X5 Group (Пятерочка). Годовой отчет за 2021 год - часть 26

FINANCIAL STATEMENTS

202

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)

07

acquisition  

of businesses

aCqUiSitioNS iN 2021

In 2021 the Group acquired 100% of several businesses 
of other retail chains in Russian regions. The acquisitions 
were individually immaterial.

In the year ended 31 December 2021 the acquired 
businesses contributed revenue of RUB 5,996 from 
the date of acquisition. As the businesses were not 
acquired as separate legal entities, it is impracticable to 
disclose net profit from the date of acquisition. These 
businesses did not prepare relevant financial information 
immediately before the acquisition, therefore, it is 
impracticable to disclose revenue and net profit of the 
Group for the year ended 31 December 2021 as though 
the acquisition date had been the beginning of that 
period.

Details of assets and liabilities of acquired businesses 
and the related goodwill are as follows: 

PRoViSioNal FaiR 

ValUeS at the 

aCqUiSitioN date

Other intangible assets (Note 14)

 10 

Right-of-use assets (Note 11)

 3,928 

Deferred tax assets (Note 30)

 244 

Indemnification asset

 6 

Trade, other accounts receivable  
and prepayments

 22 

Lease liabilities (Note 11)

 (3,928)

Current income tax payable

 (34)

Provisions and other liabilities

 (80)

Net assets acquired

168 

Goodwill (Note 13)

 1,118 

Purchase consideration

1,286

Net cash outflow arising from the 

acquisition

1,021 

The Group assigned provisional fair values to net assets 
acquired. The Group will finalise the purchase price 
allocation within a 12-month period from the acquisition 
date which is not yet finished at the date of approval of 
these consolidated financial statements.

The purchase consideration for the reporting period 
comprised consideration paid in cash of RUB 1,021 and 
RUB 265 as deferred consideration measured at fair 
value.

The goodwill recognised was attributable to: 
i) the business concentration in the Russian regions; 
ii) expected cost synergies from the business 
combination and iii) acquired traffic from existing 
customers. The goodwill related to these acquisitions 
was allocated to Pyaterochka segment in amount of 
RUB 1,063, Perekrestok segment in amount of RUB 35 
and other segment in amount of RUB 20.

During the 12 months ended 31 December 2021 the 
Group transferred RUB 750 as deferred payments for 
the prior periods acquisitions.

aCqUiSitioNS iN 2020

During 2020 the Group acquired 100% of several 
businesses of other retail chains in Russian regions. The 
acquisitions were individually immaterial.

In the year ended 31 December 2020 the acquired 
businesses contributed revenue of RUB 8,137 from 
the date of acquisition. As the businesses were not 
acquired as separate legal entities, it is impracticable to 
disclose net profit from the date of acquisition. These 
businesses did not prepare relevant financial information 
immediately before the acquisition, therefore, it is 
impracticable to disclose revenue and net profit of the 
Group for the year ended 31 December 2020 as though 
the acquisition date had been the beginning of that 
period. 

FINANCIAL STATEMENTS

203

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)

07

acquisition  

of businesses

PRoViSioNal FaiR

ValUeS at the

aCqUiSitioN date

FiNaliSed FaiR  

ValUeS at the 

aCqUiSitioN date

eFFeCt oF ChaNGe iN PURChaSe PRiCe

alloCatioN oN the CoNSolidated

StatemeNt oF FiNaNCial PoSitioN

aS at 31 deCemBeR 2021

Indemnification asset

−

 258 

 258 

Right-of-use assets (Note 11)

 8,507 

 8,507 

−

Deferred tax assets (Note 30)

575

575

−

Cash and cash equivalents

 55

 55

−

Lease liabilities (Note 11)

 (8,505)

 (8,505)

−

Current income tax payable

−

 (79)

 (79)

Provisions and other liabilities

−

 (179)

 (179)

Net assets acquired

 632

632

−

Goodwill (Note 13)

 2,963

 2,963

−

Purchase consideration

 3,595

 3,595

−

Net cash outflow arising 

from the acquisition

 2,699

 2,699

−

The purchase consideration for the reporting period 
comprised consideration paid in cash of RUB 2,754 and 
RUB 841 as deferred consideration measured at fair 
value. 

The goodwill recognised was attributable to: 
i) the business concentration in the Russian regions;  
ii) expected cost synergies from the business 
combination and iii) acquired traffic from existing 
customers. The goodwill related to these acquisitions 
was allocated to Pyaterochka segment in amount of 
RUB 1,142, Perekrestok segment in amount of RUB 1,158 
and other segments in amount of RUB 663.

During the 12 months ended 31 December 2020 the 
Group transferred RUB 439 as deferred payments for 
the prior periods’ acquisitions.

At 31 December 2020 the Group assigned provisional 
fair values to net assets acquired, in estimating 
provisional fair values of acquired assets. In 2021 the 
Group completed the purchase price allocation, which 
resulted in the following changes in fair values at the 
acquisition date:

FINANCIAL STATEMENTS

204

The following transactions were carried out  
with related parties:

RelatioNShiP

2021

2020

CTF Holdings S.A.

Entity with significant 
influence over the 
Company

Management  
services received

 113 

 125

Other

Under control by the 
entity with significant 
influence over the 
Company 

Purchases from  
related parties

 4,122 

 3,826

Other operating 
expenses

 1 

 −

Bonuses from  
related parties

 201 

 185

Other

Other

Other operating 
expenses

44 

 39

The consolidated financial statements include  
the following balances with the related parties:

RelatioNShiP

31 deC 

2021

31 deC 

2020

CTF Holdings S.A.

Entity with significant 
influence over the 
Company

Other accounts 
payable

 27 

−

Other

Under control by the 
entity with significant 
influence over the 
Company 

Other receivables  
from related parties

 45 

−

Trade accounts 
payable

 759 

 757

Trade accounts 
receivable

 23 

 24

Other accounts 
payable

 50 

−

Other

Other, including 
associates

Advances

 26 

−

Other accounts 
payable

 4 

 12

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)

08

Related party 

transactions

In considering each possible related party relationship, 
attention is directed to the substance of the relationship, 
not merely the legal form. Related parties may enter 
into transactions which unrelated parties might not, 
and transactions between related parties may not be 
effected on the same terms, conditions and amounts as 
transactions between unrelated parties. 

The nature of the relationships for those related 
parties with which the Group entered into significant 
transactions or had significant balances outstanding 
at 31 December 2021 and at 31 December 2020 are 
provided below. The ownership structure is disclosed in 
Note 1.

During 2021 the Group together with ALFA-BANK JSC 
and Alfa Investments LLC formed associate company X5 
FINANCIAL SOLUTIONS LLC. The company is to launch 
and develop financial services under the X5 Bank brand. 
The Group has a 49.99% interest in X5 FINANCIAL 
SOLUTIONS LLC with Group’s share in equity amounted 
to RUB 50 at 31 December 2021.

Key maNaGemeNt PeRSoNNel ComPeNSatioN

Key management personnel compensation is disclosed 
in Note 28.

teRmS aNd CoNditioNS oF tRaNSaCtioNS  
with Related PaRtieS

The sales to and purchases from related parties are 
made on terms equivalent to those that prevail in arm’s 
length transactions. Outstanding balances at the year-
end are unsecured and interest free and settlement 
occurs in cash. There have been no guarantees 
provided or received for any related party receivables 
or payables. For the years ended 31 December 2021 
and 31 December 2020, the Group did not record any 
material expected credit loss provisions for trade and 
other receivables nor did it recognise any impairment 
provisions for prepayments.

FINANCIAL STATEMENTS

205

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)

09

Cash and cash 

equivalents,  

short-term financial 

investments

31 deCemBeR 

2021

31 deCemBeR 

2020

Bank current account — 
Roubles

 2,733 

 528

Bank current account —  
other currencies

 49 

 2

Cash in transit — Roubles

 14,997 

 12,590

Cash in hand — Roubles

 8,278 

 6,888

Deposits — Roubles

 5 

−

TOTAL

26,062 

20,008

The bank accounts represent current accounts. Interest 
income on overnights / term deposits was immaterial. 
Cash in transit is cash transferred from retail outlets 
to bank accounts and bank card payments being 
processed. 

Short-term financial investments at 31 December 2021 
represent irrevocable bank deposits in Russian Roubles 
with maturity not more than a year that earned interest 
income at the rates in the range of 8.0% — 9.0% per 
annum.

The Group assessed credit quality of outstanding cash 
and cash equivalents balances as high and considered 
that there was no significant individual exposure. The 
maximum exposure to credit risk at the reporting date 
was the carrying value of cash and bank balances.

Credit quality of cash and cash equivalents and short-term financial investments balances  
are summarised as follows: 

BaNK

moody’S

FitCh

S&P

31 deCemBeR 

 2021

31 deCemBeR 

2020

Cash and cash equivalents

Alfa-Bank

Ba1

BBB−

BBB−

 1,559 

263

Sberbank

Baa3

BBB

 — 

 1,025 

11

Gazprombank

Ba1

BBB−

BBB−

 31 

25

GPB International S.A.

−

−

 BBB−

 5 

−

Vneshtorgbank

Baa3

−

BBB−

 108 

181

Other banks

 59 

50

Cash in transit and in hand

 23,275 

19,478

TOTAL

 26,062 

20,008

Short-term financial investments

GPB International S.A.

−

−

BBB−

50,092 

−

TOTAL

50,092 

−

FINANCIAL STATEMENTS

206

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)

10

Property, plant  

and equipment

laNd aNd 

BUildiNGS

maChiNeRy aNd 

eqUiPmeNt

ReFRiGeRatiNG 

eqUiPmeNt

VehiCleS

otheR

CoNStRUCtioN  

iN PRoGReSS

 *

total

Cost

At 1 January 2020

299,815

55,317

64,657

25,547

52,428

4,637

502,401

Additions

 −

 −

 −

 −

 −

 74,275

 74,275

Transfers

 30,216

 15,585

 12,077

 1,142

 12,499

(71,519)

 −

Disposals

(13,486)

(4,915)

(4,006)

(1,016)

(5,837)

(119)

(29,379)

At 31 December 2020

 316,545

 65,987

 72,728

 25,673

 59,090

 7,274

 547,297

Additions

 −

 −

 −

 −

 −

 79,716

 79,716

Transfers

 31,764

 16,375

 11,208

 5,795

 13,140

(78,282)

 −

Disposals

(7,360)

(5,536)

(4,098)

(921)

(3,835)

(282)

(22,032)

At 31 December 2021

 340, 949

 76,826

 79,838

 30,547

 68,395

 8,426

 604,981

*  This category also includes machinery and equipment, refrigerating equipment, vehicles and other items of property, plant and equipment not yet available for use.

FINANCIAL STATEMENTS

207

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)

10

Property, plant  

and equipment

laNd aNd 

BUildiNGS

maChiNeRy aNd 

eqUiPmeNt

ReFRiGeRatiNG 

eqUiPmeNt

VehiCleS

otheR

CoNStRUCtioN  

iN PRoGReSS

 *

total

Accumulated depreciation and impairment 

At 1 January 2020

(96,152)

(24,221)

(26,319)

(8,847)

(31,384)

(221)

(187,144)

Depreciation charge

(27,764)

(9,171)

(8,668)

(3,636)

(10,484)

 −

(59,723)

Impairment charge

(3,151)

(1,096)

(884)

(5)

(385)

(58)

(5,579)

Reversal of impairment

 1,508

 −

 −

 61

 −

 −

 1,569

Disposals

 10,884

 4,700

 3,897

 914

 5,773

 119

 26,287

At 31 December 2020

(114,675)

(29,788)

(31,974)

(11,513)

(36,480)

(160)

(224,590)

Depreciation charge

(28,408)

(10,709)

(9,513)

(4,044)

(10,865)

 −

(63,539)

Impairment charge

(3,160)

(872)

(585)

(27)

(196)

(131)

(4,971)

Reversal of impairment

 1,829

 9

 4

 22

 2

 −

 1,866

Disposals

 4,539

 5,161

 3,946

 808

 3,745

 198

 18,397

At 31 December 2021

(139, 875)

(36,199)

(38,122)

(14,754)

(43,794)

(93)

(272,837)

Net book value at 31 December 2021

 201,074

 40,627

 41,716

 15,793

 24,601

 8,333

 332,144

Net book value at 31 December 2020

 201,870

 36,199

 40,754

 14,160

 22,610

 7,114

 322,707

Net book value at 1 January 2020

203,663

31,096

38,338

16,700

21,044

4,416

315,257

*  This category also includes machinery and equipment, refrigerating equipment, vehicles and other items of property, plant and equipment not yet available for use.

FINANCIAL STATEMENTS

208

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)

10

Property, plant  

and equipment

Depreciation charge, impairment charge and reversal 
of impairment were included in selling, general and 
administrative expenses in the consolidated statement 
of profit or loss for the years ended 31 December 2021 
and 31 December 2020.

Construction in progress predominantly related to 
the development of stores through the use of sub-
contractors.

The buildings are mostly located on leased land. No 
loans were collateralised by land and buildings including 
investment property as of 31 December 2021.

imPaiRmeNt teSt

At the end of 2021 management performed an 
impairment test of property, plant and equipment, right-
of-use assets, other intangible assets and investment 
property. The approach for determination of the 
recoverable amount of an asset was different for each 
class of property, plant and equipment, right-of-use 
assets, other intangible assets and investment property. 

The evaluation for long-lived assets is performed at the 
lowest level of identifiable cash flows, which is generally 
at the individual store / unit level (cash generating unit — 

CGU). The variability of these factors depends on a 
number of conditions, including uncertainty about future 
events and changes in demand. 

The impairment review has been carried out by 
comparing recoverable amount of the individual 
store / unit with their carrying values. The recoverable 
amount of store / unit is determined as the higher of fair 
value less cost of disposal or value in use.

The resulting impairment charge arose primarily from 
underperforming stores and Karusel transformation. 
At the same time the Group recognised the reversal 
of previously recorded impairment charges due to 
improved performance of certain stores. Due to the 
great number of CGUs being tested for impairment 
it is considered impracticable to disclose detailed 
information for each individual CGU.

The Group analysed external and internal sources of 
information including the potential impact of COVID-19 
pandemic on the Group itself and on the macro 
economic environment and identified that COVID-19 
caused lower traffic in certain stores located in shopping 
malls which however was partly compensated by 
improved performance of other stores and segments. 

Fair value of land and buildings and construction 
in progress is determined by management internal 
specialists by reference to current observable prices 
on an active market subsequently adjusted for specific 
characteristics of respective assets. The fair value 
measurement of these assets is classified at level 3 of 
the fair value hierarchy.

Value in use

For property, plant and equipment, right-of-use assets, 
other intangible assets and investment property the 
discounted future cash flow approach is applied and 
covers a 10-year period from 2022 onwards. The Group 
believes that use of 10 year forecast better reflects 
expected future cash flows of its cash generating units 
due to cyclical nature of their renovation expenditures. 
The future cash flows are based on the current budgets 
and forecasts approved by the management. For the 
forecast period, the data of the strategic business plan 
is extrapolated based on the consumer price indices as 
obtained from external resources and key performance 
indicators inherent to the strategic plan. One of the main 
assumptions used for the forecast period is revenue 
growth being in the range from 4.00% to 7.86% in 
accordance with the internal forecasts based on budget 
and consumer price index projections (31 December 
2020: 4.00% to 6.78%). For the years beyond the forecast 
period the long-term consumer price index forecast of 
4.00% at 31 December 2021 is used (31 December 2020: 
4.00%). The projections are made in the functional 
currency of the Group’s entities, being Russian Rouble, 
on a pre-tax basis and discounted at the Group pre-tax 
weighted average cost of capital which is then adjusted 
to reflect the risks specific to the respective assets (cash-
generating units (CGUs)) — 13.39% (31 December 2020: 
12.14%). Inflation rates are in line with the consumer price 
index forecast published by the Ministry of Economic 
Development of Russian Federation. The Group’s 
management believes that all of its estimates are 
reasonable and consistent with the internal reporting 
and reflect management’s best knowledge.

The result of applying discounted cash flows model 
reflects expectations about possible variations in the 
amount and timing of future cash flows and is based on 
reasonable and supportable assumptions that represent 
management’s best estimate of the range of uncertain 
economic conditions. If the revised estimated discount 
rate consistently applied to the discounted cash flows 
had been 200 b.p. higher than management’s estimates, 
the Group would need to reduce the carrying value 
of property, plant and equipment, right-of-use assets, 
investment property and intangible assets by RUB 
1,544 (31 December 2020: RUB 2,216), if 200 b.p. lower — 
increase by RUB 1,198 (31 December 2020: RUB 1,487). 
If the annual revenue growth rate used in calculations of 
value in use had been 200 b.p. higher, the Group would 
need to increase the carrying value of property, plant 
and equipment, right-of-use assets, investment property 
and intangible assets by RUB 809 (31 December 2020: 
RUB 619), lower — decrease by RUB 1,026 (31 December 
2020: RUB 705).

FINANCIAL STATEMENTS

209

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)

11

leases

RiGht-oF-USe  

aSSetS (laNd  

aNd BUildiNGS) 

leaSe 

liaBilitieS

At 1 January 2020

428,166

(484,795)

Additions

 115,529 

 (114,970)

Acquisition of businesses 
(Note 7)

 8,507 

 (8,505)

Depreciation expense

 (69,206)

−

Impairment charge

 (1,806)

−

Reversal of impairment

 2,156 

−

Derecognition (decrease in 
the scope of the lease  
and terminations of lease 
agreements)

 (2,835)

 4,690 

Interest accrued

−

 (39,996)

Payments

−

 97,553 

Effect of changes in foreign 
exchange rates

−

 (2,478)

At 31 December 2020

 480,511 

 (548,501)

GRoUP aS a leSSee

The Group has lease contracts for land and buildings 
used in its operations. Leases of land and buildings 
generally have fixed lease terms between 5 and 45 
years and contain extension options provided by the 
law. However vast majority of lease contracts include 
cancellation options on 2-12 months notice. 

Lease terms are negotiated on an individual basis and 
contain a wide range of different terms and conditions. 
The lease agreements do not impose any covenants 
other than the security interests in the leased assets that 
are held by the lessor. 

Set out below, are the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movements 
during the period:

RiGht-oF-USe  

aSSetS (laNd  

aNd BUildiNGS) 

leaSe 

liaBilitieS

At 1 January 2021

480,511

(548,501)

Additions

 96,964 

 (96,555)

Acquisition of businesses 
(Note 7)

 3,928 

 (3,928)

Depreciation expense

 (74,601)

−

Impairment charge

 (1,596)

−

Reversal of impairment

 966 

−

Derecognition (decrease 
in the scope of the lease 
and terminations of lease 
agreements)

 (3,847)

 6,787 

Interest accrued

−

 (40,572)

Payments

−

 105,182 

Effect of changes in foreign 
exchange rates

−

 224 

At 31 December 2021

 502,325 

 (577,363)