Exhibit 99.2
QIWI plc
Unaudited interim condensed consolidated
financial statements
June 30, 2023
QIWI plc
Unaudited interim condensed consolidated financial statements
June 30, 2023
Content
Report of Independent Registered Public Accounting Firm | F-2 |
Interim condensed consolidated financial statements | |
Interim condensed consolidated statement of financial position | F-3 |
Interim condensed consolidated statement of comprehensive income | F-4 |
Interim condensed consolidated statement of cash flows | F-5 |
Interim condensed consolidated statement of changes in equity | F-6 |
Notes to interim condensed consolidated financial statements | F-8 |
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
QIWI plc:
Results of Review of Interim Financial Information
We have reviewed the interim condensed consolidated statement of financial position of QIWI plc and subsidiaries (the “Group”) as of June 30, 2023, the related interim condensed consolidated statements of comprehensive income for the three-month and six-month periods ended June 30, 2023 and 2022, interim condensed consolidated statements of cash flows and changes in equity for the six-month periods ended June 30, 2023 and 2022, and the related notes (collectively referred to as the “interim condensed consolidated financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the interim condensed consolidated financial information for it to be in conformity with IAS 34 Interim Financial Reporting.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statement of financial position of the Group as of December 31, 2022, the related consolidated statements of comprehensive income, cash flows and changes in equity for the year then ended, and the related notes (not presented herein); and in our report dated March 31, 2023, we expressed an unqualified audit opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated statement of financial position as of December 31, 2022, is fairly stated, in all material respects, in relation to the consolidated statement of financial position from which it has been derived.
Basis for Review Results
This interim condensed consolidated financial information is the responsibility of the Group’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with the standards of the PCAOB. A review of interim consolidated condensed financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ JSC “Kept”
Moscow, Russia
August 16, 2023
F-2
QIWI plc
Interim condensed consolidated statement of financial position
(in millions of rubles)
Notes | As of December 31, 2022 | As of June 30, 2023 (Unaudited) | ||||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Property and equipment | 1,163 | 1,271 | ||||||||||
Goodwill and other intangible assets | 13,126 | 13,077 | ||||||||||
Investments in associates | 13 | 303 | 579 | |||||||||
Long-term debt securities | 21 | 2,946 | 4,991 | |||||||||
Long-term loans issued | 6, 21 | 843 | 623 | |||||||||
Other non-current assets | 257 | 241 | ||||||||||
Deferred tax assets | 208 | 242 | ||||||||||
Total non-current assets | 18,846 | 21,024 | ||||||||||
Current assets | ||||||||||||
Trade and other receivables | 7 | 15,194 | 12,169 | |||||||||
Short-term loans issued | 6 | 14,200 | 16,728 | |||||||||
Short-term debt securities | 21 | 14,029 | 28,809 | |||||||||
Other current assets | 9 | 2,195 | 1,846 | |||||||||
Cash and cash equivalents | 8 | 47,462 | 39,570 | |||||||||
Total current assets | 93,080 | 99,122 | ||||||||||
Total assets | 111,926 | 120,146 | ||||||||||
Equity and liabilities | ||||||||||||
Equity attributable to equity holders of the parent | ||||||||||||
Share capital | 1 | 1 | ||||||||||
Additional paid-in capital | 1,876 | 1,876 | ||||||||||
Share premium | 12,068 | 12,068 | ||||||||||
Other reserves | 2,696 | 2,352 | ||||||||||
Retained earnings | 39,941 | 48,935 | ||||||||||
Translation reserve | 401 | 169 | ||||||||||
Total equity attributable to equity holders of the parent | 56,983 | 65,401 | ||||||||||
Non-controlling interests | 912 | 977 | ||||||||||
Total equity | 57,895 | 66,378 | ||||||||||
Non-current liabilities | ||||||||||||
Long-term deferred income | 1,154 | 1,062 | ||||||||||
Long-term lease liabilities | 14 | 133 | 84 | |||||||||
Other non-current liabilities | 156 | 81 | ||||||||||
Deferred tax liabilities | 1,847 | 1,749 | ||||||||||
Total non-current liabilities | 3,290 | 2,976 | ||||||||||
Current liabilities | ||||||||||||
Trade and other payables | 10 | 33,048 | 29,740 | |||||||||
Customer accounts and amounts due to banks | 11 | 11,203 | 15,011 | |||||||||
Short-term debt | 12 | 3,922 | 3,745 | |||||||||
Short-term lease liabilities | 14 | 300 | 302 | |||||||||
Other current liabilities | 9 | 2,268 | 1,994 | |||||||||
Total current liabilities | 50,741 | 50,792 | ||||||||||
Total equity and liabilities | �� | 111,926 | 120,146 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
F-3
QIWI plc
Interim condensed consolidated statement of comprehensive income
(in millions of rubles, except per share data)
(Unaudited)
Notes | Three months ended | Six months ended | Three months ended | Six months ended | ||||||||||||||||
June 30, 2022 | June 30, 2023 | |||||||||||||||||||
Revenue: | 14,015 | 23,732 | 18,037 | 35,909 | ||||||||||||||||
Revenue from contracts with customers | 15 | 11,650 | 19,460 | 15,645 | 31,373 | |||||||||||||||
Interest revenue calculated using the effective interest rate | 15 | 1,929 | 3,381 | 1,944 | 3,708 | |||||||||||||||
Fees from inactive accounts and unclaimed payments | 436 | 891 | 448 | 828 | ||||||||||||||||
Operating costs and expenses: | (7,425 | ) | (13,732 | ) | (13,295 | ) | (26,997 | ) | ||||||||||||
Cost of revenue (exclusive of items shown separately below) | 16 | (3,807 | ) | (7,219 | ) | (8,843 | ) | (18,163 | ) | |||||||||||
Selling, general and administrative expenses | 17 | (773 | ) | (1,544 | ) | (1,184 | ) | (2,143 | ) | |||||||||||
Personnel expenses | (2,002 | ) | (3,675 | ) | (3,034 | ) | (5,785 | ) | ||||||||||||
Depreciation and amortization | (287 | ) | (564 | ) | (315 | ) | (624 | ) | ||||||||||||
Credit loss (expense)/income | 6,7,8 | (520 | ) | (694 | ) | 81 | (282 | ) | ||||||||||||
Impairment of non-current assets | (36 | ) | (36 | ) | – | – | ||||||||||||||
Profit from operations | 6,590 | 10,000 | 4,742 | 8,912 | ||||||||||||||||
Gain from disposal of subsidiary | – | – | – | 424 | ||||||||||||||||
Share of loss of an associate | – | – | (5 | ) | (44 | ) | ||||||||||||||
Foreign exchange gain/(loss), net | (2,369 | ) | (2,810 | ) | 1,296 | 2,115 | ||||||||||||||
Other income and expenses, net | 22 | 111 | (262 | ) | (246 | ) | ||||||||||||||
Profit before tax | 4,243 | 7,301 | 5,771 | 11,161 | ||||||||||||||||
Income tax expense | 18 | (1,433 | ) | (2,234 | ) | (954 | ) | (1,845 | ) | |||||||||||
Net profit for the period | 2,810 | 5,067 | 4,817 | 9,316 | ||||||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the parent | 2,625 | 4,799 | 4,653 | 8,994 | ||||||||||||||||
Non-controlling interests | 185 | 268 | 164 | 322 | ||||||||||||||||
Other comprehensive (loss)/income | ||||||||||||||||||||
Other comprehensive income to be reclassified to profit or loss in subsequent periods: | ||||||||||||||||||||
Foreign currency translation: | ||||||||||||||||||||
Exchange differences on translation of foreign operations | 88 | �� | 76 | 143 | 213 | |||||||||||||||
Net gain recycled to profit or loss upon disposal | – | – | – | (424 | ) | |||||||||||||||
Debt securities at fair value through other comprehensive income (FVOCI): | ||||||||||||||||||||
Net gain/(loss) arising during the period, net of tax | 964 | 110 | (77 | ) | (64 | ) | ||||||||||||||
Net gain recycled to profit or loss upon disposal | – | – | (18 | ) | (18 | ) | ||||||||||||||
Share of other comprehensive Income of an associate | – | – | (1 | ) | 3 | |||||||||||||||
Total other comprehensive (loss)/income, net of tax | 1,052 | 186 | 47 | (290 | ) | |||||||||||||||
Total comprehensive income, net of tax | 3,862 | 5,253 | 4,864 | 9,026 | ||||||||||||||||
Attributable to: | ||||||||||||||||||||
Equity holders of the parent | 3,697 | 5,006 | 4,689 | 8,683 | ||||||||||||||||
Non-controlling interests | 165 | 247 | 175 | 343 | ||||||||||||||||
Earnings per share: | ||||||||||||||||||||
Basic, earnings attributable to ordinary equity holders of the parent | 41.93 | 76.75 | 74.20 | 143.42 | ||||||||||||||||
Diluted, earnings attributable to ordinary equity holders of the parent | 41.93 | 76.75 | 74.20 | 143.42 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
F-4
QIWI plc
Interim condensed consolidated statement of cash flows
(in millions of rubles)
(Unaudited)
Six months ended | ||||||||||||
Notes | June 30, 2022 | June 30, 2023 | ||||||||||
Operating activities | ||||||||||||
Profit before tax | 7,301 | 11,161 | ||||||||||
Adjustments to reconcile profit before tax to net cash flows generated from operating activities: | ||||||||||||
Depreciation and amortization | 564 | 624 | ||||||||||
Foreign exchange loss/(gain), net | 2,810 | (2,115 | ) | |||||||||
Interest income, net | 15 | (3,212 | ) | (3,540 | ) | |||||||
Credit loss expense | 694 | 282 | ||||||||||
Share of loss of an associate | – | 44 | ||||||||||
Gain from disposal of subsidiary | – | (424 | ) | |||||||||
Impairment of non-current assets | 36 | – | ||||||||||
Other | 78 | 277 | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||
Decrease/(Increase) in trade and other receivables | (1,739 | ) | 2,847 | |||||||||
Decrease in other assets | 144 | 884 | ||||||||||
Increase in customer accounts and amounts due to banks | 3,728 | 3,213 | ||||||||||
Decrease in accounts payable and accruals | (5,345 | ) | (4,519 | ) | ||||||||
(Decrease)/Increase in other liabilities | 313 | (328 | ) | |||||||||
Increase in loans issued as operating activity | (1,670 | ) | (2,459 | ) | ||||||||
Cash generated from operations | 3,702 | 5,947 | ||||||||||
Interest received | 3,569 | 4,140 | ||||||||||
Interest paid | (283 | ) | (196 | ) | ||||||||
Income tax paid | (1,033 | ) | (2,266 | ) | ||||||||
Net cash flow generated from operating activities | 5,955 | 7,625 | ||||||||||
Investing activities | ||||||||||||
Cash used in business combinations | 4 | (215 | ) | (50 | ) | |||||||
Cash paid for investments in associates | 4 | – | (315 | ) | ||||||||
Proceeds from sale of an associate | 4 | 4,855 | – | |||||||||
Purchase of property and equipment | (133 | ) | (359 | ) | ||||||||
Purchase of intangible assets | (106 | ) | (141 | ) | ||||||||
Proceeds from sale of fixed and intangible assets | 5 | 27 | ||||||||||
Loans issued | (7 | ) | (19 | ) | ||||||||
Repayment of loans issued | 30 | 79 | ||||||||||
Purchase of debt securities | (1,737 | ) | (19,873 | ) | ||||||||
Proceeds from sale and redemption of debt instruments | – | 3,150 | ||||||||||
Net cash flow generated from investing activities | 2,692 | (17,501 | ) | |||||||||
Financing activities | ||||||||||||
Repayment of debt | (392 | ) | (161 | ) | ||||||||
Payment of principal portion of lease liabilities | 14 | (34 | ) | (57 | ) | |||||||
Dividends paid to non-controlling shareholders | (106 | ) | (218 | ) | ||||||||
Transactions with non-controlling interest | – | (304 | ) | |||||||||
Net cash flow used in financing activities | (532 | ) | (740 | ) | ||||||||
Effect of exchange rate changes on cash and cash equivalents | (2,068 | ) | 2,724 | |||||||||
Effect of change in ECL on cash and cash equivalents | (10 | ) | – | |||||||||
Net increase/(decrease) in cash and cash equivalents | 6,037 | (7,892 | ) | |||||||||
Cash and cash equivalents at the beginning of the period | 8 | 33,033 | 47,462 | |||||||||
Cash and cash equivalents at the end of the period | 8 | 39,070 | 39,570 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
F-5
QIWI plc
Interim condensed consolidated statement of changes in equity
(in millions of rubles, except number of shares)
(Unaudited)
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 January 1, 2023 | 62,712,975 | 1 | 1,876 | 12,068 | 2,696 | 39,941 | 401 | 56,983 | 912 | 57,895 | ||||||||||||||||||||||||||||||||
Profit for the period | – | – | – | – | – | 8,994 | – | 8,994 | 322 | 9,316 | ||||||||||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | – | – | – | – | – | – | (232 | ) | (232 | ) | 21 | (211 | ) | |||||||||||||||||||||||||||||
Debt instruments at FVOCI | – | – | – | – | (82 | ) | – | – | (82 | ) | – | (82 | ) | |||||||||||||||||||||||||||||
Share of OCI of an associate | – | – | – | – | 3 | – | – | 3 | – | 3 | ||||||||||||||||||||||||||||||||
Total comprehensive income for the period | – | – | – | – | (79 | ) | 8,994 | (232 | ) | 8,683 | 343 | 9,026 | ||||||||||||||||||||||||||||||
Purchase of additional interest in subsidiary | 4 | – | – | – | – | (265 | ) | – | – | (265 | ) | (39 | ) | (304 | ) | |||||||||||||||||||||||||||
Dividends to non-controlling interests | – | – | – | – | – | – | – | – | (218 | ) | (218 | ) | ||||||||||||||||||||||||||||||
Other | – | – | – | – | – | – | – | – | (21 | ) | (21 | ) | ||||||||||||||||||||||||||||||
Balance as of June 30, 2023 | 62,712,975 | 1 | 1,876 | 12,068 | 2,352 | 48,935 | 169 | 65,401 | 977 | 66,378 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
F-6
QIWI plc
Interim condensed consolidated statement of changes in equity (continued)
(in millions of rubles, except number of shares)
(Unaudited)
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 January 1, 2022 | 62,437,768 | 1 | 1,876 | 12,068 | 2,376 | 26,822 | 542 | 43,685 | 155 | 43,840 | ||||||||||||||||||||||||||||||||
Profit for the period | – | – | – | – | – | 4,799 | – | 4,799 | 268 | 5,067 | ||||||||||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation | – | – | – | – | – | – | 97 | 97 | (21 | ) | 76 | |||||||||||||||||||||||||||||||
Debt instruments at FVOCI | – | – | – | – | 110 | – | – | 110 | – | 110 | ||||||||||||||||||||||||||||||||
Total comprehensive income for the period | – | – | – | – | 110 | 4,799 | 97 | 5,006 | 247 | 5,253 | ||||||||||||||||||||||||||||||||
Share-based payments | 263,841 | – | – | – | 86 | – | – | 86 | – | 86 | ||||||||||||||||||||||||||||||||
Exercise of options | 11,366 | – | – | – | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||
Dividends to non-controlling interests | – | – | – | – | – | – | – | – | (106 | ) | (106 | ) | ||||||||||||||||||||||||||||||
Business combinations | 4 | – | – | – | – | – | – | – | – | 39 | 39 | |||||||||||||||||||||||||||||||
Other | – | – | – | – | (1 | ) | – | – | (1 | ) | – | (1 | ) | |||||||||||||||||||||||||||||
Balance as of June 30, 2022 | 62,712,975 | 1 | 1,876 | 12,068 | 2,571 | 31,621 | 639 | 48,776 | 335 | 49,111 |
The accompanying notes form an integral part of these interim condensed consolidated financial statements.
F-7
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited)
(in millions of rubles, except when otherwise indicated)
1. | Corporate Information and description of business |
The interim condensed consolidated financial statements of QIWI plc (hereinafter “the Company”) and its subsidiaries (collectively “the Group”) for the three and six months ended June 30, 2023 were authorized for issue on August 16, 2023.
The Company 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 and later to QIWI plc.
Sergey Solonin is the ultimate controlling shareholder of the Group as of June 30, 2023.
Information on the Company’s principal subsidiaries is disclosed in Note 3.
2. | Basis of preparation and changes to the Group’s accounting policies |
2.1. Basis of preparation
The interim condensed consolidated financial statements for the three and six months ended June 30, 2023 have been prepared in accordance with IAS 34 Interim Financial Reporting.
The interim condensed consolidated financial statements are presented in Russian rubles (“RUB”) and all values are rounded to the nearest million except where otherwise indicated.
The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group’s annual financial statements as of December 31, 2022, included in the annual report on form 20-F.
2.2. New standards, interpretations and amendments adopted by the Group
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 consolidated financial statements for the year ended December 31, 2022, except for the adoption of new and amended IFRS and IFRIC interpretations effective as of January 1, 2023. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The following amended standards and interpretations became effective for the Group from January 1, 2023, but did not have any material impact on the financial statements of the Group:
- | IFRS 17 Insurance Contracts (issued in May 2017) |
- | Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information (issued in December 2021) |
- | Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued in February 2021) |
- | Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued in February 2021) |
- | Amendments to IAS 12 Income tax: Deferred tax related to assets and liabilities arising from a single transaction (issued in May 2021) and International Tax Reform—Pillar Two Model Rules (issued in May 2023) |
2.3. Changes in presentation
In 2023 the Group decided to present Payment processing fees and Other revenue as a single «Revenue from contracts with customers».
The effects of the change in presentation on the previously reported amounts in interim condensed consolidated statement of comprehensive income are set out below:
Three months ended | Six months ended | Three months ended | Six months ended | |||||||||||||
June 30, 2022 | June 30, 2022 | |||||||||||||||
As previously reported | Restated | |||||||||||||||
Revenue from contracts with customers | – | – | 11,650 | 19,460 | ||||||||||||
Payment processing fees | 10,839 | 17,787 | – | – | ||||||||||||
Other revenue | 811 | 1,673 | – | – |
F-8
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
3. | Group structure |
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, 2022 | As of June 30, 2023 | |||||||
JSC QIWI (Russia) | Operation of electronic payment kiosks | 100 | % | 100 | % | |||||
QIWI Bank JSC (Russia) | Maintenance of electronic payment systems, money transfers and Bank operations | 100 | % | 100 | % | |||||
QIWI Payments Services Provider Ltd (UAE)1 | Operation of online payments | 100 | % | – | ||||||
QIWI International Payment System LLC (USA) | Operation of electronic payment kiosks | 100 | % | 100 | % | |||||
Qiwi Kazakhstan LP (Kazakhstan) | Operation of electronic payment kiosks | 100 | % | 100 | % | |||||
JLLC OSMP BEL (Belarus) | Operation of electronic payment kiosks | 51 | % | 51 | % | |||||
QIWI-M S.R.L. (Moldova) | Operation of electronic payment kiosks | 51 | % | 51 | % | |||||
QIWI Technologies LLC (Russia) (Note 4) | Software development | 80 | % | 100 | % | |||||
ROWI Factoring Plus LLC (Russia) | Factoring services to SME | 51 | % | 51 | % | |||||
ContactPay Solution (United Kingdom) | Operation of on-line payments | 100 | % | 100 | % | |||||
Rocket Universe LLC (Russia) | Software development | 100 | % | 100 | % | |||||
Billing Online Solutions LLC (Russia) | Software development | 100 | % | 100 | % | |||||
Flocktory Ltd (Cyprus) | Holding company | 100 | % | 100 | % | |||||
Flocktory Spain S.L. (Spain) | SaaS platform for customer lifecycle management and personalization | 100 | % | 100 | % | |||||
FreeAtLast LLC (Russia) | SaaS platform for customer lifecycle management and personalization | 100 | % | 100 | % | |||||
SETTE FZ-LLC (UAE) | Payment Services Provider | 100 | % | 100 | % | |||||
LALIRA DMCC (UAE) | Payment Services Provider | 100 | % | 100 | % | |||||
MFC Polet Finance LLC(Russia) | Retail financial services | 100 | % | 100 | % | |||||
QIWI Finance LLC (Russia) | Financing management | 100 | % | 100 | % | |||||
ROWI Tech LLC (Russia) | Software development | 51 | % | 51 | % | |||||
Flocktory LLC (Russia) | Research and development | 100 | % | 100 | % | |||||
Qiwi Lab LLC (Russia) | Software development | 100 | % | 100 | % | |||||
QIWI Payments LLC (Russia) (Note 4) | Software development | 80 | % | 100 | % | |||||
IntellectMoney LLC (Russia) | Software development | 100 | % | 100 | % | |||||
Managing Company "RealWeb" LLC (Russia) | Management services | 100 | % | 100 | % | |||||
IA RealWeb LLC (Russia) | Digital marketing | 75 | % | 75 | % | |||||
Sfera LLC (Russia) | Digital marketing | 83 | % | 83 | % | |||||
Centra LLC (Russia) | Software development | 100 | % | 100 | % | |||||
Fusion Tech LLC (Russia) 3 | Digital marketing | 100 | % | – | ||||||
De Vision LLC (Russia) | Software development | 75 | % | 75 | % | |||||
Vailmobail LLC (Russia) | Digital marketing | 75 | % | 75 | % | |||||
Konversiya LLC (Russia) | Recruitment services | 75 | % | 75 | % | |||||
IA REAL WEB CJSC (Armenia) | Digital marketing | 75 | % | 75 | % | |||||
RW Consulting SIA (Latvia) | Digital marketing | 83 | % | 83 | % | |||||
RealWeb Latvia SIA (Latvia) | Digital marketing | 83 | % | 83 | % | |||||
IT LAB AND PAYMENTS FE LLC (Uzbekistan) | Software development | 100 | % | 100 | % | |||||
Epic Growth LLC (Russia)2 | Digital marketing | – | 83 | % | ||||||
Data Go LLC (Russia)2 | Software development | – | 75 | % | ||||||
Associate | ||||||||||
Advanced Digital Applications Holding Ltd (BVI) | Operation of on-line payments | 9.91 | % | 12.6 | % |
1 | The entity was liquidated during 2023 |
2 | The entities were acquired in 2023 for insignificant consideration |
3 | The entity was sold in 2023 for insignificant consideration |
F-9
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
4. | Acquisitions, disposals and discontinued operations |
2022
Taxiaggregator
During December 2021 - January 2022, the Group completed a series of transactions related to the acquisition of assets of the Taxiaggregator business combined with the hiring of its employees into an existing Group subsidiary QIWI Technologies LLC. In January 2022, the Group obtained control over the Taxiaggregator business. As a result, the Group came to own 80% of the business with the remaining 20% owned by the founder of Taxiaggregator. The acquisition has been accounted for using the acquisition method.
Taxiaggregator is a SaaS platform that provides payment solutions and data analytics tool for taxi companies and taxi drivers. The platform allows drivers to see balances and order history from all aggregators consolidated in real time at a convenient interface and get instant payouts after each trip. The transaction falls within the Group’s strategy to further develop its value proposition in payment segment for self-employed. QIWI had been an exclusive payment partner of Taxiaggregator form its inception. The Group’s expenses for information services from the business for the year ended December 31, 2021, amounted to 139.
The consideration measured at fair values comprised the following:
The acquisition date fair value of the Group’s previously held interest | 116 | |||
Cash consideration | 706 | |||
Total consideration transferred | 822 |
Cash consideration has been paid in full as of March 31, 2022 (215 during the first quarter 2022 and 491 during the year 2021).
The fair value of the identifiable assets and liabilities as of the date of acquisition was:
Fair value | ||||
Net assets acquired: | ||||
Intangible assets | 233 | |||
Software | 64 | |||
Client base | 169 | |||
Deferred tax liabilities | (39 | ) | ||
Total identifiable net assets at fair value | 194 | |||
Group’s share of net assets acquired (80%) | 155 | |||
Goodwill arising on acquisition | 667 |
The Goodwill resulted as the difference between group’s share of fair value of net assets acquired in the business combination and the consideration paid amounted to 667 and related to potential synergy with the Payment services segment of the Group. Goodwill was allocated to CGU Payment services. None of the goodwill recognized is expected to be deductible for income tax purposes.
Revenue and net profit of Taxiaggregator business from the acquisition date to December 31, 2022 was insignificant.
During the second quarter of 2023, the Group acquired remaining 20% for the amount of 304.
F-10
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
4. | Acquisitions, disposals and discontinued operations (continued) |
RealWeb
During December 2022, the Group completed a series of transactions related to the acquisition of subsidiaries of RealWeb group. In the middle of December 2022, the Group obtained control over the RealWeb business. As a result, the Group owns 79% of the business and has the intention to increase its share to 100% during the year 2023. The acquisition has been accounted for using the acquisition method. Pre-existing relationships between the Group and RealWeb were not significant.
RealWeb is a leading full-cycle digital marketing service provider in Russia, which provides context and media advertising management services, social network presence, programmatic, CPA and mobile marketing type of services. The transaction allows the Group to attain leading positions in the growing advertising and digital marketing business segments based on RealWeb’s expertise, and to further diversify the Group’s product portfolio.
The consideration transferred to the seller comprised cash only and amounted to 1,773.
The provisional fair value of the identifiable assets and liabilities as of the date of the acquisition was:
Net assets acquired: | Fair value | |||
Intangible assets | 1,163 | |||
Software | 792 | |||
Trademarks | 371 | |||
Trade and other receivables | 3,248 | |||
Cash and cash equivalents | 3,089 | |||
Other assets | 116 | |||
Deferred tax | (123 | ) | ||
Trade and other payables | (6,140 | ) | ||
Other liabilities | (273 | ) | ||
Total identifiable net assets at fair value | 1,080 | |||
Group’s share of net assets acquired (79%) | 849 | |||
Goodwill arising on acquisition | 924 |
The Group applied the relief-from-royalty method to determine the fair value of the trademarks and replacement cost approach to determine the fair value of the software. The significant assumptions used to estimate the fair value of the trademarks are the forecasted revenue growth rates, royalty rate and discount rate. The significant assumptions used to estimate the fair value of the software are the number of staff hours required to develop the software and the related personnel cost.
The provisional Goodwill calculated as the difference between the Group’s share of the fair value of the identifiable net assets acquired in the business combination and the consideration paid amounted to 924 and related to the expected synergy with the Group’s existing business. Goodwill was allocated to the new CGU RealWeb. None of the goodwill recognised is expected to be deductible for the income tax purposes.
Revenue of RealWeb business from the acquisition date to December 31, 2022, amounted to 981 and the net profit was insignificant. The management of the Group does not provide the information regarding revenue and profit or loss of the combined entity for the year 2022 as though the acquisition happened on January 1, 2022, due to the fact that RealWeb had no financial statements prepared in accordance with IFRS and therefore preparation of such disclosure would have been impracticable.
F-11
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
4. Acquisitions, disposals and discontinued operations (continued)
RealWeb (continued)
Analysis of cash flows on acquisition: | Amount | |||
Cash paid | (1,773 | ) | ||
Net cash acquired with the subsidiaries | 3,089 | |||
Total cash acquired in business combination | 1,316 |
Investment in associate
At the end of September, 2022, the Group acquired a minority stake in fintech company that provides financial services for underbanked customers in Middle East and North Africa region. The transaction is in line with the management plans for an expansion to the international fintech markets. Also, as part of the deal, the Group obtained for free the option to increase its stake in the future, valid until the end of August 2024. The Group recognizes this investment as an associate and accounts for it under the equity method, given the Group has call option and representation on the board of directors of the associate
The consideration measured at fair values was made by the following:
Cash consideration transferred ($11 million) | 660 | |||
Fair value of option received from associate | (333 | ) | ||
Total consideration | 327 |
Cash consideration has been paid in full as of the reporting date.
The fair value of the identifiable assets and liabilities as of the date of acquisition was:
Net assets acquired: | Fair value | |||
Intangible assets | 408 | |||
Accounts receivable | 610 | |||
Cash and cash equivalents | 603 | |||
Other assets | 25 | |||
Debt | (512 | ) | ||
Trade and other payables | (204 | ) | ||
Other liabilities | (57 | ) | ||
Total identifiable net assets at fair value | 873 | |||
Group’s share of net assets acquired | 86 | |||
Goodwill arising on acquisition | 241 |
Goodwill related to the associate amounted to 241 and is included in the carrying amount of the investment in associate.
At the end of June 2023, the Group invested another tranche of cash in the amount of 315 and recognized additional goodwill of 308.
F-12
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
5. | Operating segments |
The Chief executive officer (CEO) of the Group is considered as the chief operating decision maker of the Group (CODM). In reviewing the operational performance of the Group and allocating resources, the CODM reviews selected items of each segment’s interim condensed consolidated statement of comprehensive income.
In determining that the CODM was the CEO, the Group considered his responsibilities as well as the following factors:
- | The CEO determines compensation of other executive officers while the Group’s board of directors approves corporate key performance indicators (KPIs) and total bonus pool for those executive officers. In case of underperformance of corporate KPIs a right to make a final decision on bonus pool distribution is left with the Board of directors (BOD); |
- | The CEO is actively involved in the operations of the Group and regularly chairs meetings on key projects of the Group; and |
- | The CEO regularly reviews the financial and operational reports of the Group. These reports primarily include segment net revenue, segment profit before tax and segment net profit for the Group as well as certain operational data. |
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, which are the metrics the Group uses to measure the performance of its operating segments. Segment net revenue is a measure of profitability defined as the segment revenues less segment direct revenue-related costs. The Group does not monitor balances of assets and liabilities by segment as the CODM considers they have no impact on decision-making.
The Group has identified its operating segments based on the types of products and services the Group offers. The CODM reviews segment net revenue, segment profit before tax and segment net profit separately for each reportable segment.
- | Payment Services (PS) is the operating segment that generates revenue through operations of the payment processing system offered to the Group’s customers through a diverse range of channels and interfaces. |
- | Digital Marketing (DM) is the operating segment that generates revenue through providing context and media advertising management services, including platform services under subscription, social network presence, programmatic, CPA and mobile marketing type of services. After RealWeb acquisition in December 2022 (note 4), DM segment exceeds the quantitative thresholds, thus became reportable. Results of DM segment were previously presented in Corporate and Other category. |
For the purpose of management reporting, expenses related to corporate back-office operations were not allocated to any operating segment and are presented separately to the CODM. Results of other operating segments and corporate expenses are included in Corporate and Other (CO) category for the purpose of segment reporting.
Management reporting is different from IFRS, because it does not include certain IFRS adjustments, which are not analyzed by the CODM in assessing the operating performance of the business. The adjustments affect such major areas as share-based payments, the effect of disposal of subsidiaries and fair value adjustments, such as amortization and impairment, as well as non-recurring items that occur from time to time and are evaluated for adjustment as and when they occur. The tax effect of these adjustments is also excluded from management reporting.
F-13
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
5. | Operating segments (continued) |
The segments’ interim condensed consolidated statements of income for the six months ended June 30, 2023, as presented to the CODM are presented below:
Six months ended June 30, 2023 | ||||||||||||||||
PS | DM | CO | Total | |||||||||||||
Segment net revenue | 14,159 | 1,671 | 1,916 | 17,746 | ||||||||||||
Segment profit before tax | 8,112 | 375 | 2,813 | 11,300 | ||||||||||||
Segment net profit/(loss) | 6,462 | 329 | 2,623 | 9,414 |
The segments’ interim condensed consolidated statements of income for the three months ended June 30, 2023, as presented to the CODM are presented below:
Three months ended June 30, 2023 | ||||||||||||||||
PS | DM | CO | Total | |||||||||||||
Segment net revenue | 7,215 | 930 | 1,049 | 9,194 | ||||||||||||
Segment profit before tax | 3,733 | 250 | 2,226 | 6,209 | ||||||||||||
Segment net profit/(loss) | 2,926 | 213 | 2,095 | 5,234 |
The segments’ interim condensed consolidated statements of income for the six months ended June 30, 2022, as presented to the CODM are presented below:
Six months ended June 30, 2022 | ||||||||||||||||
PS | DM | CO | Total | |||||||||||||
Segment net revenue | 14,967 | 285 | 1,261 | 16,513 | ||||||||||||
Segment profit/(loss) before tax | 10,735 | (37 | ) | (3,121 | ) | 7,577 | ||||||||||
Segment net profit/(loss) | 8,601 | (26 | ) | (3,285 | ) | 5,290 |
The segments’ interim condensed consolidated statements of income for the three months ended June 30, 2022, as presented to the CODM are presented below:
Three months ended June 30, 2022 | ||||||||||||||||
PS | DM | CO | Total | |||||||||||||
Segment net revenue | 9,318 | 128 | 762 | 10,208 | ||||||||||||
Segment profit/(loss) before tax | 6,979 | (67 | ) | (2,476 | ) | 4,436 | ||||||||||
Segment net profit/(loss) | 5,572 | (56 | ) | (2,552 | ) | 2,964 |
F-14
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
5. | Operating segments (continued) |
Segment net revenue, as presented to the CODM, for the three and six months ended June 30, 2023 and 2022 is calculated by subtracting cost of revenue from revenue as presented in the table below:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Revenue under IFRS | 14,015 | 23,732 | 18,037 | 35,909 | ||||||||||||
Cost of revenue | (3,807 | ) | (7,219 | ) | (8,843 | ) | (18,163 | ) | ||||||||
Total segments net revenue, as presented to CODM | 10,208 | 16,513 | 9,194 | 17,746 |
A reconciliation of segment profit before tax as presented to the CODM to IFRS interim condensed consolidated profit before tax of the Group, for the three and six months ended June 30, 2023 and 2022, is presented below:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Interim condensed consolidated profit before tax under IFRS | 4,243 | 7,301 | 5,771 | 11,161 | ||||||||||||
Fair value adjustments recorded on business combinations, and their amortization | 98 | 181 | 438 | 563 | ||||||||||||
Gain on disposal of subsidiary | – | – | – | (424 | ) | |||||||||||
Impairment of non-current assets | 36 | 36 | – | – | ||||||||||||
Share-based payments | 59 | 59 | – | – | ||||||||||||
Total segments profit before tax, as presented to CODM | 4,436 | 7,577 | 6,209 | 11,300 |
A reconciliation of segment net profit as presented to the CODM to IFRS interim condensed consolidated net profit of the Group, for the three and six months ended June 30, 2023 and 2022, is presented below:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Interim condensed consolidated net profit under IFRS | 2,810 | 5,067 | 4,817 | 9,316 | ||||||||||||
Fair value adjustments recorded on business combinations, and their amortization | 98 | 181 | 438 | 563 | ||||||||||||
Gain on disposal of subsidiary | – | – | – | (424 | ) | |||||||||||
Impairment of non-current assets | 36 | 36 | – | – | ||||||||||||
Share-based payments | 59 | 59 | – | – | ||||||||||||
Effect from taxation of the above items | (39 | ) | (53 | ) | (21 | ) | (41 | ) | ||||||||
Total segments net profit, as presented to CODM | 2,964 | 5,290 | 5,234 | 9,414 |
F-15
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
5. | Operating segments (continued) |
Geographic information
Revenues from external customers are presented below:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Russia | 12,681 | 21,085 | 14,767 | 28,757 | ||||||||||||
Other CIS | 727 | 1,409 | 844 | 1,738 | ||||||||||||
EU | 172 | 340 | 1,740 | 4,186 | ||||||||||||
Other | 435 | 898 | 686 | 1,228 | ||||||||||||
Total revenue | 14,015 | 23,732 | 18,037 | 35,909 |
Revenue is recognized according to merchants’ or consumers’ geographic place. The majority of the Group’s non-current assets are located in Russia.
The Group does not have any single external customer amounting to 10% or greater of the Group’s revenue for the six months and the three months ended June 30, 2023 and for the six months ended June 30, 2022. There was one third party customer, which generated revenues in excess of 10% (13.7%) of the Group’s revenue for the three months ended June 30, 2022. This revenue was generated within the PS segment.
Disaggregated revenue information
Disaggregation of revenues from contracts with customers for the six months ended June 30, 2023 are presented below:
PS | DM | CO | Total | |||||||||||||
Payment processing fees | 17,435 | – | – | 17,435 | ||||||||||||
Cash and settlement service fees | 1,233 | – | 5 | 1,238 | ||||||||||||
Platform and marketing services related fees | 81 | 11,377 | – | 11,458 | ||||||||||||
Fees for guarantees issued | 9 | – | 886 | 895 | ||||||||||||
Other revenue | 237 | 75 | 35 | 347 | ||||||||||||
Total revenue from contracts with customers | 18,995 | 11,452 | 926 | 31,373 |
Disaggregation of revenues from contracts with customers for the three months ended June 30, 2023 are presented below:
PS | DM | CO | Total | |||||||||||||
Payment processing fees | 8,687 | – | – | 8,687 | ||||||||||||
Cash and settlement service fees | 719 | – | 3 | 722 | ||||||||||||
Platform and marketing services related fees | 36 | 5,517 | – | 5,553 | ||||||||||||
Fees for guarantees issued | 4 | – | 474 | 478 | ||||||||||||
Other revenue | 137 | 49 | 19 | 205 | ||||||||||||
Total revenue from contracts with customers | 9,583 | 5,566 | 496 | 15,645 |
F-16
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
5. | Operating segments (continued) |
Disaggregation of revenues from contracts with customers for the six months ended June 30, 2022 are presented below:
PS | DM | CO | Total | |||||||||||||
Payment processing fees | 17,787 | – | – | 17,787 | ||||||||||||
Cash and settlement service fees | 383 | – | 77 | 460 | ||||||||||||
Platform and marketing services related fees | 57 | 379 | – | 436 | ||||||||||||
Fees for guarantees issued | 10 | – | 590 | 600 | ||||||||||||
Other revenue | 167 | – | 10 | 177 | ||||||||||||
Total revenue from contracts with customers | 18,404 | 379 | 677 | 19,460 |
Disaggregation of revenues from contracts with customers for the three months ended June 30, 2022 are presented below:
PS | DM | CO | Total | |||||||||||||
Payment processing fees | 10,839 | – | – | 10,839 | ||||||||||||
Cash and settlement service fees | 185 | – | – | 185 | ||||||||||||
Platform and marketing services related fees | 23 | 178 | – | 201 | ||||||||||||
Fees for guarantees issued | 5 | – | 329 | 334 | ||||||||||||
Other revenue | 86 | – | 5 | 91 | ||||||||||||
Total revenue from contracts with customers | 11,138 | 178 | 334 | 11,650 |
F-17
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
6. Long-term and short-term loans issued
As of June 30, 2023, long-term and short-term loans issued consisted of the following:
Total as of June 30, 2023 | Expected credit loss allowance | Net as of June 30, 2023 | ||||||||||
Long-term loans | ||||||||||||
Loans to legal entities, including SME | 636 | (16 | ) | 620 | ||||||||
Loans to individuals | 3 | – | 3 | |||||||||
Total long-term loans | 639 | (16 | ) | 623 | ||||||||
Short-term loans | ||||||||||||
Factoring loans | 12,245 | (155 | ) | 12,090 | ||||||||
Loans to legal entities, including SME | 4,881 | (327 | ) | 4,554 | ||||||||
Loans to individuals | 193 | (109 | ) | 84 | ||||||||
Total short-term loans | 17,319 | (591 | ) | 16,728 |
As of December 31, 2022, long-term and short-term loans consisted of the following:
Total as of December 31, 2022 | Expected credit loss allowance | Net as of December 31, 2022 | ||||||||||
Long-term loans | ||||||||||||
Loans to legal entities, including SME | 871 | (28 | ) | 843 | ||||||||
Total long-term loans | 871 | (28 | ) | 843 | ||||||||
Short-term loans | ||||||||||||
Factoring loans | 12,668 | (100 | ) | 12,568 | ||||||||
Loans to legal entities, including SME | 1,840 | (254 | ) | 1,586 | ||||||||
Loans to individuals | 85 | (39 | ) | 46 | ||||||||
Total short-term loans | 14,593 | (393 | ) | 14,200 |
The amounts in the tables show the maximum exposure to credit risk regarding loans issued. Loans issued within the factoring scheme are collateralized with the accounts receivable of the debtor. The other part of loans issued are not collateralized.
F-18
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
6. Long-term and short-term loans issued (continued)
An analysis of the changes in the ECL allowances due to changes in corresponding gross carrying amounts for the six months ended June 30, 2023, was the following:
Stage 1 Collective | Stage 2 Collective | Stage 3 | Total | |||||||||||||
ECL allowance as of January 1, 2023 | (24 | ) | (120 | ) | (277 | ) | (421 | ) | ||||||||
Changes because of financial instruments (originated or acquired)/derecognized during the reporting period | (162 | ) | 40 | (68 | ) | (190 | ) | |||||||||
Transfers between stages | 121 | (2 | ) | (119 | ) | – | ||||||||||
Amounts sold and written off | – | – | 4 | 4 | ||||||||||||
ECL allowance as of June 30, 2023 | (65 | ) | (82 | ) | (460 | ) | (607 | ) |
An analysis of the changes in the ECL allowances due to changes in corresponding gross carrying amounts for the three months ended June 30, 2023, was the following:
Stage 1 Collective | Stage 2 Collective | Stage 3 | Total | |||||||||||||
ECL allowance as of April 1, 2023 | (90 | ) | (76 | ) | (363 | ) | (529 | ) | ||||||||
Changes because of financial instruments (originated or acquired)/derecognized during the reporting period | 24 | (5 | ) | (97 | ) | (78 | ) | |||||||||
Transfers between stages | 1 | (1 | ) | – | – | |||||||||||
Amounts sold and written off | – | – | – | – | ||||||||||||
ECL allowance as of June 30, 2023 | (65 | ) | (82 | ) | (460 | ) | (607 | ) |
An analysis of the changes in the ECL allowances due to changes in corresponding gross carrying amounts for the six months ended June 30, 2022, was the following:
Stage 1 Collective | Stage 2 Collective | Stage 3 | Total | |||||||||||||
ECL allowance as of January 1, 2022 | (34 | ) | (5 | ) | (53 | ) | (92 | ) | ||||||||
Changes because of financial instruments (originated or acquired)/derecognized during the reporting period | – | (120 | ) | (77 | ) | (197 | ) | |||||||||
Transfers between stages | 9 | (3 | ) | (6 | ) | – | ||||||||||
Amounts sold and written off | – | – | 7 | 7 | ||||||||||||
ECL allowance as of June 30, 2022 | (25 | ) | (128 | ) | (129 | ) | (282 | ) |
An analysis of the changes in the ECL allowances due to changes in corresponding gross carrying amounts for the three months ended June 30, 2022, was the following:
Stage 1 Collective | Stage 2 Collective | Stage 3 | Total | |||||||||||||
ECL allowance as of April 1, 2022 | (21 | ) | (65 | ) | (80 | ) | (166 | ) | ||||||||
Changes because of financial instruments (originated or acquired)/derecognized during the reporting period | (7 | ) | (61 | ) | (55 | ) | (123 | ) | ||||||||
Transfers between stages | 3 | (2 | ) | (1 | ) | – | ||||||||||
Amounts sold and written off | – | – | 7 | 7 | ||||||||||||
ECL allowance as of June 30, 2022 | (25 | ) | (128 | ) | (129 | ) | (282 | ) |
As of June 30, 2023, and December 31, 2022, the Group had no overdue but not impaired loans.
F-19
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
7. | Trade and other receivables |
As of June 30, 2023, trade and other receivables consisted of the following:
Total as of June 30, 2023 | Expected credit loss allowance | Net as of June 30, 2023 | ||||||||||
Cash receivable from agents | 1,623 | (178 | ) | 1,445 | ||||||||
Deposits issued to merchants | 5,685 | (15 | ) | 5,670 | ||||||||
Receivables related to marketing activity | 3,539 | (59 | ) | 3,480 | ||||||||
Receivables related to guarantees issued and exercised | 1,000 | (933 | ) | 67 | ||||||||
Commissions receivable | 276 | (15 | ) | 261 | ||||||||
Other receivables | 869 | (111 | ) | 758 | ||||||||
Total financial assets | 12,992 | (1,311 | ) | 11,681 | ||||||||
Advances issued | 488 | – | 488 | |||||||||
Total trade and other receivables | 13,480 | (1,311 | ) | 12,169 |
As of December 31, 2022, trade and other receivables consisted of the following:
Total as of December 31, | Expected credit loss allowance | Net as of December 31, | ||||||||||
Cash receivable from agents | 4,385 | (325 | ) | 4,060 | ||||||||
Deposits issued to merchants | 6,771 | (15 | ) | 6,756 | ||||||||
Receivables related to marketing activity | 3,422 | (20 | ) | 3,402 | ||||||||
Receivables related to guarantees issued and exercised | 686 | (589 | ) | 97 | ||||||||
Commissions receivable | 394 | (30 | ) | 364 | ||||||||
Other receivables | 226 | (37 | ) | 189 | ||||||||
Total financial assets | 15,884 | (1,016 | ) | 14,868 | ||||||||
Advances issued | 326 | – | 326 | |||||||||
Total trade and other receivables | 16,210 | (1,016 | ) | 15,194 |
The amounts in the tables show the maximum exposure to credit risk regarding Trade and other receivables. Receivables are non-interest bearing, except for agent receivables bearing, generally, interest rate of 20%-36% per annum and credit terms generally do not exceed 30 days. There is no requirement for collateral for customer to receive an overdraft.
An analysis of changes in the ECL allowances due to changes in the corresponding gross carrying amounts for the six months ended June 30, 2023 and June 30, 2022, was the following:
2022 | 2023 | |||||||
ECL allowance as of January 1, | (509 | ) | (1,016 | ) | ||||
Changes because of financial instruments (originated or acquired)/ derecognized during the reporting period | (106 | ) | (432 | ) | ||||
Amounts written off | 31 | 137 | ||||||
ECL allowance as of June 30, | (584 | ) | (1,311 | ) |
An analysis of changes in the ECL allowances due to changes in the corresponding gross carrying amounts for the three months ended June 30, 2023 and June 30, 2022, was the following:
2022 | 2023 | |||||||
ECL allowance as of April 1, | (553 | ) | (966 | ) | ||||
Changes because of financial instruments (originated or acquired)/ derecognized during the reporting period | (41 | ) | (359 | ) | ||||
Amounts written off | 10 | 14 | ||||||
ECL allowance as of June 30, | (584 | ) | (1,311 | ) |
F-20
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
8. | Cash and cash equivalents |
As of June 30, 2023, and December 31, 2022, cash and cash equivalents consisted of the following:
As of December 31, 2022 | As of June 30, 2023 | |||||||
Correspondent accounts with Central Bank of Russia (CBR) | 3,025 | 1,870 | ||||||
Сash with banks and on hand | 9,833 | 12,295 | ||||||
Short-term CBR deposits | 27,100 | 17,300 | ||||||
Other short-term bank deposits | 7,507 | 8,108 | ||||||
Less: Allowance for ECL | (3 | ) | (3 | ) | ||||
Total cash and cash equivalents | 47,462 | 39,570 |
The amounts in the table show the maximum exposure to credit risk regarding cash and cash equivalents. The banks the Group holds its cash have low credit risk and are approved by the Board of Directors of the Group on a regular basis.
The Group holds cash and cash equivalents in different currencies and therefore is exposed to foreign currency risk.
As of December 31, 2022 | As of June 30, 2023 | |||||||
Russian ruble | 39,980 | 28,820 | ||||||
Euro | 735 | 969 | ||||||
US Dollar | 2,230 | 2,346 | ||||||
Chinese Yuan | 2,160 | 2,599 | ||||||
Others | 2,357 | 4,836 | ||||||
Total | 47,462 | 39,570 |
F-21
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
9. | Other current assets and other current liabilities |
9.1 Other current assets
As of June 30, 2023, and December 31, 2022, other current assets consisted of the following:
As of December 31, 2022 | As of June 30, 2023 | |||||||
Other financial assets | ||||||||
Reserves at CBR* | 63 | 129 | ||||||
Option received from ADAH | 470 | 158 | ||||||
Restricted cash accounts and payments | 2,015 | 1,035 | ||||||
Less: Allowance for ECL | (1,404 | ) | (1,035 | ) | ||||
Total other financial assets | 1,144 | 287 | ||||||
Other non-financial assets | ||||||||
Prepaid expenses | 191 | 178 | ||||||
Tax receivables | 288 | 860 | ||||||
Costs of obtaining a contract | 455 | 495 | ||||||
Other | 117 | 26 | ||||||
Total other current assets | 2,195 | 1,846 |
* | Banks are currently required to post mandatory reserves with the CBR to be held in non-interest-bearing accounts. Such mandatory reserves are established by the CBR for liabilities in RUB and in foreign currency according to its monetary policy. The amount is excluded from cash and cash equivalents for the purposes of interim condensed consolidated statement of cash flows and does not have a repayment date. |
As of June 30, 2023, cash with banks in the amount of 574 and payments to partners in the amount of 461 were restricted due to the sanctions imposed on certain Russian banks and other restrictions (December 31, 2022 – 2,015). Restricted cash accounts and the related ECL allowance in the amount of 1,035 fall under stage 3 of impairment (December 31, 2022 – 1,404).
9.2 Other current liabilities
As of June 30, 2023, and December 31, 2022, other current liabilities consisted of the following:
As of December 31, 2022 | As of June 30, 2023 | |||||||
Contract liability related to guarantees issued | 1,157 | 1,243 | ||||||
Deferred income | 131 | 137 | ||||||
Tax payable | 913 | 526 | ||||||
Other | 67 | 88 | ||||||
Total other current liabilities | 2,268 | 1,994 |
F-22
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
10. | Trade and other payables |
As of June 30, 2023, and December 31, 2022, the Group's trade and other payables consisted of the following:
As of December 31, 2022 | As of June 30, 2023 | |||||||
Payables to merchants | 11,431 | 8,581 | ||||||
Money remittances and e-wallets accounts payable | 8,807 | 9,282 | ||||||
Deposits received from agents | 3,415 | 2,407 | ||||||
Payables related to marketing activity | 5,751 | 5,720 | ||||||
Commissions payable | 485 | 375 | ||||||
Accrued personnel expenses and related taxes | 2,073 | 1,865 | ||||||
Other payables | 1,086 | 1,510 | ||||||
Total trade and other payables | 33,048 | 29,740 |
11. | Customer accounts and amounts due to banks |
As of June 30, 2023, and December 31, 2022, customer accounts and amounts due to banks consisted of the following:
As of December 31, 2022 | As of June 30, 2023 | |||||||
Legal entities’ current/demand accounts | 8,829 | 11,257 | ||||||
Correspondent accounts of other banks | 2,335 | 3,695 | ||||||
Individuals’ current/demand accounts | 39 | 59 | ||||||
Total customer accounts and amounts due to banks | 11,203 | 15,011 |
Customer accounts and correspondent accounts of other banks bear interest of up to 7% (2022 – 7%).
12. | Debt |
As of June 30, 2023, and December 31, 2022, Group’s debt consisted of the following:
Credit limit | Effective interest rate | Maturity | As of December 31, 2022 | As of June 30, 2023 | ||||||||||||||
Non-current interest-bearing debt | ||||||||||||||||||
Bonds issued | 5,000 | 9.3% | October 10, 2023 | 3,922 | 3,745 | |||||||||||||
Total debt | 3,922 | 3,745 | ||||||||||||||||
Including short-term portion | 3,922 | 3,745 |
The Group is subject to various covenants regarding its bonds issued. As of June 30, 2023, and December 31, 2022, the Group was in compliance with all covenants stipulated by the public irrevocable offers.
Interest expense regarding Group’s debt for the six months ended June 30, 2023 amounted to 141 (for the six months ended June 30, 2022 – 184).
F-23
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
13. | Investments in associates |
The following table illustrates the summarized financial information of the Group’s investment in the associate (see Note 4):
As of December 31, 2022 | As of June 30, 2023 | |||||||
Current assets, including cash and cash equivalents of 124 (2022-82) | 750 | 1,366 | ||||||
Non-current assets | 497 | 571 | ||||||
Current liabilities | (342 | ) | (1,359 | ) | ||||
Non-current debt | (281 | ) | (348 | ) | ||||
Equity | 624 | 230 | ||||||
Group’s share in equity 12.6% (2022 - 9.9%) | 62 | 30 | ||||||
Goodwill | 241 | 549 | ||||||
Group’s carrying amount of the investment | 303 | 579 |
Six months ended June 30, 2022 | Six months ended June 30, 2023 | |||||||
Revenue | – | 572 | ||||||
Cost of revenue | – | (440 | ) | |||||
Other income and expenses, net | – | (1,067 | ) | |||||
including personnel expenses | – | (458 | ) | |||||
including depreciation and amortization | – | (44 | ) | |||||
Total net loss | – | (935 | ) | |||||
Group’s share of total net loss | – | (93 | ) | |||||
Gain from contribution to equity by other investors | – | 49 | ||||||
Total share of loss of an associate | – | (44 | ) |
F-24
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
14. | Leases |
The Group has commercial lease agreements of office buildings. The leases have an average life up to four years. The contracts for a term of less than a year fall under the recognition exemption for being short-term leases. Total lease expense for the six months ended June 30, 2023 recognized under such contracts is 28 (six months ended June 30, 2022 – 14). Future minimum lease rentals under non-cancellable lease commitments for office premises for a term less than one year as of June 30, 2023 are 15 (December 31, 2022 – 25).
For long-term contracts, right-of-use assets and lease liabilities were recognized. Right-of-use assets are included into property and equipment. The change in the balances of Right-of-use assets and Lease liabilities for the six months ended June 30, 2023 was as follows:
Right-of-use assets Office buildings | Lease liabilities | |||||||
As of January 1, 2023 | 455 | 433 | ||||||
Additions | 29 | 21 | ||||||
Derecognition | (11 | ) | (11 | ) | ||||
Depreciation | (130 | ) | – | |||||
Interest expense | – | 18 | ||||||
Payments | – | (75 | ) | |||||
As of June 30, 2023 | 343 | 386 | ||||||
Including short-term portion | 302 |
The change in the balances of Right-of-use assets and Lease liabilities for the six months ended June 30, 2022 was as follows:
Right-of-use assets Office buildings | Lease liabilities | |||||||
As of January 1, 2022 | 653 | 642 | ||||||
Additions | 104 | 104 | ||||||
Derecognition | (136 | ) | (155 | ) | ||||
Depreciation | (137 | ) | – | |||||
Interest expense | – | 30 | ||||||
Payments | – | (64 | ) | |||||
As of June 30, 2022 | 484 | 557 | ||||||
Including short-term portion | 263 |
For the amount of rent expense recognized from short-term leases and variable lease payments for the three and six months ended June 30, 2023 and June 30, 2022 see note 17.
F-25
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
15. | Revenue from contracts with customers |
Revenue from contracts with customers for three and six months ended June 30 was as follows:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Payment processing fees | 10,839 | 17,787 | 8,687 | 17,435 | ||||||||||||
Platform and marketing services related fees | 201 | 436 | 5,553 | 11,458 | ||||||||||||
Fees for guarantees issued | 334 | 600 | 478 | 895 | ||||||||||||
Cash and settlement service fees | 185 | 460 | 722 | 1,238 | ||||||||||||
Other revenue | 91 | 177 | 205 | 347 | ||||||||||||
Total revenue from contracts with customers | 11,650 | 19,460 | 15,645 | 31,373 |
For the purposes of interim condensed consolidated statement of cash flows, “Interest income, net” consists of the following:
Six months ended | ||||||||
June 30, 2022 | June 30, 2023 | |||||||
Interest revenue calculated using the effective interest rate | (3,381 | ) | (3,708 | ) | ||||
Interest expense classified as part of cost of revenue | 241 | 162 | ||||||
Interest income and expenses from non-operating activities | (72 | ) | 6 | |||||
Interest income, net, for the purposes of interim condensed consolidated statement of cash flows | (3,212 | ) | (3,540 | ) |
16. | Cost of revenue |
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Transaction costs | 3,260 | 6,090 | 3,645 | 7,309 | ||||||||||||
Platform and marketing services related expenses | 29 | 54 | 4,630 | 9,765 | ||||||||||||
Guarantees issued related expenses | 141 | 275 | 216 | 400 | ||||||||||||
Interest expense | 121 | 241 | 84 | 162 | ||||||||||||
Other expenses | 256 | 559 | 268 | 527 | ||||||||||||
Total cost of revenue | 3,807 | 7,219 | 8,843 | 18,163 |
F-26
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
17. | Selling, general and administrative expenses |
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Advertising, client acquisition and related expenses | 80 | 148 | 116 | 193 | ||||||||||||
Tax expenses, except for income and payroll taxes | 69 | 146 | 77 | 166 | ||||||||||||
Advisory and audit services | 190 | 434 | 247 | 490 | ||||||||||||
Rent of premises | 25 | 51 | 34 | 68 | ||||||||||||
Expenses related to Tochka platform services | 178 | 311 | 282 | 415 | ||||||||||||
IT related services | 92 | 188 | 138 | 252 | ||||||||||||
Business travel and representative expenses | 66 | 95 | 126 | 222 | ||||||||||||
Other expenses | 73 | 171 | 164 | 337 | ||||||||||||
Total selling, general and administrative expenses | 773 | 1,544 | 1,184 | 2,143 |
F-27
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
18. | Income tax |
The Company is incorporated in Cyprus under the Cyprus Companies Law, but the business activity of the Group and joint ventures is subject to taxation in multiple jurisdictions, the most significant of which include:
Cyprus
The Company is subject to 12.5% corporate income tax applied to its worldwide income. On December 9, 2021, the Minister of Finance presented to parliament the proposed Cyprus budgetary plan for 2022 and envisaged fiscal policy plan for the next three-year period, including an outline of the government’s vision with respect to a possible reform of the Cyprus tax system. Specifically, an increase of the corporate income tax rate from 12.5% to 15% is envisaged, in line with the OECD Inclusive Framework’s Pillar Two agreement. The European Commission’s proposal indicates that the new rules should be transposed into domestic law by EU Member States by December 31, 2023. Once duly adopted, it is proposed to take effect from January 1, 2024.
The Company is exempt from the special contribution to the Defense Fund on dividends received from abroad.
In 2020 the Company obtained a written confirmation from the Cyprus tax authorities in the form of a tax ruling in which the Cyprus tax authorities accept in writing not to impose any deemed dividend distribution liability since the Company is a public entity and it is impossible to identify the ultimate minority shareholders.
The Russian Federation
The Company’s subsidiaries incorporated in the Russian Federation are subject to corporate income tax at the standard rate of 15% applied to income received from Russian government bonds and 20% applied to their other taxable income.
The Protocol of September 8, 2020 effective from January 1, 2021 established withholding tax rates as 15% in respect of interest and dividend income paid to Cyprus (though it provides for a number of exceptions where the lower rates of 5% or 0% are envisaged). The Company believes that it fulfills the conditions for application of the reduced 5% tax rate under the amended Russia-Cyprus Double Tax Treaty in respect of dividend income.
Republic of Kazakhstan
The Company’s subsidiary incorporated in Kazakhstan is subject to corporate income tax at the standard rate of 20% applied to their taxable income.
The major components of income tax expense in the interim condensed consolidated statement of comprehensive income are:
Three months ended June 30, 2022 | Six months ended June 30, 2022 | Three months ended June 30, 2023 | Six months ended June 30, 2023 | |||||||||||||
Current income tax expense | (1,179 | ) | (1,893 | ) | (761 | ) | (1,860 | ) | ||||||||
Deferred tax (expense)/benefit | (254 | ) | (341 | ) | (193 | ) | 15 | |||||||||
Income tax expense for the period | (1,433 | ) | (2,234 | ) | (954 | ) | (1,845 | ) |
F-28
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
19. | Commitments, contingencies and operating risks |
Operating environment
The Ukraine crisis, which started in late 2013 and escalated into a major military conflict between Russia and Ukraine in February 2022, has had a devastating effect on Russian relations with the West. In response to the Ukraine crisis, Ukraine, the European Union, the United Kingdom and the United States (as well as numerous other countries such as Switzerland, Japan, Norway, Canada and Australia) have passed a variety of economic sanctions against numerous Russian banks, other companies, private individuals, and whole sectors of the Russian economy, as well as export restrictions and “sectoral” sanctions affecting specified types of transactions with named participants in certain industries, including named Russian financial institutions, and sanctions that prohibit certain significant commercial activities of U.S., UK and EU entities in Russia, as well as in certain specific territories affected by the conflict. While the scope of sanctions has been expanding since 2014, when they were first introduced in response to annexation of Crimea, 2022 saw the imposition of extremely severe measures that have hitherto been unprecedented. Introduction of further economic or trade sanctions remains highly likely as the conflict in Ukraine develops.
Several of Russia’s largest banks, as well as a number of smaller banks are now on the U.S. Department of the Treasury’s Office of Foreign Assets Control’s List of Specially Designated Nationals and Blocked Persons (SDNs), such that their property in the U.S. is blocked and U.S. entities are prohibited from transacting with them, and are also subject to various EU and UK sanctions. Since March 2, 2022, a number of major Russian banks have been banned from the SWIFT system by the EU.
As of the date of these interim condensed consolidated financial statements, the Group is not subject to any sanctions from the US, the UK or the EU. However, further expansion of the sanctions list, the shutdown of the SWIFT system for some Russian banks, the possible introduction of restrictions on the CBR and a number of companies, including customers and counterparties of the Group, may have a significant impact on the activities and financial position of the Group in the future.
In addition, in response to the Ukraine conflict, numerous companies from the U.S., the EU, the UK and other countries have withdrawn from Russia or suspended, wound down or substantially scaled back their Russian operations, stopped dealings with Russian counterparts, or announced plans to do so, due to what ostensibly is a combination of compliance, political, reputational, and other reasons, in a manner that goes significantly beyond the mere compliance with applicable sanctions. It has been observed that businesses from the U.S., the EU, the UK and certain other countries, are exhibiting an overall trend of avoiding any associations with Russia. Such businesses include, among others, software and hardware providers the use of whose products and services is material to the Group’s operations. Accordingly, the Group may face the risk of interruptions to its normal operations due to the need to replace such products and services and integrate alternative solutions on an emergency basis, and its business, financial condition and results of operations could be materially adversely affected as a result. Further, on March 5, 2022, Visa and Mastercard suspended membership of all their Russian members, rendering Russian banks, including Qiwi Bank, unable to issue Visa and Mastercard cards, and Russian consumers unable to execute purchases from most foreign merchants, which has had a limited negative effect on the Group’s payment volumes in 2022 and 2023.
F-29
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
19. | Commitments, contingencies and operating risks (continued) |
Operating environment (continued)
In response to the actions of foreign countries and companies described above, the Russian Federation has developed and continues to implement a number of legal, financial and economic measures in order to secure and stabilize the Russian economy, as well as severe retaliatory measures, including significant restrictions on foreign companies executing transactions, repatriating profits and proceeds from sales of businesses, challenging regulatory compliance, increasing taxes, implementing new obligatory or voluntary fees and others. Such measures may be applied to the Group, especially given that its parent company is registered in a country that is considered by the Russian Government to be an “unfriendly jurisdiction”.
On March 15, 2023, QIWI received a notice from the Nasdaq Listing Qualifications Staff that the Staff had determined to delist the Company’s American Depositary Shares from the Nasdaq Global Select Market. On June 6, 2023, upon hearing an appeal from the Company, the Panel granted its request to continue its listing on Nasdaq, subject in particular to the Company timely implementing a restructuring plan to divest its Russian assets. Upon implementation of the restructuring plan, the Group will focus on further growth of its international business both by developing its existing operations and through M&A activities.
Currently, the Board of Directors and management are considering various ways to divest the Russian business from QIWI plc in order to maintain the listing on NASDAQ and protect the interests of all groups of investors. At present, there is still additional work required to carefully and comprehensively evaluate the risks and consequences of potential solutions. Furthermore, the restructuring may require certain approvals from various regulatory bodies in Russia, including the CBR, or other countries. As a result, there is no single option for restructuring which could be considered as highly probable. At the same time, such restructuring may result in substantial losses to be recognized in the consolidated financial statements depending on the limitations imposed by such regulatory bodies, as has been evidenced in practice in a number of recent cases where other foreign companies divested Russian assets.
F-30
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
19. | Commitments, contingencies and operating risks (continued) |
Regulatory environment
The Group’s business is impacted by laws and regulations that affect its industry, the number of which has increased significantly in recent years. The Group is subject to a variety of regulations, including those aimed at preventing money laundering and the financing of criminal activity and terrorism, financial services regulations, payment services regulations, consumer protection laws, currency control regulations, advertising laws, betting laws and privacy and data protection laws. As a result, the Group experiences periodic investigations by various regulatory authorities in connection with such laws and regulations, which may sometimes result in the imposition of monetary or other sanctions. An example of such investigations was a routine audit by the CBR that resulted in certain restrictions on operations of Qiwi Bank in July 2023 (see Note 22). Further, these laws and regulations vary significantly from country to country. Many of these laws and regulations are constantly evolving, and are often unclear and inconsistent with other applicable laws and regulations, including across various jurisdictions, making compliance challenging and increasing the Group’s related operating costs and legal risks. If local authorities in Russia or other countries choose to enforce specific interpretations of the applicable legislation that differ from the Group’s, it may be found to be in violation and subject to penalties or other liabilities. This could also limit the Group’s ability to provide some of its services going forward and may increase its cost of doing business.
For more detailed disclosure on operating and regulatory environment and on other key risks please refer to the most recent annual report on Form 20-F and Financial Statements filed with the Securities and Exchange Commission.
Taxation
Russian and the CIS countries’ tax, currency and customs legislation is subject to varying interpretations, and changes, which can occur frequently. There can be no assurance that the Russian Tax Code and CIS countries’ (specifically, Kazakhstan) tax legislation will not be changed in the future in a manner adverse to the stability and predictability of the Russian and CIS countries’ tax system. These factors, together with the potential for state budget deficits, raise the risk of the imposition of additional taxes on the Group. The introduction of new taxes or amendments to current taxation rules may have a substantial impact on the overall amount of the Group’s tax liabilities. An example of such new tax is a new “windfall tax” introduced in August 2023 (see Note 22). Recent events within the Russian Federation and Kazakhstan suggest that the tax authorities are taking a more assertive position in their 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. As such, significant additional taxes, penalties and interest may be assessed. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year of review. Under certain circumstances reviews may cover longer periods. There is no assurance that it would not be required to make substantially larger tax payments in the future, which may adversely affect the Group’s business, financial condition and results of operations.
For more detailed disclosure on taxation please refer to the most recent annual report on Form 20-F and Financial Statements filed with the Securities and Exchange Commission.
F-31
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
19. | Commitments, contingencies and operating risks (continued) |
Risk assessment
The Group’s management believes that its interpretation of the relevant legislation is appropriate and is in accordance with the current industry practice and that the Group’s currency, customs, tax and other regulatory positions will be sustained. However, the interpretations of the relevant authorities could differ and the maximum effect of additional losses, if the authorities were successful in enforcing their different interpretations, could be significant, amount up to RUB 1.4 billion as assessed by the Group as of June 30, 2023 (RUB 2.2 billion as of December 31, 2022).
Legal proceedings
In the ordinary course of business, the Group is subject to legal actions and complaints. Management does not believe that the ultimate liability, if any, arising from such actions or complaints will have a material adverse effect on the financial condition or the results of future operations of the Group.
Following the disclosure of the restrictions imposed by the CBR on the Group in December 2020, QIWI plc and certain of its current and former executive officers have been named as defendants in a putative class action filed in the United States. These lawsuits allege that the defendants made certain false or misleading statements that were supposedly revealed after the CBR audit results and restrictions were disclosed in December 2020, which the plaintiffs perceive as a violation of Sections 10(b) and 20(a) of the 1934 Securities Exchange Act, and seek damages and other relief based upon such allegations. Management believes that these lawsuits are without merit and intends to defend against them vigorously, and expects to incur certain costs associated with defending against these actions. As of the date of these interim condensed consolidated financial statements there have been no developments regarding the lawsuits, the ultimate outcomes are uncertain and management cannot reasonably predict the timing or outcomes, or estimate the amount of loss, if any, or their effect, if any, on the Group’s financial position. Any negative outcome could result in payments of substantial monetary damages and accordingly the Group’s business could be seriously harmed.
F-32
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
19. | Commitments, contingencies and operating risks (continued) |
Guarantees issued
The Group issues financial and performance guarantees to non-related parties for the term of up to five years at market rates.
December 31, 2022 | June 30, 2023 | |||||||
(Stage 1) | (Stage 1) | |||||||
Performance guarantees | 81,537 | 79,950 | ||||||
Financial guarantees | 1,116 | 783 | ||||||
Total | 82,653 | 80,733 |
Financial guarantees are issued to Russian companies that do not have an external credit rating. Performance guarantees are issued to small and medium enterprises within the ROWI segment. Starting January 1, 2023, for the assessment of expected credit losses of the performance guaranties the Group applies the same methodology as for the financial guaranties based on the provisions of IFRS9 “Financial Instruments”. Management does not believe that expected losses from the performance guarantees will exceed the amount of contract liability provided for in these interim condensed consolidated financial statements (see Note 9.2).
Credit related commitments
The primary purpose of these instruments is to ensure that funds are available to a customer as required. Commitments to extend credit represent unused portions of authorizations to extend credit in the form of loans. With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments, if the unused amounts were to be drawn down.
December 31, 2022 | June 30, 2023 | |||||||
(Stage 1) | (Stage 1) | |||||||
Unused limits on loans to legal entities | 1,618 | 2,636 | ||||||
Credit loss allowance | (19 | ) | (60 | ) |
F-33
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
20. | Balances and transactions with related parties |
The following table provides the total amount of transactions that have been entered into with related parties during the six months ended June 30, 2023 and 2022, as well as balances with related parties as of June 30, 2023 and December 31, 2022:
For the six months ended June 30, 2023 | As of June 30, 2023 | |||||||||||||||
Sales to/ income from related parties | Purchases/ from related | Amounts owed by related parties | Amounts owed to related parties | |||||||||||||
Associates | 11 | – | 131 | (47 | ) | |||||||||||
Key management personnel | – | (269 | ) | – | (256 | ) | ||||||||||
Other related parties | 15 | (40 | ) | 77 | (30 | ) |
For the six months ended June 30, 2022 | As of December 31, 2022 | |||||||||||||||
Sales to/ income from related parties | Purchases/ from related | Amounts owed by related parties | Amounts owed to related parties | |||||||||||||
Associates | – | – | – | (3 | ) | |||||||||||
Key management personnel | – | (273 | ) | – | (244 | ) | ||||||||||
Other related parties | – | (6 | ) | 101 | (11 | ) |
Benefits of key management and Board of Directors for the six months ended June 30, 2023 comprise of short-term benefits of 173 and benefits under long-term incentive programs of 96 (164 and 69, respectively, and share-based payments of 40 - for the six months ended June 30, 2022).
F-34
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
21. | Financial instruments |
The Group's principal financial instruments comprise loans receivable, trade and other receivables, customer accounts and amounts due to banks, trade and other payables, cash and cash equivalents, long- and short-term debt instruments and reserves at CBR. The Group has various financial assets and liabilities which arise directly from its operations. During the reporting period, the Group did not undertake trading in financial instruments.
The fair value of the Group's financial instruments as of June 30, 2023 and December 31, 2022 is presented by type of the financial instrument in the table below:
As of December 31, 2022 | As of June 30, 2023 | |||||||||||||||||||
Carrying amount | Fair value | Carrying amount | Fair value | |||||||||||||||||
Financial assets | ||||||||||||||||||||
Debt securities | AC | 4,155 | 4,131 | 5,101 | 5,004 | |||||||||||||||
Debt securities | FVOCI | 12,820 | 12,820 | 28,699 | 28,699 | |||||||||||||||
Long-term loans | AC | 822 | 822 | 623 | 623 | |||||||||||||||
Long-term loans | FVPL | 21 | 21 | – | – | |||||||||||||||
Option received from ADAH | FVPL | 470 | 470 | 158 | 158 | |||||||||||||||
Financial liabilities | ||||||||||||||||||||
Bonds issued | AC | 3,922 | 3,887 | 3,745 | 3,739 |
Financial instruments used by the Group are included in one of the following categories:
• | AC – accounted at amortized cost; |
• | FVOCI – accounted at fair value through other comprehensive income; |
• | FVPL – accounted at fair value through profit or loss. |
Carrying amounts of cash and cash equivalents, short-term loans issued, short-term deposits placed, debt, accounts receivable and payable, reserves at CBR, lease liabilities, customer accounts and amounts due to banks approximate their fair values largely due to short-term maturities of these instruments.
Debt securities of the Group mostly consist of RUB nominated government and high-quality corporate bonds with interest rate 0.0% - 12.33% and maturity up to January 2037.
Long-term loans generally represent RUB-denominated loans to Russian legal entities and have a maturity up to three years. For the purpose of fair value measurement of these loans the Group uses comparable market interest rates which range between 9 and 38%.
F-35
QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
21. | Financial instruments (continued) |
The following table provides the fair value measurement hierarchy of the Group’s financial instruments to be accounted for or disclosed at fair value:
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 accounted at fair value through profit or loss | ||||||||||||||||||||
Long-term loans | June 30, 2023 | – | – | – | – | |||||||||||||||
Option received from ADAH | June 30, 2023 | 158 | – | – | 158 | |||||||||||||||
Assets accounted at fair value through other comprehensive income | ||||||||||||||||||||
Debt securities | June 30, 2023 | 28,699 | 28,699 | – | – | |||||||||||||||
Assets for which fair values are disclosed | ||||||||||||||||||||
Debt securities | June 30, 2023 | 5,004 | 5,004 | – | – | |||||||||||||||
Long-term loans | June 30, 2023 | 623 | – | – | 623 | |||||||||||||||
Liabilities for which fair values are disclosed | ||||||||||||||||||||
Bonds issued | June 30, 2023 | 3,739 | 3,739 | – | – | |||||||||||||||
Assets accounted at fair value through profit or loss | ||||||||||||||||||||
Long-term loans | December 31, 2022 | 21 | – | – | 21 | |||||||||||||||
Option received from ADAH | December 31, 2022 | 470 | – | – | 470 | |||||||||||||||
Assets accounted at fair value through other comprehensive income | ||||||||||||||||||||
Debt securities | December 31, 2022 | 12,820 | 12,820 | – | – | |||||||||||||||
Assets for which fair values are disclosed | ||||||||||||||||||||
Debt instruments | December 31, 2022 | 4,131 | 4,131 | – | – | |||||||||||||||
Long-term loans | December 31, 2022 | 822 | – | – | 822 | |||||||||||||||
Liabilities for which fair values are disclosed | ||||||||||||||||||||
Bonds issued | December 31, 2022 | 3,887 | 3,887 | – | – |
There were no transfers between Level 1 and Level 2 fair value measurements and no transfers into or out of Level 3 fair value measurements during the six months ended June 30, 2023.
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. |
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QIWI plc
Notes to interim condensed consolidated financial statements (Unaudited) (continued)
(in millions of rubles, except when otherwise indicated)
21. | Financial instruments (continued) |
Valuation methods and assumptions
The fair value of the financial assets and liabilities are evaluated at the amount the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.
Long-term fixed-rate loans issued are evaluated by the Group based on parameters such as interest rates, terms of maturity, specific country and industry risk factors and individual creditworthiness of the customer. With regard to the level 3 assessment of fair value of loans issued, management believes that no reasonably possible change in any of the unobservable inputs would be sensitive for the fair value of these assets.
22. | Events after the reporting date |
CBR inspection
At the end of July, 2023, during a routine audit of Qiwi Bank, the CBR issued an order to introduce temporary and partial limitations for individuals to withdraw funds from QIWI wallets to bank accounts or make cash withdrawals. As of the date of this condensed consolidated financial statements, Qiwi Bank has already fixed the identified deficiencies and provided the respective evidence to the regulator. Management is currently working closely with the CBR to lift these limitations fully or at least partially. The Group remains financially stable and profitable despite the imposed restrictions. Qiwi Bank has substantial liquidity reserves and maintains the required capital adequacy ratios.
Taxation
In August, 2023, Federal Law 414-FZ was issued in Russia with the effective date of January 1, 2024. It introduces a one-off special tax (windfall tax) which Russian Group subsidiaries are subject to. Although certain terms and aspects of the windfall tax law are unclear and subject to interpretation, it is expected that in case companies will transfer the windfall tax in the form of a voluntary "security payment" to the Russian federal budget in the fourth quarter of 2023 they may reduce the effective rate by up to 50%. The Group expects to utilize the “early payment” option and expects to settle its windfall tax obligation in the fourth quarter 2023 by making a payment of up to RUB 0,5 billion.
In August, 2023, the Russian Federation suspended certain articles of its double taxation treaties with a number of countries, including Cyprus. Consequently, the withholding tax rate in respect of dividends paid to Cyprus is 15% and in respect of interest and royalties, 20%.
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