SISTEMA PJSFC AND SUBSIDIARIES
Consolidated Financial Statements for 2022 and Independent Auditor's Report
SISTEMA PJSFC AND SUBSIDIARIES
TABLE OF CONTENTS
Page | ||
INDEPENDENT AUDITOR'S REPORT | 1-6 | |
CONSOLIDATED FINANCIAL STATEMENTS FOR 2022: | ||
Consolidated statement of profit or loss | 7 | |
Consolidated statement of comprehensive income | 8 | |
Consolidated statement of financial position | 9-10 | |
Consolidated statement of changes in equity | 11 | |
Consolidated statement of cash flows | 12-13 | |
Notes to the consolidated financial statements | ||
1. | General | 14 |
2. | Basis of preparation | 14 |
3. | Significant accounting policies, judgements, estimates and assumptions | 14 |
4. | Segment information | 19 |
5. | Discontinued operations and subsidiaries disposals | 22 |
6. | Business combinations | 26 |
7. | Capital transactions of subsidiaries | 37 |
8. | Revenue | 38 |
9. | Impairment of long-lived assets | 44 |
10. | Impairment of financial assets | 44 |
11. | Income taxes | 45 |
12. | Employee benefits expenses | 47 |
13. | Property, plant and equipment | 48 |
14. | Investment property | 51 |
15. | Goodwill | 52 |
16. | Other intangible assets | 56 |
17. | Investments in associates and joint ventures | 59 |
18. | Other financial assets | 64 |
19. | Restricted cash | 71 |
20. | Inventories | 71 |
21. | Accounts receivable | 72 |
22. | Equity | 73 |
23. | Accumulated other comprehensive income | 73 |
24. | Loans and borrowings | 74 |
25. | Lease liabilities and right-of-use assets | 78 |
26. | Bank deposits and liabilities | 79 |
27. | Other financial liabilities | 80 |
28. | Provisions | 80 |
29. | Earnings/(loss) per share | 82 |
30. | Capital and financial risk management | 82 |
31. | Derivative instruments | 86 |
32. | Fair values | 88 |
33. | Related party transactions | 91 |
34. | Subsidiaries | 92 |
35. | Non-cash transactions | 93 |
36. | Reconciliation of liabilities arising from financing activities | 94 |
37. | Contingencies and commitments | 95 |
38. | Subsequent events | 100 |
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INDEPENDENT AUDITOR'S REPORT
To the Shareholders and the Board of Directors of Sistema Public Joint Stock Financial Corporation
Opinion
We have audited the consolidated financial statements of Sistema Public Joint Stock Financial Corporation ("Sistema") 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, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, 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 the year then ended in accordance with International Financial Reporting Standards ("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 Auditor's Independence Rules and the Auditor's Professional Ethics Code, that are relevant to our audit of the financial statements in the Russian Federation together with the ethical requirements of the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (the "IESBA Code"), 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.
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.
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Why the matter was determined to be | How the matter was addressed in the audit |
a key audit matter |
Significant non-routine transactions
In light of its strategy, the Group regularly conducts complex acquisitions and disposals, debt restructurings and other significant non-routine transactions. In 2022 the non-routine transactions were conducted in the course of changing operating environment (see Note 37 to the consolidated financial statements).
We focus on these matters because the appropriate accounting treatment of such transactions is often complex and requires exercise of significant judgement, in particular, in determining whether or not the Group has control over its investees, and whether or not the Group has assumed obligations to third-party investors.
In the current period, these included, among others, sale of a stake in SFH Invest S.A., recognition of EWUB as assets held for sale, and other transactions involving the sale of shares in subsidiaries resulting in the loss of control by the Group.
See Note 5 to the consolidated financial statements.
Our procedures included reviewing legal documents to fully understand the terms and conditions of each transaction and therefore the associated accounting implications and evaluating documentation of management's positions on how IFRSs were applied to the transactions.
In relation to the previously mentioned specific transactions, we:
- analysed legal documents and evaluated the appropriateness of management's conclusions on whether or not the Group has control over the investees in the context of investee's governance structure, size of the Group's shareholding relative to other shareholders, dispersion of other vote holdings and other factors relevant to determining whether the Group has current ability to direct relevant activities of the investees;
- analysed agreements and key terms of transactions on the disposal of Group's subsidiaries and reviewed the reflection of the disposal in the consolidated financial statements;
- analysed management's calculation of the expected credit losses allowance for the financial assets arising as a result of disposal;
- verified the compliance of the disclosures contained in the consolidated financial statements with IFRS requirements.
In addition, we analysed management's assessment | |
of the impact of changes in the operating | |
environment on the Group's operations and | |
significant non-routine transactions. | |
Diversified structure of the Group | We obtained an understanding of the group-wide |
Sistema is a holding company that owns | controls over the consolidation process and the |
preparation of the consolidated financial | |
mainly controlling stakes in its subsidiaries, | |
statements, including instructions of the Group's | |
whose results are included in the | |
management to its subsidiaries. | |
consolidated financial statements. The | |
large number of entities of the Group and | Our audit approach was developed considering the |
diversified nature of their operations | Group's diversified structure and associated risks of |
require the Group's management to design | material misstatement of the consolidated financial |
and implement group wide controls, | statements. It included determination of necessary |
including monitoring and control activities | procedures and audit scope in relation to each |
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Why the matter was determined to be | How the matter was addressed in the audit |
a key audit matter |
to ensure timely, reliable and complete financial information received from its subsidiaries.
Audit procedures regarding the financial information of the subsidiaries included in the consolidated financial statements may be performed by us or by the auditors of those subsidiaries ("components") acting under our supervision. As the group auditor, we are fully responsible for conducting the audit and forming our audit opinion.
We focused on this matter because the diversified structure of the Group has a significant impact on our audit approach, and the nature and extent of our involvement in component auditors' work is significant.
component's financial information, depending on its significance for the Group and identification of risks of misstatement of their financial information. The nature and extent of our involvement in the component auditors' work was also dependent on our assessment of their professional competence in the context of allocated scope.
To obtain reasonable assurance of fair presentation of the components' financial information, we assessed risks and determined audit procedures performed by the component auditors, and evaluated the results of the procedures. This included a critical analysis of the component auditors' documentation, discussion of significant matters with the component auditors, component or Group management and, if applicable, designing and performing additional audit procedures.
We also performed procedures with respect to consolidation adjustments to the financial information of the subsidiaries in order to assess their nature, completeness and accuracy.
Compliance with anti-bribery laws and regulations and associated accounting and disclosure implications
In March 2019, the Group's subsidiary MTS reached a resolution with the United States Securities and Exchange Commission ("SEC") and the United States Department of Justice ("DOJ") relating to the investigation concerning the Group's former subsidiary in Uzbekistan. The Group consented to the commencement of an administrative cease-and-desist order (the "Order") by the SEC and entered into a deferred prosecution agreement ("DPA"). Under the DPA and the Order in September 2019 the Group appointed an independent compliance monitor ("Independent Monitor") for, inter alia, review, testing and improving MTS' anti-corruption compliance code, policies, and procedures for a period of three years. In 2021, the DOJ and SEC approved a one year extension of the monitorship, which is permitted by the terms of the DPA and the Order.
Our audit procedures related to the Group's estimation of any contingencies related to any potential instance of non-compliance with anti- corruption laws and regulations included the following, among others:
- We inspected the laws and regulations MTS has to comply with in order to obtain an understanding of the relevance and applicability to MTS and to assess any potential penalties that may arise for non- compliance;
- We read the procedures performed by the Independent Monitor and evaluated the implications of their findings, including discussing these with management as well as internal and external legal advisors;
- We inquired management regarding their follow up on the results of internal and external investigations and on the design and operational effectiveness of the MTS's compliance programs and internal controls relating to the prevention and detection of fraud and corruption;
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Afk Sistema OAO published this content on 10 April 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 April 2023 17:15:05 UTC.