Form 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF A FOREIGN ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For June 9, 2014

 

 

QIWI plc

 

 

12-14 Kennedy Ave.

Kennedy Business Centre, 2nd Floor, Office 203

1087 Nicosia Cyprus

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F  x            Form 40-F  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ¨            No   x

If ‘‘Yes’’ is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

THIS REPORT ON FORM 6-K IS INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-190918) OF QIWI PLC AND IN THE OUTSTANDING PROSPECTUS CONTAINED IN SUCH REGISTRATION STATEMENT.

 

 

 


Explanatory Note

The purpose of this Report on Form 6-K is to revise the presentation of the consolidated financial statements of QIWI plc (the “Company”) included in the Company’s Annual Report on Form 20-F for the year ended December 31, 2013 filed on March 12, 2014 with the Securities and Exchange Commission (“SEC”) (the “2013 Form 20-F”) to reflect changes in the Company’s reportable segments.

Beginning January 1, 2014, the Company revised its financial reporting structure such that it has one financial reporting segment. The Company decided to consolidate its previous financial reporting segments, Visa QIWI Wallet and QIWI Distribution, in order to better reflect the Company’s underlying business in light of the growing interconnectedness and interrelation between Visa QIWI Wallet and QIWI Distribution.

Attached as Exhibit 99.1 are the revised consolidated financial statements and revised notes to the consolidated financial statements which reflect the change in the financial reporting segments. Only the following notes have been revised and updated from their previous presentation to reflect the new presentation:

 

    Note 9 – Operating Segments; and

 

    Note 33 – Events after the reporting date.

Similarly, “Item 3.A—Selected financial information” and “Item 5—Operating and Financial Review and Prospects” as included in the 2013 Form 20-F have been revised and updated from its previous presentation to reflect the Company’s new financial reporting segments. The revised presentation is attached as Exhibit 99.2.

Finally, the Company has included in this Report on Form 6-K the Report of Independent Registered Public Accounting Firm on the consolidated financial statements, which is unchanged from the 2013 Form 20-F, other than being dual dated to reflect revised notes 9 and 33 to the Company’s consolidated financial statements.

The change in reportable segment structure had no impact on the Company’s historical consolidated financial position, results of operations or cash flows, as reflected in the revised consolidated financial statements contained in Exhibit 99.1 to this Report on Form 6-K. The revised consolidated financial statements do not represent a restatement of previously issued consolidated financial statements.

No attempt has been made in this Report on Form 6-K, and it should not be read, to modify or update disclosures as presented in the 2013 Form 20-F to reflect events or occurrences after the date of the filing of the 2013 Form 20-F, except for matters relating specifically to the change in the Company’s financial reporting segments and the amendments reflected in note 33 (Events after the reporting date) to the consolidated financial statements. Therefore, this Report on Form 6-K (including Exhibits 99.1 and 99.2 hereto) should be read in conjunction with the 2013 Form 20-F and the Company’s filings made with the SEC subsequent to the filing of the 2013 Form 20-F.

 

2


Exhibits

 

23.1    Consent of Ernst & Young LLC
99.1    Financial Statements from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013, revised solely to amend notes 9 and 33 thereof
99.2    “Item 3.A—Selected financial information” and “Item 5—Operating and Financial Review and Prospects” from the Company’s Annual Report on Form 20-F for the fiscal year ended December 31, 2013, revised solely to reflect the change in segment reporting

 

3


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    QIWI PLC (Registrant)
Date: June 9, 2014     By:  

/s/ Alexander Karavaev

      Alexander Karavaev
      Chief Financial Officer

 

4

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 333-190918) of securities to be offered to employees in employee benefit plans of Qiwi plc of our report dated March 12, 2014, except for Notes 9 and 33 as to which the date is June 9, 2014, relating to the financial statements of QIWI plc included as Exhibit 99.1 to this Report on Form 6-K.

/s/ Ernst & Young LLC

Moscow, Russia

June 9, 2014

EX-99.1

Exhibit 99.1

QIWI plc

Consolidated financial statements

For the year ended December 31, 2013


QIWI plc

Consolidated financial statements

for the year ended December 31, 2013

Content

 

Report of independent registered public accounting firm

     1   

Consolidated financial statements

  

Consolidated statement of financial position

     2   

Consolidated statement of comprehensive income

     3   

Consolidated cash flow statement

     4   

Consolidated statement of changes in equity

     5   

Notes to consolidated financial statements

     8   


LOGO

Report of independent registered public accounting firm

The Board of Directors and members of QIWI plc

We have audited the accompanying consolidated statements of financial position of QIWI plc as of December 31, 2012 and 2013, and the related consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated cash flow statements for each of the three years in the period ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of QIWI plc as of December 31, 2012 and 2013, and of its financial performance and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with International Financial Reporting Standards (IFRS) as endorsed by the European Union, and IFRS as published by the IASB.

/s/ Ernst & Young LLC

Moscow, Russia

March 12, 2014 except for Notes 9 and 33 as to which the date is June 9, 2014.

A member firm of Ernst & Young Global Limited


QIWI plc

Consolidated statement of financial position

As of December 31, 2013

(in thousands of Rubles, except per share data)

 

     Notes    As of
December 31,
2012
    As of
December 31,
2013
 

Assets

       

Non-current assets

       

Property and equipment

   11      105,653        307,500   

Goodwill and other intangible assets

   12, 13      1,975,930        2,405,645   

Long-term debt instruments

   31      616,473        1,376,862   

Long-term loans

   14      185,384        10,637   

Investments in associates

   7      100,436        —     

Deferred tax assets

   27      101,805        183,333   

Other non-current assets

   17      16,377        38,394   
     

 

 

   

 

 

 

Total non-current assets

        3,102,058        4,322,371   
     

 

 

   

 

 

 

Current assets

       

Trade and other receivables

   15      3,437,671        2,772,297   

Short-term loans

   14      324,086        65,430   

Short-term debt instruments

   31      1,751,119        1,635,291   

Prepaid income tax

        37,835        60,537   

VAT and other taxes receivable

        19,511        12,478   

Cash and cash equivalents

   16      9,943,160        11,636,913   

Other current assets

   17      93,334        159,264   
     

 

 

   

 

 

 

Total current assets

        15,606,716        16,342,210   
     

 

 

   

 

 

 

Total assets

        18,708,774        20,664,581   
     

 

 

   

 

 

 

Equity and liabilities

       

Equity attributable to equity holders of the parent

       

Share capital

   18      904        907   

Additional paid-in capital

        1,876,104        1,876,104   

Other reserve

        101,124        337,254   

Retained earnings

        569,317        573,604   

Translation reserve

        705        10,757   
     

 

 

   

 

 

 

Total equity attributable to equity holders of the parent

        2,548,154        2,798,626   

Non-controlling interest

        (49,311     (94,766
     

 

 

   

 

 

 

Total equity

        2,498,843        2,703,860   
     

 

 

   

 

 

 

Non-current liabilities

       

Long-term borrowings

   19      38,762        109,351   

Long-term deferred revenue

        43,605        31,629   

Deferred tax liabilities

   27      44,065        58,630   

Other non-current liabilities

        —          7,625   
     

 

 

   

 

 

 

Total non-current liabilities

        126,432        207,235   
     

 

 

   

 

 

 

Current liabilities

       

Short-term borrowings

   19      26,105        635   

Trade and other payables

   20      14,934,194        16,768,973   

Amounts due to customers and amounts due to banks

   21      944,549        831,226   

Income tax payable

        9,558        10,823   

VAT and other taxes payable

        138,742        95,403   

Deferred revenue

        30,048        46,233   

Other current liabilities

        303        193   
     

 

 

   

 

 

 

Total current liabilities

        16,083,499        17,753,486   
     

 

 

   

 

 

 

Total equity and liabilities

        18,708,774        20,664,581   
     

 

 

   

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

2


QIWI plc

Consolidated statement of comprehensive income

for the year ended December 31, 2013

(in thousands of Rubles, except per share data)

 

          Year ended December 31  
     Notes    2011     2012     2013  

Revenue

   22      8,158,097        8,911,438        11,666,050   

Operating costs and expenses:

         

Cost of revenue (exclusive of depreciation and amortization)

   23      5,572,609        5,454,288        6,396,499   

Selling, general and administrative expenses

   24      1,543,688        1,838,797        2,607,718   

Depreciation and amortization

   11, 12      140,598        129,051        113,100   

Impairment of intangible assets and goodwill

   12, 13      —          3,636        5,479   
     

 

 

   

 

 

   

 

 

 

Profit from operations

        901,202        1,485,666        2,543,254   
     

 

 

   

 

 

   

 

 

 

Gain on bargain purchase

   5.2      14,765        —          —     

Gain/(loss) from disposal of subsidiaries

        7,024        (1,027     —     

Change in fair value of derivative financial assets

        —          (328     —     

Other income

        9,620        16,669        20,615   

Other expenses

   25      (73,182     (28,738     (20,089

Foreign exchange gain/(loss), net

        (12,083     (21,126     8,021   

Share of loss of associates

   7      (22,926     (13,236     (78,896

Impairment of investment in associates

   7      —          —          (21,540

Interest income

   22      6,146        25,510        22,204   

Interest expense

   22      (4,064     (7,520     (28,686
     

 

 

   

 

 

   

 

 

 

Profit before tax from continuing operations

        826,502        1,455,870        2,444,883   

Income tax expense

   27      (240,523     (407,729     (609,509
     

 

 

   

 

 

   

 

 

 

Net profit from continuing operations

        585,979        1,048,141        1,835,374   

Discontinued operations

         

Loss from discontinued operations

   8      (156,255     (240,363     —     
     

 

 

   

 

 

   

 

 

 

Net profit

        429,724        807,778        1,835,374   
     

 

 

   

 

 

   

 

 

 

Attributable to:

         

Equity holders of the parent

        519,993        910,138        1,873,226   

Non-controlling interests

        (90,269     (102,360     (37,852

Other comprehensive income

         

Other comprehensive income to be reclassified to profit or loss in subsequent periods:

         

Exchange differences on translation of foreign operations

        2,907        2,477        4,561   
     

 

 

   

 

 

   

 

 

 

Total comprehensive income, net of tax

        432,631        810,255        1,839,935   
     

 

 

   

 

 

   

 

 

 

Attributable to:

         

Equity holders of the parent

        524,451        912,095        1,883,278   

Non-controlling interests

        (91,820     (101,840     (43,343

Earnings per share:

       

Basic, profit attributable to ordinary equity holders of the parent

   10      10.00        17.50        36.00   

Basic, profit from continuing operations attributable to ordinary equity holders of the parent

   10      11.46        20.72        36.00   

Diluted, profit attributable to ordinary equity holders of the parent

   10      10.00        17.50        35.70   

Diluted, profit from continuing operations attributable to ordinary equity holders of the parent

   10      11.46        20.72        35.70   

The accompanying notes form an integral part of these consolidated financial statements.

 

3


QIWI plc

Consolidated cash flow statement

for the year ended December 31, 2013

(in thousands of Rubles, except per share data)

 

          Year ended December 31  
     Notes    2011     2012     2013  

Cash flows from operating activities

         

Profit before tax from continuing operations

        826,502        1,455,870        2,444,883   

Loss before tax from discontinued operations

   8      (137,568     (233,535     —     
     

 

 

   

 

 

   

 

 

 

Profit before tax

        688,934        1,222,335        2,444,883   
     

 

 

   

 

 

   

 

 

 

Adjustments to reconcile profit before income tax to net cash flows generated from operating activities

         

Depreciation and amortization

   11, 12      156,586        137,101        113,100   

Loss/(gain) on disposal of property, plant and equipment

        5,321        (91     12,739   

Impairment of investment in associates

   7      —          —          21,540   

Impairment of intangible assets and goodwill

   12      8,225        3,636        5,479   

Foreign exchange loss (gains), net

        32,738        (22,770     (8,021

Interest expense/(income), net

   22      (130,646     (243,490     (346,013

Bad debt expense/(recovery)

   14, 15      97,426        211,030        266,711   

Loss/(gain) on loans issued at rate different from market

   25      30,993        (8,042     —     

Change in financial assets at fair value through profit or loss

   31      —          328        —     

Gain from disposal of subsidiaries and discontinued operations

   8      (39,859     (45,519     —     

Loss recognized in remeasurement of fair value before classification as assets held for sale

   8      —          167,333        —     

Share of profit for the period attributable to non-controlling interest and accounted for as a liability

   25      16,609        24,298        —     

Loss on acquisition of non-controlling interest classified as a liability

   25      12,252        —          —     

Gain on bargain purchase

   5.2      (14,765     —          —     

Share of loss of associates

   7      28,740        13,236        78,896   

Share-based payments

   32      —          65,718        230,937   

Other

        11,910        3,588        4,609   
     

 

 

   

 

 

   

 

 

 

Operating profit before changes in working capital

        904,464        1,528,691        2,824,860   

(Increase)/decrease in trade and other receivables

        (703,506     (1,028,028     508,751   

Decrease in rent prepayment

        225,700        —          —     

Increase in other assets

        (45,302     (8,741     (92,553

Increase/(decrease) in amounts due to customers and amounts due to banks

        152,309        (490,038     (102,750

Increase in accounts payable and accruals

        1,575,986        4,041,454        1,593,765   

Loans (issued)/repaid from banking operations

        (39,518     (324,199     257,194   
     

 

 

   

 

 

   

 

 

 

Cash generated from operations

        2,070,133        3,719,139        4,989,267   

Interest received

        174,409        170,904        467,205   

Interest paid

        (6,088     (6,608     (24,194

Income tax paid

        (189,650     (384,281     (706,512
     

 

 

   

 

 

   

 

 

 

Net cash flow from operating activities

        2,048,804        3,499,154        4,725,766   
     

 

 

   

 

 

   

 

 

 

Cash flows from investing activities

         

Acquisitions of shares in subsidiaries, net of cash acquired

   5.1, 5.2      (11,955     (1,062     (44

Payment for assignment of loans

        —          —          (90,750

Net cash inflow on disposal of subsidiaries

   8      1,166        12,931        4,000   

Purchase of property and equipment

        (90,906     (35,587     (182,823

Proceeds from sale of property and equipment

        5,093        5,349        6,848   

Purchase of intangible assets

        (47,941     (42,229     (192,385

Loans issued

        (23,576     (17,752     (24,508

Repayment of loans issued

        2,985        33,638        29,715   

Purchase of debt instruments

        (635,011     (1,649,547     (2,862,535

Proceeds from settlement of debt instruments

        1,143,750        289,500        2,111,902   

Purchase of investments in associates

   7      (4,240     (92,859     —     
     

 

 

   

 

 

   

 

 

 

Net cash (used in)/generated from investing activities

        339,365        (1,497,618     (1,200,580
     

 

 

   

 

 

   

 

 

 

Cash flows from financing activities

         

Proceeds from borrowings

        48,221        52,253        34,068   

Repayment of promissory notes issued

        (8,421     (16,297     —     

Repayment of borrowings

        (15,916     (3,395     (2,526

Proceeds from/(disbursements of) from overdraft facilities, net

        2,132        (47,452     —     

Transactions with non-controlling interest

   6      9,748        10,340        —     

Other financing

        (22,177     —          —     

Dividends paid to owners of the Group

   26.1      (424,720     (865,687     (1,881,082

Dividends paid to non-controlling shareholders

   26.1      (60,803     (914     (2,098

Compensation from underwriters

   26.2      —          —          72,836   

Distribution of underwriters’ commission

   26.2      —          —          (67,643

Net cash used in financing activities

        (471,936     (871,152     (1,846,445

Effect of exchange rate changes on cash and cash equivalents

        2,327        2,335        15,012   
     

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents

        1,918,560        1,132,719        1,693,753   
     

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at the beginning of year

   16      6,891,881        8,810,441        9,943,160   
     

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at the end of year

   16      8,810,441        9,943,160        11,636,913   
     

 

 

   

 

 

   

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

4


QIWI plc

Consolidated statement of changes in equity

for the year ended December 31, 2013

(in thousands of Rubles, except per share data)

 

    Notes   Attributable to equity holders of the parent              
    Share capital     Additional
paid-in
capital
    Other
reserves
    Retained
earnings
    Translation
reserve
    Total     Non-
controlling
interests
    Total equity  
    Number of
shares
issued and
outstanding
    Amount                

As of December 31, 2012

  18     52,000,000        904        1,876,104        101,124        569,317        705        2,548,154        (49,311     2,498,843   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the year

      —          —          —          —          1,873,226        —          1,873,226        (37,852     1,835,374   

Foreign currency translation

      —          —          —          —          —          10,052        10,052        (5,491     4,561   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

      —          —          —          —          1,873,226        10,052        1,883,278        (43,343     1,839,935   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share-based payments

  32     —          —          —          230,937        —          —          230,937        —          230,937   

Exercise of options

  32     118,794        3        —          —          —          —          3        —          3   

Reimbursement of expenses from the underwriters

  26.2     —          —          —          72,836        —          —          72,836        —          72,836   

Non-proportional distribution of the reimbursement from the underwriters

  26.2     —          —          —          (67,643     —          —          (67,643     —          (67,643

Dividends (35.86 per share)

  26.1     —          —          —          —          (1,868,939     —          (1,868,939     —          (1,868,939

Dividends to non-controlling interest

  26.1     —          —          —          —          —          —          —          (2,112     (2,112
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2013

      52,118,794        907        1,876,104        337,254        573,604        10,757        2,798,626        (94,766     2,703,860   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

5


QIWI plc

Consolidated statement of changes in equity (continued)

(in thousands of Rubles, except per share data)

 

    Notes   Attributable to equity holders of the parent              
    Share capital     Additional
paid-in
capital
          Retained
earnings
    Translation
reserve
    Total     Non-
controlling
interests
    Total equity  
    Number of
shares
issued and
outstanding
    Amount       Other
reserves
           

As of December 31, 2011

  18     15,000        890        1,876,104        32,811        526,079        6,015        2,441,899        (87,020     2,354,879   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the year

      —          —          —          —          910,138        —          910,138        (102,360     807,778   

Foreign currency translation

      —          —          —          —          —          1,957        1,957        520        2,477   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

      —          —          —          —          910,138        1,957        912,095        (101,840     810,255   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Split of shares

  18     51,285,000        —          —          —          —          —          —          —          —     

Issue of share capital

  18     700,000        14        —          —          —          —          14        —          14   

Share-based payments

  32     —          —          —          65,718        —          —          65,718        —          65,718   

Disposal of subsidiaries

  8     —          —          —          —          —          (7,267     (7,267     132,718        125,451   

Contribution from non-controlling interest without change in ownership

  6     —          —          —          2,595        —          —          2,595        7,745        10,340   

Dividends (16.67 per share)

  26.1     —          —          —          —          (866,900     —          (866,900     —          (866,900

Dividends to non-controlling interest

  26.1     —          —          —          —          —          —          —          (914     (914
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2012

  18     52,000,000        904        1,876,104        101,124        569,317        705        2,548,154        (49,311     2,498,843   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

6


QIWI plc

Consolidated statement of changes in equity (continued)

(in thousands of Rubles, except per share data)

 

    Notes   Attributable to equity holders of the parent              
    Share capital     Additional
paid-in
capital
    Other
reserves
    Retained
earnings
    Translation
reserve
    Total     Non-
controlling
interests
    Total equity  
    Number of
shares
issued and
outstanding
    Amount                

As of December 31, 2010

  18     15,000        890        1,876,104        5,909        422,623        1,557        2,307,083        41,250        2,348,333   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit (loss) for the year

      —          —          —          —          519,993        —          519,993        (90,269     429,724   

Foreign currency translation

      —          —          —          —          —          4,458        4,458        (1,551     2,907   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

      —          —          —          —          519,993        4,458        524,451        (91,820     432,631   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Share in changes in equity of associates

  7     —          —          —          31,508        —          —          31,508        —          31,508   

Transactions with non-controlling interest in subsidiaries

  6     —          —          —          (1,555     —          —          (1,555     10,669        9,114   

Acquisition of subsidiaries

      —          —          —          —          —          —          —          (1,287     (1,287

Other changes in equity

      —          —          —          (3,051     —          —          (3,051     8,850        5,799   

Dividends (8.01 per share)

  26.1     —          —          —          —          (416,537     —          (416,537     —          (416,537

Dividends to non-controlling interest

  26.1     —          —          —          —          —          —          —          (54,682     (54,682
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2011

  18     15,000        890        1,876,104        32,811        526,079        6,015        2,441,899        (87,020     2,354,879   
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

7


QIWI plc

Notes to consolidated financial statements

for the year ended December 31, 2013

(in thousands of Rubles, except per share data)

 

1. Corporate information and description of business

QIWI plc (formerly known as QIWI limited) (the Company, QIWI) was registered on February 26, 2007 as a limited liability Company OE Investment in Cyprus under the Cyprus Companies Law, Cap. 113. The registered office of the Company is 12 Kennedy Avenue, Kennedy Business Centre, 2nd Floor, office 203 P.C.1087, Nicosia, Cyprus. On September 13, 2010 the directors of the Company resolved to change the name of the Company from OE Investments Limited to QIWI Limited. On February 25, 2013 the directors of the Company resolved to change the legal form of the Company from QIWI Limited to QIWI plc. The consolidated financial statements of Qiwi plc and its subsidiaries for the year ended December 31, 2013 were authorized for issue by Board of Directors on February 28, 2014.

QIWI plc and its subsidiaries (collectively the “Group”) operate electronic online payment systems primarily in Russia, Kazakhstan, Moldova, Belarus, Romania, United States of America (USA) and United Arab Emirates (UAE) and maintain banking activity supporting processing of payments.

The Company was founded as a holding company as a part of the business combination transaction in which ZAO Ob’edinennya Sistema Momentalnykh Platezhey and ZAO e-port Groups of entities were brought together by way of contribution to the Company. The transaction was accounted for as a business combination in which ZAO Ob’edinennya Sistema Momentalnykh Platezhey was identified as the acquirer.

During 2013 year QIWI plc completed initial public offering (May 2, 2013) of 13,473,808 and secondary offering of 9,427,546 (October 1, 2013) of Class B Shares in the form of American Depositary Shares (ADS).

All of the ADSs were offered by selling shareholders. QIWI did not receive any proceeds from the offerings.

None of the direct or indirect shareholders has control over the Company. Therefore there is no ultimate parent of the Group.

Information on the Company’s principal subsidiaries is disclosed in Note 6.

 

2. Principles underlying preparation of consolidated financial statements

 

2.1 Basis of preparation

The consolidated financial statements are prepared on a historical cost basis, except for derivative financial instruments that have been measured at fair value. The consolidated financial statements are presented in Russian rubles (“RUB”) and all values are rounded to the nearest thousand (RUB (000)) except when otherwise indicated.

The Group’s subsidiaries maintain and prepare their accounting records and prepare their statutory accounting reports in accordance with domestic accounting legislation. Standalone financial statements of subsidiaries are prepared in their respective functional currencies (see Note 3.3 below).

 

8


QIWI plc

Notes to consolidated financial statements (continued)

 

2. Principles underlying preparation of consolidated financial statements (continued)

 

2.1 Basis of preparation (continued)

 

In accordance with European regulation No 1606/2002 dated July 19, 2002, the 2013 consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRSs) as endorsed by the European Union (available on the website http://ec.europa.eu/internal_market/accounting/ias/ index_en.htm). Comparative figures are presented for 2011 and 2012 compiled using the same basis of preparation. For the reported periods, there are no differences as applies to the Group between the accounting standards and interpretations endorsed by the European Union and the standards and interpretations published by the International Accounting Standards Board (IASB). Consequently, the Group accounts are prepared in accordance with the IFRS standards and interpretations, as published by the IASB. These consolidated financial statements are based on the underlying accounting records appropriately adjusted and reclassified for fair presentation in accordance with IFRS. IFRS adjustments include and affect but not limited to such major areas as consolidation, revenue recognition, accruals, deferred taxation, fair value adjustments, business combinations and impairment.

The Group adopted IFRS as approved by the IASB and EU (see above) by applying IFRS 1 First-Time Adoption of International Financial Reporting Standards in its first IFRS financial statements for the year ended December 31, 2008, with January 1, 2007 being its date of transition to IFRS. At the time of adoption, IFRS 1 requires a first-time adopter to disclose reconciliations that give sufficient detail to enable users to understand the material adjustments to the balance sheet and requires reconciliations of equity reported under previous GAAP to its equity under IFRS. At the time of adoption of IFRS, the Company’s primary operations were in Russia and the CIS. The Company did not previously prepare consolidated financial statements and concluded that a reconciliation of its IFRS consolidated financial statements to the Company’s parent company separate financial statements would not be meaningful. IFRS 1 First-Time Adoption of International Financial Reporting Standards allows first-time adopters certain exemptions from the general requirement to apply IFRS as effective for December 2007 year-end retrospectively. The Group has applied the following exemption: cumulative currency translation differences for all foreign operations were deemed to be zero as of January 1, 2007.

IFRS 1 also prohibits retrospective application of some aspects of other IFRSs. In this respect, the estimates at the date to transition to IFRS are consistent with those made for the same dates in accordance with local GAAP by the Group’s subsidiaries (after adjustments to reflect any differences in accounting policies).

The Group applied no other exemptions either allowed or required by IFRS 1.

 

2.2 Basis of consolidation

The consolidated financial statements comprise the financial statements of QIWI plc and its subsidiaries as of December 31 each year.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if and only if the Group has:

 

  Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee),

 

  Exposure, or rights, to variable returns from its involvement with the investee, and

 

  The ability to use its power over the investee to affect its returns.

 

9


QIWI plc

Notes to consolidated financial statements (continued)

 

2. Principles underlying preparation of consolidated financial statements (continued)

 

2.2 Basis of consolidation (continued)

 

When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

 

  The contractual arrangement with the other vote holders of the investee.

 

  Rights arising from other contractual arrangements.

 

  The Group’s voting rights and potential voting rights.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

All intra-group balances, income, expenses and unrealized gains and losses resulting from intra-group transactions are eliminated in full, except for the foreign exchange gains and losses arising on intra-group loans.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies.

Acquisitions and disposals of non-controlling interests are accounted for as equity transactions. Written put options over non-controlling interests acquired for no consideration separately from the business combination are recognized as a financial liability at acquisition date, with an offset to Other reserves. The financial liability is measured at the fair value of its redemption amount. All subsequent changes in the carrying amount of the financial liability are recognized in the parent’s profit or loss. The exercise of such put options is accounted for as an acquisition of non-controlling interest: the Group derecognizes the financial liability and recognizes an offsetting credit in equity, using the same component of Other reserves. If the put option expires unexercised, the financial liability is reclassified to Other reserves.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:

 

  Derecognises the assets (including goodwill) and liabilities of the subsidiary.

 

  Derecognises the carrying amount of any non-controlling interests.

 

  Derecognises the cumulative translation differences recorded in equity.

 

  Recognises the fair value of the consideration received.

 

  Recognises the fair value of any investment retained.

 

  Recognises any surplus or deficit in profit or loss.

 

  Reclassifies the parent’s share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

 

10


QIWI plc

Notes to consolidated financial statements (continued)

 

2. Principles underlying preparation of consolidated financial statements (continued)

 

2.3 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial years except for the changes described below. The Group has adopted the following new and amended IFRS and IFRIC interpretations as of January 1, 2013:

 

Standard

  

Content of change

  

Impact

IFRS 10

Consolidated Financial Statements

   Single control model that applies to all entities including special purpose entities. Changed definition of control.    The changes did not have any significant effect on the Company’s financial position or financial results.

IFRS 11

Joint Arrangements

   Option to account for jointly controlled entities (JCEs) using proportionate consolidation has been removed. Instead, JCEs that meet the definition of a joint venture under IFRS 11 must be accounted for using the equity method.    The changes did not have any significant effect on the Company’s financial position or financial results.

IFRS 12

Disclosure of Interests in Other Entites

   Requirements for disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities in accordance with the amended requirements of IAS 27, IAS 28, IFRS 10, and IFRS 11.    The changes did not have any significant effect on the Company’s financial position or financial results.

IFRS 13

Fair value management

   Single source of guidance under IFRS for all fair value measurements.    The changes did not have any significant effect on the Company’s financial position or financial results.

IAS 1

Presentation of Financial Statements

   Presentation of items of Other Comprehensive Income: requirement to disclose separately the items that could be reclassified to profit or loss at a future point of time and the items that will never be reclassified.    The changes did not have any significant effect on the Company’s financial position or financial results.

IAS 1

Clarification of the requirements for comparative information

   Clarification of the requirement for comparative information: clarifying difference between voluntarily additional comparative information and minimum required comparative information.    The changes did not have any significant effect on the Company’s financial position or financial results.

IAS 19

Employee Benefits

   Option to defer the recognition of changes in net defined benefit liability has been eliminated. Amendments to disclosure requirements.    The changes did not have any significant effect on the Company’s financial position or financial results.

 

11


QIWI plc

Notes to consolidated financial statements (continued)

 

2. Principles underlying preparation of consolidated financial statements (continued)

 

2.4. Standards issued by the IASB but not yet effective and not yet adopted by EU

Standards issued but not yet effective up to the date of issuance of the Company’s financial statements and not yet endorsed in EU are listed below. This listing of standards and interpretations issued are those that the Company reasonably expects to have an impact on disclosures, financial position or performance when applied at a future date. The Company intends to adopt these standards when they become effective.

 

Standard

  

Content of change

  

Impact and effective date

IFRS 9

Financial Instruments: Classification and Measurement

  

IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and measurement of financial assets and financial liabilities as defined in IAS 39. In subsequent phases, the IASB will address hedge accounting and impairment of financial assets.

 

   The standard is effective for annual periods beginning on or after January 1, 2015.The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Company’s financial assets, but will likely have no impact on classification and measurements of financial liabilities. The Company will quantify the effect in conjunction with the other phases, when issued, to present a comprehensive picture.

Hedge accounting

   The amendments introduced a new hedge accounting model, together with corresponding disclosures about risk management activity for those applying hedge accounting. The new model represents a substantial overhaul of hedge accounting that will enable entities to better reflect their risk management activities in their financial statements. The most significant improvements apply to those that hedge non-financial risk, and so these improvements are expected to be of particular interest to non-financial institutions.   

Own credit

   As part of the amendments, the changes introduced also enable entities to change the accounting for liabilities that they have elected to measure at fair value, before applying any of the other requirements in IFRS 9. This change in accounting would mean that gains caused by a worsening in an entity’s own credit risk on such liabilities are no longer recognised in profit or loss. These amendments will facilitate earlier application of this long-awaited improvement to financial reporting.   

IAS 36

Impairment of Assets: Recoverable Amount Disclosures for Non-Financial Assets

   These amendments remove the unintended consequences of IFRS 13 on the disclosures required under IAS 36. In addition, these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed during the period.   

These amendments are effective retrospectively for annual periods beginning on or after January 1, 2014 with earlier application permitted,

provided IFRS 13 is also applied. The Company does not expect the amendments to have a material impact on its future financial statements.

 

12


QIWI plc

Notes to consolidated financial statements (continued)

 

2. Principles underlying preparation of consolidated financial statements (continued)

 

2.4. Standards issued by the IASB but not yet effective and not yet adopted by EU (continued)

 

Standard

  

Content of change

  

Impact and effective date

Investment Entities

(Amendments to IFRS 10, IFRS 12 and IAS 27)

   These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS 10. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss.    These amendments are effective for annual periods beginning on or after January 1, 2014. The Company does not expect the amendments to have a material impact on its future financial statements.

IAS 32

Offsetting Financial Assets and Financial Liabilities

   These amendments clarify the meaning of “currently has a legally enforceable right to set-off” and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting.    These amendments are effective for annual periods beginning on or after January 1, 2014. The Company does not expect the amendments to have a material impact on its future financial statements.

IAS 19

Employee Benefits entitled Defined Benefit Plans: Employee Contributions

   These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans. The objective of the amendments is to simplify the accounting for contributions that are independent of the number of years of employee service.    These amendments are effective for annual periods beginning on or after July 1, 2014. The Company does not expect the amendments to have a material impact on its future financial statements.

IAS 39

Novation of Derivatives and Continuation of Hedge Accounting

   These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria.    These amendments are effective for annual periods beginning on or after January 1, 2014. The Company does not expect the amendments to have a material impact on its future financial statements.

IFRS 14

Regulatory Deferral Accounts

   IFRS 14 allows rate-regulated entities to continue recognising regulatory deferral accounts in connection with their first-time adoption of IFRS. Existing IFRS preparers are prohibited from adopting this standard. Entities that adopt IFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or loss and other comprehensive income. The standard requires disclosures on the nature of, and risks associated with, the entity’s rate regulation and the effects of that rate regulation on its financial statements.    These amendments are effective for annual periods beginning on or after January 1, 2016 with earlier application permitted. The Company does not expect the amendments to have a material impact on its future financial statements.

 

13


QIWI plc

Notes to consolidated financial statements (continued)

 

2. Principles underlying preparation of consolidated financial statements (continued)

 

2.4. Standards issued by the IASB but not yet effective and not yet adopted by EU (continued)

 

Standard

  

Content of change

  

Impact and effective date

IFRIC 21

Levies

  

IFRIC 21 clarifies that an entity recognises a liability for a levy when the activity that triggers payment, as

identified by the relevant legislation, occurs. For a levy that is triggered upon reaching a minimum threshold, the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached.

   IFRIC 21 is effective for annual periods beginning on or after January 1, 2014. The Company does not expect the amendments to have a material impact on its future financial statements.

Management of the Company has not completed the assessment of the impact of Standards and Interpretations not yet effective as of December 31, 2013 on the Company’s accounting policies.

Annual Improvements to IFRSs 2010-2012 Cycle

Annual Improvements to IFRSs 2010-2012 Cycle is a collection of amendments to IFRSs in response to eight issues addressed during the 2010-2012 cycle for annual improvements to IFRSs. It includes the following amendments:

 

  IFRS 2 Share-based Payment: Definition of vesting condition.

 

  IFRS 3 Business Combinations: Accounting for contingent consideration in a business combination.

 

  IFRS 8 Operating Segments: Aggregation of operating segments.

 

  IFRS 8 Operating Segments: Reconciliation of the total of the reportable segments’ assets to the entity’s assets.

 

  IFRS 13 Fair Value Measurement: Short-term receivables and payables.

 

  IAS 16 Property, Plant and Equipment: Revaluation method – proportionate restatement of accumulated depreciation.

 

  IAS 24 Related Party Disclosures: Key management personnel.

 

  IAS 38 Intangible Assets: Revaluation method – proportionate restatement of accumulated amortization.

Annual Improvements to IFRSs 2011-2013 Cycle.

Annual Improvements to IFRSs 2011-2013 Cycle is a collection of amendments to IFRSs in response to four issues addressed during the 2011-2013 cycle. It includes the following amendments:

 

  IFRS 1 First-time Adoption of International Financial Reporting Standards: Meaning of ‘effective IFRSs’.

 

  IFRS 3 Business Combinations: Scope exceptions for joint ventures.

 

  IFRS 13 Fair Value Measurement: Scope of paragraph 52 (portfolio exception).

 

  IAS 40 Investment Property: Clarifying the interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property.

The Company does not expect the amendments to have a material impact on its future financial statements.

 

14


QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies

Set out below are the principal accounting policies used to prepare these consolidated financial statements:

 

3.1 Business combinations and goodwill

Business combinations are accounted for using the acquisition method.

Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also includes the fair value of any contingent consideration and share-based payment awards of the acquiree that are replaced mandatorily in the business combination (see below).

If a business combination results in the termination of pre-existing relationships between the Group and the acquiree, then the Group identified any amounts that are not part of what the Group and the acquiree exchanged in the business combination. The Group recognizes as part of application the acquisition method only the consideration transferred for the acquiree and the assets acquired and liabilities assumed in the exchange for the acquiree.

If the business combination is achieved in stages, any previously held equity interest is re-measured at its acquisition date fair value and any resulting gain or loss is recognised in profit or loss. It is then considered in the determination of goodwill.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with changes in fair value recognised either in either profit or loss or as a change to OCI. If the contingent consideration is not within the scope of IAS 39, it is measured in accordance with the appropriate IFRS. Contingent consideration that is classified as equity is not re-measured and subsequent settlement is accounted for within equity.

The Group measures any non-controlling interest at its proportionate interest in the identifiable net assets of the acquiree.

Transaction costs that the Group incurs in connection with a business combination, such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred (were zero for all periods presented).

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

 

15


QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.1 Business combinations and goodwill (continued)

 

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquired are assigned to those units.

Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed in this circumstance is measured based on the relative values of the operation disposed and the portion of the cash-generating unit retained.

 

3.2 Investments in associates

The Group’s investment in its associate is accounted for using the equity method. An associate is an entity in which the Group has significant influence.

Under the equity method, the investment in the associate is carried on the statement of financial position at cost plus post acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortized nor individually tested for impairment.

The statement of comprehensive income reflects the Group’s share of the results of operations of the associate. When there has been a change recognized directly in the equity of the associate, the Group recognizes its share of any changes and discloses this, when applicable, in the statement of changes in equity. Unrealized gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.

The Group’s share of profit of an associate is shown on the face of the statement of comprehensive income. This is the profit attributable to equity holders of the associate and, therefore, is profit after tax and non-controlling interests in the subsidiaries of the associate.

The financial statements of the associates are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognize an additional impairment loss on its investment in its associates. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of an associate and its carrying value and recognizes the amount in the statement of comprehensive income.

Upon loss of significant influence over the associate, the Group measures and recognizes any retaining investment at its fair value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from disposal is recognized in profit or loss.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.3 Foreign currency translation

The consolidated financial statements are presented in Russian rubles (RUB), which is the Company’s functional and the Group’s presentation currency. Each entity in the Group determines its own functional currency, depending on what the underlying economic environment is, and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded at the functional currency rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are re-measured at the functional currency rate of exchange at the reporting date. All differences are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as of the dates of the initial transactions.

Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognized in other comprehensive income or profit or loss is also recognized in other comprehensive income or profit or loss, respectively).

The functional currency of the foreign operations is generally the respective local currency – US Dollar (U.S.$), Euro (€), Kazakhstan tenge (KZT), Belarussian ruble (BYR), Moldovan leu (MDL), Latvian Lats (LVL) and New Romanian leu (RON).

As of the reporting date, the assets and liabilities of these subsidiaries are translated into the presentation currency of the Group (the Russian Ruble) at the rate of exchange at the reporting date and their statements of comprehensive income are translated at the weighted average exchange rates for the year or exchange rates prevailing on the date of specific transactions. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign entity, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in the profit or loss.

The exchange rates of the Russian ruble to each respective currency as of December 31, 2013 and 2012 were as follows:

 

Exchange rates at December 31

   2012      2013  

US Dollar

     30.3727         32.7292   

Euro

     40.2286         44.9699   

Kazakhstan Tenge (100)

     20.2107         21.3088   

Belarus Ruble (10,000)

     35.3376         34.3073   

Moldovan Leu (10)

     25.1014         25.0798   

Latvian Lats

     57.6989         64.0744   

New Romanian Leu (10)

     90.8247         100.8910   

The currencies listed above are not a fully convertible outside the territories of countries of their operations. Related official exchange rates are determined daily by the Central Bank of the Russian Federation (further CB RF). Market rates may differ from the official rates but the differences are, generally, within narrow parameters monitored by the respective Central Banks. The translation of assets and liabilities denominated in the currencies listed above into RUB for the purposes of these financial statements does not indicate that the Group could realize or settle, in RUB, the reported values of these assets and liabilities. Likewise, it does not indicate that the Group could return or distribute the reported RUB value of capital and retained earnings to its shareholders.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.4 Property and equipment

 

3.4.1 Cost of property and equipment

Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment in value. Expenditures for continuing repairs and maintenance are charged to the profit or loss as incurred.

 

3.4.2 Depreciation and useful lives

Depreciation is calculated on property and equipment on a straight-line basis from the time the assets are available for use, over their estimated useful lives as follows:

 

Bank equipment

     3-20 years   

Processing servers and engineering equipment

     3-10 years   

Computers and office equipment

     3-5 years   

Other equipment

     2-7 years   

The asset’s residual values, useful lives and depreciation methods are reviewed, and adjusted as appropriate, at each financial year-end.

 

3.5 Intangible assets

 

3.5.1 Software and other intangible assets

Software and other intangible assets acquired separately are measured on initial recognition at cost. The cost of other intangible assets acquired in a business combination is their fair value as of the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses.

Following initial recognition of the development expenditure as an asset, the cost model is applied requiring the asset to be carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete and the asset is available for use. It is amortized over the period of expected future benefit, generally 3-5 years. During the period of development, the asset is tested for impairment annually.

 

3.5.2 Software development costs

Development expenditure on an individual project is recognized as an intangible asset when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the asset and the ability to measure reliably the expenditure during development.

 

3.5.3 Useful life and amortization of intangible assets

The Group assesses whether the useful life of an intangible asset is finite or indefinite and, if finite, the length of that useful life. An intangible asset is regarded by the entity as having an indefinite useful life when, based on an analysis of all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the entity.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.5 Intangible assets (continued)

 

Intangible assets with finite lives are amortized on a straight-line basis over the useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. Below is the summary of useful lives of intangible assets:

 

Customer base (agents collecting cash from ultimate customers)

     4 years   

Software

     3-6 years   

Licenses

     3-5 years   

Bank license

     indefinite   

Trademarks and other rights

     3-5 years   

Amortization periods and methods for intangible assets with finite useful lives are reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and treated as changes in accounting estimates.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. Indefinite-lived intangible assets include the acquired banking license with a carrying value of 183,076 as of December 31, 2013 and 2012. It is considered indefinite-lived as the related license is expected to be renewed indefinitely.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of comprehensive income when the asset is derecognized.

 

3.6 Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset, other than Goodwill and intangible assets with indefinite useful life, may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. 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 the risks specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used.

These calculations are corroborated by valuation multiples, quoted share prices for publicly traded subsidiaries, if applicable, or other available fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of the Group’s CGUs, to which the individual assets are allocated.

These budgets and forecast calculations generally cover a period of five years or longer, when management considers appropriate. For longer periods, a long-term growth rate is calculated and applied to project future cash flows after the last year.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.6 Impairment of non-financial assets (continued)

 

Impairment losses of continuing operations are recognized in profit or loss in those expense categories consistent with the function of the impaired asset.

For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Group makes an estimate of recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount of the asset is increased to its recoverable amount.

That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in profit or loss. The following criteria are also applied in assessing impairment of specific assets:

Goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating units, to which the goodwill relates. Where the recoverable amount of the cash-generating units is less than their carrying amount an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. The Group performs its annual impairment test of goodwill as of December 31.

Intangible assets

Intangible assets with indefinite useful lives are tested for impairment annually as of December 31, either individually or at the cash generating unit level, as appropriate and whenever events and circumstances indicate that an asset may be impaired.

 

3.7 Financial assets

 

3.7.1 Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale financial assets, as appropriate. When financial assets are recognized initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. The Group determines the classification of its financial assets on initial recognition and, where allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognized on the trade date, which is the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.7 Financial assets (continued)

 

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with net changes in fair value recognized in “change in fair value of derivative financial assets”, “other gains” or “other losses” in the statement of comprehensive income.

Financial assets designated upon initial recognition at fair value through profit or loss are designated at their initial recognition date and only if the criteria under IAS 39 are satisfied.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, loans and receivables are carried at amortized cost using the effective interest rate method less any allowance for impairment. Gains and losses are recognized in profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process.

Debt instruments

Debt instruments and financial investments are non-derivative financial assets with fixed or determinable payments and fixed maturities, which the Group has the intention and ability to hold to maturity. After initial measurement, held-to-maturity financial investments are subsequently measured at amortized cost using the effective interest rate (EIR), less impairment.

If the Group sold or reclassified more than an insignificant amount of debt instruments before maturity (other than in certain specific circumstances), the entire category would be tainted and would have to be reclassified as available-for-sale. Furthermore, the Group would be prohibited from classifying any financial asset as held to maturity during the following two years.

Due from banks and loans and advances to customers

‘Due from banks’ and ‘Loans and advances to customers’, include non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, other than:

 

  Those that the Group intends to sell immediately or in the near term and those that the Group upon initial recognition designates at fair value through profit or loss;

 

  Those that the Group, upon initial recognition, designates as available for sale; or

 

  Those for which the Group may not recover substantially all of its initial investment, other than because of credit deterioration.

After initial measurement, amounts ‘Due from banks’ and ‘Loans and advances to customers’ are subsequently measured at amortized cost, less allowance for impairment.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.7 Financial assets (continued)

 

Where the loan, on drawdown, is expected to be retained by the Group, and not sold in the short term, the commitment is recorded only when the commitment is an onerous contract and it is likely to give rise to a loss (for example, due to a counterparty credit event).

Amortized cost

Held-to-maturity investments, due from banks and loans and advances to customers and debt issued, other borrowed funds and loans and receivables are measured at amortized cost. This is computed using the EIR method less any allowance for impairment. Amortized cost is calculated taking into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. The EIR amortization is included in interest income in the statement of comprehensive income. The losses arising from impairment are recognized in the statement of comprehensive income in finance costs for loans and in cost of sales or other operating expenses for receivables.

 

3.7.2 Impairment and derecognition of financial assets

Impairment

The Group assesses at each reporting date whether a financial asset or group of financial assets is impaired.

Assets carried at amortized cost

For financial assets carried at amortized cost (such as loans and receivables, amounts due from banks, loans and advances to customers as well as held-to-maturity investments), the Group first assesses individually whether objective evidence of impairment exists for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Group determines that no objective evidence of impairment exists for an individually assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is, or continues to be, recognized are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss on assets carried at amortized cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced through use of an allowance account. The amount of the loss is recognized in profit or loss.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed, to the extent that the carrying value of the asset does not exceed its amortized cost at the reversal date. Any subsequent reversal of an impairment loss is recognized in profit or loss.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.7 Financial assets (continued)

 

In relation to trade receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms of the invoice. The carrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognized when they are assessed as uncollectible.

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when:

 

  The rights to receive cash flows from the asset have expired

 

  The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognized to the extent of the Group’s continuing involvement in the asset.

In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

 

3.8 Financial liabilities

 

3.8.1 Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss, loans and borrowings, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Group determines the classification of its financial liabilities at initial recognition.

Financial liabilities are recognized initially at fair value less, in the case of loans and borrowings, directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, bank overdraft, loans and borrowings.

 

23


QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.8 Financial liabilities (continued)

 

The measurement of financial liabilities depends on their classification as follows:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. This category includes derivative financial instruments entered into by the Group that do not meet the hedge accounting criteria as defined by IAS 39.

Gains or losses on liabilities held for trading are recognized in profit or loss.

The Group has not designated any financial liabilities at fair value through profit or loss.

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method.

Gains and losses are recognized in profit or loss when the liabilities are derecognized as well as through the amortization process.

 

3.8.2 Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. Where an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in profit or loss.

 

3.8.3 Offsetting financial assets and liabilities

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statement of financial position if, and only if:

 

  There is a currently enforceable legal right to offset the recognized amounts; and

 

  There is an intention to settle on a net basis, or to realize the assets and settle the liabilities simultaneously.

 

3.9 Cash and cash equivalents

Cash comprises cash at banks and in hand and short-term deposits with an original maturity of three months or less. All these items are included as a component of cash and cash equivalents for the purpose of the statement of financial position and statement of cash flows.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.10 Employee benefits

 

3.10.1 Current employment benefits

Wages and salaries paid to employees are recognized as expenses in the current period. The Group also accrues expenses for future vacation payments.

 

3.10.2 Social contributions

Under provisions of the Russian legislation, social contributions are calculated by the Group by the application of a regressive rate (from 34% to 0% in 2011; from 30% to 10% both in 2012 and 2013) to the annual gross remuneration of each employee.

 

3.11 Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

If the effect of discounting is material, provisions are determined by discounting the expected value of future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as an interest expense.

 

3.12 Special contribution for defence of the Republic of Cyprus

Companies that do not distribute 70% of their profits after tax, as defined by the relevant tax law, within two years after the end of the relevant tax year, are deemed to have distributed as dividends 70% of these profits. A special contribution for defence of the Republic of Cyprus is levied at the 15% rate up to August 30, 2011 and 17% thereafter, at 20% rate for the tax years 2012 and 2013 and at the 17% rate for 2014 and thereafter will be payable on such deemed dividends distribution. Profits that are attributable to shareholders who are not tax resident of Cyprus and own shares in the Company either directly and/or indirectly at the end of two years from the end of the tax year to which the profits relate, are exempted. The amount of deemed distribution is reduced by any actual dividends paid out of the profits of the relevant year at any time. This special contribution for defence is payable by the Company for the account of the shareholders.

 

3.13 Income taxes

Current income tax

Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current income tax relating to items recognized in other comprehensive income is recognized in other comprehensive income.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.13 Income taxes (continued)

 

Deferred income tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

 

3.14 Revenue and certain expenses recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenues and related cost of revenue from services are recognized in the period when services are rendered, regardless of when payment is made.

Payment processing fee revenues and related transaction costs

The Group earns a fee for processing payments initiated by the ultimate customers (“consumers”) to pay to merchants and service providers (“merchants”). Payment processing fees are earned from consumers or merchants, or both. Consumers can make payments to various merchants through kiosks or through the Group’s website or applications using a unique user login and password (e-payments). Payment kiosks are owned by third parties – cash collection agents (“agents”). When consumer payments are made, the Group incurs payment costs to acquire payments payable to agents, mobile operators, international payment systems and other parties. The payment processing fee revenue and related receivable, as well as the transaction cost and the related payable, are recognized at the point when merchants accept payments from consumers in the gross amount, including fees payable for payment acquisition. Payment processing fees and transaction costs are reported gross, except for the consumer fees on payments collected through payment kiosks, which is recorded in the net amount receivable from the agents-owners of kiosks. Visa payment processing fee revenues and related transaction costs are reported net.

 

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QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.14 Revenue and certain expenses recognition (continued)

 

In accordance with terms and conditions of use of QIWI Wallet accounts, the Group charges a fee to its consumers on the balance of unused accounts after certain period of inactivity. Such fees are recorded as revenues in the period a fee is charged to a consumer.

The Group generates revenue from the foreign currency conversion when payments are made in currencies different from the country of the consumer, mainly Russia. The Group recognizes the related revenues at the time of conversion in the amount of conversion commission representing the difference between the current Russian or relevant country Central Bank foreign currency exchange rate and the foreign currency exchange rate charged by the Group’s processing system.

Revenue from advertising and advertising commissions

Advertising revenues are fixed pursuant to contracts with customers, generally advertising agencies, and are recognized monthly based on agreed amount of advertising that were displayed on electronic payment kiosks owned by agents in fixed by agreement period. Revenue from customers and commissions payable to agents for the use of kiosks is recognized gross.

The Group generates revenues from advertising through Short Message Service (SMS) through delivery of advertising messages to the Group’s consumers together with an SMS confirmation of payment made. The Group enters into agreements with advertising agencies and recognizes advertising revenue based on the number of SMS delivered to end consumers at the time of delivery of the respective SMS. The Group concluded that it needs to report these SMSs advertising revenues gross of related SMS expenses. The conclusion is based on the fact that the Group acts a principal in the transaction, because it is ultimately responsible for the delivery of service, has discretion over a choice of SMS delivery channel, determines the price and bears credit risk.

Interest revenue from agents’ overdrafts

The Group charges interest on overdrafts to agents and includes them in revenue. Related revenues are recognized using the EIR method by applying the contractually agreed interest rates to the actual daily amounts outstanding balance of overdrafts.

Revenue and cost from rent of space for kiosks

Revenue from rent of space for kiosks represents revenues received from agents for sublease of space rented from retail shops for installation of the agents’ payment kiosks. Cost of rent of space for kiosks represents payments to retail shops.

The agreements for the lease of space for kiosks from the retail shops and the agreements for the sublease of space for kiosks with the agents are based on a fixed monthly lease fee per one kiosk space. Therefore both lease revenue and cost from rent of space for kiosks are recognized on a straight-line basis over the lease term for each kiosk space. Total revenue and expense for a reporting period is equal to the number of spaces leased multiplied by the applicable lease revenue and cost per single space.

 

27


QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.14 Revenue and certain expenses recognition (continued)

 

Interest revenue

For all financial instruments measured at amortized cost, interest bearing financial assets classified as available for sale and financial instruments designated at fair value through profit or loss, interest income or expense is recorded using the EIR. The carrying amount of the financial asset or financial liability is adjusted if the Group revises its estimates of payments or receipts. Once the recorded value of a financial asset or a group of similar financial assets has been reduced due to an impairment loss, interest income continues to be recognized using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Interest income from bank loans and short- and long- term investments performed as part of the Group’s treasury function is classified as part of revenues, Interest income derived from loans issued to various 3rd and related parties as part of other arrangements is classified as interest income.

Cash and settlement services

The Group charges a fee for managing cash and deposits, including guarantee deposits from agents placed with the bank to cover consumer payments they accept. Related revenue is recorded as services are rendered or as transactions are processed.

 

3.15 Share-based payments

Employees of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

The cost of equity-settled transactions is recognized, together with a corresponding increase in other reserves in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The statement of comprehensive income expense or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in payroll expense.

No expense is recognized for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognized is the expense that would have been incurred had the terms not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

When an equity-settled award is cancelled, it is treated as if it vested on the date of cancellation, and any expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting conditions within the control of either the entity or the employee are not met. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in previous paragraph.

 

28


QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.15 Share-based payments (continued)

 

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

The option awards that are outstanding at December 31, 2012 and 2013 can only be settled in shares, which is why they are accounted for as equity-settled transactions. If awards can be settled in cash or shares at the election of the option holders, such awards are treated as liability awards.

 

3.16 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. The Group does not capitalize borrowing costs due to immateriality.

 

3.17 Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether fulfillment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that right is not explicitly specified in an arrangement.

Group as a lessee

Operating lease payments are recognized as an operating expense in the statement of comprehensive income on a straight-line basis over the lease term.

Group as a lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognized over the lease term on the same basis as rental income. Contingent rents are recognized as revenue in the period in which they are earned.

 

3.18 Non-current assets held for sale and discontinued operations

Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

In the statement of comprehensive income, income and expenses from discontinued operations are reported separately from income and expenses from continuing operations, down to the level of profit after taxes, even when the Group retains a non-controlling interest in the subsidiary after the sale. The resulting profit or loss (after taxes) is reported separately in the statement of comprehensive income.

 

29


QIWI plc

Notes to consolidated financial statements (continued)

 

3. Summary of significant accounting policies (continued)

 

3.18 Non-current assets held for sale and discontinued operations (continued)

 

Property and equipment and intangible assets once classified as held for sale are not depreciated or amortized.

 

4. Significant accounting judgments, estimates and assumptions

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the reporting dates and the reported amounts of revenues and expenses during the reporting periods. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods.

Significant judgments

Revenue recognition

The Group exercised significant judgment in reaching a conclusion about its accounting policy for gross versus net reporting of payment processing fee revenues and related transaction costs. In particular, there are two major sources of payment processing fee revenues:

 

  Payment processing fees charged to consumers on payments collected through agents, mobile operators and other payment methods; and

 

  Payment processing fees charged to merchants.

Either one of the two types of payment processing fees above, or in some cases, both payment processing fees apply to a single consumer payment. Transaction costs relate to acquisition of payments by agents, mobile operators, international payment systems and some other parties, and the applicable fees, generally determined as a percentage of consumer payment, for each specific payment channel are on terms similar to those available to other market participants.

A merchants’ payment processing fee, when it is charged, is recorded gross of related transaction costs, because the Group (i) is the primary obligor as it undertakes to transfer the consumer payment to the merchant using its payment processing system; (ii) it negotiates and ultimately sets the fee receivable from a merchant, generally as a percentage of payments; and (iii) it bears credit risk in most of the cases, unless the payment is made from a deposit made with the Group.

A consumer payment processing fee, when it is charged on payments made by consumers through payment kiosks, is reported net of any transaction costs payable to or retained by agents. This is because, although the Group is the primary obligor, it does not have any discretion over the ultimate payment processing fee set by the agent as a kiosk owner to the consumer, does not have readily available information about gross fee, and is only exposed to the net amount of fee receivable from agents.

 

30


QIWI plc

Notes to consolidated financial statements (continued)

 

4. Significant accounting judgments, estimates and assumptions (continued)

 

Significant judgments (continued)

 

A consumer payment processing fee revenue collected through mobile operators and other payment methods is reported gross of related transaction costs. Such payments are made by consumers through the Group’s website or an application using a unique user login and password, and are called e-payments. In contrast with the consumer payment processing fee revenue collected through payment kiosks, the Group, being a primary obligor in e-payment transactions, also sets the consumer’s payment processing fee, generally as a percentage of payment, although credit risk for these transactions is limited. Thus, the Group concluded that its ability to control the consumer payment processing fee for e-payments is a key differentiator from the consumer payment processing fees on payments collected through payment kiosks.

The total amounts of transaction costs reported gross for the years ended December 31, 2011, 2012 and 2013 are 4,446,945, 4,420,460 and 5,065,182 respectively, including the transaction costs for e-payments of 312,687, 659,704 and 1,236,890 respectively.

Starting from August 2012 the Group charges a fee for managing special guarantee deposit accounts made by agents to cover consumer payments they accept. Related revenues in the amounts of 109,980 and 462,332 for the years ended December 31, 2012 and 2013 are reported gross of transaction costs paid to the same agents for collection of consumer payments, because these revenues relate to a separate service having distinct value to agents and are provided at their discretion.

Functional currency

Each entity in the Group determines its own functional currency, depending on the economic environment it operates in, and items included in the financial statements of each entity are measured using that functional currency.

Significant estimates and assumptions

Significant estimates and assumptions reflected in the Company’s financial statements include, but are not limited to:

 

  Useful lives of property and equipment and of intangible assets,

 

  Fair values of assets and liabilities acquired in business combinations,

 

  Impairment of intangible assets and goodwill,

 

  Deferred tax assets,

 

  Impairment of loans and receivables,

 

  Share-based payments.

Actual results could materially differ from those estimates. The key assumptions concerning the future events and other key sources of estimation uncertainty at the reporting date that have a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Useful life of property and equipment

The Group assesses the remaining useful lives of items of property and equipment at least at each financial year-end. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. These estimates may have a material impact on the amount of the carrying values of property and equipment and on depreciation recognized in profit or loss.

 

31


QIWI plc

Notes to consolidated financial statements (continued)

 

4. Significant accounting judgments, estimates and assumptions (continued)

 

Useful life of intangible assets

The Group assesses remaining useful lives of intangible assets at each reporting date. If expectations differ from previous estimates, the changes are accounted for as a change in an accounting estimate in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors. These estimates may have a material impact on the amount of the carrying values of intangible assets and on the amount of amortization expenses recognized in profit or loss.

Fair values of assets and liabilities acquired in business combinations

The Group recognizes separately, at the acquisition date, the identifiable assets, liabilities and contingent liabilities acquired or assumed in the business combination at their fair values, which involves estimates. Such estimates are based on valuation techniques, which require considerable judgment in forecasting future cash flows and developing other assumptions. When the amounts of fair values are significant, the Group hires 3rd party appraisers to assist it in determining the related fair values.

Impairment of goodwill and indefinite-lived intangible assets

In order to determine whether the goodwill and Indefinite-lived intangible assets are impaired, it is necessary to estimate the value in use of the cash-generating units to which the goodwill and Indefinite-lived intangible assets are allocated. Estimating the value in use requires the Group to make an estimate of the expected future cash flows from the cash-generating unit and to choose a suitable discount rate in order to calculate the present value of those cash flows, and hence such estimates are subject to uncertainty. See also Note 13 below for details.

Deferred tax assets

The utilization of deferred tax assets will depend on whether it is possible to generate sufficient taxable income against which the deductible temporary differences can be utilized. Various factors are used to assess the probability of the future utilization of deferred tax assets, including past operating results, operational plans, expiration of tax losses carried forward, and tax planning strategies. The carrying amounts of deferred tax assets were 183,333 as of December 31, 2013 (2012 – 101,805) net of allowance of 19,233 which was recorded as of December 31, 2013 (2012 – 6,877) to reduce the amount of deferred tax assets to the recoverable amounts.

The allowance relates to deferred tax assets which were not recorded because the Group does not expect to realize certain of its tax loss carry forwards in the foreseeable future due to history of losses. Further details on deferred taxes are disclosed in Note 27.

Impairment of loans and receivables

Management maintains an impairment of loans and receivables to account for estimated losses resulting from the inability of customers to make required payments. When evaluating the adequacy of an impairment of loans and receivables, management bases its estimates on the aging of accounts receivable balances and loans and historical write-off experience, customer credit worthiness and changes in customer payment terms. If the financial condition of customers were to deteriorate, actual write-offs might be higher than expected.

As of December 31, 2013, the impairment of loans and receivables was recorded amounting to 612,287 (2012 – 385,111).

 

32


QIWI plc

Notes to consolidated financial statements (continued)

 

4. Significant accounting judgments, estimates and assumptions (continued)

 

Share-based payments

Management estimates the fair value of stock options at the date of grant using the Black-Scholes-Merton pricing model. The option pricing models were originally developed for use in estimating the fair value of traded options, which have different characteristics than the stock options granted by the Company and its subsidiaries and associates. The models are also sensitive to changes in the subjective assumptions, which can materially affect the fair value estimate. These subjective assumptions include the expected life of the options, expected volatility, risk-free interest rates, expected dividend yield, the fair value of the underlying shares. The amount of expense is also sensitive to the number of awards, which are expected to vest, taking into account estimated forfeitures. Below is the discussion of each of these estimates:

Expected life of the option

The Company did not have any option grants in the past, and does not have sufficient history to determine the time the option holders will hold the shares. Therefore, the Company used the expected term as the average between the vesting and contractual term of each option tranche.

Expected volatility

Due to a relatively short period of historical market data, QIWI’s share price volatility as of December 31, 2013 is defined based on the historical volatility of peer group companies over a period, which approximates the expected life of option tranches.

Risk-free interest rates are based on the implied yield currently available in the US treasury bonds with a remaining term approximating the expected life of the option award being valued.

Expected dividend yield

At the time of grant in 2012 the Group had no plans to pay cash dividends, and the Group used an expected dividend yield of zero in its option pricing model for option awards granted in 2012. Following its IPO in 2013, the Group started to pay dividends and set an expected dividend yield of 2.83% based on post-IPO dividend payments.

Fair value of the underlying shares

Prior to May 2013 the Company’s ordinary shares were not publicly traded. Therefore, it estimated the fair value of the underlying shares on the basis of valuations arrived at by employing the “income approach” valuation methodology. Since May 2013 QIWI plc is a public company and the fair value of its shares defined by reference to closing market price of its traded shares.

Estimated forfeitures

Low attrition rate among key personnel and management and lack of history resulted in an estimated forfeiture rate of zero in 2012 and the use of actual accumulated to date rate of forfeitures in 2013. If, in future, the actual forfeiture rate is higher, the actual amount of related expense will become lower.

 

33


QIWI plc

Notes to consolidated financial statements (continued)

 

5. Acquisitions of shares in subsidiaries

 

5.1 Acquisitions in 2013

K5 Retail LLC

On December 27, 2013, the Group acquired the remaining 62.5% of Blestgroup Enterprize Limited previously – a 37.5%-owned associate with its whole-owned subsidiary K5 Retail LLC. The main activities of K5 Retail LLC are sublease of space for electronic payment kiosks. Prior to the acquisition date K5 Retail LLC was an associate of the Group.

 

Cash consideration for 62.5%

     56   

Settlement of pre-existing relationships cash due to acquiree

     (10,573

loans receivable from acquiree

     127,105   

Fair value of the existing 37.5% ownership interest

     34   
  

 

 

 

Total purchase consideration transferred

     116,622   
  

 

 

 

The fair value of the identifiable assets and liabilities as of the date of acquisition were:

 

     Fair value  

Net assets acquired:

  

Property and equipment

     46   

Intangible assets

     295,384   

Accounts receivable

     49,420   

Cash and cash equivalents

     12   

Other current assets

     801   

Long-term borrowings

     (182,276

Deferred tax liability

     (9,075

Other liabilities

     (37,690
  

 

 

 

Total identifiable net assets

     116,622   

Company’s share in acquired net assets (100%)

     116,622   
  

 

 

 

Goodwill arising on acquisition

     0   
  

 

 

 

As of acquisition date the Group had a liability of 10,573 which represents the cash in QIWI Bank due to acquiree and loan receivable of 127,105. The Group recognized no gain or losses as a result of settlement of pre-existing relationships as their fair value is approximately equal to carrying amount as of acquisition date.

Net assets of K5 Retail LLC exclude loans payable to the Group of 127,105 at the date of the transaction.

The Group assigned intangible assets amounting 295,384 to contract rights. The acquired intangible asset represents a right to become a party to a lease contract with favorable lease rates and terms, and is to be amortized over the term of 2 years.

As of December 27, 2013 K5 Retail LLC had accounts receivable, gross in amount of 71,898 that were impaired by 22,478.

From the date of acquisition until December 31, 2013, Blestgroup Enterprize Limited did not contribute any revenue nor profit or loss to consolidated revenue and profit or loss.

 

34


QIWI plc

Notes to consolidated financial statements (continued)

 

5. Acquisitions of shares in subsidiaries (continued)

 

5.2 Acquisitions in 2011

Freshpay IT solutions PVl Ltd

On February 9, 2011, Akhron Finance Ltd., the Group’s subsidiary, acquired 100% of Freshpay IT solutions PVl Ltd (“Freshpay”). Freshpay operates an electronic online payment system in India.

 

Purchase consideration (cash paid)

     25,197   
  

 

 

 

Total purchase consideration transferred

     25,197   
  

 

 

 

The fair value of the identifiable assets and liabilities as of the date of acquisition was:

 

     Fair value  

Net assets acquired:

  

Property and equipment

     2,276   

Accounts receivable

     3,009   

Cash and cash equivalents

     9,257   

Accounts payable

     (1,889

Other current liabilities

     (96
  

 

 

 

Total identifiable net assets

     12,557   

Company’s share in acquired net assets (100%)

     12,557   
  

 

 

 

Goodwill arising on acquisition

     12,640   
  

 

 

 

The goodwill in the amount of 12,640 relates to future growth of acquired business and potential synergies with existing operations.

Following the acquisition of 100% ownership in Freshpay, on June 25, 2011 the Group decided to attract a local partner and sold to it a 25%, but retained control over Freshpay. Further, on December 25, 2011, to attract an additional local partner in this business, the Group disposed of an additional 25% of Freshpay, which resulted in a loss of control over the subsidiary. The above transactions were not contemplated on acquisition and were not linked to one another. The transaction was accounted for as an acquisition of an associate and a de-consolidation of a subsidiary and resulted in a 31,577 gain recorded on disposal, which is calculated as follows:

 

Fair value of the investment in Freshpay (retained interest 50%)

     20,847   

Cash consideration

     11,238   

over:

  

Carrying value of the interest in Freshpay, incl:

     (508

Derecognized carrying amount of net assets (including Goodwill)

     (3,933

Derecognized carrying amount of non-controlling interest

     3,425   
  

 

 

 

Gain from disposal of Freshpay

     31,577   
  

 

 

 

Upon loss of control in Freshpay, the Group recognized a gain resulting from remeasurement of carrying value of interest in Freshpay to fair value recorded as part of ‘Gain from disposal of subsidiaries’ in the statement of comprehensive income.

Gain from disposal of other subsidiaries comprises 8,282. Total amount of gain from disposal of subsidiaries for 2011 is equal to 39,859, of which 32,835 is included in gain or loss from discontinuing operations (Note 8)

 

35


QIWI plc

Notes to consolidated financial statements (continued)

 

5. Acquisitions of shares in subsidiaries (continued)

 

5.2 Acquisitions in 2011 (continued)

 

Management allocated the fair value of consideration for 50% interest in Freshpay to the Group’s share of Freshpay’s assets and liabilities as follows:

 

     Fair value  

Intangible assets

     9,273   

Fixed assets

     655   

Accounts receivable

     2,913   

Cash and cash equivalents

     5,750   

Other current assets

     2,789   

Other current liabilities

     (29,543

Other non-current liabilities

     (82
  

 

 

 

Total share in net assets

     (8,245
  

 

 

 

Goodwill as part of equity method investment

     29,092   
  

 

 

 

From the date of acquisition until the date control was lost, Freshpay contributed 6,075 revenue and 35,875 net losses to the Group for 2011. If the combination had taken place at the beginning of 2011, Freshpay’s revenue would have been 6,161 and its net losses would have been 29,150.

Instant Payments LLP

On December 23, 2011 ZAO Ob’edinennya Sistema Momentalnykh Platezhey, the Group’s subsidiary, acquired 60% of Instant Payments LLP (“Instant Payments”) for a cash consideration of 6, and realized a gain on bargain purchase in the amount of 14,765 relating to favorable terms negotiated with a related party, a member of the Company’s key management. Instant Payments operates an electronic online payment system in Kazakhstan, and compliments the Group’s existing business in this country through provision of services to certain key local merchants. The Group’s share in net assets of the acquired subsidiary was not material for further disclosure. From the date of acquisition through December 31, 2011 Instant Payments contributed immaterial amounts of revenue and net losses.

Other acquisitions and disposals

During 2011 total acquisition, including other individually insignificant subsidiaries, are presented below:

 

     Cash
consideration
paid
     Less cash
acquired
    Net cash
acquired with
the subsidiary
 

Freshpay

     25,197         (9,257     15,940   

Other subsidiaries

     1,370         (5,355     (3,985
  

 

 

    

 

 

   

 

 

 

Total

     26,567         (14,612     11,955   
  

 

 

    

 

 

   

 

 

 

In 2011 the Group acquired 51% in QIWI Chile S.A., 100% in TOB Finance Company OMP, 49.5% in ITBillion LLC, 100% in ZAO OSMP (Russia), and 51% in OOO Izobilie, all for an aggregate consideration of 1,370. Share in ITBillion LLC was increased from 1% (purchased in 2010) to 50,5%. It also sold 100% share in ZAO AVTOKARD-Holding for 8 and 100% of share in OOO Eksimarket for 20.

 

36


QIWI plc

Notes to consolidated financial statements (continued)

 

6. Consolidated subsidiaries

The consolidated IFRS financial statements include the assets, liabilities and financial results of the Company and its subsidiaries. The subsidiaries are listed below:

 

          Ownership interest  

Subsidiary

  

Main activity

   As of
December 31,
2012
    As of
December 31,
2013
 

ZAO QIWI (renamed from Ob’edinennya Sistema Momentalnykh Platezhey) (Russia)

   Operation of electronic payment kiosks      100     100

ZAO QIWI-Service (former ZAO OSMP) (Russia)

   Corporate center of the Group      100     100

ZAO QIWI Bank (Russia)

   Maintenance of electronic payment systems      100     100

OOO QIWI International Processing Services (renamed from QIWI Wallet) (Russia)

   Operation of on-line payments      100     100

QIWI Payment Services Provider Ltd (UAE)

   Operation of electronic payment kiosks      100     100

QIWI International Payment System LLC (USA)

   Operation of electronic payment kiosks      100     100

TOO OSMP (Kazakhstan)

   Operation of electronic payment kiosks      100     100

SOOO OSMP BEL (Belarus)

   Operation of electronic payment kiosks      51     51

SP OOO OSMP-M (Moldova)

   Operation of electronic payment kiosks      51     51

RO SRL United System of Instant Payments Ltd (Romania)

   Operation of electronic payment kiosks      51     51

IT Billion LLC (USA)

   Operation of electronic payment kiosks      50.5     50.5

QIWI USA LLC (USA)

   Operation of electronic payment kiosks      50.5     50.5

QIWI WALLET EUROPE SIA (Latvia)

   Operation of electronic payment kiosks      100     100

K5 Retail LLC (Russia) (Note 5.1)

   Sublease of space for electronic payment kiosks in Russia      37.5     100

Blestgroup Enterprises Ltd (Cyprus) (Note 5.1)

   Sublease of space for electronic payment kiosks in Russia      37.5     100

 

37


QIWI plc

Notes to consolidated financial statements (continued)

 

6. Consolidated subsidiaries (continued)

 

Below is a schedule that shows the effects of changes in the Company’s ownership interest in subsidiaries that do not result in a loss of control on the equity attributable to owners of the parent and contribution from non-controlling interest without change in ownership for the years ended December 31, 2011 and December 31, 2012:

 

Name of a subsidiary

   Consideration
received (paid) for
non-controlling
interest
    Carrying value of
non-controlling
interest acquired
(sold) classified as
equity
    Resulting increase
(decrease) of
equity
 

Changes in ownership in 2011

     9,114        10,669        (1,555

Freshpay IT Solutions Private Ltd.

     9,615        3,192        6,423   

Colorstar Management Limited

     (1     (928     927   

QIWI Malaysia SDN. BHD.

     (439     8,417        (8,856

SJETTA Ltd.

     (61     (12     (49

Contribution from non-controlling interest without change in ownership in 2012

     10,340        7,745        2,595   

QIWI Argentina S.A.

     6,175        4,569        1,606   

QIWI Chile S.A.

     3,801        2,812        989   

QIWI Baltic Ltd

     686        686        —     

IT Billion LLC

     (322     (322     —     

There were no such changes in 2013.

 

7. Investment in associates

The Group has the following associates:

 

          Ownership interest  

Associate

  

Main activity

   As of
December 31,
2012
    As of
December 31,
2013
 

QIWI Jordan Ltd. Co. (Hashemite Kingdom of Jordan)

   Operation of electronic payment kiosks in Jordan      49     49

QIWI BRASIL TECNOLOGIA DE CAPTURA E PROCESSAMENTO DE TRANSAÇÕES LTDA (Brazil)

   Operation of electronic payment kiosks in Brazil      29.57     29.57

Blestgroup Enterprises Ltd (Cyprus) (associate became subsidiary, see Note 5.1)

   Sublease of space for electronic payment kiosks in Russia      37.5     —     

QIWI International JLT (Dubai, UAE) (liquidated in 2013)

   Operation of electronic payment kiosks in UAE      50     —     

Dengionline Ltd (Cyprus)

   Aggregation services for on-line electronic payment systems      49     —     

The Group acquired and set-up certain new associates in 2012 and 2011. The overall effect of these acquisitions is not material, other than as disclosed in below.

On September 14, 2012 the Group sold 51% of Kingstown Limited, which has 100% in QIWI BRASIL TECNOLOGIA DE CAPTURA E PROCESSAMENTO DE TRANSAÇÕES LTDA (Brazil), retaining a 29.57% interest in QIWI BRASIL TECNOLOGIA DE CAPTURA E PROCESSAMENTO DE TRANSAÇÕES LTDA (Brazil). The retained 29.57% interest was recorded at fair value at the date of a loss control, amounting to 6,355.

 

38


QIWI plc

Notes to consolidated financial statements (continued)

 

7. Investment in associates (continued)

 

On May 15, 2012 the Group acquired 49% of Dengionline Ltd and an option to acquire the remaining 51% from existing shareholders of Dengionline for U.S.$3,000,000 (equivalent of 90,796). The option exercise price is 51% of eight times EBITDA of Dengionline group for the year ended April 1, 2017, and the option can be exercised during the six months starting from May 1, 2017. Based on the estimated exercise price calculated using Dengionline’s forecasted business plan, the option was out-of-the money at the date of acquisition and as of December 31, 2012, and its fair value was immaterial at both dates. On December 2, 2013 the Group sold investment in Dengionline Ltd. for U.S.$ 1 and waived from the option for nominal consideration.

The main activities of Dengionline Ltd are aggregation services for on-line electronic payment systems. The table below presents a purchase price allocation.

The value of the identifiable assets and liabilities as of the date of acquisition, May 15, 2012, was:

 

     Carrying amount     Fair value  

Net assets acquired

    

Intangible assets

     14,292        95,392   

Other non-current assets

     1,856        1,856   

Cash and cash equivalents

     155,694        155,694   

Accounts receivable

     370,651        370,651   

Other current assets

     4,740        4,740   

Deferred tax liabilities

     —          (16,785

Other non-current liabilities

     (105,231     (105,231

Accounts payable

     (654,924     (654,924

Short-term borrowings

     (19,761     (19,761

Other current liabilities

     (1,473     (1,473
  

 

 

   

 

 

 

Total identifiable net assets

     (234,156     (169,841

Company’s share in acquired net assets (49%)

     (114,736     (83,222
  

 

 

   

 

 

 

Goodwill arising on acquisition

       174,018   
    

 

 

 

Goodwill in the amount of 174,018 relates to potential synergies with the existing operations. The fair value of intangible assets amounting 95,392 are assigned to billing software, client’s database and agreements with payment systems.

From the date of acquisition till December 31, 2012, Dengionline Ltd contributed 3,319 to the Group’s share of profit from associates.

As of June 30, 2013 the Company recognized 72,574 as share in net losses of Dengionline Ltd and the remaining amount of investment of 21,540 was impaired due to deterioration of performance. In the second half of 2013 unallocated share in loss of Dengionline Ltd was 8,798. On December 2, 2013 the Group sold Dengionline Ltd for consideration U.S.$1.

 

39


QIWI plc

Notes to consolidated financial statements (continued)

 

7. Investment in associates (continued)

 

The Group’s interest in associates is accounted for using the equity method in the consolidated financial statements. The following table illustrates summarized financial information of the Group’s investment in its individually insignificant associates:

 

     As of
December 31,
2012
    As of
December 31,
2013
 

Share of the associates’ statement of financial position:

    

Current assets

     346,220        12,301   

Non-current assets

     163,010        16,071   

Current liabilities

     (401,416     (9,695

Non-current liabilities

     (188,784     (44,977
  

 

 

   

 

 

 

Net assets

     (80,970     (26,300

Unrecognized share of losses of associates

     8,521        26,300   

Impairment of investment in associates

     (1,133     —     

Goodwill

     174,018        —     
  

 

 

   

 

 

 

Carrying amount of investment in associates

     100,436        —     
  

 

 

   

 

 

 

Share of the associates’ revenue and loss:

    

Revenue

     193,745        291,644   

Share of net loss (including unrecognized share of loss 2013: 67,755; 2012: 0)

     (13,236     (168,189

The impairment of 1,133 in 2012 was caused by under-performance of the Group’s associate in Jordan.

The total share of the associates’ revenue for the year 2013 includes share in revenue of Dengionline Ltd. disposed in 2013 in the amount of 222,482 and share in revenue of Blestgroup Ltd before the acquisition of control by the Group in the amount of 67,787.

The total share of the associates’ loss for the year 2013 includes share in loss of Dengionline Ltd. disposed in 2013 in the amount of 102,912 and share in loss of Blestgroup Ltd before the acquisition of control by the Group in the amount of 32,656.

Movements in investments in associates in 2013, 2012 and 2011:

 

     2011     2012     2013  

Investments in associates as of January 1

     4,101        34,656        100,436   

Acquisition of shares in associates – cash consideration

     695        90,795        —     

Acquisition of shares in associates – at fair value

     20,847        6,355        —     

Contribution to associates without a corresponding change in ownership

     3,545        13,440        —     

Contribution to newly founded associates

     —          2,116        —     

Loss recognized on the remeasurement to fair value prior to classification as assets held for sale

     —          (29,816     —     

Share in net losses of associates

     (22,926     (13,236     (78,896

Impairment of investment in associates

     —          —          (21,540

Foreign currency translation

     (3,114     (3,874     —     

Share in other changes in capital of associates

     31,508        —          —     
  

 

 

   

 

 

   

 

 

 

Investments in associates at December 31

     34,656        100,436        —     
  

 

 

   

 

 

   

 

 

 

 

40


QIWI plc

Notes to consolidated financial statements (continued)

 

8. Disposals and discontinued operations

As part of the restructuring, on June 30, 2012, the Group Board of Directors approved a single coordinated plan to dispose of its non-core subsidiaries and associates as described below:

 

(i) Ukrainian business and non-CIS international early stage businesses forming two major geographical areas of operation of the QIWI Distribution segment classified as discontinued operations;

 

(ii) Diomachin group – engaged in production of transaction recording devices for payment kiosks classified as discontinued operations;

 

(iii) Master Loto Ltd., OOO Loto Integrator and OOO Loto Master are engaged in distribution of lotteries through electronic on-line payment kiosks – not included in discontinued operations as insignificant.

All these companies had been disposed by September 30, 2012.

The loss from disposal was calculated as the differences between:

 

(i) The fair value of the consideration received, plus the fair value of the retained interest in the entities disposed; and the carrying value of net assets disposed of, as of the date of the transaction.

 

Cash consideration receivable

     10,294   

Cash received for assignment of loans agreement from subsidiaries and associates classified as discontinued operations

     61,391   

Investment in associates, at fair value

     6,355   
  

 

 

 

Total consideration received

     78,040   

Net assets of discontinued operations derecognized on disposal

     (38,761

Recycling of translation gain upon disposal

     7,267   
  

 

 

 

Gain on disposal of discontinued operations

     46,546   
  

 

 

 

The results of identified companies were re-classified as discontinued operations for the years ended December 31. These results are presented below:

 

     Year ended December 31  
     2011     2012  

Revenue

     342,537        155,127   

Operating expenses

     (478,461     (249,431
  

 

 

   

 

 

 

Loss from operations

     (135,924     (94,304

Finance cost, net

     (8,043     (8,621

Gain from disposal of subsidiaries

     —          46,546   

Other income/(expenses), net

     6,399        (9,823

Loss recognized on the remeasurement to fair value

     —          (167,333
  

 

 

   

 

 

 

Loss before tax

     (137,568     (233,535

Income tax expense

     (18,687     (6,828
  

 

 

   

 

 

 

Net loss from discontinued operation

     (156,255     (240,363
  

 

 

   

 

 

 

attributable to:

    

Equity holders of the parent

     (75,736     (167,573

Non-controlling interests

     (80,519     (72,790

Earnings per share (Note 10):

    

Basic, loss from discontinued operations

     (1.46     (3.22

Diluted, from discontinued operations

     (1.46     (3.22

 

41


QIWI plc

Notes to consolidated financial statements (continued)

 

8. Disposals and discontinued operations (continued)

 

All of the discontinued operations were sold by QIWI plc, which is a Cyprus company. According to Cyprus tax legislation, income from investing activities is not subject to income tax. Hence income tax expense on the disposal of discontinued operations equals to nil.

Loss for the period from discontinued operations consists of loss from current operations in the amount of 119,576, loss recognized on the remeasurement to fair value upon the classification of disposal groups as discontinued operations in the amount of 167,333 and gain from disposal equal to 46,546.

Both prior to and upon the classification of the disposal groups as discontinued operations, the Group performed an impairment test and recorded an impairment charge of 111,520 related to investments in associates, property and equipment, intangible assets, loans and receivables and inventories. In addition to that, the Group recorded an impairment of the intra-Group loans issued to the disposal groups, classified as part of investments into discontinued operations due to losses accumulated by them in the amount of 55,813.

Loans receivable from the disposed subsidiaries as of December 31, 2012 include the loans issued by QIWI plc to Sanmere Investment Holding Ltd and Akhron Finance Ltd for the total amount of 132,093 (113,545 of which is principal and 18,548 of which is accrued interest), repayable by the end of 2013, and bearing interest of 10%. Fair value of these loans was estimated to be nil as the repayment is not considered probable at this time.

Below are the assets and liabilities of all companies classified as discontinued operations as of the date of their disposal:

 

Non-current assets

     65,869   

Current assets

     282,813   

Liabilities

     (435,191

Non-controlling interest

     125,270   
  

 

 

 
     38,761   
  

 

 

 

Net cash inflow on disposal of discontinued operations for the year ended December 31, 2012 are as follows:

 

Net cash inflow on disposal of subsidiaries – discontinued

     29,907   

Cash consideration received

     61,391   

Cash and cash equivalents disposed

     (31,484

The net cash flows incurred by discontinued operations for the year ended December 31 are as follows:

 

     Year ended December 31  
     2011     2012  

Operating

     (50,767     39,737   

Investing

     (13,747     (34,502

Financing

     24,418        (36,950
  

 

 

   

 

 

 

Net cash outflow

     (40,096     (31,715
  

 

 

   

 

 

 

 

42


QIWI plc

Notes to consolidated financial statements (continued)

 

8. Disposals and discontinued operations (continued)

 

In addition the Group disposed the other subsidiaries which were not classified as discontinued operations. Their financial results and net cash flows for the year ended December 31 are as follows:

 

     Year ended December, 31  
     2011     2012  

Net cash inflow/(outflow) on disposal of subsidiaries – continuing

     1,166        (16,976

Cash consideration received

     12,838        1   

Cash and cash equivalents disposed

     (11,672     (16,977

Gain/(loss) from disposal of subsidiaries – continuing

     39,859        (1,027

Cash consideration receivable

     12,838        4,000   

Less net assets disposed

     25,453        46,266   

Less expense on assignment of loans

     —          (35,939

Less impairment of accounts receivable from the disposed subsidiaries

     —          (7,906

Less disposal of non-controlling interest

     1,568        (7,448

 

9. Operating segments

In reviewing the operational performance of the Group and allocating resources, the chief operating decision maker of the Group (CODM), who is the Croup’s CEO and, prior to the appointment of the CEO, was the board of directors of the Group, reviews selected items of each segment’s statement of comprehensive income.

Management reporting is different from IFRS, because it does not include certain IFRS adjustments which are not analyzed by the chief operating decision maker in assessing the core operating performance of the business. Such adjustments affect such major areas as deferred taxation, business combinations, offering expenses, share-based payments, fair value adjustments and amortization thereof, impairment, as well as nonrecurring items.

The financial data is presented on a combined basis for all key subsidiaries and associates representing the segment net revenue, segment profit before tax and segment net profit. . The Group measures the performance of its operating segments by monitoring: segment net revenue, segment profit before tax and segment net profit. Segment net revenue is a measure of profitability defined as the segment revenues less segment direct costs, which include the same items as the “Cost of revenue (exclusive of depreciation and amortization)” as reported in the Group’s consolidated statement of comprehensive income, except for payroll costs. Payroll costs are excluded because, although required to maintain the Group’s distribution network, they are not linked to payment volume.

Subsequent to December 31, 2013, the Group has adjusted its segment presentation as described in Note 33.

 

43


QIWI plc

Notes to consolidated financial statements (continued)

 

9. Operating segments (continued)

 

The segment’s statement of comprehensive income for the years ended December 31, 2011, 2012 and 2013, as presented to the CODM is presented below:

 

     2011
(revised)
     2012
(revised)
     2013
(revised)
 

Segment net revenue

     3,261,335         4,169,510         6,167,526   
  

 

 

    

 

 

    

 

 

 

Segment profit before tax

     1,057,715         1,704,889         2,788,214   
  

 

 

    

 

 

    

 

 

 

Segment net profit

     782,096         1,276,311         2,172,891   
  

 

 

    

 

 

    

 

 

 

Segment net revenue, as presented to the CODM, for the years ended December 31, 2011, 2012 and 2013 is calculated by subtracting cost of revenue (exclusive of depreciation and amortization) from revenue and adding back payroll and related taxes as presented in table below:

 

     2011
(revised)
    2012
(revised)
    2013
(revised)
 

Revenue under IFRS

     8,158,097        8,911,438        11,666,050   

Cost of revenue (exclusive of depreciation and amortization)

     (5,572,609     (5,454,288     (6,396,499

Difference in timing of expense recognition

     6,899        —          —     

Payroll and related taxes

     668,948        712,360        897,975   
  

 

 

   

 

 

   

 

 

 

Total segment net revenue, as presented to CODM

     3,261,335        4,169,510        6,167,526   
  

 

 

   

 

 

   

 

 

 

A reconciliation of segment profit before tax to IFRS consolidated profit before tax from continuing operations of the Group, as presented to the CODM, for the years ended December 31, 2011, 2012 and 2013 is presented below:

 

     2011
(revised)
    2012
(revised)
    2013
(revised)
 

Total segment net profit before tax, as presented to CODM

     1,057,715        1,704,889        2,788,214   

Amortization of fair value adjustments to intangible assets recorded on acquisitions and related impairment

     (51,405     (42,471     (22,183

Corporate costs allocated to discontinued international operations

     (140,862     (61,274     —     

Effect of software development cost, not capitalized in segment presentation

     9,876        35,000        —     

Offering expenses

     —          (109,237     (84,732

Share-based payments

     —          (65,718     (230,937

Gain/(loss) on loans issued at rate different from market

     (30,993     8,042        —     

Difference in timing of expense recognition

     (6,899     —          —     

Goodwill impairment

     —          —          (5,479

Other

     (10,930     (13,361     —     
  

 

 

   

 

 

   

 

 

 

Profit before tax from continuing operations under IFRS

     826,502        1,455,870        2,444,883   
  

 

 

   

 

 

   

 

 

 

 

44


QIWI plc

Notes to consolidated financial statements (continued)

 

9. Operating segments (continued)

 

A reconciliation of segment net profit to IFRS consolidated net profit from continuing operations of the Group, as presented to the CODM, for the years ended December 31, 2011, 2012 and 2013 is presented below:

 

     2011
(revised)
    2012
(revised)
    2013
(revised)
 

Total segment net profit, as presented to CODM

     782,096        1,276,311        2,172,891   

Amortization of fair value adjustments to intangible assets recorded on acquisitions and related impairment

     (51,405     (42,471     (22,183

Corporate costs allocated to discontinued international operations

     (140,862     (61,274     —     

Effect of software development cost, not capitalized in segment presentation

     9,876        35,000        —     

Offering expenses

     —          (109,237     (84,732

Share-based payments

     —          (65,718     (230,937

Gain/(loss) on loans issued at rate different from market

     (30,993     8,042        —     

Difference in timing of expense recognition

     (6,899     —          —     

Goodwill impairment

     —          —          (5,479

Other

     (10,930     (13,361     —     

Effect from taxation of the above items

     35,096        20,849        5,814   
  

 

 

   

 

 

   

 

 

 

Net profit under from continuing operations under IFRS

     585,979        1,048,141        1,835,374   
  

 

 

   

 

 

   

 

 

 

Geographic information

Revenues from external customers are presented below:

 

     2011      2012      2013  

Russia

     7,511,401         7,949,320         9,817,941   

Kazakhstan

     581,128         737,916         677,745   

Other

     65,568         224,202         1,170,364   
  

 

 

    

 

 

    

 

 

 

Total revenue per consolidated income statement

     8,158,097         8,911,438         11,666,050   
  

 

 

    

 

 

    

 

 

 

 

45


QIWI plc

Notes to consolidated financial statements (continued)

 

9. Operating segments (continued)

 

The revenue information above is based on the location of the customer.

Revenues from a single external customer amounting to 10% or greater of Group’s revenue from continuing operations are presented in the table below:

 

     2011      2012     2013  

Customer 1

     1,682,221         <10     <10

Customer 2

     905,001         <10     <10

Customer 3

     739,940         <10     <10

The Group allocates non-current assets by geographical region based on the principal country of major operations of a particular legal entity within the Group:

 

     As of
January 1,
2012
     As of
December 31,
2012
     As of
December 31,
2013
 

Russia

     2,133,222         2,066,637         2,695,778   

Kazakhstan and other

     12,878         14,946         17,367   
  

 

 

    

 

 

    

 

 

 

Total non-current assets of continuing operations

     2,146,100         2,081,583         2,713,145   

Non-current assets from discontinued operations

     50,297         —           —     
  

 

 

    

 

 

    

 

 

 

Non-current assets

     2,196,397         2,081,583         2,713,145   
  

 

 

    

 

 

    

 

 

 

Non-current assets for this purpose consist of property and equipment, goodwill and intangible assets.

 

10. Earnings per share

Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary equity holders of the parent adjusted for effect of potential share exercise by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

 

46


QIWI plc

Notes to consolidated financial statements (continued)

 

10. Earnings per share (continued)

 

The following reflects the income and share data used in basic and diluted earnings per share computations for the years ended December 31:

 

     Notes    2011     2012     2013  

Net profit attributable to ordinary equity holders of the parent from continuing operations

        595,728        1,077,531        1,873,226   

Profit/(loss) attributable to ordinary equity holders of the parent from a discontinued operation

        (75,735     (167,393     —     
     

 

 

   

 

 

   

 

 

 

Net profit attributable to ordinary equity holders of the parent for basic earnings

        519,993        910,138        1,873,226   
     

 

 

   

 

 

   

 

 

 

Weighted average number of ordinary shares for basic earnings per share

   18      52,000,000        52,000,000        52,034,085   

Effect of share-based payments

   32      —          1,316        434,630   
     

 

 

   

 

 

   

 

 

 

Weighted average number of ordinary shares for diluted earnings per share

   18      52,000,000        52,001,316        52,468,715   
     

 

 

   

 

 

   

 

 

 

Earnings per share:

         

Basic, profit attributable to ordinary equity holders of the parent

        10.00        17.50        36.00   

Basic, profit from continuing operations attributable to ordinary equity holders of the parent

        11.46        20.72        36.00   

Diluted, profit attributable to ordinary equity holders of the parent

        10.00        17.50        35.70   

Diluted, profit from continuing operations attributable to ordinary equity holders of the parent

        11.46        20.72        35.70   

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

 

47


QIWI plc

Notes to consolidated financial statements (continued)

 

11. Property and equipment

 

     Processing
servers and
engineering
equipment
    Computers
and office
equipment
    Bank
equipment
    Other
equipment
    Assets
under
construction
    Total  

Cost

            

Balance as of December 31, 2011

     254,828        73,265        10,163        12,086        4,829        355,171   

Internal transfers

     6,996        3,864        1,099        179        (12,138     —     

Additions

     14,205        12,979        —          833        7,570        35,587   

Disposals

     (7,700     (13,768     (2,170     (1,182     —          (24,820

Disposals of subsidiaries

     (1,779     (682     —          (20     —          (2,481

Discontinued operations

     (46,692     (4,823     —          (4,301     —          (55,816

Foreign currency translation

     (2,233     (533     —          (229     (2     (2,997
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2012

     217,625        70,302        9,092        7,366        259        304,644   

Internal transfers

     67,902        431        380        69,598        (138,311     —     

Additions

     123,328        9,704        —          788        146,451        280,271   

Disposals

     (28,504     (14,875     (6,329     (5,516     (181     (55,405

Foreign currency translation

     547        2,068        —          26        (6     2,635   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2013

     380,898        67,630        3,143        72,262        8,212        532,145   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated depreciation and impairment:

            

Balance as of December 31, 2011

     (140,405     (37,903     (2,476     (6,516     —          (187,300

Internal transfers

     —          (41     —          41        —          —     

Depreciation charge

     (52,668     (17,292     (3,910     (1,440     —          (75,310

Depreciation charge (discontinued operations)

     (1,407     (484     —          (132     —          (2,023

Disposals

     4,646        11,449        2,068        497        —          18,660   

Disposals of subsidiaries

     1,514        585        —          16        —          2,115   

Discontinued operations

     36,342        2,947        —          3,388        —          42,677   

Foreign currency translation

     1,762        299        —          129        —          2,190   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2012

     (150,216     (40,440     (4,318     (4,017     —          (198,991

Internal transfers

     (587     227        —          360        —          —     

Depreciation charge

     (41,852     (14,265     (2,145     (2,739     —          (61,001

Disposals

     17,877        10,530        4,187        4,257        —          36,851   

Foreign currency translation

     310        (1,807     —          (7     —          (1504
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2013

     (174,468     (45,755     (2,276     (2,146     —          (224,645
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net book value

            

As of December 31, 2011

     114,423        35,362        7,687        5,570        4,829        167,871   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2012

     67,409        29,862        4,774        3,349        259        105,653   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2013

     206,430        21,875        867        70,116        8,212        307,500   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

In 2013 and 2012 no significant impairment of property and equipment is recognized. As of December 31, 2013, the total amount of fully depreciated assets is equal to 174,444 (2012 – 105,102).

 

48


QIWI plc

Notes to consolidated financial statements (continued)

 

12. Intangible assets

 

    Goodwill     Licenses     Computer
Software
    Customer
relationships
    Trade
marks
    Contract
rights and
others
    Total  

Cost

             

Balance as of December 31, 2011

    1,671,993        183,076        481,937        170,310        107,300        10,447        2,625,063   

Additions

    —          —          40,487        —          —          1,742        42,229   

Transfer between groups

    —          —          813        —          —          (813     —     

Disposals

    —          —          (3,085     —          —          —          (3,085

Disposals of subsidiaries

    (4,454     —          (1,096     —          (30     —          (5,580

Discontinued operations

    (30,654     —          (65,576     —          (3     (5     (96,238

Foreign currency translation

    —          —          (177     —          —          718        541   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2012

    1,636,885        183,076        453,303        170,310        107,267        12,089        2,562,930   

Additions

    —          —          159,388        —          —          36,098        195,486   

Additions from business combinations (Note 5.1)

    —          —          —          —          —          295,384        295,384   

Transfer between groups

    —          —          1,988        —          —          (1,988     —     

Disposals

    —          —          (206,983     —          (107,170     (5,336     (319,489

Foreign currency translation

    —          —          580        —          —          9        589   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2013

    1,636,885        183,076        408,276        170,310        97        336,256        2,734,900   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Accumulated amortization and Impairment:

             

Balance as of December 31, 2011

    (32,747     —          (279,835     (170,310     (107,254     (6,391     (596,537

Charge for the year

    —          —          (51,676     —          (19     (2,046     (53,741

Charge for the year (discontinued operations)

    —          —          (6,026     —          —          (1     (6,027

Transfer between groups

    —          —          (29     —          —          29        —     

Impairment

    —          —          (3,636     —          —          —          (3,636

Impairment (discontinued operations)

    (2,361     —          (26,277     —          —          —          (28,638

Disposals

    —          —          3,085        —          —          —          3,085   

Disposals of subsidiaries

    4,454        —          873        —          6        —          5,333   

Discontinued operations

    30,654        —          62,768        —          —          2        93,424   

Foreign currency translation

    —          —          (275     —          35        (23     (263
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2012

    —          —          (301,028     (170,310     (107,232     (8,430     (587,000

Charge for the year

    —          —          (50,811     —          (9     (1,279     (52,099

Impairment

    (5,479     —          —          —          —          —          (5,479

Disposals

    —          —          202,982        —          107,144        5,215        315,341   

Foreign currency translation

    —          —          (20     —          —          2        (18
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance as of December 31, 2013

    (5,479     —          (148,877     (170,310     (97     (4,492     (329,255
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net book value

             

As of December 31, 2011

    1,639,246        183,076        202,102        —          46        4,056        2,028,526   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2012

    1,636,885        183,076        152,275        —          35        3,659        1,975,930   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2013

    1,631,406        183,076        259,399        —          —          331,764        2,405,645   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of December 31, 2013, the total amount of fully amortized assets is equal to 174,789 (2012 – 466,112).

 

49


QIWI plc

Notes to consolidated financial statements (continued)

 

13. Impairment testing of goodwill and intangible assets with indefinite useful life

An analysis and movement of goodwill and licenses acquired through business combinations, by CGU, as included in the intangible assets note (Note 12), is as follows:

 

     OSMP      Visa QIWI
Wallet
     Others     Total  

Cost

          

As of December 31, 2011

     1,449,570         364,912         7,840        1,822,322   

Impairment

     —           —           (2,361     (2,361
  

 

 

    

 

 

    

 

 

   

 

 

 

As of December 31, 2012

     1,449,570         364,912         5,479        1,819,961   

Impairment

     —           —           (5,479     (5,479
  

 

 

    

 

 

    

 

 

   

 

 

 

As of December 31, 2013

     1,449,570         364,912         —          1,814,482   
  

 

 

    

 

 

    

 

 

   

 

 

 

The Group determined the following CGUs: OSMP which is the major part of QD and Visa QIWI Wallet.

The carrying amount of Visa QIWI Wallet includes intangible assets 183,076 with an indefinite useful life (Bank license is expected to be renewed indefinitely) recorded by the Group at the date of acquisition on September 24, 2010. Based on the analysis of Visa QIWI Wallet CGU’s carrying value, including allocated goodwill and bank license, compared to its recoverable amount, the Group did not identify impairment of intangible assets with indefinite useful life as of December 31, 2013.

Prior to May 2013 the Company’s ordinary shares were not publicly traded, and Company measured the recoverable amounts of CGUs based on value in use using internal forecasted cash flows. Since then the Company estimated the recoverable amounts of its CGUs based on fair value less costs to sell on the basis of Group earnings multiples derived from market quotes as of December 31, 2013.

The calculation of recoverable amounts of these CGUs is most sensitive to:

 

  Market price and volume of traded shares;

 

  The Group’s transaction volume and net revenue yields;

 

  Net profit margins of each CGU;

The values assigned to each of these parameters reflect market views on business.

With regard to the assessment of recoverable amounts of cash-generating units, management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the units to materially exceed its recoverable amount.

As a result of deterioration of performance of one of Group business units in 2013 and 2012, an impairment charge of 5,479 (2012 – 2,361; 2011 – 8,225) was recorded in “Others” CGUs.

The principal factors leading to recognition by the Group the impairment losses of other CGU’s goodwill in 2013 and 2012 were reductions in the projected future cash flows of the recently acquired or established international businesses. Although the Group continued to project future long-term growth in cash flows, such growth was lower than that estimated at the time the businesses were acquired.

 

50


QIWI plc

Notes to consolidated financial statements (continued)

 

14. Long-term and short-term loans

As of December 31, 2013, long-term and short-term loans consisted of the following:

 

     Total as of
December 31,
2013
     Provision for
impairment of
loans
    Net as of
December 31,
2013
 

Long-term loans

       

Loans to individuals

     10,637         —          10,637   

Loans to legal entities

     31,944         (31,944     —     
  

 

 

    

 

 

   

 

 

 

Total long-term loans

     42,581         (31,944     10,637   
  

 

 

    

 

 

   

 

 

 

Short-term loans

       

Loans to individuals

     10,196         —          10,196   

Loans to legal entities

     136,848         (85,362     51,486   

Due from financial institutions

     7,196         (3,448     3,748   
  

 

 

    

 

 

   

 

 

 

Total short-term loans

     154,240         (88,810       65,430   
  

 

 

    

 

 

   

 

 

 

As of December 31, 2012, long-term and short-term loans consisted of the following:

 

     Total as of
December 31,
2012
     Provision for
impairment of
loans
    Net as of
December 31,
2012
 

Long-term loans

       

Loans to individuals

     18,480         —          18,480   

Loans to legal entities

     166,904         —          166,904   
  

 

 

    

 

 

   

 

 

 

Total long-term loans

     185,384         —          185,384   
  

 

 

    

 

 

   

 

 

 

Short-term loans

       

Loans to individuals

     14,436         (106     14,330   

Loans to legal entities

     367,632         (60,000     307,632   

Due from financial institutions

     5,572         (3,448     2,124   
  

 

 

    

 

 

   

 

 

 

Total short-term loans

     387,640         (63,554     324,086   
  

 

 

    

 

 

   

 

 

 

As of December 31, 2013, the provision for impairment of loans movement was the following:

 

     Provision for
impairment
of loans as of
December 31,
2012
    Charge for
the period
    Write offs      Provision for
impairment
of loans as of
December 31,
2013
 

Loans due from credit institutions

     (3,448     —          —           (3,448

Short term loans and due from to individuals

     (106     —          106         —     

Short term loans and due from legal entities

     (60,000     (57,306     —           (117,306
  

 

 

   

 

 

   

 

 

    

 

 

 

Total short-term receivables

     (63,554     (57,306     106         (120,754
  

 

 

   

 

 

   

 

 

    

 

 

 

 

51


QIWI plc

Notes to consolidated financial statements (continued)

 

14. Long-term and short-term loans (continued)

 

As of December 31, 2012, the provision for impairment of loans movement was the following:

 

     Provision for
impairment
of loans as of
December 31,
2011
    Recovery/
(Charge) for the
period
    Provision for
impairment
of loans as of
December 31,
2012
 

Loans due from credit institutions

     (3,448     —          (3,448

Short term loans and due from to individuals

     (573     467        (106

Short term loans and due from legal entities

     (10,000     (50,000     (60,000
  

 

 

   

 

 

   

 

 

 

Total Bank’s short-term receivables

     (14,021     (49,533     (63,554
  

 

 

   

 

 

   

 

 

 

As of December 31, 2011, the provision for impairment of loans movement was the following:

 

     Provision for
impairment
of loans as of
December 31,
2010
    Charge for the
period
    Provision for
impairment
of loans as of
December 31,
2011
 

Loans due from credit institutions

     (3,361     (87     (3,448

Short term loans and due from to individuals

     (7     (566     (573

Short term loans and due from legal entities

     (10,000     —          (10,000
  

 

 

   

 

 

   

 

 

 

Total Bank’s short-term receivables

     (13,368     (653     (14,021
  

 

 

   

 

 

   

 

 

 

As of December 31, 2011, 2012 and 2013, the Group had no overdue but not impaired loans.

The following table demonstrates due dates of the Group’s loans issued including interests accrued as of December 31, 2012 and 2013:

 

     On demand
and
<1 month
     1-6 months      6-12 months      >1 year      Total long-
term and
short-term
loans
 

Loans receivable as of December 31, 2012

     14,857         72,620         236,609         185,384         509,470   

Loans receivable as of December 31, 2013

     5,395         55,345         4,690         10,637         76,067   

 

52


QIWI plc

Notes to consolidated financial statements (continued)

 

15. Trade and other receivables

As of December 31, 2013, trade and other receivables consisted of the following:

 

     Total as of
December 31,
2013
     Provision for
impairment of
receivables
    Net as of
December 31,
2013
 

Cash receivable from agents

     932,541         (448,042     484,499   

Deposits issued to merchants

     1,945,370         (6,223     1,939,147   

Payment processing fees receivable from merchants

     150,561         (1,080     149,481   

Receivables for advertising

     74,730         (24,083     50,647   

Advances issued to vendors

     42,763         (1,726     41,037   

Rent receivables

     71,271         (5,459     65,812   

Other receivables and advances

     46,594         (4,920     41,674   
  

 

 

    

 

 

   

 

 

 

Total trade and other receivables

     3,263,830         (491,533     2,772,297   
  

 

 

    

 

 

   

 

 

 

As of December 31, 2012, trade and other receivables consisted of the following:

 

     Total as of
December 31,
2012
     Provision for
impairment of
receivables
    Net as of
December 31,
2012
 

Cash receivable from agents

     1,418,248         (288,017     1,130,231   

Deposits issued to merchants

     1,996,324         (5,296     1,991,028   

Payment processing fees receivable from merchants

     171,610         (1,352     170,258   

Receivables for advertising

     67,776         (16,361     51,415   

Advances issued to vendors

     43,121         (3,026     40,095   

Rent receivables

     17,425         (3,701     13,724   

Other receivables and advances

     44,724         (3,804     40,920   
  

 

 

    

 

 

   

 

 

 

Total trade and other receivables

     3,759,228         (321,557     3,437,671   
  

 

 

    

 

 

   

 

 

 

Trade receivables aged but not impaired as of December 31, 2013 are presented below:

 

                   Ageing of receivables (days)  

As of December 31, 2013

   Total      <30      30-60      60-90      90-180      180-360      >360  

Cash receivable from agents

     484,499         447,640         16,474         2,140         13,330         4,722            193   

Payment processing fees receivable from merchants

     149,481         120,527         28,418         307         227         —           2   

Receivables for advertising

     50,647         18,295         19,714         8,956         3,682         —           —     

Rent receivables

     65,812         25,599         22,384         6,417         11,380         32         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total trade and other receivables

     750,439         612,061         86,990         17,820         28,619         4,754         195   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

53


QIWI plc

Notes to consolidated financial statements (continued)

 

15. Trade and other receivables (continued)

 

Trade receivables aged but not impaired as of December 31, 2012 are presented below:

 

                   Ageing of receivables (days)  

As of December 31, 2012

   Total      <30      30-60      60-90      90-180      180-360      >360  

Cash receivable from agents

     1,130,231         1,059,433         22,660         34,923         8,584         1,062         3,569   

Payment processing fees receivable from merchants

     170,258         156,164         8,709         3,442         1,796         116         31   

Receivables for advertising

     51,415         37,951         10,153         2,213         1,087         11         —     

Rent receivables

     13,724         8,133         4,335         986         270         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total trade and other receivables

     1,365,628         1,261,681         45,857         41,564         11,737         1,189         3,600   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

For the year ended December 31, 2013, the provision for impairment of receivables movement was the following:

 

     Provision for
impairment of
receivables as
of December 31,
2012
    Charge for
the year
    Write offs     Provision for
impairment of
receivables as
of December 31,
2013
 

Cash receivable from agents

     (288,017     (194,456     34,431        (448,042

Deposits issued to merchants

     (5,296     (1,550     623        (6,223

Payment processing fees receivable from merchants

     (1,352     (70     342        (1,080

Receivables for advertising

     (16,361     (7,722     —          (24,083

Advances issued to vendors

     (3,026     (42     1,342        (1,726

Rent receivables

     (3,701     (1,435     (323     (5,459

Other receivables and advances

     (3,804     (4,130     3,014        (4,920
  

 

 

   

 

 

   

 

 

   

 

 

 

Total trade and other receivables

     (321,557     (209,405     39,429        (491,533
  

 

 

   

 

 

   

 

 

   

 

 

 

Receivables are non-interest bearing and credit terms generally do not exceed 30 days. There is no requirement for collateral to receive credit. Interest of 0%-36% per annum is accrued on overdrafts granted to some agents.

For the year ended December 31, 2012, the provision for impairment of receivables movement was the following:

 

     Provision for
impairment of
receivables as
of December 31,
2011
    Charge for
the year
    Write offs      Provision for
impairment of
receivables as
of December 31,
2012
 

Cash receivable from agents

     (163,465     (136,975     12,423         (288,017

Deposits issued to merchants

     (5,204     (93     1         (5,296

Payment processing fees receivable from merchants

     (1,087     (802     537         (1,352

Receivables for advertising

     (13,162     (3,216     17         (16,361

Advances issued to vendors

     (1,896     (2,636     1,506         (3,026

Rent receivables

     (3,143     (558     —           (3,701

Other receivables and advances

     (1,231     (8,071     5,498         (3,804
  

 

 

   

 

 

   

 

 

    

 

 

 

Total trade and other receivables

     (189,188     (152,351     19,982         (321,557

Discontinued operations

     (54,459     (9,146     63,605         —     
  

 

 

   

 

 

   

 

 

    

 

 

 

Trade and other receivables, including receivables from discontinued operations

     (243,647     (161,497     83,587         (321,557
  

 

 

   

 

 

   

 

 

    

 

 

 

 

54


QIWI plc

Notes to consolidated financial statements (continued)

 

15. Trade and other receivables (continued)

 

For the year ended December 31, 2011, the provision for impairment of receivables movement was the following:

 

     Provision for
impairment of
receivables as
of December 31,
2010
    Charge for
the year
    Write offs     Provision for
impairment of
receivables as
of December 31,
2011
 

Cash receivable from agents

     (158,650     (33,721     28,906        (163,465

Deposits issued to merchants

     (642     (4,660     98        (5,204

Payment processing fees receivable from merchants

     (1,362     217        58        (1,087

Receivables for advertising

     (439     (12,989     266        (13,162

Advances issued to vendors

     (2,652     699        57        (1,896

Rent receivables

     —          (3,143     —          (3,143

Other receivables

     (1,224     (139     132        (1,231
  

 

 

   

 

 

   

 

 

   

 

 

 

Total trade and other receivables

     (164,969     (53,736     29,517        (189,188

Discontinued operations

     (7,878     (43,037     (3,544     (54,459
  

 

 

   

 

 

   

 

 

   

 

 

 

Trade and other receivables, including receivables from discontinued operations

     (172,847     (96,773     25,973        (243,647
  

 

 

   

 

 

   

 

 

   

 

 

 

 

16. Cash and cash equivalents

As of December 31, 2013 and 2012, cash and cash equivalents consisted of the following:

 

     As of
December 31,
2012
     As of
December 31,
2013
 

Correspondent accounts with CB RF

     1,098,389         656,488   

Correspondent accounts with other banks

     1,681,656         6,606,561   

Short-term CB RF deposits

     5,560,000         1,500,000   

Other short-term bank deposits

     929,626         2,389,619   

RUB denominated cash with banks and on hand

     239,969         267,855   

Foreign currency denominated cash with banks and on hand

     433,520         216,390   
  

 

 

    

 

 

 

Total cash and cash equivalents

     9,943,160         11,636,913   
  

 

 

    

 

 

 

Cash and short-term investments are placed in financial institutions or financial instruments, which are considered at the time of deposit to have minimal risk of default.

 

17. Other assets

As of December 31, 2013 and 2012, other non-current assets consisted of the following:

 

     As of
December 31,
2012
     As of
December 31,
2013
 

Long term right to lease premises

     16,325         —     

Lease deposit

     —           28,745   

Other

     52         9,649   
  

 

 

    

 

 

 

Total other non-current assets

     16,377         38,394   
  

 

 

    

 

 

 

 

55


QIWI plc

Notes to consolidated financial statements (continued)

 

17. Other assets (continued)

 

As of December 31, 2013 and 2012, other current assets consisted of the following:

 

     As of
December 31,
2012
     As of
December 31,
2013
 

Reserves at CB RF*

     54,683         108,695   

Inventories

     22,761         19,004   

Other

     15,890         31,565   
  

 

 

    

 

 

 

Total other current assets

       93,334         159,264   
  

 

 

    

 

 

 

 

* Banks are currently required to post mandatory reserves with the CB RF to be held in non-interest bearing accounts. Starting from March 1, 2013, such mandatory reserves established by the CBR constitute 4.25% for all liabilities. The amount is excluded from cash and cash equivalents for the purposes of cash flow statement and does not have a repayment date.

 

18.