Company Registration Number: C95118
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements
31 December 2021
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Financial Statements - 31 December 2021
Contents Pages
Directors’ Report1 – 6
Corporate Governance - Statement of Compliance 7 –11
Consolidated Statement of Profit or Loss and Other Comprehensive Income 12
Consolidated Statement of Financial Position 13 – 14
Consolidated Statement of Changes in Equity 15 – 17
ConsolidatedStatement of Cash Flows 18 – 19
Notes to the Consolidated Financial Statements 20–59
Independent Auditor’s Report60– 66
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
1
Directors’ Report
The directors present their annual report and the audited consolidated financial statements of the Group
and the Company for the year ended 31 December 2021.
Principal activities
Review of the business
The Group continued its tradingoperations during the year and has reported positive results. The level of
business and the Group’s financial position remain satisfactory, and the directors expect that the present
level of activity will beimproved in the foreseeable future. During the year the Group took over the
operations of two new pharmacies which continued to consolidate it’s financial position. During the year
ending 31 December 2021, the pharmacy licences were revalued as at 31 December 2021 with a
revaluation gain through other comprehensive income of €11,184,485 (2020: revaluation loss of
€2,364,761).
The Company continued to be consistent with last year’s financial performance as it has registered a profit
before tax of €2,329,188 (2020: €1,234,644). The Company’s financial position remain satisfactory, and
the directors expect that the present level of activity will beimproved in the foreseeable future. During the
year, the Company successfully issued a €13,000,000 3.9% unsecured bond. A portion of the proceeds of
such bond were mainly advanced to one of its subsidiaries, Brown’s Pharma Limited,which were in turn
used to repay the bank facilities and topart finance various capital projectsof such subsidiary. The rest of
the proceeds are held by a Trustee and will be drawn down against the presentation of agreements,
requests for payments and/or invoices in relation of future purchase of new pharmacy licences and
refurbishment of existing pharmacies.
Results and dividends
The consolidated and separate statement of profit or loss and other comprehensive income is set out on
page 12. As at 31 December 2021, the Company’s directors proposed a final gross dividend of €2,123,058
to the ordinary shareholders. These dividends are being declared out of taxable profits resulting in a total
net dividend to the ordinary shareholders of €1,379,988, equivalent to €0.07 per share. Net dividends to
the ordinary shareholders with respect to the period end 31 December 2020 amounted to €798,244,
equivalent to €0.04 per share.
Post balance sheet events
There were no adjusting or other significant non-adjusting events between the end of the reporting period
and the date of authorisation by the Board of Directors.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
2
Directors’ Report –continued
Directors
The directors of the Companywho held office during the year ended 31 December 2021 and as at the date
of this report are:
Mr. Benjamin Muscat (Chairman)
Mr Alexander Fenech (Retail Director)
Mr. Joseph Caruana
Mr Robert Spiteri
Mr. Paul Camilleri
Mr. Jean-Pierre Miceli
Mr. Joseph Caruana
Mr. Mark Grech (appointed on 18 January 2021)
In accordance with the Group’s Articles of Association, the present directors shall remain in office.
Statement of directors’ responsibilities
The directors are required by the Companies Act,1995 to prepare consolidated financial statements which
give a true and fair view of the state of affairs of the Group and the Company as at the end of each financial
period and of the profit or loss for that period.
In preparing the consolidated and separate financial statements, the directors are responsible for ensuring
that:
•appropriate accounting policies have been consistently applied and supported by reasonable and
prudent judgments and estimates;
•the consolidated and separate financial statements have been drawn up in accordance with
International Financial Reporting Standards as adopted by the European Union;
•the consolidated and separate financial statements are prepared on the going concern basis unless it
is inappropriate to presume that the Group and the Company will continue in business as a going
concern.
The Board of Directors are also responsible for keeping proper accounting records which disclose with
reasonable accuracy at any time the financial position of the Group and the Company and to enable them
to ensure that the consolidated financial statements comply with the Companies Act, 1995. This
responsibility includes designing, implementing, and maintaining such internalcontrols, as the Board of
Directors determines the necessary procedures toenable the preparation of the consolidation and
separate financial statements that are free from material misstatement, whether due to fraud or error. They
are also responsible for safeguarding the assets of the Group and the Company, and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
3
Directors’ Report –continued
Statement of directors’ responsibilities– continued
The financial statements of Brown’s Pharma Holdings plc, for the year ended 31 December 2021 are
included in the Annual Report 2021 which is published in iXBRL format, in line with the ESEF
requirements, and are made available on the Group’s website. In view of their responsibility for the controls
over, and the security of, the website, the Board of Directors are responsible for the maintenance and
integrity of the Annual Report on the website. Access to information published on the Group’swebsite is
available in other countries and jurisdictions, where legislation governing the preparation and
dissemination of financial statements may differ from requirements or practice in Malta .
Financial reporting framework
The directors have resolved to prepare the Group’s consolidated financial statements and the Company’s
separate financial statements for the year ended 31 December 2021 in accordance with International
Financial Reporting Standards as adopted by the European Union.
Disclosures in terms of the Capital Market Rules
Pursuant to the Capital Market Rule 5.62
Going Concern
The Directors, as required by Listing Rule 5.62 have considered the Group’s and Company’s operational
performance, the statements of financial position as at year end as well as the business plans for the
coming year, and declare that they have a reasonable expectation that the Group and theCompany have
adequate resources to continue in operational existence for the foreseeable future. For this reason, in
preparing theconsolidated financial statements, the Group and the Company are in a position to continue
operating as a going concern for the foreseeable future.
Pursuant to the Capital Market Rule 5.64
Share capital structure
The Group’s and the Company’s authorisedand issued share capital amounts to €14,662,916 Ordinary “A”
shares of €1 each and €5,432,270 Ordinary “B” shares of €1 each. Class ‘A’ shares have the right to
appoint 1 director whoshall have 2.5votes each in meetings of the Board of Directors. Class ‘A’ and ‘B’
share shall, together, beentitled to appoint 3 directors to the Board of Directors of the Group and the
Company who shall have 1 vote each in meetings of the Board of Directors. Each holder of ‘B’ shares shall
have the right to appoint 1director to the Board of Directors of theGroup who shall have1vote each in
meetings of the Board of Directors. Except as otherwise provided, all ordinary shares irrespectiveof class,
shall rank equally in all respects, including without limitation, equal participation in profits distributed by the
Group and the Company and equal rights upon distribution of the Group’s and Company’s assets upon its
winding up. Each ordinary share shall entitle the holder to 1 vote at each general meeting. No restrictions
apply to the transfer of shares.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
4
Directors’ Report –continued
Disclosures in terms of the Capital Market Rules– continued
Pursuant to the Capital Market Rule 5.64 – continued
Holding in excess of 5% of the Share Capital
On the basis of the information available to the Company as at 31 December 2021, 13i Limited and N&N
Investments Limited held 7,331,458 shares each, whichis equivalent to 36.5% each of the Company’s
authorized and issued share capital, whilst Elka Investments Limited and JLMX Investments Limited held
2,711,635 shares each, which is equivalent to 13% each of the Company’s authorized and issued share
capital.
Appointment and Replacement of Directors
Board members are appointed every 1 years and are eligible for re-appointment at the Annual General
Meeting. All Directors shall retire from office, at least, once every three (3) years but shall be eligible for re-
election
Board Member Powers
The powers of the Board members are contained in Article 54 of the Company’s Articles of Association.
Contracts with Board Members and Employees
The Company has no agreements between the Company and the Directors of the Company’s Board or
employees providing for compensation on termination or cessation of their office for any reason
whatsoever.
It is hereby declared that as at 31 December 2021, information required under Capital Market Rules 5.64.4,
5.64.5, 5.64.6, 5.64.7 and 5.64.10 are not applicable to the Company.
Pursuant to the Capital Market Rule 5.68
We confirm that to the best of our knowledge:
a)The consolidated and separate financial statements give a true and fair view of the consolidated and
separate financial position of the Group and the Company as at 31 December 2021, and of its
consolidated and separate financial performance and its cashflows for the year then ended in
accordance with International Financial Reporting Standards as adopted by the EU.
b)The annual report includes a fair review of the development and performance of the business and the
position of the Group and the Company, together with a description of the principal risks and
uncertainties that the Group and the Company faces.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
5
Directors’ Report –continued
Disclosures in terms of the Capital Market Rules– continued
Pursuant to the Capital Market Rule 5.70
There were no material contracts in relation to which a Director of the Group and the Company was directly
or indirectly interested.
Pursuant to the Capital Market Rule 5.70.2
Up until 2 March 2021, the Company secretary was Mr. Richard Deschrijver with a registered office at ‘St.
Paul’, Triq Hal-Tartarni, Dingli, Malta.As from 2March 2021, the Company secretary is Mr. Jean Carl
Farrugia and the registered office is 32, Triq Santa Margerita, Siggiewi, Malta.
Disclosure of information to auditors
At the date of making this report the Board of Directors confirm the following:
a)As far as each director is aware, there is no relevant information needed by the independent auditor in
connection with preparing the audit report of which the independent auditor is unaware, and
b)Each director has taken all steps that they ought to have taken as directors in order to make themselves
aware of any relevant information needed by the independent auditor in connection with preparing the
audit report and to establish that the independent auditor is aware of that information.
Effects of the Covid-19 pandemic
Following the outbreak of the Covid-19 pandemic, the Board of Directors have continued to actively monitor
all developments currently taking place in Malta totake any immediate action to safeguard the interest of
the Group and the Company as changes in the business environment become more evident. Such events
might have an impact on the performance and financial position of the Group and the Company in the future
due to any effects that this pandemic is having on the economy and the industry in which the Group and the
Company operates.
The results for the current year show that the Group and the Company has achieved satisfactory results.
Whilst the situation remains extremely fluid and future events may have an adverse effectonthe Group’s
and the Company’s profitability in the medium to longer term, as well as its liquidity and financial position,
the outlook remains cautiously optimistic.
Despite the Group and the Company challenges faced during the peak of Covid-19 pandemic in 2021, the
management of the Group and the Company have well-handled these challenges and the Group and the
Company has continued its operations normally during the pandemic months.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
6
Directors’ Report –continued
Principle risks and uncertainties faced by the Group and the Company
The Board as a whole, including the Audit Committee members, considers the nature and extent of the risk
management framework and risk profile that is acceptable to the Board of Directors. The Audit Committee
regularly reviews the work carried out and ensures that any weaknesses identified are remedied so as not
to pose a risk to the Group and the Company.
The Group has established strategic relationships with key suppliers. These relationships support the
Group’s products and services offered and sales activities in general. There is no guarantee that the Group
will be able to maintain these alliances, enter into further alliances or that existing suppliers will not enter
into relationships with the Group’s competitors. The loss of any of these relationships could have a material
adverse effect on the Group’s business, results of operations and financial condition.
Auditor
The auditor, Equis Assurance Limited, has intimated its willingness to continue in office and aresolution to
reappoint them as auditor of the Group and the Company will beproposed at the forthcoming Annual
General Meeting.
Registered address:
The registered office of the Group and the Company is Brown’s Pharmacies, Triq l-Industrija, Qormi, Malta .
Signed on behalf of the Group’s and the Company’s Board of Directors on 27 April 2022 by Mr. Benjamin
Muscat (Chairman), Mr. Alexander Fenech (Retail Director) and Mr. Paul Camilleri (Director) as perthe
Director’s Declarationon ESEF Annual Financial Report submitted in conjunction with the Annual Report
and Accounts 2021
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
7
Corporate Governance - Statement of Compliance
The Capital Market Rules issued by the Malta Financial Services Authority, require listed companies to
observe The Code of Principles of Good Corporate Governance (the "Code"). Although the adoption of the
Code is not obligatory, Listed Companies are required to include, intheir Annual Report, a Directors'
Statement of Compliance which deals with the extent to which Brown’s Pharma Holdings plc (the
‘Company’) has adopted the Code of Principles of Good Corporate Governance and the effective measures
that the Company has taken to ensure compliance with the Code, accompanied by a report of the auditors
thereon.
Compliance
The Company’s Board of Directors (the "Board") believe inthe adoption of the Codeand has endorsed
them except where the size and/or circumstances of the Company are deemed by the Board not to warrant
the implementation of specific recommendations. In this context, it is relevant to note that the Company has
issued bonds to the public and has no employees. Accordingly, some of the provisions of the Code are not
applicable whilst others are applicable to a limited extent.
The Board
The Board of Directors is responsible for devising a strategy, setting policies and the management of the
Company. It is also responsible for reviewing internal control procedures, financial performance and
business risks facing the Company. The Board is also responsible for decisions relating to the redemption
of the Bond, and for monitoring that its operations are in conformity with the Prospectus and all relevant
rules and regulations.
Throughout the year under review, the Board regularly reviewed management performance. The Company
has in place systems whereby the directors obtain timely information from the Retail Director, not only at
meetings of the Board but at regular intervals or when the need arises.
Chairperson and Chief Executive Officer
The Chairperson's main functionis to lead the board, set the agenda and ensure that all board members
partake in discussions of complex and contentious issues.
The Company did not appoint any Chief Executive Officer; however, the day-to-day operations of the Group
is under the responsibility of the Retail Director.
Complement of the Board
The Board is composed of one executive and six non-executive directors, as listed below. The directors
were appointed on 25 November 2020, the date of incorporation of the Company, while Mark Grech, was
appointed on 18 January 2021. All directors have been reappointed to their posts on a three-yearly basis.
Executive Director
Alexander Fenech (Retail Director)
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
8
Corporate Governance - Statement of Compliance – continued
Complement of the Board – continued
Non-Independent Non-Executive Directors
Robert Spiteri
Paul Camilleri
Jean-Pierre Micelli
Independent Non-Executive Directors
Benjamin Muscat (Chairperson)
Joseph Caruana
Mark Grech
Directors are appointed during the Company's Annual General Meeting for periods of one year, at the end
of which term they may stand again for re-election. All Directors shall retire from office at least once in each
three (3) years but shall be eligible for re-election. The Articles of Association of the Company clearly set
out the procedures to be followed in the appointment of directors.
Internal Control
The Board is responsible for the Company's system of internal controls and for reviewing its effectiveness.
Such a system is designed to achieve business objectives and to manage rather than to eliminate the risk
of failure to achieve business objectives and can only provide reasonable assurance against material error,
losses or fraud.
Authority to manage the Company is delegated to the Retail Director within the limits set by the Board of
Directors. Systems andprocedures are in place for the Companyto control,report, monitorand assess
risks and their financial implications, and to take timely corrective actions where necessary. Regular
financial budgets and strategic plans are prepared, and performance against these plans is actively
monitored and reported to the directors on a regular basis.
The Board also approves, after review and recommendationby the Audit Committee, the transfer of funds
and other amounts payable to companies within the same group,and ensures that these are subject to
terms and conditions which are on an arm's length basis.
Directors' Attendance at Board Meetings
The Board believes that it has systems in place to fully comply with the principles of the Code. Directors
meet regularly, mainly toreview the financial performance of the Company and to review internal control
processes. Board members are notified of forthcoming meetings by the Company Secretary with the issue
of an agenda and supporting Board papers, which are circulated well in advance of the meeting. All the
directors have access to independent professional advice at the Company's expense should they so
require.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
9
Corporate Governance - Statement of Compliance – continued
Directors' Attendance at Board Meetings – continued
The Board met formally six times during the year under review. The number of board meetings attended by
directors for the year ended 31 December 2021 is as follows:
Member Attended
Alexander Fenech Benjamin Muscat 6
Benjamin Muscat 6
Joseph Caruana 5
Mark Grech 5
Robert Spiteri 6
Paul Camilleri 6
Jean-Pierre Micelli 6
Committees
The directors believe that, due to the Company's size and operation, the remuneration, evaluation and
nominations committees that are suggested in the Code are not required, and that the function of these can
efficiently be undertaken by the board itself. However, the Board on an annual basis undertakes a review of
the remuneration paid to the directors and carries out an evaluation of their performance and of the audit
committee. The shareholders approve the remuneration paid to the directors at the annualgeneral meeting.
Audit Committee
The Board established an Audit Committee (the "Committee") in 2021 and has formally set out Terms of
Reference as outlined in the Principles laid out in the Capital Markets Rules. The purpose of the Committee
is to protect the interest of theCompany's share and bondholders and assist the directors in conducting
their role effectively. The Audit Committee also monitors the financial reporting process, the effectiveness of
internal control and the audit of the annual financial statements. Additionally, it is responsible for monitoring
the performance of the entities borrowing funds from the Company, to ensure that budgets are achieved
and if not that corrective action is taken as necessary. It also scrutinises and supervises related party
transactions for materiality and ensures that these are carried out at arm's length basis.
The Members of the Audit Committee are:
Joseph Caruana (Chairman of the Audit Committee)
Benjamin Muscat
Mark Grech
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
10
Corporate Governance - Statement of Compliance – continued
Audit Committee – continued
Joseph Caruana graduated with a Bachelor of Mechanical Engineering (Hons.) in 1986 and obtained a
Master’s degree in Business Administration from Brunel University in 2000. An engineer by profession,
Joseph held various posts in several companies worldwide including Sulzer Escher-Wyss A.G., and Air
Malta Co.Ltd. He also acted as Operations Director and Deputy Chief Executive Officer at Toly Products
and was a General Manager in FXB Furniture Ltd., Marsovin Ltd., H.H. Ltd., and MGC Electronics Ltd. In
2005 he set up Inspectra Limited, providing custom quality control inspections and sorting as well as
calibration services to the Maltese industry. Joseph acted as Chief Executive Officer of Mater Dei Hospital
between 2011 and 2014 and currently is the senior partner and founder of Tuning Fork Limited –a
management consulting firm.
Benjamin Muscat is a Certified Public Accountant by profession (Fellow of the Association of Chartered and
Certified Accountants – ACCA) with a long career in finance and management at senior executive positions.
He has worked in various industry sectors includingswitchgear manufacturing, food production, beer and
soft drink brewing and production and bottling, international fast food franchising, hospitality and timeshare,
construction and real estate development, including marketing and selling luxury condominiums. In his
capacity as Chief Executive Officer of MIDI Plc, a Maltese listed company, Benjamin was key in the
development of the Tigné Point Project. Benjamin was also instrumental in the promotion of the re-
generation of part of Malta’s historical Grand Harbour including the development of a cruise ship porting
facility locally known as the Valletta Waterfront project. He also has extensive experience in raisingproject
specific funding via banking facilities, third party investment, private placements, and issue of equity and
debt instruments through retail offers subsequently listed on the Malta Stock Exchange. Today, Benjamin
provides professional services as a freelance consultant and sits on the board of directors of anumber of
listed companies, three on the MSE Main Market, namely; Merkanti Holdings Plc, Shoreline Mall Plc and
Phoenicia Finance Plc, and two on the Prospects MTF, namely; The Convenience Shop (Holding) Plc and
Horizon Finance Plc.
Mark Grech is a lawyer by profession (graduated as Doctor of Laws from the University of Malta in 2016)
with a passion for business. Mark co-founded One Culture Limited a company that specialises in mass
events. Mark is a co-founder of Eleven Entertainment Group and Thirteen Media Limited. In 2018, Mark co-
founded X Factor Malta and, in 2020, Malta’s Got Talent - two television entertainment-related projects.
The Committee met three times during the year to 31 December 2021.
The Audit Committee is independent and is constituted in accordance with the requirements of the Capital
Market Rules. The Head of Finance and the external auditors of the Company attend the meetings of the
Committee by invitation. Other executive directors and external consultants are requested to attend when
required. The Company Secretary also acts as Secretary to the Audit Committee.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
11
Corporate Governance - Statement of Compliance – continued
Remuneration Statement
In terms of the Company's Memorandum and Articles of Association, it is the shareholders of the Company
in the General Meeting who determine the maximum annual aggregate remuneration of the directors.
None of the directors is employed or has a service contract with the Company.
No part of the remuneration paid to the directors is performance-based. None of the directors, in their
capacity as a Director of the Company, is entitled to profit sharing, share options or pension benefits.
The directors received € 33,111 in aggregate for services rendered during 2021.
Relations with bondholders and the market
The Company publishes interimand annual financial statements, and when required, company
announcements. The Board feels these provide the market with adequate information about its activities.
Conflicts of Interest
On joining the Board and regularly thereafter, directors and officers of the Company are informed and
reminded of their obligations on dealing in securities of theCompany within the parameters of law and
Capital Markets Rules. The Company has also set reporting procedures in linewith the Capital Markets
Rules, Code of Principles, and internal code of dealing.
Signed on behalf of the Group’s and the Company’s Board of Directors on 27 April 2022 by Mr. Benjamin
Muscat (Chairman), Mr. Alexander Fenech (Retail Director) and Mr. Paul Camilleri (Director) as perthe
Director’s Declarationon ESEF Annual Financial Report submitted in conjunction with the Annual Report
and Accounts 2021
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
12
Consolidated Statement of Profit or Loss and Other Comprehensive Income
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
Notes
2021
2020
2021
2020
€
€
€
€
Revenue
3
-
-
Cost of Sales
4
(20,880,733 )
(17,435,466 )
-
-
Gross profit
-
-
Administrative expenses
4
(5,631,144 )
(4,385,188 )
(109,064)
(12,732)
Selling and distribution expenses
4
(501,830 )
(366,622 )
-
-
Other income
7
-
-
Net loss from other trading
activities
(398 )
-
-
Operating profit/(loss)
(109,064)
(12,732)
Investment Income
6
2,712,000
1,247,376
Finance costs
8
(780,935 )
(498,170 )
(273,748)
-
Profit before income tax
2,329,188
1,234,644
Income tax
9
(1,307,832 )
(753,475 )
(949,200)
(436,400)
Profit for the financial
year/period
1,379,988
798,244
Other comprehensive
income/(loss)
Revaluation increase/(decrease)
on intangible assets
11
(2,364,761 )
-
-
Income tax (charge)/credit relating
to components of other
comprehensive income
9
(3,914,570 )
-
-
Other comprehensive
income/(loss) for the financial
year/period
(1,537,094 )
-
-
Total comprehensive
income/(loss) for the financial
year/period
(299,053 )
1,378,988
798,244
The accounting policies and explanatory notes on pages 20 to 59 form an integral part of the consolidated
and separate financial statements.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
13
Consolidated Statement of Financial Position
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
Notes
2021
2020
2021
2020
€
€
€
€
ASSETS
Non-current assets
Intangible assets
11
-
-
Goodwill
13
-
-
Property, plant and equipment
12
-
-
Right of use assets
14
-
-
Financial assets
-Investments in subsidiaries
15
20,084,988
20,084,988
Trade and other receivables
17
3,996,603
-
24,081,591
20,084,988
Current assets
Inventories
16
-
-
Trade and other receivables
17
9,390,142
800,691
Cash and cash equivalents
27
1,200
1,200
9,391,342
801,891
Total assets
33,472,933
20,886,879
EQUITY
Capital and reserves
Share capital
Retained earnings
20
-
-
Revaluation reserve
19
(1,537,094 )
-
-
Equity attributable to the equity
holders of the present
20,086,186
20,086,186
Non – controlling interest
-
-
Total Equity
20,086,186
20,086,186
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
14
Consolidated Statement of Financial Position– continued
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
Notes
2021
2020
2021
2020
€
€
€
€
LIABILITIES
Non-current liabilities
Interest-bearing borrowings
21
12,735,710
-
Redeemable preference shares
Trade and other payables
24
-
-
Deferred taxation
23
-
-
Lease liabilities
22
-
-
12,735,710
-
Current liabilities
Interest-bearing borrowings
21
-
-
Redeemable preference shares
Trade and other payables
24
651,037
800,693
Lease liabilities
22
-
-
Current taxation
25
-
-
651,037
800,693
Total liabilities
13,386,747
800,693
Total equity and liabilities
33,472,933
20,886,879
The accounting policies and explanatory notes on pages 20 to 59 form an integral part of the consolidated
and separate financial statements.
The consolidated and separate financial statements on pages 12to 59 were approved and authorised for
issue by the Board of Directors on 27 April 2022 and signed on behalf of the Group’s and the Company’s
Board of DirectorsbyMr. Benjamin Muscat (Chairman), Mr. Alexander Fenech (Retail Director) and Mr.
Paul Camilleri (Director) as per theDirector’s Declaration on ESEF Annual Financial Report submitted in
conjunction with the Annual Report and Accounts 2021
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
15
Consolidated Statement of Changes in Equity
The Company
Note
Share
Retained
capital
earnings
Total
€
€
€
Issue of share capital
20,086,186
-
20,086,186
Comprehensive income
Total comprehensive income
for the financial period
-
798,244
798,244
Transactions with owners
Dividends
10
-
(798,244)
(798,244)
Balance at 31 December 2020
20,086,186
-
20,086,186
Balance at 1 January 2021
20,086,186
-
20,086,186
Comprehensive income
Total comprehensive income
for the financial year
-
1,379,988
1,379,988
Transactions with owners
Dividends
10
-
(1,379,988)
(1,379,988)
Balance at 31 December 2021
20,086,186
-
20,086,186
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
16
Consolidated Statement of Changes in Equity– continued
The Group
Attributable to the equity holders of the parent
Share
Retained
Revaluation
Non-controlling
Total
Note
capital
earnings
reserve
Total
interests
Equity
€
€
€
€
€
€
Accumulated losses taken over upon acquisition
(143,063 )
(143,063 )
(121,575 )
Issue of share capital
Comprehensive loss
Total comprehensive loss for the financial period
(1,537,094 )
(299,053 )
(299,053 )
Transaction with owners
Dividends
10
(798,244 )
(798,244 )
(798,244 )
Balance at 31 December 2020
(1,537,094 )
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
17
Consolidated Statement of Changes in Equity– continued
The Group
Attributable to the equity holders of the parent
Share
Retained
Revaluation
Non-controlling
Total
Note
capital
earnings
reserve
Total
interests
Equity
€
€
€
€
€
€
Balance at 1 January 2021
(1,537,094 )
Accumulated losses taken over upon acquisition
(21,488 )
Comprehensive income
Total comprehensive income for the financial year
Transaction with owners
Dividends
10
(1,379,988 )
(1,379,988 )
(1,379,988 )
Balance at 31 December 2021
The accounting policies and explanatory notes on pages 20 to 59 form an integral part of the consolidated and separate financial statements.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
18
Consolidated Statement of Cash Flows
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
Notes
2021
2020
2021
2020
Operating activities
€
€
€
€
Cash generated from/ (used by)
operations
26
(88,110)
1,202
Interest paid
(135,223 )
(102,001 )
-
-
Tax paid
25
(1,165,535 )
(510,245 )
-
-
Net cash generated from operating
activities
(88,110)
1,202
Investing activities
Goodwill upon acquisition and issue of
share capital
(2,149,380 )
-
-
Intangible assets upon issue of share
capital
(17,934,559 )
-
-
Purchase of property, plant and
equipment
12
(867,344 )
(506,070 )
-
-
Purchase of website costs
11
(141,082 )
(87,757 )
-
-
Purchase of pharmacy licence
11
(2,800,000 )
(1,652,000 )
-
-
Purchase of shares in subsidiary
companies
Increase in amounts due from
subsidiaries
-
-
(6,832,154)
-
Net cash used in investing activities
(3,808,426 )
(22,329,766 )
(6,832,154)
(20,084,988)
Financing activities
Issue of share capital
-
20,086,186
Issue of redeemable preference
shares
-
-
Non-controlling interest
-
-
(Decrease)/increase in bank
borrowings
(2,038,350 )
-
-
Increase in debt securities in issue net
of transaction costs
12,721,800
-
Net movement in amounts held by
Trustee
(3,996,603 )
(3,966,603)
-
Net movements in shareholders’ loan
(net of dividend declared)
Principal payments of lease liabilities
(1,016,547 )
(653,695 )
-
-
Net cash generated from financing
activities
6,920,264
20,084,986
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
19
Consolidated Statement of Cash Flows – continued
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
Notes
2021
2020
2021
2020
€
€
€
€
Net movement of assets and liabilities
taken over upon consolidation
-
-
Movement in cash and cash
equivalents
-
1,200
Cash and cash equivalents at
beginning of year/period
1,200
-
Cash and cash equivalents at end of
year/period
27
1,200
1,200
The accounting policies and explanatory notes on pages 20 to 59 form an integral part of the consolidated
and separate financial statements.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
20
Notes to the Financial Statements
1.Accounting policies
The principal accounting policies adopted in the preparation of these consolidated financial
statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
a.Basis of preparation
These consolidated financial statements are prepared in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union (EU) and comply with the
Companies Act (Cap.386). The consolidated financial statements have also been prepared in
accordance with IFRS Standards adopted by the European Union and therefore the Group
consolidated financial statements comply with Article 4 of the EU IAS Consolidated Regulation.
The consolidated financial statements are prepared under the historical cost convention, except for
the revaluation of intangible assets that are measured at revalued amounts, as explained in the
accounting policies below. Historical cost is generally based on the fair value of the consideration
given in exchange for goods and services.
The comparative period of the consolidated and separate financial statement hasbeen prepared for
a 10-months period which is from 5 March 2020 to 31 December 2020.
i. Use of estimates and judgements
The preparation of consolidated financial statements in conformity with IFRSs as adopted by the EU
requires management to make judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual
results may differ from these estimates.
Estimates and underlying assumptions are reviewed onan ongoing basis. Revisions to accounting
estimates are recognized in the period in which the estimates are revised and in any future periods
affected.
However, in the opinion of the Board of Directors, there are no areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the
consolidated financial statements.
ii.New and amended IFRS Standards that are effective for the current year
Impact of the initial application of other new and amended IFRS Standards that are effective for the
current year
In the current year, the Group and the Company has applied the below amendments to IFRS
Standards and Interpretations issued by the Board that are effective for an annual period that begins
on or after 1 January 2021. Their adoption has not had any material impact on the disclosures or on
the amounts reported in these consolidated financial statements.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
21
1.Accounting policies – continued
a.Basis of preparation – continued
ii.New and amended IFRS Standards that are effective for the current year – continued
Impact of the initial application of other new and amended IFRS Standards that are effective for the
current year – continued
Covid-19-Related Rent Concessions beyond 30 June 2021 – Amendment to IFRS 16
In March 2021, the Board issued Covid-19-Related Rent Concessions beyond 30 June 2021
(Amendment to IFRS 16) that extends the practical expedient to apply to reduction in lease
payments originally due on or before 30 June 2022.
In the current financial year, the Group has applied the amendment toIFRS 16 (as issued by the
Board in May 2021) in advance of its effective date.
The practical expedient permits a lessee to elect not to assess whether a COVID-19-related rent
concession is a lease modification. A lessee that makes this election shall account for any change in
lease payments resulting from the COVID-19-related rent concession applying IFRS 16 as if the
change were not a lease modification.
The practical expedient applies only torent concessions occurring as a direct consequence of
COVID-19 and only if all of the following conditions are met:
•Thechange in lease payments results in revised consideration for the lease that is substantially
the same as, or less than, the consideration for the lease immediately preceding the change
•Any reduction in lease payments affects only payments originally due on or before 30 June 2022
(a rent concession meets this condition if it results in reduced lease payments on or before 30
June 2022 and increased lease payments that extend beyond 30 June 2022)
•There is no substantive change to other terms and conditions of the lease.
Impact on accounting for changes in lease payments applying the exemption
The impact for changes in lease payments applying the exemption is not considered to be material.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
22
1.Accounting policies – continued
a.Basis of preparation – continued
iiiNew and revised IFRS Standards in issue but not yet effective
At the date of authorisation of these consolidatedand separate financial statements, the Group and
the Company has not applied the following new and revised IFRS Standards that have been issued
but are not yet effective had not yet been adopted by the EU:
IFRS 17 (including the June 2020 amendments
to IFRS 17)
Insurance Contracts
Amendments to IFRS 10 and IAS 28
Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Amendments to IAS 1
Classification of Liabilities as Current and Non-
current
Amendments to IFRS 3
Reference to the Conceptual Framework
Amendments to IAS 16
Property, Plant and Equipment –Proceeds
before Intended Use
Amendments to IAS 37
Onerous Contracts –Cost of Fulfilling a
Contract
Annual Improvements to IFRS Standards 2018-
2020 Cycle
Amendments to IFRS 1 First-time Adoption of
International FinancialReporting Standards,
IFRS 9 Financial Instruments, IFRS 16 Leases,
and IAS 41 Agriculture
Amendments to IAS 1 and IFRS Practice
Statement 2
Disclosure of Accounting Policies
Amendments to IAS 8
Definition of Accounting Estimates
Amendments to IAS 12
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction
The Board of Directors do not expect that the adoption of the Standards listed above will have a material
impact on the consolidated financial statements of the Group and the Company in future periods.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
23
1.Accounting policies – continued
b.Basis of consolidation
The Group’s consolidated financial statements consolidate those of the parent company and all of its
subsidiaries and sub-subsidiaries as of 31 December 2021. The parent controls a subsidiary if itis
exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability
to affect those returns through its power over the subsidiary. The subsidiaries have a reporting date
of 31 December.
All transactions and balances between group companies are eliminated on consolidation, including
unrealised gains and losses on transactions between group companies. Where unrealised losses on
intra-group asset sales are reversed on consolidation, the underlying asset is also tested for
impairment losses from the Group’sperspective. The amounts reported in the separate financial
statement of the subsidiaries have been adjusted, where necessary, to ensure consistency with the
accounting policies adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries acquired or disposed off during the
year are recognised from the effective date of acquisition, or up to the effective date of disposal, as
applicable.
c. Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is
measured as the aggregate of the consideration transferred, which is measured at acquisition date
fair value, and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquire at fair
value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs
are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives
in host contracts by the acquire.
Any contingent consideration tobe transferred by the acquirer will be recognised at fair value at the
acquisition date. Contingent consideration classified as an asset or liability that is a financial
instrument and within the scope of IFRS 9 Financial Instruments: Recognition and Measurement, is
measured at fair value with the changes in fair value recognised in the statement of profit and loss.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognised for non-controlling interests, and any previous interest held,
over the identifiable assets acquiredand liabilities assumed. If the fair value of the net assets
acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it
has correctly identified all of the assets acquired and all the liabilities assumed and reviews the
procedure used to measure the amounts to be recognised at the acquisition date.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
24
1.Accounting policies – continued
c.Business combinations and goodwill– continued
If the reassessment stillresults in an excess of the fair value of net assets acquired over the
aggregate consideration transferred, then the gain is recognised in profit or loss.
After initial recognition, goodwill is measuredat cost less any accumulated impairment losses. For
the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquire are assigned to
those units.
Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit
is disposed of, the goodwill associated with the disposed operation is included in the carrying amount
of the operation when determining the gain or loss on disposal. Goodwill disposed in these
circumstances is measured based on the relative values of the disposal operation and the portion of
the cash-generating unit retained.
d. Revenue recognition
Revenue is recognised upon delivery of products and service. They are reported in the consolidated
financial statements as revenue, net of VAT and discounts. Other revenues earned by the Group
and the Company are recognised on the following basis:
Interest income – as it accrues, unless collectability is in doubt.
Dividend income –when the shareholder’s right to receive payment is established.
e. Foreign currencies
(i) Functional and presentation currency
Items included in the Group’s consolidated, and the Company’s separate financial statements are
measured using the currency of the primary economic environment in which the entity operates. The
Euro is the Group’sand the Company’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency (Euro) using the exchange
rates prevailing at the dates of the transactions. 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 consolidated statement
of profit or loss and other comprehensive income.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
25
1 Accounting policies – continued
f. Intangible assets
Intangible assets comprise of pharmacy licences and website costs. The subsidiary companies
within the Group hold the licence to operate the pharmacy outlets and gave therights to operate
these licences to Brown’s Pharma Limited, the Company’s subsidiary.
Acquired website is capitalised on the basis of the costs incurred to acquire and bring touse the
specific software. These costs are amortised over their estimated useful life of 4 years. Costs
associated with maintaining the website are recognised as an expense incurred.
The licences are initially measured at cost. After initial recognition, the licences are carried at
revalued amount, being its fair value at the date of revaluation less any subsequent accumulated
amortisation and any subsequent accumulated impairment losses. Fair value is based on active
market prices, adjusted,if necessary, for any difference in the nature, location or condition of the
specific asset.
If the carrying amount is increased as a result of a revaluation, the increase shall be recognised in
other comprehensive income and accumulated in equity under the heading of revaluation reserve.
However, the increase shall be recognised in profit or loss to the extent that it reverses a revaluation
decrease of the same asset previously recognised in profit or loss.
If the carrying amount is decreased as a result of a revaluation, the decrease shall be recognised in
profit or loss. However, the decrease shall be recognised in other comprehensive income to the
extent of any credit balance in the revaluation surplus in respect of that asset. The decrease
recognised in other comprehensive income reduces the amount accumulated in equity under the
heading of revaluation surplus.
The licenses have an indefinite useful life thus should not be amortised. An asset is considered as
having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no
foreseeable limit tothe period over which the asset is expected togenerate net cashinflows for the
entity. The useful life should be reviewed each reporting period to determine whether events and
circumstances continue to support an indefinite useful life assessment for that asset. If they donot,
the change in the useful life assessment from indefinite to definite should be accounted for as a
change in an accounting estimate.
Where an indication of impairment exists, in that the carrying amount of an intangible asset is greater
than its estimated recoverable amount, a charge is made towrite down the value of the asset to its
estimated recoverable amount (Accounting policy (j)).
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
26
1.Accounting policies – continued
g. Leases
The Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The
Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease
arrangements in which it is thelessee, except for short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value assets. For theseleases, theGrouprecognises
the lease payments as an operating expense on a straight-line basis over the termof the lease
unless another systematic basis is more representative of the time pattern in which economic
benefits from the leased assets are consumed. The lease liability is initially measured at the present
value of the lease payments that are not paid at the commencement date, discounted at the Group's
incremental borrowing rate, currently established at 5.5%.
Lease payments included in the measurement of the lease liability comprise:
•Fixed lease payments (including in-substance fixed payments);
•Variable lease payments that depend on anindex or rate, initially measured using the index
or rate at the commencement date;
The lease liability is presented as a separate line in the consolidated statement of financial position.
The leaseliability is subsequently measured by increasing the carrying amount to reflect interest on
the lease liability (using the incremental borrowing rate) and by reducing the carrying amount to
reflect the lease payments made.
The Group remeasures the leaseliability (and makes a corresponding adjustment to therelated
right-of-use asset) whenever:
•The lease term has changed, in which cases the lease liability is remeasured by discounting
the revised lease payments using an unchanged discount rate
•The lease payments change due to changes in an index or rate inwhich cases the lease
liability is remeasured by discounting the revised lease payments using an unchanged
discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease
payments made at or before the commencement date. They are subsequently measured at cost less
accumulated depreciation and impairment losses as per IAS 36 - Impairment of Assets.
Right-of-use assets are depreciatedover the shorter period of lease term and useful life of the right-
of-use asset. The depreciation starts at the commencement date of the lease.The right-of-use
assets are presented as a separate line in the consolidated statement of financial position.
The Group applies IAS 36 todetermine whether a right-of-use asset is impaired and accounts for
any identified impairment loss as described in the ‘Property, Plant and Equipment’ policy.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
27
1.Accounting policies – continued
h.Property, plant and equipment
Property, plant and equipment, comprising improvements to premises, computer equipment, furniture
and fittings, electrical installations and shop equipment are initially recorded at cost and are
subsequently stated at cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of items.
Subsequent costs are included in the asset’s carrying amount, or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group, and the cost of the item can be measured reliably. All other repairs and maintenance
are charged to the statement of profit or loss and other comprehensive income.during the financial
period in which they are incurred.
Depreciation is calculated on the straight-line method to allocate the cost of the assets totheir
residual values over their estimated useful lives as follows:
•Improvements to premises 1%
•Computer equipment 33%
•Furniture and fittings 10%
•Shop equipment 15%
•Electrical installations 6.66%
•Motor Vehicle 20%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period.
Gains and losses on disposal of property, plant and equipment are determined by comparing
proceeds with the carrying amount, and are taken into account in determining operating profit.
An asset’s carrying amount is written down immediately to its recoverable amount if its carrying
amount is greater than its estimated recoverable amount (Accounting policy (j)).
i. Investments in subsidiaries
In the Company’s separate financial statements, investments in subsidiaries are accounted for by the
cost method of accounting. The dividend income from such investments is included in the statement
of profit or loss and other comprehensive income.in the accounting period in which theCompany’s
rights to receive payment of any dividend is established. The Company gathers objective evidence
that an investment is impaired. On disposal of an investment, the difference between the net
disposal proceeds and the carrying amount is charged or credited to the statement of profit or loss
and other comprehensive income.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
28
1.Accounting policies – continued
j. Impairment of non-financial assets
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use.
k. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is calculated using the
weighted average method and comprises expenditure incurred in acquiring the inventories and other
costs incurred in bringing the inventories to their presentlocation and condition. Net realisable value
is theestimate of the selling price in the ordinary course of business, less the costs of completion
and selling expenses.
l. Financial assets
(a)Initial recognition and measurement
Financial assets are classified, at initial recognition either at amortised cost, fair value through other
comprehensive income (“OCI”) or fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s contractual
cash flow characteristics and the Group’s and Company’s business model for managing them. With
the exception oftrade receivables that donot contain a significant financing component, or for which
the Group and the Company has applied the practical expedient, the Group and the Company initially
measures a financial asset at its fair value.
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.
In order for a financial asset to be classified and measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on
the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at
an instrument level.
The Group’s and the Company’s business model for managing financial assets refer to how it
manages its financial assets in order to generate cash flows. The business model determines
whether cash flows will result from collecting contractual cash flows, selling thefinancial assets, or
both.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
29
1.Accounting policies – continued
l.Financial assets – continued
(a)Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
a) Financial assets at amortised cost;
b) Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments);
c) Financial assets designated at fair value through OCI with no recycling of cumulative gains
and losses upon derecognition (equity instruments);
d) Financial assets at fair value through profit or loss
The Group and the Company does not hold any financial assets at fair value through OCI, financial
assets designated at fair value through OCI and financial assets at fair value through profit or loss.
(b)Financial assets at amortised cost
The Group and the Company measures financial assets at amortisedcost if both of the following
conditions are met:
a)The financial asset is held within a business model with the objective to hold financial assets in
order to collect contractual cash flows; and
b)The contractual terms of the financial asset give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
(c)Financial assets at amortised cost
Financial assets at amortised cost are subsequently measured using the effective interest rate
(“EIR”) method and are subject to impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
The Group’sand the Company’sfinancial assets at amortised cost are trade and other receivables
which are expected to be received within 1 year from period end.
(d)Derecognition
A financial asset is primarily derecognised when:
a)The rights to receive cash flows from the asset have expired; or
b)The Group and the Company has transferred its rights to receive cash flows from the asset, or
has assumed an obligation to pay the received cash flows in full without material delay to a
third party and either the Group and the Company has transferred substantially all the risks
and rewards of the asset or the Group and the Company has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
30
1.Accounting policies – continued
l.Financial assets – continued
(e)Impairment
The Group and the Company recognises an allowance forexpected 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 and the Company expects to receive, discounted at an approximate of the original
effective interest rate. The expected cash flows will include cash flows from the sale of a collateral
held or other credit enhancements that are integral to the contractual terms.
For amounts due from related party, the Group and the Company applies a simplified approach in
calculating ECLs. Therefore, the Group and the Company does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group and
the Company has established a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to debtors and the economic environment.
The Group and the Company considers a financial asset in default when contractual payments are
ninety (90) days past due. However, in certain cases, the Group and the Company may also consider
a financial asset to be in default when internal or external information indicates that the Group and
the Company is unlikely to receive the outstanding contractual amounts in full before taking into
account any credit enhancements held by the Group and the Company. A financial asset is written-
off when there is no reasonable expectation of recovering the contractual cash flows.
m. Financial liabilities at amortised costs (loans and borrowings)
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 caseof loans and borrowings
and payables, net of directly attributable transaction costs.
The Group’s and Company’s financial liabilities include debt securities in issue.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate, 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 costis calculated by considering any discount or premium on acquisitionand fee 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.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
31
1. Accounting policies – continued
m. Financial liabilities at amortised costs (loans and borrowings)– continued
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognitionof
a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss.
n.Trade and other payables
Tradeandotherpayables are obligations to pay forgoodsor services that havebeenacquiredin the
ordinary course of businessfrom suppliers.Accountspayableare classified as current liabilitiesif
payment is due within one year or less (or in the normal operating cycle of the business if longer). If not,
they are presented asnon-current liabilities.
o. Cash and cash equivalents
Cash and cash equivalentsarecarried in the consolidated statement of financialposition at facevalue.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents comprise
cash in hand and deposits held at call with banks.
p. Current and deferred taxation
The tax expense for the period comprises current and deferred taxation.
Taxation is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax is also recognised in other
comprehensive income or equity, respectively.
Current tax is based on the taxable result for the period. The taxable result for the period differs from
the results as reported in profit or loss because it excludes items which hare non-assessable or
disallowed and it further excludes items that are taxable or deductible in other periods. Current tax
also includes any tax arising from dividends. It is calculated using the tax rates that have enacted or
substantively enacted by the end of the reporting period, and any adjustments in relation to the prior
periods.
Deferred taxation is provided using the liability method, for all temporary differences arising between
the tax bases of assets and liabilities and their carrying values for financial reporting purposes.
Deferred taxation is determined using tax rates (and laws) that have been enacted or substantially
enacted by the end of the reporting period and are expected to apply when the related deferred tax
asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised only to the
extent that it is probable that future taxable profits will be available against which the temporary
differences can be utilised.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
32
1. Accounting policies – continued
q.Share capital and dividends
Ordinary shares are classified as equity.
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s
financial statements in the period in which the dividends are approved by the Company’s
shareholders.
r. Borrowings
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months from the end of the reporting period.
s. Preference share capital
Preference share capital that provides for mandatory redemption by the Company for afixed or
determinable amount at a fixed or determinable future date, or at the option of the holder, contains a
financial liability as the issuer has an obligation to transfer financial assets to the holder of the share.
t.Employee benefits
The Group contribute towards the state pension in accordance with local legislation. The only
obligation is to make the required contributions. Costs are expensed in the period in which they are
incurred.
u. Borrowing costs
Borrowing costs include the costs incurred in obtaining external financing. Borrowing costs directly
attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use or sale, are
capitalised from the time that expenditure for these assets and borrowing costs are being incurred
and activities that are necessary to prepare these assets for their intended use or sale are in
progress. Borrowing costs are capitalised until such time as the assets are substantially ready for
their intended use or sale. Borrowing costs are suspended during extended periods in which active
development is interrupted. All other borrowing costs are recognised as an expense in profit or loss
in the period in which they are incurred.
v. Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the
other party or exercise significant influence over the other party in makingfinancial and operating
decisions. Parties are also considered to be related if they are subject to common control or common
significant influence. Related parties may be individuals or corporate entities. Related party accounts
are carried at cost, net of any impairment charge.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
33
2. Critical accounting estimates and judgements
Estimates and judgements 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.
In the opinion of the Board of Directors, the accounting estimates and judgements made in the
course of preparing these consolidated and separate financial statements are not difficult, subjective
or complex to a degree which would warrant their description as critical in terms of the requirements
of IAS 1.
3. Revenue
All the Group’s revenue is generated from the local sales and export of pharmaceutical products.
4.Expenses by nature
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Depreciation of property, plant and
equipment (Note 12)
309,238
225,809
-
-
Depreciation of right-of-use assets
(Note 14)
473,462
418,456
-
-
Amortisation of intangible assets
(Note 11)
58,413
23,143
-
-
Staff costs (Note 5)
3,529,943
2,809,331
-
-
Foreign exchange differences
104
(6,738)
-
-
Directors’ remuneration
95,815
91,473
33,311
-
Auditor’s remuneration
33,075
25,556
10,900
2,950
Bad debts
31,162
475
-
-
Cost of goods sold
20,880,733
17,435,466
-
-
Other expenses
1,601,762
1,164,305
64,853
9,782
Total cost of sales, administrative
expenses and selling and
distribution expenses
27,013,707
22,187,276
109,064
12,732
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
34
4.Expenses by nature– continued
Auditor’s fees
Fees charged, excluding VAT, by the auditor for the services rendered during the financial periods
ended 31 December 2021 & 2020 relate to the following:
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Annual statutory auditors
33,075
25,556
10,900
2,950
Tax compliance & advisory services
4,275
-
300
-
Other non – audit services
5,200
-
3,800
-
42,550
25,556
15,000
2,950
5.Staff costs
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Wages and salaries
3,399,621
2,701,749
-
-
Social security costs
130,322
107,582
-
-
3,529,943
2,809,331
-
-
Average number of full-time equivalents employed by the Group and the Company during the
year/period:
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
Direct
195
169
-
-
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
35
6.Investment income
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Dividend receivables
-
-
2,712,000
1,247,376
Interest receivable on bank balances
-
2
-
-
-
2
2,712,000
1,247,376
7.Other income
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Other income
9,885
49,751
-
-
Reimbursement of salaries
53,802
24,922
-
-
63,687
74,673
-
-
8.Finance costs
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Interest payable on debt security in
issue
259,838
-
259,838
-
Amortisation of debt security in issue
costs
13,910
-
13,910
-
Interest payable on amounts due to
third party
10,432
-
-
-
Interest payable on bank loans
116,785
93,100
-
-
Interest payable on bank overdraft
6
901
-
-
Interest payable on third party loan
8,000
8,000
-
-
Finance cost – lease liability
371,964
396,169
-
-
780,935
498,170
273,748
-
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
36
9. Income tax
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Current tax:
At 15 %
-
-
-
136
At 35%
1,321,552
769,483
949,200
436,264
Under provision of
prior period tax
3,710
-
-
-
Deferred tax credit for
the year/period (Note 23)
(17,430)
(16,008)
-
-
1,307,832
753,475
949,200
436,400
The tax expense and the result of accounting profit multiplied by the statutory domestic income tax
rate is reconciled as follows:
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Profit before tax
3,428,550
1,991,516
2,329,188
1,234,644
Tax on accounting profit at 35%
thereon
1,199,993
697,031
815,216
432,125
Tax effect of:
Net effect on right-of-use assets
depreciation and lease liabilities
finance charge
(80,417)
56,326
-
-
Income not subject to tax
(4,007)
(6,381)
-
-
Income subject to reduce tax rates of
tax
-
-
-
(182)
Non-allowable expenses
189,443
15,792
133,984
4,457
Temporary difference
16,540
6,715
-
-
Movement in deferred tax
(17,430)
(16,008)
-
-
Under provision of prior-period tax
3,710
-
-
-
1,307,832
753,475
949,200
436,400
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
37
9.Income tax– continued
In addition to the amount charged to profit or loss, the following amounts relating to tax have been
recognised in consolidated other comprehensive income:
Year ended
31 December
Period ended
31 December
Year ended
31 December
Period ended
31 December
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Deferred tax:
Gains/(losses) on pharmacy
licences revaluation
3,914,570
(827,667)
-
-
Total income tax recognised in
other comprehensive income
3,914,570
(827,667)
-
-
10. Dividends
Year ended
31 December
Period ended
31 December
The Group and the Company
2021
2020
€
€
Ordinary shares
Final dividend
1,379,988
798,244
Cents per share
0.07
0.04
As at 31 December 2021, the directors proposed final gross dividend of €2,123,058 to the ordinary
shareholders. These dividends are being declared out of taxable profits resulting in a total net
dividend to the ordinary shareholders of €1,378,988 which case, equivalent to €0.07 per share. Net
dividends to the ordinary shareholders with respect to the period end 31 December 2020 amounted
to €798,244, equivalent to €0.04 per share.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
38
11. Intangible assets
Pharmacy
Website
Licences
Costs
Total
€
€
€
Movements for the period ended
31 December 2020
Opening net book amount taken over upon
consolidation
29,844,900
3,189
29,848,089
Additions
1,652,000
87,757
1,739,757
Amortisation charge
-
(23,143)
(23,143)
Net revaluation decrease
(2,364,761)
-
(2,364,761)
Closing net book amount
29,132,139
67,803
29,199,942
At 31 December 2020
Cost
4,517,095
95,340
4,612,435
Accumulated amortisation
-
(27,537)
(27,537)
Revaluation surplus
24,615,044
-
24,615,044
Net book amount
29,132,139
67,803
29,199,942
Movements for the year ended 31 December 2021
Opening net book amount
29,132,139
67,803
29,199,942
Additions
2,800,000
141,082
2,941,082
Amortisation charge
-
(58,413)
(58,413)
Net revaluation surplus
11,184,485
-
11,184,485
Closing net book amount
43,116,624
150,472
43,267,096
At 31 December 2021
Cost
7,317,095
236,422
7,553,517
Accumulated amortisation
-
(85,950)
(85,950)
Net revaluation surplus
35,799,529
-
35,799,529
Net book amount
43,116,624
150,472
43,267,096
The pharmacy licences were valued by the Board of Directors as at 31 December 2021.
Amortisation charge of €58,413 (2020: €23,143) is included in administrative expenses.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
39
12. Property, plant and equipment
The Group
Improvements
Computer
Furniture &
Shop
Motor
Electrical
to premises
equipment
fittings
equipment
Vehicle
Installations
Total
€
€
€
€
€
€
€
Movements for period ended
31 December 2020
Opening net book amount upon
consolidation
468,868
53,745
299,787
212,268
-
116,777
1,151,445
Additions
93,955
58,330
169,330
132,487
-
51,968
506,070
Depreciation charge
(6,012)
(52,370)
(77,112)
(72,327)
-
(17,988)
(225,809)
Closing net book amount
556,811
59,705
392,005
272,428
-
150,757
1,431,706
At 31 December 2020
Cost
601,319
397,949
1,168,708
635,786
19,555
270,087
3,093,404
Accumulated depreciation
(44,508)
(338,244)
(776,703)
(363,358)
(19,555)
(119,330)
(1,661,698)
Net book amount
556,811
59,705
392,005
272,428
-
150,757
1,431,706
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
40
12. Property, plant and equipment – continued
The Group
Improvements
Computer
Furniture &
Shop
Motor
Electrical
to premises
equipment
fittings
equipment
Vehicle
Installations
Total
€
€
€
€
€
€
€
Movements for year ended
31 December 2021
Opening net book amount
556,811
59,705
392,005
272,428
-
150,757
1,431,706
Additions
144,765
71,141
383,985
223,839
-
43,614
867,344
Depreciation charge
(7,461)
(63,963)
(107,550)
(109,372)
-
(20,892)
(309,238)
Closing net book amount
694,115
66,883
668,440
386,895
-
173,479
1,989,812
At 31 December 2021
Cost
746,084
469,090
1,552,693
859,625
19,555
313,701
3,960,748
Accumulated depreciation
(51,969)
(402,207)
(884,253)
(472,730)
(19,555)
(140,222)
(1,970,936)
Net book amount
694,115
66,883
668,440
386,895
-
173,479
1,989,812
Fully depreciated assets which were still in use at31 December 2021 had a cost of €1,195,939 (2020: €1,051,412), on which depreciation otherwise chargeable
would have amounted to €223,290 (2020: €191,136).
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
41
13. Goodwill
The Group
The movement in the carrying amount of goodwill are as follows
€
Goodwill taken over upon consolidation
3,445
Goodwill for the period
2,149,380
At 31 December 2020
2,152,825
At 31 December 2021
2,152,825
Carrying amount
At 31 December 2020
2,152,825
At 31 December 2021
2,152,825
14. Right-of-use assets
The Group
Buildings
€
Cost
Additions
7,254,352
At 31 December 2020
7,254,352
At 1 January 2021
7,254,352
Additions
1,751,595
Net effect on modifications made on existing contracts
459,767
Disposals
(307,737)
At 31 December 2021
9,157,977
Accumulated depreciation
Depreciation charge
589,064
At 31 December 2020
589,064
At 1 January 2021
589,064
Depreciation charge
473,462
At 31 December 2021
1,062,526
Carrying amount
At 31 December 2020
6,665,288
At 31 December 2021
8,095,451
The Group leases buildings. The average lease term is 18 years (2020: 19 years)
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
42
14. Right-of-use assets – continued
Amounts recognised in profit and loss
2021
2020
€
€
Depreciation expense on right-of-use assets
(473,462)
(418,456)
Interest expense on lease liabilities
(371,964)
(396,169)
Expense relating to short-term leases
-
(6,000)
Expense relating to leases of low value assets
(8,367)
(14,712)
Expense related to variable lease payments not included in the
measurement of lease liability
(177,837)
(78,803)
Net release of Right-of-use assets and lease liabilities upon disposal
34,170
-
Variable lease payments
Some of the property leases in which the Group is the lessee contain variable lease payment terms
that are linked to sales generated from the leased property or depend on the change in the
consumer price index. The breakdown of lease payments for these retail outlets is as follows:
2021
2020
€
€
Fixed payments
1,016,547
653,695
Variable payments
177,837
78,803
Total payments
1,194,384
732,498
Overall, the variable payments constituteup to 15% (2020: 11%) of the Group’s entire lease
payments. The Group expects this ratio to change in future years as the variable payments depend
on sales, consumer price index and consequentlyon the overall economic development over the
next few years. The total cash outflow for leases amount to €1,194,384 (2020: €732,498)
On 14 October 2021, the Group entered into a4-year lease to rent a property, commencing on 1
November 2021, which had not commenced by the year-end and as result, a lease liability and right-
of-use asset has not been recognised as at 31 December 2021. The aggregate future cash outflows
to which the Group is exposed in respect of this contract are fixed payments of €40,526 for the first
year which increase annually by 10%. Furthermore, the Group is exposed to a rent variable payment
between 6% - 15% on the turnover generated from the premises and a commission of 5% on
turnover generated from the premises. The lease agreement does not specify whether the Group has
the option to extend the rent for a further term.
On 1 November 2021, the Group entered into a 10-year lease to rent a property, commencing on27
December 2021, which had not commenced by the year-end and as result, a lease liability and right-
of-use asset has not been recognised as at 31 December 2021.The 10-year lease is split into 3-
years di fermo period and 7-years di rispetto period. During the di rispetto period, the Group may
terminate the lease at any time by giving a 6-months’ notice.The aggregate future cash outflows to
which the Group is exposed in respect of this contract is fixedpayments of €50 per day for the first 5
years and increase to €60 per day thereafter.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
43
15. Investments in subsidiaries
The Company
2021
2020
€
€
Movements for the year/period ended 31 December
Opening net book amount
20,084,988
-
Additions
-
20,084,988
Closing net book amount
20,084,988
20,084,988
At 31 December
Cost/net book amount
20,084,988
20,084,988
The subsidiaries, all of which are unlisted, at 31 December are shown below:
Percentage of
shares held
Name
Registered office
Principal activities
2021
2020
Brown’s Pharma
Limited
Brown’s Pharmacies
Triq L-Industrija
Qormi
Operation of pharmacies
100%
100%
JP Pharma Retail
Holdings Limited
42 – 46, Mill Street
Qormi, QRM 3105
Holding company of companies
holding the pharmacy licences
100%
100%
As at 31 December 2021, JP Pharma Retail Holdings Limited held 100% in Brown’s Grognet
Pharmacy Ltd., Brown’s Medical Plaza Ltd., Brown’s Pharmacy Fleur-de-Lys Ltd., Brown’s Pharmacy
Hamrun Ltd., Brown’s Pharmacy KalkaraLtd., Brown’s Pharmacy M1 Ltd., Brown’s Pharmacy M2
Ltd., Brown’s Pharmacy Paola Ltd., Brown’s Pharmacy Pieta’ Ltd., Brown’s Pharmacy Rahal Gdid
Ltd., Brown’s Pharmacy Sliema Ltd., Brown’s Pharmacy Zebbug Ltd. and Brown’s SM Pharmacy Ltd.
The registered office of these companies is Brown’s Pharmacies, Triq l-Industrija, Qormi, Malta . As at
31 December 2020, these companies were 100% ownedby Brown’s Pharma Limited. However,
following the restructuring process made by the Group, these were transferred to JPPharma Retail
Holdings Limited on 28 January 2021.
Also, as at 31 December 2021, JP Pharma Retail Holdings Limited held 100% (2020: 100%) in JP
Pharma B’Kara Limited, JP Pharma Hamrun Limited, JP Pharma Iklin Limited, JP Pharma Naxxar
Limited, JP Pharma San Gwann Limited and JP Pharma St.Julians Limited. The registered office of
these companies is 42-46, Mill Street Qormi QRM3105, Malta.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
44
16. Inventories
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Goods held for resale
2,412,560
2,061,941
-
-
Goods in transit
101,221
-
-
-
2,513,781
2,061,941
-
-
17. Trade and other receivables
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Non-current
Amount held by Trustee (Note iii)
3,996,603
-
3,996,603
-
Current
Trade receivables (Note i)
2,167,313
2,452,374
-
-
Amounts due from
shareholders (Note ii)
5,776
-
5,776
-
Amounts due from
related parties (Note ii)
56,029
163,603
-
-
Amounts due from
subsidiary (Note ii & iv)
-
-
9,370,275
775,321
Other receivables
30,340
23,411
1,515
-
Prepayments, accrued income and
deferred expenditure
584,176
503,536
12,576
25,370
2,843,634
3,142,924
9,390,142
800,691
Notes:
i.The majority of the sales of goods and services are made on a cash basis. The average credit period
on sales of goods and services madeon credit sales is 90 days. Trade receivables disclosedabove
include amounts that are past due at the end of the reporting period for which the Group has not
recognised an allowance in credit quality and the amounts are still considered recoverable.
ii.Amounts due from shareholders, related parties and subsidiary are unsecured, interest free and are
repayable on demand.
iii.Amount held by Trustee relates to proceeds from the debt securities in issue held by in a Trust
company and will be drawn down against the presentationof agreements, requests for payments
and/or invoices in accordance with the provisions of the prospectus as noted in Note 21.
iv.Amount due from subsidiary includes a portion of proceeds from the debt security in issue that have
been advanced by the Issuer in accordance with theprovisions of the prospectus as noted in Note
21.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
45
17. Trade and other receivables– continued
Age of receivables that are past due but not impaired
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
91-120 days
64,325
392,184
-
-
120-365 days
62,995
83,241
-
-
365 days +
19,178
13,716
-
-
Total
146,498
489,141
-
-
In determining the recoverability of a trade receivable, the Group considers any change in the credit
quality of the trade receivable from the date credit was initially granted upto the end of the reporting
period and any receipts made after year end. Theconcentration of credit risk is limited due to the fact
that the customer base is large and unrelated.
18. Share capital
The Group and the Company
2021
2020
€
€
Authorised
14,662,916 Ordinary “A” shares of €1 each
14,662,916
14,662,916
5,423,270 Ordinary “B” shares of €1 each
5,423,270
5,423,270
20,086,186
20,086,186
Issued and fully paid
14,662,916 Ordinary “A” shares of €1 each
14,662,916
14,662,916
5,423,270 Ordinary “B” shares of €1 each
5,423,270
5,423,270
20,086,186
20,086,186
Class ‘A’ shares have the right to appoint 1 director who shall have 2.5 votes each in meetings of the
Board of Directors. Class ‘A’ and ‘B’ share shall, together, be entitled to appoint 3 directors to the
Board of Directors of the Groupand the Companywho shall have 1 vote each in meetings of the
Board of Directors. Each holder of ‘B’ shares shall have the right to appoint 1 director to the Board of
Directors of the Group and the Company who shall have 1 vote each in meetings of the Board of
Directors. Except as otherwise provided, all ordinary shares irrespective of class, shall rank equally in
all respects, including without limitation, equal participation in profits distributed by the Group and the
Company and equal rights upon distribution of the Group’sand the Company’sassets upon its
winding up. Each ordinary share shall entitle the holder to 1 vote at each general meeting.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
46
19. Revaluation reserve
The revaluation reserve comprises revaluation surpluses/(decreases) onintangible assets used in
the production and supply of goods and services, net of deferred tax. The revaluation reserve is not
available for distribution to the Group’s and the Company’s shareholders.
20. Retained earnings
Retained earnings represent accumulated losses or profits. Dividends paid out of retained earnings
during the year/period is disclosed in Note 10.
21. Interest-bearing borrowings
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Non-current
Debt securities in issue
12,735,710
-
12,735,710
-
Bank loans
-
1,723,317
-
-
12,735,710
1,723,317
12,735,710
-
Current
Bank loans
-
315,033
-
-
Other loan
100,000
100,000
-
-
100,000
415,033
-
-
12,835,710
2,138,350
12,735,710
-
\
Debt securities in issue
By virtue of a prospectus dated 10 June 2021, Brown’s Pharma Holdings plc (the ‘Issuer’) issued
€13,000,000 unsecured bond with a face value of €100 each. The bonds have a coupon interest of
3.9% which is payable annually in arrears on 9 July of each year. The bonds are redeemable at par
and are due for redemption between 2027 and 2031, unless they are previously re-purchased and
cancelled or redeemed in the case of an Early redemption or a partial conditional early redemption.
The bonds shall constitute the general, direct, unconditional, and unsecured obligations of the Issuer
to the Bondholders and shall at all times, rank pari passu, without any priority or preference among
themselves and with other outstanding and unsecured debt of the Issuer, present and future.
The bonds were admitted on the Official List of the Malta Stock Exchange on 15 July 2021. The
quoted market price as at 31 December 2021for the bonds was €103.50, which in the opinion of the
directors fairly represents the fair value of these financial liabilities.
As noted in Note 17, in accordance with the provisions of the prospectus, a portion of the proceeds
from the bond issue have been advanced by the Issuer to its subsidiary, whilst the rest of the
proceeds are held by a Trustee and will be draw down against the presentation of agreements,
requests for payments and/or invoices.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
47
21. Interest-bearing borrowings – continued
Debt securities in issue – continued
The bonds are measured at the amount of the net proceeds adjusted for the amortisation of the
difference between the net proceeds and the redemption value of such bonds, using the effective
interest rate as follows:
The Group and the Company
2021
2020
€
€
Original face value of the bonds issued
13,000,000
-
Bond issue costs
(278,200)
-
Accumulated amortisation
13,910
-
Unamortised bond issue costs
(264,290)
-
-
-
-
-
Amortised costs and closing carrying amount
of the debt securities in issue
12,735,710
-
-
-
-
-
Bank and other loans
The other loan is unsecured, bears an interest of 8% per annum and was repayable by 31 December
2021 in lump sum payments at the option of the Group.
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
At floating rates
-
2,038,350
-
-
At fixed rates
12,835,710
100,000
12,735,710
-
-
-
-
-
Total borrowings
12,835,710
2,138,350
12,735,710
-
-
-
-
-
Weighted average effective interest rates during the reporting year/period:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
%
%
%
%
Bank overdraft
-
5.95
-
-
Bank loans
4-5.95
4-5.95
-
-
Other loan
8
8
-
-
\
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
48
21. Interest-bearing borrowings – continued
Bank and other loans – continued
Maturity of bank and other loans falling due after more than one year:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Between 1 and 2 years
-
305,483
-
-
Between 2 and 5 years
-
879,575
-
-
Over 5 years
-
538,259
-
-
\
-
1,723,317
-
-
\
22. Lease Liabilities
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Maturity Analysis
Year 1
329,319
271,689
-
-
Year 2
356,758
286,630
-
-
Year 3
362,236
302,396
-
-
Year 4
346,130
304,230
-
-
Year 5
338,856
305,560
-
-
Onwards
6,448,539
5,452,290
-
-
8,181,838
6,922,795
-
-
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Analysed as:
Non-current
7,852,519
6,651,106
-
-
Current
329,319
271,689
-
-
8,181,838
6,922,795
-
-
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
49
23. Deferred taxation
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
At beginning of year/period
8,575,760
-
-
-
Opening balance taken
over upon consolidation
-
9,419,435
-
-
Credit to consolidated income
statement (Note 9)
(17,430)
(16,008)
-
-
Charged/(credit) to consolidated
other comprehensive income
3,914,570
(827,667)
-
-
At end of year/period
12,472,900
8,575,760
-
-
Deferred tax is analysed as follows:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Net deferred tax asset at:
Fair value movement on pharmacy
licence
12,529,835
8,615,265
-
-
Excess of capital allowances over
depreciation
(56,935)
(39,505)
-
-
12,472,900
8,575,760
-
-
24. Trade and other payables
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Non-current
Amounts due to shareholders (Note i)
73,597
2,135,090
-
-
Current
Trade payables
4,383,339
4,873,080
-
-
Amounts due to
shareholders (Note ii)
377,874
797,032
377,874
797,044
Amounts due to
related parties (Note ii)
676,209
6,984
-
-
Other payables and indirect tax
37,378
210,961
-
-
Accruals
670,326
183,182
273,163
3,649
6,145,126
6,071,239
651,037
800,693
Notes:
i.Amounts due to shareholders are unsecured, interest free and is repayable by 31 December
2025
ii.Amounts due to related parties and shareholders are unsecured, interest free and repayable
on demand.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
50
25. Current taxation
Income tax payable is made up as follows:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Balance at 1 January
514,748
255,510
-
-
Current tax charge
for the year/period (Note 9)
1,321,552
769,483
949,200
436,400
Settlement tax paid
(514,744)
(255,507)
-
-
Provisional tax paid
(650,791)
(254,738)
-
-
Under provision of
prior period tax (Note 9)
3,710
-
-
-
Withholding tax paid
-
-
(949,200)
(436,400)
Balance at 31 December
674,475
514,748
-
-
26. Cash generated from operations
Reconciliation of operating profit/loss to cash generated from/(used by) operations:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Operating profit/(loss)
4,209,485
2,489,684
(109,064)
(12,732)
Adjustments for:
Depreciation of property, plant and
equipment (Note 12)
309,238
225,809
-
-
Depreciation of right-of-use assets
(Note 14)
473,462
418,456
-
-
Amortisation of intangible assets
(Note 11)
58,413
23,143
-
-
Interest received
-
2
-
-
Changes in working capital:
Inventories
(451,840)
(177,473)
-
-
Trade and other receivables
305,066
558,088
11,278
(25,370)
Trade and other payables
233,193
(493,618)
9,676
39,304
Cash generated from/ (used by)
operations
5,137,017
3,044,091
(88,110)
1,202
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
51
26. Cash generated from operations - continued
Non-cash transaction
The Group’s principal non-cash transaction during the year ended 31 December 2021, related to
dividends declared but not paid in the current year amounting to €362,800 and to finance costs –
lease liability amounting to €371,964. These havebeen recorded as amounts due to shareholders
and finance costs respectively.
27. Cash and cash equivalents
For the purposes of theconsolidated statement of cash flows, the cash and cash equivalents at the
end of the year/period comprise the following:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Cash at bank and in hand
2,402,403
570,682
1,200
1,200
28. Redeemable preference shares
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Non-current
Redeemable Preference ‘A’ Share
-
12
-
-
Current
Redeemable Preference ‘A’ Share
14
-
-
-
The Redeemable Preference ‘A’ share was redeemable within 15 days from the payment in full of
any amount owned by the Group to the holder, provided that the holder shall have the option to
redeem the preference share at an earlier date at its discretion, provided further that in no case shall
the preference share be redeemed later than 31 December 2099.
During the year, the amounts owed by the Groupto the holder were all paid in full, and thus, the
redeemable preference shares as at 31 December 2021 has been classified as current, as these
were redeemed on 26 January 2022.
29. Related party transactions
Year/period-end balances due from or to related parties, from or to subsidiaries, due to ultimate
controlling companies and dueto shareholders are disclosed in notes 16 and 24 to these
consolidated financial statements.
The Group and the Company also entered intorelated party transactions on an arm’s lengthbasis
with its subsidiaries. Transaction between the Group have been eliminated on consolidation.
Transactions with related parties are also made on an arm’s length basis.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
52
29. Related party transactions– continued
The following transactions were carried out with related parties:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
(a)Recharge of directors’
remuneration
Subsidiary
-
-
33,311
-
(b) Rental charge
Related party
385,781
-
-
-
(c) Purchase of stock
Related party
1,839,364
1,568,850
-
-
(d) Other income
Related party
13,788
11,340
-
-
(e) Dividend receivable
Subsidiary
-
-
2,712,000
1,247,376
(f) Amounts due from subsidiary
Beginning of the year/period
-
-
775,321
-
Dividend receivable net of tax
-
-
1,762,800
810,976
Debt securities in issue proceeds
transferred to subsidiary
8,875,000
-
Payments made on behalf of the
Company
-
-
(2,042,846)
(35,655)
-
-
9,370,275
775,321
(g) Amounts due from related parties
Beginning of the year/period
163,603
-
-
-
Opening balance taken over upon
consolidation
-
49,075
-
-
Transfer to amounts due to related
parties
(130,950)
-
-
-
Payments made on behalf of the related
parties
23,376
114,528
-
-
56,029
163,603
-
-
(h) Amounts due from shareholders
Transfer from amounts due to
shareholder
(215,202)
-
(215,202)
-
Dividend declared
(372,597)
-
(372,597)
-
Payments made during the year/period
593,575
-
593,575
-
5,776
-
5,776
-
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
53
29. Related party transactions– continued
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
(i) Amounts due to related parties
Beginning of the year/period
(6,984)
-
-
Opening balance taken over upon
consolidation
-
(3,547)
-
-
Transfer from amounts due from
related parties
130,950
-
-
-
Rental Charge
(455,221)
-
-
-
Purchase of stock made
during the year/period
(2,170,450)
(1,851,243)
-
-
Other income made
during the year/period
13,788
11,370
-
-
Repayments made
during the year/period
1,829,773
1,839,873
-
-
Other movements
during the year/period
(18,065)
(3,437)
-
-
(676,209)
(6,984)
-
-
(j) Amounts due to shareholders -
non-current
Beginning of the year/period
(2,135,090)
-
-
-
Opening balance taken
over upon consolidation
-
(2,136,690)
-
-
Repayments made
during the year/period
2,061,493
-
-
-
Other movements
during the year/period
-
1,600
-
-
(73,597)
(2,135,090)
-
-
(k) Amounts due to shareholders -
current
Beginning of the year/period
(797,032)
-
(797,044)
-
Transfer to amounts due from
shareholders
215,202
-
215,202
-
Issue of share capital
-
20,086,186
-
20,086,186
Sale of shares in subsidiary
companies
-
(20,084,986)
-
(20,084,986)
Dividend declared
(1,007,391)
(798,244)
(1,007,391)
(798,244)
Payments made on behalf of the
Group/Company
1,211,347
12
1,211,359
-
(377,874)
(797,032)
(377,874)
(797,044)
(l) Key management compensation
Directors remuneration
95,815
91,473
33,311
-
Key management personnel compensation, consisting of directors’ remuneration, has been disclosed
in Note 4. Dividends paid to shareholders have been disclosed in Note 10.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
54
30. Financial risk management
Overview
TheGroup and the Company has an exposureto thefollowingrisksarising fromthe use of financial
instruments within its activities:
•Credit risk
•Liquidity risk
•Market risk
This note presents information about the Group’sand the Company’sexposureto each of the above
risks, policiesand processes for measuring and managing risk, and theGroup’sand the Company’s
managementof capital. Furtherquantitative disclosuresare included in these consolidated financial
statements.
Theresponsibility for the management of risk isvested in the Boardof Directors. Accordingly, it is the
Board of Directors who have the overall responsibility for establishing an appropriate risk management
framework.
Credit risk
Credit risk is the risk of financial loss to the Group and the Companyif a counterparty to a financial
instrument fails tomeet its contractual obligations and arises principally fromthe Group and the
Company’s tradeandotherreceivablesandcashandcash equivalents held at banks. The carrying
amounts of financial assets represent the maximum credit exposure.
TheGroup assesses the credit quality of its customers by takinginto account their financial standing,
past experience,anypayments made post reporting date and other factors, such as bank references
and the customers’ financial position.
Managementisresponsible forthe qualityof the Group’scredit portfolios and has establishedcredit
processesinvolving delegatedapproval authoritiesandcredit procedures,the objective of whichis to
build and maintain assets of high quality.
TheGroup’s policyis to dealonly withcreditworthy counterparties. The creditterms aregenerally 90
days. The Group regularlyreview the ageing analysis together with the credit limits per customer.
Trade and other receivables
Thelevelofcredit risk is minimumas the majority of the Group’sclients are paid in cash upon the
delivery of services or goods sold.
To measure the expected credit losses, trade receivables have been groupedbased on shared credit
risk characteristics and the days past due. Management considers the probability of default from such
trade receivables to benot material. More than 35% of trade receivables that exceeded the 90days
credit term has been received after reporting period date. In view of this, the amount calculated using
the 12-month expected credit loss model is considered to be very insignificant. Therefore, based on the
above, no loss allowance has been recognized by the Group.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
55
30. Financial risk management– continued
Overview - continued
Credit risk– continued
Trade and other receivables – continued
Trade receivables are written off when there is no reasonable expectation ofrecovery. Indicators that
there is no reasonable expectation of recovery include, amongst others, thefailure of a debtor to
engage in a repayment plan with the Group, and a failure to make contractual payments for a period of
greater than a year past due.
The ageing analysis of trade receivables have been disclosed in Note 17.
The Group’s and the Company’s concentration to credit risk arising from certain other receivables;
that comprise amounts due from shareholders, related parties and from subsidiary, are considered
limited as there were no indications that these counterparties are unable to meet their obligations.
Management considers these counterparties to be of a good credit quality. Furthermore,
management does not consider these counterparties to have deteriorated in credit quality and the
effect of management’s estimate of the 12-month credit loss has been determined to be insignificant
to the results of the Group and the Company.
Cash and cash equivalents
The cash and cash equivalents held with banks as at 31 December 2021 and 2020 are callable on
demand and held with local financial institutions with high quality standing or rating. Management
considers the probability of default from such banks to be insignificant. Therefore, based on the
above, no loss allowance has been recognized by the Group and the Company.
Liquidity risk
Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations
as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will
always have sufficient liquidity to meet its liabilities when due. Generally, the Group and the Company
ensures that it has sufficient cash on demand to meet expected operational expenditure, including the
servicing of financial obligations.
Thetablebelowanalysesthe Groupand the Company’s financial liabilitiesintorelevant maturity
grouping based on the remaining period at the endof the reporting periodto the contractual maturity
date. The amountsdisclosed in thetable are the contractualundiscounted cashflows with respect to
the debt securities in issue.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
56
30. Financial risk management – continued
Overview – continued
Liquidity risk –continued
The Group
As at
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total
Carrying
amount
31 December 2021
€
€
€
€
€
€
Interest-bearing
borrowings
607,000
507,000
1,521,000
15,535,000
18,170,000
12,835,710
Redeemable
preference shares
14
-
-
-
14
14
Trade and other
payables
6,145,126
-
73,597
-
6,218,723
6,218,723
Current taxation
674,475
-
-
-
674,475
674,475
7,426,615
507,000
1,594,597
15,535,000
25,063,212
19,728,922
-
-
-
-
-
-
As at
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total
Carrying
amount
31 December 2020
€
€
€
€
€
€
Interest-bearing
borrowings
415,033
387,661
1,060,835
584,702
2,448,231
2,138,350
Redeemable
preference shares
-
-
-
12
12
12
Trade and other
payables
6,071,239
-
2,135,090
-
8,206,329
8,206,329
Current taxation
514,748
-
-
-
514,748
514,748
7,001,020
387,661
3,195,925
584,714
11,169,320
10,859,439
-
-
-
-
-
-
The Company
As at
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total
Carrying
amount
31 December 2021
€
€
€
€
€
€
Interest-bearing
borrowings
507,000
507,000
1,521,000
15,535,000
18,070,000
12,735,710
Trade and other
payables
651,037
-
-
-
651,037
651,037
1,158,037
507,000
1,521,000
15,535,000
18,721,037
13,386,747
-
-
-
-
-
-
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
57
30. Financial risk management – continued
Overview – continued
Liquidity risk –continued
The Company – continued
As at
Less than
1 year
Between 1
and 2 years
Between 2
and 5 years
Over 5
years
Total
Carrying
amount
31 December 2020
€
€
€
€
€
€
Trade and other
payables
800,693
-
-
-
800,693
800,693
-
-
-
-
-
-
Market risk
Market risk is the risk that changes inmarket prices, such as foreign exchangerates or interestrates,
will affect the fair value or future cash flows of a financialinstrument.The objectiveof market risk is to
manage and control market risk exposureswithinacceptable parameters, while optimisingthe return
on risk.
Theoperatingcash flows of the Groupand the Company are influencedby changes in market interest
rates.Up to the statement of financialposition date, the Group and the Company did not have any
hedgingarrangements with respectto the exposureof floating interest raterisk.The Groupand the
Company is notexposed to foreign exchange risk since all operations areconductedlocally in the
Group’sand the Company’s functional currency.
Capital management
It is thepolicyof the Board of Directors to maintain an adequate capitalbase in orderto sustain the
futuredevelopmentof the business and safeguardthe ability of the Group andthe Company to
continue as a going concern. In this respect, the Board of Directors monitor the operations and results
of the Group and the Company, and also monitor the level of dividends, if any, payable to the ordinary
shareholders.
The Group and the Company is not subject to externally imposed capital requirements.
There wereno changesin the Group and the Company’sapproach to capital managementduringthe
year/period.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
58
30. Financial risk management – continued
Overview – continued
Fair values
TheGroup is required to disclose for financial instrumentsthat are measuredin the consolidated and
separate statement of financialposition at fairvalue,fair value measurementsby level of the following
fair value measurement hierarchy:
•Quoted prices(unadjusted) in active markets for identical assets or liabilities (Level 1)
•Inputs other thanquoted prices included within Level1 that are observablefortheassetor
liabilities, either directly (that is, as prices) or indirectly (that is, derived from prices (Level 2)
•Inputs for the assetorliabilitythatarenotbasedonobservable market data(that is,
unobservable inputs (Level 3)
At31 December 2021 and 2020 the carrying amounts of cash and cashequivalents, tradeandother
receivables, trade payablesand accrued expenses, lease liabilities and short-term borrowings are
reflected intheconsolidated and separatefinancial statementsarereasonable estimatesof fairvalue
in viewof the nature of these instruments or the relatively short periodof time between theorigination
of the instruments and their expected realisation.
The carrying amounts of the other financial liabilities as at 31 December 2021 and 31 December 2020,
comprising lease liabilities, are reasonable estimates of their fair value as there has not been
significant changes in the Group’s internal borrowing rate since the date of first application of IFRS 16.
The current market interest rates utilised for discounting purposes, which were almost equivalent to the
respective instruments’ contractual interest rates, are deemedobservable and accordinglythesefair
value estimates have been categorisedas Level2 within the fair valuemeasurement hierarchy.
Information on the fair value of the bondsissuedtothepublicis disclosed inNote21 to the financial
statements. The fair value estimate in this respect is deemed Level 1 as it constitutes a quoted price in
an active market.
31. Capital commitments
Commitments for capital expenditure not provided for in these consolidated financial statements are
as follows:
The Group
The Group
The Company
The Company
2021
2020
2021
2020
€
€
€
€
Contracted but not provided for
-
1,650,000
-
-
Commitments with respect to right-of-use assets are disclosed in Note 13.
BROWN’S PHARMA HOLDINGS PLC
Annual Report and Consolidated Financial Statements - 31 December 2021
59
32. Statutory information
As at 31 December 2021, the ownership of Brown’s Pharma Holdings plc is ultimately shared
between 13i Limited, N&N Investments Limited, Elka Investments Limited and JLMX Investments
Limited. The ownership of such company’s share capital and voting rights related to such holding are
such that no particular individual or identifiable group may be deemed to exercise control over the
company.
33. Comparative information
Certain comparative information has been reclassified to conform with thecurrent year’s disclosure
for the purpose of fairer presentation.
34. Post balance sheet events
There wereno adjusting or significant non-adjusting eventsthathave occurred betweentheend of the
reporting period and at the date of authorisation by the Board of Directors.
60
Independent Auditor’s Report
To the Members of BROWN’S PHARMA HOLDINGS PLC
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Brown’s Pharma Holdings plc (the “Company”) and its
subsidiaries (collectively the “Group”), set out on pages 12to 59, which comprise theconsolidated and separate
statement of financial position as at 31 December 2021, the consolidated and separate statement of profit or
loss and other comprehensive income, the consolidated and separate statement of changes in equity andthe
consolidated and separate statement of cash flows for the year then ended, and notes to theconsolidated and
separate financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated and separate financial statements give a true and fair view of the
financial position of the Group and the Company as at 31 December 2021, and of its financial performance for
the year then ended in accordance with International Financial Reporting Standards as adopted by the European
Union (EU IFRSs) and have been prepared in accordancewith the requirements of theCompanies Act (Cap.
386).
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and
Separate Financial Statements section of our report. We are independent of the Group and the Company in
accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the
consolidated and separate financial statements in accordance with the Accountancy Profession (Code of Ethics
for Warrant Holders) Directive issued in terms of the AccountancyProfession Act (Cap. 281) in Malta, and we
have fulfilled our other ethical responsibilities inaccordancewith these requirements and the IESBA Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Matter
The consolidated and separate financial statements of Brown’s Pharma Holdings plc for the period ended 31
December 2020 were audited by another auditor who expressed an unmodified opinion on these statements on
14 April 2021.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated and separate financial statements of the current year. These matters were addressed in the
context of our audit of the consolidated and separate financial statements as a whole and in forming our opinion
thereon, and we do not provide a separate opinion on those matters.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated
and separate financial statements section of our report, including in relation to these matters. Accordingly, our
audit included the performance of proceduresdesigned to respond to our assessmentof the risks of material
misstatement of the consolidated and separate financial statements. The results of our audit procedures,
including the procedures performed to address the matters below, provide the basis of our audit opinion on the
accompanying consolidated and separate financial statements.
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Independent Auditor’s Report–continued
Key Audit Matters – continued
(i)Intangible assets – Pharmacy licences
Part of the Group’sintangible assets include the revaluation of pharmacy licences purchased and operated by the
Group, which is being further described inNote 1 Accounting policies - Section f and Note 11 of the consolidated
financial statements. This represents 64% of the total assets of the Group as at 31 December 2021.
Management is determining fair value of its pharmacy licences on a periodical basis. The fair value of these licences
iscalculated on market-based valuation techniques by applying the acquisition price to pre-takeover turnover using
acquisition transactions in process of being completed or recently completed.
The valuation of such licences at its fair value is highly dependent on estimates and assumptions. We have
considered the valuation of the intangible assets asa key audit matter in view of the subjectivity surrounding the
judgement applied and our audit focus on this area.
We gained understanding of the design and implementation of key controls over the Group’svaluation process by
inquiring with the processowners. We have also gained understanding on the Group’svaluation methodology and
assumptions used in estimating the fair value of the intangible assets as at the reporting date. As part of our
procedures, we have analysed the key assumptions used by comparing to independent sources, marketdata and
condition and assessing the completeness, relevance and accuracy of the revenue values underlying the model with
the audited revenue figures per pharmacy. No issues were identified.
(ii)Investment in subsidiaries
The Company holds shares in Brown’s Pharma Limited and JP Pharma Holdings Limited which is being further
described in Note 1 Accounting policies - Section i and Note 15 of the separate financial statements. This represents
60% of the total assets of the Company as at 31 December 2021.
During the year ended 31 December 2021, management carried out an assessment to establish whether the carrying
amount of the investments in subsidiaries in the separate financial statements at 31 December 2021 is impaired. We
focussed on this area because of the significant of the investment in subsidiaries which at 31 December 2021,
amounted to €20,084,988. Moreover, the Board of Directors’assessment process is complex and highly judgemental
and is based on assumptions, such as forecasted growth rates and profit margin which are driven by expected future
market or economic conditions.
We evaluated the suitability and appropriateness of the impairment methodology applied by management to assess
the reliability of the Board of Directors’ forecasts and to challenge the methodology used and the underlying
assumptions. We concluded that the parameters utilised were reasonable. We also assessed the adequacy of the
disclosures made in Note 2 of the consolidated and separate financialstatements related to investments in
subsidiaries including those concerning the key assumptions used in assessing it carrying amount. Those disclosures
specifically explain that the Board of Directors have assessed when carrying amount of investments as at 31
December 2021 and concluded that no provision for impairment of investments in subsidiaries was required.
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Independent Auditor’s Report–continued
Other Information
The Board of Directors are responsible for the other information. The other information comprises the directors’ report
and the corporate governance –statement of compliance. Our opinion on the consolidated and separate financial
statements does not cover this information, including the directors' report and the corporate government –statement
of compliance. In connection with our audit of the consolidated and separate financial statements, our responsibility is
to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the consolidated and separate financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated.
With respect to the Directors’ Report,we also considered whether the Directors’ Report includes the disclosures
required by Article 177 of the MalteseCompanies Act (Cap. 386). Based on the work we have performed,in our
opinion:
▪the information given in the directors’ report for the financial year for which the consolidated and separate
financial statements are prepared is consistent with the financial statements; and
▪the directors’ report has been prepared in accordance with the Maltese Companies Act (Cap.386).
In addition, in light of the knowledge and understanding of the Group and the Company and its environment obtained
in the course of the audit, we are required to report if we have identified material misstatements in the directors’
report. We have nothing to report in this regard.
With respect to the Corporate Governance –Statement of Compliance, the Capital Market Rules issued by the Malta
Listing Authority require the directors to prepare and include in the Annual Report, the Corporate Governance -
Statement of Compliance within Appendix 5.1 to Chapter 5 of the Capital Market Rules. The Statement’s required
minimum contents are determined by reference to Capital Market Rule 5.97. The Statement provides explanation as
to how the Group has complied with the provisions of the Code, presenting the extent to which the Group has
adopted the Code and the effective measures that the Board has taken to ensure compliance throughout the
accounting period with those Principles.
We are required to report on the Corporate Governance - Statement of Compliance by expressing an opinion as to
whether, in light of the knowledge and understanding of the Group and its environment obtained in the course of the
audit, we have identified any material misstatements with respect to the information referred to in Capital Market
Rules 5.97.4 and 5.97.5, giving an indication of the nature of any such misstatement.
We are also required to assess whether the Corporate Governance - Statement of Compliance includes all the other
information required to be presented as per Capital Market Rule 5.97.
We are not required to, and we do not consider whether the Board’sstatements on internal control included in the
Corporate Governance - Statement of Compliance cover all risks and controls or form an opinion on the effectiveness
of the Group’s corporate governance procedures or its risk and control procedures.
In our opinion, the Corporate Governance - Statement of Compliancehas been properly prepared in accordance with
the requirements of the Capital Market Rules issued by the Malta Listing Authority.
Responsibilities of the Board of Directors
The Board of Directors are responsible for the preparation of the consolidated and separate financial statements that
give a true and fair view in accordance with EU IFRSs, and for such internal control as the Board of Directors
determine is necessary to enable the preparation of consolidated and separate financial statements that are free from
material misstatement, whether due to fraud or error.
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Independent Auditor’s Report–continued
Responsibilities of the Board of Directors – continued
In preparing the consolidatedand separate financial statements, the directors are responsible for assessing the
Group’s and the Company’sability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and
the Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the consolidated and separate Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs 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 and separate
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism
throughout the audit. We also:
▪Identify and assess the risks of material misstatement of the consolidated and separate financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficientand appropriateto providea basis for our opinion.The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
▪Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate inthe circumstances, butnot for the purpose of expressing an opinion on the effectiveness of the
Group’s and the Company’s internal control.
▪Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
▪Conclude on the appropriateness of the Board of Directors’ use of the going concernbasis of accounting and
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s and the Company’sability to continue as agoing concern. If we
conclude that a material uncertaintyexists, we are required to draw attention in our auditor’s report to the related
disclosures in the consolidated and separate financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group and the Company to cease to continue as a
going concern.
▪Evaluate the overall presentation, structure and content of the consolidated and separate financial statements,
including the disclosures, and whether the consolidated and separate financial statementsrepresent the
underlying transactions and events in a manner that achieves fair presentation.
▪Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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Independent Auditor’s Report–continued
Auditor’s Responsibilities for the Audit of the consolidated and separate Financial Statements –continued
We communicate with the directors 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.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the financial statements of the current period and are therefore the key audit matters.We
describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Report on Other Legal and Regulatory Requirements
Report on compliance with the requirementsof the European Single Electronic Format Regulatory Technical
Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6
We have undertaken a reasonable assurance engagement in accordance with the requirements of Directive 6 issued
by the Accountancy Board interms of the Accountancy Profession Act (Cap. 281) - the Accountancy Profession
(European Single Electronic Format) Assurance Directive (the “ESEF Directive 6”) on the Annual Financial Report of
Brown’s Pharma Holdings plc. for the year ended 31 December 2021, entirely prepared in a single electronic
reporting format.
Responsibilities of the directors
The directors are responsible for the preparation of the Annual Financial Report, including the consolidated financial
statements and the relevant mark-up requirements therein, by reference to Capital Markets Rule 5.56A, in
accordance with the requirements of the ESEF RTS.
Our responsibilities
Our responsibility is to obtain reasonable assurance about whether the Annual Financial Report, including the
consolidated financial statements and the relevant electronic tagging therein,comply in all material respects with the
ESEF RTS based on the evidence we have obtained. We conducted our reasonable assurance engagement in
accordance with the requirements of ESEF Directive 6.
Our procedures included:
▪Obtaining an understanding of the Group’sfinancial reporting process, including the preparation of the Annual
Financial Report, in accordance with the requirements of the ESEF RTS.
▪Obtaining the Annual Financial Reportand performing validations to determine whether the Annual Financial
Report has been prepared in accordance with the requirements of the technical specifications of the ESEF RTS.
▪Examining the information in the Annual Financial Report to determine whether all the required taggings therein
have been applied and whether, in all material respects, they are in accordance with the requirements of the
ESEF RTS.
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Independent Auditor’s Report–continued
Report on Other Legal and Regulatory Requirements – continued
Report on compliance with the requirementsof the European Single Electronic Format Regulatory Technical
Standard (the “ESEF RTS”), by reference to Capital Markets Rule 5.55.6 – continued
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the Annual Financial Report for the year ended 31 December 2021 has been prepared, in all material
respects, in accordance with the requirements of the ESEF RTS.
Report on the Statement of Compliance with the Principles of Good Corporate Governance
The Capital Market Rules issued by the Malta Listing Authority (the “Capital Market Rules”) require the Board of
Directors to prepare and include in their Annual Report a Statement of Compliance providing an explanation of the
extent to which they have adopted the Code of Principles of Good Corporate Governance and the effective measures
that they have taken to ensure compliance throughout the accounting period with those Principles.
The Capital Market Rules also require us, as the auditor of the Group, to include a report on the Statement of
Compliance prepared by the Board of Directors.
We read the Corporate Governance - Statement of Compliance with the Code of Principles of Good Corporate
Governance and consider the implications for our report if we become aware of any apparent misstatements or
material inconsistencies with the consolidated financial statements included in the Annual Report. Our responsibilities
do not extend to considering whether this statement is consistent with any other information included in the Annual
Report.
Our responsibilities and opinion over the Corporate Governance - Statement of Compliance is disclosed the Other
Information section of our report.
Other reporting requirements
Under the Maltese Companies Act (Cap. 386) we are required to report to you if, in our opinion:
▪We have not received all the information and explanations we require for our audit.
▪Adequate accounting records have not been kept, or that returns adequate for our audit have not been received
from branches not visited by us.
▪The consolidated and separate financial statements are not in agreement with the accounting records and
returns.
We have nothing to report to you in respect of these responsibilities.
Other matter – use of this report
Our report, including the opinions, has been prepared for and only for the Group’s and theCompany’s members as a
body in accordance with Article 179 of the Maltese Companies Act (Cap. 386) and for no other purpose. We do not, in
giving these opinions, accept or assume responsibility for any other purposeor to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by our prior written consent.
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Independent Auditor’s Report–continued
Appointment
This is our first year that we were appointed as auditors of the Group and the Company with effect on 17 January
2022. Our total period of uninterrupted engagement appointment is 1 year. The Company became listed on a
regulated market on 6 July 2021.
Non-audit services
To the best of our knowledge and belief, we declare that non-auditservices that we have provided to the Group and
the Company are in accordance with the applicable law and regulations in Malta and we have not provided non-audit
services that are prohibited under Article18A(1) of the Accountancy Profession Act, Cap. 281 of the Laws of Malta
were provided by us to the Group and the Company. We remain independent of the Group and the Company as
described in the Basis for Opinion section of our report. No other services besides statutory audit services and
services disclosed in the annual report and in the consolidated and separate financial statements were provided by us
to the Group and the Company and its controlled undertakings.
David Busuttil
Director
For and on behalf of
Equis Assurance Limited
Certified Public Accountants
Nr. 11, “L-Ufficcji”
Misrah 28 ta’ Frar 1883
Birkirkara
BKR1501
Malta
27 April 2022
