
(273)
(655)
(50)
5,494
95
(5,169)
(1,787)
312
156,334
128,248
(1)
The prior reporting period has been restated as a result of:
- a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details); and
-
interest paid on leases being reclassified to operating cash flows.
(2)
The 2021 reporting period includes depreciation of property, plant and equipment of $352,000 and depreciation and impairment of right-of-use assets of $548,000 relating to Sizzler
Australia, which was discontinued during the 2021 reporting period.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 45 of 101
58 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B1: Cash and cash equivalents continued
RECONCILIATION OF LIABILITIES TO CASH FLOWS ARISING FROM FINANCING ACTIVITIES
2022
At 3 May 2021
Changes from financing cash flows
Proceeds from borrowings – bank loan facilities
Repayment of borrowings and other obligations
Refinance fees paid
Payments for lease principal
Dividends paid
Borrowings
LIABILITIES
Lease
liabilities
$000
$000
271,490
397,812
32,581
(28,000)
(1,472)
–
–
–
–
–
(36,465)
–
EQUITY
Retained
earnings
$000
61,054
–
–
–
–
(28,591)
Total
$000
$000
32,581
(28,000)
(1,472)
(36,465)
(28,591)
Total changes from financing cash flows
3,109
(36,465)
(28,591)
(61,947)
Other changes
Lease additions and modifications
Lease disposals
Interest expense
Interest paid (operating cash flow)
Interest paid on leases (operating cash flow)
Foreign exchange adjustments
Debt modification loss
Profit for the reporting period
Amortisation of loan establishment fees
At 1 May 2022
2021 Restated (1) (2)
At 4 May 2020
Changes from financing cash flows
Proceeds from borrowings – bank loan facilities
Repayment of borrowings and other obligations
Payments for lease principal
Dividends paid
–
–
6,647
(6,647)
141,909
(21,505)
22,679
–
–
(22,679)
(5,649)
(4,362)
945
–
1,099
–
–
–
270,994
477,389
$000
$000
317,252
389,860
4,673
(42,000)
–
–
–
–
(31,222)
–
–
–
–
–
–
–
–
54,799
–
87,262
$000
52,928
–
–
–
(24,482)
141,909
(21,505)
29,326
(6,647)
(22,679)
(10,011)
945
54,799
1,099
$000
4,673
(42,000)
(31,222)
(24,482)
Total changes from financing cash flows
(37,327)
(31,222)
(24,482)
(93,031)
Other changes
Lease additions and modifications (2)
Lease disposals
Interest expense
Interest paid (operating cash flow)
Interest paid on leases (operating cash flow)
Foreign exchange adjustments
Profit for the reporting period (1)
Amortisation of loan establishment fees
At 2 May 2021
–
–
8,160
(8,160)
42,865
(238)
20,621
–
–
(19,449)
(9,022)
(4,625)
–
587
–
–
271,490
397,812
–
–
–
–
–
–
32,608
–
61,054
42,865
(238)
28,781
(8,160)
(19,449)
(13,647)
32,608
587
(1)
(2)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 46 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 59
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B2: Borrowings
AVAILABLE FINANCING FACILITIES
Used (1)
Unused
Total
2022
Working Capital
Facility
Bank Loan
Facility
Working Capital
Facility
$000
11,902
22,841
34,743
$000
261,038
81,132
342,170
$000
10,190
25,386
35,576
2021
Bank Loan
Facility
$000
263,794
90,240
354,034
(1) $845,000 (2021: $845,000) of the working capital facility has been used for bank guarantees rather than drawn down cash funding. In addition, an amount of $1,101,000 (2021:
$1,650,000) relating to capitalised fees is not included in the above figures, but included in the total Borrowings amount on the Balance Sheet.
A subsidiary of the Company, CFG Finance Pty Limited, is the primary borrower under a Syndicated Facility Agreement. The
Syndicated Facility Agreement includes bank loan facilities (Revolving Bank Loans) and a Working Capital Facility Agreement
(Working Capital Facility). On 14 September 2021, the Group entered into a new Syndicated Facility Agreement for a total of
$200 million and €120 million, which includes both the bank loan facilities and working capital facilities. The new term of the
facility is a blend of maturities with $120 million and €75 million maturing on 31 October 2024 and the remaining $80 million and
€45 million expiring on 31 October 2026.
FACILITIES
The Revolving Bank Loans and Working Capital Facility are subject to certain financial covenants and restrictions such as net
leverage ratios, interest cover ratios and others which management believe are customary for these types of loans. During the
reporting period ended 1 May 2022, 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.
For further information on the Group's borrowings refer to notes C1 and C2.
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
leverage ratio, which it defines as net debt divided by total capital. Net debt is calculated as borrowings (excluding capitalised
fees) 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 net leverage was 17% (2021: 34%).
Net debt
General cash at bank and on hand
Notes
Borrowings
Capitalised fees
Net debt
Net leverage
Net debt
EBITDA per Syndicated Facility Agreement (1)
Net leverage (1)
2022
$000
97,217
2021
$000
95,717
(270,994)
(271,490)
(1,101)
(1,650)
(174,878)
(177,423)
2022
$000
(174,878)
150,008
1.17
(1) 2021
$000
(177,423)
132,831
1.34
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 47 of 101
60 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
B4: Dividends
Dividends
Dividends paid of $0.25 (2021: $0.21) per fully paid share
Franking credits
2022
$000
28,591
2022
$000
2021
$000
24,482
2021
$000
Franking credits available for subsequent reporting periods based on a tax rate of 30.0%
(2021: 30.0%)
136,540
122,971
The above amount represents 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 15.0 cents per ordinary share (2021: 12.5 cents) to be paid on 1 August 2022. 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 $17,504,417 (2021: $14,572,656).
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 48 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 61
Notes to the Consolidated Financial Statements
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 2022 and 2021, the financial instruments of the Group and the parent entity were denominated in Australian dollars apart
from certain bank accounts, trade receivables, trade payables and borrowings 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 investment
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.
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 49 of 101
62 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C1: Financial risk management continued
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 G4) is not past due, nor impaired (2021: 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. Despite Swap Contracts being in a receivable position for
the current reporting period, they have been included below for comparability to the prior year reporting period.
Less than
1 year
Between
1 and 2
years
Between
2 and 5
years
Total
contractual
cash flows
Carrying
amount
(assets)/
liabilities
Note
$000
$000
$000
$000
$000
G9
B2
C3
Note
G9
B2
116,473
5,310
121,783
(675)
$000
96,654
6,099
102,753
–
5,520
5,520
(1,710)
$000
–
206,233
206,233
–
278,181
278,181
(1,239)
$000
–
73,491
73,491
116,473
289,011
405,484
(3,624)
$000
96,654
285,823
382,477
116,473
270,994
387,467
(3,446)
$000
96,654
271,490
368,144
2022
Non-derivatives
Trade payables
Borrowings (excluding finance leases)
Total non-derivatives
Derivatives
Net settled (Swap Contracts)
2021 Restated (1) (2)
Non-derivatives
Trade payables (1)
Borrowings (excluding finance leases) (2)
Total non-derivatives
Derivatives
Net settled (Swap Contracts)
C3
1,541
822
–
2,363
2,355
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
(2)
The prior reporting period has been restated to include the maturities of working capital facility amounts.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 50 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 63
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C1: Financial risk management continued
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:
2022
Financial assets
Financial liabilities
Total increase/(decrease)
2021 Restated (1)
Financial assets
Financial liabilities
Interest rate risk
Foreign currency risk
Carrying
amount
-1%
+1%
-1%
+1%
Profit
Equity
Profit
Equity
Profit
Equity
Profit
Equity
$000
$000
$000
$000
$000
$000
$000
$000
$000
104,863
392,981
$000
98,758
377,583
(681)
(1,967)
681
1,967
254
–
(254)
–
847
–
(847)
–
(374)
1,210
374
(1,210)
166
(1,967)
(166)
1,967
(120)
1,210
120
(1,210)
$000
$000
$000
$000
$000
$000
$000
$000
(670)
–
670
–
671
(1,846)
(671)
1,846
283
(325)
(42)
–
(283)
–
958
958
325
(958)
42
(958)
Total increase/(decrease)
1
(1,846)
(1)
1,846
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
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
Fix interest
maturing in:
3 - 5 years
Non-interest
bearing
Total
Weighted
average
effective rate
2022
Trade and other payables
Borrowings - unhedged
Borrowings - hedged (1)
Borrowings - working capital
Notes
G9
B2
B2
B2
2021 Restated (2)
Notes
Trade and other payables (2)
Borrowings - unhedged
Borrowings - hedged (1)
Borrowings - working capital
G9
B2
B2
B2
$000
–
121,038
–
–
121,038
$000
–
95,794
–
–
$000
–
–
140,000
11,057
151,057
$000
–
–
168,000
9,346
$000
116,473
–
–
–
116,473
$000
96,654
–
–
–
$000
116,473
121,038
140,000
11,057
377,511
$000
96,654
95,794
168,000
9,346
%
–
1.3
0.8
1.3
%
–
1.3
1.0
1.4
(1) Refer Note C3 for details of derivative financial instruments.
(2)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
95,794
177,346
96,654
360,448
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)
2022
$000
4,200
(1) 2021
$000
3,041
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
CREDIT RISK
There is no concentration of credit risk with respect to external current and non-current receivables.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 51 of 101
64 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
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 1 May 2022, 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 2 May 2021, the Group had derivative financial instruments which were
classified as Level 2 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 PROCESSES
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. Discussions of valuation
processes and results are held between the Group CFO, Audit and Risk Committee, 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 (if any) fair values are analysed at the end of each reporting period during the half-year
valuation discussion between the Group CFO, Audit and Risk Committee, 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 | Financial Report - for the reporting period ended 1 May 2022
Page 52 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 65
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:
Bank Loan (net of borrowing costs)
270,994
252,374
Carrying
amount
$000
Fair
value
$000
2022
Discount
rate
%
4.1
Carrying
amount
$000
Fair
value
$000
271,490
258,808
(1) 2021
Discount
rate
%
4.1
(1)
The prior reporting period has been restated to include the working capital facility in the calculation of fair value.
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 2 values in the fair value hierarchy due to the use of observable 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.
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 53 of 101
66 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C2: Recognised fair value measurements continued
(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; and
• Lease receivables and trade receivables that give rise to an unconditional right to consideration.
C3: Derivative financial instruments
Current assets
Interest rate swap contracts - cash flow hedges
Non-current assets
Interest rate swap contracts - cash flow hedges
Current liabilities
Interest rate swap contracts - cash flow hedges
Non-current liabilities
Interest rate swap contracts - cash flow hedges
INSTRUMENTS USED BY THE GROUP
2022
$000
662
2,784
–
–
2021
$000
–
–
1,536
819
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
The following Swap Contracts were entered into in the 2021 reporting period 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 commencing on 31 October 2020, with a maturity date of 31 October 2022.
These Swap Contracts remain active as at 1 May 2022.
An additional four Swap Contracts were entered into during the 2022 reporting period for a total of $90.0 million, however are
not due to commence until 30 October 2022. $75.0 million will expire on 30 October 2024, with the remaining $15.0 million
expiring on 20 October 2026.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 54 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 67
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C3: Derivative financial instruments continued
Swap Contracts currently in place cover approximately 100% (2021: 100%) 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
0.22% (2021: 0.06%). 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
2022
Weighted average
fixed interest rate
2021
Weighted average
fixed interest rate
$000
140,000
–
140,000
%
0.8
–
$000
–
168,000
168,000
%
–
1.0
The Swap Contracts require settlement of net interest receivable or payable each month. 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 1 May 2022, the Swap Contracts gave rise to receivables for unrealised gains on derivative instruments of $3.45 million
(2021: $2.36 million payable on unrealised losses) 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.
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 Financial Instruments.
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 55 of 101
68 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
C3: Derivative financial instruments continued
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 | Financial Report - for the reporting period ended 1 May 2022
Page 56 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 69
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
Share based payments
Termination benefit
Total KMP compensation
2022
Whole Dollars
$
5,536,290
–
162,792
815,551
–
2021
Whole Dollars
$
4,417,193
(100,324)
132,673
678,445
459,821
6,514,633
5,587,808
(1)
Long term employee benefits are negative in the prior 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 the 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 achieving performance targets. In FY22, the Board introduced a second
performance target with 50% of the grant having a Compound earnings per share (EPS) growth target and the remaining 50%
having a relative total shareholder return (TSR) target. 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 and TSR 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;
the vesting conditions not being satisfied by the Vesting Determination 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 employment ceasing (resignation,
dismissal for cause, death or illness).
Performance rights when issued under the LTIP are not entitled to receive a dividend and carry no voting rights.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 57 of 101
70 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
D2: Share based payments continued
Set out below are summaries of performance rights issued under the LTIP:
Performance rights
Balance at the beginning of the reporting period
Vested and exercised
Issued during the reporting period
Lapsed during the reporting period
Balance at the end of the reporting period
2022
653,255
(114,866)
298,175
(199,279)
637,285
2021
926,998
–
204,207
(477,950)
653,255
During the 2019 financial year, grants under the long-term incentive plan were made with a performance period of FY19, FY20
and FY21 (FY19 Grant). Based upon the EPS growth achieved over the three year performance period (FY19-FY21), 114,866
performance rights (Vesting Rights) granted under the LTIP converted to fully paid ordinary shares. Each participant was issued
shares based on the volume weighted average price of $11.60.
All performance rights issued during the reporting period ended 1 May 2022 have an expiry date of 24 July 2024 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.
FAIR VALUE OF PERFORMANCE RIGHTS ISSUED
There were two tranches of performance rights issued during the reporting period ended 1 May 2022:
•
•
•
The assessed fair value of performance rights (with an EPS growth target) issued on 14 September 2021 was $11.76.
The fair value at grant date was determined using a discounted cash flow model incorporating the share price at grant
date of $12.45, the term of the right, the expected dividend yield of 1.85% and the risk free interest rate for the term of the
rights of 0.16%.
The assessed fair value of performance rights (with an EPS growth target) issued on 1 January 2022 was $12.69.
The fair value at grant date was determined using a discounted cash flow model incorporating the share price at grant
date of $13.37, the term of the right, the expected dividend yield of 1.72% and the risk free interest rate for the term of the
rights of 0.75%.
The assessed fair value at grant date of performance rights (with TSR target) was determined using a Monte Carlo simulation
model that takes into account the exercise price, the term of the option, the impact of dilution (where material), the share
price at grant date and expected price volatility of the underlying share, the expected dividend yield, the risk-free interest
rate for the term of the option and the correlations and volatilities of the peer group companies.
The model inputs for performance rights granted with a TSR target during the reporting period ended 1 May 2022 included:
Assumption
Fair value
Expiry date
Share price at Grant date
Term (years)
Expected dividend yield
Risk free interest rate
Grant date
14 September 2021
1 January 2022
$7.54
$8.62
24 July 2024
24 July 2024
$12.45
3.0
1.91%
0.11%
$13.37
3.0
1.91%
0.78%
There were two tranches of performance rights issued on the same date during the reporting period ended 2 May 2021:
•
The assessed fair value of performance rights (with an EPS growth target) issued on 16 October 2020 was an average of
$10.18. The fair value at issuance date was determined using a discounted cash flow model incorporating the share price at
grant 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%.
EXPENSES ARISING FROM SHARE BASED PAYMENT TRANSACTIONS
Total expenses arising from share based payment transactions recognised during the period as part of employee benefit
expense were $1,321,498 (2021: $984,846)
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 58 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 71
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
Balance as at 2 May 2021
Senior Executive Performance Rights Plan Issue
End of the reporting period
ORDINARY SHARES
Number of ordinary
shares - fully paid
Share capital
$000
116,581,244
114,866
116,696,110
290,788
606
291,394
Parent Entity
Total equity
$000
290,788
606
291,394
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 59 of 101
72 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
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
Sizzler China Pte Ltd
Singapore
SCP
Summarised financial information of joint ventures
Aggregate carrying amount of individually immaterial joint ventures
Aggregate amounts of the Group's share of:
Profit/(loss) from continuing operations
Total comprehensive income
ACCOUNTING POLICY
% of ownership interest
2022
%
50
2022
$000
2,497
(5)
(5)
2021
%
50
2021
$000
2,301
50
50
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 one joint venture. 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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 60 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 73
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
E2: Related party transactions
PARENT ENTITY
The parent entity and ultimate parent entity within the Group is Collins Foods Limited.
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 AND PURCHASES OF GOODS AND SERVICES
There were no outstanding balances (2021: nil) with related parties at the end of the reporting period.
TRANSACTIONS WITH RELATED PARTIES
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 61 of 101
74 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
F: DISCONTINUED OPERATION
F1: Sizzler Australia
F2: Financial performance and cash flow information
F1: Sizzler Australia
There were no discontinued operations for the period ended 1 May 2022.
During the period ended 2 May 2021, 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 1 May 2022 and 2 May 2021.
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
Income tax benefit
Loss of discontinued operations
Expenses in the 2021 reporting period included closure costs of $2,630,000.
Net cash outflow from operating activities
Net cash inflow from investing activities
Net cash inflow from financing activities
Net decrease in cash generated by the discontinued operations
2022
$000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2022
$000
–
–
–
–
2021
$000
9,573
(6,354)
3,219
(2,395)
(3,344)
(928)
(532)
(1,809)
39
(5,750)
(7)
(5,757)
1,094
(4,663)
2021
$000
(3,374)
266
–
(3,108)
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 62 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 75
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G: OTHER ITEMS
G1: Commitments for expenditure
G8: Leases
G2: Other gains/(losses) - net
G9: Trade and other payables
G3: Earnings per share
G4: Receivables
G5: Property, plant and equipment
G6: Intangible assets
G7: Impairment of assets
G10: Provisions
G11: Reserves
G12: Tax
G13: Auditor’s Remuneration
G14: 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
2022
$000
31,134
8,541
5,125
44,800
2021
$000
29,908
2,637
4,300
36,845
(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: Other gains/(losses) – net
Net foreign exchange gain
Net loss on disposal of property, plant and equipment
Net gain/(loss) on disposal of leases
Gain on sale and leaseback
Fair value loss on debt modification
Other gains/(losses) – net
2022
$000
613
(217)
2,684
1,238
(945)
3,373
2021
$000
41
(207)
(155)
–
–
(321)
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 63 of 101
76 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G3: Earnings per share
Earnings used in the calculation of basic and diluted earnings per share from continuing
operations (1)
Net profit/(loss) from discontinued operation
Weighted average basic ordinary shares outstanding
Weighted average diluted ordinary shares outstanding
Basic earnings per share
Basic earnings per share from continuing operations
Basic earnings per share from discontinued operations
Total basic earnings per share attributable to members of Collins Foods Limited
Diluted earnings per share
Diluted earnings per share from continuing operations
Diluted earnings per share from discontinued operations
Total diluted earnings per share attributable to members of Collins Foods Limited
2022
$000
54,799
–
Shares
(1) 2021
$000
37,271
(4,663)
Shares
116,696,110
116,581,244
117,223,628
117,141,933
Cents
Cents
46.96
–
46.96
46.75
–
46.75
31.97
(4.00)
27.97
31.82
(3.98)
27.84
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share
Adjustments for calculation of diluted earnings per share:
Performance rights
Weighted average number of ordinary and potential ordinary shares used as the
denominator in calculating diluted earnings per share
2022
Shares
2021
Shares
116,696,110
116,581,244
527,518
560,689
117,223,628
117,141,933
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.
G4: Receivables
CURRENT ASSETS – RECEIVABLES
Trade receivables
2022
$000
4,200
4,200
(1) 2021
$000
3,041
3,041
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
ACCOUNTING POLICY
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 64 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 77
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G4: Receivables continued
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 1 May 2022 or
2 May 2021 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.
G5: Property, plant and equipment
Land &
Buildings
Leasehold
improvements
Plant and
equipment
Construction
in progress
$000
$000
$000
$000
Total
$000
At 3 May 2021
Cost or fair value
Accumulated depreciation & impairments
Net book amount at 3 May 2021
Additions
Acquisitions through controlled entity purchased
Transfers
Depreciation charge
Impairment charge (2)
Disposals
Exchange differences
Net book amount at 1 May 2022
At 1 May 2022
Cost or fair value
Accumulated depreciation & impairments
Net book amount at 1 May 2022
At 4 May 2020
Cost or fair value
Accumulated depreciation & impairments
Net book amount at 4 May 2020
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 & impairments
Net book amount at 2 May 2021
13,774
(968)
12,806
–
–
10,000
(361)
–
(1,482)
–
20,963
22,201
(1,238)
20,963
$000
13,774
(606)
13,168
–
–
–
(362)
–
–
–
12,806
13,774
(968)
12,806
264,633
163,545
9,983
451,935
(158,055)
(103,993)
–
(263,016)
106,578
59,552
9,983
188,919
20,868
(59,374)
(22,900)
(20,239)
63,184
15,234
216,099
293,736
182,607
15,234
513,778
(177,018)
(119,423)
–
(297,679)
1,950
6,039
27,868
(968)
(249)
(1,600)
116,718
116,718
$000
256,296
(142,272)
114,024
10,835
18
8,089
(21,172)
(3,322)
(23)
(1,871)
106,578
2,265
2,530
(555)
(385)
(852)
63,184
$000
143,273
(90,074)
53,199
10,681
953
(18,192)
(1,154)
(251)
(178)
59,552
65,105
69,320
152
–
–
(350)
(282)
8,721
(638)
(43,500)
(1,523)
(2,466)
(2,734)
15,234
216,099
$000
$000
7,078
420,421
–
(232,952)
7,078
187,469
25,383
46,899
–
–
–
36
971
496
(39,726)
(4,476)
(238)
(427)
(2,476)
9,983
188,919
14,494
(22,087)
264,633
163,545
9,983
451,935
(158,055)
(103,993)
–
(263,016)
106,578
59,552
9,983
188,919
(1)
(2)
Includes depreciation charge of $352,000 relating to Sizzler Australia, which was discontinued during the prior reporting period.
Included in Note G7 is the breakdown of impairments.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 65 of 101
78 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G5: 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
Buildings
Leasehold improvements:
Buildings
Other leasehold improvements
Plant and equipment
Motor vehicles
Method
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 G7).
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.
G6: Intangible assets
(1) Goodwill
Franchise
rights
$000
$000
At 3 May 2021
Cost
Accumulated amortisation & impairments
Net book amount at 3 May 2021
Additions
Acquisitions through controlled entity purchased
Transfers
Amortisation
Impairment charge
Exchange differences
Net book amount at 1 May 2022
At 1 May 2022
Cost
Accumulated amortisation & impairments
Net book amount at 1 May 2022
455,463
(28,070)
427,393
–
30,431
–
–
–
(7,801)
450,023
478,093
(28,070)
450,023
Brand
names
$000
29,648
(21,183)
8,465
–
–
–
(2) Software
Total
$000
$000
9,844
(5,510)
4,334
2,696
152
638
514,532
(62,983)
451,549
4,449
30,583
638
19,577
(8,220)
11,357
1,753
–
–
(1,094)
(878)
(2,592)
(4,564)
(31)
(218)
–
725
–
(38)
(31)
(7,332)
11,767
8,312
5,190
475,292
21,154
(9,389)
11,765
31,105
(22,793)
13,142
(7,950)
543,494
(68,202)
8,312
5,192
475,292
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 66 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 79
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G6: Intangible assets continued
At 4 May 2020
Cost
Accumulated amortisation & impairments
Net book amount at 4 May 2020
Additions
Acquisitions through controlled entity purchased (1)
Transfers
Amortisation
Impairment charge
Disposals
Exchange differences
Net book amount at 2 May 2021
At 2 May 2021
Cost
Accumulated amortisation & impairments
Net book amount at 2 May 2021
(1) Goodwill
Franchise
rights
$000
$000
459,231
(28,070)
431,161
–
4,629
–
–
–
–
(8,397)
427,393
455,463
(28,070)
427,393
17,819
(7,017)
10,802
3,379
–
–
(1,029)
(175)
(1,327)
(293)
11,357
19,577
(8,220)
11,357
Brand
names
$000
33,585
(22,335)
11,250
–
–
–
(881)
–
–
(1,904)
8,465
(2) Software
Total
$000
$000
8,157
(3,981)
4,176
2,633
–
(495)
(1,677)
(57)
–
(246)
4,334
518,792
(61,403)
457,389
6,012
4,629
(495)
(3,587)
(232)
(1,327)
(10,840)
451,549
29,648
(21,183)
9,844
(5,510)
514,532
(62,983)
8,465
4,334
451,549
(1) Goodwill in the prior reporting period has been restated due to adjustments to the provisional fair value of a business combination. Refer to Note A2 for further details.
(2)
Software in the prior reporting period includes a restatement as a result of a change in accounting policy for the recognition of cloud computing arrangements. Refer to Note I2 for
further details.
G7: Impairment of assets
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.
IMPAIRMENT TEST FOR GOODWILL
Allocation of goodwill
KFC Restaurants Australia
KFC Restaurants Europe
Sizzler Asia
2022
$000
327,005
121,716
1,302
450,023
Carrying value
(1) 2021
$000
327,005
99,191
1,197
427,393
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 67 of 101
80 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G7: Impairment of assets continued
During the reporting period ended 1 May 2022, the above cash generating units and the individual restaurant assets (including
Taco Bell restaurants) were tested for impairment in accordance with AASB 136 Impairment of Assets. 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 Australia
restaurants
KFC Europe
restaurants
Taco Bell
restaurants
2022
$000
2021
$000
2022
$000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2021
$000
1,224
1,154
82
57
2,346
4,863
2022
$000
968
555
31
–
1,609
3,163
2021
$000
2,098
–
93
–
2,457
4,648
2022
$000
968
555
31
–
1,609
3,163
Total
2021
$000
3,322
1,154
175
57
4,803
9,511
Leasehold improvements
Plant and equipment
Franchise rights
Software
Right-of-use assets
Total
KEY ASSUMPTIONS USED FOR VALUE-IN-USE CALCULATIONS
Post-tax discount rate segment
Post-tax discount rate restaurant
Growth rates:
Revenue for Yr 1 - Yr 5 (1)
Revenue for Yr 6 - Yr 20
Annual growth for terminal value
KFC Australia
KFC Europe
2022
7.4%
2021
7.5%
2022
7.4%
2021
7.3%
2022
(2) N/A
Taco Bell
2021
(2) N/A
Restaurant
specific
Restaurant
specific
Restaurant
specific
Restaurant
specific
Restaurant
specific
Restaurant
specific
* 5.0%
* 3.7%
* 4.1%
* 4.8%
* 12.0%
* 9.3%
2.5%
2.5%
2.5%
2.5%
1.5%
1.5%
1.5%
1.5%
2.5%
2.5%
2.5%
2.5%
(1)
The Revenue Growth rates applied from Yr 1 – Yr 5 relate specifically to restaurant assets where detailed impairment models were prepared.
(2) Only individual restaurant assets were tested for impairment in the Taco Bell cash generating unit.
*
Restaurant 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 restaurant
level for the purpose of testing goodwill and restaurant specific assets, respectively. Restaurant assets include Property, Plant &
Equipment and Right-of-use assets. Detailed impairment models were prepared for the cash generating unit and for some of
the KFC Australia restaurants 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 estimate for the individual restaurant assets have been estimated after applying growth rates from the
commencement date of FY 2023 through to the end of 2042. The value in use calculations were based on a 20 year-period
due to the analysis required to conform with AASB 16 Leases.
The annual growth rates applied in the first five years average 5.0% (2021: 3.7%) for the stores modelled. The year one
projections have been aligned to the division's specific cash flows reflected in the 2023 budget.
• Annual growth rates of 2.5% (2021: 2.5%) have been applied from year 6 onwards.
Management believe that these growth percentages are reasonable considering the growth that has been seen in this
operating segment during 2022, 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 volume.
• An indefinite terminal cash flow calculation has been applied for cash flows beyond 2027 and 2042, for the cash generating
unit and the restaurant assets, respectively. These projections used those years’ cash flows as a base. The growth rate of
2.5% (2021: 2.5%) 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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 68 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 81
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G7: Impairment of assets continued
• A post-tax discount rate of 7.4% has been calculated for the KFC Australia segment (2021: 7.5% post tax). The change in the
post-tax discount rate applied to certain restaurant assets is the result of the discount rates applied to each individual
restaurant 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 5.0 - 8.5% for the individual restaurants assessed for impairment (2021: range 5.5 – 8.5%).
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
the impairment of some of the Group’s KFC Australia restaurant 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 assessed against
current market factors.
Management do not consider that a reasonable possible change in any of the key assumptions would cause their carrying
amounts to significantly exceed their recoverable amounts.
KFC Europe restaurants
Value in use recoverable amount valuations were performed at the cash generating unit level and at the individual restaurant
level for the purpose of testing goodwill and restaurant specific assets, respectively. Restaurant assets include Property, Plant &
Equipment and Right-of-use assets. Detailed impairment models were prepared for the cash generating unit and for some of
the KFC Europe restaurants where indicators of impairment were identified. The impairment test did not result in any impairments
for the KFC Europe restaurants. These results correlate with an improved restaurant performance in the KFC Europe market as a
result of the post-lockdown recovery during FY22.
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 2023 through to the end of 2042. The value in use calculations were based on a 20 year-period
due to the analysis required to conform with AASB 16 Leases.
The year one projections have been aligned to the division's specific cash flows reflected in the 2023 budget. In addition,
the annual growth rates applied in the first 5 years are reflective of restaurant specific plans which assume a continuing
trend in sales recovery to pre-COVID-19 levels, particularly for the inline restaurants, and certain locations that continue to
suffer the impact of COVID-19 restrictions during the financial year. This results in certain restaurants having additional growth
expectations (the average annual revenue growth is 4.1% in the first five years). 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.
• Annual growth rates of 1.5% have been applied from year 6 onwards (2021: 1.5%).
• An indefinite terminal cash flow calculation has been applied for cash flows beyond 2027 and 2042, for the cash generating
unit and the restaurant assets, respectively. These projections used those years’ cash flows as a base. The growth rate of
1.5% (2021: 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 7.4% has been calculated for the KFC Europe segment (2021: 7.3% post tax). The change in the
post-tax discount rate applied to certain restaurant assets is the result of the discount rates applied to each individual
restaurant 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 - 7.8% for the individual restaurants assessed for impairment (2021: range 5.5 – 7.8%).
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
the impairment of some of the Group’s KFC Europe restaurant assets.
However, management has considered the likelihood of these possible changes and believe that strong revenue growth
achieved in the operating segment historically and prior to COVID-19 supports the growth percentages applied in the cash
flows and that the discount rate applied are appropriate having assessed against current market factors.
Management do not consider that a reasonable possible change in any of the key assumptions would cause their carrying
amounts to significantly exceed their recoverable amounts.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 69 of 101
82 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G7: Impairment of assets continued
Taco Bell
Value in use recoverable amount valuations were not performed at the Taco Bell segment level as there is no goodwill or other
indefinite life intangible assets for Taco Bell. However, each of the individual restaurants represents a cash generating unit for the
purpose of testing Property, Plant & Equipment, Right-of-use assets and other restaurant specific assets. Accordingly, impairment
models were prepared for all Taco Bell restaurants where indicators of impairment were identified.
Management identified indicators of impairment amongst the Taco Bell restaurants network due to their financial performance
compared to the individual restaurant forecasts. Detailed impairment models were prepared, resulting in the impairment of $1.5
million of Property, plant and equipment, $1.6 million of Right-of-use assets and $31 thousand of Franchise rights.
The restaurant specific impairment models have been prepared as follows:
•
•
The cash flow estimates for the individual restaurant assets have been estimated after applying growth rates from the
commencement date of FY 2023 through to the end of 2042. The value in use calculations were based on a 20 year-period
due to the analysis required to conform with AASB 16 Leases.
The annual growth rates applied in the first 5 years are reflective of significant growth expected for the Taco Bell brand in
Australia, given the increase in brand awareness as a result of marketing-focused campaigns. 5-year restaurant 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 restaurants having high average growth expectations during this period (the average annual
revenue growth is 12.0% in the first five years) (2021: average 9.3%). The increased average growth assumption is partly due
to the stronger recovery expected from certain inline locations that continued to experience disruptions from COVID-19
during FY22, together with greater confidence around future benefits arising from upcoming brand and marketing
campaigns.
•
The year one projections have been aligned to the division's specific cash flows reflected in the FY 2023 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.
• Cost of sales percentage is estimated to remain reasonably consistent over the cash flow period.
• Annual growth rates of 2.5% have been applied from year 6 onwards (2021: 2.5%).
• An indefinite terminal cash flow calculation has been applied for cash flows beyond 2042, using that year’s cash flow as a
base. The growth rate of 2.5% (2021: 2.5%) 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.
• Restaurant specific discount rates have been applied to restaurant assets to account for the different post-tax discount
rates applied to each individual restaurant after being adjusted by the IBR applied to each AASB 16 lease. This has resulted
in post-tax discount rates in the range of 7.0 – 8.0% for the individual restaurants assessed for impairment (2021: range 6.3 –
9.3%).
SIGNIFICANT ESTIMATE: IMPACT OF POSSIBLE CHANGES IN KEY ASSUMPTIONS
The business is still in the growth phase, with a further 12 restaurants planned to open in FY 2023 and a significant investment in
marketing campaigns to increase brand awareness. Therefore, the revenue growth rates for Years 1 - 5 are the most significant
assumptions underpinning the Taco Bell impairment analysis.
Management recognises that changes in the key assumptions such as revenue growth rates and discount rates could result in
either partial or full impairment of two additional restaurants.
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 restaurants. Significant expansion plans are underway in South-East Queensland and Victoria.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 70 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 83
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G7: Impairment of 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 2023 through to the end of the 2027 reporting period which average 3.0% (2021: 3.0%). The year one
projections have been aligned to the cash flows reflected in the 2023 budget. The growth rate of 3.0% (2021: 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 2027, using that year’s cash flow
as a base.
A pre-tax discount rate of 14.0% (2021: 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 2022, 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 deferred
and 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 Intangible Assets 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. 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 | Financial Report - for the reporting period ended 1 May 2022
Page 71 of 101
84 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G8: 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
2022
$000
430,162
2,306
432,468
37,766
439,623
477,389
(1) 2021
$000
360,945
712
361,657
34,211
363,601
397,812
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
Additions to the right-of-use assets during the 2022 financial period were $98,199,000 (2021: $40,037,000).
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
Gain on sale and leaseback
Interest expense (included in finance costs) (1)
Expense relating to short-term leases (included in selling marketing and royalty, occupancy,
and administrative expenses)
2022
$000
44,008
1,023
45,031
1,609
1,609
2022
$000
1,238
22,679
919
2021
$000
40,415
700
41,115
4,803
4,803
2021
$000
–
20,614
519
Expense relating to variable lease payments not included in lease liabilities (included in
occupancy expenses)
3,056
2,649
(1)
In the 2021 reporting period, Finance costs of $7,000 in relation to Sizzler Australia have been excluded.
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 72 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 85
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G8: Leases continued
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, e.g. term, country, currency and security.
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 lease liabilities was
4.85% (2021: 7.45%)
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 restaurant. For individual
restaurants, 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 restaurants. 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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 73 of 101
86 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G8: Leases continued
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.
More than 90% of the Group's leases are of restaurants 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 restaurant 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
Primary term of the lease, plus options, to an upper limit of 20 years.
KFC Europe
Primary term of the lease, plus next option term where renewal process has commenced.
Taco Bell
Primary term of the lease, plus next option term where renewal process has commenced.
Other
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.
Less than
1 year
Between
1 and 2
years
Between
2 and 5
years
Over
5 years
Total
contractual
cash flows
Carrying
amount
2022
$000
$000
$000
$000
$000
$000
Lease liabilities
59,837
57,670
158,807
373,916
650,230
477,389
2021 Restated (1)
Lease liabilities
$000
52,764
$000
$000
$000
$000
$000
49,052
135,644
326,618
564,078
397,812
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 74 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G9: Trade and other payables
Current liabilities
Trade payables and accruals - unsecured
Other payables - unsecured
Total payables
Notes to the Consolidated Financial Statements
2022
$000
97,944
18,529
116,473
(1) 2021
$000
79,014
17,640
96,654
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
ACCOUNTING POLICY
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.
G10: Provisions
Employee entitlements
Make good provision
Other provisions
Total provisions
Current
$000
5,907
548
281
Non-
current
$000
3,954
3,236
–
2022
Total
$000
9,861
3,784
281
6,736
7,190
13,926
Current
$000
5,838
202
1,514
7,554
Non-
current
$000
4,292
2,684
–
(1) 2021
Total
$000
10,130
2,886
1,514
6,976
14,530
(1)
The prior reporting period has been restated as a result of an adjustment to the provisional accounting for the KFC restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details).
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 restaurants 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 | Financial Report - for the reporting period ended 1 May 2022
Page 75 of 101
88 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Notes to the Consolidated Financial Statements
G11: 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
2022
$000
2,467
2,087
10,317
14,871
2021
$000
(1,565)
1,493
10,828
10,756
Notes
2022
$000
2021
$000
G12
G12
(1,565)
5,488
(1,646)
272
(82)
2,467
1,493
1,200
(606)
2,087
10,828
(4,537)
4,026
10,317
(2,923)
2,089
(627)
(149)
45
(1,565)
292
1,201
–
1,493
16,719
6,756
(12,647)
10,828
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 76 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Notes to the Consolidated Financial Statements
G12: 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 (1)
Loss from discontinued operation before income tax expense
Tax at the Australian tax rate of 30.0% (2021: 30.0%)
Tax effect of amounts which are not deductible (taxable) in calculating taxable income:
Other non-deductible expenses
Difference in foreign taxation rates
Non-assessable income received
Changes in tax laws and/or tax rates
Carried forward losses brought to account
Derecognition of previously recognised deductible temporary differences
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
2022
$000
26,018
132
(260)
25,890
25,890
–
25,890
(17,430)
17,562
132
2022
$000
80,689
–
80,689
24,207
1,293
89
(688)
–
(443)
428
–
1,264
26,150
(260)
25,890
2021
$000
29,332
(6,234)
(559)
22,539
23,633
(1,094)
22,539
17
(6,251)
(6,234)
(1) 2021
$000
60,904
(5,757)
55,147
16,544
2,872
1,635
100
(1,335)
–
–
876
2,406
23,098
(559)
22,539
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Tax expense relating to items of other comprehensive income
Cash flow hedges
G11
(1,728)
(582)
Notes
2022
$000
2021
$000
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 77 of 101
90 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G12: 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
2022
$000
51,429
64,607
2021
$000
50,603
66,083
Total unused tax losses for which no deferred tax asset has been recognised
116,036
116,686
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
2022
$000
25,384
3,554
6,256
130,678
1,226
408
–
2021
$000
28,464
5,137
4,838
110,007
1,371
259
706
167,506
150,782
(127,681)
(109,653)
39,825
41,129
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
Cash flow hedges
Other
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax liabilities
2022
$000
2021
$000
120,997
103,764
979
10,327
458
1,034
(966)
923
9,844
336
–
(634)
132,829
114,233
(127,681)
(109,653)
5,148
4,580
All movements in the DTL were recognised in the Consolidated Income Statement and the Consolidated Statement of
Comprehensive Income.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 78 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 91
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G12: 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 | Financial Report - for the reporting period ended 1 May 2022
Page 79 of 101
92 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
G13: 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 Australia:
Audit and review of financial reports and other audit work for foreign subsidiary
OTHER ASSURANCE SERVICES:
PricewaterhouseCoopers Australian firm:
Restaurant sales certificates
Agreed upon procedures for covenant calculations
ESG support
Network firm of PricewaterhouseCoopers Australia:
Government subsidy audit
Taxation advice
Total remuneration for audit and other assurance services
TAXATION SERVICES
PricewaterhouseCoopers Australian firm:
2022
Whole
dollars
$
2021
Whole
dollars
$
401,370
45,402
579,747
42,432
349,618
796,390
506,824
1,129,003
25,096
7,650
70,890
29,478
7,650
–
–
129,620
10,457
114,093
910,483
–
166,748
1,295,751
Tax compliance services, including review of tax returns and allowance claims
46,560
58,160
Network firm of PricewaterhouseCoopers Australia:
Tax compliance services, including review of company tax returns
Total remuneration for taxation services
OTHER SERVICES
PricewaterhouseCoopers Australian firm:
Acquisition related due diligence
Total remuneration for other services
TOTAL REMUNERATION FOR SERVICES
5,011
51,571
56,675
114,835
120,000
120,000
276,787
276,787
1,082,054
1,687,373
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.
G14: 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 wholly-owned 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 | Financial Report - for the reporting period ended 1 May 2022
Page 80 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 93
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
The Consolidated Financial Statements at 1 May 2022 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
Percentage of
shares held
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
Collins Property Development Pty Ltd
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
2022
%
2021
%
Australia
CFGF
100
100
Australia
CFH
100
100
Australia
CFF
100
100
Australia
CFG
100
100
Australia
CRQ
100
100
Australia
CRN
100
100
Australia
CRW
100
100
Australia
FNC
100
100
Australia
SRG
100
100
Australia
CRM
100
100
Australia
CRS
100
100
Australia
CFS
100
100
Australia
SSL
100
100
Australia
SSC
100
100
Australia
SSF
100
100
Australia
SSI
100
100
Australia
SNG
100
100
Australia
CPD
100
100
Australia
CSP
100
100
Australia
CFA
100
100
Australia
CFM
100
100
Singapore
SingCo
100
100
Delaware, USA
SIM
100
100
Delaware, USA
SAH
100
100
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(c)
(c)
(c)
(c) (d)
Delaware, USA
SSEA
100
100
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 81 of 101
94 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1: Subsidiaries and Deed of Cross Guarantee continued
Name of entity
Notes
Place of business/
country of
incorporation
Acronym
Percentage of
shares held
2022
%
2021
%
Sizzler New Zealand LLC
(c) (d)
Delaware, USA
SNZ
100
100
Sizzler Restaurant Services LLC
(c) (d)
Delaware, USA
SRS
100
100
Collins Foods Europe Limited
Collins Foods Europe Services Limited
Collins Foods Europe Finco Limited
Collins Foods Germany Limited
Collins Foods Netherlands Limited
(c)
(c)
(c)
(c)
(c)
United Kingdom
CFEL
100
100
United Kingdom
CFESL
100
100
United Kingdom
CFEFL
100
100
United Kingdom
CFGL
100
100
United Kingdom
CFNL
100
100
Collins Foods SPV B.V. (formerly MAAS KFC Amersfoort B.V.)
(c) (e)
Netherlands
SPV
100
100
MAAS KFC Utrecht B.V.
(c) (e)
Netherlands
UTR
100
100
MAAS KFC Veenendaal B.V.
(c) (e)
Netherlands
VDL
100
100
Taupo Lelystad B.V.
(c) (f)
Netherlands
TAU
100
Collins Foods Holdings Europe B.V.
Collins Foods Netherlands Operations B.V.
Collins Foods Netherlands Management B.V.
(c)
(c)
(c)
Netherlands
CFEH
100
Netherlands
CFNO
100
Netherlands
CFNM
100
Horeca Exploitatie Maatschappij De Kok Alexandrium B.V.
(c) (g)
Netherlands
ALEX
100
Horeca Exploitatie Maatschappij De Kok Spijkenisse B.V.
(c) (g)
Netherlands
SPIJ
100
Horeca Exploitatie Maatschappij De Kok Binnenwegplein B.V.
(c) (g)
Netherlands
BINN
100
Horeca Exploitatie Maatschappij De Kok Barendrecht B.V.
(c) (g)
Netherlands
BARE
100
H.E.M. de Kok Stadion-Boulevard B.V.
(c) (g)
Netherlands
STAD
100
Horeca Exploitatie Maatschappij De Kok Groene Hilledijk B.V.
(c) (g)
Netherlands
GROE
100
Horeca Exploitatie Maatschappij J.G.B. De Kok Bergweg B.V.
(c) (g)
Netherlands
BERG
100
Horeca Exploitatie Maatschappij De Kok Zuidplein B.V.
(c) (g)
Netherlands
ZUID
100
Horeca Exploitatie Maatschappij J.G.B. De Kok Kruiskade B.V.
(c) (g)
Netherlands
KRUI
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 three KFC restaurants from MAAS Holdings B.V. located in the Netherlands, Europe
(f) On 1 June 2021 Collins Foods Netherlands Limited acquired one KFC restaurant Kia Ora Holdings B.V. located in the Netherlands, Europe
(g) On 1 February 2022 Collins Foods Netherlands Operations B.V. acquired nine KFC restaurants from the De Kok Group of companies, located in the Netherlands, Europe
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 82 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 95
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1: Subsidiaries and Deed of Cross Guarantee continued
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’.
CONSOLIDATED INCOME STATEMENT
Sales revenue
Cost of sales
Gross profit
Selling, marketing and royalty expenses
Occupancy expenses
Restaurant related expenses
Administration expenses (1)
Other expenses
Other income
Finance costs
Other gains/(losses) – net
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
Closed Group
2022
$000
(1) 2021
$000
991,260
(473,796)
517,464
928,450
(439,267)
489,183
(219,447)
(199,925)
(64,224)
(70,033)
(53,412)
(8,058)
415
(59,938)
(70,393)
(50,769)
(6,667)
468
(26,096)
(26,084)
2,124
78,733
(24,296)
54,437
–
54,437
(109)
75,766
(23,544)
52,222
(4,663)
47,559
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
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
Total comprehensive income for the reporting period is attributable to:
Owners of the parent
Closed Group
2022
$000
(1) 2021
$000
54,437
47,559
5,760
(1,728)
4,032
58,469
1,940
(582)
1,358
48,917
58,469
48,917
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
SUMMARY OF MOVEMENTS IN CONSOLIDATED RETAINED EARNINGS
Retained earnings at the beginning of the reporting period
Profit for the period (1)
Dividends provided for or paid
Retained earnings at the end of the reporting period
Closed Group
2022
$000
(1) 2021
$000
102,046
54,437
(28,591)
127,892
70,931
47,559
(16,444)
102,046
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 83 of 101
96 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
H1: Subsidiaries and Deed of Cross Guarantee continued
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:
Closed Group
Current assets
Cash and cash equivalents
Receivables
Inventories
Derivative financial instruments
Other assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets (1)
Right-of-use assets
Deferred tax assets
Derivative financial instruments
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
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
2022
$000
74,360
1,159
6,258
662
2,096
84,535
173,380
341,896
364,011
39,825
2,784
134,244
1,056,140
(1) 2021
$000
68,684
9,141
6,082
–
2,159
86,066
155,043
340,477
319,196
41,130
–
134,244
990,090
1,140,675
1,076,156
90,689
25,566
5,023
–
6,488
81,866
20,846
7,077
1,536
6,141
127,766
117,466
210,217
373,026
–
6,218
241,895
321,509
819
6,139
589,461
570,362
717,227
687,828
423,448
388,328
291,394
4,162
127,892
423,448
290,788
(4,507)
102,047
388,328
(1)
The prior reporting period has been restated as a result of a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 84 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 97
Notes to the Consolidated Financial Statements
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
2022
$000
2021
$000
516,071
487,484
–
516,071
148,459
379
148,838
367,233
208
487,692
139,682
23
139,705
347,987
337,725
337,119
2,080
27,428
1,493
9,375
367,233
347,987
46,644
35,156
46,644
35,156
(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 $200 million and
€120 million as stated in Note B2. In addition, 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 2023. 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 1 May 2022
(2021: nil).
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 85 of 101
98 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I: BASIS OF PREPARATION AND OTHER ACCOUNTING POLICIES
Notes to the Consolidated Financial Statements
I1: Basis of preparation
I2: Changes to 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
consolidated 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 $52.6 million. The predominant reason for this net
current liability position is the introduction of AASB 16, with lease payments due in the next financial year recognised as current
liabilities. The Group does not deem this to be a going concern risk, as excluding lease liabilities there would be a net current
liability position of $14.9 million with undrawn bank loan facilities of $81.1 million and undrawn working capital facilities of $22.8
million. 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 2022 reporting
period comprised the fifty-two weeks which ended on 1 May 2022 (2021: a fifty-two week reporting period which ended on 2
May 2021).
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 86 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 99
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 combinations;
• Note G5 Property, plant and equipment;
• Note G6 Non-current assets - intangible assets;
• Note G7 Impairment of assets;
• Note G8 Leases; and
• Note G10 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 that Instrument to the nearest thousand dollars, or in
certain cases, the nearest dollar.
COMPARATIVES AND RESTATEMENTS OF PRIOR YEAR BALANCES
Amounts have been restated as a result of:
• an adjustment to the provisional accounting for the KFC Restaurants (Europe) acquisition that occurred in the prior period
(refer to Note A2 for further details); and
• a change in accounting policy for the recognition of cloud computing arrangements (refer to Note I2 for further details).
Other comparatives have been reclassified where appropriate to enhance comparability.
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 3
May 2021.
NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED
Certain new accounting standards and interpretations have been published that are not mandatory for 1 May 2022 reporting
periods and have not been early adopted by the group. The Group’s assessment of the impact 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
following standards before the effective dates.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 87 of 101
100 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I2: Changes in accounting policies
During the year, the Group revised its accounting policy in relation to upfront configuration and customisation costs incurred in
implementing SaaS arrangements in response to the IFRIC agenda decision clarifying its interpretation of how current
accounting standards apply to these types of arrangements. The revised accounting policy is presented below. Historical
financial information has been restated to account for the impact of the change, which is presented below.
SAAS ARRANGEMENTS – ACCOUNTING POLICY APPLIED FROM 4 MAY 2020
SaaS arrangements are service contracts providing the Group with the right to access the cloud provider’s application software
over the contract period. As such the Group does not receive a software intangible asset at the contract commencement
date. A right to receive future access to the supplier’s software does not, at the contract commencement date, give the
customer the power to obtain the future economic benefits flowing from the software itself and to restrict others’ access to
those benefits.
The following outlines the accounting treatment of costs incurred in relation to SaaS arrangements:
Cost treatment
Stage of implementation process
Recognise as an operating expense over the
term of the service contract
• Fee for use of application software
• Customisation costs of provider offerings
Recognise as an operating expense as the
service is received
• Configuration costs of provider offerings
• Data conversion and migration costs
•
Testing costs
• Employee training costs
• Post-implementation maintenance
• Post-implementation access to the SaaS
Recognise as an asset that depreciates over
the shorter of the term of the related service
contract or estimated useful life
• Acquisition or development of bridging modules to existing systems and
applications
• Development of training materials
• Acquisition or development of data conversion software
Costs incurred for the development of software code that enhances or modifies, or creates additional capability to, existing on-
premises systems and meets the definition of and recognition criteria for an intangible asset are recognised as intangible
software assets. Refer to the annual report for the period ended 2 May 2021 for an outline of accounting for intangible assets.
Impact of revision
In previous reporting periods, the Group had capitalised software implementation costs where future economic benefits are
expected to be derived from its use. These costs were recognised as intangible assets and from the point at which the asset was
ready for use, were amortised on a straight-line basis over their estimated useful life.
In the current reporting period, the Group has revised its accounting policy in response to the IFRIC agenda decisions on SaaS
arrangements, resulting in such costs being recognised as an expense as services are received. This revision in accounting policy
has been applied retrospectively and the prior period comparative amounts restated.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 88 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 101
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
I2: Changes in accounting policies continued
The following tables discloses the impact of the change in accounting policy in relation to SaaS arrangements affecting the
prior reporting period. In addition, other adjustments have been included to display the full impact to the restated balances.
Other adjustments relate to a change in the provisional accounting for the KFC restaurants (Europe) acquisition in the Balance
Sheet (refer to Note A2 for further details) and the reclassification of interest paid on leases in the Statement of Cash Flows.
Consolidated Income Statement
As previously
reported
Saas Policy
adjustments
(1) Other
adjustments
For the reporting period ended 2 May 2021
Administration expenses
Underlying EBITDA
Profit from continuing operations before finance
income, finance costs and income tax (EBIT)
Profit from continuing operations before income tax
Profit from continuing operations
Net profit attributable to members of Collins Foods
Limited
$000
(63,339)
186,130
90,586
61,245
37,612
32,949
Total comprehensive income for the reporting period
28,416
$000
(341)
(341)
(341)
(341)
(341)
(341)
(341)
$000
–
–
–
–
–
–
–
As
restated
$000
(63,680)
185,789
90,245
60,904
37,271
32,608
28,075
(1) Other adjustments relate to a change in the provisional accounting for the KFC restaurants (Europe) acquisition. They have been included in this table to display a full impact to the
restated Income statement. Refer to Note A2 for further details.
Consolidated Balance Sheet
As previously
reported
SaaS Policy
adjustments
(1) Other
adjustments
As at 2 May 2021
Receivables
Total current assets
Intangible assets
Right-of-use assets
Total non-current assets
Total assets
Trade and other payables
Lease liabilities (current)
Provisions (current)
Total current liabilities
Total liabilities
Net assets
Retained earnings
Total equity
$000
2,786
110,836
451,063
359,100
1,042,969
1,153,805
96,895
31,654
6,231
143,400
790,866
362,939
61,395
362,939
$000
–
–
(341)
–
(341)
(341)
–
–
–
–
–
(341)
(341)
(341)
$000
255
255
827
2,557
3,384
3,639
(241)
2,557
1,323
3,639
3,639
–
–
–
As
restated
$000
3,041
111,091
451,549
361,657
1,046,012
1,157,103
96,654
34,211
7,554
147,039
794,505
362,598
61,054
362,598
(1) Other adjustments relate to a change in the provisional accounting for the KFC Restaurants (Europe) acquisition. They have been included in this table to display a full impact to the
restated balance sheet. Refer to Note A2 for further details.
Consolidated Statement of Cash Flows
As previously
reported
Saas Policy
adjustments
(1) Other
adjustments
For the reporting period ended 2 May 2021
$000
Payments to suppliers and employees (inclusive of GST)
(933,159)
Interest paid on leases
Net operating cash flows
Payments for intangible assets
Net investing cash flows
Interest paid on leases
Net financing cash flows
–
148,038
(5,359)
(50,918)
(19,449)
(112,480)
$000
(341)
–
(341)
341
341
–
–
$000
–
(19,449)
(19,449)
–
–
19,449
19,449
As
restated
$000
(933,500)
(19,449)
128,248
(5,018)
(50,577)
–
(93,031)
(1) Other adjustments relate to a change in the classification of Interest paid on leases from Financing cash flows to Operating cash flows. They have been included in this table to
display a full impact to the restated Statement of cash flows.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 89 of 101
102 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 G8).
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.
OTHER INCOME
Interest income is recognised on a time proportion basis using the effective interest method.
Also included in other income is development agreement income, which is related to achieving targets included in
development agreements. This is recognised at a point in time when the targets are achieved.
Other items of miscellaneous income are also included in this amount.
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.
Traineeship grants are accounted for as a reduction of the related expense.
Government grants were received by the Group in the current year for traineeships, amounting to $2.7 million.
In the 2021 reporting period, government grants were received by the Group for traineeships and support in relation to the
impacts of COVID-19. COVID-19 support amounts were received 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 the
balance of $1.8 million covering wages for hours worked by employees. In March 2021, the Group repaid the $1.8 million of
JobKeeper 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 | Financial Report - for the reporting period ended 1 May 2022
Page 90 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 103
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
J: SUBSEQUENT EVENTS
J1: Subsequent events
Subsequent to year-end, on 3 May 2022, Collins Restaurants South Pty Ltd, a wholly-owned subsidiary of the Group, entered into
a Business Sale Agreement to purchase the assets and assume the liabilities of a KFC restaurant located in Griffith, New South
Wales from Shayden Nominees Pty Ltd
The consideration transferred amounted to $7.6 million, satisfied by $4.6 million in cash and $3.0 million in Collins Food Limited
(ASX Ticker: CKF) fully paid ordinary shares. This amounted to 284,091 shares based on a volume weighted average price of the
shares for the ten trading days to 2 May 2022 of $10.56.
The purchase price accounting will be finalised after the completion date and will be disclosed in the 2023 half-year interim
financial report.
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.
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 91 of 101
104 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
DIRECTORS' DECLARATION
DIRECTOR’S DECLARATION
In the Directors’ opinion:
• the financial statements and notes set out on pages 43 to 104 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 1 May 2022 and of its performance
for the period ended on that date;
• 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 Managing Director & Chief Executive Officer and the Group 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 Directors.
Robert Kaye SC
Chair
Brisbane
28 June 2022
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 92 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 105
Independent auditor’s report
To the members of Collins Foods Limited
Independent auditor’s report
Report on the audit of the financial report
To the members of Collins Foods Limited
Our opinion
Report on the audit of the financial report
In our opinion:
The accompanying financial report of Collins Foods Limited (the Company) and its controlled entities
Our opinion
(together the Group) is in accordance with the Corporations Act 2001, including:
In our opinion:
(a) giving a true and fair view of the Group's financial position as at 1 May 2022 and of its financial
performance for the period from 3 May 2021 to 1 May 2022 (the reporting period) then ended
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:
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
(a) giving a true and fair view of the Group's financial position as at 1 May 2022 and of its financial
performance for the period from 3 May 2021 to 1 May 2022 (the reporting period) then ended
What we have audited
The Group financial report comprises:
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
●
What we have audited
●
The Group financial report comprises:
●
●
●
●
●
●
●
●
●
●
●
Basis for opinion
the consolidated balance sheet as at 1 May 2022
the consolidated income statement for the reporting period then ended
the consolidated statement of comprehensive income for the reporting period then ended
the consolidated balance sheet as at 1 May 2022
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 notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the consolidated statement of changes in equity for the reporting period then ended
the directors’ declaration.
the consolidated statement of cash flows for the reporting period then ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
●
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
Basis for opinion
report section of our report.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
those standards are further described in the Auditor’s responsibilities for the audit of the financial
for our opinion.
report section of our report.
Independence
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
We are independent of the Group in accordance with the auditor independence requirements of the
for our opinion.
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
We are independent of the Group in accordance with the auditor independence requirements of the
fulfilled our other ethical responsibilities in accordance with the Code.
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our 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
T: +61 7 3257 5000, F: +61 7 3257 5999
Liability limited by a scheme approved under Professional Standards Legislation.
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
Liability limited by a scheme approved under Professional Standards Legislation.
106 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
INDEPENDENT AUDITOR'S REPORT (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:
− Carrying value of store
assets
− Accounting for leases in
accordance with AASB
16 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 operated
by the Group.
● For the purpose of our audit, we
used overall Group materiality of
$4.0m, which represents
approximately 5% of the Group's
profit before tax adjusted for the
impairment charge recognised in
the current 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
because, in our view, it is the
benchmark against which the
performance of the Group is
most commonly measured. We
adjusted 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.
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 107
INDEPENDENT AUDITOR'S REPORT (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
Carrying value of store assets
Impairment of Assets (Refer to note G7)
Property, Plant & Equipment $216.1m (Refer to note
G5), Franchise Rights $11.8m (Refer to note G6), and
Right of Use assets $432.5m (Refer to note G8)
The Group assesses impairment of store assets on a
restaurant-by-restaurant basis for each segment. An
impairment indicators analysis is performed, and
where impairment indicators are present, value in use
impairment models are then prepared to determine
whether the carrying amount is supported.
Following the Group’s assessment, a pre-tax
impairment charge of $3.1m was recorded in relation
to two Taco Bell stores ($1.5m for Property Plant &
Equipment, and $1.6m for Right of Use Asset).
We considered this a key audit matter given the
financial significance of the store asset balances in
the Group’s balance sheet and the significant level of
judgement and estimate involved in determining the
value in use for each restaurant with indicators of
impairment.
We performed the following audit procedures in
relation to the Group’s review of each restaurant,
amongst others:
• Evaluated the reasonableness of management’s
impairment indicator assessment
For each restaurant that presented an indicator of
impairment, we:
• Developed an understanding of the process
undertaken by the Group in the preparation of the
discounted cash flow models used to assess the
recoverable amount of the store asset (the
“impairment models”).
• Tested the mathematical accuracy of the
underlying calculations in the impairment models.
• Compared the FY2022 actual results with prior
corresponding reporting period forecasts to
assess the historical accuracy of the Group’s
forecasting processes.
• Assessed the reasonableness of growth rates
used for Year 1 to Year 5 with reference to
historical results, and specific store action plans
and initiatives as required.
• Evaluated the appropriateness of the discount
rate and long-term growth rate assumptions in the
impairment models, with the support of PwC
valuation specialists, by comparing them to
market observable inputs.
• Assessed the sensitivity to changes in key
assumptions that would be required for assets to
be impaired and considered the likelihood of such
movements in those key assumptions arising.
• Evaluated the adequacy of the disclosures made
in note G7 to the financial report in light of the
requirements of Australian Accounting Standards.
108 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
Accounting for leases in accordance with AASB
16 Leases
Right of Use assets $432.5m, Lease Liabilities
$477.4m (Refer to note G8)
The Group applies Australian Accounting Standard
AASB 16 Leases (AASB 16) in accounting for the
Group’s portfolio of store leases. As a result, Right of
Use assets and Lease Liabilities are recognised in the
balance sheet.
We considered this a key audit matter given the
financial significance of the related balances in the
Group’s balance sheet and the critical judgements
used in determining the lease term assumptions in
the lease calculations, as well as the significant
amount of audit effort in auditing the balances.
We performed the following audit procedures:
• 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 G8 in light of the requirements of
Australian Accounting Standards.
• Evaluated the judgements applied by the Group in
determining the probability of exercising extension
options.
For a sample of lease agreements, we:
• Evaluated the lease calculation against the terms
of the lease agreement and the requirements of
AASB 16.
• Tested the mathematical accuracy of the lease
calculations.
• Evaluated the appropriateness of the lease term
applied and the Group’s assumptions relating to
the exercise of option periods.
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 1 May 2022, 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.
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 109
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
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.
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 23 to 38 of the directors’ report for the
reporting period ended 1 May 2022.
In our opinion, the remuneration report of Collins Foods Limited for the period 3 May 2021 to
1 May 2022 complies with section 300A of the Corporations Act 2001.
110 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
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
Brisbane
28 June 2022
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 111
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 17 June 2022.
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
Number of
shareholders of
ordinary shares
Percentage of
total ordinary
shares on issue
%
Number of
holders of
performance
rights
Percentage of
performance
rights on issue
%
5,995
4,140
716
451
40
11,342
2.23
8.35
4.43
8.84
76.15
100.00
0
8
12
7
2
29
0.00
3.02
10.06
41.47
45.45
100.00
116,980,201
637,285
TOTAL ORDINARY SHARES ON ISSUE
TOTAL UNQUOTED PERFORMANCE RIGHTS ON ISSUE
There were 619 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 William Joseph Perkins
BNP Paribas Nominees Pty Ltd
BNP Paribas Noms Pty Ltd
Sandhurst Trustees Ltd
HSBC Custody Nominees (Australia) Limited
Chrikim Pty Ltd
BNP Paribas Nominees Pty Ltd HUB24 Custodial Serv Ltd
BNP Paribas Noms Pty Ltd
UBS Nominees Pty Ltd
Mrs Heather Lynnette Grace
Chrikim Pty Ltd
Perkins Family Investment Corporation Pty Ltd
Citicorp Nominees Pty Limited
Michael Kemp Pty Ltd
Shayden Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited
ORDINARY SHARES
Number held Percentage of issued
shares %
21,507,121
20,015,208
13,777,441
10,580,369
6,850,574
2,969,989
2,900,492
1,322,812
1,116,466
823,710
520,505
475,179
431,268
429,801
369,421
327,273
313,229
300,910
284,091
283,802
18.39
17.11
11.78
9.04
5.86
2.54
2.48
1.13
0.95
0.70
0.44
0.41
0.37
0.37
0.32
0.28
0.27
0.26
0.24
0.24
TOTAL
85,599,661
73.00
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 99 of 101
112 ANNUAL REPORT 2022 | COLLINS FOODS LIMITED
CORPORATE DIRECTORY
Directors
Robert Kaye SC, Chair
Drew O’Malley, Managing Director & CEO
Company Secretary
Principal registered office in Australia
Level 3, KSD1, 485 Kingsford Smith Drive
Share and debenture register
Computershare Investor Services Pty Ltd
Mark Hawthorne
Christine Holman
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Frances Finucan
Hamilton QLD 4007
Telephone: +61 7 3352 0800
Level 1, 200 Mary Street
Brisbane QLD 4000
Telephone: 1300 850 505
Outside Australia: +61 3 9415 4000
PricewaterhouseCoopers
480 Queen Street
Brisbane QLD 4000
Auditor
Stock exchange listings
Collins Foods Limited shares are listed on the Australian Securities Exchange
Website address
www.collinsfoods.com
The Collins Foods Corporate Governance Statement is located at www.collinsfoods.com/investors/corporate-governance/
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 101 of 101
Shareholder information
Substantial holders
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
ORDINARY SHARES
Number held
Percentage %
7,221,484
8,909,589
6.17
7.63
Restricted Securities and share buy-backs
A voluntary holding lock will be applied to 1,658 fully paid ordinary shares for a period of 48 months, if they are issued, upon the
vesting of 1,658 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.
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.
CORPORATE DIRECTORY
Directors
Robert Kaye SC, Chair
Drew O’Malley, Managing Director & CEO
Mark Hawthorne
Christine Holman
Bronwyn Morris AM
Kevin Perkins
Russell Tate
Company Secretary
Frances Finucan
Principal registered office in Australia
Share and debenture register
Auditor
Level 3, KSD1, 485 Kingsford Smith Drive
Hamilton QLD 4007
Telephone: +61 7 3352 0800
Computershare Investor Services Pty Ltd
Level 1, 200 Mary Street
Brisbane QLD 4000
Telephone: 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
Website address
www.collinsfoods.com
The Collins Foods Corporate Governance Statement is located at www.collinsfoods.com/investors/corporate-governance/
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 100 of 101
ANNUAL REPORT 2022 | COLLINS FOODS LIMITED 113
Collins Foods Limited ACN 151 420 781 | Financial Report - for the reporting period ended 1 May 2022
Page 101 of 101
ecoStar+ is an environmentally responsible paper made
Carbon Neutral and the fibre source is FSC (CoC) Recycled
certified. ecoStar+ is manufactured from 100% post consumer
recycled paper in a process chlorine free environment under
the ISO 14001 environmental management system.