Sistema PublicFinancial : Financial statements 2020

SISTEMA PJSFC AND SUBSIDIARIES

Consolidated Financial Statements for 2020 and Independent Auditor's Report

SISTEMA PJSFC AND SUBSIDIARIES

TABLE OF CONTENTS

		Page
STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION
AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR 2020	1
INDEPENDENT AUDITOR'S REPORT	2-6
CONSOLIDATED FINANCIAL STATEMENTS FOR 2020:
Consolidated statement of profit or loss	7
Consolidated statement of comprehensive income	8
Consolidated statement of financial position	9-10
Consolidated statement of changes in equity	11
Consolidated statement of cash flows	12-13
Notes to the consolidated financial statements
1.	General	14
2.	Basis of preparation	14
3.	Significant accounting policies, judgements, estimates and assumptions	14
4.	Segment information	18
5.	Discontinued operations	21
6.	Business combinations	24
7.	Capital transactions of subsidiaries	27
8.	Revenue	28
9.	Impairment of long-lived assets	33
10.	Impairment of financial assets	34
11.	Income taxes	34
12.	Employee benefits expenses	37
13.	Property, plant and equipment	37
14.	Investment property	40
15.	Goodwill	41
16.	Other intangible assets	43
17.	Investments in associates and joint ventures	46
18.	Profit on disposal of other assets	53
19.	Other financial assets	53
20.	Restricted cash	60
21.	Inventories	60
22.	Accounts receivable	61
23.	Equity	62
24.	Accumulated other comprehensive income	62
25.	Loans and borrowings	63
26.	Lease liabilities and right-of-use assets	66
27.	Bank deposits and liabilities	67
28.	Other financial liabilities	68
29.	Provisions	68
30.	Earnings/(loss) per share	69
31.	Capital and financial risk management	70
32.	Derivative instruments	73
33.	Fair values	75
34.	Related party transactions	77
35.	Subsidiaries	78
36.	Non-cash transactions	79
37.	Reconciliation of liabilities arising from financing activities	80
38.	Contingencies and commitments	81
39.	Subsequent events	84

SISTEMA PJSFC AND SUBSIDIARIES

STATEMENT OF MANAGEMENT'S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2020

Management is responsible for the preparation of the consolidated financial statements that present fairly the financial position of Sistema Public Joint Stock Financial Corporation and its subsidiaries (the "Group") as of 31 December 2020, and the results of its operations, cash flows and changes in equity for 2020, in compliance with International Financial Reporting Standards ("IFRSs").

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 IFRSs 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 judgements and assumptions that are reasonable and prudent;
• Stating whether IFRSs have been followed, subject to any material departures disclosed and explained in the consolidated financial statements; and
• 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 and sound 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 IFRSs;
• Maintaining statutory accounting records in compliance with the Russian 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 2020 were approved by:

________________________	________________________
Vladimir Chirakhov	Vladimir Travkov
Chief Executive Officer (President)	Vice President for Finance (CFO)
6 April 2021

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INDEPENDENT AUDITOR'S REPORT

To the Shareholders and the Board of Directors of Sistema Public Joint Stock Financial Corporation

Opinion

We have audited the consolidated financial statements of Sistema Public Joint Stock Financial Corporation ("Sistema") and its subsidiaries (the "Group"), which comprise the consolidated statement of financial position as at 31 December 2020 and the consolidated statement of profit or loss, 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 present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended 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 International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the "IESBA Code") together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Russian Federation, 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 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 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 these matters.

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Why the matter was determined to be	How the matter was addressed in the audit
a key audit matter

Diversified structure of the Group

Sistema is a holding company that owns mainly controlling stakes in its subsidiaries, whose results are included in the consolidated financial statements. The large number of entities of the Group and diversified nature of their operations require the Group's management to design and implement group wide controls, including monitoring and control activities to ensure timely, reliable and complete financial information received from its subsidiaries.

Audit procedures regarding the financial information of the subsidiaries included in the consolidated financial statements may be performed by us or by the auditors of those subsidiaries ("components") acting under our supervision. As the group auditor, we are fully responsible for conducting the audit and forming our audit opinion.

We focused on this matter because the diversified structure of the Group has a significant impact on our audit approach, and the nature and extent of our involvement in component auditors' work is significant.

We obtained an understanding of the group-wide controls over the consolidation process and the preparation of the consolidated financial statements, including instructions of the Group's management to its subsidiaries.

Our audit approach was developed considering the Group's diversified structure and associated risks of material misstatement of the consolidated financial statements. It included determination of necessary procedures and audit scope in relation to each component's financial information, depending on its significance for the Group and identification of risks of misstatement of their financial information. The nature and extent of our involvement in the component auditors' work was also dependent on our assessment of their professional competence in the context of allocated scope.

To obtain reasonable assurance of fair presentation of the components' financial information, we assessed risks and determined audit procedures performed by the component auditors, and evaluated the results of the procedures. This included a critical analysis of the component auditors' documentation, discussion of significant matters with the component auditors, component or Group management and, if applicable, designing and performing additional audit procedures.

We also performed procedures with respect to consolidation adjustments to the financial information of the subsidiaries in order to assess their nature, completeness and accuracy.

Significant non-routine transactions

In light of its strategy, the Group regularly conducts complex acquisitions and disposals, debt restructurings and other significant non-routine transactions.

We focus on these matters because the appropriate accounting treatment of such transactions is often complex and requires exercise of significant judgement, in particular, in determining whether or not the Group has control over its investees, and whether or not the Group has assumed obligations to third-party investors.

Our procedures included reviewing legal documents to fully understand the terms and conditions of each transaction and therefore the associated accounting implications and evaluating documentation of management's positions on how IFRSs were applied to the transactions.

In relation to the previously mentioned specific transactions, we analysed legal documents and evaluated the appropriateness of management's conclusions on whether or not the Group has control over the investees in the context of investee's governance structure, size of the Group's shareholding relative to other shareholders, dispersion of other vote holdings and other factors

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