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 4, 2015

 

 

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 republish QIWI’s unaudited interim condensed consolidated financial statements for the three months ended March 31, 2015, which were furnished to the SEC on a Report on Form 6-K dated May 14, 2015, and adding thereto the notes to the unaudited interim condensed consolidated financial statements.


Exhibits

 

99.1 Unaudited interim condensed consolidated financial statements for the three months ended March 31, 2015


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 4, 2015 By:

/s/ Alexander Karavaev

Alexander Karavaev
Chief Financial Officer
EX-99.1

Exhibit 99.1

QIWI plc

Unaudited interim condensed consolidated

financial statements

March 31, 2015


QIWI plc

Unaudited interim condensed consolidated financial statements

March 31, 2015

Content

 

Interim condensed consolidated financial statements

Interim condensed consolidated statement of financial position

  2   

Interim condensed consolidated statement of comprehensive income

  3   

Interim condensed consolidated statement of cash flows

  4   

Interim condensed consolidated statement of changes in equity

  5   

Notes to interim condensed consolidated financial statements

  7   


QIWI plc

Interim condensed consolidated statement of financial position

March 31, 2015

(in thousands of rubles)

 

     Notes    As of
December 31, 2014
(audited)
    As of
March 31, 2015
(unaudited)
 

Assets

       

Non-current assets

       

Property and equipment

   12      379,943        363,781   

Goodwill and other intangible assets

   13      2,367,623        2,326,613   

Long-term debt instruments

   21      1,806,295        2,312,855   

Long-term loans

   21      52,648        49,783   

Other non-current assets

   9      42,455        54,208   

Deferred tax assets

        239,571        230,227   
     

 

 

   

 

 

 

Total non-current assets

  4,888,535      5,337,467   
     

 

 

   

 

 

 

Current assets

Trade and other receivables

7, 21   5,305,275      3,042,247   

Short-term loans

21   31,588      23,901   

Short-term debt instruments

21   2,132,887      1,725,966   

Prepaid income tax

  89,239      82,500   

VAT and other taxes receivable

  51,078      94,219   

Cash and cash equivalents

8, 21   17,079,965      11,612,312   

Other current assets

9   345,688      318,297   
     

 

 

   

 

 

 

Total current assets

  25,035,720      16,899,442   
     

 

 

   

 

 

 

Assets of disposal group classified as held for sale

5   125,867      117,464   
     

 

 

   

 

 

 

Total assets

  30,050,122      22,354,373   
     

 

 

   

 

 

 

Equity and liabilities

Equity attributable to equity holders of the parent

Share capital

  963      965   

Additional paid-in capital

  1,876,104      1,876,104   

Share premium

  3,044,303      3,044,303   

Other reserve

  764,243      785,017   

Retained earnings

  2,683,805      3,991,941   

Translation reserve

  204,337      240,667   
     

 

 

   

 

 

 

Total equity attributable to equity holders of the parent

  8,573,755      9,938,997   

Non-controlling interest

  (239,385   (271,957
     

 

 

   

 

 

 

Total equity

  8,334,370      9,667,040   
     

 

 

   

 

 

 

Non-current liabilities

Long-term borrowings

21   41,981      42,080   

Long-term deferred revenue

  8,394      6,464   

Other non-current liabilities

  987      862   

Deferred tax liabilities

  37,758      73,182   
     

 

 

   

 

 

 

Total non-current liabilities

  89,120      122,588   
     

 

 

   

 

 

 

Current liabilities

Short-term borrowings

21   1,061      439   

Trade and other payables

10, 21   20,179,673      11,027,405   

Amounts due to customers and amounts due to banks

11, 21   1,001,286      997,538   

Income tax payable

  11,290      11,786   

VAT and other taxes payable

  127,733      197,626   

Deferred revenue

  52,008      24,033   

Other current liabilities

  56      10,665   
     

 

 

   

 

 

 

Total current liabilities

  21,373,107      12,269,492   
     

 

 

   

 

 

 

Liabilities directly associated with the assets of a disposal group classified as held for sale

5   253,525      295,253   
     

 

 

   

 

 

 

Total equity and liabilities

  30,050,122      22,354,373   
     

 

 

   

 

 

 

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

 

2


QIWI plc

Interim condensed consolidated statement of comprehensive income

March 31, 2015

(in thousands of rubles)

 

          Three months ended (unaudited)  
     Notes    March 31, 2014     March 31, 2015  

Revenue

   14      3,259,462        3,971,476   

Operating costs and expenses:

Cost of revenue (exclusive of depreciation and amortization)

   15      1,688,133        1,740,016   

Selling, general and administrative expenses

   16      582,188        652,203   

Depreciation and amortization

        84,294        102,130   
     

 

 

   

 

 

 

Profit from operations

  904,847      1,477,127   
     

 

 

   

 

 

 

Other income

  375      4,995   

Other expenses

  (5,006   (1,159

Foreign exchange gain

  146,980      447,720   

Foreign exchange loss

  (149,033   (343,986

Share of loss of associates

  (7,311   —     

Impairment of investment in associates

  (2,903   —     

Interest income

  712      556   

Interest expense

  (10,572   (13,331
     

 

 

   

 

 

 

Profit before tax

  878,089      1,571,922   

Income tax expense

18   (189,912   (293,210
     

 

 

   

 

 

 

Net profit

  688,177      1,278,712   
     

 

 

   

 

 

 

Attributable to:

Equity holders of the parent

  704,335      1,308,136   

Non-controlling interests

  (16,158   (29,424

Other comprehensive income

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

Exchange differences on translation of foreign operations

  (3,012   33,182   
     

 

 

   

 

 

 

Total comprehensive income, net of tax

  685,165      1,311,894   
     

 

 

   

 

 

 

Attributable to:

Equity holders of the parent

  710,123      1,344,466   

Non-controlling interests

  (24,958   (32,572

Earnings per share:

Basic, profit attributable to ordinary equity holders of the parent

  13.50      23.98   

Diluted, profit attributable to ordinary equity holders of the parent

  13.27      23.77   

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

 

3


QIWI plc

Interim condensed consolidated statement of cash flows

March 31, 2014

(in thousands of rubles)

 

          Three months ended  
     Notes    March 31, 2014
(unaudited)
    March 31, 2015
(unaudited)
 

Cash flows from operating activities

       

Profit before tax

        878,089        1,571,922   

Adjustments to reconcile profit before income tax to net cash flows used in operating activities

       

Depreciation and amortization

        84,294        102,130   

Foreign exchange loss (gain), net

        2,053        (103,734

Interest income, net

   14      (63,733     (189,877

Bad debt expense/(recovery), net

   16      62,435        (67,289

Share of loss of associates

   4      7,311        —     

Impairment of investment in associates

        2,903        —     

Share-based payments

   22      78,933        20,774   

Other

        2,324        588   
     

 

 

   

 

 

 

Operating profit before changes in working capital

  1,054,609      1,334,514   

Decrease in trade and other receivables

  526,911      2,298,756   

Decrease/(increase) in other assets

  (31,221   39,419   

Decrease in amounts due to customers and amounts due to banks

  (72,468   (3,748

Decrease in accounts payable and accruals

  (5,655,583   (9,109,181

Decrease/(increase) in loans issued from banking operations

  (4,004   5,089   
     

 

 

   

 

 

 

Cash used in operations

  (4,181,756   (5,435,151

Interest received

  73,103      202,037   

Interest paid

  (6,575   (7,496

Income tax paid

  (160,806   (241,214
     

 

 

   

 

 

 

Net cash flow used in operating activities

  (4,276,034   (5,481,824
     

 

 

   

 

 

 

Cash flows (used in)/generated from investing activities

Contribution to associates without change in ownership

  (10,214   —     

Payment for assignment of loans

  (8,471   —     

Purchase of available-for-sale investments

  —        (5,628

Purchase of property and equipment

  (66,032   (12,326

Purchase of intangible assets

  (14,799   (33,365

Loans issued

  (11,325   (14,314

Repayment of loans issued

  720      —     

Purchase of debt instruments

  (706,846   (499,876

Proceeds from settlement of debt instruments

  1,242,313      400,000   
     

 

 

   

 

 

 

Net cash flow (used in)/generated from investing activities

  425,346      (165,509
     

 

 

   

 

 

 

Cash flows generated from financing activities

Exercise of options

  5,168      —     

Proceeds from borrowings

  336,206      26,131   

Repayment of borrowings

  (672   (778
     

 

 

   

 

 

 

Net cash flow generated from financing activities

  340,702      25,353   
     

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

  747      154,327   
     

 

 

   

 

 

 

Net decrease in cash and cash equivalents

  (3,509,239   (5,467,653

Cash and cash equivalents at the beginning of the period

8   11,636,913      17,079,965   
     

 

 

   

 

 

 

Cash and cash equivalents at the end of the period

8   8,127,674      11,612,312   
     

 

 

   

 

 

 

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

 

4


QIWI plc

Interim condensed consolidated statement of changes in equity

March 31, 2015

(in thousands of rubles)

 

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

Balance as of December 31, 2014 (audited)

        54,505,998         963         1,876,104         3,044,303         764,243         2,683,805         204,337         8,573,755         (239,385     8,334,370   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Profit (loss) for the period

  —        —        —        —        —        1,308,136      —        1,308,136      (29,424   1,278,712   

Exchange differences on translation of foreign operations

  —        —        —        —        —        —        36,330      36,330      (3,148   33,182   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive income

  —        —        —        —        —        1,308,136      36,330      1,344,466      (32,572   1,311,894   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Share-based payments

22   —        —        —        —        20,774      —        —        20,774      —        20,774   

Exercise of options

  55,372      2      —        —        —        —        —        2      —        2   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance as of March 31, 2015 (unaudited)

  54,561,370      965      1,876,104      3,044,303      785,017      3,991,941      240,667      9,938,997      (271,957   9,667,040   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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

 

5


QIWI plc

Interim condensed consolidated statement of changes in equity (continued)

 

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

Balance as of December 31, 2013 (audited)

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

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Profit (loss) for the period

  —        —        —        —        704,335      —        704,335      (16,158   688,177   

Exchange differences on translation of foreign operations

  —        —        —        —        —        5,788      5,788      (8,800   (3,012
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Total comprehensive income

  —        —        —        —        704,335      5,788      710,123      (24,958   685,165   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Share-based payments

22   —        —        —        78,933      —        —        78,933      —        78,933   

Exercise of options

  86,882      2      —        5,168      —        —        5,170      —        5,170   

Dividends to non-controlling interest

17   —        —        —        —        —        —        —        (2,170   (2,170
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

Balance as of March 31, 2014 (unaudited)

  52,205,676      909      1,876,104      421,355      1,277,939      16,545      3,592,852      (121,894   3,470,958   
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

 

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

 

6


QIWI plc

Notes to interim condensed consolidated financial statements

March 31, 2015

(in thousands of rubles, except per share data)

 

1. Corporate Information and description of business

The interim condensed consolidated financial statements of QIWI plc, formerly QIWI Limited prior to December 31, 2012 when the company’s name was changed, (hereinafter “the Company”) and its subsidiaries (collectively “the Group”) for the three months ended March 31, 2015 were authorized for issue on May 12, 2015.

The Company QIWI plc was registered on February 26, 2007 as a limited liability Company OE Investments in Cyprus under the Cyprus Companies Law, Cap. 113. The registered office of the Company is Kennedy 12, Kennedy Business Centre, 2nd Floor, 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.

The Group operates electronic online payment systems in Russia, Kazakhstan, Moldova, Belarus, Romania, United States of America (USA), United Arabic Emirates (UAE) and other countries, sells electronic payment kiosks and maintains banking activity supporting processing of payments.

Sergey Solonin is the ultimate controlling party of the Group as of March 31, 2015.

Saldivar Investments Limited is the parent of the Group as of March 31, 2015.

Information on the Company’s principal subsidiaries is disclosed in Note 3.

 

2. Principles underlying preparation of interim condensed consolidated financial statements

 

a) Basis of preparation and accounting policies

The interim condensed consolidated financial statements for the three months ended March 31, 2015 have been prepared in accordance with IAS 34.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements, and should be read in conjunction with the Group’s annual consolidated financial statements as of December 31, 2014.

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.

 

7


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

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

 

b) Adoption of new and amended IFRS and IFRIC

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group’s annual financial statements for the year ended December 31, 2014, except for the adoption of the following new and amended IFRS and IFRIC interpretations as of January 1, 2015. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.

The nature and the effect of these changes are disclosed below. Although these new standards and amendments apply for the first time in 2015, they do not have a material impact on the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group. The nature and the impact of each new standard or amendment is described below:

Annual improvements 2010-2012 Cycle

These improvements are effective from 1 July 2014 and have no material impact on the Group. They include:

IFRS 2 Share-based Payment

This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including:

 

  A performance condition must contain a service condition

 

  A performance target must be met while the counterparty is rendering service

 

  A performance target may relate to the operations or activities of an entity, or to those of another entity in the same group

 

  A performance condition may be a market or non-market condition

 

  If the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service condition is not satisfied.

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IFRS 9 (or IAS 39, as applicable).

IFRS 8 Operating Segments

The amendments are applied retrospectively and clarifies that:

 

  An entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are ‘similar’

 

  The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities.

 

8


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

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

 

IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets

The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data on either the gross or the net carrying amount. In addition, the accumulated depreciation or amortisation is the difference between the gross and carrying amounts of the asset.

IAS 24 Related Party Disclosures

The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services.

Annual improvements 2011-2013 Cycle

These improvements are effective from 1 July 2014 and have no material impact on the Group.

They include:

IFRS 3 Business Combinations

The amendment is applied prospectively and clarifies for the scope exceptions within IFRS 3 that:

 

  Joint arrangements, not just joint ventures, are outside the scope of IFRS 3

 

  This scope exception applies only to the accounting in the financial statements of the joint arrangement itself

IFRS 13 Fair Value Measurement

The amendment is applied prospectively and clarifies that the portfolio exception in IFRS 13 can be applied not only to financial assets and financial liabilities, but also to other contracts within the scope of IFRS 9 (or IAS 39, as applicable).

 

9


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

3. Consolidated subsidiaries

The interim condensed 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,
2014
    As of
March 31,
2015
 

CJSC QIWI (Russia)

  

Operation of electronic payment kiosks

     100     100

CJSC QIWI-Service (Russia)

  

Corporate center of the Group

     100     100

QIWI Bank JSC (Russia)

  

Maintenance of electronic payment systems

     100     100

CJSC QIWI International Processing Services (Russia)

  

Operation of on-line payments

     100     100

QIWI Payments 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 QIWI Kazakhstan (Kazakhstan)

  

Operation of electronic payment kiosks

     100     100

SOOO OSMP BEL (Belarus)

  

Operation of electronic payment kiosks

     51     51

“QIWI-M” S.R.L. (Moldova)

  

Operation of electronic payment kiosks

     51     51

RO SRL United System of Instant Payments (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

QIWI Retail LLC (renamed from K5 Retail LLC) (Russia)

  

Sublease of space for electronic payment kiosks in Russia

     100     100

Blestgroup Enterprises Ltd (Cyprus)

  

Sublease of space for electronic payment kiosks in Russia

     100     100

CMT Engineering LLC (Russia)

  

Production and sales of kiosks

     100     100

QIWI Management Services FZ-LLC (UAE)

  

Management services

     100     100

QIWI Publisher LLC (Russia)

  

Sale of licenses and software

     100     100

 

4. Investment in associates

The Group has the following associates:

 

          Ownership interest  

Associate

  

Main activity

   As of
December 31,
2014
    As of
March 31,
2015
 

QIWI Jordan Ltd. (Hashemite Kingdom of Jordan)

  

Operation of electronic payment kiosks in Jordan

     49     49

QIWI BRASIL TECNOLOGIA S.A. (Brazil)

  

Operation of electronic payment kiosks in Brazil

     20.7     20.7

The Group’s interest in associates is accounted for using the equity method in the consolidated financial statements. The amount of unrecognized share of loss was 88,908 as at March 31, 2015 and 62,219 as at December 31, 2014.

 

10


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

5. Disposals and discontinued operations

On December 16, 2014 the Board of Directors (BOD) of QIWI plc approved a plan to dispose of its non-core subsidiaries QIWI USA LLC, IT Billion LLC and QIWI WALLET EUROPE SIA, and investments in QIWI BRASIL TECNOLOGIA S.A. and QIWI Jordan Ltd.

As of December 31, 2014 the management has decided to sell QIWI USA LLC and IT Billion LLC and identified a potential buyer. The disposal is expected to be completed within one year. QIWI BRASIL TECNOLOGIA S.A. will be disposed by dilution of the Group’s share. There is neither a strategy nor a potential buyer for sale of QIWI WALLET EUROPE SIA and QIWI Jordan Ltd.

As of March 31, 2015, the assets and liabilities of subsidiaries are classified as held for sale. Below are the assets and liabilities of IT Billion LLC and QIWI USA LLC classified as held for sale as of March 31, 2015 and December 31, 2014:

 

     As of
December 31, 2014
     As of
March 31, 2015
 

Assets:

     

Non-current assets

     

Property and equipment

     11,338         11,595   

Deferred tax asset

     150         156   

Other non-current assets

     10,577         19,383   
  

 

 

    

 

 

 

Total non-current assets

  22,065      31,134   
  

 

 

    

 

 

 

Current assets

Trade and other accounts receivable

  68,844      67,265   

VAT and other taxes receivable

  206      112   

Cash and cash equivalents

  14,820      3,296   

Other current assets

  19,932      15,657   
  

 

 

    

 

 

 

Total current assets

  103,802      86,330   
  

 

 

    

 

 

 

Total assets

  125,867      117,464   
  

 

 

    

 

 

 

 

     As of
December 31, 2014
     As of
March 31, 2015
 

Liabilities:

     

Non-current liabilities

  

Long-term borrowings

     232,031         268,132   
  

 

 

    

 

 

 

Total non-current liabilities

  232,031      268,132   
  

 

 

    

 

 

 

Current liabilities

Trade and other payables

  15,115      5,501   

Short-term borrowings

  3,099      18,032   

VAT and other taxes payable

  3,280      3,588   
  

 

 

    

 

 

 

Total current liabilities

  21,494      27,121   
  

 

 

    

 

 

 

Total liabilities

  253,525      295,253   
  

 

 

    

 

 

 

 

11


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

5. Disposals and discontinued operations (continued)

 

The cumulative translation reserve recognised directly in other comprehensive income related to the disposal group amounted to 164,276 as at March 31, 2015 and 152,143 as at December 31, 2014.

The non-controlling interest within equity related to the disposal group amounted to 224,155 as at as at March 31, 2015 and 191,299 as at December 31, 2014.

 

6. 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 reviews selected items of segment’s statement of comprehensive income.

In determining that the CODM was the CEO, the Group considered the aforementioned roles of responsibilities of CEO as well as the following factors:

 

  The CEO manages the remuneration of the Company’s executives within policies set by the Compensation Committee;

 

  The CEO is actively involved in the day-to-day operations of the Company and regularly chairs meetings on key projects of the Company; and

 

  The CEO regularly reviews the financial and operational reports of the Company. These reports primarily include segment net revenue, segment profit before tax and segment net profit for the Company as a whole as well as certain operational data including transaction volume, number of users on an annual basis and the number of users on monthly basis for major market segments.

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 segment 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.

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 and fair value adjustments and amortization thereof, impairment, as well as nonrecurring items.

 

12


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

6. Operating segments (continued)

 

The segments’ statement of comprehensive income for the three months ended March 31, 2015 and 2014, as presented to the CODM are presented below:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Segment net revenue

     1,877,230         2,514,616   
  

 

 

    

 

 

 

Segment profit before tax

  978,891      1,413,176   
  

 

 

    

 

 

 

Segment net profit

  784,610      1,117,329   
  

 

 

    

 

 

 

Segment net revenue, as presented to the CODM, for the three months ended March 31, 2015 and 2014 is calculated as follows:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Total segment net revenue, as presented to CODM

     1,877,230         2,514,616   

Cost of revenue (exclusive of depreciation and amortization)

     1,688,133         1,740,016   

Payroll and related taxes

     (305,901      (283,156
  

 

 

    

 

 

 

Revenue under IFRS

  3,259,462      3,971,476   
  

 

 

    

 

 

 

A reconciliation of segment profit before tax to IFRS consolidated net profit before tax of the Group, as presented to the CODM, for the three months ended March 31, 2015 and 2014, is presented below:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Total segment profit before tax, as presented to CODM

     978,891         1,413,176   

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

     (21,869      (16,192

Share-based payments

     (78,933      (20,774

Net effect of foreign exchange gains and losses on June 2014 SPO funds

     —           195,712   
  

 

 

    

 

 

 

Consolidated profit before tax under IFRS

  878,089      1,571,922   
  

 

 

    

 

 

 

A reconciliation of segment net profit to IFRS consolidated net profit of the Group, as presented to the CODM, for the three months ended March 31, 2015 and 2014, is presented below:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Total segment net profit, as presented to CODM

     784,610         1,117,329   

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

     (21,869      (16,192

Share-based payments

     (78,933      (20,774

Net effect of foreign exchange gains and losses on June 2014 SPO funds

     —           195,712   

Effect from taxation of the above items

     4,369         2,637   
  

 

 

    

 

 

 

Consolidated net profit under IFRS

  688,177      1,278,712   
  

 

 

    

 

 

 

 

13


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

6. Operating segments (continued)

 

Geographic information

Revenues from external customers are presented below:

 

     Three months ended  
   March 31, 2014      March 31, 2015  

Russia

     2,667,899         2,945,503   

Commonwealth of Independent States (CIS)

     148,844         296,567   

European Union (EU)

     90,302         134,277   

British Virgin Islands (BVI)

     104,548         71,082   

Other

     247,869         524,047   
  

 

 

    

 

 

 

Total revenue per consolidated income statement

  3,259,462      3,971,476   
  

 

 

    

 

 

 

Revenue is recognized according to merchants’ place.

The Group does not have any single external customer amounting to 10% or greater of Group’s revenue both in three months ended March 31, 2015 and in three months ended March 31, 2014.

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
December 31,
2014
     As of
March 31,
2015
 

Russia

     2,738,678         2,682,434   

Kazakhstan and other

     8,888         7,960   
  

 

 

    

 

 

 

Non-current assets

  2,747,566      2,690,394   
  

 

 

    

 

 

 

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

 

7. Trade and other receivables

As of March 31, 2015, trade and other receivables consisted of the following:

 

     Total as of
March 31,
2015
     Provision for
impairment of
receivables
     Net as of
March 31,
2015
 

Cash receivable from agents

     1,919,659         (440,687      1,478,972   

Deposits issued to merchants

     1,049,639         (915      1,048,724   

Payment processing fees receivable from merchants

     143,039         (2,107      140,932   

Receivables for advertising

     55,283         (9,074      46,209   

Advances issued to vendors

     163,696         (1,050      162,646   

Rent receivables

     78,596         (21,770      56,826   

Other receivables and advances

     118,355         (10,417      107,938   
  

 

 

    

 

 

    

 

 

 

Total trade and other receivables

  3,528,267      (486,020   3,042,247   
  

 

 

    

 

 

    

 

 

 

 

14


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

7. Trade and other receivables (continued)

 

As of December 31, 2014, trade and other receivables consisted of the following:

 

     Total as of
December 31,
2014
     Provision for
impairment of
receivables
     Net as of
December 31,
2014
 

Cash receivable from agents

     1,027,687         (506,274      521,413   

Deposits issued to merchants

     4,337,688         (6,569      4,331,119   

Payment processing fees receivable from merchants

     128,158         (1,921      126,237   

Receivables for advertising

     52,891         (9,088      43,803   

Advances issued to vendors

     116,372         (2,012      114,360   

Rent receivables

     80,043         (28,985      51,058   

Other receivables and advances

     126,886         (9,601      117,285   
  

 

 

    

 

 

    

 

 

 

Total trade and other receivables

  5,869,725      (564,450   5,305,275   
  

 

 

    

 

 

    

 

 

 

Trade receivables aged but not impaired as of March 31, 2015 are presented below:

 

            Ageing of receivables (days)  

As of March 31, 2015

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

Cash receivable from agents

     1,478,972         1,282,894         192,405         —           389         2,351         933   

Payment processing fees receivable from merchants

     140,932         123,822         16,065         284         660         101         —     

Receivables for advertising

     46,209         19,264         18,207         1         8,457         1         279   

Rent receivables

     56,826         33,651         21,961         —           1,214         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total receivables ageing

  1,722,939      1,459,631      248,638      285      10,720      2,453      1,212   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Trade receivables aged but not impaired as of December 31, 2014 are presented below:

 

            Ageing of receivables (days)  

As of December 31, 2014

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

Cash receivable from agents

     521,413         496,888         5,898         14,914         1,882         1,329         502   

Payment processing fees receivable from merchants

     126,237         116,570         8,432         967         268         —           —     

Receivables for advertising

     43,803         23,669         14,431         4,239         1,279         185         —     

Rent receivables

     51,058         32,813         17,797         217         231         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total receivables ageing

  742,511      669,940      46,558      20,337      3,660      1,514      502   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

15


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

7. Trade and other receivables (continued)

 

For the three months ended March 31, 2015, the provision for impairment of receivables movement was the following:

 

     Provision for
impairment of
receivables as

of December 31,
2014
     (Charge) /
reversal for
the period
     Write offs      Provision for
impairment of
receivables as

of March 31,
2015
 

Cash receivable from agents

     (506,274      61,461         4,126         (440,687

Deposits issued to merchants

     (6,569      94         5,560         (915

Payment processing fees receivable from merchants

     (1,921      (172      (14      (2,107

Receivables for advertising

     (9,088      (69      83         (9,074

Advances issued to vendors

     (2,012      587         375         (1,050

Rent receivables

     (28,985      4,990         2,225         (21,770

Other receivables and advances

     (9,601      (701      (115      (10,417
  

 

 

    

 

 

    

 

 

    

 

 

 

Total provision for impairment of receivables

  (564,450   66,190      12,240      (486,020
  

 

 

    

 

 

    

 

 

    

 

 

 

For the three months ended March 31, 2014, the provision for impairment of receivables movement was the following:

 

     Provision for
impairment of
receivables as

of December 31,
2013
     Charge for the
period
     Write offs      Provision for
impairment of
receivables as of
March 31, 2014
 

Cash receivable from agent

     (448,042      (35,769      602         (483,209

Deposits issued to merchants

     (6,223      (48      42         (6,229

Payment processing fees receivable from merchants

     (1,080      (209      42         (1,247

Receivables for advertising

     (24,083      (276      54         (24,305

Advances issued to vendors

     (1,726      (857      3         (2,580

Rent receivables

     (5,459      (15,703      7         (21,155

Other receivables and advances

     (4,920      (885      (48      (5,853
  

 

 

    

 

 

    

 

 

    

 

 

 

Total provision for impairment of receivables

  (491,533   (53,747   702      (544,578
  

 

 

    

 

 

    

 

 

    

 

 

 

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 24%-54% per annum is accrued on overdrafts granted to some agents.

 

16


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

8. Cash and cash equivalents

As of March 31, 2015 and December 31, 2014, cash and cash equivalents consisted of the following:

 

     As of
December 31,
2014
     As of
March 31,
2015
 

Correspondent accounts with the Central Bank of the Russian Federation (CB RF)

     2,427,102         316,558   

Correspondent accounts with other banks

     7,489,553         3,401,413   

Short-term CB RF deposits

     1,500,000         700,000   

Other short-term bank deposits

     5,288,106         6,689,873   

RUB denominated cash with banks and on hand

     36,432         38,401   

Other currency denominated cash with banks and on hand

     338,772         466,067   
  

 

 

    

 

 

 

Total cash and cash equivalents

  17,079,965      11,612,312   
  

 

 

    

 

 

 

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.

 

9. Other non-current and current assets

As of March 31, 2015 and December 31, 2014, other non-current assets consisted of the following:

 

     As of
December 31,
2014
     As of
March 31,
2015
 

Security deposit

     22,345         23,520   

Rent prepayment

     8,133         6,958   

Available-for-sale investments

     —           17,798   

Other

     11,977         5,932   
  

 

 

    

 

 

 

Total other non-current assets

  42,455      54,208   
  

 

 

    

 

 

 

As of March 31, 2015 and December 31, 2014, other current assets consisted of the following:

 

     As of
December 31,
2014
     As of
March 31,
2015
 

Reserves at CB RF*

     179,809         149,941   

Inventories

     89,665         98,747   

Prepaid expenses

     75,154         63,168   

Other

     1,060         6,441   
  

 

 

    

 

 

 

Total other current assets

  345,688      318,297   
  

 

 

    

 

 

 

 

* 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 CB RF 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.

 

17


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

10. Trade and other payables

As of March 31, 2015 and December 31, 2014, the Group’s accounts payable and other payables consisted of the following:

 

     As of
December 31,
2014
     As of
March 31,
2015
 

Payables to merchants

     3,675,182         3,730,102   

Deposits received from agents

     11,529,923         2,690,037   

Deposits received from individual customers

     3,701,483         3,588,188   

Payment processing fees payable to agents

     417,902         398,935   

Accrued expenses

     265,573         223,883   

Payables to vendors

     491,591         213,211   

Payables for rent

     53,819         85,638   

Payables to employees

     32,175         85,163   

Other advances received

     12,025         12,248   
  

 

 

    

 

 

 

Total trade and other payables

  20,179,673      11,027,405   
  

 

 

    

 

 

 

 

11. Amounts due to customers and amounts due to banks

As of March 31, 2015 and December 31, 2014, amounts due to customers and amounts due to banks consisted of the following:

 

     As of
December 31,
2014
     As of
March 31,
2015
 

Due to banks

     17,478         3,426   

Due to customers: individuals

     629,323         729,469   

Due to customers: legal entities

     354,485         264,643   
  

 

 

    

 

 

 

Total amounts due to customers and amounts due to banks

  1,001,286      997,538   
  

 

 

    

 

 

 

Amounts due to customers and amounts due to banks bear the interest up to 1% and are due on demand.

 

12. Property and equipment

During the three months ended March 31, 2015, the Group acquired assets with a cost of 12,326 (three months ended March 31, 2014: 40,009). The main additions were processing servers and engineering equipment and computers and office equipment.

As of March 31, 2015 the Group did not identify any indicators of property and equipment impairment.

 

13. Intangible assets

During the three months ended March 31, 2015, the Group acquired intangible assets with a cost of 33,365 (three months ended March 31, 2014: 35,742). The main additions were computer software.

As of March 31, 2015 the Group did not identify any indicators of intangible assets impairment.

 

18


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

14. Revenue

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Payment processing fees

     2,755,600         3,198,210   

Revenue from advertising

     72,345         60,223   

Interest revenue from agent’s overdrafts

     43,204         112,814   

Interest revenue

     73,593         202,652   

Gain from currency swaps

     49,627         9,147   

Revenue from rent of space for kiosks

     72,912         94,081   

Cash and settlement services

     172,327         186,520   

Revenue from sale of kiosks

     9,106         90,561   

Other revenue

     10,748         17,268   
  

 

 

    

 

 

 

Total revenue

  3,259,462      3,971,476   
  

 

 

    

 

 

 

For the purposes of consolidated cash flow statement, “Interest expense/(income), net” consists of the following:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Interest income classified as part of revenue

     (73,593      (202,652

Interest income from non-banking loans classified separately in the consolidated statement of comprehensive income

     (712      (556

Interest expense*

     10,572         13,331   
  

 

 

    

 

 

 

Interest income, net, for the purposes of consolidated cash flow statement

  (63,733   (189,877
  

 

 

    

 

 

 

 

15. Cost of revenue (exclusive of depreciation and amortization)

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Transaction costs

     1,266,403         1,171,844   

Payroll and related taxes

     305,901         283,156   

Advertising commission

     12,482         18,975   

Cost of rent of space for kiosks

     37,176         61,260   

Cost of kiosks sold

     7,554         74,045   

Other expenses

     58,617         130,736   
  

 

 

    

 

 

 

Total cost of revenue (exclusive of depreciation and amortization)

  1,688,133      1,740,016   
  

 

 

    

 

 

 

 

16. Selling, general and administrative expenses

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Payroll, related taxes and other personal expenses

     317,977         382,753   

Rent of premises and related utility expenses

     55,009         88,433   

Bad debt expense/(recovery)

     62,435         (67,289

Office maintenance expenses

     35,821         59,931   

Telecommunication and internet expenses

     9,172         12,753   

Travelling and representation expenses

     12,298         20,542   

Advertising and related expenses

     7,409         42,999   

Professional fees

     39,346         39,830   

Other tax expenses

     16,450         32,087   

Bank services

     2,434         5,046   

Other operating expenses

     23,837         35,118   
  

 

 

    

 

 

 

Total selling, general and administrative expenses

  582,188      652,203   
  

 

 

    

 

 

 

 

19


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

17. Dividends paid and proposed

Dividends paid and proposed by the Group are presented below:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Proposed, declared and approved during the period:

     —           —     

Paid during the period:

     —           —     

Proposed for approval (not recognized as a liability as of March 31):

     

Three months ended March 31, 2015: Interim dividend for 2015: U.S.$ 13,640,343 or U.S.$ 0.25 per share.) (Three months ended March 31, 2014: Final dividend for 2013: U.S.$ 16,700,349 or U.S.$ 0.32 per share.

     

Interim dividend for 2014: U.S.$ 15,139,646 or U.S.$ 0.29 per share.)

     1,136,277         692,262   

Dividends payable as of March 31

     —           —     

During the three months ended March 31, 2015 no dividends to non-controlling shareholders were distributed. Dividends payable as of March 31, 2015, relates to dividends payable by QIWI Bank to non-controlling shareholders in the amount of 43.

During the three months ended March 31, 2014, “QIWI-M” S.R.L (Moldova) proposed and declared dividends to non-controlling shareholders in the amount of 2,170. Dividends payable as of March 31, 2014, relates to dividends payable by QIWI Bank and “QIWI-M” S.R.L (Moldova) to non-controlling shareholders in the amount of 21 and 2,170 accordingly.

 

     Dividend payable as of  
     March 31, 2014      March 31, 2015  

Total amount of dividends payable to shareholders and non-controlling shareholders

     2,191         43   

The Company itself is a holding company, and majority of its consolidated earnings are earnings of its foreign subsidiaries. Earnings of its foreign subsidiaries are not easily distributable to the Company due to currency control restrictions, taxation of dividends and other restrictions.

 

20


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

18. Income tax

The Company is incorporated in Cyprus under the Cyprus Companies Law, but the business activity of the Group and its associates is subject to taxation in multiple jurisdictions, the most significant of which include:

Cyprus

As of January 1, 2013, the Company is subject to 12.5% corporate income tax applied to its worldwide income (prior to that it was 10%).

Gains from the sale of securities/titles (including shares of companies) either in Cyprus or abroad are exempt from corporate income tax in Cyprus. Capital Gains Tax is levied at a rate of 20% on profits from disposal of immovable property situated in Cyprus or of shares in companies which own immovable property situated in Cyprus (unless the shares are listed on a recognized stock exchange).

Dividends received from a non-resident (foreign) company are exempt from the levy of defence contribution if either the dividend paying company derives at least 50% of its income directly or indirectly from activities which do not lead to investment income (“active versus passive investment income test” is met) or the foreign tax burden on the profit to be distributed as dividend has not been substantially lower than the Cypriot corporate income tax rate (i.e. lower than 6,25%) at the level of the dividend paying company (“effective minimum foreign tax test” is met). The Company has not been subject to defence tax on dividends received from abroad as the dividend paying entities are engaged in trading activities.

The Russian Federation

The Company’s subsidiaries and associates incorporated in the Russian Federation are subject to corporate income tax at the standard rate of 20% applied to their taxable income. Withholding tax of 15% is applied to any dividends paid out of Russia, reduced to as low as 5% for some countries (including Cyprus), with which Russia has double-taxation treaties.

 

21


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

18. Income tax (continued)

 

Kazakhstan

The Company’s subsidiaries incorporated in the Kazakhstan are subject to corporate income tax at the standard rate of 20% applied to their taxable income.

The major components of income tax in the interim consolidated statement of comprehensive income are:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Current income tax expense

     (231,508      (248,280

Deferred tax benefit/(expense)

     41,596         (44,930
  

 

 

    

 

 

 

Income tax expense for the year

  (189,912   (293,210
  

 

 

    

 

 

 

Theoretical and actual income tax expense is reconciled as follows:

 

     Three months ended  
     March 31, 2014      March 31, 2015  

Profit before tax

     878,089         1,571,922   

Theoretical income tax expenses at the Company’s tax rate of 12.5% (Cyprus)

     (109,761      (196,490

Increase resulting from the tax effect of:

     

Non-deductible expenses

     (24,729      (35,127

Non-taxable income

     4,027         33,422   

Tax on dividends

     (16,045      (52,902

Effect of income of subsidiaries taxed at different rates

     (21,165      (19,206

Unrecognized tax assets

     (22,239      (22,907
  

 

 

    

 

 

 

Income tax expense

  (189,912   (293,210
  

 

 

    

 

 

 

During the three months ended March 31, 2015 and 2014 the Group does not recognize deferred tax assets related to tax loss carry forward in the amount of 22,907 (three months 2014 – 22,239) mostly in Romania, QIWI plc and QIWI USA because the Group does not believe that the realization of the related deferred tax assets is probable.

 

22


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

19. Commitments, contingencies and operating risks

Operating environment

Russia continues economic reforms and development of its legal, tax and regulatory frameworks as required by a market economy. The future stability of the Russian economy is largely dependent upon these reforms and developments and the effectiveness of economic, financial and monetary measures undertaken by the government.

Starting from the end of year 2014, the Russian economy has been negatively impacted by a significant drop in crude oil prices and a significant devaluation of the Russian Rouble, as well as sanctions imposed on Russia by several countries. In December 2014, the Rouble interest rates have increased significantly after the Central Bank of Russia raised its key rate to 17% (slightly decreased in the first quarter of 2015 to 14% and to 12.5% as of May 5). The combination of the above resulted in reduced access to capital, a higher cost of capital, increased inflation and uncertainty regarding economic growth, which could negatively affect the Group’s future financial position, results of operations and business prospects. Management believes it is taking appropriate measures to support the sustainability of the Group’s business in the current circumstances.

In addition, following the accession of Crimea to Russia, which is seen by the EU as illegal annexation of Crimea, the Company’s Russian subsidiaries started operating in that region with a limited number of kiosks. On December 19, 2014, U.S. President Obama signed a new executive order imposing comprehensive sanctions on the Crimea region. Almost all transactions involving a U.S. person or that are subject to U.S. jurisdiction and that directly or indirectly involve an individual or entity in Crimea are prohibited, with the exception of certain transactions involving certain agricultural commodities, medicine and medical devices. The executive order also permits the designation of persons that operate in Crimea, leaders of entities operating in Crimea, entities that are owned or controlled by a person that is designated by OFAC, or persons that provide material assistance or financial, material, or technological support to a person that is designated by OFAC. The EU has similarly introduced a broad set of sanctions through the Council Regulation (EU) 692/2014 as amended by Regulation (EU) 1351/2014, including: an investment ban prohibiting to acquire new or extend any existing participation or ownership of real estate located in Crimea or Sevastopol, acquire new or extend any existing participation or ownership or control of an entity in Crimea or Sevastopol, provide financing to an entity in Crimea or Sevastopol, create any joint venture in Crimea or Sevastopol or with an entity in Crimea or Sevastopol or provide investment services directly related to the above activities; an embargo on certain listed goods and technology that are suited for the key sectors of transport, telecommunications, energy and mining; and an import ban on goods originating from Crimea and Sevastopol and on financial assistance as well as insurance and reinsurance related to such import.

To date, we do not believe that any of the current sanctions as in force limit our ability to operate in Crimea. However, relevant regulators and/or our counterparties could take a view that is different from ours on the issue. Moreover, any new or expanded sanctions that may be imposed on Russian businesses operating in Crimea by the U.S., EU, or other countries may materially adversely affect us and any future plans we may have to expand in that region.

In light of hardening geopolitical situation in the Ukraine, the United States of America, the European Union and other countries has adopted the package of economic restrictive measures imposing certain sanctions on operations of various Russian banks, including VTB Bank and Gazprombank. Some subsidiaries of the Company hold bank accounts in the aforementioned banks as well as have credit lines and bank guarantees in VTB Bank. Management is monitoring these developments in the current environment and taking actions where appropriate. These and any further possible negative developments in Ukraine could adversely impact results and financial position of the Group in a manner not currently determinable.

 

23


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

19. Commitments, contingencies and operating risks (continued)

 

Taxation

Russian and the CIS’s tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. Management’s interpretation of such legislation as applied to the transactions and activity of the Group may be challenged by the relevant regional and federal authorities. Recent events within Russia and the CIS which are discussed below suggest that the tax authorities are taking a more assertive position in its interpretation of the legislation and assessments and as a result, it is possible that transactions and activities that have not been challenged in the past may be challenged.

Due to its international structure, the Group is subject to transfer pricing and permanent establishment risks in various jurisdictions it operates in. Starting 1 January 2012, a new Russian transfer pricing legislation came into force, which allows the Russian tax authorities to apply transfer pricing adjustments and impose additional tax liabilities in respect of “controlled” transactions, if the transaction price differs from the market price. The Russian transfer pricing legislation grants taxpayers the right to justify their compliance with the arm’s length principle at prices used in controlled transactions by preparing the transfer pricing documentation.

The Group manages the related risks by looking at its management functions and risks in various countries and level of profits allocated to each subsidiary. The list of “controlled” transactions of the Group includes various transactions between different Russian entities as well as certain types of cross-border transactions. The Group determines its tax liabilities arising from “controlled” transactions using actual transaction prices.

Currently the tax authorities perform tax audits of many Russian taxpayers with major focus on compliance with new transfer pricing legislation. It is therefore possible that the Group entities may become subject to transfer pricing tax audits by tax authorities in the near future. Due to the uncertainty and lack of established practice of application of the new Russian transfer pricing legislation the Russian tax authorities may challenge the level of prices applied by the Group under the “controlled” transactions (including certain intercompany transactions) and accrue additional tax liabilities. If additional taxes are assessed with respect to these matters, they may be material.

The Management believes that the Group is able to prove the arms’ length nature of prices with respect to the “controlled” transactions, and that there has been proper reporting to the Russian tax authorities, supported by appropriate available transfer pricing documentation.

In 2014 significant changes to the Russian tax legislation were adopted which are aimed at preventing the abuse of “offshore” structures (so-called “de-offshorization” legislation). In particular, these changes include the definition of beneficiary ownership, tax residence of legal entities by the place of actual carrying out activities, as well as approach to taxation of controlled foreign companies. The amendments came into force since January 1, 2015. The Group is currently evaluating the potential effect of the new legislative changes on the Group business and financial results.

 

24


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

19. Commitments, contingencies and operating risks (continued)

 

Government regulation of the electronic payment systems, and advertising

In certain jurisdictions where the Group operates, the legislation on e-payments is not yet mature and is developing, and no assurance can be made that if such legislation is changed or the new legislation adopted it will be beneficial to the Group’s business. From time to time, the Group may also be subject to the investigations in the area of anti-money laundering by the regulatory authorities. The subject of investigation varies and may include alleged violations of the Russian law on advertising, in particular related to consents from the Group’s consumers for sending them SMS advertising messages. Historically, the penalties imposed on us as a result of such investigations were insignificant. In addition, the Group generally disputes them in the normal course of business, and expects to be able to resolve such disputes in Group’s favor. Subsequent legislation and regulation and interpretations thereof, litigation, court rulings, or other events could expose the Group to increased costs, liability and reputational damage that could have a material adverse effect on the Group’s business, financial condition and results of operations.

Anti-Trust issues in Kazakhstan

In April 2012 the Competition Protection Agency of the Republic of Kazakhstan, or the Competition Protection Agency, included our subsidiary in Kazakhstan in the state register of market participants with dominant or monopoly position in Kazakhstan. Entities included in this register are prohibited from performing actions that may have a detrimental effect on competition, restrict access to the market or infringe the rights of consumers, including predatory or discriminatory pricing, unjustified resale restrictions, imposing unreasonable terms, or refusing to supply or halting supplies for unjustified reasons. Status as a dominant market participant also puts an entity under much more stringent scrutiny from the Competition Protection Agency, therefore increasing the probability of being investigated and penalized if a violation occurs. As a result, the Competition Protection Agency may impose restrictions on our operations, or take other measures that may be inconsistent with our strategy. The maximum liability to which we can be exposed is a penalty equal to 10% of the revenue earned as a result of market abuse, plus confiscation of the full amount of such revenue. The maximum liability is determined in reference to not more than one year of such revenues. In November 2012, our subsidiary in Kazakhstan became subject to an investigation conducted by the Competition Protection Agency concerning alleged abuse of its dominant position in Kazakhstan’s electronic payments market. No fine has been levied as a result of the investigation, but the Competition Protection Agency ordered us to rectify certain violations of the anti-trust legislation. We have complied with the orders and have taken actions to remedy these violations. However, we expect similar investigations by the Competition Protection Agency to recur in the future, and we cannot reliably estimate the amounts of claims that can be brought against us in connection with these investigations. In March and May 2014, our subsidiary in Kazakhstan received various requests from anti-trust authorities for information related to its business in connection with the analysis of the Kazakhstan market of payments through kiosks. We complied with the requests, however, as of the date of issue of this financial statements, it remains unclear what, if any, actions, the Kazakh authorities may take in connection with this. These limitations may reduce our operational and commercial flexibility and responsiveness, which may adversely affect our business, financial condition and results of operations.

 

25


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

19. Commitments, contingencies and operating risks (continued)

 

Risk of cybersecurity breach

The Company stores and/or transmits sensitive data, such as credit or debit card numbers and mobile phone numbers, and the Company has ultimate liability to its consumers for the failure to protect this data. The Company has experienced breaches of its security by hackers in the past, and breaches could occur in the future. In such circumstances, the encryption of data and other protective measures have not prevented unauthorized access and may not be sufficient to prevent future unauthorized access. However, any future breach of the system, including through employee fraud, may subject the Company to material losses or liability, payables to other payment systems, fines and claims for unauthorized purchases with misappropriated credit or debit card information, identity theft, impersonation or other similar fraud claims. In addition, misuse of such sensitive data or a cybersecurity breach could result in claims, regulatory scrutiny and other negative consequences.

Insurance policies

The Group holds no insurance policies in relation to its assets, operations, or in respect of public liability or other insurable risks. There are no significant physical assets to insure. Management has considered the possibility of insurance of business interruption in Russia, but the cost of it outweighs the benefits in management’s view.

Legal proceedings

The Group has been and continues to be the subject of legal proceedings and adjudications from time to time, none of which has had, individually or in the aggregate, a material adverse impact on the Group. Management believes that the resolution of all business matters will not have a material impact on the Group’s financial position or operating results.

National Payment System law amendments

Amendments to the law “On the national payment system” and to the anti-terrorism legislation were enacted and are effective starting from May 15, 2014. The law includes no limits on consumer to business payment transactions. However, under the new law, customers who do personalize their Visa QIWI Wallet account through a simplified identification procedure will see their previous transaction limits significantly increased to 60,000 Rubles per day and 200,000 Rubles per month, up from 15,000 Rubles and 40,000 Rubles previously. Management believes this provision could be a long-term positive for the Group, as it plans to identify certain Visa QIWI Wallet customers. Next, the law does prohibit unidentified P2P money transfers. As a result, Visa QIWI Wallet customers who wish to make personal, wallet-to-wallet money transfers will be required to go through an identification procedure. The Group experiences little to its current business as a result of this as the Group does not charge its customers for P2P money transfer.

The Group takes all possible measures to bring its current activities in compliance with the requirements of the above mentioned amendments to law. Though certain clauses of the law may impact the loan repayment and money remittance volumes and the Group is currently assessing the potential impact on its business. The analysis has not yet been completed, but the adverse impact on Group’s business cannot currently be ruled out.

 

26


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

19. Commitments, contingencies and operating risks (continued)

 

Operating lease commitments

The Group has commercial lease agreements of office buildings and kiosk places. The leases have an average life of between one (for kiosk places) and six (for office buildings) years. Total lease expense for the three months ended March, 2015 is for rent of office places 83,065 (three months 2014 – 49,977) and for kiosk places rent 61,260 (three months 2014 – 37,173).

Future minimum lease rentals under non-cancellable operating lease commitments for office premises as of March 31, 2015 are as follows:

 

Within one year

     239,024   

After one year but not more than five years

     779,028   

More than five years

     31,353   

Pledge of assets

As of March 31, 2015 the Group had no pledged assets (2014 – 400,000 of pledged debt instruments) as collateral for merchants, but pledged 2,418,781 (2014 – 1,136,653) as collateral for VTB bank guarantee issued to VISA and 486,828 (2014 – 509,007) as coverage for supporting its short-term overnight credit facility at CB RF.

Commitments to Mail.ru Group Limited

The Group committed to purchase of advertising services from Mail.ru Group Limited affiliates in amount of 260,000 during three years starting from November 2014. Mail.ru Group Limited makes advertising available for the Group on the standard commercial rates. As at March 31, 2015 the Group spent 50,000 on advertising under this agreement.

 

20. Balances and transactions with related parties

The following table sets forth the total amount of transactions entered into with related parties for the three months ended March 31, 2015 and three months ended March 31, 2014, as well as balances with related parties as of March 31, 2015 and December 31, 2014:

 

Category of related party

   Amounts
owed by
related
parties
     Amounts
owed to
related
parties
     Cash due
to related
party
customers
 

As of March 31, 2015

        

Associates

     —           (16,411      —     

Key management personnel of the entity or its parent, incl.:

        

Short-term benefits

     —           (3,006      —     

Other operations

     1,581         —           (98,157

Other related parties (A) (D)

     —           (293,044      (584,729

As of December 31, 2014

        

Associates

     —           (24,798      —     

Key management personnel of the entity or its parent, incl.:

        

Short-term benefits

     —           (46,154      —     

Other operations

     2,411         —           (586,469

Other related parties (A) (B) (C)

     —           (257,768      (13

 

27


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

20. Balances and transactions with related parties (continued)

 

Category of related party

   Sales to
related
parties
     Transaction
costs to
related
parties
     Operating
expenses
     Interest
paid/
(received)
 

Three months ended March 31, 2015

           

Associates

     636         —           —           —     

Key management personnel of the entity or its parent, incl.:

           

Short-term benefits

     —           —           (33,210      —     

Share-based payments

     —           —           (1,818      —     

Other operations

     —           —           (2,809      —     

Other related parties (B) (C)

     —           —           —           (6,162

Three months ended March 31, 2014

           

Associates

     729         —           —           712   

Key management personnel of the entity or its parent, incl.:

           

Short-term benefits

     —           —           (40,242      —     

Share-based payments

     —           —           (8,169      —     

Other operations

     —           —           (2,757      —     

Other related parties (B) (C)

     80,868         (62,970      (2,885      (2,501

Other related parties mostly include transactions that are described below:

 

(A) Other related parties include Shareholders which have significant influence on the Group’s partly-owned subsidiaries and finance them in the form of loans. The loan agreements were entered into on arm’s length terms and do not deviate in any material aspect from the terms used in similar contracts with non-related parties. Interest expense from these loans is not significant.
(B) Other related parties include a group of companies controlled by one of the shareholders that act as merchants. Since September 9, 2014 this group of companies is not related party for the Group. Revenue accrued by the Group from these related parties for the first quarter of 2014 in the amount of 29,850 represents payment processing fees. Cost of revenue incurred from these entities by the Group for the first quarter of 2014 is not significant. The terms of this commission arrangement were entered into on arm’s length terms and do not deviate in any material aspect from the terms that the Group would use in similar contracts with non-related parties.
(C) Since June 7, 2013 other related parties include a group of companies under common control with one of the Group’s shareholders described in the previous paragraph above, which act as both merchants and agents for the Group and include a mobile network operator, which is one of the Group’s top three customers. Since September 9, 2014 this group of companies is not related party for the Group. Revenue accrued to the Group by these related parties for the three months ended March 31, 2014 in the amount of 50,860 represents payment processing fees. Cost of revenue, incurred to these entities by the Group for the three months ended March 31, 2014 in the amount 60,341 represents transaction costs. The terms of this commission arrangement were entered into on arm’s length terms and do not deviate in any material aspect from the terms that The Group would use in similar contracts with non-related parties.
(D) Other related parties include close family members of key management personnel. Cash in Group due to related party customers amounts to 584,729 as of March 31, 2015 (2014 – nil).

 

28


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

20. Balances and transactions with related parties (continued)

 

The above stated balances and transactions have been entered into on terms as described above or as between the parties, are not secured, nor bear interest. None of these balances has been impaired.

 

21. Financial instruments

The Group’s principal financial instruments comprise loans receivable, trade and other receivables, trade and other payables, cash and cash equivalents, long and short-term debt instruments and borrowings. The Group has various other financial assets and liabilities such as options over the shares of subsidiaries and associates which arise directly from its operations. During the year, the Group did not undertake trading in financial instruments.

The fair value of the Group’s financial instruments as of March 31, 2015 and December 31, 2014, is presented by type of the financial instrument in the table below:

 

            As of December 31, 2014      As of March 31, 2015  
            Carrying
amount
     Fair
value
     Carrying
amount
     Fair
value
 

Financial assets

              

Cash and cash equivalents

     LAR         17,079,965         17,079,965         11,612,312         11,612,312   

Trade and other receivables

     LAR         5,170,865         5,170,865         2,852,449         2,852,449   

Debt instruments

     HTM         3,939,182         3,742,857         4,038,821         3,980,501   

Short-term loans

     LAR         31,588         31,588         23,901         23,901   

Long-term loans

     LAR         52,648         52,648         49,783         49,783   

Investments

     AFS         —           —           17,798         17,798   
     

 

 

    

 

 

    

 

 

    

 

 

 

Total financial assets

  26,274,248      26,077,923      18,595,064      18,536,744   
     

 

 

    

 

 

    

 

 

    

 

 

 

Financial liabilities

Long-term borrowings

  FLAC      41,981      41,981      42,080      42,080   

Short-term borrowings

  FLAC      1,061      1,061      439      439   

Trade and other payables

  FLAC      20,180,660      20,180,660      11,028,267      11,028,267   

Due to banks

  FLAC      17,478      17,478      3,426      3,426   

Bank’s customer’s accounts

  FLAC      983,808      983,808      994,112      994,112   

Currency SWAP

  FVPL      —        —        10,622      10,622   
     

 

 

    

 

 

    

 

 

    

 

 

 

Total financial liabilities

  21,224,988      21,224,988      12,078,946      12,078,946   
     

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of the Group’s available for sale investments in PINbonus LTD as of March 31, 2015, were determined based on recent cash transactions. This acquisition by cash transaction was the only operation with investment in PINbonus LTD that took place during the period.

 

29


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

21. Financial instruments (continued)

 

Financial instruments used by the Group are included in one of the following categories:

 

  LAR – loans and receivables;

 

  AFS – available-for-sale financial assets;

 

  FLAC – financial liabilities at amortized cost;

 

  HTM – held-to-maturity financial assets.

 

  FVPL – Financial instruments at fair value through profit or loss

The fair value of the financial assets and liabilities included at the amount the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

The following methods and assumptions were used to estimate fair values:

 

  Cash and cash equivalents, short-term investments and accounts receivable and payable, other current assets and liabilities approximate their carrying amount largely due to short-term maturities of these instruments;

 

  Non-current financial liabilities is estimated by discounting future cash flows using rates currently available for debt of similar terms and remaining maturities.

Long-term fixed-rate assets are evaluated by the Group based on parameters such as interest rates, specific country risk factors and individual creditworthiness of the customer. Based on this evaluation, impairment is taken into account for the expected losses of these receivables.

Short and long-term debt instruments include debt securities carried at amortized cost. The Group concluded that no impairment needed to be recorded at December 31, 2014 and 2013 because the fall in fair value of debt instruments is due to decrease of credit rating of Russia but not reflected the real future cash inflow.

The Group uses the following IFRS hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

 

  Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities;

 

  Level 2: Other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly;

 

  Level 3: Techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.

 

30


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

21. Financial instruments (continued)

 

The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities:

 

                 Fair value measurement using  
                 Quoted prices
in active
markets
     Significant
observable
inputs
     Significant
unobservable
inputs
 
     Date of valuation    Total      (Level 1)      (Level 2)      (Level 3)  

Assets measured at fair value

              

Available-for-sale financial assets

              

Investments (Unquoted equity shares)

   March 31, 2015      17,798         —           —           17,798   

Assets for which fair values are disclosed

              

Debt instruments

   March 31, 2015      3,980,501         3,980,501         —           —     

Long-term loans

   March 31, 2015      49,783         —           —           49,783   

Liabilities measured at fair value

              

Derivative financial liabilities

              

Currency swap

   March 31, 2015      10,622         —           10,622         —     

Liabilities for which fair values are disclosed

              

Long-term borrowings

   March 31, 2015      42,080         —           —           42,080   
                 Fair value measurement using  
                 Quoted prices
in active
markets
     Significant
observable
inputs
     Significant
unobservable
inputs
 
     Date of valuation    Total      (Level 1)      (Level 2)      (Level 3)  

Assets for which fair values are disclosed

              

Debt instruments

   December 31, 2014      3,742,857         3,742,857         —           —     

Long-term loans

   December 31, 2014      52,648         —           —           52,648   

Liabilities for which fair values are disclosed

              

Long-term borrowings

   December 31, 2014      41,981         —           —           41,981   

 

31


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

22. Share-based payments

In October, 2012 the board of directors and shareholders approved an Employee Stock Ownership Plan (“ESOP”) for management of the Group, under which up to 2,565,000 shares of the Company can be granted to management during the ten years of the plan term. Later in January 2013, the Company’s ESOP was amended and restated to increase the maximum amount of shares reserved for issuance under the Plan to 3,640,000 class B shares, or 7% of the Company entire issued and outstanding share capital. Vesting is individually agreed for each grant. The contractual term of the options granted is 10 years from the date of grant. The board of directors shall determine the exercise price applicable to the options granted under the ESOP. Following an initial public offering of the Group, the exercise price shall not be less than the average closing price of the shares on the principal exchange on which such shares are then traded for the ten business days immediately preceding the grant date. The options can be exercised on a gross or net share basis. Upon exercise, the shares cannot be sold or otherwise transferred until after the Group achieve a net income target per the Group’s management accounts (prepared on a basis consistent with the basis of preparation of segment data) of U.S.$170,000,000 for the last four consecutive fiscal quarters.

The following table illustrates the movements in share options during the three months ended March 31, 2015:

 

     Tranche vesting date   As of
December 31,
2014
     Forfeited
during the
period
    Exercised
during the
period
    Granted
during the
period
     As of
March 31,
2015
 

Tranche 1

   December 21, 2012     203,644         —          (28,711     —           174,933   

Tranche 2.1

   upon IPO (May 2013)     203,644         —          (28,711     —           174,933   

Tranche 2.2

   January 1, 2014     913,724         —          (28,711     —           885,013   

Tranche 3

   January 1, 2015     1,047,482         —          (67,186     —           980,296   

Tranche 4

   January 1, 2016     789,686         (52,565     —          —           737,121   

Based on the above, as of March 31, 2015 the Company has a total of 2,952,296 options outstanding, of which 2,215,175 is vested and 737,121 are unvested.

The amount of expense arising from equity-settled share-based payment transactions for the three months ended March 31, 2015 was 20,774 (three months ended March 31, 2014 – 78,933).

The weighted average remaining contractual life for the share options outstanding as of March 31, 2015 was 2.75 years.

The weighted average share price for share options exercised during the reporting period was U.S. $13.6452.

 

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QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

22. Share-based payments (continued)

 

The following table presents the summary of inputs of the Black-Scholes Merton option pricing model used for the ESOP for the determination of the fair value of the granted options which was calculated separately for each tranche:

 

Granted on

   Exercise
price

(U.S. $)
     Dividend
yield

(%)
     Expected
volatility

(%)
     Risk free
interest
rate (%)
     Expected
life of
options
(years)
     Share price
(U.S. $)
     Grant-date
fair value of
the options,
(U.S. $)
 

December 21, 2012

     13.6452         —           28-30         0.75-1.09         5.0-6.5         15.84         5.34-5.73   

November 15, 2013

     41.2380         2.83         30-32         0.34-0.63         2.0-3.0         43.32         7.09-8.32   

November 16, 2013

     41.3990         2.83         30-32         0.34-0.63         2.0-3.0         43.32         7.02-8.27   

December 4, 2013

     46.573         2.83         29-32         0.30-0.61         2.0-3.0         45.37         5.86-7.57   

February 6, 2014

     36.091         2.83         28-31         0.32-0.65         2.0-3.0         38.69         6.10-7.56   

February 14, 2014

     37.427         2.83         29-32         0.31-0.66         2.0-3.0         39.93         6.26-7.86   

May 22, 2014

     34.09         2.83         28-29         2.94-3.26         2.0-3.0         44.89         12.26-13.24   

May 23, 2014

     35.46         2.83         28-29         2.94-3.25         2.0-3.0         43.85         10.57-11.70   

May 28, 2014

     37.89         2.83         28-29         2.94-3.23         2.0-3.0         43.64         9.01-10.24   

The expected volatility was determined by reference to the historical volatility of peer companies. The share price for options granted on December 21, 2012 was determined using the discounted cash flows projections based on financial budgets approved by the Group’s senior management covering an eight-year period (2013-2020). An eight-year period was used for projections, as the Group considers this time frame to be reasonably forecasted. The share price for options granted after IPO was determined by reference to closing market prices of the Group’s traded shares. Due to lack of historical data, the expected life of the options was estimated as a mid-point average between the vesting and the expected term of each option vesting tranche.

 

23. Borrowings

On August 13, 2014 CJSC QIWI entered into a long-term ruble overdraft facility agreement with Raiffeisenbank for an overdraft up to 460,000. The tranches within the overdraft facility agreement are short-term and available from one to three months. The interest rate for each tranche is set at the choice of the borrower as either of the following: one month rate of MOSPRIME in Russian RUB plus 3.5% per annum or internal rate of Raiffeisenbank at the date of the tranche for the term of this tranche. In case if MOSPRIME is not quoted at the date of the loan or at the date of the interest-paying period, the internal one-month rate of Raiffeisenbank set at the tranche date is used. Besides the bank charges a commission at 0.3% per annum for reservation of overdraft facility. Interest on the outstanding overdraft facility agreement can be increased by 1% if any breaches of the covenants, of the borrower’s liabilities, and of the information presented to the bank over the terms of the overdraft facility agreement take place. The overdraft facilities contain covenants, mainly related to maintaining certain level of revenue, assets, profit, debt, cash, equity to asset ratio, the composition of major shareholders, the prohibition of cession of liabilities under this overdraft facility to third parties, and presentation of necessary information to the bank. There are no amounts drawn and outstanding under this overdraft facility at any reporting dates presented in these financial statements.

 

33


QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

23. Borrowings (continued)

 

On September 27, 2013 CJSC QIWI entered into a short-term ruble overdraft facility agreement with bank VTB for an overdraft up to 85,000 with a commitment fee payable on the total amount of the facility of 0.45% per annum, and interest payable on amounts drawn and outstanding at 10.3%. The credit facility is available for 335 days and to be settled within 365 days. Interest on the outstanding credit facility can be increased by 1% if a monthly turnover of overdraft does not exceed the average outstanding loan plus 800,000. The overdraft facilities contain covenants, mainly related to maintaining certain level of revenue, profitability, debt, as well as contractual relationships with the three largest Russian mobile operators as service providers, and maintaining liquidity at QIWI Bank JSC. The overdraft facility is guaranteed by the CEO of the Group. There are no amounts drawn and outstanding under this overdraft facility at any reporting dates presented in these financial statements.

On December 31, 2013 CJSC QIWI entered into a short-term ruble overdraft facility agreement with bank VTB for an overdraft up to 315,000 with a commitment fee payable on the total amount of the facility of 0.45% per annum, and interest payable on amounts drawn and outstanding at 10.3%. The credit facility is available for 335 days and to be settled within 365 days. Interest on the outstanding credit facility can be increased by 1% if a monthly turnover of overdraft does not exceed the average outstanding loan plus 950,000. The overdraft facilities contain covenants, mainly related to maintaining certain level of revenue, profitability, debt, as well as contractual relationships with the three largest Russian mobile operators as service providers, and maintaining liquidity at QIWI Bank JSC. The overdraft facility is guaranteed by the CEO of the Group. There are no amounts drawn and outstanding under this overdraft facility at any reporting dates presented in these financial statements.

 

24. Events after the reporting date

As of April 30, 2015 CJSC QIWI-Service and CJSC QIWI International Processing Services were reorganized in the form of accession to Closed Joint-Stock Company QIWI.

On May 1. 2015 the Company sold QIWI USA LLC and IT Billion LLC for the remuneration of U.S.$ 5,050 (equivalent of 295) and purchased the outstanding share of 49% in RO SRL United System of Instant Payments for 490 Romanian lei (equivalent of 7).

On May 12. 2015 the Board of Directors of the Company approved a dividend of U.S.$ 13,640,343 (equivalent of 692,262).

On May 14, 2015, the Company entered into a subscription agreement (the “Subscription Agreement”), with Otkritie Investments Cyprus Limited (“Otkritie”) to acquire 100% ownership of the Contact money transfer system (“Contact”) and the Rapida payment processing system (“Rapida”). Under the terms of the Subscription Agreement, the Company has agreed to issue 5,593,041 class B shares to Otkritie in exchange for all of the outstanding interests in Contact and Rapida. On June 2, 2015, pursuant to the Subscription Agreement, the Company acquired a 70% interest in Contact and Rapida from Otkritie in exchange for the issuance of 3,915,129 class B shares to Otkritie.

 

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