(all figures in EUR millions unless stated otherwise)
AMREST Annual Accounts and Directors’ Report 10
for the year ended 31 December 2021
2. Basis of preparation
True and fair view
The Annual Accounts for 2021 have been prepared on the basis of the accounting records of AmRest Holdings SE by the
Company’s Board of Directors in accordance with current commercial legislation and with the rules established in the
General Accounting Plan approved by Royal Decree 1514/2007 and the modifications incorporated thereto, the last being
those incorporated by Royal Decree 1/2021, of 12 December, effective for fiscal years beginning on or after January 1,
2021, in order to give a true and fair view of the Company’s equity and financial position as of 31 December 2021 and
results of operations, changes in equity and cash flows for the year then ended 31 December 2021.
Critical aspects of the valuation and estimation of relevant uncertainties and judgments used in the application
of accounting principles.
In late 2019 a novel strain of coronavirus, COVID-19, was first detected and in March 2020, the World Health
Organization declared COVID-19 a global pandemic. Throughout 2020 and in 2021 COVID-19 has spread throughout
globally, including the countries where the subsidiaries of the Company operates. Most governments have been
implementing restrictions to reduce the spread of COVID-19. With the approvals of first vaccines at the end of 2020, the
governments deployed and started carrying out mass vaccination programs in 2021.
Visible results of the COVID-19 outbreak include the decrease in demand, the disruption or slowdown of supply chains
and an increase in economic uncertainty, increase of volatility in the price of assets, exchange rates. Possible results of
the pandemic include changes in the market environment, peoples behaviors and ways of living.
The Company is adapting to new local sanitary regulations, developing, and executing safety measures to protect
employees. The Company and its subsidiaries continues adapting the business model and sales channels, as well, the
quality of the services offered, that result in steady increase in sales levels.
The new variants of COVID-19 that have emerged during the year have had a lesser impact in the main economies
where the Company and its subsidiaries operates thanks to the progress in vaccination levels, which have enabled the
spread of the virus to be contained and the restrictions imposed by governments to be gradually relaxed, thus facilitating
greater mobility and social interaction. However, the evolution and impact has been uneven by geographic areas.
This gradual reopening of economies was reflected in the upward trend in AmRest's revenues and reflected in the higher
number of restaurants in operation from its subsidiaries, which stood at 99% at the end of 2021, compared to 92% at the
end of 2020. The sales performance of the Group controlled by the Company is also the result of the transformation work
being carried out in the Group, developing economies of scale thanks to the adoption of new distribution channels where
AmRest aims to offer its guests the same consumer experiences regardless of the distribution channel selected.
The Company maintains close communication with its financing banks and bondholders. In December 2021, after
assessing different funding alternatives, the Company has decided to sign an amendment to the existing credit facilities
and to extend the maturities. Based on the extended agreement, the repayments are scheduled on each 30 September
anniversary of the next three years and the remaining amount on 31 December 2024.
Based on the available information, facts, circumstances and uncertainties about the future, the Board of Directors have
prepared this standalone financial statements, under going concern principle.
The preparation of the Annual Accounts requires the Company to use certain estimates and judgments regarding the
future that are continually evaluated and based on historical experience and other factors, including expectations of future
events that are believed to be reasonable, under the circumstances.
The estimates and judgments more complex or with a higher impact in the carrying amounts of the assets and liabilities
are related to:
-The recoverability of the investments, and the corresponding valuation adjustments for the difference between the book
value and the recoverable amount. In the determination of the impairment estimate of these investments (always that
there are impairment evidences), the future cash flows expected to be generated by the investees are taken into account
using hypotheses based on the existing market conditions).
-Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation
model, which depends on the terms and conditions of the grant. This estimate also requires determination of the most
appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and
making assumptions about them.
For the measurement of the fair value of equity-settled transactions with employees at the grant date, the Company uses
a finite difference method. The assumptions and models used for estimating fair value for share-based payment
transactions are disclosed.