MTY Food Group to Restate Financial Statements

MTY Food Group Inc. has announced its intention to restate its consolidated financial statements and corresponding management discussion and analysis for the year ended November 2016, as well as for the three and nine-month periods ended August 31, 2017. The company identified an issue with the accounting for breakage on gift cards acquired as part of the Kahala Brands acquisition in July 2016.

The Board of Directors determined that a restatement is necessary due to an erroneous recognition of revenue related to the breakage of Kahala gift cards. The company stated that the methodology used to calculate the fair value of the liability for these gift cards at the time of acquisition was inappropriate. This led to inaccuracies in the reporting of revenues and expenses associated with these specific gift cards.

MTY Food Group emphasized that the restatement will not impact past, current, or future cash flows and does not affect the company's business operations. The company is also changing its method for estimating future breakage on these gift cards, starting in the fourth quarter of 2017, to use a more proportionate method.

The amounts subject to restatement are preliminary and remain subject to audit. MTY Food Group operates a portfolio of quick-service restaurants and casual dining brands in Canada, the United States, and internationally.