PJSC Cherkizovo Group

Consolidated Financial Statements

for the year ended 31 December 2021 and Independent Auditor's Report

Contents

Page

STATEMENT OF MANAGEMENT RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF

THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

1

INDEPENDENT AUDITOR'S REPORT

2

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

6

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

7

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

9

CONSOLIDATED STATEMENT OF CASH FLOWS

10

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS:

1.

Nature of the business

11

2.

Significant accounting policies

12

3.

New and revised International Financial Reporting Standards

22

4.

Key sources of estimation uncertainty

24

5.

Operating segments

27

6.

Cost of sales

30

7.

Selling, general and administrative expenses

31

8.

Other operating income (expenses), net

31

9.

Interest expense, net of government grants

31

10.

Other (expenses) income, net

32

11.

Income tax benefit (expense)

32

12.

Property, plant and equipment

34

13.

Investment property

35

14.

Right-of-use assets

36

15.

Goodwill

36

16.

Intangible assets

37

17.

Biological assets

38

18.

Investments in joint ventures and associates

40

19.

Long-term deposits in banks

42

20.

Inventories

42

21.

Taxes recoverable and prepaid

42

22.

Trade receivables

42

23.

Cash and cash equivalents

42

24.

Shareholder's equity

43

25.

Non-controlling interests

43

26.

Borrowings

44

27.

Lease liabilities

46

28.

Tax related liabilities

46

29.

Financial instruments

47

30.

Related parties

50

31.

Acquisitions

52

32.

Commitments and contingencies

56

33.

Subsequent events

57

PJSC CHERKIZOVO GROUP

STATEMENT OF MANAGEMENT RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

Management is responsible for the preparation of the consolidated financial statements that present fairly the financial position of PJSC Cherkizovo Group (the "Company") and its subsidiaries (the "Group") as at 31 December 2021, and the consolidated results of its operations, cash flows and changes in equity for the year then ended, in compliance with International Financial Reporting Standards ("IFRS").

In preparing the consolidated financial statements, management is responsible for:

  • Properly selecting and applying accounting policies;
  • Presenting information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
  • Providing additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Group's consolidated financial position and financial performance;
  • Making an assessment of the Group's ability to continue as a going concern.

Management is also responsible for:

  • Designing, implementing and maintaining an effective system of internal controls throughout the Group;
  • Maintaining adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the consolidated financial position of the Group, and which enable them to ensure that the consolidated financial statements of the Group comply with IFRS;
  • Maintaining statutory accounting records in compliance with local legislation and accounting standards;
  • Taking such steps as are reasonably available to them to safeguard the assets of the Group; and
  • Preventing and detecting fraud and other irregularities.

The consolidated financial statements of the Group for the year ended 31 December 2021 were approved by Management on 17 February 2022.

On behalf of the Management:

_________________________________

_________________________________

Sergei Mikhailov

Ludmila Mikhailova

Chief Executive Officer

Chief Financial Officer

1

AO Deloitte & Touche CIS

5 Lesnaya Street

Moscow, 125047,

Russia

Tel: +7 (495) 787 06 00

Fax: +7 (495) 787 06 01 deloitte.ru

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of PJSC Cherkizovo Group:

Opinion

We have audited the consolidated financial statements of PJSC Cherkizovo Group (the "Company") and its subsidiaries (collectively - the "Group"), which comprise the consolidated statement of financial position as at 31 December 2021, and

the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for 2021, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2021, and its consolidated financial performance and its consolidated cash flows for 2021

in accordance with International Financial Reporting Standards ("IFRSs").

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Auditor's Independence Rules and the Auditor's Professional Ethics Code, that are relevant to our audit of the financial statements in the Russian Federation together with the ethical requirements of the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the "IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matter is the matter that, in our professional judgment, was of most significance in our audit of the consolidated financial statements of the current period. This matter was addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on this matter.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL

and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.

© AO Deloitte & Touche CIS. All rights reserved.

Why the matter was determined

How the matter was addressed in the audit

a key audit matter

Impairment assessment of Ready-to-eat ("RTE") meat processing cash-generating unit

As at 31 December 2021 RTE meat processing cash-generating unit is represented by non-current assets of all RTE Meat-Processing production facilities of the Group except for burger patties production in Kaliningrad region, its carrying value amounts to 10 608 millions of Russian rubles. As a result of the poor performance of the cash-generating unit ("CGU") in 2021 the Group conducted an impairment test of the CGU by determining its recoverable amount and comparing it to the carrying value of non- current assets of the CGU. The recoverable amount was determined based on a value in use calculation.

Further details are provided in Note 4 to the consolidated financial statements.

We focused on this area as a key audit matter because impairment assessment process and value in use calculation involves a high degree of subjectivity and judgement in selecting appropriate assumptions. In particular, the value in use of the CGU is sensitive to changes in significant assumptions, including forecasted sales prices, sales volumes, operating profit margin rates and discount rate.

We obtained an understanding of the process and tested the effectiveness of controls over the Group's impairment assessment, including the analysis of impairment indicators, determination of the recoverable amount and selection of appropriate key assumptions used in value in use calculation. We assessed the methodology of determining the recoverable amount for its compliance with IFRS. We performed the following audit procedures in respect to the recoverable amount calculation performed by the Group's management:

  • Verified that the input data used in the impairment testing model is consistent with the approved budgets and forecasts;
  • With the assistance of our internal valuation specialists challenged reasonableness of key assumptions used in the management's forecasts, with reference to historical data and, where applicable, external / independent sources, noting that the assumptions used fell within an acceptable independently determined range;
  • Tested the accuracy of the calculation and sensitivity analysis of the recoverable amount to changes in significant assumptions;
  • Tested the appropriateness of the related disclosures provided in the consolidated financial statements. In particular,
    we focused on the disclosure of key unobservable inputs and the related sensitivity analysis.

Other Information

Management is responsible for the other information. The other information comprises

the information included in the Annual report, but does not include the consolidated financial statements and our auditor's report thereon. The Annual report is expected to be made available to us after the date of this auditor's report.

Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

3

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Cherkizovo Group OAO published this content on 17 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 February 2022 16:17:04 UTC.