REGISTERED NUMBER: 06040998 (England and Wales) |
Pinkas Ltd |
Group Strategic Report, Report of the Director and |
Audited Consolidated Financial Statements for the Year Ended 31st December 2022 |
REGISTERED NUMBER: 06040998 (England and Wales) |
Pinkas Ltd |
Group Strategic Report, Report of the Director and |
Audited Consolidated Financial Statements for the Year Ended 31st December 2022 |
Pinkas Ltd (Registered number: 06040998) |
Contents of the Consolidated Financial Statements |
for the Year Ended 31st December 2022 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Director | 9 |
Report of the Independent Auditors | 11 |
Consolidated Statement of Profit or Loss | 15 |
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
16 |
Consolidated Statement of Financial Position | 17 |
Company Statement of Financial Position | 19 |
Consolidated Statement of Changes in Equity | 20 |
Company Statement of Changes in Equity | 21 |
Consolidated Statement of Cash Flows | 22 |
Notes to the Consolidated Statement of Cash Flows | 23 |
Notes to the Consolidated Financial Statements | 24 |
Pinkas Ltd |
Company Information |
for the Year Ended 31st December 2022 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
Statutory Auditors |
2 Oriel Court |
Omega Park |
Alton |
Hampshire |
GU34 2YT |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
The directors present their strategic report of the RETN Capital Ltd. and its subsidiaries ('the Company' and together 'the Group') for the year ended 31 December 2022. |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
REVIEW OF BUSINESS |
Pinkas Limited is the holding company for the RETN Group, the strategic report refers to the RETN Group as the whole organisation.The makeup of the group is given below the report. |
RETN Group is a leading Eurasian data services provider with unique network assets operating an extensive network connecting 40 countries in three continents. The fiber optic network has the reach of 45,500 km (35% owned and the remaining on long-term leases) with deep metro network in selected cities. The RETN network has connections in almost 900 on-net data centers and buildings across the world providing a broad product offering of data transmission services such as IP Transit, Capacity, Dedicated Internet Access, VPN, cloud connectivity, Ethernet and DDoS mitigation. RETN long-haul network is running on latest DWDM FlexGrid technology. |
The Group’s widened standardised product offering includes: cloud connect to major American and Chinese cloud services, an extensive suite of security products and further services to appeal to the Group’s large and growing enterprise customer base. The Group has further invested in its network in Western, Central and Eastern Europe, its network in South East Asia, as well as in research and development activities with the aim of automating major parts of the service provision and thereby providing a network platform as well as a network, generating further efficiencies to both the RETN Group and its customers. |
Many of RETN's fiber routes and points of presence, especially in Central Eastern Europe ("CEE") and Central Asia, are unique and they secure direct access to high growth, under under-served markets. RETN’s AS9002 (Autonomous Systems) is ranked 11th globally by customer cone size (asrank.caida.org) and along with the other networks utilising RETN’s fiber infrastructure, forms a critical part of the global internet. Currently RETN is rated as the largest Teir 2 network globally, with extensive peering relationships with the world's largest networks. |
The RETN Group serves about 1,550 international and local carriers and corporate customers with connectivity and related needs in Europe, Central and East Asia, Russia, Ukraine, central and beyond. These unique network routes, industry leading service delivery, strong technical expertise, and competitive pricing, supplied with more flexible commercial arrangements than larger players, makes the Group an attractive partner for many European, American and Asian carriers, the world’s largest OTT (Over-The-Top) and content companies from both the USA and Asia, and global enterprises. |
In 2022, the Group has continued its network expansion internationally, introducing new routes such as Stockholm-Riga, Riga-Daugavpils, Budapest-Sofia as well as Lutsk-Monastyrysche in Ukraine, optimised its capacity between Frankfurt and the Polish border. In addition, the Group has opened 41 new PoPs among others in Baltics and Nordics, Germany, Singapore, Armenia, Kyrgyzstan, Italy and Poland. It has also invested heavily in its metro networks in Warsaw and Riga and developed its data centre presence in many major European and Asian cities. In 2022, the Group opened its offices in Finland and USA. |
The Group has capitalised on sector trends and market opportunity and solidified its position as the go-to network service provider for Western Europe, Eastern Europe and Asia. During 2022 the Group has successfully grown its revenue from EUR 58.1m in 2021 to EUR 69.0m in 2022 or 19%. The growth in revenue was generated from the higher traffic in the RETN network, upselling of services to existing customers, but also getting new customers to our network. Another factor was a strong RUB vs EUR exchange rate, which impacted EUR equivalent of revenue generated from Russia. At the same time, the Group experienced disconnection of services from customers which closed their operations in Russia. During 2022 the number of customers net of disconnections increased by 29 (2021: 57). |
Russia's invasion of Ukraine in February 2022 caused the Group to revise future investment and growth plans. Immediately following these tragic events, the Group focused its efforts on network stability, repairing damaged parts of the network and restoring services in Ukraine and maintaining access to the internet for our Ukrainian customers as well as building routes both by-passing Ukraine and further routes from Ukraine towards the EU. |
At the same time, both due to international sanctions imposed and other factors, the Group limited its investment in Russia and Belarus and reinvigorated the ongoing process of reducing the proportion of the Group's revenue from the Russian market through increased activity in high growth potential regions on the network. The Group has stopped to transfer telecom equipment to Russia and Belarusian entities to comply with the sanctions. |
In 2022, RETN Capital closed its representative office in St. Petersburg (Russian Federation). |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
Group Structure |
The Company and its subsidiaries (together "the Group") has 31 entities as of 31st December 2022: |
1. Pinkas Limited, |
2. RETN Capital Ltd., |
3. RETN Limited (UK), |
4. RETN Poland SP. z o.o (Poland), |
5. RETN GmbH (Germany), |
6. RETN B.V. (The Netherlands), |
7. RETN GmbH (Switzerland), |
8. RETN SRL (Italy), |
9. RETN TELEKOMÜNIKASYON HIZMETLERI LIMITED SIRKETI (Turkey), |
10. RETN Nordic AB (Sweden), |
11. RETN Baltic AS (Estonia), |
12. RETN Finland OY (Finland), |
13. RETN Baltic SIA (Latvia), |
14. RETN (Hong Kong) Limited (Hong Kong), |
15. RETN Consultancy services (China), |
16. RETN K.K. (Japan), |
17. RETN PTE. LTD. (Singapore), |
18. RETN Telecoms (Taiwan), |
19. RETN KZ LLC (Kazakhstan), |
20. RETN Kyrgyzstan Ltd (Kyrgyzstan), |
21. RETN LLC (Ukraine), |
22. RETN BALKANS LTD (Bulgaria), |
23. RETN AM LLC (Armenia), |
24. RETN LLC (Georgia), |
25. RETN Networks SRL (Moldova), |
26. JSC RetnNet (Russian Federation), |
27. Foreign Unitary Enterprise RETN (Belarus), |
28. RETN Hungary Kft (Hungary), |
29. RETN d.o.o. Beograd (Serbia), |
30. UAB RETN Lithuania (Lithuania), |
31. RETN US LLC (USA). |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
PRINCIPAL RISKS AND UNCERTAINTIES |
RUSSIAN INVASION IN UKRAINE |
In 2023, the Russian invasion which started on 24th February 2022, on Ukraine, still continues. The RETN Group has operations in Ukraine, in Russia, but also in Belarus, another country actively involved. This invasion has changed the geo-political landscape in which the Group operates. Economic sanctions, difficulties in cross border payments between Russia, Belarus and EU countries, energy price, inflation, and the withdrawal of many clients from Russian markets create uncertainty of the impact not only on our operations, but globally on the entire world. The network located in Ukraine is exposed to military activities, power cuts and other factors creating the threat of damage or service disruption. The Group decided to continue its operations in all countries engaged in the conflict and to continuing to provide lawful, reliable, undisrupted internet services across our network. However, as events are constantly evolving, and. if further sanctions are imposed, or government interventions are introduced, or if there is any physical damage to the assets, it could lead to difficult trading conditions and that may impact the ability of the group to operate effectively in these countries. As a result, this may require the Group to reassess the carrying value of assets held in these countries totalling €21,337k in the Consolidated Statement of Financial Position as at 31 December 2022. In addition, this may also have an impact on the carrying value of investments relating to these countries that are included in the Company's Statement of Financial Position, amounting to €7,237k as at 31 December 2022 along with the balance on trade and other receivables totalling €3,176k at the same date. The shareholders are considering various scenarios on the separation of Russian and Belarussian operations from the Group. |
So far, the Group has not experienced any material adverse impact on its operations. Services in Ukraine are still active. There some outages, which are going to be repaired as soon as possible. Clients in Ukraine are being invoiced and pay us, while we settle our payables to suppliers and loan repayment to the bank in Ukraine. Despite the extensive military operations in Ukraine only parts of the group's network have been impacted. However, the situation is changing every month. The group has initiated several steps to reduce exposure to Russian operations, including diverting key competencies outside Russia and accelerating network expansion outside Russia. |
The Group is continuously monitoring its compliance with laws and regulations, which include sanctions from the governments, where the Group operates, to ensure the Group remains in compliance.This is done in conjunction with their legal advisors who offer them support and advice. |
Management continues to monitor all their options available and continue to assess various scenarios in respect of their operations in Russia and Belarus. The Group has run a range of scenarios of the financial results to quantify the adverse impact on its cash flows. Based on the results, the Group is confident that it can continue as a going concern in any of the scenarios. In the same time, the Group has procured analysis on legal separation of the Russian and Belarusian entities from the rest of its entities. No decision had been taken by the shareholders as to legal reorganisation yet. |
RUSSIA |
Substantial Group revenue comes from the Russian Federation. In 2022 following the Russian invasion of Ukraine, the United Kingdom, the European Union, USA and some other countries have imposed new packages of sanctions against a number of Russian individuals and legal entities and services provided by these countries. They are regarded as most severe sanctions ever imposed on any major economy. |
The imposition of the sanctions has led to increased economic uncertainty, withdrawal of many foreign entities from Russia, a reduction in foreign direct investment inflows due to significant uncertainty. As a result, the Russian economy has become more and more isolated from the international markets. Russian businesses will have no access to international equity and debt markets and may become increasingly dependent on the state support for their operations. The longer-term effects of current and possible future sanctions are difficult to determine. |
JSC RetnNet (Russia) accounts for EUR 24,107 thousand of revenue in 2022 (35%). Management continue to monitor all their options available and continue to assess various scenarios in respect of their operations in Russia. |
BELARUS |
The EU and UK adopted new sanctions in 2022 and 2023, as an expression of the condemnation of Belarus' involvement in Russia's military aggression against Ukraine. Restrictions relate to bans on targeted sectors, individuals and entities, they are financial or trade-related. |
In 2022 IUP RETN (Belarus) legally been moved to JSC RetnNet and is not a direct subsidiary anymore. |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
IUP RETN (Belarus) accounts for only EUR 378 thousand of the total group revenue in 2022 (0.5%). The Group has a cooperation agreement with a Belarussian partner for developing an international optic fibre line as described in Note 2. |
UKRAINE |
Russia's renewed attacks on Ukraine from 24th February 2022 is an escalation of the political and economic changes in 2013, followed by various events in Ukraine in 2014, leading to the accession of the Republic of Crimea to the Russian Federation and creation of the self-proclaimed republics of Donetsk and Lugansk in the East of Ukraine. These events resulted in a significant deterioration of the relationship between Ukraine and the Russian Federation. RETN Group does not provide any services to clients in Crimea, Luhansk, or Donetsk regions (similarly with any recently occupied regions of Ukraine). |
RETN's Ukraine operations contribute EUR 2,816 thousand of the Group's revenue (4%) and the Group's proportion of PPE located in Ukraine amounted to EUR 2,621 thousand as of end of 2022 (4%). The RETN Ukraine continues to provide its services in 2022 to its customers and collects payment for its services. |
COVID-19 |
The impact of the COVID-19 pandemic turned out to be very limited on our operations from a financial point of view. In 2022 our operations came back to what they were before. The Group still accommodates a hybrid working environment, when possible, but all processes continue as normal. |
FX RISK |
A key risk comes from currency fluctuations in the markets they operate, including the Russian Federation and Ukraine. In 2022 there were significant exchange fluctuations. In 2022 the RUB devalued by about 50% when sanctions were implemented reaching a low of 1EUR=150 RUB, while in June 2022 the RUB significantly strengthened to less than 60 RUB for 1EUR. Any impact on EUR translated revenue is to a large extent offset by the costs, as the majority of costs in Russia are also borne in RUB. |
AUH to EUR was pretty stable in 2022 with average rate of 34. In the same time USD strengthened against EUR to historical 1:1 in 2022 from 1.13 at the end of 2021. |
The Group has also accelerated its rebalancing of revenues from a European and Asian customer base, utilising an increased local presence and focused marketing initiatives, to mitigate any future dependency upon a specific geographic market or currency. |
SECTION 172(1) STATEMENT |
The Director, in line with their duties under s172 of the Companies Act 2006, act individually and collectively in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its member, and in doing so have regard, amongst other matters, to the: |
- | Likely consequences of any decision in the long term |
- | Interests of the company's employees |
- | Need to foster the company's business relationships with suppliers, customers and others |
- | Impact of the company's operations on the community and the environment |
- | Desirability of the company maintaining a reputation for high standards of business conduct |
- | Need to act fairly as between members of the company |
The Director regards to these matters is embedded in their decision-making process, through the Company's business strategy, culture, governance framework, management information flows and stakeholder engagement processes. The Company's business strategy is focused on achieving success for the Company in the long-term. In setting this strategy, the Board takes into account the impact of relevant factors and stakeholder interests on the Company's performance. The Board also identifies principal risks facing the business and sets risk management objectives. The Board promotes a culture of upholding the highest standards of business and regulatory conduct. The Board ensures these core values are communicated to the Company's employees and embedded in the Company's policies and procedures, employee induction and training programmes and its risk control and oversight framework. The Board recognizes that building strong and lasting relationships with our stakeholders will help us to deliver our strategy in line with our long-term values and operate a sustainable business. |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
The Director is supported in the discharge of their duties by: |
- | Processes which ensure the provision of actual management information |
- | Approval of material transactions |
- | Setting strategic guidelines |
- | Oversight of the Group's risk and control functions, support teams and committees of the Board |
- |
Agenda planning for Board and Committee meetings to provide sufficient time for the consideration and discussion of key matters |
Stakeholders |
The Board understands the importance of engagement with all of its stakeholders and gives appropriate weighting to the outcome of its decisions for the relevant stakeholder in weighing up how best to promote the success of the Company. The Board regularly discusses issues concerning employees, clients, suppliers, community and environment, regulators and its shareholder, which it takes into account in its discussions and in its decision-making process. In addition to this, the Board seeks to understand the interests and views of the Company's stakeholders by engaging with them directly when required. |
KEY PERFORMANCE INDICATORS |
For the purposes of business analysis of the Group's performance for the reporting period, and the position at the year end, management considers the following financial KPIs and ratios: |
- | Net debt to equity ratio allows the assessment of financial gearing and therefore financial risk. At the end of 2022 the level is 0.54:1 (2021: 0.41:1). This movement is due to increase of borrowings and lease liabilities. |
- | The amount of net working capital at the end of 2022 is EUR (17,001) thousand (2021: EUR (7,156) thousand). |
- | The net current asset ratio is 0.39 (2021: 0.64). The ratio decreased mainly due to reduced cash balance at the end of the period, lower trade and other receivables, increased trade and other payables, and increased borrowings. |
- | The return on assets ratio allows an estimate of the rate of profitability of all assets employed to be made. Profit is adjusted for financial costs and tax expense to reflect the real operational performance. During the period of 2022 the rate of return on assets improved to 6.81% (2021: 3.58%). |
FUTURE DEVELOPMENTS |
In 2023, the Group continued what was started in 2022, to accelerate its network development in Europe outside Russia, mostly in Baltics and Balkans regions, UK, Germany and Poland, but also with further investment in Asia. The goal is to increase its presence in global markets, develop further products focused on the enterprise market and accelerate R&D investment in automation for its internal systems and service provisioning to improve efficiency. |
The Group are continuously monitoring their compliance with laws and regulations, which include sanctions from the governments, where the Group operates, to ensure the Group remains in compliance. This is done in conjuction with their legal advisors who offer them support and advice. |
Management continue to monitor all their options available to continue to assess various scenarios in respect of legal separation of their operations in Russia and Belarus. |
In 2023, the Group also set up a new entity in UK - RETN Networks Ltd and in Uzbekistan - RETN Networks LLC as it continues to expand its operations. |
Pinkas Ltd (Registered number: 06040998) |
Group Strategic Report |
for the Year Ended 31st December 2022 |
GOING CONCERN |
The Group operates in Europe and Asia, including all three countries involved in the war- Russia, Belarus and Ukraine and therefore is exposed to the impact of the sanctions regulations. The Group is continuously monitoring its compliance with laws and regulations, which include sanctions from the governments, where the Group operates to ensure the Group remains in compliance. This is done in conjunction with their legal advisors who offer them support and advice. |
Management continue to monitor all their options available and has run a range of scenarios of the financial results to quantify the adverse impact on its cash flows. This exercise included the preparation of cashflow forecasts under different scenarios including a scenario without JSC RetnNet (Russia) in the RETN Capital Group. These scenarios indicate that the Group will continue in operational existence for the foreseeable future and for at least twelve months from the approval of these financial statements. |
Therefore, the Directors believe that the Group is well placed to manage its business risks successfully, despite the current uncertain economic and political outlook and therefore continue to adopt the going concern basis of accounting in preparing the annual financial statements. |
CARBON EMISSION DISCLOSURE |
In accordance with The Companies (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 no information has been provided in respect of group carbon emissions, energy consumption or energy efficiency activities since all entities within the group are individually exempt from the preparation of such information |
ON BEHALF OF THE BOARD: |
Pinkas Ltd (Registered number: 06040998) |
Report of the Director |
for the Year Ended 31st December 2022 |
The director presents his report with the financial statements of the company and the group for the year ended 31st December 2022. |
PRINCIPAL ACTIVITY |
Pinkas group is an international network service provider offering a range of services across its own fiber-optic network to large enterprises, media content providers, carriers and internet service providers. Pinkas has over 44,000 km of lit fiber on its pan-European network which connects 40 countries across Europe, Asia and North America, with a heavy presence in the highly attractive markets of Eastern Europe and Russia. The RETN backbone (which is connected directly to all major carrier-neutral Data Centre's) carries a large proportion of international traffic in the regions it passes through. The Dense Wavelength Division Multiplexing ("DWDM") based network is designed in a ring-architecture offering multiple layers of redundancy. The network's unique geographical footprint provides over 5 Tbps of capacity over its four primary routes between the West and Asia. For the most part, the network is either fully owned by the Group or secured through long-term leases (typically 10 years each). |
RETN Group also operates its terrestrial network- TRANSKZ -connecting the RETN pan-European network with Hong Kong. The TRANSKZ Network allows for transport of high capacity traffic between Europe and East Asia, linking three of the world's biggest financial centers in London, Frankfurt and Hong Kong. The Group also provides further value added services such as; DDoS Mitigation and security products, remote Internet Exchange, dedicated private connections to major cloud service providers and colocation services, deploying and housing for equipment, servers and data storage at RETN points of presence ("POPs") and RETN data centres. |
Future developments in the business of the Group are detailed in Strategic report. |
DIVIDENDS |
No dividends will be distributed for the year ended 31st December 2022. |
EVENTS SINCE THE END OF THE YEAR |
Information relating to events since the end of the year is given in the notes to the financial statements. |
DIRECTOR |
D. Samarin |
A. Kuznetsov (resigned 28th February 2022) |
P. Maltseva (resigned 28th February 2022 |
A. D. O’Sullivan (resigned 28th February 2022) |
DONATIONS AND EXPENDITURE |
The Group made charitable donations during the year EUR 144,132 (2021: EUR 11,283). |
STREAMLINED ENERGY AND CARBON REPORTING |
In accordance with The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 no information has been provided in respect of group carbon emissions, energy consumption or energy efficiency activities since all entities within the group are individually exempt from the preparation of such information. |
Pinkas Ltd (Registered number: 06040998) |
Report of the Director |
for the Year Ended 31st December 2022 |
STATEMENT OF DIRECTOR'S RESPONSIBILITIES |
The director is responsible for preparing the Group Strategic Report, the Report of the Director and the financial statements in accordance with applicable law and regulations. |
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with UK-adopted international accounting standards. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and the group and of the profit or loss of the group for that period. In preparing these financial statements, the director is required to: |
- | select suitable accounting policies and then apply them consistently; |
- | make judgements and accounting estimates that are reasonable and prudent; |
- | state that the financial statements comply with IFRS; |
- | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. |
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group and enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the company and the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the director is aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
The directors who held office at the date of approval of this directors' report confirm that, so far as they are each aware, there is no relevant audit information of which the Group's auditor is unaware; and each director has taken all the steps that they ought to have taken as a director to make themselves aware of any relevant audit information and to establish that the Group's auditor is aware of that information. |
AUDITORS |
The auditors, Sheen Stickland, will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
Report of the Independent Auditors to the Members of |
Pinkas Ltd |
Disclaimer of Opinion |
We were engaged to have audited the financial statements of Pinkas Ltd (the 'parent company') for the year ended 31 December 2022 which comprise of the Consolidated statement of Profit and Loss and Other Comprehensive Income, the Consolidated and Company Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and international accounting standards in conformity with the requirements of the Companies Act 2006/ United Kingdom adopted International Financial Reporting Standards (IFRSs). |
Basis for disclaimer of opinion |
During the year they UK Government introduced the Russia (Sanctions) (EU Exit) (Amendment) (No.17) Regulations 2022 with effect from 16 December 2022. The sanctions prohibit the direct or indirect provision of auditing services to a person connected with Russia. As a result these sanctions prohibited component auditors and therefore the parent company auditors to perform procedures set out in the International Standard on Auditing (UK) (ISA 600) Audits of Group Financial Statements, Special considerations - audits of group financial statements (including the work of component auditors). Therefore, no audit procedures, review or discussions could take place with component auditors that relate to company JSC RetnNet, which is a company incorporated and registered in Russia. JSC RetnNet is material sub-subsidiary of the parent company. |
Overall we were unable to gather sufficient or appropriate audit evidence in support of the following transactions and balances as a result of the regulations: |
Amounts in EUR | Percentage of group |
'000 | % |
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
Profit before income tax | 2,530 | 75% |
Profit for the year | 2,317 | 98% |
Consolidated Statement of Financial Position |
Non-current assets | 21,405 | 30% |
Current assets | 2,943 | 27% |
Non-current liabilities | (1,730) | 9% |
Current liabilities | (6,229) | 22% |
Equity | (7,346) | 22% |
Conclusions relating to going concern |
Other information |
The director is responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Director, but does not include the financial statements and our Report of the Auditors thereon. |
We have not been able to obtain sufficient appropriate audit evidence to conclude if a material misstatement of the other information exists for reasons described in the Basis for disclaimer of opinion section of our audit report. |
Opinions on other matters prescribed by the Companies Act 2006 |
Because of the significance of the matter described in the basis for disclaimer of opinion section of our report, we have been unable to form an opinion, whether based on the work undertaken in the course of the audit: |
- | the information given in the strategic report and directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the strategic report and directors' report have been prepared in accordance with applicable legal requirements. |
Report of the Independent Auditors to the Members of |
Pinkas Ltd |
Matters on which we are required to report by exception |
Notwithstanding our disclaimer of an opinion on the financial statements, in the light of the knowledge and understanding of the company and its environment obtained in the course of the audit performed subject to the pervasive limitation described above, we have not identified material misstatements in the strategic report or the directors' report. |
Arising from the limitation of our work referred to above: |
- | we have not obtained all the information and explanations that we considered necessary for the purpose of our audit; and |
- | we were unable to determine whether adequate accounting records have been kept. |
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: |
- | the financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' remuneration specified by law are not made |
Responsibilities of director |
As explained more fully in the Statement of Director's Responsibilities set out on page ten, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. |
In preparing the financial statements, the director is responsible for assessing the group's and the parent company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the group or the parent company or to cease operations, or has no realistic alternative but to do so. |
Report of the Independent Auditors to the Members of |
Pinkas Ltd |
Auditors' responsibilities for the audit of the financial statements |
Our responsibility is to conduct an audit of the company's financial statements in accordance with International Standards on Auditing (UK) and to issue an auditor's report. However, because of the matter described in the basis for disclaimer of opinion section of our report, we were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these financial statements. |
We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. |
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Except for the matter described in the Basis for disclaimer of opinion section of our report, the extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
We ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations. |
The laws and regulations applicable to the company were identified through discussions with the director and other management also from Our commercial knowledge and experience of the company. Of these laws and regulations, we focused on those that we considered may have a direct material effect on the financial statements or the operations of the company, including but not limited to The Companies Act 2006, taxation legislation, data protection, anti-bribery, anti-money-laundering, employment, environmental and health and safety legislation. |
The extent of compliance with these laws and regulations identified above was assessed through making enquiries of management and inspecting legal expenditure and correspondence. The identified laws and regulations were communicated within the audit team, the team remained alert to instances of non-compliance throughout the audit. |
We assessed the susceptibility of the company's financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by: |
- | considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations; and understanding the design of the company's remuneration policies. |
- | making enquiries of management as to where they considered there was susceptibility to fraud, them knowledge of actual, suspected and alleged fraud; |
To address the risk of fraud through management bias and override of controls, we: |
- | tested journal entries to identify unusual transactions; |
- | performed analytical procedures to identify any unusual or unexpected relationships, |
- | assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias: |
- | and investigated the rationale behind significant or unusual transactions. |
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to: |
- | agreeing financial statement disclosures to underlying supporting documentation; |
- | reading the minutes of meetings of those charged with governance; |
- | enquiring of management as to actual and potential litigation and claims; |
- | and reviewing correspondence relevant regulators and the company's legal advisors. |
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. |
Report of the Independent Auditors to the Members of |
Pinkas Ltd |
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors. |
Use of our report |
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in a Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed. |
for and on behalf of |
Chartered Accountants |
Statutory Auditors |
2 Oriel Court |
Omega Park |
Alton |
Hampshire |
GU34 2YT |
Pinkas Ltd (Registered number: 06040998) |
Consolidated Statement of Profit or Loss |
for the Year Ended 31st December 2022 |
2022 | 2021 |
Notes | €'000 | €'000 |
CONTINUING OPERATIONS |
Revenue | 2 | 69,018 | 58,131 |
Cost of sales | (30,188 | ) | (25,400 | ) |
GROSS PROFIT | 38,830 | 32,731 |
Other operating income | 218 | 226 |
Administrative expenses | (35,233 | ) | (28,909 | ) |
OPERATING PROFIT | 3,815 | 4,048 |
Finance costs | 4 | (516 | ) | (3,384 | ) |
Finance income | 4 | 54 | 48 |
PROFIT BEFORE INCOME TAX | 5 | 3,353 | 712 |
Income tax | 6 | (990 | ) | (359 | ) |
PROFIT FOR THE YEAR | 2,363 | 353 |
Profit attributable to: |
Owners of the parent | 1,788 | 264 |
Non-controlling interests | 575 | 89 |
2,363 | 353 |
Pinkas Ltd (Registered number: 06040998) |
Consolidated Statement of Profit or Loss and Other Comprehensive Income |
for the Year Ended 31st December 2022 |
2022 | 2021 |
€'000 | €'000 |
PROFIT FOR THE YEAR | 2,363 | 353 |
OTHER COMPREHENSIVE INCOME |
Item that will not be reclassified to profit or loss: |
Foreign currency translation differences | (451 | ) | 1,672 |
Income tax relating to item that will not be reclassified to profit or loss |
- |
- |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
(451 |
) |
1,672 |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
1,912 |
2,025 |
Total comprehensive income attributable to: |
Owners of the parent | 1,473 | 1,412 |
Non-controlling interests | 439 | 613 |
1,912 | 2,025 |
Pinkas Ltd (Registered number: 06040998) |
Consolidated Statement of Financial Position |
31st December 2022 |
2022 | 2021 |
Notes | €'000 | €'000 |
ASSETS |
NON-CURRENT ASSETS |
Goodwill | 8 | 14 | 14 |
Owned |
Intangible assets | 9 | 2,300 | 1,704 |
Property, plant and equipment | 10 | 65,164 | 53,268 |
Right-of-use |
Investments | 11 | - | - |
Contract assets | 2 | 3,269 | 2,762 |
Deferred tax | 22 | 374 | 199 |
71,121 | 57,947 |
CURRENT ASSETS |
Inventories | 12 | 894 | 386 |
Trade and other receivables | 13 | 8,733 | 9,268 |
Tax receivable | 87 | 95 |
Cash and cash equivalents | 14 | 1,325 | 2,993 |
11,039 | 12,742 |
TOTAL ASSETS | 82,160 | 70,689 |
EQUITY |
SHAREHOLDERS' EQUITY |
Called up share capital | 16 | 2 | 2 |
Share premium | 17 | 2,342 | 2,342 |
Capital reserve | 17 | 8,330 | 8,330 |
Merger reserve | 17 | 1,550 | 1,550 |
Currency translator reserve | 17 | (9,229 | ) | (8,778 | ) |
Retained earnings | 17 | 10,747 | 8,959 |
13,742 | 12,405 |
Non-controlling interests | 15 | 20,366 | 19,927 |
TOTAL EQUITY | 34,108 | 32,332 |
Pinkas Ltd (Registered number: 06040998) |
Consolidated Statement of Financial Position - continued |
31st December 2022 |
2022 | 2021 |
Notes | €'000 | €'000 |
LIABILITIES |
NON-CURRENT LIABILITIES |
Trade and other payables | 18 | 7,887 | 7,539 |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 19 | 10,772 | 9,655 |
Deferred tax | 22 | 1,349 | 1,265 |
20,008 | 18,459 |
CURRENT LIABILITIES |
Trade and other payables | 18 | 18,550 | 13,004 |
Financial liabilities - borrowings |
Interest bearing loans and borrowings | 19 | 8,805 | 6,749 |
Tax payable | 689 | 145 |
28,044 | 19,898 |
TOTAL LIABILITIES | 48,052 | 38,357 |
TOTAL EQUITY AND LIABILITIES | 82,160 | 70,689 |
The financial statements were approved by the director and authorised for issue on 28th February 2024 and were signed by: |
D Samarin - Director |
Pinkas Ltd (Registered number: 06040998) |
Company Statement of Financial Position |
31st December 2022 |
2022 | 2021 |
Notes | €'000 | €'000 |
ASSETS |
NON-CURRENT ASSETS |
Goodwill | 8 |
Owned |
Intangible assets | 9 |
Property, plant and equipment | 10 |
Right-of-use |
Investments | 11 | 9,013 | 9,013 |
CURRENT ASSETS |
Trade and other receivables | 13 |
Cash and cash equivalents | 14 |
TOTAL ASSETS |
EQUITY |
SHAREHOLDERS' EQUITY |
Called up share capital | 16 |
Share premium | 17 |
Capital reserve | 17 |
Currency translator reserve | 17 | ( |
) | ( |
) |
Retained earnings | 17 | ( |
) | ( |
) |
TOTAL EQUITY | 9,046 |
LIABILITIES |
NON-CURRENT LIABILITIES |
Trade and other payables | 18 |
CURRENT LIABILITIES |
Trade and other payables | 18 |
TOTAL LIABILITIES |
TOTAL EQUITY AND LIABILITIES |
The financial statements were approved by the director and authorised for issue on |
Pinkas Ltd (Registered number: 06040998) |
Consolidated Statement of Changes in Equity |
for the Year Ended 31st December 2022 |
Called up |
share | Retained | Share | Capital |
capital | earnings | premium | reserve |
€'000 | €'000 | €'000 | €'000 |
Balance at 1st January 2021 | 2 | 8,695 | 2,342 | 8,330 |
Changes in equity |
Total comprehensive income | - | 264 | - | - |
Balance at 31st December 2021 | 2 | 8,959 | 2,342 | 8,330 |
Changes in equity |
Total comprehensive income | - | 1,788 | - | - |
Balance at 31st December 2022 | 2 | 10,747 | 2,342 | 8,330 |
Currency |
Merger | translator | Non-controlling | Total |
reserve | reserve | Total | interests | equity |
€'000 | €'000 | €'000 | €'000 | €'000 |
Balance at 1st January 2021 | 1,550 | (10,450 | ) | 10,469 | 19,314 | 29,783 |
Changes in equity |
Total comprehensive income | - | 1,672 | 1,936 | 613 | 2,549 |
Balance at 31st December 2021 | 1,550 | (8,778 | ) | 12,405 | 19,927 | 32,332 |
Changes in equity |
Total comprehensive income | - | (451 | ) | 1,337 | 439 | 1,776 |
Balance at 31st December 2022 | 1,550 | (9,229 | ) | 13,742 | 20,366 | 34,108 |
Pinkas Ltd (Registered number: 06040998) |
Company Statement of Changes in Equity |
for the Year Ended 31st December 2022 |
Called up |
share | Retained | Share |
capital | earnings | premium |
€'000 | €'000 | €'000 |
Balance at 1st January 2021 | ( |
) |
Changes in equity |
Total comprehensive income | - | ( |
) | - |
Balance at 31st December 2021 | 2 | (1,308 | ) | 2,342 |
Changes in equity |
Total comprehensive income | - | ( |
) | - |
Balance at 31st December 2022 | ( |
) |
Currency |
Capital | translator | Total |
reserve | reserve | equity |
€'000 | €'000 | €'000 |
Balance at 1st January 2021 | ( |
) |
Changes in equity |
Total comprehensive income |
Balance at 31st December 2021 | 8,330 | ( |
) | 9,046 |
Changes in equity |
Total comprehensive income | ( |
) | ( |
) |
Balance at 31st December 2022 | 8,330 | ( |
) |
Pinkas Ltd (Registered number: 06040998) |
Consolidated Statement of Cash Flows |
for the Year Ended 31st December 2022 |
2022 | 2021 |
€'000 | €'000 |
Cash flows from operating activities |
Cash generated from operations | 1 | 28,218 | 21,031 |
Interest paid | 756 | - |
Lease interest paid | (1,272 | ) | (931 | ) |
Finance costs paid | - | (2,434 | ) |
Tax paid | (529 | ) | (90 | ) |
Net cash from operating activities | 27,173 | 17,576 |
Cash flows from investing activities |
Purchase of intangible fixed assets | (1,560 | ) | (776 | ) |
Purchase of tangible fixed assets | (17,927 | ) | (8,648 | ) |
Sale of intangible fixed assets | 225 | - |
Sale of tangible fixed assets | (1,844 | ) | (2,318 | ) |
Interest received | 54 | 48 |
Net cash from investing activities | (21,052 | ) | (11,694 | ) |
Cash flows from financing activities |
Proceeds from loans | 288 | 3,486 |
Loan repayments in year | (2,638 | ) | (2,266 | ) |
Payment of lease liabilities | (6,566 | ) | (6,336 | ) |
Amount withdrawn by directors | - | 55 |
Non-Controlling Interest | 136 | (522 | ) |
Proceeds from sale leaseback equipment | 1,306 | 1,003 |
Net cash from financing activities | (7,474 | ) | (4,580 | ) |
(Decrease)/increase in cash and cash equivalents | (1,353 | ) | 1,302 |
Cash and cash equivalents at beginning of year |
2 |
2,993 |
1,828 |
Effect of foreign exchange rate changes | (315 | ) | (137 | ) |
Cash and cash equivalents at end of year | 2 | 1,325 | 2,993 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Statement of Cash Flows |
for the Year Ended 31st December 2022 |
1. | RECONCILIATION OF PROFIT BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS |
2022 | 2021 |
€'000 | €'000 |
Profit before income tax | 3,353 | 712 |
Depreciation charges | 17,052 | 13,744 |
Loss/(profit) on disposal of fixed assets | 281 | (12 | ) |
Forex difference on consolidation | 1,656 | 2,962 |
Finance costs | 516 | 3,384 |
Finance income | (54 | ) | (48 | ) |
22,804 | 20,742 |
Increase in inventories | (508 | ) | (171 | ) |
Decrease/(increase) in trade and other receivables | 535 | (1,498 | ) |
Increase in contract assets | (507 | ) | - |
Increase in trade and other payables | 5,894 | 2,501 |
Decrease in contract liabilities | - | (543 | ) |
Cash generated from operations | 28,218 | 21,031 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Statement of Cash Flows in respect of cash and cash equivalents are in respect of these Statement of Financial Position amounts: |
Year ended 31st December 2022 |
31.12.22 | 1.1.22 |
€'000 | €'000 |
Cash and cash equivalents | 1,325 | 2,993 |
Year ended 31st December 2021 |
31.12.21 | 1.1.21 |
€'000 | €'000 |
Cash and cash equivalents | 2,993 | 1,828 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES |
Basis of preparation |
Pinkas Ltd. (the "Company") is a company incorporated and domiciled in the UK. Pinkas Limited is a private company, limited by shares, incorporated in England and Wales. The address of the registered office is Office 6, Bizspace, Courtwick Lane, Littlehampton, England, BN17 7TL. The registration number is 06040998. |
The group financial statements consolidate those of the Company and its subsidiaries (together referred to as the "Group"). The parent company financial statements present information about the Company as a separate entity and not about its group. |
The Company and its subsidiaries (together "the Group") has 31 entities: |
1. Pinkas Limited, |
2. RETN Capital Ltd., |
3. RETN Limited (UK), |
4. RETN Poland SP. z o.o (Poland), |
5. RETN GmbH (Germany), |
6. RETN B.V. (The Netherlands), |
7. RETN GmbH (Switzerland), |
8. RETN SRL (Italy), |
9. RETN TELEKOMÜNIKASYON HIZMETLERI LIMITED SIRKETI (Turkey), |
10. RETN Nordic AB (Sweden), |
11. RETN Baltic AS (Estonia), |
12. RETN Finland OY (Finland), |
13. RETN Baltic SIA (Latvia), |
14. RETN (Hong Kong) Limited (Hong Kong), |
15. RETN Consultancy services (China), |
16. RETN K.K. (Japan), |
17. RETN PTE. LTD. (Singapore), |
18. RETN Telecoms (Taiwan), |
19. RETN KZ LLC (Kazakhstan), |
20. RETN Kyrgyzstan Ltd (Kyrgyzstan), |
21. RETN LLC (Ukraine), |
22. RETN BALKANS LTD (Bulgaria), |
23. RETN AM LLC (Armenia), |
24. RETN LLC (Georgia), |
25. RETN Networks SRL (Moldova), |
26. JSC RetnNet (Russian Federation), |
27. Foreign Unitary Enterprise RETN (Belarus), |
28. RETN Hungary Kft (Hungary), |
29. RETN d.o.o. Beograd (Serbia), |
30. UAB RETN Lithuania (Lithuania), |
31. RETN US LLC (USA). |
The Company has representative offices in St. Petersburg (Russian Federation) and Kiev (Ukraine). In 2022, the representative office in St. Petersburg was closed. In 2022, the Group also set up entities in Hungary, Serbia, US and Lithuania as it continues to expand its operations. |
The Group financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). |
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs"). The Group also prepares consolidated financial statements in accordance with International Financial Reporting Standards in conformity with the requirements of the Companies Act 2006 ("Adopted IFRSs"), which include along with consolidated, the financial information of the Company prepared in accordance with Financial reporting Standard 101 Reduced Disclosure Framework ("FRS 101"). |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these Group financial statements. The principal activities are disclosed in Director's report. |
The financial statements are presented in Euros and rounded to the nearest thousand €. |
Measurement convention |
The financial statements are prepared on the historical cost basis, except for revaluation of financial instruments. |
Going Concern |
The Group has positive cash flows from operating activities and adequate financial resources and continued support from its shareholders. The Management has prepared forecasts indicating that the Group will continue in operational existence, and continue growing, for the foreseeable future, and at least for twelve months from the approval of these consolidated financial statements. Therefore, the Management believes that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook and therefore continue to adopt the going concern basis of accounting in preparing the annual consolidated financial statements. |
Basis of consolidation |
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. |
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. Unrealised gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. |
Critical accounting estimates and judgements |
The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from those estimates. |
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. |
Information about critical assumptions in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes: |
- | Note 20 - Lease term: sufficient assurance that the Group will exercise the option to extend the lease, and the Group's interpretation of the penalties in lease agreements. |
- | Notes 1, 10 - useful lives of property, plant and equipment: assessment of useful economic lives of property, plant and equipment - the Group depreciates the property, plant and equipment using the straight-line method over their estimated useful lives. The estimated useful life reflects management's estimate of the period that the Group intends to derive future economic benefits from the use of the Group's property, plant and equipment. Changes in the expected level of usage and technological developments could affect the useful economic lives of these assets which could then consequentially impact future depreciation charges. |
Revenue recognition |
Revenue is recognized when it is probable that future economic benefits will flow to the Group and the amount of revenue can be measured reliably. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
Revenue for services rendered (works), goods transferred is recognized for each identified performance obligation to transfer a distinct product or a distinct service (work) as a separate performance obligation at the moment of the transfer of goods or services (works) to the buyer. Revenue from the transfer of goods or services (works) to buyers is recognized in an amount of consideration that the Group expects to receive in exchange for such goods or services (works). |
If the promised product or service (work) is not distinct, then they are grouped with other promised goods or services (work) under the contract until a distinct package of goods or services (work) is identified. |
If the buyer receives and consumes the benefits of the contract as the Group fulfils its obligations, or the buyer controls the asset created or improved by the Group under the contract throughout the entire period of creation or improvement, revenue is recognized over the term of the contract. |
The Group's revenue is derived from the provision of telecommunication services, the main three groups are Capacity (Wavelength, and leased channels); IP Transit and Internet Access services; L2/L3 VPN services. Revenue from other activity which is not significant to these consolidated financial statements. |
The Group recognises revenue from Data transmission revenue (IP transit and Internet access) and from Capacity and VPN services over time as the services are provided. |
Revenue from other services and other sales is recognised when control over the goods have passed to the buyer or when the services are provided. |
The services are provided to customers based on standard term contracts, usually 12-36 months, which provide for fixed monthly recurring fee and installation fee. IP transit may contain a variable element, related to the usage in excess of pre-agreed transfer. Under Russian law the contract can be terminated any time. The Group also enters from time to time into long-term contracts which provide for the delivery of the services for 5-10 years. The standard payments terms are 30 days from invoice date. Usually the services are billed monthly, with the exception to quarterly and advance payments. |
Contracts with customers usually contain certain requirements as to the availability of the services- Service Level Agreements ('SLA'). In case when SLA is not met, the customer is entitled to the compensation and receives a credit note to its monthly invoice. |
Provisions |
A provision is recognised in the consolidated statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability. The unwinding of the discount is recognised as finance cost. |
Finance income and finance costs |
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Dividend income is recognised in the Statement of profit and loss and other comprehensive income on the date the entity's right to receive payments is established. Foreign currency gains and losses are reported on a net basis. |
Financing expenses comprise borrowing costs, finance lease costs recognised in profit or loss using the effective interest method, unwinding of the discount on provisions, and net foreign exchange losses that are recognised in the Statement of profit and loss and other comprehensive income (see foreign currency accounting policy). Financing income comprise interest receivable on funds invested, dividend income, and net foreign exchange gains. |
Borrowing costs are interest and other costs that the Group incurs in connection with the borrowing of funds. Borrowing costs may include: |
- | interest expense on borrowings; |
- | ancillary costs incurred in connection with the transaction of loans and borrowings, issue and placement of loan obligations; |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
- | exchange differences arising from foreign currency borrowings to the extent they are treated as an adjustment to interest costs. |
Borrowing costs that are not capitalised are recognised in profit or loss. |
Cash and cash equivalents |
Cash represents cash in hand and deposits held on demand with financial institutions. Cash equivalents are short-term, highly-liquid investments with original maturities of three months or less (as at their date of acquisition). Cash equivalents are readily convertible to known amounts of cash and subject to an insignificant risk of change in that cash value. |
In the presentation of the Statement of Cash Flows, cash and cash equivalents also include bank overdrafts. Any such overdrafts are shown within borrowings under ‘current liabilities’ on the Statement of Financial Position. |
Intangible assets |
Intangible assets that are acquired by the Group are stated at cost less accumulated amortisation and accumulated impairment losses. |
Amortisation is charged to the Statement of profit and loss and other comprehensive income on a straight-line basis over the estimated useful lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life (goodwill) are systematically tested for impairment at each Statement of financial position date. The intangible assets owned by the company are IP addresses which have an indefinite useful life. The Group determines whether there were any indications that an asset may be impaired (i.e. its carrying amount may be higher than its recoverable amount). If there is an indication that an asset may be impaired, then the asset's carrying amount is reduced and any impairment loss is charged to expenses. |
Other intangible assets are amortised from the date they are available for use. The estimated useful lives are as follows: |
- | Licenses, patents and trademarks | 5 years |
- | Development costs | 4 years |
- | Software | 1-2 years |
- | Data centre (customer relationships) | 16.1 years |
Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an asset should include all charges necessary to place the asset into its intended location and condition for use, which includes internal labour costs. |
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. |
Any gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within other income/other expenses in profit or loss. |
Depreciation methods, useful lives and residual values are reviewed at each financial year end and adjusted if appropriate. |
Depreciation is charged to the consolidated statement of profit or loss and other comprehensive income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows: |
- | buildings | 17-20 years; |
- | colocation racks | 12 -15 years; |
- | fibre optics | 12.5 -15 years; |
- | network and other equipment | 2-7 years; |
- | office equipment and furniture | 1-5 years on cost; |
- | transport | 3-7 years. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Financial instruments |
Initial recognition |
Trade receivables are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions of the instrument. |
A financial asset or financial liability is initially measured at fair value, for an item not at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price. |
Classification and subsequent measurement |
Financial assets |
On initial recognition, a financial asset is classified as measured at: amortised cost; fair value through other comprehensive income (FVOCI) - debt investment; FVOCI - equity investment; or FVTPL. |
Financial assets are reclassified subsequent to their initial recognition unless the Group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. |
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL: |
- | it is held within a business model whose objective is to hold assets to collect contractual cash flows; and |
- | its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. |
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. |
Financial assets - Business model assessment |
The Group makes an assessment of the objective of the business model in which a financial asset is held at certain instruments level. |
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the Group's continuing recognition of the assets. |
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL. |
Financial assets - Assessment whether contractual cash flows are solely payments of principal and interest |
For the purposes of this assessment, 'principal' is defined as the fair value of the financial asset on initial recognition. 'Interest' is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Group considers: |
- | contingent events that would change the amount or timing of cash flows; |
- | terms that may adjust the contractual coupon rate, including variable-rate features; |
- | prepayment and extension features; and |
- | terms that limit the Group's claim to cash flows from specified assets (e.g. non-recourse features). |
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual par amount, a feature that permits or requires prepayment at an amount that substantially represents the contractual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable additional compensation for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is insignificant at initial recognition. |
Financial assets - Subsequent measurement and gains and losses |
Financial assets at FVTPL | These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss. |
Financial assets at amortised cost | These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss. |
Debt investments at FVOCI | These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognised in profit or loss. Other net gains and losses are recognised in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss. |
Equity investments at FVOCI | These assets are subsequently measured at fair value. Dividends are recognised as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognised in OCI and are never reclassified to profit or loss. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Financial liabilities |
Classification, subsequent measurement and gains and losses |
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative, or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss on derecognition is also recognised in profit or loss. |
The Group has fixed rate bank loans for which the banks have the option to revise the interest rate following the change of key rate set by the Central Bank of Russia (CBR). The Group considers these loans as in essence floating rate loans. |
Derecognition |
Financial assets |
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset. |
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognised. |
Financial liabilities |
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognised at fair value. |
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. |
Offsetting of financial instruments |
Financial assets and financial liabilities are offset and the net amount presented in the consolidated statement of financial position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously. |
Inventories |
Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs in bringing them to their existing location and condition. |
The Group annually assesses the liquidity and condition of inventory. A special allowance is created for obsolete inventories and inventories unlikely to be used or sold. Inventory obsolescence allowance reflects the estimated decline in their cost at the reporting date. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Taxation |
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the consolidated statement of profit or loss and other comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. |
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the consolidated statement of financial position date, and any adjustment to tax payable in respect of previous years. |
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the Statement of financial position date. |
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which deferred tax asset can be utilised. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Impairment |
Financial assets |
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or group of financial assets is deemed to be impaired when there is objective evidence of impairment as a result of one or more events. |
In accordance with the requirements of IFRS 9, an asset impairment model for recognizing impairment allowances is compiled based on expected credit losses ("ECLs"), and not just credit losses incurred. The Group estimates loss allowance in an amount equal to the lifetime ECL because receivables are mostly short-term. |
Lifetime ECLs are ECLs that result from all possible default events over the expected life of a financial instrument. |
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. |
The Group has elected to use the simplified expected credit loss model when applying IFRS 9. |
Measurement of ECLs |
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Group expects to receive). |
Non-financial assets |
The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. |
The recoverable amount of an asset or cash-generating unit (CGU) is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the "cash-generating unit"). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units, or ("CGU"). |
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Foreign currencies |
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the Statement of financial position date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the consolidated statement of profit or loss and other comprehensive income. |
Non-monetary assets and liabilities that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. |
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group's presentational currency, Euro, at foreign exchange rates ruling at the statement of financial position date. The revenues and expenses of foreign operations are translated at an average rate for the year where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. |
Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve. When a foreign operation is disposed of, such that control, joint control or significant influence (as the case may be) is lost, the entire accumulated amount in the foreign currency translation reserve (FCTR), is recycled to profit or loss as part of the gain or loss on disposal. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Employee benefits |
Short-term benefits |
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. |
Share Option Plan |
In March 2019, the shareholders of RETN Capital approved the plan granting selected key employees the right to subscribe for or to convert any security into ordinary shares of RETN Capital up to amount of GBP 1,476,000. The plan was modified in 2021 and new grant was made available to participants. The plan, after 2021 modification provides for grant of option A and option B, which have different criteria of minimum valuation of the Company's equity. The options vest proportionally over 4-year period with all options vesting on exit. The term of the plan is 10 years. This plan is an exit only scheme, meaning that the options are exercisable only in the event of exit of the shareholders. The plan includes certain additional conditions to be met to be eligible to benefit from receiving any equity consideration, among others minimum valuation of the Company's shares at the moment of exit set for option A and option B type. |
Number | Weighted Average excercise price (EUR | ) |
Options as at 1 January 2022 | 1,243,682 | 8.471* |
Forfeited | (31,619 | ) | 8.471 |
New grant | - | 8.471 |
Options as at 31 December 2022 | 1,212,063 | 8.471 |
Exercisable | - |
*In 2021 the Option Plan was modified and the exercise price of option B was changed to be the same as of option A, being EUR 8.471 for new and existing share options. At the same time the minimum valuation required for the exit event was reduced. Both changes were designed to make the terms of the option plan more attractive to the participants. |
No charge has been recognised during the year in relation to the share options due to not meeting the criteria of exit and minimum valuation which are required to exercise the options. In 2021, the Group was engaged in the process of consulting new potential investors and building its next 5 year plan. The project ended without an outcome which would be satisfactory for the shareholders and share options were not exercisable. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Functional currency |
The functional currency for each of the Group's consolidated entities is the currency of the primary economic environment in which the entity operates. |
Group company | Country | Functional currency |
JSC RetnNet | Russian Federation | Russian Rouble ("RUB") |
RETN Capital Limited | United Kingdom | British Pound ("GBP") |
RETN Limited | United Kingdom | British Pound ("GBP") |
RETN Baltic AS | Estonia | Euro ("EUR") |
RETN GmbH | Germany | Euro ("EUR") |
RETN Baltic SIA | Latvia | Euro ("EUR") |
RETN B.V. | Netherlands | Euro ("EUR") |
RETN Poland Sp. z o.o. | Poland | Polish Zloty ("PLN") |
RETN Hong Kong (HK) Ltd | Hong-Kong | Hong-Kong Dollar ("HKD") |
RETN Consultancy Services Ltd. |
China |
Chinese Yuan ("CNY") |
RETN KZ LLC | Kazakhstan | Kazakhstani Tenge ("KZT") |
Foreign Unitary Enterprise RETN |
Belarus |
Belarusian Rouble ("BYR") |
LLC RETN | Ukraine | Ukraine Hryvnia ("UAH") |
RETN GmbH | Switzerland | Swiss Franc ("CHF") |
RETN TELEKOMÜNIKASYON IZMETLERI LIMITED SIRKETI |
Turkey |
Turkish Lira ("TRY") |
RETN Nordic AB | Sweden | Swedish Krona ("SEK") |
RETN K.K. | Japan | Japanese Yen ("JPY") |
RETN PTE. LTD. | Singapore | Singapore Dollar ("SGD") |
RETN Telecoms Ltd. | Taiwan | Taiwan Dollar ("TWD") |
RETN AM LLC | The Republic of Armenia | Armenian Dram ("AMD") |
RETN LLC | Georgia | Georgian Lari ("GEL") |
RETN Kyrgyztan Ltd | Kyrgyzstan | Kyrgyzstani Som ("KGS") |
RETN SRL | Italy | Euro ("EUR") |
RETN BALKANS LTD | Bulgaria | Bulgarian Lev ("BGN") |
RETN Networks SRL | Moldova | Moldovan leu ("MDL") |
RETN Finland OY | Finland | Euro ("EUR") |
RETN Lithuania UAB | Lithuania | Euro ("EUR") |
RETN US LLC (USA) | USA | United States Dollar ("USD") |
RETN Hungary Kft | Hungary | Hungarian Forint ("HUF") |
RETN d.o.o Beograd (Serbia) | Serbia | Serbian Dinar ("RSD") |
Presentation Currency |
All amounts in these consolidated financial statements are presented in Euro ("EUR"), unless otherwise stated. All financial information presented in EUR has been rounded to the nearest thousands, except when otherwise indicated. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Translation from functional to presentation currency |
As at 31 December 2022 and 31 December 2021 the principle rates of exchange used for translating foreign currency balances were as follows: |
Average 2022 | 31.12.22 | Average 2021 | 31.12.21 |
RUB for 1EUR | 73.8401 | 78.8640 | 87.1458 | 84.8876 |
UAH for 1EUR | 33.9722 | 39.0873 | 32.0258 | 30.6939 |
GBP for 1EUR | 0.8524 | 0.8843 | 0.8597 | 0.8394 |
KZT for 1EUR | 484.1439 | 493.4189 | 502.8705 | 492.6249 |
HKD for 1EUR | 8.2488 | 8.3505 | 9.1940 | 8.8428 |
PLN for 1EUR | 4.6810 | 4.6721 | 4.5618 | 4.5878 |
BYR for 1EUR | 3.0056 | 2.6955 | 2.9984 | 2.8914 |
CHF for 1 EUR | 1.0048 | 0.9893 | 1.0810 | 1.0353 |
SGD for 1 EUR | 1.4511 | 1.4339 | 1.5890 | 1.5304 |
SEK for 1 EUR | 10.6261 | 11.1484 | 10.1420 | 10.2585 |
TRY for 1 EUR | 17.3534 | 19.9843 | 10.4312 | 14.9681 |
JPY for 1 EUR | 137.9632 | 140.2750 | 129.8316 | 130.5380 |
BGN for 1 EUR | 1.9558 | 1.9558 | 1.9558 | 1.9558 |
TWD for 1 EUR | 31.3206 | 32.8278 | 33.0284 | 31.4035 |
AMD for 1 EUR | 438.1953 | 391.1153 | 581.5375 | 525.2929 |
GEL for 1 EUR | 3.0455 | 2.8458 | 3.7802 | 3.4820 |
MLD for 1 EUR | 19.6696 | 20.3106 | 20.6847 | 19.9858 |
USD for 1 EUR | 1.0536 | 1.0699 | - | - |
HUF for 1 EUR | 390.6622 | 398.8000 | - | - |
SRD for 1 EUR | 117.2789 | 117.1529 | - | - |
Leases |
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. |
Group as a lessee |
The Group as a lessee recognised right-of-use assets under all lease agreements which represent the right to use the underlying asset, and lease liabilities, which represent an obligation for lease payments. |
The agreement or its components contain a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration. To apply this definition the Group assesses whether the contract meets two key evaluations which are whether: |
- |
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being identified at the time the asset is made available to the Group; |
- |
the Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use, considering its rights within the defined scope of the contract. |
At the commencement date of the lease liability is estimated as present value of the remaining lease payments. Lease payments are discounted using the interest rate implied by the contract if such a rate is readily determinable otherwise incremental borrowing rate of the Group is applicable. At the commencement date of the lease the Group measures the right-of-use assets at initial cost. |
- | Lease liability |
(a) | increasing the carrying amount to reflect interest charge on the lease liability; |
(b) | decreasing the carrying amount to reflect lease payments made; |
(c) |
restating the carrying amount to reflect the revaluation or modification of leases or to reflect substantially revised fixed lease payments. |
- | Right-of-use assets at initial cost less accumulated depreciation; depreciation is calculated on a straight-line basis over the term of the lease |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
The term of the lease corresponds to non-cancellable period of a lease agreement unless there is sufficient confidence in the extension of the lease. The following facts and circumstances are analysed when assessing the lease term that can affect the economic feasibility of extending lease agreements: |
- | the availability of alternatives |
- | probability of asset replacement |
- | costs to terminate the lease |
- | historical experience when assessing lease terms with extension or termination options |
- | the Group's strategic plans |
The maturity of leasing obligation ranges from 1 year to over 15 years. |
The value right-of-use assets is tested for impairment in accordance with IAS 36 "Impairment of Assets". |
The present value of lease liabilities is restated in the following cases: |
- | change in future lease payments as a result of a change in rate |
- | change of rental terms associated with the option to extend or terminate a contract |
The Group recognises interest expense on lease liabilities and depreciation charge on right-of-use assets separately. |
To calculate the lease liability Group used weighed average incremental borrowing rate of 7.5%. |
Group as a lessor |
For Group as a lessor leasing is classified according to IFRS 16. |
Sale and leaseback |
Sale and leaseback transaction occur where the Group sells an asset and immediately reacquires the use of the asset by entering into a lease contract with the buyer. For sale and finance leasebacks, any profit from the sale is deferred and amortised over the lease term. For sale and operating leasebacks, generally the assets are sold at fair value, and accordingly the profit or loss from the sale is recognised immediately in the Group consolidated statement of profit or loss and other comprehensive income. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Business environment |
Russian business environment |
Substantial Group revenue comes from the Russian Federation. In 2022 following the Russian invasion of Ukraine, the United Kingdom, the European Union, USA and some other countries have imposed new packages of sanctions against a number of Russian individuals and legal entities and services provided by these countries. They are regarded as most severe sanctions ever imposed on any major economy. |
The imposition of the sanctions has led to increased economic uncertainty, withdrawal of many foreign entities from Russia, a reduction in both local and foreign direct investment inflows due to significant uncertainty. As a result, the Russian economy has become more and more isolated from the international markets. Russian businesses will have no access to international equity and debt markets and may become increasingly dependent on the state support for their operations. The longer-term effects of current and possible future sanctions are difficult to determine. |
JSC RetnNet (Russia) accounts for EUR 24,107 thousand of revenue in 2022 (35%). Management continue to monitor all their options available and continue to assess various scenarios in respect of their operations in Russia. |
Ukrainian business environment |
Russia's renewed attacks on Ukraine from 24th February 2022 is an escalation of the political and economic changes in 2013, followed by various events in Ukraine in 2014, leading to the accession of the Republic of Crimea to the Russian Federation and creation of the self-proclaimed republics of Donetsk and Lugansk in the East of Ukraine. These events resulted in a significant deterioration of the relationship between Ukraine and the Russian Federation. RETN Group does not provide any services to clients in Crimea, Luhansk, or Donetsk regions (similarly with any recently occupied regions of Ukraine). |
RETN's Ukraine operations contribute EUR 2,816 thousand of the Group's revenue (4%) and the Group's proportion of PPE located in Ukraine amounted to EUR 2,621 thousand as of end of 2022 (4%). The RETN Ukraine continues to provide its services in 2022 to its customers and collects payment for its services. |
Belarusian Business Environment |
The EU and UK adopted new sanctions in 2022 and 2023, as an expression of the condemnation of Belarus' involvement in Russia's military aggression against Ukraine. Restrictions relate to bans on targeted sectors, individuals and entities, they are financial or trade-related. |
In 2022 IUP RETN (Belarus) has legally been moved to JSC RetnNet and is not a direct subsidiary anymore. |
IUP RETN (Belarus) accounts for only EUR 378 thousand of the total group revenue in 2022 (0.5%). The Group has a cooperation agreement with a Belarussian partner for developing an international optic fibre line as described in Note 2. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
1. | ACCOUNTING POLICIES - continued |
Issued ifrs not yet applied |
The following standards pronouncements that have been issued by the International Accounting Standards Board (IASB) will become effective in future financial reporting periods and have not been adopted by the Group in these consolidated financial statements: |
New and Amended Standards and Interpretations |
Interest Rate Benchmark Reform, Phase 2: Amendments to IFRS9, IAS39, IFRS7, IFRS4, IFRS16 |
The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR). The amendments include the following practical expedients: |
- A practical expedient to require contractual changes, or changes to cash flows that are directly required by the reform, to be treated as changes to a floating interest rate, equivalent to a movement in a market rate of interest |
- Permit changes required by IBOR reform to be made to hedge designations and hedge documentation without the hedging relationship being discontinued |
- Provide temporary relief to entities from having to meet the separately identifiable requirement when an RFR instrument is designated as a hedge of a risk component. |
These amendments had no impact on the consolidated financial statements of the Group. The Group intends to use the practical expedients in future periods if they become applicable. |
Standards not yet effective for the financial statements for the year ended 31 December 2022 |
Standards not yet effective for the financial statements for the year ended 31 December 2022 |
Effective for annual periods beginning on or after |
IFRS 17 "Insurance Contracts", including amendments | 1 January 2023* |
Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting Policies |
1 January 2023* |
Amendments to IAS 8: Definition to Accounting Estimates | 1 January 2023* |
Amendments to IAS 12: Defined Tax Related to Assets and Liabilities Arising from a Single Transaction |
1 January 2023* |
Amendments to IAS 1: Classification of Liabilities as Current or Non-current | 1 January 2023* |
Amendments to IFRS 16: Lease Liability in a Sale and Leaseback | 1 January 2024 |
Amendments to IAS 1: Non-current Liabilities with Covenants | 1 January 2024 |
*Subject to UK endorsement |
The Group expects that the adoption of the amendments and the standards listed above will not |
have a significant impact on the Group’s results of operations and financial position in the period of initial application. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
2. | REVENUE |
Segmental reporting |
2022 | 2021 |
'000 EUR | '000 EUR |
IP transit | 26,612 | 21,776 |
Capacity and wavelength | 19,984 | 18,582 |
VPN services | 14,724 | 11,747 |
Other telecoms services | 6,148 | 4,286 |
Telecommunications services | 67,468 | 56,391 |
Other revenue | 1,550 | 1,740 |
Revenue | 69,018 | 58,131 |
All revenue recognised are from contracts with customers. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
Below is a breakdown of revenue by subsidiary. Each RETN subsidiary is responsible for sale to its home market and certain surrounding countries, except for RETN Ltd (UK) which has responsibility not only for its home market but also for large global accounts. |
2022 | % | 2021 | % |
'000 EUR | '000 EUR |
Russia | 24,113 | 17,524 |
JSC RetnNet (Russia) | 24,113 | 35 | 17,524 | 30 |
England, UK | 16,157 | 14,912 |
RETN Ltd (UK) | 16,157 | 23 | 14,912 | 26 |
Europe | 21,369 | 20,243 |
RETN GmbH (Germany) | 4,241 | 6 | 4,111 | 7 |
RETN Baltic SIA (Latvia) | 3,420 | 5 | 2,213 | 4 |
RETN Poland Sp. Zo.o. (Poland) | 3,345 | 5 | 3,802 | 7 |
RETN LLC (Ukraine) | 2,816 | 4 | 2,874 | 5 |
RETN B.V. (The Netherlands) | 2,659 | 4 | 3,159 | 5 |
RETN Baltic AS (Estonia) | 2,126 | 3 | 2,221 | 4 |
RETN Nordic AB (Sweden) | 782 | 1 | 737 | 1 |
RETN BALKANS LTD (Bulgaria) | 534 | 1 | 197 | - |
IUP RETN (Belarus) | 378 | 1 | 301 | 1 |
RETN SRL (Italy) | 232 | - | 202 | - |
RETN GmbH (Switzerland) | 203 | - | 179 | - |
RETN AM LLC (Armenia) | 182 | - | 85 | - |
RETN Finland Oy | 162 | - | - | - |
RETN Networks SRL (Moldova) | 124 | - | 46 | - |
RETN TELEKOMÜNIKASYON HIZMETLERI LIMITED SIRKETI (Turkey) |
94 |
- |
66 |
- |
RETN GE LLC (Georgia) | 60 | - | 50 | - |
RETN KZ Ltd | 10 | - | - | - |
RETN Lithuania UAB (Lithuania) | 1 | - | - | - |
Asia | 7,379 | 5,452 |
RETN HK Ltd. (Hong Kong) | 5,425 | 8 | 4,005 | 7 |
RETN PTE (Singapore) | 1,181 | 2 | 804 | 1 |
RETN Telecoms Ltd. (Taiwan) | 773 | 1 | 643 | 1 |
Total | 69,018 | 100 | 58,131 | 100 |
Below is a breakdown of revenue by timing of revenue recognition. |
2022 | 2021 |
'000 EUR | '000 EUR |
Revenue recognised over time | 64,320 | 53,875 |
Revenue recognised at a point in time | 4,698 | 4,256 |
Revenue | 69,018 | 58,131 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
Revenue recognised over time |
Performance obligation of the Group is to provide data transmission, capacity through fibre optic channels and VPN services. Customers simultaneously receive and consume services. The Group issues bills on a monthly basis depending on terms of the contracts in advance or at end of the month. |
Revenue recognised at a point in time |
Revenue recognised at a point in time is mainly from sale of equipment. Performance obligation of the Group is to transfer a control over certain assets to customer. The Group issues bills when goods are despatched. |
Contract balances |
The following table provides information about receivables and contract liabilities from contracts with customers. |
Note | 31 December 2022 | 31 December 2021 |
'000 EUR | '000 EUR |
Receivables, which are included in 'trade and other receivables' |
21 |
5,120 |
4,827 |
Contract liabilities | below | (9,683 | ) | (8,973 | ) |
Under "Deferred income" and "Other non-current liabilities" lines at the consolidated statement of financial position the Group reflects contract liabilities arising from contracts with customers - Group's obligation to provide services to customers for which the Group received consideration. During 2022 EUR 1,589 thousand have been recognised in revenue. |
As at 31 December 2022 the contract liabilities represent the aggregate amount of the transaction price, which is expected to be recognised as revenue as follows: |
31 December 2022 | 31 December 2021 |
'000 EUR | '000 EUR |
Over the next year | 1,811 | 1,589 |
Over the 2nd year | 1,304 | 1,212 |
Between 3-5 years | 3,232 | 2,863 |
Between 6-11 years | 3.336 | 3,309 |
9,683 | 8,973 |
Contract balances |
2022 | 2021 |
€'000 | €'000 |
Contract assets |
Non-current |
Contract assets | 3,269 | 2,762 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
2. | REVENUE - continued |
In 2017 the Group signed an agreement with Transtelecom Kazakhstan for developing an international optic fibre line. The line is 8,153 km long from Russia-Kazakhstan border to Kazakhstan-China border. This agreement is for 11 years (till 2030). According to the agreement Transtelecom contributed fibre and the Group contributed cash and telecom equipment. RETN and Transtelecom will be using infrastructure together and each party will compensate to another party for contribution and mutual services by paying 50% of cash inflow from usage of developed infrastructure. |
During 2019 the Group concluded the contract with China Mobile for 7 years which was paid up front. The advance received from China Mobile is shown within contract liabilities. To meet its obligations under the agreement, the Group paid 50% of the collected revenue to Transtelecom Kazakhstan. This prepayment is shown within non-current assets in the consolidated statement of financial position. |
The Group entered into similar agreement with Beltelecom (BY) in August 2019 for developing an international optic fibre line. This agreement is made for 11 years (till 2030). |
3. | EMPLOYEES AND DIRECTORS |
2022 | 2021 |
€'000 | €'000 |
Wages and salaries | 10,517 | 8,496 |
Social security costs | 2,013 | 1,619 |
12,530 | 10,115 |
The average number of employees during the year was as follows: |
2022 | 2021 |
Management staff | 15 | 16 |
Technical staff | 90 | 79 |
Sales and admin staff | 124 | 121 |
4. | NET FINANCE COSTS |
2022 | 2021 |
€'000 | €'000 |
Finance income: |
Other financial income | 53 | 46 |
Interest receivable | 1 | 2 |
54 | 48 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
4. | NET FINANCE COSTS - continued |
2022 | 2021 |
€'000 | €'000 |
Finance costs: |
Interest expense | 195 | 156 |
Interest on finance agreement | 779 | 733 |
(Gain)/loss from foreign exchange differences (net) |
(1,730 |
) |
1,565 |
Interest on finance lease | 1,272 | 930 |
516 | 3,384 |
Net finance costs | 462 | 3,336 |
5. | PROFIT BEFORE INCOME TAX |
The profit before income tax is stated after charging/(crediting): |
2022 | 2021 |
€'000 | €'000 |
Cost of inventories recognised as expense | 30,188 | 25,400 |
Depreciation - owned assets | 16,425 | 13,227 |
Loss/(profit) on disposal of fixed assets | 273 | (27 | ) |
Licences, patents and trademarks amortisation | 610 | 500 |
Customer relationships amortisation | 17 | 17 |
Auditors' remuneration | 14 | 11 |
Audit subsidiaries financial |
statements | 433 | 341 |
The auditors remuneration is payable to the auditors of Pinkas Limited and the auditors remuneration for the subsidiaries is payable to the intermediate parent company auditors. |
Included in auditors' remuneration are fees for non audit services for EUR 5,428 (2021: EUR 4,583). |
6. | INCOME TAX |
Analysis of tax expense |
2022 | 2021 |
€'000 | €'000 |
Current tax: |
Tax | 945 | 241 |
Tax authority penalty | 2 | 1 |
Total current tax | 947 | 242 |
Deferred tax | 43 | 117 |
Total tax expense in consolidated statement of profit or loss | 990 | 359 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
6. | INCOME TAX - continued |
Factors affecting the tax expense |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2022 | 2021 |
€'000 | €'000 |
Profit before income tax | 3,353 | 712 |
Profit multiplied by the standard rate of corporation tax in the UK of 19 % (2021 - 19 %) |
637 |
135 |
Effects of: |
Effect of tax rates in different jurisdictions | 29 | 38 |
tax rates |
Non-deductible expenses | (291 | ) | 379 |
Utilisation of brought forward losses previously unrecognised | 131 | (277 | ) |
Unrecognised deferred tax assets on loss | 509 | 75 |
Carry back current year losses | (25 | ) | 9 |
Tax expense | 990 | 359 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
6. | INCOME TAX - continued |
The statutory real income tax rate for the subsidiary of the Group is presented below: |
- | registered in England and Wales in 2022 was 19% (2021: 19%); |
- | registered in the Russian Federation in 2022 is 20% (2021: 20%); |
- | registered in Ukraine in 2022 was 18% (2021: 18%); |
- | registered in Poland in 2022 was 19% (2021: 19%); |
- | registered in Belarus in 2022 was 18% (2021: 18%); |
- | registered in Estonia in 2022 was 25% (if profits were distributed) (2021: 25%); |
- | registered in Netherlands in 2022 was 25% (2021: 25%); |
- | registered in Germany in 2022 was 30% (2021: 30%); |
- | registered in Hong Kong in 2022 was 16.5% (2021: 16.5%); |
- | registered in Latvia in 2022 was 25% (if profits were distributed) (2021:25%); |
- | registered in Singapore in 2022 was 17% (2021: 17%); |
- | registered in Japan in 2022 was 30.62% (2021: 30.62%); |
- | registered in Sweden in 2022 was 21.4% (2021: 21.4%); |
- | registered in Turkey in 2022 was 22% (2021: 22%); |
- | registered in Taiwan in 2022 was 20% (2021: 20%); |
- | registered in Armenia in 2022 was 18% (2021: 28%); |
- | registered in Georgia in 2022 was 15% (2021: 15%); |
- | registered in Italy in 2022 was 24%. (2021: 24%); |
- | registered in Switzerland in 2022 was 15% (2021: 15%); |
- | registered in Kazakhstan in 2022 was 20% (2021: 20%); |
- | registered in Bulgaria in 2022 was 10% (2021: 10%); |
- | registered in Moldova in 2022 was 12% (2021: 12%); |
- registered in Finland in 2022 was 20% (2021: 18%); |
- registered in Serbia in 2022 was 15% (2021: 15%); |
- registered in Hungary in 2022 was 9% (2021: 9%); |
- registered in Lithuania in 2022 was 15% (2021: 15%); |
- registered in USA in 2022 was 21% (2021: 8.5%). |
The Group has unrecognised tax losses of EUR 5,223 thousand (2021: EUR 1,873 thousand) that are available to carry forward against future taxable income of the subsidiaries in which the losses arose. Deferred tax asset have not been recognised in respect of these losses as they may not be used to offset taxable profits elsewhere in the Group, they have arisen in subsidiaries that have been loss-making for some time, and there are no other tax planning opportunities or other evidence of recoverability in the near future to support the recognition of the losses as deferred income tax asset. |
7. | LOSS OF PARENT COMPANY |
As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company's loss for the financial year was €(21,936) (2021 - €(17,078)). |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
8. | GOODWILL |
Group |
€'000 |
COST |
At 1st January 2022 |
and 31st December 2022 | 14 |
NET BOOK VALUE |
At 31st December 2022 | 14 |
At 31st December 2021 | 14 |
9. | INTANGIBLE ASSETS |
Group |
Licences, |
patents |
and | Development | Customer |
trademarks | costs | relationships | Totals |
€'000 | €'000 | €'000 | €'000 |
COST |
At 1st January 2022 | 2,316 | 9 | 270 | 2,595 |
Acquisitions- externally |
purchases | 1,560 | - | - | 1,560 |
Disposals | (292 | ) | - | - | (292 | ) |
Exchange differences | (156 | ) | - | - | (156 | ) |
At 31st December 2022 | 3,428 | 9 | 270 | 3,707 |
AMORTISATION |
At 1st January 2022 | 814 | 9 | 68 | 891 |
Amortisation for year | 610 | - | 17 | 627 |
Eliminated on disposal | (67 | ) | - | - | (67 | ) |
Exchange differences | (44 | ) | - | - | (44 | ) |
At 31st December 2022 | 1,313 | 9 | 85 | 1,407 |
NET BOOK VALUE |
At 31st December 2022 | 2,115 | - | 185 | 2,300 |
At 31st December 2021 | 1,502 | - | 202 | 1,704 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
10. | PROPERTY, PLANT AND EQUIPMENT |
Group |
Construction |
Land and | in | Fibre |
buildings | progress | optics |
€'000 | €'000 | €'000 |
COST |
At 1st January 2022 | 14,774 | 1,899 | 32,759 |
Additions | 3,473 | 10,834 | 4,269 |
Disposals | (1,174 | ) | (223 | ) | (4,432 | ) |
Exchange differences | 8 | 67 | 763 |
Reclassification/transfer | 85 | (6,894 | ) | 5,680 |
At 31st December 2022 | 17,166 | 5,683 | 39,039 |
DEPRECIATION |
At 1st January 2022 | 6,914 | - | 17,589 |
Charge for year | 2,880 | - | 3,996 |
Eliminated on disposal | (875 | ) | - | (3,678 | ) |
Exchange differences | 7 | - | 49 |
At 31st December 2022 | 8,926 | - | 17,956 |
NET BOOK VALUE |
At 31st December 2022 | 8,240 | 5,683 | 21,083 |
At 31st December 2021 | 7,860 | 1,899 | 15,170 |
Office |
equipment | Network |
and | and other |
furniture | Transport | equipment | Totals |
€'000 | €'000 | €'000 | €'000 |
COST |
At 1st January 2022 | 860 | 382 | 60,929 | 111,603 |
Additions | 59 | 22 | 11,453 | 30,110 |
Disposals | (47 | ) | (37 | ) | (286 | ) | (6,199 | ) |
Exchange differences | (53 | ) | (102 | ) | (3,104 | ) | (2,421 | ) |
Reclassification/transfer | 62 | 77 | 990 | - |
At 31st December 2022 | 881 | 342 | 69,982 | 133,093 |
DEPRECIATION |
At 1st January 2022 | 647 | 266 | 32,919 | 58,335 |
Charge for year | 112 | 34 | 9,403 | 16,425 |
Eliminated on disposal | (46 | ) | (41 | ) | (1,816 | ) | (6,456 | ) |
Exchange differences | (48 | ) | (7 | ) | (376 | ) | (375 | ) |
At 31st December 2022 | 665 | 252 | 40,130 | 67,929 |
NET BOOK VALUE |
At 31st December 2022 | 216 | 90 | 29,852 | 65,164 |
At 31st December 2021 | 213 | 116 | 28,010 | 53,268 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
10. | PROPERTY, PLANT AND EQUIPMENT - continued |
Group |
As at 31 December 2022 the net book value of property, plant and equipment includes EUR 25,386 thousand in respect of right-of-use assets ("RoU") (2021: EUR 19,818 thousand). The depreciation charged to the consolidated statement of profit or loss and other comprehensive income during 2022 in respect of such assets amounted to EUR 7,439 thousand (2021: EUR 5,477 thousand). The total cash outflow in respect of leases related to RoU assets was EUR 7,838 thousand (2021: EUR 7,267 thousand). The RoU asset disclosure presented below. |
Right-of-use assets: |
'000 EUR |
Fibre optics |
Land and buildings |
Network and other equipment |
Spectrum |
Transport |
Total |
Gross value as at 1 January 2022 |
21,150 |
11,597 |
5,310 |
274 |
59 |
38,390 |
Accumulated depreciation as at 1 January 2022 |
(9,413 |
) |
(6,395 |
) |
(2,511 |
) |
(220 |
) |
(33 |
) |
18,572 |
Net value as at 1 January 2022 |
11,737 |
5,202 |
2,799 |
54 |
26 |
19,818 |
Additions | 2,267 | 3,468 | 952 | - | 21 | 13,708 |
Disposals - Gross Value | (1,824 | ) | (1,174 | ) | (56 | ) | (274( | ) | - | (3,328 | ) |
Disposals - Depreciation | 3,633 | 1,150 | 44 | 274 | - | 5,101 |
Depreciation charge | (2,929 | ) | (3,059 | ) | (1,394 | ) | (53 | ) | (4 | ) | (7,439 | ) |
Effect of movements in exchange rates, Gross value |
(6,239 |
) |
- |
3,594 |
- |
- |
2,645 |
Effect of movements in exchange rates, depreciation |
1,752 |
- |
(1,580 |
) |
- |
- |
172 |
Gross value as at 31 December 2022 |
22,353 |
13,891 |
9,800 |
- |
80 |
46,124 |
Accumulated depreciation as at 31 December 2022 |
(6,956 |
) |
(8,304 |
) |
(5,441 |
) |
- |
(37 |
) |
20,739 |
Net value as at 31 December 2022 |
15,397 |
5,587 |
4,358 |
- |
43 |
25,386 |
Advances given to suppliers for capital construction in the amount of EUR 1,072 thousand (2021: EUR 90 thousand) are included in the construction in progress. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
10. | PROPERTY, PLANT AND EQUIPMENT - continued |
Group |
(a) Security |
In relation to the overdraft with Barclays Bank PLC, a debenture and cross-guarantee agreement with Barclays Bank PLC was set up as a security by a way of fixed and floating charges in case the liabilities to Barclays Bank are not paid when due. Under the agreement the chargors are RETN Capital and its subsidiary RETN Limited. Fixed charges are represented by tangible assets of chargors (including land, plant, machinery and equipment), intangible assets, all securities, all rental income and the benefits to which the chargor is entitled or may become entitled in the future, and other benefits of all instruments, guarantees and other charges. Floating charges relate to all assets of chargors are represented by present and future undertakings. |
The net book value of property, plant and equipment of RETN Capital and its subsidiary RETN Limited as at 31 December 2022 amounted to EUR 2,105 thousand (2021: EUR 3,449 thousand), the net book value of intangible assets of RETN Capital and its subsidiary RETN Limited as at 31 December 2022 amounting to EUR 734 thousand (2021: EUR 426 thousand). |
The amount of overdraft payable to Barclays Bank as at 31 December 2022 amounted to nil. |
The Group's subsidiary- RETN LTD, assigned the rights to assets which were covered by hire purchase agreements by way of a legal mortgage to the Close Leasing Ltd. The subsidiary was the guarantor of these hire purchase contracts. The liability was repaid fully in July 2022, the charge was satisfied and removed. |
The loan agreement with Pireus Bank entered by RETN Ukraine is secured on the telecommunication equipment financed by Pireus Bank with the value of EUR 486 thousand and guarantee provided by RETN Capital. As at 31 December 2022 this loan was fully repaid. |
11. | INVESTMENTS |
Company |
Shares in |
group |
undertakings |
€'000 |
COST |
At 1st January 2022 |
and 31st December 2022 | 9,013 |
NET BOOK VALUE |
At 31st December 2022 | 9,013 |
At 31st December 2021 | 9,013 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
11. | INVESTMENTS - continued |
Company |
The group or the company's investments at the Statement of Financial Position date in the share capital of companies include the following: |
Subsidiary |
Registered office: 5th Floor, 3 Harbour Exchange Square, London, UK, E14 9GE |
Nature of business: |
% |
Class of shares: | holding |
2022 | 2021 |
€'000 | €'000 |
Aggregate capital and reserves |
Profit/(loss) for the year | ( |
) |
12. | INVENTORIES |
Group |
2022 | 2021 |
€'000 | €'000 |
Inventories | 894 | 386 |
13. | TRADE AND OTHER RECEIVABLES |
Group | Company |
2022 | 2021 | 2022 | 2021 |
€'000 | €'000 | €'000 | €'000 |
Current: |
Trade accounts receivable | 5,861 | 5,382 |
Allowance for trade and other |
receivables | (463 | ) | (99 | ) | - | - |
VAT reimbursable | 1,230 | 2,142 | - | - |
VAT from advances | 1 | - | - | - |
Prepayment for other taxes | 160 | 10 | - | - |
Other debtors | - | 55 | - | 55 |
Trade advances given | 632 | 570 | - | - |
Prepayments and accrued income | 1,312 | 1,208 | - | - |
8,733 | 9,268 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
13. | TRADE AND OTHER RECEIVABLES - continued |
For aging of the trade and other receivables please refer to Note 21. |
Movement of the allowance for trade and other receivables and advances given is presented below. |
Impairment allowances is compiled based on expected credit losses ("ECLs"). The Group estimates loss allowance to be immaterial. |
2022 | 2021 |
Allowance | Allowance | Total | Allowance | Allowance | Total |
for | for | for trade | for |
trade and | advances | and | advances |
other | given | other | given |
receivables | receivables |
Balance at 1 January | (99 | ) | - | (99 | ) | (174 | ) | - | (174 | ) |
Allowance for the year | (758 | ) | - | (758 | ) | 60 | - | 60 |
Allowance reversed/released for the year |
372 |
- |
372 |
19 |
- |
19 |
Effect of foreign currency translation differences |
22 |
- |
22 |
(4 |
) |
- |
(4 |
) |
Balance at 31 December | (463 | ) | - | (463 | ) | 99 | - | 99 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
14. | CASH AND CASH EQUIVALENTS |
Group | Company |
2022 | 2021 | 2022 | 2021 |
€'000 | €'000 | €'000 | €'000 |
Cash in hand | 2 | 12 |
Bank accounts | 1,323 | 2,981 |
1,325 | 2,993 |
31 December 2022 | 31 December 2021 |
'000 EUR | '000 EUR |
Cash at banks in EUR | 600 | 2,257 |
Cash at banks in USD | 353 | 443 |
Cash at banks in UAH | 75 | 72 |
Cash at banks in TWD | 50 | - |
Cash at banks in GBP | 35 | 52 |
Cash at banks in BYR | 31 | 19 |
Cash at banks in PLN | 27 | 7 |
Cash at banks in BGN | 25 | 13 |
Cash at banks in SGD | 25 | 2 |
Cash at banks in KZT | 13 | 2 |
Cash at banks in RUB | 9 | 23 |
Cash at banks in CNY | 9 | 9 |
Cash at banks in SEK | 8 | 2 |
Cash at banks in AMD | 5 | 17 |
Cash at banks in CHF | 5 | 8 |
Cash at banks in TRY | 4 | - |
Cash at banks in JPY | 1 | - |
Cash at banks in HUF | 1 | - |
Cash at banks in RSD | 1 | - |
Cash at banks in GEL | - | 13 |
Cash at banks in HKD | - | 19 |
1,277 | 2,958 |
As at 31 December 2022 and 2021 the Group did not have any restricted cash on the consolidated statement of financial position. |
Negative cash balances represent overdrafts on credit cards. |
Company | 2022 | 2021 |
'000 EUR | '000 EUR |
Cash at banks in EUR | 48 | 35 |
Cash at banks in GBP | - | - |
48 | 35 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
15. | NON-CONTROLLING INTERESTS |
On the 21st June 2017 RETN Capital Limited issued 1,587,302 preference shares to an external investor. This reduced Pinkas Limited's effective holding to 83.4%. Each Ordinary and Preference share carries one vote. |
On the 11th July 2018 RETN Capital Limited issued 952,381 preference shares to an external investor. This reduced Pinkas Limited's effective holding to 75.90%. Each Ordinary and Preference share each carries one vote. |
As this was a deemed disposal and Pinkas Limited still had control, the net share proceeds received by RETN Capital Limited has been recorded in the non-controlling interest. |
2022 | 2021 |
EUR '000 | EUR '000 |
Non-Controlling Interest b/f | 19,927 | 19,314 |
Net proceeds received by RETN Capital Limited | - | - |
Share of post-acquisition profits | 439 | 613 |
Non-Controlling Interest c/f | 20,366 | 19,927 |
16. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2022 | 2021 |
value: | €'000 | €'000 |
A Ordinary | £1 | 1 | 1 |
B Ordinary | £1 | 1 | 1 |
Redeemable preference | £1 | - | - |
2 | 2 |
The A and B Ordinary shares each carry one voting right and rank pari passu with each other. |
On the 12th February 2016, the Company issued 2 redeemable preference shares with a par value of £1 per share. The shares are redeemable when at least 51% of the shares in the company or in RETN Capital Limited are sold or the whole or a substantial part of the assets and undertaking of the Company or RETN Capital Limited are sold. The redemption value is equal to the lower of the net amount after taxes and expenses received upon the completion of the relevant sale or the principal amount of the €7,000,000 together with accrued and unpaid interest. |
17. | RESERVES |
Group |
Retained | Share | Capital |
earnings | premium | reserve |
€'000 | €'000 | €'000 |
At 1st January 2022 | 8,959 | 2,342 | 8,330 |
Profit for the year | 1,788 |
At 31st December 2022 | 10,747 | 2,342 | 8,330 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
17. | RESERVES - continued |
Group |
Currency |
Merger | translator |
reserve | reserve | Totals |
€'000 | €'000 | €'000 |
At 1st January 2022 | 1,550 | (8,778 | ) | 12,403 |
Profit for the year | 1,788 |
Minority interest OCI | - | 136 | 136 |
Currency translation difference | - | (587 | ) | (587 | ) |
At 31st December 2022 | 1,550 | (9,229 | ) | 13,740 |
Company |
Currency |
Retained | Share | Capital | translator |
earnings | premium | reserve | reserve | Totals |
€'000 | €'000 | €'000 | €'000 | €'000 |
At 1st January 2022 | ( |
) | ( |
) |
Deficit for the year | ( |
) | ( |
) |
Currency translation difference |
- |
- |
- |
(24 |
) |
(24 |
) |
At 31st December 2022 | ( |
) | ( |
) | 8,998 |
18. | TRADE AND OTHER PAYABLES |
Group | Company |
2022 | 2021 | 2022 | 2021 |
€'000 | €'000 | €'000 | €'000 |
Current: |
Trade creditors | 10,641 | 6,700 |
Other short-term liabilities | 1,461 | 766 | - | - |
Advances from operating |
activity | 1,203 | 501 | - | - |
Payroll and related |
liabilities | 1,736 | 1,151 |
Due to pension fund and other |
social taxes | 702 | 335 | - | - |
Other creditors | 23 | 24 |
Accrued expenses | 19 | 13 | 19 | 13 |
Deferred income | 1,815 | 1,589 | - | - |
VAT | 950 | 1,925 | - | - |
18,550 | 13,004 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
18. | TRADE AND OTHER PAYABLES - continued |
Group | Company |
2022 | 2021 | 2022 | 2021 |
€'000 | €'000 | €'000 | €'000 |
Non-current: |
Trade creditors | - | 135 |
Other creditors | 17 | 18 |
Other non-current liabilities | 7,868 | 7,384 | - | - |
Directors' loan accounts | 2 | - | 2 | 2 |
7,887 | 7,537 |
Aggregate amounts | 26,437 | 20,541 |
19. | FINANCIAL LIABILITIES - BORROWINGS |
Group |
2022 | 2021 |
€'000 | €'000 |
Current: |
Bank loans | 2,053 | 667 |
Other loans | - | 1,979 |
Leases (see note 20) | 6,752 | 4,103 |
8,805 | 6,749 |
Non-current: |
Other loans - 1-5 years | 1,026 | 2,877 |
Leases (see note 20) | 9,746 | 6,778 |
10,772 | 9,655 |
Terms and debt repayment schedule |
Group |
1 year or | More than |
less | 1-2 years | 5 years | Totals |
€'000 | €'000 | €'000 | €'000 |
Bank loans | 2,053 | - | - | 2,053 |
Other loans | - | 1,026 | - | 1,026 |
Leases | 6,752 | 6,615 | 3,131 | 16,498 |
8,805 | 7,641 | 3,131 | 19,577 |
20. | LEASING |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
20. | LEASING - continued |
Group |
Lease liabilities |
Minimum lease payments fall due as follows: |
2022 | 2021 |
€'000 | €'000 |
Gross obligations repayable: |
Within one year | 7,309 | 4,485 |
Between one and five years | 7,893 | 6,452 |
In more than five years | 3,615 | 2,138 |
18,817 | 13,075 |
Finance charges repayable: |
Within one year | 557 | 382 |
Between one and five years | 1,278 | 1,070 |
In more than five years | 484 | 742 |
2,319 | 2,194 |
Net obligations repayable: |
Within one year | 6,752 | 4,103 |
Between one and five years | 6,615 | 5,382 |
In more than five years | 3,131 | 1,396 |
16,498 | 10,881 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
21. | FINANCIAL INSTRUMENTS |
(a) Overview |
The Group has exposure to the following risks from its use of financial instruments: |
- | credit risk |
- | liquidity risk |
- | market risk |
This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated financial statements. |
The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. |
(b) Credit risk |
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group's receivables from customers and investment securities. |
(i) Trade and other receivables |
Trade and other receivables are exposed to credit risk more than other classes of financial assets. The Group minimises its exposure to the risk by ensuring that credit risk is spread across a number of counterparties, and by continuously monitoring the credit standing of customers and other debtors. In monitoring customer credit risk, customers are grouped according to their credit characteristics. To diminish the risks of bad debts the Group's management develops a number of procedures regulating all the activities undertaken through the process of trade receivables handling. |
To determine the customers' credit standing, the Group's management uses available credit ratings which are reviewed periodically depending on the customer's credit history. Other preventive measures (advance payments, bank guarantees and other security) are also used to minimise credit risk exposure. |
The Group's management uses various measures to collect overdue receivables: from suspension of services to judicial collection. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
(ii) Guarantees |
The Group considers that financial guarantee contracts entered into by the Group to guarantee the indebtedness of other parties are contingent liabilities until it becomes probable that the Group will be required to make a payment under the guarantee. |
Exposure to credit risk |
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: |
Carrying Amount |
31.12.2022 | 31.12.2021 |
Trade and other receivables | 5,861 | 5,382 |
Cash and cash equivalents | 1,325 | 2,993 |
Total | 7,186 | 8,375 |
Credit quality of financial assets and impairment losses |
The aging of trade receivables at the reporting date was: |
Gross 2022 |
Impairment 2022 |
Gross 2021 |
Impairment 2021 |
Not past due | 3,768 | - | 4,026 | - |
Past due [0-30day] | 983 | (98 | ) | 889 | (12 | ) |
Past due [31-120day] | 594 | (36 | ) | 375 | (15 | ) |
More than 120 days | 552 | (364 | ) | 91 | (72 | ) |
5,897 | (499 | ) | 5,381 | (99 | ) |
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. Allowance for impairment is created based on the individual creditworthiness analysis of debtors. In accordance with the requirements of IFRS 9, an asset impairment model for recognizing impairment allowances is compiled based on expected credit losses ("ECLs"), and not just credit losses incurred. The Group estimates loss allowance to be immaterial. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
(c) Liquidity risk |
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group's reputation. |
The Group monitors and manages liquidity risk by maintaining bank credit lines, obtaining loans and sufficient cash balances on its settlement accounts. |
Monitoring the risks of shortage of the working capital along with preparation and on-line control of compliance with a monthly cash flow forecasts provides the Group's capability to discharge its obligation on a timely basis. |
To minimise the liquidity risks the Group's management undertakes the program aimed to: |
- | Improving the efficiency of cost management system and increasing cash flows from operating activities; |
- | Entering to the hire purchase agreement (up to 3 years); |
- | Monitoring the compliance of Group's trade receivables and trade payables maturities; |
- | Restructuring loan accounts through the converting short-term loans and borrowings into the long- term liabilities. |
As at 31 December 2022 current liabilities exceeded current assets by EUR 17,006 thousand (2021: EUR 7,196 thousand), the Group plans to cover this liquidity deficit by inflows from operating activities and additional financing. |
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements. It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
Contractual terms of the Group's loans and borrowings, which are measured at amortised cost |
Short-term borrowings were presented as follows: |
Currency |
Effective interest rate |
Year of Maturity |
31 December 2022 |
31 December 2021 |
Bank Loans |
CitiBank overdraft | RUB | ME 1M+2,5% | n/a | - | 345 |
Rosbank overdraft | RUB | 11.11% | 2023 | 278 | - |
BNP Paribas loan (first tranche) |
EUR |
6.54% |
2022 |
- |
108 |
BNP Paribas loan (second tranche) |
EUR |
6.09% |
2022 |
- |
181 |
BNP Paribas loan (third tranche) |
EUR |
6.09% |
2023 |
173 |
219 |
BNP Paribas loan (fourth tranche) |
EUR |
6.00% |
2023 |
105 |
99 |
Barclays loan | GBP | 3.25% | 2023 | 471 | 496 |
Junipter Networks | EUR | 5.62% | 2024 | 199 | 249 |
Societe Generale | EUR | 5.62% | 2024 | 732 | 779 |
Siemens Finance | PLN | 8.32% | 2025 | 35 | - |
Siemens Finance | PLN | 15.18% | 2025 | 48 | - |
Pireus Bank | UAH | 14.00% | 2023 | - | 145 |
Other loans |
Interest payable | 11 | 25 |
Total | 2,053 | 2,646 |
Long-term borrowings were presented as follows: |
Currency |
Effective interest rate |
Year of Maturity |
31 December 2022 |
31 December 2021 |
Bank Loans |
BNP Paribas loan (third tranche) |
EUR |
6.09% |
2023 |
- |
174 |
BNP Paribas loan (fourth tranche) |
EUR |
6.00% |
2024 |
28 |
134 |
Barclays loan | GBP | 3.25% | 2023 | - | 496 |
Junipter Networks | EUR | 5.62% | 2024 | 141 | 411 |
Societe Generale | EUR | 5.62% | 2024 | 679 | 1,517 |
Siemens Finance | PLN | 8.32% | 2025 | 57 | - |
Siemens Finance | PLN | 15.18% | 2025 | 122 | - |
Pireus Bank | UAH | 14.00% | 2023 | - | 145 |
Total | 1,026 | 2,877 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
(d) Market risk |
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return. |
The Group's significant market risks exposures are currency risks and interest rate risks. As at the reporting date the Group does not possess any available for sale financial assets quoted on active market, its operating activity is not exposed to any other type of market risk. |
(i) Currency risk |
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities. The currencies in which these transactions primarily are denominated are RUB, EUR, GBP and USD. |
The Group's companies try to balance financial assets and financial liabilities denominated in foreign currency where possible, in order to minimise currency risk. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
Exposure to currency risk |
The Group's exposure to foreign currency risk was as follows based on notional amounts: |
2022 | EUR - denominated | USD - denominated |
Trade and other receivables | 2,005 | 1,482 |
Cash and cash equivalents | 500 | 353 |
Loans and borrowings | (2,057 | ) | - |
Finance lease payables | (11,405 | ) | (51 | ) |
Trade and other payables | (3,872 | ) | (5,150 | ) |
Gross SFP exposure | (9,359 | ) | (1,123 | ) |
2021 | EUR - denominated | USD - denominated |
Trade and other receivables | 1,801 | 1,391 |
Cash and cash equivalents | 2,258 | 443 |
Loans and borrowings | (3,871 | ) | - |
Finance Lease payables | (6,818 | ) | (38 | ) |
Trade and other payables | (2,819 | ) | (2,919 | ) |
Gross SFP exposure | (9,449 | ) | (1,123 | ) |
Sensitivity analysis |
A 10% increase/decrease in EUR and USD against of RUB, GBP and UAH as at 31 December would have decreased/increased profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. |
2022 | 2021 |
EUR | (1,473 | ) | (945 | ) |
USD | (337 | ) | (112 | ) |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
(ii) Interest rate risk |
Changes in interest rates impact primarily loans and borrowings by changing either their fair value (fixed rate debt) or their future cash flows (variable rate debt). Management does not have a formal policy of determining how much of the Group's exposure should be to fixed or variable rates. However, at the time of raising new loans or borrowings management uses its judgment to decide whether it believes that a fixed or variable rate would be more favourable to the Group over the expected period until maturity. |
Profile |
At the reporting date the interest rate profile of the Group's interest-bearing financial instruments was: |
'000 EUR | 2022 | 2021 |
Fixed rate instruments |
Financial liabilities | 2,790 | 5,153 |
Variable rate instruments |
Financial liabilities (Loans and borrowings) | 278 | 345 |
Total | 3,068 | 5,498 |
Fair value sensitivity analysis for fixed rate instruments |
The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore, a change in interest rates at the reporting date would not affect profit or loss. |
(e) Capital management |
Management manages capital such as to ensure that the Group is able to continue as a going concern maximising the return on capital through the optimisation the debt to equity ratio. In order to achieve this goal, the Group undertakes actions aimed to minimise risks and costs associated with future financing. |
To meet its need in capital the Group combines such types of borrowings as long and short-term loans. |
The Group does not establish any formal policies with respect to debt to equity ratio, however, the Group reviews its capital needs on a regular basis to determine the necessary measures in order to maintain a balanced structure of its capital. In such review the management considers the cost of capital and risks related to each capital class. The Group's capital is not subject to any capital adequacy requirements as may be set by external regulatory authorities. The companies registered in the Russian Federation are subject to external capital requirements that require that its net assets as determined in accordance with Russian Accounting Principles must exceed its charter capital at all times. |
The Group's debt to capital ratio as at 31 December was as follows: |
'000 EUR | 2022 | 2021 |
Total borrowings | 19,577 | 16,404 |
Less: cash and cash equivalents | (1,325 | ) | (2.993 | ) |
Net debt | 18,252 | 13,411 |
Total equity | 34,108 | 32,332 |
Debt to capital ratio at 31 December | 0.54:1 | 0.41:1 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
There were no changes in the Group's approach to capital management during the year. |
(f) Fair value of financial instruments |
The Group's principal financial instruments comprise cash and cash equivalents, accounts payable, lease liability and bank loans. These instruments serve to finance the Group's operations and capital expenditures. Other financial assets and liabilities such as trade receivables and trade payables arise directly from the Group's operations. The following table presents the carrying amounts of financial assets and liabilities as at 31 December 2022 and 2021: |
Classes | Categories | 31.12.22 | 31.12.21 |
Cash and cash equivalents | 1,277 | 2,958 |
Trade and other receivables | Assets at amortized cost | 1 | 7,434 |
Total financial assets | 1,278 | 10,392 |
Loans and borrowings and financial lease |
Liabilities at amortised cost |
19,577 |
16,394 |
Trade and other payables | Liabilities at amortised cost | 14,471 | 8,614 |
Total financial liabilities | 34,048 | 25,008 |
The fair value of cash and cash equivalents, current receivables, trade payables, other current financial assets and liabilities approximate their carrying amount largely due to the short-term maturity of these instruments. |
The fair value of long-term debt investments, long-term accounts receivable and non-current accounts payable correspond to the present values of the payments related to the assets and liabilities, taking into account the current interest rate parameters that reflect market-based changes to terms and conditions and expectations. Fair values of financial liabilities approximate their carrying amount. |
The interest rates used to discount estimated cash flows, where applicable, are based on the weighted average cost of capital during reporting periods, were as follows: |
2022 | 2021 |
Loans and borrowings | 3.25%-15.18% | 3.25%-14.0% |
22. | DEFERRED TAX |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
22. | DEFERRED TAX - continued |
The components of net deferred tax assets and liabilities as at 31 December 2022 and 2021 and the respective movements during 2022 were as follows: |
Assets | Liabilities | Net |
2022 | 2021 | 2022 | 2021 | 2022 | 2021 |
Property, plant and equipment | 31 | 31 | (2,000 | ) | (2,155 | ) | (1,969 | ) | (2,124 | ) |
Intangible assets | - | - | (59 | ) | (27 | ) | (59 | ) | (27 | ) |
Trade and other receivables | 8 | 12 | 20 | - | 28 | 12 |
Loans and borrowings and financial lease | 1,404 | 1,296 | (119 | ) | (306 | ) | 1,285 | 990 |
Other taxes payable | (2 | ) | (1 | ) | (3 | ) | (3 | ) | (5 | ) | (4 | ) |
Tax loss carry forward | (32 | ) | 36 | (253 | ) | - | (285 | ) | 36 |
Trade and other payables | 30 | 51 | - | - | 30 | 51 |
Tax assets / (liabilities) | 1,439 | 1,425 | (2,414 | ) | (2,491 | ) | (975 | ) | (1,066 | ) |
Set off of tax | (1,065 | ) | (1,226 | ) | 1,065 | 1,226 | - | - |
Net tax assets/ (liabilities) | 374 | 199 | (1,349 | ) | (1,265 | ) | (975 | ) | (1,066 | ) |
Differences between IFRS and statutory taxation and reporting regulations give rise to temporary differences between the carrying value of certain assets and liabilities for financial reporting and tax purposes. |
Asset and liability that arise under a lease are integrally linked, accordingly, they are accrued on a net basis for the purpose of recognising deferred tax. |
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred income tax assets and deferred income tax liabilities relate to the income taxes levied by the same fiscal authority on the same taxable entity. |
01 January 2022 |
Recognised in profit or loss |
Foreign currency translation difference |
31 December 2022 |
Tax effect of deductible temporary differences |
Property, plant and equipment | (2,124 | ) | (52 | ) | 207 | (1,968 | ) |
Intangible assets | (67 | ) | (7 | ) | (25 | ) | (59 | ) |
Current advances given | 12 | 4 | 11 | 27 |
Loans and borrowings and financial lease | 990 | 34 | 260 | 1,284 |
Other taxes payable | (4 | ) | 1 | (1 | ) | (5 | ) |
Tax loss carry forward | 36 | (3 | ) | (318 | ) | (285 | ) |
Trade and other payables | 51 | (20 | ) | 1 | 31 |
Total net deferred tax liability | (1,066 | ) | (43 | ) | 134 | (975 | ) |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
22. | DEFERRED TAX - continued |
01 January 2021 |
Recognised in profit or loss |
Foreign currency translation difference |
31 December 2021 |
Tax effect of deductible temporary differences |
Property, plant and equipment | (2,379 | ) | (129 | ) | 383 | (2,125 | ) |
Intangible assets | (25 | ) | (21 | ) | 19 | (27 | ) |
Trade and other receivables | 12 | - | 1 | 13 |
Loans and borrowings and financial lease | 1,206 | 302 | (517 | ) | 991 |
Other taxes payable | 18 | - | (22 | ) | (4 | ) |
Tax loss carry forward | 283 | (255 | ) | 8 | 36 |
Trade and other payables | 50 | (14 | ) | 01 | 50 |
Total net deferred tax liability | (835 | ) | (117 | ) | (114 | ) | (1,066 | ) |
23. | CONTINGENCIES |
(a) Insurance |
The Group does not have full coverage for its plant facilities, business interruption, or third-party liability in respect of property or environmental damage arising from accidents on Group property or relating to Group operations. Until the Group obtains adequate insurance coverage, there is a risk that the loss or destruction of certain assets could have a material adverse effect on the Group's operations and financial position. The insurance industry in the Russian Federation and CIS (Commonwealth of Independent States) is in a developing state and many forms of insurance protection common in other parts of the world are not yet generally available. |
(b) Litigation |
The Group is the subject of lawsuits and claims arising in the ordinary course of business from time to time. The Group reviews any such legal proceedings and claims on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions. The Group establishes accruals for those contingencies where the incurrence of a loss is probable and can be reasonably estimated, and it discloses the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued, if such disclosure is necessary for the Group's financial statements to not be misleading. To estimate whether a loss contingency should be accrued by a charge to income, the Group evaluates, among other factors, the degree of probability of an unfavourable outcome and the ability to make a reasonable estimate of the amount of the loss. Based upon present information, there are no asserted or un-asserted claims for which material losses are possible. Thus, no matter required an accrual as 31 December 2022 and 2021, or disclosure. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
(c) Taxation contingencies |
Taxation contingencies in the Russian Federation |
The taxation system in the Russian Federation continues to evolve and is characterised by frequent changes in legislation, official pronouncements and court decisions, which are sometimes contradictory and subject to varying interpretation by different tax authorities. |
Taxes are subject to review and investigation by a number of authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year generally remains open for review by the tax authorities during the three subsequent calendar years; however, under certain circumstances a tax year may remain open longer. Recent events within the Russian Federation suggest that the tax authorities are taking a more assertive and substance-based position in their interpretation and enforcement of tax legislation. |
Transfer pricing legislation enacted in the Russian Federation starting from 1 January 2012 provides for major modifications making local transfer pricing rules closer to OECD guidelines, but creating additional uncertainty in practical application of tax legislation in certain circumstances. |
These transfer pricing rules provide for an obligation for the taxpayers to prepare transfer pricing documentation with respect to controlled transactions and prescribe the basis and mechanisms for accruing additional taxes and interest in case prices in the controlled transactions differ from the market level. |
The transfer pricing rules apply to cross-border transactions between related parties, as well as to certain cross-border transactions between independent parties, as determined under the Russian Tax Code (no threshold is set for the purposes of prices control in such transactions). In addition, the rules apply to in-country transactions between related parties if the accumulated annual volume of the transactions between the same parties exceeds a particular threshold (RUB 1 billion in 2014 and thereon). |
The compliance of prices with the arm's length level could be as well subject to scrutiny on the basis of unjustified tax benefit concept. |
All these circumstances may create tax risks in the Russian Federation that are substantially more significant than in other countries. Management believes that it has provided adequately for tax liabilities based on its interpretations of applicable Russian tax legislation, official pronouncements and court decisions. However, the interpretations of the tax authorities and courts, especially due to reform of the supreme courts that are resolving tax disputes, could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant. |
Taxation contingencies in the Ukraine |
The Group operates in Ukraine and therefore within the jurisdiction of the Ukrainian tax authorities. The Ukrainian tax system can be characterized by numerous taxes and frequently changing legislation which may be applied retroactively, open to wide interpretation and in some cases are conflicting. Instances of inconsistent opinions between local, regional, and national tax authorities and between the Ministry of Finance and other state authorities are not unusual. Tax declarations are subject to review and investigation by a number of authorities that are enacted by law to impose severe fines, penalties and interest charges. |
A tax year remains open for review by the tax authorities during the three subsequent calendar years, however under certain circumstances a tax year may remain open longer. |
These facts create tax risks substantially more significant than typically found in countries with more developed systems. Management believes that it has adequately provided for tax liabilities based on its interpretation of tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant. |
24. | CAPITAL COMMITMENTS |
As at 31 December 2022 the Group have several valid contracts to purchase property, plant and equipment for EUR 5,671 thousand (2021: EUR 11,295 thousand). |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
25. | RELATED PARTY DISCLOSURES |
(a) Group Structure |
Name |
Country of incorporation |
Registered address |
Principal activity |
Ownership % |
2022 | 2021 |
Pinkas Limited |
England and Wales |
14 Old Queen Street, London, England, SW1H 9HP |
Parent Company |
Parent Company |
Parent Company |
RETN Capital Limited |
England and Wales |
5th Fl., 3 Harbour Exchange Square, London, UK, E14 9GE |
Intermediary Parent Company |
75.9 |
75.9 |
JSC RetnNet |
Russian Federation |
26 Leninskaya Sloboda str., bldg. 2, Moscow, Russia, 115280 |
Wholesale carrier in Russia |
100 |
100 |
RETN Ltd |
England and Wales |
5th Fl., 3 Harbour Exchange Square, London, UK, E 14 9GE |
Wholesale carrier in Europe |
100 |
100 |
LLC RETN |
Ukraine |
Moskovska Str. 24, apt. 21, Kyiv, Ukraine, 01021 |
Wholesale carrier in Ukraine |
100 |
100 |
RETN Poland Sp. z.o.o |
Poland |
uI. Krakowiakow 48, Budynek 3, pietro 2, Warszawa, Poland, 02-255 |
Wholesale carrier in Poland |
100 |
100 |
RETN (HK) Limited |
Hong-Kong |
Unit 1103, 11/F CF Commercial Tower 22-28 Mody Road Tsim Sha Tsui, Kowloon, Hong Kong |
Wholesale carrier in Hong-Kong & China |
100 |
100 |
RETN Baltic AS |
Estonia |
Tornimae 7-156, Tallinn, Estonia, 10145 |
Wholesale carrier in Baltic |
100 |
100 |
RETN KZ LLC |
Kazakhstan |
Office number 72, 7th floor, 180 Dostyk prospect, Almaty, Kazakhstan, 050000 |
Wholesale carrier in Kazakhstan |
100 |
100 |
Foreign Unitary enterprise RETN |
Belarus |
Room 7220013, 5th floor, P. Brovki str. 18, Minsk, the Republic of Belarus |
Wholesale carrier in Belarus |
100 |
100 |
RETN GmbH |
Germany |
Kleyerstrasse 75-87, Frankfurt am Main, Germany, D-60326 |
Wholesale carrier in Germany |
100 |
100 |
RETN B.V. |
Netherlands |
Arlandaweg 92, Amsterdam, TheNetherlands, 1043 EX |
Wholesale carrier in Netherlands |
100 |
100 |
RETN BALKANS LTD |
Bulgaria |
6 Credec Akakov, Obshina Stolichna, Sofia, Bulgaria, 1000 |
Wholesale carrier in Bulgaria |
100 |
100 |
RETN GmbH |
Switzerland |
Bahnhofstrasse 21, 6300 Zug, Switzerland |
Wholesale carrier in Switzerland |
100 |
100 |
RETN Baltic SIA |
Latvia |
A.Deglava street 73, Riga, Latvia, LV- 1082 |
Wholesale carrier in Latvia |
100 |
100 |
RETN PTE Ltd |
Singapore |
50 Raffles Place #15-05/06, Singapore (048623 |
) |
Wholesale carrier in Singapore |
100 |
100 |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
RETN K.K |
Japan |
6-2-31-1917 Tpyosu, Koto-ku, Tokyo 135-0061 Japan |
Wholesale carrier in Japan |
100 |
100 |
RETN Nordic AB |
Sweden |
Nynas Brafall 1, 611 99 Tystberga, Sweden |
Wholesale carrier in Sweden |
100 |
100 |
RETN TELEKOMUNI KASYON HIZMETLERI LIMITED SIRKETI |
Turkey |
Yesilkoy Mahalessi Ataturk Cadde No:12/70, Bakirkoy, Istanbul, Turkey |
Wholesale carrier in Turkey |
100 |
100 |
RETN Consultancy Services Ltd |
China |
3A33 3/F Xinlvdao Mansion, 1175 Nanshan Avenue, Nanshan District, Shenzhen City, Guangdong Province, P.R.C. |
Wholesale Carrier in China |
100 |
100 |
RETN Telecoms Ltd. |
Taiwan |
9F-5, No.70 Yanping South Road, Zhongzheng District, Taipei City 100001, Taiwan R.O.C. |
Wholesale Carrier in Taiwan |
100 |
100 |
RETN AM LLC |
The Republic of Armenia |
63 Pushkin street, 43, Yerevan, 0002, The Republic of Armenia |
Wholesale Carrier in Armenia |
100 |
100 |
RETN Finland Oy |
Finland |
PL15, 45101, Kouvola, Finland |
Wholesale Carrier in Finland |
100 |
100 |
RETN LLC |
Georgia |
Mtatsminda district, Pushkini street, N6/Gr. Abashidze street, N14 Commercial space N10a, Tbilisi, Georgia |
Wholesale Carrier in Georgia |
100 |
100 |
RETN LLC |
Kyrgyzstan |
Bishkek, Oktyabrskiy district, Djukeeva-Pudovkina street 138, Kyrgyzstan |
Wholesale Carrier in Kyrgyzstan |
100 |
100 |
RETN SRL |
Italy |
Viale Abruzzi 94, 20131 Milan, Italy |
Wholesale Carrier in Italy |
100 |
100 |
RETN Networks SRL |
Moldova |
laicu Pircalab 63 street, Chisinau, Moldova, MD-2012 |
Wholesale Carrier in Moldova |
100 |
100 |
RETN Lithuania UAB |
Lithuania |
J. Basanaviciaus g. 26 street, Vilnius, Lithuania, LT-03224, |
Wholesale carrier in Lithuania |
100 |
- |
RETN Hungary Kft |
Hungary |
Vaci ut 33 street, 1134 Budapest, Hungary |
Wholesale carrier in Hungary |
100 |
- |
RETN d.o.o Beograd |
Serbia |
SIMINA 16 street, Belgrade, Serbia |
Wholesale carrier in Serbia |
100 |
- |
RETN US LLC |
USA |
9428 Providence Sq Orland Park IL 60467-5632, USA |
Wholesale carrier in USA |
100 |
- |
All the consolidated companies are directly controlled by RETN Capital, except for RETN China which is RETN HK 100% subsidiary and Foreign Unitary enterprise RETN Belarus which is JSC RetnNet 100% subsidiary. In 2022, RETN Capital transferred 100% of shares in Foreign Unitary enterprise RETN, Belarus to its wholly-owned subsidiary - JSC RetnNet in Russia. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
All the subsidiaries of the group, with the exception of RETN Capital Limited only have Ordinary shares, with a single vote attached to each share. |
On the 11th July 2018 RETN Capital Limited issued 952,381 preference shares to an external investor. This reduced Pinkas Limited's effective holding to 75.90%. Each Ordinary and Preference share each carries one vote. |
(b) Transactions with management and close family members |
During the year ended 31 December 2022 total remuneration of the key management personnel of the Group, including salary, bonuses and other discretionary compensations, amounted to EUR 4,213 thousand (2021: EUR 3,362 thousand). The remuneration of the highest paid director was EUR 355 thousand. |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
(c) Other related party transactions - Group |
In 2022 and 2021 the Group entered into transaction with Akson JSC, a company ultimately controlled by Dmitry Samarin and Andrey Kuznetsov, for the lease of office space in St. Petersburg. |
In 2022, JSC RetnNet purchased office property in Voronezh from Akson JSC. |
In January 2022 the Group entered into transaction with Samlogic Ltd for the consultancy services. The contact with Samlogic was terminated in July 2022. |
In 2022 there was a contract signed with Njord Parners LLP for the reimbursement of other expenses. There were no such transactions in 2021. |
In 2022, there was a contract signed with Astern GmbH, a company owned entirely by Ms Anna Tindl for consultancy services. The charge related to these services amounted to EUR 15,000. |
Outstanding balances and transactions with other related parties |
2022 | 2021 |
'000 EUR | '000 EUR |
Interest Income (P. Maltseva) | 2 | 2 |
Operating expenses (Astern GmbH) | (15 | ) | - |
Operating expenses (Samlogic Ltd) | - | (264 | ) |
Operating expenses (Tetris Telecom Holding Ltd) | (47 | ) |
Operating expenses (Njord Partners LLP) | (2 | ) | (3 | ) |
Operating expenses (Akson JSC) | (567 | ) | (401 | ) |
Total | (629 | ) | (666 | ) |
2022 | 2021 |
'000 EUR | '000 EUR |
Loans and accounts receivable (P. Maltseva) | - | 55 |
Accounts receivable (Akson JSC) | 61 | - |
Accounts payable (Akson JSC) | - | (35 | ) |
Loans (Laviks Limited) | (17 | ) | (18 | ) |
Loans (UMIS OU) | (23 | ) | (24 | ) |
Total | 21 | (22 | ) |
2022 | 2021 |
'000 EUR | '000 EUR |
Cash outflow (Akson JSC) | (723 | ) | (364 | ) |
Cash outflow (Samlogic Ltd) | - | (264 | ) |
Cash outflow (Astern GmbH) | (15 | ) | - |
Cash outflow (Tetris Telecom Holding Ltd) | (47 | ) | - |
Cash inflow (Njord Partners LLP) | (2 | ) | (3 | ) |
Cash inflow (P. Maltseva) | 43 | 11 |
Total | (744 | ) | (620 | ) |
Pinkas Ltd (Registered number: 06040998) |
Notes to the Consolidated Financial Statements - continued |
for the Year Ended 31st December 2022 |
Other related party transactions - Company |
Outstanding balances and transactions with other related parties |
2022 | 2021 |
'000 EUR | '000 EUR |
Interest Income (P. Maltseva) | 1 | 2 |
Total | 1 | 2 |
2022 | 2021 |
'000 EUR | '000 EUR |
Loans and accounts receivable (P. Maltseva) | - | 55 |
Loans and interest (D.Samarin) | (2 | ) | (2 | ) |
Loans (Laviks Limited) | (17 | ) | (18 | ) |
Loans (UMIS OU) | (23 | ) | (24 | ) |
Total | (42 | ) | 11 |
2022 | 2021 |
'000 EUR | '000 EUR |
Cash inflow/ (outflow) (P. Maltseva) | 43 | 11 |
Total | 43 | 11 |
26. | EVENTS AFTER THE REPORTING PERIOD |
In March 2023 RETN Networks LLC (located in Uzbekistan) were incorporated. |
In April 2023 RETN Networks LTD (located in United Kingdom) were incorporated. |
In January 2023 new long-term loan was obtained by RETN Capital from Juniper Networls for EUR 265 thousand with interest rate of 6.07%. |
In June 2023 new long-term loan was obtained by RETN Capital from Juniper Networks for EUR 907 thousand with interest rate 6.75%. |
In 2023 Management continue to monitor all their options available and continue to assess various scenarios in respect of legal separation of their operations in Russia and Belarus. |
There have been no other significant events after the end of the reporting year that might have material effect on the Group's consolidated financial statements for the year ending 31 December 2022. |
27. | ULTIMATE CONTROLLING PARTY |
As of 31 December 2022 Laviks Ltd (50%) and Astern GmbH (50%) were the shareholders of Pinkas Limited (UK). Dmitry Samarin owns 100% of shares in Laviks Ltd. |