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 registrant’s 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 Company’s Registration Statement on Form F-3 (Registration No. 333-239560).

 


 

EXHIBIT INDEX

 

Exhibit
No.

 

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
ended June 30,

 

For the six months ended
June 30,

 

 

 

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 Company’s 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.

 

3


 

HeadHunter Group PLC

 

Unaudited Condensed Consolidated Interim Statements of Financial Position

As at

 

(in thousands of Russian Roubles)

 

Note

 

June 30, 2020

 

December 31,
2019

 

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.

 

4


 

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
translation
reserve

 

Retained earnings

 

Total

 

Non-controlling
interest

 

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.

 

5


 

HeadHunter Group PLC

 

Unaudited Condensed Consolidated Interim Statements of Cash Flows

(in thousands of Russian Roubles)

 

 

 

 

 

For the six months ended
June 30,

 

 

 

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.

 

6


 

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 Russia’s 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 Company’s 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 Group’s existing shareholders have offered 16,304,348 of the Group’s 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 Group’s 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 Group’s 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 management’s 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 management’s assessment.

 

7


 

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 company’s 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).

 

8


 

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 Group’s 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 Group’s 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.

 

9


 

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 Company’s 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 Group’s 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 Group’s 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 Group’s 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:

 

10


 

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 Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on these reports.

 

The Group’s operating segments are based on geography of the Group’s 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
segments

 

Total
segments

 

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
segments

 

Total
segments

 

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

 

 

11


 

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
segments

 

Total
segments

 

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
segments

 

Total
segments

 

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
June 30,

 

For the six months ended
June 30

 

 

 

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

 

 

12


 

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
June 30,

 

For the six months ended
June 30

 

 

 

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 Group’s revenue by country of domicile of a customer, including the Group’s principal country of operations and in all foreign countries.

 

(in thousands of Russian Roubles)

 

 

 

For the three months ended
June 30,

 

For the six months ended
June 30,

 

 

 

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 Group’s 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).

 

13


 

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
June,

 

For the six months ended
June,

 

 

 

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

 

 

14


 

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
segment

 

Total
segments

 

Russia

 

Other
segment

 

Total
segments

 

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
segment

 

Total
segments

 

Russia

 

Other
segment

 

Total
segments

 

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
June 30,

 

For the six months ended
June 30,

 

 

 

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)).

 

15


 

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
June 30,

 

For the six months ended
June 30,

 

 

 

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).

 

16


 

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
June 30,

 

For the six months ended
June 30,

 

 

 

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
June 30,

 

For the six months ended
June 30,

 

 

 

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
June 30,

 

For the six months ended
June 30,

 

 

 

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

 

17


 

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 Group’s applicable tax rate is the Russian corporate income tax rate of 20%.

 

(in thousands of Russian Roubles)

 

 

 

For the three months ended
June 30,

 

For the six months ended
June 30,

 

 

 

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.

 

18


 

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,
2020

 

December 31,
2019

 

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,
2020

 

December 31,
2019

 

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.

 

19


 

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 Group’s 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).

 

20


 

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,
2019

 

“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,
2020

 

December 31,
2019

 

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

 

21


 

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 costs”line 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,
2020

 

December 31,
2019

 

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,
2020

 

December 31,
2019

 

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,
2020

 

December 31,
2019

 

 

 

 

 

 

 

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

 

 

22


 

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 Company’s 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 Group’s 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.

 

23


 

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 Company’s 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
units

 

Grant date

 

Exercise price
(per unit)

 

Fair value at grant
date

 

 

 

 

 

 

 

RUB’000

 

RUB’000

 

 

 

 

 

 

 

 

 

 

 

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.

 

24


 

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
June 30

 

For the six months period
ended June 30

 

 

 

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.

 

25


 

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).

 

The related liability of RUB 83,607 thousand (as at December 31, 2019 – RUB 40,548 thousand) is presented within ‘Provisions’ in the statement of financial position.

 

(ii)                                                2018 Unit Option Plan

 

In 2018, the shareholders of the Group established an incentive program that provides key management of the Group with rights to receive shares. The amount of payment is conditional on share price at the vesting date. The share options vest if the average share price exceed the exercise price at the vesting date and the participant remains employed on such date. The awards vest in instalments over the vesting period, being 20% after 3 years in service from the grant date and 20% annually thereafter, resulting in full vesting in 7 years. The programme assumes grant of up to 600 units, and a unit is defined as 0.005% of the number of issued ordinary shares of the Company.

 

The Group has no liability to make cash payments to management, therefore the program is classified by the Group as equity-settled in this unaudited condensed consolidated interim financial information.

 

The Board of Directors approved the grant of 300 units, 41 units and 33 units on May 28, 2019, March 5, 2020 and May 26, 2020, respectively, under the 2018 Unit Option Plan.

 

Awards series