ASBISc Enterprises Plc
ANNUAL REPORT
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021
Limassol, March 31
st
, 2022
2
Dear Shareholders, partners, and colleagues,
On behalf of the Board of Directors of ASBIS Group, I am pleased to present to you our Consolidated Annual
Report for the year 2021.
If I had to describe the past year in one word, I would say
“Phenomenal”. In 2021 we have achieved multiple
milestones and broken all-time records in terms of both revenues and profits.
Thanks to an effective strategy, a strong team, a quite rich product portfolio and very good relations with
vendors we once again proved that we could operate efficiently and flexibly, adjusting to the prevailing
market circumstances.
In 2021 our revenues amounted to USD 3.1 billion -
the Company’s record
-high, which compared to that of
2020 shows an increase of 30%. The Group's profit from operations reached USD 113.7 million and net
profit after taxation skyrocketed to USD 77.1 million, another record-breaking, which reflects an excellent
increase of 111% when compared to previous year.
The year-over-year increase in net sales reflected growth in all markets in which we operate and all major
product lines. The products that were the biggest contributors were smartphones, processors and laptops.
Among smartphones, the most wanted were iPhones, including the iPhone 13, Apple’s second-generation
5G smartphone. These models had a great acceptance in the markets where we are the authorized
distributor, and the demand was significantly higher than other competitive brands. We are quite proud to
be the APPLE’s distributor in all these markets.
Looking at the regions we cover, the Former Soviet Union and Central & Eastern Europe regions traditionally
had the largest share in the Group’s revenues. Poland’s 2021 revenues reached USD 78.0 million and
ranked among the top 10 countries with the biggest revenue contribution to the Group.
As regards our own brands, in 2021 we added to our portfolio two more new own brands: AENO – a brand
of smart home appliances and LORGAR – a brand of ultimate accessories for gamers. As a result, our own
brands significantly contributed to both revenues and profitability. It is the Company’s aim to push private
label revenues to higher levels.
Following our dividend policy in 2021, we paid our investors a final and interim dividend from the Company’s
profits, which is in line with our strategy to reward our long-standing investors. This has also been supported
by a very strong cash flow of the Company. We want to continue our hefty dividend policy should the
circumstances allow us.
It is worth mentioning that the Company focuses not only on delivering super strong results but also on being
socially responsible. In the third edition of the Companies Climate Awareness Survey, conducted in 2021
among 153 companies listed on the Warsaw Stock Exchange, ASBIS was among the 7 companies with the
highest ratings, receiving the title: “Climate Aware Company”. Moreover, in 2021, ASBIS entered the WIG-
ESG index, which includes socially responsible companies, in particular in the field of environmental, social,
economic and corporate governance issues.
In 2021 as a result of the tremendous increase in ASBIS share price that has continued since last year and
record financial results generated in 2020 and the continuation of this trend in 2021, ASBIS was included in
the mWIG40 index on the WSE.
3
At the end of 2021, ASBIS also joined the WIGdiv index, which brings together companies listed on the
Warsaw Stock Exchange classified in the indices WIG20, mWIG40 or sWIG80, which in the last 5 financial
years have regularly paid a dividend.
All in all, I am extremely satisfied with the financial and non-financial achievements in 2021. That was a
super challenging year for the entire global economy taking into account the unstable situation with the
pandemic, tensions between Russia and Ukraine, product shortages and price increases in many raw
materials and finished products. This is a huge success, and I am very proud of the whole team.
The year 2022 started very dynamically. We were prepared for it, but the current situation is difficult for all
companies operating in these markets. I would like to emphasize that ASBIS stand next to the people of
Ukraine. We have mobilized all our resources to assist all our colleagues there and provide them with safety
and their well-being is our top priority. We have instructed our teams in the neighboring countries to provide
any possible assistance to Ukrainian team members and their families. I am very proud to see such a spirit
in the Company where all of us stand next to each other. This proves that ASBIS is one nation and will not
leave any of its members to suffer.
On behalf of the Board of Directors of ASBIS Group, I would like to thank our shareholders for their trust,
clients for our successful cooperation, as well as all of our employees without whom such a successful year
could not have been so successful. I would like to assure them all, that despite the difficult situation part of
the world is currently in, we shall do the utmost to weather this crisis. I am convinced that such a strong
Company with such an experienced management board will come out even stronger from the current
geopolitical situation.
Siarhei Kostevitch
Chairman & CEO
4
Directors’ report on the Group operations
For the fiscal year ended 31 December 2021
5
TABLE OF CONTENTS
ITEM 1. KEY INFORMATION .............................................................................................................8
6
ASBISc Enterprises Plc is one of the leading distributors of Information Technology ("IT") products in
Europe, Middle East and Africa (“EMEA”) Emerging Markets: Central and Eastern Europe, the Baltic States,
the Former Soviet Union, the Middle East and Africa, combining a broad geographical reach with a wide
range of products distributed on a "one-stop-shop" basis. Our main focus is on the following countries:
Slovakia, Poland, Czech Republic, Romania, Croatia, Slovenia, Bulgaria, Serbia, Hungary, Middle East
countries (i.e., United Arab Emirates, Qatar and other Gulf states), Russia, Belarus, Kazakhstan, Ukraine
and Latvia.
The Group distributes IT components (to assemblers, system integrators, local brands and retail) as well as
A-branded finished products like desktop PCs, laptops, servers, and networking to SMB and retail. Our IT
product portfolio encompasses a wide range of IT components, blocks and peripherals, and mobile IT
systems. We currently purchase most of our products from leading international manufacturers, including
Apple, Intel, Advanced Micro Devices ("AMD"), Seagate, Western Digital, Samsung, Microsoft, Toshiba,
Dell, Acer, Lenovo and Hitachi. In addition, a part of our revenues is comprised of sales of IT products under
our private labels: Prestigio, Canyon, Perenio, AENO and LORGAR.
ASBISc commenced business in 1990 in Belarus and in 1995 we incorporated our holding Company in
Cyprus and moved our headquarters to Limassol. Our Cypriot headquarters support, through two master
distribution centers (located in the Czech Republic and the United Arab Emirates), our network of 31
warehouses located in 27 countries. This network supplies products to the Group's in-country operations
and directly to its customers in approximately 56 countries.
The Company’s registered and principal administrative office is at Diamond Court, 43 Kolonakiou Street,
Ayios Athanasios, CY4103 Limassol, Cyprus.
We have prepared this annual report as required by Paragraph 60 section 1 point 3 of the Regulation of the
Ministry of Finance dated 29 March 2018 on current and periodic information to be published by issuers of
securities and rules of recognition of information required by the law of non-member country as equivalent.
In this annual report, all references to the Company apply to ASBISc Enterprises Plc and all references to
the Group apply to ASBISc Enterprises Plc and its consolidated subsidiaries. Expressions such as "we",
"us", "our" and similar apply generally to the Group (including its particular subsidiaries, depending on the
country discussed) unless from the context it is clear that they apply to the stand-alone Company. “Shares”
refers to our existing ordinary shares traded on the Warsaw Stock Exchange.
Forward-Looking Statements
This annual report contains forward-looking statements relating to our business, financial condition and
results of operations. You can find many of these statements by looking for words such as "may", "will",
"expect", "anticipate", "believe", "estimate" and similar words used in this annual report. By their nature,
forward-looking statements are subject to numerous assumptions, risks and uncertainties. Accordingly,
actual results may differ materially from those expressed or implied by the forward-looking statements. We
caution you not to place undue reliance on such statements, which speak only as of the date of this annual
report.
The cautionary statements set out above should be considered in connection with any subsequent written
or oral forward-looking statements that we or persons acting on our behalf may issue. We do not undertake
any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions
to any forward-looking statements to reflect events or circumstances after the date of this annual report.
7
Industry and Market Data
In this annual report, we set out information relating to our business and the market in which we operate
and compete.
The information regarding our market, market share, market position, growth rates and other industry data
relating to our business and the market in which we operate consists of data and reports compiled by various
third-party sources, discussions with our customers and our own internal estimates. We have obtained
market and industry data relating to our business from providers of industry data, including:
•
Gartner and GfK - leading research companies on IT,
•
IDC
–
a dedicated organization on publishing data for IT industry, and
•
Other independent research conducted on our sector
We believe that these industry publications, surveys and forecasts are reliable, but we have not
independently verified them and cannot guarantee their accuracy or completeness. The data of independent
surveyors might not have taken into consideration recent developments in the markets we operate and
therefore in certain instances might have become outdated and not represent the real market trends.
In addition, in many cases, we have made statements in this annual report regarding our industry and our
position in the industry based on our experience and our own investigation of market conditions. We cannot
assure you that any of these assumptions are accurate or correctly reflect our position in the industry, and
none of our internal surveys or information has been verified by any independent sources.
Financial and Operating Data
This annual report contains financial statements and financial information relating to the Group. In particular,
this annual report contains our audited consolidated financial statements for the twelve months ended 31
December 2021. The financial statements appended to this annual report are presented in U.S. dollars and
have been prepared in accordance with International Financial Reporting Standards ("IFRS").
The functional currency of the Company is U.S. dollars. Accordingly, transactions in currencies other than
our functional currency are translated into U.S. dollars at the exchange rates prevailing on the applicable
transaction dates.
Certain arithmetical data contained in this annual report, including financial and operating information, have
been subject to rounding adjustments. Accordingly, in certain instances, the sum of the numbers in a column
or a row in tables contained in this annual report may not conform exactly to the total figure given for that
column or row.
All numbers are presented in thousands, except share, per share and exchange rate data, unless otherwise
stated.
8
PART I
ITEM 1. KEY INFORMATION
Currency Presentation and Exchange Rate Information
Unless otherwise indicated, all references in this annual report to "U.S. $" or "U.S. dollars" are to the lawful
currency of the United States; all references to "€" or the "Euro" are to the lawful curre
ncy of the member
states of the European Union that adopt the single currency in accordance with the EC Treaty, which means
the Treaty establishing the European Community (signed in Rome on 25 March 1957), as amended by the
Treaty on European Union (signed in Maastricht on 7 February 1992) and as amended by the Treaty of
Amsterdam (signed in Amsterdam on 2 October 1997) and includes, for this purpose, Council Regulations
(EC) No. 1103/97 and all references to "PLN" or "Polish Zloty" are to the lawful currency of the Republic of
Poland. All references to U.S. dollars, Euro, Polish Zloty and other currencies are in thousands, except
share and per share data, unless otherwise stated.
The following tables set out, for the periods indicated, certain information regarding the average of the 11:00
a.m. buying/selling rates of the dealer banks as published by the National Bank of Poland, or NBP, for the
zloty
, the “effective NBP exchange rate”, expressed in Polish Zloty per dollar and Polish Zloty per Euro. The
exchange rates set out below may differ from the actual exchange rates used in the preparation of our
consolidated financial statements and other financial information appearing in this annual report. Our
inclusion of the exchange rates is not meant to suggest that the U.S. dollars amounts actually represent
such polish Zloty or Euro amounts or that such amounts could have been converted into Polish Zloty or
Euros at any particular rate, if at all.
Year ended December 31,
Year (Polish Zloty to U.S. dollar) 2017 2018 2019 2020 2021
Exchange rate at end of period .....................................
3.48
3.76
3.80
3.76
4.06
Average exchange rate during period
(1)
.........................
3.74
3.62
3.84
3.90
3.88
Highest exchange rate during period .............................
4.23
3.83
4.02
4.27
4.12
Lowest exchange rate during period .............................
3.48
3.32
3.72
3.63
3.67
__________
The average exchange rate as certified for customs purposes by NBP on the last business day of each month during the applicable
period
Highest Lowest
exchange rate exchange rate
during the during the
Month (Polish Zloty to U.S. dollar) month month
January 2021 .................................................................................................
3.77
3.67
February 2021 ...............................................................................................
3.76
3.69
March 2021 ...................................................................................................
3.97
3.75
April 2021 ......................................................................................................
3.94
3.77
May 2021 .......................................................................................................
3.81
3.65
June 2021 ......................................................................................................
3.82
3.65
July 2021……………………………………………………………………………
3.90
3.80
August 2021………………………………………………………………………...
3.93
3.83
September 2021……………………………………………………………………
3.99
3.80
October 2021……………………………………………………………………….
4.00
3.92
November 2021…………………………………………………………………….
4.19
3.96
December 2021…………………………………………………………………….
4.12
4.06
9
The following table shows for the dates and periods indicated the period-end, average, high and low Euro
to U.S. dollar exchange rate as calculated based on the rates reported by the National Bank of Poland.
Year ended December 31 (Euro to U.S. dollar)
2017
2018
2019
2020
2021
Exchange rate at end of period .....................................
0.8347
0.8743
0.8918
0.8144
0.8827
Average exchange rate during period
(1)
.........................
0.8819
0.8487
0.8935
0.8729
0.8467
Highest exchange rate during period .............................
0.9607
0.8702
0.9149
0.9207
0.8874
Lowest exchange rate during period .............................
0.8289
0.8008
0.8782
0.8575
0.8205
The average NBP exchange rate, euro per U.S. $, on the last business day of each month during the applicable period
Month (Euro to U.S. dollar)
Highest Lowest
exchange rate
exchange rate
during the
during the
month
month
January 2021 .................................................................................................
0.8286
0.8151
February 2021 ...............................................................................................
0.8313
0.8251
March 2021 ...................................................................................................
0.8514
0.8293
April 2021 ......................................................................................................
0.8527
0.8307
May 2021 .......................................................................................................
0.8321
0.8157
June 2021 ......................................................................................................
0.8398
0.8205
July 2021……………………………………………………………………………
0.8489
0.8433
August 2021…………………………………………………………………………
0.8562
0.8444
September 2021……………………………………………………………………
0.8618
0.8431
October 2021……………………………………………………………………….
0.8641
0.8623
November 2021…………………………………………………………………….
0.8874
0.8624
December 2021…………………………………………………………………….
0.8857
0.8847
Selected Financial Data
The following table set forth our selected historical financial data for the years ended December 31, 2021,
and 2020 and should be read in conjunction with Item 3. “Operating and Financial Review and Prospects”
and the consolidated financial statements (including the notes thereto) included elsewhere in the annual
report. We have derived the financial data presented in accordance with IFRS from the audited consolidated
financial statements.
For your convenience, certain U.S. $ amounts as of and for the year ended 31 December 2021, have been
converted into Euro and PLN as follows:
• Individual items of the balance sheet – based at average exchange rates quoted by the National
Bank of Poland 31 December 2021, that is 1 US$ = 4.0600 PLN and 1 EUR = 4.5994 PLN.
• Individual items in the income statement and cash flow statement – based at exchange rates
representing the arithmetic averages of the exchange rates quoted by the National Bank of Poland
for the last day of each month in a period between 1 January to 31 December 2021, that is 1 US$
= 3.8757 PLN and 1 EUR = 4.5775 PLN.
10
Period from 1 January to 31 December
2021 2020
USD
PLN
EUR
USD
Revenue
3,077,976
11,929,311
2,606,093
2,366,441
Cost of sales
(2,859,448)
(11,082,434)
(2,421,067)
(2,228,156)
Gross profit
218,528
846,955
185,026
138,285
Gross profit margin
7.1%
5.84%
Selling expenses
(62,286)
(241,403)
(52,737)
(48,541)
Administrative expenses
(42,493)
(164,691)
(35,978)
(33,071)
Profit from operations
113,749
440,861
96,311
56,673
Financial expenses
(24,313)
(94,231)
(20,586)
(16,708)
Financial income
4,626
17,929
3,917
4,319
Other gains and losses
180
698
152
377
Share of profit/(loss) of equity-accounted
investees
0
0
0
6
Profit before taxation
94,242
365,257
79,794
44,667
Taxation
(17,175)
(66,566)
(14,542)
(8,152)
Profit after taxation
77,067
298,691
65,252
36,515
Attributable to:
Non-controlling interests
44
171
37
(2)
Owners of the Company
77,023
298,520
65,215
36,517
USD
PLN
EUR
USD
EBITDA calculation
Profit before tax
94,242
365,257
79,794
44,667
Add back:
Financial expenses/net
19,687
76,301
16,669
12,389
Other income
(180)
(698)
(152)
(377)
Share of loss of equity-accounted investees
0
0
0
(6)
Depreciation
3,910
15,154
3,309
3,388
Amortization
1,164
4,511
986
999
EBITDA for the period
118,823
460,525
100,606
61,061
USD
(cents)
PLN
(grosz)
EUR
(cents)
USD
(cents)
Earnings per share
Weighted average basic and diluted earnings per
share from continuing operations
138.86
538.18
117.57
66.15
11
2021
2020
USD
PLN
EUR
USD
Net cash inflows from operating activities
41,367
160,326
35,025
42,175
Net cash outflows from investing activities
(15,029)
(58,248)
(12,725)
(4,755)
Net cash inflows/outflows from financing activities
10,899
42,242
9,228
(2,043)
Net increase in cash and cash equivalents
37,237
144,320
31,528
35,377
Cash at the beginning of the year
113,683
440,604
96,254
78,306
Cash at the end of the year
150,920
584,924
127,783
113,683
As of 31 December, 2021
As of 31
December,
2020
USD
PLN
EUR
USD
Current assets
874,760
3,551,526
772,172
751,844
Non-current assets
48,427
196,614
42,748
37,068
Total assets
923,187
3,748,140
814,919
788,912
Liabilities
733,723
2,978,915
647,675
653,274
Equity
189,464
769,224
167,244
135,638
Definitions and use of Alternative Performance Measures:
Gross profit
Gross profit is the residual profit made after deducting the cost of sales from revenue.
Gross profit margin
Gross profit margin is calculated as the gross profit divided by revenue, presented as a percentage.
EBITDA
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) is calculated as the Profit before Tax,
Net financial expenses, Other income, Share of profit/loss of equity-accounted investees, Depreciation,
Amortization, Goodwill impairment and Negative goodwill, all of which are directly identifiable in financial
statements.
The use of the above Alternative Performance Measures (“APM”) is made for the purpose of providing a more
detailed analysis of the financial results
12
Risk Factors
This section describes significant risks and uncertainties affecting our business. The risks and uncertainties
described below are not the only ones we face. There may be additional risks and uncertainties not presently
known to us or that we currently deem immaterial. Any of these risks could adversely affect our business,
financial condition, our results of operations and our liquidity.
Risk factors relating to our business and industry
The war between Russia and Ukraine and sanctions imposed on Russia
The war between Russia and Ukraine which are the two major markets for ASBIS constitutes a major
disruption in demand in both countries and the whole region around them. Despite the large geographical
presence of the Group, it is not possible to totally weather the impact of a full-scale war between these two
countries. The Company has been in business for more than 30 years and has experienced a lot of crises.
We are well prepared to defend our position, however the Company considers the situation as critical, and
it is premature to judge how it will evolve. We have a mutual understanding with all our vendors and service
providers that our partnerships will continue but we cannot warrant that the business can be retained due
to the sanctions imposed on Russia. These sanctions are significant and limit the ability of the Group to sell
specific products which will impact its revenues.
Spreading of the Covid-19 Virus in the markets we operate
The COVID-19 pandemic has had, and continues to have, a significant impact around the world. We are still
in the pandemic mode and the world is looking to see how the situation will evolve from now onwards. The
shutdowns of the economies are no longer options; however, consumers are still very much concerned of
the overall situation.
It is of extreme importance for the Company to be able to weather this situation and take all necessary steps
to avoid any serious impact from the overall situation.
The in-country financial conditions affecting our major markets, gross profit, and gross profit margin
Throughout the years of operation, the Company has from time to time suffered from specific in-country
problems, emanating from the deterioration of specific countries’ financial situation, due to a number of
issues including but not limited to political instability. We need to monitor any developments, react fast and
weather every risk showing up in a specific market to secure our results.
The Company needs to keep in mind that different in-country problems might arise at any time and affect
our operations. Even though we have improved our procedures, we cannot be certain that all risks are
mitigated.
Fluctuation in the value of currencies in which operations are conducted and activities are financed
relative to the U.S. dollar could adversely affect our business, operating results, and financial
condition.
The Company’s reporting currency is the U.S. dollar. In 2021 approximately 50% of our revenues were
denominated in U.S. dollars, while the balance is denominated in Euro, Ruble, UAH, KZT and other
currencies, certain of which are linked to the Euro. Our trade payable balances are principally (about 80%)
denominated in U.S. dollars.
In addition, approximately half of our operating expenses are denominated in U.S. dollars and the other half
in Euro or other currencies, certain of which are linked to the Euro.
13
As a result, reported results are affected by movements in exchange rates, particularly in the exchange rate
of the U.S. dollar against the Euro and other currencies of the countries in which we operate, including the
Russian Ruble, the Ukrainian Hryvnia, the Czech Koruna, the Polish Zloty, the Croatian Kuna, the
Kazakhstani Tenge and the Hungarian Forint.
Strengthening of the U.S. dollar against the Euro and other currencies of the countries in which we operate
may result in a decrease in revenues and gross profit, as reported in U.S. dollars, and foreign exchange
loss relating to trade receivables and payables, which would have a negative impact on our operating and
net profit despite a positive impact on our operating expenses.
On the other hand, a devaluation of the U.S. dollar against the Euro and other currencies of the countries in
which we operate may have a positive impact on our revenues and gross profit, as reported in U.S. dollars,
which would have a positive impact on operating and net profit despite a negative impact on our operating
expenses. In addition, foreign exchange fluctuation between the U.S. dollar and the Euro or other currencies
of the countries in which we operate may result in translation gains or losses affecting foreign exchange
reserves.
Furthermore, a major devaluation or depreciation of any such currencies may result in a disruption in the
international currency markets and may limit the ability to transfer or to convert such currencies into U.S.
dollars and other currencies.
Despite all efforts of the Company, there can be no assurance that fluctuations in the exchange rates of the
Euro and/or other currencies of the countries in which we operate against the U.S. dollar will not have a
material adverse effect on our business, financial condition and results of operations. Therefore, careful
observation of the current environment remains a crucial factor for our success.
Worldwide financial environment
The world’s financial crisis has eased throughout the last few years. Following partial recovery, the Company
has undertaken certain efforts to benefit from this recovery both in revenues and profitability.
The revised strategy and adaptation to the new environment, i.e., by rebuilding our product portfolio, has
paid off in terms of profitability and sales in the last three years.
However, there are many uncertainties about the world economy following turmoil in different countries, the
volatility of currencies and the fragility of demand in many markets. Additionally, from time to time,
unpredictable situations may happen in selected markets.
A recent example is the war between Ukraine and Russia. We believe that the Company is today much
more flexible and better prepared to weather any obstacles that may arise due to the worldwide turbulent
financial environment.
In addition to the above, recently it has been noticed that multiple raw materials and finished product prices
have risen dramatically, and this might significantly impact demand generation. This must be closely
monitored, and the Company is alerted to manage any market anomalies.
Credit risk faced by us due to our obligations under supply contracts and the risk of delinquency of
customer accounts receivable could have a material adverse effect on our business, operating
results, and financial position.
The Company buys components and finished products from its suppliers on its own account and resells
them to its customers. The Company extends credit to some of its customers at terms ranging from 7 to 90
days or, in a few cases, to 120 days.
The Company’s payment obligations towards its suppliers under such agreements are separate and distinct
from its customers' obligations to pay for their purchases, except in limited cases where the Company’s
arrangements with its suppliers require the Company to resell to certain resellers or distributors. Thus, the
Company is liable to pay its suppliers regardless of whether its customers pay for their respective purchases.
14
As the Company’s profit margin is relatively low compared to the total price of the products s
old, in the event
where the Company is not able to recover payments from its customers, it is exposed to financial liquidity
risk. The Company has in place credit insurance which covers such an eventuality for the majority of its
revenue.
Despite all efforts to secure our revenues, certain countries remained non-insured (Ukraine and Belarus);
therefore, it is very important for us to ensure that we find other sources of securities which help us minimize
our credit risk. The Board of Directors decided to enh
ance the Company’s risk management procedures.
These do not guarantee that all issues will be avoided, however, they have granted the Company with
confidence that is in a position to weather any possible major credit issue that may arise.
Competition and price pressure in the industry in which we operate on a global scale may lead to a
decline in market share, which could have a material adverse effect on our business, operating
results, and financial condition.
The IT distribution industry is a highly competitive market, particularly with regards to products selection and
quality, inventory, price, customer services and credit availability and hence is open to margin pressure from
competitors and new entrants.
The Company competes at the international level with a wide variety of distributors of varying sizes, covering
different product categories and geographic markets. In particular, in each of the markets in which the
Company operates it faces competition from:
1. International IT and CE distributors with presence in all major markets we operate
2. Regional IT and CE distributors who cover mostly a region but are quite strong
3. Local distributors who focus mostly on a single market but are very strong
4. International IT and mobile phone brokers, who opportunistically sell in any region and/or country
Competition and price pressures from market competitors and new market entrants may lead to significant
reductions in the Company’s sales prices.
Such pressures may also lead to a loss of market share in certain of the Group's markets. Price pressures
can have a material adverse effect on the Company’s profit margins and its overall profitability, especially
since our gross profit margins, like those of most of its competitors, are low and sensitive to sales price
fluctuations.
The IT distribution and mobile devices business have low-profit margins, which means that
operating results are highly sensitive to increased operating costs, which if not successfully
managed could have a material adverse effect on our business, results of operations and financial
condition.
The Company’s business is comprised of both a traditional distribution of third-party products and own
brands. This allows the Company to deliver healthier gross profit margins when conditions are favorable.
In the traditional distribution business, the Company’s gross profit margins, like those of other distributors of
IT products, are low and the Company expects that in the distribution arm of its business they will remain
low in the foreseeable future.
Increased competition arising from industry consolidation and low demand for certain IT products may hinder
the Company’s ability to maintain or improve its gross margins.
15
A portion of the Company’s operating expenses is relatively fixed, and planned expenditures a
re based in
part on anticipated orders that are forecasted with limited visibility of future demand. As a result, the
Company may not be able to reduce its operating expenses as a percentage of revenue to mitigate any
reductions in gross margins in the future.
To increase gross margins, the Company has developed its own brand business, that allows for higher gross
profit margins. It has also invested in the VAD business which is also expected to deliver higher gross profit
margins.
Inventory obsolescence and price erosion in the industry in which we operate may have a material
adverse effect on our business, financial condition, and results of operations.
The Company is often required to buy components and finished products according to forecasted
requirements and orders of its customers and in anticipation of market demand. The market for IT finished
products and components is characterized by rapid changes in technology and short product shelf life, and,
consequently, inventory may rapidly become obsolete. Due to the fast pace of technological changes, the
industry may sometimes face a shortage or, at other times, an oversupply of IT products.
As the Company increases the scope of its business and, in particular, of inventory management for its
customers, there is an increasing need to hold inventory to serve as a buffer in anticipation of the actual
needs of the Company’s customers. This increases the risk of inventory becoming devalued or obsolete and
could affect the Company’s profits either because pric
es for obsolete products tend to decline quickly, or as
a result of the need to make provisions or even write-offs.
In an oversupply situation, other distributors may elect to proceed with price reductions to dispose of their
existing inventories, forcing the Company to lower its prices to stay competitive. The Company’s ability to
manage its inventory and protect its business against price erosion is critical to its success.
A number of the Company’s most significant contracts with its major suppliers contain advantageous
contract terms that protect the Company against exposure to price fluctuations, defective products, and
stock obsolescence.
Our business is highly dependent on distribution contracts with a limited number of suppliers; a
loss of or change in the material terms of these contracts could have a material adverse effect on
our business, operating results and financial condition.
The part of our business consisting of the distribution of third-party products is dependent on the decisions
and actions of a limited number of suppliers. In the year ended 31 December 2021, the Company held
contracts with Apple, Intel, Advanced Micro Devices (AMD), Seagate, Western Digital, Microsoft, Dell,
Toshiba, Acer, Lenovo and other international suppliers. Contracts with these suppliers are typically on a
non-exclusive basis, allow for termination with or without cause and are open-ended with respect to
requirements and output rather than imposing any commitment to a specific volume of business or scope
of work.
We face a risk of termination of our distribution agreements, in the event that we do not perform pursuant to
the supplier's expectations or for any other reason, including a number of factors outside our control.
Changes in the suppliers' business strategies, including moving part or all of their distribution arrangements
to our competitors, or directly distributing products to end-users, could result in the termination of the
respective distribution contracts. Any of these suppliers may merge with, acquire or be acquired by any of
our competitors which already has its own distribution network in the market. Any supplier may consider us
redundant as a distributor and may terminate our distribution agreement or may experience financial
difficulties, as a result of which it may not be able to grant beneficial credit terms and/or honour financial
terms in the relevant distribution agreements, such as those relating to price protection, stock returns,
rebates, performance incentives, credit from returned materials and reimbursement of advertising expenses
incurred during joint promotion campaigns. Termination or material change in the terms of a vendor contract
due to any of the aforesaid factors could have a material adverse effect on our business, results of
operations and financial condition.
16
Our inability to maintain or renew our distribution and supply contracts on favourable terms with
key customers and suppliers could have a material adverse effect on our business, operating results
and financial condition.
In the part of our business related to the distribution of third-party products, we have significant contracts
with a limited number of customers and other business partners, some of which are oral agreements, the
precise terms of which and the enforceability of which, remain uncertain, or are agreements that may be
terminated without cause or by written notice at the expiry of their term.
In addition, a number of our most significant contracts with our major suppliers contain terms that protect us
against exposure to price fluctuations, defective products and stock obsolescence. Specifically, our
contracts terms including terms such as (i) a price protection policy, which allows us to request
reimbursement from the suppliers for inventory in transit or held at our warehouses in the event that product
prices decline; (ii) a stock rotation policy under which we have the right to return to the supplier slow moving
inventory in exchange for credit, which reduces our exposure to obsolescence of inventory; and (iii) a return
material authorization policy under which we can return defective items to our suppliers in return for either
credit, replacements or refurbished products.
If we are unable to maintain or enforce our significant contracts, or if any of our significant suppliers refuse
to renew contracts with us on similar terms, or new significant suppliers of ours do not make such terms
available to us, we could face a higher risk of exposure to price fluctuations and stock obsolescence, which
given our narrow gross profit margins, could have a material adverse effect on our business, operating
results and financial condition.
Our suppliers' increasing involvement in e-commerce activities, which would enable them to directly
sell to our customers, could threaten our market share, and therefore adversely affect our business,
operating results and financial condition.
In the third-party products distribution part of our business, we operate as a distributor, or a "middleman",
between manufacturers and our customers. Manufacturers are sometimes able to outsource their sales and
marketing functions by engaging the services of a distributor and concentrating on their core competencies.
With the emergence, however, of new internet technologies and e-commerce, more manufacturers are
developing their own online commerce platforms with the capability to accept orders and conduct sales
through the internet. Global distributors have also set up their own web-sites to enable sales and purchases
to be conducted online.
Although we have developed the IT4Profit platform, an online purchasing platform for electronic dealing with
our customers (B2B), there can be no assurance that any of our suppliers or competing distributors will not
successfully implement similar electronic purchasing platforms and manage to fully satisfy our customers'
needs, in which case our risks losing a significant part of our business.
In addition, market prices of components may deteriorate as a result of increasing online competition, as
online customers have the ability to search globally for the cheapest available components.
If we are unable to effectively leverage our internet technologies and e-commerce or successfully compete
with emerging competitors offering online services, this could have a material adverse effect on our
business, operating results and financial condition.
Our success is dependent on our own logistics and distribution infrastructure and on third parties
that provide those services, a loss of which could adversely affect our business, operating results
and financial performance.
We maintain two large regional distribution centres from which the great majority of our products are
shipped. As a result, we are highly dependent on third-party providers for logistics such as courier and other
transportation services. An interruption or delay in delivery services causing late deliveries could result in
loss of reputation and customers and could force us to seek alternative, more expensive delivery services,
thereby increasing operating costs, which would have an adverse effect on our business, operating results
17
and financial performance. An important part of our strategy to achieve cost efficiencies while maintaining
turnover growth is the continued identification and implementation of improvements to our logistics and
distribution infrastructure. We need to ensure that our infrastructure and supply chain keep pace with our
anticipated growth. The cost of this enhanced infrastructure could be significant and any delays to such
expansion could adversely affect our growth strategy, business, operating results and financial performance.
Therefore, any significant disruption to the services of these third-party providers could have a material
adverse effect on our business, results of operations and financial condition. Recently, we have observed a
significant increase in transportation costs, as well as an increase in raw material prices. The Group has to
constantly search and find ways of mitigating such increases and offer competitive pricing to customers.
Our inability to recruit and retain key executives and personnel could have a material adverse effect
on our business, operating results and financial condition.
Our business depends upon the contribution of a number of our executive Directors, key senior management
and personnel, including Siarhei Kostevitch, our Chief Executive Officer and Chairman of the Board of
Directors. There can be no certainty that the services of Mr Kostevitch and of other of our key personnel will
continue to be available to us. We have in the past experienced and may in the future continue to experience
difficulty in identifying expert personnel in our areas of activity, and particularly in the areas of information
technology and sales and marketing, in the countries in which we operate. In addition, we do not currently
maintain "key person" insurance.
If we are not successful in retaining or attracting highly qualified personnel in key management positions,
this could have a material adverse effect upon our business, operating results and financial condition.
High cost of debt
The distribution business entails a higher need for cash available to support growth. The Group has
managed to raise cash from various financial institutions, however, in certain cases, the cost of this financing
is expensive. The Company has already negotiated improved terms with some of its supply-chain financiers
and banks and is currently undertaking certain extra steps to further lower its cost of financing. However,
the sanctions imposed to Russia and tensions related to the Ukrainian crisis have resulted in increased
financing cost in these countries and this may limit our efforts to further decrease our average cost of debt.
In 2021, we have experienced a stable cost of financing in the F.S.U. and this is reflected in our overall
financial cost
.
The weighted average cost of debt (WACC)in 2021 has dropped to 6%, from 8% in 2020.
Development of own brand business
The Company’s strategy is to focus more on profitability than on revenues, thus we continue to develop the
own-brand business that allows for higher gross profit margins. This includes the development of tablets
and other product lines that are sold under Prestigio and Canyon brands in all regions of the Company’s
operations.
The Company has also invested in another own brand, Perenio - which includes the sales of smart-home,
smart-security sensors and other products.
In 2021 we added to our portfolio two more new own brands: AENO – a brand of smart home appliances
and LORGAR - a brand of ultimate accessories for gamers.
In order to keep quality under control and achieve the maximum possible gross profit margins, the
Company’s Directors have decided to go under a back-to-back scheme. This implies that orders are placed
with ODMs, only if they are in advance confirmed by customers
.
18
The Company is undertaking a number of quality control measures to mitigate this risk but given the volumes
and a large number of factories used to produce these products, these controls might not be sufficient.
Moreover, competition has already been intensified and the Company may not be able to sustain its
profitability levels.
Despite the Company’s efforts, there can be no assurance of a similar development pace in the own
-brand
business in future periods. This is because there may be a significant change in market trends, customer
preferences or technology changes that may affect the development of own-brand business and therefore,
its results.
Warranty claims from own brand products
The own-brand business requires us to put extra efforts to avoid any problems with the quality of devices.
Despite all our efforts, we cannot predict if consumers decide to return significant amounts of products.
This situation has much improved in previous years and in 2021.
This risk has negatively affected our results in the past when certain ODMs have not honored their
contractual obligations on products with epidemic failure. The Group is undertaking all possible steps
towards ensuring proper compensation of past expenses.
In the same time, in an effort to avoid such problems in the future, a much more scrutinized selection of
suppliers is currently in place, which, however, does not guarantee the elimination of the risk of warranty
losses.
Environmental and Climate Changes
In terms of transition risks that arise from the transition to a low-carbon and climate-resilient economy, we
may face the following risks: policy and legal risks (there may be laws or policies put in place that may
require a more environmentally cautious approach to raw materials and land use), technology risks (changes
in technology used to produce IT equipment) – these both may lead to growing prices in terms of IT
equipment and solutions. We may also face market risk with consumers switching to more energy-efficient
appliances or making more savvy purchases to limit their own impact on the environment. We will monitor
these trends and introduce the latest hardware for our customers. We may also face reputational risks with
difficulties in attracting customers, business partners and employees if we do not take strong enough actions
against climate changes. In terms of physical risks resulting from climate changes, we may face both acute
and chronic risks.
Acute physical risks may arise from weather-related events in the form of floods, fires or droughts that may
damage factories in certain regions, cause factories to limit or temporarily stop their production or disrupt
our supply chain in other ways.
These may result in temporary limitations in our product offering or rising prices of hardware and
components. Chronic physical risks - i.e., risks that may result from long-term changes in the climate, may
also affect ASBIS.
Growing temperatures worldwide may cause a need for more temperature-resilient hardware and
appliances and may also result in more hardware malfunctions that may increase warranty claims.
Shortages of specific components in IT industry
Throughout the last quarters, and with the demand for IT products to rise significantly, there have been
shortages in the market of semiconductors and microchips. This might lead to higher cost price for multiple
products which will have an adverse effect on Group revenues.
The situation is expected to stabilize in the second half of 2022. The Group must take all necessary
measures to ensure constant supply of components and finished products to satisfy the demand from its
customers.
19
ITEM 2. Information on the Company
History and Development of Asbisc Enterprises Plc and Business Overview
Asbisc Enterprises Plc. is the parent entity for the Group described in this chapter, in the section "
Group
Structure and Operations
".
ASBISc Enterprises Plc is one of the leading distributors of Information Technology ("IT") products in
Europe, Middle East and
Africa (“EMEA”) Emerging Markets: Central and Eastern Europe, the Baltic States,
the Former Soviet Union, the Middle East and Africa, combining a broad geographical reach with a wide
range of products distributed on a "one-stop-shop" basis. Our main focus is on the following countries:
Slovakia, Poland, Czech Republic, Romania, Croatia, Slovenia, Bulgaria, Serbia, Hungary, Middle East
countries (i.e., United Arab Emirates, Qatar and other Gulf states), Russia, Belarus, Kazakhstan, Ukraine
and Latvia.
The Group distributes IT components (to assemblers, system integrators, local brands and retail) as well as
A-branded finished products like desktop PCs, laptops, servers, and networking to SMB and retail. Our IT
product portfolio encompasses a wide range of IT components, blocks and peripherals, and mobile IT
systems. We currently purchase most of our products from leading international manufacturers, including
Apple, Intel, Advanced Micro Devices ("AMD"), Seagate, Western Digital, Samsung, Microsoft, Toshiba,
Dell, Acer, Lenovo and Hitachi. In addition, a part of our revenues is comprised of sales of IT products under
our private labels: Prestigio, Canyon, Perenio, AENO and LORGAR.
ASBISc commenced business in 1990 and in 1995 we incorporated our holding Company in Cyprus and
moved our headquarters to Limassol. Our Cypriot headquarters support, through two master distribution
centers (located in the Czech Republic and the United Arab Emirates), our network of 31 warehouses
located in 26 countries. This network supplies products to the Group's in-country operations and directly to
its customers in approximately 56 countries.
The Company’s registered and principal administrative office is at Diamond Court, 43 Kolonakiou Street,
Ayios Athanasios, CY 4103 Limassol, Cyprus.
Our revenues amounted to U.S. $ 3,077,976 in 2021, compared to U.S. $ 2,366,441 in 2020, following our
strategy to increase profitable business and improve market share alongside with improving gross profit
margins. As a consequence, the Company significantly improved its net result and posted another record-
high net profit after tax of U.S.$ 77,067 in comparison to U.S.$ 36,515 in 2020.
Our headquarters are home to our centralized purchasing department and global control function, which
centrally monitors and controls our global activities, including purchasing, warehousing and transportation
operations. In line with our strategy of focusing on automation and innovation in order to increase our cost-
efficiency, in 2002 we began developing the IT4Profit platform, our online purchasing platform for electronic
trading with our customers (B2B) and electronic data interchange for the Company and its subsidiaries.
Within this platform, we have also implemented our end-to-end online supply chain management system, in
order to effectively manage our multinational marketplace and increase automation and reporting
transparency both internally and vis-à-vis our suppliers. We combine international experience of our central
management team with local expertise of our offices in each of the 26 countries in which we operate. With
our broad local presence, we have developed an in-depth knowledge and understanding of fast-growing
markets in regions such as Central and Eastern Europe “(CEE”) and FSU and our diverse cultural, linguistic
and legal landscape, which may form significant barriers to entry for most of our international competitors.
The Directors believe that this advantage has helped us to quickly and cost-effectively penetrate emerging
markets and strengthen our competitive position, in the markets where we operate.
20
History of the Group
The business has been established in Minsk, in 1990 by Mr Siarhei Kostevitch and
the Company’s
main
activity was the distribution of Seagate Technology products in the territory of the Former Soviet Union.
Then, in 1995, the Company was incorporated in Cyprus and moved its headquarters to Limassol together
with all key management. In 2002, in order to fund further growth, we privately placed U.S. $ 6,000 worth of
shares with MAIZURI Enterprises Ltd (formerly named Black Sea Fund Limited) and U.S. $ 4,000 with Alpha
Ventures SA. In 2006, we listed our common stock on Alternative Investment Market of London Stock
Exchange («AIM»), however after the successful listing on the Warsaw Stock Exchange (October 2007) the
Board of Directors took a decision and cancelled the AIM listing as of the 18
th
of March 2008.
Strengths of the Group
The Directors consider that our key strengths are:
•
Broad geographic coverage combined with a strong local presence.
Unlike most of our international competitors, we operate with active local presence in a number of countries
across different regions. Since many of our competitors target the same markets from a number of different
locations in Western Europe, we benefit from increased logistical cost efficiencies. In particular, our broad
geographic coverage, combined with our centralized structure and automated processes, results in reduced
shipping costs and lower revenue collection expense, as well as a consistent marketing approach, as
compared to our competitors. As a result, we have become an authorized distributor for leading international
suppliers wishing to penetrate a number of fast-growing markets served by us, offering them the ability to
penetrate these markets in a cost-efficient manner and through a consistent marketing approach.
• Experienced management team combined with local expertise.
Our management team consists of experienced executives. Our Chief Executive Officer has been with the
Company since inception in 1990, while the majority of our key executives have served for more than twenty
years.
In addition, our subsidiary operations are managed by teams of mainly local experienced managers, which
provides us with strong expertise and understanding of the diverse markets in which we operate. The
Directors believe that local presence represents a significant competitive advantage for us over our
multinational competitors.
• A critical mass of operations.
Having revenues of 3.1 billion U.S. Dollars, sales in approximately 56 countries and facilities in 26 countries,
we believe that we have become a strong partner for leading international suppliers of IT components and
finished products, including Apple, Intel, AMD, Seagate, Western Digital, Samsung, Microsoft, Hitachi, Dell,
Toshiba, Logitech, etc. in most of our regions of operations. Thanks to our size and the scope of our regional
reach, we have achieved authorized distributor status with leading international suppliers, either on a pan-
European, regional, or on a country-by-country basis, thus enjoying a number of beneficial commercial terms
and achieving agreements with respect to the distribution of products offering higher profit margins.
• Price protection and stock rotation policy for inventory.
As an authorized distributor for a number of leading international suppliers of IT components, we are able
to benefit from certain beneficial contract terms that provide protection from declining prices or slow-moving
inventory. In particular, such terms allow us to return part of the inventory to the respective distributors at
the event market prices decline or such inventory becomes obsolete. See "Our Main Suppliers - Price
Protection Policy and Stock Rotation Policy". In contrast, in some of the countries in which we operate, many
of our major competitors tend to buy from the open market, which leaves them exposed to the risk of price
changes and obsolete stock.
21
•
One-stop-shop for producers and integrators of IT equipment.
We distribute a broad range of IT components, blocks, peripherals, and finished products supplied by a large
number of leading international suppliers. As a result, we serve as a one-stop-shop, providing complete
solutions to producers and integrators of the server, mobile and desktop segments in the countries in which
we operate. The Directors consider this to be a significant advantage over competitors with more limited
product offerings.
•
Own brands business improving our profitability
In the past years, we have invested in the development of our own brands and built a strong market position.
In 2021, we added to our portfolio two more new own brands: AENO - a brand of small kitchen appliances
and LORGAR - a brand of ultimate accessories for gamers, following our decision to strengthen our brand
portfolio and having seen the growing demand for such devices. We try to keep revenues from own brands
at sustainable levels based on expected profitability and good cash flow. The Directors consider own brands
to be a valuable reinforcement to our profitability if it is developed as an addition to the distribution business.
Thus, the development of this segment is and will be continued.
•
Ability to adjust our cost structure to the new business environment and the Company needs.
This is considered a very big advantage of the Company. It has been proven that the Company could quickly
adjust its cost structure to any turbulent business environment.
Group Structure and Operations
The following table presents our corporate structure as at December 31
st
, 2021:
Company
Consolidation
Method
ASBISC Enterprises PLC
Mother company
Asbis Ukraine Limited (Kiev, Ukraine)
Full (100%)
Asbis PL Sp.z.o.o (Warsaw, Poland)
Full (100%)
Asbis Poland Sp. z o.o. (Warsaw, Poland)
Full (100%)
Asbis Romania S.R.L (Bucharest, Romania)
Full (100%)
Asbis Cr d.o.o (Zagreb, Croatia)
Full (100%)
Asbis d.o.o Beograd (Belgrade, Serbia)
Full (100%)
Asbis Hungary Commercial Limited (Budapest, Hungary)
Full (100%)
Asbis Bulgaria Limited (Sofia, Bulgaria)
Full (100%)
Asbis CZ,spoI.s.r.o (Prague, Czech Republic)
Full (100%)
UAB Asbis Vilnius (Vilnius, Lithuania)
Full (100%)
Asbis Slovenia d.o.o (Trzin, Slovenia)
Full (100%)
Asbis Middle East FZE (Dubai, U.A.E)
Full (100%)
Asbis SK sp.l sr.o (Bratislava, Slovakia)
Full (100%)
FPUE Automatic Systems of Business Control (Minsk, Belarus)
Full (100%)
E.M. Euro-Mall Ltd (Limassol, Cyprus)
Full (100%)
OOO ‘Asbis’-Moscow (Moscow, Russia)
Full (100%)
Asbis Morocco Limited (Casablanca, Morocco)
Full (100%)
Prestigio Plaza Ltd (formerly Prestigio Technologies) (Limassol, Cyprus)
Full (100%)
Perenio IoT spol. s.r.o. (Prague, Czech Republic)
Full (100%)
22
Asbis Kypros Ltd (Limassol, Cyprus)
Full (100%)
“ASBIS BALTICS” SIA (Riga, Latvia)
Full (100%)
Asbis d.o.o. (Sarajevo, Bosnia Herzegovina)
Full (90%)
ASBIS Close Joint-Stock Company (Minsk, Belarus)
Full (100%)
ASBIS Kazakhstan LLP (Almaty, Kazakhstan)
Full (100%)
Euro-Mall SRO (Bratislava, Slovakia)
Full (100%)
Asbis China Corp. (former Prestigio China Corp.) (Shenzhen, China)
Full (100%)
ASBIS DE GMBH, (Munchen, Germany)
Full (100%)
EUROMALL BULGARIA EOOD (Sofia, Bulgaria)
Full (100%)
E-vision Production Unitary Enterprise (Minsk, Belarus)
Full (100%)
iSupport Ltd (Kiev, Ukraine) (former ASBIS SERVIC Ltd)
Full (100%)
I ON Ltd (Kiev, Ukraine)
Full (100%)
ASBC MMC LLC (Baku, Azerbaijan)
Full (65.85%)
ASBC KAZAKHSTAN LLP (Almaty, Kazakhstan)
Full (100%)
Atlantech Ltd (Ras Al Khaimah, U.A.E)
Full (100%)
ASBC LLC (Tbilisi, Georgia)
Full (100%)
Private Educational Institution “Center of excellence in Education for executives and
specialists in Information Technology” (Minsk, Belarus)
Full (100%)
OOO Must (Moscow, Russia)
Full (100%)
Real Scientists Limited (London, United Kingdom)
Full (55%)
i-Care LLC (Almaty, Kazakhstan)
Full (100%)
ASBIS IT Solutions Hungary Kft. (Budapest, Hungary)
Full (100%)
Breezy LLC (Minsk, Belarus) (former Café-Connect LLC)
Full (100%)
MakSolutions LLC (Minsk, Belarus)
Full (100%)
Breezy TOO (Almaty, Kazakhstan) (former TOO “ASNEW”)
Full (100%)
Breezy Ltd (Kiev, Ukraine)
Full (100%)
I.O.N. Clinical Trading Ltd (Limassol, Cyprus)
Full (70%)
R.SC. Real Scientists Cyprus Ltd (Limassol, Cyprus)
Full (85%)
ASBIS CA LLC (Tashkent, Uzbekistan)
Full (100%)
Breezy Service LLC (Kiev, Ukraine)
Full (100%)
Breezy Trade-In Ltd (Limassol, Cyprus) (former Redmond Europe Ltd)
Full (80%)
I.O. Clinic Latvia SIA (Riga, Latvia)
Full (100%)
SIA Joule Production (Riga, Latvia)
Full (100%)
ASBC LLC (Yerevan, Armenia)
Full (100%)
Breezy Georgia LLC (Tbilisi, Georgia)
Full (100%)
ASBC Entity OOO (Tashkent, Uzbekistan)
Full (100%)
Asbisc Enterprises Plc is the parent company of the Group. Our subsidiaries are involved in diverse activities
related to the distribution of IT products and components and mobile devices. In particular, our subsidiaries
operating under the ASBIS name are involved in the distribution of IT components, mobile devices, finished
products and equipment, including distribution of products from worldwide leading manufacturers such as Apple,
Intel, AMD, Seagate, Western Digital, Samsung, Microsoft, Hitachi Dell, Acer, Toshiba and many other well-known
international suppliers.
Our subsidiaries operating under Prestigio, Canyon and Perenio brands are primarily responsible for the
procurement, quality control, marketing, and wholesale distribution of our private label (Canyon, Prestigio and
Perenio) IT products.
23
Changes in the Group’s structure
During the year ended December 31
st
, 2021, there were the following changes in the structure of the Company
and the Group:
x
On January 8
th
, 2021, the Issuer has acquired 100% shares of the company SIA Joule Production
(Riga, Latvia). The Issuer holds 100% in this subsidiary, being equal to share capital of EUR 5,000
(USD 6,052). We acquired this entity for the development, production and distribution of IT products
and medical devices.
x
On February 1
st
, 2021, the Issuer has acquired 100% shares of the company Vizuators LLC (Moscow,
Russia). The Issuer holds 100% in this subsidiary, being equal to share capital of RUB 10,000 (USD
134). We acquired this entity for the sale of software licenses.
x
On February 3
rd
, 2021, the Issuer has acquired the 100% shares of the company I.O. Clinic Latvia SIA
(Riga, Latvia). The Issuer holds 100% in this subsidiary, being equal to share capital of EUR 5,000
(USD 6,052). We acquired this entity for the development, production and distribution of IT products
and medical devices.
x
On February 5
th
, 2021, the Issuer has acquired the 100% shares of the company ASBIS CA LLC
(Tashkent, Uzbekistan). The Issuer holds 100% in this subsidiary, being equal to share capital of UZS
105,000,000 (USD 9,962). We acquired this entity to distribute IT products.
x On March 15
th
, 2021, the Issuer has acquired 100% shares of the company Breezy Service LLC (Kiev,
Ukraine). The Issuer holds 100% in this subsidiary, being equal to share capital of UAH 1,000 (USD
35). We acquired this entity to provide warranty services.
x On March 30
th
, 2021, the Issuer has acquired the remaining 50% shares of the company Redmond
Europe Ltd (Limassol, Cyprus). The Issuer holds 100% in this subsidiary, being equal to share capital
of EUR 400,000 (USD 461,660). We acquired this entity to distribute IT products.
x On May 24
th
, 2021, the Issuer has disposed the 75% shares of the company LLC Vizuatica (Minsk,
Belarus) for the consideration of USD 500.
x On May 24
th
, 2021, the Issuer has disposed the 75% shares of the company LLC Vizuators (Minsk,
Belarus) for the consideration of USD 500.
x On May 24
th
, 2021, the Issuer has disposed the 100% shares of the company Vizuators LLC (Moscow,
Russia) for zero consideration
x On August 23rd, 2021, the Issuer has acquired 100% of shares of the company ASBC LLC (Yerevan,
Armenia). The Issuer holds 100% in this subsidiary, being equal to share capital of AMD (Armenian
Dram) 120,570,000 (USD 244,504). We acquired this entity to distribute IT products.
x On September 7th, 2021, the Issuer has acquired the 100% shares of the company Breezy Georgia
LLC (Tbilisi, Georgia). The Issuer holds 100% in this subsidiary. We acquired this entity to provide
warranty services
x On October 13th, 2021, the Issuer has disposed the 20% shares of the company Breezy Trade-In Ltd
(Limassol, Cyprus) for the consideration of USD 80.
x On October 25th, 2021, the Issuer has disposed the 100% shares of the company Prestigio Plaza Sp.
z o.o (Warsaw, Poland) for zero consideration.
x On October 30th, 2021, the Issuer has disposed the 100% shares of the company Advanced Systems
Company LLC (Riyadh, Kingdom of Saudi Arabia) for zero consideration.
x On November 30th, 2021, the Issuer has disposed the 100% shares of the company Asbis TR
Bilgisayar Limited Sirketi (Istanbul, Turkey) for zero consideration.
x On November 30th, 2021, the Issuer has come to an agreement to dispose the 100% of the shares of
AVECTIS and the agreement was finalized and signed on February 11th, 2022.
x On December 15th, 2021, the Issuer has acquired 100% shares of the company ASBC Entity OOO
(Tashkent, Uzbekistan). The Issuer holds 100% in this subsidiary, being equal to share capital of UZS
550,000 (USD 51). We acquired this entity to expand the retail business with Apple stores.
24
Regional operations
We operate as a one-stop-shop for the desktop PC, server, laptop, tablet PC, smartphones, and software
segments. The management believes that the Company is currently the only IT component and A-branded
finished products distributor that covers substantially all of Eastern Europe, as part of a single supply chain
with highly integrated sales and distribution systems. We also have operations in the Baltic States, the
Balkans, the Former Soviet Union, the United Arab Emirates, and other Middle East countries.
We also provide technical support for all new products that we stock through product line sales managers.
Sales personnel receive internal training and focus groups are established that have an in-depth knowledge
of their respective product lines.
Our sales staff are also trained by our suppliers, such as Apple, Intel, AMD, Seagate, Western Digital,
Samsung, Microsoft, Hitachi, and others, as a result of our status as an authorized distributor of their
products. The Directors consider that this organizational process allows us to provide added value to our
customers and differentiate us from our competitors.
Key markets and regions
Historically, the regions of the Former Soviet Union (“FSU”) and Central Eastern Europe (“CEE”) have been
the larger revenue contributors of the Group. This has not changed in 2021.
The following table presents a breakdown of our revenue by regions for the years ended 31 December 2021,
2020, and 2019:
Year ended 31 December
2021
2020
2019
%
%
%
Former Soviet Union
57.66
54.49
53.50
Central and Eastern Europe
21.25
24.27
26.42
Middle East & Africa
10.65
11.81
11.38
Western Europe
8.66
7.23
6.66
Other
1.78
2.20
2.04
Total revenue
100
100
100
Products
We engage in the sales and distribution of a variety of products including IT components, mobile devices,
laptops, server and mobile building blocks and peripherals to third-party distributors, OEMs, retailers and e-
tailers and resellers. Our customers are located mainly in Central and Eastern Europe, the Former Soviet
Union, Western Europe, North and South Africa and the Middle East.
We engage in the following primary business lines:
• Sales and distribution of IT components and blocks described below that we purchase from a variety
of suppliers such as Intel, AMD, Seagate, and Western Digital
• Value-add distribution (“VAD”) of Apple products in certain Former Soviet Union countries
25
•
Sales of accessories and gaming products (like Logitech)
•
Sales of a wide range of finished products from worldwide manufacturers (Dell, Apple, Acer) as well
as software (Microsoft and antivirus software producers)
•
Sales of a range of private label products (such as tablet PCs, multiboards, data storage devices,
GPS devices, peripherals, accessories, security solution, products in the field of servers, mass
storage, solutions for data centers) with larger volumes and profit potential selected by us and
manufactured by ODM/OEM producers in the Far East under our own private label brands: Canyon,
Prestigio, Perenio, AENO and LORGAR.
The products that are purchased from suppliers and distributed by us are divided into various categories
and are presented in the table below:
Year ended 31 December
2021
2020
(U.S. $)
Smartphones
895,664
684,482
Central processing units (CPUs)
441,968
397,093
PC mobile (laptops)
305,333
177,967
Hard disk drives (HDDs)
149,644
153,793
Peripherals
148,669
104,494
Audio devices
137,456
115,839
Solid-state drives (SSDs)
136,080
89,443
Servers & server blocks
119,608
109,780
PC desktop
76,589
55,398
Smart devices
72,735
50,154
Networking products
71,308
60,077
Software
69,331
58,331
Memory modules (RAM)
63,578
47,049
Display products
60,607
44,483
Tablets
59,266
54,649
Multimedia
58,204
33,164
Video cards and GPUs
54,503
19,789
Other
157,433
110,452
Total revenue
3,077,976
2,366,441
Revenues in 2021 showed a strong increase of 30.1% as compared to that of 2020.
All changes in our product portfolio comply with our main focus, which is the increase in margins and
profitability with a strong cash flow.
In 2021, ASBIS remained the distributor of first choice for many worldwide suppliers.
26
The period of the twelve months of 2021 has shown that ASBIS had no issue in significantly raising its
revenues despite the turmoil in the region, the COVID impact, shortages in several product groups (i.e.,
semiconductors, SSDs and selected CPUs) as well as the significant increases of cargo and transportation
costs. ASBIS has proved that thanks to its effective strategy, its strong position on the market and a complete
products portfolio it can quickly adapt to the new market conditions and generate record results.
The chart below indicates trends in sales per product line:
The chart below indicates trends in smartphones sales
Sales of smartphones, the leader of our revenues, increased by 30.9% in 2021, as compared to 2020.
27
Private labels: Canyon, LORGAR, Prestigio, Perenio and AENO
ASBIS creates, develops, and promotes several proprietary brands
–
Canyon and Lorgar, Prestigio,
Perenio, AENO. We carefully research the needs of the users in the market and form our portfolio of
categories for each own brand with the most popular and innovative products.
We cooperate directly with reliable factories and suppliers of components and products in the Far East,
particularly in China. Our engineers check and improve each product before it goes into production. There
is a strong quality control system ASBIS. We have high requirements on quality and attentively test products
step by step before entering the consumer market. All products of ASBIS brands have the requested
certificates of conformity to quality at the international format.
In the countries where ASBIS operates, we sell products of our own brands with improved characteristics
and capabilities at competitive prices.
Canyon
is a brand with 19-years of history. For a long time, the brand included a wide range of products:
RAM and flash memory modules, webcams, mice, networking products, external HDDs, handbags, phone
accessories, and speakers.
Now, Canyon is a brand targeting younger customers who want good quality products. The brand is focused
on the needs and values of the youthful audience of Generation-Z. In 2020 Canyon unveiled its new brand
identity, a redesigned logo, and a slogan. The changes are appealing to the audience of young people with
a clear and simple motto of nowadays: “You can!”.
Canyon combines two directions: a general consumer electronic category (smartwatches, fitness trackers,
power banks, headphones, HUBs, wireless charging stations, headsets, BT speakers, webcams, car
chargers) and special label Canyon Gaming of gaming devices and PC accessories (mice, keyboards,
headsets, gamepads, mousepad, gaming chairs). Canyon Gaming is a brand of gaming devices for entry-
level gamers at affordable prices.
In 2021, Canyon achieved record sales of some products. According to the GFK report from January-
December 2021, in the Russian market: Canyon held the third place among all brands of wireless desk
chargers, was brand #2 in webcams category with a market share of 16% in units and wall-charger Canyon
was #3 in best sellers list. Also, two webcams Canyon were included in the top-25 visual cams on the
Ukrainian market.
Canyon has won TOP-3 list in AV/IT/Gaming Category at Pitсh Your Product Award by ChannelHub –
international on-line exhibition attended by 242 distributors, 67 retailers and 40 brands from EMEA region
in March 2021.
To meet the needs of advanced users, a new gaming brand Lorgar was launched at the end of 2021,
focusing on high-end professional gaming devices.
www.canyon.eu I www.gaming.canyon.eu
LORGAR. Lorgar is a brand of gaming devices aimed to bring the gaming experience to a high level. The
brand’s mission is to provide every gamer feel living and exciting emotions from gaming with high-quality
devices, inspired by the requests of the best gamers.
Lorgar successfully entered the market with the first product category, professional microphones, at the end
of 2021. In 2022, the product portfolio will be expanded with gaming chairs, mice, keyboards, mousepads,
gamepads, chairs, microphones, web cameras, headsets, and other peripherals.
www.lorgar.eu
28
Prestigio
. Prestigio is an international brand offering wide range of consumer electronics for home,
education and office for 20 years. It combines two business directions: Prestigio consumer electronics for
the B2C segment and Prestigio Solutions with cases for B2B partners. Brand sells products in 27+ countries
around the world.
Prestigio consumer portfolio includes 8 categories so far - tablets, laptops, TVs, devices based on
TouchOnKeys™, wine accessories, wireless chargers, portable accumulators and auto elect
ronics, among
which are unique devices developed by own design-buro.
Brand pays a lot of attention on product design and details and use high-quality materials in production.
Prestigio keyboards Click&Touch and Click&Touch 2 even won Red Dots awards in 2020 and 2021 for
outstanding design. Products packaging is eco-friendly.
www.prestigio.com
Perenio
. Perenio was launched in 2018. Perenio is innovative, technological all-around company
specialized on Internet of Things, Smart Home/Office, Smart Health. More than 40 engineering team
members (including industrial designers, hardware and firmware engineers, applications and server
software programmers) create full capability to develop complex solutions and products: IoT platforms, IoT
routers, smart sensors, smart health devices. Perenio ecosystem includes its own base software platform
and a wide range of connected smart devices. The team is constantly conducting market research,
developing and testing new product ideas to expand the product portfolio and perspective market launch.
www.perenio.com
AENO. AENO is a young dynamic brand of smart household appliances with the most requested and
innovative smart features, created and manufactured in China in modern production. AENO’s mission is to
make smart technologies more accessible, taking on an everyday routine and lessening the burden of
housework.
The AENO brand's product portfolio includes a wide range of categories in key usage areas: creating a
healthy microclimate (air purifiers, humidifiers), cleaning, home and clothing care (robot vacuum cleaners,
stick vacuum cleaners, steam mops, garment steamers), cooking (kettles, electric grills, blenders, electric
ovens, Sous-Vide, vacuum sealers), personal hygiene, wellbeing (electric toothbrushes and irrigators).
The product portfolio will be systematically supplemented with new categories searched for by clients.
https://aeno.com/
Suppliers and Procurement
Our Main Suppliers/Partners
We believe that establishing strong supplier relationships is a critical success factor for our business and
have devoted considerable resources over the years to establish strong relationships based on mutual trust
with our key suppliers. In that direction, we strive to provide full visibility to our suppliers by reporting to them
crucial information on a daily/weekly basis, including stock levels, sales-out reports by country, thus
assisting them in monitoring customer demand and allowing them time to comprehend and react to specific
market peculiarities, trends and dynamics.
In 2021, a significant portion of our revenues was generated from our ten biggest suppliers. However, the
management believe that we place no reliance on anyone of our suppliers since we carry for every product
category a wide portfolio of brands.
Acting as a non-exclusive distributor, we are generally responsible for promoting, marketing, advertising,
selling, and providing training and after-sales support for each supplier's products in the respective markets.
29
A monitoring mechanism is established by the suppliers to ensure that minimum sales targets are met,
pursuant to which we are responsible for providing our suppliers with various reports, including weekly
inventory reports and monthly point of sales reports.
Price Protection Policy
. In an attempt to reduce distributors' exposure to market price fluctuations, a
number of our large suppliers provide in their standard contractual terms for protection from a decline in
product prices by allowing such distributors, including us, to request, within an agreed time frame,
reimbursement for inventory in transit or held in warehouses. This is not, however, usually the case with
smaller suppliers, with whom we are more exposed to potential price variations.
Stock Rotation Policy
. Our exposure to the risk of obsolescence of inventory is limited through the stock
rotation policy provided by many of our large suppliers, but not generally under arrangements with smaller
suppliers.
In general, under a stock rotation policy, we have the right
to return to the supplier, within a predefined time
frame, slow-moving inventory in exchange for credit. In practice, we can return a certain percentage of
products we hold immediately after the end of each quarter, usually based on our sales performance in the
preceding quarter.
Return Material Authorization Policy (“RMA”)
. Subject to the specific provisions of each suppliers' RMA
policy, we have the flexibility to return defective items to our major suppliers in return for either credit,
replacements, or refurbished products.
Procurement Policies
We operate a system of centralized purchasing through our headquarters in Limassol, Cyprus. Country
managers communicate expected sales levels and targets, analyzed by product lines and suppliers, to our
Product Line Managers ("PLMs") who then identify purchasing requirements for the forthcoming three weeks
and in turn forward this information to the Product Marketing Director who verifies and, upon agreement,
consolidates the information. The Product Marketing Director then presents the relevant information to
management, holding weekly meetings to review and approve requirements.
We strive to keep our stock, including stock in transit, for our main product lines at a level of four weeks of
sales revenues, and to cover four to five weeks of sales revenues for other product lines in order to ensure
adequate supply, while reducing the length of time over which we hold our inventory at our warehouses.
Since we maintain a stable supplier base, there is no need for any formal supplier take-on procedures.
Sales and Marketing
We focus on developing an efficient online sales infrastructure and a rewarding profit commission scheme,
as well as on investing in training our sales managers in order to instill a thorough understanding of our
product offerings with the goal of enhancing customer satisfaction. We also have the possibility to use some
of our main supplier's marketing funds, to increase our sales and our clients’ satisfaction.
Our marketing department is divided into two groups. The product marketing group establishes pricing
policies, oversees product supply, and communicates with suppliers with regards to the training of PLMs;
the channel marketing group responsible for both central and in-country activities such as public relations,
marketing and website content management.
Our marketing team consists of the Central Marketing Group and the Local Marketing Coordinators, both of
which work in close coordination with suppliers, product managers and sales teams.
Distribution
Distribution model. Our distribution model is based on a system of centralized purchasing operations at our
headquarters in Cyprus, which is in direct contact with the suppliers.
30
Suppliers replenish their product stocks with our warehouses weekly or even several times per week, after
receiving our product orders, most of them by shipping their products directly to our two master distribution
centres, leading to significant cost savings for us. Local in-country operations place their orders online
through our IT4profit online platform and receive their goods directly from one of the two distribution centres.
On the other hand, products such as memory modules and our private label products with small size, high-
price dynamics and high value are supplied directly to our local in-country operations from the suppliers'
factories.
Distribution centers
. Our two master distribution centers are located in Dubai and Prague.
The facility in Prague is responsible for distribution across whole Europe; Dubai serves our operations in the
Middle East and Africa and certain Central Asian countries.
The table below presents information with respect to the size and ownership of each of our two master
distribution centers:
Facility Location
Office area (m2)
Warehouse area (m2)
Total area (m2)
Ownership
Prague (including
buffer warehouse)
677.5
5,688
6,365.5
Leased
Dubai
952
3,294
4,246
Owned
In order to ensure visibility and bottom-line efficiencies of our warehousing environment, we have connected
our warehouse management system ("WMS") to IT4Profit. Thus, when an order is placed on IT4Profit, this
is communicated to our relevant master distribution centre, which can then process the order for delivery.
This WMS is currently functional in the Prague and Dubai warehouses. The Directors believe that the
advantages of operating the WMS connected through IT4Profit include the ability to meet or exceed shipping
commitments, instant visibility of inventory movements, consistency of inventory management records,
reduction of inventory write-offs and simplicity in shipment planning, lot replenishment and storage activities.
In-Country Operations. We operate through 31 local offices in 26 countries. Customer orders are mainly
served through the supply of local offices, and - to the event that local inventory levels are insufficient,
additional inventory is drawn from one of the two distribution centers. Each local office operates its own
logistics function and is responsible for direct shipments to its customers. Our headquarters monitor and
assess the performance of each local logistics center by using a number of key performance indicators,
including transit time of incoming shipments, order fulfilment, (such as pick, pack and ship time and the
percentage of orders shipped to commitment by date and time), on-time delivery, transport, cost per
kilogram shipped and cycle count performance.
Distribution Operations Management - "Asbis on IT4Profit"
The Directors consider that an efficient logistics and distribution model is one of the key contributors to
maintaining our success in the distribution industry. Each in-country logistics centre is focused on continuous
improvement with key performance indicators in place to measure performance.
IT4Profit is our online supply chain management software owned by us, which was internally developed,
and which we continuously improve. We use IT4Profit to effectively manage the flow of goods within our
distribution network. This system collaborates and exchanges business data with our key suppliers, master
distribution centres, subsidiaries and customers. Local subsidiaries place their orders online through our e-
market place on www.IT4Profit.com and receive their goods directly from one of the two distribution centres.
In addition, local logistics staff use this online system to ensure that every online order is picked, packed,
and shipped within the allocated timeframe.
31
IT4Profit provides the following functions:
•
interconnectivity with suppliers;
•
B2B and B2C online shops to our customers for both front and back-office administration;
•
online supply chain management;
•
statistics for product pricing and product content management and
•
comprehensive operational reports and a balanced scorecards management system.
Disaster Recovery
We have developed and will continue to enhance, an enterprise-wide business plan, incorporating a
disaster recovery plan that will enable us to restore all major procedures from offices around the world.
For our servers, we use Intel, Dell and IBM hardware.
In case of a system failure, spare servers kept at a number of locations where we operate can be made
available within 24 hours. In addition to the daily back-ups that we maintain in Cyprus, we have our storage
space resources in Lithuania for performing daily back-ups. In the event of a system failure, we can restore
applications and recover data. In such an instance, this will enable us to continue operating with electronic
means and servicing our clients. ASP services have a different scheme of high availability.
On the main host in Lithuania, the services have fully duplication hardware according to the active-standby
scheme with full online replication. Additionally, data is being replicated with 15 minutes delay to the standby
host in Prague and every day a full back-up of each service is taken.
Customers
We served 20,000 customers in approximately 56 countries in 2021. We have no reliance on any single
customer, as our biggest customer is only responsible for around 3.0% of total revenues. Approximately
60% of our total sales were conducted on-line, based on our IT4Profit platform described above.
Industry overview and competition
Market characteristics
The markets we operate in are characterized by multi-culture environment and significantly lower per capita
income when compared to the Western European markets.
Despite differences in GDP per person, our markets have been proving quite technology-oriented that
consist of very much educated and demanding consumers.
Distributors are considered to be a basic component of the industry since the major suppliers of technology
would rather deal with distribution, instead of own in-country operational investment.
This is particularly true of the European market, where a diversity of national business practices, as well as
cultural and language differences make it difficult to pursue efficient hardware distribution models without
having a strong local presence. In the Central and Eastern European and Former Soviet Union markets,
different currencies, varying levels of economic development, import regulations and periodic episodes of
political and economic instability create additional impediments to IT distribution not found in Western
Europe. At the same time, leading manufacturers of IT do not want to rely solely on multinational OEMs and
world-wide distributors for distribution as this would reduce producers' bargaining power.
32
For companies having own brands business, like us, it is important to find new niches all the time and
leverage on market position and brand recognition. The need for new product lines is very important since
we need to timely replace saturated product segments.
Market trends
The year 2021 was another record year in ASBIS
’s
history. We have achieved multiple milestones and
broken all-time records in terms of both revenues and profits.
It was another challenging year. The market environment was not so favorable for us, but we managed
perfectly. The results achieved in 2021 also confirm our very good product portfolio and focus on VAD
projects, which are characterized, among others, by higher than classical distribution margins.
The key drivers of our revenues were smartphones, CPUs, and laptops.
Although, our main focus was mostly on increasing margins, we were able to generate record-high sales
despite the ongoing turmoil around our regions, continuous pandemic worldwide, product shortages and
price increases in multiple raw materials and finished products. We have continued to search for new
opportunities that would
be supported by big vendors, like cloud services and internet of things (“IoT”).
The policy described above and the fact that the Company built a solid market position and gained
recognition and trust
from customers, allows the Company’s management to be optimistic about 20
22.
Nevertheless, much will depend on the course of the war between Russia and Ukraine and its impact on
the world economy.
Competitive Landscape – traditional distribution
Distribution of IT and mobile devices in Central and Eastern Europe and the Former Soviet Union is
fragmented. Major multinational players who dominate the U.S. and Western European markets are present
in a few countries each.
A large number of local distributors operate mostly in a single country with only a few operating in more than
one country. Typically, these local players have the largest share in each of the countries.
The Directors consider the Company to be one of the largest distributors of IT components in Eastern
Europe, with a distribution network covering the majority of countries in Eastern Europe, and one of the
three largest distributors in the EMEA region for IT components such as HDDs and CPUs. As no other
distributor has a pan-regional presence like ASBIS, we believe we are very much protected with our current
set up and infrastructure.
We compete with local distributors, but the Directors consider that none of them has comparable geographic
coverage, nor carry as diverse a portfolio as we do. The Directors consider that we do not have one main
competitor but rather a group of competitors varying from country-to-country.
As some consolidation is seen on the market, and this trend may continue due to the effects of the recent
world’s financial crisis and limited abilities of the smaller distributors to finance themselves, ASBIS is ready
to benefit from any opportunities that may arise.
Competitive Landscape – Private Labels
The private labels, Canyon, Prestigio, Perenio, AENO and Lorgar are competing with a variety of brands in
all markets we operate. The market leaders of the tablet and smartphone segments are Apple and Samsung.
We do not consider our Prestigio brand to be competing with these conglomerates since we are not
considered as an A-brand. We are positioning ourselves as a B-Brand with a limited amount of product
offerings and limited countries of presence. Recently the market was flooded by cheap brands, thus we
have decided not to compete on price but rather on quality and decreased our product lines and number of
models to achieve better margins.
33
We continue our own brand business on a back-to-back basis and expect it to be responsible for a good
share of our total revenues. This will allow us to benefit from its higher profitability, but we try not to carry
any other related risks, such as inventory obsolescence.
Directions of further development
Our strategy is to grow our business and increase profitability by improving our operational efficiency in the
distribution of IT products within all of the regions we operate in, upgrading our product portfolio and
increasing sales of our private label products.
We intend to achieve this by:
a) increasing or retaining sales and market share in countries of Central and Eastern Europe,
some particular markets of Former Soviet Union and the Middle East and Africa and taking
advantage of the weaknesses of the competition
b) benefiting from increased smartphones business, keep enhancing the IT component
business, adding more third-party products to our portfolio, and improving the gross profit
margin
c) further optimizing our private label business
d) further developing of the VAD business
e) decreasing cost of financing
f) engaging in alternative investments and new technologies
g) controlling our cost structure, enhancing operating efficiency and automated processes,
including our online sales channels
h) continuing our successful foreign exchange hedging and other risk management activities
a) Increasing or retaining sales and market share in countries of Central and Eastern Europe,
some particular markets of Former Soviet Union and the Middle East and Africa and taking
advantage of the weaknesses of the competition
In 2021 the Group has shown a record level of revenues despite the ongoing pandemic, the turmoil around
our regions and product shortages. We have built very solid foundations which allow us to adapt to the
current market situation and generate high revenues
.
We have revised our strategy and product portfolio and addressed the market with more Apple products,
more solutions to data centers and cloud-related products. This strategy was proven successful as our 2021
results significantly improved, both in terms of gross profit, as well as in terms of net profitability.
b) Benefiting from increased smartphones business, keep enhancing the IT component
business, adding more third-party products to our portfolio, and improving gross profit
margin.
For 2022, we plan to maintain a strong market position on Apple products, following a year of record-high
sales. In 2021, global smartphone sales grew 6% year-over-year for the first time since 2017, with annual
shipments reaching 1.43 billion units. Smartphone sales rebounded in the first half of 2021, following a
12.5% decline in 2020.
34
According to independent analysts, the global smartphone shipments will grow +3.8% in 2022, up from +6%
in 2021. Components supply and Covid-19 remain a challenge for the whole industry in H1 2022 but are
expected to ease down in H2 2022. Given the recent developments following the invasion of Russia in
Ukraine, the situation is not clear, and we are closely monitoring the situation and place all efforts in
weathering the temporary vulnerability of our markets.
The traditional IT components segment is characterized by high volumes, low gross profit margins. The
component business is the backbone of our company. The example of growth in servers and server blocks
proves that components are going to continue to play a significant role in our success.
Thus, the Company continues its efforts to rebuild its product portfolio by adding more finished-goods,
namely networking, accessories, and other products in order to benefit from growing sales and better
margins. This strategy paid off well in recent years and therefore the Company will continue this in order to
increase its overall gross profit margin in the future.
c) Further optimizing of Private Labels
Our private label (branded) product lines, Canyon, Prestigio, Perenio, AENO and Lorgar are manufactured
by leading Original Equipment Manufacturers (“OEM”) in the Far East (China), often based on designs
developed by us, selected on the basis of their quality and potential for achieving high-profit margins in our
markets. We market and sell these products under our own brands, successfully competing with products of
comparable quality marketed under international brands.
We believe that keeping a share of private label business in our total revenues at healthy levels will have a
positive impact on the overall profitability, as these products deliver a higher profit margin, compared to
international suppliers' products distributed by us. We will increase such sales though only to the extent this
comes with high gross and net margins and healthy cash flow.
We aim to continue expanding the range of our private label products and strengthening their promotion in
our markets and we expect that this will have a positive impact on our profitability.
d) Further developing of the VAD business
Development of Value-Added-Distribution (VAD) solutions is a key priority of the Group. Following the
changes in the market trends and the significant increase in storage as well as other commercial services
leave no room but to ensure that we are re-enforcing our presence in this segment.
e) Decreasing cost of financing
The distribution business entails a higher need for cash available to support growth. The Group has
managed to raise cash from various financial institutions, however, in certain cases, the cost of this financing
is expensive.
The Company has already negotiated improved terms with some of its supply-chain financiers and banks
and is currently undertaking certain extra steps to further lower its cost of financing.
In 2021 we have experienced a stable cost of financing in the F.S.U. and this is reflected in our overall
financial cost.
The weighted average cost of debt (WACC) has dropped to 6% in 2021, as compared to 8% in 2020.
f) Controlling our cost structure, enhancing operating efficiency and automated processes,
including online sales channels.
We continue to focus on improving our operating efficiency and enhancing our automated processes, with
a view to reducing operating expenses and increasing our profit margins.
35
In 2021 SG&A expenses grew by 28% YoY mainly due to higher gross profit and investments made in
human capital in all regions of our operations but scaled well compared to increase in gross and net
profitability.
The cost structure will continue to be under strict control in the coming years.
g) Continuing our successful foreign exchange hedging and other risk management activities
In 2021 our FX hedging strategy has successfully shielded our results. However, since there is no such
thing as perfect hedging, the currency environment needs to be closely monitored and FX hedging strategies
updated as soon as new developments are visible in the markets.
Managing also credit risk and transactional risk is also part of our success path. In the transactional risk we
also include the ability of the Group to properly manage its compliance in all rules and regulations imposed
by the relevant authorities in sanctioned territories.
Real property and other tangible assets
The table below presents our main real properties:
Area (m
2
)
Name of company
Country
Land
Office
Warehouse
Total
ASBISc Enterprises Plc
Cyprus
10,520
10,130
1,429
22,079
Asbis CZ, spol s.r.o.
Czech Republic
5,000
622
1,220
6,842
Asbis Ukraine Limited
Ukraine
-
2,660
334
2,994
ASBC Ltd
Belarus
-
1,056
-
1,056
Asbis SK sp.l. sr.o.
Slovakia
10,397
2,276
4,622
17,295
Asbis Middle East FZE
United Arab Emirates
-
952
3,294
4,246
CJSC ASBIS (Asbis BY)
Belarus
-
1,205
1,030
2,235
ASBIS Bulgaria Ltd
Bulgaria
3,855
-
-
3,855
TOTAL 60,602
Our remaining premises are under lease.
Information regarding real property owned by us and relevant encumbrances are provided in the annual
consolidated audited financial statements included elsewhere in this report. Other than this real property,
we do not hold any other significant tangible assets.
Intellectual Property
We have registered (or registration is pending) the following trademarks, including their word and graphical
representations in color and design.
a) ASBIS;
b) "CANYON", CANYON LED;
c) "PRESTIGIO", "PRESTIGIO SOLUTIONS" and its product group trademarks, which
include Nobile, Cavaliere, Signore, Visconte, Emporio, Prestigio Multi-Pad and Prestigio
Grace;
d) “PrestigioPlaza;
e) Lorgar;
f) Perenio, Perenio Ionic Shield, Perenio Smart Health, Perenio Making Life Easy,
g) AENO
36
h) TopDevice
i) iSpace
j) iON
k) iSupport
l) BREEZY
m) MacSolutions, and
n) Joule
Most of these trademarks are registered and protected in the countries in which we operate, both under
international, regional, and national registration schemes and systems, to the extent and other terms set
forth in the provisions based on which they were registered. The registrations are mostly in the international
class of goods 09, computers and IT products, and related classes of services.
In addition, we have registered a number of domain names for ASBIS, E.M. Euromall, Canyon, Perenio
Prestigio and other private labels.
Insurance
We hold two different types of insurance: products or “cargo” insurance and credit insurance.
Products insurance.
We have a products insurance policy with M.N. Leons B.V. We assume the risks of
products we receive from our suppliers only upon transfer of legal title, and thereafter.
Under our product insurance policy, covering twelve months and ending 1 January 2022 with tacit renewal
thereafter our products are insured for a maximum of U.S. $ 4,000 from any single shipment of computers,
monitors and supplies of accessories transported from country to country or warehouse to warehouse.
Typical shipment values for each warehouse are as follows: Czech Republic: U.S. $ 120 and the Middle
East: U.S. $ 140.
Furthermore, goods held in storage at both distribution centers (i.e., both the Czech Republic and Middle
East) and certain local warehouses are insured up to US 10,000.
The aforementioned insurance coverage approximates the typical value of stock held in each warehouse.
Credit Insurance: We have a major credit insurance policy in place with Atradius Credit Insurance N.V.
reducing our exposure in respect to possible non-recoverability of our receivables. The insurers have agreed
to indemnify us for losses due to bad debts in respect of goods delivered and services performed during the
policy period, which covers a term of twelve months, subject to annual renewal. We insured about 75% of
our 2021 revenues.
The major insurance policy is held with Atradius Credit Insurance N.V. which was signed in April 2008 and
is renewed every year. It covers Asbisc Enterprises PLC, Asbis Middle East FZE, Asbis D.o.o. (Slovenia),
Asbis Doo (Serbia), ASBIS Romania, ASBIS Bulgaria, Asbis OOO (Russian Federation), OOO MUST,
ASBIS Kazakhstan and ASBIS Hungary. Each buyer, primarily our large customers, who have an approved
credit limit is insured for a coverage amounting to 85%. Atradius also offers us a discretionary credit limit up
to a maximum of U.S. $ 60.
We also hold stand-alone credit insurance policies with Atradius in Slovakia covering the receivables of the
country. Additionally, for the receivables of the Czech Republic, we insure through a standalone policy with
Euler Hermes. Finally, the receivables of the Croatian subsidiary are covered by COFACE SA.
37
ITEM 3. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following Management's discussion and analysis of our financial position and results of operations
review our historical financial results as at, and for the years ended, 31 December 2021 and 2020. The
reader shall read the following discussion in conjunction with our audited financial statements as at 31
December 2021 and 2020, including the accompanying notes thereto, which are included elsewhere in this
Annual Report, and have been prepared in accordance with IFRS and audited by KPMG Limited, our
independent auditors and in conjunction with the information set forth under "
Risk Factors"
and
"Information
on the Company
".
Unless we indicate otherwise, references to U.S. $, PLN and € are in thousands except for share and per
share data.
Summary
The principal events of 2021 were as follows:
• Revenues in 2021 strongly increased by 30.1% to U.S. $ 3,077,976 from U.S. $ 2,366,441 in 2020.
• Gross profit in 2021 increased by 58.0% to U.S. $ 218,528 from U.S. $ 138,285 in 2020.
• Gross profit margin in 2021 was much improved to 7.10% from 5.84% in 2020.
• Selling expenses in 2021 increased by 28.3% to U.S. $ 62,286 from U.S. $ 48,541 in 2020.
• Administrative expenses in 2021 grew by 28.5% to U.S. $ 42,493 from U.S. $ 33,071 in 2020.
• EBITDA in 2021 amounted to U.S. $ 118,823 in comparison to U.S. $ 61,061 in 2020, a stunning
improvement of 94.6%.
• As a result of strong growth in revenues, gross profit and controlled expenses, in 2021 the net profit
after tax outstandingly improved by 111.1% to U.S. $ 77,067 in comparison to U.S. $ 36,515 in 2020.
We consider this as a remarkable and historical achievement for the Group - the highest net income in
ASBIS history.
Principal Factors Affecting Financial Condition and Results of Operations
In 2021, the Company’s results of operations have been affected and are expected to continue to be affected
by a number of factors.
Below we present all factors that have affected and continue to affect our business:
War between Russia and Ukraine and sanctions imposed on Russia and Belarus
War between Russia and Ukraine which are the two major markets for ASBIS is a key factor which will affect
our results. Despite the large geographical presence of the Group, it would not be possible to totally weather
the impact of a full-scale war between the two countries. The Company is well prepared to defend its position
considering the sanctions imposed on Russia and Belarus; however, the Company considers the situation
as critical and premature to be judged as to how it will evolve. We are strictly abiding with all sanctions that
the EU imposed, and we are making the utmost to support our Ukrainian colleagues and operations.
38
The pandemic situation with COVID - 19 update
A novel strain of coronavirus (“COVID
-
19”) does not stop, spreading rapidly throughout the world, prompting
governments and businesses to take unprecedented measures in response. Such measures included
restrictions on travel and business operations, temporary closures of businesses, and quarantines.
The COVID-19 pandemic has significantly affected the economies across the globe which has caused
significant disruptions to the overall economic environment.
We should bear in mind that the pandemic effects will continue to occur at all levels of demand (consumers,
corporations, governments, etc.) and may in the future materially and ad
versely impact the Company’s
business, results of operations and financial condition.
The Company closely monitors the evolution of this pandemic and has already undertaken certain measures
to weather the situation. Despite that the pandemic has not adversely affected our results so far, we are
ready to take more actions following any developments over this situation.
The in-country financial conditions affecting our major markets, gross profit and gross profit margin
Throughout the years of operation, the Company has from time to time suffered from specific in-country
problems, emanating from the deterioration of specific countries’ financial situation, due to a number of
issues including but not limited to political instability. We need to monitor any developments, react fast and
weather every risk showing up in a specific market to secure our results.
The Company needs to keep in mind that different in-country problems might arise at any time and affect
our operations. Even though we have improved our procedures, we cannot be certain that all risks are
mitigated.
Currency fluctuations
The Company’s reporting currency is the U.S. dollar. In 2021 approximately 50% of our revenues were
denominated in U.S. dollars, while the balance is denominated in Euro, Ruble, UAH, KZT and other
currencies, certain of which are linked to the Euro. Our trade payable balances are principally (about 80%)
denominated in U.S. dollars.
In addition, approximately half of our operating expenses are denominated in U.S. dollars and the other half
in Euro or other currencies, certain of which are linked to the Euro.
As a result, reported results are affected by movements in exchange rates, particularly in the exchange rate
of the U.S. dollar against the Euro and other currencies of the countries in which we operate, including the
Russian Ruble, the Ukrainian Hryvnia, the Czech Koruna, the Polish Zloty, the Croatian Kuna, the
Kazakhstani Tenge and the Hungarian Forint.
In particular, a strengthening of the U.S. dollar against the Euro and other currencies of the countries in
which we operate may result in a decrease in revenues and gross profit, as reported in U.S. dollars, and
foreign exchange loss relating to trade receivables and payables, which would have a negative impact on
our operating and net profit despite a positive impact on our operating expenses.
On the other hand, a devaluation of the U.S. dollar against the Euro and other currencies of the countries in
which we operate may have a positive impact on our revenues and gross profit, as reported in U.S. dollars,
which would have a positive impact on operating and net profit despite a negative impact on our operating
expenses. In addition, foreign exchange fluctuation between the U.S. dollar and the Euro or other currencies
of the countries in which we operate may result in translation gains or losses affecting foreign exchange
reserves.
Furthermore, a major devaluation or depreciation of any such currencies may result in a disruption in the
international currency markets and may limit the ability to transfer or to convert such currencies into U.S.
dollars and other currencies.
Despite all efforts of the Company, there can be no assurance that fluctuations in the exchange rates of the
Euro and/or other currencies of the countries in which we operate against the U.S. dollar will not have a
material adverse effect on our business, financial condition and results of operations. Therefore, careful
observation of the current environment remains a crucial factor for our success.
39
Competition and price pressure
The IT distribution industry is a highly competitive market, particularly with regards to products selection and
quality, inventory, price, customer services and credit availability and hence is open to margin pressure from
competitors and new entrants. The Company competes at the international level with a wide variety of
distributors of varying sizes, covering different product categories and geographic markets. In particular, in
each of the markets in which the Company operates it faces competition from:
1. International IT and CE distributors with presence in all major markets we operate
2. Regional IT and CE distributors who cover mostly a region but are quite strong
3. Strong local distributors who focus mostly on a single market but are very strong
4. International IT and mobile phones brokers, who sell opportunistically in any region and/or
country
Competition and price pressures from market competitors and new market entrants may lead to significant
reductions in the Company’s
sales prices.
Such pressures may also lead to a loss of market share in certain of the Group's markets. Price pressures
can have a material adverse effect on the Company’s profit margins and its overall profitability, especially
in view of the fact that its gross profit margins, like those of most of its competitors, are low and sensitive to
sales price fluctuations.
Low gross profit margins
The Company’s business is comprised of both a traditional distribution of third-party products and own
brand. This allows the Company to deliver healthier gross profit margins when conditions are favorable.
In the traditional distribution business, the Company’s gross profit margins, like those of other distributors
of IT products, are low and the Company expects that in the distribution arm of its business they will remain
low in the foreseeable future.
Increased competition arising from industry consolidation and low demand for certain IT products may hinder
the Company’s ability to maintain or improve its gross margins. A portion of the Company’s operating
expenses is relatively fixed, and planned expenditures are based in part on anticipated orders that are
forecasted with limited visibility of future demand. As a result, the Company may not be able to reduce its
operating expenses as a percentage of revenue to mitigate any reductions in gross margins in the future.
To increase gross margins, the Company has developed its own brand business, that allows for higher
gross profit margins. It has also invested in the VAD business which is also expected to deliver higher gross
profit margins
.
Inventory obsolescence and price erosion
The Company is often required to buy components and finished products according to forecasted
requirements and orders of its customers and in anticipation of market demand. The market for IT finished
products and components is characterized by rapid changes in technology and short product shelf life, and,
consequently, inventory may rapidly become obsolete. Due to the fast pace of technological changes, the
industry may sometimes face a shortage or, at other times, an oversupply of IT products.
As the Company increases the scope of its business and of inventory management for its customers, there
is an increasing need to hold inventory to serve as a buffer in anticipation of the actual needs of the
Company’s customers. This increases the risk of inventory becoming devalued or obsolete and could affect
the Company’s profits either because prices for obsolete products tend to decline quickly, or because of the
need to make provisions or even write-offs.
In an oversupply situation, other distributors may elect to proceed with price reductions to dispose of their
existing inventories, forcing the Company to lower its prices to stay competitive. The Company’s ability to
manage its inventory and protect its business against price erosion is critical to its success.
40
Several the Company’s most significant contracts with its major suppliers contain advantageous contract
terms that protect the Company against exposure to price fluctuations, defective products and stock
obsolescence.
Credit risk
The Company buys components and finished products from its suppliers on its own account and resells
them to its customers. The Company extends credit to some of its customers at terms ranging from 7 to 90
days or, in a few cases, to 120 days.
The Company’s payment obligations towards its suppliers under such agreements are separate and distinct
from its customers' obligations to pay for their purchases
, except in limited cases where the Company’s
arrangements with its suppliers require the Company to resell to certain resellers or distributors. Thus, the
Company is liable to pay its suppliers regardless of whether its customers pay for their respective purchases.
As the Company’s profit margin is relatively low compared to the total price of the products sold, in the event
where the Company is not able to recover payments from its customers, it is exposed to financial liquidity
risk. The Company has in place credit insurance which covers such an eventuality for most of its revenue.
Despite all efforts to secure our revenues, certain countries remained non-insured (Ukraine and Belarus)
therefore it is very important for us to ensure that we find other sources of securities that help us minimize
our credit risk. The Board of Directors decided to enhance the Company’s risk management procedures.
These do not guarantee that all issues will be avoided, however, they have granted the Company with
confidence that is in a position to weather any possible major credit issue that may arise.
Worldwide financial environment
The overall financial environment and the economic landscape of each country we operate in, always play
a significant role in our performance. The revised strategy and adaptation to the new environment, i.e., by
rebuilding our product portfolio, has paid off in terms of profitability and sales in the last three years.
However, there are many uncertainties about the world economy following turmoil in different countries, the
volatility of currencies and the fragility of demand in many markets. Additionally, from time to time,
unpredictable situations may happen in selected markets.
A recent example is the war between Ukraine and Russia. We believe that the Company is much more
flexible and better prepared to weather any obstacles that may arise due to the worldwide financial
environment, however a full-scale war between these two countries will have unprecedented consequences.
In addition to the above, recently it has been noticed that multiple raw materials and finished product prices
have risen dramatically, and this might significantly impact demand generation. This must be closely
monitored, and the Company is alerted to manage any market anomalies.
Seasonality
Traditionally the IT distribution industry in which the Company operates experiences high demand during
the months prior to and leading up to the Christmas and New Year holiday period. In particular, IT
distributors’ demand tends to increase in the period starting from September till the end of the year.
Development of own brand business
The Company’s strategy is to focus more on profitability than on revenues, thus we continue to develop the
own-brand business that allows for higher gross profit margins.
This includes the development of tablets and other product lines that are sold under Prestigio and Canyon
brands in all regions of the Company’s operations.
41
The Company has also invested in another own brand, Perenio - which includes sales of smart-home, smart-
security sensors and other products. The results from Perenio brand were not the ones we expected to see;
thus, we currently undertake certain corrective actions.
In 2021 the Company launched two new own brands: Lorgar - a brand of ultimate accessories for gamers
and AENO - a brand of smart home appliances.
In order to keep quality under control and achieve the maximum possible gross profit margins, the
Company’s Directors have decided to go under a back
-to-back scheme. This implies that orders are placed
with ODMs, only if they are in advance confirmed by customers.
The Company is undertaking a number of quality control measures to mitigate this risk but given the volumes
and a large number of factories used to produce these products, these controls might not be sufficient.
Moreover, competition has already been intensified and the Company may not be able to sustain its
profitability levels.
Despite the Company’s efforts, there can be no assurance of a similar development pace in the own
-brand
business in future periods. This is because there may be a significant change in market trends, customer
preferences or technology changes that may affect the development of own-brand business and, therefore,
its results.
Warranty claims from own brand products
The own-brand business requires us to put extra efforts to avoid any problems with the quality of devices.
Despite all our efforts, we cannot predict if consumers decide to return significant amounts of products.
This situation has much improved in previous years and in the course of the twelve months of 2021.
This risk has negatively affected our results in the past when certain ODMs have not honored their
contractual obligations on products with epidemic failure.
The Group is undertaking all possible steps towards ensuring proper provisions for all past and future sales.
The Group might be affected by changes in certifications and/or any other compliance matters from
countries we offer our private label products.
The high cost of debt
The distribution business entails a higher need for cash available to support growth. The Group has
managed to raise cash from various financial institutions, however, in certain cases, the cost of this financing
is expensive.
The Company has already negotiated improved terms with some of its supply-chain financiers and banks
and is currently undertaking certain extra steps to further lower its cost of financing.
Environmental and Climate Changes
In terms of transition risks that arise from the transition to a low-carbon and climate-resilient economy, we
may face the following risks: policy and legal risks (there may be laws or policies put in place that may
require a more environmentally cautious approach to raw materials and land use), technology risks (changes
in technology used to produce IT equipment) – these both may lead to growing prices in terms of IT
equipment and solutions.
We may also face market risk with consumers switching to more energy-efficient appliances or making more
savvy purchases to limit their own impact on the environment. We will monitor these trends and introduce
the latest hardware for our customers.
42
We may also face reputational risks with difficulties in attracting customers, business partners and
employees if we do not take strong enough actions against climate changes. In terms of physical risks
resulting from climate changes, we may face both acute and chronic risks.
Acute physical risks may arise from weather-related events in the form of floods, fires or droughts that may
damage factories in certain regions, cause factories to limit or temporarily stop their production or disrupt
our supply chain in other ways.
These may result in temporary limitations in our product offering or rising prices of hardware and
components. Chronic physical risks i.e., risks that may result from long-term changes in the climate, may
also affect ASBIS.
Growing temperatures worldwide may cause a need for more temperature-resilient hardware and
appliances and may also result in more hardware malfunctions that may increase warranty claims
.
Shortages of specific components in IT industry
Throughout the last quarters, and with the demand for IT products to rise significantly, there have been
shortages in the market of semiconductors and microchips. This might lead to higher cost price for multiple
products which will have an adverse effect on Group revenues.
The situation is expected to stabilize in the second half of 2022. The Group must take all necessary
measures to ensure constant supply of components and finished products to satisfy the demand from its
customers.
Financial position and results of operations / in U.S.$ thousand/
Year ended December 31, 2021, compared to year ended December 31, 2020
Revenues: Revenues in 2021 strongly increased by 30.1% to U.S. $ 3,077,976 from U.S. $ 2,366,441 in
2020.
The table below sets a breakdown of revenues, by product lines, for the years ended 31 December 2021
and 2020:
43
2021
2020
U.S.
$ thousand
% of total
revenues
U.S.
$ thousand
% of total
revenues
Smartphones
895,664
29.10%
684,482
28.92%
Central processing units
(CPUs)
441,968
14.36%
397,093
16.78%
PC mobile (laptops)
305,333
9.92%
177,967
7.52%
Hard disk drives (HDDs)
149,644
4.86%
153,793
6.50%
Peripherals
148,669
4.83%
104,494
4.42%
Audio devices
137,456
4.47%
115,839
4.90%
Solid
-
state drives (SSDs)
136,080
4.42%
89,443
3.78%
Servers & server blocks
119,608
3.89%
109,780
4.64%
PC desktop
76,589
2.49%
55,398
2.34%
Smart devices
72,735
2.36%
50,154
2.12%
Networking products
71,308
2.32%
60,077
2.54%
Software
69,331
2.25%
58,331
2.46%
Memory modules (RAM)
63,578
2.07%
47,049
1.99%
Display products
60,607
1.97%
44,483
1.88%
Tablets
59,266
1.93%
54,649
2.31%
Multimedia
58,204
1.89%
33,164
1.40%
Video cards and GPUs
54,503
1.77%
19,789
0.84%
Other
157,431
5.10%
110,454
4.67%
Total revenue
3,077,976
100%
2,366,441
100%
ASBIS remains the distributor of first choice for many worldwide suppliers. In 2021 the Company
continued its strategy to broaden its product portfolio and invest in brands which have been on top of the
technological trends. All changes in our product portfolio have to comply with our main focus, which is the
increase in margins and profitability.
During 2021, the majority of ASBIS’s product groups have noticed a significant growth on a year-on-year
basis.
44
The chart below indicates the trends in sales per product line:
In 2021 the main drivers for our strong growth in revenues were smartphones, CPUs and laptops.
On a year-on-year basis revenues from CPUs increased by 11.3% in 2021. Sales of HDDs declined by 2.7%
in 2021. Revenues from software increased by 18.9% in 2021. Laptop’s business increased by 71.6% in
2021. Revenues from SSDs increased by 52.1% in 2021.PC desktop business grew by 38.3% in 2021. The
tablet segment recorded an increase by 8.4% in 2021.
It is also worth mentioning that all” Other” product lines have noticed a super positive trend in 2021.
As regards our own brands, all of them have been selling well. As a result, our own brands significantly
contributed to both our revenues and profitability. The Company’s intention is to continue developing its own
brand sales to the extent they bring targeted gross margin and deliver healthy cash flow.
The chart below indicates the trends in smartphones sales:
Sales of smartphones, which contribute to the majority of our revenues increased by 30.9% in 2021, as
compared to 2020.
45
The table below presents a geographical breakdown of sales for the years ended 31 December 2021 and
2020:
2021
2020
U.S. $
thousand
% of total
revenues
U.S. $
thousand
% of total
revenues
Former Soviet Union
1,774,834
57.66%
1,289,513
54.49%
Central and Eastern Europe
654,117
21.25%
574,389
24.27%
Middle East and Africa
327,799
10.65%
279,419
11.81%
Western Europe
266,607
8.66%
171,104
7.23%
Other
54,619
1.78%
52,016
2.20%
Total
3,077,976
100%
2,366,441
100%
The table below presents a country-by-country breakdown of sales for our most important markets for the
years ended 31 December 2021 and 2020:
2021
2020
Country
Sales in U.S.
$ thousands
% of total
revenues
Country
Sales in U.S. $
thousands
% of total
revenues
1.
Russia 575,615
18.70%
Russia
434,334
18.35%
2.
Ukraine 475,303
15.44%
Ukraine
352,350
14.89%
3.
Kazakhstan
383,141
12.45%
Kazakhstan
248,381
10.50%
4.
United Arab
Emirates
219,940
7.15%
United Arab
Emirates
189,360
8.00%
5.
Slovakia
197,708
6.42%
Slovakia
177,063
7.48%
6.
Belarus 190,028
6.17%
Belarus
147,874
6.25%
7.
Czech Republic
107,577
3.50%
Czech Republic
85,934
3.63%
8.
The Netherlands
78,746
2.56%
Poland
71,164
3.01%
9.
Poland 77,981
2.53%
The Netherlands
66,795
2.82%
10.
Romania
64,067
2.08%
Romania
59,135
2.50%
11.
Other 707,870
23.00%
Other 534,051
22.57%
TOTAL 3,077,976
100.00%
TOTAL
2,366,441
100.00%
46
Gross Profit:
Gross profit in 2021 highly increased by 58.0% to U.S. $ 218,528 from U.S. $ 138,285 in
2020.
Gross profit margin (gross profit as a percentage of revenues): Gross profit margin in 2021 much
improved to 7.10% from 5.84% in 2020. This was a result of products shortages and the continuation of the
current Company’s strategy to mostly focus on high margin products and IT solutions.
Selling Expenses: largely comprise of salaries and benefits paid to sales employees (sales, marketing,
and logistics departments), marketing and advertising fees, commissions, and travelling expenses. Selling
expenses usually grow together (but not in-line) with growing sales and, most importantly, gross profit.
Selling expenses in 2021 increased by 28.3% to U.S. $ 62,286 from U.S. $ 48,541 in 2020.
Administrative Expenses: largely comprise of salaries and wages of administrative personnel.
Administrative expenses in 2021 increased by 28.5% to U.S. $ 42,493 from U.S. $ 33,071 in 2020.
47
EBITDA:
EBITDA in 2021 amounted to U.S. $ 118,823 in comparison to U.S. $ 61,061 in 2020 (an excellent
improvement of 94.6%).
Profit After Taxation: As a result of strong growth in gross profit and controlled expenses, in 2021, the net
profit after tax skyrocketed to U.S. $ 77,067 in comparison to U.S. $ 36,515 in 2020. This is a significant
111.1 % improvement year-on-year. We considered this as a remarkable and historical achievement for the
Group - the highest net income in ASBIS history.
Liquidity and Capital Resources
The Company has in the past funded its liquidity requirements, including ongoing operating expenses and
capital expenditures and investments, for the most part, through operating cash flows, debt financing and
equity financing. Cash flow for 2021 has been impacted by strong revenue growth, improved working capital
utilization and final and interim dividend payout. Nevertheless, cash from operations in 2021 was positive.
Nevertheless, the management team has managed to turn
h full ear cash from operations positive.
The following table presents a summary of cash flows for the twelve months ended December 31
st
, 2021,
and 2020 (in U.S. $ thousand):
Twelve months ended December 31
st
2021 2020
Net cash inflows from operating activities
41,367
42,175
Net cash outflows from investing activities
(15,029)
(4,755)
Net cash inflows/(outflows) from financing
activities
10,899
(2,043)
Net increase in cash and cash equivalents
37,237
35,377
48
Net cash inflows from operations
Net cash inflows from operations amounted to U.S. $ 41,367 for the twelve months of 2021, compared to
inflows of U.S. $ 42,175 in the corresponding period of 2020, an excellent achievement taking into
consideration revenue growth of 30%.
Net cash outflows from investing activities
Net cash outflows from investing activities were U.S. $ 15,029 for the twelve months of 2021, compared to
outflows of U.S. $ 4,755 in the corresponding period of 2020. This mainly relates to the acquisition of a new
building in Limassol.
Net cash inflows from financing activities
Net cash inflows from financing activities were U.S. $ 10,899 for the twelve months of 2021, compared to
outflows of U.S. $ 2,043 in the corresponding period of 2020.
Net increase in cash and cash equivalents
As a result of a higher profitability and increased working capital efficiency, in Q1-Q4 2021 cash and cash
equivalents have increased by U.S. $ 37,237 as compared to an increase of U.S. $ 35,377 in the
corresponding period of 2020.
Capital Resources
The Company’s management believe that the Company has ample resources to finance its operations, as
described in the audited financial statements attached to this annual report, going forward.
As at 31 December 2021, we had a total short-term and long-term debt (excluding amounts due to factoring
creditors and lease liabilities) of U.S. $ 103,947 (including U.S. $ 123 of current maturities due within one
year from 31st, December 2020), compared to U.S. $ 80,055 (including U.S. $ 523 of current maturities, as
at 31 December 2020).
The table below presents our principal debt facilities as at 31 December 2021:
Entity
Creditor
Type of, facilities
Credit limit
Currency
Rate
US$ Equivalent
Valid from
Valid till
ASBIS Middle
East FZE
NATIONAL BANK OF FUJAIRAH
Short Term
Loan/Revolving
Loan
20 000 000
AED
3,6700
5 442 177
26/12/2006
non term
ASBIS Middle
East FZE
MASHREQBANK PSC
Short Term
Loan/Revolving
Loan
6 000 000
AED
3,6700
1 632 653
30/12/2020
non term
ASBIS Middle
East FZE
NATIONAL BANK OF FUJAIRAH
Factoring with
recourse
15 000 000
AED
3,6700
4 081 633
26/12/2006
non term
ASBIS Middle
East FZE
NATIONAL BANK OF FUJAIRAH
Factoring with
recourse
3 000 000
AED
3,6700
816 327
08/02/2018
non term
ASBIS Middle
East FZE
MASHREQBANK PSC
Factoring with
recourse
6 000 000
AED
3,6700
1 632 653
30/12/2020
non term
ASBIS Middle
East FZE
MASHREQBANK PSC
Factoring with
recourse
4 000 000
AED
3,6700
1 088 435
30/12/2020
non term
ASBC MMC,
AZ
KAPITAL BANK
Short Term
Loan/Revolving
Loan
200 000
AZN
1,7000
117 647
07/06/2021
07/06/2022
ASBC MMC,
AZ
KAPITAL BANK
Overdraft
100 000
AZN
1,7000
58 824
25/07/2021
09/02/2022
ASBIS d.o.o.
(BA)
SBERBANK BH D.D.,
SARAJEVO
BGs/SBLCs
500 000
KM
1,7200
289 749
06/09/2018
03/02/2022
ASBIS d.o.o.
(BA)
RAIFFEISEN BANK D.D. BOSNA
I HERCEGOVINA
BGs/SBLCs
300 000
KM
1,7200
173 849
17/01/2020
31/12/2026
ASBIS d.o.o.
(BA)
ASA BANKA D.D. SARAJEVO
BGs/SBLCs
300 000
KM
1,7200
173 849
20/06/2019
31/12/2025
49
ASBIS d.o.o.
(BA)
SBERBANK BH D.D.,
SARAJEVO
Short Term
Loan/Revolving
Loan
1 150 000
KM
1,7200
666 423
06/09/2018
03/02/2022
ASBIS d.o.o.
(BA)
RAIFFEISEN BANK D.D. BOSNA
I HERCEGOVINA
Short Term
Loan/Revolving
Loan
1 000 000
KM
1,7200
579 498
17/01/2020
31/12/2021
ASBIS d.o.o.
(BA)
ASA BANKA D.D. SARAJEVO
Short Term
Loan/Revolving
Loan
500 000
KM
1,7200
289 749
10/12/2020
31/12/2025
ASBIS d.o.o.
(BA)
ASA BANKA D.D. SARAJEVO
Short Term
Loan/Revolving
Loan
700 000
KM
1,7200
405 649
04/12/2020
31/12/2025
ASBIS d.o.o.
(BA)
ASA BANKA D.D. SARAJEVO
Short Term
Loan/Revolving
Loan
1 000 000
KM
1,7200
579 498
21/04/2021
31/12/2025
ASBIS d.o.o.
(BA)
RAIFFEISEN BANK D.D. BOSNA
I HERCEGOVINA
Overdraft
300 000
KM
1,7200
173 849
17/01/2020
31/12/2022
ASBIS d.o.o.
(BA)
SBERBANK BH D.D.,
SARAJEVO
Overdraft
350 000
KM
1,7200
202 824
06/09/2018
03/02/2022
ASBIS
BULGARIA
EOOD
UNICREDIT BULBANK AD
Overdraft
5 000 000
BGN
1,7200
2 895 445
04/10/2021
31/08/2022
ASBIS
BULGARIA
EOOD
UNICREDIT BULBANK AD
Factoring with
recourse
2 000 000
BGN
1,7200
1 158 178
01/02/2021
31/07/2022
ASBIS
BULGARIA
EOOD
UNITED BULGARIAN BANK
(UBB)
Factoring with
recourse
1 300 000
BGN
1,7200
752 816
09/08/2021
09/08/2022
ASBIS
BULGARIA
EOOD
UNICREDIT BULBANK AD
Factoring with
recourse
700 000
BGN
1,7200
405 362
04/11/2021
31/07/2022
ASBIS Belarus
BANK DABRABYT JSC
Short Term
Loan/Revolving
Loan
4 500 000
USD
1,0000
4 500 000
18/02/2020
13/01/2022
ASBIS Belarus
CJSC VTB BANK (BELARUS)
Short Term
Loan/Revolving
Loan
2 170 000
BYN
2,5400
851 615
06/08/2021
05/08/2024
ASBIS Belarus
CJSC VTB BANK (BELARUS)
Short Term
Loan/Revolving
Loan
8 680 000
BYN
2,5400
3 406 460
06/08/2021
05/08/2024
ASBIS Belarus
BANK BELVEB OJSC
Short Term
Loan/Revolving
Loan
12 600 000
BYN
2,5400
4 944 861
25/10/2021
24/10/2024
ASBIS Belarus
BANK DABRABYT JSC
Short Term
Loan/Revolving
Loan
1 500 000
USD
1,0000
1 500 000
06/12/2021
05/12/2023
ASBIS Belarus
BANK DABRABYT JSC
Short Term
Loan/Revolving
Loan
4 500 000
USD
1,0000
4 500 000
30/12/2021
29/12/2023
ASBIS Belarus
BANK DABRABYT JSC
Overdraft
2 700 000
BYN
2,5400
1 059 613
03/03/2021
02/03/2022
ASBIS Belarus
BANK DABRABYT JSC
Factoring with
recourse
2 500 000
BYN
2,5400
981 123
24/04/2020
23/04/2022
ASBIS Belarus
PRIORBANK
Factoring with
recourse
3 000 000
BYN
2,5400
1 177 348
07/12/2020
02/02/2022
ASBIS Belarus
BANK DABRABYT JSC
Factoring without
recourse
2 000 000
BYN
2,5400
784 899
19/11/2020
18/11/2022
ASBC TUE, BY
CJSC VTB BANK (BELARUS)
Short Term
Loan/Revolving
Loan
2 150 000
BYN
2,5400
843 766
22/10/2019
22/08/2022
ASBC TUE, BY
CJSC VTB BANK (BELARUS)
Short Term
Loan/Revolving
Loan
62 000 000
RUB
74,2400
835 118
01/08/2020
22/08/2022
ASBC TUE, BY
BANK BELVEB OJSC
Overdraft
345 000
BYN
2,5400
135 395
14/02/2019
11/02/2022
ASBIS
KYPROS LTD
ANCORIA BANK LTD
Overdraft
100 000
EUR
0,8800
113 240
16/01/2017
non term
ASBIS
KYPROS LTD
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
Overdraft
500 000
EUR
0,8800
566 200
30/04/2021
01/05/2022
ASBIS
KYPROS LTD
BANK OF CYPRUS PLC-
FACTORING DIVISION
Factoring with
recourse
800 000
EUR
0,8800
905 920
19/06/2019
non term
ASBISC
Enterprises
PLC
BARCLAYS BANK PL
BGs/SBLCs
10 000 000
USD
1,0000
10 000 000
21/12/2015
non term
ASBISC
Enterprises
PLC
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
BGs/SBLCs
10 000 000
USD
1,0000
10 000 000
13/07/2020
15/04/2022
ASBISC
Enterprises
PLC
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
BGs/SBLCs
22 000 000
USD
1,0000
22 000 000
26/09/2020
25/09/2022
ASBISC
Enterprises
PLC
BANK OF
CYPRUS PUBLIC
COMPANY LIMITED
BGs/SBLCs
30 000
EUR
0,8800
33 972
22/05/2021
21/05/2022
50
ASBISC
Enterprises
PLC
VSEOBECNA UVEROVA BANKA
A.S (VUB, A.S.)
BGs/SBLCs
1 000 000
USD
1,0000
1 000 000
26/05/2021
25/05/2022
ASBISC
Enterprises
PLC
VSEOBECNA UVEROVA BANKA
A.S (VUB, A.S.)
BGs/SBLCs
5 000 000
USD
1,0000
5 000 000
23/08/2021
19/08/2022
ASBISC
Enterprises
PLC
SOCIETE GENERALE CYPRUS
LIMITED
BGs/SBLCs
5 000 000
USD
1,0000
5 000 000
05/10/2021
04/10/2022
ASBISC
Enterprises
PLC
CYPRUS
DEVELOPMENT
BANK PUBLIC COMPANY LTD
LCs
3 933 000
USD
1,0000
3 933 000
23/09/2010
non term
ASBISC
Enterprises
PLC
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
LCs
-
USD
1,0000
-
14/12/2021
non term
ASBISC
Enterprises
PLC
RAIFFEISEN
BANK
INTERNATIONAL AG
Overdraft
2 000 000
USD
1,0000
2 000 000
21/09/2020
non term
ASBISC
Enterprises
PLC
NATIONAL BANK OF GREECE
(CYPRUS) LTD
Overdraft
7 000 000
USD
1,0000
7 000 000
17/03/2021
16/03/2022
ASBISC
Enterprises
PLC
CYPRUS
DEVELOPMENT
BANK PUBLIC COMPANY LTD
Overdraft
-
USD
1,0000
-
31/03/2021
non term
ASBISC
Enterprises
PLC
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
Overdraft
10 400 000
USD
1,0000
10 400 000
30/04/2021
29/04/2022
ASBISC
Enterprises
PLC
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
Overdraft
500 000
EUR
0,8800
566 200
30/04/2021
29/04/2022
ASBISC
Enterprises
PLC
CYPRUS
DEVELOPMENT
BANK PUBLIC COMPANY LTD
Overdraft
5 000 000
EUR
0,8800
5 662 000
22/06/2021
non term
ASBISC
Enterprises
PLC
SOCIETE GENERALE CYPRUS
LIMITED
Overdraft
1 500 000
USD
1,0000
1 500 000
01/06/2021
non term
ASBISC
Enterprises
PLC
VSEOBECNA UVEROVA BANKA
A.S (VUB, A.S.)
Overdraft
8 000 000
USD
1,0000
8 000 000
08/11/2021
non term
ASBISC
Enterprises
PLC
BANK OF CYPRUS
PLC-
FACTORING DIVISION
Factoring with
recourse
18 000 000
USD
1,0000
18 000 000
21/07/2021
29/04/2022
ASBISC
Enterprises
PLC
FIMBANK PLC
Supply Chain
Financing/Reverse
Factoring
10 000 000
USD
1,0000
10 000 000
11/09/2019
non term
ASBISC
Enterprises
PLC
DEUTSCHE BANK TRUST
COMPANY AMERICAS
Supply Chain
Financing/Reverse
Factoring
21 500 000
USD
1,0000
21 500 000
10/04/2019
non term
ASBISC
Enterprises
PLC
ADFPEM
Supply Chain
Financing/Reverse
Factoring
13 000 000
USD
1,0000
13 000 000
19/11/2021
non term
ASBISC
Enterprises
PLC
ADF ALLIANZ GI
Supply Chain
Financing/Reverse
Factoring
7 000 000
USD
1,0000
7 000 000
19/11/2021
non term
ASBISC
Enterprises
PLC
ADF POSTFINANCE AG
Supply Chain
Financing/Reverse
Factoring
10 500 000
USD
1,0000
10 500 000
19/11/2021
non term
PRESTIGIO
PLAZA
LIMITED
BANK OF CYPRUS PUBLIC
COMPANY LIMITED
Overdraft
50 000
EUR
0,8800
56 620
30/04/2021
29/04/2022
ASBIS CZ spol
s r.o.
CESKOSLOVENSKA
OBCHODNI BANKA, A.S.
Short Term
Loan/Revolving
Loan
140 000 000
CZK
21,9500
6 377 842
11/06/2021
non term
ASBIS CZ spol
s r.o.
VSEOBECNA UVEROVA
BANKA, A.S.
Overdraft
2 000 000
EUR
0,8000
2 500 000
16/11/2020
non term
ASBIS CZ spol
s r.o.
CESKOSLOVENSKA
OBCHODNI BANKA, A.S.
Overdraft
45 000 000
CZK
21,9500
2 050 021
27/10/2021
non term
ASBC LLC,
GE
Ge119
TBC BANK
Overdraft
630 000
GEL
3,0900
203 383
28/10/2021
31/12/2022
ASBISc-CR
d.o.o.
OTP BANKA HRVATSKA D.D.
BGs/SBLCs
300 000
HRK
6,6400
45 157
05/07/2019
non term
ASBISc
-
CR
d.o.o.
ERSTE AND
STEIERMAERKISCHE BANK
D.D.
Short Term
Loan/Revolving
Loan
15 000 000
HRK
6,6400
2 257 830
07/09/2020
06/09/2022
ASBISc
-
CR
d.o.o.
ERSTE AND
STEIERMAERKISCHE BANK
D.D.
Short Term
Loan/Revolving
Loan
2 000 000
HRK
6,6400
301 044
01/11/2021
01/11/2022
ASBIS IT
Solutions
Hungary Kft.
CIB BANK LTD.
Overdraft
100 000 000
HUF
325,7100
307 022
28/06/2021
28/06/2022
ASBIS
KAZAKHSTAN
TOO
ALFA BANK JSC SB
BGs/SBLCs
500 000
USD
1,0000
500 000
01/03/2021
31/12/2021
51
ASBIS
KAZAKHSTAN
TOO
ALFA BANK JSC SB
BGs/SBLCs
500 000
USD
1,0000
500 000
07/04/2021
31/12/2021
ASBIS
KAZAKHSTAN
TOO
ALFA BANK JSC SB
Short Term
Loan/Revolving
Loan
1 600 000 000
KZT
431,6700
3 706 535
30/10/2020
30/10/2023
ASBIS
KAZAKHSTAN
TOO
ALFA BANK JSC SB
Factoring with
recourse
16 400 000 000
KZT
431,6700
37 991 985
30/10/2020
30/10/2023
ASBIS
BALTICS SIA
OP CORPORATE BANK PLC
LATVIA BRANCH
Overdraft
3 300 000
EUR
0,8800
3 737 580
01/09/2021
31/08/2022
ASBIS
BALTICS SIA
OP CORPORATE BANK PLC
LATVIA BRANCH
Factoring without
recourse
1 088 000
EUR
0,8800
1 232 269
26/10/2021
non term
ASBIS
POLAND Sp. z
o.o.
CREDIT AGRICOLE BANK
POLSKA S.A.
BGs/SBLCs
1 000 000
USD
1,0000
1 000 000
11/05/2016
18/05/2022
ASBIS
POLAND Sp. z
o.o.
CREDIT AGRICOLE BANK
POLSKA S.A.
Overdraft
4 000 000
PLN
4,0600
984 470
01/08/2021
30/06/2022
ASBIS
POLAND Sp. z
o.o.
BANK OCHRONY
SRODOWISKA S.A. (BOS S.A.)
Overdraft
4 400 000
PLN
4,0600
1 082 917
01/08/2021
14/06/2022
ASBIS
ROMANIA SRL
ALPHA BANK ROMANIA SA
Short Term
Loan/Revolving
Loan
17 000 000
RON
4,3700
3 889 537
15/09/2019
15/11/2022
ASBIS
ROMANIA SRL
BRD
- GROUPE SOCIETE
GENERALE SA
Short Term
Loan/Revolving
Loan
5 000 000
RON
4,3700
1 143 982
13/07/2021
12/07/2022
ASBIS
ROMANIA SRL
BRD - GROUPE SOCIETE
GENERALE SA
Factoring without
recourse
1 500 000
RON
4,3700
343 194
14/12/2017
non term
ASBIS
ROMANIA SRL
BRD - GROUPE SOCIETE
GENERALE SA
Factoring without
recourse
1 000 000
RON
4,3700
228 796
24/10/2016
non term
ASBIS
ROMANIA SRL
BRD - GROUPE SOCIETE
GENERALE SA
Factoring without
recourse
6 000 000
RON
4,3700
1 372 778
03/11/2020
non term
ASBIS
ROMANIA SRL
BRD - GROUPE SOCIETE
GENERALE SA
Factoring without
recourse
16 000 000
RON
4,3700
3 660 741
10/12/2020
non term
ASBIS d.o.o.
ADDIKO BANK A.D. BEOGRAD
BGs/SBLCs
40 000 000
CSD
103,9200
384 889
30/06/2020
30/06/2023
ASBIS d.o.o.
EUROBANK AD
BGs/SBLCs
25 000 000
CSD
103,9200
240 555
05/03/2021
05/03/2022
ASBIS d.o.o.
EUROBANK AD
Long Term Loan
50 000 000
CSD
103,9200
481 111
03/06/2020
03/06/2023
ASBIS d.o.o.
UNICREDIT BANK SRBIJA AD
BEOGRAD
Short Term
Loan/Revolving
Loan
58 789 890
CSD
103,9200
565 689
01/03/2021
16/02/2022
ASBIS d.o.o.
ADDIKO BANK A.D. BEOGRAD
Short Term
Loan/Revolving
Loan
35 000 000
CSD
103,9200
336 777
15/09/2021
15/09/2022
ASBIS d.o.o.
ADDIKO BANK A.D. BEOGRAD
Overdraft
15 000 000
CSD
103,9200
144 333
15/09/2021
15/09/2022
Asbis OOO
SBERBANK
Short Term
Loan/Revolving
Loan
350 000 000
RUR
74,2900
4 711 102
08/07/2021
07/07/2023
Asbis OOO
SBERBANK
Overdraft
650 000 000
RUR
74,2900
8 749 189
17/05/2021
07/05/2023
Asbis OOO
MTS BANK
Factoring with
recourse
120 000 000
RUR
74,2900
1 615 235
06/09/2019
non term
Asbis OOO
ABSOLUT FACTORING LIMITED
COMPANY
Factoring with
recourse
150 000 000
RUR
74,2900
2 019 044
27/03/2020
non term
Asbis OOO
ABSOLUT FACTORING LIMITED
COMPANY
Factoring with
recourse
55 000 000
RUR
74,2900
740 316
01/01/2021
non term
Asbis OOO
ABSOLUT FACTORING LIMITED
COMPANY
Factoring with
recourse
400 000 000
RUR
74,2900
5 384 116
25/02/2021
non term
Asbis OOO
NATIONAL FACTORING
COMPANY (NFK)
Factoring with
recourse
200 000 000
RUR
74,2900
2 692 058
15/11/2021
non term
Asbis OOO
ZENIT BANK
Factoring without
recourse
400 000 000
RUR
74,2900
5 384 116
25/09/2018
non term
Asbis OOO
OFISMARKET LLC
Factoring without
recourse
100 000 000
RUR
74,2900
1 346 029
01/01/2021
non term
Asbis OOO
SBERBANK
Factoring without
recourse
70 000 000
RUR
74,2900
942 220
01/01/2021
non term
Asbis OOO
SBERBANK
Factoring without
recourse
20 000 000
RUR
74,2900
269 206
01/01/2021
non term
Asbis OOO
SBERBANK
Factoring without
recourse
168 000 000
RUR
74,2900
2 261 329
08/03/2021
non term
Asbis OOO
RAIFFEISENBANK ZAO
Factoring without
recourse
235 000 000
RUR
74,2900
3 163 168
29/05/2021
non term
Asbis OOO
SBERBANK
Factoring without
recourse
2 000 000 000
RUR
74,2900
26 920 582
01/09/2021
non term
Asbis OOO
ST.-PETERSBURG FACTORING
COMPANY LTD
Factoring without
recourse
50 000 000
RUR
74,2900
673 015
01/09/2021
non term
Asbis OOO
ST.-PETERSBURG FACTORING
COMPANY LTD
Factoring without
recourse
240 000 000
RUR
74,2900
3 230 470
01/09/2021
non term
52
Asbis OOO
ST.-PETERSBURG FACTORING
COMPANY LTD
Factoring without
recourse
20 000 000
RUR
74,2900
269 206
15/11/2021
non term
Asbis OOO
PJSC ROSBANK
Factoring without
recourse
200 000 000
RUR
74,2900
2 692 058
01/11/2021
non term
Asbis OOO
SBERBANK
Factoring without
recourse
600 000 000
RUR
74,2900
8 076 174
29/11/2021
non term
Asbis OOO
RAIFFEISENBANK ZAO
Supply Chain
Financing/Reverse
Factoring
500 000 000
RUR
74,2900
6 730 145
01/11/2021
30/09/2024
Limited
company
"MUST" (New)
SBERBANK
Overdraft
980 000 000
RUR
74,2900
13 191 085
24/09/2021
19/09/2022
Limited
company
"MUST" (New)
SBERBANK
Factoring without
recourse
50 000 000
RUR
74,2900
673 015
22/09/2021
non term
Limited
company
"MUST" (New)
RAIFFEISENBANK ZAO
Supply Chain
Financing/Reverse
Factoring
150 000 000
RUR
74,2900
2 019 044
23/11/2021
22/11/2022
ASBIS Slovenia
ADDIKO BANK D.D.
Short Term
Loan/Revolving
Loan
300 000
EUR
0,8800
339 712
30/11/2021
25/11/2022
ASBIS SK spol.
s r. o.
TATRA BANKA A.S.
Overdraft
20 000 000
EUR
0,8800
22 668 000
03/12/2019
31/10/2022
ASBIS SK spol.
s r. o.
VSEOBECNA UVEROVA BANKA
A.S (VUB, A.S.)
Overdraft
20 000 000
EUR
0,8800
22 668 000
04/11/2019
31/10/2022
Asbis
-
Ukraine
ltd
CREDIT AGRICOLE BANK PJSC
Short Term
Loan/Revolving
Loan
138 750 000
UAH
27,2700
5 086 479
01/05/2021
29/04/2022
Asbis
-
Ukraine
ltd
TASCOMBANK JSC
(FORMERLY BANK BUSINESS
STANDARD)
Short Term
Loan/Revolving
Loan
150 000 000
UAH
27,2700
5 498 897
19/05/2021
03/06/2022
Asbis
-
Ukraine
ltd
FIRST UKRAINIAN
INTERNATIONAL BANK
Short Term
Loan/Revolving
Loan
50 000 000
UAH
27,2700
1 832 966
14/05/2021
03/05/2024
Asbis
-
Ukraine
ltd
JOINT
-STOCK
COMPANY OTP
BANK
Short Term
Loan/Revolving
Loan
100 000 000
UAH
27,2700
3 665 931
01/08/2021
21/07/2026
Asbis
-
Ukraine
ltd
PRAVEX
-BANK JOINT-
STOCK
COMPANY COMMERCIAL BANK
Short Term
Loan/Revolving
Loan
253 316 000
UAH
27,2700
9 286 390
04/08/2021
04/08/2024
Asbis
-
Ukraine
ltd
RAIFFEISEN BANK
Short Term
Loan/Revolving
Loan
157 500 000
UAH
27,2700
5 773 841
01/09/2021
01/06/2022
Asbis
-
Ukraine
ltd
JSC «ALFA-BANK»
Short Term
Loan/Revolving
Loan
350 000 000
UAH
27,2700
12 830 759
29/11/2021
31/12/2025
Asbis
-
Ukraine
ltd
BANK PIVDENNYI
Short Term
Loan/Revolving
Loan
75 000 000
UAH
27,2700
2 749 448
24/11/2021
31/03/2022
Asbis-Ukraine
ltd
JOINT-STOCK COMPANY OTP
BANK
Overdraft
30 000 000
UAH
27,2700
1 099 779
02/09/2020
21/07/2026
Asbis-Ukraine
ltd
FIRST UKRAINIAN
INTERNATIONAL BANK
Factoring with
recourse
20 000 000
UAH
27,2700
733 186
21/03/2019
27/10/2023
Asbis-Ukraine
ltd
JOINT-STOCK COMPANY OTP
BANK
Factoring with
recourse
250 000 000
UAH
27,2700
9 164 828
30/11/2020
21/07/2026
Asbis-Ukraine
ltd
FIRST UKRAINIAN
INTERNATIONAL BANK
Factoring with
recourse
135 000 000
UAH
27,2700
4 949 007
02/09/2021
27/10/2023
Asbis
-
Ukraine
ltd
TASCOMBANK JSC
(FORMERLY BANK BUSINESS
STANDARD)
Factoring with
recourse
249 900 000
UAH
27,2700
9 161 162
01/09/2021
03/06/2022
Capital Expenditure
Our total capital expenditure for tangible and intangible assets amounted to U.S. $ 16,448 for the year 2021,
compared to U.S. $ 4,416 for the year 2020.
Commitments and contingencies
Commitments and contingencies are presented in the audited financial statements included elsewhere in
this annual report.
53
Critical Accounting Policies
The preparation of our financial statements under IFRS requires Management to select and apply certain
accounting policies that are important to the presentation of our financial condition and results of operations.
Certain of our accounting policies have been identified as critical accounting policies. A "critical accounting
policy" is one that both (i) is significant to our financial condition and results of operations (in that the
application of a different accounting principal or changes in related estimates and assumptions that
Management could reasonably have used or followed would have a material impact on our financial
condition and results of operations) and (ii) requires difficult, complex or subjective analysis to be made by
Management based on assumptions determined at the time of analysis.
Our accounting policies are reviewed on a regular basis and Management believe that the assumptions and
estimates made in the application of such policies for the purposes of preparing our financial statements are
reasonable; actual amounts and results, however, could vary under different methodologies, assumptions
or conditions. Our accounting policies and certain critical accounting estimates and judgments with respect
to the preparation of our financial statements are described in Note 2 to the financial statements included
elsewhere in this annual report.
Financial forecast for the year 2022
The Company decided to postpone the announcement of its official financial forecast for 2022, for May 2022.
Given the situation and the current unstable environment, the Board of Directors considers it more prudent
to come out in early May to share its forecast with its stakeholders.
ITEM 4. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Board of Directors
The Board of Directors is responsible for formulating, reviewing, and approving our strategy, budgets, and
corporate actions. We intend to hold Board of Directors meetings at least four times each financial year and
at other times as and when required.
The following table sets out our current Directors:
Name
Year of
Birth
Position
Appointed to the Board
Expiry of term
Nationality
Siarhei Kostevitch
1964
Chairman,
Chief Executive Officer
30 August 1999 2023
Cypriot
Marios Christou
1968
Chief Financial Officer
28 December 2001
2023
Cypriot
Constantinos Tziamalis
1975
Deputy CEO of ASBIS
Group
23 April 2007 2022
Cypriot
Julia Prihodko
1982
Chief Human Relations
Officer
7 May 2021 2022
Ukrainian
Tasos A.
Panteli
1976
Non
-
Executive Director
18 April 2019 2024
Cypriot
Maria Petridou
1977
Non
-
Executive Director
29 March 2021 2024
Cypriot
54
The biographical details of the members of our Board of Directors are set out below:
Siarhei Kostevitch,
born in 1964, holds a
master’s
degree in radio engineering design from the Radio
Engineering University of Minsk (1987). Between 1987 and 1992, Siarhei worked as a member of the
Research Center at the Radio Engineering University in Minsk, where he published a series of articles on
microelectronics design in local and worldwide specialist magazines. In 1990, Siarhei established a design
and manufacturing business in Minsk, Belarus, and within 15 years has built it into the leading computer
component distributor in Eastern Europe and the Former Soviet Union. Siarhei is the Chairman and the
CEO of the Group.
Marios Christou
, born in 1968, holds a B.A., dual major in Accounting and Information Systems and
Economics, from Queens College of the City University of New York (C.U.N.Y.) (1992), and an M.B.A. in
International Finance from St. John's University, New York (1994). Marios is also a Certified Public
Accountant (CPA) and a member of the American Institute of Certified Public Accountants (AICPA). Marios
worked with Deloitte & Touche Limassol, Cyprus, for four years, as an audit manager. Marios then worked
as a Financial Controller at Photos Photiades Breweries Ltd (part of the Carlsberg Group of companies) for
three years. Marios joined the Company in August 2001 and is the Chief Financial Officer.
Constantinos Tziamalis
, born in 1975, holds a B.Sc. in Banking and Financial Services (1998) and a Masters
(M.Sc.) in Finance (1999) from the University of Leicester. Constantinos Tziamalis worked at the private
banking department of BNP Paribas in Cyprus and then joined a brokerage house, Proteas Asset
Management Limited, for 3 years as Investor Accounts Manager. Constantinos joined the Company in
January 2002 as Financial Project Manager.
He was promoted to the position as Corporate Credit Controller & Investor Relations in March 2003 and
became Director of Risk and Investor Relations as of 23 April 2007. In January 2010 Constantinos has been
also appointed as head of the FX Risk Management team. In February 2022, he was nominated to the newly
created position of Deputy CEO of ASBIS Group.
Julia Prihodko, born in 1982, holds a Masters (M.Sc.) in Psychology. Julia Prihodko started her career in a
Ukrainian recruiting agency as a Recruiting Manager, held the position of Head of HR Department at “NOVA”
Insurance Company and Investment Consulting Center for 2 years, and worked for PJSC "Insurance
Company" Alfa Insurance" (part of the European private investment holding company ABH Holdings S.A.
(ABHH)) for 7 years as Head of Human Resources Department. Julia joined the Company in May 2015 as
Human Relation Manager of ASBIS Ukraine. She was promoted to the position of Chief Human Relations
Officer in February 2019. On the 7
th
of May 2021, Julia Prihodko was appointed to the Board of Directors as
an Executive Director.
Mr. Tasos A.Panteli joined the Group in 2019. Tasos started his professional career at Nicos Chr.
Anastasiades & Partners (Advocates – Legal Consultants), holding the position of Advocate in 2001. Since
2005, Tasos has been working at Andreas M. Sofocleous & Co LLC (Advocates – Legal Consultants) as
Advocate (Advocate - Partner since 2010). He received a Bachelor of Laws (LLB) from the Queen Mary and
Westfield College (1999), a Postgraduate Diploma in Legal Skills from the City University London, Inns of
Court School of Law (2000). In the same year, he completed the Bar Vocational Course at the City University
London, Inns of Court School of Law and was Called to the Bar. In 2001 he received a Master of Laws (LLM)
from the King’s College London. In 2002 he was admitted to the Cyprus Bar Association. He is a member
of the Board of Directors of Cyprus Hydrocarbons Company (CHC) Ltd, a member of the Cyprus Bar
Association and a member of the Honourable Society of Lincoln’s Inn (Barrister at Law). Tasos is one of the
two Non-Executive Directors of the Company.
Mrs. Maria Petridou joined the Group in 2021. She started her professional career at KPMG Metaxas,
Loizides, Syrimis (Limassol, Cyprus), holding the position of Audit Supervisor (1998-2002). Since 2002 Mrs.
Maria Petridou has worked at EFG EUROBANK SA (Athens, Greece) as an Assistant Manager at Finance
and Control Department. Between 2006 and 2007 she has worked for KOMMUNALKREDIT
INTERNATIONAL BANK LTD (Limassol, Cyprus) as a Manager at Accounting Department. Since 2008 she
has held the position of Finance Lead, SOX Compliance Office at MF GLOBAL LIMITED (London, UK).
Between 2011 and 2012 she has worked for Versatile Apparel Ltd (London, UK), holding the position of
Finance Director. Since 2013 she has worked as a Head of Fund Administration Services for AMF Horwath
DSP (Limassol, Cyprus).
55
Between 2016 and 2018 she has been engaged in accounting and financial services projects as a
consultant. Since 2018 she has held the position of Chief Accountant at Agri Europe Cyprus Limited.
Mrs. Maria Petridou received a Bachelor of Arts in accounting and financial management (1998) and was
awarded an Upper Second-Class Honours degree at UNIVERSITY OF ESSEX (Colchester, England). She
is a member of the Institute of Chartered Accountants in England and Wales (ICAEW).
Directors’ remuneration
Unless determined by ordinary resolution, the number of Directors shall be not less than three and there
shall be no maximum number of Directors.
Subject to our Articles of Association, we may by ordinary resolution appoint a person who is willing to act
as a Director, either to fill a vacancy or as an addition to the existing Board of Directors.
The remuneration of the Directors will from time to time be determined by the general meeting on the
recommendation of the remuneration committee.
Any Director performing special or extraordinary services in the conduct of our business or in discharge of
his or her duties as Director, or who travels or resides abroad in discharge of his or her duties as Director
may be paid such extra remuneration as determined by the Directors, upon recommendation by the
remuneration committee.
Executive Directors are also entitled to receive a bonus every quarter depending upon quarterly results. The
bonus consists of a certain amount or percentage which is agreed and described in each Director’s service
agreements or contracts, as applicable, however, Directors only receive such a bonus to the extent profit
meets certain pre-set budgetary figures. All such bonus amounts are included in the remuneration tables
set forth below.
56
The following table presents the remuneration (including bonuses) of Directors for the years ended 31
December 2021 and 2020, in U.S.$:
Name of the
director, Position
Year
1
Fixed remuneration
2
Variable remuneration
3
Extraordinary
items
4
Provident
Fund
5
Total
remuneration
Basic
Fees
Fringe
benefits
One-year
variable
Multi-year
variable
Siarhei
Kostevitch,
Chairman,
Executive
(Chief Executive
Officer)
2020
138
367
15
4
524
2021
228
851
0
7
1,086
Marios Christou,
Executive
(Chief Financial
Officer)
2020
90
7
61
3
161
2021
138
115
0
4
257
Costas Tziamalis,
Executive
(Deputy CEO of
ASBIS Group)
2020
90
7
61
3
161
2021
138
120
0
4
262
Yuri Ulasovich,
Executive
(Chief Operating
Officer)
2020
135
0
61
4
200
2021
43
4
0
1
48
Demos Demou,
Non-
executive
(Non-
executive
Director)
2020
14
0
0
0
14
2021
7
0
0
7
Tasos Panteli,
Non-
executive
(Non-
executive
Director)
2020
14
0
0
0
14
2021
14
0
0
0
14
Julia Prihodko
Executive
(Chief Human
Relations Officer)
2020
2021
31
20
0
1
52
Maria Petridou
Non-
executive
(Non-
executive
Director)
2020
2021
11
0
0
0
11
Information about non-financial remuneration components due to each board member and key
manager
Executive members of the Board of Directors are entitled to a car, phone, and medical insurance.
Significant amendments of the remuneration policy in the last financial year or information about
their absence.
During 2021, there were no significant changes in the Company’s remuneration policy.
Assessment of the implementation of the remuneration policy
The Board of Directors positively evaluates the functioning of the remuneration policy from the point of view
of achieving its objectives, in particular, the long-term shareholder value growth and the stability of the
Company's operations.
57
Shares ownership
The table below presents the beneficial interests of Directors in the Company’s issued share capital as at
the date of the publication of this annual report:
Name
Number of Shares
% of the share capital
Siarhei Kostevitch (directly and
indirectly) *
20,448,127 36.84%
Constantinos Tziamalis
556,600
1.00%
Marios Christou
463,061
0.83%
Julia Prihodko
0
0%
Tasos A. Panteli
0
0%
Maria Petridou
0
0%
* Siarhei Kostevitch holds shares as the ultimate beneficial owner of KS Holdings Ltd.
To the best of the Company's knowledge, the members of the Board of Directors do not have any rights to
the Company’s shares.
During 2021, Mr. Constantinos Tziamalis purchased 1,150 of ASBIS shares.
In 2022 Mr. Siarhei Kostevitch and Mr. Constantinos Tziamalis purchased 5,000 and 450 of ASBIS shares
respectively.
Committees
The Audit Committee of the Company was comprising Tasos A. Panteli and Maria Petridou (both non-
executive Directors) and Marios Christou (as attending member) and is chaired by Maria Petridou. The Audit
Committee meets at least twice a year. The Audit Committee is responsible for ensuring that the Group’s
financial performance is properly monitored, controlled, and reported. It also meets the auditors and reviews
reports from the auditors relating to accounts and internal control systems. The Audit Committee meets at
least once a year with the auditors.
The Remuneration Committee of the Company was comprising Tasos A. Panteli and Maria Petridou (both
non-executive Directors) and Siarhei Kostevitch (as attending member) and is chaired by Tasos A. Panteli.
It sets and reviews the scale and structure of the executive Directors’ remuneration packages, including
share option schemes and terms of their service contracts.
The remuneration and the terms and conditions of the non-executive Directors are determined by the
Directors with due regard to the interests of the Shareholders and the performance of the Group. The
Remuneration Committee also makes recommendations to the Board concerning the allocation of share
options and/or treasury stock allocation to directors, managers and employees of the Company.
Changes in main management rules
There were no changes to main management rules in 2021.
58
List of all agreements signed with directors that gives the right to compensation in a case the person
resigns or is fired
There were no changes in the service agreements of any of the directors.
Information about ownership of shares of any related parties - owned by the Directors
None of our Directors holds shares of any of our subsidiary companies, other than disclosed.
Employees
During 2021, we had an average 2,079 employees, of whom 167 were employed by the Company and the
remainder in the rest of the Company’s offices worldwide
.
The split of employees by area of activity in 2021 and 2020 is as follows:
2021
2020
Sales and Marketing
1,093
954
Administration and IT
358
343
Finance
197
179
Logistics
431
361
Total
2,079
1,837
ITEM 5. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
The following table presents shareholders possessing more than 5% of our shares as of the date of
publication of this report, according to our best knowledge. The information included in the table is based
on the information received from the shareholders pursuant to Art. 69, sec. 1, point 2 of the Act on Public
Offering, conditions governing the introduction of financial instruments to organized trading and public
companies.
Name
Number of shares
% of the
share capital
Number of votes
% of
votes
KS Holdings Ltd*
20,448,127
36.84%
20,448,127
36.84%
Free-float
35,051,873
63.16%
35,051,873
63.16%
TOTAL
55,500,000
100%
55,500,000
100%
*Siarhei Kostevitch holds shares as the ultimate beneficial owner of KS Holdings Ltd
Information on the disposal program of the treasury shares:
In 2021, ASBIS sold all 325,389 of own shares, representing 0.59% of share capital and giving 325,389
votes (0.59%) at the General Meeting of Shareholders. These shares have been purchased on the Warsaw
Stock Exchange, on an average of PLN 2,52 per share. ASBIS sold these shares to key, selected
employees for the average price of PLN 5.0 per share.
Besides the above-mentioned sales of the treasury shares, there were no changes in the number of shares
possessed by major shareholders in 2021.
59
Related Party Transactions
During the year ended 31 December 2021, the Company did not have any material related party transaction
other than typical or routine transactions. For the ordinary course of business transactions, please refer to
the notes on the audited financial statement attached on this annual report.
In the year 2021, a number of transactions have occurred between the Company and its subsidiaries and
between our subsidiaries. In our opinion, all of these transactions were based on terms that did not vary
from market terms and their nature and conditions resulted from ongoing needs and operations of the
Company and of the Group, such as contracts related to the purchases of goods for onward distribution to
external clients. All of these transactions and related outstanding balances were eliminated in the Financial
Statements included in this Annual Report and, as a result, did not have any impact on our consolidated
financial results and on our financial position as a whole.
ITEM 6. FINANCIAL INFORMATION
Legal Proceedings
Currently, there are no legal significant proceedings pending against us or any of the members of our Group.
Information on loans granted to any other party
During the year ended 31
st
December 2021, we have not granted any loan to any other party other than to
our subsidiaries which are disclosed in another part of this report (audited financial statements).
Information on granted guarantees
We grant certain guarantees to some of our vendors and to certain customs authorities. All our guarantees
are reported in the financial statements section of this annual report.
The total corporate guarantees the Company has issued, as at December 31st, 2021, to support its
subsidiaries’ local financing, amounted to U.S.$ 230.835
The total bank guarantees and letters of credit raised by the Group (mainly to Group suppliers) as at
December 31st, 2021, was U.S.$ 60.275 – as per note number 17 to the financial statements.
Evaluation of financial resources management (including the ability to pay back commitments) and
information about actions undertaken to avoid risks
This has been discussed in note 32 of our financial statements to this annual report under the headline
Financial Risk management.
Evaluation of the possibility of realization of investment intentions
The Company has completed almost all of its current investments in prior years and in 2022 intends to
mainly grow organically, therefore there is low risk connected with the realization of current investment
intentions.
60
Characteristics of the structure of assets and liabilities in the consolidated balance sheet including
characteristics from the point of view of Company liquidity
The structure of assets and liabilities in the balance sheet including characteristics from the point of view
of the Company’s liquidity has been discussed in detail in the financial statements included in this a
nnual
report:
a) note 14 - Trade receivables - Ageing analysis of receivables
b) note 32
–
Financial risk management
–
point 1.3. Liquidity risk
Information about the structure of main deposits and capital investments in 2021
There were no deposits other than those disclosed as pledged deposits in the financial statements to this
annual report.
There were no other capital investments than the ones disclosed in note 10 of the financial statements
included in this annual report.
Information about relevant off-balance sheet positions as at December 31
st
, 2021
There were no relevant off-balance sheet positions as at December 31
st
, 2021, other than Bank Guarantees
disclosed in note 17 of the audited financial statements.
DIVIDEND POLICY
Our dividend policy is to pay dividends at levels consistent with our growth and development plans while
maintaining a reasonable level of liquidity.
On the 5
th
of May 2021, the Annual General Meeting of Shareholders adopted a resolution on a final dividend
payment for the year ended December 31
st
, 2020, amounting to USD 0.20 per share and USD 11,100,000
in total, in line with the recommendation of the Company’s Board of Directors. The Annual General Meeting
has also acknowledged the decision of the Board of Directors to approve an interim dividend of USD
5,550,000, paid in December 2020. Thus, the total dividend payment from the Company's profit for 2020
amounted to U.S.$ 0.30 per share which meant a total payment of USD 16,650,000.
On November 3
rd
, 2021, the Board of Directors decided on the payment of an interim dividend from the
Company’s 2021 profits. The interim dividend of US$ 0.20 per share (a total payment of USD 11,100,000)
was paid out on December 2
nd
, 2021.
Any future dividends will be solely at the discretion of the Board of Directors and the General Meeting of
shareholders after considering various factors, including business prospects, future earnings, cash
requirements, financial position, expansion plans and requirements of the Cyprus law.
The Cyprus law does not limit dividends that may be paid out except that it states that dividends may only
be paid out of profits and may not be higher than those recommended by the Board of Directors.
Throughout recent years the Group has always followed a steady Dividend Policy, by not paying anything
more than 50% of the profitability of the precedent year.
Significant Contracts
During 2021 neither the Company nor any of the members of our Group have concluded any significant
contracts.
61
PART II
ITEM 7. PRINCIPAL ACCOUNTANT FEES AND SERVICES
We enter into agreements with our principal auditors, KPMG Limited, as well as other auditors of Group
companies, to review interim (period ending the 30
th
of June) and audit annual financial statements (fiscal
year ending 31 December).
The last agreement has been signed on the 13
th
of January 2022.
The following table presents a summary of accountant fees and services for the twelve months ended
December 31, 2021, and 2020:
(U.S. $)
2021
2020
Auditors’ fees regarding annual report
(1)
Auditors’
fees regarding other approval services
Auditors’
fees for tax advisory
Auditors’ fees for other services
437
0
19
6
432
0
3
5
Total fees
462
440
(1)
Positions in the table include fees and expenses for certain services (i.e., in relation to reviews and audits of financial statements)
for the periods covered by the fiscal year, notwithstanding when the fees and expenses were billed.
ITEM 8. ASBISC ENTERPRISES PLC STATEMENT ON NON-FINANCIAL INFORMATION FOR THE
YEAR 2021
According to art. 55.2b of the Polish Bill of Accounting (which implements the 2014/95/EU Directive into
Polish law), ASBISc Enterprises Plc presents separately a consolidated report on non-financial information
for Y2021.
The report includes all non-financial information regarding the ASBISc Enterprises Plc Group in the period
from January 1 to December 31, 2021.
The report is available at the Company website http://investor.asbis.com/csr-reports
Signatures:
……………………………………………………
Siarhei Kostevitch
Chairman, Chief Executive Officer
Member of the Board of Directors
......................................................................
Marios Christou
Chief Financial Officer
Member of the Board of Directors
62
.......................................................................
Constantinos Tziamalis
Deputy CEO of ASBIS Group
Member of the Board of Directors
.......................................................................
Julia Prihodko
Chief Human Relations Officer
Member of the Board of Directors
63
ITEM 9. MANAGEMENT REPRESENTATIONS
In accordance with the requirements of the Decree of the Minister of Finance of March 29th, 2018, on current
and periodic information to be published by issuers of securities and on rules of recognition of information
required by law of a non-member country as equivalent, the Board of Directors of ASBISc Enterprises Plc
hereby represents that:
a) to its best knowledge, the annual consolidated financial statements and the comparative data have been
prepared in accordance with the applicable accounting policies and that they give a true, fair and clear
reflection of the Group’s financial position and its results of operations, and that the annual Directors’,
b)
The report gives a true view of the Group’s development, achievements and position, i
ncluding a
description of the basic risks and threats
c) The Company adheres to the provisions regarding the appointment, composition and functioning of the
audit committee, including the fulfilment of independence criteria by its members and the requirements
for knowledge and skills in the industry in which ASBISc Enterprises Plc operates and in the field of
accounting or auditing
d) The audit committee performed the tasks provided for in the applicable regulations
e) The auditing company and the members of the audit team met the conditions for drawing up an unbiased
and independent audit report on the annual consolidated financial statements in accordance with
applicable regulations, professional standards and professional ethics,
f) The applicable regulations related to the rotation of the auditing company and the key statutory auditor
and mandatory grace periods are observed
g) The issuer has a policy regarding the selection of the audit company and the policy for providing the
issuer by the auditing company, an entity related to the auditing company or a member of its network of
additional non-audit services, including services conditionally exempt from the prohibition by the audit
company
Signatures:
……………………………………………………
Siarhei Kostevitch
Chairman, Chief Executive Officer
Member of the Board of Directors
64
......................................................................
Marios Christou
Chief Financial Officer
Member of the Board of Directors
.......................................................................
Constantinos Tziamalis
Deputy CEO of ASBIS Group
Member of the Board of Directors
.......................................................................
Julia Prihodko
Chief Human Relations Officer
Member of the Board of Directors
Limassol, 31
st
of March 2022
65