22. RELATED PARTIES
Related parties include entities under common ownership with the Group, affiliated companies and associated companies.
Terms and conditions of transactions with related parties—Outstanding balances as of December 31, 2017 were unsecured and settlements are made on a cash basis. There have been no guarantees provided or received for any related party receivables or payables. As of December 31, 2017 and December 31, 2016 the Group had no impairment of receivables relating to significant amounts owed by related parties as well as expenses recognized during the year ended December 31, 2017 and 2016 in respect to bad or doubtful debts from related parties.
Accounts receivable from and accounts payable to related parties were as follows:
|
|
|
December 31, |
|
December 31, |
|
||
|
Accounts receivable |
|
|
|
|
|
|
|
|
MTS Belarus, the Group's associate |
|
|
4,835 |
|
|
2,273 |
|
|
Business Nedvizhimost, a subsidiary of Sistema |
|
|
4,052 |
|
|
3,693 |
|
|
MTS Bank, the Group's associate |
|
|
1,232 |
|
|
1,726 |
|
|
Zifrovoe TV, the Group's associate |
|
|
702 |
|
|
50 |
|
|
Sitronics, a subsidiary of Sistema |
|
|
317 |
|
|
— |
|
|
Sitronics KASU, a former subsidiary of Sistema |
|
|
— |
|
|
51 |
|
|
Other related parties |
|
|
222 |
|
|
301 |
|
|
|
|
|
|
|
|
|
|
|
Total accounts receivable, related parties |
|
|
11,360 |
|
|
8,094 |
|
|
|
|
|
|
|
|
|
|
|
Less non-current portion |
|
|
(2 |
) |
|
(3,693 |
) |
|
Accounts receivable, related parties—current |
|
|
11,358 |
|
|
4,401 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable |
|
|
|
|
|
|
|
|
MTS Belarus, the Group's associate |
|
|
828 |
|
|
491 |
|
|
MTS Bank, the Group's associate |
|
|
157 |
|
|
134 |
|
|
Business Nedvizhimost, a subsidiary of Sistema |
|
|
60 |
|
|
32 |
|
|
Sitronics, a subsidiary of Sistema |
|
|
9 |
|
|
— |
|
|
Sitronics KASU, a former subsidiary of Sistema |
|
|
— |
|
|
36 |
|
|
Maxima, a subsidiary of Sistema |
|
|
— |
|
|
184 |
|
|
Other related parties |
|
|
48 |
|
|
137 |
|
|
|
|
|
|
|
|
|
|
|
Total accounts payable, related parties |
|
|
1,102 |
|
|
1,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Group has neither the intent nor the ability to offset the outstanding accounts payable and accounts receivable with related parties under the terms of existing agreements.
The Group provides advances to related parties which are summarized as follows:
|
|
|
December 31, |
|
December 31, |
|
||
|
Advances for property, plant and equipment: |
|
|
|
|
|
|
|
|
Kapstroi Telecom, a former subsidiary of Sistema |
|
|
— |
|
|
186 |
|
|
Other related parties |
|
|
1 |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
Total advances for property, plant and equipment |
|
|
1 |
|
|
187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing and financing transactions—The Group holds certain investments in related parties which are summarized as follows:
|
|
|
December 31, |
|
December 31, |
|
||
|
Short-term investments |
|
|
|
|
|
|
|
|
Sistema-Capital, a subsidiary of Sistema (assets management) |
|
|
9,600 |
|
|
3,721 |
|
|
Promissory notes of Intellect Telecom, a subsidiary of Sistema |
|
|
257 |
|
|
230 |
|
|
Loan receivable from Intellect Telecom, a subsidiary of Sistema |
|
|
77 |
|
|
72 |
|
|
Deposits at MTS Bank, the Group's associate |
|
|
67 |
|
|
33 |
|
|
Sistema International Funding S.A. Bonds due in 2019, a subsidiary of Sistema |
|
|
57 |
|
|
65 |
|
|
Promissory notes of Sistema |
|
|
— |
|
|
574 |
|
|
Other loans receivable |
|
|
6 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Total short-term investments in related parties |
|
|
10,064 |
|
|
4,695 |
|
|
Other investments |
|
|
|
|
|
|
|
|
Promissory notes of Sistema |
|
|
618 |
|
|
— |
|
|
Loan receivable from MTS Bank, the Group's associate |
|
|
— |
|
|
2,116 |
|
|
Other |
|
|
— |
|
|
60 |
|
|
|
|
|
|
|
|
|
|
|
Total other investments to related parties |
|
|
618 |
|
|
2,176 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other investments in shares |
|
|
|
|
|
|
|
|
Sistema Venture Capital, a subsidiary of Sistema |
|
|
117 |
|
|
117 |
|
|
Other investments |
|
|
32 |
|
|
32 |
|
|
|
|
|
|
|
|
|
|
|
Total investments in shares of related parties |
|
|
149 |
|
|
149 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating transactions—For the years ended December 31, 2017, 2016 and 2015, operating transactions with related parties were as follows:
|
|
|
Year ended |
|
Year ended |
|
Year ended |
|
|||
|
Revenues from related parties |
|
|
|
|
|
|
|
|
|
|
|
MTS Bank, the Group's associate (telecommunication and call center services, bank cards distribution commission) |
|
|
1,507 |
|
|
900 |
|
|
588 |
|
|
Zifrovoe TV, the Group's associate (subscriber acquisition services) |
|
|
724 |
|
|
55 |
|
|
3 |
|
|
Sitronics, subsidiary of Sistema (construction of a fiber optic lines) |
|
|
303 |
|
|
— |
|
|
— |
|
|
MTS Belarus, the Group's associate (roaming and interconnect services) |
|
|
248 |
|
|
276 |
|
|
266 |
|
|
Detsky Mir, subsidiary of Sistema (telecommunication services) |
|
|
188 |
|
|
129 |
|
|
64 |
|
|
Medsi Group, subsidiary of Sistema (telecommunication and call center services) |
|
|
156 |
|
|
242 |
|
|
113 |
|
|
Sistema, parent company (consulting services) |
|
|
19 |
|
|
83 |
|
|
61 |
|
|
Segezha Group, a subsidiary of Sistema (software supply) |
|
|
10 |
|
|
149 |
|
|
— |
|
|
Sitronics KASU, a former subsidiary of Sistema (construction of fiber optic lines, project management, software support) |
|
|
5 |
|
|
40 |
|
|
8 |
|
|
NVision Group, a former subsidiary of Sistema (fixed line services) |
|
|
— |
|
|
— |
|
|
119 |
|
|
Stream, a former Group's associate (SMS notifications) |
|
|
— |
|
|
— |
|
|
141 |
|
|
Other related parties |
|
|
189 |
|
|
304 |
|
|
121 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues from related parties |
|
|
3,349 |
|
|
2,178 |
|
|
1,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses incurred on transactions with related parties |
|
|
|
|
|
|
|
|
|
|
|
MTS Bank, the Group's associate (commission related expenses) |
|
|
2,259 |
|
|
347 |
|
|
61 |
|
|
Business Nedvizhimost, a subsidiary of Sistema (rent and sale of property) |
|
|
821 |
|
|
246 |
|
|
224 |
|
|
AB Safety, a subsidiary of Sistema (security services) |
|
|
302 |
|
|
271 |
|
|
212 |
|
|
Jet Air Group, subsidiary of Sistema (transportation services) |
|
|
172 |
|
|
183 |
|
|
180 |
|
|
Maxima, a subsidiary of Sistema (advertising) |
|
|
143 |
|
|
1,018 |
|
|
1,351 |
|
|
MTS Belarus, the Group's associate (roaming and interconnect services) |
|
|
121 |
|
|
161 |
|
|
394 |
|
|
Elavius, a subsidiary of Sistema (transportation services) |
|
|
11 |
|
|
159 |
|
|
328 |
|
|
Inturavtoservis, subsidiary of Sistema (transport services) |
|
|
4 |
|
|
124 |
|
|
44 |
|
|
Rent-Nedvizhimost, a former subsidiary of Sistema (rent), merged with Business Nedvizhimost in 2016 |
|
|
— |
|
|
308 |
|
|
776 |
|
|
Stream, a former Group's associate (content services) |
|
|
— |
|
|
— |
|
|
2,132 |
|
|
NVision Group, a former subsidiary of Sistema (IT consulting) |
|
|
— |
|
|
— |
|
|
575 |
|
|
Other related parties |
|
|
220 |
|
|
297 |
|
|
301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses incurred on transactions with related parties |
|
|
4,053 |
|
|
3,114 |
|
|
6,578 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income, which arose from investment transactions with related parties for years ended December 31, 2017, 2016 and 2017 was the following:
|
|
|
Year ended |
|
Year ended |
|
Year ended |
|
|||
|
Finance income from related parties |
|
|
|
|
|
|
|
|
|
|
|
Sistema-Capital, a subsidiary of Sistema (assets management) |
|
|
369 |
|
|
128 |
|
|
— |
|
|
Business Nedvizhimost, a subsidiary of Sistema |
|
|
359 |
|
|
491 |
|
|
346 |
|
|
MTS Bank, the Group's associate |
|
|
345 |
|
|
285 |
|
|
447 |
|
|
Zifrovoe TV, the Group's associate |
|
|
70 |
|
|
12 |
|
|
— |
|
|
Sistema, parent company |
|
|
48 |
|
|
53 |
|
|
188 |
|
|
Other related parties |
|
|
76 |
|
|
16 |
|
|
86 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total finance income from related parties |
|
|
1,267 |
|
|
985 |
|
|
1,067 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Public Joint-Stock Company "MTS Bank" ("MTS Bank")—The Group maintains certain bank accounts with MTS Bank, an associate of the Group. As of December 31, 2017 and December 31, 2016, the Group's cash position at MTS Bank amounted to RUB 13,746 million and RUB 4,902 million, respectively, including short-term deposits in the amount of RUB 633 million and RUB 532 million, respectively. As of December 31, 2016 the subordinated loan issued by the Group to MTS Bank amounted to RUB 2,100 million. The loan was repaid in January, 2017.
East-West United Bank—The Group maintains certain bank accounts with East-West United Bank, a subsidiary of Sistema. As of December 31, 2017 and December 31, 2016, the Group's cash position at East-West United Bank amounted to RUB 5,969 million and RUB 736 million, respectively, including short-term deposits in the amount of RUB 5,810 million and nil, respectively.
Sistema—In November 2009, the Group accepted a promissory note, issued by Sistema, as repayment of the loan principal and interest accrued to date under an agreement with Sistema-Hals. The note is interest free and repayable in 2019. As of December 31, 2017 and December 31, 2016 the amount of RUB 618 million and RUB 574 million was included in other investments and short-term investments, respectively in the accompanying consolidated statements of financial position.
In October 2014 the Group acquired 2,501,350 Sistema Notes due 2016 (series 04) and 1,000 Sistema International Funding S.A. Bonds due in 2019 for RUB 519 million and RUB 32 million, respectively. The acquired bonds were classified as available for sale and accounted for at fair value to recognize changes in fair value in other comprehensive income. In March 2015 and May 2015 upon scheduled redemption, the Group received principal and coupon in the amount of RUB 409 million. In March 2016 the Group received principal and coupon of Sistema Notes due 2016 (series 04) in the amount of RUB 201 million.
As of December 31, 2017 and December 31, 2016, the balance of Sistema International Funding S.A. Bonds due in 2019 amounted to RUB 57 million and RUB 65 million respectively.
Business Nedvizhimost—In February 2015 and further in May 2015, the Group sold its 100% stake in Rent Nedvizhimost to Business Nedvizhimost, subsidiary of Sistema, for RUB 8,500 million in total.
As of December 31, 2017 and December 31, 2016 the balance of accounts receivable amounted to RUB 4,052 million and RUB 3,693 million, respectively. The amount as of December 31, 2017 is due before December 31, 2018 and bears interest of 12% p.a.
Sistema-Capital—In April 2016 the Group entered into trust agreement with the asset management company Sistema-Capital. In December 2017 the Group entered into additional trust agreement with the same terms. As of December 31, 2017 and December 31, 2016, the balance of assets under trust management amounted to RUB 9,600 million and RUB 3,721 million respectively.
Zifrovoe TV—In June 2017 the Group made a cash contribution to Zifrovoe TV (ZTV) in the amount of RUB 171 million.
Remuneration of key management personnel—Key management personnel of the Group are members of the Board of Directors and Management Board. During the year ended December 31, 2017, 2016 and 2015 their total remuneration amounted to RUB 739 million, RUB 760 million and RUB 835 million, respectively. These amounts comprised of RUB 490 million, RUB 470 million and RUB 514 million in base salaries and 249 RUB million, RUB 290 million and RUB 321 million in bonuses paid pursuant to a bonus plan, respectively.
Management and directors are also entitled to cash-settled and equity-settled share-based payments. Related compensation accrued during the year ended December 31, 2017, 2016 and 2015 amounted to RUB 486 million, RUB 481 million and RUB 175 million, respectively.