X5 Group (Пятерочка). Годовой отчет за 2021 год - часть 24

FINANCIAL STATEMENTS

186

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

2.3

  Foreign currency translation  

 

and transactions

(a) 

Functional and presentation currency

The functional currency of the Group’s entities is the 
national currency of the Russian Federation, the Russian 
Rouble (“RUB”). The presentation currency of the Group 
is the Russian Rouble (“RUB”), which management 
believes is the most useful currency to adopt for users of 
these consolidated financial statements.

(b) 

transactions and balances

Monetary assets and liabilities denominated in foreign 
currencies are translated into the functional currency at 
the official exchange rate of the Central Bank of Russian 
Federation (“CBRF”) at the respective reporting dates. 
Foreign exchange gains and losses resulting from the 
settlement of the transactions and from the translation 
of monetary assets and liabilities into the functional 
currency at period-end official exchange rates of the 
CBRF are recognised in profit or loss. Translation at 
period-end rates does not apply to non-monetary items. 

2.4

  Segment reporting

Operating segment is reported in a manner consistent 
with the internal reporting provided to the chief 

operating decision-maker. The chief operating decision-
maker has been identified as the Management Board. 
The chief operating decision-maker is responsible for 
allocating resources and assessing performance of the 
operating segments. The Group identifies retail chains of 
each format and dark kitchens (see Note 1) as separate 
operating segments in accordance with the criteria set 
forth in IFRS 8. Reportable segments whose revenue, 
result or assets are ten percent or more of all the 
segments are reported separately.

2.5

  Property, plant and equipment

Property, plant and equipment are stated at cost less 
accumulated depreciation and accumulated impairment, 
where required. Cost includes expenditure that is directly 
attributable to the acquisition or construction of the 
item.

Costs of minor repairs and maintenance are expensed 
when incurred. Costs of replacing major parts or 
components of property, plant and equipment are 
capitalised and the replaced parts are retired. Capitalised 
costs are depreciated over the remaining useful life of 
the property, plant and equipment or part’s estimated 
useful life whichever is sooner.

Leasehold improvements are capitalised when it is 
probable that future economic benefits associated with 
the improvements will flow to the Group and the cost 
can be measured reliably. 

At each reporting date management assesses whether 
there is any indication of impairment of property, plant 
and equipment including construction in progress. 

If any such indication exists, management estimates 
the recoverable amount, which is determined as the 
higher of an asset’s fair value less costs of disposal 
and its value in use. The carrying amount is reduced 
to the recoverable amount and the impairment loss 
is recognised in the consolidated statement of profit 
or loss. An impairment loss recognised for an asset in 
prior years is reversed if there has been a favourable 
change in circumstances affecting estimates used to 
determine the asset’s value in use or fair value less costs 
of disposal.

Gains and losses on disposals determined by comparing 
the proceeds with the carrying amount are recognised in 
profit or loss.

Land and assets under construction are not 
depreciated. Depreciation on other items of property, 
plant and equipment is calculated using the straight-line 
method to allocate their cost to their residual values over 
their estimated useful lives. Buildings are divided into 
foundation and frame with a depreciation period of 40-
50 years and other parts of 7-8 years. Other parts mainly 
include fixtures and fitting. 

The depreciation periods, which approximate the 
estimated useful economic lives of the respective assets, 
are as follows:

USeFUl liVeS

Buildings (foundation and frame)

40−50 years

Buildings (other parts)

7−8 years

Machinery and equipment

>1−10 years

Refrigerating equipment 

7−10 years

Vehicles

4−7 years

Other

3−5 years

The residual value of an asset is the estimated amount 
that the Group would currently obtain from the disposal 
of the asset less the estimated costs of disposal, if 
the asset were already of the age and in the condition 
expected at the end of its useful life. The residual value 
of an asset is nil if the Group expects to use the asset 
until the end of its physical life. The assets’ residual 
values and useful lives are reviewed, and adjusted 
prospectively if appropriate, at  ach reporting date.

2.6

  investment properties

Investment properties consist of buildings held by the 
Group to earn rental income or for capital appreciation, 
or both, and which are not occupied by the Group. The 
Group recognises the part of owned shopping centres 
that are leased to third party retailers as investment 
properties, unless they represent insignificant portions of 
the property and are used primarily to provide auxiliary 
services to retail customers not provided by the Group 
rather than to earn rental income. 

FINANCIAL STATEMENTS

187

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

2.6  investment properties (continued)

After purchase or construction of the building the 
Group assesses the main purpose of its use and, if the 
main purpose is to earn rental income or for capital 
appreciation, or both, the building is classified as 
investment property.

Investment properties are stated at cost less 
accumulated depreciation and provision for impairment, 
where required. If any indication exists that investment 
properties may be impaired, the Group estimates the 
recoverable amount as the higher of value in use and fair 
value less costs of disposal. Subsequent expenditure is 
capitalised only when it is probable that future economic 
benefits associated with it will flow to the Group and 
the cost can be measured reliably. All other repairs and 
maintenance costs are expensed when incurred. 

Transfers are made to (or from) investment properties 
only when there is a change in use. Transfers between 
investment property and owner occupied property do not 
change the carrying amount of the property transferred 
and they do not change the cost of that property for 
measurement or disclosure purposes. Depreciation on 
items of investment properties is calculated using the 
straight-line method to allocate their cost to their residual 
values over their estimated useful lives. The depreciation 
periods, which approximate the estimated useful 
economic lives of the respective assets, are 40-50 years.

Investment properties are derecognised either when 
they have been disposed of (i.e., at the date the 
recipient obtains control) or when they are permanently 
withdrawn from use and no future economic benefit is 
expected from their disposal. The difference between 
the net disposal proceeds and the carrying amount 
of the asset is recognised in profit or loss in the 
period of derecognition. The amount of consideration 
to be included in the gain or loss arising from the 
derecognition of investment property is determined in 
accordance with the requirements for determining the 
transaction price in IFRS 15. 

Fair value determined for the disclosure purposes (Note 
12) represents the price that would be received to sell 
an asset in an orderly transaction between market 
participants at the measurement date. The measurement 
is classified in level 3 of the fair value hierarchy.

2.7

  intangible assets

(a) 

Goodwill

Goodwill is carried at cost less accumulated impairment 
losses. Goodwill represents the excess of the 
consideration transferred for the acquiree, the amount 
of non-controlling interest in the acquiree and fair value 
of an interest in the acquiree held immediately before 
the acquisition date over the fair value of the net assets 
of the acquired subsidiary at the date of exchange. 
Goodwill is not deductible for tax purposes.

 
 
 

The Group tests goodwill for impairment at least annually 
and whenever there are indications that goodwill may be 
impaired. Goodwill is tested on the operating segment 
level.

(b) 

Brand and private labels

Brand and private labels acquired in a business 
combination are recognised initially at fair value. Private 
labels are amortised using the straight-line method 
over their useful lives. The useful life of “Pyaterochka” 
brand is estimated to be indefinite-lived as there is no 
foreseeable limit to the period over which the brand is 
expected to generate net cash inflows for the Group. 
In 2021 the Group revised the useful live of brand 
“Karusel” and determined that the useful life of 5 years 
fairly reflects the period over which the Group expects 
net cash inflows from the asset. Change in estimate 
was based on the demonstration of the brands’ ability 
to survive changes in the economic environment and 
Karusel reorganisation.

USeFUl liVeS

Brand “Karusel”

5 years

Private labels

1−8 years

(c) 

Software and other intangible assets

Expenditure on acquired patents, licenses and software 
development is capitalised and amortised using the 
straight-line method over their useful lives ranging from 1 
to 10 years (5 on average). 

Research costs related to software development 
are expensed as incurred. Software development 
expenditures on an individual project are recognised as 
an intangible asset when the following criteria are met: 

• 

It is technically feasible to complete the intangible 
asset so that the asset will be available for use or sale;

• 

The Group intends to complete the asset and use or 
sell it;

• 

There is an ability to use or sell the asset;

• 

It can be demonstrated how the asset will generate 
probable future economic benefits;

• 

Adequate technical, financial and other resources 
to complete the development and to use or sell the 
asset are available;

• 

The expenditure attributable to the asset during its 
development can be reliably measured.

Following initial recognition of the development 
expenditure as an asset, the asset is carried at cost 
less any accumulated amortisation and accumulated 
impairment losses. Amortisation of the asset begins when 
development is complete and the asset is ready for use. 

(d) 

impairment of intangible assets

Where an indication of impairment exists, the 
recoverable amount of any intangible asset, including 
goodwill, is assessed and, when impaired, the asset is 
written down immediately to its recoverable amount. 
Goodwill and intangible assets not yet available for use 
are tested for impairment at least annually and whenever 
impairment indicators exist.

FINANCIAL STATEMENTS

188

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

2.8

 leases

The Group assesses at contract inception whether a 
contract is, or contains, a lease. That is, if the contract 
conveys the right to control the use of an identified 
asset for a period of time in exchange for consideration.

GRoUP aS a leSSee

Right-of-use assets

The Group recognises right-of-use assets at the 
commencement date of the lease (i.e., the date the 
underlying asset is available for use). Right-of-use 
assets are measured at cost, less any accumulated 
depreciation and impairment losses, and adjusted for 
any remeasurement of lease liabilities. The cost of right-
of-use assets includes the amount of lease liabilities 
recognised, initial direct costs incurred and lease 
payments made at or before the commencement date 
less any lease incentives received. Unless the Group is 
reasonably certain to obtain ownership of the leased 
asset at the end of the lease term, the recognised right-
of-use assets are depreciated on a straight-line basis 
over the shorter of its estimated useful life and the lease 
term. The Group’s right-of-use assets comprise leased 
land and buildings with depreciation periods mostly 
ranging from 5 to 45 years.

Right-of-use assets obtained as part of acquisition of 
business are recognised at an amount equal to the lease 
liabilities and lease payments made at or before the 
acquisition date and adjusted to reflect the favourable 
terms of the lease relative to market terms.

Where an indication of impairment exists, the 
recoverable amount of any right-of-use assets is 
assessed and, when impaired, the asset is written down 
to its recoverable amount (Note 3).

lease liabilities

At the commencement date of the lease, the Group 
recognises lease liabilities measured at the present value 
of lease payments to be made over the lease term. The 
lease payments include fixed payments (including in-
substance fixed payments) less any lease incentives 
receivable, variable lease payments that depend on 
an index or a rate, and amounts expected to be paid 
under residual value guarantees. The lease payments 
also include the exercise price of a purchase option 
reasonably certain to be exercised by the Group and 
payments of penalties for terminating a lease, if the 
lease term reflects the Group exercising the option 
to terminate. The variable lease payments that do not 
depend on an index or a rate are recognised as expense 
in the period on which the event or condition that 
triggers the payment occurs.

Lease liabilities obtained as part of acquisition of 
business are recognised at the present value of the 
remaining lease payments at the date of acquisition.

In calculating the present value of lease payments, 
the Group uses the incremental borrowing rate at the 

lease commencement date if the interest rate implicit 
in the lease is not readily determinable. After the 
commencement date, the amount of lease liabilities 
is increased to reflect the accretion of interest and 
reduced for the lease payments made. In addition, the 
carrying amount of lease liabilities is remeasured if there 
is a modification, a change in the lease term, a change 
in the in-substance fixed lease payments or a change in 
the assessment to purchase the underlying asset. 

In the consolidated financial statement of cash flows 
payments of principal portion of lease liabilities are 
recognised as cash outflows related to financing 
activities, payments of interest portion of the lease 
liabilities are recognised within operating cash flows. 

Sale and leaseback 

When the Group sells an asset and immediately 
reacquires the use of the asset by entering into a lease 
with the buyer, such an operation is treated as sale and 
leaseback transaction. A sale occurs when control of 
the underlying asset passes to the buyer. A lease liability 
is recognised, the associated non-current asset is 
derecognised, and a right-of-use asset is recognised at 
the proportion of the carrying value relating to the rights 
retained. Any gain or loss arising relates to the rights 
transferred to the buyer.

Short-term leases 

The Group applies the short-term lease recognition 
exemption to its short-term leases of assets other than 
land and buildings (i.e., those leases that have a lease 

term of 12 months or less from the commencement date 
and do not contain a purchase option). Lease payments 
on short-term leases are recognised as expense on a 
straight-line basis over the lease term.

GRoUP aS a leSSoR 

Leases in which the Group does not transfer 
substantially all the risks and rewards incidental to 
ownership of an asset are classified as operating leases. 
Rental income arising is accounted for on a straight-
line basis over the lease terms and is included in 
Lease / sublease and other income in the consolidated 
statement of profit or loss. Initial direct costs incurred 
in negotiating and arranging an operating lease are 
added to the carrying amount of the leased asset and 
recognised over the lease term on the same basis as 
rental income. Contingent rent is recognised as income 
in the period in which it is earned.

2.9

 inventories

Inventories at distribution centres and retail outlets 
are stated at the lower of cost and net realisable value. 
Cost comprises direct costs of goods, transportation 
and handling costs. Cost is determined by the weighted 
average method. Net realisable value is the estimated 
selling price in the ordinary course of business less the 
estimated costs of completion and the estimated costs 
necessary to make the sale. 

FINANCIAL STATEMENTS

189

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

Summary of significant 

accounting policies 

2.9  inventories (continued)

The Group provides for estimated inventory losses 
(shrinkage) between physical inventory counts on the 
basis of a percentage of cost of sales. The provision is 
adjusted to actual shrinkage based on regular inventory 
counts. The provision is recorded as a component of 
cost of sales. The Group also provides for aged stock 
provision where the net realisable value is below cost. 

2.10 

Financial instruments

A financial instrument is any contract that gives rise to 
a financial asset of one entity and a financial liability or 
equity instrument of another entity. 

(a) 

Financial assets

initial recognition and measurement

The Group classifies its financial assets as those to be 
measured subsequently at amortised cost, fair value 
through other comprehensive income or fair value 
through profit and loss. The classification depends on 
the financial asset’s contractual cash flow characteristics 
and the business model for managing the financial 
assets. 

With the exception of trade receivables that do not 
contain a significant financing component or for which 
the Group has applied the practical expedient, the 
Group initially measures a financial asset at its fair 
value plus, in the case of a financial asset not at fair 
value through profit or loss, transaction costs. Trade 
receivables that do not contain a significant financing 
component or for which the Group has applied the 
practical expedient are measured at the transaction 
price determined under IFRS 15. Refer to the accounting 
policies in section 2.24 (a) Revenue from contracts with 
customers. 

Management determines the classification of its financial 
assets at initial recognition and re-evaluates this 
designation at every reporting date, if required under 
IFRS. In order for a financial asset to be classified and 
measured at amortised cost or fair value through OCI, it 
needs to give rise to cash flows that are ‘solely payments 
of principal and interest (SPPI)’ on the principal amount 
outstanding. This assessment is referred to as the SPPI 
test and is performed at an instrument level. 

The Group’s business model for managing financial 
assets refers to how it manages its financial assets 
in order to generate cash flows. The business model 
determines whether cash flows will result from collecting 
contractual cash flows, selling the financial assets, or 
both. Purchases or sales of financial assets that require 
delivery of assets within a time frame established by 
regulation or convention in the market place (regular way 
trades) are recognised on the trade date, i.e., the date 
that the Group commits to purchase or sell the asset. 

Subsequent measurement

For purposes of subsequent measurement, financial 
assets are classified in four categories:

• 

Financial assets at amortised cost  
(debt instruments);

• 

Financial assets at fair value through OCI with 
recycling of cumulative gains and losses  
(debt instruments);

• 

Financial assets designated at fair value through OCI 
with no recycling of cumulative gains and losses upon 
derecognition (equity instruments);

• 

Financial assets at fair value through profit or loss.

Financial assets at amortised cost (debt instruments) 
is the most relevant to the Group. The Group measures 
financial assets at amortised cost if both of the following 
conditions are met:

• 

The financial asset is held within a business model 
with the objective to hold financial assets in order to 
collect contractual cash flows; and

• 

The contractual terms of the financial asset give 
rise on specified dates to cash flows that are solely 
payments of principal and interest on the principal 
amount outstanding.

Financial assets at amortised cost are subsequently 
measured using the effective interest (EIR) method 
and are subject to impairment. Gains and losses 
are recognised in profit or loss when the asset is 
derecognised, modified or impaired. 

derecognition

A financial asset (or, where applicable, a part of a 
financial asset or part of a group of similar financial 
assets) is primarily derecognised (i.e., removed from the 
Group’s consolidated statement of financial position) 
when:

• 

The rights to receive cash flows from the asset have 
expired; or

• 

The Group has transferred its rights to receive cash 
flows from the asset or has assumed an obligation 
to pay the received cash flows in full without 
material delay to a third party under a ‘pass-through’ 
arrangement; and either (a) the Group has transferred 
substantially all the risks and rewards of the asset, 
or (b) the Group has neither transferred nor retained 
substantially all the risks and rewards of the asset, but 
has transferred control of the asset.

When the Group has transferred its rights to receive 
cash flows from an asset or has entered into a pass-
through arrangement, it evaluates if, and to what extent, 
it has retained the risks and rewards of ownership. When 
it has neither transferred nor retained substantially all 
of the risks and rewards of the asset, nor transferred 
control of the asset, the Group continues to recognise 
the transferred asset to the extent of its continuing 
involvement. In that case, the Group also recognises 
an associated liability. The transferred asset and the 
associated liability are measured on a basis that reflects 
the rights and obligations that the Group has retained. 

FINANCIAL STATEMENTS

190

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

2.10  Financial instruments (continued)

Continuing involvement that takes the form of a 
guarantee over the transferred asset is measured at the 
lower of the original carrying amount of the asset and 
the maximum amount of consideration that the Group 
could be required to repay.

impairment of financial assets 

The Group recognises an allowance for expected credit 
losses (ECLs) for all debt instruments not held at fair 
value through profit or loss. ECLs are based on the 
difference between the contractual cash flows due in 
accordance with the contract and all the cash flows 
that the Group expects to receive, discounted at an 
approximation of the original effective interest rate. The 
expected cash flows will include cash flows from the sale 
of collateral held or other credit enhancements that are 
integral to the contractual terms. 

ECLs are recognised in two stages. For credit exposures 
for which there has not been a significant increase in 
credit risk since initial recognition, ECLs are provided 
for credit losses that result from default events that are 
possible within the next 12-months (a 12-month ECL). 
For those credit exposures for which there has been a 
significant increase in credit risk since initial recognition, 
a loss allowance is required for credit losses expected 

over the remaining life of the exposure, irrespective of 
the timing of the default (a lifetime ECL). 

For trade and other receivables the Group applies a 
simplified approach in calculating ECLs. Therefore, the 
Group does not track changes in credit risk, but instead 
recognises a loss allowance based on lifetime ECLs 
at each reporting date. The Group has established a 
provision matrix that is based on its historical credit loss 
experience, adjusted for forward-looking factors specific 
to the debtors and the economic environment. 

(b) 

  Financial liabilities

Financial liabilities are classified, at initial recognition, as 
financial liabilities at fair value through profit or loss, loans 
and borrowings, payables, or as derivatives designated 
as hedging instruments in an effective hedge, as 
appropriate. 

All financial liabilities are recognised initially at fair value 
and, in the case of loans and borrowings and payables, 
net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other 
payables, loans and borrowings. For more information 
refer to Note 2.11 and Note 2.12.

derecognition

A financial liability is derecognised when the obligation 
under the liability is discharged or cancelled or expires. 
When an existing financial liability is replaced by another 
from the same lender on substantially different terms, 
or the terms of an existing liability are substantially 

modified, such an exchange or modification is treated 
as the derecognition of the original liability and the 
recognition of a new liability. The difference in the 
respective carrying amounts is recognised in the 
statement of profit or loss.

2.11 

Borrowings 

Borrowings are initially recognised at their fair value, net 
of transaction costs, and are subsequently stated at 
amortised cost; any difference between the proceeds 
(net of transaction costs) and the redemption value 
is recognised in the consolidated statement of profit 
or loss over the period of the borrowings using the 
effective interest method. Borrowings are classified as 
current liabilities unless the Group has an unconditional 
right to defer settlement of the liability for at least 
12 months after the reporting date. Borrowing costs 
directly attributable to the acquisition, construction or 
production of assets that necessarily take a substantial 
period of time to get ready for intended use or sale 
(qualifying assets) are capitalised as part of the costs of 
those assets. 

The commencement date for capitalisation is when (a) 
the Group incurs expenditures for the qualifying asset; 
(b) it incurs borrowing costs; and (c) it undertakes 
activities that are necessary to prepare the asset for its 
intended use or sale. 

Capitalisation of borrowing costs continues up to the 
date when the assets are substantially ready for their use 
or sale. 

The Group capitalises borrowing costs that could have 
been avoided if it had not made capital expenditure 
on qualifying assets. Borrowing costs capitalised 
are calculated at the Group’s average funding cost 
(the weighted average interest cost is applied to the 
expenditures on the qualifying assets), except to 
the extent that funds are borrowed specifically for 
the purpose of obtaining a qualifying asset. Where 
this occurs, actual borrowing costs incurred less any 
investment income on the temporary investment of 
those borrowings are capitalised.

After initial recognition, interest-bearing borrowings 
are subsequently measured at amortised cost using 
the effective interest (“EIR”) method. Gains and losses 
are recognised in profit or loss when the liabilities are 
derecognised as well as through the EIR amortisation 
process. 

Amortised cost is calculated by taking into account any 
discount or premium on acquisition and fees or costs 
that are an integral part of the EIR. The EIR amortisation 
is included as finance costs in the consolidated 
statement of profit or loss. 

2.12 

trade and other payables

Trade and other payables are accrued when the 
counterparty performs its obligation under the contract 
and are carried at amortised cost using the effective 
interest method. Trade payables are recognised initially 
at fair value and measured subsequently at amortised 
cost.

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

FINANCIAL STATEMENTS

191

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

2.13 

Cash and cash equivalents

Cash and cash equivalents include cash in hand, 
deposits held at call with banks, and other short-term 
highly liquid investments used for meeting short term 
cash commitments.

2.14

 Provisions

Provisions are recognised when the Group has a 
present legal or constructive obligation as a result of 
past events, it is probable that an outflow of resources 
embodying economic benefits will be required to settle 
the obligation, and a reliable estimate of the amount of 
the obligation can be made. Provisions are measured as 
the best estimate of the expenditure required to settle 
the present obligation at the reporting date.

2.15 

Value added tax

Output VAT related to sales is payable to tax authorities 
on the earliest of (a) collection of the receivables from 
customers or (b) delivery of the goods or services to 
customers. Input VAT is generally recoverable against 
output VAT upon receipt of the VAT invoice and 
fulfilment of other conditions in compliance with Russian 
tax legislation. 

The tax authorities permit the settlement of VAT on a net 
basis. VAT related to sales and purchases is recognised 
in the consolidated statement of financial position on 
a gross basis and disclosed separately as an asset and 
liability, except for VAT, presented within other non-
current assets. Where a provision has been made for 
the impairment of receivables, the impairment loss is 
recorded for the gross amount of the debtor, including 
VAT.

2.16 

employee benefits

Wages, salaries, bonuses, paid annual leave and sick 
leave are accrued in the period in which the associated 
services are rendered by the employees of the 
Group. The Group’s entities contribute to the Russian 
Federation’s state pension and social insurance funds 
in respect of their employees. These contributions are 
accrued when incurred. The Group’s commitment ends 
with the payment of these contributions.

2.17 

Share-based payments

emPloyee StoCK PlaN

The Group receives services from employees as 
consideration for conditional rights to receive GDRs 
after vesting period of 3 years and fulfilment of certain 
predetermined performance conditions. 

Share-based payment transactions under the employee 
stock plan are accounted for as equity-settled 
transactions. 

The fair value of the employee services received in 
exchange for the grant of the conditional rights is 
recognised as an expense over the vesting period with 
the corresponding increase in equity (Share-based 
payment reserve) and measured by reference to the 
market price of the GDRs which is determined at grant 
date. 

Service and non-market performance conditions are not 
taken into account when determining the grant date fair 
value of awards, but the likelihood of the conditions being 
met is assessed as part of the Group’s best estimate of 
the number of equity instruments that will ultimately vest. 
Market performance conditions are reflected within the 
grant date fair value. Any other conditions attached to an 
award, but without an associated service requirement, are 
considered to be non-vesting conditions. Non-vesting 
conditions are reflected in the fair value of an award 
and lead to an immediate expensing of an award unless 
there are also service and/or performance conditions. No 
expense is recognised for awards that do not ultimately 
vest because non-market performance and/or service 
conditions have not been met. Where awards include 
a market or non-vesting condition, the transactions are 
treated as vested irrespective of whether the market or 
non-vesting condition is satisfied, provided that all other 
performance and/or service conditions are satisfied.

The cumulative expense recognised for equity-settled 
transactions at each reporting date until the vesting 
date reflects the extent to which the vesting period has 
expired and the Group’s best estimate of the number 
of equity instruments that will ultimately vest. The 
expense or credit in the statement of profit or loss for a 
period represents the movement in cumulative expense 
recognised as at the beginning and end of that period.

2.18

  Share capital

Ordinary shares are classified as equity. External costs 
directly attributable to the issue of new shares are 
shown as a deduction in equity from the proceeds. Any 
excess of the fair value of consideration received over 
the par value of shares issued is recognised as share 
premium.

2.19

 dividends 

Dividends are recognised as a liability and deducted 
from equity at the reporting date only if they are 
declared on or before the reporting date. Dividends are 
disclosed when they are proposed before the reporting 
date or proposed or declared after the reporting date 
but before the consolidated financial statements are 
authorised for issue.

2.20  

treasury shares

Where any group company purchases the Company’s 
equity share capital, the paid consideration, including 
any directly attributable incremental costs (net of 
income taxes) is deducted from equity attributable 
to the Company’s equity holders until the shares 
are cancelled, reissued or disposed of. Where such 
shares are subsequently sold or reissued, any received 
consideration, net of any directly attributable incremental 
transaction costs and the related income tax effects, is 
included in equity attributable to the Company’s equity 
holders.

FINANCIAL STATEMENTS

192

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

2.21

  earnings per share

Earnings per share are determined by dividing the profit 
or loss attributable to equity holders of the Company 
by the weighted average number of participating 
shares outstanding during the reporting period. Diluted 
earnings per share are calculated by adjusting the 
earnings and the number of shares for the effects of 
dilutive options.

2.22

   taxes

Current tax is the amount expected to be paid to, or 
recovered from, the state budget in respect of taxable 
profits or losses for the current and prior periods. 
Taxable profits or losses are based on estimates if 
consolidated financial statements are authorised prior 
to filing relevant tax returns. Taxes other than on income 
are recorded within operating expenses.

Current income tax liabilities (assets) are measured in 
accordance with IAS 12 Income Taxes and IFRIC 23 
Uncertainty over Income Tax Treatments, based on 
legislation that is enacted or substantively enacted at 
the reporting date, taking into consideration applicable 
tax rates and tax exemptions.

Deferred income tax is provided using the reporting 
liability method for temporary differences arising between 

the tax bases of assets and liabilities and their carrying 
values for financial reporting purposes. A deferred tax 
asset is recorded only to the extent that it is probable 
that taxable profit will be available against which the 
deductible temporary differences can be utilised. In 
accordance with the initial recognition exception, deferred 
tax liabilities are not recorded for temporary differences 
on initial recognition of goodwill and subsequently 
for goodwill which is not deductible for tax purposes. 
Deferred tax assets and liabilities are measured at tax 
rates that are expected to apply to the period in which 
the asset is realised or the liability is settled, based on 
tax rates which are enacted or substantially enacted at 
the reporting date. 

Deferred income tax assets and liabilities are offset 
when there is a legally enforceable right to offset current 
tax assets against current tax liabilities and when the 
deferred income tax assets and liabilities relate to 
income taxes levied by the same taxation authority 
on either the same taxable entity or different taxable 
entities where there is an intention to settle the balances 
on a net basis. Deferred tax assets and liabilities are 
netted within the consolidated group of taxpayers (CGT) 
and within individual companies of the Group for the 
entities that are not members of the CGT.

The Group considers whether it is probable that a 
taxation authority will accept an uncertain tax treatment. 
If the Group concludes it is probable that the taxation 
authority will accept an uncertain tax treatment, the 
Group determines the taxable profit (tax loss), tax bases, 
unused tax losses, unused tax credits or tax rates 
consistently with the tax treatment used or planned to 
be used in its income tax filings.

If the Group concludes it is not probable that the 
taxation authority will accept an uncertain tax 
treatment, the Group reflects the effect of uncertainty 
in determining the related taxable profit (tax loss), tax 
bases, unused tax losses, unused tax credits or tax 
rates. The Group reflects the effect of uncertainty for 
each uncertain tax treatment by using either of the 
following methods, depending on which method the 
entity expects to better predict the resolution of the 
uncertainty: the most likely amount or the expected 
value.

If an uncertain tax treatment affects current tax and 
deferred tax (for example, if it affects both taxable profit 
used to determine current tax and tax bases used to 
determine deferred tax), the Group makes consistent 
judgements and estimates for both current tax and 
deferred tax.

The Group’s uncertain tax positions are reassessed by 
management at the end of each reporting period. The 
assessment is based on the interpretation of tax laws 
that have been enacted or substantively enacted by the 
end of the reporting period, any known court or other 
rulings on such issues, and relevance and effect of a 
change in facts and circumstances or of new information 
in the context of applicable tax laws. Liabilities for 
penalties, interest and taxes other than on income are 
recognised based on management’s best estimate of 
the expenditure required to settle the obligations at the 
end of the reporting period. Adjustments for uncertain 
income tax positions are recorded within the income 
tax charge and included in current income tax payable 
line of the consolidated statement of financial position. 
Interest incurred in relation to taxation is included in 

finance costs in the consolidated statement of profit or 
loss. Provisions are maintained, and updated if necessary, 
for the period over which the respective tax positions 
remain subject to review by the tax and customs 
authorities, being 3 years from the year of filing.

2.23 

Fair value measurement

Fair values of financial instruments measured at 
amortised cost are disclosed in Note 34.

Fair value is the price that would be received to sell 
an asset or paid to transfer a liability in an orderly 
transaction between market participants at the 
measurement date. The fair value measurement is based 
on the presumption that the transaction to sell the asset  
or transfer the liability takes place either:

• 

In the principal market for the asset or liability; or

• 

In the absence of a principal market, in the most 
advantageous market for the asset or liability.

The principal or the most advantageous market must be 
accessible by the Group.

The fair value of an asset or a liability is measured using 
the assumptions that market participants would use 
when pricing the asset or liability, assuming that market 
participants act in their economic best interest.

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)

FINANCIAL STATEMENTS

193

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

2.23  Fair value measurement (continued)

A fair value measurement of a non-financial asset takes 
into account a market participant’s ability to generate 
economic benefits by using the asset in its highest and 
best use or by selling it to another market participant 
that would use the asset in its highest and best use.

The Group uses valuation techniques that are 
appropriate in the circumstances and for which sufficient 
data are available to measure fair value, maximising the 
use of relevant observable inputs and minimising the 
use of unobservable inputs.

All assets and liabilities for which fair value is measured 
or disclosed in the financial statements are categorised 
within the fair value hierarchy, described as follows, 
based on the lowest level input that is significant to the 
fair value measurement as a whole:

• 

Level 1 — quoted (unadjusted) market prices in active 
markets for identical assets or liabilities;

• 

Level 2 — valuation techniques for which the 
lowest level input that is significant to the fair value 
measurement is directly or indirectly observable;

• 

Level 3 — valuation techniques for which the 
lowest level input that is significant to the fair value 
measurement is unobservable. 

For assets and liabilities that are recognised in the 
financial statements on a recurring basis, the Group 
determines whether transfers have occurred between 
Levels in the hierarchy by re-assessing categorisation 
(based on the lowest level input that is significant to the 
fair value measurement as a whole) at the end of each 
reporting period.

2.24 

income and expense recognition

Income and expenses are recognised on an accrual 
basis as earned or incurred. Recognition of the principal 
types of income and expenses is as follows: 

(a)  

Revenue from contracts with customers

The Group is in the retail business and sells its goods 
both through stores operated by the Group and through 
franchisees (agents) acting as a principal. The revenue 
recognised by the Group meets the definition of 
revenue from contracts with customers as per IFRS 15. 
The Group recognises revenue when control of goods 
and services is transferred to the customer, generally 
for the retail customers it is occurred in the stores at the 
point of sale. Payment of the transaction price is due 
immediately when the customer purchases goods. 

The Group has loyalty points programmes, which 
allow customers to accumulate points that can be 
redeemed for free products. The loyalty points give 
rise to a separate performance obligation as they 
provide a material right to the customer. A portion of 
the transaction price is allocated to the loyalty points 
awarded to customers based on relative stand-alone 
selling price and recognised as a contract liability until 

the points are redeemed. Revenue is recognised upon 
redemption of products by the customer. 

When estimating the stand-alone selling price of the 
loyalty points, the Group considers the likelihood that 
the customer will redeem the points. The Group updates 
its estimates of the points that will be redeemed on 
a monthly basis and any adjustments to the contract 
liability balance are charged against revenue. 

(b)  

Cost of sales

Cost of sales includes the purchase price of the 
products sold and other costs incurred in bringing 
the inventories to the location and condition ready 
for sale, i.e. retail outlets. These costs include costs 
of purchasing, storing, rent, salaries and transporting 
the products to the extent it relates to bringing the 
inventories to the location and condition ready for sale.

The Group receives various types of allowances from 
suppliers in the form of volume discounts and other 
forms of payment. In accounting for supplier bonuses 
received by the Group, the Group determined that 
these bonuses are a reduction in prices paid for the 
product and are reported as part of the cost of sales as 
the related inventory is sold. Bonuses receivable from 
suppliers in cash are presented as trade receivables.

(c)  

interest income and expense

Interest income and expense are recognised on an 
effective yield basis.

(d)  

Selling, general and administrative expenses

Selling expenses consist of salaries and wages of stores 
employees, store expenses, variable lease expenses, 
depreciation of stores, utilities, advertising costs and 
other selling expenses. General and administrative 
expenses include costs of salaries and wages of support 
office employees, depreciation of support offices, 
impairment and amortisation charges of non-current 
assets and other general and administrative expenses. 
Selling, general and administrative expenses are 
recognised on an accrual basis as incurred. 

2.25  

Contract liability

A contract liability is the obligation to transfer goods or 
services to a customer for which the Group has received 
consideration (or an amount of consideration is due) 
from the customer. If a customer pays consideration 
before the Group transfers goods or services to the 
customer, a contract liability is recognised when the 
payment is made or the payment is due (whichever is 
earlier). Contract liabilities are recognised as revenue 
when the Group performs under the contract.

for the year ended 31 December 2021 

(expressed in millions of Russian Roubles,  
unless otherwise stated)