PJSC «RusHydro»
Financial statements and Independent Auditor's report
31 December 2021
Translation from Russian original
Content | ||
INDEPENDENT AUDITOR'S REPORT | ||
FINANCIAL STATEMENTS | ||
BALANCE SHEET..................................................................................................................................................................... | 1 | |
STATEMENT OF FINANCIAL RESULTS ................................................................................................................................. | 3 | |
STATEMENT OF CHANGES IN EQUITY ................................................................................................................................. | 4 | |
STATEMENT OF CASH FLOWS .............................................................................................................................................. | 6 | |
I. | GENERAL INFORMATION ............................................................................................................................................... | 8 |
1.1 | Information about the Company................................................................................................................... | 8 |
1.2 | The Company's operating environment ....................................................................................................... | 9 |
II. | ACCOUNTING POLICIES............................................................................................................................................... | 13 |
2.1 | Basis of presentation.................................................................................................................................. | 13 |
2.2 | Assets and liabilities denominated in foreign currency .............................................................................. | 13 |
2.3 | Accounting for assets and liabilities ........................................................................................................... | 13 |
2.4 | Property, plant and equipment and construction-in-progress .................................................................... | 14 |
2.5 | Investments ................................................................................................................................................ | 15 |
2.6 | Cross-currencyinterest-rate swap ............................................................................................................. | 17 |
2.7 | Inventories .................................................................................................................................................. | 17 |
2.8 | Expenses of future periods ........................................................................................................................ | 18 |
2.9 | Accounts receivable ................................................................................................................................... | 18 |
2.10 | Cash equivalents and presentation of cash flows in the statement of cash flows ................................. | 18 |
2.11 | Share capital, additional and reserve capital.......................................................................................... | 18 |
2.12 | Loans and bank credits received............................................................................................................ | 19 |
2.13 | Estimated liabilities, contingent liabilities and contingent assets ........................................................... | 19 |
2.14 | Revenue recognition............................................................................................................................... | 20 |
2.15 | Recognition of expenses ........................................................................................................................ | 20 |
2.16 | Changes in the Company's accounting policies ..................................................................................... | 21 |
III. | DISCLOSURE OF MATERIAL INDICATORS ............................................................................................................. | 25 |
3.1 | Non-current assets (Section I of the balance sheet).................................................................................. | 25 |
3.1.1 Property, plant and equipment (line 1151 of the balance sheet), construction-in-progress (line 1152
of the balance sheet) ......................................................................................................................................... | 25 | |
3.1.2 | Long-term investments (line 1170 of the balance sheet).................................................................... | 28 |
3.1.3 | Other non-current assets (line 1190 of the balance sheet) ................................................................ | 33 |
3.2 | Current assets (Section II of the balance sheet) ........................................................................................ | 33 |
3.2.1 | Inventories (line 1210 the balance sheet) ........................................................................................... | 33 |
3.2.2 | Accounts receivable (line 1230 of the balance sheet) ........................................................................ | 34 |
3.2.3 | Short-term investments (Line 1240 of the balance sheet) .................................................................. | 37 |
3.2.4 | Cash and cash equivalents (line 1250 of the balance sheet) ............................................................. | 39 |
3.3 | Equity and reserves (Section III of the balance sheet) .............................................................................. | 41 |
3.3.1 | Share capital (line 1310 of the balance sheet) ................................................................................... | 41 |
3.3.2 | Revaluation of non-current assets (line 1340 of the balance sheet) .................................................. | 41 |
3.3.3 | Additional paid-in capital (line 1350 of the balance sheet) ................................................................. | 42 |
3.3.4 | Reserve capital (line 1360 of the balance sheet)................................................................................ | 42 |
3.4 | Non-current liabilities (Section IV of the balance sheet) ............................................................................ | 42 |
3.4.1 | Long-term borrowings (line 1410 of the balance sheet) ..................................................................... | 42 |
3.4.2 | Other non-current liabilities (line 1450 of the balance sheet) ............................................................. | 44 |
3.5 | Current liabilities (Section V of the balance sheet) .................................................................................... | 44 |
3.5.1 | Short-term borrowings (line 1510 of the Balance sheet) .................................................................... | 44 |
3.5.2 | Accounts payable (line 1520 of the balance sheet) ............................................................................ | 44 |
3.5.3 | Estimated liabilities (line 1540 of the balance sheet).......................................................................... | 45 |
3.6 | Off-balance-sheet valuables ...................................................................................................................... | 45 |
3.6.1 | Leased property, plant and equipment ............................................................................................... | 45 |
3.6.2 | Collateral for liabilities and payments received................................................................................... | 46 |
3.6.3 | Collateral for liabilities and payments issued...................................................................................... | 46 |
3.6.4 | Non-deliverable forward contract for shares ....................................................................................... | 47 |
3.7 | Income and expenses on operating activities (statement of financial results)........................................... | 48 |
3.7.1 | Revenue (line 2110 of the statement of financial results)................................................................... | 48 |
3.7.2 Cost of sales and Administrative expenses (line 2120 and line 2220 of the statement of financial results) 48
3.8 Other income and expenses (line 2340 and line 2350 of the statement of financial results) .................... | 49 | |
3.9 | Taxes.......................................................................................................................................................... | 50 |
3.10 | Dividends ................................................................................................................................................ | 51 |
3.11 | Earnings per share ................................................................................................................................. | 51 |
3.12 | Related Parties ....................................................................................................................................... | 52 |
3.12.1 Controlling entity ................................................................................................................................. | 52 | |
3.12.2 Sales to related parties ....................................................................................................................... | 52 | |
3.12.3 Purchases from related parties ........................................................................................................... | 53 | |
3.12.4 Settlements with non-state pension fund ............................................................................................ | 53 | |
3.12.5 Settlements with related parties.......................................................................................................... | 53 | |
3.12.6 Related parties' debt within investments............................................................................................. | 54 | |
3.12.7 Income from investments in other companies (related parties) .......................................................... | 54 | |
3.12.8 Remuneration to key management personnel.................................................................................... | 55 | |
3.12.9 Cash flows between the Company and subsidiaries/associates ........................................................ | 55 | |
3.13 | Segment Information .............................................................................................................................. | 56 |
3.14 | Contingent liabilities................................................................................................................................ | 56 |
3.15 | Financial risk management..................................................................................................................... | 57 |
3.16 | Subsequent events ................................................................................................................................. | 58 |
Independent Auditor's Report
To the Shareholders and Board of Directors of public Joint Stock Company Federal Hydro-Generating Company - RusHydro (PJSC RusHydro):
Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of PJSC RusHydro (the "Company") as at 31 December 2021, and the Company's financial performance and cash flows for the year then ended in accordance with the reporting rules established in the Russian Federation.
What we have audited
The Company's financial statements comprise:
- the balance sheet as at 31 December 2021;
- the statement of financial results for the year then ended;
- the statement of changes in equity for the year then ended;
- the statement of cash flows for the year then ended; and
- the notes to the balance sheet and statement of financial results, which include significant accounting policies.
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 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 Company 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 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
TRANSLATION NOTE: This version of our report is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation. This English translation does not contain the English translation of the notes to the balance sheet and statement of financial results, which are part of the official Russian version of the accompanying financial statements.
Emphasis of matter
We draw attention to Note 2.5 Investments and Note 3.1.2 Long-term investments (balance sheet line 1170) to the balance sheet and statement of financial results which describe the reasons for departure from accounting rules in respect of non-revaluation of quoted financial investments in shares of
AO RAO ES of East which previously had current market value, at their last available market value, PAO Yakutskenergo, PAO Far East Energy Company and PAO Kamchatskenergo at their current market values. As of 31 December 2021 the amount of unrecognised decrease in the market value as compared to the carrying value of these investments is Russian Roubles ("RUB") 6,489 million, as of 31 December 2020 - RUB 6,208 million. Our opinion is not modified in respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the 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 | How our audit addressed the Key audit |
matter | |
Impairment assessment of financial investments and accounts receivable from subsidiaries and other related parties
See paras 2.5, 2.9, 3.1.2, 3.2.2, 3.2.3, 3.12.5 and 3.12.6 of the explanatory notes to the balance sheet and income statement.
At 31 December 2021, the aggregate carrying amount of the Company's equity and debt investments in its subsidiaries and other related parties was RUB 380,896 million (net of the impairment provision of RUB
60,458 million), or 33% of the total value of Company's assets.
At 31 December 2021, the carrying amount of accounts receivable from subsidiaries and other related parties was RUB 111,064 million (net of the doubtful debt provision of RUB 4,699 million), or 10% of the total value of Company's assets.
As part of the annual reporting process the Company performs a comprehensive analysis of all investments that are not carried at their current market value and of accounts receivable from related parties (primarily in the form of interest-free loans and bills) as at the reporting date, to identify any indications of impairment and its amount.
Our audit procedures aimed at analysing the impairment testing by the management of Company's financial investments and accounts receivable from related parties, included:
- understanding of how estimates in accounting and financial statements were calculated;
- review of the methodology used by Company's management for the impairment test purposes;
- review of reasonableness of accounting estimates made by the management and management's position on whether there are indicators of assets' potential impairment;
- review on a test basis of key assumptions and source data used in the impairment tests and their compliance with the approved budgets and business plans, external available and reliable information and our expert knowledge of industry specifics;
TRANSLATION NOTE: This version of our report is a translation from the original, which was prepared in Russian. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation. This English translation does not contain the English translation of the notes to the balance sheet and statement of financial results, which are part of the official Russian version of the accompanying financial statements.
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