X5 RETAIL GROUP X5 Retail Group N.V.
International Financial Reporting Standards Consolidated Financial Statements
31 December 2022
X5 Retail Group N.V. | ||
Consolidated Financial Statements for the year ended 31 December 2022 | ||
Contents | ||
INDEPENDENT AUDITOR'S REPORT | 3 | |
CONSOLIDATED FINANCIAL STATEMENTS | ||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | 9 | |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS | 10 | |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 11 | |
CONSOLIDATED STATEMENT OF CASH FLOWS | 12 | |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | 13 | |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | ||
1 | PRINCIPAL ACTIVITIES AND THE GROUP STRUCTURE | 14 |
2 | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 14 |
3 | CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS IN APPLYING ACCOUNTING POLICIES | 27 |
- ADOPTION OF NEW AND REVISED STANDARDS AND INTERPRETATIONS AND NEW
ACCOUNTING PRONOUNCEMENTS | 30 | |
5 | SEGMENT REPORTING | 31 |
6 | SUBSIDIARIES | 32 |
7 | ACQUISITION OF BUSINESSES | 32 |
8 | RELATED PARTY TRANSACTIONS | 35 |
9 | CASH AND CASH EQUIVALENTS, SHORT-TERM FINANCIAL INVESTMENTS | 37 |
10 | PROPERTY, PLANT AND EQUIPMENT | 38 |
11 | LEASES | 39 |
12 | INVESTMENT PROPERTIES | 41 |
13 | GOODWILL | 42 |
14 | OTHER INTANGIBLE ASSETS | 43 |
15 | INVENTORIES | 44 |
16 | FINANCIAL INSTRUMENTS BY CATEGORY | 44 |
17 | TRADE, OTHER ACCOUNTS RECEIVABLE AND PREPAYMENTS | 45 |
18 | VAT AND OTHER TAXES RECEIVABLE | 47 |
19 | PROVISIONS AND OTHER LIABILITIES | 47 |
20 | CONTRACT LIABILITIES | 47 |
21 | BORROWINGS | 48 |
22 | SHARE CAPITAL | 49 |
23 | EARNINGS PER SHARE | 49 |
24 | REVENUE | 49 |
25 | EXPENSES BY NATURE | 50 |
26 | LEASE/SUBLEASE AND OTHER INCOME | 50 |
27 | FINANCE INCOME AND COSTS | 50 |
28 | STAFF COSTS | 51 |
29 | SHARE-BASED PAYMENTS | 51 |
30 | INCOME TAX | 52 |
31 | FINANCIAL RISK MANAGEMENT | 54 |
32 | OPERATING ENVIRONMENT OF THE GROUP | 56 |
33 | CAPITAL RISK MANAGEMENT | 57 |
34 | FAIR VALUE OF FINANCIAL INSTRUMENTS | 57 |
35 | COMMITMENTS AND CONTINGENCIES | 57 |
36 | SUBSEQUENT EVENTS | 59 |
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«ЦАТР - аудиторские услуги» Россия, 115035, Москва Садовническая наб., 77, стр. 1
Тел.: +7 495 705 9700 +7 495 755 9700 Факс: +7 495 755 9701
ОГРН: 1027739707203
ИНН: 7709383532
ОКПО: 59002827
КПП: 770501001
TSATR - Audit Services LLC Sadovnicheskaya Nab., 77, bld. 1 Moscow, 115035, Russia
Tel: +7 495 705 9700 +7 495 755 9700 Fax: +7 495 755 9701
www.b1.ru
Independent auditor's report
To the Shareholders
and the Supervisory board of X5 Retail Group N.V.
Opinion
We have audited the consolidated financial statements of X5 Retail Group N.V. and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2022, and the consolidated statement of profit or loss, the consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated statement of changes in equity for 2022, and notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2022 and its consolidated financial performance and its consolidated cash flows for 2022 in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union
(EU IFRSs).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs).
Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' (IESBA), International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in the Russian Federation, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and
in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial statements.
The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
Key audit matter
Goodwill impairment
We consider goodwill impairment a key audit matter since the goodwill amount is significant at the reporting date, and also due to the fact that the methodology for assessment of the recoverable amount is complex and management's process to assess the recoverable amount is based on the use of significant judgment with regard to the assumptions on expected future cash flows, the discount rate and other forecasts values.
Information on goodwill and the results of its impairment testing is disclosed in Note 13 to the consolidated financial statements.
How our audit addressed the key audit matter
As part of our audit procedures, we reviewed the Group's methodology used for goodwill impairment testing purposes and assessed its compliance with IFRS requirements as well as its consistent application. We analyzed key assumptions used by management and compared them with industry trends and forecasts prepared by independent analysts, internal forecasts and historical indicators.
With the involvement of internal valuation experts we reviewed the methodology applied, compared the inputs and assumptions used in the impairment model with common practice and observable market data and also assessed the applicable methodology for compliance with IFRS requirements.
We tested the accuracy of estimates and assumptions applied by management in the previous reporting period to exclude potential bias.
We assessed the mathematical accuracy of goodwill impairment testing. We compared inputs used in the model with figures from the audited consolidated financial statements and other information obtained during the audit.
We analyzed goodwill impairment disclosures presented in notes to the consolidated financial statements.
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Key audit matter | How our audit addressed the key audit matter |
Impairment of stores and other non-current assets
The carrying amount of stores and other non-current assets, such as right-of-use assets, property, equipment and intangible assets, excluding goodwill, as at 31 December 2022 approximated RUB 867 billion. We consider impairment of stores and other non-current assets a key audit matter due to the materiality of their carrying amount and the significant use of judgment in assessing the recoverable amount of those assets. Judgment is mainly used in determining the discount rate and preparing store performance forecasts, which, inter alia, depend on the expected income determined on the basis of the strategic development plan with reference to macroeconomic forecasts and local competition. Judgment is also used in determining the fair value of property on the basis of internal and external property valuation reports.
Information on property, plant and equipment, right-of-use assets, investment property and other intangible assets is presented in
Notes 10, 11, 12 and 14 to the consolidated financial statements.
As part of our audit procedures, we reviewed the Group's methodology used for impairment testing of stores and other non-current assets and assessed its compliance with IFRS requirements as well as its consistent application.
For stores covered by impairment testing, we analyzed key assumptions used by management to prepare cash flow forecasts and compared them with industry trends and forecasts prepared by independent analysts, internal forecasts and historical indicators.
We tested the accuracy of estimates and assumptions applied by management in the previous reporting period to exclude potential bias.
With the involvement of internal valuation experts we reviewed the methodology applied, compared the inputs and assumptions used in the impairment model with common practice and observable market data and assessed the applicable methodology for compliance with IFRS requirements.
We assessed the mathematical accuracy of impairment testing of stores and other non-current assets. We compared inputs used in the model with figures from the audited consolidated financial statements and other information obtained during the audit.
With the involvement of internal real estate valuation experts we analyzed the results of property valuation performed by the Group. We also analyzed objectivity and competence of independent appraisers engaged by the Group.
We reviewed disclosures in notes to the consolidated financial statements.
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Key audit matter
Recognition of vendor allowances
The Group receives various types of vendor allowances, such as discounts and income from services rendered. Discounts largely depend on the volumes of purchased goods, while income from services rendered is associated with promotional activities for certain products.
Vendor allowances represent a significant component of the cost of sales and are recognized as its reduction. Although most vendor allowances are settled during the financial year, a significant amount remains outstanding at the end of each year and is recognized as trade receivables.
We consider vendor allowances a key audit matter, since bonus conditions vary from contract to contract and can be complicated. In addition, the recognition of vendor allowances and related receivables requires management to use certain judgment, in particular, considering the delivery of such services or allocation of vendor allowances to the inventory cost.
Information on the Group's accounting policies relating to bonuses from suppliers is disclosed in Note 2.24 to the consolidated financial statements.
How our audit addressed the key audit matter
Our procedures included tests of internal control over the occurrence, completeness and measurement of vendor allowances recognized in the accounting records, and covered both IT application and manual controls.
We tested a sample of direct confirmations received from suppliers with regard to receivables as at
30 September 2022. We also tested vendor allowances for the fourth quarter of 2022, including performing substantive analytical procedures and detailed testing on a sample of vendor allowances transactions and settlements.
We also tested on a sample basis documents supporting journal entries regarding the recognition of vendor allowances and service fees. In addition, we performed a margin analysis and reviewed subsequent collections on prior period vendor allowance receivables and subsequent collections of the vendor allowances receivable in the current year.
We analyzed accounting policies related to vendor allowances.
We reviewed disclosures in notes to the consolidated financial statements.
Other information included in the annual report of X5 Group
Other information consists of the annual report of X5 Group other than the consolidated financial statements and our auditor's report thereon. Management is responsible for the other information. The annual report of X5 Group is expected to be made available to us after the date of this auditor's report.
Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
Responsibilities of management and the Supervisory Board for the consolidated financial statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with EU-IFRSs, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
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In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The Supervisory Board are responsible for overseeing the Group's financial reporting process.
Auditor's responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
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►
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause Group to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
- Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
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We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the Supervisory Board, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The partner in charge of the audit resulting in this independent auditor's report is M.Y. Golovkina.
Signed by M.Y. Golovkina
acting on behalf of TSATR - Audit Services Limited Liability Company on the basis of power of attorney dated 18 April 2022,
partner in charge of the audit resulting in this independent auditor's report (main registration number 21906100348)
16 March 2023
Details of the auditor
Name: TSATR - Audit Services Limited Liability Company
Record made in the State Register of Legal Entities on 5 December 2002, State Registration Number 1027739707203. Address: Russia 115035, Moscow, Sadovnicheskaya naberezhnaya, 77, building 1.
TSATR - Audit Services Limited Liability Company is a member of Self-regulatory organization of auditors Association "Sodruzhestvo". TSATR - Audit Services Limited Liability Company is included in the control copy of the register of auditors and audit organizations, main registration number 12006020327.
Details of the audited entity
Name: X5 Retail Group N.V.
Record made in the Netherlands Chamber of Commerce on 13 August 1975, Registration Number 33143036. Address: the Netherlands, Amsterdam, Zuidplein 196, 1077 XV.
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X5 Retail Group N.V.
Consolidated Statement of Financial Position
at 31 December 2022
(expressed in millions of Russian Roubles, unless otherwise stated)
31 December | 31 December | ||
Note | 2022 | 2021 | |
Assets | |||
Non-current assets | |||
Property, plant and equipment | 10 | 315,612 | 332,144 |
Right-of-use assets | 11 | 508,543 | 502,325 |
Investment properties | 12 | 4,573 | 4,461 |
Goodwill | 13 | 112,929 | 105,028 |
Other intangible assets | 14 | 38,327 | 39,006 |
Investments in associates and joint ventures | − | 50 | |
Other non-current assets | 4,164 | 4,209 | |
Deferred tax assets | 30 | 27,482 | 23,047 |
1,011,630 | 1,010,270 | ||
Current assets | |||
Inventories | 15 | 208,661 | 166,840 |
Indemnification asset | 7, 35 | 6,391 | 435 |
Trade, other accounts receivable and prepayments | 17 | 21,382 | 20,190 |
Current income tax receivable | 1,622 | 4,057 | |
VAT and other taxes receivable | 18 | 9,007 | 8,802 |
Short-term financial investments | 9 | 50,067 | 50,092 |
Cash and cash equivalents | 9 | 43,255 | 26,062 |
340,385 | 276,478 | ||
Total assets | 1,352,015 | 1,286,748 | |
Equity and liabilities | |||
Equity attributable to equity holders of the parent | |||
Share capital | 22 | 2,458 | 2,458 |
Share premium | 46,127 | 46,127 | |
Retained earnings | 84,125 | 38,926 | |
Other capital reserves | 432 | − | |
Share-based payment reserve | 29 | − | 118 |
133,142 | 87,629 | ||
Total equity | 133,142 | 87,629 | |
Non-current liabilities | |||
Long-term borrowings | 21 | 147,386 | 206,571 |
Long-term lease liabilities | 11 | 519,317 | 507,099 |
Deferred tax liabilities | 30 | 6,954 | 928 |
Other non-current liabilities | 7, 28 | 6,206 | 1,670 |
679,863 | 716,268 | ||
Current liabilities | |||
Trade accounts payable | 238,641 | 212,949 | |
Short-term borrowings | 21 | 87,146 | 87,767 |
Interest accrued | 1,143 | 1,792 | |
Short-term lease liabilities | 11 | 71,843 | 70,264 |
Short-term contract liabilities | 20 | 3,767 | 2,392 |
Current income tax payable | 6,020 | 3,014 | |
Provisions and other liabilities | 19 | 130,450 | 104,673 |
539,010 | 482,851 | ||
Total liabilities | 1,218,873 | 1,199,119 | |
Total equity and liabilities | 1,352,015 | 1,286,748 |
__________________________ | __________________________ |
Igor Shekhterman | Vsevolod Starukhin |
Chief Executive Officer | Chief Financial Officer |
16 March 2023 | 16 March 2023 |
The accompanying notes are the integral part of these consolidated financial statements.
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X5 Retail Group N.V.
Consolidated Statement of Profit or Loss for the year ended 31 December 2022
(expressed in millions of Russian Roubles, unless otherwise stated)
Note | 2022 | 2021 | |
Revenue | 24 | 2,605,232 | 2,204,819 |
Cost of sales | 25 | (1,970,036) | (1,643,502) |
Gross profit | 635,196 | 561,317 | |
Selling, general and administrative expenses | 25 | (519,757) | (467,468) |
Net impairment losses on financial assets | 17 | (346) | (154) |
Lease/sublease and other income | 26 | 23,025 | 23,877 |
Operating profit | 138,118 | 117,572 | |
Finance costs | 27 | (73,727) | (57,815) |
Finance income | 27 | 5,310 | 586 |
Net foreign exchange (loss)/gain | (2,032) | 399 | |
Profit before tax | 67,669 | 60,742 | |
Income tax expense | 30 | (22,481) | (18,004) |
Profit for the year | 45,188 | 42,738 | |
Profit for the year attributable to: | |||
Equity holders of the parent | 45,199 | 42,738 | |
Non-controlling interests | (11) | − | |
Basic earnings per share for profit attributable to the equity | |||
holders of the parent (expressed in RUB per share) | 23 | 665.78 | 629.55 |
Diluted earnings per share for profit attributable to the equity | |||
holders of the parent (expressed in RUB per share) | 23 | 665.78 | 629.54 |
__________________________ | __________________________ |
Igor Shekhterman | Vsevolod Starukhin |
Chief Executive Officer | Chief Financial Officer |
16 March 2023 | 16 March 2023 |
The accompanying notes are the integral part of these consolidated financial statements.
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X5 Retail Group NV published this content on 24 November 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 November 2023 20:33:08 UTC.
