SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

July 20, 2020

Commission File Number 001-35893

 

 

QIWI plc

 

 

Kennedy 12,

Kennedy Business Centre, 2nd Floor,

P.C. 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  ☒            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  ☒

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 F-3 (FILE NO. 333-235239) AND THE REGISTRATION STATEMENTS ON FORM S-8 (FILE NO. 333-190918; FILE NO. 333-212441) OF QIWI PLC AND IN THE OUTSTANDING PROSPECTUS CONTAINED IN SUCH REGISTRATION STATEMENTS.

 

 

 

EXPLANATORY NOTE

The purpose of this Report on Form 6-K is (1) to republish QIWI’s unaudited interim consolidated financial statements for the first quarter ended March 31, 2020, which were furnished to the SEC on a Report on Form 6-K dated May 20, 2020, and adding there to the notes to the unaudited interim condensed financial statements and the related eXtensible Business Reporting Language and (2) to publish an operating and financial review and prospects with respect to the first quarter ended March 31, 2020.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

FOR THE FIRST QUARTER ENDED MARCH 31, 2020

Results of Operations

Revenue

Revenue for the three months ended March 31, 2020 was RUB 10,610 million, an increase of 19%, or RUB 1,672 million, compared to the same period in 2019. This increase was primarily driven by an increase in payment processing fees of RUB 988 million, resulting predominantly from volume growth in Money Remittance, E-commerce, and Telecom market verticals, partially offset by a slight decline in the Payment Average Adjusted Net Revenue Yield.

The number of active Qiwi Wallet consumers increased to 21.8 million as of March 31, 2020 from 21.5 million as of March 31, 2019. The increase resulted mainly from the development of consumer and merchant use cases in the core market verticals, network effects as well as increasing convenience and usability of our services. The number of our kiosks and terminals decreased, with 127,643 active kiosks and terminals as of March 31, 2020 compared to 141,721 as of March 31, 2019, primarily as a result of secular market trends towards higher share of digital payments.

Interest revenue calculated using the effective interest rate for the three months ended March 31, 2020 was RUB 1,060 million, an increase of 33%, or RUB 264 million, compared to the same period in 2019. The growth was primarily related to Factoring Plus revenue growth, which was driven by the scaling of the factoring project, including an expansion of the factoring loan portfolio and an increasing number of factoring transactions.

Fees for inactive accounts and unclaimed payments for the three months ended March 31, 2020 was RUB 490 million, an increase of 10%, or RUB 45 million, compared to the same period in 2019. The increase was driven primarily by the introduction of new types of penalties in the beginning of 2020.

Other revenue for the three months ended March 31, 2020 was RUB 1,125 million, an increase of 50%, or RUB 375 million, compared to the same period of 2019. This increase was due to: (i) an RUB 260 million increase in SOVEST installment card related fees, which was driven by higher turnovers as well as an increase in commission charged to consumers for value added options; and (ii) the increase of Factoring Plus revenue, which was driven by the scaling of the project, including expansion of digital guaranties portfolio. This increase was partially offset by a decrease of cash and settlement service fees of RUB 163 million, primarily resulting from the transfer of Tochka project to JSC Tochka on February 1, 2019, and its consequent recognition as an associate.

Operating expenses     

Cost of revenue

Cost of revenue for the three months ended March 31, 2020 was RUB 4,350 million, an increase of 22%, or RUB 779 million, compared to the same period in 2019. Transaction costs for the three months ended March 31, 2020 were RUB 3,340 million, an increase of 20%, or RUB 567 million, compared to the same period in 2019. The increase is largely in line with the payment processing fees growth.

Ancillary expenses for the three months ended March 31, 2020 was RUB 1,010 million, an increase of 27%, or RUB 212 million, compared to the same period in 2019. The increase in ancillary expenses was mainly due to (i) increase in expenses related to Factoring Plus bank guarantee line of business resulting from its scaling; (ii) Deposit Insurance Agency contributions; and (iii) increase in other costs by RUB 85 million primarily due to the Flocktory consolidation in December 2019.

Segment Net Revenue

Segment net revenue attributable to the Payment Services segment for the three months ended March 31, 2020 was RUB 5,321 million, an increase of 10%, or RUB 485 million, compared to the same period in 2019. The growth in Payment Services segment net revenue was mainly due to an increase in payment processing fees and interest revenue calculated using the effective interest rate partially offset by a decrease in other revenue and an increase in transaction costs. Payment processing fees increased by 14%, or by RUB 988 million, compared to the same period

in 2019 in line with volume growth. The growth of payment processing fees was driven primarily by growth in E-commerce, Money Remittances and Financial Services market verticals and was partially offset by the slight decline of the Payment Average Adjusted Net Revenue Yield. Transaction costs increased by 20% or by RUB 567 million, largely in line with the increase in payment processing fees. Interest revenue increased by 14% or by RUB 59 million compared to the three months ended March 31, 2019. The increase in interest revenue resulted primarily from larger amounts of deposits that QIWI Bank placed within CBR and other banks during the three months ended March 31, 2020. Fees from inactive accounts and unclaimed payments increased by 10%, or RUB 45 million, in the three months ended March 31, 2020. Other revenue increased by 92%, or RUB 34 million, compared to the same period in 2019. Payment Services segment net revenue accounted for 85% of total net revenue in the three months ended March 31, 2020.

Segment net revenue attributable to the Consumer Financial Services segment for the three months ended March 31, 2020 was RUB 566 million, an increase of 160%, or RUB 348 million, compared to the same period in 2019. The increase in Consumer Financial Services segment net revenue was driven predominantly by the increase of revenue from merchants resulting from the scaling of the SOVEST project and its volume growth. Consumer Financial Services segment net revenue accounted for approximately 9% of total net revenue in the three months ended March 31, 2020.

Segment net revenue attributable to the Rocketbank segment for the three months ended March 31, 2020 was RUB 23 million, compared to negative net revenue contribution of RUB 186 million in the same period in 2019. This improvement resulted primarily from the growth of revenue from settlement services driven by improved monetization and volume growth. The Rocketbank segment net revenues accounted for approximately 0.4% of total net revenue in the three months ended March 31, 2020.

Net revenues attributable to the Corporate and Other segment for the three months ended March 31, 2020 was RUB 350 million, a decrease of 26%, or RUB 126 million, compared to the same period in 2019. This decrease was primarily due to the decrease in Tochka revenues resulting from the transfer of Tochka’s operations to JSC Tochka, an associate starting in February 2019. Corporate and Other category net revenue accounted for approximately 5.6% of total net revenue in the three months ended March 31, 2020.

Selling, general and administrative expenses

Selling, general and administrative expenses for the three months ended March 31, 2020 were RUB 1,228 million, an increase of 4%, or RUB 49 million, compared to the same period in 2019. The increase in expenses was driven primarily by: (i) an increase in expenses related to the Tochka platform of 171%, or RUB 70 million, from RUB 41 million in the three months ended March 30, 2019 to RUB 111 million for the three months ended March 31, 2020; (ii) advisory and audit services, which increased by 25%, or RUB 39 million, from RUB 156 million in the three months ended March 31, 2019 to RUB 195 million in the three months ended March 31, 2020, mostly related to the operation of Rocketbank; (iii) the growth in IT related services expenses, which increased by 22%, or RUB 20 million, mostly due to the development of the Rocketbank and Sovest projects. The increase was further offset by: (i) advertising, client acquisition and related expenses, which decreased by 7%, or RUB 30 million, from RUB 417 million in the three months ended March 31, 2019 to RUB 387 million in the three months ended March 31, 2020, mostly due to the reduction of expenses related to the Rocketbank and SOVEST projects as well as cancellation of participation in certain exhibitions and forums; (ii) the decrease in rent and related utility expenses by 38% or by RUB 35 million from RUB 92 million in the three months ended March 31, 2019 to RUB 57 million in the three months ended March 31, 2020, mainly driven by the termination of recognition of certain lease expenses in connection with the partial transfer of Tochka’s operations to an associate starting in February 2019; and (iii) no recognition of loss from initial recognition for the three months ended March 31, 2020 as compared to same period in the previous year following the change of the estimate in relation to the market rate used in measurement of fair value of its installment card loans.

Personnel expenses

Personnel expenses for the three months ended March 31, 2020 were RUB 2,283 million, an increase of 25%, or RUB 462 million, compared to the same period in 2019. This increase was driven primarily by: (i) an increase in

Rocketbank segment payroll expenses, including a RUB 142 million severance payment provisions related to the wind-down process, which began at the end of the first quarter; (ii) RUB 98 million accrued remuneration on the new long-term incentive program in the three months ended March 31, 2020 as compared to nil for the same period in the prior year; and (iii) RUB 83 million Flocktory payroll expenses resulting from the consolidation of Flocktory business starting in December 2019. This increase was partially offset by the RUB 173 million decrease in Tochka payroll, which was driven by the transfer of personnel from Tochka Bank to Tochka JSC in February 2019.

Depreciation and amortization

Depreciation and amortization for the three months ended March 31, 2020 was RUB 319 million, a decrease of 8%, or RUB 27 million, compared to the same period in 2019.

Credit loss expense

Credit loss expense for the three months ended March 31, 2020 was RUB 520 million, an increase of 300%, or RUB 390 million, compared to the same period in 2019. The increase was mostly related to the growth of the SOVEST loans portfolio and adjustments made to our provisioning models in light of the expected operating environment and credit quality deterioration resulting from the global distress caused by COVID-19, declining oil prices and ruble devaluation.

Impairment of non-current assets

Impairment of non-current assets for the three months ended March 31, 2020 was RUB 20 million, compared to nil in the same period in 2019. The impairment related to the Rocketbank wind-down, which began at the end of the first quarter.

Other non-operating gains and losses

Share of gain/(loss) of an associate and joint ventures

Share of gain/(loss) of an associate and joint ventures for the three months ended March 31, 2020 was RUB 132 million gain, compared to RUB 79 million loss for the same period in 2019. The increase was mainly driven by the increase in profit recognized by Tochka JSC primarily due to the growth and development of the Tochka business.

Other income and expenses, net

Other expenses, net for the three months ended March 31, 2020 was RUB 16 million, compared to RUB 49 million in income in the same period in 2019. This change was mainly driven by the decrease in income from compensation from Tochka JSC.

Foreign exchange gain

Foreign exchange gain for the three months ended March 31, 2020 was RUB 1,434 million, an increase of 651%, or RUB 1,243 million, compared to RUB 191 million for the same period in 2019. The increase of foreign exchange gain primarily resulted from revaluation of assets denominated primarily in USD and ruble devaluation during the three months ended March 31, 2020.

Foreign exchange loss

Foreign exchange loss for the three months ended March 31, 2020 was RUB 1,397 million, an increase of 300%, or RUB 1,048 million, compared to the same period in 2019. The increase of foreign exchange loss primarily resulted from revaluation of liabilities denominated primarily in USD and ruble devaluation during the three months ended March 31, 2020.

Interest income and expenses, net

Interest expenses for the three months ended March 31, 2020 was RUB 32 million, an increase of 113%, or RUB 17 million, compared to the same period in 2019. The increase was mainly driven by an increase of interest expenses resulting from new lease contracts.

Income tax

Income tax for the three months ended March 31, 2020 was RUB 412 million, an increase of 14%, or RUB 51 million, compared to the same period in 2019, driven primarily by the increase in profit before tax. Our effective tax rate for the three months ended March 31, 2020 was 20.5%, a decrease of 92 bps compared to the same period in 2019, as a result of a slightly lower level of non-deductible expenses.

Segment Net Profit

For the quarter ended March 31, 2020, Payment Services Segment net profit was RUB 3,051 million, an increase of 2%, compared with RUB 2,988 million in the same period in 2019, driven predominantly by Payment Services Segment net revenue growth offset by an increase in payroll and related taxes (excluding effect of share-based payments) and Payment Services Segment foreign exchange loss.

The Consumer Financial Services Segment net loss for the quarter ended March 31, 2020 was RUB 522 million, compared to a net loss of RUB 532 million for the same period in 2019, resulting primarily from segment net revenue growth offset by an increase in credit loss expenses including a RUB 186 million increase in expected credit loss allowance due to the adjustments made to our provisioning models in light of the expected operating environment and credit quality deterioration resulting from the global distress caused by COVID-19, declining oil prices and ruble devaluation.

Rocketbank Segment net loss was RUB 660 million, an increase of 35%, compared with net loss of RUB 490 million in the prior year resulting primarily from the increase in payroll and including RUB 142 million severance payment provisions related to the wind-down process, which began at the end of the first quarter.

Corporate and Other Category net loss for the first quarter 2020 was RUB 115 million compared to a net loss of RUB 313 million for the same period of the previous year. This decrease was driven primarily by the following factors: (i) Tochka net profit for the quarter ended March 31, 2020 was RUB 143 million compared with a net loss RUB 5 million in the same period in 2019. The net profit increase resulted from the equity pick-up primarily driven by the growth and development of the Tochka business; and (ii) Corporate net loss for the first quarter of the 2020 was RUB 239 million, compared to RUB 312 million for the same period of the previous year.

Liquidity and capital resources

Our principal sources of liquidity are cash and cash equivalents (including deposits and current accounts of our customers (including Tochka customers) as well as Qiwi Wallet balances), cash receivable from agents, deposits issued to merchants and revenues generated from our operations.

Our balance of cash and cash equivalents as of March 31, 2020 was RUB 32,240 million compared to RUB 42,101 million as of December 31, 2019. Cash and cash equivalents are comprised predominantly of cash at banks and short-term deposits with an original maturity of three months or less. The decrease in cash and cash equivalents was caused by seasonality resulting from larger advances received from agents before New Year holidays as well as by the outflow of Rocketbank customer account balances related to the wind-down of the project that began in the end of the first quarter of 2020.

In 2017 the Company received a guarantee and secured it by a cash deposit of USD 2.5 million until July 31, 2021.

As of March 31, 2020, customer accounts and amounts due to banks, payables to merchants, money remittances and e-wallets accounts payable, and deposits received from agents, were RUB 35,286 million, compared to RUB 46,840 million as of December 31, 2019. The decrease in deposits received from agents was caused predominantly

by the seasonal factors as we accumulated larger advances received from agents before New Year holidays in line with our usual practice. The significant decrease in customer accounts and amounts due to banks was driven primarily by the outflow of Rocketbank’s client funds as a result of the wind-down process started at the end of the first quarter.

As of March 31, 2020, cash receivable from agents and deposits issued to merchants were RUB 3,789 million, compared to RUB 5,426 million as of December 31, 2019. The decrease primarily due to the decrease in deposits issued to merchants and was caused by the same seasonal factor when larger deposits are accumulated at the year-end to ensure payment continuity throughout the New Year holidays.

Our principal needs for liquidity have been, and will likely continue to be, customer accounts and amounts due to banks, payables to merchants, money remittances and e-wallets accounts payable, deposits received from agents and other working capital items, capital expenditures and acquisitions. We believe that our liquidity is sufficient to meet our current obligation as well as for financing our short- and midterm needs. Such needs may include, but are not limited to funding the expansion of our Factoring Plus project and corresponding factoring portfolio as well as other pilot projects for new products. We expect to fund the outstanding factoring portfolio primarily by our accumulated cash, through credit lines that we get from other banks and potentially by raising debt. Shall our view in respect of our sources of liquidity change or shall our ability to attract customers’ or agents’ funds deteriorate we may seek to raise additional liquidity (through the capital or debt markets or through bank financing) in order to fund the abovementioned projects as well as fund or finance other potential projects that we may seek to develop in the future.

Capital Expenditures

Our capital expenditures primarily relate to the acquisition of IT equipment for our processing systems and the acquisition of the software that we use in operations. Capital expenditures for the three months ended March 31, 2020 were RUB 128 million and included: (i) RUB 27 million related to the acquisition of the hardware for processing and data centers; (ii) RUB 55 million related to the acquisition of computer software; (iii) RUB 39 million related to additions of workplace and other office equipment.

As of March 31, 2020 we had no material capital expenditure commitments.

Cash Flow

Cash flows from operating activities

Net cash flow used in operating activities for the three months ended March 31, 2020 was RUB 9,776 million, compared to RUB 1,852 million for the same period in 2019. This increase in net cash flow used in operating activities was driven predominantly by the changes in working capital, primarily resulting from a RUB 8,897 million decrease in customer accounts and amounts due to banks as compared to a decrease of RUB 805 million in the same period in 2019. The decrease in change in customer accounts and amounts due to banks was related predominantly to the Rocketbank wind-down process launched in the end of the first quarter and corresponding outflow of the client account balances in the amount of RUB 5,184 million.

Cash flows from investing activities

Net cash flow used in investing activities for the three months ended March 31, 2020 was RUB 1,388 million, compared to RUB 2,253 million for the same period in 2019. The reduction in net cash outflow was primarily driven by lower purchase and higher redemption of debt securities that amounted to RUB 1,293 million net in the first quarter of 2020 compared to RUB 1,700 million net in the first quarter of 2019 resulting from the winding-down of Rocketbank and subsequent decrease in available cash. At the same time the decrease in net cash flow used in investing activities was related to certain loans issued that amounted to RUB 342 million in 2019.

Cash flows used in financing activities

Net cash flows from financing activities for the three months ended March 31, 2020 was RUB 238 million, compared to net cash used in financing activities of RUB 69 million for the same period in 2019. This change was mostly due to additional borrowings taken in the amount RUB 305 million related to Factoring Plus projects expansion.

Borrowings

During the three months ended March 31, 2020 the Group had available RUB denominated credit facilities with an overall credit limit of RUB 3,460 million (RUB 2,000 million of which is secured), with maturity up to December 2021, and with interest rates of up to 30% per annum. The balance payable under these credit lines as of March 31, 2020 was RUB 1,863 million and matures in 2021. Some of these agreements stipulated the right of a lender to increase the interest rate in case the covenants are violated.

Off-balance sheet arrangements

Guarantees issued

As part of our operations we issue financial guaranties to non-related parties for a term of up to six years at market rate. The amount of guaranties issued as of March 31, 2020 was RUB 8,659 million, up from RUB 8,545 million as of December 31, 2019. The growth of the amount of bank guarantees outstanding resulted from the development of our project focused on providing bank guarantees to different legal entities primarily small and medium enterprises.

EXHIBITS

 

99.1		Unaudited interim consolidated financial statements for the first quarter ended March 31, 2020
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

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
Date: July 20, 2020						By:		/s/ Varvara Kiseleva
						Name:		Varvara Kiseleva
						Title:		Interim Chief Financial Officer

QIWI plc

Unaudited interim condensed consolidated

financial statements

March 31, 2020

QIWI plc

Unaudited interim condensed consolidated financial statements

March 31, 2020

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, 2020

(in millions of rubles)

 

		Notes				As of December 31, 2019 (audited)				As of March 31, 2020 (unaudited)
Assets
Non-current assets
Property and equipment			14				2,346				2,442
Goodwill and other intangible assets							11,316				11,232
Investments in associates			13				1,118				1,250
Long-term debt securities and deposits			22				4,015				5,280
Long-term loans			6, 22				265				264
Other non-current assets							83				72
Deferred tax assets							217				250
Total non-current assets							19,360				20,790
Current assets
Trade and other receivables			7				6,162				4,588
Short-term loans			6				11,419				12,150
Short-term debt securities and deposits			22				1,136				1,166
Prepaid income tax							259				279
Other current assets			9				917				1,097
Cash and cash equivalents			8				42,101				32,240
Total current assets							61,994				51,520
Assets held for sale							123				58
Total assets							81,477				72,368
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 reserve							2,576				2,596
Retained earnings							10,557				11,132
Translation reserve							289				464
Total equity attributable to equity holders of the parent							27,367				28,137
Non-controlling interests							70				40
Total equity							27,437				28,177
Non-current liabilities
Long-term debt			12				1,545				1,863
Long-term lease liabilities			14				1,017				1,142
Long-term customer accounts			11				444				438
Other non-current liabilities							45				68
Deferred tax liabilities							749				724
Total non-current liabilities							3,800				4,235
Current liabilities
Trade and other payables			10				27,295				24,225
Customer accounts and amounts due to banks			11				21,519				13,200
Dividends payable							—				1,072
Short-term lease liabilities			14				340				397
VAT and other taxes payable							184				174
Other current liabilities			9				902				888
Total current liabilities							50,240				39,956
Total equity and liabilities							81,477				72,368

 

2

QIWI plc

Interim condensed consolidated statement of comprehensive income

March 31, 2020

(in millions of rubles)

 

						Three months ended (unaudited)
		Notes				March 31, 2019				March 31, 2020
Revenue:							8,938				10,610
Payment processing fees							6,947				7,935
Interest revenue calculated using the effective interest rate			15				796				1,060
Fees from inactive accounts and unclaimed payments							445				490
Other revenue			15				750				1,125
Operating costs and expenses:							(7,047	)			(8,720	)
Cost of revenue (exclusive of items shown separately below)			16				(3,571	)			(4,350	)
Selling, general and administrative expenses			17				(1,179	)			(1,228	)
Personnel expenses							(1,821	)			(2,283	)
Depreciation and amortization							(346	)			(319	)
Credit loss expense			6, 7, 8, 20				(130	)			(520	)
Impairment of intangible assets							—				(20	)
Profit from operations							1,891				1,890
Share of (loss)/gain of an associate and a joint venture			13				(79	)			132
Other income and expenses, net							49				(16	)
Foreign exchange gain							191				1,434
Foreign exchange loss							(349	)			(1,397	)
Interest income and expenses, net			15				(15	)			(32	)
Profit before tax							1,688				2,011
Income tax expense			19				(361	)			(412	)
Net profit							1,327				1,599
Attributable to:
Equity holders of the parent							1,315				1,587
Non-controlling interests							12				12
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Foreign currency translation:
Exchange differences on translation of foreign operations							(181	)			186
Debt securities at fair value through other comprehensive income (FVOCI):
Net losses arising during the period, net of tax							—				(8	)
Net gains recycled to profit or loss upon disposal							—				(22	)
Total other comprehensive income, net of tax							(181	)			156
Total comprehensive income, net of tax							1,146				1,755
Attributable to:
Equity holders of the parent							1,139				1,732
Non-controlling interests							7				23
Earnings per share:
Basic, profit attributable to ordinary equity holders of the parent							21.35				25.54
Diluted, profit attributable to ordinary equity holders of the parent							21.20				25.44

 

3

QIWI plc

Interim condensed consolidated statement of cash flows

March 31, 2020

(in millions of rubles)

 

						Three months ended (unaudited)
		Notes				March 31, 2019				March 31, 2020
Cash flows from operating activities
Profit before tax							1,688				2,011
Adjustments to reconcile profit before tax to net cash flows (used in) /generated from operating activities
Depreciation and amortization							346				319
Foreign exchange (gain)/loss, net							158				(37	)
Interest income, net			15				(586	)			(843	)
Credit loss expense			6, 7, 8, 20				130				520
Share of (gain) / loss of an associate and a joint venture							79				(132	)
Share-based payments							99				59
Loss from initial recognition			17				42				—
Other							(8	)			(2	)
Operating profit before changes in working capital							1,948				1,895
Decrease in trade and other receivables							1,122				2,272
Increase in other assets							(24	)			(167	)
Decrease in customer accounts and amounts due to banks							(805	)			(8,897	)
Decrease in accounts payable and accruals							(5,100	)			(4,004	)
Decrease/(Increase) in loans issued from banking operations							547				(1,265	)
Cash used in operations							(2,312	)			(10,166	)
Interest received							789				1,083
Interest paid							(66	)			(211	)
Income tax paid							(263	)			(482	)
Net cash flow used in operating activities							(1,852	)			(9,776	)
Cash flows used in investing activities
Acquisition of associate and joint control company							(185	)			—
Purchase of property and equipment							(112	)			(59	)
Purchase of intangible assets							(29	)			(62	)
Proceeds from sale of fixed and intangible assets							97				12
Loans issued							(342	)			(7	)
Repayment of loans issued							18				21
Purchase of debt instruments and funds depositing							(2,435	)			(2,361	)
Proceeds from sale and redemption of debt instruments							735				1,068
Net cash flow used in investing activities							(2,253	)			(1,388	)
Cash flows (used in)/generated from financing activities
Proceeds from borrowings							—				305
Payment of principal portion of lease liabilities							(69	)			(23	)
Dividends paid to non-controlling shareholders							—				(44	)
Net cash flow (used in) / generated from financing activities							(69	)			238
Effect of exchange rate changes on cash and cash equivalents							(285	)			1,065
Net decrease in cash and cash equivalents							(4,459	)			(9,861	)
Cash and cash equivalents at the beginning of the period			8				40,966				42,101
Cash and cash equivalents at the end of the period			8				36,507				32,240

 

4

QIWI plc

Interim condensed consolidated statement of changes in equity

March 31, 2020

(in millions of rubles, except per share data)

 

						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, 2019 (audited)							62,092,835				1				1,876				12,068				2,576				10,557				289				27,367				70				27,437
Profit for the period							—				—				—				—				—				1,587								1,587				12				1,599
Other comprehensive income:
Foreign currency translation							—				—				—				—				—				—				175				175				11				186
Debt instruments at FVOCI							—				—				—				—				(30	)			—				—				(30	)			—				(30	)
Total comprehensive income							—				—				—				—				(30	)			1,587				175				1,732				23				1,755
Share-based payments			23.4				—				—				—				—				59				—				—				59				—				59
Exercise of options							32,765				—				—				—				—				—				—				—				—				—
Dividends (16 RUR per share)			18				—				—				—				—				—				(1,012	)			—				(1,012	)			—				(1,012	)
Dividends to non-controlling interests							—				—				—				—				—				—				—				—				(53	)			(53	)
Other							—				—				—				—				(9	)			—				—				(9	)			—				(9	)
Balance as of March 31, 2020 (unaudited)							62,125,600				1				1,876				12,068				2,596				11,132				464				28,137				40				28,177

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

 

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QIWI plc

Interim condensed consolidated statement of changes in equity (continued)

 

		Notes				Attributable to equity holders of the parent																																Non- controlling interests				Total equity
						Share capital								Additional paid-in capital				Share premium				Other reserves				Retained earnings				Translation reserve				Total
						Number of shares issued and outstanding				Amount
Balance as of December 31, 2018 (audited)							61,451,513				1				1,876				12,068				2,097				9,091				513				25,646				60				25,706
Profit for the period							—				—				—				—				—				1,315				—				1,315				12				1,327
Exchange differences on translation of foreign operations							—				—				—				—				—				—				(176	)			(176	)			(5	)			(181	)
Total comprehensive income							—				—				—				—				—				1,315				(176	)			1,139				7				1,146
Share-based payments			23.4				—				—				—				—				99				—				—				99				—				99
Exercise of options							127,267				—				—				—				—				—				—				—				—				—
Dividends to non-controlling interests							—				—				—				—				—				—				—				—				(35	)			(35	)
Balance as of March 31, 2019 (unaudited)							61,578,780				1				1,876				12,068				2,196				10,406				337				26,884				32				26,916

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

 

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QIWI plc

Notes to interim condensed consolidated financial statements

 

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 months ended March 31, 2020 were authorized for issue on July 15, 2020.

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 March 31, 2020.

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 months ended March 31, 2020 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The condensed consolidated financial statements are presented in Russian rubles (“RUB”) and all values are rounded to the nearest million (RUB (000,000)) except when 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, 2019.

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, 2019, except for the adoption of new standards effective as of January 1, 2020. 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, 2020, but did not have any material impact on the Group:

 

•

Amendments to References to the Conceptual Framework in IFRS Standards (issued on March 29, 2018).

 

•

Amendments to IAS 1 and IAS 8: Definition of Material (issued on October 31, 2018).

 

•

Amendment to IFRS 3 Business Combinations (issued on October 22, 2018).

 

•

Amendments to IFRS 9, IAS 39 and IFRS 7: Interest Rate Benchmark Reform (issued in September, 2019).

 

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QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

2.	Basis of preparation and changes to the Group’s accounting policies (continued)

 

2.3 Changes in presentation

In 2019 the Group changed the presentation of its personnel and related costs by segregating it from cost of revenue and selling, general and administrative expenses in a separate line on the face of the financial statements. The reclassification was made to better reflect the nature and amount of these costs in the current business environment and in order to make the financial statements more comparable with industry peers.

 

		As originally presented				Reclassification				As reclassified
For the three months ended March 31, 2019
Personnel expenses			—				(1,821	)			(1,821	)
Cost of revenue			(4,454	)			883				(3,571	)
Selling, general and administrative expenses			(2,117	)			938				(1,179	)

2.4 Significant accounting judgments, estimates and assumptions

Significant accounting judgments, estimates and assumptions 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, 2019, except for the following:

The outbreak of coronavirus and associated responses from various countries around the world in early 2020 have negatively affected consumer demand across the globe and across industries, and there is the potential for the coronavirus and the responses to it to cause a global recession. One immediate effect of the coronavirus outbreak was a substantial plunge in the price of crude oil due to extended factory shutdowns and a fall in air travel and road transportation. As a result, the Russian ruble has significantly and abruptly depreciated against the U.S. dollars and the euro. The full scope of the negative impact that coronavirus, corresponding lockdowns, the abrupt decline in oil prices and resulting exchange rate drop may have on the Russian economy remains unclear but has the potential to be very significant. As a result of the challenging operating environment in Russia, the Group has experienced slower payment volume growth. Further adverse changes in economic conditions in Russia could adversely impact the Group’s future revenues and profits and cause a material adverse effect on its business, financial condition and results of operations.

Fair value of loans issued

The Group changed the estimate in relation to market rate used in measurement of fair value of its installment card loans issued that also used as the effective interest rate in calculating interest revenue. In prior periods such rate was assumed to be equal prevailing consumer loans rate. Starting January 1, 2020, it is determined with a reference to the interest rate specific to the formed installment cards market based on market participants statistics available to the Group. This change in estimate is applied prospectively starting January 1, 2020, and resulted in no recognition of loss from initial recognition for the three months ended March 31, 2020. If there were no changes in the estimate, the Group would have recognized the loss from initial recognition in the amount of 43 for the three months ended March 31, 2020.

 

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QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

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, 2019				As of March 31, 2020
JSC QIWI (Russia)		Operation of electronic payment kiosks			100	%			100	%
QIWI Bank JSC (Russia)		Maintenance of electronic payment systems, money transfer, consumer and SME financial services			100	%			100	%
QIWI Payments Services Provider Ltd (UAE)		Operation of on-line payments			100	%			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 ROMANIA SRL (Romania)		Operation of electronic payment kiosks			100	%			100	%
QIWI Management Services FZ-LLC (UAE)		Management services			100	%			100	%
Attenium LLC (Russia)		Management services			100	%			100	%
Postomatnye Tekhnologii LLC (Russia)		Logistic			100	%			100	%
Future Pay LLC (Russia)		Operation of on-line payments			100	%			100	%
Qiwi Blockchain Technologies LLC (Russia)		Software development			100	%			100	%
QIWI Shtrikh LLC (Russia)1		On-line cashbox production			51	%			—
QIWI Platform LLC (Russia)		Software development			100	%			100	%
Factoring PLUS LLC (ex. QIWI Processing LLC (Russia)		Software development			100	%			100	%
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			99	%			99	%
Flocktory Spain S.L. (Spain)		SaaS platform for customer lifecycle management and personalization			99	%			99	%
FreeAtLast LLC (Russia)		SaaS platform for customer lifecycle management and personalization			99	%			99	%
SETTE FZ-LLC (UAE)		Payment Services Provider			100	%			100	%
LALIRA DMCC (UAE)		Payment Services Provider			100	%			100	%
Associate
JSC Tochka (Russia)		Digital services for banks			40	%			40	%

 

1	The entity was liquidated during the year 2020.

 

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QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

4.	Acquisitions, disposals and business combinations

2020

Rocketbank

In March 2020, the Board of Directors has decided to wind down the Rocketbank project and the Group is currently investigating the most efficient way to reuse or dispose of the Rocketbank assets. The Rocketbank’s operations are not considered as discontinued until the liquidation is completed.

 

5.	Operating segments

The Chief executive officer (CEO) and management board 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 statement of comprehensive income.

In determining that the CODM was the CEO, the Group considered the CEO 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. The Group measures the performance of its operating segments by monitoring: segment net revenue, segment profit before tax and segment net profit. Segment net revenue is a measure of profitability defined as the segment revenues less segment direct costs. The Group does not monitor balances of assets and liabilities by segments 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 of the following reportable segments: Payment Services, Consumer Financial Services and Rocketbank:

 

•

Payment Services (PS), 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;

 

•

Consumer Financial Services (CFS), operating segment that generates revenue through financial services rendered to individuals, currently presented by SOVEST installment card project;

 

•

Rocketbank (RB), operating segment that generates revenue through offering digital banking service including debit cards and deposits to retail customers.

 

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QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

5.	Operating segments (continued)

 

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, expenses associated with filing the registration statement on Form F-3 for our major shareholders and related transaction expenses, foreign exchange gain/(loss) from revaluation of cash proceeds received from secondary public offering, the effect of disposal of subsidiaries and fair value adjustments, such as amortization and impairment, as well as irregular 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.

The segments’ statement of comprehensive income for the three months ended March 31, 2020, as presented to the CODM are presented below:

 

		PS				CFS				RB				CO				Total
Revenue			8,988				640				437				545				10,610
Segment net revenue			5,321				566				23				350				6,260
Segment profit/(loss) before tax			3,724				(659	)			(803	)			(78	)			2,184
Segment net profit/(loss)			3,051				(522	)			(660	)			(115	)			1,754

The segments’ statement of comprehensive income for the three months ended March 31, 2019, as presented to the CODM are presented below:

 

		PS				CFS				RB				CO				Total
Revenue			7,869				259				275				535				8,938
Segment net revenue			4,836				218				(163	)			476				5,367
Segment profit/(loss) before tax			3,580				(667	)			(604	)			(279	)			2,030
Segment net profit/(loss)			2,988				(532	)			(490	)			(313	)			1,653

Segment net revenue, as presented to the CODM, for the three months ended March 31, 2020 and 2019 is calculated by subtracting cost of revenue from revenue as presented in the table below:

 

		Three months ended
		March 31, 2019				March 31, 2020
Revenue under IFRS			8,938				10,610
Cost of revenue			(3,571	)			(4,350	)
Total segment net revenue, as presented to CODM			5,367				6,260

 

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QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

5.	Operating segments (continued)

 

A reconciliation of segment profit before tax as presented to the CODM to IFRS consolidated profit before tax of the Group, for the three months ended March 31, 2020 and 2019, is presented below:

 

		Three months ended
		March 31, 2019				March 31, 2020
Consolidated profit before tax under IFRS			1,688				2,011
Fair value adjustments recorded on business combinations and their amortization			102				84
Impairment of non-current assets			—				20
Share-based payments			99				59
Form F-3 and related expenses			—				10
Foreign exchange loss from revaluation of cash proceeds received from secondary public offering			141				—
Total segment profit before tax, as presented to CODM			2,030				2,184

A reconciliation of segment net profit as presented to the CODM to IFRS consolidated net profit of the Group, for the three months ended March 31, 2020 and 2019, is presented below:

 

		Three months ended
		March 31, 2019				March 31, 2020
Consolidated net profit under IFRS			1,327				1,599
Fair value adjustments recorded on business combinations and their amortization			102				84
Impairment of non-current assets			—				20
Share-based payments			99				59
Form F-3 and related expenses			—				10
Foreign exchange loss from revaluation of cash proceeds received from secondary public offering			141				—
Effect from taxation of the above items			(16	)			(18	)
Total segment net profit, as presented to CODM			1,653				1,754

Geographic information

Revenues from external customers are presented below:

 

		Three months ended
		March 31, 2019				March 31, 2020
Russia			6,569				8,146
Other CIS			365				397
EU			848				674
Other			1,156				1,393
Total revenue			8,938				10,610

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 has the only one external customer where revenue exceeded 10% of the Group’s total revenue for the three months ended March 31, 2020 and amounted to 12.3%. This revenue was generated within the PS segment. The Group had no single external customer amounting to 10% or greater of the Group’s revenue for the three months ended March 31, 2019.

 

12

QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

6.	Long-term and short-term loans issued

As of March 31, 2020, long-term and short-term loans issued consisted of the following:

 

		Total as of March 31, 2020				Expected credit loss allowance				Net as of March 31, 2020
Long-term loans
Loans to legal entities			264				—				264
Total long-term loans			264				—				264
Short-term loans
Loans to legal entities			3,659				(41	)			3,618
Instalment Card Loans			9,872				(1,340	)			8,532
Total short-term loans			13,531				(1,381	)			12,150

As of December 31, 2019, long-term and short-term loans consisted of the following:

 

		Total as of December 31, 2019				Expected credit loss allowance				Net as of December 31, 2019
Long-term loans
Loans to legal entities			265				—				265
Total long-term loans			265				—				265
Short-term loans
Loans to legal entities			3,467				(33	)			3,434
Instalment Card Loans			8,795				(810	)			7,985
Total short-term loans			12,262				(843	)			11,419

The amounts in the tables show the maximum exposure to credit risk regarding loans issued. The Group has no internal grading system of loans issued for credit risk rating grades analysis. Loans issued are not collateralized.

An analysis of changes in the ECL allowances due to changes in corresponding gross carrying amounts for the three months ended March 31, 2020, was the following:

 

		Stage 1 Collective				Stage 2 Collective				Stage 3				Total
ECL allowance as of January 1, 2020			(229	)			(120	)			(494	)			(843	)
Changes because of financial instruments (originated or acquired)/derecognized during the reporting period			(188	)			(254	)			(96	)			(538	)
Transfers between stages			131				(17	)			(114	)			—
ECL allowance as of March 31, 2020			(286	)			(391	)			(704	)			(1,381	)

 

13

QIWI plc

Notes to interim condensed consolidated financial statements (continued)

 

6.	Long-term and short-term loans issued (continued)

 

An analysis of changes in the ECL allowances due to changes in corresponding gross carrying amounts for the three months ended March 31, 2019, was the following:

 

		Stage 1 Collective				Stage 2 Collective				Stage 3				Total
ECL allowance as of January 1, 2019			(216	)			(120	)			(517	)			(853	)
Changes because of financial instruments (originated or acquired)/derecognized during the reporting period			(107	)			(20	)			6				(121	)
Transfers between stages			120				(9	)			(111	)			—
ECL allowance as of March 31, 2019			(203	)			(149	)			(622	)			(974	)

As of March 31, 2020, the Group had no overdue but not impaired loans.

 

7.	Trade and other receivables

As of March 31, 2020, trade and other receivables consisted of the following:

 

		Total as of March 31, 2020				Expected credit loss allowance/ Provision for impairment				Net as of March 31, 2020
Cash receivable from agents			2,025				(177	)			1,848
Deposits issued to merchants			1,952				(11	)			1,941
Commissions receivable			187				(21	)			166
Other receivables			360				(58	)			302
Total financial assets			4,524				(267	)			4,257
Advances issued			333				(2	)			331
Total trade and other receivables			4,857				(269	)			4,588

As of December 31, 2019, trade and other receivables consisted of the following:

 

		Total as of December 31, 2019				Expected credit loss allowance/ Provision for impairment				Net as of December 31, 2019
Cash receivable from agents			2,947				(199	)			2,748
Deposits issued to merchants			2,690				(12	)			2,678
Commissions receivable			158				(21	)			137
Other receivables			276				(56	)			220
Total financial assets			6,071				(288	)			5,783
Advances issued			380				(1	)			379
Total trade and other receivables			6,451				(289	)			6,162

The amounts in the tables show the maximum exposure to credit risk regarding Trade and other receivables. The Group has no internal grading system of Trade and other receivables for credit risk rating grades analysis. 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.

 

14