RUSHYDRO GROUP

Consolidated Financial Statements prepared in accordance with IFRS with independent auditor's report

As at and for the year ended 31 December 2021

CONTENTS

INDEPENDENT AUDITOR'S REPORT

Consolidated Financial Statements

Consolidated Statement of Financial Position..............................................................................................

1

Consolidated Income Statement...................................................................................................................

2

Consolidated Statement of Comprehensive Income....................................................................................

3

Consolidated Statement of Cash Flows.......................................................................................................

4

Consolidated Statement of Changes in Equity.............................................................................................

6

Notes to the Consolidated Financial Statements

Note 1.

The Group and its operations...................................................................................................

7

Note 2.

Summary of significant accounting policies..............................................................................

9

Note 3.

Adoption of new or revised standards and interpretations.......................................................

20

Note 4.

New accounting pronouncements............................................................................................

20

Note 5.

Principal subsidiaries................................................................................................................

20

Note 6.

Segment information................................................................................................................

22

Note 7.

Related party transactions........................................................................................................

25

Note 8.

Property, plant and equipment.................................................................................................

27

Note 9.

Investments in associates and joint ventures...........................................................................

30

Note 10.

Other non-current assets………………….................................................................................

33

Note 11.

Cash and cash equivalents……………………..........................................................................

34

Note 12.

Accounts receivable and prepayments………………………....................................................

34

Note 13.

Inventories………………………………….................................................................................

35

Note 14.

Other current assets…………………........................................................................................

36

Note 15.

Equity………….........................................................................................................................

36

Note 16.

Income tax………………….......................................................................................................

37

Note 17.

Pension benefit obligations.......................................................................................................

38

Note 18.

Current and non-current debt…………………………………….................................................

40

Note 19.

Non-deliverable forward contract for shares….........................................................................

41

Note 20.

Other non-current liabilities………………………......................................................................

42

Note 21

Accounts payable and accruals…………………………............................................................

42

Note 22.

Other taxes payable……………………………………………....................................................

42

Note 23.

Revenue………........................................................................................................................

43

Note 24.

Government grants………………….........................................................................................

43

Note 25.

Operating expenses (excluding impairment losses)………………………................................

44

Note 26.

Finance income, costs………………….....................................................................................

45

Note 27.

Capital commitments................................................................................................................

45

Note 28.

Contingencies……………………..............................................................................................

45

Note 29.

Financial risk management.......................................................................................................

47

Note 30.

Management of capital.............................................................................................................

49

Note 31.

Fair value of assets and liabilities.............................................................................................

50

Note 32.

Presentation of financial instruments by measurement category.............................................

52

Note 33.

Subsequent events...................................................................................................................

53

Independent Auditor's Report

To the Shareholders and Board of Directors of Public joint stock company Federal Hydro-Generating Company - RusHydro:

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Public joint stock company Federal Hydro-Generating Company - RusHydro (PJSC RusHydro) and its subsidiaries (together - the "Group") as at 31 December 2021, and the Group's consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS).

What we have audited

The Group's consolidated financial statements comprise:

  • the consolidated statement of financial position as at 31 December 2021;
  • the consolidated income statement for the year then ended;
  • the consolidated statement of comprehensive income for the year then ended;
  • the consolidated statement of cash flows for the year then ended;
  • the consolidated statement of changes in equity for the year then ended; and
  • the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Auditor's Professional Ethics Code and Auditor's Independence Rules that are relevant to our audit of the consolidated financial statements in the Russian Federation. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code.

AO PricewaterhouseCoopers Audit

White Square Office Center 10 Butyrsky Val Moscow, Russian Federation, 125047

T: +7 (495) 967 6000, F:+7 (495) 967 6001, www.pwc.ru

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

Assessment of impairment of property, plant and equipment

For matters requiring disclosure and related significant accounting policies, judgements and accounting estimates see Notes 2 and 8 to the consolidated financial statements.

At 31 December 2021, the Group's aggregate carrying amount of property, plant and equipment was RUB 702,164 million. This is the most significant asset on the Group's balance sheet, accounting for 75% of the total assets.

The Group management analysed the Group's financial performance, industry outlook and operational plans, and assessed whether there are indicators of impairment of property, plant and equipment or potential release of previously recognised impairment losses, by cash generating unit. For cash generating units where such indicators were identified, the management assessed the recoverable amounts of property, plant and equipment.

As a result of management's impairment test, the Group accrued a net impairment loss of RUB 32,813 million in the consolidated income statement for the year ended 31 December 2021.

The impairment test is sensitive to reasonably possible changes in assumptions. The most significant judgements are related to the applied discount rate together with the assumptions supporting the relevant forecast cash flows, in particular those concerning the electricity and capacity tariff rates and volumes of investments.

We focused on the property, plant and equipment impairment assessment as this

How our audit addressed the Key audit matter

We obtained and examined the financial models that management used for assessing impairment of property, plant and equipment. We engaged our valuation experts to form our conclusion on the assumptions and methodology that were used in the impairment assessment.

Our audit procedures related to the management's assessment of impairment of property, plant and equipment, included the following:

  • evaluation of the methodology used by the Group management for the impairment test;
  • examination, on a sample basis, of key assumptions used in financial models and whether they are in line with the approved budgets and business plans, available reliable external sources (including macroeconomic forecasts, information on regulated and market electricity and capacity prices, etc.) and our industry-specific expertise;
  • assessment of competence, skills, experience and objectivity of the management's experts;
  • examination, on a sample basis, of accuracy and relevance of inputs that management incorporated in the financial models for assessing the impairment of property, plant and equipment;
  • examination, on a sample basis, of mathematical accuracy of financial models used by management to assess the impairment of property, plant and equipment;

ii

Key audit matter

process is complicated, requires significant management's judgements and is based on assumptions that are affected by the projected future market and economic conditions that are inherently uncertain.

Assessment of expected credit losses in relation to trade receivables

For matters requiring disclosure, and related significant accounting policies, judgements and accounting estimates see Notes 2 and 12 to the consolidated financial statements.

At 31 December 2021, the carrying amount of the Group's trade receivables was RUB 34,899 million (RUB 65,248 million less the credit loss allowance of RUB 30,349 million).

Thus, at 31 December 2021, the allowance for credit losses is significant and accounts for 47% of the gross trade receivables.

In accordance with IFRS 9 'Financial Instruments' the Group management assesses

How our audit addressed the Key audit matter

  • consideration of potential impact of reasonably possible changes in key assumptions;
  • obtaining and reviewing management's written representations related to their property, plant and equipment impairment test.

Acceptability of management's current estimates regarding the property, plant and equipment impairment for the purpose of preparing the financial statements for the year ended

31 December 2021 does not guarantee that future events that are inherently uncertain would not lead to a significant change in these estimates.

We note that management's financial models are to a significant extent sensitive to the changes in key assumptions. It could reasonably be expected, that if actual results differ from assumptions made, accordingly, there could arise either additional losses from impairment in the future or gains from the release of previously recognised impairment.

We also assessed the compliance of disclosures in Notes 2 and 8 to the consolidated financial statements with the disclosure requirements of IAS 36 'Impairment of Assets'.

Our audit procedures in respect of the management's assessment of expected credit losses in relation to trade receivables included:

  • evaluation of the methodology used by the Group's management to assess expected credit losses in relation to trade receivables, including definition of default;
  • examination, on a sample basis, of accuracy of management's classification of trade receivables for their further assessment on a collective or individual basis depending on the credit risk characteristics and the length of payment delinquency;

iii

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OAO RusHydro published this content on 01 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 01 March 2022 13:46:48 UTC.