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.
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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.