mk restaurant group public company limited and its

MK Restaurant Group Public Company Limited

and its subsidiaries

Review report and interim financial statements

For the three-month period ended 31 March 2021

Independent Auditor’s Report on Review of Interim Financial Information

To the Shareholders of MK Restaurant Group Public Company Limited

I have reviewed the accompanying consolidated statement of financial position of MK Restaurant

Group Public Company Limited and its subsidiaries (the Group) as at 31 March 2021, the related

consolidated statements of income, comprehensive income, changes in shareholders’ equity and

cash flows for the three-month period then ended, as well as the condensed notes to the

consolidated financial statements. I have also reviewed the separate financial information of

MK Restaurant Group Public Company Limited for the same period (collectively “interim financial

information”). Management is responsible for the preparation and presentation of this interim

financial information in accordance with Thai Accounting Standard 34 Interim Financial Reporting.

My responsibility is to express a conclusion on this interim financial information based on my

review.

Scope of review

I conducted my review in accordance with Thai Standard on Review Engagements 2410, Review

of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of

interim financial information consists of making inquiries, primarily of persons responsible for

financial and accounting matters, and applying analytical and other review procedures. A review

is substantially less in scope than an audit conducted in accordance with Thai Standards on

Auditing and consequently does not enable me to obtain assurance that I would become aware of

all significant matters that might be identified in an audit. Accordingly, I do not express an audit

opinion.

Conclusion

Based on my review, nothing has come to my attention that causes me to believe that the

accompanying interim financial information is not prepared, in all material respects, in accordance

with Thai Accounting Standard 34 Interim Financial Reporting.

2

Emphasis of Matter

I draw attention to Note 1.2 to the interim financial statements. The COVID-19 pandemic has

resulted in an economic slowdown and adversely impacted most businesses and industries in

terms of supply chains, consumer spending, limited or suspended operations, operational delays,

and more.

This situation significantly affects the Group’s business since the number of restaurant customers

have not yet been restored. In addition, the second wave of COVID-19 outbreak situation in

Thailand that began in December 2020 caused the Group to again decreasing in number of

customers using the service starting from January 2021. Moreover, the third wave of COVID-19

outbreak occur again during end of March 2021 to present. These are significantly impacting the

Group’s financial position, operating results, and cash flows at present and is expected to do so in

the future. The Group’s management has continuously monitored ongoing developments and

assessed the financial impact in respect of the valuation of assets, provisions and contingent

liabilities, and has used estimates and judgements in respect of various issues as the situation has

evolved.

My conclusion is not modified in respect of this matter.

Wichart Lokatekrawee

Certified Public Accountant (Thailand) No. 4451

EY Office Limited

Bangkok: 13 May 2021

MK Restaurant Group Public Company Limited and its subsidiaries

Statements of financial position

As at 31 March 2021

(Unit: Thousand Baht)

31 March 31 December 31 March 31 December

Note 2021 2020 2021 2020

(Unaudited (Audited) (Unaudited (Audited)

but reviewed) but reviewed)

Assets

Current assets

Cash and cash equivalents 4 138,357 509,452 90,025 383,588

Trade and other receivables 3, 5 112,637 110,000 195,785 196,808

Inventories 357,878 418,164 318,477 378,378

Other current financial assets 6 7,634,792 7,153,654 6,688,257 6,255,938

Other current assets 122,644 118,624 90,153 85,179

Total current assets 8,366,308 8,309,894 7,382,697 7,299,891

Non-current assets

Other non-current financial assets 6 813,102 825,807 813,102 825,807

Investments in subsidiaries 7 - - 2,761,480 2,761,480

Investments in joint ventures 8 889,492 895,040 912,947 912,947

Property, plant and equipment 9 3,108,477 3,253,668 2,372,824 2,478,230

Right-of-use assets 10 3,751,341 3,956,250 2,919,163 3,067,677

Goodwill 1,477,657 1,477,657 - -

Intangible assets 11 909,058 919,273 78,870 82,304

Deferred tax assets 202,007 181,838 159,773 148,219

Deposits 540,168 534,005 362,066 356,721

Total non-current assets 11,691,302 12,043,538 10,380,225 10,633,385

Total assets 20,057,610 20,353,432 17,762,922 17,933,276

The accompanying notes are an integral part of the financial statements.

Director Director

Rit Thirakomen

Separate financial statementsConsolidated financial statements

Somchai Hanjitkasem


Statements of financial position (continued)

As at 31 March 2021



Note 2021 2020 2021 2020



Liabilities and shareholders' equity

Current liabilities

Trade and other payables 3, 12 1,095,493 1,312,171 921,364 1,113,072

Current portion of deferred income of

membership fee 19,594 21,064 13,680 14,925

Current portion of lease liabilities 13 1,099,339 1,126,493 813,506 831,564

Income tax payable 174,473 145,406 171,569 142,497

Other current financial liabilities 566 - 566 -

Other current liabilities 224,680 239,990 172,697 181,207

Total current liabilities 2,614,145 2,845,124 2,093,382 2,283,265

Non-current liabilities

Lease liabilities, net of current portion 13 2,402,159 2,564,580 1,897,750 2,017,023

Provision for long-term employee

benefits 14 735,269 718,466 644,111 630,148

Deferred tax liabilities 163,842 165,271 - -

Other non-current liabilities 207,898 212,547 151,570 156,487

Total non-current liabilities 3,509,168 3,660,864 2,693,431 2,803,658

Total liabilities 6,123,313 6,505,988 4,786,813 5,086,923


Director Director

Rit Thirakomen Somchai Hanjitkasem

Consolidated financial statements Separate financial statements


Statements of financial position (continued)

As at 31 March 2021



2021 2020 2021 2020



Liabilities and shareholders' equity (continued)

Shareholders' equity

Share capital

Registered

920,878,100 ordinary shares of Baht 1 each 920,878 920,878 920,878 920,878

Issued and fully paid

920,878,100 ordinary shares of Baht 1 each 920,878 920,878 920,878 920,878

Share premium 8,785,028 8,785,028 8,785,028 8,785,028

Capital reserve for share-based payment 656,331 656,331 656,331 656,331

transactions

Retained earnings

Appropriated - statutory reserve 92,585 92,585 92,585 92,585

Unappropriated 3,152,879 3,064,101 2,521,287 2,391,531

Other component of shareholders' equity 4,369 4,077 - -

Equity attributable to owners of the Company 13,612,070 13,523,000 12,976,109 12,846,353

Non-controlling interests of the subsidiaries 322,227 324,444 - -

Total shareholders' equity 13,934,297 13,847,444 12,976,109 12,846,353

Total liabilities and shareholders' equity 20,057,610 20,353,432 17,762,922 17,933,276

- - - -


Director Director


Consolidated financial statements Separate financial statements

(Unaudited but reviewed)


Income statements


(Unit: Thousand Baht except earnings per share expressed in Baht)

Separate

financial statements

Note 2021 2020 2021 2020

Revenues

Sales and service income 3,115,980 3,795,026 2,631,324 3,156,369

Other income 39,683 81,752 87,925 121,724

Total revenues 3,155,663 3,876,778 2,719,249 3,278,093

Expenses

Cost of sales and services 1,115,787 1,269,687 1,093,293 1,222,647

Selling and distribution expenses 1,634,010 1,922,506 1,258,176 1,458,884

Administrative expenses 291,105 264,994 208,013 192,941

Total expenses 3,040,902 3,457,187 2,559,482 2,874,472

Profit from operating activities 114,761 419,591 159,767 403,621

Finance income 5,020 15,836 5,020 15,836

Share of loss from investments in joint ventures 8 (5,840) (2,146) - -

Finance cost (19,380) (24,576) (15,444) (18,265)

Profit before income tax expenses 94,561 408,705 149,343 401,192

Income tax expenses 15 (8,000) (65,368) (19,587) (65,606)

Profit for the period 86,561 343,337 129,756 335,586

Profit attributable to:

Equity holders of the Company 88,778 340,183 129,756 335,586

Non-controlling interests of the subsidiaries (2,217) 3,154

86,561 343,337

Earnings per share 16

Basic earnings per share

Profit attributable to equity holders of the Company 0.10 0.37 0.14 0.36


Director Director


Consolidated




Statements of comprehensive income



Separate


Note 2021 2020 2021 2020

Profit for the period 86,561 343,337 129,756 335,586

Other conprehensive income:

Other comprehensive income to be reclassified to

profit or loss in subsequent periods

Exchange differences on translation of

financial statements in foreign currency 292 (119) - -

Gain on change in value of available-for-sale

investments - 130 - 130

Less: Income tax effect 15 - (26) - (26)

Gain (loss) on investments designated at fair value

through other comprehensive income - net

of income tax - 104 - 104

Other comprehensive income for the period 292 (15) - 104

Total comprehensive income for the period 86,853 343,322 129,756 335,690

Total comprehensive income attributable to:

Equity holders of the Company 89,070 340,168 129,756 335,690

Non-controlling interests of the subsidiaries (2,217) 3,154

86,853 343,322


Director Director



Consolidated



Statements of cash flows



Separate


2021 2020 2021 2020

Cash flows from operating activities

Profit before tax 94,561 408,705 149,343 401,192

Adjustments to reconcile profit before tax to net cash

provided by (paid from) operating activities:

Gain on sales of investments (29,317) (34,570) (28,139) (31,355)

Loss on change in value of investment

in debt instruments 24,035 17,315 23,776 16,899

Unrealised gain on exchange (89) (10,133) (89) (10,133)

Amortised premium on investments in available-for-sale

securities - 434 - 434

Share of loss from investments in joint ventures 5,840 2,146 - -

Loss from damaged inventories 620 565 620 565

Amortisation of prepaid expenses 11,522 10,732 8,990 9,159

Depreciation and amortisation 509,677 538,253 368,332 392,962

Reduction in lease payments by lessors (54,255) - (35,052) -

Loss (gain) on disposals and write-off of equipment, right-of-use

assets and intangible assets 10,586 1,486 9,763 (125)

Provision for long-term employee benefits 17,794 15,366 14,954 13,282

Realisation of gift voucher, net of sales

and cash received during the period (25,913) (12,840) (15,041) (9,863)

Realisation of deferred income, net of sales

and cash received during the period (8,663) (15,171) (6,123) (10,534)

Interest income (5,020) (15,836) (5,020) (15,836)

Interest expenses 22,152 24,576 17,388 18,265

Profit from operating activities before changes in

operating assets and liabilities 573,530 931,028 503,702 774,912


Director Director



Consolidated



Statements of cash flows (continued)



Separate


2021 2020 2021 2020

Cash flows from operating activities (continued)

Operating assets (increase) decrease

Trade and other receivables (874) (7,324) 2,786 57,799

Inventories 59,666 17,243 59,281 14,127

Other current assets (12,960) (1,207) (14,863) (7,434)

Deposits (6,163) (11,960) (5,345) (6,678)

Operating liabilities increase (decrease)

Trade and other payables (193,900) (806,595) (175,457) (639,685)

Other current liabilities 10,603 (36,356) 6,531 (37,116)

Deferred income 7,193 13,465 4,879 10,208

Provision for long-term employee benefits (991) (2,557) (991) (5,879)

Other non-current liabilities (3,872) 9,051 (4,077) 2,640

Cash from operating activities 432,232 104,788 376,446 162,894

Cash received from interest income 3,257 6,424 3,257 6,424

Cash paid for income tax (4,460) (3,308) (2,069) (2,235)

Net cash from operating activities 431,029 107,904 377,634 167,083


Director Director



Consolidated



Statements of cash flows (continued)



Separate


2021 2020 2021 2020

Cash flows from investing activities

Increase in investments in debt instruments

and fixed deposits (462,496) (283,730) (414,596) (235,327)

Cash paid for purchases of plant and equipment (51,620) (128,123) (38,071) (82,798)

Cash paid for purchases of computer software (1,774) (1,201) (994) (701)

Proceeds from disposals of equipment and computer software 645 227 2,509 5,680

Net cash used in investing activities (515,245) (412,827) (451,152) (313,146)

Cash flows from financing activities

Cash paid to settle liabilities under lease liabilitties (286,879) (345,088) (220,045) (257,354)

Net cash used in financing activities (286,879) (345,088) (220,045) (257,354)

Net decrease in cash and cash equivalents (371,095) (650,011) (293,563) (403,417)

Cash and cash equivalents at beginning of period 509,452 808,108 383,588 508,643

Cash and cash equivalents at end of period 138,357 158,097 90,025 105,226

Supplement disclosure of cash flows information

Non-cash transactions

Accounts payable for purchases of plant and equipment 26,044 30,347 22,652 22,903

Increase in right-of-use assets 144,832 207,048 115,739 138,682


Director Director


Consolidated




Statements of changes in shareholders' equity



Other component of equity

Other comprehensive income

Exchange

differences on Equity

Capital reserve translation of Fair value Total other Total equity attributable to

Issued and of share-based Appropriated - financial reserve of components of attributable to non-controlling

paid-up payment statutory statements in investments shareholders' owners of interests of

share capital Share premium transactions reserve Unappropriated foreign currencies at FVOCI equity the Company the subsidiaries Total

Balance as at 1 January 2020 920,878 8,785,028 656,331 92,585 3,844,557 4,776 2,323 7,099 14,306,478 320,210 14,626,688

Profit for the period - - - - 340,183 - - - 340,183 3,154 343,337

Other comprehensive income for the period - - - - - (119) 104 (15) (15) - (15)

Total comprehensive income for the period - - - - 340,183 (119) 104 (15) 340,168 3,154 343,322

Balance as at 31 March 2020 920,878 8,785,028 656,331 92,585 4,184,740 4,657 2,427 7,084 14,646,646 323,364 14,970,010

Balance as at 1 January 2021 920,878 8,785,028 656,331 92,585 3,064,101 4,077 - 4,077 13,523,000 324,444 13,847,444

Profit for the period - - - - 88,778 - - - 88,778 (2,217) 86,561

Other comprehensive income for the period - - - - - 292 - 292 292 - 292

Total comprehensive income for the period - - - - 88,778 292 - 292 89,070 (2,217) 86,853

Balance as at 31 March 2021 920,878 8,785,028 656,331 92,585 3,152,879 4,369 - 4,369 13,612,070 322,227 13,934,297


Director Director

Rit Thirakomen

Consolidated financial statements

Retained earnings

Equity attributable to owners of the Company

Somchai Hanjitkasem



Statements of changes in shareholders' equity (continued)



Other component

of shareholders'

equity

Other

comprehensive

income

Capital reserve Fair value

Issued and of share-based Appropriated - reserve of

paid-up payment statutory investments

share capital Share premium transactions reserve Unappropriated at FVOCI Total

Balance as at 1 January 2020 920,878 8,785,028 656,331 92,585 3,160,650 2,322 13,617,794

Profit for the period - - - - 335,586 - 335,586

Other comprehensive income for the period - - - - - 104 104

Total comprehensive income for the period - - - - 335,586 104 335,690

Balance as at 31 March 2020 920,878 8,785,028 656,331 92,585 3,496,236 2,426 13,953,484

Balance as at 1 January 2021 920,878 8,785,028 656,331 92,585 2,391,531 - 12,846,353

Profit for the period - - - - 129,756 - 129,756

Other comprehensive income for the period - - - - - - -

Total comprehensive income for the period - - - - 129,756 - 129,756

Balance as at 31 March 2021 920,878 8,785,028 656,331 92,585 2,521,287 - 12,976,109


Director Director

Retained earnings


Separate financial statements


1 ……………………....…............……Director

Rit Thirakomen

……………………....…..............……Director Somchai Hanjitkasem


Notes to consolidated interim financial statements


1. General information

1.1 Corporate information

MK Restaurant Group Public Company Limited (“the Company”) was incorporated as a

limited company under Thai laws and subsequently registered the change of its status to a

public limited company under the Public Limited Companies Act, and domiciled in Thailand.

The Company is principally engaged in sales of foods and beverages through restaurants,

under the trademark “MK Restaurants”. The registered office address of the Company is at

1200 Debaratna Road, Bangnatai, Bangna, Bangkok.

As at 31 March 2021, the Company had operated 713 branches (the Company only: 491

branches) (31 December 2020: 722 branches, the Company only: 499 branches).

1.2 The COVID-19 Pandemic

The COVID-19 pandemic has resulted in an economic slowdown and adversely impacted

most businesses and industries in terms of supply chains, consumer spending, limited or

suspended operations, operational delays, and more.

This situation significantly affects the Group’s business since the number of restaurant

customers have not yet been restored. In addition, the second wave of COVID-19 outbreak

situation in Thailand that began in December 2020 caused the Group to again decreasing

in number of customers using the service starting from January 2021. Moreover, the third

wave of COVID-19 outbreak occur again during end of March 2021 to present. These are

significantly impacting the Group’s financial position, operating results, and cash flows at

present and is expected to do so in the future. The Group’s management has continuously

monitored ongoing developments and assessed the financial impact in respect of the

valuation of assets, provisions and contingent liabilities, and has used estimates and

judgements in respect of various issues as the situation has evolved.

1.3 Basis of preparation of interim financial statements

These interim financial statements are prepared in accordance with Thai Accounting

Standard No. 34 Interim Financial Reporting, with the Company choosing to present

condensed interim financial statements. However, the Company has presented the

statements of financial position, income, comprehensive income, changes in shareholders'

equity, and cash flows in the same format as that used for the annual financial statements.


2 ……………………....…............……Director

Rit Thirakomen


The interim financial statements are intended to provide information additional to that

included in the latest annual financial statements. Accordingly, they focus on new activities,

events and circumstances so as not to duplicate information previously reported. These

interim financial statements should therefore be read in conjunction with the latest annual

financial statements.

The interim financial statements in Thai language are the official statutory financial

statements of the Company. The interim financial statements in English language have

been translated from the Thai language financial statements.

1.4 Basis of consolidation

These consolidated financial statements include the financial statements of MK Restaurant

Group Public Company Limited (herein after called “the Company”) and its subsidiaries

which were incorporated in Thailand (herein after called “the subsidiaries”) and have been

prepared on the same basis as that applied for the consolidated financial statements for the

year ended 31 December 2020.

1.5 New financial reporting standards

a) Financial reporting standards that became effective in the current period

During the period, the Group has adopted the revised financial reporting standards

and interpretations which are effective for fiscal years beginning on or after 1

January 2021. These financial reporting standards were aimed at alignment with the

corresponding International Financial Reporting Standards with most of the changes

directed towards clarifying accounting treatment and providing accounting guidance

for users of the standards.

The adoption of these financial reporting standards does not have any significant

impact on the Group’s financial statements.

Furthermore, the Group elected to adopt the amendments to TFRS 16 Leases relating to

COVID-19-related rent concessions. These amendments provide a practical expedient that

permits a lessee to not assess whether rent concessions are lease modifications. The

practical expedient applies only to rent concessions occurring as a direct consequence of

the COVID-19 pandemic and only if all of the conditions are met, i.e., the change in lease

payments results in a revised consideration for the lease that is substantially the same as,

or less than, the consideration for the lease preceding the change; any reduction in lease

payments affects only payments originally due on or before 30 June 2021; and there is no

substantive change to other terms and conditions of the lease.


3 ……………………....…............……Director

Rit Thirakomen


The Group apply the practical expedient to rent concessions that meet the above conditions

and the impact of this application, amounting to Baht 54.2 million (the Company only: Baht

35.1 million, due to changes in lease payments resulting from rent concessions, was

recognised in the income statements for the three-month period ended 31 March 2021.

There was no impact on the opening balance of retained earnings.

b) Financial reporting standards that will become effective for fiscal years beginning on

or after 1 January 2022

The Federation of Accounting Professions issued amendments to Thai Financial Reporting

Standard 16 Leases that provide temporary exemptions from the impact of interest rate

benchmark reform for a lessee, provided that all specified conditions are to be met.

The adoption of these temporary exemptions will not have any significant impact on the

Group’s financial statements.

2. Significant accounting policies

The interim financial statements are prepared by using the same accounting policies and

methods of computation as were used for the financial statements for the year ended 31

December 2020.

3. Related party transactions

During the periods, the Group had significant business transactions with related parties.

Such transactions, which are summarised below, arose in the ordinary course of business

and were concluded on commercial terms and bases agreed upon between the Company,

its subsidiaries and those related parties.


4 ……………………....…............……Director

Rit Thirakomen


(Unit: Million Baht)

For the three-month periods ended 31 March

Consolidated


Separate

financial statements Transfer pricing policy

2021 2020 2021 2020

Transactions with subsidiaries

(Eliminated from the consolidated

financial statements)

Sales of goods - - 227 252 Cost plus margin

Sublease and subservice income - - 6 6 At the rate stipulated in the agreements

Management service income - - 47 44 At the rate stipulated in the agreements

Sales of fixed assets - - 2 5 Net book value plus margin

Rental income - - 1 1 At the rate stipulated in the agreements

Purchases of goods - - 45 50 Market price

Training expenses - - 46 34 Market price

Royalty fee expenses - - 1 - At the rate stipulated in the agreements

Transactions with related companies

Sales of goods 1 1 1 1 Market price

Royalty fee income 1 1 1 1 At the rate stipulated in the agreement

Management service income 1 1 1 1 At the rate stipulated in the agreement

Operation support service

income

2 2 2 2 At the rate stipulated in the agreement

Royalty fee expenses 10 12 - - At the rate stipulated in the agreement

Rental expenses for operating

equipment

10 12 6 7 Market price

Rental expenses for land and

construction

10 9 10 9 At the rate stipulated in the agreement

Logistic expenses 37 44 37 44 At the rate stipulated in the agreement

Service expenses 24 40 19 33 Contractually agree prices

Warehousing service expenses 36 40 36 40 At the rate stipulated in the agreement


5 ……………………....…............……Director

Rit Thirakomen


As at 31 March 2021 and 31 December 2020, the balances of the accounts between the

Company and its subsidiaries and those related parties are as follows:


Consolidated


Separate


31 March

2021

31 December

2020

31 March

2021

31 December

2020

Trade and other receivables -

related parties (Note 5)

Subsidiaries - - 114,428 113,503

Related companies (related by

common directors) 2,003 1,909 1,921 1,906

Total trade and other receivables -

related parties 2,003 1,909 116,349 115,409

Trade and other payable -

related parties (Note 12)

Subsidiaries - - 33,931 36,236

Related companies (related by

common directors) 44,581 48,803 36,267 40,526

Total trade and other payable - related

parties 44,581 48,803 70,198 76,762

Significant agreements with related parties

Franchise agreement for use of trademark, servicemark and license to operate

On 10 February 1994, the Company entered into a franchise agreement with Plenus-MK

Limited, a related party in Japan, in order to grant the latter the right to use the trademark and

the servicemark of “MK Restaurants” in its operating of the Thai-style Sukiyaki restaurants in

Japan. A monthly royalty fee is charged at a rate stipulated in the agreement. The agreement

shall continue for a term of 3 years, and thereafter shall be automatically renewed on a

3 years basis until being terminated by either party by giving a written notice 180 days prior to

the expiration of such contract.

Management service agreements

The Company entered into management service agreements with its subsidiaries, whereby

the Company agreed to provide management service to the subsidiaries in areas of branch

operations, business development, engineering, procurement, marketing, accounting and

finance, human resources, quality assurance and information technology support. The

subsidiaries agreed to pay management fee to the Company the rate stipulated in the

agreements. The agreements is effective from 1 January 2021 to 31 December 2021. The

agreements shall be automatically extended for another 1 year until the subsidiaries give a

written notice of termination 3 months prior to its expiration.


6 ……………………....…............……Director

Rit Thirakomen


Sublease and subservice agreements

The Company entered into several sublease and subservice agreements, granting 6

leasehold rights to MK Interfood Company Limited (“MKI”). Sublease and subservice fees are

charged according to the terms of the agreements. The agreements are effective for a period

of 3 years and will be renewed automatically for another 3 years unless MKI has breached

them.

Building lease agreement

On 1 February 2016, the Company entered into a lease agreement for lease of building to

International Food Supply Co., Ltd. (“IFS”), under which IFS agrees to pay rental to the

Company at a rate of Baht 0.54 million per month. The lease agreement is for a period of 6

years, from 1 May 2016 to 30 April 2022. Subsequently, on 17 May 2016, the Company and

IFS agreed to adjust the rental space and the rental rate to be Baht 0.37 million per month.

On 15 June 2017, the Company and IFS agreed to adjust the rental space and the rental to

be Baht 0.46 million per month.

On 28 October 2020, the Company entered into a lease agreement for lease of building to

M-Senko Logistics Company Limited (“M-Senko”), under which M-Senko agrees to pay rental

to the Company at a rate of Baht 0.02 million per month. The lease agreement is for a period

of 1 year, from 1 November 2020 to 31 October 2021.

Land and construction lease thereon agreement

On 16 November 2017, the Company and Global Asset Development Co., Ltd. entered into a

lease agreement, whereby the latter agrees to lease land and construction thereon to the

Company and the Company agrees to pay the rental to Global Asset Development Co., Ltd.

In a total amount of Baht 1.94 million per month, from 1 January 2018 to 31 December 2020.

In addition, the Company shall give a written notice to extend the agreement at least 90 days

prior to the expiry date.

On 23 October 2020, the Company and Global Asset Development Co., Ltd. entered into a

new lease agreement, whereby the latter agrees to lease land and construction thereon to the

Company and the Company agrees to pay the rental to Global Asset Development Co., Ltd.

In a total amount of Baht 2.23 million per month, from 1 January 2021 to 31 December 2023.

In addition, the Company shall give a written notice to extend the agreement at least 90 days

prior to the expiry date.


7 ……………………....…............……Director

Rit Thirakomen


Operation support service agreement

The Company entered into operation support service agreement with M-Senko Logistics

Company Limited (“M-Senko”), whereby the Company agreed to provide management

service to M-Senko in areas of procurement, accounting and finance, human resources and

information technology support. M-Senko agreed to pay management fee to the Company

and at a rate of Baht 0.38 million per month. This agreement is effective from 1 January 2021

to 31 December 2021 (for the period as from 1 July 2018 to 31 August 2019: at a rate of Baht

0.22 million per month and for the period as from 1 September 2019 to 31 December 2020: at

a rate of Baht 0.31 million per month).

The Company entered into operation support service agreement with M-Senko Logistics

Company Limited (“M-Senko”), whereby the Company agreed to provide service of utilities

and truck repair and maintenance to M-Senko. M-Senko agreed to pay service fee to the

Company at a rate of Baht 0.59 million per month, effective from 1 January 2021 to 31

December 2021 (for the period as from 1 July 2018 to 31 August 2019: at a rate of Baht 0.59

million per month and for the period as from 1 September 2019 to 31 December 2020: at a

rate of Baht 0.53 million).

Land and distribution center building lease agreement

On 1 March 2013, the Company entered into a lease agreement for lease of land and

distribution center building with Global Asset Development Co., Ltd., whereby the latter

agrees to lease land and distribution center building to the Company and the Company

agrees to pay the rental to Global Asset Development Co., Ltd. At the rate stipulated in the

agreement. The lease agreement is for a period of 20 years, from 1 November 2013 to 31

October 2033. The agreement states that the Company shall begin to pay the monthly rent

from 1 November 2013 onwards. In addition, the Company shall give a written notice to

extend the agreement at least 90 days prior to the expiry date.

On 18 April 2016, the Company entered into additional lease agreement for lease of land with

Global Asset Development Co., Ltd., whereby the latter agrees to lease land to the Company

and the Company agrees to pay the rental to Global Asset Development Co., Ltd. At the rate

stipulated in the agreement. The lease agreement is for a period of 17 years and 6 months,

from 1 May 2016 to 31 October 2033. The agreement states that the Company shall begin to

pay the monthly rent from 1 May 2016 onwards. In addition, the Company shall give a written

notice to extend the agreement at least 90 days prior to the expiry date.

Warehousing and logistics service agreement

The Company entered into a warehousing and logistics service agreement with M-Senko

Logistics Company Limited (“M-Senko”), whereby the latter agrees to provide the service

for the warehousing and logistics to the Company and the Company agrees to pay the

service fee at the rate stipulated in the agreement. The agreement is expired on 30 June

2021.


8 ……………………....…............……Director

Rit Thirakomen


Directors and management’s benefits

During the three-month period ended 31 March 2021 and 2020, the Group had employee

benefit expenses payable to their directors and management as below.


Consolidated financial

statements /Separate


For the three-month

periods ended 31 March

2021 2020

Short-term employee benefits 46 37

Post-employment benefits 1 2

Total 47 39

4. Cash and cash equivalents


Consolidated


Separate


31 March

2021

31 December

2020

31 March

2021

31 December

2020

Cash 60,793 115,415 46,203 92,288

Bank deposits 77,564 394,037 43,822 291,300

Total 138,357 509,452 90,025 383,588

As at 31 March 2021, bank deposits in savings accounts carried interests between 0.05 and

0.125 percent per annum (31 December 2020: between 0.05 and 0.125 percent per

annum).


9 ……………………....…............……Director

Rit Thirakomen


5. Trade and other receivables


Consolidated


Separate


31 March

2021

31 December

2020

31 March

2021

31 December

2020

Trade accounts receivable - related parties

Aged on the basis of due dates

Not yet due 175 121 91,132 92,838

Total trade accounts receivable

- related parties 175 121 91,132 92,838

Trade accounts receivable - unrelated parties Aged on the basis of due dates

Not yet due 62,758 61,700 41,643 44,544

Total trade accounts receivable

- unrelated parties 62,758 61,700 41,643 44,544

Total trade accounts receivable 62,933 61,821 132,775 137,382

Other receivables

Other receivables - related parties 1,828 1,788 25,217 22,571

Advances 8,632 7,772 5,876 6,963

Accrued interest receivable 8,687 6,924 8,687 6,924

Others 30,557 31,695 23,230 22,968

Total other receivables 49,704 48,179 63,010 59,426

Total trade and other

receivables 112,637 110,000 195,785 196,808


10 ……………………....…............……Director

Rit Thirakomen


6. Other financial assets

As at 31 March 2021, other financial assets investments consisted of the following:


Consolidated

financial

statements

Separate

financial

statements

Other financial assets at amortised cost

Fixed deposits 100,001 100,001

Other financial assets at FVTPL

Investments in debt instruments 8,347,893 7,401,358

Equity instruments designated at FVOCI

Non-listed equity instruments - -

Total other financial assets 8,447,894 7,501,359

Consisted of :

Other current financial assets 7,634,792 6,688,257

Other non-current financial assets 813,102 813,102

7. Investments in subsidiaries

Details of investments in subsidiaries as presented in the separate financial statements are

as follows:


Paid-up capital

Shareholding

percentage Cost

31

March

31

December

31

March

31

December

31

March

31

December

Company’s name 2021 2020 2021 2020 2021 2020

(Percent) (Percent)

MK Interfood Company Limited 400,000 400,000 100 100 299,050 299,050

MK Service Training Center Company

Limited 35,000 35,000 100 100 52,430 52,430

International Food Supply Company

Limited 280,000 280,000 100 100 280,000 280,000

Mark One Innovation Center Company

Limited 60,000 60,000 100 100 60,000 60,000

Catapult Company Limited 2,070,000 2,070,000 100 100 2,070,000 2,070,000

Total 2,761,480 2,761,480


11 ……………………....………Director

Rit Thirakomen

….....…………………....………Director Somchai Hanjitkasem

8. Investments in joint ventures

8.1 Details of investments in joint ventures

Investments in joint ventures represents investments in entities which are jointly controlled by the Company and other company. Details of

these investments are as follows:


Consolidated

financial statements Separate financial statements

Joint venture

Nature of

business Paid-up capital

Shareholding

percentage

Carrying amount based

on equity method Cost

Allowance for

impairment loss

Carrying amount based

on cost method - net

31

March

2021

31

December

2020

31

March

2021

31

December

2020

31

March

2021

31

December

2020

31

March

2021

31

December

2020

31

March

2021

31

December

2020

(Percent) (Percent)

Plenus and MK Pte Ltd. Restaurant 12.5 million

Singapore dollar

50.0 50.0 42,924 45,596 149,207 149,207 (106,885) (106,885) 42,322 42,322

M-Senko Logistics

Co., Ltd.

Warehousing

and logistic

services

Baht 1,300 million 49.7 49.7 846,568 849,444 870,625 870,625 - - 870,625 870,625

Total 889,492 895,040 1,019,832 1,019,832 (106,885) (106,885) 912,947 912,947


12 ……………………....………Director

Rit Thirakomen

………………........……....………Director Somchai Hanjitkasem

8.2 Share of loss

During the periods, share of loss from investments in joint ventures in the consolidated

financial statements was as follows:


Consolidated financial statements

Joint ventures

Share of loss from investments in

joint ventures for the three-month


2021 2020

Plenus and MK Pte Ltd 2,964 1,606

M-Senko Logistics Company Limited 2,876 540

5,840 2,146

9. Property, plant and equipment

Movements in the property, plant and equipment account during the three-month period

ended 31 March 2021 are summarises below.


Consolidated


Separate


Net book value as at 1 January 2021 3,253,668 2,478,230

Acquisitions - at cost

Decrease in accounts payable for purchases of

equipment during the period (21,431) (15,352)

Cash paid for purchases of equipment 51,620 38,071

Total 30,189 22,719

Disposals and write-off - net book value at disposal

and write-off date

Proceeds from disposals of equipment (645) (2,509)

Loss on disposals of equipment (2,296) (2,154)

Loss on write-off of equipment (8,343) (7,662)

Total (11,284) (12,325)

Depreciation for the period (164,096) (115,800)

Net book value as at 31 March 2021 3,108,477 2,372,824


13 ……………………....………Director

Rit Thirakomen


10. Right-of-use assets

Movements in the right-of-use assets account during the three-month period ended 31

March 2021 are summarised below.


Consolidated

financial

statements

Separate

financial

statements

Net book value as at 1 January 2021 3,956,250 3,067,677

Increase during the period 144,832 115,739

Write-off (16,143) (16,143)

Depreciation for the period (333,598) (248,110)

Net book value as at 31 March 2021 3,751,341 2,919,163

11. Intangible assets

Movements in the intangible assets account during the three-month period ended 31 March

2021 are summarised below.


Consolidated


Separate


Net book value as at 1 January 2021 919,273 82,304

Acquisitions during the period - at cost 1,774 994

Disposals (6) (6)

Amortisation for the period (11,983) (4,422)

Net book value as at 31 March 2021 909,058 78,870


14 ……………………....………Director

Rit Thirakomen


12. Trade and other payables


Consolidated


Separate


31 March

2021

31 December

2020

31 March

2021

31 December

2020

Trade accounts payable - related party - - 18,860 20,974

Trade accounts payable - unrelated parties 338,416 415,850 298,721 374,209

Other payables - related parties 44,581 48,803 51,338 55,788

Other payables - unrelated parties 62,660 72,692 53,180 64,935

Accounts payable for purchases of

plant and equipment 26,044 48,822 22,652 38,903

Accrued expenses 603,507 708,302 459,903 543,511

Others 20,285 17,702 16,710 14,752

Total 1,095,493 1,312,171 921,364 1,113,072

13. Lease liabilities

Lease liabilities as at 31 March 2021 are presented below.


Consolidated

financial

statements

Separate

financial

statements

Lease liabilities 3,709,602 2,885,750

Less: Deferred interest expenses (208,104) (174,494)

Total 3,501,498 2,711,256

Less: Portion due within one year (1,099,339) (813,506)

Lease liabilities - net of current portion 2,402,159 1,897,750


15 ……………………....………Director

Rit Thirakomen


Movements in lease liabilities during the three-month period ended 31 March 2021 are

summarised below.

14. Provision for long-term employee benefits

Movements in the provision for long-term employee benefits account during the three-

month period ended 31 March 2021 are summarised below.


Consolidated


Separate


As at 1 January 2021 718,466 630,148

Expenses recognised during the period 17,794 14,954

Benefit paid during the period (991) (991)

As at 31 March 2021 735,269 644,111


Consolidated

financial

statements

Separate

financial

statements

Balance as at 1 January 2021 3,691,073 2,848,588

Add: Additions during the period 144,977 115,738

Accretion of interest 21,413 16,858

Less: Payments during the period (286,879) (220,045)

Reduction in lease payments by lessors (54,255) (35,052)

Decrease from cancelation of lease agreements (14,831) (14,831)

Balance as at 31 March 2021 3,501,498 2,711,256


16 ……………………....………Director

Rit Thirakomen


15. Income tax

Interim corporate income tax was calculated on profit before income tax for the period,

using the estimated effective tax rate for the year.

Income tax expenses for the three-month period ended 31 March 2021 and 2020 are made

up as follows:


For the three-month periods ended 31 March

Consolidated


Separate


2021 2020 2021 2020

Current income tax:

Interim corporate income tax charge 31,981 88,763 31,142 86,231

Deferred tax:

Relating to origination and reversal of

temporary differences (23,981) (23,395) (11,555) (20,625)

Income tax expenses reported in the

income statements 8,000 65,368 19,587 65,606

The amounts of income tax relating to each component of other comprehensive income for

the three-month period ended 31 March 2021 and 2020 are as follows:


Consolidated financial

statements/

Separate financial statements

For the three-month


2021 2020

Deferred tax relating to changes in value of

available-for-sale investments - 26

Total - 26


17 ……………………....………Director

Rit Thirakomen


16. Earnings per share

Basic earnings per share is calculated by dividing profit for the period attributable to equity

holders of the Company (excluding other comprehensive income) by the weighted average

number of ordinary shares in issue during the period.

17. Operating segment information

Operating segment information is reported in a manner consistent with the internal reports

that are regularly reviewed by the chief operating decision maker in order to make decisions

about the allocation of resources to the segment and assess its performance.

The Group are engaged in two business segments which are restaurant business and other

businesses that support restaurant business including training service provider,

manufacture and distribution of foods and research and development of technology and

innovation of food and beverage products. Their operations are carried on in geographical

areas of Thailand. However, the restaurant business in Thailand is the main business

segment and the segment information that has been considered based on a quantitative

basis is over 90 percent of operating segments and geographical areas. For this reason, the

chief operating decision maker considers aggregating the operating segments into one

reportable segment of restaurant operation.

Segment performance is measured based on operating profit or loss, on a basis consistent

with that used to measure operating profit or loss in the financial statements. As a result, all

of the revenues, operating profits and assets as reflected in these financial statements

pertain to the aforementioned reportable operating segment and geographical area.

18. Commitments and contingent liabilities

18.1 Lease of the low-value assets and other service commitments

The Group have entered into several long-term contracts in respect of the lease of the low-

value assets and related services. The terms of the agreements are generally between 3

and 30 years.

As at 31 March 2021, future lease and service fees payables under these lease and service

contracts were as follows:


Consolidated


Separate


Payable within:

Less than 1 year 604 452

1 year to 5 years 1,066 817

More than 5 years 63 56


18 ……………………....………Director

Rit Thirakomen


18.2 Futures contracts

The Group has entered into futures contracts with many local companies, whereby the

Group and those companies agreed quantity, schedule, place and price of inventories to be

delivered. The Group agreed to pay for inventories at the rates stipulated in the contracts.

18.3 Guarantees

18.3.1 Bank guarantees

As at 31 March 2021, there were outstanding letters of guarantee issued by the

banks on behalf of the Group of approximately Baht 21.2 million (separate financial

statements: Baht 20.9 million) (31 December 2020: Baht 21.2 million, the Company

only: Baht 20.9 million), in respect of certain performance bonds as required in the

normal course of businesses. These included letters of guarantee amounting to Baht

8.3 million (the Company only: Baht 8.3 million) (31 December 2020: Baht 8.3

million, the Company only: Baht 8.3 million) to guarantee payments due to creditors

and Baht 12.9 million (the Company only: Baht 12.6 million) (31 December 2020:

Baht 12.9 million, the Company only: Baht 12.6 million) to guarantee electricity use.

18.3.2 Guarantees to related party

As at 31 March 2021, the Company had guaranteed bank credit facilities of

International Food Supply Co., Ltd. (“a subsidiary”) of Baht 45 million (31 December

2020: Baht 45 million).

19. Foreign currency risk

The Company’s exposure to foreign currency risk arises mainly from short-term investments

that are denominated in foreign currencies. The Company enters into forward exchange

contracts to hedge such risk.

The balances of financial assets denominated in foreign currencies as at 31 March 2021

are summarised below.

Foreign currency Amount Exchange rates as at 31 March 2021

(Million) (Baht per foreign currency unit)

US dollar 10 31.1735

Forward exchange contracts outstanding as at 31 March 2021 are summarised below.

Foreign currency Sold amount Contractual maturity date Contractual exchange rate

(Million) (Baht per foreign currency unit)

US dollar 10 June 2022 31.19


19 ……………………....………Director

Rit Thirakomen


20. Fair value hierarchy

As of 31 March 2021, the Group had the assets and liabilities that were measured at fair

value as follows:


Consolidated


Separate


Level 2 Level 2

Financial assets measured at fair value

Investments in debt instruments 8,348 7,401

Financial liabilities measured at fair value

Derivatives - forward exchange contracts - loss 1 1

During the current period, there were no transfers within the fair value hierarchy.

21. Event after the reporting period

On 7 May 2021, the Annual General Meeting of the Company’s shareholders acknowledged

two interim dividend payments at the rate of Baht 1.00 per share or Baht 920.88 million in

total. The first interim dividend payment was made on 10 September 2020 at the rate of

0.50 Baht per share totaling Baht 460.44 million. The second interim dividend payment will

be made to the shareholders on 25 May 2021 at the rate of 0.50 Baht per share totaling

Baht 460.44 million, which paid from the operating period 1 July to 31 December 2020 and

retained earnings.

22. Approval of interim financial statements

These interim financial statements were authorised for issue by the Company’s Board of

Directors on 13 May 2021.

mk restaurant group public company limited and its

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