HeadHunter Group PLC Announces Fourth Quarter and Full-Year 2020 Financial Results
HeadHunter Group PLC (HHR) reported strong financial results for Q4 2020, with revenue up 18.5% to ₽2,450 million and a net income increase of 30.9% to ₽650 million. The Russia segment revenue grew by 20.1%, driven by a rise in key account customers. Full-year revenue also rose by 6.3% to ₽8,282 million. However, adjusted EBITDA margin declined to 47.4%. The acquisition of Zarplata.ru strengthened market presence, but net debt surged by 61.5% to ₽4,909 million, raising concerns over financial leverage. CEO Mikhail Zhukov noted a positive long-term outlook amidst market recovery.
- Q4 revenue increased by 18.5% to ₽2,450 million.
- Net income grew by 30.9% to ₽650 million.
- Russia segment revenue up 20.1%.
- Full-year revenue increased by 6.3% to ₽8,282 million.
- Adjusted net income rose by 19.5% to ₽852 million.
- Acquisition of Zarplata.ru enhances market share.
- Adjusted EBITDA margin decreased to 47.4%.
- Net debt increased by 61.5% to ₽4,909 million.
- Net debt to adjusted EBITDA ratio rose from 0.8x to 1.2x.
MOSCOW, March 18, 2021 (GLOBE NEWSWIRE) -- HeadHunter Group PLC (Nasdaq: HHR, MOEX: HHRU) announced today its financial results for the fourth quarter and the full year ended December 31, 2020. As used below, references to “we,” “our,” “us” or the “Company” or similar terms shall mean HeadHunter Group PLC.
Fourth Quarter 2020 Financial and Operational Highlights
| (in millions of RUB(1) and USD(2)) | Three months ended December 31, 2020 | Three months ended December 31, 2019 | Change(3) | Three months ended December 31, 2020 | |||
| RUB | RUB | USD(4) | |||||
| Revenue | 2,450 | 2,066 | 33.2 | ||||
| Russia Segment Revenue | 2,299 | 1,914 | 31.1 | ||||
| Net Income | 650 | 496 | 8.8 | ||||
| Net Income Margin, % | 2.5 ppts | ||||||
| Adjusted EBITDA(5) | 1,160 | 1,023 | 15.7 | ||||
| Adjusted EBITDA Margin, %(5) | (2.2) ppts | ||||||
| Adjusted Net Income(5) | 852 | 713 | 11.5 | ||||
| Adjusted Net Income Margin, %(5) | 0.3 ppts |
(1) “RUB” or “₽” denote Russian Ruble throughout this release.
(2) “USD” or “$” denote U.S. Dollar throughout this release.
(3) Percentage movements and certain other figures in this release may not recalculate exactly due to rounding. This is because percentages and/or figures contained herein are calculated based on actual numbers and not the rounded numbers presented.
(4) Dollar translations throughout this release are included solely for the convenience of the reader and were calculated at the exchange rate quoted by the Central Bank of Russia as of December 31, 2020 (RUB 73.8757 to USD 1).
(5) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are non-IFRS measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation to the nearest IFRS measure.
- Revenue is up
18.5% due to the increase in revenue across all customer segments in Russia reflecting a return to growth following a slowdown caused by COVID-19. - Net income is up
30.9% to ₽650 million. - Adjusted EBITDA is up
13.4% to ₽1,160 million; Adjusted EBITDA Margin is down to47.4% from49.5% , or by 2.2 ppts., mostly due to a discretionary bonus payment to our personnel in the fourth quarter 2020. - Adjusted Net Income is up
19.5% to ₽852 million.
| (in millions of RUB and USD) | As of December 31, 2020 | As of December 31, 2019 | Change | As of December 31, 2020 | |||
| RUB | RUB | USD | |||||
| Net Working Capital(1) | (3,849) | (2,994) | (52.1) | ||||
| Net Debt(1) | 4,909 | 3,040 | 66.4 | ||||
| Net Debt to Adjusted EBITDA Ratio(1) | 1.2x | 0.8x |
(1) Net Working Capital, Net Debt, and Net Debt to Adjusted EBITDA Ratio are non-IFRS financial measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation to the nearest IFRS measure.
- Net Working Capital as of December 31, 2020 decreased by ₽855 million, or
28.5% , primarily due to (i) an increase in contract liabilities of ₽418 million from customer prepayments, and (ii) an increase in trade and other payables (current portion) due to ₽234 million consideration payable for the acquisition of Zarplata.ru; - Net Debt increased by ₽1,869 million, or
61.5% , primarily due to ₽3,100 million paid for the acquisition of Zarplata.ru and ₽1,885 million dividend payment, offset by ₽3,215 million cash generated from operating activities (see “Cash Flows”); - As a result of the increase in Net Debt, Net Debt to Adjusted EBITDA Ratio increased from 0.8x to 1.2x.
Full-Year 2020 Financial and Operational Highlights
| (in millions of RUB and USD) | Twelve months ended December 31, 2020 | Twelve months ended December 31, 2019 | Change | Twelve months ended December 31, 2020 | |||
| RUB | RUB | USD | |||||
| Revenue | 8,282 | 7,789 | 112.1 | ||||
| Russia Segment Revenue | 7,724 | 7,212 | 104.6 | ||||
| Net Income | 1,886 | 1,581 | 25.5 | ||||
| Net Income Margin, % | 2.5 ppts | ||||||
| Adjusted EBITDA(1) | 4,187 | 3,931 | 56.7 | ||||
| Adjusted EBITDA Margin, %(1) | 0.1 ppts | ||||||
| Adjusted Net Income(1) | 2,733 | 2,409 | 37.0 | ||||
| Adjusted Net Income Margin, %(1) | 2.1 ppts |
(1) Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Net Income Margin are non-IFRS measures. See “Use of Non-IFRS Financial Measures” elsewhere in this release for a description of these measures and a reconciliation to the nearest IFRS measure.
- Revenue is up
6.3% due to the increase in revenue across all customer segments in Russia, except Small and Medium Accounts in Moscow, which were affected most by the COVID-19 pandemic and related government measures to curb its spread. - Our Russia Segment is up
7.1% , and the year-on-year growth/(decline) in revenues in this segment versus the same quarters in 2019 was18.2% , (19.1)%,9.1% , and20.1% in the first, second, third, and fourth quarter of 2020, respectively, reflecting significant impact of the
COVID-19 pandemic in the second quarter 2020, followed by a gradual return to growth during the third and fourth quarters. - Net Income is up
19.3% to ₽1,886 million. - Adjusted EBITDA is up
6.5% ; Adjusted EBITDA Margin is50.6% , flat compared to50.5% in the year 2019, as the increase in personnel expenses (excluding equity-settled share-based compensations and other items) as a percentage of revenue was offset by the foreign exchange gain. - Adjusted Net Income is up
13.4% to ₽2,733 million.
CEO quote
“Even though 2020 was unprecedentedly turbulent year, it has also brought about a radical behavioral transformation into the entire economy, which, in our view, will have a long-lasting positive effect on digital recruitment market,” said Mikhail Zhukov, Chief Executive Officer of HeadHunter Group PLC. “Having recovered from the pandemic hit, in Q4 we managed to put the business back on growth track across all major products and segments, capitalizing on our leading market positions and solid industry fundamentals.
“Despite being fairly busy dealing with COVID-19 repercussions throughout the year, we still delivered on key pillars of our growth strategy: sustained overall customer base expansion, significantly enhanced monetization switching to new subscription model and further consolidated regional market by acquisition of Zarplata.ru.
“Looking forward, we expect that further recovery of the Russian economy will reinforce our leadership and accelerate execution on our long-term strategy.”
Impact of the COVID-19 Pandemic on Our Operations and Financial Position
In March 2020, the World Health Organization declared the spread of COVID-19 virus a global pandemic.
Measures taken by the Russian government to curb spread of the disease, such as a lock-down in Moscow and a nation-wide “period of non-working days,” led to a decrease in the number of job postings and the number of new CV database subscriptions in the second quarter of 2020. As a response to the decrease in revenue, we implemented temporary cost-cutting initiatives, including putting all non-essential hiring, capital expenditure and other expenses on hold. Following easing of restrictions in May 2020, we saw a gradual recovery of our key performance indicators (“KPIs”) in the third quarter of 2020. Although there was a spike in the number of new cases in the fourth quarter of 2020 that was comparable to that of the second quarter of 2020, less severe restrictions were in place in Russia, and we did not experience similar decrease in our KPIs in the fourth quarter 2020.
We have not seen a specific impact of COVID-19 on our financial position as of December 31, 2020. Recent developments in the first quarter of 2021, as of the date of this release, also do not indicate a specific impact of COVID-19 on our financial position.
Our liquidity analysis, based on our recent performance and current estimates, shows that we have adequate resources to finance our operations for the foreseeable future.
Our financial position, results and liquidity may be affected in the future by any further adverse developments related to COVID-19.
Operating Segments
For management purposes, we are organized into operating segments based on the geography of our operations. Our operating segments include “Russia,” “Belarus,” “Kazakhstan” and other countries. As each segment, other than Russia, individually comprises less than
On December 25, 2020, we completed the acquisition of
Customers
We sell our services predominantly to businesses that are looking for job seekers to fill vacancies inside their organizations. We refer to such businesses as “customers.” In Russia, we divide our customers into (i) Key Accounts and (ii) Small and Medium Accounts, based on their annual revenue and employee headcount. We define “Key Accounts” as customers who, according to the Spark-Interfax database, have an annual revenue of ₽2 billion or more or a headcount of 250 or more employees and have not marked themselves as recruiting agencies on their page on our website. We define “Small and Medium Accounts” as customers who, according to the Spark-Interfax database, have both an annual revenue of less than ₽2 billion and a headcount of less than 250 employees and have not marked themselves as recruiting agencies on their page on our website. Our website allows several legal entities and/or natural persons to be registered, each with a unique identification number, under a single account page (e.g., a group of companies). Each legal entity registered under a single account is defined as a separate customer and is included in the number of paying customers metric. Natural persons registered under a single account are assumed to be employees of the legal entities of that account and, thus, are not considered separate customers and so are not included in the number of paying customers metric. However, in a specific reporting period, if only natural persons used our services under such account, they are collectively included in the number of paying customers as one customer.
Seasonality
Revenue
We generally do not experience seasonal fluctuations in demand for our services and, prior to COVID-19, our revenue remained relatively stable throughout each quarter. However, our customers are predominately businesses and, therefore, use our services mostly on business days. As a result, our quarterly revenue is affected by the number of business days in a quarter, with the exception of our services that represent “stand-ready” performance obligations, such as subscriptions to access our curriculum vitae (“CV”) database, which are satisfied over the period of subscription, including weekends and holidays.
Public holidays in Russia predominantly fall during the first quarter of each year, which results in lower business activity in that quarter. Accordingly, our first quarter revenue is typically slightly lower than in the other quarters. For example, our first quarter revenue in our Russia segment in 2019 was
The number of business days in a quarter may also be affected by calendar layout in a specific year. In addition, the Government of Russia decides on an annual basis how public holidays that occur on weekends will be reallocated to business days throughout the year as a requirement of the Labor Code of Russia. As a result, the number of business days in a quarter may be different in each year (while the total number of business days in a year usually remains the same). Therefore, the comparability of our quarterly results, including with respect to our revenue growth rate, may be affected by this variance. In addition, when a calendar layout in a specific year provides for several consecutive holidays or a small number of business days between holidays or holidays adjacent to weekends, HR managers of our customers may take short vacations, further contributing to the decrease in business activities in these periods.
The following table illustrates the number of business days by quarter for the years 2018 to 2020. In 2020 there was one business day more in the second quarter and in the total year and the same number of business days in the first, third and fourth quarters, meaning that the calendar layout in 2020 is substantially the same as in 2019, allowing for good comparability of our quarterly results:
| Number of business days | As % of total business days per year | |||||||||||||
| 2020 | 2019 | 2018 | 2020 | 2019 | 2018 | |||||||||
| First quarter | 57 | 57 | 56 | 23.0 | % | 23.1 | % | 22.7 | % | |||||
| Second quarter | 60 | 59 | 61 | 24.2 | % | 23.9 | % | 24.7 | % | |||||
| Third quarter | 66 | 66 | 65 | 26.6 | % | 26.7 | % | 26.3 | % | |||||
| Fourth quarter | 65 | 65 | 65 | 26.2 | % | 26.3 | % | 26.3 | % | |||||
| Year | 248 | 247 | 247 | 100.0 | % | 100.0 | % | 100.0 | % | |||||
On March 25, 2020, in response to the COVID-19 pandemic, the period from March 30, 2020 to May 11, 2020 was announced a ‘period of non-working days’ in Russia. As a result, two and 22 working days formally became non-working in the first and second quarter of 2020, respectively. However, at least some level of business activity was retained during this period, as remote work was encouraged and some sectors such as banking were functioning with limited capacity.
Operating costs and expenses (exclusive of depreciation and amortization)
Our operating costs and expenses (exclusive of depreciation and amortization) consist primarily of personnel and marketing expenses. Personnel and marketing expenses, in total, accounted for
Marketing expenses are more volatile in terms of allocation to quarters and are affected by our decisions on how we realize our strategy in a particular year, which can differ from year to year. Therefore, total marketing expenses as a percentage of revenue for a particular quarter may not be fully representative of the whole year. Personnel expenses are relatively stable over the year. However, they are also affected by other dynamics, such as our hiring decisions. Some costs and expenses, such as share-based compensation or foreign exchange gains or losses, can be significantly concentrated in a particular quarter.
As an example, the fourth quarter segment external expenses in our Russia segment in 2019 were
Net income and Adjusted EBITDA
Even though our revenue remains relatively stable throughout each quarter, seasonal revenue fluctuations, as described above, affect our net income. As a result of revenue seasonality, our profitability in the first quarter is usually lower than in other quarters and for the full year, because our expenses as a percentage of revenue are usually higher in the first quarter due to lower revenue. For example, our Adjusted EBITDA margin was
Our profitability is also affected by our decisions on timing of expenses, as described above.
Contract liabilities
Our contract liabilities are mostly affected by the annual subscriptions’ renewal cycle in our Key Accounts customer segment. A substantial number of our Key Accounts renew their subscriptions in the first quarter but prepay us in the fourth quarter of a previous year, as per our normal payment terms. As a result, we receive substantial prepayments from our customers in the fourth quarter which causes a consequential increase in our contract liabilities at the end of that quarter. For example, our contract liabilities as of March 31, June 30, September 30, and December 31, 2020 were ₽2,584 million, ₽2,355 million, ₽2,323 million, and ₽2,785 million, respectively.
Net cash generated from operating activities
Our net cash generated from operating activities is affected by seasonal fluctuations in business activity as explained in “Revenue” and by substantial prepayments from our customers (see “Contract liabilities”), as well as by our decisions in regard to timing of expenses (see “Operating expenses (exclusive of depreciation and amortization)”), and to a lesser extent by payment terms provided to us by our largest suppliers, such as TV advertising agencies and others.
Net Working Capital
Our Net Working Capital is primarily affected by changes in our contract liabilities as discussed above. As our contract liabilities have usually been highest in the fourth quarter, our Net Working Capital has usually been lowest in the fourth quarter. For example, our Net Working Capital of March 31, June 30, September 30, and December 31, 2020 was ₽ (3,130) million, ₽ (2,865) million, ₽ (3,111) million, and ₽(3,849) million, respectively.
Fourth Quarter 2020 Results
Our revenue was ₽2,450 million for the three months ended December 31, 2020 compared to ₽2,066 million for the three months ended December 31, 2019. Revenue for the three months ended December 31, 2020 increased by ₽383 million, or
In our Russia segment, Key Accounts revenue increased by
Small and Medium Accounts revenue increased by
Our revenue in Other segments remained relatively flat on the back of political unrest in Belarus.
The following table breaks down revenue by product for the periods indicated:
| For the three months ended December 31, | For the year ended December 31, | ||||||||||||
| (in thousands of RUB) | 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||
| Bundled Subscriptions | 653,755 | 581,484 | 12.4 | % | 2,372,467 | 2,223,951 | 6.7 | % | |||||
| CV Database Access | 490,445 | 448,931 | 9.2 | % | 1,812,245 | 1,761,729 | 2.9 | % | |||||
| Job Postings | 1,082,075 | 821,930 | 31.7 | % | 3,342,225 | 3,112,188 | 7.4 | % | |||||
| Other value-added services | 223,387 | 214,013 | 4.4 | % | 755,170 | 690,873 | 9.3 | % | |||||
| Total revenue | 2,449,662 | 2,066,358 | 18.5 | % | 8,282,107 | 7,788,741 | 6.3 | % | |||||
The following table sets forth the revenue broken down by type of customer and region for the periods indicated:
| For the three months ended December 31, | For the year ended December 31, | ||||||||||||
| (in thousands of RUB) | 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||
| Key Accounts in Russia | |||||||||||||
| Moscow and St. Petersburg | 663,028 | 537,981 | 23.2 | % | 2,156,248 | 1,981,959 | 8.8 | % | |||||
| Other regions of Russia | 236,847 | 200,631 | 18.1 | % | 815,323 | 664,649 | 22.7 | % | |||||
| Sub-total | 899,876 | 738,612 | 21.8 | % | 2,971,571 | 2,646,608 | 12.3 | % | |||||
| Small and Medium Accounts in Russia | |||||||||||||
| Moscow and St. Petersburg | 746,836 | 649,335 | 15.0 | % | 2,526,381 | 2,579,517 | (2.1 | )% | |||||
| Other regions of Russia | 536,932 | 418,479 | 28.3 | % | 1,825,497 | 1,614,359 | 13.1 | % | |||||
| Sub-total | 1,283,768 | 1,067,814 | 20.2 | % | 4,351,878 | 4,193,876 | 3.8 | % | |||||
| Foreign customers of Russia segment | 15,809 | 5,259 | 200.6 | % | 57,822 | 41,385 | 39.7 | % | |||||
| Other customers in Russia | 99,840 | 102,358 | (2.5 | )% | 342,993 | 329,893 | 4.0 | % | |||||
| Total for “Russia” operating segment | 2,299,293 | 1,914,043 | 20.1 | % | 7,724,264 | 7,211,762 | 7.1 | % | |||||
| Other segments | 150,370 | 152,315 | (1.3 | )% | 557,843 | 576,979 | (3.3 | )% | |||||
| Total revenue | 2,449,662 | 2,066,358 | 18.5 | % | 8,282,107 | 7,788,741 | 6.3 | % | |||||
The following table sets forth the number of paying customers and ARPC for the periods indicated:
| For the three months ended December 31, | For the year ended December 31, | ||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||
| Number of paying customers | |||||||||||||
| Russia segment | |||||||||||||
| Key Accounts | |||||||||||||
| Moscow and St. Petersburg | 4,697 | 4,506 | 4.2 | % | 5,514 | 5,368 | 2.7 | % | |||||
| Other regions of Russia | 5,167 | 4,657 | 11.0 | % | 6,287 | 5,757 | 9.2 | % | |||||
| Key Accounts, total | 9,864 | 9,163 | 7.7 | % | 11,801 | 11,125 | 6.1 | % | |||||
| Small and Medium Accounts | |||||||||||||
| Moscow and St. Petersburg | 69,309 | 61,275 | 13.1 | % | 129,599 | 123,295 | 5.1 | % | |||||
| Other regions of Russia | 94,138 | 75,491 | 24.7 | % | 185,246 | 162,005 | 14.3 | % | |||||
| Small and Medium Accounts, total | 163,447 | 136,766 | 19.5 | % | 314,845 | 285,300 | 10.4 | % | |||||
| Foreign customers of Russia segment | 749 | 533 | 40.5 | % | 1,579 | 1,253 | 26.0 | % | |||||
| Total for “Russia” operating segment | 174,060 | 146,462 | 18.8 | % | 328,225 | 297,678 | 10.3 | % | |||||
| Other segments, total | 11,641 | 12,846 | (9.4 | )% | 22,334 | 24,715 | (9.6 | )% | |||||
| Total number of paying customers | 185,701 | 159,308 | 16.6 | % | 350,559 | 322,393 | 8.7 | % | |||||
| ARPC (in RUB) | |||||||||||||
| Russia segment | |||||||||||||
| Key Accounts | |||||||||||||
| Moscow and St. Petersburg | 141,160 | 119,392 | 18.2 | % | 391,050 | 369,217 | 5.9 | % | |||||
| Other regions of Russia | 45,838 | 43,082 | 6.4 | % | 129,684 | 115,451 | 12.3 | % | |||||
| Key Accounts, total | 91,228 | 80,608 | 13.2 | % | 251,807 | 237,897 | 5.8 | % | |||||
| Small and Medium Accounts | |||||||||||||
| Moscow and St. Petersburg | 10,775 | 10,597 | 1.7 | % | 19,494 | 20,922 | (6.8 | )% | |||||
| Other regions of Russia | 5,704 | 5,543 | 2.9 | % | 9,854 | 9,965 | (1.1 | )% | |||||
| Small and Medium Accounts, total | 7,854 | 7,808 | 0.6 | % | 13,822 | 14,700 | (6.0 | )% | |||||
| Other segments, total | 12,917 | 11,857 | 8.9 | % | 24,977 | 23,345 | 7.0 | % | |||||
Operating Costs and Expenses (exclusive of depreciation and amortization)
Operating costs and expenses (exclusive of depreciation and amortization) were ₽1,419 million for the three months ended December 31, 2020 compared to ₽1,143 million for the three months ended December 31, 2019, representing an increase by ₽276 million, or
The following table sets forth operating costs and expenses (exclusive of depreciation and amortization) for the periods indicated:
| (in thousands of RUB) | For the three months ended December 31, | For the year ended December 31, | |||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||
| Personnel expenses | (808,344 | ) | (605,016 | ) | 33.6 | % | (2,579,958 | ) | (2,234,309 | ) | 15.5 | % | |||||
| Marketing expenses | (318,219 | ) | (274,274 | ) | 16.0 | % | (1,105,247 | ) | (1,046,678 | ) | 5.6 | % | |||||
| Other general and administrative expenses: | |||||||||||||||||
| Subcontractors and other expenses related to provision of services | (63,942 | ) | (59,483 | ) | 7.5 | % | (194,644 | ) | (186,337 | ) | 4.5 | % | |||||
| Office rent and maintenance | (54,289 | ) | (58,149 | ) | (6.6 | )% | (176,672 | ) | (206,501 | ) | (14.4 | )% | |||||
| Professional services | (90,653 | ) | (52,371 | ) | 73.1 | % | (335,681 | ) | (347,963 | ) | (3.5 | )% | |||||
| Insurance expense | (47,649 | ) | (42,454 | ) | 12.2 | % | (181,047 | ) | (111,251 | ) | 62.7 | % | |||||
| Hosting and other web-site maintenance | (11,783 | ) | (11,718 | ) | 0.6 | % | (46,325 | ) | (40,421 | ) | 14.6 | % | |||||
| Other operating expenses | (23,919 | ) | (39,655 | ) | (39.7 | )% | (71,726 | ) | (126,803 | ) | (43.4 | )% | |||||
| Total other general and administrative expenses | (292,235 | ) | (263,830 | ) | 10.8 | % | (1,006,095 | ) | (1,019,276 | ) | (1.3 | )% | |||||
| Operating costs and expenses (exclusive of depreciation and amortization) | (1,418,798 | ) | (1,143,120 | ) | 24.1 | % | (4,691,300 | ) | (4,300,263 | ) | 9.1 | % | |||||
The following table sets forth operating costs and expenses (exclusive of depreciation and amortization) as percentage of revenue for the periods indicated:
| For the three months ended December 31, | For the year ended December 31, | ||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||
| Personnel expenses | 33.0 | % | 29.3 | % | 3.7 | % | 31.2 | % | 28.7 | % | 2.5 | % | |||||
| Marketing expenses | 13.0 | % | 13.3 | % | (0.3 | )% | 13.3 | % | 13.4 | % | (0.1 | )% | |||||
| Other general and administrative expenses: | |||||||||||||||||
| Subcontractors and other expenses related to provision of services | 2.6 | % | 2.9 | % | (0.3 | )% | 2.4 | % | 2.4 | % | 0.0 | % | |||||
| Office rent and maintenance | 2.2 | % | 2.8 | % | (0.6 | )% | 2.1 | % | 2.7 | % | (0.5 | )% | |||||
| Professional services | 3.7 | % | 2.5 | % | 1.2 | % | 4.1 | % | 4.5 | % | (0.4 | )% | |||||
| Insurance expense | 1.9 | % | 2.1 | % | (0.1 | )% | 2.2 | % | 1.4 | % | 0.8 | % | |||||
| Hosting and other web-site maintenance | 0.5 | % | 0.6 | % | (0.1 | )% | 0.6 | % | 0.5 | % | 0.0 | % | |||||
| Other operating expenses | 1.0 | % | 1.9 | % | (0.9 | )% | 0.9 | % | 1.6 | % | (0.8 | )% | |||||
| Total other general and administrative expenses | 11.9 | % | 12.8 | % | (0.8 | )% | 12.1 | % | 13.1 | % | (0.9 | )% | |||||
| Operating costs and expenses (exclusive of depreciation and amortization) as a percentage of revenue | 57.9 | % | 55.3 | % | 2.6 | % | 56.6 | % | 55.2 | % | 1.4 | % | |||||
Personnel expenses
Personnel expenses for the three months ended December 31, 2020 increased by ₽203 million, or
Personnel expenses increased as a percentage of revenue from
Personnel expenses (excluding share-based compensations and other items) were
See “Use of Non-IFRS Financial Measures” elsewhere in this release for a reconciliation of personnel expenses (excluding share-based compensations and other items) to the nearest IFRS measure.
Marketing expenses
Marketing expenses for the three months ended December 31, 2020 increased by ₽44 million, or
Marketing expenses as percentage of revenue were
Other general and administrative expenses
Our other general and administrative expenses consist primarily of professional services, insurance costs and office rent and maintenance costs. Our total other general and administrative expenses for the three months ended December 31, 2020 increased by ₽28 million, or
Our other general and administrative expenses as a percentage of revenue decreased to
Our other general and administrative expenses (excluding items unrelated to our core business activity) were
See “Use of Non-IFRS Financial Measures” elsewhere in this release for a reconciliation of other general and administrative expenses (excluding items unrelated to our core business activity) to the nearest IFRS measure.
Net foreign exchange loss
Net foreign exchange loss was ₽1 million for the three months ended December 31, 2020 compared to ₽22 million for the three months ended December 31, 2019.
Depreciation and amortization
Depreciation and amortization were ₽195 million for the three months ended December 31, 2020, an increase of
Finance income and costs
Finance income was ₽25 million for the three months ended December 31, 2020 compared to ₽19 million for the three months ended December 31, 2019.
Finance costs were ₽98 million for the three months ended December 31, 2020 compared to ₽133 million for the three months ended December 31, 2019. Finance costs for the three months ended December 31, 2020 decreased by ₽35 million, or
Income tax expense
Income tax expense for the three months ended December 31, 2020 increased by ₽14 million, or
The effective tax rate has decreased to
Income tax expense in the fourth quarter 2020 and the fourth quarter 2019 was affected by reversal of provision for uncertain tax positions of ₽88 million in the fourth quarter of 2019 and ₽92 million in the fourth quarter of 2020, resulting in the effective tax rates not indicative of the full-year effective tax rates.
The effective tax rate for the year ended December 31, 2020 decreased to
Net income, Adjusted EBITDA and Adjusted Net Income
In the three months ended December 31, 2020 compared to the three months ended December 31, 2019, our net income has increased by
Cash Flows
The following table sets forth the summary cash flow statements for the periods indicated:
| (in thousands of RUB) | For the twelve months ended December 31, | |||||||
| 2020 | 2019 | Change | ||||||
| Net cash generated from operating activities | 3,214,573 | 2,611,054 | 603,519 | |||||
| Net cash used in investing activities | (3,227,607 | ) | (637,117 | ) | (2,590,490 | ) | ||
| Net cash generated from/(used in) financing activities | 1,114,050 | (2,653,440 | ) | 3,767,490 | ||||
| Net increase/(decrease) in cash and cash equivalents | 1,101,016 | (679,503 | ) | 1,780,519 | ||||
| Cash and cash equivalents, beginning of period | 2,089,215 | 2,861,110 | (771,895 | ) | ||||
| Effect of exchange rate changes on cash | 177,379 | (92,392 | ) | 269,771 | ||||
| Cash and cash equivalents, end of period | 3,367,610 | 2,089,215 | 1,278,395 | |||||
Net cash generated from operating activities
For the twelve months ended December 31, 2020, net cash generated from operating activities was ₽3,215 million, compared to ₽2,611 million for the twelve months ended December 31, 2019. The change between the periods of ₽604 million was primarily driven by: (i) a decrease in interest paid due to decreases in the Key Rate of Central Bank of Russia, (ii) an increase in net income adjusted for non-cash items and items not affecting cash flow from operating activities and (iii) a decrease in income tax paid due to a decrease in income tax expense. This was offset by change in other liabilities due to advances issued from depositary related to the IPO.
Net cash used in investing activities
For the twelve months ended December 31, 2020, net cash used in investing activities was ₽3,228 million compared to ₽637 million for the twelve months ended December 31, 2019. The change between the periods of ₽2,590 million was mainly due to the acquisition of
Net cash generated from (used in) financing activities
For the year ended December 31, 2020, net cash generated from financing activities was ₽1,114 million, compared to ₽2,653 million used in the year ended December 31, 2019. The change between the periods of ₽3,767 million was primarily due to (i) the issue of ₽4,000 million interest-bearing non-convertible bonds in the fourth quarter of 2020 and (ii) the decrease in bank and other loans repaid (net of bank and other loans received) due to restructuring of a bank loan, which was partly offset by an increase of the dividends paid to shareholders by ₽752 million.
Capital Expenditures
Our additions to property and equipment and intangible assets for the twelve months ended December 31, 2020 were ₽4,332 million compared to ₽492 million for the twelve months ended December 31, 2019, an increase of ₽3,840 million was primarily due to acquisition of property and equipment and intangible assets, including goodwill relating to the purchase of Zarplata.ru in the amount of ₽4,071 million, that was partly offset by a decrease of ₽231 million primarily due to office renovation costs mostly incurred during 2019.
Dividend
Our Board of Directors plans to discuss a potential 2020 dividend in the second quarter of 2021, based on recent developments in revenue, COVID-19 impact in Russia, growth opportunities and other factors.
Financial Outlook
The following forward-looking statement reflects our expectations as of March 18, 2021:
We currently expect our revenue to grow in the range of
This outlook reflects our current view, based on the trends that we see at this time, and may change considering market, economic and social developments in jurisdictions in which we operate.
Fourth Quarter and Full-Year 2020 Financial Results Conference Call
HeadHunter will host a conference call and webcast to discuss its results at 9:00 a.m. U.S. Eastern Time (4:00 p.m. Moscow time, 1:00 p.m. London time) the same day.
We recommend to use the dial-in option only if you would like to ask questions. In this case please dial in at least 15 minutes prior to the call start time and clearly state the requested information. For listen only mode, please use the webcast link. The earnings release can be accessed through our website at https://investor.hh.ru/. Following the call, a replay will be available on our website.
To participate in the conference call, please use the following details:
| Standard International: | +44 (0) 2071 928338 |
| UK (local): | +44 (0) 8444 819752 |
| UK (toll free): | 0800 279 6619 |
| USA (local): | +1 646 741 3167 |
| USA (toll free): | +1 877 870 9135 |
| Russian Federation (local): | +7 495 249 9851 |
| Russian Federation (toll free): | 810 800 2114 4011 |
| Conference ID: | 2242365 |
Webcast:
https://edge.media-server.com/mmc/p/w3yf6uws
Contacts:
Investor Inquiries
Roman Safiyulin
E-mail: r.safiyulin@hh.ru
Media Inquiries
Alexander Dzhabarov
E-mail: a.dzhabarov@hh.ru
About HeadHunter Group PLC
HeadHunter is the leading online recruitment platform in Russia and the Commonwealth of Independent States focused on providing comprehensive talent acquisition services, such as access to extensive CV database, job postings (jobs classifieds platform) and a portfolio of value-added services.
USE OF NON-IFRS FINANCIAL MEASURES
To supplement our consolidated financial statements, which is prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the International Accounting Standards Board (“IASB”), we present the following non-IFRS1 financial measures: Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with IFRS. For more information on these non-IFRS financial measures, please see the tables captioned “Reconciliations of non-IFRS financial measures to the nearest comparable IFRS measures”, included following the accompanying financial tables. We define the various non-IFRS financial measures we use as follows:
- “Adjusted EBITDA” as net income/(loss) plus: (1) income tax expense; (2) net interest expense/(income); (3) depreciation and amortization; (4) transaction costs related to business combinations; (5) (gain)/loss on the disposal of subsidiary; (6) transaction costs related to disposal of subsidiary; (7) expenses related to equity-settled awards, including related social taxes; (8) IPO-related costs and other income/(loss) not related to underlying business activity; (9) insurance expenses related to the IPO; (10) (income) from the depositary; (11) one-off litigation settlement and related legal costs; and (12) share of (profit)/loss of equity-accounted investees; (13) secondary public offering (“SPO”) related costs.
- “Adjusted Net Income” as net income/(loss) plus: (1) transaction costs related to business combinations; (2) (gain)/loss on the disposal of subsidiary; (3) transaction costs related to the disposal of subsidiary; (4) expenses related to equity-settled awards, including related social taxes; (5) IPO-related costs and other income/(loss) not related to underlying business activity; (6) insurance expenses related to IPO; (7) (income) from the depositary; (8) one-off litigation settlement and related legal costs; (9) share of (profit)/loss of equity-accounted investees; (10) amortization of intangible assets recognized upon the acquisition by HeadHunter Group PLC of the outstanding equity interests of HeadHunter FSU Limited from Mail.Ru Group Limited (the “Acquisition”); (11) the tax effect of the adjustment described in (10); (12) (gain)/ loss related to the remeasurement and expiration of a tax indemnification asset; (13) net (gain)/loss on financial assets measured at fair value through profit and loss; (14) secondary public offering (“SPO”) related costs
- “Adjusted EBITDA Margin” as Adjusted EBITDA divided by revenue.
- “Adjusted Net Income Margin” as Adjusted Net Income divided by revenue.
_________
1 Denotes International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”).
Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by our management to monitor the underlying performance of the business and its operations. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by us to Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin as reported by other companies. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are unaudited and have not been prepared in accordance with IFRS or any other generally accepted accounting principles.
Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin are not measurements of performance under IFRS or any other generally accepted accounting principles, and you should not consider Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin or Adjusted Net Income Margin as alternatives to net income, operating profit or other financial measures determined in accordance with IFRS or other generally accepted accounting principles. Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:
- Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments,
- Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin do not reflect changes in, or cash requirements for, our working capital needs, and
- the fact that other companies in our industry may calculate Adjusted EBITDA, Adjusted Net Income, Adjusted EBITDA Margin and Adjusted Net Income Margin differently than we do, which limits their usefulness as comparative measures.
The tables at the end of this release provide detailed reconciliations of each non-IFRS financial measure we use to the most directly comparable IFRS financial measure.
We provide earnings guidance on a non-IFRS basis and do not provide earnings guidance on an IFRS basis. A reconciliation of our Adjusted EBITDA Margin guidance to the most directly comparable IFRS financial measure cannot be provided without unreasonable efforts and is not provided herein because of the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliations, including depreciation and amortization, expenses related to equity-settled awards and the other adjustments reflected in our reconciliation of historical non-IFRS financial measures, the amounts of which, could be material.
Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization)
Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) is a financial measure not defined under IFRS. We believe that Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) is a useful metric to assess our operating activities. We excluded expenses incurred in connection with potential financing and strategic transactions, including IPO and SPO- related expenses that are not indicative of our ongoing expenses. We also excluded equity-settled awards as these are non-cash expenses and highly dependent on our share price at the time of equity award grants. Therefore, we believe that it is useful for investors and analysts to see operating costs and expenses financial measures excluding the impact of these charges in order to obtain a clearer picture of our operating activity . Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization).
Net Working Capital
Net Working Capital is a financial measure not defined under IFRS. We define Net Working Capital as our trade and other receivables plus prepaid expenses and other current assets, less our contract liabilities and trade and other payables, in all cases, a current portion of a specific asset or liability. We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Working Capital.
Net Debt and Net Debt to Adjusted EBITDA Ratio
Net Debt and Net Debt to Adjusted EBITDA Ratio are financial measures not defined under IFRS. We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt. These measures should not be considered in isolation or as a substitute for any standardized measure under IFRS. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures. See the tables at the end of this release providing the calculation of Net Debt and discussion of Net Debt to Adjusted EBITDA Ratio.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that do not relate to matters of historical fact should be considered forward-looking statements, including, without limitation, statements regarding our expected financial performance and operational performance for the year ending December 31, 2021, future discussions regarding a 2020 dividend, the anticipated impact of the COVID-19 pandemic on our business and results of operations, the sufficiency of our resources and our ability to finance our operations for the foreseeable future, as well as statements that include the words “expect,” “intend,” “plan,” “believe,” “project,” “forecast,” “estimate,” “may,” “should,” “anticipate” and similar statements of a future or forward-looking nature. These forward-looking statements are based on management’s current expectations. Actual results may differ materially from the results predicted or implied by such statements, and our reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted or implied by such statements include, among others, significant competition in our markets, our ability to maintain and enhance our brand, our ability to improve our user experience and product offerings, our ability to respond to industry developments, our reliance on Russian Internet infrastructure, macroeconomic and global geopolitical developments affecting the Russian economy or our business, including the impact of the COVID-19 pandemic, changes in the political, legal and/or regulatory environment, privacy and data protection concerns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the caption “Risk Factors” in our Annual Report on Form 20-F for the year ended December 31, 2019 and our prospectus pursuant to Rule 424(b) filed with the SEC on July 16, 2020, as such factors may be updated from time to time in our other filings with the U.S. Securities and Exchange Commission (“SEC”), each of which is on file with the SEC and is available on the SEC website at www.sec.gov. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements that we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this release are inherently uncertain and may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Accordingly, you should not rely upon forward-looking statements as predictions of future events. In addition, the forward-looking statements made in this release relate only to events or information as of the date on which the statements are made in this release. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.
Unaudited Consolidated Statement of Income and Comprehensive Income
(in thousands of RUB and USD, except per share amounts)
| For the three months ended December 31, | For the year ended December 31, | ||||||||||||||||
| 2020 | 2019 | 2020 | 2020 | 2019 | 2020 | ||||||||||||
| RUB | RUB | USD | RUB | RUB | USD | ||||||||||||
| Revenue | 2,449,662 | 2,066,358 | 33,159 | 8,282,107 | 7,788,741 | 112,109 | |||||||||||
| Operating costs and expenses (exclusive of depreciation and amortization) | (1,418,798 | ) | (1,143,120 | ) | (19,205 | ) | (4,691,300 | ) | (4,300,263 | ) | (63,503 | ) | |||||
| Depreciation and amortization | (195,061 | ) | (177,786 | ) | (2,640 | ) | (750,558 | ) | (683,317 | ) | (10,160 | ) | |||||
| Operating income | 835,803 | 745,452 | 11,314 | 2,840,249 | 2,805,161 | 38,446 | |||||||||||
| Finance income | 25,316 | 19,041 | 343 | 59,329 | 76,764 | 803 | |||||||||||
| Finance costs | (97,902 | ) | (133,120 | ) | (1,325 | ) | (409,545 | ) | (603,280 | ) | (5,544 | ) | |||||
| Net foreign exchange gain/(loss) | (1,443 | ) | (21,778 | ) | (20 | ) | 83,030 | (46,508 | ) | 1,124 | |||||||
| Share of loss of equity-accounted investees (net of income tax) | (10,404 | ) | (21,958 | ) | (141 | ) | (49,181 | ) | (30,542 | ) | (666 | ) | |||||
| Other income | 13,761 | 10,309 | 186 | 47,715 | 23,853 | 646 | |||||||||||
| Profit before income tax | 765,131 | 597,946 | 10,357 | 2,571,597 | 2,225,448 | 34,810 | |||||||||||
| Income tax expense | (115,326 | ) | (101,504 | ) | (1,561 | ) | (685,772 | ) | (644,422 | ) | (9,283 | ) | |||||
| Net income for the period | 649,805 | 496,442 | 8,796 | 1,885,825 | 1,581,026 | 25,527 | |||||||||||
| Attributable to: | |||||||||||||||||
| Owners of the Company | 621,015 | 465,926 | 8,406 | 1,748,960 | 1,448,018 | 23,674 | |||||||||||
| Non-controlling interest | 28,790 | 30,516 | 390 | 136,865 | 133,008 | 1,853 | |||||||||||
| Comprehensive income/(loss) | |||||||||||||||||
| Items that are or may be reclassified subsequently to profit or loss: | |||||||||||||||||
| Foreign currency translation differences | (26,915 | ) | (16,227 | ) | (364 | ) | 15,109 | (41,818 | ) | 205 | |||||||
| Total comprehensive income. net of tax | 622,890 | 480,215 | 8,432 | 1,900,934 | 1,539,208 | 25,732 | |||||||||||
| Attributable to: | |||||||||||||||||
| Owners of the Company | 597,291 | 450,442 | 8,085 | 1,762,011 | 1,408,597 | 23,851 | |||||||||||
| Non-controlling interest | 25,599 | 29,773 | 347 | 138,923 | 130,611 | 1,880 | |||||||||||
| Earnings per share | |||||||||||||||||
| Basic (in Russian Roubles per share) | 12.3 | 9.3 | 0.17 | 34.8 | 29.0 | 0.47 | |||||||||||
| Diluted (in Russian Roubles per share) | 12.0 | 9.0 | 0.16 | 33.9 | 28.4 | 0.46 | |||||||||||
Unaudited Consolidated Statement of Financial Position
As at
| (in thousands of RUB and USD) | December 31, 2020 | December 31, 2019 | December 31, 2020 | |||||
| RUB | RUB | USD | ||||||
| Non-current assets | ||||||||
| Goodwill | 9,875,224 | 6,954,183 | 133,674 | |||||
| Intangible assets | 3,439,959 | 2,733,417 | 46,564 | |||||
| Property and equipment | 466,725 | 429,744 | 6,318 | |||||
| Equity-accounted investees | 129,666 | 178,847 | 1,755 | |||||
| Right-of-use assets | 215,120 | 279,249 | 2,912 | |||||
| Deferred tax assets | 176,328 | 149,835 | 2,387 | |||||
| Loans issued to equity-accounted investees | 11,541 | – | 156 | |||||
| Other financial assets | 25,491 | 25,341 | 345 | |||||
| Other non-current assets | 22,176 | 22,134 | 300 | |||||
| Total non-current assets | 14,362,230 | 10,772,750 | 194,411 | |||||
| Current assets | ||||||||
| Trade and other receivables | 69,120 | 57,908 | 936 | |||||
| Indemnification asset | 186,473 | – | 2,524 | |||||
| Loans issued to equity-accounted investees (current portion) | 8,178 | – | 111 | |||||
| Prepaid expenses and other current assets | 179,118 | 119,249 | 2,425 | |||||
| Cash and cash equivalents | 3,367,610 | 2,089,215 | 45,585 | |||||
| Total current assets | 3,810,499 | 2,266,372 | 51,580 | |||||
| Total assets | 18,172,729 | 13,039,122 | 245,991 | |||||
| Equity | ||||||||
| Share capital | 8,597 | 8,547 | 116 | |||||
| Share premium | 1,987,044 | 1,863,877 | 26,897 | |||||
| Foreign currency translation reserve | (92,140 | ) | (105,191 | ) | (1,247 | ) | ||
| Retained earnings | 1,536,137 | 1,587,697 | 20,794 | |||||
| Total equity attributable to owners of the Company | 3,439,638 | 3,354,930 | 46,560 | |||||
| Non-controlling interest | 69,104 | 33,263 | 935 | |||||
| Total equity | 3,508,742 | 3,388,193 | 47,495 | |||||
| Non-current liabilities | ||||||||
| Loans and borrowings | 7,791,326 | 4,064,501 | 105,465 | |||||
| Lease liabilities | 164,245 | 230,802 | 2,223 | |||||
| Deferred tax liabilities | 658,970 | 512,804 | 8,920 | |||||
| Trade and other payables | 178,607 | 4,239 | 2,418 | |||||
| Provisions | 87,822 | 19,498 | 1,189 | |||||
| Other non-current liabilities | 142,531 | 126,828 | 1,929 | |||||
| Total non-current liabilities | 9,023,501 | 4,958,672 | 122,144 | |||||
| Current liabilities | ||||||||
| Contract liabilities | 2,785,402 | 2,367,416 | 37,704 | |||||
| Trade and other payables | 1,273,089 | 780,219 | 17,233 | |||||
| Loans and borrowings (current portion) | 485,100 | 1,064,554 | 6,566 | |||||
| Lease liabilities (current portion) | 77,752 | 59,816 | 1,052 | |||||
| Income tax payable | 401,733 | 369,974 | 5,438 | |||||
| Provisions (current portion) | 578,651 | 26,398 | 7,833 | |||||
| Other current liabilities | 38,759 | 23,880 | 525 | |||||
| Total current liabilities | 5,640,486 | 4,692,257 | 76,351 | |||||
| Total liabilities | 14,663,987 | 9,650,929 | 198,495 | |||||
| Total equity and liabilities | 18,172,729 | 13,039,122 | 245,991 | |||||
Unaudited Consolidated Statement of Cash Flows
For the year ended
| (in thousands of RUB and USD) | December 31, 2020 | December 31, 2019 | December 31, 2020 | |||||
| RUB | RUB | USD | ||||||
| OPERATING ACTIVITIES: | ||||||||
| Net income for the period | 1,885,825 | 1,581,026 | 25,527 | |||||
| Adjusted for non-cash items and items not affecting cash flow from operating activities: | ||||||||
| Depreciation and amortization | 750,558 | 683,317 | 10,160 | |||||
| Net finance costs | 350,216 | 526,516 | 4,741 | |||||
| Net foreign exchange (gain)/loss | (83,030 | ) | 46,508 | (1,124 | ) | |||
| Other non-cash items | (5,509 | ) | 5,690 | (75 | ) | |||
| Management incentive agreement, including social taxes | 262,647 | 196,993 | 3,555 | |||||
| Share-based payments to Board of directors | 21,714 | 12,842 | 294 | |||||
| Share of loss of equity-accounted investees, net of income tax | 49,181 | 30,542 | 666 | |||||
| Income tax expense | 685,772 | 644,422 | 9,283 | |||||
| Change in trade receivables and other operating assets | (19,546 | ) | (90,218 | ) | (264 | ) | ||
| Change in contract liabilities | 343,903 | 307,388 | 4,655 | |||||
| Change in trade and other payables | 161,742 | 76,418 | 2,189 | |||||
| Change in other liabilities | 17,300 | 147,685 | 234 | |||||
| Income tax paid | (840,021 | ) | (975,656 | ) | (11,371 | ) | ||
| Interest paid | (366,179 | ) | (582,420 | ) | (4,957 | ) | ||
| Net cash generated from operating activities | 3,214,573 | 2,611,054 | 43,513 | |||||
| INVESTING ACTIVITIES: | ||||||||
| Acquisition of subsidiary, net of cash acquired | (3,004,299 | ) | – | (40,667 | ) | |||
| Acquisition of equity-accounted investee | – | (234,730 | ) | – | ||||
| Acquisition of intangible assets | (77,723 | ) | (97,818 | ) | (1,052 | ) | ||
| Acquisition of property and equipment | (178,782 | ) | (381,648 | ) | (2,420 | ) | ||
| Loans issued to equity-accounted investees | (19,235 | ) | (260 | ) | ||||
| Interest received | 52,432 | 77,079 | 710 | |||||
| Net cash used in investing activities | (3,227,607 | ) | (637,117 | ) | (43,690 | ) | ||
| FINANCING ACTIVITIES: | ||||||||
| Bank and other loan received | 4,616,478 | – | 62,490 | |||||
| Non-convertible bonds issued | 4,000,000 | – | 54,145 | |||||
| Bank loan origination fees | (56,668 | ) | – | (767 | ) | |||
| Bank and other loans repaid | (5,397,895 | ) | (1,325,000 | ) | (73,067 | ) | ||
| Payment for lease liabilities | (59,737 | ) | (61,376 | ) | (809 | ) | ||
| Dividends paid to shareholders | (1,885,441 | ) | (1,133,501 | ) | (25,522 | ) | ||
| Dividends paid to non-controlling interest | (102,731 | ) | (131,456 | ) | (1,391 | ) | ||
| Acquisition of non-controlling interest | – | (2,107 | ) | – | ||||
| Contribution from non-controlling interest | 44 | – | 1 | |||||
| Net cash used in financing activities | 1,114,050 | (2,653,440 | ) | 15,080 | ||||
| Net increase/(decrease) in cash and cash equivalents | 1,101,016 | (679,503 | ) | 14,904 | ||||
| Cash and cash equivalents, beginning of period | 2,089,215 | 2,861,110 | 28,280 | |||||
| Effect of exchange rate changes on cash | 177,379 | (92,391 | ) | 2,401 | ||||
| Cash and cash equivalents, end of period | 3,367,610 | 2,089,215 | 45,585 | |||||
Reconciliations of non-IFRS financial measures to the nearest comparable IFRS measures
Reconciliation of net income to EBITDA and Adjusted EBITDA, the most directly comparable IFRS financial measures:
| (in thousands of RUB) | For the three months ended December 31, | For the year ended December 31, | |||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||
| Net income | 649,805 | 496,442 | 1,885,825 | 1,581,026 | |||||||
| Add the effect of: | |||||||||||
| Income tax expense | 115,326 | 101,504 | 685,772 | 644,422 | |||||||
| Net interest costs | 72,586 | 114,079 | 350,216 | 526,516 | |||||||
| Depreciation and amortization | 195,061 | 177,786 | 750,558 | 683,317 | |||||||
| EBITDA | 1,032,778 | 889,811 | 3,672,371 | 3,435,281 | |||||||
| Add the effect of: | |||||||||||
| Equity-settled awards, including social taxes(1) | 82,323 | 61,891 | 249,286 | 178,953 | |||||||
| IPO-related costs(2) | – | 1,990 | – | 190,284 | |||||||
| Insurance cover related to IPO(3) | – | 38,175 | 54,772 | 100,048 | |||||||
| Income from depository(4) | (12,476 | ) | (8,551 | ) | (41,617 | ) | (22,095 | ) | |||
| SPO-related costs (5) | 12,779 | – | 151,087 | – | |||||||
| Transaction costs related to business combinations (6) | 34,275 | – | 51,665 | – | |||||||
| One-off litigation settlements and legal costs(7) | – | 17,734 | – | 17,734 | |||||||
| Share of loss of equity-accounted investees(8) | 10,404 | 21,958 | 49,181 | 30,542 | |||||||
| Adjusted EBITDA | 1,160,083 | 1,023,008 | 4,186,745 | 3,930,747 | |||||||
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming Russian tax resident in June 2019.
(2) In connection with our initial public offering in May 2019, we incurred expenses related to legal, accounting and other professional
fees that are not indicative of our ongoing expenses.
(3) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(4) In connection with our IPO, we have signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(5) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(6) Reflects transaction costs related to business combination of Zarplata.ru in December 2020.
(7) Represents one-off litigation costs related to administrative proceeding with the Federal Antimonopoly Service of Russia.
(8) On May 6, 2019, we acquired a
Reconciliation of net income to Adjusted Net Income, the most directly comparable IFRS financial measure:
| (in thousands of RUB) | For the three months ended December 31, | For the year ended December 31, | |||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||
| Net income | 649,805 | 496,442 | 1,885,825 | 1,581,026 | |||||||
| Add the effect of: | |||||||||||
| Equity-settled awards, including social taxes(1) | 82,323 | 61,891 | 249,286 | 178,953 | |||||||
| IPO-related costs(2) | – | 1,990 | – | 190,284 | |||||||
| Insurance cover related to IPO(3) | – | 38,175 | 54,772 | 100,048 | |||||||
| Income from depositary(4) | (12,476 | ) | (8,551 | ) | (41,617 | ) | (22,095 | ) | |||
| SPO-related costs(5) | 12,779 | – | 151,087 | – | |||||||
| Transaction costs related to business combinations (6) | 34,275 | – | 51,665 | – | |||||||
| One-off litigation settlements and legal costs(7) | – | 17,734 | – | 17,734 | |||||||
| Share of loss of equity-accounted investees(8) | 10,404 | 21,958 | 49,181 | 30,542 | |||||||
| Amortization of intangible assets recognized upon the Acquisition(9) | 103,947 | 103,947 | 415,787 | 415,787 | |||||||
| Net (gain)/loss on financial assets measured at fair value through profit and loss(10) | (8,574 | ) | – | (150 | ) | – | |||||
| Tax effect on adjustments(11) | (20,789 | ) | (20,789 | ) | (83,157 | ) | (83,157 | ) | |||
| Adjusted Net Income | 851,694 | 712,796 | 2,732,679 | 2,409,122 | |||||||
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming a Russian tax resident in June 2019.
(2) In connection with our initial public offering in May 2019, we incurred expenses related to legal, accounting and other professional
fees that are not indicative of our ongoing expenses.
(3) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(4) In connection with our IPO, we signed the Deposit Agreement, in accordance with which we shall receive income from our depositary over the five-year period from the date of the IPO, provided that we meet certain covenants as specified in the Deposit Agreement. We believe that this income does not relate to our ordinary course of business.
(5) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(6) Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(7) Represents one-off litigation costs related to administrative proceeding with the Federal Antimonopoly Service of Russia.
(8) On May 6, 2019, we acquired a
(9) As a result of the Acquisition, we recognized the following intangible assets: (i) trademark and domain names in the amount of ₽1,634,306 thousand, (ii) non-contractual customer relationships in the amount of ₽2,064,035 thousand and (iii) CV database in the amount of ₽618,601 thousand, which have a useful life of 10 years, 5-10 years and 10 years, respectively.
(10) We believe that the movements in fair values of financial assets measured at fair value through profit and loss are not indicative of our underlying business performance.
(11) Calculated by applying the statutory Russian tax rate of
Reconciliation of operating costs and expenses (exclusive of depreciation and amortization) to Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization), the most directly comparable IFRS financial measure:
| For the three months ended December 31, 2020 | For the three months ended December 31, 2019 | ||||||||||||||||||||||
| (in thousands of RUB) | Personnel expenses | Marketing expenses | Other general and administrative expenses | Total | Personnel expenses | Marketing expenses | Other general and administrative expenses | Total | |||||||||||||||
| Operating costs and expenses (exclusive of depreciation and amortization) | (808,344 | ) | (318,219 | ) | (292,235 | ) | (1,418,798 | ) | (605,016 | ) | (274,274 | ) | (263,830 | ) | (1,143,120 | ) | |||||||
| Add the effect of: | |||||||||||||||||||||||
| Equity-settled awards, including social taxes(1) | 82,323 | – | – | 82,323 | 61,891 | – | – | 61,891 | |||||||||||||||
| IPO-related costs(2) | – | – | – | – | – | – | 1,990 | 1,990 | |||||||||||||||
| Insurance cover related to IPO(3) | – | – | – | – | – | – | 38,175 | 38,175 | |||||||||||||||
| SPO-related costs(4) | 6,693 | – | 6,087 | 12,779 | – | – | – | – | |||||||||||||||
| Transaction costs related to business combinations(5) | 3,042 | – | 31,233 | 34,275 | – | – | – | – | |||||||||||||||
| One-off litigation settlements and legal costs(6) | – | – | – | – | – | – | 17,734 | 17,734 | |||||||||||||||
| Adjusted Operating Costs and Expenses (Exclusive of Depreciation and Amortization) | (716,286 | ) | (318,219 | ) | (254,915 | ) | (1,289,420 | ) | (543,125 | ) | (274,274 | ) | (205,931 | ) | (1,023,330 | ) | |||||||
(1) Represents non-cash expenses related to equity-settled awards issued in accordance with the Management Incentive Agreement, and equity-settled share-based awards issued to board members and related social taxes, which are payable as a result of us becoming a Russian tax resident in June 2019.
(2) In connection with our initial public offering in May 2019, we incurred expenses related to legal, accounting and other professional
fees that are not indicative of our ongoing expenses.
(3) Subsequent to and in connection with the IPO, we purchased a one-year insurance policy for
(4) Reflects legal, accounting, and other professional fees incurred in connection with our secondary public offering that took place in July 2020.
(5) Reflects transaction costs related to the acquisition of Zarplata.ru in December 2020.
(6) Represents one-off litigation costs related to administrative proceeding with the Federal Antimonopoly Service of Russia.
We believe that Net Working Capital is a useful metric to assess our ability to service debt, fund new investment opportunities, distribute dividends to our shareholders and assess our working capital requirements.
Calculation of our Net Working Capital is presented in the table below:
| (in thousands of RUB) | December 31, 2020 | December 31, 2019 | |||
| Trade and other receivables | 69,120 | 57,908 | |||
| Prepaid expenses and other current assets | 179,118 | 119,249 | |||
| Contract liabilities | (2,785,402 | ) | (2,367,416 | ) | |
| Trade and other payables | (1,273,089 | ) | (780,219 | ) | |
| Other current liabilities | (38,759 | ) | (23,880 | ) | |
| Net Working Capital | (3,849,012 | ) | (2,994,358 | ) | |
We believe that Net Debt and Net Debt to Adjusted EBITDA Ratio are important measures that indicate our ability to repay outstanding debt.
Calculation of our net debt is presented in the table below:
| (in thousands of RUB) | December 31, 2020 | December 31, 2019 | |||
| Loans and borrowings | 7,791,326 | 4,064,501 | |||
| Loans and borrowings (current portion) | 485,100 | 1,064,554 | |||
| Cash and cash equivalents | (3,367,610 | ) | (2,089,215 | ) | |
| Net Debt | 4,908,816 | 3,039,840 | |||
We calculate our Net Debt to Adjusted EBITDA Ratio by dividing Net Debt by Adjusted EBITDA.
| December 31, 2020 | December 31, 2019 | ||
| Net Debt | 4,908,816 | 3,039,840 | |
| Adjusted EBITDA | 4,186,745 | 3,930,747 | |
| Net Debt to Adjusted EBITDA Ratio | 1.2x | 0.8x | |
FAQ
What were HeadHunter Group's Q4 2020 financial results?
How did the pandemic affect HeadHunter's 2020 performance?
What is the impact of the acquisition of Zarplata.ru on HHR?
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