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Year by year, all of us pursuing separate patterns of world
vision, we find ourselves thinking - what makes a good company?
Its size and industry don’t matter much. It’s corporate spirit, or
even team spirit is what matters. Let alone the so much beaten,
vague and obscure corporate terminology, such as ‘corporate
culture’, ‘motivation’ or ‘teamwork’, it’s eventually all about one
word - ‘understanding’. The very understanding and its breadth
and depth is the only thing to bring about the so much coveted
word ‘success’.
Late 2019 is a lesson for the whole world to learn. Meanwhile,
it got all of us to think if changes are really that bad. They
bring problems when no understanding is in sight. Synergic
understanding is what turns changes into new opportunities,
which later turn into instruments and practices that no one else
yet has. Finding ones is our new reality from now on.
Back in December 2019, COVID-19 was generally treated as
somebody else’s problem. As soon as in March countries one after
another started imposing travel bans and lockdown rules. Negative
oil prices, small and medium businesses shutdowns all over the
world, deserted streets in megapolises look so much like strips
from apocalyptic movie, but one day they have become reality for
Russia, Europe, the US, or almost any country you may think of.
Most things previously taken for granted have changed beyond
recognition.
However, it’s getting obvious that no apocalyptic scenario is
to be seen. The market still has a long road to recovery, but new
opportunities waiting to be learned do emerge. We’ve seen people
in the market change, we’ve seen market leadership change
hands, we’ve seen game rules change. Now the game itself has
changed. We are entering a new epoque of extraordinary low
interest rates and mounting tax burdens, but we see new market
physics looming. It is yet to be understood. Let’s face it. Moderate
optimism is gone, and now it’s time for quick decision making and
strict rationale. There will be no time for sharp market turns or
breaking points as most of the risks anticipated have in a certain
way materialized. From now on ups and downs are ordinary thing
for everyone, and they will take fast reshuffling and constant
doublechecking. This is it. Life has changed. Life goes on.
RONIN Partners team
Annual Report 2019
LETTER
4
RONIN Partners is a Group of companies that specialize in providing high quality financial ser-vices and tailored solutions to high net worth individuals and institutional investors. With a head office in Moscow and an additional of-fice in Cyprus we offer services for both Rus-sian and international clients. The scope of our services includes but is not limited to: private wealth management, brokerage services, asset management and corporate finance.
BROKERAGE SERVICES
We provide brokerage services through RONIN Europe Limited – our European broker, and RONIN LLC – our Russian company, depending on the nature of services. Our clients can conclude an agreement with either of them. Our private wealth management business is aimed at wealthy individuals and institutional investors. The minimal entry capital is 1 million dollars. We complement brokerage services with portfolio management services, providing our clients with the fullest range of financial products. The availability of a wide range of partners together with internal resources provides a considerable reserve of liquidity which we can provide to our clients on attractive terms.
Companies that comprise RONIN
Partners Group are members of professional organizations, such as National Association of Stock Market Traders (NAUFOR), National Securities Market Association (NFA), and they also regularly participate in various MICEX committees.
We conduct our client operations on leading international financial markets such as London Stock Exchange, NYSE, NYMEX, NASDAQ, CME, Borsa Italiana, Deutsche Boerse Xetra, Eurex Ultra, Euronext, Hong Kong Stock Exchange, Shenzhen Stock Exchange, Shanghai Stock Exchange, ICE Futures Europe.
We have access to international markets through our broker partners – UBS, Instinet, CLSA, CITI, Credit Suisse, NOMURA. In the Eurobond market we collaborate with global banking institutions and investment houses (JP Morgan Chase, Deutsche Bank, Morgan Stanley, Jefferies, ING, Macquarie Bank, Raiffaisen, Goldman Sachs, Barclays, NOMURA, BNP PARIBAS, UBS, Zarattini Banca, Commerzbank and others) and brokers (TRADITION, ICAP, GFI, TULLET Prebon, BGC, Continental Capital, Enigma Securities, Global Credit Partners).
ASSET MANAGEMENT SERVICES
Asset management services, for residents of the Russian Federation is provided by JSC RONIN Trust. The company provides operations for mutual funds, non – state pension funds, insurance companies, liquidity service and asset management for corporations, as well as for private clients. We understand the individuality of each clients requirements and will always work to the specific needs of each project and customers wishes. RONIN Trust, by utilizing the RONIN Partners group capabilities, operates on the domestic and international financial markets and provides residents of the Russian Federation the opportunity to receive profits from operations carried out in the Russian and international financial markets. According to the Russian Federation tax legislation, the asset management company acts as a tax agent and takes responsibility for the correct and punctual transfer of relevant taxes to the tax system. RONIN Trust, in fact, provides a service for the payment of taxes in the Russian and international financial markets, supplying customers with all of the necessary information about taxation and taxes that are due, during the reporting year. This undoubtedly gives a competitive advantage in the context of the dramatic complexity of the tax legislation during recent years.
At the end of 2019 RONIN Trust managed 10.2 bil. RUB ( 164,7mil. USD) of clients assets. RONIN Trust manages the following funds currently:
• Khanty-Mansiysky NPF (since 2005)• Rostec NPF (since 2006)• Close-end investment fund for the qualified investors – “Kazakova 23”• Open-end equity investment fund – “RONIN equity fund”• Close-end investment fund for the qualified investors – “Citadel”
Specialized Endowment Funds: • Fund for the development of the Moscow Institute of Physics and Technology• Fund for national support socially oriented non-profit organizations (SONCO)
CORPORATE FINANCE
We are able to provide the full range of corporate finance and investment banking services, thanks to our experience in advising companies of all sizes, including large corporations, small and medium-size enterprises, across all industries and sectors.
Annual Report 2019
OVERVIEW
5
MINORITY INVESTMENT(COMPANY MANAGEMENT)
25%+1
99.9% 100% 100% 100% 100% 100% 100%
90%
98% 2%
75%-1
MR. ANDREY GAEK
We help our clients to achieve their goals in all aspects of corporate finance and business development matters. We provide advice in corporate finance and strategic development, including financial analysis, business planning, capital structure management, investment projects analysis and valuation. Our team has substantial experience handling business transactions, including M&A on both the buyer and seller sides, as well as assets restructuring.
Our Group assists our clients to raise financing for various corporate needs, including M&A transactions, capital expenditures, projects financing, working capital or restructuring. Our team has experience in arranging both equity and debt financing, including securities private placement, public offering and bank debt raising. While assisting in capital collection for fast growing companies we are able to employ the Group’s own funds.
RONIN Partners invests mainly in small and medium-size businesses, capable to generate attractive returns from different industries. As a financial investor we are focused on establishing a long-term partnership with our investee companies, sharing our extensive experience in strategic development and business planning as well as in-depth industry
knowledge and expertise. We are committed to providing all necessary support required to accelerate the company’s growth and to generate viable investment returns. As a result, our financial resources and operational support creates additional value to the business and helps the company to move to a new level of development with increasing investment attractiveness.
OUR PHILOSOPHY
We aim at achieving an outstanding competitive advantage in the financial industry, using our core competencies:
• Specific, tailored solutions for each client• Professional team of experts• Believing that the most important factor of
our success is the success of our clients
OUR MISSION
To protect and multiply capital, while verifying the trust of our clients. When we act as a broker or manage private assets or institutional investor’s funds - regardless of the nature of the capital of our clients, we consider that our essential goal is to assert their expectations and trust.
Annual Report 2019
OVERVIEW
SHAREHOLDERS STRUCTURE
6
Profit or loss highlights ($ thousands)
Year 2019 2018 2017 2016 2015 2014
Net gain on financial assets and liabilities
3 281 14 724 19 066 15 768 7 871 27 439
Rendering of financial services
16 699 13 650 18 690 18 625 17 232 14 430
Interest revenue 3 427 1 669 5 131 2 564 2 647 9 129
Other Income 505 - 42 665 1 047 559 1 345
Interest expense -3 154 -10 308 -13 280 -3 518 -2 816 -5 220
Rendering financial services
-935 -473 -1 703 -677 -605 -542
Administrative expenses
-7 067 -7 081 -8 893 -6 206 -6 174 -7 565
Other expenses -1 065 -1 509 -6 720 -2 037 -3 305 -1 676
Profit before tax 11 691 10 672 54 956 25 566 15 409 37 340
Profit after tax 10 415 9 760 54 163 23 072 14 537 36 260
Total comprehensive income
11 658 3 055 50 825 26 349 14 942 24 471
Total Equity ($ million)
2019
2018
2017
2016
2015
2014
292
280
277
226
200
185
Assets under our Guidance ($ billion)
2019
2018
2017
2016
2015
2014
1.92
2.04
3.17
2.38
1.97
Total Assets ($ million)
2019
2018
2017
2016
2015
2014
430
409
409
265
234
205
Annual Report 2019
FINANCIAL HIGHLIGHTS
1.88
7
Ratios
Return on average equity 4,08%
Current ratio 3,04
Debt to equity 47,42%
Brokerage services
Asset management
Stocks
Promissory notes
Domestic bonds
2019 Revenue by segment
Trade Turnover 2019
S&P Global Ratings has confirmed its long-term/short-term credit rating of “BB-/B” for Ronin Europe Limited issuer. The Outlook is Stable.
During the year 2019 we have conducted:
BB- / B
Annual Report 2019
FINANCIAL HIGHLIGHTS
35%
14%19%
15%
13%
Eurobonds
Depository notes
Futures & options
47%24%
Investment Banking
Trading and principal investments
over 324
11.7 bln USD
thousand 11
7 bln USD
thousandbuy and sell deals with a total volume
over
REPO deals with a total volume of
over
over
14%
15%
4%
8
Dmitry Ikonnikov is an internationally acclaimed artist of painting and graphics. The exhibition featured paintings of different years from his home collection. His own unique painting techniques are making him an outstanding representative of the modern fine arts. Dmitry Ikonnikov was a participant of more than 150 exhibitions in Russia and abroad, where he was awarded a number of prizes. His works are a part of regular exhibitions in Museum of Modern Art, ‘Korea’ National Gallery, they are a part of many private collections in Russia, Sweden, Denmark, Germany, Ireland, the US, Japan, South Korea and Italy.
Hawk moths.Gouache on paper. 110 x 120 cm.1999 year
Three bananas.Gouache on paper. 120 x 70 cm.
year 2001
Annual Report 2019
ART EXHIBITIONS
Dmitry Ikonnikov’s Exhibition
9
My cat.Paper, author’s technique. 100 x 80 cm.
2006 year
Seamstress, cat and mannequin.Acrylic on canvas. 100 x 120 cm.2008 year
Ladies on the balcony.Gouache, mixed technics on paper. 80 x 120 cm.2004 year
Annual Report 2019
ART EXHIBITIONS
10
Annual Report 2019
ART EXHIBITIONS
In his works Valery Mironov pursues the sacred metaphorical trend for over two decades. With his profound use of ancient artists’ techniques, he creates characters he himself later determines in his own adages. These self-created phrases, written in Slavic font, are stylistically intrinsic in his paintings, making them idea-complete and interior-decorative. His creative legacy accounts for more than a thousand works, featured in a number of high-profile exhibitions in Italy, The Netherlands, Germany and France. He is a regular exhibitor in Central House of Artists, Art-Manege in Moscow and Art-Expo in New York. The artist’s works are popular with private collectors both in Russia and abroad.
Valery Mironov’s Sacred Metaphorism
11
“Knight of the Bee”“A mild punishment for a little evil”130 x 160 cm., Oil on canvas.year 2001
“Crocodile dreams or dragonfly dreams”2005 year.
Annual Report 2019
ART EXHIBITIONS
RONIN PARTNERS B.V.
CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31 DECEMBER 2019
15
18
19
REPORT OF THE BOARD OF DIRECTORS ....................................................................... 21
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................... 23
CONSOLIDATED STATEMENT OF PROFIT OR LOSS ..................................................... 25
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ...................................... 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................... 27
CONSOLIDATED CASH FLOW STATEMENT .................................................................. 28
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS .......................................... 29
1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIES ........................................ 31
2. GROUP’S OPERATING ENVIRONMENT ..................................................................... 33
3. BASIS OF PREPARATION........................................................................................... 34
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................. 36
5. NEW ACCOUNTING PRONOUNCEMENTS ............................................................... 42
6. ACCOUNTING ESTIMATES AND ASSUMPTIONS ...................................................... 44
7. OTHER NON-CURRENT ASSETS ............................................................................... 45
8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS .......................... 46
9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME ......................................................................................... 50
10. TRADE AND OTHER RECEIVABLES.......................................................................... 52
11. CASH AND CASH EQUIVALENTS ............................................................................ 53
12. LOANS ORIGINATED .............................................................................................. 53
13. LOANS PAYABLE .................................................................................................... 54
14. ISSUED CAPITAL AND RESERVES ........................................................................... 54
15. ACCOUNTS PAYABLE ............................................................................................. 54
16. ACCRUED LIABILITIES ............................................................................................. 54
17. NET GAIN ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS ................................................................... 55
18. REVENUE FROM RENDERING FINANCIAL SERVICES ............................................. 55
19. COST OF RENDERING FINANCIAL SERVICES ........................................................... 55
20. MOVEMENT IN IMPAIRMENT ALLOWANCE ......................................................... 56
21. ADMINISTRATIVE EXPENSES .................................................................................. 56
22. OPERATING LEASES................................................................................................ 56
23. INCOME TAX ......................................................................................................... 57
24. ANALYSIS BY SEGMENT ........................................................................................ 59
25. FAIR VALUES ......................................................................................................... 63
26. FINANCIAL RISK MANAGEMENT .......................................................................... 63
27. RELATED PARTY TRANSACTIONS .......................................................................... 72
28. SUBSEQUENT EVENTS ............................................................................................ 72
29. COMMITMENTS AND CONTINGENCIES ................................................................ 73
Annual Report 2019
CONTENTS
21
REPORT OF THE BOARD OF DIRECTORS
INTRODUCTIONRONIN Partners B.V. (‘’RONIN’’) is a holding company, having its statutory seat in Amsterdam. The shares are held 75% less one share by Blodgettex Finance Limited and 25% plus one share by minorityshareholders including Management.As at 31 December 2019 the Group had offices in the Netherlands, Russia and Cyprus.The Group’s activities are trading, principal investments and rendering of financial services in the followingbusiness segments: brokerage, asset management and corporate investment banking services in Russiaand abroad.The Group focuses its brokerage and asset management services on the Russian and European fixedincome and equity markets.For the full, up to date, group structure please refer to note 1 of the financial statements.
FINANCIAL STATEMENTS 2019The figures presented in the attached Financial Statements 2019 accurately reflect the value of the assetsand liabilities of the company at year end, as well as the results for the year.During the year Management were active in considering the ever changing requirements of financialreporting especially IFRS. The activities of the Group during 2019 were determined by the influence of external factors, the most significant of which are following:
• Political instability and sanctions;• Significant change in foreign exchange;• Gradual stabilization of Russian economy
As a result the management strategy of Ronin Group starting from spring 2017 was based on the following main principals:
• Providing sufficient and in some cases over-sufficient positive liquidity gap to cover the possibilityof closing limits of counterparties from the their side, which was possible due to volatility on financialmarkets;• Use of wide spreads for financial instruments with fixed income for more active short-termspeculative deals.
During 2019 the economy situation in Russian has showed further stabilization, but Group has continuedto use mentioned above principles in its activity.Among some practical steps attention may be brought to:
• Further growing of portfolio of government bonds of different growing economies as well as stablecorporates;• Minimization of interest rates risks and currency risks in assets structure of the Group;• Very thorough analysis of clients’ positions not to have a situation when net assets may fell todangerously low level;• Minimization of banking risks and almost full avoidance of keeping own and clients’ resources inRussian commercial banks.
The above described concept allowed to maintain the acceptable level of clients’ deals and as a result highlevel of commission income, avoiding critical impairment of assets.The profit after tax of the Group increased. The main course of increase in profit after tax was operationalrevenue from commission income and interest revenue. Also, the performance of trading portfoliodemonstrate positive effect.Revenue shows a positive effect in the part of arising from gains received from active trading operationswith assets at fair value through profit and loss.In assets terms there were increase in part of financial assets at fair value through profit or loss.Capital does slightly changed as a result in profits as noted above.
22
SUBSEQUENT EVENTSSince 31 December 2019, the outbreak of COVID-19 and related global responses have caused materialdisruptions to businesses around the world, leading to an economic slowdown. Global equity markets have experienced significant volatility and weakness.
While governments and central banks have reacted with monetary interventions designed to stabilizeeconomic conditions, the duration and extent of the impact of the COVID-19 outbreak, as well as theeffectiveness of government and central bank responses, remains unclear at this time. These subsequentchanges in the fair value of the Group’s investments are not reflected in the financial statements as at 31December 2019.
RISKS AND RISK MANAGEMENT The operating environment of the Group and a full description of risks and risk management is given innotes 2 and 25 to the attached financial statements.
EXPECTATIONS FOR 2020In the current global economic climate future projections are difficult to say the least some might saypointless, and in the face of global trends the Directors do not have complete power to control results.
The outbreak of COVID-19, significant volatility and weakness in economic performance, unexpectedpolitical actions and political conflict are just some of the potential issues both global and domestic thatcould affect results in the coming year.
However in general terms we expect the total level of activity and level of assets will increase if onlymodestly and we remain fully committed to taking the Group on the path of growth that has been sosuccessful for the last few years.
In terms of analysis of revenues, asset management fees are expected to grow in proportion with assetvalues and gradually take a bigger relative share of overall income. Brokerage fees and trust managementfees will also grow, but more slowly, based on the fact there is relatively less volatility in the markets thanin recent history. It should be noted of course as we have seen that this picture can change suddenly.
We also anticipate considering new business lines and making investments with our partners in newmarkets and these will be carefully analyzed on a case-by-case basis, and usually conducted with the jointefforts of known partners and relevant industry specialists.
25 May 2020
RONIN Partners B.V.
23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Notes 31 December 2019 31 December 2018
ASSETS
Non-current assets
Other non-current assets 7 5 701 4 404
Long-term loans originated 12 3 097 3 113
Deferred tax assets 22 416 214
9 214 7 731
Current assets
Financial assets at fair value through profit or loss 8 320 082 244 948
Financial assets at fair value through other 9 53 639
Trade and other receivables 10 4 100 9 174
Profit tax receivable 47 28
Short-term loans originated 12 41 368 145 892
Cash and cash equivalents 11 1 375 1 713
420 611 401 755
TOTAL ASSETS 429 825 409 486
EQUITY AND LIABILITIES
Equity attributable to owners of the parent
Issued capital 14 664 664
Share premium 14 72 949 72 949
Additional capital (subordinated loan) 14 - -
Revaluation Reserve 2 589 -
Translation reserve 14 (19 654) (18 295)
Retained profit 234 865 224 450
291 413 279 768
Minority interests 146 133
TOTAL EQUITY 291 559 279 901
24
Non-current liabilities - -
Long-term loans 13 133 142 125 442
Deferred tax liabilities 123 3
133 265 125 445
Current liabilities
Trade and other payables 15 793 443
Income tax payable 224 -
Short-term loans 13 3 220 3 524
Lease liabilities 22 328 -
Accrued liabilities 16 436 173
138 266 4 140
TOTAL EQUITY AND LIABILITIES 429 825 409 486
The Consolidated Statement of Financial Position shall be seen together with the Notes to the consolidated financial statements on pages 10 to 47 which form an integral part of these
consolidated financial statements
25
The Consolidated Statement of Profit or Loss shall be seen together with the Notes to theconsolidated financial statements on pages 10 to 47 which form an integral part of these consolidated
financial statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
Notes 2019 2018
Net gain on financial assets and li-abilities at fair value through profitor loss 17 3 281 14 724
Rendering financial services 18 16 699 13 650
Interest revenue 3 427 1 669
Net foreign exchange gains - -
Acquisition of subsidiary - -
Other Income 505 -
23 912 30 043
Interest expense (3 154) (10 308)
Rendering financial services 19 (935) (473)
Allowance for doubtful accounts 20 (18) (27)
Net foreign exchange loss (221) (1 482)
Administrative expenses 21 (7 067) (7 081)
Other expenses (826) -
(12 221) (19 371)
Profit before tax 11 691 10 672
Profit tax 23 (1 276) (912)
Profit after tax 10 415 9 760
Profit 10 415 9 760
Attributable to:
Majority shareholders 10 402 9 753
Minority interest 13 7
26
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 2019 2018
Profit for the period 10 415 9 760
Exchange difference on translation of foreign operations (1 359) (5 850)
Fair value gains/(losses) on finan-cial assets at FVTOCI 2 589 (862)
Other comprehensive income 13 -
Total comprehensive income/ (loss) that may be reclassified to profit or loss 1 243 (6 712)
Total comprehensive income for the period 11 658 3 055
Attributable to:
Majority shareholders 11 645 3 048
Minority interest 13 7
The Consolidated Statement of Financial Position shall be seen together with the Notes to the consolidated financial statements on pages 33 to 77 which form an integral part of
these consolidated financial statements
27
CO
NSO
LID
ATE
D S
TATE
MEN
T O
F CH
AN
GES
IN
EQ
UIT
Y
Issu
ed
capital
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miu
m
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cial
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ts a
t fa
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ugh
oth
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-si
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e
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tran
slat
ion
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rve
Ret
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(loss
es)
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at 3
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ecem
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(12
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- -
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- 1
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The
Con
solid
ated
Sta
tem
ent
of F
inan
cial
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itio
n sh
all be
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geth
er w
ith
the
Not
es
to t
he c
onso
lidat
ed f
inan
cial
sta
tem
ents
on
page
s 33
to
77 w
hich
for
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n in
tegr
al p
art
of
thes
e co
nsol
idat
ed f
inan
cial
sta
tem
ents
28
CONSOLIDATED CASH FLOW STATEMENT
2019 2018
OPERATING ACTIVITIES
Profit before tax 11 691 10 672
Non-cash adjustments to reconcile profit be-fore tax to net cash flows:
Accruals 591 (97)
Finance income (3 427) (1 669)
Finance costs 3 154 10 308
Revaluation of securities - (862)
Movements in provisions (18) (27)
Working capital adjustments:
Decrease (Increase) in trade and other receivables 5 092 (819)
(Decrease) Increase in trade and other payables 350 82
Income tax paid (1 273) (1 837)
Net cash flows from operating activities 4 469 5 079
INVESTING ACTIVITIES
Acquisition of non-current assets (1 297) (1 064)
Acquisition of financial assets, net (126 184) 89 143
Cash flow from loans originated 104 306 (94 769)
Interest received 3 419 1 674
Net cash used in investing activities (19 756) (5 016)
FINANCING ACTIVITIES
Interest paid (3 154) (10 309)
Net cash (used in)/from financing activities (3 154) (10 309)
Net increase / (decrease) in cash and cash equiv-alents (6 750) 426
Net foreign exchange difference 6 412 (6 802)
Cash and cash equivalents at 1 January 1 713 8 102
Cash and cash equivalents at 31 December 1 375 1 713
The Consolidated Cash Flow Statement shall be seen together with the Notes to theconsolidated financial statements on pages 10 to 47 which form an integral part of these consolidated
financial statements
RONIN PARTNERS
NOTESTO THE CONSOLIDATEDFINANCIAL STATEMENTS
31
1. CORPORATE INFORMATION AND PRINCIPAL ACTIVITIESThese consolidated financial statements include the financial statements of RONIN Partners B.V. (the “Company”) and its subsidiaries. RONIN Partners B.V. and its subsidiaries hereinafter collectively referred to as the “Group”.
The consolidated financial statements of the Group for the year ended 31 December 2019 were authorized for issue in accordance with a resolution of the directors on 25 May 2020.
RONIN Partners B.V., the parent company of the Group, is a private limited liability company incorporated on 18 November 2008 in the Netherlands.
The Company’s postal and registered address is 21 Kabelweg, Amsterdam, the Netherlands, 1014 BA.
As at 31 December 2019 the Company was owned by following shareholders:• Blodgettex Finance Limited, Cyprus (75% of share capital - 1 share) - the ultimate parent of the Group
• Minority shareholders (total 25% + 1 share).
As at 31 December 2019 the Group had offices in the Netherlands, Russia and Cyprus.
The Group’s activities are trading, principal investments and rendering of financial services in the following business segments: brokerage, asset management and corporate investment banking services in Russia and abroad.
The Group focuses its brokerage and asset management services on the Russian and European fixed income and equity markets.
As at 31 December 2019 Navia Ltd. was merged with RONIN Projects Ltd. All assets and liabilities were fully recognized on balance of RONIN Projects Ltd.
The companies that formed the Group as at 31 December 2019 and their key activities are described below:
Share in equity, % Country of incor-poration Principal activities31 Dec 2019 31 Dec 2018
RONIN Partners B.V.Parent
companyParent
companyNetherlands Holding company
RONIN Europe Ltd. (formerly NOMOS Europe Ltd.)
100 100 CyprusInvestment firm (portfolio management, brokerage, investment advice, ancillary services and underwriting)
RONIN LLC 98 98 RussiaBrokerage, dealership, custodian, asset management services
RONIN Trust OJSC 100 100 Russia Asset management company
RONIN Holding CJSC 100 100 Russia Holding company
RONIN Estate LLC 100 100 Russia Investment activities, Group’s supplier
RONIN Finance Ltd. 100 100 CyprusFinancing of holding companies, investment activities
RONIN Management 100 100Cayman Islands
Management company of Cayman’s investment funds – dormant
RONIN All Opportunities Fund
100 100Cayman Islands
Investment Fund – dormant
RONIN Geared Fund 100 100Cayman Islands
Investment Fund – dormant
RONIN Comecon Fund 90 90Cayman Islands
Investment Fund
Maripol Holding Ltd. 100 100 Cyprus SPV of Comecon Fund
RONIN Projects Ltd. 100 100 Cyprus Investment activities, venture investments
RONIN Consulting Ltd. 100 100 CyprusBookkeeping, advisory and consulting services
Ronin To Final Ltd. 100 100 Cyprus Dormant
Navia Ltd. - 100 Cyprus Investment activities, venture investments
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At 31 December 2019 the Group employed 90 people (31 December 2018: 92).
Brokerage services in Russia and worldwide are provided by RONIN LLC and RONIN Europe Ltd –Russia and Cyprus-based companies, licensed under the law of the Russian Federation and European Union respectively.
Asset management services in Russia are provided by RONIN Trust OJSC, in particular, to private investors, mutual and pension funds. RONIN Europe Ltd. is authorized to provide portfolio management services under the law of the Republic of Cyprus.
As of 31 December 2019 RONIN Trust OJSC had 3 private pension funds (31 December 2018: 3) and 3 individual trust management agreements (31 December 2018: 3) and 2 endowment fund (31 December 2018: 1) and 3 mutual funds (31 December 2018: 3) under its management.
As at 31 December 2019 the companies of the Group had licenses as follows.
Company Type of license
RONIN Trust OJSCAsset management (perpetual)
Fund management (perpetual)
RONIN LLC
Brokerage (perpetual)
Dealing (perpetual)
Futures exchange intermediate operations (perpetual)
Asset management (perpetual)
Depositary services (perpetual)
RONIN Europe Ltd. Cyprus Investment Firm regulated by CySEC (perpetual)
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2. GROUP’S OPERATING ENVIRONMENT By focusing its operations on the Russian financial markets and by the presence of its subsidiaries in the country the Group is significantly exposed to the economy and the financial system of the Russian Federation. Simultaneously, the Group is exposed to the financial regulation framework of Cyprus through its major subsidiary RONIN Europe Ltd.
RUSSIAN FEDERATIONThe Russian Federation displays certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations. During 2019, the Russian economy continued to stabilized, ongoing political tension in the region and international sanctions against certain Russian companies and individuals, all of which contributed to the country’s economic recession characterised by a decline in gross domestic product. The financial markets continue to be volatile and are characterised by frequent significant price movements and increased trading spreads. This operating environment has a significant impact on the Group’s operations and financial position. Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the future effects of the current economic situation are difficult.
CYPRUSThe Republic of Cyprus is a Mediterranean country which is a member of the European Union from 1 May 2004.
The country has a favorable tax system with the 12,5% corporate tax rate applied to residents while being in full compliance with European directives and procedures and Organization for Economic
Co-operation and Development (OECD) requirements against harmful tax practices. In accordance with Cyprus’ Income Tax Laws, the definition of tax resident of Cyprus follows the OECD model convention in relation to “place of effective management”. Cyprus has concluded treaties on double taxation with 26 countries, including the Russian Federation.
To regulate the financial market the Cyprus Securities and Exchange Commission (CySEC), a public corporate body, was established in accordance with the Securities and Exchange Commission (Establishment and Responsibilities) Law of 2001. Since its establishment CySEC has been elaborating regulation of the financial industry. Presently Cyprus Investment firms (CIF) falling under the CySEC supervision are required to set up full-time compliance, internal audit and risk management functions. RONIN Europe Ltd. is a CIF regulated by CySEC.
The Cyprus economy has been adversely affected in the beginning of decade by the international credit crisis and the instability in the financial markets. During 2012 there was a considerable tightening of financing availability, mainly resulting from financial instability in relation to the Greek sovereign debt crisis and its impact on the Cyprus economy. In addition, following the credit downgrades the ability of the Republic of Cyprus to borrow from international markets has been significantly affected. There was a stabilization of situation in 2013-2014.
There was no impact on the other banking institutions operating in Cyprus.
In September 2018 the independent rating of Cyprus provided by agency Standard and Poor’s has been upgraded to BBB- level.
Management has assessed the potential impact of the operating environment in Cyprus and, due to the fact that it holds its proprietary assets and assets of its clients at non-Cyprus based, global banking and financial institutions, considers that it has no material exposure to Cyprus Banks, Cyprus sovereign debts and others assets related to Cyprus economy.
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3. BASIS OF PREPARATION
STATEMENT OF COMPLIANCEThe consolidated financial statements of the Group for the year ended 31 December 2019 have been prepared in accordance with International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) published by the International Accounting Standards Board, and interpretations published by the International Financial Reporting Interpretations Committee (IFRIC).
The Group’s Management is responsible for the preparation of these consolidated financial statements in accordance with IFRS.
The consolidated financial statements have been prepared on a historical cost basis, except financial instruments and derivative financial instruments that have been measured at fair value. Preparation of the consolidated financial statements requires application of estimates and assumptions which have an effect on the recorded amounts of assets and liabilities, disclosure of the contingent assets and liabilities at the date of the consolidated financial statements preparation as well as on the recorded amounts ofincome and expenses in the reporting period. Such estimates are based on the information on current events and transactions which is available to Management, but actual results can differ from such estimates (see Note 6, Accounting Estimates and Assumptions).
The Group companies maintain accounting records and prepare financial statements in compliance with the legislation of their incorporation states. Thus, accounting policies and bases of preparation used by the companies forming the Group may differ from IFRS requirements. These consolidated financial statements are prepared based on the accounting records of Group’s companies with allowance for all adjustments and reclassifications required to comply with IFRS principles.
FUNCTIONAL AND PRESENTATION CURRENCYThe individual financial statements of the Group’s entities are prepared in the currency of primary economic environment in which each company operates, i.e., its functional currency.
The Group’s entities’ functional currencies are as follows:
RONIN Partners B.V., RONIN Europe Ltd., RONIN Management, RONIN Comecon Fund, RONIN Finance Ltd., RONIN Projects Ltd., RONIN Consulting Ltd.
USD
RONIN LLC, RONIN Trust OJSC, RONIN Holding CJSC, RONIN Estate LLC RUR
The consolidated financial statements are presented in USD for the convenience of the users and all values are rounded to the nearest thousand except where otherwise indicated.
The Group’s underlying entities’ transactions in currencies other than functional are translated to its functional currency at the exchange rate prevailing at the date of transaction. Foreign exchange differences arising out of such transactions, as well as resulting from translation of monetary assets and liabilities denominated in foreign currencies at the rates prevailing at the reporting date, are recognized in profit or loss.
The Group’s underlying entities’ financial performance and statement of financial position items are translated into the presentation currency of the Group on consolidation as follows:
• assets and liabilities for each statement of financial position presented are translated at the closing rate at the proper reporting date;
• income and expenses for the period are translated at average monthly exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at rates on the dates of the transactions);
• aall resulting translation differences are recognized as a separate component of equity via other comprehensive income or loss.
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The foreign exchange rates in RUR fixed by the Central Bank of the Russian Federation and used in these consolidated financial statements were as follows:
EUR USD
31 December 2019 69.3406 61.9057
31 December 2018 79.4605 69.4706
The corresponding cross rates on the reporting dates were as follows:
31 Dec 2019 31 Dec 2018
USD/EUR 0.8928 0.8735
GOING CONCERN ASSUMPTION
These consolidated financial statements were prepared based on the going concern assumption, which means that assets are realized and liabilities are settled in the course of normal business operations. Recoverability of the Group assets as well as its future operations may be materially affected by the current and future economic situation in the Russian Federation, as well as in other counties where the Group entities operate. These consolidated financial statements do not include any adjustments which would be required had the Group been unable to continue as a going concern.
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4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATIONThe consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2019. Subsidiaries are those companies over which the Group, directly or indirectly, exercises control. This is established in accordance with details given in Note 6.
Subsidiaries are consolidated from the date when the control over such company’s operations is actually transferred to the Group and are de-consolidated from the date when such control ceases. The purchase method of accounting is used for acquisition of subsidiaries. The cost of acquisition is measured at the fair value of net assets, shares issued or liabilities incurred as of the date of acquisition, with allowance for the costs directly attributable to acquisition of the entity. The excess of the acquisition cost over the fair value of the subsidiary’s net assets is recognized as goodwill. All intra-group transactions, relevant account balances and unrealized gains on intra-group transactions are eliminated. Non-realized expenses are also eliminated unless the cost can be recovered. The accounting policies of the subsidiaries, if appropriate, were changed to make them consistent with the Group’s accounting policies.
Non-controlling interest is that part of the net results and of the net assets of a subsidiary which is attributable to the interest which is not owned, directly or indirectly, by the Group. Non-controlling interest is presented in the consolidated statement of financial position separately from liabilities and equity.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each cash-generating unit (or group of cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than their carrying amount an impairment loss is recognized.
Acquisitions of non-controlling interests are accounted for using the entity concept method, whereby, the difference between the consideration and the carrying amount of the acquired non-controlling interest is regarded as an equity transaction and so has no impact on goodwill or the income statement.
FINANCIAL INSTRUMENTS
RECOGNITION AND DERECOGNITIONFinancial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or loss, directly attributable transaction costs. All financial liabilities are recognised initially at fair value and in the case of loans and borrowings, plus directly attributable transaction costs.
In view of transactions settlement risk purchases or sales of securities that require delivery of assets within the time frame established by over-the-counter (OTC) convention are recognized on the date of title transfer, except transactions executed in the marketplace (regular way trades). Transactions with financial assets in the marketplace are recognized on the trade date, i.e. the date that the Group commits to purchase or sell the assets.
Derivative financial instruments are recognized at the trade date.
CLASSIFICATION AND INITIAL MEASUREMENT OF FINANCIAL ASSETSExcept for those trade receivables that do not contain a significant financing component and are measured at the transaction price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
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Financial assets, other than those designated and effective as hedging instruments, are classified into the following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets categorised as FVOCI. The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income or other financial items, except for impairment of trade receivables which is presented within other expenses.
SUBSEQUENT MEASUREMENT OF FINANCIAL ASSETS
FINANCIAL ASSETS AT AMORTISED COSTFinancial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (FVTPL)Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL.
All derivative financial instruments fall into this category, except for those designated and effective as hedging instruments, for which the hedge accounting requirements apply (see below).
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME (FVOCI)The Group accounts for financial assets at FVOCI if the assets meet the following conditions:
• they are held under a business model whose objective it is “hold to collect” the associated cash flows and sell and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
Any gains or losses recognised in other comprehensive income (OCI) will be recycled upon derecognition of the asset.
IMPAIRMENT OF FINANCIAL ASSETSIFRS 9’s impairment requirements use forward-looking information to recognise expected credit losses – the ‘expected credit loss (ECL) model’.
Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade receivables, contract assets recognised and measured under IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
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Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event. Instead the Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:• financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date. ‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second category.
DERIVATIVE FINANCIAL INSTRUMENTS This category includes OTC derivative financial instruments entered into by the Group that are not designated as hedging instruments in hedge relationships as defined by IFRS 9.
Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivatives are included in net amount in “Trading and investment income (expenses)”.
For derivative financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques.
OTC currency swaps are initially recognized and subsequently carried at fair value. The fair value at the reporting date in compare with initial zero value at the recognition date can be calculated as the difference between an asset “swap receivable” equal to the present value of the principle and interest payments the counterparty will make in entity’s local currency and a liability “swap payable” equal to the present value of the principle and interest payments the entity of the Group will make in foreign currency to the counterparty. The currency swaps are shown in the consolidated statement of financial position as the difference between future discounted in- and outflows.
Cash and cash equivalents are cash and (or) financial assets which may be converted to cash within one day. Cash includes cash on hand and cash in current and settlement bank accounts, cash in market trading systems and held by banks providing brokerage services.
Loans and receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the effective interest rate method (EIR), less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fee or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the income statement.
Borrowings are initially recognized at fair value which is the amount of assets received (fair value of assets received) plus transaction costs. Borrowings are subsequently stated at amortised cost; any difference between proceeds and redemption value is recognized in the consolidated income statement as finance expenses over the period of borrowings using the EIR.
Transactions under repurchase and reverse repurchase agreements. Securities sold under agreements to repurchase at a specified future date (REPO) are not derecognized from the statement of financial position. If a contractor has the right to sell or pledge acquired securities, the Group reclassifies these securities into category of “Financial assets held-for-trading transferred under REPO agreements”. The corresponding cash received, including accrued interest, is recognized on the statement of financial position as a “REPO loans”, reflecting its economic substance as a loan. The difference between the sale and repurchase prices is treated as interest expense and is accrued over the life of the agreement using the effective interest rate method.
Conversely, securities purchased under agreements to resell at a specified future date (reverse REPO) are not recognized on the statement of financial position. The corresponding cash paid is recognized on the statement of financial position as a “REPO receivables”. The difference between the purchase and resale prices is treated as interest income and is accrued over the life of the agreement using the effective interest rate method.
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Accounts receivable are recognized at the estimated recoverable value calculated as the current value of expected cash flows, including amounts received under guarantees, discounted, if necessary, using the applicable initial interest rate. The difference between the carrying value and the estimated recoverable value is recognized in the consolidated income statement as interest income for the entire term of the corresponding accounts receivable.
Fair value of financial instruments is an amount for which a financial instrument may be exchanged in a current transaction between two interested parties, excluding forced sale or liquidation. Fair value is best evidenced by the price of a financial instrument quoted in the market.
Estimated fair value of a financial instrument was calculated by the Group on the basis of available market information (if any) and appropriate valuation methods. However, a professional judgment is used to interpret market information for the purpose of fair value determination. Market information may fail to represent the value of financial instruments which could be identified in an active market, in which transactions are carried out between interested sellers and buyers. Although the Management uses available market information to determine the fair value of financial instruments, this information may fail to reflect the value which could be realized under current conditions.
The following methods and assumptions were used to estimate the fair values:• Cash and short-term deposits, trade receivables, trade payables and other current liabilities approximate their carrying amounts largely due to short-term maturities of these instruments;
• Fair value of quoted bonds is based on price quotations at the reporting date. The fair value of unquoted debt instruments, loans from bank and other financial liabilities as well as OTC currency swaps is estimated by discounting future cash flows using rates currently available for debt on similar terms, credit risk and remaining maturities.
The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities,
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly,
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
Offsetting. Financial assets and liabilities are set off and the net value is stated in the consolidated statement of financial position only if there is a legally enforceable right to set off the recognized amounts, and the entity intends either to set off or to realize an asset and discharge a liability simultaneously.
Fixed assets and intangible assets are stated at cost less accumulated depreciation/ amortization. These assets are recognized in Other non-current assets.
At each reporting date the Group assesses whether there is any indication of impairment of such type of assets. If any such indication exists, the Management estimates the recoverable amount, which is de-termined as the higher of an asset’s fair value less costs to sell and its value in use. If the book value of an asset exceeds its estimated recoverable amount, the book value is reduced to the recoverable amount and the difference is recognized in consolidated income statement. Impairment loss recognized for an asset in prior years is reversed if there has been a change in the estimates used for the calculation of the assets’ recoverable value.
Gains and losses on disposal of assets are determined on the basis of the assets’ carrying value and are considered in calculation of profit/loss. Expenses related to repairs and maintenance are recognized in the consolidated income statement when incurred.
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Depreciation is calculated using the straight-line method over the assets’ useful life at the depreciation rates from 10% to 33%.
Income tax. Income tax expenses are recognized in the consolidated financial statements in accordance with the requirements of the effective legislation of the countries where the Group’s companies operate. Income tax expenses recognized in the consolidated income statement include current taxation and changes in deferred taxation. Current taxes are calculated on the basis of expected taxable profit for the year using income tax rates effective as of the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated income statement.
Deferred income tax is calculated using the liability method in respect of all temporary differences between the tax base of assets and liabilities for the purpose of income tax calculation, and their book value stated in the consolidated financial statements. Deferred tax assets are recognized to the extent that it is probable that taxable profit will be received against which temporary differences may be used. Deferred tax liabilities are not recognized where it arises from the initial recognition of goodwill. Assets and liabilities for deferred taxes are determined using the tax rates, which are expected to be applicable in the period when assets are sold or liabilities settled, based on the tax rates actually in effect at the reporting date. Deferred tax items are recognized in correlation to the underlying transaction either in other comprehensive income or directly in equity. Deferred tax assets and liabilities are set off only within each individual company of the Group.
Other taxes. Taxes other than income and sales tax are recognized in Administrative expenses.
Revenues, expenses and assets are recognized net of the amount of value added tax (VAT) except:
• where VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case VAT is recognized as part of the cost of acquisition of the asset or as part of the expense item as applicable;
• receivables and payables that are stated with the amount of VAT included.
Recognition of income and expenses. For all financial instruments measured at amortised cost and interest, interest income or expense is recorded using the effective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or liability. Interest income to be received on loans granted, banks deposits and interest expenses to be paid to the third parties on borrowings are recognized as financial income or expenses in the consolidated income statement on an accrual basis.
Commission and other fee income is recognized when the corresponding transactions are completed and the income may be determined with a reasonable degree of assurance. Payments for deposit services are recognized according to the scope of services rendered within the term of such services, on a pro rata basis.
Non-interest expenses are recognized in the consolidated income statement at the time of the provision of services, with the exception of expenses incurred in acquisition of investments which are included in the cost of investments.
INFLATION ACCOUNTING In the opinion of Management, effective from 1 January 2003, the Russian Federation no longer meets the criteria of IAS 29 “Financial Reporting in Hyperinflationary Economies”, and therefore, the Group ceased applying IAS 29 to current periods and only recognised the cumulative impact of inflation indexing on non-monetary elements of the financial statements to 31 December 2002. Consequently, monetary items and results of operations as of and for the years ended 31 December 2003 and all subsequent years are reported at actual, nominal amounts.
Non-monetary assets and liabilities acquired prior to 31 December 2002, and share capital transactions occurring before 31 December 2002 were restated by applying the relevant inflation factors to the historical cost (“restated cost”) through 31 December 2002. Gains or losses on subsequent disposals are recognised based on the restated cost of the non-monetary assets and liabilities.
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LEASESThe Group as lessee
The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets (such as tablets and personal computers, small items of office furniture and telephones). For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise:
• Fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
• Variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
• The amount expected to be payable by the lessee under residual value guarantees;
• The exercise price of purchase options, if the lessee is reasonably certain to exercise the options; and
• Payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate the lease. The lease liability is presented as a separate line in the statement of financial position.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related rightof-use asset) whenever:
• The lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using a revised discount rate.
• The lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using an unchanged discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
• A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.
The Group did not make any such adjustments during the periods presented.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment losses.
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5. NEW ACCOUNTING PRONOUNCEMENTS
ADOPTION OF NEW OR REVISED STANDARDS AND INTERPRETATIONSDuring the current year the Group adopted all the new and revised International Financial Reporting Standards (IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2019. This adoption did not have a material effect on the accounting policies of the Group, with the exception of IFRS 16 Leases.
The effect on the accounting policies of the Group from the adoption of IFRS 16 is described below:
IFRS 16 LEASES
General impact of application of IFRS 16 LeasesIFRS 16 provides a comprehensive model for the identification of lease arrangements and their treatment in the financial statements for both lessors and lessees. IFRS 16 supersedes the previous lease guidance including IAS17 Leases and the related Interpretations for accounting periods beginning on or after 1 January 2019. The date of initial application of IFRS 16 for the Group was 1 January 2019. Impact of the new definition of a lease.
The change in definition of a lease mainly relates to the concept of control. IFRS 16 distinguishes between leases and service contracts on the basis of whether the use of an identified asset is controlled by the customer. Control is considered to exist if the customer has:
• The right to obtain substantially all of the economic benefits from the use of an identified asset; and
• The right to direct the use of that asset
Impact on Lessee Accounting - Operating leases:IFRS 16 changes how the Group accounts for leases previously classified as operating leases under IAS 17, which were off balance sheet. On initial application of IFRS 16, for all leases (except as per paragraph IFRS16.3), the Group:
a) Recognises right of use assets and lease liabilities in the statement of financial position, initially measured at the present value of the future lease payments:
b) Recognises depreciation of right of use assets and interest on lease liabilities in the statement of profit or loss:
c) Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest (presented within operating activities) in the cash flow statement.
Under IFRS 16, right of use assets is tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces the previous requirement to recognize a provision for onerous lease contracts.
The Group apply the standard using one of the following methods on a modified retrospective approach with optional practical simplifications.
As at 31 December 2019, the Group reported the right-of-use asset and a lease liability in amount of 472 and 328 thousand USD respectively (note 7 and 21).
NEW STANDARDS, INTERPRETATIONS, AND AMENDMENTS ISSUED BUT NOT YET EFFECTIVEIFRS 17 “Insurance Contracts” (effective for annual periods beginning on or after 1 January 2021).The new standard establishes the principles for recognition, measurement, presentation, and disclosure of insurance contracts and supersedes IFRS 4 “Insurance Contracts”. This standard stipulates use of a common model modified pursuant to insurance contracts with direct participation features described as contracts with a variable insurance benefit. The common model is presented in a simplified form subject to certain criteria by evaluating liabilities for remaining insurance coverage using the insurance premium allocation approach. The common model will use current assumptions to evaluate an amount, timing, and uncertainty of future cash flows and will separately measure the value of such uncertainty; the model takes into account market interest rates and influence of options and guarantees of policyholders. Profit from sale of insurance certificates is deferred
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to future periods in a separate liability component on the 1st day and aggregated in groups of insurance contracts; then it is reflected consistently in a profit and loss statement during the period, in which insurers provide insurance coverage after adjustments due to the changes in assumptions on future insurance coverage. The standard applies retrospectively, except as it is impracticable, in which cases the modified retrospective approach or the fair value approach applies.
Amendments IFRS Interpretations Committee• Amendments to IFRS 9. IAS 39 and IFRS17: Interest Rate Benchmark Reform (effective for annual periods beginning 1 January 2020)
• Amendments to IAS 1 and IAS 8: Definition of Material (effective for annual periods beginning 1 January 2020).
• Amendments to References to the Conceptual Framework in IFRS Standards (effective for annual periods beginning 1 January 2020).
• Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current of liabilities as Current or Non-current (issued on 23 January 2020).
• Amendment to IFRS 3 Business Combinations (issued on 22 October 2018) (effective for annual periods beginning on or after 1 January 2020)
The Group expects that adoption of these amendments will not have a material effect on the financial statements of the Group.
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6. ACCOUNTING ESTIMATES AND ASSUMPTIONSIn preparation of IFRS consolidated financial statements, Management is required to make certain subjective accounting judgments, estimates and assumptions about future events that affect the assessed value of assets and liabilities as of the date of consolidated financial statements, as well as assessed value of income and expenses in the reporting period. The actual results may differ from these assumptions. The most significant areas of judgment are as follows:
CONSOLIDATION The key principle under the IFRS 10 is that consolidation is required by a company if it:
• possesses power over an investee
• has exposure to variable returns from its involvement with the investee and
• has the ability to use its power over the investee to effect its return.
The IFRS also contains detailed guidance and examples. In the case of the subsidiaries except the three funds this is not a complex judgment, however in the case of the funds Management judgment is required and a decision was taken to consolidate. Management consider the group exercises power via owning 100% of the voting or management shares and having the ability to appoint or remove directors and also controlling investment decisions. Management considers they have exposure to variable returns through the investment management fees which depend on the performance of the funds. They also consider that they have power to affect the return through a significant investment in the investment shares as well as control of management shares and the absence of other large investors. The situation could change in the future as and when other investors invest in the fund and a review of the decision to consolidate or not is regularly made by Management.
IMPAIRMENT OF GOODWILLDetermining whether goodwill is impaired requires an estimation of the value in use of the cash – generating unit to which goodwill has been allocated. The value in use calculation requires Management to estimate future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value.
FAIR VALUECertain of the Group’s financial instruments are carried at fair value with changes in fair value recognised in the income statement. In reaching estimates of fair value significant judgment sometimes needs to be exercised. The level of Management judgment required in establishing fair value of financial instruments for which there is a quoted price in an active market is minimal. Similarly there is little subjectivity or judgment required for instruments valued using valuation models that are standard across the industry and where all parameter inputs are quoted in active markets. Where different valuation techniques indicate a range of possible fair values for an instrument Management has to establish which point in the range of possible values best represent fair value.
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7. OTHER NON-CURRENT ASSETSOther non-current assets are represented by fixed assets, intangible assets, prepared expense and other assets.
The cost of fixed and intangible assets is not material in the consolidated statement of financial position in total, and thus is reported within other non-current assets without any detailed disclosure.
31 Dec 2019 31 Dec 2018
Fixed assets 706 614
Depreciation of fixed assets (556) (464)
Right-of-use assets 472 -Depreciation of right-of-use assets (156) -Net value of fixed assets 466 150
Art objects 5 234 4 253
Other 1 1
5 701 4 404
Art objects consist of paintings and sculptures (including art objects of Felix Labisse, Kurt Seligmann, Dominguez, Salvador Dali and others) bought on Sotheby’s auction in different years from 2012 to 2019.
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8. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
FINANCIAL ASSETS HELD-FOR-TRADING
31 Dec 2019 31 Dec 2018
Government bonds 14 139 33 705
Government bonds of Russian Federation 114 123 60 401
Corporate bonds 191 820 75 802
Depositary Receipt - 75 040
Total 320 082 244 948
As at 31 December 2019 Financial assets at fair value through profit or loss comprise Government and-Corporate bonds, included debt securities of the following issuers:
Quote list MOEX Coupon, %
Fair valueas at 31Dec 2019
RUSSIA Level 1 4,875% - 6,4% 114 123
Gazprom Level 1 7,288% - 8,1% 39 600
RURAIL Level 1 7,3% - 8,5% 32 642
VEBBNK Level 3 5,942% - 7,67% 31 603
SBERRU Level 3 5% 20 332
VTB Level 3 1% - 9,5% 14 399
Republic of Turkey Level 1 4,875% - 6,25% 14 138
GPBRU Level 1 8% 11 630
CRBKMO Level 1 5,55% - 5,875% 7 802
GMKNRM Level 1 4.1% - 7,2% 6 548
SIBNEF Level 1 6% 5 618
BONOS Level 3 6% 5 616
MOBTEL Level 1 5% 5 373
MTS Level 3 6,85% - 8,6% 3 968
LOGLAB EUROPE LIMITED - - 3 347
Otkritie Bank Level 1 0,01% - 6,4% 999
Rosneft Level 3 7% 676
TRUBRU Level 3 7% 515
Toyota Bank Level 3 7% 375
Moscow Credit Bank Level 3 10% 258
Russian Agricultural Bank Level 3 7% 225
Transneft Level 3 8% 178
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PDVSA Level 3 6% 80
Gazprom Neft Level 1 7% 30
DOMRF Level 1 9% 6
RU National Settlement Depository
Level 1 0% 1
Total financial assets at fair value through profit or loss
320 082
MOEX quote list is different from data of the previous period due to the new rules of MOEX. The list of
securities is formed in accordance with the requirements of the Central Bank of Russian Federation by the following rules:
• The first level is formed of the securities on the date preceding the effective date of the listing rules, included in the quotation list A (levels one and two);
• The second level is formed of the securities on the date preceding the effective date of the listing rules, are included in quotation list “B”;
• The third level is formed of securities admitted to trading on the date preceding the effective date of the listing rules).
The Group holds listed Roubles, US Dollars and GBP denominated bonds with fixed-income, which are issued, by Russian subjects and Government, Corporate Companies and Banks. As at 31 December 2019 the maturity date of these bonds was from February 2020 to June 2048 (2018: from February 2019 to December 2049).
Analysis by hierarchy of levels of fair value assessment is given in Note 25.
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As at 31 December 2018 Financial assets at fair value through profit or loss comprise Government and Corporate bonds and Depositary Receipt, included debt securities of the following issuers
Corporate bonds Quote list MOEX Coupon, % Fair value as
at 31 Dec 2018
MNOD LI Equity Level 1 - 75 040
Russia Level 1 4,875% - 12,75% 60 401
GPBRU Level 1 7,88% 11 315
RURAIL Level 1 4,70% 10 036
CRBKMO Level 1 5,55% -5,875% 9 582
SBERRU Level 3 5,13% 8 041
Republic of Turkey Level 1 4,875%-6,250% 7 868
TRUBRU Level 3 7,75% 6 985
Treasury Level 1 1,500% - 2,000% 5 392
GMKNRM Level 1 4,10% 4 819
VEBBNK Level 3 6,90% 3 607
LOGLAB EUROPE LIMITED Level 3 - 3 347
ALROSA Level 1 7,75% 2 889
Steel Capital Level 1 5,90% 2 859
Banco Inbursa Inbur Level 1 4,13% 2 851
VTB Level 3 6,551%-6,950% 2 254
Republic of Brasil Level 1 4,875% -6,000% 2 126
United of Mexica Level 1 4,00% 2 013
Republic of South Africa Level 1 4,67% 2 001
Qatar Level 1 3,25% 1 493
Republic of Korea Level 1 5,63% 1 149
NOTKRM Level 1 6,60% 1 071
Bermuda Government Level 1 4,85% 1 063
Republica Orient Uruguay Level 1 4,50% 1 042
Import and Export Korea Level 1 4,00% 1 041
Republic of Chile Level 1 3,88% 1 029
Republic of Azerbaidzhan Level 1 4,75% 1 014
Republic of Kazahstan Level 1 3,88% 1 014
State of Israel Level 1 3,15% 997
Novatek Level 1 4,42% 987
Canada Government Level 1 2,00% 982
NLMK Level 1 4,50% 979
Banco Brasil Banbra Level 1 3,88% 973
Saudi Arabia Level 1 2,38% 970
Republic of Colombia Level 1 2,63% 953
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DERIVATIVE FINANCIAL ASSETS
The Group uses short-term OTC currency swaps with maturities from 1 day till 1 year either to obtain the optimum return on its surplus funds or to hedge cash flows in respect of committed transactions. The Group does not use “hedge accounting” as defined by IFRS 9.
There were no derivative financial instruments outstanding as at 31 December 2019 and 31 December 2018.
Corporate bonds Quote list MOEX Coupon, % Fair value as
at 31 Dec 2018
RSKHB Level 3 8,00% 773
Hungary Level 1 0,00% 528
Republic of Poland Level 1 5,13% 527
BRASKM Level 1 5,75% 521
Morocco Level 1 4,25% 503
NMOSRM Level 1 4,50% 502
Valebz Level 1 4,38% 495
Rosnano Level 1 5,80% 424
VIP Level 1 7,25% 208
PDVSA Level 3 9,75% 151
AIZHK Level 3 11,00% 93
SWIFT SCRL Level 1 - 29
DOMRFR Level 1 8,80% 11
Total financial assets at fair value throughprofit or loss
244 948
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9. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME
FINANCIAL ASSETS HELD-TILL-MATURITY AND FOR TRADING During 2019 Management of Group has changed his business – model for follow financial asset.
31 Dec 2019 31 Dec 2018
Government bonds 39 414 -
Government bonds of Russian Federation 2 212 -
Corporate bonds 11 984 -
Depositary Receipt - -
Shares 29 -
Total 53 639 -
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As at 31 December 2019 Financial assets at fair value through other comprehensive income comprise
Government and Corporate bonds, included debt securities of the following issuers:
Issued by Quote list MOEX Coupon, % Fair value as at
31 Dec 2019
US Treasury Level 1 1,5% - 2,5% 5 037
Saudi Arabia Level 1 2,375% - 3,25% 4 624
Republic of South Africa Level 1 4,67% 4 269
Republic of Turkey Level 1 4,875% - 6,25% 4 073
Republic of Brasil Level 1 2,625% - 6% 3 248
SBERRU Level 3 5,13% 3 210
United of Mexica Level 1 4,00% 3 196
Republic of Korea Level 1 4% - 5,625% 2 287
RUSSIA Level 1 4,875% - 6,4% 2 212
VTB Level 3 6,551% - 6,95% 2 147
VEBBNK Level 3 5,942% - 7,67% 2 113
Novatek Level 1 4,422% - 4,5% 2 112
Qatar Level 1 3,25% - 5,25% 2 098
Bermuda Government Level 1 4,85% 1 115
Republic Orient Uruguay Level 1 4,50% 1 100
Republic of Azerbaidzhan Level 1 4,75% 1 086
Republic of Kazahstan Level 1 3,88% 1 083
Morocco Level 1 4,25% 1 059
State of Israel Level 1 3,15% 1 042
Banco Inbursa Inbur Level 1 4,13% 1 041
Banco Brasil Banbra Level 1 3,88% 1 030
Republic of Chile Level 1 3,88% 1 028
Republic of Colombia Level 1 2,63% 1 015
Canada Government Level 1 2,00% 1 012
Republic of Poland Level 1 5,13% 527
Hungary Level 1 6,25% 515
ALROSA Level 1 7,75% 331
SWIFT SCRL Level 3 share 29
Total financial assets at fair value other comprehensive income
53 639
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MOEX quote list is different from data of the previous period due to the new rules of MOEX. The list of securities is formed in accordance with the requirements of the Central Bank of Russian Federation by the following rules:
• The first level is formed of the securities on the date preceding the effective date of the listing rules, included in the quotation list A (levels one and two);
• The second level is formed of the securities on the date preceding the effective date of the listing rules, are included in quotation list “B”;
• The third level is formed of securities admitted to trading on the date preceding the effective date of the listing rules).
Analysis by hierarchy of levels of fair value assessment is given in Note 25
10. TRADE AND OTHER RECEIVABLES
31 Dec 2019 31 Dec 2018
Trade receivables 3 807 9 012
Less allowance for impairment losses (18) (163)
Trade receivables, net 3 789 8 849
Advances paid 52 -
Taxes receivable 44 201
Other receivables 215 124
Total 4 100 9 174
The book value of trade receivables adjusted for allowance for impairment losses approximates its fair value.
Aging analysis of accounts receivables is presented in Note 26.
In estimating the probability of settlement of the accounts receivable, the Group takes into account any change in the debtor’s credit quality from the date of debt origination until the reporting date.
Movements in impairment allowance on trade and other receivables are disclosed in Note 20.
As of 31 December 2019, there were concentration of trade receivables balances in amount 1 985 within 3 main counterparties or 48.4% of trade receivables (2018: 7 795 within 2 main counterparties or 77.3% of trade receivables).
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11. CASH AND CASH EQUIVALENTS
31 Dec 2019 31 Dec 2018
USD 114 1 383
EURO 186 190
RUB 1 020 69
GBP 55 71
Total 1 375 1 713
Client funds amounts received by the Group’s entities providing brokerage services are disclosed in Note 29, Commitments and Contingencies.
As of 31 December 2019 the Group holds its settlement accounts with the Banks rated from BB- and higher with the major concentrations in EUROCLEAR BANK S.A., PPF, HELLENIC BANK (2018: Banks rated from BB- and higher EUROCLEAR BANK S.A., PPF, HELLENIC BANK).
12. LOANS ORIGINATEDAs of 31 December 2019 and 31 December 2018 the Group had the following secured loans originated.
Loans with maturity date more than one year, including: 31 Dec 2019 31 Dec 2018
RUB 12,5% – 15% 3 097 3 113
Total - 3 097 3 113
Loans with maturity date less than one year, including: 31 Dec 2019 31 Dec 2018
USD 2% - 2,75% 15 340 119 423
EURO 0,5% - 9,0% 22 671 23 739
RUB 8% - 15% 3 357 2 744
Gross short-term loans originated 41 368 145 906
Less: impairment allowance - (14)
Net short-term loans 41 368 145 892
As at 31 December 2019, long-term loans are represented by one loan issued to individual with maturity date10 September 2024 and one loan issued to Russian company with maturity date 30 April 2021.
As at 31 December 2018, long-term loans are represented by one loan issued to individual with maturity date10 September 2024.
As of 31 December 2019 the Group does not have loans that are overdue but not impaired (2018: none).As of 31 December 2019 the Group does not have loans classified as current that had been subject to re-negotiation and would otherwise had been categorized as overdue (2018: none).
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13. LOANS PAYABLEAs of 31 December 2019 and 31 December 2018 the Group had the following unsecured loans payable.
Loans with maturity date more than one year, including:
Interestrate 31 Dec 2019 31 Dec 2018
USD 7% 133 142 124 442
Total 133 142 124 442
Loans (Unsecured) with maturity date less than one year, including:
RUB 9,00% 3 220 3 024
EURO 7,00% - 500
Total 3 220 3 524
Loans received are mostly presented by promissory notes.
14. ISSUED CAPITAL AND RESERVESAs at 31 December 2019 share capital of the Group consisted of 500,000 (not thousands, 31 December 2018: 500,000) ordinary shares authorized, issued, fully paid and outstanding each with a par value of one EUR.
As at 31 December 2019 the issued share capital at par value was 664 (31 December 2018: 664).
The Group neither declared not paid dividends for the period ended 31 December 2019 and year ended 31 December 2018.
15. ACCOUNTS PAYABLE
31 Dec 2019 31 Dec 2018
Trade payable 120 184
Other payable 648 193
Other tax payable 25 66
Total 793 443
Aging analysis of accounts payable is presented in Note 26..
16. ACCRUED LIABILITIESAccrued liabilities include employees’ bonuses and provisions for vacation.
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17. NET GAIN ON FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
2019 2018
Proceeds from sale of bonds, SWAP and shares
145 080 232 281
Carrying value of sold bonds, SWAP and shares
(132 195) (214 584)
Net revaluation (2 356) (2 973)
Loss on second purchase agreement (7 248) -
Net gain on financial assets and liabilities at fair value through profit or loss
3 281 14 724
Financial result from swap transaction is shown on net basis.
18. REVENUE FROM RENDERING FINANCIAL SERVICES
2019 2018
Brokerage commission 11 093 8 215
Asset management fees and commissions 3 016 2 754
Portfolio management 2 590 2 642
Underwriting fee - 39
Total 16 699 13 650
19. COST OF RENDERING FINANCIAL SERVICES
2019 2018
Depositary services (648) (40)
Information services (233) (431)
Brokerage commission (54) (2)
Total (935) (473)
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20. MOVEMENT IN IMPAIRMENT ALLOWANCE
OtherInvestments
Trade and otherreceivables
Short-termloans originated Total
At 31 December 2017 (2 505) (124) - (2 637)
Recovery/(Charge) - (27) - (27)
At 31 December 2018 (2 505) (163) - (2 664)
Recovery/(Charge) - (18) - (18)
At 31 December 2019 (2 505) (181) - (2 686)
21. ADMINISTRATIVE EXPENSES
2019 2018
Payroll (4 224) (3 931)
Lease (229) (225)
Other taxes (125) (129)
Audit and consulting (353) (383)
Social taxes (43) (43)
Software (91) (97)
Travel expenses (52) (57)
Other expenses (2 112) (2 216)
Total (7 067) (7 081)
Remuneration of top managers is recognized as administrative expenses, as a part of payroll (see Note 27, Related party transactions). The remuneration amount includes both salary and bonus payments. Remuneration of the Management is determined on the basis of employment agreements.
22. OPERATING LEASES
The Group lease liabilities are presented in the statement of financial position as follows:
2019 2018
Current 129 -
Non-current 199 -
Total 328 -
The Group has leases for the office facilities. With the exception of short-term leases and leases of lowvalue underlying assets, and inter group operation each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable lease payments which do not depend on an index or a rate (such as lease payments based on a percentage of Group sales) are excluded from the initial meas-urement of the lease liability and asset. The Group classifies its right-of-use assets in a consistent manner to its property, plant and equipment (see Note 7).
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23. INCOME TAXThe major components of the income tax expense in the consolidated income statement are as follows:
2019 2018
Current tax (1 326) (936)
Deferred tax movement 50 24
Total (1 276) (912)
The differences between IFRS and the tax legislation of the countries, where the Group’s companies operate, result in temporary differences between the carrying value of assets and liabilities for the purpose of consolidated financial statements and the tax base. Stated below is the tax effect from movements in those temporary differences calculated at the tax rate of 12.5% (the Republic of Cyprus) and 20% (the Russian Federation).
The most significant deferred tax assets and liabilities recognized by the Group, as well as the respective changes during the reporting period are set out below.
31 Dec 2019 Movements forthe period 31 Dec 2018
Accrued liabilities 211 28 183
Trade and other receivables 205 174 31
Financial assets - - -
Total 416 202 214
31 Dec 2019 Movements for the period 31 Dec 2018
Deferred tax liabilities 123 120 3
Total 123 120 3
The most significant deferred tax assets and liabilities recognized by the Group, as well as the respective changes during the period ended 31 December 2018 are set out below.
31 Dec 2018 Movements for the period 31 Dec 2017
Accrued liabilities 183 78 105
Trade and other receivables 31 (16) 47
Financial assets - (47) 47
Total 199 192 199
Under the existing Group structure, tax losses and current tax assets of individual Group companies cannot be set off against current tax liabilities and taxable profit of other Group companies, and thus a tax may be charged even in case of a consolidated tax loss. Therefore, deferred tax assets and liabilities can be offset only if those pertain to the same taxpayer.
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The reconciliation between the computed income tax and the actual income tax expenses is set out below:
2019 2018
Profit before tax at the tax rate: 10 415 9 760
20% (108) 672
15% 239 94
12,5% 10 852 4 945
not taxable (3 609) 4 050
Computed tax at the rate:
20% 22 (134)
15% (36) (14)
12,5% (1 357) (618)
Tax effect of expenses not deductible for tax purposes
95 (145)
Income tax for the period (1 276) (912)
Not taxable profit is mostly represented by profit received from operations with securities performed by
Cyprus subsidiary. These operations are not taxable under Cyprus legislation.
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24. ANALYSIS BY SEGMENTFor management purposes, the Group is organized into the following reportable operating segments based on their services and activities::
• brokerage services;
• asset management services;
• investment banking services (M&A advisory, restructuring support, attracting strategic investors and their involvement, securities issue etc.);
• trading and principal investments.
No operating segments have been aggregated to form the above reportable operating segments.
The information on reportable operating segments is preparing for the Group’s management purposes in accordance with IFRS. Management monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.
Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties. The following tables present the information regarding the Group’s operating segments for the year ended 31 December 2019.
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Net gain on financial assetsand liabilities at fair valuethrough profit or loss
- - - 3 281 - 3 281
Rendering financial services 11 093 5 606 - - - 16 699
Interest revenue - - 3 427 - - 3 427
Net foreign exchange gains - - - - - -
Acquisition of subsidiary - - - - - -
Other Income - - - - 505 505
11 093 5 606 3 427 3 281 505 23 912
Interest expense - - (3 154) - - (3 154)
Rendering financial services expenses (702) - - - (233) (935)
Allowance for doubtful accounts - - - - (18) (18)
Net foreign exchange loss - - - - (221) (221)
Administrative expenses (4 989) (417) (468) (229) (964) (7 067)
Other expenses - - - (826) - (8 074)
(5 691) (417) (3 622) (1 055) (1 436) (12 221)
Profit/(loss) before tax 5 402 5 189 (195) 2 226 (931) 11 691
Profit tax (1 276) (1 276)
Profit / (loss) after tax 5 402 5 189 (195) 2 226 (2 207) 10 415
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Segment assets asof 31 Dec 2019
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Non-current assets
Other non-current assets - - - - 5 701 5 701
Long-term loans originated - - - - 3 097 3 097
Deferred tax assets - - - - 416 416
Current assets - - - - - -
Financial assets at fair value through profit or loss - - - 320 082 - 320 082
Financial assets at fair valuethrough other comprehensiveincome
- - - 53 639 - 53 639
Trade and other receivables 2 565 464 1 071 4 100
Profit tax receivable - - - - 47 47
Short-term loans originated - - 41 368 - - 41 368
Cash and cash equivalents - - - 1 320 55 1 375
Total assets 2 565 464 41 368 375 041 10 387 429 825
Segment liabilities as of 31 Deс 2019
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Non-current liabilities
Long-term loans - - - 133 142 - 133 142
Deferred tax liabilities - - - - 123 123
Current liabilities
Trade and other payables 322 - 7 454 10 357
Income tax payable - - - - 224 49
Short-term loans - - - 3 220 - 3 220
Lease liabilities - - - - 328 328
Accrued liabilities - - - - 436 436
Total liabilities 322 - 7 136 816 1 121 138 266
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The following tables present the information regarding the Group’s operating segments for the year ended 31 December 2018.
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Net gain on financialassets and liabilities atfair value through profitor loss
- - - 14 724 - 14 724
Rendering financial services 8 215 5 396 - - 39 13 650
Interest revenue - - 1 669 - - 1 669
Net foreign exchangegains
Acquisition of subsidiary
Other Income - - - - - -
8 215 5 396 1 669 14 724 39 30 043
Interest expense - - (10 308) - - (10 308)
Rendering financialservices expenses (2) - (40) - (431) (473)
Allowance for doubtfulaccounts - - - - (27) (27)
Net foreign exchange loss - - - - (1 482) (1 482)
Administrative expenses (4 060) (1 737) (468) (321) (495) (7 081)
(4 062) (1 737) (10 816) (321) (2 435) (19 371)
Profit / (loss) before tax 4 153 3 659 (9 147) 14 403 (2 396) 10 672
Profit tax - - - - (912) (912)
Profit / (loss) after tax 4 153 3 659 (9 147) 14 403 (3 308) 9 760
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Segment assets asof 31 December 2018
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Non-current assets
Other non-current assets - - - - 4 404 4 404
Long-term loans originated - - - - 3 113 3 113
Deferred tax assets - - - - 214 214
Current assets - -
Financial assets at fair valuethrough profit or loss - - - 244 948 - 244 948
Trade and other receivables 2 328 1 588 1 249 53 3 956 9 174
Profit tax receivable - - - - 28 28
Short-term loans originated - - 145 892 - - 145 892
Cash and cash equivalents - - - 1 644 69 1 713
Total assets at 31 Dec 2018 2 328 1 588 147 141 246 645 11 784 409 486
Segment liabilities as of 31 Dec 2018
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Non-current liabilities
Long-term loans - - - 125 442 - 125 442
Deferred tax liabilities - - - - 3 3
Current liabilities - -
Trade and other payables - 279 128 30 6 443
Income tax payable - - - - - -
Short-term loans - - - 3 524 - 3 524
Accrued liabilities - - - - 173 173
Total liabilities - 279 128 128 996 182 129 585
The information in column “Unallocated” have not been disclosed by segment as these items are managed on a group basis, and are not provided to the chief operating decision maker at the operating segment level.
No revenue from transactions with a single external customer or counterparty amounted to 10% or more of the Group’s total revenue in the period ended 31 December 2019 and 31 December 2018.
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25. FAIR VALUESThe carrying amounts and fair value of the Group’s financial instruments that are carried in the consolidated financial statements are not materially different.
The methods and assumptions which were used to estimate the fair values are disclosed in Note 4, Summary of significant accounting policies.
The following table shows the analysis of financial instruments recorded at fair value by level of the fair value hierarchy as of 31 December 2019 and 31 December 2018 correspondingly.
As of 31 Dec 2019 Level 1 Level 2 Level 3 Total 2019
Financial assets
Financial assets at fair value through profit or loss
238 509 81 573 320 082
Financial assets at fair value through other comprehensive income
46 140 - 7 499 53 639
284 649 0 89 072 373 721
As of 31 Dec 2018 Level 1 Level 2 Level 3 Total 2018
Financial assets
Financial assets at fair value through profit or loss
219 697 - 25 251 244 948
219 697 - 25 251 244 948
During the reporting period ending 31 December 2019, there were no transfers between Level 1 and Level
2 fair value measurements, and no transfers out of Level 3 fair value measurements.
26. FINANCIAL RISK MANAGEMENT
(A) RISK MANAGEMENT FUNCTIONThe risk management function within the Group is carried out in respect of major types of risks: credit, market, liquidity and operational risks.
Overall management of those risks is performed at the holding’s level by ensuring a proper coordination between the risk management units of the Group’s operating companies.
Risk management committee of RONIN Europe Ltd. comprising Executive director, General manager and Risk manager is ultimately responsible for risk monitoring and implementation of risk mitigat ion measures while the daily functions of risk management are performed by the risk manager. In its risk managements policies RONIN Europe Ltd. follows the guidelines formulated in directives of CYSEC, including Capital requirements and Large Exposure directives.
RONIN LLC and RONIN Trust OSJC are firms regulated by the Central Bank of Russian Federation (previous - Federal Financial Markets Service, Russia (FFMS)) and follow CBR’s regulation in their risk management policies.
RONIN’s LLC risk management functions are performed by an internal controller whose main task is to avoid and mitigate conflict of interest situations and make sure that the company is in compliance with the corresponding regulation.
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RONIN Trust CJSC has a risk management manager whose tasks include:
• formulating risk management measures for portfolios under management tailor made to requirements of each portfolio outlined in the corresponding investment declaration;
• managing risks of investing on its own account.
The Group’s risk management policies are designed to identify and analyse these risks, to set appropriate risk limits and controls, and monitor the risks and limits. The main risk management procedures in respect of particular types of risk currently used by the Group and risk evaluations are described below. Presently the Group’s risk assessment and management policies are not formalized in a document form as each company of the Group has internal guidelines compliant with the corresponding regulations.
Management have an opportunistic approach to risk and accept different levels depending on the situation. For example in certain market conditions the Group hedge all or most foreign exchange risk, but in situations when the Group consider they may obtain a favorable result by accepting risk they may have a larger open foreign currency position. Similarly, regarding investments, the Group may elect to hold a larger portion of assets in cash if conditions are poor, but significantly increase investment holdings if conditions are expected to be favorable in the securities markets.
(B) OPERATIONAL RISKSManagement defines operational risks to include capital, reputation, legal risks and the risk of a client funds sufficiency.
The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of its business. The Group is subject to minimum capital requirements established by CySEC and CBR which apply to parts of the Group in Cyprus and Russia correspondingly.
Under the current capital requirements set by CySEC CIFs have to maintain a ratio of capital to risk weighted assets (Capital Adequacy Ratio) above 8%. The ratio of RONIN Europe Ltd as of 31 December 2019 stood at 110.25 % (as at 31 December 2018: 108.12%).
CBR requires investment and asset management firms to maintain capital not less than 3m Roubles and 35m Roubles respectively.
The capital adequacy is closely monitored by Group’s management and shareholders. If the above capital requirements are raised by the authorities as may be expected the Group possesses sufficient capital to increase the share capital of entities to ensure their compliance.
Reputation risk is the risk from a possible association of the Group with the activities of its customer. In order to mitigate the reputation risk the Group has Know Your Customer (KYC) procedures in place, also the Group has a very selective approach to choosing its customers. The Management of the Group estimates the reputation risk as low.
Legal risk is the risk of financial losses, including fines and other penalties, which arise from non-compliance with laws and regulations as a result of weakness in the legal framework or from insufficient analysis of legal issues during transaction documentation preparation. Some companies of the Group are present in jurisdictions where the regulation of financial firms is rapidly developing. The risk is limited to a significant extent due to the presence of an internal lawyer and compliance officers in the Group.
Funds sufficiency risk. The Group does not finance trading operations of its clients, so when accepting a client order a check of the client funds sufficiency is performed. In the case of exchange based orders whereas orders are being received and processed automatically the funds sufficiency is being checked by the software (the Transaq programme). In case of OTC orders the control is being carried out by a sales officer and a trader independently. The Group has not received any losses due to this risk in the reporting period.
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(C) CREDIT RISKCredit risk is the risk of losses as a result of non-performance, late or partial performance by a debtor of its contractual financial obligations to the Group.
Trading activities of the Group on behalf of its clients and its own involve settlement risk which arises when a counterparty becomes unable to meet its obligations under an OTC trade.
The Group settles most of its OTC transactions on delivery versus payment terms through Russian and international settlement/clearing agents to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations. Acceptance of settlement risk on free delivery transactions requires a specific and/or counterparty specific approval by the Group’s top Management.
The Group’s back office regularly monitors the settlement reports so that it always has actual information on the status of settlement including the lists of unsettled transactions. If a counterparty fails to meet its obligation beyond some reasonable time the back-office asks the manager in charge of the transaction to take an action to mitigate this risk.
The Group is exposed to the credit risks of bond issuers as disclosed in Note 10, Financial assets at fair value through profit and loss. The Group mitigates this risk through diversification of its portfolio.
The credit and liquidity quality of financial assets at fair value through profit of loss could be assessed by reference to MOEX’s SE quotation list (if listed) disclosed in Note 8; and Financial assets at fair value through other comprehensive income in Note 9.
The Group holds funds in accounts with Russian, Cyprus and international banks. Only banks of high-credit quality qualify to hold the Group’s funds. Each new bank for account opening is to be approved by the Group’s shareholders and should satisfy the following conditions:
• bank should possess sufficient financial strength;
• the Group’s Management should have understanding of the bank’s financial situation and its deci-sion making process.
The Group also limits its exposure to bank risk by limiting share of funds kept in any particular bank. The information about Long-term Issuer Default rating (IDR) assigned by Fitch Ratings to the Group’s banks are disclosed in Note 11, Cash and cash equivalents.
The total credit risk of the Group arising from loans, receivables and bonds as of the reporting date does not exceed their carrying value, 423 661 (2018: 404 840).
Concentration risk occurs in case of excessive increase of the securities stake of a single issuer (or related issuers) in the portfolio, or where there is an increase in liabilities of a single counterparty (or several related counterparties), which enhances the likelihood of material losses when the above issuers or counterparties are exposed to unfavorable factors.
The Group’s concentrations of credit risk are managed by client/counterparty/issuer and by geographical region. Concentration of accounts receivable is outlined with a breakdown by counterparty in Note 10, Trade and other receivables. Concentration of loans originated is outlined in Note 12, Loans originated.
The following tables shows the maximum exposure to credit risk for the components of the consolidated statement of financial position, by geography before the effect of mitigation through the use of master netting as of 31 December 2019 and 31 December 2018 correspondingly.
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As of 31 Dec 2019 Russian Federation Cyprus
Other (incl. Switzerland and USA)
Total 31 Dec 2018
Financial assets
Financial assets at fair value through profit or loss
176 157 - 143 925 320 082
Financial assets at fair value through other comprehensive income
53 639 - - 53 639
Trade and other receivables 3 705 188 207 4 100
Long-term loans originated 3 097 - - 3 097
Short-term loans originated - 41 368 - 41 368
Cash and cash equivalents 867 508 - 1 375
237 465 42 064 144 132 423 661
As of 31 Dec 2018 Russian Federation Cyprus
Other (incl. Switzerland and USA)
Total 31 Dec 2018
Financial assets
Financial assets held-for-trading 75 290 - 169 658 244 948
Trade and other receivables 9 059 115 - 9 174
Long-term loans originated 3 113 - - 3 113
Short-term loans originated 122 165 23 727 - 145 892
Cash and cash equivalents 611 1 102 - 1 713
210 238 24 944 169 658 404 840
(D) MARKET RISKMarket risk is the risk that movements in market prices, including foreign exchange rates, interest rates and equity prices will have an adverse effect on the Group’s income or the value of its financial investments. Market risk arises from open positions in interest rate fixed income, currency and equity financial instruments, which are subject to general and specific market movements and changes in the level of volatility of market prices.
The Group is exposed to the market risk mainly through its debt securities.
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The market risk sensitivity of the Group’s financial instruments as of 31 December 2019 and 31 December 2018 was as follows:
31 Dec 2018
Impact on
Changes in market quotations
Profit/(loss) before tax Equity
+10% 24 495 24 495
-10% (24 495) (24 495)
+20% 48 990 48 990
-20% (48 990) (48 990)
31 Dec 2019
Impact on
Changes in market quotations
Profit/(loss) before tax Equity
+10% 37 372 37 372
-10% (37 372) (37 372)
+20% 74 744 74 744
-20% (74 744) (74 744)
The Group holds funds in accounts with Russian, Cyprus and international banks. Only banks of high credit quality qualify to hold the Group’s funds. Each new bank for account opening is to be approved by the Group’s shareholders and should satisfy the following conditions:
• bank should possess sufficient financial strength;
• the Group’s Management should have understanding of the bank’s financial situation and its decision making process.
The Group also limits its exposure to bank risk by limiting share of funds kept in any particular bank. The information about Long-term Issuer Default rating (IDR) assigned by Fitch Ratings to the Group’s banks are disclosed in Note 11, Cash and cash equivalents.
The total credit risk of the Group arising from loans, receivables and bonds as of the reporting date does not exceed their carrying value, 423 661 (2018: 404 840).
Currency risk occurs in case of excessive increase of the securities stake of a single issuer (or related issuers) in the portfolio, or where there is an increase in liabilities of a single counterparty (or several related counterparties), which enhances the likelihood of material losses when the above issuers or counterparties are exposed to unfavorable factors.
The Group’s concentrations of credit risk are managed by client/counterparty/issuer and by geographical region. Concentration of accounts receivable is outlined with a breakdown by counterparty in Note 10, Trade and other receivables. Concentration of loans originated is outlined in Note 12, Loans originated.
The following tables shows the maximum exposure to credit risk for the components of the consolidated statement of financial position, by geography before the effect of mitigation through the use of master netting as of 31 December 2019 and 31 December 2018 correspondingly.
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31 Dec 2019Russian
Roubles and USD
EURO GBP Total
Financial assets at fair value through profit or loss 291 338 - 28 744 320 082
Financial assets at fair value through other comprehensive income
53 639 - - 53 639
Cash and cash equivalents 1 134 186 55 1 375
Trade and other receivables 3 846 200 54 4 100
Long-term loans originated 3 097 - - 3 097
Short-term loans originated 18 697 22 671 - 41 368
Total monetary financial assets 371 751 23 057 28 853 423 661
Long-term loans 133 142 - - 133 142
Short-term loans 3 220 - - 3 220
Trade and Other payables 636 157 - 793
Accrued liabilities 434 2 - 436
Total monetary financial liabilities 137 432 159 - 137 591
Net financial assets (liabilities) 234 319 22 898 28 853 286 070
31 Dec 2018 Russian Roubles EURO GBP Total
Financial assets at fair value through profit or loss 234 912 - 10 036 244 948
Cash and cash equivalents 1 452 190 71 1 713
Trade and other receivables 9 075 85 14 9 174
Long-term loans originated 3 113 - - 3 113
Short-term loans originated 122 153 23 739 - 145 892
Total monetary financial assets 370 705 24 014 10 121 404 840
Long-term loans 125 442 - - 124 442
Short-term loans 3 024 500 - 3 524
Trade and Other payables 443 - - 443
Accrued liabilities 173 - - 173
Total monetary financial liabilities 129 082 500 - 129 582
Net financial assets (liabilities) 241 623 23 514 10 121 275 258
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Stated below is an effect on the Group’s profit before tax (due to changes in the fair value of financial assets and liabilities) and the Group’s equity (also due to changes in the fair value of financial assets) as a result of a 3%, 10% and 20% weakening (strengthening) of foreign currencies against 1 USD:
31 Dec 2019
Impact on
Changes in foreign currency rates Profit/(loss) before tax Equity
3% strengthening/ (weakening) of RUB, USD 7 030/ (7 030) 7 030/ (7 030)
3% strengthening/ (weakening) of EURO 687 / (687) 687 / (687)
3% strengthening/ (weakening) of GBP 866 / (866) 866 / (866)
31 Dec 2018
Impact on
Changes in foreign currency rates Profit/(loss) before tax Equity
3% strengthening/ (weakening) of RUB 7 249 / (7 249) 7 249 / (7 249)
3% strengthening/(weakening) of EURO 705 / (705) 705 / (705)
3% strengthening/(weakening) of GBP 304 / (304) 304 / (304)
Interest rate riskInterest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. At the reporting date the Group was not directly exposed to the interest rate risk.
(E) LIQUIDITY RISKLiquidity risk is the risk that the Group will encounter difficulty in meeting obligations from its financial liabilities. The Group’s liabilities to clients are always fully covered by the client funds held in bank and brokerage accounts. The Group’s other liabilities are normally fully covered by funds held in the own accounts of the Group, also the financial instruments which the Group invests as principal are highly liquid. Thus the Group is not exposed to the liquidity risk.
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The table below summaries the maturity profile of the Group’s financial assets and liabilities as of 31 December 2019 and 31 December 2018 correspondingly.
31 Dec 2019 On demand
Less than 1 month
1 to 3 months
3 to 12 months
1 to 5 years Total
Financial assets
Financial assets at fairvalue through profit or loss 320 082 - - - - 320 082
Financial assets at fairvalue through othercomprehensive income
53 639 - - - - 53 639
Trade and other receivables - 4 100 - - - 4 100
Long-term loans originated - - - - 3 097 3 097
Short-term loans originated - 38 011 3 357 - - 41 368
Cash and cash equivalents 1 375 - - - - 1 375
375 096 42 111 3 357 - 3 097 423 661
Financial liabilities
Trade and other payables - 793 - - - 793
Long-term loans 133 142 133 142
Short-term loans 3 220 - - - - 3 220
Lease liabilities - - - 129 199 328
Accrued liabilities 436 - - - - 436
3 656 793 - 129 133 341 137 919
Net position as of 31 Dec 2019 371 440 41 318 3 357 (129) (130 244) 285 742
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31 Dec 2018 On demand
Less than 1 month
1 to 3 months
3 to 12 months
1 to 5 years Total
Financial assets
Financial assets at fairvalue through profit or loss 244 948 - - - - 244 948
Trade and other receivables - 9 174 - - - 9 174
Long-term loans originated - - - - 3 113 3 113
Short-term loans originated - 145 892 - - - 145 892
Cash and cash equivalents 1 713 - - - - 1 713
246 661 155 066 - - 3 113 404 840
Financial liabilities
Trade and other payables - 443 - - - 443
Long-term loans - - - - 125 442 125 442
Short-term loans 3 524 - - - - 3 524
Accrued liabilities 173 - - - - 173
3 697 443 - - 124 442 129 582
Net position as of 31 December 2018 242 964 154 623 - - (122 329) 275 258
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27. RELATED PARTY TRANSACTIONSFor the purpose of preparation of these consolidated financial statements parties are considered related if one of them is capable to control the other party or may exert significant influence on financial and operating decisions of the other party, as defined in IAS 24, Related party disclosures. In considering relations with each related party, attention is directed to the economic substance of such relations and not merely the legal form.
Throughout the reporting period ended 31 December 2019 the Group made a number of transactions with related parties in the course of its ordinary activities.
The following tables provide the total amount of income and cash flow financial statements transactions that have been entered into with related parties for the relevant and 2019 financial years and information regarding.
At 31 Dec 2019 At 31 Dec 2018
Shareholders Other Shareholders Other
Long-term loans originated - - - -Financial assets at fair valuethrough profit or loss - - - -
Trade and other receivables 137 - 5 23
Current liabilities
Trade and other payables 6 - - -
Short-term loans 344 - - -
Other payable - - - 10
Revenue
Rendering financial services 148 - - -
Brokerage commission - - 4 -
Interest revenue - - - 67
For the most part transactions with related parties were made at market rates. Outstanding balances atthe year-end are unsecured, interest free and settlement occurs in cash.
28. SUBSEQUENT EVENTSWith the recent and rapid development of the Coronavirus (COVID-19) outbreak the world economy entered a period of unprecedented health care crisis that has already started causing considerable global disruption in business activities and everyday life. Many countries have adopted extraordinary and economically costly containment measures requiring in some cases companies to limit or even suspend normal business operations and governments to implement restrictions on travelling as well as strict quarantine measures.
A number of industries are expected to be disrupted significantly by these measures whereas others like financial services are expected to incur sideway losses. Considering the above unfortunate circumstances, the pace at which the outbreak expands and because of the high level of uncertainties due to the unpredictable outcome of this outbreak, the financial effect of the current crisis on the global economy
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and the overall business activities going forward is not possible to be estimated with reasonable certainty at this stage.
Management is closely monitoring the developments in relation to the Coronavirus (COVID-19) outbreak on a continuous basis and has considered the unique circumstances and the risk exposures of the Company.
As of today, the current trading portfolio of the Company did not have any significant impact and the trading volumes of its clients have seen a small growth. However, since the management is still in the early stages of fully understanding the economic impact of the outbreak and because of the high level of uncertainties involved, the management will continue to monitor the situation closely and will assess the need for any measures to be taken, in case the period of disruption is prolonged.
There were no other material events after the reporting period, which have a bearing on the understanding of the financial statements.
29. COMMITMENTS AND CONTINGENCIESBeing a provider of financial services to its clients which include brokerage and asset management services the Group holds client assets including cash, securities and other in bank and depo accounts. Financial instruments and cash held in such accounts on behalf of clients or in a fiduciary capacity are not included in these financial statements.
As at 31 December 2018 the Group held securities on behalf of its clients according to brokerage agreements with net assets value of 1 713 368 USD (as at 31 December 2018: 1 791 086 ).
The Group entity, RONIN Trust CJSC, offers asset management services on the Russian market. As at 31 December 2019 the amount of financial instruments held in a fiduciary capacity by RONIN Trust CJSC was equal to 164 676 USD (as at 31 December 2018: 131 857).
As at 31 December 2019 the Group has deposited in client bank and brokerage accounts under its own name 80 029 USD (as at 31 December 2018: 83 785). All cash is deposited in leading financial institutions with the major concentrations in EUROCLEAR BANK S.A., PPF, UBS and JPMorgan.
In the normal course of business, the Group enters into agreements to manage funds of private and corporate clients without potential liability in respect of any losses suffered by the clients as a result of common risks of investing and owning of the securities, except if resulting from gross negligence or willful default of the Group. However, in asset management agreements with private pension funds the Group offers to its clients the return of the principal amount transferred under such agreements.
As at 31 December 2019 the Group had no legal disputes or proceedings with counterparties or official authorities significantly material to be disclosed in these consolidated financial statements (31 December 2018: none).
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• License No. 21-000-1-00100 dated 24.12.2002 for investment funds, mutual investment funds and non-state pension funds management issued by the Federal Service for Financial Markets of Russia;
• License No. 077-09333-001000 dated 08.08.2006 for securities management issued by the Federal Service for Financial Markets of Russia.
• License No. 177-11092-010000 of series 01 No.000927 dated 18.03.2008 for dealer activity issued for an indefinite term by the Central Bank of the Russian Federation;
• License No. 177-11090-100000 000928 dated 18.03.2008 for brokerage activit - issued for an indefinite term by the Central Bank of the Russian Federation;
• License No. 177-11096-000100 of series 01 No. 000925 dated 18.03.2008 for depositary activity issued for an indefinite term by the Central Bank of the Russian Federation;
• License No. 177-11094-001000 of series 01 No. 000926 dated 18.03.2008 for securities management issued for an indefinite term by the Central Bank of the Russian Federation.
Licenses of RONIN LLC
Licenses of RONIN Trust OJSC
Licenses of RONIN Europe Limited
RONIN LLC.23 Kazakova Str. Build.1, Moscow 105064, RussiaPhone +7 (495) 645-88-85; Fax +7 (495) 645-88-83E-mail [email protected]; Website www.ron.in/russia
23 Kazakova Str. Build.1, Moscow 105064, RussiaPhone +7 (495) 645-88-81 Fax +7 (495) 645-88-86E-mail [email protected], [email protected] Website www.ronintrust.ru
19 Promachon Eleftherias, ALPHA TOWER, Agios Athanasios, 4103 Limassol, CyprusPhone +357 258 789 39; Fax +357 258 782 91E-mail [email protected]; Website www.europe.ron.in
License from the Cyprus Securities and Exchange Commission, with license number 081/07 as of 31st October 2008. This license grants the right to provide the following investment services and carry out the following activities:
• brokerage services;• portfolio management;• investment advice;• dealing on own account. as well as to the following ancillary services;• safekeeping and administration of financial instruments;• deals with margin for clients on securities market;• conversion operations on securities market;• services related to underwriting.
Annual Report 2019
LICENSES & CONTACTS
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To the best of the management’s knowledge and belief (who have taken all reasonable care to ensure that such is the case), the information presented in this Annual Report is in accordance with the facts and does not omit anything likely to affect the import of such information.
The sole purpose of this Annual Report is to provide background information to assist the recipient in obtaining a general understanding of the business of RONIN Partners and its outlook. It is not intended to provide the basis for any investment decision, credit or any other evaluation and is not to be considered as a recommendation or a solicitation of RONIN Partners for any recipient of this Annual Report to participate in any financial activity. Each recipient of this Annual Report contemplating participation in any financial activity in any of the jurisdictions, where RONIN Partners operates, must make (and will be deemed to have made) its own independent investigation and appraisal of the business, financial condition, prospects, creditworthiness, status and affairs of any legal entity in which such individual is seeking to invest. None of the statements in this report are intended as financial advice or as a recommendation to buy, sell or call on any security, product, service or investment.
Certain statements contained in this Annual Report may constitute as looking forward statements and future expectations. These expectations are based on the current assumptions and estimates made by the management and speak only as of the time in which they are made (December 2019 – May 2020), the company accepts no obligation to update or amend these statements in the future.
Foreseeable statements represent matters which are by their nature uncertain and bear a risk of a different actual event development other than predicted. Anticipated results may differ from material results due to, among other factors:
(1) changes in the general economic conditions, particularly in the Russian Federation and the other areas in which RONIN Partners operates, including but not limited to changes in GDP, inflations, interest rates and exchange rates;
(2) changes in the economic policies, such as monetary and fiscal, pursued by the Russian Federation and other major world economies;
(3) developments and trends on the money, equity, commodity, capital and other markets;
(4) changes in the availability and the cost of capital and funding associated with the general conditions on the credit markets as well as creditworthiness of borrowers and counterparties;
(5) changes in the accessibility of different liquidity sources;
(6) changes in the financial regulation in the RussianFederation, Cyprus and other major financial centers in which RONIN Partners operates, that may alter the scope of our activities by imposing certain constraints and limitations on our operations and on other financial institutions;
(7) the degree to which RONIN Partners will be able to implement its strategic plans and whether their realization will bring the intended effects. RONIN Partners does not undertake to provide the recipient with access to any additional Information or to update this Annual Report, or to correct any inaccuracies therein which may become apparent.
Annual Report 2019
DISCLAMER
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