RESBUD SE
Consolidated Financial Statements
for the year 2021
[not audited]
Consolidated Financial Statements
for the year 2021
[not audited]
Company name: Resbud SE
Registry number: 14617750
Address: Tallinn, Kesklinna linnaosa, Järvevana tee 9, 11314
Telephone:+372 5332 36615332 3661
+48 12 307 15 99
E-mail: resbud@resbud.ee
Corporate website: www.resbud.ee
Financial year: 1 January 2021 - 31 December 2021
Reporting period: 1 January 2021 - 31 December 2021
Supervisory board: Anna Jõemets, Alexey Petrov, Adam Zaremba
Management Board: Krzysztof Włodzimierz Długosz, Joanna Maria Dyja
Auditor: KPMG Baltics OÜ
RESBUD SE
Independent auditor's report
These Consolidated Financial Statements for 2021 have not yet received a statutory auditor's
opinion. The opinion will be provided immediately after it is obtained by the Company.
RESBUD SE
6
The consolidated statement of financial position should be read in conjunction with the notes to the
consolidated financial statements and forming part of these consolidated financial statements on pages 18 to
80.
Consolidated statement of financial position
as at December 31, 2021
'000 EUR
Note
December 31st
2021
December 31st
2020
Tangible fixed assets
15
Goodwill
16
Long-term receivables
21
Investments accounted for using the
equity method
18
Long-term loans
26
Deferred tax assets
13
Fixed assets
Inventory
20
Trade receivables
21
Cash and cash equivalents
22
Assets classified as held for sale
23
Short-term loans
26
Other receivables
21
Other assets
21
Current assets
Total assets
RESBUD SE
7
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the notes to the consolidated financial statements and forming part of these consolidated financial
statements on pages 18 to 80.
'000EUR
Note
December 31st
2021
December 31st
2020
Share capital
24
Supplementary capital
24
Reserve capital
24
Revaluation reserve
24
(498 )
(498 )
Capital from business combinations
24
(4 )
(4 )
Differences from conversion to EURO
13
(67 )
Retained earnings
24
(2710 )
(2243 )
Equity capital
Credits and loans
6
Deferred tax liabilities
13
Other non-current liabilities
26
Long-term liabilities
26
Credits and loans
26
Trade and other sources of income
29
Reserves
27
Current tax liabilities
13
Other liabilities
30
Current liabilities
Total liabilities
6
Total
RESBUD SE
8
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the notes to the consolidated financial statements and forming part of these consolidated financial
statements on pages 18 to 80.
Consolidated statement of profit or loss and other
comprehensive income for 2021
'000 EUR
Note
2021
2020
Income
8
Sales cost
9
Profit / loss on core activities
Depreciation
9
Consumption of materials
9
Services
9
Tax expenses and fees
9
Salaries
12
Social security
12
Other costs
9
Other operating income
9
Other operating cost
9
Profit (loss) from operations
(324 )
Financial income
42
Financial costs
42
Profit (loss) Gross
(94 )
(347 )
Income tax
16
Net profit / loss
(467 )
(347 )
Other comprehensive income
Items that will never be reclassified to the income statement
Equity investments in FVOCI - net change in fair
value
13
(777 )
Total
(777 )
Items that are or may be reclassified to the income statement
Exchange differences on translating foreign units
13
(3 )
Total
(3 )
Other comprehensive income excluding
income tax
(780 )
RESBUD SE
9
The consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the notes to the consolidated financial statements and forming part of these consolidated financial
statements on pages 18 to 80.
'000 EUR
Note
2021
2020
Comprehensive income for the year
(1127 )
Profit / (loss) attributable to:
Company owners
(1127 )
Comprehensive income attributable to:
Company owners
(1127 )
Earnings per share
Basic earnings per share (EUR)
10
(0,06 )
Diluted earnings per share (EUR)
10
(0,06 )
Earnings per share - continued operations
Basic earnings per share (EUR)
10
(0,06 )
Diluted earnings per share (EUR)
10
(0,06 )
RESBUD SE
Consolidated statement of changes in equity for 2021
10
The consolidated statement of changes in equity should be read in conjunction with the notes to the consolidated financial statements, which form part thereof, on pages 18 to80.
Consolidated statement of changes in equity for 2021
'000EUR
2020
Note
Share capital
Reserve
capital
Supplement
ary capital
Revaluation
reserve
Capital from
business
combinations
Differences
from
conversion to
EURO
Retained
profit
Total equity
Balance as at January 1, 2020
24
(4 )
(64 )
(1896 )
Issue of shares
24
Profit / (loss) for the year
24
(347 )
(347 )
Other comprehensive income
(777 )
(3 )
(780 )
Balance as at December 31, 2020
(498 )
(4 )
(67 )
(2243 )
'000EUR
2021
Note
Share capital
Reserve
capital
Supplement
ary capital
Revaluation
reserve
Capital from
business
combinations
Differences
from
conversion to
EURO
Retained
profit
Total equity
Balance as of January 1, 2021
24
(498 )
(4 )
(67 )
(2243 )
Issue of shares
24
Profit / (loss) for the year
24
(467 )
(467 )
Other comprehensive income
Balance as at December 31, 2021
(498 )
(4 )
(2 710 )
RESBUD SE
11
The consolidated cash flow statement should be read in conjunction with the notes and forming part of the
consolidated financial statements on pages 18 to 80.
Consolidated cash flow statement for 2021
'000EUR
Note
2021
2020
Profit / (loss) for the year
6
(467 )
(347 )
Income tax recognised in profit or loss
13
Finance costs recognised in profit or loss
9
(23 )
Gain (loss) on disposal of property, plant and
equipment
15
Gain (loss) on impairment of receivables and
payables
30
(630 )
Depreciation
9
Net foreign exchange gains / losses
24
(84 )
Change in receivable
42
(29988 )
Change in inventories
20
(2305 )
Increase / decrease in other
21
(469 )
Change in liabilities
37
Increase/(decrease) in provisions
13
Change in other liabilities
37
Income tax paid
13
(11 )
Interest and exchange differences paid
24
Total adjustments
Net cash from operating activities
(221 )
Proceeds from repayment of loans
23
Amount of loans granted
32
(313 )
Payments for acquisition of property, plant and
equipment
15
(2083 )
(10 )
Proceeds from disposal of property, plant and
equipment
26
Cash flows from investing activities
(2178 )
Taking loans
26
Repayment of loan instalments
24
(3539 )
Repayment of interest on loans
26
(18 )
Repayment of other debts
30
(14 )
Net cash from financing activities
Net cash flow
(29 )
RESBUD SE
Consolidated cash flow statement for 2021
12
'000EUR
Note
2021
2020
Balance sheet change in funds, of which:
(29 )
Cash at beginning of period
22
Cash and cash equivalents at the end of the
period
22
These Consolidated Annual Financial Statements were approved by the Management Board on
September 9, 2022 and signed on its behalf by:
……………………………………… . …………………………………………
Krzysztof Długosz Joanna Dyja
President of the Management Board Member of the Management Board
(signed) (signed)
RESBUD SE
Consolidated cash flow statement for 2021
13
Notes to the consolidated financial statements
for the year 2021
Note
Side
Note
Side
1. Notifying entity 14
2. The basis of accounting 16
3. Functional and presentation currency 17
4. Use of estimates and judgments 18
5. Changes in significant accounting principles 19
6. Operating segments 20
7. Discontinued activities 21
8. Income 21
9. Income and expenses 23
10. Earnings per share 24
11. Employee benefits 25
12. Expenses for employee benefits 25
13. Income taxes 26
14. Adjusted profit before interest, tax,
depreciation and amortization (adjusted
EBITDA) 28
15. Tangible fixed assets 29
16. Intangible assets and goodwill 30
17. Investment Estates 33
18. Investments accounted for using the equity
method 33
19. Other investments 33
20. Supplies 33
21. Trade and other receivables 34
22. Cash and cash equivalents 34
23. Disposal group held for sale 35
The amount of EUR 3 983 thousand includes -
short-term financial assets (promissory note,
share in other entities), which the Group
companies did not recognize as long-term
financial assets.K. 35
24. Capital and reserves 35
25. Capital management 36
26. Credits and loans - debt repayment schedule 36
27. Deferred income / income 38
28. Reserves 38
29. Trade and other sources of income 39
30. Fair values and risk management 39
31. Significant subsidiaries and unconsolidated
structured entities 44
32. Acquisition and disposal of subsidiaries 44
33. Non-controlling interests 50
34. Acquisition of non-controlling interests 50
35. Waiver of a loan agreement 50
36. Lease 51
37. Liability 51
38. Unforeseen events 52
39. Related pages 53
40. Further events 55
41. Basis of measurement 55
42. Correction of errors 56
43. Significant accounting principles 56
44. New standards and interpretations have not yet
been adopted 79
RESBUD SE
Notes to the consolidated financial statements for 2021
14
Basis of preparation 11
1. Notifying entity
Business environment
consolidated financial statements as at December 31, 2021 include the Company and its
subsidiaries (collectively, the "Group").
The group mainly deals with:
- in Estonia, the management and administrative activities of the parent company (Resbud SE )
concerned the management of subsidiaries,
- in Poland, activity in the construction industry related to construction and the production of
bitumen-concrete mixtures,
- in the Russian Federation, he is engaged in the purchase and sale of materials and equipment for
large construction companies and holdings.
Polish business environment
The Group operates in Poland in the construction industry related to road construction (Conpol
Ltd.- production of concrete, construction of roads, communication junctions, bridges and viaducts)
and the production of bituminous concrete mixtures (Uniwersim Ltd.).
According to the final estimate of the Central Statistical Office regarding the GDP dynamics in
Poland, the gross domestic product in 2021 was higher by 5.9% in real terms compared to 2020,
compared to a decrease by 2.2% in 2020 compared to 2019. This proves normalization
consumption demand and the adjustment of the economy to the conditions of the pandemic despite
the restrictions that were in force in 2021. The degree of restrictions was gradually limited due to
the vaccination program. According to GUS data, domestic demand increased by 8.2% compared
to 2020, total consumption increased by 4.8%, and gross fixed capital formation also increased by
8.0%, with a drop in 2020 by 9%. The investment rate in the national economy in 2021 remained at
a similar level as in 2020, i.e. 16.6%.
During the year 2021, companies faced supply disruptions as a result of insufficient supply of
components for production in the markets. The sharp increases in energy prices in European
markets were significantly impacting on inflationary processes and the increase in costs. A very
important factor influencing the uncertainty for future economic activity in the world and in Poland
is the armed aggression of Russia against Ukraine. However, due to the small share of Polish
exports to these countries, it can be assumed that the favorable economic conditions will continue
in the following year.
In 2021, a weakening of the zloty against the dollar was recorded (an increase of 8% compared to
2020. The zloty exchange rate against the dollar in 2021 was influenced by low interest rates with a
simultaneous increase in inflation, which according to the Central Statistical Office (GUS)
amounted to 5.1% interim .
RESBUD SE
Notes to the consolidated financial statements for 2021
15
The process of increasing interest rates by the Monetary Policy Council was started only in the
fourth quarter of 2021. The currencies of the Polish market were mainly affected by the uncertainty
related to the pandemic, the strengthening of the dollar and the lack of funds from the EU
Reconstruction Fund in the face of the conflict between the Polish government and the European
Commission over the approval of the National Reconstruction Plan. The year-on-year change in
EUR was not significant: the rate as of December 31, 2021 was 4.5994 with the exchange rate of
4.6148 at the end of 2020.
The weakening of the zloty exchange rate in the next period may be influenced by the continuing
war over Poland's eastern border in Ukraine, causing investors' uncertainty. The announcements of
the National Bank of Poland about the forecasts related to further interest rate increases may
stabilize the level of the zloty exchange rate, however, the very low level of interest rates persisting
in the first half of 2021 resulted in the undervaluation of the zloty. Inflation at the end of December
2021 was 8.6% and a quick rebound in demand hit a production capacity blockage. In the face of
high commodity prices on domestic and world markets due to a shortage of raw materials, they
consequently caused disruptions of supply. Parallel to the increase in demand, the prices of energy,
fuels and labor increased, which the entrepreneurs were forced to pass on to the prices of final
goods.
At the beginning of the year, the Polish government implemented the Anti-Inflation Shield in order
to lower retail prices through lower indirect taxes in force until July 31, 2022 with the possibility of
extending it until the end of 2022. The Shield activity affects the prices of fuels, energy and food.
However, the labor market and the related wage and price pressure, increases in energy market
prices at the beginning of 2022 will force the transfer of these factors to the prices of goods and
services. In the first quarter of 2022, in the published forecasts, the National Bank of Poland took
into account the Russian invasion of Ukraine, which increased market uncertainty as to the
macroeconomic situation in Poland.
According to preliminary data of the Central Statistical Office of Poland (GUS), the average annual
construction and assembly production (in constant prices) realized in Poland in 2021 increased by
3.2% y / y. The corresponding period a year earlier showed a decline by 2.2%, which was mainly
caused by the impact of the Covid-19 pandemic.
The best situation was in specialist construction works, where the average annual increase
amounted to 9.3%. Growth was also recorded in the civil engineering segment, where it was
recorded at the level of 2.8%. On the other hand, construction and assembly production among
entities
The Group continued the investment tasks started in 2020 and undertook new ones to maintain an
appropriate level of sales despite difficulties in the shortage of supplies, human resources and price
increases.
Russian business environment
In the Russian Federation (LLC Energokomplekt) it deals with the purchase and sale of materials
and equipment for the maintenance of the supply of large construction companies and holding
companies. Consequently, the Group is exposed to the economic and financial markets of the
Russian Federation, which have the characteristics of an emerging market. The legal, tax and
regulatory framework is still developing, but is subject to different interpretations and frequent
changes which, together with other legal and tax constraints, contribute to the challenges faced by
entities operating in the Russian Federation.
RESBUD SE
Notes to the consolidated financial statements for 2021
16
Due to the gradual expansion of sanctions by the United States of America, the European Union
and other countries against the Russian Federation, the uncertainty of the economic situation
increases, including greater volatility of the stock markets, the depreciation of the Russian ruble, a
reduction in the inflow of local and foreign direct investments and a significant reduction in the
availability of credit.
It is difficult to define the long-term effects of the imposed and possible additional sanctions. The
COVID-19 coronavirus pandemic has further increased uncertainty in the business community.
Organization and activities
Union (Conpol Ltd., Uniwersim Ltd.) and the Russian Federation (LLC Energokomplekt)
RESBUD SE was established as a result of numerous transformations of the Polish a state-owned
enterprise established in 1950, and was registered as a European-type compan y in February 2018.
The Company's shares have been listed on the Warsaw Stock Exchange since September 2007.
The registered office of the Company is Järvevana tee 9-40, 11314, Tallinn, Estonia .
2. The basis of accounting
Statement of compliance
These consolidated annual financial statements have been prepared in accordance with the
International Financial Reporting Standards ("IFRS") approved by the European Union.
Going on business
The group has adequate resources to continue as a going concern for at least the next 12 months
and the going concern principle remains appropriate. The Group has not experienced any
significant impact of COVID-19 on its current operations.
The implemented construction tasks and orders were carried out without major disruptions, there
were no penalties for delays in implementation, and the additional costs caused by ensuring the
safety of employees did not significantly affect the Group's results in 2021.
RESBUD SE
Notes to the consolidated financial statements for 2021
17
There were slight deviations in the maintenance of an adequate cash balance, however, not
affecting the timely payment of liabilities or the recoverability of receivables without significant
delays.
The outlook for the road construction market is good. Regardless of the macroeconomic situation,
the number and value of GDDKiA's investments remains high. It is important for companies in the
construction industry to prepare accurate cost estimates and maintain partner relations with
investors, especially in conditions of rapidly changing prices affecting margins. High construction
costs and rising interest rates are expected to cause many public and private investors to review
their investment plans.
In 2022, road projects commissioned by GDDKiA are to enter the implementation phase.
As predicted by the Central Bank, the scale of the recovery in construction may largely depend on
the efficient implementation of the investment package co-financed with new EU funds (this
applies both to the new EU perspective for 2021-2027 and the Reconstruction Fund, which is
delayed). In the case of effective use of funds from both sources, the construction market in Poland
should return to the upward trend in the years 2022–2023.
It is expected that in the next two or three years the investments of GDDKiA and PKP PLK will be
an important element stabilizing the economic situation in the engineering industry
The conflict in Ukraine, sanctions imposed on a number of Russian companies, industries, goods
and natural persons did not affect the activities of the Russian segment of the Group. The group
company is not dependent on changes in interest rates as it does not have bank loans.
Accordingly, management concluded that there is no significant uncertainty about the Group's
ability to continue as a going concern.
These consolidated annual financial statements have been prepared on the going concern basis and
do not contain any adjustments to the carrying amounts and classification of assets, liabilities and
recognized expenses that might otherwise be required if the going concern was not appropriate.
3. Functional and presentation currency
These consolidated annual financial statements are presented in euro ("EUR"), however, the
functional currency for Estonia is the euro ("EUR"), for Poland the Polish zloty ("PLN"), for the
Russian Federation is the ruble ("RUB"). All amounts have been rounded to the nearest thousand
unless otherwise indicated.
The results and financial position of subsidiaries with a different functional currency from the
presentation currency are converted into the presentation currency using the following procedures:
- assets and liabilities for each presented statement of financial position are translated at the closing
rate on the date of that statement of financial position;
- income and expenses for each statement of comprehensive income presented are translated at the
average exchange rate for the reporting period; and
- all the resulting exchange rate differences are recognized in other comprehensive income.
RESBUD SE
Notes to the consolidated financial statements for 2021
18
In preparing the consolidated annual financial statements, the following rates of exchange of
national currencies into euro were used:
Currency
Exchange rate
December 31, 2021
Weighted average exchange
rate for 12 months of 2021
Exchange rate
December 31, 2020
PLN
4,5969
4,5652
4,5597
RUB
85,3004
87,1527
91,4671
The exchange rate of the ruble against the euro was adopted according to the data of the European
Central Bank for the relevant dates. The exchange rate of PLN to EUR is adopted according to the
data of the National Bank of Poland.
4. Use of estimates and judgments
The preparation of the consolidated financial statements in accordance with IFRS requires the
Management Board to make judgments, estimates and assumptions that affect the adopted
principles and the presented values of assets, liabilities, revenues and costs. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Adjustments of
accounting estimates are recognized in the period in which the estimates are changed and in any
future periods in which they affect.
Information on critical judgments in applying the accounting principles (policy) that have the most
significant impact on the amounts recognized in the consolidated financial statements is included in
the following notes:
– Note 2(b)- going concern: are there material uncertainties that cast significant doubt on the
entity's ability to continue as a going concern;
– Note 8 - commission income, determining whether the Group acts as an intermediary in the
transaction and not as the principal;
– Note 16a- periods of use tangible fixed assets;
– Note 21- write-offs for trade receivables;
– Note 31- consolidation: does the Group actually exercise control over the investment entity.
Information on the assumptions and uncertainties of estimates that bear a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities in the next financial year is
included in the following notes:
– Note 8 and Note 30 - revenue recognition: estimating expected returns;
– Note 16b- intangible assets and goodwill impairment test: key assumptions regarding
recoverable amounts.
RESBUD SE
Notes to the consolidated financial statements for 2021
19
Fair value measurement
A number of the Group's accounting policies and disclosures require fair value measurement of
both financial and non-financial assets and liabilities.
The Group has an established control framework with regard to the measurement of fair values. This
includes the valuation team, which has overall responsibility for overseeing all material fair value
measurements, including Level 3 fair values, and reports directly to the chief financial officer.
Management reviews material unobservable inputs and valuation adjustments on a regular basis.
When third party information is used to measure fair value, management assesses the evidence
obtained from third parties to support its conclusion that such measurements meet the requirements
of IFRSs, including the level of the fair value hierarchy at which such measurements should be
classified.
When determining the fair value of an asset or liability, the Group uses data that can be observed
on the market as much as possible. The fair values are classified at different levels in the fair value
hierarchy based on the inputs used in the valuation techniques as follows.
–
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
–
Level 2: Inputs other than quoted prices included in Level 1 that can be observed for the
asset or liability, directly (ie as prices) or indirectly (ie price derivatives).
–
Level 3: Inputs for an asset or liability that are not based on observable market data
(unobservable inputs).
If the inputs used to measure the fair value of the asset or liability can be classified at different
levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety at
the same level of the fair value hierarchy as the lowest level of inputs that are relevant to the
overall measurement.
The Group recognizes the transfers between the levels of the fair value hierarchy at the end of the
reporting period in which the change occurs.
5. Changes in significant accounting principles
The Group initially adopted the Definition of Business (Amendments to IFRS 3) and the Interest
Rate Benchmarking Reform (Amendments to IFRS 9, IAS 39 and IFRS 7) from January 1, 2020. A
number of other amendments to the existing standards also apply from January 1, 2020, but not
have a significant impact on the Group's financial statements.
The Group applied the Definition of Enterprises (Amendments to IFRS 3) for business
combinations with an acquisition date on or after February 4, 2021, when assessing whether it
acquired a business or a group of assets. Details of the accounting policies are presented in the Note
43. See also the Note 32- detailed information on the Group's acquisition of subsidiaries during the
year.
RESBUD SE
Notes to the consolidated financial statements for 2021
20
6. Operating segments
The Group has distinguished three operating segments. The segments are aggregated according to
geographic criteria. The Russia segment includes supplies for construction sites.
Komponent Polska operates in the construction industry.
The Estonian component belongs to other companies.
The table below provides information on the revenues, costs, profits and losses of each segment.
Inter-segment transactions related to interest income and expense have been eliminated.
Comparable information for previous periods is not presented by segments, as the Group was
established in 2021 and this is the first time that a consolidated financial statement is prepared.
Completed in 12 months
December 31, 2021
"Thousand EUR "
Russia
Poland
Estonia
Total
External revenues
58290
2769
0
61059
Revenue between segments
0
91
11
102
Segment profit (loss) before
income tax
1231
(1264)
(49)
(82)
The segments are independent and have no cross-segment revenues or expenses.
December 31, 2021
"Thousand EUR "
Russia
Poland
Estonia
Total
Assets of the reporting segment
46083
11031
34663
91777
Liabilities of the reporting
segment
37987
10768
781
49536
RESBUD SE
Notes to the consolidated financial statements for 2021
21
(i) Reconciliation of information on reporting segments with IFRS measures
'000EUR
2021
2020
Revenue
Total revenues for reporting segments
61157
0
Elimination of inter-segment revenues
(98)
0
Consolidated income
61059
0
Profit or loss before tax
291
0
Total profit / (loss) before tax for reporting segments
Consolidated gross profit / (loss) from continuing operations
291
0
Fortune
Total assets for reporting segments
91777
0
Other unallocated amounts
0
Total Consolidated Assets
77483
0
Indebtedness
Total liabilities for reporting segments
49536
0
Total consolidated liabilities
43806
0
(ii) Main customer
In 2021, no customer accounted for more than 10% of the Group's total revenues.
7. Discontinued activities
There are no discontinued operations in the Group.
8. Income
The Group generates income mainly from commercial activities related to the sale of construction
equipment and materials in the territory of the Russian Federation under contracts concluded with
major construction contractors implementing significant infrastructure projects. Other sources of
revenues include revenues from the sale of construction works and revenues from the sale of
manufactured building materials. The Group's revenues come from contracts with customers.
Polish components are subject to seasonal fluctuations due to weather conditions. In particular,
they are adversely affected by winter weather conditions that occur from January to March, with
the first quarter of the year usually bringing lower revenues and results for this segment.
RESBUD SE
Notes to the consolidated financial statements for 2021
22
Revenue sources
"Thousand EUR "
In 12 months 2021
In 12 months 2020
Revenue from the sale of
equipment and construction
materials
58290
0
Income from construction works
1512
0
Revenue from the sale of finished
products
1257
0
Total income
61059
0
Disaggregation of revenues from contracts with customers
In the table below, revenue from contracts with customers has been disaggregated by primary
geographic market, major products and service lines, and revenue recognition time. The table also
includes a reconciliation of disaggregated revenues with the Group's reporting segments.
For the 12 months
ended
December 31, 2021
Sale of
construction
equipment and
materials
Works
Finished goods
Total
"Thousand EUR "
12
months
2021
12
months
2020
12
months
2021
12
months
2020
12
months
2021
12
months
2020
12
months
2021
12
months
2020
Primary
geographic
markets
Russia
58290
0
0
0
0
0
58290
0
Poland
0
0
1512
0
1257
0
2769
0
Total
58290
0
1512
0
1257
0
61059
0
Revenues are recognized when goods are delivered and services are collected by customers within
a specified period of time. Revenue comes from contracts with customers.
Obligations to provide services and principles of revenue recognition
Revenue is measured on the basis of the payment specified in the contract with the customer. The
Group recognizes revenues when the control over a good or service is transferred to the customer.
The table below provides information on the nature and timing of obligations under contracts with
customers, including material payment terms, and the related revenue recognition policies.
Accounting rules for onerous contracts, see Note 44.
RESBUD SE
Notes to the consolidated financial statements for 2021
23
Type of
product /
service
Nature and timing of performance
obligations, including material payment
terms
Revenue Recognition Policy
Machines and
construction
materials,
construction
services,
products
Customers gain control of standard
products as goods are delivered and
received at their premises.
Invoices are generated at this point.
Invoices are normally payable within 30
days.
There are no discounts on standard
products.
Revenue is recognized when the goods are
delivered and accepted by the customer at
their premises.
Revenues and related costs are recognized
over time - ie before the goods are delivered
to the customer's premises. Progress is
determined on a cost-to-cost basis.
Construction
contracts
The Group builds facilities for clients in
the segment, based on their projects, and
on their premises.
Each project begins after signing the
contract with the client, and its length
depends on the complexity of the project.
Revenue is recognized over time using the
cost-cost method. The related costs are
recognized in the profit and loss account at the
moment they are incurred.
The received advances are recognized in
contractual obligations.
9. Income and expenses
Cost of products, goods and materials sold
'000EUR
2021
2020
Uniwersim Ltd.
620
0
LLC Energokomplekt
53630
0
Total
54250
0
RESBUD SE
Notes to the consolidated financial statements for 2021
24
Other income
'000EUR
2021
2020
Profit on disposal of tangible fixed assets
76
0
Government subsidies
73
0
Other income
67
0
Total
216
0
Other expenses
'000EUR
2021
2020
Other expenses
2088
8
Total
2088
8
Expenses by nature
'000EUR
2021
2020
Depreciation
569
0
Service material consumption
710
13
Services
2060
222
Taxes and fees
38
1
Salaries
796
63
Social security and overhead
211
17
Other costs
164
0
Total
4548
316
Changes in the classification
In 2021, there were no changes in the classification of income and expenses in the Group.
10. Earnings per share
The calculation of the basic earnings per share as at December 31, 2021 was based on the loss
attributable to ordinary shareholders in the amount of 825 thousand EUR (2020: 347 thousand
EUR) and the weighted average number of ordinary shares outstanding of 215 666 265 (2020:
18 100 000), calculated as shown below.
RESBUD SE
Notes to the consolidated financial statements for 2021
25
An indicator reflecting the duration of a particular stock, it is the number of days that a certain
number of stocks exist up to the total number of days in a given period.
December 31, 2021
31 December 2020
Shares issued on January 1
18 100 000
18 100 000
Number of shares issued in February
218 520 263
0
Weighted average number of shares in the reporting
period
215 666 265
18 100 000
EARN PER SHARE (EPS)
December 31, 2021
December 31, 2020
Weighted average number of shares
215 666 265
18 100 000
Net profit / loss for 12 months 2021
(467)
(347)
Basic EPS (in Euro)
(0,002)
(0,02)
11. Employee benefits
Due to the number of employees, the company does not create provisions for retirement and
holiday benefits.
Liabilities due to employee benefits:
'000EUR
2021
2020
Delcfaft Ehitus OÜ
4
0
LLC Energokomplekt
68
0
Total
72
0
12. Expenses for employee benefits
'000EUR
2021
2020
Salaries
796
63
Social security contributions
211
17
Total
1007
80
Income taxes
RESBUD SE
Notes to the consolidated financial statements for 2021
26
13. Income taxes
The obligatory burden on the financial result consists of two elements: current income tax and
deferred tax.
Due to temporary differences between the value of assets and liabilities shown in the books of
account and their tax value and tax loss possible to be deducted in the future, the Group, using the
balance sheet method, creates: deferred income tax liabilities in relation to positive temporary
differences and determines the assets from deferred income tax in relation to negative exchange
differences and tax loss deductible using the prudence principle.
Liabilities and assets due to deferred income tax are not recognized in the case of temporary
differences arising on the initial recognition of an asset or liability in a transaction not constituting
a business combination and at the time of carrying out transactions that have no impact on the
accounting or tax result.
Deferred tax assets and liabilities are offset if there is a legal title to offset tax receivables and
current tax liabilities, and if the deferred tax relates to a tax imposed by the same tax authority on
the same taxpayer. This means that deferred tax assets and liabilities are offset in the Group's
financial statements.
The Group recognizes a tax asset only when the forecasts of future financial results indicate that a
tax profit will be achieved that will allow the asset to be realized in a specific future.
The carrying amount of a deferred tax asset is verified as at each balance sheet date and is reduced
accordingly by the amount that it is no longer probable that the taxable income will be sufficient to
partially or fully realize the deferred tax asset. The elements of the judgment in the area of
recoverability of deferred tax assets are the Group's projected future financial results and their
impact on the recoverability of assets.
Amounts included in the profit and loss account
The applicable tax rate of the Group is the income tax rate of 20% for Estonian and Russian
companies, and 9% for Polish companies.
'000 EUR
Note
2021
2020
Current tax burden
Current year
373
0
Deferred tax
839
0
RESBUD SE
Notes to the consolidated financial statements for 2021
27
Amounts included in other comprehensive income
2021
'000 EUR
Before tax
Tax benefits
(expenses)
Net
Items that will not be reclassified to the
profit and loss account
Revaluation of property, plant and
equipment
0
0
0
Additional depreciation on revaluation of
property, plant and equipment
0
0
0
Equity investments in FVOCI - net
change in fair value
0
0
0
Total
0
0
0
Items that are or may later be reclassified
to the income statement
Foreign operations - exchange rate
differences from translation
747
0
747
Total
747
0
747
Amounts recognized directly in equity
Agreeing on the effective tax rate:
2021
'000 EUR
%
Gross profit / (loss) from continuing operations
(467)
0
Tax at the Company's domestic tax rate
0
0
The impact of tax rates in foreign jurisdictions
373
23
Income exempt from tax
73
0
Tax charge for continuing operations
373
23
RESBUD SE
Notes to the consolidated financial statements for 2021
28
Deferred tax assets and liabilities recognized
Deferred tax assets and liabilities can be allocated to:
Fortune
'000 EUR
2021
2020
Tangible fixed assets
(81)
0
Trade and other receivables
(702)
0
Accruals
(2)
0
Liabilities and provisions
14
0
Tax (assets) / liabilities
(771)
0
Tax deduction
0
0
Tax (assets) / net liabilities
(771)
0
Tax (liabilities)/ tax liabilities
362
0
14. Adjusted profit before interest, tax, depreciation and amortization
(adjusted EBITDA)
Management disclosed an adjusted EBITDA of results as it monitors the results on a consolidated
basis and believes that this ratio is relevant to understanding the Group's financial performance.
Adjusted EBITDA is not a defined performance measure in IFRS. The definition of the Group's
adjusted EBITDA may not be comparable to similarly named performance measures and third
party disclosures.
Reconciliation of adjusted EBITDA with profit from continuing operations:
'000 EUR
Note
2021
2020
Profit from continuing operations
(467)
(347)
Income tax
13
373
0
Profit before tax
(94)
(347)
Corrections for:
Net financial expenses
42
(468)
(23)
Depreciation
15
569
0
Adjusted EBITDA
943
(324)
RESBUD SE
Notes to the consolidated financial statements for 2021
29
15. Tangible fixed assets
'000EUR
Land and
buildings
Machines
and devices
Means of
transport
Other
Measures
together
Balance as of January 1, 2021
0
0
0
0
0
Acquisitions through business
combinations
1566
1808
84
31
3489
Acquisition
594
1538
296
0
2428
Disposal
0
(288)
(49)
(16)
(353)
Valuation update
0
1372
0
0
1372
Balance as at
December 31, 2021
2160
4430
331
15
6936
Write-offs and write-downs
Balance as of January 1, 2021
0
0
0
0
0
Acquisitions through business
combinations
93
1066
73
16
1248
Redemptions
25
307
60
4
396
Disposal
0
(285)
(37)
(10)
(332)
Valuation update
0
219
0
0
219
Balance as at December 31,
2021
118
1307
96
10
1531
Balance sheet amounts
As of December 31, 2020
0
0
0
0
0
As of December 31, 2021
2042
3123
235
5
5405
Land revaluation
Absent.
Revaluation of property, plant and equipment
The company updated the value of two fixed assets: WMB BENIGHOFFEN bitumen production
plant and WMB BHS - TWIN MIX.
Security
Not applicable.
RESBUD SE
Notes to the consolidated financial statements for 2021
30
Leased equipment and machinery
In 2021, the Group leased a building that is the seat of Polish companies of the Group and premises
for the Group's employees on a delegation.
For the purposes of the concluded contracts, an additional concrete batching plant is leased.
The Group has entered into lease agreements which give the possibility to purchase the leased asset
after the termination of the agreement.
Property, plant and equipment under construction
Do not occur.
Change in estimates
Not applicable.
16. Intangible assets and goodwill
000 'EUR
Goodwill
Patents and
trademarks
Development
costs
Total
Balance as of January 1, 2021
0
0
0
0
Acquisitions through business
combinations
31279
0
0
31279
Balance as at December 31, 2021
31279
0
0
31279
Depreciation
Goodwill acquired as a result of a business combination is the excess of the cost of the business
combination over the net fair value of the identifiable assets, liabilities and contingent liabilities.
Tangible fixed assets are recognized at cost less accumulated depreciation and any impairment
losses.
Land is measured at fair value less any accumulated impairment.
The depreciation is based on the cost minus the estimated residual value. Property, plant and
equipment are depreciated over their estimated useful lives. Right-of-use assets are depreciated
over their estimated useful life or contract period, whichever is the shortest.
Machines and devices over 5-10 years
Buildings and structures over 10-50 years old
Land is considered to have an indefinite useful life. Computer equipment is amortized over 3-5
years. If an item of property, plant and equipment consists of elements with different useful lives,
each such material element is depreciated separately. The depreciation methods and estimated
residual values and useful lives are reviewed at the end of each year.
RESBUD SE
Notes to the consolidated financial statements for 2021
31
If the carrying amount of an asset is higher than its estimated recoverable amount, it is immediately
written down to its recoverable amount. Gains and losses on disposal are determined by comparing
the inflows with the carrying amount and are recognized in the operating profit or loss in an
appropriate item. Subsequent costs are recognized respectively in the carrying amount of the asset
or recognized as a separate asset only when it is probable that the future economic benefits related
to the item will flow to the Group and the cost of the component can be reliably measured. All
other repairs and maintenance are charged to the profit and loss account in the financial period in
which they are incurred.
Impairment test
Goodwill is measured at cost less any accumulated impairment losses. Goodwill is allocated to
cash-generating units and an annual impairment test is carried out or when there are indications of
impairment. Goodwill impairment losses are not reversed.
Any negative goodwill resulting from acquisitions is recognized directly in the profit and loss
account.
"Thousand EUR "
December 31st
2021
Expense
Balance at the beginning of the period
0
Acquisition by business combination (see Note 32)
31279
including the Poland component
394
including the Russian component
30886
Balance as at December 31, 2021
31279
Impairment losses
0
Russian component
The Russian component generated a profit in 12 months of 2021.
However, it operates in Russia in an unstable economic environment, and therefore an impairment
test was carried out. The estimated recoverable amount of the CGU exceeded the book value of
goodwill and as at December 31, 2021, there was no impairment.
The recoverable amount of the CGU was determined based on value in use.
- Cash flow has been estimated based on past experience, actual operating results and a five-year
business plan. The cash flow for the next 5 years has been extrapolated using a constant growth rate
of 3%, which does not exceed the long-term average growth rate for the industry.
- It was assumed that the sales volume will grow at a rate of 10-12% annually in the years 2022-
2026, which is in line with the forecasts of the industry report.
RESBUD SE
Notes to the consolidated financial statements for 2021
32
- When determining the recoverable amount of the centers, a pre-tax discount rate of 18.57% was
used. The discount rate has been estimated based on the historical weighted average cost of capital
in the industry.
Polish ingredient
After the loss in the Polish component during the period ended December 31, 2021 (see Note Błąd!
Nie można odnaleźć źródła odwołania.), The Group assessed the recoverable amount of the
CGUs that make up this operating segment. As a result of this assessment, the carrying amount of
the CGU was determined to be lower than its recoverable amount. As at December 31, 2021, there
is no impairment of goodwill.
The recoverable amount of the CGU was based on its value in use.
• Cash flow was estimated based on experience, actual operating results and a five-year business
plan. The cash flow for the next 12 years has been extrapolated using a constant growth rate of
2%, which does not exceed the long-term average growth rate for the industry.
• It was assumed that the sales volume would increase by 10% annually in the years 2022-2026,
which is in line with the forecasts included in industry reports.
• A pre-tax discount rate of 7.3% was used to determine the recoverable amount of the units. The
discount rate was estimated on the basis of the historical industry average weighted cost of
capital.
(i) Impairment tests of cash generating units containing goodwill
Management presented an adjusted EBITDA performance measure as it monitors the results on a
consolidated basis and believes that this measure is relevant to understanding the Group's financial
performance. The definition of adjusted EBITDA is the same as in the most recent annual financial
statements.
Adjusted EBITDA is not a defined performance measure in IFRS. The definition of the Group's
adjusted EBITDA may not be comparable to similarly named performance measures and third
party disclosures.
"Thousand euro"
12 months ended
December 31, 2021
12 months ended
December 31, 2020
Loss for the period
(467)
(347)
Income tax
373
0
Profit before tax
(94)
(347)
Corrections for:
Net financial expenses
(468)
(23)
Depreciation
569
0
Adjusted EBITDA
943
(324)
RESBUD SE
Notes to the consolidated financial statements for 2021
33
Development costs
Not applicable.
17. Investment Estates
Not applicable.
18. Investments accounted for using the equity method
Not applicable.
19. Other investments
Debt securities
The company has short-term financial assets with a balance sheet value of 464 thousand EUR in
the form of a debt instrument of a Swiss company. The promissory note is secured with real estate
the value of which exceeds the value of the financial instrument many times over.
20. Supplies
"Thousand EUR "
in 12 months 31 December 2021
Raw materials and materials
181
Goods for resale
2124
Supplies
2305
Supplies are not subject to revaluation write-offs and no provisions were created.
No inventory pledged.
RESBUD SE
Notes to the consolidated financial statements for 2021
34
21. Trade and other receivables
In the group's accounts, receivables are stated at fair value less impairment losses.
"Thousand euro"
12 months ended
December 31, 2021
December 31, 2020
Long-term receivables
13
0
Trade receivables
29992
4
Prepayment
0
0
Other receivables
331
22
Short-term receivables
30436
26
22. Cash and cash equivalents
As at December 31, 2021, the Group had cash in the amount of 3548 thousand EUR. Cash is kept
at banks and credit unions. Cash in hand as at December 31, 2021 amounted to 1094 thousand
EUR. Cash in bank accounts amounted to 2454 thousand. EUR.
'000EUR
2021
2020
Cash on hand
1094
0
Bank balances
2454
4
Cash and cash equivalents in the statement of
financial position
3548
4
Cash and cash equivalents in the cash flow
statement
3548
4
The Group's exposure to interest rate risk and the sensitivity analysis of financial assets and
liabilities are presented in Note 30.
RESBUD SE
Notes to the consolidated financial statements for 2021
35
23. Disposal group held for sale
The amount of EUR 3 983 thousand includes - short-term financial assets (promissory note, share
in other entities), which the Group companies did not recognize as long-term financial assets.K.
own l
iabilities and liabilities
24. Capital and reserves
Share capital and additional paid-in capital
The number of actions,
unless otherwise stated
Ordinary shares
2021
2020
As of January 1
18 100 000
18 100 000
Issue of shares
218 520 263
0
As of December 31
236 620 263
0
Nominal value of shares
0,11
0,11
All common stocks are of equal rank in relation to the remaining assets of the Company.
Dividends
Throughout 2021, the company did not report or pay dividends (year ended December 31, 2020:
zero).
Exchange differences
The conversion capital covers all foreign exchange differences resulting from the translation of
financial statements of foreign entities.
Fair value reserve
Not applicable.
Revaluation surplus
Revaluation surplus relates to the revaluation of property, plant and equipment.
RESBUD SE
Notes to the consolidated financial statements for 2021
36
Profit / loss for the current year, retained earnings
'000EUR
2021
2020
Corrections relating to
previous years
Profit / loss
(467)
(347)
0
Retained earnings
(2243)
(1896)
0
25. Capital management
The Group does not have a formal capital management policy, but the Management Board aims to
maintain a sufficient capital base to meet the operational and strategic needs of the Group and to
maintain the confidence of market participants. This is achieved through effective cash
management, constant monitoring of the Group's revenues and profits, and long-term investment
plans financed mainly from the Group's operating cash flows. Thanks to these activities, the Group
aims at constant profit growth.
26. Credits and loans - debt repayment schedule
Debt repayment terms and schedule
This note provides information on the contractual terms of the Group's interest-bearing loans and
borrowings. For more information on the Group's exposure to interest rate, foreign currency and
liquidity risk, see the Note 30.
Balance
Loan
currency
Interest
Due date
Loans received
6516
Long-term loans
18
RESBUD SE
Notes to the consolidated financial statements for 2021
37
Balance
Loan
currency
Interest
Due date
Polish Development Fund
18
PLN
0%
October 25, 2023
Short-term loans
6498
Related parties outside the group
1613
EUR
4% - 8.5%
December 31, 2022
26
USD
6%
December 31, 2022
2738
RUB
10.6%
December 31, 2022
Unrelated entities
2097
EUR
4% - 8.5%
December 31, 2022
Polish Development Fund
24
PLN
0%
October 25, 2023
Loans granted
444
Long-term loans
35
Unrelated entities
35
RUB
5.6%
March 19, 2024
Short-term loans
409
Related parties outside the group
314
RUB
4.17 -10.6%
December 31, 2022
Unrelated entities
39
PLN
4.6% - 6%
December 31, 2022
Unrelated entities
56
RUB
4.17% - 10.6%
December 31, 2022
'000 EUR
2021
2020
Long-term liabilities
1981
0
A loan from related entities
991
0
Leasing obligations
133
0
PFR subsidies
18
0
Deferred tax liability
839
0
Short-term liabilities
47555
614
Loans from related entities
9061
365
Loans from other entities
2097
0
PFR subsidies
24
0
Trade payables from related parties
19582
0
Trade payables from other entities
13241
93
Tax liabilities
362
0
Other liabilities
3180
156
Short-term provisions
8
0
RESBUD SE
Notes to the consolidated financial statements for 2021
38
Government aid - Polish Development Fund (PFR)
In 2020, the Polish companies included in the Group received a government subsidy in the amount
of PLN 121 thousand. EUR. The Polish Development Fund granted a financial subsidy to help
companies survive in the COVID period, to cover the costs of economic activity (including
employee labor costs, expenses for the purchase of goods and materials) or early loan repayment.
In 2021, Polish companies met certain conditions, and the subsidy was canceled in the amount of
PLN 73 thousand. EUR and included in the Condensed Consolidated Statement of Profit and Loss
and Other Comprehensive Income under Other Income.
Part of the subsidy in the amount of PLN 6,000 EUR was returned in 2021, the rest of the subsidy
in the amount of 42 thousand. EUR will be returned in 2022 and 2023, in the amount of 24
thousand. EUR and 18 thousand. EUR.
27. Deferred income / income
'000EUR
2021
Other short-term interperiod provisions
8
The remaining short-term interperiod provisions appear in Conpol Ltd. and Uniwersim Ltd. and
Resbud SE, they are booked costs related to 2021, which were invoiced by suppliers in January and
February 2022. These costs relate to exchange fees, energy, property protection, services related to
contract management.
28. Reserves
Guarantees
LLC Energokomplekt issued guarantees for the liabilities of related companies as at December 31,
2021 for the total amount of 2277 thousand Euro and sureties for the total amount of 120121
thousand Euro.
RESBUD SE
Notes to the consolidated financial statements for 2021
39
29. Trade and other sources of income
Trade liabilities
'000 EUR
2021
2020
Other trade payables in the consolidated accounts
32768
93
Other obligations
'000EUR
2021
2020
Other current taxes
2722
Payroll tax
34
VAT tax
1951
VAT to be deducted in the future
678
Social benefits
59
Other obligations
458
Deposits
22
Assignments
107
Payroll liabilities
328
The remaining
1
Total
3180
Financial instrum
30. Fair values and risk management
Fair value measurement
Not applicable because the Company does not measure the fair value of financial instruments.
Financial risk management
The Group is exposed to the following risks related to the use of financial instruments:
credit risk
liquidity risk
market risk
currency risk
interest rate risk
RESBUD SE
Notes to the consolidated financial statements for 2021
40
Risk management framework
The Board of Directors has overall responsibility for establishing and overseeing the Group's risk
management framework.
The Group's risk management principles are aimed at identifying and analyzing the risks to which
the Group is exposed, setting appropriate limits and risk controls, as well as monitoring the risk and
compliance with the limits.
The Management Board supervises and monitors compliance with the Group's risk management
policies and procedures and reviews the adequacy of the risk management framework in relation to
the risks to which the Group is exposed.
(i) Credit risk
Credit risk is the risk of a financial loss incurred by the Group in the event of failure by a customer
or counterparty of a financial instrument to fulfill its contractual obligations, which results mainly
from the Group's receivables from customers and investments in debt securities.
Write-downs on trade receivables and contract assets recognized in the profit and loss account were
as follows.
Group of
receivables
As at the
beginning
of the
financial
year
Change in write-offs during the year
increase
use
recognition
unnecessary
As at the end of
the financial year
short-term
receivables
7
561
7
0
561
a / for supplies and
services
7
482
7
0
482
- up to 12 months
0
482
0
0
482
- over 12 months
7
0
7
0
0
b / other receivables
0
79
0
0
79
In 2021, the Group created revaluation write-offs for receivables whose repayment is at risk and
their collection is impossible or difficult. As at the balance sheet date, the Group assessed the
feasibility and probability of settling the liabilities by debtors as well as the degree of risk and loss
of future economic benefits.
The following receivables were 100% write-offs:
a / for supplies and services from contractors:
- Astaldi SpA in remedial proceedings - 430
- SFS Polska Sp. z o. o. Ukrainian company - 13
- VISTAL SA in composition proceedings - 7
RESBUD SE
Notes to the consolidated financial statements for 2021
41
- Europejski Holding Energetyczny Sp. z o. o. no contact with management board
members living in Ukraine - 32
and terminated the write-off with Elitax Sp. z o. o. in the equivalent of the write-off created in 2020
as a result of payment;
b / due to accounting errors from previous years - 79.
Trade receivables and assets under construction contracts
In order to protect against credit risk resulting from receivables related to the implementation of
construction contracts (i.e. receivables from deliveries and services, receivables from construction
contracts - deposits and from the valuation of construction contracts), the Group has in place a
policy of assessing and verifying credit risk related to all contracts, both at the pre-bid stage and
during implementation. Before signing the contract, each contractor is assessed in terms of the
possibility of meeting its financial obligations. In the event of a negative assessment of the
contractor's payment capacity, accession to the contract depends on the establishment of adequate
financial or property security. In addition, contracts with investors include clauses providing for the
right to suspend works, if there is a delay in the payment of payments for services rendered. If
possible, contractual provisions are also created that condition payments to subcontractors from the
inflow of funds from the investor.
There is no concentration of credit risk in the Group related to trade receivables and receivables
from construction contracts - deposits and from the valuation of construction contracts.
Debt securities
The company has short-term financial assets with a balance sheet value of 464 thousand EUR in
the form of a debt instrument of a Swiss company. The promissory note has security on real estate
the value of which exceeds the value of the financial instrument many times over.
Cash and cash equivalents
As at December 31, 2021, the Group had cash in the amount of 3548 thousand EUR. Cash is kept
at banks and credit unions. Cash in hand as at December 31, 2021 amounted to 1094 thousand
EUR. Cash in bank accounts amounted to 2454 thousand EUR.
Guarantees
LLC Enegokomplekt issued guarantees for the liabilities of related companies as at December 31,
2021 for the total amount of 2277 thousand EUR and sureties for the total amount of 120121
thousand EUR.
RESBUD SE
Notes to the consolidated financial statements for 2021
42
Guarantees and sureties ‘000 EURO
2021
Guarantees
2277
Sureties
120121
Total
122398
• Ural Power Engineering Construction Company АО (JSC) - 83 776 thousand EUR
• UrlalProjectEngineering OOO (Ltd.) - 12 370 thousand EUR
• Elektrouralmontazh AO (JSC) - Company forelectricalinstallation of power stations and
substations - 23 975 thousand EUR
(ii) Liquidity risk
The liquidity risk is the risk that the Group will encounter difficulties in meeting its obligations
arising from its financial liabilities which are settled by delivering cash or another financial asset.
The Group's approach to liquidity management is to ensure, to the extent possible, that it will
always have sufficient liquidity to pay its liabilities in a timely manner, under both normal and
stressed conditions, without incurring unacceptable losses or risking the Group's reputation.
December 31, 2021
Contractual cash flows
'000EUR
Balance
sheet value
Together
obligations
Current
Less
than 2
months
2-12
months
1-2
years
2-5
years
Over 5
years
Financial liabilities other
than derivative instruments
36081
36136
34929
62
314
755
76
0
Leasing obligations
141
141
4
4
26
31
76
0
Trade liabilities
32768
32823
32495
56
260
12
0
0
Other liabilities
3172
3172
2430
2
28
712
0
0
Differences between the carrying amount and the total item of liabilities result from liabilities
between related parties.
(iii) Market risk
Market risk is the risk that changes in market prices, such as exchange rates, interest rates and share
prices, will affect the Group's income or the value of its financial instruments. The objective of
market risk management is to manage and control exposure to market risk within acceptable
parameters, with simultaneous optimization and return.
RESBUD SE
Notes to the consolidated financial statements for 2021
43
The Group does not apply hedge accounting to manage the volatility of the financial result.
As part of its basic operating activities, the Group does not conclude construction contracts
denominated in EUR. With regard to receivables and liabilities resulting from concluded contracts
for the purchase of materials, for which payments will be made in EUR, and with regard to granted
loans denominated in EUR, the Group determined that the risk was immaterial.
(iv) Currency risk
The Group is exposed to currency risk to the extent that there is a mismatch between the currencies
in which sales, purchases and loans are denominated and the respective functional currencies of the
Group's entities. The functional currencies of the Group companies are mainly Polish zloty (PLN),
Russian ruble (RUB) and euro (EUR).
In 2021, a weakening of the zloty against the dollar was recorded (an increase of 8% compared to
2020). The zloty exchange rate against the dollar in 2021 was influenced by low interest rates with
a simultaneous increase in inflation, which, according to the Central Statistical Office, amounted to
5.1% interim. The process of increasing interest rates by the Monetary Policy Council was started
only in the fourth quarter of 2021. The currencies of the Polish market were mainly affected by the
uncertainty related to the pandemic, the strengthening of the dollar and the lack of funds from the
EU Reconstruction Fund in the face of the conflict between the Polish government and the
European Commission over the approval of the National Reconstruction Plan.
The year-on-year change in the Euro currency was not significant. The rate at December 31, 2021
was 4,5994 compared to 4,6148 at the end of 2020.
Since the outbreak of the war in Ukraine, there has been increased volatility in financial markets
and an increase in the level of currency risk, commodity prices or interest rates.
The Russian rouble has come under pressure from geopolitical risks, resulting in its dynamic
weakening. In March this year, the dollar/ruble exchange rate reached historic peaks at 144, an
increase of 80% over pre-war levels in Ukraine. The creation of a significant supply-demand
imbalance in the foreign exchange market and the limitation of the Central Bank's ability to
intervene, forced the Central Bank of Russia to introduce countermeasures such as raising interest
rates and restricting capital movements. The imposition of sanctions on Russia has resulted in a
flight of foreign investors from Russian markets and a decrease in liquidity, which translates into
higher exchange rate volatility. Since March this year, the European Central Bank has not
published the RUB/EUR exchange rate quotations.
(v) Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument
will change due to changes in market interest rates.
The Group is not exposed to interest rate risk as all loans bear interest at a fixed rate.The interest
rate risk occurs mainly in connection with the use by the Group's companies of bank loans,
RESBUD SE
Notes to the consolidated financial statements for 2021
44
borrowings and finance leases. Most of the exposure related to debt financing is short-term, which
reduces the risk associated with rising interest rates.
The companies of the Group use fixed-rate instruments for which the movements of market interest
rates have no impact on the interest costs incurred or the generated interest income.
Trade receivables and liabilities as well as other receivables and liabilities do not bear interest and
have payment terms of up to one year.
Sensitivity analysis - stock price risk
Not applicable .
Framework agreements or similar agreements
The Group may conclude sale and purchase agreements with the same counterparty in the ordinary
course of its business. The related receivables and liabilities do not always meet the criteria for a
set-off in the statement of financial position. This is because the Group may not currently have a
legally enforceable right to set off the recognized amounts, as the right to set off may only be
enforceable in the event of future events. In particular, according to civil law, an obligation may be
settled by offsetting against a similar claim, if it is due or is payable on demand.
31. Significant subsidiaries and unconsolidated structured entities
Significant subsidiaries
2021
2020
Subject
Country of residence
Ownership / vote
Ownership / vote
LLC Energokomplekt
Russia
100%
4,1%
Conpol Ltd.
Poland
100%
38,64%
Universim Ltd.
Poland
100%
0%
32. Acquisition and disposal of subsidiaries
Acquisition of subsidiaries
The company, as a minority shareholder, held the following shares as at December 31,
2020:
RESBUD SE
Notes to the consolidated financial statements for 2021
45
▪ 3,091 shares in the share capital of Conpol Ltd. with its seat in Modlniczka, Poland,
constituting 38.64% of shares and votes at the shareholders' meeting in the amount of
38.64%;
▪ 4.1% of shares in LLC Energokomplekt with its seat in Ekaterinburg, Russia, which gives
the right to vote at the shareholders' meeting in the amount of 4.1%.
At the beginning of 2021, RESBUD SE received as an in-kind contribution shares in the following
companies:
✓ 83.7% of shares in LLC Energokomplekt (Russia)
✓ 100% of shares in Universim Ltd. (Poland)
✓ 61.36% of shares in Conpol Ltd. (Poland)
As at February 4, 2021, the Company has the following assets:
• 8,000 shares in the share capital of Conpol Ltd. with its registered office in Modlniczka,
Poland, which constitutes 100% of the share capital and entitles to 100% of votes.
• direct share in the share capital of LLC Energokomplekt with its registered office in
Ekaterinburg, Russia, which constitutes 87.80% of the share capital and entitles to 87.80%
votes at the shareholders' meeting, while the company also indirectly holds 12.2% through
Conpol Ltd. in the capital company LLC Energokomplekt, which gives 100% direct or
indirect control
• 100 shares in the share capital of Universim Ltd. with its registered office in Modlniczka,
Poland, which constitutes 100% of the shares and entitles to 100% of votes at the
shareholders' meetings.
• indirectly through Conpol Ltd. 100% of shares in Delcraft Ehitus OÜ based in Tallinn,
Estonia, entitling to 100% of votes at the shareholders' meeting.
As the acquisition of all companies took place simultaneously, the acquisition date is February 1,
2021. The Group decided to determine the goodwill based on the acquired companies with a
subsequent division of the goodwill between the companies.
The following is a summary of the major classes of consideration transferred as well as the
recognized amounts of assets assumed and liabilities assumed as of the acquisition date.
(i) Payment transferred
The following table summarizes the acquisition-date fair value of each major class of consideration
transferred.
Equity instruments (common stocks)
218 520 263
Price per share, EUR
0,177
Total payment transferred (in thousand EUR)
38730
The fair value of the issued ordinary shares was determined based on the quoted share price of
Resbud SE on February 1, 2021 of 0,177 EUR per share
RESBUD SE
Notes to the consolidated financial statements for 2021
46
(ii) Identifiable assets acquired and liabilities assumed
The tables below summarize the recognized amounts of assets acquired and liabilities assumed as
at the date of acquisition:
Conpol Ltd. and Delcraft Ehitus OÜ
It should be taken into account that Conpol Ltd. owned 100% of the shares of Delcraft Ehitus OÜ
at the date of acquisition, therefore, when estimating the amounts of acquired assets and liabilities,
the valuation was based on the consolidated reports of Conpol Ltd. and Delcraft Ehitus OÜ.
"Thousand EUR "
Recognized fair values at
the time of acquisition
Conpol Ltd.
with Delcraft
Values at 31-12-2021
Fixed assets
5694
4609
Property, plant and equipment
49
142
Long-term receivables
0
83
Long-term loans
0
557
Long-term investments
5645
3827
Current assets
4428
2924
Short-term loans
1650
262
Current tax assets
0
0
Trade and other receivables
1409
136
Cash and cash equivalents
20
166
Other receivables
1345
315
Short-term prepayments and accruals
4
10
Short-term financial assets
2035
Long-term liabilities
(7354)
(291)
Credits and loans
(7354)
(217)
Other long-term financial liabilities
0
(74)
Current liabilities
(655)
(7045)
Credits and loans
(58)
(6626)
Trade and other sources of income
(279)
(67)
Other liabilities
(318)
(350)
Other short-term provisions
0
(2)
Identifiable net assets, liabilities and
contingent liabilities
2113
197
RESBUD SE
Notes to the consolidated financial statements for 2021
47
Acquisition of Conpol Ltd. is in line with the strategy of building a holding in the following
industries: road construction, civil engineering and construction works. The acquisition is to
increase the Group's share in the road construction market by providing access to the customer base
of the acquired companies. The Group also expects to reduce costs thanks to the economies of
scale.
From the date of acquisition to December 31, 2021, Conpol Ltd. contributed to the Group's results
in the amount of 1530 thousand EUR and a loss of -1399 thousand EUR.The company's losses are
due to the effects of the Covid-19 pandemic, namely a significant decrease in construction volumes
in 2020 and 2021 at constant costs. The Group's management estimates that in 2022 the pandemic
will not have a significant impact on the company's operations and expects an increase in revenues
and profits from the conducted activity.
Universim Ltd.
'000 EUR
Recognized fair values
at the time of
acquisition
Values at 31-12-2021
Fixed assets
2161
3283
Property, plant and equipment
2161
3283
Current assets
788
215
Inventory
157
143
Trade and other receivables
59
18
Short-term loans
0
4
Cash and cash equivalents
102
40
Other receivables
467
5
Short-term prepayments
3
5
Long-term liabilities
(2265)
(624)
Credits and loans
(2265)
(565)
Current liabilities
0
(2808)
Credits and loans
(380)
(2585)
Current tax liabilities
(97)
0
Trade and other sources of income
0
(191)
Other obligations
(273)
(28)
Other short-term provisions
(10)
(4)
Identifiable net assets, liabilities
and contingent liabilities
304
66
When estimating the fair value of the identifiable acquired net assets, tangible fixed assets were
increased to fair value for the total amount of 1372 thousand EUR. As a result, the fair value of
identifiable net assets was established at 974 thousand EUR.
RESBUD SE
Notes to the consolidated financial statements for 2021
48
Takeover of Universim Ltd. is in line with the strategy of building a holding in the road,
engineering and construction sectors. The acquisition is expected to increase the Group's market
share in the construction materials industry through access to the customer base of the acquired
companies. The Group also expects to reduce costs thanks to the economies of scale.
From the acquisition date to December 31, 2021, Universim Ltd. contributed to the Group's results
in the amount of 1 333 thousand EUR and a loss of - 1421 thousand EUR. The company's losses
are the result of the Covid-19 pandemic, i.e. a significant decrease in construction works in 2020
and2021, and thus a decrease in the production and sale of bitumen-concrete mixtures and concrete,
at constant costs. Management
The group estimates that in 2022 the pandemic will not have a significant impact on the company's
operations and expects an increase in revenues and profits from the operations of Universim Ltd.
LLC Energokomplekt
'000€
Recognized fair values
at the time of
acquisition
Values at 31-12-2021
Fixed assets
193
2139
Property, plant and equipment
19
2006
Loans
35
35
Deferred tax assets
139
68
Other long-term receivables
0
30
Current assets
37726
43944
Inventory
2247
2162
Trade and other receivables
28546
29889
Short-term loans granted
4356
5051
Other receivables
7
Cash and cash equivalents
202
3335
Short-term financial assets
2368
3507
Long-term liabilities
(1043)
(839)
Credits and loans
0
0
Deferred tax liabilities
(1041)
(839)
Other long-term liabilities
(2)
0
Current liabilities
(30124)
(37148)
Credits and loans
(4969)
(1573)
Trade and other sources of income
(20176)
(32487)
Other obligations
(3094)
(2726)
Liabilities due to employee benefits
(1885)
(362)
Identifiable net assets, liabilities and
contingent liabilities
6752
8096
RESBUD SE
Notes to the consolidated financial statements for 2021
49
Trade and other receivables include gross contractual receivables in the amount of 19 288
thousand EUR, neither of which was to be uncollectible at the date of acquisition. For the
remaining acquired assets and liabilities, the carrying amount is close to their fair value.
At the end of the reporting period, short-term financial assets consist of goods and services tax on
received advance payments, which was acquired through the purchase of LLC Energokomplekt.
Other liabilities as at December 31, 2021 include: value added tax on advance payments made as a
result of the acquisition of LLC Energokomplekt.
As a minority shareholder, the Group held 4.1% of shares in LLC Energokomplekt as at December
31, 2020. The fair value of the share as at December 31, 2020 was 1 598 thousand. EUR. On
February 4, 2021, the Group took control of LLC Energokomplekt by acquiring 83.7% of shares
with voting rights in the company. As a result, the Group's share in the capital of LLC
Energokomplekt increased from 4.1% to 87.8%. On February 4, 2021, the Group also acquired
100% of shares in Conpol Ltd., which in turn owned 12.2% in LLC Energokomplekt, so the Group
holds 100% of shares in LLC Energokomplekt.
Acquisition of control over a LLC Energokomplekt is part of the strategy of building a holding in
the sector of trading in building materials and equipment. The acquisition is expected to increase
the Group's market share in the construction materials industry through access to the customer base
of the acquired companies. The Group also expects to reduce costs thanks to the economies of
scale.
From the date of acquisition to December 31, 2021, LLC Energokomplekt contributed to the
Group's results in the amount of 58 290 thousand EUR and profit of 1 231 thousand EUR.
Fair value measurement
The valuation techniques used to measure the fair value of the acquired significant assets are as
follows.
Acquired assets
Valuation technique
Ownership, factory
and equipment
Technique of comparing markets and cost technique:The valuation model takes into
account quoted market prices for similar items, when available, and an amortized
replacement cost, when appropriate. The amortized replacement cost reflects
adjustments for physical deterioration as well as functional and economic
obsolescence.
Intangible assets
The method of exemption from royalties and the method of multi-period excess
earnings:The license fee waiver method takes into account discounted estimated
license fees to be avoided as a result of owning patents or trademarks. The multi-
period excess income method takes into account the present value of the net cash
flows to be generated by customer relationships by excluding any cash flows
related to contributing assets.
Supplies
Technique of comparing markets:The fair value is determined based on the
estimated selling price in the ordinary course of business, less estimated costs of
finishing and selling, and a reasonable profit margin based on the effort required to
assemble and sell the inventory.
RESBUD SE
Notes to the consolidated financial statements for 2021
50
(iii) Goodwill
Goodwill was recognized as a result of the acquisition as follows:
'000EUR
2021
Total payment transferred
38 730
Fair value of pre-existing interests in the acquiree
1 860
Fair value of identifiable net assets
(2638)
Goodwill adjustment
(6673)
Goodwill
31279
Goodwill is tested for impairment at least once a year. Any impairment is recognized immediately
as a reduction in goodwill and charged to the income statement, additionally it is not reversed in
subsequent reporting periods.
In order to perform the impairment test, goodwill is allocated to cash-generating units. In the event
of disposal of an activity included in a cash-generating unit to which goodwill has been allocated,
the goodwill relating to the disposed of operations is included in the carrying amount when
determining the profit or loss on disposal.
The goodwill impairment test, which was carried out as at December 31, 2021, did not show the
need to recognize an impairment loss.
33. Non-controlling interests
Not applicable.
34. Acquisition of non-controlling interests
The Group did not acquire any additional shares in any company.
T. The company did not acquire additional shares in any company. The company did not take over y
35. Waiver of a loan agreement
Not applicable.
RESBUD SE
Notes to the consolidated financial statements for 2021
51
36. Lease
Leasing as a lessee
The Group has 6 vehicles (cars) covered by long-term operating lease.
Right to use assets
Right-of-use assets related to rented real estate that do not meet the definition of investment real
estate are presented as tangible fixed assets (see Note 15).
'000EUR
Means of transport
Total
Balance as of January 1, 2021
0
0
Depreciation write-off for the year
(49)
(49)
Increase in lease-use rights in connection with
the formation of the Group
190
190
Balance as at December 31, 2021
141
141
Amounts included in the income statement
'000EUR
2021
Income from subletting right-of-use assets is presented in
operating income
56
Profit
56
Amounts included in the statement of cash flows
'000EUR
2021
Total cash outflow for the lease
14
37. Liability
Not applicable.
RESBUD SE
Notes to the consolidated financial statements for 2021
52
38. Unforeseen events
Insurance
Companies based in Poland and Estonia have full insurance coverage, covering all areas of activity.
The insurance industry in the Russian Federation is in a developing state. Many forms of insurance
cover common to other parts of the world are not yet widely available. A company located in
Russia does not have full protection of its activities.
Dispute
As at the reporting date, a number of cases related to commercial disputes initiated by the Group's
companies are still pending before the courts. In the opinion of the management, the claims losses
are not significant from the point of view of the Group's financial standing.
Unforeseen tax circumstances
• Polish tax system
The Polish tax system consists of eleven tax titles that are subject to substantive and specific tax
law. These include: direct taxes, i.e. those that burden the taxpayer's income or property, including:
personal income tax (PIT), corporate income tax (CIT), indirect taxes, i.e. those that are paid when
purchasing goods , value added tax (VAT) and excise duty, tax on games.
In addition to the Polish Constitution, the issues of taxes and related obligations are also regulated
by the Tax Ordinance of August 29, 1997.
The biggest problem of Polish tax law is its complexity. Particularly acute for Polish taxpayers is
the issue of volatile regulations and uncertainty related to their adoption.
The volatility of tax regulations has no significant impact on the results of the activities conducted
by Conpol Ltd. and Uniwersim Ltd.
• Russian tax system
The tax system in the Russian Federation is still evolving and is characterized by frequent changes
in legislation, official and court decisions.
Since 2015, a number of changes have been introduced to regulate the tax consequences of
transactions with foreign entities and their activities, such as the concept of favorable income,
taxation of controlled foreign entities, tax residence rules, etc. These changes may potentially affect
the tax situation of the Group and create additional future tax risks. This legislation and its
application practice are still evolving and the impact of legislative changes must be considered on
the basis of the actual circumstances.
All these circumstances can create a tax risk in the Russian Federation. The Management Board
believes that it has properly settled its tax liabilities based on its interpretations of the applicable
Russian tax law, official rulings and court rulings.
• Estonian tax system
Estonia is famous for its extremely favorable corporate taxation, completely different from taxes in
Poland. The CIT in Estonia is 20%. It should be mentioned that the tax system in the country was
structured in a very simple way to attract investors. In Estonia, there is no double taxation of the
RESBUD SE
Notes to the consolidated financial statements for 2021
53
same amount. Also, income tax is only payable when the income is shared. This will mean that a
company in Estonia does not pay tax as long as the money is kept in the company, for example for
investment in its development, unlike most countries in this Poland, where the money is taxed
when income is earned. The tax is therefore payable in the event of dividend payment to partners,
i.e. in the distribution of income, as well as in the case of representation of the company or non-
business expenses.
39. Related pages
Dominant and ultimate controlling party
The direct parent company of the group is RESBUD SE based in Tallinn, Estonia.
"Thousand EUR "
Values at 31-12-2020
Values at 31-12-2021
Fixed assets
1860
34638
Property, plant and equipment
0
0
Long-term receivables
0
0
Long-term loans
0
207
Long-term investments
1860
34431
Current assets
94
25
Short-term loans
0
3
Current tax assets
0
0
Trade and other receivables
4
4
Cash and cash equivalents
4
7
Other receivables
22
11
Short-term prepayments and accruals
36
0
Short-term financial assets
28
0
Long-term liabilities
0
(227)
Credits and loans
0
(227)
Other long-term financial liabilities
0
0
Current liabilities
(614)
(554)
Credits and loans
(365)
(398)
Trade and other sources of income
(93)
(78)
Other liabilities
(156)
(76)
Other short-term provisions
0
(2)
Identifiable net assets, liabilities and
contingent liabilities
1340
33882
RESBUD SE
Notes to the consolidated financial statements for 2021
54
Transactions with key management personnel
(i) Key management remuneration
During the year, key management received remuneration:
2021
Supervisory Board
25
Salaries
19
Social taxes
6
Management
38
Salaries
29
Social taxes
9
Total
63
(ii) Key management personnel transactions
2021
Management Board
Loans
38
Total
38
The loans relate to the subsidiary LCC Energokomplekt.
Other related party transactions
(i) Revenue
'000EUR
Transaction value for the twelve
months ended December 31, 2021
Sale of goods and services:
Entities with significant influence
on the Group
136
(ii) Expenses
'000EUR
Transaction value for the twelve
months ended December 31, 2021
Services received:
Entities with significant influence
on the Group
102
Fixed assets :
Entities with significant influence
on the Group
34
RESBUD SE
Notes to the consolidated financial statements for 2021
55
(iii) Balances with related parties
Type of relationship
December 31, 2021
Trade receivables
Entities with significant influence on
the Group
17 940
Other receivables
Entities with significant influence on
the Group
1559
Trade liabilities
Entities with significant influence on
the Group
19527
Other obligations
Entities with significant influence on
the Group
0
Transactions with the government
Not applicable to the Group.
40. Further events
Restructuring
The Group is not restructuring.
Accounting rules
accounting policies
41. Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis, except for the
following items, which are measured alternatively at each reporting date.
Items
Measurement bases
Derivative financial instruments in WGPWF
Good price
Non-derivative financial instruments in the
WGPWF
Good price
Debt and equity securities in FVOCI
Good price
Contingent consideration accepted in a business
combination
Good price
Biological resources
Fair value less selling costs
Investment Estates
Good price
Liabilities for shared cash-settled payment
arrangements
Good price
RESBUD SE
Notes to the consolidated financial statements for 2021
56
Net defined benefit liability (asset)
The fair value of plan assets less the present value of
the defined benefit obligation.
42. Correction of errors
The errors were corrected by restating each of the affected financial statements for the previous
periods. Each subsidiary has made adjustments to the separate financial statements. The tables
below summarize the impact on the Group's consolidated financial statements.
Corrections of errors for previous years were classified as unsettled financial result from previous
years.
Consolidated statement of financial position
'000 EUR
Effect of error correction
January 1, 2021
Corrections
How changed
Total liabilities
0
Profit - loss
(1671)
(467)
Retained earnings
(1671)
(2243)
Consolidated statement of profit or loss and other comprehensive income
'000 EUR
Effect of error correction
January 1, 2021
Corrections
How changed
Financial income
102
Financial costs
(1773)
It has no material effect on the Group's basic or diluted earnings per share and does not affect total
cash flows from operating, investing or financing activities for the year ended December 31, 2021.
43. Significant accounting principles
The accounting policies presented below have been consistently applied in all the periods presented
in these consolidated financial statements and have been consistently applied by the Group's
entities.
Certain comparative amounts have been adjusted to correct errors (see Note 42).
RESBUD SE
Notes to the consolidated financial statements for 2021
57
The following is an index of the most important accounting policies, details of which are available
on the following pages:
The basis of consolidation 57
Discontinued activities 59
Income 59
Financial income and financial costs 59
Foreign currency 60
Employee benefits 61
Income tax 63
Supplies 64
Assets held for sale or distribution 64
Tangible fixed assets 65
Intangible assets 66
Investment Estates 67
Financial instruments 67
Share capital 73
Reserves 74
Write-downs 77
Lease 77
Earnings per share 78
Segmental reporting 78
The basis of consolidation
(i) Business connections
The Group accounts for business combinations using the acquisition method when the acquired
group of activities and assets meets the definition of a business and is transferred to the Group (see
Note 44). When determining whether a specific set of activities and assets is a business, the Group
assesses whether the acquired set of assets and activities includes at least the expenditure and
substantive process, and whether the acquired set is capable of producing products.
The Group has the option of applying the "concentration test", which allows for a simplified
assessment of whether the acquired set of activities and assets is not an enterprise. The optional test
of concentration is met if substantially all of the fair value of the acquired gross assets is
concentrated in one identifiable asset or group of similar identifiable assets.
Business combinations are accounted for using the acquisition method as at the acquisition date,
i.e. the date control is transferred to the Group (see Note 44).
The Group measures goodwill as at the acquisition date as:
RESBUD SE
Notes to the consolidated financial statements for 2021
58
– The fair value of the payment made; plus
– The recognized amount of any non-controlling interest in the acquiree; plus
– Where the business combination is achieved in stages, the fair value of a pre-existing
interest in the acquiree; less
– The net amount recognized (generally the fair value) of the identifiable assets acquired and
liabilities assumed.
When the surplus is negative, the gain on a bargain purchase is recognized immediately in the
income statement.
The consideration transferred does not include amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognized in the profit and loss account.
Transaction costs, other than those related to the issue of debt or equity securities, which the Group
incurs in connection with the business combination are recognized as costs as incurred.
Contingent consideration is measured at the acquisition-date fair value. If a contingent consideration
payment obligation that meets the definition of a financial instrument is classified as equity, it is not
remeasured and the settlement is accounted for in equity. Otherwise, other contingent consideration
is remeasured at fair value at each reporting date and subsequent changes to the fair value of the
contingent consideration are recognized in profit or loss.
(ii) Non-controlling interests
Not applicable.
(iii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed
to, or has rights to, variable returns and has the ability to influence these returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial
statements from the date of commencement of the control until the date of termination of the
control. Accounting principles of the subsidiaries have been changed as necessary to adjust them to
the principles adopted by the Group. Losses related to non-controlling interests in a subsidiary are
allocated to non-controlling interests even if this causes the non-controlling interests to have a
deficit.
(iv) Takeovers from entities under common control
Business combinations resulting from the transfer of interests in entities controlled by the
shareholder controlling the Group are accounted for as if the acquisition occurred at the beginning
of the earliest comparative period presented or, if later, at the date on which joint control is
established; for this purpose the comparisons are reviewed. The acquired assets and liabilities are
recognized at the carrying amounts previously disclosed in the consolidated financial statements of
the Group's parent shareholder. The components of the equity of the acquired entities are added to
the same components within the Group's equity, except that the share capital of the acquired
entities is recognized as part of the additional paid-in capital.
RESBUD SE
Notes to the consolidated financial statements for 2021
59
(v) Loss of control
Upon loss of control, the Group derecognises the subsidiary's assets and liabilities, all non-
controlling interests and other components of equity related to the subsidiary. Any surpluses or
deficiencies resulting from the loss of control are recognized in the profit and loss account. If the
Group retains any shares in the former subsidiary, such shares are measured at fair value at the date
control is lost. It is then accounted for as an equity-settled investment or measured at FVOCI
financial assets depending on the level of retained impact.
(vi) Shares in investments accounted for using the equity method
Not applicable.
(vii) Transactions eliminated on consolidation
Intra-group balances and transactions as well as any unrealized gains and costs resulting from intra-
group transactions are eliminated. Unrealized gains resulting from transactions with investment
entities accounted for using the equity method are eliminated from the investment up to the amount
of the Group's share in the investment. Unrealized losses are eliminated in the same way as
unrealized gains, but only to the extent that there are no indications of impairment.
Discontinued activities
Not applicable.
Income
Information on the accounting policies applied by the Group relating to contracts with customers
can be found in the Note 8.
Financial income and financial costs
The Group's financial income and costs include:
– net interest income;
– interest cost;
– dividend income;
– dividend expenditure on issued preference shares classified as financial liabilities;
– net profit or loss on disposal of investments in debt securities valued at FVOCI;
– net profit or loss on financial assets in WGPWF;
– currency gain or loss on financial assets and financial liabilities;
– impairment (and reversals) of investments in debt securities measured at amortized cost or
FVOCI;
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– the gain on revaluation to fair value of any pre-existing interest in the acquiree in the
business combination;
– loss of fair value due to contingent consideration classified as a financial liability.
Interest income or expense is recognized using the effective interest rate method. Dividend income
is recognized in the profit and loss account on the date the Group's right to receive payment is
established.
The 'effective interest rate' is the rate that accurately discounts estimated future cash payments or
receipts over the expected life of the financial instrument to:
– the gross carrying amount of the financial asset; or
– the amortized cost of a financial liability.
In calculating interest income and expense, the effective interest rate is applied to the gross
carrying amount of the asset (if the asset is not impaired) or to the amortized cost of the liability.
However, for financial assets that have lost their credit value after initial recognition, interest
income is calculated by applying the effective interest rate to the amortized cost of the financial
asset. If the asset is no longer impaired, the interest income computation reverts to gross base.
Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are converted into the relevant functional currencies of the
Group's entities according to the exchange rates as at the transaction date.
Monetary assets and liabilities denominated in foreign currencies as at the reporting date are
translated into the functional currency at the exchange rate on that date. The foreign exchange gain
or loss on monetary items is the difference between the amortized cost in the functional currency at
the beginning of the period, adjusted for effective interest and payments in the period, and the
amortized cost in foreign currency translated at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies measured at fair value are
translated into the functional currency at the exchange rate effective on the date of determining the
fair value. Non-cash items in foreign currencies measured at historical cost are translated at the
exchange rate as at the transaction date.
Exchange differences are generally recognized in the income statement.
However, exchange differences resulting from the translation of the following items are recognized
in other comprehensive income:
– investment in equity securities designated as FVOCI (except for impairment, in which case
the exchange differences that have been recognized in other comprehensive income are
reclassified to the income statement).
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(ii) Foreign operations
Assets and liabilities of foreign entities, including goodwill and fair value adjustments arising on
the acquisition, are translated into the presentation currency at the exchange rate at the reporting
date. Foreign operations income and expenses are translated into the presentation currency at the
exchange rates applicable at the date of the transaction.
The exchange rate differences are recognized in other comprehensive income and presented in the
capital from the conversion of exchange differences in equity. However, if the business is a wholly-
owned subsidiary, an appropriate proportionate share of the difference from the translation is
allocated to the non-controlling interest.
When a foreign operation is disposed of in such a way that control, significant influence or joint
control is lost, the cumulative amount of the translation provision related to that foreign operation
is transferred to the income statement as part of the profit or loss on disposal. When the Group
disposes of only part of its interest in a subsidiary that obtains control, the relevant part of the
cumulative amount is reallocated to non-controlling interests. When the Group disposes of only
part of its investment in an associate or joint venture that includes a foreign entity while retaining
significant influence or joint control, the relevant portion of the cumulative amount is reclassified
to the income statement.
If the settlement of a monetary item due or payable to a foreign entity is not planned or probable in
the foreseeable future, foreign exchange gains and losses resulting from such item constitute part of
the net investment in the foreign operation and are recognized in other comprehensive income and
presented in the translation capital. in equity.
Employee benefits
(i) Short-term employee benefits
Liabilities for short-term employee benefits are measured without discount and recognized in costs
as the related services are performed. The liability is recognized at the amount expected to be paid
under short-term cash bonuses or profit sharing plans if the Group has a present legal or
constructive obligation to pay that amount as a result of the employee's past service and the
obligation can be reliably estimated.
To the extent that the Group's contributions to social programs benefit the community as a whole
and are not limited to Group employees, they are recognized in profit or loss as incurred.
(ii) Defined Contribution Programs
A defined contribution plan is a post-employment benefit plan under which an entity pays constant
contributions to a separate entity and has no legal or constructive obligation to pay further amounts.
Liabilities for contributions to defined contribution pension plans, including the Russian State
Pension Fund, are recognized as an employee benefit expense in profit or loss in the periods in
which employees render services. Prepaid premiums are recognized as assets to the extent that a
cash return or reduction in future payments is available. Contributions to a defined contribution
plan due 12 months after the end of the period in which the employees perform work are
discounted to their present value.
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(iii) Defined benefit plans
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Group's net liability under defined benefit pension plans is calculated separately for each plan
by estimating the amount of future benefits employees received in return for their service in the
current and prior periods, discounting this amount and deducting the fair value of any plan assets.
The discount rate is the profit at the reporting date on government bonds with maturities similar to
the terms of the Group's liabilities and denominated in the same currency in which payment of the
benefits is expected.
The calculation is made annually by an authorized actuary using the projected unit credit method. If
the calculation shows a potential asset for the Group, the recognized asset is limited to the present
value of the economic benefits available in the form of any future program returns or reductions in
future plan contributions. For the purpose of calculating the present value of the economic benefits,
any minimum funding requirements that apply to each program within the Group are taken into
account. The group may derive an economic benefit if it is realizable during the term of the
program or when the obligations of the program are settled.
The remeasurement of the net defined benefit liability, which includes actuarial gains and losses,
return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding
interest) is recognized immediately in other comprehensive income. The Group determines the net
interest expense (income) on the net defined benefit liability (asset) for the period by applying the
discount rate used to measure the defined benefit obligation at the beginning of the annual period to
the then net defined benefit liability (assets). ) after taking into account any changes in the net
defined benefit liability (asset) during the period as a result of contributions and benefit payments.
In the event of a change in the plan's benefits or its reduction, the resulting change in benefits,
which relates to past employment or the curtailment gain or loss, is recognized immediately in the
profit and loss account. The Group recognizes profits and losses from the settlement of the defined
benefit plan at the time of settlement.
(iv) Other long-term employee benefits
The Group's net liability for long-term employee benefits other than retirement plans is the amount
of future benefits that employees have earned in return for their service in the current and previous
periods; the benefit is discounted to determine its present value and the fair value of any related
assets is subtracted. The discount rate is the profit at the reporting date on government bonds with
maturities similar to the terms of the Group's liabilities and denominated in the same currency in
which payment of the benefits is expected. The calculation is made using the projected unit credit
method. Revaluations are recognized in the profit and loss account in the period in which they
arise.
(v) Termination benefits
Benefits due to termination of employment are recognized as costs at an earlier date, when the
Group can no longer withdraw the offer of these benefits and when the Group recognizes the costs
of restructuring. If benefits are not expected to be settled in full within 12 months from the end of
the reporting period, they are discounted.
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Income tax
Income tax includes current and deferred tax. It is recognized in the profit and loss account, except
when it relates to a business combination or items recognized directly in equity or in other
comprehensive income.
(i) Current tax
The current tax covers the expected tax due or payable on the taxable income or loss for a given
year, using the tax rates adopted or actually enacted as at the reporting date, and any adjustments of
the tax due for previous years. The current tax payable also includes all tax liabilities on account of
dividends.
(ii) Deferred tax
Deferred tax is recognized in relation to temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the values used for tax purposes. Deferred
tax is not recognized for:
– temporary differences in the initial recognition of assets or liabilities in a transaction that is not
a business combination and affects neither accounting profit nor taxable profit or loss;
– temporary differences related to investments in subsidiaries, associates and joint arrangements
to the extent to which the Group is able to control the moment of the reversal of the temporary
differences and it is probable that they will not reverse in the foreseeable future; and
– taxable temporary differences that arose on initial recognition of goodwill.
Deferred tax assets are recognized on unused tax losses, unused tax credits and negative temporary
differences to the extent that it is probable that future taxable income will be available to enable
them to be utilized. Future taxable income is determined based on the reversal of the relevant
taxable temporary differences. If the amount of taxable temporary differences is insufficient to
recognize the entire deferred tax asset, future taxable income, adjusted for the reversal of the
existing temporary differences, is taken into account based on the business plans of the individual
Group subsidiaries. Deferred income tax assets are verified at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realized; such
reductions are reversed when the likelihood of future taxable income improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent
that it is probable that taxable income will be available in the future to enable them to be utilized.
Deferred tax is measured using the tax rates that, as expected, will be applied to temporary
differences when they are reversed, in accordance with the law or actually in force at the reporting
date.
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The measurement of deferred tax reflects the tax consequences that will result from how the Group
expects to recover or settle the carrying amount of its assets and liabilities at the end of the
reporting period.
Deferred tax assets and liabilities are netted if there is a legally enforceable title to set off current
tax assets and liabilities and they relate to income tax imposed by the same tax authority on the
same taxpayer or on different tax entities, but they have the intention of current settlements tax
liabilities and assets in the net amount or their assets and tax liabilities will be fulfilled
simultaneously.
In accordance with the tax legislation of the Russian Federation, tax losses and current tax assets of
the Group companies may not be set off against the tax revenues and current tax liabilities of other
Group companies. In addition, the tax base is determined separately for each of the Group's main
activities, and therefore tax losses and taxable profits related to the various activities cannot be
offset.
When determining the amount of current and deferred tax, the Group takes into account the impact
of uncertain tax positions and possible additional taxes, penalties and late payment interest. Based
on the assessment of many factors, including tax rulings and previous experience, the Group
believes that accruals are appropriate for all open tax years. This judgment is based on estimates
and assumptions and may include a range of judgments about future events. There may be new
information that will change the Group's judgment as to the adequacy of existing tax liabilities;
such changes in tax liabilities will affect the tax burden in the period in which the determination is
made.
Supplies
Inventories are valued at a price lower than their cost and net realizable value. The cost of
inventories is based on the [first in, first out] principle and includes the expenditure incurred in
acquiring the inventory, manufacturing or conversion costs, and other costs incurred in bringing
them to their current location and condition. In the case of manufactured inventories and work in
progress, the cost includes the appropriate proportion of production overheads based on normal
operating capabilities.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated
completion and selling expenses.
Assets held for sale or distribution
Fixed assets or disposal groups consisting of assets and liabilities that are expected to be recovered
principally through sale or distribution rather than further use, are classified as held for sale or
distribution.
Such assets or disposal group are usually measured at the lower of their carrying amount and fair
value less costs to sell. Any impairment loss for the disposal group is allocated to goodwill first and
then to other assets and liabilities on a pro rata basis, except that the loss is not allocated to
inventories, financial assets, deferred tax assets or employee benefits that are still measured in line
with the Group's other accounting policies. Impairment losses on initial classification as held for
sale or distribution, and subsequent valuation gains or losses are recognized in the profit and loss
account. Profits do not exceed the accumulated impairment write-offs.
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Intangible assets and tangible fixed assets classified as held for sale or distribution are not subject
to depreciation or amortization. In addition, the equity accounting of investments accounted for
using the equity method will cease to apply once they are classified as held for sale or distribution.
Tangible fixed assets
(i) Recognition and measurement
Items of property, plant and equipment are valued at cost less accumulated depreciation and any
accumulated impairment losses.
Cost includes expenses that are directly attributable to the acquisition of the asset. The cost of self-
constructed fixed assets includes the costs of materials and direct labor, all other costs directly
related to bringing the asset to a usable condition in accordance with its intended use, costs of
disassembly and removal of items and restoration of the place where the costs of external financing
are located and capitalized. Purchased software that is an integral part of the functionality of the
related hardware is capitalized as part of that hardware.
If significant parts of the items of property, plant and equipment have different useful lives, they
are recognized as separate items (main components) of property, plant and equipment.
Any profits or losses on the sale of an item of tangible fixed assets are determined by comparing
the proceeds from the sale with the carrying amount of the tangible fixed assets and are recognized
net of other income / other costs in the profit and loss account. When revalued assets are sold, any
related amounts recognized in the revaluation reserve as revaluation surplus are transferred to
retained earnings.
(ii) Further expenses
Subsequent expenditure is capitalized only when it is probable that the future economic benefits
associated with the expenditure will flow to the Group.
The costs of current service of property, plant and equipment are recognized in the profit and loss
account at the moment they are incurred.
(iii) Land revalorization
The land is valued at fair value on the basis of periodic valuations performed by independent
external appraisers. The increase in the value of the land is recognized directly in the revaluation
surplus item in other comprehensive income. However, that increase is recognized in profit or loss
to the extent that it reverses a revaluation decrease for the same asset previously recognized in
profit or loss.
The decrease in the value of the land due to revaluation is recognized in the profit and loss account.
However, this decrease is recognized in other comprehensive income up to the amount of any
credit outstanding in the revaluation surplus.
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(iv) Depreciation
Items of property, plant and equipment are depreciated from the date they are installed and are
ready for use, or in the case of internally built assets, from the date the asset is completed and ready
for use. Depreciation is based on the cost of the asset less its estimated residual value.
Depreciation is generally recognized in the income statement on a straight-line basis over the
estimated useful life of each portion of the item of property, plant and equipment because it most
accurately reflects the expected pattern of consumption of the future economic benefits embodied
in the advantage.
The estimated useful lives of material items of property, plant and equipment for the current and
comparative period are as follows:
– Buildings 40years;
– installations and devices 5-12years;
– fittings and equipment 5-10years;
– main components 3-5 years.
The depreciation methods, useful lives and residual values are verified at each reporting date and
adjusted if necessary. The estimates for some fixed asset items were updated in 2021.
(v) Reclassification to investment real estate
In the event of a change in the use of the property from owner-occupied to property investment
property is re-measured to fair value and reclassified accordingly. All gains resulting from this
revaluation are recognized in the profit and loss account to the extent to which they reverse the
previous impairment loss for a given property, and all other gains are recognized in other
comprehensive income and presented in the revaluation reserve. All losses are recognized in the
profit and loss account. However, to the extent that the amount is included in the revaluation
surplus for that property, the loss is recognized in other comprehensive income and reduces the
revaluation surplus in equity.
Intangible assets
(i) Intangible assets
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment
losses.
(ii) Other intangible assets
Other intangible assets acquired by the Group with a limited useful life are measured at cost less
accumulated depreciation and accumulated impairment losses.
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(iii) Further expenses
Subsequent expenditure is capitalized only when it increases the future economic benefits
embodied in the specific asset to which it relates. All other expenditure, including expenditure on
internally generated goodwill and brands, is recognized in the income statement when incurred.
(iv) Depreciation
Depreciation is based on the asset's price less its estimated residual value.
Amortization is generally recognized in the income statement using the straight-line method over
the estimated useful lives of intangible assets other than goodwill from the date they are available
for use as it most accurately reflects the resource's expected pattern of consumption of future
economic benefits. The estimated useful lives for the current and comparable period are as follows:
– patents and trademarks 10-20 years;
– software 3-10years;
– capitalized development costs 5-7 years.
The depreciation methods, useful lives and residual values are verified at the end of each financial
year and adjusted if necessary.
Investment Estates
Investment property is initially measured at cost, and then at fair value, and any changes to it are
recognized in the profit and loss account.
Any gains or losses on the sale of the investment property (calculated as the difference between the
net proceeds from the sale and the carrying amount of the item) are recognized in the income
statement. In the case of sale of investment property that was previously classified as property,
plant and equipment, all related amounts are recognized in the revaluation reserve and are
transferred to retained earnings.
Financial instruments
(i) Recognition and initial measurement
Trade receivables and issued debt securities are initially recognized when they arise. All other
financial assets and liabilities are initially recognized when the Group becomes a party to the
contract for this instrument.
A financial asset (unless it is a trade receivable without a significant financing element) or a
financial liability is initially measured at fair value plus, in the case of an item not included in the
FVTPL, transaction costs directly attributable to its acquisition or emissions. Trade receivables
without a significant financing element are initially measured at the transaction price.
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(ii) Classification and subsequent measurement
Financial assets
Upon initial recognition, a financial asset is classified as measured at: amortized cost; FVOCI -
debt investment; FVOCI - capital investment; or FVTPL.
Financial assets are not reclassified after their initial recognition, unless the Group changes the
financial asset management business model, in which case all affected financial assets are
reclassified on the first day of the first reporting period following the change in business model.
A financial asset is measured at amortized cost if it meets both of the following conditions and is
not designated as FVTPL:
–
it is held in a business model designed to hold assets to accumulate contractual cash flows; and
–
its contractual terms give rise to specified dates of cash flows that are solely payments of
principal and interest on the principal amount outstanding.
A debt investment is measured in the FVOCI if it meets both of the following conditions and is not
marked as WGPWF:
–
takes place as part of a business model whose goal is achieved by both obtaining contractual
cash flows and selling financial assets; and
–
its contractual terms give rise to specified dates of cash flows that are solely payments of
principal and interest on the principal amount outstanding.
Upon initial recognition of an equity investment that is not held for trading, the Group may
irrevocably elect to display subsequent changes in the fair value of the investment in other income.
These choices are made on the basis of individual investments.
All financial assets that are not classified as measured at amortized cost or FVOCI, as described
above, are measured at WGPWF. This includes all derivative financial assets. Upon initial
recognition, the Group may irrevocably designate a financial asset that otherwise meets the
amortized cost or FVOCI requirements of the FVGPF, if such action eliminates or significantly
reduces an accounting mismatch that would otherwise arise.
Financial Assets - Business Model Assessment
The Group assesses the purpose of the business model in which the financial asset is held at the
portfolio level as this best reflects the way the enterprise is managed and communicated to
management. Information taken into account includes:
–
the defined principles and objectives of the portfolio and the operation of these principles in
practice. These include whether management's strategy focuses on obtaining a contractual
interest income, maintaining a specific interest rate profile, matching the duration of a financial
asset with the duration of any associated liability or expected cash outflow, or realizing cash
flows by selling the assets;
–
how the portfolio performance is assessed and reported to the Group management;
–
risks that affect the performance of the business model (and the financial assets held within that
business model) and how those risks are managed;
–
How the entity's management is remunerated - for example, whether the compensation is based
on the fair value of the assets under management or on contractual cash flows; and
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–
the frequency, volume and timing of sales of financial assets in prior periods, the reasons for
such sales, and expectations about future sales.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not
treated as sales for this purpose, in line with the continued recognition of assets by the Group.
Financial assets held for trading or managed, the results of which are measured at fair value, are
measured at the FVTPL.
Financial assets - Assess whether the contractual cash flows are purely principal and interest
payments
For the purposes of this assessment, 'equity' is defined as the fair value of the financial asset on
initial recognition. 'Interest' is defined as the consideration for the time value of money and the
credit risk related to the principal amount outstanding during the period and other underlying credit
risk and costs (eg liquidity risk and administrative costs) as well as profit margin.
When assessing whether contractual cash flows are only payments of principal and interest (SPPI
criterion), the Group takes into account the contractual terms of the instrument. This includes
assessing whether the financial asset contains a contractual term that could alter the timing or
amount of the contractual cash flows such that it would not satisfy that condition. In making this
assessment, the Group takes into account:
–
contingencies that would change the amount or timing of the cash flows;
–
conditions that may adjust the notional coupon rate, including floating rate features;
–
prepayment and extension functions; and
–
conditions limiting the Group's claim to cash flows from specific assets (e.g. non-recourse
features).
The prepayment function is consistent with the principal and interest only criterion if the
prepayment amount essentially represents outstanding principal and interest amounts on
outstanding principal, which may include reasonable additional early termination compensation. In
addition, in the case of a financial asset purchased at a discount or premium to its notional notional
amount, a feature that enables or requires a prepayment of an amount that essentially represents the
notional notional amount plus accrued (but unpaid) contractual interest (which may also include
reasonable additional remuneration for early termination) shall be treated as complying with this
criterion if the fair value of the prepayment component is immaterial at initial recognition.
Financial assets - subsequent valuation and gains and losses:
Financial assets in
WGPWF
These assets are then measured at fair value. Net gains and losses, including any
interest or dividend income, are recognized in the income statement. However, see
note44 (m) (vi)for derivative instruments designated as hedging instruments.
Financial assets at
amortized cost
These assets are then measured at amortized cost using the effective interest method.
The amortized cost is reduced by impairment write-offs. Interest income, foreign
exchange gains and losses and impairment are recognized in the profit and loss
account. Any gains or losses on removal are recognized in the profit and loss account.
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Debt investments in
FVOCI
These assets are then measured at fair value. Interest income calculated using the
effective interest rate method, positive and negative foreign exchange differences and
impairment are recognized in the profit and loss account. Other net gains and losses
are recognized in other comprehensive income. Upon removal from the balance sheet,
profits and losses accumulated in other comprehensive income are reclassified to the
profit and loss account.
Equity investments
in FVOCI
These assets are then measured at fair value. Dividends are recognized as income in
the income statement, unless the dividend specifically represents the recovery of a
portion of the investment cost. Other net gains and losses are recognized in other
comprehensive income and are never reclassified to the income statement.
Financial liabilities - Classification, subsequent valuation and gains and losses
Financial liabilities are classified as measured at amortized cost or WGPWF. A financial liability is
classified as WGPWF if it is classified as held for trading, is a derivative or was designated as such
upon initial recognition. Financial liabilities in WGPWF are measured at fair value, and net gains
and losses, including any interest costs, are recognized in the income statement. Other financial
liabilities are then measured at amortized cost using the effective interest method. Interest costs as
well as foreign exchange gains and losses are recognized in the profit and loss account. Any profits
or losses resulting from derecognition from the balance sheet are also recognized in the profit and
loss account.
The Group has bank loans with a fixed interest rate, for which banks have the possibility to revise
the interest rate after changing the key rate set by the CBR. The Group has the option of accepting
the changed rate or repaying the loan at its nominal value without penalty. The group treats these
loans essentially as floating rate loans.
(iii) Modification of financial assets and financial liabilities
Financial assets
When the terms of a financial asset change, the Group assesses whether the cash flows of the
modified asset differ materially. If the cash flows differ materially (the "material modification"),
the contractual rights to the cash flows on the original financial asset are deemed to have expired.
In such a case, the original financial asset is derecognised and the new financial asset is recognized
at fair value.
The Group performs a quantitative and qualitative assessment of whether the modification is
significant, ie whether the cash flows from the original financial asset and the modified or replaced
financial asset differ materially. The group assesses whether a change is significant on the basis of
quantitative and qualitative factors in the following order: qualitative factors, quantitative factors,
the combined effect of qualitative and quantitative factors. If the cash flows are materially
different, then the contractual rights to the cash flows on the original financial asset are deemed to
have expired. In making this assessment, the Group makes an analogy to the guidelines for
derecognition of financial liabilities.
The group concludes that the change is significant as a result of the following qualitative factors:
– change the currency of the financial asset;
– collateral change or other credit enhancement;
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– a change in the terms of a financial asset resulting in non-compliance with the SPPI
criterion (e.g. inclusion of a conversion feature).
If the cash flows of a modified asset at amortized cost do not differ significantly, the modification
does not remove the financial asset from the balance sheet. In such a case, the Group recalculates
the gross carrying amount of the financial asset and recognizes the amount resulting from the
adjustment of the gross carrying amount as profit or loss on modification in the profit and loss
account.The gross carrying amount of the financial asset is translated as the present value of the
renegotiated or modified contractual cash flows that are discounted at the original effective interest
rate of the financial asset. Any costs or fees incurred adjust the carrying amount of the modified
financial asset and are amortized over the remaining period of the modified financial asset.
Financial liabilities
The Group derecognises a financial liability when its terms change and the cash flows of the
modified liability are materially different. In such a case, the new financial liability based on the
changed terms is recognized at fair value. The difference between the carrying amount of an
expired financial liability and a new financial liability with changed terms is recognized in the
profit and loss account.
If the modification (or replacement) does not remove the financial liability, the Group applies an
accounting policy consistent with the requirements for adjusting the gross carrying amount of the
financial asset, when the modification does not remove the financial asset from the balance sheet,
i.e. the Group recognizes any adjustments to the amortized cost of the financial liability resulting
from from such modification (or replacement) in the profit and loss account at the date of
modification (or conversion).
Changes in cash flows from existing financial liabilities are not considered a modification if they
result from existing contractual terms, e.g. changes in fixed interest rates initiated by banks as a
result of a change in the key CBR rate, if the loan agreement authorizes the banks to do so and the
Group is able to accept the amended rates or loan repayments at face value without penalty. Group
treatsmodification of the interest rate to the current market rate using the guidelines for financial
instruments with floating interest,. It means thatthe effective interest rate is adjusted prospectively.
The group makes a quantitative and qualitative assessment of whether a modification is material,
taking into account: qualitative factors, quantitative factors, and the combined influence of
qualitative and quantitative factors. The group concludes that the change is significant as a result of
the following qualitative factors:
– change the currency of the financial liability;
– collateral change or other credit enhancement;
– turning on the conversion option;
– change in the subordination of a financial liability.
For a quantitative assessment, the terms vary significantly if the discounted present value of the
cash flows under the new terms, including any fees paid net of any fees received and discounted
using the original effective interest rate, is at least 10 per cent different from the discounted present
value of the other the cash flows of the original financial liability. If an exchange of debt
instruments or a change in terms and conditions is treated as an expiry, any costs or fees incurred
are recognized as part of the gain or loss on expiry. If a replacement or modification is not treated
as an expiry, any costs or fees incurred adjust the carrying amount of the liability and are amortized
over the remaining period of the modified liability.
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(iv) Removal of recognition
Financial assets
The Group derecognises a financial asset from the balance sheet when the contractual rights to cash
flows from the financial asset expire or when the rights to receive contractual cash flows are
transferred in a transaction in which substantially all the risks and rewards of ownership of the
financial asset are transferred or in which the Group does not transfers or retains substantially all of
the risks and rewards of ownership, and does not retain control of the financial asset.
The Group enters into transactions where it transfers the assets recognized in its statement of
financial position, but retains either all or substantially all of the risks and rewards associated with
the transferred assets. In such cases, the transferred assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are fulfilled, redeemed
or expire. The Group also derecognises a financial liability from the balance sheet when its terms
change and the cash flows of the modified liability are materially different, in which case the new
financial liability based on the changed terms is recognized at fair value.
At the time of derecognition of a financial liability, the difference between the carrying amount that
has been settled and the consideration paid (including all other items) - transferred cash assets
or assumed liabilities) are recognized in the profit and loss account.
(v) Shift
Financial assets and liabilities are netted, and the net amount is presented in the statement of
financial position if and only if the Group has the legal title to set off the amounts and intends to
either settle them net or to settle the asset and settle the liability at the same time.
(vi) Derivative financial instruments and hedge accounting
The Group has derivative financial instruments to hedge its exposure to currency risk and interest
rate risk. Embedded derivatives are separated from the host contract and accounted for separately if
the host contract is not a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. After initial recognition, derivative instruments are
measured at fair value and their changes are usually recognized in the profit and loss account.
The Group designates certain derivative instruments as hedging instruments to hedge the volatility
of cash flows related to highly probable forecast transactions resulting from changes in exchange
rates and interest rates, and certain derivative instruments and non-derivative financial liabilities as
hedges of the currency risk of a net investment in a foreign operation.
At the moment of establishing the designated hedging relationships, the Group documents the
purpose of risk management and the strategy for establishing the hedge. The Group also documents
the economic relationship between the hedged item and the hedging instrument, including whether
it is expected that changes in cash flows from the hedged item and the hedging instrument will
offset each other.
Cash flow hedges
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When a derivative is designated as a cash flow hedging instrument, the effective portion of the
change in the fair value of the derivative is recognized in other comprehensive income and
accumulated in the hedge reserve. The effective portion of changes in the fair value of a derivative
recognized in other comprehensive income is limited to the cumulative change in the fair value of
the hedged item, determined on the basis of the present value, from the moment the hedge is
established. The ineffective part of the change in the fair value of the derivative is recognized
immediately in the profit and loss account.
As a hedging instrument in hedging relationships, the Group designates only the change of the fair
value of the spot element of currency forward contracts. The change in the fair value of the forward
element of the forward foreign exchange contracts ("forward points") is accounted for separately as
a hedge cost and recognized in the hedge's cost of equity under equity.
When a hedged forecast transaction then results in the recognition of a non-financial item such as
inventories, the amount accumulated in the hedge reserve and the cost of the hedge reserve are
recognized directly in the cost of the non-financial item when it is recognized.
For all other hedged forecast transactions, the amount accumulated in the hedge reserve and the
cost of the hedge reserve are reclassified to profit or loss in the same period or periods in which the
hedged expected future cash flows affect profit or loss.
If the hedge ceases to meet the criteria of hedge accounting or the hedging instrument is sold,
expires, terminated or executed, then hedge accounting is interrupted prospectively. In the event
that cash flow hedge accounting is discontinued, the amount accumulated in the hedge capital
remains in equity until, in the case of a hedge of a transaction resulting in the recognition of a non-
financial item, it is recognized in the cost of the item at its initial recognition or, in the case of other
cash flow hedges, is transferred to the profit and loss account in the same period or periods in
which the hedged expected future cash flows affect the profit and loss account.
If it is no longer expected that the hedged future cash flows will not occur, the amounts held in the
hedging reserve and the cost of the hedging reserve are immediately reclassified to the profit and
loss account.
Net investment hedges
When a derivative or non-derivative financial liability is designated as a hedging instrument of a
net investment in a foreign operation, the effective portion, in the case of a derivative, of the
change in the fair value of the hedging instrument or, in the case of non-derivative foreign
exchange gains and losses, are recognized in other comprehensive income and presented in capital
from conversion in equity. The ineffective part of the changes in the fair value of the derivative or
the gains and losses on exchange differences relating to the non-derivative instrument is recognized
immediately in the profit and loss account.
Share capital
Ordinary shares
Ordinary shares are classified as equity. Marginal costs directly related to the issue of ordinary
shares and share options are recognized as a deduction from equity, net of any tax effects.
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Preference shares
The Group's contractual preference shares are classified as financial liabilities because they involve
non-discretionary dividends and are redeemed in cash by their holders. Non-discretionary
dividends are recognized as interest expense in the profit and loss account as they accrue.
Non-mortgage preference shares are classified as equity because they involve discretionary
dividends, do not contain commitments to deliver cash or other financial assets, and do not require
settlement in a variable number of the Group's equity instruments. Dividends on this account are
recognized as payments from equity upon approval by the Company's shareholders.
Purchase, sale and reissue of share capital (own shares)
In the event of the repurchase of shares recognized as equity, the amount of the consideration paid,
which includes directly attributable costs, less any tax consequences, is recognized as a deduction
from equity. The purchased shares are classified as own shares and are presented in the reserve
capital of own shares. In the event of a subsequent sale or reissue of own shares, the received
amount is recognized as an increase in equity, and the resulting surplus or shortage in the
transaction is recognized in the additional paid-in capital.
Reserves
(i) Financial assets that are not derivative instruments
Financial instruments and contract assets
The Group creates write-offs for losses due to expected credit losses due to:
–
financial assets measured at amortized cost;
–
debt investments valued at FVOCI; and
–
contracted assets.
The Group measures provisions for losses at an amount equal to the lifetime expected impairment
losses, except for the following which are measured by the 12-month expected impairment losses:
–
debt securities deemed to have low credit risk as at the reporting date; and
–
other debt securities and bank balances for which credit risk (ie the risk of a default occurring
over the expected life of the financial instrument) has not increased significantly since initial
recognition.
Loss allowances for trade receivables and contract assets are always measured at an amount equal
to the expected lifetime impairment loss.
When determining whether the credit risk of a financial asset has increased significantly since
initial recognition and when estimating expected credit losses, the Group takes into account
reasonable and documentable information that is material and available without undue cost or
effort. This includes both quantitative and qualitative information and analyzes, based on the
Group's historical experience and informed credit assessment, as well as forward-looking
information.
The Group assumes that the credit risk associated with a financial asset has increased significantly
if it is more than 30 days past due.
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The Group recognizes a financial asset as past due when:
–
it is unlikely that the borrower will repay its credit obligations to the Group in full, without the
Group taking actions such as realizing collateral (if any); or
–
the financial asset is more than 90 days past due.
Lifetime ECLs are the expectation of losses arising from any possible default event over the
expected life of the financial instrument.
The 12-month expected credit losses are part of the expected credit losses that arise from default
events that are possible within 12 months of the reporting date (or for a shorter period if the
expected useful life of the instrument is less than 12 months).
The maximum period taken into account when estimating expected credit losses is the maximum
contractual period during which the Group is exposed to credit risk.
ECL measurement
ECL is a probability-weighted estimate of credit losses. Credit losses are measured as the present
value of all cash shortfalls (ie the difference between the contractual cash flows of the entity and
the cash flows expected to be received by the Group).
ECLs are discounted at the effective interest rate of the financial asset.
Financial assets with reduced credit value
At each reporting date, the Group assesses whether financial assets measured at amortized cost and
debt securities in FVOCI are impaired. A financial asset is 'impaired' when one or more events
have occurred that would adversely affect the estimated future cash flows of the financial asset.
Evidence that the financial asset is impaired includes the following observable data:
–
significant financial difficulties of the borrower or issuer;
–
breach of contract, such as default or being overdue by more than 90 days;
–
restructuring of a credit or loan by the Group on terms which the Group would not have
provided otherwise;
–
it is probable that the borrower will file for bankruptcy or other financial reorganization; or
–
the disappearance of an active stock market due to financial difficulties.
Presentation of the allowance for the ECL in the statement of financial position
Write-downs on financial assets measured at amortized cost reduce the gross carrying amount of
the assets.
In the case of debt securities in FVOCI, an allowance for losses is charged to the profit and loss
account and is recognized in other comprehensive income.
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The gross carrying amount of a financial asset is written off when the Group has no reasonable
expectation that it will recover the financial asset in whole or in part. In the case of individual
customers, the Group applies a policy of writing off the gross carrying amount when a financial
asset is 180 days past due, based on historical experience in recovering similar assets. In the case of
corporate clients, the Group individually assesses the date and amount of the write-off based on the
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reasonable expectation of recovery. The Group does not expect a significant recovery of the
amount written off. However, the written-off financial assets may still be subject to enforcement
actions to complete the Group's recovery procedures.
Investments accounted for using the equity method
An impairment loss for investments accounted for using the equity method is measured by
comparing the recoverable amount of the investment with its carrying amount. An impairment loss
is recognized in the profit and loss account and is reversed if there has been a favorable change in
the estimates used to determine the recoverable amount.
(ii) Non-financial assets
The carrying amount of the Group's non-financial assets, other than inventories and deferred tax
assets, are reviewed at each reporting date to determine whether there are any indications of
impairment. If such premises exist, the asset's recoverable amount is estimated. For goodwill and
intangible assets that have an indefinite useful life or that are not yet available for use, the
recoverable amount is estimated at the same time each year.
For the purpose of the impairment test, assets that cannot be tested individually are grouped into
the smallest group of assets that generates cash inflows from continued use that are largely
independent of the cash inflows of other assets or CGUs. Subject to the operating segment cap test,
for the purposes of the goodwill impairment test, the CGUs to which goodwill has been allocated
are aggregated in such a way that the level at which the impairment test is performed reflects the
lowest level at which goodwill is monitored for the purposes of internal reporting. Goodwill
acquired as a result of a business combination is allocated to the CGU groups that are expected to
benefit from the synergy of the combination.
The Group's corporate assets do not generate separate cash inflows and are used by more than one
CGU. Corporate assets are allocated to the CGU in a rational and consistent manner and tested for
impairment as part of the testing of the CGU to which the corporate assets are allocated.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time
value of money and risks specific to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset or a related cash-generating
unit (CGU) exceeds its estimated recoverable amount.
Impairment losses are recognized in the profit and loss account. Impairment losses recognized in
relation to the CGU are allocated first to the reduction of the carrying amount of the goodwill
assigned to the CGU (CGU group), and then to the reduction of the carrying amount of the
remaining assets in the CGU (CGU group) on the basis of installment.
Goodwill impairment is not reversed. With regard to other assets, impairment losses recognized in
previous periods are assessed at each reporting date in terms of premises indicating that the loss has
decreased or ceased to exist. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the carrying amount of the asset does not exceed the carrying amount that, less
depreciation, would have been determined had the impairment loss not been recognized.
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Write-downs
The provision is recognized if, as a result of past events, the Group has a present legal or
constructive obligation which can be reliably estimated and it is probable that the fulfillment of this
obligation will result in an outflow of economic benefits. Provisions are determined by discounting
the expected future cash flows using a pre-tax rate that reflects current market assessments of the
time value of money and the liability specific risk. The unwinding of the discount is recognized as
a financial cost.
(i) Guarantees
Provision for guarantees is created when the products or services underlying them are sold. The
provision is based on historical guarantee data and weighting all possible outcomes against the
associated probability.
(ii) Restructuring
Provision for onerous contracts is recognized when the benefits from the contract expected by the
Group are lower than the unavoidable costs of meeting obligations under the contract. The
provision is measured at the current value of the lower of the expected contract termination costs
and the anticipated net costs of continuing the contract. Before creating the provision, the Group
makes an impairment write-off for the assets related to this contract.
(iii) Burdensome contracts
Provision for restructuring is recognized when the Group has approved a detailed and formal
restructuring plan and the restructuring has already started or has been publicly announced. No
future operating costs are anticipated.
Lease
At the time of concluding the contract, the Group assesses whether the contract is a lease or
includes a lease. if, in return for consideration, it gives the right to control the use of the identified
asset over a specified period of time.
(i) As a lessee
The Group recognizes the right-of-use asset and the lease liability on the lease commencement
date. A right-of-use asset is initially measured at cost, which includes the original amount of the
lease liability adjusted for any lease payments made on or before the commencement date, plus any
initial direct costs incurred and the estimated costs of dismantling and removing the underlying
asset. assets or renewals of the underlying asset or site in which it is located, less any lease
incentives received.
The right to use an asset is then depreciated on a straight-line basis from the commencement date to
the end of the lease term, unless the lease transfers to the Group ownership of the underlying asset
until the end of the lease term or the cost of the right to use the asset means that the Group will
exercise the purchase option. In such a case, the right-of-use asset will be depreciated over the
useful life of the underlying asset, which is determined on the same basis as for real estate and
equipment. In addition, the right-of-use asset is periodically reduced by any impairment losses, and
adjusted for some revaluation of the lease liability.
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The lease liability is initially measured at the present value of the lease payments that are not paid
at the commencement date, discounted using the lease interest rate or, if that rate cannot be readily
determined, the incremental Group interest rate. In general, the Group uses its marginal interest rate
as the discount rate.
Lease fees included in the measurement of the lease liability include:
– fixed fees, including, in principle, fixed fees;
– variable lease payments that depend on an index or rate initially priced using the index or rate
at the commencement date;
– the amounts to be due under the residual value guarantee; and
– the exercise price under the purchase option that the Group is reasonably sure will realize, the
lease payments in the optional renewal period, if the Group is reasonably confident that it will
exercise the extension option, and the penalties for early termination of the lease, unless the
Group is reasonably confident, that I did not finish sooner.
The Group recognizes the lease payments related to these leases as an expense on a straight-line
basis over the lease term.
Earnings per share
The group presents basic and diluted earnings per share ("EPS") data for its common stock. Basic
earnings per share are calculated by dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary shares outstanding during the period,
adjusted for the treasury shares held. Diluted earnings per share are determined by adjusting the
profit or loss attributable to ordinary shareholders and the weighted average number of ordinary
shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary
shares, which include convertible bonds and share options granted to employees.
Segmental reporting
An operating segment is a component of the Group that conducts business activities from which it
may earn income and incur costs, including income and expenses related to transactions with any
other component of the Group. The operating results of all operating segments are regularly
monitored by the parent company's management board, making decisions about allocating
resources to the segment and evaluating its results.
The results that are reported to the parent company include items that are directly allocated to the
segment as well as those that can be reasonably allocated. Unallocated items mainly include HQ
expenses and income tax assets and liabilities.
The segment's capital expenditure is the total cost incurred during the year for the acquisition of
property, plant and equipment and intangible assets other than goodwill.
Inter-segment prices are set on an arm's length basis.
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44. New standards and interpretations have not yet been adopted
A number of the new standards are effective for annual periods beginning after January 1, 2020 and
early application is permitted; however, the Group did not apply the new or changed standards in
the preparation of these consolidated financial statements.
Onerous contracts - contract performance cost (Amendments to IAS 37)
The changes specify the costs that the entity takes into account when determining the cost of
performing a contract in order to assess whether the contract is onerous. The amendments apply to
annual reporting periods beginning on or after January 1, 2022, to contracts existing on the date of
the first application of the amendments. As at the date of first application, the cumulative effect of
the application of the amendments is recognized as an adjustment to the opening balance according
to retained earnings or other components of equity. The comparative data is not transformed. The
Group has determined that all contracts existing as at December 31, 2020 will be terminated before
the amendments come into force.
Interest rate benchmark reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16)
The amendments relate to issues that may have an impact on financial reporting as a result of the
interest rate benchmark reform, including the effects of changes in contractual cash flows or
hedging relationships resulting from the replacement of the interest rate benchmark with an
alternative reference rate. The amendments provide a practical exemption from some of the
requirements contained in IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 regarding:
– changes in the basis for determining contractual cash flows from financial assets, financial
liabilities and lease liabilities; and
– hedge accounting.
(i) Changing the basis for determining cash flows
The amendments will require an entity to take into account the change in the basis for determining
the contractual cash flows of the financial asset or financial liability required under the interest rate
benchmark reform by updating the effective interest rate of the financial asset or financial liability.
As at December 31, 2020, the Group has LIBOR-secured bank loans in the amount of PLN xx
thousand. RUB, which will be subject to the IBOR rate reform. The Group expects that the interest
rate benchmark for these loans will be changed to SONIA in 2021 and that no significant gains or
losses will arise from the modification as a result of applying the changes to these changes.
(ii) Hedge accounting
The changes introduce exceptions to the requirements of hedge accounting in the following areas.
– Allow the designation of the hedging relationship to be changed to reflect the changes required
by the reform.
– If the hedged item in the cash flow hedge is changed to reflect the changes required by the
reform, the amount accumulated in the cash flow hedge reserve will be deemed to be based on
the alternative reference rate at which the hedged future cash flows are determined.
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– When a group of items is designated as a hedged item and the items in the group are changed to
reflect the changes required by the reform, the hedged items are allocated to subgroups based
on the reference rates being hedged.
– If an entity reasonably expects that an alternative reference rate will be separately identifiable
over a period of 24 months, it is not prohibited to designate that rate as a non-contractually
specified risk if it is not separately identifiable at the date of designation.
Due to the lack of hedge accounting, the Group does not expect an effect of switching to IBOR.
(iii) Disclosure
The changes will require the Group to disclose additional information about the entity's exposure to
risk arising from the reform of the interest rate benchmark and related risk management activities.
(iv) Transformation
The Group plans to apply the amendments from January 1, 2021. The application will not affect the
amounts disclosed for 2020 or earlier periods.
Other standards
It is expected that the following new and changed standards will not have a significant impact on
the Group's consolidated financial statements.
— COVID-19 related rent concessions (amendment to IFRS 16).
— Property, plant and equipment: Receipts before allocation (Amendments to IAS 16).
— Reference to the Framework (Amendments to IFRS 3).
— Classification of liabilities as short-term or long-term (Amendments to IAS 1).
— IFRS 17 Insurance Contracts and amendments to IFRS 17 Insurance Contracts
Although new or amended standards that will not have a material effect or will not have a
material effect on the financial statements need not be presented, the Group took into
account all new or amended standards and their possible impact on the consolidated financial
statements for illustrative purposes only.