Go! Fish GmbH

QSR Platform Holding

Luxembourg

Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Table of contents

Consolidated Management report

Independent auditor's report

Consolidated financial statements

Consolidated statement of financial position

Consolidated statement of comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the consolidated financial statements

Consolidated management report

Dear Shareholders,

In accordance with the statutory and legal measures in force in Luxembourg, we hereby present to you the management report of the Board of Managers of the General Partner for the financial year ended on 31 December 2022, and we are pleased to submit to you the consolidated annual accounts of QSR Platform Holding S.C.A. (hereinafter the "Company" or "Group" if taken together with its subsidiaries) for the financial year ended on 31 December 2022, which are attached to the report.

1. Information concerning operations

Incorporated as a partnership limited by shares on 17 July 2018 under the previous name KC North Sea S.C.A., the Group operates a chain of quick service restaurants ("QSR") in Europe, either directly with own restaurants or through franchisees. The Group acquired certain rights pertaining to the Nordsee brand (hereafter referred to also as "Seafood"), in a range of European countries and derives income from the exercise of contracts in relation with these rights.

In 2020 the Company changed its name to QSR Platform Holding S.C.A. to reflect the structure as result of the contributions that occurred on February 12th 2020 when the entity acquired the control of Gripinvest Sarl (Burger business with Quick and Burger King as brands) and KC Next QSR S.C.A. (O'Tacos brand (hereafter referred to also as "French tacos")). This contribution was made with the intention to constitute one of the largest independent quick service restaurants group in Europe with more than 1,000 operating selling points. The brands of the new platform are as such Quick, Burger King, Nordsee, Go!Fish, O'Tacos and Chick&Cheez which are primarily operated in Belgium, Luxembourg, France, Germany, Austria and Italy. With the sale of BKSEE Poland (hereafter referred to as "BK Poland") in August 2022 the Group was no longer active in Poland during the last 4 months of 2022 with a consequential closure of 20 restaurants ¹.

As at 31 December 2022, the Group reached a total of 1,043 restaurants (of which 302 Company-Owned) with 55 openings and 29 closures during 2022. As at 31 December 2022 the Group had opened a total of 224 virtual kitchens ("VKs"), reaching a total of 1.267 points of sale. As at 31 December 2022, the Group employed 5.196 staff (2021: 5.088), of which 4 827 (2021: 4.717) are active in restaurants.

2. Existence of branches and subsidiaries

As at 31 December 2022, the Company holds 100% of the share capital of QSR Platform S.à.r.l. incorporated and existing under the laws of Luxembourg.

As further detailed in the other sections of the consolidated management report the Group operates through various subsidiaries and branches that are located in several countries across Europe.

The Group owns the Nordsee and Go!Fish brands, both mainly operated in Germany and Austria, the O'Tacos and Chick&Cheez brands mainly operated in France and Belgium and the Quick brand operated in Belgium and Luxembourg. The Group has also the right to use the Burger King brand and operate Burger King restaurants in Belgium, Luxembourg and Italy through a master franchise agreement with Burger King Europe. Until the end of August 2022, the Group also operated Burger King Company-Owned restaurants in Poland through a franchise agreement with Burger King Europe. The latter business was sold, further information regarding the divestment in Poland is in note 34.

¹ the following figures are presented excluding BKSEE Poland for comparability.

3. Results of the year end position

3.1. Significant changes in the year

During the year an updated assessment by the Board of Managers of the General Partner resulted in a change to the accounting of leasing and deferred income taxes, which has been applied retrospectively in these financial statements by restating balances that were previously reported. Further details on the adjustments are set out in note 2.28 of the Financial Statement.

FY22 was characterized by Covid restrictions during the first months of the year across all countries. In the course of Q2 of 2022 all these restrictions were lifted, however across all businesses the dine-in share has remained considerably below pre-covid levels. An adverse international context, on the back of the Russo-Ukrainian war, characterized the second half of the year, marked by high inflation amongst other on cost of food and energy. Even though this context softened consumer confidence, our activity remained resilient.

Development

High inflation

Throughout FY22 raw material prices increased meaningfully:

Continued progress on long term strategic value creation drivers (Innovation & Development, Digital & ESG)

Furthermore, we pursued our development strategy and as of December 31, 2022, we operate:

Our results of operations have been, and will continue to be, affected by a number of factors, many of which are beyond our control. See "Financial risk factors." There are several key items that have impacted, and we expect will continue to impact, our results of operations on a consolidated basis. These items are described below.

3.2. Factors that impact the results of operations

3.2.1. Impact of the COVID-19 pandemic

The QSR industry has been impacted by the Covid-19 pandemic especially during the first months of 2022. The effects have been a decrease in dine-in customers and a shift towards online and delivery options compared to pre-covid levels.

3.2.2. Impact of Russo-Ukrainian war

The Russian invasion of Ukraine in late February 2022 has led to increased market volatility and economic uncertainty. Although the war between Russia and Ukraine remains localized, it has broad implications for economies around the world, as the two countries account for a large share of global energy exports, as well as exports of a range of metals, food commodities, and agricultural inputs. As a result, the main consequences of the conflict for economies are: inflation, due to rising energy and nonenergy commodity prices.

3.3. Segment and revenue information

We summarize below the key consolidated financial and other operational data for the years ended 2021 and 2022.

Please note that during the period some segments have been renamed in the management reporting. 'Fish' was renamed to 'Seafood' and 'Tacos' to 'French tacos' and the presentation is reflected in these financial statements. The scope of the segments remains unchanged. The non-material segment Chicken, comprising Chick&Cheez, is included under 'Other'.

3.3.1. Points of Sale

In number of restaurants

In number of virtual kitchen

During the periods under review, the main trends in our restaurant and virtual kitchen network have been: (i) an expansion of O'Tacos and GolFish; (ii) an increasing number of Franchised Restaurants over Company-Owned restaurants; (iii) closures of certain loss-making restaurants, in particular in the Nordsee brand, and a limited contraction of the Quick network resulting from conversions into Burger King restaurants; (iv) steady growth in all our segments and (v) expansion beyond France, Belgium, Germany and Italy.

3.3.2. System Wide Sales

In KEUR

Our revenue generation is largely driven by System Wide Sales to consumers.

SWS increased by KEUR 292.872 or 32% to KEUR 1.213.109 for the twelve-month period ended December 31, 2022, from KEUR 930.237 for the twelve-month period ended December 31, 2021.

The increase in SWS for the twelve-month period ended December 31, 2022, as compared to the previous year for the same period, was mainly driven by (i) the removal of Covid-19 restrictions during 2022 while these were still implemented in most of 2021, (ii) opening of 55 new restaurants and 146 virtual kitchens in addition to the full year effect of openings in 2021 (iii) the development of new offers, (iv) record sales in the Burger and French tacos segment driven by strong same store sales performance helped by consumer price increases.

These effects were partly offset by (i) the adverse international context in 2022, impacting consumer confidence (ii) the definitive closing or disposal of 31 restaurants (of which 3 Burger, 19 Seafood, 8 French tacos and 1 Chicken). Apart from the above 20 restaurants were sold in August 2022 due to divestment of BK Poland.

3.3.3. Revenue

The Group derives revenues from services over time and at a point in time in the following major business lines and geographical regions. Those major business lines and geographical regions have also been identified as segments.

3.3.3.1. Company-Owned restaurants revenue:

Company-Owned restaurants revenue increased by KEUR 84.728 or 33% to KEUR 345.333 for the twelve-month period ended December 31, 2022, from KEUR 260.605 for the twelve-month period ended December 31, 2021.

During the last twelve months ended December 31, 2022, the net increase in Company-Owned restaurant revenue was mainly due to the following effects:

The overall number of restaurants operated as Company-Owned restaurants during the last twelve-month period ended December 31 2022 is 302 (95 operated under the Burger segment, 205 Seafood segment and 2 French tacos segment), following:

The above-mentioned positive effects were however partly offset by the challenging international context as already explained.

3.3.3.2. Franchised restaurants revenue:

Franchised revenue increased by KEUR 27,492 or 44% to KEUR 89,875 for the twelve-month period ended December 31, 2022, from KEUR 62,382 for the twelve-month period ended December 31, 2021. The increase was mainly driven by:

The net increase in the overall number of Franchised restaurants by 27 to 741 Franchised restaurants at the end of December 2022 (of which 284 operated under the Burger segment, 135 under the Seafood segment, 317 under the French tacos segment and 5 Chicken under the other segment), from 714 Franchised restaurants at the end of December 2021 (of which 267 operated under the Burger segment, 148 under the Seafood segment, 297 under the French tacos segment and 2 Chicken operated under the other segment), following:

The above-mentioned positive effects were however partly offset by (i) the disposal or definitive closing of 23 restaurants (3 Burger, 12 Seafood and 7 French tacos and 1 Chicken) (ii) the adverse international context affecting consumer confidence as explained above.

3.3.3.3. By segment

Revenue increased from KEUR 351.417 in FY21 to KEUR 473.448 in FY22. The increase (35%) was driven by the factors explained above.

3.3.3.4. Result of operations

The following table sets forth the consolidated results of operations of QSR Platform Holding for the twelve-month audited period ended 31 December 2021 and 2022, prepared in accordance with IFRS:

Total cost of sales increased by KEUR 85,322, or 29% to KEUR 381,046 for the twelve-month period ended December, 2022, form KEUR 295,724 for the twelve-month period ended December 2021. Gross margin improved from 15.8% in 2021 to 19.5% in 2022 on the back of higher revenue as explained above.

The higher cost of sales is driven by (i) the increase in Company-Owned restaurants labour costs by KEUR 12,547, or 13% to KEUR 106,830 For the twelve-month period ended December, 2022, from KEUR 94,283 for the twelve-month period ended December 2021 (ii) the increase in Company-Owned restaurants' food costs by KEUR 36,636, or 49% to KEUR 111,264 for the twelve-month period ended December, 2022, from KEUR 74,628 for the twelve-month period ended December 2021 (iii) the increase in Company-Owned restaurants' Occupancy and other operating expenses by KEUK 21,436, or 53% to KEUR 61,736 for the twelve-month period ended December, 2022, from KEUR 40,300 for the twelve-month period ended December 2021.

The higher cost of sales was mainly attributable to (i) increased revenue as explained above (ii) higher raw material costs driven by higher inflation in FY22 (ii) higher Company-Owned restaurant labour cost due the salary adjustment and an increase in total worked hours.

The Group recognised an operating profit of KEUR 18.201 in FY22 compared to an operating profit of KEUR 19.217 in FY21. The decrease was mainly driven by (i) less covid related government subsidies received from the local authorities, mainly in Germany, presented with other operating income for a total amount of KEUR 5.703 in FY22 and KEUR 31.638 in FY21 (ii) an increase in Selling, General & Administrative expenses of KEUR 15.320 related to Employee benefits expenses (KEUR 9.883) and Service & other goods (14.988)

Further details on the Government subsidies are included in note 32 and 33 of the consolidated financial statements.

3.3.3.5. By geographical breakdown

The geographical breakdown of the Group's revenue is as follows:

For further details on the breakdown of revenue by nature and by geography, we refer to note 24 of the financial statements.

3.3.4. EBITDA

KEUR

4. Future perspective and recent developments

The Company plans to continue with the execution of its operational development plan focused on the organic expansion of its existing network by opening of new restaurants and virtual kitchens. In addition, the Company keeps on exploring any relevant and interesting M&A opportunities.

5. Research and development

Research and development is essentially focused on food offering, food and customer experience quality.

6. Risks and uncertainties

The principal risks and uncertainties identified by the Board of Managers of the General Partner are as follows:

Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group's market risks arise from open positions in (a) foreign currencies and (b) interest-bearing liabilities, to the extent that these are exposed to general and specific market movements. In practice, this is unlikely to occur, and changes in some of the factors may be correlated - for example, changes in interest rate and changes in foreign currency rates. Management at the level of each of the Group's entities is in charge of risk management and reviews financial positions periodically.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations when they fall due. The investments made by the Group are illiquid in nature. The ability of the Group to liquidate its investments at attractive prices or appropriate times will depend on a number of factors that may be outside of the control of management. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close market positions. Excluding the cash from a financing of KEUR 85,000 for long term acquisition the Group structural negative working capital is due to the capex investments in restaurants and the longer credit facilities with the suppliers. Due to the dynamic nature of the underlying businesses, management aims to maintain flexibility in funding by keeping sufficient cash available.

The Group uses financial instruments for hedging against interest rate fluctuations. The fair value of these instruments amounted to KEUR 5.108 (2021: KEUR 63).

For additional financial risks affecting the Group, please refer to note 4 of the financial statement.

Operational risk

The activities of the Group are highly labour intensive. The Group's profitability is affected by its ability to manage labour costs and its impact on profit margins. Attracting and retaining qualified managers and employees remains challenging and the inability to meet these challenges could require the Group to pay higher wages and/or incur additional costs associated with high employee turnover. In addition, increases in the minimum wage or labour regulations in the countries in which the Group operates could increase labour costs. Additional labour costs could adversely affect profit margins. The Group seeks to minimize the long-term trend toward higher wages through increases in labour efficiencies.

Food is the primary product of the Group therefore food safety is a top priority. The Group's reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents could be caused by factors outside its control and that multiple locations would be affected rather than a single restaurant. Any report or publicity linking the Group's brands in instances of food-borne illness or other food safety issues, including food tampering or contamination, could adversely affect its brands and reputation as well as the revenues and profits. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in supply chain, significantly increase costs and/or lower margins.

7. Subsequent events that have occurred since 31 December 2022

The Group needs to comply with certain financial covenants as outlined in the Term and Revolving Facilities Agreement with Ares Management Limited. These covenants primarily relate to the Group's (i) senior adjusted leverage, the ratio of Net senior debt to Adjusted EBITDA, and (II) minimum EBITDA cover.

On 31 March 2023, the Group agreed a covenant reset with Ares. This amendment provides for a less aggressive stepdown in the senior adjusted leverage ratio as of 31 March 2023.

The Group has complied with all financial covenants in 2021, 2022 and 2023 so far.

8. Sustainability

The Company has developed in the course of 2021 a comprehensive ESG 2030 plan, focused on 4 key pillars (Planet, Food, Engagement and People). In 2022 the Group has continued to execute according to this plan as outlined in the second ESG report which is to be published on the Group website.

9. Authorization of the financial statements

The financial statements included herein were authorized for issuance by the Board of Managers of the General Partner on 12 May 2023.

Representatives of the Board of Managers of the General Partner

Audit report

To the Shareholders of

QSR Platform Holding

Report on the audit of the consolidated financial statements

Our opinion

In our opinion, the accompanying consolidated financial statements give a true and fair view of the consolidated financial position of QSR Platform Holding (the "Company") and its subsidiaries (the "Group") as at 31 December 2022, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

What we have audited

The Group's consolidated financial statements comprise:

Basis for opinion

We conducted our audit in accordance with the Law of 23 July 2016 on the audit profession (Law of 23 July 2016) and with International Standards on Auditing (ISAs) as adopted for Luxembourg by the "Commission de Surveillance du Secteur Financier" (CSSF). Our responsibilities under the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the CSSF are further described in the "Responsibilities of the "Réviseur d'entreprises agréé" for the audit of the consolidated financial statements" section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants, including International Independence Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the consolidated financial statements. We have fulfilled our other ethical responsibilities under those ethical requirements.

Other information

The General Partner is responsible for the other information. The other information comprises the information stated in the consolidated management report but does not include the consolidated financial statements and our audit report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the General Partner for the consolidated financial statements

The General Partner is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control as the General Partner determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the General Partner is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the General Partner either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Responsibilities of the "Réviseur d'entreprises agréé" for the audit of the consolidated financial statements

The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an audit 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 Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the Law of 23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Report on other legal and regulatory requirements

The consolidated management report is consistent with the consolidated financial statements and has been prepared in accordance with applicable legal requirements.

Consolidated statement of financial position as at 31 December 2022

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

^(*) Individual line items and relevant note restated for 2021. See note 2.28 for further details

Consolidated statement of comprehensive income for the year ended 31 December 2022

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

^(*) Individual line items and relevant note restated for 2021. See note 2.28 for further details

Consolidated statement of changes in equity for the year ended 31 December 2022

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

^(*) Individual line items and relevant note restated for 2021. See note 2.28 for further details

Consolidated statement of cash flows for the year ended 31 December 2022

Following a change in accounting policy, the Consolidated Statement of Cash Flows method has been changed retrospectively and starts now with the Consolidated Profit / (Loss) (after tax). The accompanying notes form an integral part of these consolidated financial statements.

^(*) Individual line items and relevant note restated for 2021. See note 2.28 for further details

Notes to the consolidated financial statements for the year ended 31 December 2022

1. GENERAL INFORMATION

QSR Platform Holding S.C.A.. (hereinafter the "Company" or "Group" if taken together with its subsidiaries) was incorporated as a partnership limited by shares (Société en commandite par actions or "S.C.A.") formerly named KC North Sea on 17 July 2018 for an unlimited period of time. The Company is governed by the law of 10 August 1915 on commercial companies, as amended. The registered office of the Company is located at 412F Route d'Esch, 1471 Luxembourg. The Company is registered with the "Registre de Commerce et des Sociétés" in Luxembourg under the number B226204.

The Group operates a chain of fast food restaurants in Europe, either directly with own restaurants or through franchisees. The Group acquired certain rights pertaining to the Nordsee, Burger King, Quick, O'Tacos, Go! Fish and Chick&Cheez brands in a range of European countries and derives income from the exercise of contracts in relation with these rights.

These consolidated financial statements present the results for the Group for the year ended 31 December 2022 and the comparison to the year ended 31 December 2021. Amounts are presented in thousands of Euro's ("KEUR") and values are rounded to the nearest thousands, except when otherwise indicated.

These consolidated financial statements have been prepared under the responsibility of the Board of Managers of the General Partner and were authorised for issuance on 12 May 2023. Under Luxembourg Law, the financial statements are approved by the Shareholders at the Annual General Meeting.

These consolidated financial statements meet the requirements of exemption rule § 264 (3) of the German commercial law for the following entities: Go! Fish GmbH, KC QSR Germany 2 GmbH, KC QSR Germany GmbH, Nordsee Energie GmbH, Nordsee GmbH, Nordsee Holding GmbH.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.

2.1. Basis of preparation

2.1.1. Basis of measurement

The Group's consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union ("IFRS"), as well as the interpretations issued by the IFRS Interpretations Committee ("IFRS IC") applicable to companies reporting under IFRS, and in accordance with Luxembourg laws and regulations.

The consolidated financial statements have been prepared under the historical cost convention, except for certain items which are measured at fair value, as disclosed in the accounting policies below. These accounting policies have been consistently applied to all years presented, unless otherwise stated.

These consolidated financial statements are presented in thousands of Euro ("KEUR") and all values are rounded to the nearest thousands ("KEUR"), except when otherwise indicated.

2.1.2. Going concern

Management has considered the Group's ability to continue as a going concern in the foreseeable future although that the operations were impacted by Covid 19 as from the second quarter of 2020. More information on the impact and measures taken as result of Covid 19 are disclosed in note 32 and 33.

It has been established that the Group's subsidiaries have sufficient equity and cash to withstand some initial losses. Based on the perspective there is high potential in terms of cash generation at the level of the subsidiaries and an additional financing before year-end 2021 has guaranteed considerable reserves of cash.

Covid 19 did not have any impact on the expected credit losses (note 4.2.2.) given the group worked on a sustainable repayment scheme together with the franchisees that were impacted. The Russian invasion of Ukraine in late February 2022 has led to increased market volatility and economic uncertainty. Although the war between Russia and Ukraine remains localized, it has broad implications for economies around the world, as the two countries account for a large share of global energy exports, as well as exports of a range of metals, food commodities, and agricultural inputs. As a result, the main consequences of the conflict for economies are: inflation, due to rising energy and non-energy commodity prices.

Negative working capital is inherent to the nature of the business the Group is active in, partly due to restaurant customers paying directly and long payment terms with our principal food suppliers. As a result, management continues to adopt the going concern basis in preparing the consolidated financial statements.

2.2. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including structured entities) controlled by the Company and its subsidiaries.

Subsidiaries are all entities (including structured entities) over which the Group has control as at the reporting date. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. Accordingly, the consolidated statement of comprehensive income and the consolidated statement of cash flows include the results and cash flows for the period of control.

Control is achieved when the Company:

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

When the Company has less than a majority of the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it power, including:

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the noncontrolling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance.

When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

Franchised restaurants are excluded from the consolidation given the Company has no control over the franchisees.

2.2.1. Changes in the Group's ownership interest in existing subsidiaries

Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, a gain or loss is recognized in profit or loss and is calculated as the difference between (i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognized in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS9 Financial instruments when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

2.3. Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participant would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, leasing transaction that are within the scope of IFRS 16, and measurement that have some similarities to fair value but are not at fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

In addition, for financial reporting purposes, fair value measurements are categorised into level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. Changes in assumptions may have a significant impact on the consolidated financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate.

Judgements made by management in the application of IFRSs have significant effect on the financial statements and estimates with a significant risk of material adjustment in subsequent years which are discussed in each note whenever it is relevant.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

2.4. Current versus non-current classification

The Group presents assets and liabilities in the statement of financial position based on current/non-current classification. An asset is current when it is:

A liability is current when:

The Group classifies all other liabilities as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities.

2.5. Business combination

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest's proportionate share of the recognized amounts of acquiree's identifiable net assets.

Acquisition-related costs are expensed as incurred.

At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:

Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognized in the income statement. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized directly in the income statement.

For acquisitions of subsidiaries not meeting the definition of a business, the Group allocates the cost between the individual identifiable assets and liabilities in the Group based on their relative fair values at the date of acquisition. Such transactions or events do not give rise to goodwill.

All the Group companies have 31 December as their year-end. Consolidated financial statements are prepared using uniform accounting policies for similar transactions. Accounting policies of subsidiaries have been changed when necessary to ensure consistency with the policies adopted by the Group.

Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group's accounting policies.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss.

Associates

An associate is an entity in which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but without the possibility to exert control or joint control over those policies.

The Group accounts for investments in associates in the consolidated financial statements using the equity method.

Joint ventures

Interests in joint ventures are accounted for using the equity method.

Under the equity method, the investment in an associate & joint ventures is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the associate since the acquisition date. Goodwill relating to the associate is included in the carrying amount of the investment and is not shown as a separate asset therefore goodwill is not tested for impairment separately.

Disposal of subsidiaries

When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in the income statement. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to the income statement.

2.6. Goodwill

Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition of the business less accumulated impairment losses, if any.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units ("CGUs"), or groups of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognized immediately as an expense and is not subsequently reversed.

2.7. Foreign currency translation

These consolidated financial statements are presented in Euro ("EUR") which is the functional currency of the Company. Reasons include the fact that:

Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented net in the income statement with finance costs and finance income respectively unless they are capitalised. All other foreign exchange gains and losses are presented net in the statement of comprehensive income.

The assets and liabilities of subsidiaries are determined according to the accounting policies of the Group. When the measurement currency is different from the reporting currency of the Group those assets and liabilities, including goodwill, are translated at the rate of exchange ruling at the balance sheet date. The statement of comprehensive income of such subsidiaries is translated at the average exchange rate for the period since movements during the period were not considered material. Exchange differences arising on monetary items, which in substance form part of the Group's net investment in a foreign entity, are recorded as a separate component of other comprehensive income under the heading of "Currency translation adjustments". On the disposal of such a subsidiary, accumulated exchange differences are recognized in the consolidated statement of comprehensive income as a component of the gain or loss on disposal, including any tax effects.

2.8. Intangible assets

Separately acquired trademarks and licenses are measured at historical cost. Tradenames and licenses acquired in a business combination (see note 7) are initially recognized at fair value at the acquisition date. Licenses have a finite useful life and are carried at cost less accumulated amortization and accumulated impairment losses if any. No re-evaluation is performed in the consolidated accounts. Amortization is calculated using the straight-line method to allocate the cost of licenses over their estimated useful lives as follows:

Key money and doorsteps are intangible assets acquired from third parties. Key money with indefinite lives are not amortized, but are assessed for impairment annually, either individually or at the cash-generating unit level. Key money with a defined useful life are amortized over their useful lives. Other intangible assets (including brands) which have an indefinite life are not amortized and are assessed for impairment annually. Amortization periods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

Pre-opening costs such as rent, recruitment and other training costs, are not recognized as assets, but are recorded directly through the statement of comprehensive income as incurred.

Trade names are considered to have an indefinite lifecycle and are tested yearly for impairment.

2.9. Property, plant and equipment

Property, plant and equipment ("PPE") are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the asset, its purchase price and any directly attributable costs, the cost of replacing part of an existing PPE at the time that cost is incurred if the recognition criteria are met; and excludes the costs of day-to-day servicing of that item.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of those parts that are replaced is derecognized. All other repairs and maintenance are charged to the income statement during the period in which these are incurred.

Depreciation, based on a component approach, is calculated using the straight-line method to allocate the cost over the assets' estimated useful lives, as follows:

The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at least at each financial year-end. An asset's carrying amount is written down immediately to its recoverable amount if its carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in the statement of comprehensive income.

2.10. Leases

The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Group as a lessee

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low- value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified as operating leases. Rental income arising is accounted for on a straight-line basis over the lease terms and is included in revenue in the statement of profit or loss due to its operating nature. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.

In respect of leases with transfer of substantially all the risk and rewards, at commencement of the lease term a receivable, at an amount equal to the net investment in the lease is recognized. During the lease term a finance income based on a pattern reflecting a constant periodic rate of return in the net investment outstanding in respect of the finance lease is recognized.

2.11. Impairment of non-financial assets

Assets that have an indefinite useful life, such as goodwill, are not subject to amortization and are tested annually for impairment. Assets that are subject to depreciation or amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized 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 of disposal 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 (i.e. CGU). For the Company each restaurant constitutes one CGU. Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. Tangible assets that can be moved from one point of sales to another are not subject to an impairment charge. Impairment losses on goodwill are not reversed.

An impairment loss is recognized in the statement of comprehensive income in 'Cost of sales' if the impairment is related to Property Plant and Equipment or Right-of-Use. Impairments related to goodwill are recognized under the caption Other nonoperating expenses.

2.12. Financial instruments

Financial assets

Initial recognition and measurement

Classification of financial assets starts with determining whether the financial asset shall be considered as a debt or equity instrument from the issuer's perspective. Equity instruments are normally measured at FVTPL unless the Group chooses, on an instrument-by-instrument basis on initial recognition, to present fair value changes in other comprehensive income. This option is irrevocable and applies only to equity instruments, which are neither held for trading nor are contingent consideration in a business combination.

The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow characteristics and the Group's business model for managing them. With the exception of trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient, the Group initially measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables that do not contain a significant financing component or for which the Group has applied the practical expedient are measured at the transaction price determined under IFRS 15.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in four categories:

Financial assets at amortised cost (debt instruments)

This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the following conditions are met:

Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

Financial assets at fair value through OCI (debt instruments)

The Group measures debt instruments at fair value through OCI if both of the following conditions are met:

For debt instruments at fair value through OCI, interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the statement of profit or loss and computed in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI. Upon derecognition, the cumulative fair value change recognised in OCI is recycled to profit or loss.

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, as described above, debt instruments may be designated at fair value through profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.

Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss.

Derecognition

A financial asset is primarily derecognised when:

When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of its continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

Financial liabilities

Initial recognition and measurement

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Group's financial liabilities include trade and other payables, loans and borrowings including bank overdrafts, and derivative financial instruments.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated any financial liability as at fair value through profit or loss.

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit or loss.

Derivative financial instruments

Derivative financial instruments are initially recognized at fair value on the date a derivative is entered into and are subsequently remeasured at fair value through Profit and Loss. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument and if so the nature of the item being hedged. Changes in fair value of derivative financial instruments, where they are not designated as hedging instruments, are recognized through Profit and Loss because the requirements that permit hedge accounting in certain circumstances were not satisfied. Transaction costs are included directly as finance costs in the income statement.

The Group's derivative financial assets and liabilities comprise interest rate swaps for hedging purposes. The Group uses interestrate swaps to hedge its exposure to interest rate risks in forecasted transactions and firm commitments.

Impairment of financial assets

The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.

ECLs are recognised in three stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).

For trade receivables and contract assets, the Group applies a simplified approach in calculating ECLs. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.

The Group considers a financial asset in default when contractual payments are 90 days past due. However, in certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

Offsetting financial instruments

Financial assets and liabilities are offset, and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.13. Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

2.14. Inventories

Inventories are stated at the lower of cost and net realizable value in accordance with IAS 2. Cost is determined using the first-in, first-out ("FIFO") method. Group inventories are composed of supplies and food products. Cost of inventories comprises the purchase price, import duties and other taxes (other than those subsequently recoverable by the entity from the taxing authorities), and transport, handling and other costs directly attributable to the acquisition of these goods. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.15. Prepayments

Prepayments are carried at cost less any accumulated impairment losses. Prepayments relate to items of expenditure that were already paid but of which a part or the entirety relate to a future year. These items are written off to the statement of comprehensive income as incurred on an accrual basis.

2.16. Current income tax

Current income tax

Tax is recognized in the income statement except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized in other comprehensive income or equity, respectively.

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to tax authorities using the tax rates and tax laws enacted or substantially enacted at the reporting date where the consolidated entity is domiciled. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.

The Company is subject to the tax regulations applicable in Luxembourg. Other Group entities are subject to income tax on their respective tax jurisdiction (e.g. in Germany, Austria, France, Belgium, Switzerland, Italy).

2.17. Deferred tax

Deferred tax is provided in full using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax is realized, or the deferred income tax liability is settled.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized, except:

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. The carrying amount of the deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be recovered.

Deferred tax assets and liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.

2.18. Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized cost using the effective interest method. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized as finance cost over the period of the borrowings. Borrowing cost paid on the establishment of loan facilities is recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the borrowing cost is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the borrowing cost is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.

Convertible bonds are hybrid instruments including a debt instrument and an embedded derivative liability. The embedded derivative is accounted for separately from the host debt contract and measured at fair value through profit and loss. The host debt contract is subsequently measured at amortised cost.

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

Preference shares with a put option are classified as liabilities given the contractual obligation to deliver cash.

Dividends on redeemable preference shares are presented under the caption Loans & borrowings and are recognised in profit or loss as finance expenses.

2.19. Provisions

A provision is recognized when, and only when, the Group has a present obligation (legal or constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

The Group regularly reviews the operating performance of its restaurants and assesses the Group's plans for certain restaurant closures. The closure of restaurants results in a number of appraisals in order to appropriately reflect the value of assets and liabilities and related restaurant closing costs, such as a review of net realizable asset of inventory or impairment of non-current assets. In addition, the Group recognizes 'closed restaurant provisions' which primarily consist of provisions of onerous contracts and severance costs. Judgement is required in determining if a present obligation exists. Costs recognized as part of a restaurant closure are included in 'other operating expenses' in the statement of comprehensive income, except for inventory write-downs which are classified in 'cost of sales'.

Onerous contracts: a provision is recognized for a present obligation arising under an onerous contract, which is defined as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be derived from it. Judgement is required in determining if a present obligation exists.

Once a present obligation has been established to exist, the Group recognizes a provision for the present value of the amount by which the unavoidable costs of fulfilling the contracts exceed the expected benefits of the contract, which includes the estimated non-cancellable lease payments, contractually required real estate taxes, common area maintenance and insurance costs, net of anticipated subtenant income.

2.20. Employee benefits

Employee benefits consist of short-term employee benefits and post-employment benefits. Post-employment benefits depend on local and legal obligations in this field. The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity that is responsible for the plan's administrative and financial management as well as for the payment of benefits, such that the Group has no obligation to pay further contributions if the plan assets are insufficient. Contributions to the defined contribution fund are recognized as an expense as they become payable.

A defined benefit plan is a pension plan that is not a defined contribution plan. The liability recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation.

2.21. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, stated net of discounts, returns and value added taxes. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods or services.

Recurrent operational revenues are as follows:

2.22. Deferred income

Opening fees are invoices to franchisees when a new franchise agreement is executed. Revenues from the opening fees are recognized over the period of the franchise agreement.

Loyalty program. The Group records a liability for the relative fair value of providing free food or cash vouchers that can be used to purchase meals under its loyalty program for all points earned from sales of food that are expected to be redeemed for sales. The loyalty liability represents performance obligations that will be satisfied when a loyalty member redeems points for food or cash vouchers, or upon spoilage of the points. Points earned from activity are valued at their relative standalone selling price by applying fair value based on historical redemption patterns. For points that are expected to expire unused, the Group recognizes spoilage in proportion to the pattern of points used by the Customer, which approximates the average period over which the population redeem their points. The Group records revenue when the service/food is delivered.

Marketing fund income is recognized on an accrual basis and is recorded as the difference between the gross marketing fund income charged to restaurants and franchisees on a monthly basis and the associated costs.

As at the reporting date, contributions received to the marketing fund may not equal advertising and promotional expenditure for the period due to the timing of advertising promotions. As a result, any contributions in excess of advertising and promotional expenditure are recorded as deferred income and any shortfall is recorded as a receivable.

In the event the Company is unable to collect receivables relating to marketing fund income, a write off is recorded based on management judgement.

2.23. Interest income and expense

Interest income and expense are recognized within 'finance income' and 'finance costs' in the income statement using the effective interest rate method, except for borrowing costs relating to qualifying assets, which are capitalized as part of the cost of that asset.

The effective interest rate method is a method of calculating the amortized cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

2.24. Other expenses

Expenses include legal, accounting, auditing and other transaction costs. They are recognized in the income statement in the period in which they are incurred.

2.25. Government grants

Government s are recognized in profit or loss on a systematic basis over the period in which the entity recognises as expenses the related costs for which the grants are intended to compensate. Grants reduce the related expenses in statutory reporting. Grants related to income that are recovered to compensate a loss of income are presented as other non-operating income. Further information can be found in note 33.

2.26. Cash Settled share-based payment transactions

Employees working in the business development group are granted share appreciation rights, which are settled in cash (cash- settled transactions).

A liability is recognised for the fair value of cash-settled transactions. The fair value is measured initially and at each reporting date up to and including the settlement date, with changes in fair value recognised in employee benefits expense. The fair value is expensed over the period until the vesting date with recognition of a corresponding liability. The fair value is determined using a Black & Scholes model, further details of which are given in Note 35. The cost is recognised in employee benefits expense, over the period in which the service and, where applicable, the performance conditions are fulfilled (the vesting period).

2.27. Changes in accounting policy and disclosures

Several amendments and interpretations apply for the first time in 2022, but do not have an impact on the financial statements of the Company:

Standards issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company's financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.

2.28. Prior-year restatements

Following an updated assessment performed during the year 2022, we concluded that the below adjustments, applied retrospectively in these financial statements by restating balances that were previously reported, had to be reflected. The accumulated impact as of 31 December 2021 and 31 December 2020 on the retained deficit are respectively of KEUR 4.493 and KEUR 44.

An in depth review of the leasing process indicated that the Right-of-Use and lease liabilities related to rent were underestimated by respectively KEUR 40,313 and KEUR 42,992 for 2021 and were underestimated by KEUR 7,157 and overestimated by KEUR 341 in 2020. The amortization charges were therefore also underestimated for KEUR 2,647 in 2021 and KEUR 1,207 in 2020 while the interest expense was underestimated in 2021 for KEUR 1,185 and overestimated in 2020 for KEUR 94. In addition, a correction on the subleases receivables for an amount of KEUR (643) and trade payables for KEUR 4,410 has been identified as well due to timing differences between contractual lease payment date and effective payment as result of Covid rent negotiations. The impact on deferred taxes was KEUR 3,240 on deferred tax asset and KEUR 617 on deferred tax charges in 2021 and KEUR 1,069 deferred tax income in 2020. The context of the above corrections on Right-of-Use was related to an understatement of yearly rental costs due to errors in the periodicity of payments KEUR 2021: 56,620 and KEUR 2020: 56 702 in Burger Brands Belgium and errors in the periodicity of payments and missing contract extensions KEUR (6,555) and duplicate entries KEUR (9,752) in Nordsee Gmbh 2021: KEUR (16 307) and 2020: KEUR 1,069.

Please fine below the correction on the consolidated balance sheet, statement of comprehensive income and cash flow statement.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF CASH FLOWS

Following a change in accounting policy, the Consolidated Statement of Cash Flows method has been changed retrospectively and starts now with the Consolidated Profit / (Loss) (after tax).

3. CONSOLIDATION SCOPE

The consolidated financial statement of the Group include:

^1. Merged with Burger King Restaurant Italia as per January 1st 2022
^2. Sold as per August 31st 2022. Presented as discontinued operations
^3. Name change from KC North Sea 2 S.à.r.l. per February 9th 2022

Investment in joint venture

As at 31 December 2022 and as at 31 December 2021, the Group further has a 50% shareholding in Caresquick S.A. which is accounted for in accordance with the equity method. The entity is jointly controlled by Burger Brands Belgium S.A. and Autogrill België S.A.

4. FINANCIAL RISK MANAGEMENT

4.1. Capital management

The Group's objectives for managing capital is to safeguard the Group's ability to continue as a going concern and to maximize shareholder value while maintaining investment grade credit rating. The Group aims to keep sufficient flexibility to execute strategic projects and reduce the cost of capital.

4.2. Financial risk factors

The risk management function within the Group is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Group is exposed during or at the end of the reporting period. Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk.

4.2.1. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Group's market risks arise from open positions in (a) foreign currencies and (b) interest-bearing liabilities, to the extent that these are exposed to general and specific market movements. Sensitivities to market risks included below are based on a change in one factor while holding all other factors constant. In practice, this is unlikely to occur, and changes in some of the factors may be correlated - for example, changes in interest rate and changes in foreign currency rates. Management at the level of each of the Group's entities is in charge of risk management and reviews financial positions periodically.

4.2.2. Currency risk

The Group operates in different markets and is mainly exposed to fluctuations in the Swiss Franc ("CHF") and until August 2022 in the Polish Zloty ("PLN"). Since the Group's functional currency is EUR, it is exposed to currency risk.

Until August 2022 the Group was exposed to currency risks on sales in Poland which are expressed in PLN, but at this stage of business development, cash flow expressed in PLN was not subject to material fluctuation in foreign exchange.

Through its Zug Branches Burger King SEE (Switzerland) A.G and Nordsee A.G., the Group operates in CHF.

Foreign exchange exposures have their origins in EUR transactions and EUR cash balances is foreign subsidiaries located in Switzerland and Poland. The EUR transactions in Poland were mainly with Group entities.

Management periodically reviews the exposure of its operations to foreign exchange risk and determines the appropriate level of risk and coverage where applicable.

The following table demonstrates the sensitivity in KEUR to a reasonably possible change in the relevant exchange rates, with all other variables held constant.

The overall impact to the consolidated statement of comprehensive income is not deemed material.

4.2.3. Cash flow and fair value interest rate risk

The Group's interest rate risk principally arises from long-term financing facility. The facility is issued at variable interest rates and exposes the Group to cash flow interest rate risk. Within the Group the total amount of loans with variable interest amounts KEUR 488.508 (note 4.2.3.) as at 31 December 2022 (2021: KEUR 491.086).

As at 31 December 2022, the Group has with the acquisition of the French tacos and Burger business the long-term facility agreement with Ares Management Limited with a variable interest increased to EUR million 465 (note 17) resulting in borrowings totalling EUR 478 222K (see note 17) which bear variable interest rates. The variable interest (EURIBOR 6 Month) is floored at 0.5%.

In December 2021 the Group obtained an additional financing from JP Morgan for an additional 85 million bearing an interest of 11.5%. The instrument is composed of a Host Debt which basically corresponds to a value which is "Value of the pure bond": The value of the pure bond is valued at amortized cost KEUR 82.017 (2021: KEUR 82.017) by discounting the capitalized 11.5% coupons and the redemption amount at the discount rate of a comparable loan without the convertible elements included in the current agreement over 4 years (being 12.5%). If the Host Debt, including capitalized interests, would have been valued at fair market value the sensitivity of the Host Debt would be as follows:

4.2.4. Price risk

The Group's exposure to equity price risk arises from investments held by the Group and classified in the balance sheet either as at fair value through other comprehensive income or at fair value through profit or loss in Not So Dark, the details of which are disclosed in Note 4.4.1 and more information can also be found in Note 28. The valuation of the investment was performed by an external agency based on actual transaction data from June 2022 and by a careful analysis of available information regarding comparable transactions. In order to confirm that the transaction provided a good reference point for fair value, the external valuation agency analysed the market value of invested capital development of partly comparable listed companies and compared the data published for non-listed competitors of Not So Dark. The table below summarises the impact of the increases / decreases of the impact on profit and loss if the assumptions regarding the share price increased or decreased respectively by 2% with all other variables held constant. As the valuation base is determined by the share price of an investment that is not publicly traded and the capitalization of the market was concluded by the external agency as constant, the impact of +/- 2% was considered as a sufficient variable to be used in order to present the sensitivity of the fair value impact on the profit and loss of the Group.

Additionally, the Group recognises exposure to equity price risk resulting from the Shadow Equity Plan the details of which are disclosed in Note 35.

The Group entered in 2022 in an additional Interest-Rate Cap arrangement in order to hedge the main portion of its cash flow interest-rate risks with an additional coverage of KEUR 380.000 to end up to a total coverage of KEUR 465.000 notional amount (2021: KEUR 85.000) of its borrowings (see note 11), or the amount of main long term Group financing facility with variable interest rates. The risk on the unhedged portion of the credit facility is considered as low given the limited amount that is not covered. Any change in the EURIBOR 6M rate will hence be partially compensated with the instruments. At year end EURIBOR 6M was at 2.732% meaning that the interest caps compensate the increase of the EURIBOR 6M. Therefore, a change of 0.5% will only have impact on the unhedged part of the variable debt instruments. An additional 1% increase in EURIBOR 6M in the short term would result in an additional interest charge of EUR 2.066K on yearly basis. The Group has considered the change of EURIBOR of 0.5% and 1% on the unhedged part of the variable debt instrument in 2021 as immaterial.

4.2.5. Credit risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Credit risk arises from cash and cash equivalents held at banks, trade receivables, rental guarantees and derivatives.

Credit risk, or the risk of counter-parties defaulting, is inexistent on sales generated by restaurants, as payments are made in cash or by credit card. Revenue from franchisees is subject to credit risk, but franchise fee invoicing is closely monitored by management. Suspension of operating licenses is a possibility in case of debt default. Credit risk also includes guarantees given to landlords for rented restaurants and placed with financial institutions.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. The group has therefore concluded that the expected loss rates for trade receivables are a reasonable approximation of the loss rates for the contract assets.

The Group's credit exposure is represented by the aggregate balance of the trade and other receivables. See note 14 for more details. The aging of the trade receivables presented in the table hereunder.

Receivables from franchisees are examined by the Group on an individual basis and an expected credit loss has been recorded as at 31 December 2022 amounting to KEUR 5.898 (2021: KEUR 4.288). The concentration of credit risk is limited to the fact that the customer base is large and unrelated. The decrease in loss allowance is related to one franchisee. The Group considers the VAT receivables as fully recoverable.

No expected credit loss were calculated on other receivables given those are mainly related to grants from the German authorities to support businesses during the COVID 19 period.

The Group also has a credit exposure represented by cash and cash equivalents in the amount of KEUR 124.843 (2021: KEUR 137.179). The Group's cash and cash equivalents are with banks with investment grade rating.

Credit risk with respect to bank balances is considered limited due to the following credit ratings:

Liquidity risk

The investments made by the Group are illiquid in nature. The ability of the Group to liquidate its investments at attractive prices or appropriate times will depend on a number of factors that may be outside of the control of management. Management reviews the liquidity of the assets held within the Group to the current market conditions on a regular basis.

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close market positions. Due to the dynamic nature of the underlying businesses, management aims to maintain flexibility in funding by keeping sufficient cash available.

The table below provides a maturity of the Group's financial liabilities as at 31 December 2022 and 2021. The amounts disclosed in the table are the contracted undiscounted cash-flows including estimated interest payments. The difference with the primary statement is also due to the fact that in the primary statements the borrowings are measured at amortized cost and that lease liabilities presented as discounted values using the incremental borrowing rate as discount factor. The capitalized amortization cost amounts KEUR 5.207 as per 31 December 2022 (2021: KEUR 7.095) related to floating rate borrowings.

The floating rate borrowings for an amount of KEUR 639.203 are all linked to EURIBOR that can continue to be as reference rate. Therefore, the Group is not impacted by the IBOR reform.

4.3. Operational risks

The activities of the Group are highly labour intensive. The Group's profitability is affected by its ability to manage labour costs and its impact on profit margins. Attracting and retaining qualified managers and employees remains challenging and the inability to meet these challenges could require the Group to pay higher wages and/or incur additional costs associated with high employee turnover. In addition, increases in the minimum wage or labour regulations in the countries in which the Group operates could increase labour costs. Additional labour costs could adversely affect profit margins. The Group seeks to minimize the long-term trend toward higher wages through increases in labour efficiencies.

Food is the primary product of the Group therefore food safety is a top priority. The Group's reliance on third-party food suppliers and distributors increases the risk that food-borne illness incidents could be caused by factors outside its control and that multiple locations would be affected rather than a single restaurant. Any report or publicity linking the Group's brands in instances of food- borne illness or other food safety issues, including food tampering or contamination, could adversely affect its brands and reputation as well as the revenues and profits. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could result in disruptions in supply chain, significantly increase costs and/or lower margins.

The Group's revenues are heavily influenced by brand marketing and advertising. Poor marketing and advertising programs may lead to fail to attract new guests and to retain existing guests. The Group's results of operations could be materially and adversely affected.

The Group's franchise revenues are dependent on the Group's ability to maintain the Master Franchise Development Agreements ("MFDA") in the countries where it operates by opening restaurants, which, among others, allows the Group to charge a fee to franchisees. A potential loss of MFDA could result in a significant reduction of operating profits to the Group.

The Group's operations are dependent on well-functioning information systems, and an adequate information technology ("IT") infrastructure. Any IT deficiency could cause disruption in the financial reporting process and the collection and settlement process. It could also have a significant impact on the supply chain and result in suboptimal inventory management. As a result, IT deficiencies could dent profits.

4.4. Fair value hierarchy and valuation process

Some of the Group's assets and liabilities are measured at fair value for financial reporting purposes. The Board of Managers of the Company has set up a valuation committee to determine the appropriate valuation techniques and inputs for fair value measurements. The Group further adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. This required the disclosure of fair value measurements by level in the hierarchy as follows:

In estimating the fair value of an asset or a liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engages third party qualified valuers to perform the valuation. The valuation committee works closely with the qualified external valuers to establish the appropriate valuation techniques and inputs to the model.

The Group enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Interest rate swaps are valued using valuation techniques, which employ the use of market observable inputs. The most frequently applied valuation techniques include forward pricing and swap models using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies, currency basis spreads between the respective currencies, interest rate curves and forward rate curves of the underlying commodity. Some derivative contracts are fully cash collateralised, thereby eliminating both counterparty risk and the Group's own non-performance risk. As per balance sheet date, the mark-to-market value of other derivative asset positions is net of a credit valuation adjustment attributable to derivative counterparty default risk.

The fair values of the Group's interest-bearing loans and borrowings are determined by using the DCF method using discount rate that reflects the issuer's borrowing rate as at the end of the reporting period. The own non-performance risk as at 31 December 2022 was assessed to be insignificant.

Fair level 3 valuation derivates are measured in accordance to the valuation report received from the financial institution which are based on Black & Scholes valuation methodology, further information in note 4.4.1.

The main difference in borrowings with the primary statements are the capitalized financing expenses that are in debit of the liability (2022: KEUR 5.207; 2021 KEUR 7.095).

Movements of level 3 instruments have been presented below:

Level III Fair Value Measurements

Fair level 3 valuation derivates are measured in accordance to the valuation report received from the financial institution which are based on Black & Scholes valuation methodology.

The Fair Value of Not So Dark was performed by an external agency based on actual transaction data from June 2022 and by a careful analysis of available information regarding comparable transactions. In order to confirm that the transaction provided a good reference point for fair value, the external valuation agency analysed the market value of invested capital development of partly comparable listed companies and compared the data published for non-listed competitors of Not So Dark. The measurement of Fair Value is based on the number of shares and their price. The valuation is therefore subject only to the price risk which is described in Note 4.2.4.

Changes between Level 2 and Level 3 are analysed by the Group on a yearly basis.

4.4.1. VALUATION INPUT AND RELATIONSHIPS TO THE FAIR VALUE:

5. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In making estimates and assumptions, actual outcomes could differ from those assumption and estimates. The critical judgements that have been made in arriving at the amounts recognized in the Group's financial statements, and the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year are discussed below:

Critical accounting estimates and assumptions

5.1. Income taxes

The Group is subject to income taxes in Germany, Austria, France, Luxembourg, Switzerland, Italy, Belgium and Poland. Significant judgement is required in determining the total provisions for income and deferred taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax exposure based on estimates of whether additional taxes will be due and the tax rate applicable to timing differences. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income and deferred tax provisions in the period in which the determination is made.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies. A time horizon between 3 and 5 years is used during the assessment.

5.2. Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which goodwill has been allocated. The value in use calculation requires Management to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value. Where the actual future cash flows are lower than expected, a material impairment loss may arise. See note 7.1.

5.3. Employee benefits

The Group estimates the present value of defined benefit obligations based on a range of assumptions which may or may not be adjusted as market conditions or actual events develop.

5.4. Estimate of fair value

If a quoted market price is available for an instrument, the fair value is calculated based on the market price. When valuation parameters are not observable in the market or cannot be derived from observable market prices, the fair value is derived through analysis of other observable market data appropriate for each product and pricing models which use a mathematical methodology based on accepted financial theories.

The Group considers that the accounting estimates and assumptions related to valuation of financial instruments where quoted markets prices are not available is a key source of estimation uncertainty because: (a) they are highly susceptible to change from period to period because they require that Management make assumptions about interest rates, volatility, exchange rates, the credit rating of the counterpart, valuation adjustments and specific feature of the transactions and (b) the impact that recognising a change in the valuations would have on the assets reported in the consolidated statement of financial position as well as its income/(expense) could be material. Had Management used different assumptions regarding interest rates, volatility, exchange rates, credit rating of a counterparty, offer date and valuation adjustments, a larger or smaller change in the valuation of financial instruments where quoted market prices are not available would have resulted in a material impact on the Group's comprehensive income, for details please refer to note 4.4.1.

Critical judgements in applying the entity's accounting policies

5.5. Provision for impairment of franchisees and trade receivables

The Group uses a provision matrix to calculate ECLs for trade receivables. The provision rates are based on days past due.

The provision matrix is initially based on the Group's historical observed default rates. The Group will calibrate the matrix to adjust the historical credit loss experience with forward-looking information.

The assessment of the correlation between historical observed default rates, forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in circumstances and of forecast economic conditions. The Group's historical credit loss experience and forecast of economic conditions may also not be representative of customer's actual default in the future.

5.6. Depreciation and amortisation rates and residual values

The Group depreciates or amortises its assets over their estimated useful lives, as more fully described in the accounting policies for property, plant and equipment and intangible assets. The estimation of the useful lives of assets is based on historic performance as well as expectations about future use and therefore requires a significant degree of judgement to be applied by management. The actual lives of these assets can vary depending on a variety of factors, including technological innovation, product life cycles and maintenance programmes.

Significant judgement is applied by management when determining the residual values for property, plant and equipment and intangible assets.

5.7. Determining whether the loyalty points provide material rights to customers

The Group operates several loyalty points programmes, MyQuick, BK Coins and Be King which allows customers to accumulate points when they purchase products in the Group's restaurants. The points can be redeemed for free products, subject to a minimum number of points obtained. The Group assessed whether the loyalty points provide a material right to the customer that needs to be accounted for as a separate performance obligation.

The Group determined that the loyalty points provide a material right that the customer would not receive without entering into the contract. The free products the customer would receive by exercising the loyalty points do not reflect the stand-alone selling price that a customer without an existing relationship with the Group would pay for those products. The customers' right also accumulates as they purchase additional products.

5.8. Estimating the incremental borrowing rate

The Group cannot readily determine the interest rate implicit in the lease, therefore, it uses its incremental borrowing rate (IBR) to measure lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the Group 'would have to pay', which requires estimation when no observable rates are available (such as for subsidiaries that do not enter into financing transactions) or when they need to be adjusted to reflect the terms and conditions of the lease (for example, when leases are not in the subsidiary's functional currency). The Group estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates (such as the subsidiary's stand-alone credit rating).

5.9. 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 restaurants if the restaurant is profitable or has a significant marketing value due to the location 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).

6. GOODWILL

As at 31 December 2022, the carrying value of the goodwill amounted to KEUR 381.527 (2021: KEUR 442.810) and is composed of two different business combinations. A goodwill of KEUR 172 376 is related to the acquisition of the Seafood business in 2018. An additional goodwill of KEUR 270.434 is related to the goodwill recognized in 2020, of which KEUR 228 831 is allocated to the Burger business and KEUR 41.604 to the French tacos business which are considered as cash generating units 'CGU'. An impairment on goodwill on the Seafood business has been recognised as per 31 December 2022 for an amount of KEUR 59.422 (see disclosure 7.1). In addition with the sale of Burger King Poland in August 2022 the goodwill allocated to the Polish restaurants has been derecognised (KEUR 1.861).

Goodwill is monitored by management at the level of the 3 operational segments.

7. INTANGIBLE ASSETS

During the year the Group rolled out a new ERP system to replace the different accounting systems previously used. As result classification of some assets have been reviewed and harmonised resulting in reclassifications between intangible assets, between intangible assets and property, plant and equipment or within property, plant and equipment. In case of a reclassification, the carrying amount of the asset has been transferred.

Prior year addition of KEUR 10 of trade names relates to the legal fees to register Chick&Cheez brand.

7.1. Impairment testing on goodwill and other intangible assets

In accordance with IAS 36, the value of indefinite assets is subject to an annual impairment test. Based on the Group's business plan for the restaurants, including detailed sales and cost assumptions by individual restaurant, an impairment of KEUR 59.422 related to the Seafood business has been recognised in 2022, reflecting a recoverable amount of the Seafood segment of KEUR 238.276. Management assesses that the related risks and sensitivities are limited.

The carrying amount of goodwill and tradenames are allocated as follows:

During the year the Group rolled out a new ERP system to replace the different accounting systems previously used. As result classification of some assets have been reviewed and harmonised resulting in reclassifications between intangible assets, between intangible assets and property, plant and equipment or within property, plant and equipment. In case of a reclassification, the carrying amount of the asset has been transferred.

The Group performed an impairment test on (i) the goodwill resulting from the acquisition of the Burger, the French tacos and the Seafood business, (ii) the perpetual brand license and (iii) the value of the franchise agreements recognized as part of the purchase price allocation based on a detailed business plan.

For impairment testing, the goodwill, the tradenames and the value of the acquired franchise agreements (customer relations) are allocated to the respective brand network.

The business plan, covering the 4 years period from 2023 to 2026 has been prepared bottom up by restaurant and contains detailed assumptions on sales and costs by individual restaurant and for the overhead.

No reasonably possible change in a key assumption will trigger an impairment of the Burger and Tacos Segment.

Key assumptions 2022:

^(*) : The decrease in Seafood is due to the conversion impact from company operated restaurant into franchisee restaurants

Management has determined the values assigned to each of the above key assumptions as follows:

Sensitivity of the impairment model on the enterprise value:

A change in long term growth rate of 0,5% has MEUR 6, MEUR 18 and MEUR 6.5 impacton respectively the French tacos, Burger and Seafood.

A change in discount factor of 0,5% has MEUR 9.5, MEUR 41 and MEUR 9.5 impact on respectively the French tacos, Burger and Seafood.

A change in terminal EBITDA margin of 5% has MEUR 7.5, MEUR 95.5 and MEUR 27 impact on respectively the French tacos, Burger and Seafood.

Key assumptions 2021:

^(*) : The decrease in Seafood is due to the conversion impact from company operated restaurant into franchisee restaurants

Based on the forecasted free cash flows generated by the three business CGU's over the period from 2023 to 2026 and the estimated value of the CGU's as at 31 December 2026 the Board of Managers of the General Partner considers that no impairment is needed to the goodwill and intangible assets resulting allocated to the CGU's Burger and French tacos however an impairment of KEUR 59.422 was required on the Seafood CGU.

Management, supported by reports from external tier one valuation experts, have considered and assessed reasonably possible changes for other key assumptions and have not identified any instances that could cause the carrying amount of the various segments to exceed their recoverable amount.

8. PROPERTY, PLANT AND EQUIPMENT

During the year the Group rolled out a new ERP system to replace the different accounting systems previously used. As a result the classification of some assets have been reviewed and harmonised resulting in reclassifications between intangible assets, between intangible assets and property, plant and equipment or within property, plant and equipment. In case of a reclassification, the carrying amount of the asset has been transferred.

As at 31 December 2022, the Group considered additional impairments on a number of restaurants for an amount of KEUR 1.458 and impairments were reversed for KEUR 993 resulting in a net additional impairment charge of KEUR 465. As at 31 December 2021, the Group considered a reversal of impairment on a number of restaurants for an amount of KEUR 846.

Management performed a sensitivity analysis and considered changes in assumptions underpinning the valuation, including the growth and discount rates. On the basis of the present value of the future cash flows expected to be derived from the continuing use of the assets of these sites, management concluded that an impairment loss should be recorded. The net present value was based on a weighted average of a pre-IFRS 16 tax discount rate of 7-10% (depending of the entity) and the incremental borrowing rate of 2.55 p.p. and the cash flow projections covered the period up to end of 2026.

As at 31 December 2022, 35 restaurants (2021: 29) were impaired mainly in Germany (15), Austria (3), Belgium (13), Luxembourg (2), Italy (2) for an aggregate amount of KEUR 12,460 (2021: KEUR 13,566).

Amortization charges on customer relations (note 7) are presented under head office expenses.

The amount of capital commitments as per 31 December 2022 is KEUR 3,486 and 31 December 2021 is KEUR 1,368.

9. RIGHT OF USE

In 2022 an impairment charge of KEUR 6,408 (2021: 10,899) has been recognised on the right of use assets related to restaurant rent contracts in Germany and Austria. An impairment has been reversed for KEUR 929 (2021: 1,228) mainly in Belgium.

10. INTEREST IN A JOINT VENTURE AND INTEREST IN ASSOCIATES

As at 31 December 2022, entities accounted for in accordance with the equity method relate to :

As at 31 December 2022, the share in net equity value of these investments amounts to KEUR 1.193 (2021: KEUR 967).

The figures indicated below are local GAAP however the variance with IFRS is immaterial on the equity value.

Summarized financial information for joint ventures

11. DERIVATIVE FINANCIAL INSTRUMENTS

Rabobank interest caps

The fair value of derivatives is derived from unobservable market data (level 3). These forecasts incorporate the expected EURIBOR 3M and EURIBOR 6M rate at different points in time. The net present value of the derivatives was thus derived from the expected (fixed) cash flows on the interest cap. The term sheets provide for periodic payments on the interest cap.

As at 31 December 2022, the Group has the following derivatives. The total fair value is KEUR 5,108 (2021: KEUR 62):

The difference between the gain on derivatives of KEUR 5,046 (movement between KEUR 62 in 2021 and KEUR 5,108 in 2022) and the net gain on derivatives (4,082) disclosed under Note 28 is due to the fixed amount payment of the IRS for KEUR 964.

Embedded derivative

With the issuance of a convertible bond (see further in note 17 under the caption JP Morgan) of EUR 85 million a net derivative liability for an estimated amount of KEUR 13 487 (2021: KEUR 2,982) was recognized by the Group. The amount is composed of a conversion option for KEUR 13,987 (liability derivative) and an early redemption option for KEUR 500 (asset derivative) combined in one embedded derivative.

12. OTHER NON-CURRENT FINANCIAL ASSETS AND OTHER CURRENT ASSETS

Other non-current assets KEUR 30.758 (2021 : KEUR 22.992) are composed of long-term lease receivables for restaurants for an amount of KEUR 10.700 (2021: KEUR 13.031), for investments in non-consolidated companies measured at fair value (Not So Dark for KEUR 19.100 (2021 : KEUR 8.499) ; French Chips KEUR 26 (2021: 26)) and cash deposits and guarantees (predominantly related to land lease arrangements) of KEUR 930 (2021: 1.463). The decrease of the latter is mainly due to the carve out of Polish operations.

The change in fair value of Not So Dark is presented under financial income (note 28). The valuation was performed by an external agency. Additional details are presented in notes 4 and 11.

The current portion of lease receivables presented under current financial assets amounts to KEUR 3.200 (2021 : KEUR 3.845)

13. INVENTORIES

An impairment loss had to be recognized for inventories during the year ended 31 December 2022 for KEUR 4 (2021: nihil) as result of the closure of a restaurant.

14. TRADE AND OTHER RECEIVABLES

Trade and other receivables are all current. Given the short-term maturity of trade and other receivables, their carrying amounts approximate fair value as the impact of discounting is not significant. Government grants are related to Austrian and German authorities as support measure related to COVID-19.

15. SHARE CAPITAL

The Company has been incorporated with a subscribed share capital of EUR 30.000,20 represented by 10 common voting Class B shares, 10 common voting Class C shares, each with a nominal value of EUR 0,01 and one management share, having a nominal value of EUR 30.000,00, all fully paid up. Each share Class has the same characteristics and rights except those described in the articles of association of the Company, and especially those related to the maximum amount of authorized capital and the distribution of net income between investors. The articles of association also include clauses on lock-up period of 5 years, drag- along, tag-along and pre-emption rights on the shares issued by the Company.

On 5 November 2018, the General Partner decided to increase the share capital of the Company by an amount of EUR 12.983,11 so as to raise the share capital from an amount of EUR 30.000,20 to an amount of EUR 42.983,31 by the issuance without the reservation of any preferential rights of 472.311 Class A1 shares and 826.000 Class A2 shares having a nominal value of EUR 0,01 each, together with a share premium in an aggregate amount of EUR 125.198.915,31.

As at 31 December 2019, the subscribed and issued share capital amounted to EUR 42 983,31 and was divided into 472.311 Class A1 shares, 826.000 Class A2 shares, 10 Class B common voting shares, 10 Class C common voting shares, each having a nominal value of EUR 0,01, and 1 Management Share with a nominal value of EUR 30 000,00, having the same characteristics and rights save as to those differences outlined in the Articles of Association and each being fully paid up.

Following the extraordinary general meeting dated 11 February 2020, the existing common voting class B shares and the class C shares of EUR 0,01 each has been converted into 1.000.000 common class B shares and common class C shares with a nominal value of EUR 1/10.000.000 each.

On the same date the capital of the Company was increased for a total amount of KEUR 439.462 being allocated to share capital account the amount of EUR 31.710,74 representing 3.171.074 Class A1 shares with a nominal value of EUR 0,01 and to the share premium account the amount of KEUR 439.431. This capital contribution was paid in kind by transfer of shares in Gripinvest S.a.r.l., KC Next QSR S.C.A. and O'Tacos Holding SAS. The difference between the consolidated share premium and the share premium reported in the statutory financial statements is due to the fact that in the statutory financial statements the share premium is based on the contribution in kind report where for consolidation the fair value of the contribution has been used in accordance to IFRS 3.

On the same date 939.165 class A1 shares and 718.000 class A2 shares were converted into A3 shares for a total of 1.657.165 class A3 shares. Simultaneously 1.530.445 class A3 shares were repurchased for a total amount of EUR 211.966.632,50 (which includes the repurchase of 217.744 class D shares) which left a total of 126.720 class A3 shares in the share capital. As a consequence, the share capital has been reduced by EUR 15.304,47 to the final amount as at year-end of EUR 59.389,58 and the share premium account has been reduced by an amount of EUR 211.951.328,03. Furthermore, 217.744 class B shares were converted into class D shares at a total price of EUR 0,02 and were repurchased leaving a total of 782.256 class B shares.

As at 31 December 2020, the subscribed and issued share capital amounts to EUR 59 389,58 fully paid up.

On 24 December 2021, the capital of the Company was increased for a total amount of EUR 37,220,905.50 by way of issuance of 268,743 class A3 shares having a nominal value of EUR 0,01 and a subscription price of EUR 138.5 per share. This capital contribution was paid in kind by conversion of convertible bonds issued in 2020 and in 2021 and their accrued and unpaid interest as at conversion date.

As a result, the share capital has been increased by EUR 2.687,43 to the final amount as at year end of EUR 62.077,01 and the share premium account has been increased by an amount of EUR 37.218.218,07.

The equity shares of the Company as at 31 December are as follows:

16. NON-CONTROLLING INTERESTS

During the financial year ended 31 December 2022, the non-controlling interests were allocated a total comprehensive loss in the amount of KEUR (631) (2021: EUR (296)).

Set out below is summarized financial information for each subsidiary that have non-controlling interests that are material to the Group. The amounts disclosed below are before inter-company eliminations. Amounts in KEUR.

17. BORROWINGS

Facility Loans

With the repayment of the COVID 19 loan during 2021 by BKSEE AG there is no unused credit facility as at 31 December 2022 nor as at 31 December 2021.

In February 2020, QSR Finco S.a r.l. and its new sole shareholder entered into a new external financing agreement with Ares Management Limited for an amount of EUR 465 million. The facility, with a maturity of 6 years, is bearing an interest rate of EURIBOR 6M with a floor at 0.5% plus a variable margin based on leverage level which is currently at 7.00% per annum to refinance the debt structure of the Group. The refinance was used to repay the current loan of Burger Brands Belgium SA, to refinance the 'Bismark loan' at the KC North Sea II level and to finance the acguisition of the non-controlling interest of O'Tacos Holding SAS. Due to debt leverage ratio the interest rate increased to be 7.50% at the end of 2020. Interest on the loan were paid for the maturity dates of September 2021, March 2022, September 2022 and March 2023.

Precedent to the utilisation of the facility the shares of QSR Platform S.à.r.l. have been pledge for the entire amount of issued share capital. In addition, company's shares and trade receivables of QSR Platform S.à.r.l., QSR Finco S.a.r.l. (previously KC North Sea II S.à.r.l.) and of the significant of the operational entities (see note 3 for the list of operational entities) have been pledged. The bank account for those companies are secured however not restricted for the facility. The off-balance sheet pledge has been increased to the amount of the new facility.

The carrying amounts of the receivable pledged as security amounts KEUR 16.070 (2021: KEUR 20 972), the carrying amount of the pledged bank accounts was KEUR 112.104 (2021: KEUR 126 250).

The Group has compliance requirements at each quarter end in respect of senior adjusted leverage, minimum EBITDA cover and minimal cash level of EUR 30 million. On November 17th 2020 a waiver from Ares was obtained to cope with the extraordinary COVID 19 situation for the periods ending 30 September 2020, 31 December 2020, 31 March 2021 and 30 June 2021. In addition, the senior adjusted leverage that shall not be exceeded for the periods 30 September 2021, 31 December 2021, 31 March 2022 and 30 June 2022 have been increased. On March 31s1, 2023 the Group has agreed with Ares for all quarter end periods in 2023, 2024 and thereafter a senior adjusted leverage covenant reset which reflects a less aggressive stepdown in covenant than agreed on November 17th, 2020.

The Group complied with all financial covenants in 2021, 2022 and 2023 so far.

The current portion being the accrued interest amounts KEUR 16.571 (2021: KEUR 16.278), the non-current portion amounts is nihil (2021 : nihil). The difference on the long term with the notional amount of EUR 465 million are the unamortized financing expenses (KEUR 5.207 ) and capitalized PIK interest KEUR 5.944.

Banca Popolare Loan

The facilities located in Italy are related to facilities that were part of the acquired balance sheet. On 12 December 2016, the acquired Burger segment as Borrower entered a first bank loan agreement with Banca Popolare di Milano as Lender (the "BPM First Loan") whereby it was granted an amount of KEUR 2 600. The BPM First Loan is repayable within 7 years and bears interest of EURIBOR 3M + 210 bps with a floor of nil for EURIBOR. The loan is guaranteed by the underlying asset which was given to the bank as security.

On 23 May 2017, the acquired Burger segment as Borrower entered a second bank loan agreement with Banca Popolare di Milano as Lender (the "BPM Second Loan") whereby it was granted an amount of KEUR 2.150. The BPM Second Loan is repayable within 7 years and bears interest of EURIBOR 3M + 195 bps with a floor of nil for EURIBOR. The loan is guaranteed by the underlying asset which was given to the bank as security.

The outstanding notional amount as per 31 December 2022 is KEUR 1.779 (2021: KEUR 2.518)

The breakdown of the bank borrowings based on maturity is disclosed in 4.2.3.

On 27 November 2020 the Group entered into a Servizi Assicurativi del Commercio Estero (SACE) supported loan of KEUR 5.000 with maturity on 30 December 2025, EURIBOR 3M + 190 bps with a floor of nil for EURIBOR. The outstanding amount as per 31 December 2022 is KEUR 3 649 (2021 : KEUR 4.648)

The carrying amount of bank borrowings approximates its discounted value and fair value due to its marked to market floating interest rate (EURIBOR).

-Previous shareholders OTacos

O'Tacos Holding SAS had a redeemable preference shares with some of the founders of the brand of for an amount of EUR 20 million. The loan is bearing with a return of 10%, payable on a semi-annual basis conditional to the French dividend distribution limitation. The instrument is embedded with a call/put option than can be exercised by both parties to be repaid in cash during the second quarter of 2021 or in case of an event of default to specific financial and/or non-financial conditions. In 2021 several founder shareholders of O'Tacos exercised the put option on their loans for an amount of EUR 15 million. An amount of EUR 6.75 million and EUR 8.25 million has been acquired by Burger Brands Belgium respectively in 2021 and 2022. EUR 5 million is still owned by QSRP Holding.

Shareholder loan

In December 2020 the Company Board approved the issuance of up to EUR 50 million of convertible bonds with a maturity of 6 years. The loan is bearing with an interest rate of 10%. At 31st December 2020 an amount of KEUR 31 100 was subscribed by the shareholders of which KEUR 23 500 were collected in 2020. The remaining amount was collected shortly after year-end. During the year 2021 an additional subscription of KEUR 2 800 was issued and collected. On 12th December 2021 the bonds were converted in equity (see note 15 above) including an amount of KEUR 3 321 of accrued interest.

JP Morgan

On 10th December 2021 the General Partner approved the issuance of upto EUR 85 million of convertible bonds due in 2025. The loan is bearing an interest rate of 11.5% and includes an embedded derivative composed of two elements with a combined value at KEUR 13 487 (2021 : KEUR 2 982), being (i) the option to convert the bond into equity valued at KEUR 13 987 (2021 : KEUR 9 732) (liability derivative) and (ii) the early redemption option (asset derivative) for an amount of KEUR 500 (2021 : KEUR 6 570). Therefore the value of the host debt is KEUR 82 018 (2021 : KEUR 82 018). The valuation took into account a volatility of the underlying equity of 50%. As per year-end 2022 the accrued interest amounts to KEUR 10 364 (2021 : KEUR 589). The transaction expenses related to the issuance of the bond were immaterial.

18. LEASES LIABILITIES

Some property leases contain variable payment terms that are linked to sales generated from a restaurant.

19. PROVISIONS

Provisions for litigations

Provisions for litigations mainly relate to legal fees and similar expenses incurred in collection disputes as well as a dispute concerning a possible increase in rent. They reflect the best estimate of the amount the Group expects to disburse and are based on external assessments.

Others

Other long-term provisions mainly relate to the dismantling obligation of stores at the end of the lease contract KEUR 7,092 which remains stable compared to 2021 (KEUR 7,238).

Other short-term provision regard the ancillary lease costs of the stores KEUR 3,065 (2021: KEUR 2,705).

The payments for the short terms provision will most probably be executed gradually over the next 12 months.

20. EMPLOYEE BENEFITS

As at 31 December 2022, the Group employed 5,196 staff (2021: 5,088), of which 4,827 (2021: 4,717) are active in restaurants.

The long-term employee benefits amount to KEUR 79,005 at year-end 2022 (2021: KEUR 92,432) and predominantly relate to defined benefit plans in Germany (2022: KEUR 59,576; 2021: KEUR 82,597) and a long-term incentive plan, also referred to as Shadow Equity Plan (note 35), in the BKSEE Zug branch in Switzerland.

The significant decrease of the liability in Germany is predominantly driven by the increase in interest rates. The increase in the long term benefits in Switzerland is mainly driven by the vesting of existing phantom shares and new phantom shares being granted to senior executives who joined the Group in the course of 2022.

The details of the main defined benefit plans are further disclosed below.

Long term benefits per country:

Seafood

Nordsee has set up a defined benefit plan with several insurance companies for employees in the event of retirement for employees that were part of the payroll before March 31, 2002. The retirement plan provides for a pension entitlement based on final salary, on which the pension fund benefits are calculated. Furthermore, there are employees who have a pension entitlement due to individual commitments.

The defined benefit plan includes the affiliation of the employee, with no distinction between the age of exit for men and women. Salary increases are also part of the computation. In the event of the death of the beneficiary, payments are made to the surviving dependents.

The Austrian subsidiary has a defined benefit pension commitment for a limited group of people, the amount regarding retirement is fixed. This obligation is usually covered by the VBV pension fund.

Burger and headquarter

The Group offers post-employment benefits in the form of a defined contribution plan, covering management as well as staff in Belgium. The employer contribution amounts to 7% at management level and 3% at staff level and are considered to be defined benefit plan given the legal minimum guaranteed return.

In Italy the legal 'TFR' (Trattamento di Fine Rapporto) plan is granted to employees.