X5 Group (Пятерочка). Годовой отчет за 2021 год - часть 25

FINANCIAL STATEMENTS

194

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

02

Summary of significant 

accounting policies 

2.26 

impairment of non-current assets 

 

other than goodwill

The Group periodically assesses whether there is any 
indication that non-current assets may be impaired. 
If any such indicators exist, the Group estimates the 
recoverable amount of the asset. Where it is not possible 
to estimate the recoverable amount of an individual 
asset, the Group estimates the recoverable amount of 
the cash generating unit to which it belongs. Individual 
stores are considered separate cash-generating units 
for impairment testing purposes. Impairment loss is 
recognised whenever the carrying amount of an asset or 
the related cash-generating unit exceeds its recoverable 
amount. Impairment losses are recognised in the 
consolidated statement of profit or loss. Non-financial 
assets other than goodwill that suffered an impairment 
are reviewed for possible reversal of the impairment at 
each reporting date.

2.27 

Fair value of assets and liabilities 

 

at the acquisition date

A primary valuation of assets and liabilities of acquired 
companies was performed on a provisional basis. Once 
the valuation is finalised, any adjustments arising are 
recognised retrospectively. 

2.28

   indemnification asset

The indemnification asset equivalent to the fair value 
of the indemnified liabilities is included in net assets 
acquired in the business combination if the selling 
shareholders of the acquiree agreed to compensate 
possible claims or contingencies. Subsequent 
measurement of the indemnification asset and 
contingent liability does not have any impact on future 
earnings, unless the indemnification asset becomes 
impaired.

for the year ended 31 December 2021 

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

2.29  

offsetting of financial assets 

 

and financial liabilities

Accounts receivable and accounts payable are offset 
and the net amount is presented in the consolidated 
statement of financial position when, and only when, the 
Group currently has a legally enforceable right to set off 
the recognised amounts and intends to settle on a net 
basis.

2.30  

long-term employee benefits

The Group recognises the liability and respective 
expenses in relation to long-term employee benefits 
when there is a present obligation as a result of past 
events and a reliable estimate of the obligation can 
be made. The Group recognises the net total of the 
following amounts in profit or loss:

• 

Service cost;

• 

Net interest on the net defined benefit liability;

• 

Remeasurements of the net defined benefit liability.

FINANCIAL STATEMENTS

195

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

03

Critical accounting 

estimates and 

judgements in applying 

accounting policies

The Group makes estimates and assumptions that affect 
the reported amounts of assets and liabilities within 
the next financial year. Estimates and judgements are 
continually evaluated and are based on management’s 
experience and other factors including expectations of 
future events that are believed to be reasonable under 
the circumstances. Management also makes certain 
judgements, apart from those involving estimations, 
in the process of applying accounting policies. 
Judgements that have the most significant effect on 
the amounts recognised in the consolidated financial 
statements and estimates that can cause a significant 
adjustment to the carrying amount of assets and 
liabilities include:

imPaiRmeNt oF Goodwill

The Group tests goodwill for impairment at least 
annually. The recoverable amount of a cash-generating 
unit has been determined based on the higher of fair 
value less costs to sell or value-in-use calculations. 
These calculations require the use of estimates as 
further detailed in Note 13.

for the year ended 31 December 2021 

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

ideNtiFyiNG a BUSiNeSS ComBiNatioN

The Group enters into transactions to acquire integrated 
set of assets and operations of retail stores. The Group 
determines whether such transactions represent a 
business combination or assets acquisitions. The Group 
determines that it has acquired a business when the 
acquired set of activities and assets include an input 
and a substantive process that together significantly 
contribute to the ability to create outputs. The acquired 
process is considered substantive if it is critical to the 
ability to continue producing outputs, and the inputs 
acquired include an organised workforce with the 
necessary skills, knowledge, or experience to perform 
that process or it significantly contributes to the ability to 
continue producing outputs and is considered unique 
or scarce or cannot be replaced without significant 
cost, effort, or delay in the ability to continue producing 
outputs. All acquisitions of assets and operations of retail 
stores occurred in 2021 and 2020 were treated by the 
Group as business combinations.

litiGatioNS 

The Group exercises considerable judgment in measuring 
and recognising provisions and the exposure to 
contingent liabilities related to pending litigations or other 
outstanding claims subject to negotiated settlement, 
mediation, arbitration or government regulation, as well 
as other contingent liabilities. Judgement is necessary in 
assessing the likelihood that a pending claim will succeed, 
or a liability will arise, and to quantify the possible range of 
the final settlement. Because of the inherent uncertainties 
in this evaluation process, actual losses may be different 
from the originally estimated provision. These estimates 

are subject to change as new information becomes 
available, primarily with the support of internal specialists, 
if available, or with the support of outside consultants, 
such as actuaries or legal counsel. Revisions to the 
estimates may significantly affect future operating results.

taX leGiSlatioN

Russian tax, currency and customs legislation is subject 
to varying interpretations (Note 35). 

deFeRRed taX aSSetS aNd liaBilitieS 

Group’s management judgment is required for the 
calculation of current and deferred income taxes. 
Deferred tax assets are recognised to the extent that 
their utilisation is probable. The utilisation of deferred 
tax assets will depend on whether it is possible to 
generate sufficient taxable income in respective tax type 
and jurisdiction. Various factors are used to assess the 
probability of the future utilisation of deferred tax assets, 
including past operating results, the operational plan, 
expiration of tax losses carried forward, and tax planning 
strategies. In the event that an assessment of future 
utilisation indicates that the carrying amount of deferred 
tax assets must be reduced, this reduction is recognised 
in profit or loss.

IAS 12 requires a deferred tax liability to be recognised 
for all taxable temporary differences associated with 
investments in subsidiaries unless: (a) the parent, 
investor, joint venturer or joint operator is able to control 
the timing of the reversal of the temporary difference; 
and (b) it is probable that the temporary difference 

will not reverse in the foreseeable future. The Group 
exercises significant judgment in assessing the amount 
of taxable temporary differences associated with 
investments in subsidiaries (unremitted earnings) that 
will not reverse in the foreseeable future. 

If actual results differ from these estimates or if these 
estimates must be adjusted in future periods, the 
financial position, results of operations and cash flows 
may be negatively affected.

PRoPeRty, PlaNt aNd eqUiPmeNt

The Group’s management determines the estimated 
useful lives and related depreciation charges for its plant 
and equipment (Note 10). The estimation of the useful 
life of the asset is a matter of judgement based on the 
experience of the entity with similar assets. Management 
increases the depreciation charge where useful lives 
are less than previously estimated lives or it writes-off or 
writes-down technically obsolete or non-strategic assets 
that have been abandoned or reclassified as held for sale.

The Group periodically assesses whether there is any 
indication that property, plant and equipment may 
be impaired. The Group performs assets impairment 
testing (Note 10). The Group estimates the recoverable 
amount of the asset or cash generating unit and if it 
is less than the carrying amount of an asset or cash 
generating unit an impairment loss is recognised in the 
consolidated statement of profit or loss. For the year 
ended 31 December 2021 the Group recognised an 
impairment loss in the amount of RUB 3,105 (year ended 
31 December 2020: a net impairment loss in the amount 
of RUB 4,010). 

FINANCIAL STATEMENTS

196

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

03

Critical accounting 

estimates and 

judgements in applying 

accounting policies

for the year ended 31 December 2021 

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

iNVeStmeNt PRoPeRty

The Group’s management determines the estimated 
useful lives and related depreciation charges for its 
investment properties (Note 12). Management increases 
the depreciation charge where useful lives are less than 
previously estimated lives or it writes-off or writes-down 
technically obsolete or non-strategic assets that have 
been abandoned or reclassified as held for sale.

The Group periodically assesses whether there is any 
indication that investment property may be impaired. The 
Group performs assets impairment testing (Note 12). The 
Group estimates the recoverable amount of the asset or 
cash generating unit and if it is less than the carrying 
amount of an asset or cash generating unit an impairment 
loss is recognised in the consolidated statement of 
profit or loss. For the year ended 31 December 2021 the 
Group recognised a net impairment gain in the amount 
of RUB 343 (year ended 31 December 2020: a net 
impairment gain in the amount of RUB 50).

RiGht-oF-USe aSSetS

The Group periodically assesses whether there is any 
indication that right-of-use assets may be impaired. The 
Group performs assets impairment testing (Note 11). The 
Group estimates the recoverable amount of the asset 
or cash generating unit and if it is less than the carrying 
amount of an asset or cash generating unit an impairment 
loss is recognised in the consolidated statement of 
profit or loss. For the year ended 31 December 2021 the 
Group recognised a net impairment loss in the amount 
of RUB 630 (year ended 31 December 2020: a net 
impairment gain in the amount of RUB 350). 

iNVeNtoRieS PRoViSioNS

The Group provides for estimated inventory shrinkage on 
the basis of historical shrinkage as a percentage of cost 
of sales. This provision is adjusted at the end of each 
reporting period to reflect the historical trend of the 
actual physical inventory count results. The Group also 
provides for aged stock where the net realisable value is 
below cost (Note 15).

ReVeNUe ReCoGNitioN — loyalty PRoGRammeS

The Group estimates the amount of obligations 
related to customer loyalty programmes by allocating 
transaction price to loyalty points based on the 
standalone selling price of the points. The standalone 
selling price of the points is reduced for the expected 
amount of the points that will expire unredeemed. 

The Group estimates the stand-alone selling price of the 
loyalty points awarded under loyalty programmes. The 
stand-alone selling price of the loyalty points issued is 
calculated by multiplying to the estimated redemption 
rate and to the monetary value assigned to the loyalty 
points. In estimating the redemption rate, the Group 
considers breakage which represents the portion of the 
points issued that will never be redeemed. The Group 
applies statistical projection methods in its estimation 
using customers’ historical redemption patterns as the 
main input. The redemption rate is updated monthly 
and the liability for the unredeemed points is adjusted 
accordingly. The Group ensures that the value assigned 
to the loyalty points is commensurate to the stand-alone 
selling price of the products eligible for redemption 
(i.e., the value of each point is equivalent to the stand-
alone selling price of any product eligible for redemption 
divided by number of points required).

Points issued under the loyalty programmes normally 
expires in twelve months from their recognition. However 
due to periodic changes in customer redemption 
patterns estimates of the stand-alone selling price are 
subject to significant uncertainty. 

Any significant changes in customers’ redemption 
patterns will impact the estimated redemption rate. As at 
31 December 2021, the estimated liability for unredeemed 
points was RUB 2,146 (31 December 2020: RUB 1,955). 

PRoViSioN FoR eXPeCted CRedit loSSeS oF 
tRade aNd otheR ReCeiVaBleS

The Group uses a provision matrix to calculate ECLs 
for trade and other receivables. The provision rates 
are based on days past due for groupings of various 
customer segments that have similar loss patterns (by 
customer type). The calculation reflects the probability-
weighted outcome, the time value of money and 
reasonable and supportable information that is available 
at the reporting date about past events, current 
conditions and forecasts of future economic conditions. 
Generally, trade and other receivables are written-off if 
past due for more than 3 years and are no subject to 
enforcement activity. The maximum exposure to credit 
risk at the reporting date is the carrying value of each 
class of financial assets. 

The provision matrix is initially based on the Group’s 
historical observed default rates. The Group calibrates 
the matrix to adjust the historical credit loss experience 
with forward-looking information. For instance, if forecast 
economic conditions (i.e., gross domestic product) are 
expected to deteriorate over the next year which can 
lead to an increased number of defaults, the historical 
default rates are adjusted. At every reporting date, 
the historical observed default rates are updated and 
changes in the forward-looking estimates are analysed. 

FINANCIAL STATEMENTS

197

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

03

Critical accounting 

estimates and 

judgements in applying 

accounting policies

for the year ended 31 December 2021 

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

PRoViSioN FoR eXPeCted CRedit loSSeS oF 
tRade aNd otheR ReCeiVaBleS (CoNtiNUed)

The assessment of the correlation between historical 
observed default rates, forecast economic conditions 
and ECLs is a significant estimate. The amount of ECLs 
is sensitive to changes in circumstances and of forecast 
economic conditions. The Group’s historical credit loss 
experience and forecast of economic conditions may 
also not be representative of customer’s actual default 
in the future. The information about the ECLs on the 
Group’s trade and other receivables is disclosed in Note 
17. 

BRaNd aNd PRiVate laBelS

The Group periodically assesses whether there is any 
indication that brand and private labels may be impaired. 
The Group performs assets impairment testing of brands 
with indefinite useful lives at least annually (Note 14). The 
Group estimates the recoverable amount of the asset 
and if it is less than the carrying amount an impairment 
loss is recognised in the consolidated statement of profit 
or loss. For the year ended 31 December 2021 the Group 
did not recognise any impairment of brand and private 
labels (year ended 31 December 2020: impairment loss 
in amount of RUB 885).

leaSe teRm oF CoNtRaCtS with eXteNSioN 
oPtioNS aNd teRmiNatioN oPtioNS

In determining the lease term, the Group considers 
all facts and circumstances that create an economic 
incentive to exercise an extension option, or not 
exercise a termination option. For leases of retail stores 
the most relevant factors are profitability and revenue 
of particular stores, the value to the business in a 
particular region and investment strategy. For leases 
of distribution centres and offices the most relevant 
factors are the value to the business, significance of 
termination penalties and significance of leasehold 
improvements’ remaining value. At commencement 
of the lease such considerations generally result in 
determining the lease term equal to the non-cancellable 
lease period including the period covered by an option 
to terminate. The assessment of reasonable certainty is 
only revised if a significant event or a significant change 
in circumstances occurs, which affects this assessment, 
and that is within the control of the lessee.

iNCRemeNtal BoRRowiNG RateS FoR 
CalCUlatioN oF leaSe liaBility

Incremental borrowing rate is the rate of interest that 
a lessee would have to pay to borrow over a similar 
term, and with a similar security, the funds necessary 
to obtain an asset of a similar value to the right-of-use 
asset in a similar economic environment. Because there 
are normally no absolutely similar to lease agreements 
borrowings, which interest rates are observable in open 
market, the Group derives incremental borrowing rates 
from both internal and external data sources applying 
significant judgement in such calculations. The Group 
estimates incremental borrowing rates by adjusting 
Russian government risk-free bonds in a relevant 
currency by the risk-premium inherent to the Group 
which in turn is determined by comparing Group’s rate 
of borrowing with Russian government risk-free bonds 
of the same duration. Incremental borrowing rates are 
calculated on a monthly basis.

FINANCIAL STATEMENTS

198

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

for the year ended 31 December 2021 

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

04

adoption of new and 

revised standards 

and interpretations 

and new accounting 

pronouncements

The Group has not early adopted any other standard, 
interpretation or amendment that has been issued but is 
not yet effective: 

StaNdaRdS iSSUed BUt Not yet 
eFFeCtiVe iN the eURoPeaN UNioN

eFFeCtiVe FoR 

aNNUal PeRiodS 

Amendments to IAS 1 Presentation of 
Financial Statements: Classification of 
Liabilities as Current or Non-current and 
Classification of Liabilities as Current or Non-
current — Deferral of Effective Date

1 January 2023

 *

Amendments to IFRS 17 Insurance contracts: 
Initial Application of IFRS 17 and IFRS 9 — 
Comparative Information

1 January 2023

 *

Amendments to IAS 1 Presentation of 
Financial Statements and IFRS Practice 
Statement 2: Disclosure of Accounting 
policies

1 January 2023

Amendments to IAS 8 Accounting policies, 
Changes in Accounting Estimates and Errors: 
Definition of Accounting Estimates 

1 January 2023

Amendments to IAS 12 Income Taxes: 
Deferred Tax related to Assets and Liabilities 
arising from a Single Transaction 

1 January 2023

 *

Amendments to IFRS 3 Business 
Combinations; IAS 16 Property, Plant and 
Equipment; IAS 37 Provisions, Contingent 
Liabilities and Contingent Assets as well as 
Annual Improvements 2018-2020

1 January 2022

IFRS 17 Insurance Contracts including 
Amendments to IFRS 17

1 January 2023

*  Subject to EU endorsement.

The Group expects that the adoption of other 
pronouncements listed above will not have a significant 
impact on the Group’s results of operations and financial 
positions in the period of initial application except for 
amendments to IAS 12 Income Taxes.

The amendments to IAS 12 Income Taxes may require 
to recognise deferred tax on transactions that, on 
initial recognition, give rise to equal amounts of taxable 
and deductible temporary differences. The impact 
for the Group would be the recognition of additional 
deferred tax assets and liabilities attributable to right-
of-use assets and lease liabilities. The Group is currently 
assessing the potential effect of the amendments to 
IAS 12 on its consolidated financial statements.

In the preparation of these consolidated financial 
statements, the Group followed the same accounting 
policies and methods of computation as compared 
with those applied in the previous year, except for the 
adoption of new standards and interpretations and 
revision of the existing standards as of 1 January 2021. 
Standards, Interpretations and amendments effective 
1 January 2021 did not have a material impact on the 
financial position or performance of the Group. 

As a result of the amendments the Group changed 
its accounting policy for determination of whether 
an acquisition is an acquisition of business. The 
amendments did not have material impact on the 
financial position of the Group.

The following other new standards and amendments 
to IFRSs effective for the financial year beginning on or 
after 1 January 2021 do not have a material impact on 
the Group and do not result in change of the Group’s 
accounting policy:

• 

Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and 
IFRS 16 Interest Rate Benchmark Reform — Phase 2;

• 

Amendments to IFRS 4 Insurance Contracts — deferral 
of IFRS 9;

• 

Amendments to IFRS 16 Leases: Covid-19-Related 
Rent Concessions beyond 30 June 2021.

FINANCIAL STATEMENTS

199

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

for the year ended 31 December 2021 

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

05

Segment reporting

The Group identifies retail chains of each format 
and (see Note 1) as separate operating segments in 
accordance with the criteria set forth in IFRS 8.

The following significant operating functions  
are decentralised by formats:

• 

Category management, including purchasing, pricing, 
assortment management, promotion management;

• 

Distribution centres logistics;

• 

Development function.

The formats’ general managers are determined as 
segment managers in accordance with IFRS 8. The chief 
operating decision-maker has been determined as the 
Management Board. The Management Board reviews 
each format’s internal reporting in order to assess 
performance and allocate resources.

Upon adoption of IFRS 16 the Management Board 
started to assess the performance of the operating 
segments based on a measure of sales and adjusted 
earnings before interest, tax, depreciation, amortisation 
and impairment pre-IFRS 16 (EBITDA pre-IFRS 16). 
EBITDA pre-IFRS 16 is calculated by adjusting EBITDA 
to include fixed lease expenses, fixed non-lease 
components of lease contracts, exclude gain on 
derecognition of right-of-use assets and lease liabilities 
and exclude adjustment of gain / loss from sale of asset 
under sale and leaseback operations for the proportion 
of the rights retained. Adjusted capital expenditures 
include additions of property, plant and equipment, 
investment properties and intangible assets adjusted to 
replace capitalised depreciation of right-of-use assets 
with capitalisation of fixed lease expenses, acquisitions 
of property, plant and equipment, investment properties 
and intangible assets through business combinations 
as well as goodwill acquired through such business 
combinations.

The accounting policies used for segments are the same 
as accounting policies applied for these consolidated 
financial statements. In 2021 a new methodology of 
overhead expenses allocation was used for more 
accurate measurements of segments’ performance. 
The comparative figures for earlier periods have been 
adjusted in order to provide meaningful comparative 
information.

The segment information for the year ended 
31 December 2021, comparative figures for earlier 
periods and reconciliation of EBITDA pre-IFRS 16 to 
profit for the year is provided as follows:

FINANCIAL STATEMENTS

200

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

for the year ended 31 December 2021 

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

05

Segment reporting

yeaR eNded 31 deCemBeR 2021

PyateRoChKa

PeReKReStoK

otheR  

SeGmeNtS

CoRPoRate 

CeNtRe

total

Revenue (Note 24)

 1,795,018

 351,100

58,701

–

 2,204,819

EBITDA pre-IFRS 16

 145,350 

 24,213

(4,375)

(4,164)

 161,024

Fixed lease expenses and fixed  
non-lease components of lease contracts

 104,141

Gain on derecognition of right-of-use assets 
and lease liabilities

 2,940

Reversal of adjustment for the proportion of 
the rights retained under sale and leaseback 
operations (Note 11)

(255)

Depreciation, amortisation and impairment

(150,278)

Operating profit

 117,572

Finance cost, net

(57,229)

Net foreign exchange result

 399

Profit before income tax

 60,742

Income tax expense

(18,004)

Profit for the year

 42,738

Adjusted capital expenditure

 72,079

 18,656

7,189

–

97,924

31 December 2021

Inventories

 137,489

 25,638

3,713

–

166,840

yeaR eNded 31 deCemBeR 2020

PyateRoChKa

PeReKReStoK

otheR 

SeGmeNtS

CoRPoRate 

CeNtRe

total

Revenue (Note 24)

 1,598,315

 309,460

70,251

−

 1,978,026

EBITDA pre-IFRS 16

 129,268

 22,116

(2,409)

(3,838)

 145,137

Fixed lease expenses and fixed  
non-lease components of lease contracts

 96,630

Gain on derecognition of right-of-use assets 
and lease liabilities

1,855

Depreciation, amortisation and impairment

(137,905)

Operating profit

 105,717

Share of loss of associates and joint ventures

(20)

Finance cost, net

(56,636)

Net foreign exchange result

 (3,391)

Profit before income tax

 45,670

Income tax expense

(17,326)

Profit for the year

 28,344

Adjusted capital expenditure

 66,895

 17,588

5,444

 3

 89,930

31 December 2020

Inventories

 115,674

 23,963

4,756

−

 144,393

FINANCIAL STATEMENTS

201

NoteS to the CoNSolidated FiNaNCial StatemeNtS

NoteS to the CoNSolidated 

FiNaNCial StatemeNtS

for the year ended 31 December 2021 

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

06

Subsidiaries

Details of the Company’s significant subsidiaries at 31 December 2021 and 31 December 2020 were as follows:

ComPaNy

CoUNtRy

NatURe oF oPeRatioNS

owNeRShiP (%) 

31 deCemBeR 2021

owNeRShiP (%)

31 deCemBeR 2020

Agrotorg LLC

Russia

Retailing

100

100

Trade House PEREKRIOSTOK JSC

Russia

Retailing

100

100

Agroaspect LLC

Russia

Retailing

100

100

X5 Nedvizhimost CJSC

Russia

Assets holding company

100

100

KOPEYKA-MOSCOW Ltd

Russia

Retailing

100

100

Krasnoborskoe LLC

Russia

Assets holding company

100

100

Perekrestok Holdings B.V.

The Netherlands

Holding company

−

 *

100

PEREKRIOSTOK-2000 LLC

Russia

Assets holding company

100

100

Beta Estate LLC

Russia

Assets holding company

100

100

X5 FINANSE LLC

Russia

Bond issuer

100

100

Agro-Avto LLC

Russia

Assets holding company

100

100

X5 Corporate Center LLC

Russia

Assets holding company

100

100

* In 2021 Perekrestok Holdings B.V. was reorganised by merger with X5 Retail Group N.V.