UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO SECTION 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2020
Commission File Number: 001-38882
HeadHunter Group PLC
(Translation of registrants name into English)
9/10 Godovikova St.
Moscow, 129085, Russia
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
EXPLANATORY NOTE
The purpose of this Report on Form 6-K is to (1) republish the unaudited interim condensed consolidated financial statements for the six months ended June 30, 2020 of HeadHunter Group PLC (the Company), which were furnished to the SEC on a Report on Form 6-K dated August 27, 2020, and adding thereto the notes to the unaudited interim condensed consolidated financial statements and the related eXtensible Business Reporting Language tagging, and (2) publish an operating and financial review and prospects with respect to the six months ended June 30, 2020.
This Report on Form 6-K, including Exhibits 99.1, 99.2, 101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE and 101.DEF attached hereto, is hereby incorporated by reference into the Companys Registration Statement on Form F-3 (Registration No. 333-239560).
EXHIBIT INDEX
Exhibit |
|
Description |
|
|
|
99.1 |
|
Unaudited interim condensed consolidated financial statements for the six months ended June 30, 2020 |
99.2 |
|
Operating and financial review and prospects with respect to the six months ended June 30, 2020 |
101.INS |
|
XBRL Instance Document |
101.SCH |
|
XBRL Taxonomy Extension Schema Document |
101.CAL |
|
XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB |
|
XBRL Taxonomy Extension Label Linkbase Document |
101.PRE |
|
XBRL Taxonomy Extension Presentation Linkbase Document |
101.DEF |
|
XBRL Taxonomy Extension Definition Linkbase Document |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
HeadHunter Group PLC | |
|
| |
Date: September 18, 2020 |
By: |
/s/ Mikhail Zhukov |
|
|
Mikhail Zhukov |
|
|
Chief Executive Officer |
Exhibit 99.1
HeadHunter Group PLC
Unaudited Condensed Consolidated
Interim Financial Information
for the three and six months ended June 30, 2020
and June 30, 2019
HeadHunter Group PLC
Contents
Unaudited Condensed Consolidated Interim Statements of Income and Comprehensive Income for the three and six months periods ended June 30, 2020 and June 30, 2019 |
|
3 |
|
|
|
Unaudited Condensed Consolidated Interim Statements of Financial Position as of June 30, 2020 and December 31, 2019 |
|
4 |
|
|
|
Unaudited Condensed Consolidated Interim Statements of Changes in Equity for the six months periods ended June 30, 2020 and June 30, 2019 |
|
5 |
|
|
|
Unaudited Condensed Consolidated Interim Statements of Cash Flows for the six months periods ended June 30, 2020 and June 30, 2019 |
|
6 |
|
|
|
Notes to the Unaudited Condensed Consolidated Interim Financial Information |
|
7 |
HeadHunter Group PLC
Unaudited Condensed Consolidated Interim Statements of Income and Comprehensive Income
(in thousands of Russian Roubles, except per share amounts)
|
|
|
|
For the three months |
|
For the six months ended |
| ||||
|
|
Note |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Revenue |
|
8 |
|
1,533,835 |
|
1,901,624 |
|
3,524,244 |
|
3,580,061 |
|
Operating costs and expenses (exclusive of depreciation and amortization) |
|
9 |
|
(951,065 |
) |
(1,131,968 |
) |
(2,089,684 |
) |
(2,065,508 |
) |
Depreciation and amortization |
|
12, 13, 21(i) |
|
(183,904 |
) |
(168,723 |
) |
(368,310 |
) |
(333,827 |
) |
Operating income |
|
|
|
398,866 |
|
600,933 |
|
1,066,250 |
|
1,180,726 |
|
Finance income |
|
10(a) |
|
8,612 |
|
19,485 |
|
27,770 |
|
45,692 |
|
Finance costs |
|
10(b) |
|
(108,664 |
) |
(156,849 |
) |
(227,497 |
) |
(324,679 |
) |
Net foreign exchange gain/(loss) |
|
|
|
19,455 |
|
(13,487 |
) |
94,768 |
|
(36,128 |
) |
Share of loss of equity-accounted investees (net of income tax) |
|
|
|
(15,202 |
) |
(5,048 |
) |
(24,746 |
) |
(5,048 |
) |
Other income |
|
|
|
10,907 |
|
4,931 |
|
20,596 |
|
4,931 |
|
Profit before income tax |
|
|
|
313,974 |
|
449,965 |
|
957,141 |
|
865,494 |
|
Income tax expense |
|
11 |
|
(75,030 |
) |
(174,701 |
) |
(306,459 |
) |
(351,483 |
) |
Net income for the period |
|
|
|
238,944 |
|
275,264 |
|
650,682 |
|
514,011 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company |
|
|
|
219,285 |
|
241,302 |
|
582,748 |
|
450,693 |
|
Non-controlling interest |
|
|
|
19,659 |
|
33,962 |
|
67,934 |
|
63,318 |
|
Comprehensive (loss)/income |
|
|
|
|
|
|
|
|
|
|
|
Items that are or may be reclassified subsequently to profit or loss: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation differences |
|
|
|
(8,978 |
) |
(2,997 |
) |
16,540 |
|
(26,922 |
) |
Total comprehensive income, net of tax |
|
|
|
229,966 |
|
272,267 |
|
667,222 |
|
487,089 |
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
Owners of the Company |
|
|
|
210,696 |
|
238,631 |
|
596,708 |
|
425,401 |
|
Non-controlling interest |
|
|
|
19,270 |
|
33,636 |
|
70,514 |
|
61,688 |
|
Earnings per share |
|
|
|
|
|
|
|
|
|
|
|
Basic (in Russian Roubles per share) |
|
7 |
|
4.37 |
|
4.83 |
|
11.63 |
|
9.01 |
|
Diluted (in Russian Roubles per share) |
|
7 |
|
4.24 |
|
4.75 |
|
11.29 |
|
8.94 |
|
This unaudited condensed consolidated interim financial information was authorized for issuance by the Companys Board of Directors on August 25, 2020 and signed by the management:
Mikhail Zhukov |
Grigorii Moiseev |
Chief Executive Officer |
Chief Financial Officer |
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
HeadHunter Group PLC
Unaudited Condensed Consolidated Interim Statements of Financial Position
As at
(in thousands of Russian Roubles) |
|
Note |
|
June 30, 2020 |
|
December 31, |
|
Non-current assets |
|
|
|
|
|
|
|
Goodwill |
|
13(c) |
|
6,963,190 |
|
6,954,183 |
|
Intangible assets |
|
13 |
|
2,507,525 |
|
2,733,417 |
|
Property and equipment |
|
12 |
|
467,706 |
|
429,744 |
|
Equity-accounted investees |
|
15 |
|
154,101 |
|
178,847 |
|
Right-of-use assets |
|
21(i) |
|
241,434 |
|
279,249 |
|
Deferred tax assets |
|
11(c) |
|
152,830 |
|
149,835 |
|
Loans issued to equity-accounted investees |
|
15 |
|
6,732 |
|
|
|
Other financial assets |
|
15 |
|
22,699 |
|
25,341 |
|
Other non-current assets |
|
|
|
22,281 |
|
22,134 |
|
Total non-current assets |
|
|
|
10,538,498 |
|
10,772,750 |
|
Current assets |
|
|
|
|
|
|
|
Trade and other receivables |
|
14 |
|
62,192 |
|
57,908 |
|
Prepaid expenses and other current assets |
|
|
|
83,099 |
|
119,249 |
|
Loans issued to equity-accounted investees (current portion) |
|
15 |
|
4,875 |
|
|
|
Cash and cash equivalents |
|
|
|
2,425,922 |
|
2,089,215 |
|
Total current assets |
|
|
|
2,576,088 |
|
2,266,372 |
|
Total assets |
|
|
|
13,114,586 |
|
13,039,122 |
|
Equity |
|
|
|
|
|
|
|
Share capital |
|
17 |
|
8,597 |
|
8,547 |
|
Share premium |
|
17(c) |
|
1,928,109 |
|
1,863,877 |
|
Foreign currency translation reserve |
|
17(e) |
|
(91,231 |
) |
(105,191 |
) |
Retained earnings |
|
|
|
369,925 |
|
1,587,697 |
|
Total equity attributable to owners of the Company |
|
|
|
2,215,400 |
|
3,354,930 |
|
Non-controlling interest |
|
|
|
36,860 |
|
33,263 |
|
Total equity |
|
|
|
2,252,260 |
|
3,388,193 |
|
Non-current liabilities |
|
|
|
|
|
|
|
Loans and borrowings |
|
19 |
|
1,270,275 |
|
4,064,501 |
|
Lease liabilities |
|
21(ii) |
|
195,326 |
|
230,802 |
|
Deferred tax liabilities |
|
11(c) |
|
471,226 |
|
512,804 |
|
Trade and other payables |
|
20 |
|
5,269 |
|
4,239 |
|
Provisions |
|
|
|
32,883 |
|
19,498 |
|
Other non-current liabilities |
|
|
|
113,282 |
|
126,828 |
|
Total non-current liabilities |
|
|
|
2,088,261 |
|
4,958,672 |
|
Current liabilities |
|
|
|
|
|
|
|
Contract liabilities |
|
|
|
2,354,967 |
|
2,367,416 |
|
Trade and other payables |
|
20 |
|
629,173 |
|
780,219 |
|
Loans and borrowings (current portion) |
|
19 |
|
3,327,102 |
|
1,064,554 |
|
Lease liabilties (current portion) |
|
21(ii) |
|
70,659 |
|
59,816 |
|
Dividends payable |
|
17(d) |
|
1,748,783 |
|
|
|
Income tax payable |
|
11(d) |
|
559,421 |
|
369,974 |
|
Provisions (current portion) |
|
|
|
57,397 |
|
26,398 |
|
Other current liabilities |
|
|
|
26,563 |
|
23,880 |
|
Total current liabilities |
|
|
|
8,774,065 |
|
4,692,257 |
|
Total liabilities |
|
|
|
10,862,326 |
|
9,650,929 |
|
Total equity and liabilities |
|
|
|
13,114,586 |
|
13,039,122 |
|
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
HeadHunter Group PLC
Unaudited Condensed Consolidated Interim Statements of Changes in Equity
(in thousands of Russian Roubles)
|
|
Attributable to owners of the Company |
|
|
|
|
| ||||||||
|
|
Share capital |
|
Share premium |
|
Currency |
|
Retained earnings |
|
Total |
|
Non-controlling |
|
Total equity |
|
Balance as at January 1, 2020 |
|
8,547 |
|
1,863,877 |
|
(105,191 |
) |
1,587,697 |
|
3,354,930 |
|
33,263 |
|
3,388,193 |
|
Net income for the period |
|
|
|
|
|
|
|
582,748 |
|
582,748 |
|
67,934 |
|
650,682 |
|
Other comprehensive income |
|
|
|
|
|
13,960 |
|
|
|
13,960 |
|
2,580 |
|
16,540 |
|
Shares issued under Management incentive agreement (Note 17(a)) |
|
50 |
|
|
|
|
|
|
|
50 |
|
|
|
50 |
|
Management incentive agreement (Note 18(a)) |
|
|
|
53,475 |
|
|
|
|
|
53,475 |
|
|
|
53,475 |
|
Share-based payments to Board of directors (Note 25(b)) |
|
|
|
10,757 |
|
|
|
|
|
10,757 |
|
|
|
10,757 |
|
Distributions to shareholders and non-controlling interest (Note 17(d)) |
|
|
|
|
|
|
|
(1,800,520 |
) |
(1,800,520 |
) |
(66,917 |
) |
(1,867,437 |
) |
Balance as at June 30, 2020 |
|
8,597 |
|
1,928,109 |
|
(91,231 |
) |
369,925 |
|
2,215,400 |
|
36,860 |
|
2,252,260 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at January 1, 2019 |
|
8,547 |
|
1,729,400 |
|
(66,957 |
) |
1,302,981 |
|
2,973,971 |
|
29,449 |
|
3,003,420 |
|
Net income for the period |
|
|
|
|
|
|
|
450,693 |
|
450,693 |
|
63,318 |
|
514,011 |
|
Other comprehensive loss |
|
|
|
|
|
(25,292 |
) |
|
|
(25,292 |
) |
(1,630 |
) |
(26,922 |
) |
Management incentive agreement (Note 18(a)) |
|
|
|
64,312 |
|
|
|
|
|
64,312 |
|
|
|
64,312 |
|
Share-based payments to Board of directors (Note 25(b)) |
|
|
|
3,145 |
|
|
|
|
|
3,145 |
|
|
|
3,145 |
|
Distributions to shareholders and non-controlling interest (Note 17(d)) |
|
|
|
|
|
|
|
(1,160,345 |
) |
(1,160,345 |
) |
(71,485 |
) |
(1,231,830 |
) |
Balance as at June 30, 2019 |
|
8,547 |
|
1,796,857 |
|
(92,249 |
) |
593,329 |
|
2,306,484 |
|
19,652 |
|
2,326,136 |
|
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
HeadHunter Group PLC
Unaudited Condensed Consolidated Interim Statements of Cash Flows
(in thousands of Russian Roubles)
|
|
|
|
For the six months ended |
| ||
|
|
Note |
|
2020 |
|
2019 |
|
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net income for the period |
|
|
|
650,682 |
|
514,011 |
|
Adjusted for non-cash items and items not affecting cash flow from operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
12, 13, 21(i) |
|
368,310 |
|
333,827 |
|
Net finance costs |
|
10 |
|
199,727 |
|
278,987 |
|
Net foreign exchange (gain)/loss |
|
|
|
(94,768 |
) |
36,128 |
|
Other non-cash items |
|
|
|
(2,104 |
) |
572 |
|
Management incentive agreement, including social taxes |
|
18 |
|
106,547 |
|
97,364 |
|
Share grant to the Board of Directors |
|
25(b) |
|
10,757 |
|
3,145 |
|
Share of loss of equity-accounted investees, net of income tax |
|
|
|
24,746 |
|
5,048 |
|
Income tax expense |
|
11 |
|
306,459 |
|
351,483 |
|
Change in trade receivables and other operating assets |
|
|
|
31,707 |
|
(46,546 |
) |
Change in contract liabilities |
|
|
|
(14,405 |
) |
(25,127 |
) |
Change in trade and other payables |
|
|
|
(154,814 |
) |
87,263 |
|
Change in other liabilities |
|
|
|
(17,504 |
) |
|
|
Income tax paid |
|
|
|
(158,586 |
) |
(450,521 |
) |
Interest paid |
|
|
|
(209,892 |
) |
(173,269 |
) |
Net cash generated from operating activities |
|
|
|
1,046,862 |
|
1,012,365 |
|
INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Acquisition of equity-accounted investee |
|
|
|
|
|
(234,729 |
) |
Acquisition of intangible assets |
|
|
|
(42,223 |
) |
(52,070 |
) |
Acquisition of property and equipment |
|
|
|
(103,946 |
) |
(118,031 |
) |
Loans issued to equity-accounted investees |
|
15 |
|
(11,541 |
) |
|
|
Interest received |
|
|
|
27,011 |
|
44,108 |
|
Net cash used in investing activities |
|
|
|
(130,699 |
) |
(360,722 |
) |
FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Bank and other loans repaid |
|
19 |
|
(540,000 |
) |
(565,000 |
) |
Payment for lease liabilities |
|
21(ii) |
|
(24,394 |
) |
(24,740 |
) |
Dividends paid to non-controlling interest |
|
17(d) |
|
(66,975 |
) |
(76,700 |
) |
Net cash used in financing activities |
|
|
|
(631,369 |
) |
(666,440 |
) |
Net increase/(decrease) in cash and cash equivalents |
|
|
|
284,794 |
|
(14,797 |
) |
Cash and cash equivalents, beginning of period |
|
|
|
2,089,215 |
|
2,861,110 |
|
Effect of exchange rate changes on cash |
|
|
|
51,913 |
|
(72,800 |
) |
Cash and cash equivalents, end of period |
|
|
|
2,425,922 |
|
2,773,513 |
|
The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
1. Reporting entity
(a) Organization and operations
HeadHunter Group PLC (the Company), together with its subsidiaries (the Group, We, Our, Ours), is Russias leading online recruiting website hh.ru. We help employers and job seekers in Russia connect with each other. We also operate in Belarus and Kazakhstan.
The Companys registered office is located at 42 Dositheou Street, Strovolos, Nicosia, Cyprus.
The Company has changed its name from Zemenik Trading Limited to HeadHunter Group PLC on March 1, 2018.
On May 8, 2019 the Group has completed the initial public offering of American Depositary Shares, or ADSs. Each ADS represent one ordinary share of the Group. The Groups existing shareholders have offered 16,304,348 of the Groups ADSs in this offering. The initial public offering price is $13.50 per ADS. On May 10, 2019 the underwriters exercised their option to purchase 2,445,652 additional ADSs from the existing shareholders at the public offering price, less the underwriting discount.
On July 20, 2020 the Group has completed the secondary public offering of 5,000,000 ADSs, each representing one ordinary share by ELQ Investors VIII Limited, an investment vehicle associated with The Goldman Sachs Group, Inc. at a public offering price of $20.25 per share. On August 13, 2020 the underwriters exercised their option to purchase 510,217 additional ADSs from ELQ Investors VIII Limited at the public offering price, less the underwriting discount.
After completion of the initial public offering and secondary public offering, Highworld Investments Limited and ELQ Investors VIII Limited collectively have 51.15% of the Groups voting shares. See Note 26.
The ADSs are listed on The Nasdaq Global Select Market under the symbol HHR.
On June 19, 2019 the Group has obtained a Russian tax residency status. As a Russian tax resident, the Group is subject to the Russian Tax Code requirements.
(b) Business environment
The Groups operations are primarily located in the Russian Federation. Consequently, the Group is exposed to the economic and financial markets of the Russian Federation which display the characteristics of an emerging market. The legal, tax and regulatory frameworks continue development, but are subject to varying interpretations and frequent changes which contribute together with other legal and fiscal impediments to the challenges faced by entities operating in the Russian Federation.
Starting in 2014, the United States of America, the European Union and some other countries have imposed and expanded economic sanctions against a number of Russian individuals and legal entities. The imposition of the sanctions has led to increased economic uncertainty, including more volatile equity markets, a depreciation of the Russian rouble, a reduction in both local and foreign direct investment inflows and a significant tightening in the availability of credit. As a result, some Russian entities may experience difficulties accessing the international equity and debt markets and may become increasingly dependent on state support for their operations. The longer-term effects of the imposed and possible additional sanctions are difficult to determine.
This unaudited condensed consolidated interim financial information reflects managements assessment of the impact of the Russian business environment on the operations and the financial position of the Group. The future business environment may differ from managements assessment.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
(c) The COVID-19 pandemic
In March 2020, the World Health Organization declared the spread of COVID-19 virus a global pandemic.
In response to the COVID-19 pandemic, the Russian authorities undertook a series of measures to contain its spread. Across Russia, the period from March 30, 2020 to May 11, 2020 was declared a period of non-working days. Measures taken at regional level depended on the degree of spread of the virus in the region. For instance, in Moscow and Moscow area, which were hit soonest and hardest, authorities recommended that companies enable their employees to work from home from mid-March. In April a restriction on mobility was introduced, whereby walking was allowed only nearby to the home and no more than two car trips per week were allowed, both enforced by CCTV. Non-food retail, restaurants, and other points of service were closed. Some other regions of Russia also subsequently imposed similar restrictions.
Even though some businesses continued to work from home or in a limited capacity during the period of non-working days, it brought a major interruption to the ordinary course of business and a significant uncertainty as to how the economy would eventually recover after the pandemic. This resulted in a significant decrease in business activities, including recruitment processes, as companies put their hiring on hold or decreased the number of new hires. As a result, the number of job postings advertised on our platform and the number of candidates browsing through our job postings database have decreased from mid-March with the consequential impact on our revenues. From the second half of April through May and June 2020, we saw a steady recovery of activity on our platform, as restrictive measures were gradually eased. However, the level of activity is yet to reach pre-pandemic levels and not all restrictions across Russia are removed.
The Government of Russia has also introduced supportive measures. Prevention of lay-offs and sustaining households incomes was pronounced a cornerstone of Government policy. Small and medium businesses and individual entrepreneurs from the worst-affected industries were allowed to defer tax payments for up to 6 months and granted direct monthly financial aid in the form of a fixed payment per employee as well as interest-free loans for the purposes of paying salaries to their employees. Such benefits were provided to businesses which were not laying-off staff. Corporations from the worst-affected industries were allowed to postpone their tax payments for 6 months up to 3 years, depending on a decrease in a companys revenue. Corporations included in a list of backbone enterprises could obtain subsidized low-interest debt. Measures also included compensation for medical workers contacting with COVID-19 patients, and a lump sum payment for families with children.
We did not benefit from any of the supportive measures introduced by the Russian Government.
In compliance with the recommendations of the authorities, we migrated to working from home from mid- March 2020, and remained fully operational during the pandemic. As a response to a decrease in revenue, we implemented various cost-cutting initiatives, including putting all non-essential hiring on hold. In order to ensure our stability and due to uncertainty over the impact of the pandemic, in April 2020 we announced deferral of the payment of the dividend for the year 2019 (see Notes 17(d)). Also, on August 24, 2020 we entered into relevant loan agreement amendments with PJSC VTB Bank to extend the maturity of our debt, aiming to have more capital management options available to us in the future (see Note 26).
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
Presently we see no specific impact of COVID-19 on our financial position as of June 30, 2020. However, our financial results in the second quarter of 2020 were significantly affected by the COVID-19 pandemic. A decrease in the number of job postings and the number of new CV database subscriptions resulted in a decrease in revenues, offset by our cost-cutting initiatives. We recently saw the start of a recovery in revenue and removed most of our cost-saving restrictions in the third quarter of 2020.
Our liquidity analysis based on our recent performance and current estimates shows that we have adequate resources to finance our operations for the foreseeable future.
As at June 30, 2020 the Group was compliant with all financial and other covenants per the bank loan agreement (see Note 19). Based on current projections on our future performance, we expect to remain compliant with these covenants for at least 12 months from the date when this financial information was authorised for issue. Also, on August 24, 2020 we have entered into relevant loan agreement amendments with PJSC VTB Bank to temporarily relax covenants to a degree which we expect would cover for a reasonable deviation from our current projections (see Note 26).
Our financial position, results and liquidity may be affected in the future by any further adverse developments related to COVID-19, such as a potential second wave of virus outbreak.
2. Basis of accounting
(a) Statement of compliance
This unaudited condensed consolidated interim financial information has been prepared in accordance with International Accounting Standard IAS 34 Interim Financial Reporting as adopted by the International Accounting Standards Board (IASB). This unaudited condensed consolidated interim financial information does not include all of the information required for full annual financial statements and should be read in conjunction with the Groups Consolidated Financial Statements for the year ended December 31, 2019.
(b) Basis of measurement
This unaudited condensed consolidated interim financial information has been prepared on the historical cost basis except for the liability for cash-settled awards and the call option which are measured at fair value on each reporting date.
(c) Going concern
The financial position of the Group, its cash flows, liquidity position and credit facilities are described in the primary statements and notes of this unaudited condensed consolidated interim financial information, including Note 19 in relation to the long-term bank loan obtained by the Group in order to finance the acquisition of a 100% ownership interest in HeadHunter from Mail.Ru Group Limited in 2016.
Despite the deterioration of the Groups financial performance during the second quarter of 2020 and further uncertainties related to the COVID-19 pandemic, management reasonably assumes that the Group has adequate resources to continue its operations without significant disruptions for the foreseeable future, which is at least 12 months from the date when this financial information was authorized for issue. Accordingly, they are satisfied that the unaudited condensed consolidated interim financial information should be prepared on a going concern basis. Please see also Note 1(c). Management believes that there is no significant uncertainty regarding going concern.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
(d) Seasonality
We generally do not experience seasonal fluctuations in demand for our services. Prior to the impacts of COVID-19 mentioned above, our revenue remains relatively stable throughout each quarter, however, our first quarter revenue is typically slightly lower than the other quarters due to a winter holiday period in Russia, which results in lower business activity in this quarter.
3. Functional and presentation currency
This unaudited condensed consolidated interim financial information is presented in Russian Roubles (RUB), which is the Companys functional and presentation currency. Financial information presented in RUB has been rounded to the nearest thousand, except when otherwise indicated.
4. Significant accounting policies
The accounting policies applied in this unaudited condensed consolidated interim financial information are the same as those applied in the last annual financial statements. A number of amendments to standards are effective from January 1, 2020 but they do not have a material effect on the Groups financial statements:
· Amendments to References to Conceptual Framework in IFRS Standards;
· Definition of a Business (Amendments to IFRS 3);
· Definition of Material (Amendments to IAS 1 and IAS 8);
· Interest Rate Benchmarking Reform (Amendments to IFRS 9, IAS 39 and IFRS 7).
A number of new standards and of amendments to standards are effective for annual periods beginning after January 1, 2020 and earlier application is permitted; however, the Group has not earlier adopted the new or amended standards in preparing these condensed consolidated interim financial information.
5. Use of estimates and judgments
The preparation of unaudited condensed consolidated interim financial information requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
The significant judgments made by management in applying the Groups accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.
Measurement of fair values
A number of the Groups accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
· Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
· Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
· Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
6. Operating segments
(a) Basis for segmentation
The chief operating decision-maker (CODM) of the Group is the Board of Directors and the Chief Executive Officer. The CODM reviews the Groups internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.
The Groups operating segments are based on geography of the Groups operations. Our operating segments are Russia, Belarus, Kazakhstan and other countries. As each segment other than Russia individually comprises less than 10% of revenue, for reporting purposes we combine all segments other than Russia into Other segments category.
(b) Information about reportable segments
The CODM assesses the performance of the operating segments based on a measure of Segment Revenue and Segment Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA) (non-IFRS measure). Information related to each reportable segment is set out below.
(in thousands of Russian Roubles)
|
|
For the three months ended June 30, 2020 |
| ||||||||||
|
|
Russia |
|
Other |
|
Total |
|
Unallocated |
|
Eliminations |
|
Total |
|
External revenue |
|
1,421,474 |
|
112,361 |
|
1,533,835 |
|
|
|
|
|
1,533,835 |
|
Inter-segment revenue |
|
1,427 |
|
2,602 |
|
4,029 |
|
|
|
(4,029 |
) |
|
|
External expenses |
|
(779,631 |
) |
(36,174 |
) |
(815,805 |
) |
(50,709 |
) |
|
|
(866,514 |
) |
Inter-segment expenses |
|
(3,405 |
) |
(104 |
) |
(3,509 |
) |
|
|
3,509 |
|
|
|
Segment EBITDA |
|
639,865 |
|
78,685 |
|
718,550 |
|
(50,709 |
) |
(520 |
) |
667,321 |
|
(in thousands of Russian Roubles)
|
|
For the three months ended June 30, 2019 |
| ||||||||||
|
|
Russia |
|
Other |
|
Total |
|
Unallocated |
|
Eliminations |
|
Total |
|
External revenue |
|
1,757,736 |
|
143,888 |
|
1,901,624 |
|
|
|
|
|
1,901,624 |
|
Inter-segment revenue |
|
19 |
|
2,778 |
|
2,797 |
|
|
|
(2,797 |
) |
|
|
External expenses |
|
(805,630 |
) |
(51,309 |
) |
(856,939 |
) |
(22,104 |
) |
|
|
(879,043 |
) |
Inter-segment expenses |
|
(2,764 |
) |
(89 |
) |
(2,853 |
) |
|
|
2,853 |
|
|
|
Segment EBITDA |
|
949,361 |
|
95,268 |
|
1,044,629 |
|
(22,104 |
) |
56 |
|
1,022,581 |
|
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
|
|
For the six months ended June 30, 2020 |
| ||||||||||
|
|
Russia |
|
Other |
|
Total |
|
Unallocated |
|
Eliminations |
|
Total |
|
External revenue |
|
3,259,718 |
|
264,526 |
|
3,524,244 |
|
|
|
|
|
3,524,244 |
|
Inter-segment revenue |
|
2,984 |
|
4,921 |
|
7,905 |
|
|
|
(7,905 |
) |
|
|
External expenses |
|
(1,693,267 |
) |
(78,888 |
) |
(1,772,155 |
) |
(107,356 |
) |
|
|
(1,879,511 |
) |
Inter-segment expenses |
|
(6,225 |
) |
(300 |
) |
(6,525 |
) |
|
|
6,525 |
|
|
|
Segment EBITDA |
|
1,563,210 |
|
190,259 |
|
1,753,469 |
|
(107,356 |
) |
(1,380 |
) |
1,644,733 |
|
|
|
For the six months ended June 30, 2019 |
| ||||||||||
|
|
Russia |
|
Other |
|
Total |
|
Unallocated |
|
Eliminations |
|
Total |
|
External revenue |
|
3,313,251 |
|
266,810 |
|
3,580,061 |
|
|
|
|
|
3,580,061 |
|
Inter-segment revenue |
|
38 |
|
5,528 |
|
5,566 |
|
|
|
(5,566 |
) |
|
|
External expenses |
|
(1,627,928 |
) |
(96,094 |
) |
(1,724,022 |
) |
(31,477 |
) |
|
|
(1,755,499 |
) |
Inter-segment expenses |
|
(5,493 |
) |
(186 |
) |
(5,679 |
) |
|
|
5,679 |
|
|
|
Segment EBITDA |
|
1,679,868 |
|
176,058 |
|
1,855,926 |
|
(31,477 |
) |
113 |
|
1,824,562 |
|
The Group does not report total assets or total liabilities based on its operating segments.
Goodwill is allocated to reportable segments as described in Note 13(c). Intangible assets other than goodwill are allocated primarily to Russia operating segment.
(c) Reconciliation of information on reportable segments to IFRS measures
Reconciliation of Segment EBITDA to consolidated profit before income tax of the Group is presented below:
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Consolidated profit before income tax |
|
313,974 |
|
449,965 |
|
957,141 |
|
865,494 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
183,904 |
|
168,723 |
|
368,310 |
|
333,827 |
|
Net finance costs (Note 10) |
|
100,052 |
|
137,364 |
|
199,727 |
|
278,987 |
|
Net foreign exchange (gain)/loss |
|
(19,455 |
) |
13,487 |
|
(94,768 |
) |
36,128 |
|
IPO-related costs |
|
|
|
142,267 |
|
|
|
188,294 |
|
Insurance cover related to the IPO |
|
15,939 |
|
22,810 |
|
54,772 |
|
22,810 |
|
Other financing and transactional costs |
|
7,425 |
|
|
|
33,464 |
|
|
|
Management incentive agreement (Note 18) |
|
53,041 |
|
88,389 |
|
106,547 |
|
97,364 |
|
Grant of shares to the Board of Directors (including social taxes) (Note 25(b)) |
|
6,217 |
|
|
|
12,298 |
|
|
|
Share of loss of equity-accounted investees (net of income tax) |
|
15,202 |
|
5,048 |
|
24,746 |
|
5,048 |
|
Restructuring costs |
|
|
|
|
|
|
|
1,541 |
|
Income from depository |
|
(8,978 |
) |
(4,931 |
) |
(17,504 |
) |
(4,931 |
) |
Other |
|
|
|
(541 |
) |
|
|
|
|
Segment EBITDA (as presented to the CODM) |
|
667,321 |
|
1,022,581 |
|
1,644,733 |
|
1,824,562 |
|
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
Reconciliation of Segment External expenses to consolidated operating costs and expenses (exclusive of depreciation and amortization) of the Group is presented below:
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Consolidated operating costs and expenses (exclusive of depreciation and amortization) |
|
951,065 |
|
1,131,968 |
|
2,089,684 |
|
2,065,508 |
|
Adjusted for: |
|
|
|
|
|
|
|
|
|
IPO-related costs |
|
|
|
(142,267 |
) |
|
|
(188,294 |
) |
Insurance cover related to the IPO |
|
(15,939 |
) |
(22,810 |
) |
(54,772 |
) |
(22,810 |
) |
Other financing and transactional costs |
|
(7,425 |
) |
|
|
(33,464 |
) |
|
|
Management incentive agreement (Note 18) |
|
(53,041 |
) |
(88,389 |
) |
(106,547 |
) |
(97,364 |
) |
Grant of shares to the Board of Directors (including social taxes) (Note 25(b)) |
|
(6,217 |
) |
|
|
(12,298 |
) |
|
|
Restructuring costs |
|
|
|
|
|
|
|
(1,541 |
) |
Other |
|
(1,929 |
) |
541 |
|
(3,092 |
) |
|
|
Segment External expenses (as presented to the CODM) |
|
866,514 |
|
879,043 |
|
1,879,511 |
|
1,755,499 |
|
(d) Geographical information
The geographical information below analyses the Groups revenue by country of domicile of a customer, including the Groups principal country of operations and in all foreign countries.
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Russia |
|
1,408,666 |
|
1,741,814 |
|
3,231,035 |
|
3,282,887 |
|
All foreign countries, including: |
|
125,169 |
|
159,810 |
|
293,209 |
|
297,174 |
|
Belarus |
|
60,284 |
|
87,038 |
|
145,688 |
|
160,140 |
|
Kazakhstan |
|
52,078 |
|
56,854 |
|
118,839 |
|
106,680 |
|
Other countries |
|
12,807 |
|
15,918 |
|
28,682 |
|
30,354 |
|
|
|
1,533,835 |
|
1,901,624 |
|
3,524,244 |
|
3,580,061 |
|
(e) Major customers
In all reporting periods no customer represented more than 10% of the Groups total revenue.
7. Earnings per share
Basic earnings per share are calculated by dividing net income attributable to the owners of the Company by the weighted average number of ordinary shares of the Company outstanding over the period.
On May 8, 2020 the Company issued 317,860 new shares, bringing the total number of issued ordinary shares to 50,317,860, and settled with this issue the 18.75% of the awards which vested on the first anniversary of the IPO under the 2016 HeadHunter Unit Option Plan. See Note 18(a)(i).
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
Diluted earnings per share are calculated by dividing the net income attributable to the owners of the Company by the weighted average number of ordinary shares outstanding over the period plus number of ordinary shares that would be issued if all existing convertible instruments, if any, were converted.
As of the date of IPO May 8, 2019, the amended 2016 HeadHunter Unit Option Plan has become effective and fully vested. According to the plan, 75% of the awards provided by the plan will be settled in shares of the Company, which assumes issuance of up to 1,271,436 new shares over the period of 4 years from the date of the IPO (see Note 18(a)(i)).
On May 28, 2019, March 5, 2020 and May 26, 2020 the Board of Directors has granted 300, 41 and 33 units respectively, under the 2018 HeadHunter Unit Option Plan, which will be settled in shares of the Company over the period of 7 years from the grant date (see Note 18(a)(ii)). The number of new shares to be issued depends on share price performance; if on June 30, 2020 all units would vest, 204,485 new shares would have been issued.
Also, the Board of Directors granted shares to its members on May 28, 2019 and May 27, 2020 as part of their remuneration, which assumes issuance of shares after 3-year period from the date of the relevant grant. The number of shares granted as of June 30, 2020 is 36,452.
Accordingly, 1,512,373 new shares may be issued by the Company in total as of June 30, 2020 in relation to the management incentive and Board of Directors remuneration agreeements (as of June 30, 2019 1,423,797).
(in thousands of Russian Roubles, except number of shares and per share amounts)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Net income attributable to owners of the Company |
|
219,285 |
|
241,302 |
|
582,748 |
|
450,693 |
|
Weighted average number of ordinary shares outstanding (Note 17) |
|
50,188,620 |
|
50,000,000 |
|
50,094,310 |
|
50,000,000 |
|
Effects of dilution from: |
|
|
|
|
|
|
|
|
|
Share options (weighted average) |
|
1,505,684 |
|
795,758 |
|
1,531,602 |
|
400,077 |
|
Weighted average number of ordinary shares outstanding, adjusted for the effect of dilution |
|
51,694,304 |
|
50,795,758 |
|
51,625,912 |
|
50,400,077 |
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (in Russian Roubles per share) |
|
|
|
|
|
|
|
|
|
Basic |
|
4.37 |
|
4.83 |
|
11.63 |
|
9.01 |
|
Diluted |
|
4.24 |
|
4.75 |
|
11.29 |
|
8.94 |
|
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
8. Revenue
(in thousands of Russian Roubles)
|
|
For the three months ended June 30, |
| ||||||||||
|
|
2020 |
|
2019 |
| ||||||||
|
|
Russia |
|
Other |
|
Total |
|
Russia |
|
Other |
|
Total |
|
Bundled Subscriptions |
|
514,242 |
|
10,255 |
|
524,497 |
|
537,603 |
|
16,487 |
|
554,090 |
|
CV Database Access |
|
290,327 |
|
56,654 |
|
346,981 |
|
370,291 |
|
63,451 |
|
433,742 |
|
Job Postings |
|
467,412 |
|
37,707 |
|
505,119 |
|
713,302 |
|
55,813 |
|
769,115 |
|
Other VAS |
|
149,493 |
|
7,745 |
|
157,238 |
|
136,540 |
|
8,137 |
|
144,677 |
|
Total revenue |
|
1,421,474 |
|
112,361 |
|
1,533,835 |
|
1,757,736 |
|
143,888 |
|
1,901,624 |
|
|
|
For the six months ended June 30, |
| ||||||||||
|
|
2020 |
|
2019 |
| ||||||||
|
|
Russia |
|
Other |
|
Total |
|
Russia |
|
Other |
|
Total |
|
Bundled Subscriptions |
|
1,077,915 |
|
24,295 |
|
1,102,210 |
|
1,026,351 |
|
31,624 |
|
1,057,975 |
|
CV Database Access |
|
688,848 |
|
128,719 |
|
817,567 |
|
700,407 |
|
118,982 |
|
819,389 |
|
Job Postings |
|
1,191,719 |
|
94,813 |
|
1,286,532 |
|
1,310,057 |
|
100,929 |
|
1,410,986 |
|
Other VAS |
|
301,236 |
|
16,699 |
|
317,935 |
|
276,436 |
|
15,275 |
|
291,711 |
|
Total revenue |
|
3,259,718 |
|
264,526 |
|
3,524,244 |
|
3,313,251 |
|
266,810 |
|
3,580,061 |
|
The revenue arising from non-monetary exchanges of services with customers included in the table above amounted to RUB 8,893 thousand for the three months ended June 30, 2020 (for the three months ended June 30, 2019 RUB 12,983 thousand) and RUB 21,848 thousand for the six months ended June 30, 2020 (for the six months ended June 30, 2019 RUB 24,553 thousand).
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Key Accounts in Russia |
|
|
|
|
|
|
|
|
|
Moscow and St.Petersburg |
|
433,024 |
|
491,334 |
|
928,422 |
|
928,697 |
|
Other regions of Russia |
|
171,221 |
|
151,847 |
|
364,174 |
|
285,586 |
|
Sub-total |
|
604,245 |
|
643,181 |
|
1,292,596 |
|
1,214,283 |
|
Small and Medium Accounts in Russia |
|
|
|
|
|
|
|
|
|
Moscow and St.Petersburg |
|
415,921 |
|
631,218 |
|
1,043,680 |
|
1,198,438 |
|
Other regions of Russia |
|
323,099 |
|
397,969 |
|
749,506 |
|
734,739 |
|
Sub-total |
|
739,020 |
|
1,029,187 |
|
1,793,186 |
|
1,933,177 |
|
Foreign customers of Russia segment |
|
11,856 |
|
15,922 |
|
27,731 |
|
30,030 |
|
Other customers in Russia |
|
66,353 |
|
69,446 |
|
146,205 |
|
135,761 |
|
Total for Russia operating segment |
|
1,421,474 |
|
1,757,736 |
|
3,259,718 |
|
3,313,251 |
|
Our revenues for the three months ended June 30, 2020 were adversely affected by the decrease in employer and candidate activity on our platform on the back of COVID-19 spread and the associated Government measures (see Note 1(c)).
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
9. Operating costs and expenses (exclusive of depreciation and amortization)
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Personnel expenses |
|
(540,508 |
) |
(592,095 |
) |
(1,121,745 |
) |
(1,072,256 |
) |
Marketing expenses |
|
(234,394 |
) |
(221,858 |
) |
(552,260 |
) |
(479,603 |
) |
Subcontractor and other costs related to provision of services |
|
(40,648 |
) |
(34,581 |
) |
(77,828 |
) |
(79,456 |
) |
Office rent and maintenance |
|
(33,755 |
) |
(55,392 |
) |
(80,035 |
) |
(99,727 |
) |
Professional services |
|
(37,723 |
) |
(163,876 |
) |
(116,870 |
) |
(244,727 |
) |
Insurance services |
|
(43,870 |
) |
(25,173 |
) |
(87,043 |
) |
(25,173 |
) |
Hosting and other web-site maintenance |
|
(10,549 |
) |
(9,098 |
) |
(22,583 |
) |
(17,810 |
) |
Other operating expenses |
|
(9,618 |
) |
(29,895 |
) |
(31,320 |
) |
(46,756 |
) |
Operating costs and expenses (exclusive of depreciation and amortization) |
|
(951,065 |
) |
(1,131,968 |
) |
(2,089,684 |
) |
(2,065,508 |
) |
Contributions to state pension funds recognised within Personnel expenses amounted to RUB 76,910 thousand for the three months ended June 30, 2020 (for the three months ended June 30, 2019 RUB 65,055 thousand) and RUB 151,482 thousand for the six months ended June 30, 2020 (for the six months ended June 30, 2019 RUB 120,187 thousand).
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
10. Finance income and costs
(a) Finance income
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Interest on term deposits |
|
8,365 |
|
19,348 |
|
27,356 |
|
45,421 |
|
Interest accrued on loan issued to equity-accounted investee |
|
66 |
|
|
|
66 |
|
|
|
Other finance income |
|
181 |
|
137 |
|
348 |
|
271 |
|
Total finance income |
|
8,612 |
|
19,485 |
|
27,770 |
|
45,692 |
|
(b) Finance costs
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Interest accrued on bank loan (note 19(a)) |
|
(96,013 |
) |
(147,836 |
) |
(204,249 |
) |
(300,498 |
) |
Interest accrued on other loan (note 19(b)) |
|
|
|
|
|
|
|
(6,391 |
) |
Interest accrued on lease liabilities (note 21) |
|
(6,776 |
) |
(8,430 |
) |
(13,966 |
) |
(17,207 |
) |
Net loss on financial assets measured at fair value through profit and loss |
|
(2,642 |
) |
|
|
(2,642 |
) |
|
|
Other finance costs |
|
(3,233 |
) |
(583 |
) |
(6,640 |
) |
(583 |
) |
Total finance costs |
|
(108,664 |
) |
(156,849 |
) |
(227,497 |
) |
(324,679 |
) |
11. Income taxes
(a) Amounts recognized in profit or loss
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Current tax expense: |
|
|
|
|
|
|
|
|
|
Current year |
|
(91,300 |
) |
(196,443 |
) |
(350,795 |
) |
(441,342 |
) |
Recognition of provision for uncertain tax positions |
|
|
|
(447,034 |
) |
|
|
(447,034 |
) |
Total current tax expense |
|
(91,300 |
) |
(643,477 |
) |
(350,795 |
) |
(888,376 |
) |
Deferred tax expense: |
|
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
16,270 |
|
21,742 |
|
44,336 |
|
89,859 |
|
Reversal of deferred tax on unremitted earnings |
|
|
|
447,034 |
|
|
|
447,034 |
|
Total deferred tax reversal |
|
16,270 |
|
468,776 |
|
44,336 |
|
536,893 |
|
Total income tax expense |
|
(75,030 |
) |
(174,701 |
) |
(306,459 |
) |
(351,483 |
) |
In 2019, the Group has reversed its deferred tax liability on unremitted earnings of RUB 447,034 thousand and recognized provision for uncertain tax positions of RUB 447,034 thousand due to change
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
in the parent company tax residency status (see Note 1(a)) and applicable income tax rate on dividends and based on the Group interpretations of tax laws.
(b) Reconciliation of effective tax rate
As the Group generates most of its revenues and profits from operations in Russia, the Groups applicable tax rate is the Russian corporate income tax rate of 20%.
(in thousands of Russian Roubles)
|
|
For the three months ended |
|
For the six months ended |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Profit before income tax |
|
313,974 |
|
449,965 |
|
957,141 |
|
865,494 |
|
Income tax at 20% tax rate |
|
(62,795 |
) |
(89,993 |
) |
(191,428 |
) |
(173,099 |
) |
Effect of tax rates in foreign jurisdictions |
|
124 |
|
(15,767 |
) |
1,364 |
|
(24,855 |
) |
Withholding tax on intra-group dividend and unremitted earnings |
|
(183 |
) |
(3,728 |
) |
(11,196 |
) |
(45,194 |
) |
Unrecognized deferred tax asset |
|
9,882 |
|
(18,139 |
) |
(56,089 |
) |
(38,223 |
) |
Non-deductible interest expense |
|
|
|
(7,781 |
) |
|
|
(18,422 |
) |
Non-deductible expenses related to management incentive agreement |
|
(10,608 |
) |
(13,764 |
) |
(21,309 |
) |
(15,559 |
) |
Other net non-taxable income and (non-deductible expense) |
|
(7,506 |
) |
(25,529 |
) |
(23,857 |
) |
(36,131 |
) |
Fines and penalties |
|
(3,944 |
) |
|
|
(3,944 |
) |
|
|
Total income tax expense |
|
(75,030 |
) |
(174,701 |
) |
(306,459 |
) |
(351,483 |
) |
The effective tax rate was 23.9% for the three months ended June 30, 2020 and 38.8% for the three months ended June 30, 2019. The decrease in the effective tax rate was mainly due to (a) non-deductible IPO-related expense in the three months ended June 30, 2019 not occurring in the three months ended June 30, 2020, and (b) non-taxable foreign exchange gain in the three months ended June 30, 2020 not occurring in the three months ended June 30, 2019.
The effective tax rate was 31.9% for the six months ended June 30, 2020 and 40.6% for the six months ended June 30, 2019. The decrease in the effective tax rate was mainly due to: (a) non-deductible IPO-related expense in the six months ended June 30, 2019 not occurring in the six months ended June 30, 2020, and (b) withholding tax on intra-group dividend in the six months ended June 30, 2019 not occurring in the six months ended June 30, 2020.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
(c) Recognized deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
(in thousands of Russian roubles)
|
|
June 30, |
|
December 31, |
|
Deferred tax assets: |
|
|
|
|
|
Unused vacation accruals |
|
15,558 |
|
8,614 |
|
Employee benefits |
|
5,178 |
|
13,323 |
|
Contract liabilities |
|
140,509 |
|
135,203 |
|
Trade and other payables |
|
1,984 |
|
7,728 |
|
Right-of-use assets and lease liabilities |
|
5,287 |
|
4,139 |
|
Deferred tax assets netting |
|
(15,686 |
) |
(19,172 |
) |
Total deferred tax assets |
|
152,830 |
|
149,835 |
|
Deferred tax liabilities: |
|
|
|
|
|
Property and equipment |
|
(7,539 |
) |
(9,696 |
) |
Intangible assets |
|
(8,147 |
) |
(9,476 |
) |
Intangible assets identified on acquisition* |
|
(471,226 |
) |
(512,804 |
) |
Deferred tax liabilities netting |
|
15,686 |
|
19,172 |
|
Total deferred tax liabilities |
|
(471,226 |
) |
(512,804 |
) |
Net deferred tax liability |
|
(318,396 |
) |
(362,969 |
) |
* Acquisition of all of the outstanding equity interests of Headhunter FSU Limited, representing HeadHunter business, by Zemenik Trading Limited, which we subsequently converted into HeadHunter Group PLC, from Mail.Ru Group Limited on February 24, 2016.
Unrecognized deferred tax assets as at June 30, 2020 were RUB 489,429 thousand (as at December 31, 2019 RUB 433,340 thousand). They relate to tax losses of the Company and its subsidiaries. Deferred tax assets have not been recognised in respect of these tax losses because it is not probable that future taxable profit will be available against which the Company and its subsidiaries can utilise the benefits therefrom. The tax losses do not expire under current Russian tax legislation.
(d) Income tax payable
(in thousands of Russian roubles)
|
|
June 30, |
|
December 31, |
|
Current income tax payable |
|
223,095 |
|
33,648 |
|
Provision for uncertain income tax positions |
|
336,326 |
|
336,326 |
|
Total income tax payable |
|
559,421 |
|
369,974 |
|
Subsequent to the recognition of the provision for uncertain tax positions of RUB 447,034 thousand in 2019 (see Note 11(a)), the Group has partially reversed this provision for the amount of RUB 110,708 thousand, which related to uncertain tax positions of a closed tax year. As a result, the Group has recognized provision for uncertain income tax positions of RUB 336,326 thousand as at December 31, 2019, which has not changed as of June 30, 2020.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
12. Property and equipment
(a) Additions and disposals
For the six months ended June 30, 2020, the Groups property and equipment additions amounted to RUB 106,654 thousand, of which RUB 64,053 thousand relates to leasehold improvements of office premises and RUB 38,736 thousand relates to purchases of the office equipment and furniture for the renovated office space (for the six months ended June 30, 2019 RUB 140,031 thousand, which mainly relates to leasehold improvements of its office premises of RUB 71,283 thousand and purchase of the office equipment and furniture of RUB 56,029 thousand).
For the six months ended June 30, 2020 and 2019 there were no significant disposals of property and equipment.
(b) Depreciation
Depreciation of property and equipment comprised RUB 34,380 thousand for the three months ended June 30, 2020 (for the three months ended June 30, 2019 RUB 19,312 thousand).
Depreciation of property and equipment comprised RUB 68,342 thousand for the six months ended June 30, 2020 (for the six months ended June 30, 2019 RUB 36,385 thousand).
The increase of the depreciation expense in the three and six months ended June 30, 2020 in comparison with the three and six months ended June 30, 2019 relates to capital expenditures to renovation of office premises and acquisition of furniture and equipment.
(c) Commitments for the acquisition of property and equipment
As at June 30, 2020 the Group is committed to incur capital expenditures related to renovation of its office premises and acquisition of office furniture and equipment of RUB 17,952 thousand (as at December 31, 2019 RUB 9,648 thousand). These commitments are expected to be settled in 2020.
13. Intangible assets and goodwill
(a) Additions and disposals
For the six months ended June 30, 2020, the Group has capitalized internally developed website software for the amount of RUB 8,615 thousand (for the six months ended June 30, 2019 RUB 17,919 thousand).
For the six months ended June 30, 2020, the Group acquired other intangible assets from third parties for the amount of RUB 27,953 thousand (for the six months ended June 30, 2019 RUB 34,149 thousand).
For the six months ended June 30, 2020 and 2019 there were no significant disposals of intangible assets.
(b) Amortization
Amortization of intangible assets amounted to RUB 130,792 thousand for the three months ended June 30, 2019 (for the three months ended June 30, 2019 RUB 130,790 thousand).
Amortization of intangible assets amounted to RUB 262,429 thousand for the six months ended June 30, 2019 (for the six months ended June 30, 2018 RUB 260,366 thousand).
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
(c) Goodwill
Goodwill as at June 30, 2020 of RUB 6,963,190 thousand (as at December 31, 2019 RUB 6,954,183 thousand) is attributable to the acquisition of all of the outstanding equity interests of Headhunter FSU Limited, representing HeadHunter business, by Zemenik Trading Limited, which we subsequently converted into HeadHunter Group PLC, from Mail.Ru Group Limited on February 24, 2016.
Carrying amount of goodwill allocated to each of the CGUs:
(in thousands of Russian Roubles)
|
|
June 30, 2020 |
|
December 31, |
|
Russia operating segment |
|
6,607,362 |
|
6,607,362 |
|
Kazakhstan operating segment |
|
175,701 |
|
164,853 |
|
Belarus operating segment |
|
180,127 |
|
181,968 |
|
Total goodwill |
|
6,963,190 |
|
6,954,183 |
|
14. Trade and other receivables
(in thousands of Russian Roubles)
|
|
June 30, |
|
December 31, |
|
Trade receivables |
|
54,395 |
|
52,462 |
|
Taxes receivable |
|
9 |
|
2,647 |
|
Receivables from shareholders |
|
50 |
|
|
|
Other receivables |
|
7,738 |
|
2,799 |
|
Total trade and other receivables |
|
62,192 |
|
57,908 |
|
The Group has recognised allowances for expected credit losses of RUB 4,146 thousand and RUB 3,781 thousand as at June 30, 2020 and December 31, 2019, respectively.
15. Equity-accounted investees
Our equity-acccounted investees as of December 31, 2019 and June 30, 2020 comprise interest in our associate LLC Skillaz (hereinafter Skillaz), Russian HR technology company which automates routine recruiting processes by implementing complex built-to-suit integration projects, in which we acquired 25.01% of shares on May 6, 2019.
Call option in relation to Skillaz
We have concluded option contracts to purchase the additional 40.01% ownership interest in Skillaz, which are exercisable through the period from June 1, 2020 till June 30, 2021 (the call option). The fair value of the call option has been calculated using the Black Scholes Merton (BSM) pricing model as the date of acquisition and at the reporting dates (Level 3), taking into account the terms and conditions on which the call option was acquired, and based on the expected business enterprise value at the acquisition date and at the reporting dates.
The fair value of the call option is RUB 22,699 thousand as of June 30, 2020 (RUB 25,341 thousand as of December 31, 2019) and presented within line Other financial assets in the condensed consolidated interim statement of financial position. Corresponding loss amounted to RUB 2,642 thousand for the three and six months ended June 30, 2020 (for the three and six months ended June 30, 2019 nil) is
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
included in the Finance costsline in the condensed consolidated statement of income and comprehensive income.
Key assumptions used used in the BSM pricing model were as follows:
· as of June 30, 2020: expected volatility 40%, risk-free interest rate 7%
· as of December 31, 2019: expected volatility 50%, risk-free interest rate 4.32%
As of June 30, 2020 the exercise of the call option was not beneficial for the Group, therefore, the Group has accounted for the investee under the equity method.
Loan issued to Skillaz
On June 9, 2020 Headhunter LLC (Russia), the subsidiary of the Group, entered into the loan agreement with Skillaz. According to the agreement, Skillaz borrows RUB 50 million from its shareholders for operating purposes, including RUB 19 million from the Group, during year 2020. The Group has provided RUB 11.5 million to Skillaz under this agreement in June 2020 (see also Note 26). The loan matures in June 2022. The loan is secured with participation interest in LLC Skillaz.
|
|
June 30, |
|
December 31, |
|
Long-term loans and borrowings: |
|
|
|
|
|
Loan issued |
|
6,732 |
|
|
|
Total |
|
6,732 |
|
|
|
Current loans and borrowings: |
|
|
|
|
|
Loan issued current portion |
|
4,809 |
|
|
|
Loan issued interest |
|
66 |
|
|
|
Total |
|
4,875 |
|
|
|
16. Cash and cash equivalents
(in thousands of Russian Roubles)
|
|
June 30, |
|
December 31, |
|
Bank balances |
|
2,388,222 |
|
2,012,424 |
|
Call deposits |
|
37,313 |
|
75,931 |
|
Petty cash |
|
387 |
|
860 |
|
Total cash and cash equivalents |
|
2,425,922 |
|
2,089,215 |
|
Call deposits represent callable deposits with original maturities of three months or less.
17. Capital and reserves
(a) Share capital
(Number of shares, unless stated otherwise)
|
|
June 30, |
|
December 31, |
| ||
|
|
|
|
|
| ||
Number of shares issued |
|
50,317,860 |
|
50,000,000 |
| ||
Number of shares authorized |
|
60,000,000 |
|
60,000,000 |
| ||
Par value |
|
EUR |
0.002 |
|
EUR |
0.002 |
|
Share capital, RUB thousands |
|
8,597 |
|
8,547 |
| ||
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
The Company issued 1,000 ordinary shares on May 28, 2014 in exchange for contribution in cash of RUB 47 thousand that were allocated to Share capital and 99,000 ordinary shares on February 24, 2016 in exchange for contribution in cash of RUB 5,000,000 thousand, of which RUB 8,500 thousand were allocated to Share capital and RUB 4,991,500 thousand to Share premium.
On March 1, 2018 the Registrar of Companies of Cyprus registered the subdivision of the existing Companys share capital of 100,000 ordinary shares of EUR 1.00 each into 50,000,000 ordinary shares of EUR 0.002 each.
On October 24, 2019, the shareholders approved the increase of the authorized share capital of the Company from 50,000,000 shares to 60,000,000 shares.
On May 8, 2020 the Company issued 317,860 new shares under the 2016 HeadHunter Unit Option Plan, bringing the total number of issued ordinary shares to 50,317,860. See Note 18(a)(i).
All shares issued are fully paid, except 317,860 shares issued on May 8, 2020, which are not paid as of June 30, 2020, and relevant shareholder receivable of RUB 50 thousand is included in the Trade and other receivables in our unaudited consolidated condensed interim statement of financial position as of June 30, 2020.
(b) Ordinary shares
The holders of ordinary shares are entitled to receive dividends as declared from time to time, and are entitled to one vote per share at meetings of shareholders.
(c) Share premium
On January 29, 2018 the District Court of Nicosia (Cyprus) has issued a court order ratifying the reduction of the share premium of the Company by RUB 3,422,874 thousand. On February 16, 2018 the Registrar of Companies of Cyprus has registered the reduction of the Groups share premium by RUB 3,422,874 thousand based on the shareholders resolution and the court order.
As at December 31, 2019 the share premium included a contribution of RUB 1,568,626 thousand and an amount of RUB 295,251 thousand attributable to the share-based compensation (see Note 18(a)).
As at June 30, 2020 the share premium included a contribution of RUB 1,568,626 thousand and an amount of RUB 359,483 thousand attributable to the share-based compensation (see Note 18(a) and Note 25(b)).
(d) Distributions to shareholders and non-controlling interest
(i) Distributions to shareholders
On March 11, 2020 the Board of Directors has approved dividend of $0.50 per share for the year ended December 31, 2019, which amounted to $25,000,000 or RUB 1,800,520 thousand.
On April 15, 2020 the Board of Directors has taken a decision to defer the payment of the dividends due to uncertainty associated with the COVID-19 spread. The dividends liability is included as a separate line item in the unaudited condensed consolidated interim statement of financial position as of June 30, 2020.
On May 28, 2019 the Board of Directors has approved dividend of $0.36 per share for the year ended December 31, 2018, which amounted to $18,000,000 or RUB 1,160,345 thousand. The dividends were paid to shareholders in July 2019.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
(ii) Distributions to non-controlling interest
The Group subsidiaries in Kazakhstan and Belarus have declared dividends to the Group and to the non-controlling interest.
Dividends declared by these entities to non-controlling shareholders amounted to RUB 66,917 thousand for the six months ended June 30, 2020 and RUB 71,485 thousand for the six months ended June 30, 2019.
Dividends settled by these entities to non-controlling shareholders (including withholding tax) amounted to RUB 66,975 thousand for the six months ended June 30, 2020 and RUB 76,700 thousand for the six months ended June 30, 2019.
(e) Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations.
18. Management incentive agreement
(a) Equity-settled awards
(i) 2016 HeadHunter Unit Option Plan
In 2016, the shareholders of the Group established an incentive program that provides key management of the Group with rights to receive cash payments if a liquidity event occurs. Liquidity event includes either an Initial Public Offering (hereinafter IPO) or Sale (initial or subsequent) of the Companys shares by shareholders. The amount of payment is conditional on share price at the date of the liquidity event. In the initial plan the participants of the program were not entitled to receive shares of the Company. The Group has no liability to make cash payments to management, therefore the program was classified by the Group as equity-settled.
The following awards were issued as of June 30, 2020:
Awards series |
|
Number of |
|
Grant date |
|
Exercise price |
|
Fair value at grant |
|
|
|
|
|
|
|
RUB000 |
|
RUB000 |
|
|
|
|
|
|
|
|
|
|
|
Series 1 |
|
801 |
|
May 10, 2016 |
|
500 |
|
160,871 |
|
Series 2 |
|
20 |
|
September 1, 2017 |
|
500 |
|
25,511 |
|
Series 3 |
|
15 |
|
September 1, 2017 |
|
900 |
|
15,415 |
|
Series 4 |
|
12 |
|
December 1, 2017 |
|
900 |
|
13,070 |
|
Series 5 |
|
8 |
|
March 1, 2018 |
|
900 |
|
8,478 |
|
Series 6 |
|
14 |
|
May 28, 2019 |
|
500 |
|
27,671 |
|
Series 7 |
|
20 |
|
May 28, 2019 |
|
1,250 |
|
22,191 |
|
A unit is defined in the 2016 HeadHunter Unit Option Plan as 0.005% of net proceeds from a liquidity event.
The fair value of the awards of Series 1 Series 5, which were granted before the completion of the IPO, was estimated at the grant date using the Black Scholes Merton (BSM) pricing model, taking into account the terms and conditions on which the awards were granted. The fair value of the awards was calculated based on the expected business enterprise value at the grant date.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
The weighted average assumptions used in the BSM pricing model for grants made were as follows:
|
|
Awards series |
| ||||||||
|
|
Series 1 |
|
Series 2 |
|
Series 3 |
|
Series 4 |
|
Series 5 |
|
Expected volatility |
|
39 |
% |
39 |
% |
39 |
% |
39 |
% |
39 |
% |
Expected dividend yield |
|
|
|
|
|
|
|
|
|
|
|
Risk-free interest rate |
|
7.7 |
% |
7.7 |
% |
7.7 |
% |
7.3 |
% |
6.4 |
% |
Expected life at grant date (years) |
|
5.66 |
|
3.24 |
|
3.24 |
|
2.99 |
|
1.66 |
|
Expected volatility was calculated based on actual experience of similar entities that have traded equity instruments.
The fair value of the awards of Series 6 Series 7, which were granted after the completion of the IPO, is estimated at the grant date using the market price of the underlying shares, taking into account the terms and conditions on which the awards were granted.
The movement of the awards of Series 1 7 were as follows:
(number of units)
|
|
For the three months period ended |
|
For the six months period |
| ||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Outstanding at beginning of the period |
|
890 |
|
856 |
|
890 |
|
886 |
|
Granted during the period |
|
|
|
34 |
|
|
|
34 |
|
Forfeited during the period |
|
|
|
|
|
|
|
(30 |
) |
Exercised during the period |
|
|
|
|
|
|
|
|
|
Expired during the period |
|
|
|
|
|
|
|
|
|
Outstanding at end of the period |
|
890 |
|
890 |
|
890 |
|
890 |
|
In April 2018 and March 2019 the Group amended the 2016 HeadHunter Unit Option Plan. In accordance with the amended Plan, if an IPO occurs, 25% of the awards will vest on the date of IPO and will be exercised and paid by the shareholders in cash, and 18.75% will vest on each of the first, second, third and fourth anniversaries of IPO, and each will be settled in equity by the Company. The modification of the Plan did not change the classification of the awards as equity-settled.
The modification of the Plan was not beneficial to the most participants of the program, who received awards of Series 1. The modification of the Plan was beneficial to the participants, who received awards of Series 2 Series 5. The incremental fair value of RUB 10,815 was calculated as the difference between the fair value of the initial and amended program at the modification date and will be recognized over the modified vesting period.
In June 2019, the Group further amended the 2016 HeadHunter Unit Option Plan. As the result of this amendment, the participants of awards of Series 1 Series 7 became unconditionally entitled to additional lump sum payment. This amendment was beneficial to the participants. The fair value of the additional award of RUB 28 million was recognized in the three months ended June 30, 2019.
As a result of completion of the IPO on May 8, 2019, the 25% of the awards of Series 1 Series 7 were vested, and subsequently exercised and settled in cash by shareholders, and on the first anniversary of the IPO on May 8, 2020, the 18.75% of the awards of Series 1 Series 7 were vested and subsequently exercised and settled by the Company in shares.
Total employee expenses (excluding social taxes) arising from the 2016 HeadHunter Option Plan amounted to RUB 9,377 thousand for the three months ended June 30, 2020 and RUB 53,939 thousand for the three months ended June 30, 2019, and are included in Operating costs and expenses (exclusive of depreciation and amortization) in the unaudited condensed consolidated interim statement of income and comprehensive income.
HeadHunter Group PLC
Notes to the Unaudited Condensed Consolidated Interim Financial Information for the three and six months ended June 30, 2020 and June 30, 2019
Total employee expenses (excluding social taxes) arising from the 2016 HeadHunter Option Plan amounted to RUB 22,586 thousand for the six months ended June 30, 2020 and RUB 59,181 thousand for the six months ended June 30, 2019, and are included in Operating costs and expenses (exclusive of depreciation and amortization) in the unaudited condensed consolidated interim statement of income and comprehensive income.
The social taxes accrued amounted to RUB 25,361 thousand for the three months ended June 30, 2020, which are payable due to change in the parent company tax residency status (see note 1(a)), and are included in Operating costs and expenses (exclusive of depreciation and amortization) in the unaudited condensed consolidated interim statement of income and comprehensive income (for the three months ended June 30, 2019 RUB 8,248 thousand).
The social taxes accrued amounted to RUB 43,060 thousand for the six month ended June 30, 2020 (for the six months ended June 30, 2019 RUB 8,248 thousand).