1
Fotex Holding S.E.
272, rue de Neudorf
L-2222 Luxembourg
R.C.S. Luxembourg B 146.938
Consolidated financial statements as at 31 December 2021
Management report as at 31 December 2021
2
Table of contents
Management Report ................................................................................................................................. 3
Management Responsibility Statement .................................................................................................. 13
Report of the Réviseur D’Entreprises Agréé .......................................................................................... 14
Consolidated Statement of Financial Position ........................................................................................ 20
Consolidated Income Statement ............................................................................................................. 21
Consolidated Statement of Comprehensive Income ............................................................................... 22
Consolidated Statement of Changes in Equity........................................................................................ 23
Consolidated Statement of Cash Flows .................................................................................................. 25
1. General ........................................................................................................................................ 27
2. Significant Accounting Policies .................................................................................................. 28
3. Significant Accounting Judgements, Estimates and Assumptions .............................................. 41
3. Significant Accounting Judgements, Estimates and Assumptions (continued) ........................... 42
4. Standards Issued but not yet Effective ........................................................................................ 43
5. Cash and Cash Equivalents ......................................................................................................... 46
6. Other Financial Assets ................................................................................................................ 46
7. Accounts Receivable and Prepayments ....................................................................................... 47
8. Inventories ................................................................................................................................... 48
9. Property, Plant and Equipment .................................................................................................... 49
10. Investment Properties .................................................................................................................. 51
11. Intangible Assets ......................................................................................................................... 54
12. Goodwill Arising on Acquisition ................................................................................................ 55
13. Accounts Payable, Other Liabilities and Provision ..................................................................... 56
14. Share Capital and Reserves ......................................................................................................... 57
15 Operating Expenses and Gain ..................................................................................................... 58
16. Interest-bearing Loans and Borrowings ...................................................................................... 59
17. Income Tax .................................................................................................................................. 60
18. Revenue ....................................................................................................................................... 63
19. Gain on Disposal of Investment Properties ................................................................................. 64
20 Segment Information ................................................................................................................... 65
21. Financial Risks, Management Objectives and Policies ............................................................... 66
22. Leases .......................................................................................................................................... 69
23. Earnings Per Share ...................................................................................................................... 70
24. Related Party Transactions .......................................................................................................... 71
25. Subsequent Events after the End of the Reporting Period ........................................................... 72
26. Headcount ................................................................................................................................... 72
27. Audit fees .................................................................................................................................... 72
28. Contingent liabilities .................................................................................................................. 72
3
Management Report
NOTES TO THE READER
ESEF REPORTING PACKAGE/XHTML VERSION
This document is Fotex Holding SE’s 2021 Annual Report in European Single Electronic Reporting format
(the ESEF reporting package). The ESEF reporting package is available on the company’s website.
PDF/PRINTED VERSION
A PDF/printed version of Fotex Holding’s 2021 Annual Report is available on the company’s website.
In the case of discrepancies between the PDF version and the ESEF reporting package, the latter prevails
Review and development of the groups business and financial position
The net turnover for the year ended December 31, 2021, was EUR 28,374,807 compared with EUR
30,541,588 for the same period in 2020 representing a decrease of EUR 2,166,781 (7%). The net turnover is
mainly composed of income from operating a real estate portfolio in Hungary and the Netherlands. The main
reason of the decrease is the continuing impact on the Hungarian portfolio from the COVID pandemic as well
as the effect on the comparative Dutch revenue from the disposal of two large properties in 2020.
The group sold 5 properties located in Hungary during the year at a gain of EUR 25,265,217 of which
EUR 1,320,070 was not an investment property.
During the Autumn of 2020, the group reinvigorated its crystal sales channels through the launch of Ajka-
Crystal.com targeting US and western European markets as well as refurbishing its prime retail locations in
Budapest. Management expects these actions should result in improved sales of crystal in the future.
The overall income for the year amounts to EUR 28,386,368 which is impacted by the net sales and the
financial revenue (31 December 2020: EUR 30,547,741).
The net result for the year is a profit of EUR 25,650,961.
No provision is recognised for covering future environment fines or expenditures in 2021.
Principle risks and uncertainties
The Group’s business, financial condition or results can be affected by risks and uncertainties.
Management has identified the following risks:
• Change in laws and regulations governing the operations of the Company and its subsidiaries
which may affect their business, investments and results of operations
• Foreign currency risk
• Credit risk
• Interest rate risk
• Liquidity risk
• Country risk
• Economic risk arising from COVID-19
4
Management monitors these risks and applies the following risk management procedures:
Foreign currency (“FX”) risk
Financial instruments that potentially represent risk for the Group include deposits, debtors and credit
balances denominated in foreign currency, creditors in foreign currency and deposits in foreign currency other
than EUR. The Group’s rental contracts are stipulated in EUR or on EUR basis thus mitigating FX risk
associated with non-EUR based revenues. As of 31 December 2021, the Group does not have any open forward
transactions.
Credit risk
The Group aims to mitigate lending risk by its careful and continuous debtor portfolio monitoring process
and by requiring bank guarantees and collateral. In addition, the Group regularly follows up information about
the main debtors in the market.
Concentrations of credit risk, with respect to trade accounts receivable, are limited due to the large
number of customers and due to the dispersion across geographical areas.
Receivable balances are monitored on an ongoing basis.
Investments of surplus funds are made only with reliable counterparties and are allocated between more
banks and financial institutions in order to mitigate financial loss through potential counterparty failure.
Interest rate risk
In order to mitigate the interest rate risk the Group uses mainly fixed rate loans.
As of the year end the group has one fixed interest loan at an interest rate of 1.79% p.a.
Liquidity risk
Liquidity risk is monitored as follows:
• Monitoring daily available deposited and free cash by entity.
• Monitoring weekly cash flows by entity.
• As part of the management information system, the Group monitors the operations of each
entity on a monthly basis.
• The Group monitors its long-term cash flows in order to match the maturity patterns of its
assets and liabilities.
Country risk
The Group has operations in Luxembourg, in the Netherlands and in Hungary. By the geographical
diversification of the operations, the Group mitigates the effects of country risk. Notwithstanding the, ongoing
impact of the global coronavirus pandemic, the Group has not identified any significant risks that may affect
the financial performance of Group members associated with the countries in which the Group operates.
Further as members of the European Union and the legal structure associated with it, management believes
that country risk is not a matter of significant concern.
5
Economic risk arising from COVID-19
In late 2019, a cluster of cases displaying the symptoms of a “pneumonia of unknown cause” were
identified in Wuhan, the capital of China’s Hubei province. On 30 January 2020, the International Health
Regulations Emergency Committee of the WHO declared the outbreak a “Public Health Emergency of
International Concern” and on March 11, 2020, WHO declared COVID-19 a pandemic.
The Groups businesses are in geographies where the impact of the virus was primarily managed medically
with economic stimulus provided to protect businesses from any negative short-term consequences. As of the
date of the financial statements, the economic impact of the virus has had no impact upon the portfolio in the
Netherlands, whilst in Hungary, governmental restrictions that were in place from November 2020 were
removed during the spring in response to the country’s vaccination programme. These restrictions whilst
affecting most of the group’s businesses were most keenly felt in the leisure and hospitality for which
restrictions were lifted by early July 2021. There have been no further restrictions added or reimposed in any
of the geographies that the group does business that would affect the groups abilities to operate normally.
- During the year, certain tenants received discounts along with lease extensions where this was
possible. Management expects rents, subject to no further imposition of restrictions arising from a 4
th
wave, to return to normal during the second half of the year. As such the Group lost some income
during the first six months of the year but nothing which impacted it as a going concern.
- The group has supported those businesses in the hospitality and leisure sectors through rent
reductions, deferrals of rent and/or a combination of this along with other incentives in order to offset
the losses generated by these tenants. At the same time all tenants were required to cover any and all
existing operating expenses associated with the premises which they lease from the group.
- Whilst there has been some loss of tenants during the year, this has not been significant, indicating
that the ongoing support of tenants through favourable rent conditions has allowed them to remain in
business and the group to maintain high levels of occupancy.
Management continues to monitor the situation and make decisions around tenants and rents as
appropriate and based on present conditions does not foresee any major impact on the Groups financial position
nor the fair value of the real estate portfolio disclosed in the financial statements.
Internal control and risk management systems in relation to the financial reporting process
The Board of Directors has overall responsibility for ensuring that the Group maintains a sound system
of internal controls, including financial, operational and compliance controls. Such a system forms an integral
part of the corporate governance strategy of the Company. Internal control procedures help to ensure the proper
management of risks and provide reasonable assurance that the business objectives of the Company can be
achieved. The internal control procedures are defined and implemented by the Company to ensure:
• the compliance of actions and decisions with applicable laws, regulations, standards, internal rules and
contracts;
• the efficiency and effectiveness of operations and the optimal use of the Company’s resources;
• the correct implementation of the Company’s internal processes, notably those to ensure the safeguarding
of assets;
• the integrity and reliability of financial and operational information, both for internal and external use;
• that management’s instructions and directions are properly applied; and
• that material risks are properly identified, assessed, mitigated and reported.
Like all control systems, internal controls cannot provide an absolute guarantee that risks of
misstatement, losses or human error are fully mitigated or eliminated. The control environment is an essential
element of the Company’s internal control framework, as it sets the tone for the organization. This is the
foundation of the other components of internal control, providing discipline and structure.
6
Regarding the internal controls in the area of accounting and financial reporting, the following should be
noted:
• In the context of the ongoing organizational realignment implemented since the Group moved
its headquarters to Luxembourg, a greater integration of the financial operations of the parent
company and affiliates under a single management structure was established.
• Controls have been established in the processing of accounting transactions to ensure
appropriate authorizations for transactions, effective segregation of duties, and the complete and
accurate recording of financial information.
• The Company relies on a comprehensive system of financial reporting. Strategic plans, business
plans, budgets and the interim and full-year consolidated accounts of the Group are drawn up
and brought to the Board for approval. The Board also approves all significant investments. The
Board receives monthly financial reports setting out the Company’s financial performance in
comparison to the approved budget and prior year figures.
• A clear segregation of duties and assignment of bank mandates between members of
management, and the accounting departments is implemented.
Research and development
The Company itself has no research and development activity and the research and development activity
carried out through its subsidiaries is not significant.
Share capital
The Company’s approved and issued share capital totals EUR 30,543,933 consisting of shares with a
face value of EUR 0.42 each. At 31 December 2021, the Company’s issued share capital included 70,723,650
ordinary shares and 2,000,000 dividend preferred shares (31 December 2020: 70,723,650 ordinary shares and
2,000,000 dividend preferred shares).
The “dividend preferred shares” carry the same rights as ordinary shares in the event of liquidation or
dissolution. They entitle the holder to an annual dividend determined by the General Meeting, but do not carry
voting rights.
Holders of dividend preferred shares are not entitled to any rights or dividends other than those granted
to them by the General Meeting. They are paid once a year. Interim dividends may only be paid if the
conditions required for such a distribution are met.
All dividend preferred shares are held in treasury.
As at 31 December 2021, the Company held 29,827,482 treasury shares (of which 93.29% - 27,827,482
are ordinary shares and 6.71% - 2,000,000 are dividend preferred shares) at a historic cost of 43,569,317 (31
December 2020: 29,672,830 shares – of which 93.26% - 27,672,830 are ordinary shares and 6.74% -
2,000,000 are dividend preferred shares – at a historic cost of EUR 43,179,158. During 2021, the Company
purchased 154,652 of its ordinary shares (2020: 586,442 shares) on an arm’s length basis.
Significant Events after the end of the reporting period
There were no significant events after the end of the reporting period.
Significant direct and indirect Shareholders
Gábor Várszegi, Chairman of the Board of Fotex, directly or indirectly controls a part of the voting shares
of Blackburn International Luxembourg S.á.r.l. (“Blackburn Luxembourg”), a Luxembourg company.
Blackburn Luxembourg has a controlling interest in Fotex Holding S.E. As at 31 December 2021 Blackburn
Luxembourg controlled 50.35% (31 December 2020: 50.35%) of Fotex Holding S.E.’s voting shares.
7
Corporate governance
The Company adopts and applies the Ten Principles of Corporate Governance of the Luxembourg Stock
Exchange (“Ten Principles”). It reviews the Ten Principles on a yearly basis and from time to time shares the
developments with the Luxembourg Stock Exchange as part of a joint follow-up process in order to reduce the
number of exceptions.
On December 15
th
, 2021, the Company updated its Corporate Governance Charter which was disclosed
on its website. Its website is continuously updated to publish the most recent information available, concerning
especially the financial calendar for information purposes, and the management.
With respect to the directors of the Company, members of the Board of Directors possess a mixture of
relevant experience which supports the business model of the Company. More information on this topic,
specifically on the profile of the directors, can be found in the "Management" section of the Company's website
(www.fotex.lu).
A majority of the directors consists of directors who are independent in accordance with the detailed list
of criteria described below in "The Board" chapter. Each director has a sufficient level of independence when
carrying out his or her mandate as member of the Board of Directors of the Company.
They are elected by the general assembly of the shareholders of the Company, each of them has a proven
professional track record and is deemed highly skilled in his/her profession. Considering these circumstances,
following their appointment there are no separate induction trainings carried out on behalf of the directors.
With regards to special committees of the Company, due to the investment holding character, the
Company is of the opinion that the number of special committees shall be limited in order to achieve optimal
efficiency. More specifically, the Company does not have any Nomination Committee. It assesses the necessity
of this recommendation, however, given the financial holding nature of the Company, it has been considered
such committee is not necessary. As such, there are no formal recruitment procedures for the appointment of
directors, this power is exercised by the Board of Directors along with the general assembly of the shareholders
of the Company, for their election.
In addition, no Remuneration Committee has been set-up by the Company. The recommendation is
reviewed by the Company from time to time, however, it is its view that due to the financial holding nature of
the Company, a Remuneration Committee is not required. The power to determine the remuneration of the
members of the Board of Directors is reserved to the shareholders. Accordingly, the Company does not have
a remuneration policy, all remuneration allocated by the Company, more specifically tantiemes allocated to
directors or members of the Audit Committee, are decided upon by the general assembly of the shareholders,
such remuneration in each case representing fixed amounts which do not depend on the performance of the
directors, or the Company itself.
As per the Articles of the Association, the Corporate Governance Charter of the Company and the
applicable laws, the financial reporting, internal control and risk management are monitored by the Audit
Committee of the Company. The rules set out in the Corporate Governance Charter describe the operational
method of the Audit Committee. In the organisational structure of the Company, no internal audit function
exists.
Ordinary shares issued by the Company are listed on the Luxembourg Stock Exchange. Applicable
insider dealing and market manipulation laws prevent anyone with material non-public information about a
company dealing in its shares and from committing market manipulations. A detailed Dealing Code does not
exist, however, directors have a duty to report any transactions in the Company's securities to the Company.
Such report has not been submitted to the Company.
The Group does not have a formal diversity policy in place as all the positions within the Group are
awarded to the candidate whose skills and qualifications meet the requirements of the given position to the
highest extent.
8
The Board
The Company is managed by a Board of Directors (the “Board”) composed of a minimum of five and a
maximum of eleven members (the “Directors”, each one a “Director”).
The Directors shall be appointed by the General Meeting of shareholders of the Company for a maximum
period which will end at the Annual General Meeting of the Company to take place during the third year
following their appointments. They shall remain in office until their successors are elected. They may be re-
elected and they may be dismissed at any time by the General Meeting, with or without cause.
In the event that one or several positions on the Board become vacant due to death, resignation or any
other cause, the remaining Directors shall select a replacement in accordance with the applicable legal
provisions, in which case this appointment shall be ratified at the next General Meeting of the shareholders of
the Company.
The Board of Directors has been authorized by the shareholders to manage the day-to-day operations of
the Company, as well as to make administrative decisions at the Company.
All rights which have not been conferred to the shareholders by the Articles of Association or by the laws
remain the competence of the Board of Directors. The Board may decide paying interim dividends as
prescribed by law. All long-term pay schemes, plans, or incentive programs relating to the employees of the
Company and its subsidiaries, which the Board would like to implement are required to be brought to the
General Meeting of the shareholders before approval.
The remuneration of members of the Board of Directors shall be fixed by the General Meeting.
The Board shall elect a chairman from among its members.
According to the Articles of Association, persons with no legal or financial link to the Company other
than their mandate as Director are considered “independent persons”.
“Independent persons” does not include persons who:
a) are employed by the Company or its subsidiaries at the time of their appointment as a member of
the Board of Directors;
b) carry out remunerated activities for the benefit of the Company or exercise technical, legal or
financial duties within the Company;
c) are shareholders of the Company and directly or indirectly hold at least 30% of the voting rights,
or are related to such a person;
d) receive financial benefits linked to the Company’s activities or profit;
e) have a legal relationship with a non-independent member of the Company in another company in
which the non-independent member has management and supervisory powers.
9
The Board is composed as follows:
Name:
Position:
Mr. Gábor VÁRSZEGI
Chairman of the Board
Mr. Dávid VÁRSZEGI
Member of the Board
Mr. Wiggert KARREMAN
Member of the Board
Mr. Martijn J. G. WINDELS
Member of the Board
Mr. Alan J. GRIFFITHS
Member of the Board
Mr. Gábor MOCSKONYI
Member of the Board
The Annual General Meeting of the Company held on 3 May 2021 elected the members of the Board of
Directors with a mandate expiring at the Annual General Meeting of shareholders of the Company called to
approve the Company’s annual accounts as at 31 December 2021.The Annual General Meeting also appointed
Bob Dole as Independent Member of the Board. On December 5
th
, 2021, he sadly passed away and was not
replaced for the year ended December 31
st
, 2021.
Each member of the Board of Directors is a high-qualified, honest and acclaimed specialist. The
Company publishes the information about the career of the Board of Directors’ members on its website.
The Board of Directors shall be vested with the most extensive powers to manage the affairs of the
Company and to carry out all measures and administrative acts falling within the scope of the corporate object.
Any powers not expressly reserved for the General Meeting by the Articles of Association or by the laws shall
fall within the remit of the Board of Directors.
A subsequent General Meeting representing at least 50% of the ordinary shares may establish the limits
and conditions applicable to the authorized capital, within the conditions laid down by the law. In this case,
the Board of Directors is authorized and mandated to:
- carry out a capital increase, in one or several stages, by issuing new shares to be paid up either in
cash, via contributions in kind, the transformation of debt or, subject to the approval of the Annual
General Meeting, via the integration of profits or reserves into the capital;
- set the place and date of the issue or of successive issues, the issue price, and the conditions and
procedures for subscribing and paying up the new shares;
- abolish or restrict the preferential subscription rights of shareholders with regard to new shares to be
issued as part of the authorized share capital.
This authorization is valid for a period of five years from the publication date of the authorization deed
and may be renewed by a General Meeting of shareholders for any shares of the authorized capital which have
not been issued by the Board of Directors in the meantime.
Following each capital increase carried out and duly recorded according to the legal formalities, the first
paragraph of the Articles of Association shall be amended in such a way as to reflect the increase carried out;
this amendment shall be recorded in the notarial deed by the Board of Directors or any other authorized person.
Audit Committee
The audit committee of the Company (the “Audit Committee”) shall be composed of a minimum of three
and a maximum of five people.
The members of the Audit Committee shall be appointed by the General Meeting of shareholders of the
Company from the members of the Board deemed to be “independent persons” for a period not exceeding
their respective mandates.
10
The Audit Committee shall elect a chairman from among its members. The quorum shall be met at Audit
Committee meetings when the members have been validly called to attend and when a minimum of two-thirds
or three of its members are present. All of the Committee’s decisions shall be taken by a simple majority vote.
In the event of a tied vote, the person presiding over the meeting shall have the casting vote. They may be re-
elected and they may be dismissed at any time by the General Meeting, with or without cause. The Audit
Committee reviews the annual report of the Company, controls and evaluates the operation of the financial
system and provides its tasks in connection with the Auditor of the Company.
The Audit Committee is composed as follows:
- Mr. Alan J. Griffiths (Chairman of the Audit Committee)
- Mr. Martijn J. G. Windels (Member of the Audit Committee)
- Mr. Wiggert Karreman (Member of the Audit Committee)
The Members of the Audit Committee were appointed at the Annual General Meeting held on 3 May
2021. The mandate of the members of the Audit Committee will expire at the Annual General Meeting of
shareholders of the Company called to approve the Company’s annual accounts as at 31 December 2021.
No specific remuneration is attributed to the members of the Audit Committee.
The Company publishes the resolutions after the General Meeting and ensures the shareholders get to
know their content.
Subject to the provisions of the Article 10 of the Articles of Incorporation of the Company, the General
Meeting of shareholders has the broadest powers to order, carry out or ratify measures relating to the
activities of the Company.
Rules Governing Amendments to the Articles of Incorporation
Amendments to the Articles of Incorporation are approved by resolution at an Extraordinary General Meeting
of shareholders under the conditions of the law.
Branches of the Company
The Company has no branches.
Climate change
Management has considered climate-related matters in preparing the financial statements which may be
material with respect to the most significant judgements and estimates that management has made.
This assessment has concluded that at present, there is no material impact on the business, its assets and
liabilities that are effected . In reaching this conclusion management has considered:
- The exiting of the crystal production business which commenced in 2019 and the following
regeneration of the area occupied by the factory;
- The refurbishment policy of the groups investment properties that has been updated to be carbon
neutral;
- The groups key assets are not located in areas experiencing extreme weather conditions requiring
additional expenditure to secure the asset value;
- There are no liabilities, contingent or otherwise in the group that need to be recorded as a result of
climate change.
Management continues to monitor the situation and will respond accordingly to events and situations
warranting attention.
11
Other Disclosures
There are no agreements with shareholders which are known to the Company and may result in
restrictions on the transfer of securities or voting rights within the meaning of the 2004/109/EC directive
(transparency directive).
There are no restrictions on the transfer of securities in the Articles of Incorporation of the Company.
There are no securities granting special control right to their holders and there are no restrictions on
voting rights of the ordinary shares.
There are no significant agreements to which the Company is party to and which would take effect, alter
or terminate upon a change of control following a public offering or takeover bid.
There are no agreements between the Company and its Board members or employees providing for
compensation if they resign or are made redundant without valid reason or if their employment ceases because
of a takeover bid.
Future Prospects
The
company continues
to
maintain
a stable and
strong
financial position
as
its
current cash on hand is now
far more than the
debt obligations
of the entire
Group. The
Group has
divested of several non-core
assets during
the
past year
which have continued to free
up more free
cash for the Group and have
also resulted in reducing
the overall
Group debt levels. The
Group also continues
to restructure
its companies in order to optimizes its
operations which
may require further
cash injections
but these are expected
to be minimal at best.
Unfortunately, a§ management
expected
the negative
effects of the
COVID-I9 Corona Virus
still
continue
to have
a visible impact on the
Group's income
and final results for
the
year
and
we expect this to also continue
into
2022 as it did 2021, a|beit
with a smaller
impact than
before. As mentioned,
certain tenant§ have received
free
months
during
2021
as
irl,2020
whilst
others were
given
discounts along
with
lease
extensions where this
was feasible
and we expect a similar
situation
to occur during some
of
2022
but again to a lesser degree as
tenants
grow
accustomed to
the world with Covid
in it. As
a
result
of this the Group has lost some income
also
during the
past year
which is
clearly visible
within its
year
end results, but these
effects do
not
impact the Group
as an
going
concem as it continues
to be
profitable
and cashflow
positive
and the effects ofwhich
diminish
from
year
to
year.
It is
expected that we may
still lose
some more tenants in 2022
due to the long-term adverse
effects
of
the
pandemic (reduced
tourism
and spending
and increased
unemployment as
examples) however less than in
previous years;
along
with discounts
which may
once again have
to be
given
in order to assist tenants in
overcoming the
current crisis
while ensuring that
vacancy rates
do not become rampant. This
situation
is most
problematic
in the
Group's Hungarian
portfolio
while
the tenants in Holland
seem
more resilient
at
the moment.
Due
to the vaccine
drive by the EU
and most
governmonts
around the world vaccination rates
continue to
grow
and are
quite
high
already however
risks remain
as variants such
as the Omicron continue to
po§e
rrnforeseen
issues
on the basis
of which management
will
continue to be extremely
prudent
and cautious in
future invostments
and with
its
erowth
expectations. The
Group has
successfully overcome the
first
couple of
years
of the
pandemic
by
making
necessary
investments into
technology and changes in
staffing;
however,
we
will continue to be
vigilant
and
invest
further into our technological preparedness
in
case of future shutdowns
which may
impact
some
of the
Groups companies.
As the long-term
effects of this virus
are
still unknown from an
economic standpoint, we still expect
medium
to long term
con§umer habit trends
to change
which may have an impact
on some of the
property
assets
which
the Group owns. Based
on these facts
we continue
to maintain the
expectation that non-payment by
tenants
and tenant
defaults
may
also be an issue for
the
Group
itt2022.
March
3rd, 2022, Luxembourg
"",+_
Fotex
Holdirrg S.E.
chairman of the Board
l2
Management Responsibility
Statement
We confirm that to the
best of
our
knowledge,
the
consolidated financial
statements as
of 31
December
202I have
been
prepared
in accordance
with International
Financial
Reporting
Standards as adopted
by the
European
Union, and
give
a true
and fair view
ofthe assets,
liabilities,
financial
position
and
profit
or loss
of
Fotex
Holding
S.E. and its subsidiaries
included in the
consolidation
taken
as
a whole. In addition, the
management report includes
a fair review
of the
development
and
performance
of the
business and the
position
of Fotex Holding
S.E. and its
subsidiaries included
in the
consolidation
taken
as a whole,
together with a
description
ofthe
principal
risks
and uncertainties
that they face.
March 3rd, 2022, Luxemb
our
g
chairman of the Board
of Directors
Member
of
the Board of Directors
paűvÁnszpct
13
Tel. 352 45 123-1
www.bdo.lu
1, rue Jean Piret
Boîte Postale 351
L-2013 Luxembourg
14
Report of the Réviseur D’Entreprises Agréé
REPORT OF THE REVISEUR D’ENTREPRISES AGREE
To the Shareholders of
Fotex Holding S.E.
272, rue de Neudorf
L-2222 Luxembourg
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Fotex Holding S.E. and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at 31 December 2021, and the
consolidated income statement, consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at 31 December 2021, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 on
the audit profession (Law of 23 July 2016) and with International Standards on Auditing (“ISAs”) as adopted
for Luxembourg by the “Commission de Surveillance du Secteur Financier” (“CSSF”). Our responsibilities
under the EU regulation N° 537/2014, the Law of 23 July 2016 and ISAs as adopted for Luxembourg by the
CSSF are further described in the « Responsibilities of “réviseur d’entreprises agréé” for the audit of the
consolidated financial statements » section of our report. We are also independent of the Group in accordance
with the International Code of Ethics for Professional Accountants, including International Independence
Standards, issued by the International Ethics Standards Board for Accountants (IESBA Code) as adopted for
Luxembourg by the CSSF together with the ethical requirements that are relevant to our audit of the
consolidated financial statements, and have fulfilled our other ethical responsibilities under those ethical
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in the context
of the audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters.
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Valuation of Investment Properties
a) Why the matter was considered to be one of most significant in the audit?
We refer to the accounting policies 2. “Investment properties”, 2. “Non-current assets held for sale and
discontinued operations”, 3. “Significant Accounting Judgements, Estimates and Assumptions”, and note 10.
“Investment Properties”, in the consolidated financial statements of Fotex Holding S.E.
As of 31 December 2021 the Group held a portfolio of investment properties with a carrying amount of
EUR 105,489,748 (2020: EUR 118,390,830) and respective fair value of EUR 324,648,352 (2020: EUR
336,403,084). The Group’s investment properties are comprised of office, retail outlets, warehouses, land and
other real estate properties.
In accordance with the Group’s accounting policy, subsequent to the initial recognition the investment
properties are carried at cost and depreciated systematically, except for land, over their useful economic life.
The Group determines and presents in the notes the fair value of its investment properties (Note 10). Such fair
value is also used for the purpose of the impairment test of the Group’s investment properties and the
impairment test of the carrying value of the goodwill.
The Group determines the fair values based on external valuation reports issued by an accredited
independent professional. To determine the investment properties fair value the appraiser used the present
value of the estimated future cash flows generated from the respective assets, the direct capitalization method
based on actual rental income or market approach based on comparables depending on the nature of the asset.
Assumptions are applied for yields and estimated market rent, which are influenced by prevailing market
yields and comparable market transactions to arrive at the fair value.
The valuation of investment properties is complex and incorporates numerous assumptions and
parameters relevant to measurement that involve considerable estimation uncertainties and judgment. Any
change in the assumptions used and parameters used to measure the investment properties may cause a
significant change in the respective fair values.
The significance of the estimates and judgments, together with the fact that only a small percentage
difference in individual property valuation, when aggregated, could result in a material misstatement in the
note disclosure, warrants specific audit focus in this area.
b) How the matter was addressed during the audit?
Our audit procedures over the valuation of Investment properties included:
• We tested the design and implementation of the key controls around the determination and
monitoring of the fair value measurement;
• We assessed the competence, capabilities, qualifications, independence and integrity of the external
valuer and read the terms of engagement by Fotex Holding S.E. to determine whether there were
any matters that might have affected her objectivity or limited the scope of her work.
• We assessed that the valuation approach applied by the external appraiser is in accordance with
relevant valuation and accounting standards and appropriate for the purpose of the valuation of the
underlying investment properties.
• For a sample of properties we reconciled the inputs used in the valuation process with the respective
lease agreements and other relevant documentation.
• We involved our real estate specialists and considered the assumptions used by the appraiser in
their valuation models by benchmarking the key assumptions, including yield and market rents, to
comparable market data.
• Further we assessed the adequacy and completeness of the disclosures in the notes to consolidated
financial statements, and the Group’s descriptions regarding the inherent degree of subjectivity and
the key assumption in estimates.
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Other information
The Board of Directors is responsible for the other information. The other information comprises the
information included in the consolidated management report and the Corporate Governance Statement but
does not include the consolidated financial statements and our report of “réviseur d’entreprises agréé” thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report this fact. We have nothing to report in this regard.
Responsibilities of the Board of Directors and Those Charged with Governance for the
consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with IFRSs as adopted by the European Union, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
The Board of Directors is responsible for presenting the consolidated financial statements in compliance
with the requirements set out in the Delegated Regulation 2019/815 on European Single Electronic Format
(“ESEF Regulation”).
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group
or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
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Responsibilities of the “réviseur d’entreprises agréé” for the Audit of the consolidated financial
statements
The objectives of our audit are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a report
of “réviseur d’entreprises agréé” that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the EU Regulation N° 537/2014, the Law of
23 July 2016 and with ISAs as adopted for Luxembourg by the CSSF will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these consolidated financial statements.
Our responsibility is to assess whether the consolidated financial statements have been prepared in all
material respects with the requirements laid down in the ESEF Regulation.
As part of an audit in accordance with the EU Regulation N° 537/2014, the Law of 23 July 2016 and
with ISAs as adopted for Luxembourg by the CSSF, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a 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 in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Board of Directors.
• Conclude on the appropriateness of Board of Directors’ use of the going concern basis 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 ability to continue
as a going concern. If we conclude that a material uncertainty exists, we are required to draw
attention in our report of “réviseur d’entreprises agréé” to the related disclosures in the
consolidated 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 report of
“réviseur d’entreprises agréé”. However, future events or conditions may cause the Group to
cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
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• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
and 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.
We communicate with those charged with governance regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
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, actions taken to
eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and are
therefore the key audit matters. We describe these matters in our report unless law or regulation precludes
public disclosure about the matter.
Report on Other Legal and Regulatory Requirements
We have been appointed as “réviseur d’entreprises agréé” by the General Meeting of the Shareholders
on 3 May 2021 and the duration of our uninterrupted engagement, including previous renewals and
reappointments, is two years.
The consolidated management report is consistent with the consolidated financial statements and has
been prepared in accordance with applicable legal requirements.
The Corporate Governance Statement is included in the consolidated management report. The
information required by Article 68ter paragraph (1) letters c) and d) of the law of 19 December 2002 on the
commercial and companies register and on the accounting records and annual accounts of undertakings, as
amended, is consistent with the consolidated financial statements and has been prepared in accordance with
applicable legal requirements.
We confirm that the audit opinion is consistent with the additional report to the audit committee or
equivalent.
We confirm that the prohibited non-audit services referred to in the EU Regulation N° 537/2014 were
not provided and that we remained independent of the Group in conducting the audit.
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We have checked the compliance of the consolidated financial statements of the Group as at 31 December
2021 with relevant statutory requirements set out in the ESEF Regulation that are applicable to financial
statements.
For the Group it relates to:
• Consolidated financial statements prepared in a valid xHTML format;
• The XBRL markup of the consolidated financial statements using the core taxonomy and the common
rules on markups specified in in the ESEF Regulation.
In our opinion, the consolidated financial statements of Fotex Holding S.E. as at 31 December 2021,
identified as Fotex 2021 consolidated IFRS.zip, have been prepared, in all material respects, in compliance
with the requirements laid down in the ESEF Regulation.”
Luxembourg, 4 March 2022
BDO Audit
Cabinet de révision agréé
represented by
Christoph Schmitt
20
Fotex Holding S.E. and Subsidiaries
Consolidated Statement of Financial Position
Figures in EUR
Note
31 December 2021
31 December 2020
EUR
Assets
Current Assets:
Cash and short-term deposits
5
Current portion of other financial assets
6
Accounts receivable and prepayments
7
Income tax receivable
Inventories
8
Total current assets
Non-current Assets:
Property, plant and equipment
9
Right-of-use assets
Investment properties
10
Deferred tax assets
17
Intangible assets
11
Non-current portion of other financial assets
6
Goodwill arising on acquisition
12
Total non-current assets
Total assets
Liabilities and Shareholders’ Equity
Current Liabilities:
Interest-bearing loans and borrowings
16
Provision
Accounts payable and other liabilities
13
Total current liabilities
Non-current Liabilities:
Interest-bearing loans and borrowings
16
Other long-term liabilities
13
Deferred tax liability
17
Total non-current liabilities
Shareholders’ Equity:
Issued capital
14
Additional paid-in capital
Retained earnings
Translation difference
(5,502,729 )
(4,589,049 )
(43,179,158 )
Treasury shares, at cost
14
(43,569,317 )
Equity attributable to equity holders of the parent company
Non-controlling interests in consolidated subsidiaries
Total shareholders’ equity
Total liabilities and shareholders’ equity
The accompanying notes on pages 27 to 72 form an integral part of these consolidated financial
statements.
21
Fotex Holding S.E. and Subsidiaries
Consolidated Income Statement
Figures in EUR
Note
2021
2020
EUR
EUR
Revenue
18
Cost of sales
(498,301 )
(1,112,287 )
Gross Profit
Operating expenses and gain
15
(21,326,604 )
(20,225,335 )
Gain on disposal of the sales of fixed
assets
Gain on disposal of the sales of
investment properties
19
Operating profit
Interest income
Interest expenses
16
(2,266,331 )
(1,953,075 )
Income before income tax
Income tax expense
17
(3,909,388 )
(1,330,145 )
Net income
Attributable to:
Equity holders of the parent company
Non-controlling interests
Net income
Basic earnings per share
23
Diluted earnings per share
23
.
The accompanying notes on pages 27 to 72 form an integral part of these consolidated financial statements.
22
Fotex Holding S.E. and Subsidiaries
Consolidated Statement of Comprehensive Income
Figures in EUR
Note
2021
2020
EUR
EUR
Net income
Other comprehensive income:
(913,680 )
(2,565,766 )
Total comprehensive income/ (loss)
Attributable to:
Equity holders of the parent company
Non-controlling interests
Other comprehensive income is the Exchange gain/(loss) on translation of foreign operations which will
be subsequently reclassified to profit or loss on the disposal of the relevant foreign operations.
The accompanying notes on pages 27 to 72 form an integral part of these consolidated financial statements.
23
Fotex Holding S.E. and Subsidiaries
Consolidated Statement of Changes in Equity
Figures in EUR
for the year ended 31 December 2021
Issued
Capital
Additional
Paid-in
Capital
Retained
Earnings
Translation
Difference
Treasury
Shares
Total
Non-
controlling
interests
Total Equity
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
1 January 2021
(4,589,049 )
(43,179,158 )
Net income 2021
Other comprehensive income
-
(913,680 )
(913,680 )
(913,680 )
Total comprehensive income
(913,680 )
Purchase of treasury shares
(note 14)
(390,159 )
(390,159 )
(390,159 )
Shareholder dividends
Minority dividends
Purchase from Minority
shareholders
31 December 2021
(5,502,729 )
The accompanying notes on pages 27 to 72 form an integral part of these consolidated financial statements.
24
Fotex Holding S.E. and Subsidiaries
Consolidated Statement of Changes in Equity
Figures in EUR
for the year ended 31 December 2021
Issued
Capital
Additional
Paid-in
Capital
Retained
Earnings
Translation
Difference
Treasury
Shares
Total
Non-
controlling
interests
Total Equity
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
1 January 2020
(2,024,686 )
(41,751,015 )
Net income 2020
Other comprehensive income
(2,564,363 )
(2,564,363 )
(1,403 )
(2,565,766 )
Total comprehensive income
(2,564,363 )
Purchase of treasury shares
(note 14)
(1,428,143 )
(1,428,143 )
(1,428,143 )
Shareholder dividends
Minority dividends
Purchase from Minority
shareholders
31 December 2020
(4,589,049 )
(43,179,158 )
The accompanying notes on pages 27 to 72 form an integral part of these consolidated financial statements.
Fotex Holding S.E. and Subsidiaries
Consolidated Statement of Cash Flows
Figures in EUR
Note
2021
2020
EUR
EUR
Cash flows from operating activities:
Income before income taxes
Depreciation and amortisation
9, 10
Extraordinary depreciation
Scrapped tangible assets
Impairment loss of debtors and reversals
7
Derecognition of investments
(2,043 )
Creation of provision and reversals
15
(289,727 )
Loss/(gain) on disposals of fixed assets and investment properties
9, 10, 19
(25,265,217 )
(5,120,124 )
Loss/(gain) on disposals of asset held for sale
(196,356 )
Interest income
(11,561 )
(6,153 )
Effect of spread of rental related incentives and allowance
(387,306 )
Interest expenses
16
Changes in working capital:
Accounts receivable and prepayments
(1,732,200 )
Inventories
(162,226 )
Accounts payable and other liabilities
(3,391,861 )
Cash generated from operations
Income tax paid
17
(1,870,274 )
(2,920,579 )
Net cash flow from operating activities
Cash flows from investing activities:
Acquisition of investment properties
10
(1,305,702 )
(3,452,648 )
Acquisition of tangible and intangible assets
9
(1,651,514 )
(544,473 )
Sale proceeds less cost to sell of fixed assets and investment
properties
19
Sale proceeds less cost to sell of asset held for sale
Other changes of tangible and intangible assets
9
(109,071 )
Interest received
Net cash flow provided by investing activities
Cash flows from financing activities:
Interest paid
Lease interest paid
(1,915,232 )
(1,559,487 )
(4,447 )
Repayments of loan received
16
(16,979,142 )
(10,304,687 )
Payment of principal portion of lease liabilities
(30,073 )
Purchase of treasury shares
14
(390,159 )
(1,428,143 )
Change in other long term liabilities
Net cash flow from financing activities
(18,249,751 )
(13,105,205 )
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
26
Fotex Holding S.E. and Subsidiaries
Consolidated Statement of Cash Flows
Figures in EUR
Note
2021
2020
EUR
EUR
Change in cash and cash equivalents
Cash and cash equivalents at beginning of the year
5
Effect of foreign currency translation
(728,126 )
Cash and cash equivalents at end of the year
5
The accompanying notes on pages 27 to 72 form an integral part of these consolidated financial
statements.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
27
1. General
regulated under the laws of the Grand Duchy of Luxembour g. The Company is primarily the holding company
of a group of subsidiaries (Fotex and its subsidiaries, hereafter the “Group”) incorporated in Luxembourg, the
Netherlands and Hungary and engaged in a variety of property management, manufacturing, r etailing and
other activities. Fotex Holding S.E. is the parent of the Group. Except for Upington Investments S.à r.l., which
is registered in Luxembourg, and Fotex Netherlands B.V., FN2 B.V., FN3 B.V., FN5 B.V. and Long Term
CRE Fund B.V. which are registered in the Netherlands, all subsidiaries of the Group are registered and operate
in Hungary.
The only and ultimate Parent company of the group is Blackburn In ternational s.a.r.l.
The Company’s current registered address is 272, r ue de Neudorf , L -222 2 Luxembourg, Luxe mbourg.
The ownership of consolidated subsidiaries, after considering indirect shareholdings, is:
Subsidiaries
Principal Activities
Ownership (%)
Registered Address
31/12/2021
31/12/2020
Ajka Kristály
Üvegipari Kft.
Crystal manufacturing
and retail
100.00
100.00
4 Alkotmány utca, 8400 Ajka,
Hungary
Fotex Netherlands
B.V.
Property management
100.00
100.00
13 Sarphatlkade, WV1017
Amsterdam, Netherland
FN2 B.V.
Property management
100.00
100.00
13 Sarphatlkade, WV1017
Amsterdam, Netherland
FN3 B.V.
Property management
100.00
100.00
13 Sarphatlkade, WV1017
Amsterdam, Netherland
FN4 B.V*
Property management
-
100.00
13 Sarphatlkade, WV1017
Amsterdam, Netherland
FN5 B.V.
Property management
100.00
100.00
13 Sarphatlkade, WV1017
Amsterdam, Netherland
Fotexnet Kft.
Internet retail and other
services
100.00
100.00
1 Palatinus. út, 1025 Budapest,
Hungary
Hungaroton Music
Zrt.
Music archive
99.21
99.21
45-49 Reitter Ferenc utca, 1135
Budapest, Hungary
Keringatlan Kft.
Property management
99.99
99.99
1 Palatinus. út, 1025 Budapest,
Hungary
Long Term CRE
Fund B.V.
Property management
100.00
100.00
13 Sarphatlkade, WV1017
Amsterdam, Netherland
Plaza Park Kft.
Property management
-
100.00
1 Palatinus. út, 1025 Budapest,
Hungary
Sigma Kft.
Property services
100.00
100.00
12 Nagy J. utca, 1126 Budapest,
Hungary
Székhely 2007 Kft.
Property services
99.27
99.27
1 Palatinus. út, 1025 Budapest,
Hungary
Upington
Investments S.à r.l.
Investment holding
100.00
100.00
272 rue de Neudorf, L-2222
Luxembourg, Luxembourg
* In August 2021, FN4 B.V merged into Fotex Netherlands. There were no adjustments or changes to the
values of assets and liabilities arising from this transaction.
Immaterial non-consolidated subsidiary
In June 2021, Fotex established a new group company Arany Juhár Időstthon Kft. The purpose of the company
is to run a retirement home for third party customers using an investment property currently owned by the
group. The entity is expected to be consolidated in the group from 2022 when the business is operational. In
the meantime, transactions involving the entity are disclosed as related party transactions in note 24.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
28
2. Significant Accounting Policies
Basis of presentation
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the EU.
The consolidated financial statements have been prepared on a historical cost basis. The accounting
policies have been consistently applied by the Group and are consistent with those used in the previous year
except as explained in the Change in accounting policies section of this note where appropriate. The
consolidated financial statements are presented in EUR, except where otherwise indicated.
The consolidated financial statements of Fotex for the year ended 31 December 2021 were authorized
for issue by the Board of Directors on March 3rd, 2022.
Comparative figures
The consolidated financial statements provide comparative information in respect of the previous period.
Statement of compliance
The subsidiaries of the Group maintain their official accounting records and prepare their individual
financial statements in accordance with the accounting regulations of their country of registration. The
accompanying consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the EU. IFRS comprise standards and interpretations
approved by the International Accounting Standards Board (“IASB”) and the International Financial Reporting
Interpretations Committee (“IFRIC”) as endorsed by the EU.
Effective 1 January 2005, the Group prepares its consolidated financial statements in accordance with
IFRS as adopted by the EU. At 31 December 2021 there is no difference in the policies applied by the Group
between IFRS and IFRS that have been adopted by the EU.
As a result of Fotex’s transformation to an S.E. (Societas Europaea) from 1 January 2009, Fotex Holding
S.E. became a European public limited company. Fotex moved its registered office to Luxembourg and is
regulated under the laws of the Grand Duchy of Luxembourg. The reporting currency of the consolidated
financial statements changed to EUR.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Fotex and its subsidiaries as
at 31 December 2021. Control is achieved when Fotex is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, Fotex controls an investee if, and only if, it has:
• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant
activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee
• The ability to use its power over the investee to affect its returns
When Fotex has less than a majority of the voting or similar rights of an investee, Fotex considers all
relevant facts and circumstances in assessing whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• Fotex’s voting rights and potential voting rights
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
29
2. Significant Accounting Policies (continued)
Fotex reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control. Consolidation of a subsidiary begins when Fotex
obtains control over the subsidiary and ceases when Fotex loses control of the subsidiary. Assets, liabilities,
income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated
financial statements from the date Fotex gains control until the date when Fotex ceases to control the
subsidiary.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity
holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling
interests having a deficit balance. When necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with Fotex’s accounting policies. All intra-group assets
and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group
are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity
transaction. If Fotex loses control over a subsidiary, it:
• Derecognises the assets (including goodwill) and liabilities of the subsidiary
• Derecognises the carrying amount of any non-controlling interests
• Derecognises the cumulative translation differences recorded in equity
• Recognises the fair value of the consideration received
• Recognises the fair value of any investment retained
• Recognises any surplus or deficit in profit or loss
• Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or
retained earnings, as appropriate, as would be required if the Group had directly disposed of the
related assets or liabilities
Foreign currency translation
The functional currency of the Group’s subsidiaries included in the consolidation is the Hungarian Forint
(“HUF”) – except for the subsidiaries outside of Hungary, whose functional currency is EUR. Considering
that the presentation currency is EUR, it is necessary to convert the elements of statement of financial position
and income statement of subsidiaries from HUF to EUR.
Assets and liabilities have been converted to EUR using the MNB (Hungarian National Bank) FX rate
as at 31 December 2021: 369 HUF/EUR (31 December 2020: 365.13). The income statement is converted to
EUR using the Hungarian National Bank average FX rate of HUF/EUR 358.52 (31 December 2020 HUF/EUR
351.17. The exchange difference in translation of foreign operations is shown in the other comprehensive
income.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
30
2. Significant Accounting Policies (continued)
Each entity in the Group determines its own functional currency and items included in the financial
statements of each entity are measured using that functional currency. Transactions in foreign currencies are
initially recorded in the functional currency translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency
rate of exchange ruling at the balance sheet date. Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rates as at the dates of the initial transactions. Non-
monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined. Any goodwill arising on the acquisition of a foreign operation and any
fair value adjustments to the carrying amounts of assets and liabilities arising on the acquisition are treated as
assets and liabilities of the foreign operation and translated at the closing rate.
Non-current assets held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will
be recovered principally through a sale transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value
less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal
group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable and
the asset or disposal group is available for immediate sale in its present condition. Actions required to complete
the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision
to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected
to be completed within one year from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as
held for sale.
Assets and liabilities classified as held for sale are presented separately as current items in the statement
of financial position.
Discontinued operations are excluded from the results of continuing operations and are presented as a
single amount as profit or loss after tax from discontinued operations in the statement of profit or loss.
Revenue from contracts with customers
Sale of goods
Revenue is recognised when the Group satisfies a performance obligation by transferring a promised
good or service (ie an asset) to a customer. An asset is transferred when the customer obtains control of that
asset. Revenue is measured at fair value of consideration received or receivable. The revenues represent sales
at invoiced amounts net of value added tax and discounts. The revenue from selling of goods is generated
mainly by selling crystal and glass products, and other consumer products. The Group satisfies its performance
obligations upon deliveries of such goods. The contracts with customers do not contain any financing
components and the consideration does not contain any variable part.
Service charges and expenses recoverable from tenants
Income arising from expenses indirectly recharged to tenants is recognised in the period in which the
expense can be contractually recovered and at fair value of consideration received or receivable. Service
charges and other such receipts are included gross of the related costs in revenue, as the directors consider that
the Group acts as principal in this respect. The Group satisfies its performance obligations over the related
period of the services. The contracts with customers do not contain any financing components and the
consideration does not contain any variable part.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
31
2. Significant Accounting Policies (continued)
When an entity that is a principal satisfies a performance obligation, the entity recognises revenue in the
gross amount of consideration to which it expects to be entitled in exchange for the specified good or service
transferred. When an entity that is an agent satisfies a performance obligation, the entity recognises revenue
in the amount of any fee or commission to which it expects to be entitled in exchange for arranging for the
specified goods or services to be provided by the other party. An entity’s fee or commission might be the net
amount of consideration that the entity retains after paying the other party the consideration received in
exchange for the goods or services to be provided by that party. Income arising from expenses directly
recharged to tenants is recognised net of the related costs, as the management consider that the Group acts as
agent in such cases.
Ancillary mall revenue
Revenue is measured at fair value of consideration received or receivable. The revenues represent sales
at invoiced amounts net of value added taxes and discounts. The ancillary revenue arising from operating of
shopping malls refers to the revenue generated from cinema ticket and sundry food and beverage sales, as well
as revenue generated from operating a fitness centre and similar services.
The Group satisfies its performance obligations upon the provision of the service associated with the
service being delivered i.e. presentation of the film shown, entrance and use of the fitness facilities. The
contracts with customers do not contain any financing components and the consideration does not contain any
variable part.
Revenue is recognised at the time of the provision of the service.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer.
If the Group performs by transferring goods or services to a customer before the customer pays consideration
or before payment is due, a contract asset is recognised for the earned consideration that is conditional.
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e., only
the passage of time is required before payment of the consideration is due).
The Group continuously monitors the collection of its receivables and takes early actions in case of delays
in payments. As a result, the volume of overdue receivables is very low, less than 1 % of the invoiced revenues.
In case of a major delay, the Group evaluates the collectability of receivables individually and accounts for
write-off to the necessary level, on a case-by-case basis. Following these actions, the Group considers the
residual risk of non-payment as insignificant, therefore the nominal value of the non-impaired receivables is
considered as fair value. The Group evaluates the payment trends annually.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before the Group transfers goods or services to the customer, a contract liability is recognised
when the payment is made. Contract liabilities are recognised as revenue when the Group performs under the
contract.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
32
2. Significant Accounting Policies (continued)
Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group
and the revenue can be reliably measured. The following specific recognition criteria for rental income must
also be met before revenue is recognised:
Rental income receivable from operating leases less the Group’s initial direct costs of entering into the
leases is recognised on a straight-line basis over the term of the lease. Incentives for lessees to enter into lease
agreements are spread evenly over the lease term, even if the payments are not made on such a basis. The lease
term is the non –cancellable period of the lease together with any further term for which the tenant has the
option to continue the lease, where, at the inception of the lease, the directors are reasonably certain that the
tenant will exercise that option. Amounts received from tenants to terminate leases or to compensate for
dilapidations are recognised in the income statement when they arise.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Management uses judgements during initial recognition, subsequent measurement, amortisation,
impairment and de-recognition of financial instruments. Management’s judgements that have the most
significant effect on the financial statements are disclosed below in each sub-section in detail.
Fair value of financial instruments
The fair value of financial instruments that are actively traded in organised financial markets is
determined by reference to quoted market bid prices at the close of business on the balance sheet date. For
financial instruments where there is no active market, fair value is determined using valuation techniques.
Such techniques may include using recent arm's length market transactions; reference to the current fair value
of another instrument that is substantially the same; discounted cash flow analysis or other valuation models.
Amortised cost of financial instruments
Amortised cost is computed using the effective interest method less any allowance for impairment and
principal repayment or reduction. The calculation takes into account any premium or discount on acquisition
and includes transaction costs and fees that are an integral part of the effective interest rate.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair
value through other comprehensive income (OCI), and 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 business model for managing them. With the exception of certain
trade receivables, the Group initially measures a financial asset at its fair value plus, in the case of a financial
asset not at fair value through profit or loss, transaction costs.
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.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
33
2. Significant Accounting Policies (continued)
The Group’s business model for managing financial assets refers 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 the financial assets, or both.
Subsequent measurement
Under IFRS 9, debt financial instruments are subsequently measured at fair value through profit or loss
(FVPL), amortised cost, or fair value through other comprehensive income (FVOCI). The classification is
based on two criteria: the Group’s business model for managing the assets; and whether the instruments’
contractual cash flows represent ‘solely payments of principal and interest’ on the principal amount
outstanding (the ‘SPPI criterion’).
The classification and measurement of the Group’s financial assets are, as follows:
• Debt instruments at amortised cost for financial assets that are held within a business model
with the objective to hold the financial assets in order to collect contractual cash flows that meet
the SPPI criterion. This category includes the Group’s Trade and other receivables (including
mainly tax receivables) and other financial assets (both current and non-current, including
mainly deposits received from tenants).
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of financial position)
when:
• The rights to receive cash flows from the asset have expired; or
• The Group 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 under a
‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks
and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all
the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-
through arrangement, and has neither transferred nor retained substantially all the risks and rewards of the
asset nor transferred control of the asset, a new asset is recognised to the extent of the Group's continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset
is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration
that the Group could be required to repay. When continuing involvement takes the form of a written and/or
purchased option (including a cash settled option or similar provision) on the transferred asset, the extent of
the Group's continuing involvement is the amount of the transferred asset that the Group may repurchase,
except that in the case of a written put option (including a cash settled option or similar provision) on an asset
measured at fair value, the extent of the Group's continuing involvement is limited to the lower of the fair
value of the transferred asset and the option exercise price.
Impairment of financial assets.
IFRS 9 requires the Group to record an allowance for expected credit loss (ECL) for all loans and other debt
financial assets not held at FVPL.
ECLs are based on the difference between the contractual cash flows due in accordance with the contract
and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation
to the asset’s original effective interest rate.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
34
2. Significant Accounting Policies (continued)
For Contract assets and Trade and other receivables, the Group has applied the standard’s simplified
approach and has calculated ECLs based on lifetime expected credit losses. The Group has established a
provision matrix that is based on the Group’s historical credit loss experience, adjusted for forward-looking
factors specific to the debtors and the economic environment.
For other debt financial assets (i.e., loans and debt securities at FVOCI), the ECL is based on the 12-
month ECL. The 12-month ECL is the portion of lifetime ECLs that results from default events on a financial
instrument that are possible within 12 months after the reporting date. However, when there has been a
significant increase in credit risk since origination, the allowance will be based on the lifetime ECL.
The Group considers a financial asset in default when contractual payment are 90 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when internal or
external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full
before taking into account any credit enhancements held by the Group.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.
Financial liabilities are recognised initially at fair value and in the case of loans and borrowings, include
directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings including bank
overdrafts.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities held for trading and
financial liabilities designated upon initial recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing
in the near term. This category also includes derivative financial instruments entered into by the Group that
are not designated as hedging instruments in hedge relationships as defined by IFRS 9. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.
Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.
Financial liabilities designated upon initial recognition at fair value through profit or loss are designated
at the initial date of recognition, and only if the criteria in IFRS 9 are satisfied. The Group has not designated
any financial liability as at fair value through profit or loss.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
35
2. Significant Accounting Policies (continued)
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised
cost using effective interest rate method. Gains and losses are recognised in profit or loss when the liabilities
are derecognised as well as through the EIR amortisation process.
This category generally applies to interest-bearing loans and borrowings. For more information, refer to
Note 16.
Derecognition
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 recognition of a new liability. The
difference in the respective carrying amounts is recognised in the statement of profit or loss.
Cash and cash equivalents
Cash and short-term deposits in the statement of financial position comprise cash at bank and on hand
and short-term deposits with an original maturity of three months or less. Cash and cash equivalents comprise
cash on hand, deposits held at call with banks, investments in marketable securities that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and
short-term deposits as defined above.
Inventories
Inventories are valued at the lower of cost or net realisable value on a weighted average basis after making
allowance for any obsolete or slow-moving items.
Materials and merchandise goods are valued at purchase cost on a weighted average basis. Purchase costs
include purchase price, trade discounts, unrecoverable taxes, transport and other cost which are directly
attributable to purchase of the raw materials and merchandising goods.
The value of work in progress and finished goods includes cost of direct materials and labour and a
proportion of overheads in manufacturing subsidiaries but excludes borrowing costs.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs
of completion and the estimated costs necessary to make the sale.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
36
2. Significant Accounting Policies (continued)
Property, plant and equipment
Property, plant and equipment is stated at purchase price or production cost less accumulated depreciation
and impairment losses, if any. Production costs for self-constructed assets include the cost of materials, direct
labour and an appropriate proportion of production overheads.
Replacements and improvements, which prolong the useful life or significantly improve the condition of
the asset are capitalised. Maintenance and repairs are recognised as an expense in the period in which they are
incurred.
Land is not depreciated.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
Years
Buildings
50
Plant and equipment
7-12.5
Vehicles
5
Computer equipment
3
The cost of properties retired or otherwise disposed of, together with the accumulated depreciation
provided thereon, is eliminated from the accounts. The net gain or loss is recognised as other operating income
or expense.
The carrying amounts of property, plant and equipment are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable. If such an indication exists
and where the carrying value exceeds the recoverable amount, the assets or cash generating units are written
down to their recoverable amount. The recoverable amount of property, plant and equipment is the higher of
fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the cash generating unit to which the asset belongs.
Impairment losses are recognised in the income statement as an operating expense.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on de-recognition
of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
item) is included in the income statement in the year the item is derecognised.
The asset’s residual values, useful lives and methods of depreciation are reviewed and adjusted if
appropriate, at each financial year-end.
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement at inception date: whether fulfilment of the arrangement is dependent on the use of a specific
asset or assets or the arrangement conveys a right to use the asset.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
37
2. Significant Accounting Policies (continued)
Group as a lessee:
The Group has lease contracts for only few items of buildings, vehicles and other equipment.
Upon adoption of IFRS 16, the Group applied a single recognition and measurement approach for all
leases
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease
payments made at or before the commencement date less any lease incentives received. Unless the Group is
reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-
use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term.
Right-of-use assets are subject to impairment.
Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities measured at the present
value of lease payments to be made over the lease term. The lease payments include fixed payments (including
in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments
of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The
variable lease payments that do not depend on an index or a rate are recognised as expense in the period on
which the event or condition that triggers the payment occurs. In calculating the present value of lease
payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate
implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the
carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change
in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.
Group as a lessor:
Leases where the Group does not transfer substantially all the risks and benefits of ownership of the asset
are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the
carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.
Contingent rents are recognised as revenue in the period in which they are earned.
Additional disclosures are provided in Note 22.
Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing
of funds. Borrowing costs are expensed in the period in which they occur, unless they are attributable to the
acquisition, construction or production of an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
38
2. Significant Accounting Policies (continued)
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects
a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a
separate asset but only when the reimbursement is virtually certain. If the effect of the time value of money is
material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as an interest
expense.
Investment properties
Investment properties are measured initially at cost, including transaction costs. The carrying amount
includes the cost of replacing part of an existing investment property at the time that the cost is incurred if the
recognition criteria are met; and excludes the costs of day-to-day servicing of an investment property.
Subsequent to initial recognition under the cost model assets are recognised at cost and depreciated
systematically over their useful economic life. Land is not depreciated.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
Years
Buildings and investment properties in Hungary
Buildings and investment properties in the Netherlands
20
30
Investment properties are derecognised when either they have been disposed of or when the investment
property is permanently withdrawn from use and no future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an investment property are recognised in the income
statement in the year of retirement or disposal.
The carrying amounts are reviewed also when events or changes in circumstances indicate that the
carrying value may not be recoverable. If such an indication exists and where the carrying value exceeds the
recoverable amount, the assets or cash generating units are written down to their recoverable amount. The fair
value of investment properties is assessed using the market comparables or the discounted cash flow method.
Impairment losses are recognised in the income statement as an operating expense. The carrying amounts of
investment properties are reviewed for impairment based on the fair values of the individual assets determined
by an external valuation process. Impairment is accounted for if the fair value of an asset is lower than the
carrying amount. Transfers are made to investment properties when, and only when, there is a change in use,
evidenced by the end of owner occupation, commencement of an operating lease to another party or
completion of construction or development. Transfers are made from investment properties when, and only
when, there is a change in use, evidenced by commencement of owner occupation or commencement of
development with a view to sale.
Upon every acquisition of investment property, the Company determines the individual components that
have different useful lives and thus are depreciated separately. The Company determined so far two key
components: land which is not depreciated and the buildings that are depreciated over 20 to 30 years. Upon
acquisition, the Company investigates if a further separation of components is necessary. The basis of this
investigation is the physical status of the building and its built-in equipment. In case the built-in equipment is
worn out to an extent that it requires a replacement within five years, it shall be treated as a separate component
and shall have a useful life based on its estimated remaining usage. Otherwise, the equipment is considered as
a vital part of the building and its useful life is determined in line with the building’s useful life. Currently the
Company has buildings where all the built-in equipment has the same useful life as its relevant building.
Management experience on the real property operations market supports the above assumptions.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
39
2. Significant Accounting Policies (continued)
Goodwill
Goodwill is initially measured at cost being the excess of the aggregate of the consideration transferred
and the amount recognised for non-controlling interest over the net identifiable assets acquired and liabilities
assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the
difference is recognised in profit or loss.
After initial recognition, goodwill is measured at 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 acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed
of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation
when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is
measured based on the relative values of the operation disposed of and the portion of the cash-generating unit
retained.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible
assets acquired in a business combination is their fair value as at the date of acquisition. Following initial
recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated
impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not
capitalised and expenditure is reflected in the income statement in the year in which the expenditure is incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives such as production know-how and franchise fees are amortised using
the straight-line method over the useful economic lives and are assessed for impairment whenever there is an
indication that the intangible asset may be impaired.
Intangible assets with indefinite useful lives such as merchandising, and media rights are tested for
impairment annually either individually or at the cash generating unit level. Such intangibles are not amortised.
The useful life of an intangible asset with an indefinite life is reviewed annually to determine whether the
indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from
indefinite to finite is made on a prospective basis.
Income taxes
Current income tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities.
Deferred income tax is provided, using the liability method, on all temporary differences at the balance
sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax liability arises from goodwill amortisation or the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting income nor taxable income or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, except where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary differences will
not reverse in the foreseeable future.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
40
2. Significant Accounting Policies (continued)
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable income will be available
against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax
losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting income nor taxable
income or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, deferred tax assets are only recognised to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and
taxable income will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to
the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of
the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the
year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted
or substantially enacted at the balance sheet date.
Income tax relating to items recognised directly in equity is recognised in equity and not in the income
statement. Subsidiaries of the Group domiciled in Hungary pay local business tax to local municipalities at
percentages based on the physical location of their operations in Hungary. The base of the local business tax
is the revenue as decreased by the cost of goods sold, raw material expenses and certain other expense items.
Local business tax is classified as an income tax expense.
Treasury shares
Fotex ordinary and dividend preferred shares repurchased are included in shareholders’ equity and are
classified as treasury shares. No gain or loss is recognised in profit or loss on the purchase, sale, issue or
cancellation of an entity’s own shares. Accordingly, any consideration paid or received in connection with
treasury shares is recognised directly in equity.
Fair value measurement
The Group measures financial instruments, such as derivatives, at fair value at each balance sheet date.
Also, fair values of financial instruments measured at amortised cost are disclosed in Note 18. The fair value
of non-financial assets including investment properties is determined for the purpose of the impairment test
and for disclosure purposes. Investment property fair value is disclosed in Note 10.
As per IFRS 13 definition of fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at the measurement date. The fair
value measurement is based on the presumption that the transaction to sell the asset or transfer the liability
takes place either:
• In the principal market for the asset or liability, or
• In the absence of a principal market, in the most advantageous market for the asset or liability
The principal or the most advantageous market must be accessible to by the Group.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
41
2. Significant Accounting Policies (continued)
The fair value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic best interest. A
fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant
that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate
in the circumstances and for which sufficient data are available to measure fair value, maximising the use of
relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which
fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level of input that is significant to the fair value measurement as a
whole:
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation
(based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each
reporting period.
Subsequent events
Material events occurring after the period-end that provide additional information about the Group’s
position at the balance sheet date (adjusting events), are reflected in the consolidated financial statements.
Post-period-end events that are not adjusting events are disclosed in the notes when material.
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year
3. Significant Accounting Judgements, Estimates and Assumptions
Judgements
In the process of applying the Group's accounting policies, management has made the following
judgments, apart from those involving estimations, which have the most significant effect on the amounts
recognised in the consolidated financial statements:
Operating Lease Commitments – Group as Lessor
The Group has entered into commercial property leases on its investment property portfolio. The Group
has determined, based on an evaluation of the terms and conditions of the arrangements, such as the lease term
not constituting a major part of the economic life of the commercial property and the present value of the
minimum lease payments not amounting to substantially all of the fair value of the commercial property, that
it retains substantially all the risks and rewards incidental to ownership of these properties and accounts for
the contracts as operating leases.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
42
3. Significant Accounting Judgements, Estimates and Assumptions (continued)
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at the balance
sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
Impairment of Goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an
estimation of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the
value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating
unit and also to choose a suitable discount rate in order to calculate the present value of those cash flows.
Further details are given in Note 12.
Impairment of Intangible Assets
The Group determines whether intangible assets with indefinite useful lives such as merchandising and
media rights are impaired at least on an annual basis. This requires an estimation of the value in use of the
cash-generating units to which the intangible assets are allocated. Estimating the value in use requires the
Group to make an estimate of the expected future cash flows from the cash-generating unit and also to choose
a suitable discount rate in order to calculate the present value of those cash flows. Further details are given in
Note 12.
On 1 January 2012, the Hungarian Parliament enacted a law concerning the media and merchandising
rights connected to sporting organisations. In this it was determined that media and merchandising rights
connected to sporting clubs may only be owned by associations and not by third parties. Further where such
rights were held by third parties prior to the change in the law then the ownership/usage right transfers to the
sporting association from 1 January 2012. Where this is the case compensation is to be paid to the former
owner of the rights based on an agreement to be reached between the parties. If an agreement is not reached
by the parties, the local court of justice (Budapest court) will judge on the compensation on the basis of the
market value of the rights as of the date of the transfer.
Fotex includes in its intangible assets the merchandising and media rights of FTC Labdarúgó Zrt. which
are subject to the change in law described above. In management’s opinion all these rights belong to the Group
and the carrying value will be recovered.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
43
3. Significant accounting judgements, estimates and assumptions (continued)
Deferred Tax Assets
Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable
income will be available against which the losses can be utilised. Significant management judgment is required
to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level
of future taxable income together with future tax planning strategies. Further details are given in Note 17.
Fair Value of Investment Properties
The Group has determined and presented in the notes the fair value of investment property either as the
present value of the estimated future cash flows generated from leasing such assets or using comparable prices.
Future cash flows were determined separately for the following categories of investment property: retail
outlets, offices, warehouses and other real estate property using average rental fees currently realisable by the
Group; present values were calculated using a uniform discount rate that is considered by management as
appropriate for the valuation of real estate property on the relevant markets. Further details are given in Note
11.
Assets held for sale
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will
be recovered principally through a sale transaction rather than through continuing use. Non-current assets and
disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value
less costs to sell. Costs to sell are the incremental costs directly attributable to the disposal of an asset (disposal
group), excluding finance costs and income tax expense.
The criteria for held for sale classification is regarded as met only when the sale is highly probable, and
the asset or disposal group is available for immediate sale in its present condition. Actions required to complete
the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision
to sell will be withdrawn.
4. Standards Issued but not yet Effective
There are a number of standards, amendments to standards, and interpretations which have been issued
by the IASB that are effective in future accounting periods that the group has decided not to adopt early. These
are:
Standards that are not applicable to the group:
• IFRS 17 Insurance Contracts
• IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-
time adopter
• IAS 41 Agriculture – Taxation in fair value measurements
Standards for which there is expected to be no material impact upon the group which are described in more
detail below:
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
44
4. Standards Issued but not yet Effective (continued)
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to specify the requirements for
classifying liabilities as current or non-current.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and must be
applied retrospectively.
The Group is currently assessing the impact the amendments but does not expect there to be any material
impact.
Reference to the Conceptual Framework – Amendments to IFRS 3
In May 2020, the IASB issued Amendments to IFRS 3 Business Combinations - Reference to the Conceptual
Framework. The amendments are intended to replace a reference to the Framework for the Preparation and
Presentation of Financial Statements, issued in 1989, with a reference to the Conceptual Framework for
Financial Reporting issued in March 2018 without significantly changing its requirements. The Board also
added an exception to the recognition principle of IFRS 3 to avoid the issue of potential ‘day 2’ gains or losses
arising for liabilities and contingent liabilities that would be within the scope of IAS 37 or IFRIC 21 Levies,
if incurred separately. At the same time, the Board decided to clarify existing guidance in IFRS 3 for contingent
assets that would not be affected by replacing the reference to the Framework for the Preparation and
Presentation of Financial Statements.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022 and apply
prospectively.
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
In May 2020, the IASB issued Property, Plant and Equipment — Proceeds before Intended Use, which
prohibits entities deducting from the cost of an item of property, plant and equipment, any proceeds from
selling items produced while bringing that asset to the location and condition necessary for it to be capable of
operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such
items, and the costs of producing those items, in profit or loss. The amendment is effective for annual reporting
periods beginning on or after 1 January 2022 and must be applied retrospectively to items of property, plant
and equipment made available for use on or after the beginning of the earliest period presented when the entity
first applies the amendment.
The amendments are not expected to have a material impact on the Group.
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
In May 2020, the IASB issued amendments to IAS 37 to specify which costs an entity needs to include when
assessing whether a contract is onerous or loss-making. The amendments apply a “directly related cost
approach”. The costs that relate directly to a contract to provide goods or services include both incremental
costs and an allocation of costs directly related to contract activities. General and administrative costs do not
relate directly to a contract and are excluded unless they are explicitly chargeable to the counterparty under
the contract.
The amendments are effective for annual reporting periods beginning on or after 1 January 2022.
The Group will apply these amendments to contracts for which it has not yet fulfilled all its obligations at the
beginning of the annual reporting period in which it first applies the amendments but does not expect this to
have a material impact.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
45
4. Standards Issued but not yet Effective (continued)
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities
As part of its 2018-2020 annual improvements to IFRS standards process the IASB issued amendment to IFRS
9. The amendment clarifies the fees that an entity includes when assessing whether the terms of a new or
modified financial liability are substantially different from the terms of the original financial liability. These
fees include only those paid or received between the borrower and the lender, including fees paid or received
by either the borrower or lender on the other’s behalf.
An entity applies the amendment to financial liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first applies the amendment.
The amendment is effective for annual reporting periods beginning on or after 1 January 2022 with earlier
adoption permitted.
The Group will apply the amendments to financial liabilities that are modified or exchanged on or after the
beginning of the annual reporting period in which the entity first applies the amendment.
Definition of Accounting Estimates - Amendments to IAS 8
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of ‘accounting
estimates’. The amendments clarify the distinction between changes in accounting estimates and changes in
accounting policies and the correction of errors. Also, they clarify how entities use measurement techniques
and inputs to develop accounting estimates.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023 and apply to
changes in accounting policies and changes in accounting estimates that occur on or after the start of that
period.
Earlier application is permitted.
The amendments are not expected to have a material impact on the Group.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
In February 2021, the IASB issued amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality
Judgements, in which it provides guidance and examples to help entities apply materiality judgements to
accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that
are more useful by replacing the requirement for entities to disclose their ‘significant’ accounting policies with
a requirement to disclose their ‘material’ accounting policies and adding guidance on how entities apply the
concept of materiality in making decisions about accounting policy disclosures.
The amendments to IAS 1 are applicable for annual periods beginning on or after 1 January 2023 with earlier
application permitted. Since the amendments to the Practice Statement 2 provide non-mandatory guidance on
the application of the definition of material to accounting policy information, an effective date for these
amendments is not necessary.
The Group is currently assessing the impact of the amendments but does not expect it to be material.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
46
5. Cash and Cash Equivalents
Liquid assets held at banks bear daily floating interest rates and are deposited for the short-term (1 day
to 3 months) in anticipation of the liquidity needs of the Group. Such deposits yield interest according to the
applicable short-term rates. The fair value of cash and short-term deposits is EUR 110,417,472 (31 December
2020: EUR 85,097,124).
Cash includes fixed deposit of EUR 1,731,056 at rate 0 % (in 2020 cash included EUR 15,463,975 at
rate 0 %).
A significant amount of cash is held with the following institutions:
2021
2020
Rating
Cash balance
Rating
Cash balance
EUR
EUR
ING*
A+
86,436,067
A+
62 009 064
Berlin Hyp**
A+
-
A+
15 463 507
Oberbank*
A
22,995,806
A
9 390 190
Raiffeisen
A-
2,020,571
A-
1 010 943
Other
2,006,617
169 388
Total cash held at banks
113,459,061
88 043 092
* rated by S&P
** rated by Fitch
The reconciliation of cash held at banks for 2021 and 2020 is set out below:
Note
2021
2020
Cash and cash equivalents
5
110,417,472
85 097 124
Cash deposit - current
6
967,509
938 803
Cash deposit - non current
6
2,074,080
2 007 165
Total cash held at banks
113,459,061
88 043 092
6. Other Financial Assets
31 December 2021
31 December 2020
Current
EUR
EUR
Cash deposits connected to rented properties
967,509
938,803
Other short-term investments
964
958
Other current financial assets, total
968,473
939,761
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
47
6. Other Financial Assets (continued)
31 December 2021
31 December 2020
Non-current
EUR
EUR
Cash deposits connected to rented properties
2,074,080
2,007,165
Unquoted equity instruments
57,732
36,748
Other non-current financial assets, total
2,131,812
2,043,913
Cash deposits connected to rented properties:
The Group has received 2 to 3 months deposits from its tenants which are held at a bank (Note 13).
Deposits are only repayable if the related rental contract is terminated. Based on the historical and expected
rental cancellation rate, the Group has classified the deposits which are expected to be repayable in more than
one year to long-term, and the deposits which are expected to be repayable within 3-12 months were classified
as short-term.
7. Accounts Receivable and Prepayments
31 December 2021
31 December 2020
EUR
EUR
Accounts receivable
2,608,570
1,680,272
Impairment loss on accounts receivable
(98,227)
(46,278)
Income tax receivable
43,212
-
Tax assets
429,671
257,025
Other receivables
599,051
395,805
Prepayments/accrued income
2,063,520
1,953,420
Impairment loss on other receivables
(8,460)
(1,418)
Total
5,637,337
4,238,826
Tax assets are mainly VAT receivable and are typically received within three months.
Impairment loss on debtors and on other receivables at 31 December 2021 is EUR 106,687 (31 December
2020: EUR 47,696).
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
48
8. Inventories
31 December 2021
31 December 2020
EUR
EUR
Merchandise and finished products
5,463,464
5,289,331
Materials
213,424
251,103
Work in progress
1,265,319
1,377,290
Inventories, gross
6,942,207
6,917,724
Impairment of merchandise and finished products
(2,734,863)
(2,879,567)
Impairment of work in progress
(416,022)
(409,061)
Impairment of inventories
(3,150,885)
(3,288,628)
Total inventories, net
3,791,322
3,629,096
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
49
9. Property, Plant and Equipment
Movements in property, plant and equipment during 2020 were as follows:
Land,
buildings
Furniture,
machinery,
equipment,
fittings
Construction in
progress*
Total
EUR
EUR
EUR
EUR
Cost:
1 January 2021
2,389,027
10,430,978
192,790
13,012,795
Additions and capitalizations
1,281,814
346,659
-
1,628,473
Other decrease
(824,971)
(4,659,450)
(112,875)
(5,597,296)
Disposals and write downs
(647,775)
(1,159,736)
-
(1,807,511)
Currency gain/(loss) arising
on retranslation
(42,358)
(36,026)
1,965
(76,417)
31 December 2021
2,155,737
4,922,425
81,880
7,160,044
Accumulated depreciation:
1 January 2021
(1,068,962)
(8,902,352)
-
(9,971,314)
Depreciation expense
(37,475)
(420,391)
-
(457,866)
Disposals and write downs
213,901
903,588
-
1,117,489
Other decrease
493,634
4,595,071
-
5,088,705
Currency gain/(loss) arising
on retranslation
991
30,257
-
31,248
31 December 2021
(397,911)
(3,793,827)
-
(4,191,738)
Net book value
31 December 2021
1,757,826
1,128,598
81,880
2,968,304
31 December 2020
1,320,065
1,528,626
192,790
3,041,481
* Construction in progress shows the net movement of current year.
Management determined from 2021 onwards, fully depreciated assets would no longer be presented in
the movement table. The other decrease line in 2021 represents this change.
The Property, Plant and Equipment does not contain the right-of-use assets.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
50
9. Property, Plant and Equipment (continued)
Movements in property, plant and equipment during 2020 were as follows:
Land,
buildings
Furniture,
machinery,
equipment,
fittings
Construction in
progress*
Total
EUR
EUR
EUR
EUR
Cost:
1 January 2020
3,197,909
11,167,870
298,390
14,664,169
Additions and capitalizations
17,002
600,717
(80,391)
537,328
Other increase
5,517
-
-
5,517
Other decrease
-
(416)
-
(416)
Disposals and write downs
(215,849)
(279,504)
-
(495,353)
Currency gain/(loss) arising
on retranslation
(615,552)
(1,057,689)
(25,209)
(1,698,450)
31 December 2020
2,389,027
10,430,978
192,790
13,012,795
Accumulated depreciation:
1 January 2020
(1,828,655)
(9,616,511)
-
(11,445,166)
Depreciation expense
(41,337)
(449,768)
-
(491,105)
Disposals and write downs
212,260
260,755
-
473,015
Other increase
(1,851)
(4,585)
-
(6,436)
Other decrease
-
-
-
-
Currency gain/(loss) arising
on retranslation
590,621
907,757
-
1,498,378
31 December 2020
(1,068,962)
(8,902,352)
-
(9,971,314)
Net book value
31 December 2020
1,320,065
1,528,626
192,790
3,041,481
31 December 2019
1,369,254
1,551,359
298,390
3,219,003
* Construction in progress shows the net movement of current year.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
51
10. Investment Properties
The Group controls a significant property portfolio. In prior years, a significant proportion of this
portfolio was utilized by the Group companies as retail outlets and for other operating activity purposes. The
Group gradually abandoned its retail activity and has become an investment property company by leasing an
increasing proportion of its real estate portfolio to third parties. Investment property is measured in the
consolidated statement of financial position at historic cost less accumulated depreciation.
Movements in investment properties measured at cost in 2021 and 2020 were as follows:
31 December 2021
31 December 2020
Cost:
EUR
EUR
Opening balance
189,697,680
203,191,856
Additions
1,305,702
3,452,648
Disposal
(14,248,873)
(10,378,852)
Other decrease
(1,428,420)
-
Currency gain/(loss) arising from retranslation
(3,322,851)
(6,567,972)
Closing balance
172,003,238
189,697,680
Accumulated depreciation:
Opening balance
(71,306,850)
(69,542,823)
Depreciation expense
(5,500,655)
(6,578,742)
Disposal
6,565,592
1,185,325
Impairment
(412,468)
-
Other decrease
1,159,928
-
Currency gain/(loss) arising from retranslation
2,980,963
3,629,390
Closing balance
(66,513,963)
(71,306,850)
Net book value:
Closing balance
105,489,748
118,390,830
Opening balance
118,390,830
133,649,033
2021 transactions
Plaza Park concluded a sales agreement on June 1
st
, 2021 to sell Fotex Plaza at a sales price of EUR 24,325,000
at a gain of EUR 17,555,945.
On February 3
rd
, 2021, Székhely, sold two adjacent pieces of land located in the provincial town of Veszprém
for EUR 5,154,520 at a gain of EUR 4,640,388.
On September 17
th
, Keringatlan sold a property located in Budapest for a sales price of EUR 2,160,000 at a
gain of EUR 1,748,814. The sale was completed in December 2021.
2020 transactions
FN4 B.V. concluded a sales agreement on September 17, 2020 to sell a property located in Ravenswade
at a price of EUR 14,500,000. This transaction completed on December 21, 2020 and the group recognised a
gain of EUR 5,033,665.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
52
10. Investment Properties (continued)
The Company determines the fair value of investment properties once a year, and the fair value is
presented in the consolidated financial statements as of 31 December.
All fair values for both 2021 and 2020 have been determined using level 3 “Significant Unobservable
Inputs” in the fair value measurement hierarchy performed as of 31
st
December of the respective years.
The fair value of investment properties at 31 December 2021 are set out below:
Category
Net book value
Estimated fair value
EUR
EUR
Retail outlets
13,890,215
149,974,350
Offices
82,072,745
139,958,249
Warehouses
1,941,680
15,199,215
Other structures
5,825,528
11,174,608
Plots of land
1,759,580
8,341,930
Total investment properties
105,489,748
324,648,352
The fair values of investment properties at 31 December 2020 are set out below:
Category
Net book value
Estimated fair value
EUR
EUR
Retail outlets
15,240,159
150,505,082
Offices
91,623,977
149,241,949
Warehouses
1,989,891
13,378,904
Other structures
7,451,729
14,747,395
Plots of land
1,995,074
8,529,754
Total investment properties
118,390,830
336,403,084
The fair value of investment property is determined based on a combination of management assessment
and external real estate valuation (Formianum Kft.) using recognised valuation techniques.
These techniques comprise both the comparable market price method and the discounted cash flow
method. Present values of the future cash flows are determined separately for each presented category based
on the currently realised rental rates. Unbuilt plots of land were valued based on the comparable market prices
method. The valuers have used their market knowledge and professional judgement and have not only relied
on historical transactional comparables.
The external valuer holds a recognised and relevant professional qualification and with recent experience
in the location and category of the investment property being valued.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
53
10. Investment Properties (continued)
Key valuation assumptions for 2021
The present values of the investment properties have been calculated based on a market yield rate which
is suitable to measure properties in the relevant market.
• Rents on investment properties have been calculated based on the contractual rental fees and
market comparative method. For the Dutch properties the valuation assumed a 95% adjustment
factor. The adjustment factor for the Hungarian properties ranged from 10% to 30% depending
upon location and tenancy status.
• The used yield rate per property item located in Hungary is between 7% and 10% depending on
the type and location of the property (2020: 8%-10%). For the Dutch properties, the calculated
yield rate is between 6.25% and 7.35% (2020: 6.5%-7.6%).
• Rents are predominantly set in EUR in the rental contracts. Where rent is set in HUF, the related
yield has been calculated at a 369 HUF/EUR exchange rate (2020: 365 HUF/EUR).
The correlation between the most probable change in the key assumptions and the fair value of the
property portfolio is illustrated by the sensitivity analysis below for the valuation based on the comparable
market price method:
2021
2020
EUR
EUR
Yield rate drops by 50 bps
20,632,199
19,771,057
Rent rate drops by 5%
(15,734,418)
(15,986,111)
The management considers the yield variation of 50 bps as a normal variation on a stable market. A drop
of rent rate by 5% may happen on an oversupplied market thus fairly representing the risk of revenue fall.
The value of land is typically estimated based on publicly available benchmarks and then adjusted
accordingly to reflect the individual circumstances of the land (date of sale, property characteristics, selling
terms, etc.).
The following table discloses the income from the rental of investment properties net of unrecoverable
costs:
2021
2020
EUR
EUR
Revenues from the rent of investment
properties
20,980,476
23,085,259
Unrecoverable net operating costs
(912,401)
(1,212,544)
Net income from the rent of investment
properties
20,068,075
21,872,715
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
54
11. Intangible Assets
Intangible assets consist primarily of the groups holding of media and merchandising rights in FTC
Labdarúgó Zrt of Euro 1,658,396 (2020 Euro 1,658,396)
There were no movements in this balance during the year
As part of discontinuing its ownership of FTC Labdarúgó Zrt., (a company that operates and manages
the football club „FTC”) acquired in 2001 (at a cost of HUF 1.9 billion – ca, EUR 7 million), Fotex acquired
certain merchandising rights in FTC (media and brand merchandise, distribution and promotion rights
(billboards) in 2003 for an unlimited period for which an impairment of EUR 4,008,798 has been recorded in
prior years. Owing to changes in Hungarian legislation, as of 1 January 2012, all rights related to the Club’s
address, logo and name reverted to the FTC Sport Association. Such reversion is due compensation by FTC,
the amount of which is still under negotiation by the parties. In consideration of the long-lasting procedure
further impairment of EUR 1,000,000 has been recognized in 2015. Should the parties be unable to reach an
agreement, the amount of compensation will be determined based on the fair value of the rights at the time of
reversal by a court competent to act based on the location of the Club’s headquarters.
In 2016 the Court ruled in favour of the Company, however FTC Zrt and FTC Association turned to the
Supreme Court against the ruling of the Civil Court. In 2018 the Supreme Court has rejected the claim of FTC
Zrt. and FTC Association, so the ruling of the Civil Court remained in force. Based on this ruling FTC Zrt.
and FTC Association shall pay for compensation and grant the use of Skybox and 8 VIP tickets.
As of December 31, 2021, the agreement of the Settlement due remains outstanding. As this is now a legal
certainty tested at Supreme Court level management is confident that the amount shown in the balance sheet
is fully recoverable.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
55
12. Goodwill Arising on Acquisition
Goodwill is allocated to the following cash generating units:
31 December 2020
31 December 2019
EUR
EUR
Keringatlan Kft.
7,685,794
7,685,794
Plaza Park Kft.
-
1,456,136
Net book value
7,685,794
9,141,930
Goodwill is tested for impairment at least annually.
In June 2021, the group sold the investment property, Fotex Plaza, held by Plaza Park to a third party.
As the goodwill recorded at Plaza Park arose from the fair value adjustment assigned to Fotex Plaza on
acquisition, then management concluded that this goodwill has effectively been disposed of. There were no
other movements in goodwill during the year.
The goodwill is allocated to the group of cash generating units that constitute the property portfolio of
Keringatlan Kft. which is the most significant investment property group company. At the year-end, the Group
considered whether there were any indicators of impairment of the value of goodwill. The Group estimated
the value in use of the cash generating units attributable to goodwill. Based on this calculation no impairment
loss was recognised on goodwill in 2021. Management estimates that goodwill is not impaired even in case of
the potential changes in the assumptions of the underlying valuation model, since the fair values of the
investment properties, to which the goodwill relates, are significantly higher than the book values of the
properties.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
56
13. Accounts Payable, Other Liabilities and Provision
31 December 2021
31 December 2020
EUR
EUR
Trade payables
1,895,277
789,078
Taxes payable
2,858,434
290,927
Advances from customers
20,141
15,781
Accrued expenses
2,127,160
1,065,576
Deferred rental income
2,245,655
3,000,028
Amounts payable to employees
200,200
108,478
Deposits from tenants
354,045
938,803
Other liabilities
340,990
1,131,580
Total accounts payable and other current liabilities
10,041,902
7,340,251
Other long-term liabilities
3,041,947
2,007,165
Terms and conditions of the above liabilities:
Trade payables are non-interest bearing and are typically settled on a 20 to 30-days term.
Other payables are non-interest bearing and have an average term of 1 to 3 months.
Payables to employees are non-interest bearing and represent one monthly salary with contributions.
Deposits from tenants are payable typically within 30 days of the end date of the underlying rental
contract.
The Group has received 2 to 3 months deposits of EUR 3,041,589 (2020: EUR 2,945,968) from its tenants
which are repayable if the related rental contract is terminated. Based on the historical and expected rental
cancellation rate, the Group has classified as other long-term liabilities those deposit liabilities which are
expected to be repayable in more than one year EUR 2,074,080 (2020: EUR 2,007,165), and the part which is
expected within a year was classified as short-term tenant deposit liabilities EUR 967,509 (2019: EUR
938,803) (Note 6).
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
57
13 Accounts Payable, Other Liabilities and Provision (continued)
Other liabilities include the following:
31 December 2021
31 December 2020
EUR
EUR
Dividend payable
139,056
138,773
VAT compensation
-
277,970
Advances received for property management
services
-
284,462
Liabilities against social security
66,093
58,164
Other short term liabilities
135,841
372,211
Total other liabilities
340,990
1,131,580
14. Share Capital and Reserves
Share capital
The Company’s approved and issued share capital totals EUR 30,543,933 consisting of shares with a
face value of EUR 0.42 each. At 31 December 2021, the Company’s issued share capital included 70,723,650
ordinary shares and 2,000,000 dividend preferred shares (31 December 2020: 70,723,650 ordinary shares and
2,000,000 dividend preferred shares).
The “dividend preferred shares” carry the same rights as ordinary shares in the event of liquidation or
dissolution. They entitle the holder to an annual dividend determined by the General Meeting, but do not carry
voting rights.
Holders of dividend preferred shares are not entitled to any rights or dividends other than those granted
to them by the General Meeting. They are paid once a year. Interim dividends may only be paid if the
conditions required for such a distribution are met.
All dividend preferred shares are held in treasury.
Treasury shares
The 2,000,000 dividend preferred shares issued by the Company which are shown as part of “Issued
capital” with total face value of EUR 840,000 in 2021; (2020: EUR 840,000) are also shown in “Treasury
shares”.
As at 31 December 2021, the Company held 29,827,482 treasury shares (of which 27,827,482 are
ordinary shares and 2,000,000 are dividend preferred shares) at a historic cost of EUR 43,569,317 (31
December 2020: 29,672,830 shares – of which 27,672,830 were ordinary shares and 2,000,000 were dividend
preferred shares – at a historic cost of EUR 43,179,158).
During 2021, the Company purchased 154,652 of its ordinary shares at acquisition cost of 390,159 EUR
(2020: 586,442 shares at acquisition cost: EUR 1,428,143) on an arm’s length basis.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
58
15 Operating Expenses and Gain
Operating expenses and gain include the following:
2021
2020
EUR
EUR
Payments to personnel
(3,169,215)
(3,776,188)
Material and service type expenses
(6,185,399)
(6,205,350)
Depreciation and amortisation charge
(8,451,005)
(7,133,167)
Other expenses, net*
(3,520,985)
(3,110,630)
Total operating expenses
(21,326,604)
(20,225,335)
* Other expenses (net) include the following:
2021
2020
EUR
EUR
Realised and unrealized FX differences (net)
727,001
(1,502,750)
Taxes other than income tax
(2,680,782)
(1,384,568)
Impairment and scrapping of tangible and
intangible assets
(478,008)
(42,534)
Impairment and scrapping of inventories
(43,477)
457,674
Provision usage
33,557
289,727
Development grants
-
(245,864)
Other expenses/income
(1,079,276)
(682,315)
Total other expenses, net
(3,520,985)
(3,110,630)
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
59
16. Interest-bearing Loans and Borrowings
The details of the outstanding loans are as follows:
Item
Start date
End date
Loan EUR
Interest rate
Long-term
portion at
31 December
2021 EUR
Current
portion at
31 December
2021
EUR
Long-term
portion at
31 December
2020 EUR
Current
portion at
31 December
2020
EUR
III.
mortgage
20/07/2016
20/07/2023
70,000,000
fixed 1.79% p.a.
46,938,502
1,607,347
59,354,452
1,675,129
Overdraft
and short
term
-
-
-
2,437
Finance
lease
45,918
51,072
40,482
Total
46,938,502
1,653,265
59,405,524
5,912,120
Loan movements during the year:
• Loan I. Repaid to Zurich (a related party) Euro 3,800,000 and accumulated interest of Euro
619,686 on June 28, 2021, the due date of the loan.
• During the year, the group repaid Euro 11,040,000 of its outstanding long-term loan to Berlin
Hyp AG Bank (mortgage III). The group incurred costs of Euro 549,135 associated with the
early loan repayment.
The loan marked III. is secured by mortgage rights on the Fotex properties in the Netherlands and secured
by pledge on rental income from the real estate properties and other assets of Fotex Netherlands B.V., FN2
B.V., and FN5 B.V. This loan also includes the following covenants:
• Debt service coverage ratio of at least 225% throughout the term of the loan
• Loan to value ratio of
o 65% end of year 2
o 61% end of year 3
o 57% end of year 6
• Weighted average unexpired lease term equal or higher than 3 years
As of December 31
st
, 2021, the group is fully in compliance with the terms of the debt covenants.
The scheduled maturity of loans at 31 December 2021 and 2020 is set out in EUR in the table below:
Due in
within
1 year
between 1-2
years
between 2-3
years
between 3-4
years
over 4 years
Total
2021
1,400,000
46,984,420
-
-
-
48,384,420
2020
5,912,120
44,110
59,359,344
2,070
-
65,317,644
In case of variable interest rate loans, there was no significant change in the interest rate until year-end,
the book value approximates their fair value.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
60
17. Income Tax
Income tax expense:
2021
2020
EUR
EUR
Tax expense
2,974,580
1,390,220
Deferred tax expense / (income)
934,808
(60,075)
Income tax expense
3,909,388
1,330,145
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
61
17. Income Tax (continued)
The actual corporate income tax rate departs from the rate specified in the tax law due to the following:
2021
2020
EUR
EUR
Income before minority interests and income
taxes
29,560,350
12,543,846
Tax at Luxembourg rate (2020 average rate)
7,372,351
1,641,814
Effect of tax losses for which no corresponding
deferred tax asset recognized
128,590
47,586
Effect of tax rate differences
(4,795,002)
(249,434)
Effect of recurring tax relief
-
(265,028)
Hungarian sports relief
(690,281)
-
Effect of change in tax rate for deferred tax
1,104,555
-
Deferred tax liability release on sale of Fotex
Plaza
608,357
-
Effect of other permanent differences
180,818
(307,888)
Local business tax and innovation contribution
-
475,274
Reversed deferred tax asset on prior year’s
carried forward loss
-
(12,179)
Income tax expense
3,909,388
1,330,145
The group has used the domestic Luxembourg tax rate for 2021 of 24.94% for the purposes of the tax
reconciliation above (2020: an average group rate of 13.09% was used).
The tax rate of the taxable profit is 9% in Hungary.
The income tax rate applicable to Fotex Holding S.E. is 24.94% (2020: 24.94%) and Upington
Investments S.à r.l.is 18.19% (2020: 18.19%).
The income tax rate for Fotex Netherlands B.V., FN2 B.V., FN3 B.V., FN5 B.V. and Long Term CRE
Fund B.V. is on the first EUR 245,000 of taxable profit 15%, above this amount 25% (2020: the threshold was
EUR 200,000 taxable at 16.5% and 25% above this amount).
The Group is subject to periodic audit by the Hungarian, Dutch and Luxembourg Tax Authorities. As the
application of tax laws and regulations for many types of transactions are susceptible to varying interpretations,
amounts reported in the financial statements could be changed at a later date upon final determination by the
relevant tax authority.
In both 2021 and 2020 the tax rate used in the deferred tax calculation for the Hungarian companies is
9.00%.
In 2021 for the Luxembourg and Dutch entities: at the applicable income tax rates described above, for
Fotex Netherlands B.V. a tax rate of 25% (2020: 24.03%), for FN2 B.V. 25% (2020: 18.33% %), for FN3
B.V. 25% (2020: 20.99%), for FN5 B.V. 25% (2020: 16.5%%) and in case of Long Term CRE Fund B.V 25%
(2020: 21.45% tax rate was applied.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
62
17. Income Tax (continued)
Deferred tax assets and deferred tax liabilities as at 31 December 2021 and 2020 are attributable to the
items detailed in the tables below. In the below schedule, consolidated statement of financial position items
denominated in currencies other than the presentation currency were revalued at the applicable year-end
foreign exchange rates; the consolidated income statement items were determined based on average foreign
exchange rates for 2021.
Consolidated
statement of financial
position
Consolidated
income statement
2021
2020
2021
2020
EUR
EUR
EUR
EUR
Deferred income tax liability
Accumulated depreciation for tax purposes
66,001
(34,583)
100,585
(1,263)
Temporary difference between the book value and
acquisition value of buildings
-
(661,474)
661,473
85,144
Capitalisations of small value assets
-
(17,882)
17,882
1,384
Difference from loan transaction charges
(37,776)
(44,943)
7,167
18,220
Deferred tax related to rental discount
(155,762)
(154,488)
(1,273)
(64,763)
Temporary difference on loan origination fees
Reinvestment reserve*
(5,339,524)
-
(3,670,011)
(1,669,513)
-
(3,193)
Gross deferred income tax liabilities
(5,467,059)
(4,583,381)
(883,679)
35,529
Deferred income tax assets
Provision
-
2,965
(2,965)
(25,204)
Impairment of debtors
14,425
1,487
8,815
1,521
Temporary difference on loan origination fees
-
3,930
(3,930)
33,723
Tax losses carried forward
55,023
99,313
(44,290)
12,179
Revaluation difference on related party
transactions
61,853
70,611
(8,759)
2,327
Gross deferred income tax assets
131,301
178,306
(51,129)
24,546
Deferred income tax income / (expense)
(934,808)
60,075
Net deferred income tax liability
(5,335,758)
(4,405,073)
*The group has taken advantage of the possibility to defer the tax on the capital gain on disposal of its Dutch
properties in 2021 and 2020. This allows the group to defer the tax on the capital gain for a period of up to
three years after the end of the financial year of the sale and may be avoided to the extent the proceeds are
reinvested in qualifying properties from the same legal entity. This relief has been shown as the reinvested
reserve in the deferred tax disclosure above.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
63
18. Revenue
Sales revenue
2021
20120
EUR
EUR
Rental income revenue
20,980,476
23,602,855
Revenue from contracts with customers
7,394,331
6,938,733
Total sales revenue
28,374,807
30,541,588
The revenues generated by real estate management decreased during the fiscal year. The decrease mainly
delivered from the impact of COVID 19 on the Hungarian retail portfolio and the impact of two Dutch
properties sold during 2020.
Revenue from contracts with customers
2021
2020
EUR
EUR
Revenue from service charges to tenants
3,554,251
2,591,920
Ancillary mall revenue
1,752,112
1,573,120
Sale of goods*
1,734,734
1,397,160
Royalty revenue
246,475
173,203
Other sales revenue**
106,759
1,203,330
Total sales revenue
7,394,331
6,938,733
*Crystal and glass sales mainly reflect export sales realised in USD and EUR.
**Other sales revenues contain various minor items, such as marketing and consultancy fees and mainly
reflect sales realised in HUF.
Revenues from selling of goods are generated primarily by sales of crystal and glass products.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
64
19. Gain on Disposal of Investment Properties
The details of the sales of investment properties and gain on disposal for 2021 are set out below:
EUR
Fotex Plaza
Veszprém
land
Budapest
property
Total
Sales price
24,325,000
5,154,520
2,160,000
31,639,520
Net book value
(6,769,055)
(514,132)
(411,186)
(7,694,373)
Net gain
17,555,945
4,640,388
1,748,814
23,945,147
On June 1
st
, 2021, the group disposed of Fotex Plaza, the group’s main office building in Budapest. The
property was purchased by a third-party local property fund.
The sales price was Euro 24,295,000 for the building and Euro 30,000 for certain fixtures and fittings.
The proceeds were received in cash on June 4
th
. There were no significant transaction costs associated with
the sale.
On February 3
rd
, 2021, Székhely, sold two adjacent pieces of land located in the provincial town of
Veszprém to the Veszprém municipality. The cash proceeds were received on February 3
rd
. There were no
significant transaction costs associated with the sale.
On September 17
th
, 2021, Keringatlan sold an investment property located in Budapest to a third party..
The sales price was Euro 2,160,000 of which 15% was paid on signing the contract and the remaining 85%
was paid at the end of December 2021. There were no significant transaction costs associated with the sale.
The details of the sales of investment properties and gain for 2020 are set out below:
EUR
Nieuwegein
Rijswijk
Győr-
Károlyháza
Total
Sales price
14,500,000
4,000,000
59,564
18,559,654
Net book value
(9,203,160)
(3,731,044)
(2,873)
(12,937,077)
Transaction costs and settlements
(263,175)
(72,600)
-
(335,775)
Net gain
5,033,665
196,356
56,781
5,286,802
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
65
20 Segment Information
Based on the assessment of IFRS 8, management has concluded that the group operates in a single
segment, being real estate and investment properties.
As a result, since 2020 the group operates as a single segment group, disclosing geographical data only
as below:
Geographical breakdown of revenues:
2021
2020
EUR
EUR
Hungary
18,599,093
19,088,965
Netherlands
9,775,713
11,451,396
Luxembourg
-
1,227
Total sales revenue
28,374,806
30,541,588
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
66
21. Financial Risks, Management Objectives and Policies
The Group’s primary financial liabilities, include creditors, and loans taken to purchase properties. The
Group’s various financial receivables include debtors, cash and short-term deposits. The Group’s liquid assets
are held in larger banks in Hungary, the Netherlands and Luxembourg. Financial liabilities and receivables are
directly attributable to the Group’s operations.
The highest risks related to the Group’s financial instruments are FX risk, lending risk and interest rate
risk. Management monitors all these risks and applies the following risk management procedures.
Interest rate risk
The Group entered into EUR loans to buy properties in the Netherlands. As of December 31, 2021, the
group has one loan with an interest rate of 1.79%
Foreign currency (“FX”) risk
Financial instruments that potentially represent risk for the Group include debtors in foreign currency,
creditors in foreign currency and deposits in foreign currency other than in EUR. The Group’s rental contracts
are stipulated in EUR or on EUR basis thus mitigating any FX risk associated with non-EUR revenues.
The Group also has a translation risk on transactions – which occurs when the Group buys or sells in a
currency other than its functional currency.
According to management, beyond the Group’s FX risk, the risk associated with the actual profit or loss
position stems from the volume of orders, vacant investment properties and market demand which depends on
market trends rather than on FX rate fluctuations.
Certain of the Group’s financial assets and liabilities are denominated in currencies other than the
functional currency of Fotex Holding S.E. and are affected by EUR rate fluctuations as follows:
Increase/decrease in HUF/EUR
rate
Impact on total comprehensive income
EUR
2021
+10%
(311,650)
-10%
380,906
2020
+10%
(220,073)
-10%
220,073
The financial instruments that are potentially subject to currency risk consist principally of foreign
currency trade receivables and payables denominated in foreign currency other than EUR:
2021
2020
EUR
EUR
Financial liabilities
8,465,579
4,303,635
Financial assets
5,037,424
4,903,011
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
67
21. Financial Risks, Management Objectives and Policies (continued)
Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Group is exposed to credit risk from its leasing activities
and its financing activities, including deposits with banks and financial institutions.
The Group aims to mitigate lending risk by its careful and continuous debtor portfolio monitoring process
and by requiring bank guarantees and collateral. The group also requires deposits from tenants that are held
until the tenancy ends.
Concentrations of credit risk, with respect to trade accounts receivable, are limited due to the relative
immateriality of the balance mainly due to the downsizing of the group’s crystal business in Ajka.
Receivable balances are monitored on an ongoing basis.
Credit risk related to receivables resulting from the sale of inventory is managed by requiring customers
to pay upfront through online sales or advances before transfer of ownership, therefore, substantially
eliminating the Group’s credit risk in this respect.
With respect to credit risk arising from the financial assets of the Group, which comprise cash and cash
equivalents, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum
exposure equal to the carrying amount of these instruments. At 31 December 2021 the Group’s maximum
exposure to credit risk is EUR 119,155,093 (31 December 2020: EUR 92,015,174). The main reasons of this
increase are cash and cash equivalent increased by EUR 25,415,969 in 2021 compared to 2020. The group
only deals with banks with an S&P and Fitch credit rating of minimum -A, see note 5 for more details.
Investments of surplus funds are made only with reliable counterparties and are allocated between more
banks and financial institutions in order to mitigate financial loss through potential counterparty failure.
Liquidity risk
Liquidity risk is monitored as follows:
• Monitoring daily available deposited and free cash by entity
• Monitoring weekly cash flows by entity
• As part of the management information system, the Group monitors the operations of each entity
on a monthly basis
• The Group monitors its long-term cash flows in order to match the maturity patterns of its assets
and liabilities
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
68
21. Financial Risks, Management Objectives and Policies (continued)
With the exception of the groups loan liabilities, for which the maturity is disclosed in note 16, and the
deposits from tenants for which the maturity is disclosed in note 6, The Group’s other liabilities based on
contracted not discounted payments of EUR 8,003,786 (December 31, 2020, EUR 4,340,223) are all due
within 0-6 months
Capital management
The main objective of the Group’s capital management activities is to continuously ensure an equity
structure that supports the Group’s business operations, maintains its creditworthiness and maximises
shareholder value. Changes in the Group’s business environment are also reflected in the equity structure. The
Group’s equity structure is supervised by management by monitoring the Group’s indebtedness ratio and
decisions are made accordingly.
The indebtedness ratio is calculated by the Group in view of its net debt and the equity attributable to the
Group. For the calculation of the net debt, cash and cash equivalents are deducted from the aggregate of short-
term and long-term loans, trade payables and other current liabilities reduced by deferred rental income. To
calculate the indebtedness ratio, the net debt is divided with the aggregate of equity and net debt. The Group’s
indebtedness ratio calculations at 31 December 2021 and 31 December 2020 are presented below:
31 December 2021
31 December 2020
EUR
EUR
Short-term and long-term borrowings:
48,338,502
65,317,644
Trade payables and other current liabilities less
deferred rental income:
8,003,786
4,340,223
Cash and cash equivalents:
(113,459,061)
(85,097,124)
Net debt:
(57,116,773)
(15,439,257)
Equity attributable to the Company:
173,981,993
149,634,872
Total:
231,098,766
134,195,615
Indebtedness ratio:
(24.72)%
(11.51)%
The Company’s indebtedness ratio decreased from (11.51)% at 31 December 2020 to (24.72)% at 31
December 2021, primarily due to the increase in the cash and cash equivalents and in the equity. The
Company’s management considers the Company’s capital structure adequate, as property management is the
Group’s key activity and the Company’s indebtedness ratio reflects the nature of this industry and the recent
cash generation from the disposal of a number of properties over the past few years.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
69
22. Leases
Group as lessee
The group primarily leases immaterial sundry assets not used in the operations of the business.
Group as lessor
The Group leases property to third parties consisting mainly of retail outlets, offices, warehouses and
other structures. Rents are predominantly set in EUR in the rental contracts.
The Group owns 10 office buildings in the Netherlands which are leased to tenants on fixed long-term
rental agreements. Based on the rental agreements the contracted revenue is as described in the table below.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
70
22. Leases (continued)
The Group’s fixed rental fee revenue under non-cancellable leases as of 31 December 2021 (EUR):
Due in
2022
2023
2024
2025
2026
After 2026
Total
10,235,332
10,163,751
8,394,397
7,001,544
4,608,172
10,327,568
50,730,764
The Group’s fixed rental fee revenue under non-cancellable leases as of 31 December 2020 (EUR):
Due in
2021
2022
2023
2024
2025
After 2025
Total
9,973,691
10,084,085
10,096,438
7,732,455
6,429,626
11,877,561
56,193,856
23. Earnings Per Share
Basic earnings per share is calculated based on the weighted average number of ordinary shares in issue
during the year less treasury shares held by the Company. Similarly, total diluted earnings per share is also
calculated based on the weighted average number of ordinary shares in issue during the year as adjusted by
the estimated value of an issue of potentially convertible securities. For the calculation of total diluted earnings
per share, net earnings are adjusted with any gains and expenses that relate to potentially convertible securities.
Basic earnings per share is calculated by dividing the net income attributable to shareholders by the
weighted average number of ordinary shares in issue during the year, excluding the average number of ordinary
shares purchased by the Company and held as treasury shares:
2021
2020
EUR
EUR
Net profit attributable to equity holders from
continuing operations
25,650,962
11,212,050
Net profit attributable to shareholders
25,650,962
11,212,050
Weighted average number of shares in issue
during the year
42,944,686
43,395,254
Basic earnings per share (EUR)
0.60
0.26
The diluted earnings per share agree with basic earnings per share in 2021 and 2020 as there is no dilution
effect in these years.
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
71
24. Related Party Transactions
Principal related parties
Gábor Várszegi, Chairman of the Board of Fotex, directly or indirectly controls a part of the voting shares
of Blackburn International Inc. (“Blackburn”), a Panama company, and Blackburn International Luxembourg
S.à r.l. (“Blackburn Luxembourg”), a Luxembourg company. Blackburn Luxembourg has a controlling interest
in Fotex Holding S.E. and in Fotex Ingatlan Kft. (“Fotex Ingatlan”) and is the ultimate controlling party for
Fotex Holding S.E. and Fotex Ingatlan. Blackburn has a controlling interest in Zürich Investments Inc.
(“Zürich”), a British Virgin Islands company. As at 31 December 2021 Blackburn Luxembourg controlled
50.35% (31 December 2020: 50.35%) of Fotex Holding S.E.’s voting shares. APF International provides real
estate services to the group and is partly owned by two group directors. White Oak Management provides
accounting and company secretarial services to the group and is owned by two group directors. One director
rents sundry commercial property from the group on an arm’s length basis. The group also holds a controlling
interest in Arany Juhár Időstthon Kft., an unconsolidated subsidiary for 2021. These companies are considered
to be related parties.
Related party transactions
Rental and other related fees paid to Fotex Ingatlan during 2021 were EUR 105,585 (2020: EUR 13,637).
Administrative and expert fees paid by Fotex Ingatlan during 2021 were EUR 38,550 (2020: EUR
46,575).
FN2 B.V. received a loan from Zürich Investment of EUR 3.8 million in 2011. This loan was repaid in
June 2021.
For 2021, FN2 B.V. was charged interest of EUR 136,618 (2020: EUR 275,500) by Zürich Investment.
For 2021, Dutch subsidiaries were charged property management fees of EUR 145,036 (2020: EUR
439,162) by APF International.
For 2021, the Luxembourg entities were charged professional fees of EUR 259,727 by White Oak
management (2020: EUR 338,838).
For 2021 the Hungarian entities received rental income of EUR 255,925 (2020 EUR 183,772) from one
of the group directors.
The group provided loans of Euro 450.000 to Arany Juhár Időstthon Kft. and charged interest of Euro
926.
Transactions between related parties are made on terms equivalent to those that prevail in arm’s length
transactions.
Remuneration of Group management
Management, directors and members of the Supervisory Board of the Group received a total remuneration
of EUR 779,187 in 2021 (2020: EUR 715,552).
Fotex Holding S.E. and Subsidiaries
Notes to consolidated financial statements
31 December 2021
Figures in EUR
72
25. Subsequent Events after the End of the Reporting Period
There were no material events subsequent to the year end.
26. Headcount
Personnel changes: Average number of employees was 124 people in 2021 (2020: 132 people).
27. Audit fees
The breakdown of the audit fees for the group is:
2021
2020
EUR
EUR
Audit fees
109,980
114,980
Audit-related fees
-
-
Tax fees
-
-
Other fees
-
-
Other long-term liabilities
109,980
114,980
28. Contingent liabilities
The Company does not have any contingent liabilities as of 31 December 2021.