OT - Optima
Telekom d.d.
Annual Report of the
Group for 2021
20
21
Optima
Telekom
Annual Report of the Group for 2021
2
3
Optima
Telekom
Annual Report of the Group for 2021
Corporate Governance and General Information
Optima Telekom Group Members and Regional Centres
I. Management Report
Introduction
Statement by the Chairman of the Board
Market Overview
Economic Environment
Regulatory Environment
Business Indicators and Segments
a Residential Sales Segment
b Business Sales Segment
c Development of Infrastructure, Optical Network and Internal
Services
Financial results of the Group
a Nonconsolidated Results of the Company
b Consolidated Revenues
c Earnings before Interest, Tax, Amortization, Onetime Items,
After Leases
d Net Profit/Loss
e Capital Investments in
f Risk management
Purchase of Own Shares
II. Statement on the Application of the Corporate Governance Code
III. Report of the Supervisory Board on the performed supervision
in the business year and the results of the examination
of the reports related to the closing of the business year
IV. Results of the examination of the annual financial statements and
auditor’s report and the proposal on loss coverage
V. Consolidated and Nonconsolidated Financial Statements
at December together with Independent Auditor’s Report
Optima
Telekom
Annual Report of the Group for 2021
4
Corporate Governance and
General Information
Ditka Maučec —
Tomaž Kampuš —
Damir Topić —
Mario Krka —
Dina Salapić —
Dominik Glavina —
Silvija Tadić —
Suzana Čepl — —
Boris Batelić —
Tomislav Grmek —
Zagrebačka banka d.d. Zagreb
Commercial Court of Zagreb
..,
.., nominal value of . each
5
Optima
Telekom
Annual Report of the Group for 2021
Optima Telekom Group Members
and Regional Centres
Headquarters — Company
Management
-Optima Telekom d.d.
Bani a, Buzin
Zagreb, Croatia
+
+
Region West
-Optima Telekom d.d
Andrije Kačića Miošića
Rijeka, Croatia
+
+
Centar
+
Region North
-Optima Telekom d.d.
Bani a, Buzin
Zagreb, Croatia
+
+
Region East
-Optima Telekom d.d
Vinkovačka
Osijek, Croatia
+
+
Region South
-Optima Telekom d.d.
Vinkovačka ulica
Split, Croatia
+
+
Centar
Zrinsko-Frankopanska
Zadar, Croatia
+
Members of Optima Telekom Group:
—Optima direct d.o.o, Trg Josipa Broza Tita ,
Buje
—OT-Optima Telekom d.o.o, Industrijska cesta
E, Izola , Republic of Slovenia
—Optima Telekom for real estate management
and consultancy d.o.o., Bani a,
Zagreb
Optima
Telekom
Annual Report of the Group for 2021
6
I.
Management Report
7
Optima
Telekom
Annual Report of the Group for 2021
I. 1
Introduction
On th March , the Supervisory Board
passed a Decision appointing Tomislav Gr-
mek, a former member of the Management
Board, to the same position in the Company,
for a two-year term beginning on nd April
, in accordance with the Company’s Ar-
ticles of Association.
On st November , Tomislav Tadić, a
member of the Board, resigned from the po-
sition of a member of the Management Board
with effect from th November .
Since st December the Management
Board consists of: Boris Batelić, the Chairman
and Tomislav Grmek, a member of the Mana-
gement Board.
On st January , Boris Batelić, Chairman
of the Board and Tomislav Grmek, Member
of the Board, resigned from the positions of
President and Member of the Company’s Ma-
nagement Board, both with effect from en
June .
On th March , Ana Hanžeković Krznarić,
a member of the Supervisory Board, resigned
from her membership in the Company’s Su-
pervisory Board, and her resignation has been
in effect since the election of a new member
of the Company’s Supervisory Board.
On th May , Members of the Super-
visory Board, Ariana Bazala-Mišetić, Jelena
Noveljić, Blaženka Klobas, Igor Vavro and Igor
Radojković resigned from the Supervisory Bo-
ard of the Company, with effect from th July
.
The regular General Assembly of the Com-
pany was held on th July , in accordance
with the provisions of the Company’s Articles
of Association and the Decision of the Mana-
gement Board of May .
The General Assembly passed a Decision on
the election of new members of the Supervi-
sory Board for a period of four years, starting
from th July :
• Igor Tepšić, , Zagreb, Izidora
Kršnjavog , law graduate
• Zlatko Hrbud, , Zagreb, Ulica
Natka Nodila , graduate electrical engineer
• Stipanka Ivandić Štefanek, ,
Zagreb, Dalmatinska , Master of Internatio-
nal Economics
• Pavo Mišković, , Zagreb, Pi-
rovec , graduated lawyer
• Marijana Brcko, , Kraljev Vrh,
Ivana Brcka , graduate economist
• Prof. dr. sc. Danimir Gulin, ,
Zagreb, Hrgovići
On th July , at the constituent session
of the Supervisory Board of the Company, Sti-
panka Ivandić Štefanek was elected Chairman
of the Supervisory Board, and Igor Tepšić De-
puty Chairman of the Supervisory Board. In
accordance of those, the Supervisory Board
of the Company, starting from th July ,
consists of the following members:
• Stipanka Ivandić Štefanek, Chairman
• Igor Tepšić, Deputy Chairman
• Zlatko Hrbud, member
• Pavo Mišković, member
• Marijana Brcko, member
• Prof. dr. sc. Danimir Gulin, member
• Suzana Čepl, member - employee represen-
tative
The General Assembly also passed a Decision
amending the Company’s Articles of Associa-
tion, which amended the provisions of Article
, Article and Article of the Articles of
Association. These amendments to the Sta-
tute shall apply from the day of entry into
the Court Register of the Commercial Court
in Zagreb, th July .
On th January , Stipanka Ivandić Štefa
-
nek and Igor Tepšić, Marijana Brcko, Zlatko
Hrbud, Danimir Gulin and Pavo Mišković re-
signed from the Supervisory Board, and their
resignations are valid from the day of the Ge-
neral Assembly where the new members of
the Supervisory Board of the Company were
elected.
On th July the companies Hrvatski Te-
lekom d.d. and Zagrebačka banka d.d. publicly
announced that they had signed an agree-
Optima
Telekom
Annual Report of the Group for 2021
8
ment with Telemach Hrvatska d.o.o., owned
by United Group (United Group B.V., the Net-
herlands), on the purchase and sale of shares
in -Optima Telekom d.d.
Accordingly to the Decision of the Agency
for the Protection of Market Competition,
the concentration of entrepreneurs Hrvatski
Telekom and -Optima Telekom ceased on
th July .
In the period from the end of the reporting
period until the day of compiling this Report,
we additionally point out that on nd Fe-
bruary The Extraordinary General As-
sembly of the Company was held, at which
new members of the Supervisory Board were
elected, as follows:
-Ditka Maučec, economist, Republic of Slo-
venia, Ljubljana, Kamnogoriška cesta , :
;
-Tomaž Kampuš, lawyer, Republic of Slove-
nia, Šmarje pri Jelšah, Finžgarjeva ulica , :
;
-Damir Topić, lawyer, Republic of Croatia, Za-
greb, Vinogradi C, : ;
-Mario Krka, lawyer, Republic of Croatia, Za-
greb, Gajeva ulica , : ;
-Dina Salapić, lawyer, Republic of Croatia,
Zagreb, Ulica Ljudevita Posavskog , :
;
-Dominik Glavina, lawyer, Republic of Croatia,
Zagreb, Blagajska ulica , : ;
for a period of four years, beginning nd Fe-
bruary .
On th of February the constituent
assembly of the Supervisory Board was held,
at which Ditka Maučec was elected Chairman
of the Supervisory Board and Tomaž Kampuš
Deputy Chairman.
On the day of compiling this Report, the Su-
pervisory Board of the Company consists of
the following members:
-Ditka Maučec, Chairman;
-Tomaž Kampuš, Deputy Chairman;
-Damir Topic, member;
-Mario Krka, member;
-Dina Salapić, member;
-Dominik Glavina, member;
-Suzana Čepl, member - employee represen-
tative.
On st January , Hrvatski Telekom d.d.
and Zagrebačka banka d.d. publicly announ-
ced that they had signed an Agreement on
the transfer of shares to Telemach Hrvatska
d.o.o., by which holding transferred .%
of the Company’s shares and Zagrebačka
banka .% of the Company’s shares to Te-
lemach Hrvatska d.o.o., which thus acquires a
total of .% of the Company’s shares.
On th February , Telemach Hrvatska
d.o.o. announced a public offer to take over
the Company. The offer was published in the
Official Gazette, an official Gazette of the Re-
public of Croatia on nd March , with a
validity period of days.
On th April , the Central Depository and
Clearing Company () announced that the
corporate takeover bid had been completed
on the same day, by transferring the stored
-R-A shares to the account of Telemach
Hrvatska d.o.o. and payment of cash com-
pensation to shareholders who had accepted
the takeover bid, and the next day Telemach
Hrvatska d.o.o. published the Report on the
takeover of the Company.
On April Telemach Hrvatska d.o.o. sub-
mitted to the a Request for transfer of
shares of the minority shareholders of the
Company, which request relates to ,,
ordinary shares of the Company.
On March the largest shareholder of
the Company is Telemach Hrvatska d.o.o. with
a .% share in the share capital.
Following a public offer to take over the
Company, Telemach Hrvatska d.o.o. holds
,, of ordinary shares of the Company
which represent .% of the Company’s
share capital.
In addition to the website on issues re-
lated to the implementation of the Pre-Ban-
kruptcy Settlement of Optima and H, the
Company timely and transparently informs
the public about the performed obligations
in accordance with the regulations in the field
of capital markets.
9
Optima
Telekom
Annual Report of the Group for 2021
Statement of the Chairman
of the Board
In , compared to , Optima Telekom
Group recorded a decline in before
one-time items after leases of .%, which is
primarily the result of greater negative impa-
cts of and lower capitalization of own
labor costs, while declining margin of
. percentage points, so it amounts to .%.
In the same period, there was a decrease in
revenue by .% compared to , largely
due to a decrease in revenue from public voice
service and the Internet. Consolidated capi-
tal investments in amounted to .
million, while the net loss amounted to
. million.
During , we focused on the implementa
tion of our strategic and operational projects
aimed at preserving the interests of sharehol-
ders, customers and employees, and I take this
opportunity to thank all employees for their
exceptional commitment and timely and qua-
lity delivery of services to our customers.
I am pleased to welcome Optima’s entry into
Telemach and United Group. Empowered with
knowledge and a wider portfolio of customer
services, we will enable the convergence of
mobile and fixed telecommunications services
and even richer and more diverse television
Boris Batelić,
Chairman of the Board
I. 2
content. It is the beginning of a new chap-
ter in our business that opens up numerous
opportunities.
Together we will contribute to the realization
of our full potential, and so empowered we
can change things for the better - for the be-
nefit of the economy, the whole community
and each of us.
Boris Batelić
Optima
Telekom
Annual Report of the Group for 2021
10
Fixed Telephony Market
The market for telephone services in the fixed
public communications network in the fourth
quarter of recorded a decline in revenue
compared to the third quarter of .
If we compare the total revenue from telep-
hone services in the fixed public communica-
tions network in the fourth quarter of
with the third quarter of , we see a decline
in revenue of .% while the total number of
connections in the observed period decreased
by .%. The fourth quarter of , compared
to the same period in , recorded a decline
in total revenues by .%. In the same period,
the total number of connections decreased
by .%.
The fourth quarter of recorded an in-
crease in total outgoing traffic compared to
the previous period. If we compare the fourth
quarter of with the third quarter of ,
the total outgoing traffic (in minutes) of all
fixed public communications network opera-
tors increased by .%, while compared to the
same quarter in , there was a decrease
of . %.
Broadband Access Market
In the fourth quarter of , a decline in re-
venues from broadband Internet services was
visible compared to previous periods.
Compared to the third quarter of , the
number of broadband access connections via
fixed networks increased by .%, while reve-
nues from Internet access via fixed networks
fell by .% in the same period. If we compare
the fourth quarter of with the same pe-
riod in , the number of broadband acce-
ss connections via fixed networks is higher by
.% while revenues from Internet access via
fixed network in the same period are almost
the same and the decline is less than . %.
Total revenue from Internet access services,
which includes revenue from Internet acce-
ss via mobile network, in the fourth quarter
of decreased by .% compared to the
third quarter of , while compared to the
same period in visible growth of .%
is visible.
-a Market
The Internet Protocol () television market
continues to grow positively.
Comparing the fourth quarter of with
the third quarter of , the increase in the
total number of connections is .%, while
compared to the same quarter of , an
increase of .% was recorded. The number of
connections is growing for both private and
business users. The increase in the number
of connections for private users is .%, and
for business users there is an increase of .%
compared to the third quarter of . If we
make a comparison with the same quarter of
, private users have a growth of .% whi-
le business users recorded a growth of .%.
I. 3
Market Overview
11
Optima
Telekom
Annual Report of the Group for 2021
Economic environment
In the last three months of , growth
slowed year-on-year, but the growth rate
remained high at .%. Merchandise exports
contributed the most to the growth, which
increased by as much as .% year-on-year.
Exports of services and personal consumption
had a slightly smaller but still significant im-
pact. At the annual level, growth is high,
.%. At the level of the whole year, the grea-
test impact on growth was exerted by to-
urism (.%), growth in personal consumpti-
on (.%) and exports of goods (.%). The
largest growth in gross domestic value was
recorded in trade, transport and tourism. With
this achieved growth rate, Croatia records the
most dynamic growth among members,
after Ireland. Croatia was placed among the
seventeen members whose real level of
in exceeded the real level in . More
specifically, after a significant decline in
caused by the coronavirus pandemic and a
strong growth in , real was .% hig-
her than in .
Since August the number of pension in-
surance policy holders has been falling on a
monthly basis due to seasonal movements
within the year. In January it was by .
thousand lower than in December. At the
annual level, the growth that has been going
on since March continues, and the number of
insured persons in January was by . tho-
usand higher than the year before. Compared
to January , there were . thousand
more insured persons, which is also the hig-
hest number since , when that month is
compared by year. Also, the temporary num-
ber of employees in January was higher by
. thousand than a year earlier and by .
thousand than in January . At the annu-
al level, the number of unemployed has been
falling since April last year and was by .
thousand lower in January than a year before.
Compared to January , there were .
thousand fewer unemployed. At the same
time, this is the lowest number of unem-
ployed in January ever registered. The most
sought-after occupations in January this year
were salesman, chef, waiter, storekeeper and
accountant, slightly less than half (%) of job
advertisements offered an indefinite contract,
about .% of job advertisements mentioned
homes (more than in recent months), while
.% of ads were targeted at retirees (also
more than in recent months).
The average net salary per employee in legal
entities in December amounted to
, and was nominally higher by .% com-
pared to the same month last year. However,
due to high consumer price inflation, the real
average wage was lower by .%, which is the
first real annual decline since . On average
for the whole of , the average net wage
was , kuna and was nominally higher by
,%, and in real terms by .%. The highest
average monthly paid net earning per per-
son in legal entities for December was
paid in Advertising and Market research (.
thousand ), while the lowest was paid in
Manufacture of Clothing, in the amount of .
thousand . The Information and Commu-
nications recorded a nominal increase in net
wages of .% in December.
During the first two months of this year, the
stability of the kuna against the euro and ot-
her currencies continued, but the beginning
of March, marked by Russia’s attack on Ukra-
ine, led to a more pronounced but short-li-
ved decline in the kuna against the euro and
the euro against other more important global
currencies. Further exchange rate movements
are difficult to predict, but the stability of the
kuna against the euro is strongly influenced
by Croatia’s expected entry into the euro zone
early next year, and expectations of another
successful tourist season are still present. On
the other hand, global uncertainties usually
encourage the strengthening of the dollar as
a safe currency, or the weakening of the cu-
rrencies of “affected” areas. According to the
’s exchange rate list, the average value of
the middle exchange rate of the euro in the
first two months of this year against the
dollar was as much as by .% lower than in
the same period in .
, business entities were registered for
non-executed payment bases on Febru-
I. 4
Optima
Telekom
Annual Report of the Group for 2021
12
Regulatory EnvironmentI. 5
In this reporting period, the Croatian Network
Regulatory Agency (hereinafter: ) con-
tinued to regulate the electronic communi-
cations market.
Since st April , based on the final deci-
sions of , the new price of regulated
wholesale services in the market of whole-
sale local access provided at a fixed location
(Ma market) and the market of wholesale
central access provided in fixed location for
mass market products (Mb market), which
prices had a positive impact on the Company’s
operations. has made final decisions
on new wholesale prices for regulated mar-
kets of wholesale high-quality access (M and
exM). The new prices for regulated services
on the M and exM markets have been in
force since st August , and they haven’t
had a negative impact on the Company’s ope-
rations with regard to the agreed packages of
wholesale capacities and lines.
Also, first issued Interim Decisions
(Class: - / - / , Reg. No .: --
-- and Class - / - / , Reg.
No. --- -) of July and sub-
sequent final decisions (Class: - / - /
, : ---- and
Class: / I-- / - /
: ----) of rd December
, abolished the Company’s regulatory
obligations to conduct the Margin squee-
ze test of retail margins of regulated servi-
ce packages on the market of access to the
public communications network at a fixed
location for private and business customers,
the Ma market and the Mb market. By abo-
lishing this obligation, the Company was able
to, independently, without the prior consent
of , form tariff packages for end users
for voice service, broadband Internet access
service and pay- service (), regardless
of whether it provides these services indepen-
dently or as a service package. This has ena-
bled the Company to compete in a timely and
affordable manner with its offers with other
market operators.
In this reporting period, there were no signi-
ficant changes in laws and regulations in the
field of electronic communications. In the
following reporting periods, the adoption of
a new Electronic Communications Act is expe-
cted in order to comply with Directive ()
/ of the European Parliament and
of the Council of th December on the
European Electronic Communications Code.
ary , which is by business entities
or by .% less than in January and by
business entities or by .% more than in
the same year period previous year. The total
amount of unexecuted bases for payment of
business entities amounted to . billion
(principal), which is by . million (.%)
more than in the previous month, or
. million (.%) less compared to Febru-
ary . On the same day, , consumers
were registered, which is by .% less than in
the previous month, and .% more than the
year before. Basically, consumer debt amoun-
ted to . billion (principal), which is by
.% more than in January this year and .%
more than in the same period last year. The
largest part of the debt, in the amount of
. billion (excluding interest), referred to the
debt of consumers to banks as creditors, and
to all financial institutions, the debt amounted
to . billion.
13
Optima
Telekom
Annual Report of the Group for 2021
Business Indicators and Segments I. 6
Number of
Customers
.. .. ../
..
.. ../
..
Business
. . ,% . ,%
. . ,% . ,%
Internet . . ,% . ,%
Data . . ,% . ,%
Residential
. . ,% . ,%
. . ,% . ,%
Internet . . ,% . ,%
a. Residential Sales Segment
In the fourth quarter of , in the residen-
tial sales segment, Optima Telekom recorded
negative parameters compared to the third
quarter of .
In the segment, in the fourth quarter of
, negative parameters for the user base
and revenues are visible, which is a continuati-
on of the trend from the third quarter of .
If we compare the fourth quarter of with
the third quarter of , the number of users
of the service decreased by .% due to an
increase in the outflow of users who use the
service. In the same period, the decline in
the number of service users was followed
by a .% decline in revenues from users
in the residential segment. Compared to the
same quarter of , the fourth quarter of
recorded a decline in the number of users
of services in the residential segment of
.% while revenue from services com-
pared to the fourth quarter of recorded
a decline of .%.
At the level of the year, in the revenue
from services in the residential sales se-
gment is lower by .% compared to .
In the segment of Internet service users, a de-
crease of .% was recorded compared to the
third quarter of . The impact of a smaller
number of residential Internet service users
is visible in revenues from Internet services,
which fell by .% compared to the third qu-
arter of . Compared to the fourth quarter
of , the user base of Internet services de-
creased by .% while revenues in the same
period decreased by .%.
At the level of the year, in the revenue
from internet services in the segment of re-
sidential sales is lower by .% compared to
.
The number of residential users of fixed public
voice service shows the continuation of the
negative trend from previous periods. Substi
-
tutive technologies continue to have a large
impact on the decline in this segment, and the
number of residential users of fixed public vo-
ice services is lower by .% compared to the
third quarter of . Revenue from telephone
Optima
Telekom
Annual Report of the Group for 2021
14
services in the fixed public communications
network, for the residential segment, decreased
by .% compared to the third quarter of .
If we compare the number of users of fixed pu-
blic voice service with the same quarter in ,
the user base is lower by .% while revenue is
lower by .%.
At the level of the year, in the revenue from
public fixed services in the segment of residen-
tial sales is lower by .% compared to .
The total number of residential beneficiaries fell
by .% compared to the third quarter of ,
while the revenue showed a decline of .% due
to negative trends. The total number of residen-
tial users in the fourth quarter of was lower
by .% compared to the same quarter in ,
and the total decline in income was .%.
At the level of the year, in the income in the
segment of residential sales is lower by .%
compared to .
b. Business Sales Segment
The activities of business sales channels in the
fourth quarter of were focused on the tar-
geted acquisition of telecommunications servi-
ces for customers within projects, renewal of
contractual relations with the existing customer
base and the sale of the portfolio of services
and solutions.
In the segment of public voice service, compa-
red to the third quarter of , revenue decrea-
sed by .% amid the negative effect of the new
coronavirus pandemic due to easing measures
and greater availability of vaccines and the ab-
sence of one-time activities that have a positive
impact on revenue, as well as price corrections
in public procurement procedures with the aim
of preserving the customer base. Compared to
the same period last year, revenues decreased
by .% and at the annual level by .%. Com-
pared to the third quarter of , the customer
base in the segment of public voice service de-
creased by .%, and compared to the same pe-
riod last year, the decrease amounted to .%.
This decline in base and revenue compared to
the same period last year is mostly the result of
the national trend of reducing the use of public
voice service, substitution of fixed voice service
with voice service in the mobile network and
migration of Optima Telekom users to more
advanced solutions and packages, as well as the
above mentioned impact of pandemic and price
corrections in public procurement procedures.
In the segment of broadband Internet access,
compared to the third quarter of , there was
a decrease in revenue of .%, while compared
to the same period last year there was a de-
crease of .%. At the annual level, we recorded
revenue growth of .%. The user base of broad-
band Internet access is .% lower than in the
same period in , and .% lower than in the
third quarter of .
Revenue trends in the segment of broadband
internet access are a resultof sales activities in
public procurement procedures that are focused
on preserving the customer base and seasonal
effects in the tourism sector. The decrease com-
pared to the previous quarter is also a result of
the lack of one-time income from the project
realized in the previous quarters.
In the data services segment, compared to the
previous quarter, Optima Telekom recorded a
slight increase in the customer base of .%
with a decrease in revenue of .%. Revenues
from data services decreased by .% compa-
red to the same period in , with a growth
of the user base of .% due to increased sales
of private data connection services on an asym-
metric approach.
The growth in the number of data connections
and relatively stable revenue trends with a slight
decline of .% when comparing annual periods
is the result of increased perception of the be-
nefits of contracting private data services dire-
ctly with telecommunications service providers
in the segment of medium and large business
users, taking into account the high pressure on
service prices in public procurement procedures.
In Optima Telekom continues to record
positive trends in the segment of sales of
solutions and services with a margin of .
million or .%, which represents an increase
in profitability compared to the previous year
in which the realized margin was at the level of
.%. The result was achieved due to a strong
focus on the sale of solutions and services
partly financed from funds and cooperation
with partners with whom Optima Telekom
responds well to market needs.
In total wholesale revenues increased by
.% compared to the previous year. The big-
gest reason for the increase in wholesale reve-
nues is the increase in the volume of business in
the field of international transit of voice servi-
15
Optima
Telekom
Annual Report of the Group for 2021
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q4 2021
Q4 2020
VAS income
Termination income
Transit income
Data services
Source: Company ledgers
Interconnection Income Structure
ces. Revenues from transit increased by .%
this year compared to the previous year. This
increase in revenue is largely due to the in-
crease in transit traffic between international
destinations, agreed on a project basis of limi-
ted duration between international partners,
while to a lesser extent caused by increased
transit traffic to national destinations which
is seasonal and related to the tourist season.
Revenues from data services are at the level
of revenues from the last quarter, but in
they still recorded a decrease of .% compa
-
red to the previous year. This drop in revenue
was mostly caused by the cancellation of the
services of one major international customer
in the fourth quarter of , and is a result of
the fact that the implementation of a major
project was postponed from the fourth quar-
ter of to the first quarter of .
During the fourth quarter of , revenue
from termination increased by .% com-
pared to the previous quarter, while at the
annual level it decreased by .%, which is
due to a decrease in the price of termination
in fixed networks compared to the previous
year. Revenues from services with a special
tariff increased by ,% in compared to
the previous year. The growth trend was also
recorded compared to the previous quarter of
this year, amounting to .%.
c. Development of
Infrastructure, Optical Network
and Internal Services
Voice networks
During the first quarter of , the operating
systems and virtualization software of the
business (Unified Communications) soft-
switch system were upgraded.
In the second quarter of , software and
databases were upgraded, which enabled the
introduction of new functionalities, namely
(Soft-Phone) application for mobile devices
that allows making calls via mobile phones or
tablets via remote access to corporate telep-
hony of business users. During the third qu-
arter of , the integration of the (Soft-
Phone) application for mobile devices was
completed.
Data networks
In order to upgrade the capacity of the /
core of the packet, transport network
and raise the quality level after the expansi-
on of main hubs in Zagreb, Split, Rijeka and
Osijek in , in the first quarter of the
router in Varaždin was replaced and its conne-
ction capacity increased to Gb/s. The ca-
pacities of the / hubs Karlovac and Žu-
panja were also expanded, while in the second
quarter the capacity towards the main hub in
Đakovo was expanded to Gb/s.
In the second quarter, a system for monitoring
the quality of service in city hubs was la-
unched, which provided a real-time image and
error display at major city hubs.
In the fourth quarter, the capacities of the
/ network in Istria were expanded to
the hubs in Pula, Pazin, Nedešćina, Rovinj and
Žminj.
Transport networks
In the first quarter of , a new
system was installed in Varaždin, which
connected the Varaždin hub with the main
hub in Zagreb with a capacity of Gb/s and
the possibility of further capacity increase. At
Optima
Telekom
Annual Report of the Group for 2021
16
the same time, the connection of the Varaždin
hub with a Gb/s connection to Osijek was
initiated, which ensured sufficient backup ca-
pacity of Varaždin and Osijek hubs in the ring
topology with Zagreb.
Service Networks
Internet network core
In the first quarter of , the capacity of Inter-
net access was expanded with existing Internet
Upstream Providers. For this purpose, inter-
connection with individual service providers via
a Gb/s interface was performed. The total
contracted access capacity is Gb/s, while the
total interconnection capacity is Gb/s.
In the second quarter, the capacity continued
to increase and an additional Gb/s interfa-
ce was connected, so that the total contracted
capacity reached Gb/s, and the total inter-
connection capacity was Gb/s.
Network Services
In the second quarter, an system ( Addre-
ss Management), a system for the administra-
tion and management of address space, was
implemented. In the third quarter, the process
of (Auto Configuration Server) alarms repor-
ting was developed to monitor the decline in
synchronized speed on x lines.
In the fourth quarter the implementation of
a personalized reporting system for business
users on oS attacks and protection against
them was completed, which was automatically
applied during the month.
A new (Remote Authentication Dial-In
User Service) system for authorizing Cisco
(Prime Access Registry) Internet user sessions
was also installed. The system is scheduled to
go into production next quarter.
Network infrastructure and optical networks
The development of fiber optic infrastructure,
i.e. the construction of own fiber optic network,
during the fourth quarter of mostly con-
sisted of the construction of access fiber optic
network ie. access to the locations of our busi-
ness users.
Speaking of numbers, this is a total of . km of
new fiber optic network, which consists of the
construction of new fiber optic connections.
The largest number of connections was made
in western Croatia (. km, connections),
followed by northern (. km, connections),
eastern Croatia (. km, connections), and so-
uthern Croatia (. km, connections).
Access networks
In the fourth quarter of , the capacity of the
Unbundled Local Loop network () continued
to expand, primarily by increasing the number
of access interfaces.
At the end of the fourth quarter of , the
number of access interfaces was ,,
which is an increase of .% compared to ,
access interfaces at the end of the third quarter
of .
Power systems
Through a continuous process of checking the
capacity and replacement of batteries in tele-
communication hubs and data centers, the au-
tonomy of the system in case of power outage
is ensured.
In the fourth quarter of , batteries were
replaced in telecommunications hubs.
During the same quarter, a new part of the data
center in Zagreb, Buzin, was arranged and equ-
ipped as a collocation room for receiving user
servers, with a capacity of up to server cabi-
nets, and a total energy power of up to kW.
Information technologies ()
In , systems and applications have been
upgraded in the following parts:
• Development of automation of basic business
processes for large business users into an
system through a business process manage-
ment system (Workflow Engine System) which
is connected to the new billing system.
• Implementations of the basic model of the iS-
core system for calculating customer credit risk.
• Application Programming Interface ()
towards Overseas, the equipment delivery su-
pplier that provides automation of the nece-
ssary logistics business processes.
• Launch of a new digital platform for electro-
nic communication with users via , chat
and social networks Facebook, Viber and What-
sApp.
• Integration of iScore system for credit asse-
ssment of residential and business users in the
process of late payment notices and selling
debts.
17
Optima
Telekom
Annual Report of the Group for 2021
Financial Results of the Group I. 7
Summary in tsd QQ QQ QQ /
QQ
Q Q Q /
Q
Total income . . ,% . . ,%
Total expenses . . ,% . . ,%
Depreciation and
impairment
. . ,% . . ,%
. . ,% . . ,%
Financial result net . . ,% . . ,%
Profit loss before tax . . .,% . . ,%
Deffered taxes/taxes . . ,% . . ,%
Net profit/loss . . .,% . . .,%
before onetime
items after lease
. . ,% . . ,%
margin before
onetime items after
lease
,% ,% ,% ,% ,% ,%
Optima
Telekom
Annual Report of the Group for 2021
18
a. Nonconsolidated results of the Company
Summary in tsd QQ QQ QQ /
QQ
Q Q Q /
Q
Total income . . ,% . . ,%
Total expenses . . ,% . . ,%
Depreciation and
impairment
. . ,% . . ,%
. . ,% . . ,%
Financial result net . . ,% . . ,%
Profit loss before tax . . .,% . . ,%
Deffered taxes/taxes . . ,% . . ,%
Net profit/loss . . .,% . . .,%
before onetime
items after lease
. . ,% . . ,%
margin before
onetime items after
lease
,% ,% ,% ,% ,% ,%
19
Optima
Telekom
Annual Report of the Group for 2021
Source: Company ledgers
Compared to the previous year, the Group
achieved lower before one-time items
after leases by .%, and the Company decrea-
sed by .%. These developments at the Group
and Company levels are primarily the result of
greater negative impacts of and lower
capitalization of our own labour costs.
At the level of the fourth quarter, compared to
the previous year, the Group and the Company
recorded lower before one-time items
after leases by .%.
b. Consolidated Revenues
Total revenues in 2021 recorded a decrease of
4.7%, compared to the previous year, while at
the level of the fourth quarter of 2021, reve-
nues recorded a larger decrease of 16.9%.
Revenues from public voice service decre-
ased by 10.1% at the annual level as a result
of the general trend at the global level. In the
fourth quarter, compared to the same period
last year, they decreased by 16.3%. This trend
is the result of the lack of positive impact of
the -19 pandemic in 2020, in the form
of increased consumption of fixed electronic
communications network.
Revenues from the Internet in 2021 recor-
ded a smaller decrease of 7.9%, as a result of
lower revenues in the fourth quarter of 2021
compared to the previous year of 12.0%. The
decline in Internet revenue is driven by incre-
ased demand for the Internet through mobile
networks.
Revenues from data services decreased by
5.8% at the annual level. In the fourth quarter,
compared to the same period last year, they
decreased by 3.5%, mostly due to the cancella-
tion of services of one major international cu-
stomer in 2020.
Revenues from multimedia in 2021 decreased
by 1.3%, while compared to previous quar-
ter, the decrease is 1.5%. Revenues from in-
terconnection operations in 2021, compared
to the previous year, increased by 46.0% as
a result of increased business volumes in the
field of international transit of voice services
(77.3%). The increase in transit revenues in
question is accompanied by a proportional
increase in transit costs and the impact on
the margin is negligible.
Q4 2020
Q4 2021
Public Voice Service Interconnection Internet Data Multimedia
Telecommunication Services Revenue
Millions
200
180
160
140
120
100
80
60
40
20
0
Optima
Telekom
Annual Report of the Group for 2021
20
Q Q
in
share % Q in
share %
General Investments ,% ,%
Capital Technical Investments . ,% . ,%
Network . ,% . ,%
Network . ,% . ,%
Telecommunications Center . ,% . ,%
Content Capitalization . ,% . ,%
. ,% . ,%
c. Earnings before Interest, Tax,
Amortization, One-time Items,
After Leases - EBITDA
Consolidated before one-time items
after leases amounts to . million, whi-
ch is by . million less than in the previo-
us year. Achieved reduced is primarily
due to the negative effects of the application
of and lower capitalization of our own
labour costs.
margin after leases at the level of
for the Group is .%, which is a decrease of
. percentage points compared to the pre-
vious year.
d. Net profit/(loss)
In the Group realized a net loss in the
amount of . million, and the Company
in the amount of . million. The realiza-
tion of a negative financial result at the level
of the Group and Company is affected by im-
pairment of goodwill (in the amount of .
million ), lower before one-time
items after leases, higher depreciation and
taxation, which is partially mitigated by the
positive impact of financial results.
e. Capital investments in 2021
Consolidated capital investments in
amounted to . million , of which .
million was invested in customer equ-
ipment for the provision of services to resi-
dential and business customers. Investments
in the construction of optical infrastructure,
access network and network core amount to
. million , and . million was in-
vested in the expansion of customer services
and systems. The capitalization of content
in amounted to . million , while
. million was invested in general inve-
stments.
Consolidated capital investments in the fourth
quarter of were realized in the amount
of . million . Investments in customer
equipment for the provision of services to
residential and business customers amount
to . million . In the fourth quarter of
, investments in the construction of op
-
tical infrastructure, access network and core
network amounted to . million , while
. million was invested in the expansion
of customer services and systems. In the
last quarter of , . million was inve-
sted in content and . milion in general
investments.
Source: Company ledgers
21
Optima
Telekom
Annual Report of the Group for 2021
Purchase of Own Shares
In the Company did not acquire its own
shares.
I. 8
f. Risk Management
Currency Risk Management
The currency risk is the risk that the value
of financial instruments will change due to
exchange rate changes. The Group’s and the
Company’s highest exposure to currency risk
arises out of long-term loans, denominated in
foreign currencies and recalculated into
applying the relevant exchange rates as per
the balance sheet date. Any exchange rate
divergences shall be attributed to operating
costs or recorded in the profit and loss
account, but do not influence the cash flow.
Interest Risk
The Group’s and the Company’s exposure
to interest risk is not significant, since the
Group and the Company do not have liabilities
subject to variable interest rates.
The remaining assets and liabilities, including
issued bonds, are not exposed to interest risk.
Credit Risk
The credit risk is the risk that the other party
will fail to meet its contractual obligations
arising out of potential financial losses of
the Group and the Company. The Group and
the Company do not have a significant credit
risk concentration with contractual parties
possessing similar characteristics and have
adopted procedures they apply in buyer
transactions. The Group and the Company
receive sufficient collaterals, if necessary, as
a means to mitigate the risk of financial loss
due to unfulfilled obligations and offers no
guarantees for third party liabilities.
The Group and the Company consider that
their maximum exposure reflects in the
amount of receivables from debtors, minus
value depreciation reservations recognized
on the date of the financial position report.
Liquidity Risk Management
The Board of Directors has the responsibility
for liquidity risk management and sets the
appropriate framework for liquidity risk
management, with a view to manage short-
term, mid-term and long-term financing
and liquidity requirements. The Group and
the Company manage the liquidity risk by
maintaining adequate reserves and credit
lines, continuously comparing the planned
and achieved cash flow and monitoring the
receivables and liabilities due dates.
Optima
Telekom
Annual Report of the Group for 2021
22
Statement on the Application of the
Corporate Governance Code
II.
In accordance with the provision of Art. .b
paragraphs and and Article .p of the
Companies Act (Official Gazette /, /,
/, / - Decision, /, /
, /, /, / - consolidated text,
/, /, / and /), gives a Sta-
tement on the application of the Corporate
Governance Code.
In the Company applied the Corpora-
te Governance Code (hereinafter: the Code)
adopted by the Croatian Financial Services
Supervisory Agency () and the Zagreb
Stock Exchange d.d. Zagreb, in force since st
January , and published on the Exchan-
ge’s website (www.zse.hr) and on ’s
website (www.hanfa.hr).
The Company adheres to the recommendati-
ons of the Code, with the exception of those
provisions whose application at the moment
is not practical or envisaged given the appli-
cable legal framework. The exceptions men-
tioned are the following:
The work of the Supervisory Board is not
determined by special internal rules, but the
provisions of the Companies Act and the
Company’s Articles of Association apply to the
work of the Supervisory Board. In addition to
the above, the Supervisory Board has establi-
shed a Commission for monitoring synergy
measures, in accordance with the terms of the
approved concentration of Hrvatski Telekom
d.d. and the Company. The manner of work
of the mentioned Commission is prescribed
by the conditions determined in the Decision
of the Agency for the Protection of Market
Competition, Class: / I - / -
/ ; Urbr: - / -- of March
and by Decision of the same Agency Cla-
ss: / I - / - / ; Urbr: -
/ -- dated June . The commission
operated until th July when the con-
centration of Hrvatski Telekom d.d. and the
Company ceased.
• The Articles of Association stipulate which
decisions require the prior consent of the
Company’s Supervisory Board (Article of the
Code). The Company’s Articles of Association
are available on the Company’s website.
• The Supervisory Board and its Committees
are not for the most part composed of inde-
pendent members as defined by the Code’s
recommendation. All members of the Super-
visory Board were elected at the General As-
sembly of the Company in compliance with
the procedure for announcing candidacies,
and the Employees’ Council decided to appo-
int one employee representative to the Su-
pervisory Board.
• Further to the recommendation that mem-
bers of the Supervisory Board inform the Su-
pervisory Board that they are in conflict of in-
terest, on ensuring a formal and transparent
appointment procedure to the Supervisory
Board and the Management Board, on the
tasks of the Nomination and Remunerati-
on Committee, on the independence of the
majority, The Company points out that the
(Croatian Competition Agency) Decision
on the conditionally permitted concentration
of and the Company defines that obliges
that during the concentration the members
appointed by to the Optima Management
Board will not be members of the Manage-
ment Board or the Supervisory Board of or
any affiliated company of and that from
the moment of taking office in Optima until
the termination of the concentration will not
perform any functions in . At least one of
the appointed members of the Management
Board of Optima must not have any previous
connections with . Also, the members pro-
posed by to the Optima Supervisory Board
will not be members of the Management Bo-
ard or the Supervisory Board of or any of
its affiliates at the same time. The members
proposed by to the Optima Supervisory Bo-
ard, as well as the staff in charge of imple-
menting Optima restructuring measures, will
not come from ’s Business Unit for Private
Customers, ’s Business Unit for Business
Customers or ’s affiliate Iskon Internet. The
conditional concentration of these compa-
nies lasted until th July . On th July
Hrvatski Telekom and Zagrebačka banka
d.d. publicly announced that they had signed
an agreement with Telemach Hrvatska d.o.o.,
23
Optima
Telekom
Annual Report of the Group for 2021
owned by United Group (United Group B.V., the
Netherlands), on the purchase and sale of shares
in -Optima Telekom d.d. The conclusion of the
transaction is subject to the fulfillment of cer-
tain regulatory preconditions and other agreed
conditions. Pursuant to the above, on th July
, at the proposal of the shareholders of Za-
grebačka banka d.d., the General
Assembly of the Company appointed new
members of the Supervisory Board. (Articles ,
,
, , , , , , , , , , of the Code).
• Further to the recommendations that mem-
bers of the Supervisory Board and the Mana-
gement
Board do not perform activities that compete
with the Company’s operations are not mem-
bers of the Management Board or the Super-
visory Board of companies that perform such
activities or hold more than % of shares in such
companies, The Company states that a member
of the Management Board is prohibited from
performing any activities for any company that
is a competitor to the Company or any of its
affiliated companies, to participate in such a
competitor, directly or indirectly, or to perform
part-time or consulting work for such company
or for its own or another’s account or for the ac-
count of a third party or enter into transactions
from the activities performed by the Company.
Regarding the members of the Supervisory Bo-
ard, the Company is bound by the provisions of
the Decision and the explanation is given
as in line of the Compliance Questionnaire
(hereinafter: the Questionnaire) (Article of
the Code).
• Regarding the recommendation that the
members of the Management Board and the
Supervisory Board who have shares in the
companies with which the company competes,
informed the Secretary of the Company about
all the shares in such companies and details of
these shares are available free of charge on the
Company’s website. The Company states that
the member of the Management Board is pro-
hibited from performing any activities for any
company that is a competitor of the Company
or any of its affiliates, to participate in such a
competitor, directly or indirectly, or to perform
part-time or advisory work for such company or
for its own or others’ accounts. third parties to
perform and / or enter into transactions from
the activities performed by the Company. If he
has information, the member of the Manage
-
ment Board is obliged to inform the superior in
writing if a member of his family, i.e. a spouse
and members of his family hold a share in the
company of the aforementioned companies
(Article of the Code).
• Transactions with related parties are subject to
the procedure in accordance with the Compa-
nies Act and the Company’s internal procedures.
The Audit Company audited the Management
Board’s Report on Relations with Subsidiaries
and Affiliates for and issued an indepen-
dent opinion on all transactions with affiliates.
The auditor’s opinion on these transactions is
an integral part of the Company’s annual report,
but the report is not available free of charge on
the Company’s website (Article of the Code).
• The Supervisory Board did not set a target for
the percentage of female members of the Su-
pervisory Board and the Management Board to
be achieved in the next five years, did not adopt
a plan to implement this goal and the progress
report was not published in the annual report.
According to the composition of the Supervi-
sory Board of the Society, until th July ,
the percentage of female members in relation
to male members was %, and after th July
, it was %. (Article of the Code).
• Following the recommendation that the No-
mination Committee has all the tasks listed in
Article of the Code, the Supervisory Board
decided to establish a Nomination and Remu-
neration Committee, appointed members and
a chairman. Additionally, the answer as in line
of the Questionnaire (Article of the Code).
• The company publishes data on education,
, address, short , and data on other activi-
ties of the candidate, including membership in
the supervisory board or management of other
companies (Article of the Code).
• In case of re-election, the Company will provi-
de, among the materials for the General Assem-
bly, information on the presence of this member
at the meetings of the Supervisory Board and its
committees during the previous term (Article
of the Code).
• In case of reappointment, the Company will
provide, among the materials for the General
Assembly, information on the presence of this
member at the meetings of the Supervisory
Board and its committees during the previous
term (Article of the Code).
• Following the recommendation that the Su-
pervisory Board has all the tasks listed in Article
of the Code, and that the Supervisory Bo-
Optima
Telekom
Annual Report of the Group for 2021
24
ard has created a profile of the Supervisory
Board that determines the minimum num-
ber of members and a combination of skills,
knowledge and education, as well as profes-
sional and practical experience, required in the
Supervisory Board, the Company is responsi-
ble as in line of the Questionnaire (Articles
and of the Code).
• The recommendation that the internal acts
of the Company provide for the obligation of
members of the Supervisory Board to inform
the Secretary of the Company about their
membership in the Supervisory Board or ma-
nagement of other companies, the Company
will consider in the future (Article of the
Code).
• In , the Company determined the posi-
tion of the Company’s secretary in the Regula-
tion on job systematization. The duties of the
Company’s Secretary are performed by the
Head of the Department of Human Resour-
ces, Legal and Regulatory Affairs and Business
Compliance Affairs (Article of the Code).
• Materials for the meeting of the Supervisory
Board as well as for the meetings of the Board
are submitted before the meeting (Article
of the Code).
• Members of the Supervisory Board of the
Company appointed on th July and nd
February received introductory training
for their role. All elected members hold mana-
gerial or expert positions within their profe-
ssional environment. (Article of the Code).
• Further to the recommendation of the eva-
luation of the effectiveness of the Supervisory
Board, to the evaluation of individual results
of its members in the last months, that the
evaluation is led by the President or his de-
puty, that the evaluation included an evalua-
tion of all circumstances listed in Article of
the Code, and that the annual report includes
a report on the assessment of the Supervisory
Board and its committees in which all the cir-
cumstances listed in Article of the Code are
assessed, the Company states that the Super-
visory Board prepares a Report on the perfor-
med supervision and in the observed year, on
the content of sessions, the number of issued
previous consents. In accordance with the ,
the General Assembly approves the manner in
which the Supervisory Board supervised the
Company’s operations and performed other
tasks, through the discharge of the previous
business year. The appendix is also the answer
as in line of the Questionnaire (Articles ,
, of the Code).
• The work of the Management Board is not
defined by the Rules of Procedure of the Ma-
nagement Board, but by the Articles of Asso-
ciation (Article of the Code).
• Regarding the rules governing liability and
reporting procedures at the level of the lea-
ding company and subsidiaries, the procedure
is in accordance with the Companies Act. The
responsible persons of the subsidiaries report
to the parent company on significant activi-
ties. As part of the financial reporting proce-
dure, an internal reporting procedure has been
established (Article of the Code).
• Members of the Management Board do not
hold positions in the Management Board or
in the Supervisory Board of other companies
outside the companies of the Group. (Ar
-
ticle of the Code).
• In the Report on the performed supervision,
the Supervisory Board provides an overview
of the composition and changes in the Ma-
nagement Board of the Company (Article
of the Code).
• The recommendation that the Management
Board evaluates its effectiveness as well as
the
effectiveness of individual members in the last
months and that it reported to the Super-
visory Board will be considered in the future
in accordance with the answer from line
in the Questionnaire (Article of the Code).
• The duties of the remuneration committee
do not include all the activities listed in Ar-
ticle of the Code. However, the Supervi-
sory Board decided to establish a Nomination
and Remuneration Committee. It determined
the members of the Commission and the be-
ginning of the mandate. All members of the
commission are also members of the Super-
visory Board of the Company (Article of the
Code)
• The remuneration policy does not define
that a member of the Management Board
may not dispose of shares allotted to him as
part of the receipt for at least two years from
the day allotted to him or that a member of
the Management Board may not use share
options allotted to him to which they were
assigned (Article of the Code).
• The Company has not established an internal
audit function responsible for overseeing the
25
Optima
Telekom
Annual Report of the Group for 2021
Internal Supervision in the Company and Risk Management in
Relation to Financial Reporting
The Company has not established a separate
organizational unit that would perform exc-
lusively internal audit activities, however, the
Company has an organized organizational
unit of corporate security, which within its
regular activities acts to minimize all risks in
business.
The Supervisory Board has established an Au-
dit Committee that performs detailed analysis
of financial statements, supports the Com-
pany’s accounting and establishes good and
quality internal control of the Company.
The Audit Committee oversees the conduct
of the audit in the Company, discusses certa-
in issues brought to its attention by auditors
or management and advises the Supervisory
Board.
The Audit Committee is responsible for en-
suring the objectivity and credibility of the
information and reports submitted to the
Supervisory Board.
The Audit Committee is authorized to:
• request the necessary information and ot-
her documentation from the management
and senior executives of the Company and
external associates;
• Participate in meetings held at the Com-
pany, which relate to issues within the scope
of activities and responsibilities of the Audit
Committee;
effectiveness of the internal control system
including risk management, does not have an
organizational unit dealing exclusively with
internal audit and until th July used
the shared resources function with the parent
company regarding internal audit (Article
and of the Code).
• The introduction of the procedure for the
audit committee to assess the effectiveness
of the procedure and its application in the last
months, the Company will consider in the
coming period (Article of the Code).
• The Supervisory Board compiles a Report on
the performed supervision and on the results
of the examination of the report in which it
gives an overview of the number of Super-
visory Board meetings held in the observed
year, the content of meetings, the number of
issued prior consents. The Company’s annual
report also contains information on significant
shareholders and the attendance of members
at sessions (Article of the Code).
• The Company did not establish the possibili-
ty of asking questions directly to the President
of the Management Board and the President
of the Supervisory Board. The company has a
significant number of shareholders and belie-
ves that opening a direct channel of commu-
nication to the President of the Management
Board and the President of the Supervisory
Board would lead to their unnecessary bur-
den. The Company has established mecha-
nisms for asking shareholder questions via
e-mail address for investors: investitori@
optima-telekom.hr. Also, shareholders have
the opportunity at the General Assembly to
ask questions directly to the President of
the Management Board and the President of
the Supervisory Board, if necessary to assess
issues that are on the agenda (Article of
the Code).
• During the General Assembly, shareholders
were not allowed to vote using modern com-
munication technology because it is not pro-
vided by the Statute (Article of the Code).
• The Company did not make available the an-
swers to the questions asked at the General
Assembly on its website free of charge within
days from the day of the General Assem-
bly, as the Minutes from the General Assembly
were submitted to the court register, which
contained questions and answers from the
General Assembly (Article of the Code).
• The Supervisory Board is not authorized,
with prior notice to the President of the Ma
-
nagement Board, to organize meetings with
external stakeholders when it deems it nece-
ssary given that the Company does not provi-
de for this in its acts (Article of the Code).
Optima
Telekom
Annual Report of the Group for 2021
26
Rules on appointment and dismissal of members of the
Management Board and the Supervisory Board and their powers
In accordance with the Company’s Articles of
Association, the Company’s affairs are ma-
naged by a Management Board consisting of
one to five members. One of the members
of the Management Board is appointed by
the President of the Management Board. The
Management Board and the President of the
Management Board are appointed and re-
moved by the Supervisory Board. Members
of the Management Board are appointed for
a period of up to years and may be reappo-
inted. According to the Companies Act and
the Articles of Association, the Management
Board conducts business at its own risk and
is authorized to take all actions and make
decisions that it deems necessary for the su-
ccessful management of the Company. The
Management Board is obliged to respect the
restrictions determined by the Statute. Each
member of the Management Board represents
the Company together with another member
of the Management Board.
The Supervisory Board consists of seven
members, one of whom is appointed by the
employees. The Supervisory Board is elected
by the General Assembly of the Company
by a simple majority of votes, except for the
member of the Supervisory Board appointed
by the employees. The term of office of the
members of the Supervisory Board is deter-
mined for a period of years and they can be
re-elected. Members of the Supervisory Board
elect a chairman and deputy chairman of the
Supervisory Board. The Deputy President has
the rights and obligations of the President
only in the event of the President’s inability
to perform his function.
For individual transactions or decisions of the
Management Board, the Management Board
is obliged to obtain the prior consent of the
Supervisory Board according to the criteria set
out in Art. of the Statute. The Supervisory
Board, within its scope, performs the tasks
specified in Art. of the Statute.
• Appoint advisers to the Audit Committee on
any matter within its scope, if such advice is
necessary to fulfill the scope of activities and
responsibilities of the Audit Committee.
The company does not have an organizational
unit that deals exclusively with internal au-
dit activities and uses the function of shared
resources with the parent company. In
the Audit Committee adopted the Rules of
Procedure and the Rules on the Engagement
of Audit Services, which define in detail the
stated powers and tasks.
In the Audit Committee held four sessi-
ons, with an overall participation rate of %
in the meetings of the Board members.
The Commission discussed various issues, in
particular the following:
• closing in for the Company and the
Group;
• report of external auditors;
• the implementation and effectiveness of
controls over financial reporting;
• implementation and optimization of internal
control systems;
• implementation of the Annual External Audit
Program for ;
• overseeing the implementation of audit me-
asures proposed through the external audit
report;
• external audit of the information security
management system.
The Audit Committee concludes that there are
no indications within the Commission’s scope
that the internal control system is not functi-
oning effectively.
27
Optima
Telekom
Annual Report of the Group for 2021
The Management of the Company
On th March the Supervisory Board pa-
ssed a Decision appointing Tomislav Grmek,
a former member of the Management Board,
to the same position in the Company, for a
two-year term beginning on nd April
in accordance with the Company’s Articles of
Association.
On st November a member of the Mana-
gement Board, Tomislav Tadić, resigned from
the position of a member of the Management
Board of the Company with effect from th
November .
As of st December , the Management
Board consists of: Boris Batelić, President and
Tomislav Grmek, Member of the Management
Board.
Boris Batelić, President of the Management
Board and Tomislav Grmek, Member of the
Management Board, resigned on st January
with effect from th June .
Remuneration for Members of the Management Board
Remuneration and valuation of the Manage-
ment Board is carried out in accordance with
the Remuneration Policy for Members of the
Management Board approved at the General
Assembly on th August . Members of
the Management Board receive a monthly
gross salary, variable part of the annual gross
amount, additional benefits and spot bonus.
Monthly gross salary is agreed in individu-
al employment contracts. In addition to the
monthly gross salary, members of the Mana-
gement Board may also receive a variable part
in the annual gross amount, which depends
on the achievement of goals and the results
of the Company.
The variable part rewards the achievement of
the goals of the members of the Management
Board over a period of one year.
The variable part is the sum of up to three
months of the gross salary of a member of
the Management Board.
In case of achieving results and exceeding the
goals, the members of the Management Board
can be paid an additional bonus salary, which
depends on the performance in the amount
of up to % of the contracted variable part.
In the event that the term of office of a mem-
ber of the Management Board ceases to be va-
lid during the business year, the variable part
will be paid pro rata temporis. For the reco-
gnition of outstanding personal performance
and personal achievements, it is possible to
award a spot bonus (a bonus that is awarded
immediately after the realised achievement)
as a one-time payment. Even in the case of re-
payment based on a spot bonus as a voluntary
benefit provided by the Company, the right to
any future award is not exercised. The decision
is made by the Supervisory Board.
In addition to the above components, the em-
ployment contract of members of the Mana-
gement Board may include other additional
benefits. Additional benefits are non-mone-
tary benefits and services provided by the
Company and receipts in kind, e.g. benefits
after work in the Company, mobility services
(e.g. official vehicle, education, etc.). They may
be granted in the form of voluntary or com-
pulsory benefits provided by the employer. An
individual contract of a member of the Mana-
gement Board may include additional benefits:
• the right to use an official vehicle
• reimbursement of travel and other expenses
for business purposes
• reimbursement of costs of various forms of
professional and managerial training based on
special decisions
• the right to use official mobile terminal equi-
pment, laptop and necessary equipment
• insurance in case of death and permanent
disability
• the right to a thorough medical examination
once a year
• accommodation costs
• relocation costs
• tuition fees for children
• other non-monetary benefits and services,
depending on the individual situation of the
member of the Management Board.
Optima
Telekom
Annual Report of the Group for 2021
28
Supervisory Board of the Company
On th March , Ana Hanžeković Krznarić,
a member of the Supervisory Board, resigned
from her membership in the Company’s Su-
pervisory Board, and her resignation has been
in effect since the election of a new member
of the Company’s Supervisory Board.
Members of the Supervisory Board Ariana Ba-
zala-Mišetić, Jelena Noveljić, Blaženka Klobas,
Igor Vavro and Igor Radojković on th May
resigned from the Supervisory Board of
the Company, with effect from th July .
The regular General Assembly of the Company
was held on th July , in accordance with
the provisions of the Company’s Articles of
Association and the Decision of the Manage-
ment Board of st May .
The General Assembly passed a Decision on
the election of new members of the Supervi-
sory Board for a period of four years, starting
from th July :
• Igor Tepšić, , Zagreb, Izidora
Kršnjavog , law graduate
• Zlatko Hrbud, , Zagreb, Ulica
Natka Nodila , graduate electrical engineer
• Stipanka Ivandić Štefanek, ,
Zagreb, Dalmatinska , Master of Internatio-
nal Economics
• Pavo Mišković, , Zagreb, Pi-
rovec , graduated lawyer
• Marijana Brcko, , Kraljev Vrh,
Ivana Brcka , graduate economist
• Prof. dr. sc. Danimir Gulin, ,
Zagreb, Hrgovići
On th July , at the constituent session
of the Supervisory Board of the Company, Sti-
panka Ivandić Štefanek was elected Chairman
of the Supervisory Board, and Igor Tepšić De-
puty Chairman of the Supervisory Board.
Following the above, the Supervisory Board
of the Company consisted of the following
members:
• Stipanka Ivandić Štefanek, Chairman
• Igor Tepšić, Deputy Chairman
• Zlatko Hrbud, member
• Pavo Mišković, member
• Marijana Brcko, member
• Prof. dr. sc. Danimir Gulin, member
• Suzana Čepl, member - employee represen-
tative.
On th January , Stipanka Ivandić Štefa
nek and Igor Tepšić, Marijana Brcko, Zlatko Hr-
bud, Danimir Gulin and Pavo Mišković resigned
from the Supervisory Board Supervisory Board
of the Company
In accordance with the provisions of the Com-
pany’s Articles of Association and the Mana-
gement Board’s Decision of th January ,
the Extraordinary General Assembly was held
on nd February . The General Assem-
bly passed a Decision on the election of new
members of the Supervisory Board for a peri-
od of four years :
- Ditka Maučec,
- Tomaž Kampuš, - Damir Topić,
- Mario Krka,
- Dina Salapić,
- Dominik Glavina.
At the constituent session of the Supervisory
Board, Ditka Maučec was elected Chairman
of the Supervisory Board, and Tomaž Kampuš
was elected Deputy Chairman of the Supervi-
sory Board. Following the above, the Supervi-
sory Board consists of the following members:
• Ditka Maučec, Chairman
• Tomaž Kampuš, Deputy Chairman
• Damir Topic, member
• Mario Krka, member
• Dina Salapić, member
• Dominik Glavina, member
• Suzana Čepl, member - employee represen-
tative.
Society has no written diversity policy.
Remuneration of Members of the Supervisory Board
Remuneration for the work of the members
of the Supervisory Board was approved by the
decision of the General Assembly of the Com-
pany dated th August .
29
Optima
Telekom
Annual Report of the Group for 2021
Report of the Supervisory Board
on the performed supervision in
the business year 2021 and the
results of the examination of the
reports related to the closing of
the business year
III.
Corporate governance and changes during 2021
Based on the provisions of Art. paragraph
and Art. c of the Companies Act and Art.
of the Articles of Association of -Optima
Telekom d.d., Bani a, Zagreb (hereinafter
“the Company”), the Supervisory Board of the
Company, composed of the members on the
day of this Report: Ditka Maučec, President,
Tomaž Kampuš, Deputy Chairman of the Su-
pervisory Board, Damir Topić, Mario Krka, Dina
Salapić, Dominik Glavina, members and Suza-
na Čepl, member - employee representative in
the Supervisory Board of the Company, submit
to the General Assembly a report on the su-
pervision performed in the business year
and the results of examinations related to the
business year .
Compsition and changes in Management Bo-
ard during the year are presented in chapter
Company Management Board and composi-
ton and changes in Supervisory Board in chap-
ter Supervisory Board.
Members of the Supervisory Board are en-
titled to a monthly remuneration for their
work during the term of office, which, taking
into account the circumstances and condition
of the Company, may not exceed ,
net per individual member of the Supervisory
Board. Members of the Supervisory Board may
also waive the defined remuneration. The fee
does not contain a variable part.
In the event of an earlier termination of the
term of office, for the month in which the
term of office ended, the remuneration shall
be calculated and paid in accordance with the
time spent in the position (“pro rata tempo-
ris”). The Company bears travel expenses, ac-
commodation costs and other costs related to
the presence of the members of the Supervi-
sory Board at the meetings of the Supervisory
Board and the meetings of the committees
and committees of the Supervisory Board and
at the General Assembly. Members of the Su-
pervisory Board are not entitled to severance
payment, additional payments from the Com-
pany or their affiliates, nor do they participate
in share allocation plans.
Work of the Supervisory Board during 2021
The work of the Supervisory Board is not de-
termined by special internal rules. The provisi-
ons of the Companies Act and the Company’s
Articles of Association apply to the work of
the Supervisory Board. The Supervisory Bo-
Optima
Telekom
Annual Report of the Group for 2021
30
Audit Committee
The Supervisory Board has established an Au-
dit Committee that performs detailed analysis
of financial reports, provides support to the
Company’s accounting department and esta
-
blishes good and quality internal control of
the Company.
The company does not have an organizational
unit that deals exclusively with internal au-
dit activities and uses the function of shared
resources with the parent company. In ,
the Audit Committee adopted the Rules of
Procedure and the Rules on the engagement
of audit services, which define in detail the
stated powers and tasks.
Pursuant to Article of the Audit Act, the
Supervisory Board appointed three members
of the Audit Committee from among the
members of the Supervisory Board. All three
members are also financial experts.
Memeber of the Audit Committee until th
July were Igor Vavro, the chairman, Bla-
ženka Klobas, a member and Silvija Tadić, a
member.
On th July for the Audit Committee
member sare appointed Danimir Gulin, chair-
man, Marijana Brdsko, a member and Stipanka
Ivandić Štefanek, a member.
On the date of Report issue, Audit Committee
members are Ditka Maučec, chairman, Tomaž
Kampuš, a member and Dina Salapić, a mem-
ber appointed on the Supervisory Boarda on
th February .
In , the Audit Committee held four ses-
sions, with an overall member participation
rate of %.
The Committee discussed various issues, in
particular the following:
• concluding the year for the Company
and the Group;
• report of external auditors;
• the implementation and effectiveness of
controls over financial reporting;
• implementation and optimization of the
internal control system, and subsequently to
the external auditor’s report on their functi-
oning;
• implementation of the Annual External Audit
Program for ;
• overseeing the implementation of audit me-
asures proposed through the external audit
report;
• external audit of the information security
management system;
The Audit Committee concludes that there
is no indication that within the scope of the
Committee the internal control system is not
functioning effectively.
ard supervised the management of the Com-
pany’s business and performed other business
in accordance with the Companies Act and the
Company’s Articles of Association.
The Supervisory Board has an Audit Commi-
ttee, which performs detailed analysis of fi-
nancial statements, supports the company’s
accounting and establishes good and quality
internal control of the Company, the Nomi-
nation and Remuneration Committee and the
Commission for monitoring synergy projects.
During the Audit Committee held ses-
sions attended by all members.
During the Nomination and Remunera-
tion Commission held one session attended
by all members.
31
Optima
Telekom
Annual Report of the Group for 2021
Committee for monitoring synergy projects
Pursuant to the decision of the Agency for the
Protection of Market Competition, Class /
I-- / - / , dated th March
, which regulates the conditions for ma-
naging the Company during the concentrati-
on, the Commission for monitoring synergy
projects during duration of the concentration
monitors synergy projects between Hrvatski
Telekom d.d. and Optima and advises the Su-
pervisory Board of Optima on these issues.
The Supervisory Board appointed three mem-
bers of the Commission for Monitoring Syner-
gy Projects from among the members of the
Supervisory Board. All three members are also
financial experts.
Until th July members of the Commis-
sion for Monitoring Synergy Projects were
Igor Vavro, the President, Rozana Grgorinić, a
member and Silvija Tadić, a member.
In accordance with the aforementioned De-
cision, the Management Board of the Com-
pany regularly reported to the Supervisory
Board on the intention, planning, course and
outcome of the implementation of synergy
projects between Hrvatski Telekom d.d. and
the Company within the concentration and
on the benefits of these synergy projects for
the Company.
During , the Commission for the Moni-
toring of Synergy Projects held two sessions
by correspondence, with an overall participa-
tion rate of %. After the cessation of the
concentration between Hrvatski Telekom d.d.
and Optima on th July and the fact that
most members of the
Commission have resigned from their positi-
ons on the Supervisory Board, the Commission
is no longer active.
Supervisory Board meetings
During the Supervisory Board had a total
of meetings.
Of these meetings, the Supervisory Board
held meetings by correspondence (by e-ma-
il). During the Supervisory Board discu-
ssed the regular reports of the Management
Board, the state of operations, the plan and
the development of operations.
Considering the obligation of the Manage-
ment Board of the Company regarding obtai-
ning the prior consent of the Supervisory Bo-
ard to undertake legal transactions with the
Company’s shareholders (Hrvatski Telekom
d.d. and Zagrebačka banka d.d.), or related
persons, the Company’s Management Board
submitted proposed decisions of the Ma-
nagement Board in on which the Super-
visory Board decided at its meetings.
On rd September the Supervisory
Board passed, pursuant to the provisions of
Nomination and Remuneration Committee
From th May members of the Nomi-
nation and Remuneration Committee were
Igor Vavro, the President, Rozana Grgorinić, a
member and Ariana Bazala-Mišetić, a member.
On th July Igor Tepšić, the President,
Pavo Mišković, a member and Marijana Brcko,
a member were appointed members of the
Commission. On th February Ditka Ma-
učec, the President, Tomaž Kampuš, a member
and Dominik Glavina, a member, were appoin-
ted as members of the Commission.
During the Commission held one session
by correspondence, attended by all members.
Optima
Telekom
Annual Report of the Group for 2021
32
Articles and of the Company’s Articles of
Association, the Decision that for all new inve-
stment decisions of the Company, regardless
of their value, the Company’s Management
Board would request the prior consent of the
Supervisory Board. Pursuant to the aforemen-
tioned decision, in the Management Bo-
ard submitted to the Supervisory Board, with
the prior consent of proposals for decisions
of the Management Board on which the Su-
pervisory Board decided at its meetings or by
voting outside the meetings.
On th October the Supervisory Board
passed, pursuant to the provisions of Articles
and of the Company’s Articles of Asso-
ciation, the Decision that all new investment
decisions of the Company worth more than
,. (excluding ), the Com-
pany’s Management Board shall request the
prior consent of the Supervisory Board. Excep-
tions to this, regardless of value, are individual
activities related to the provisioning of users,
reconstruction and upgrades of networks
and systems, provided that their values do
not exceed the total budget of the Company
previously approved by the Supervisory Board.
Furthermore, the Company’s Management
Board was instructed to report once a month
to the Supervisory Board on adopted decisi-
ons on investments of individual value from
,. to ,. (excluding
), except for decisions on individual activi-
ties related to user provisioning, network and
system reconstruction and upgrades. With the
entry into force of this Decision, the Decision
of the Supervisory Board of rd September
ceased to be valid. Pursuant to the afo-
rementioned decision, in the Manage-
ment Board submitted two draft decisions
of the Management Board to the Supervisory
Board on which the Supervisory Board deci-
ded at its meetings or by voting outside the
meetings.
In accordance with the recommendation from
Article of the Corporate Governance Code
of the Croatian Financial Services Supervisory
Agency () and the Zagreb Stock Exchan-
ge d.d. (), below is the record of the pre-
sence of each member at the meetings of the
Supervisory Board and the committees of the
Supervisory Board.
33
Optima
Telekom
Annual Report of the Group for 2021
Supervisory Board member rate
Meeting/ Correspondence
meeting
Participation
Participation rate
in %
Supervisory Board meeting
7/7
100%
Correspondence meeting
2/2
100%
Audit Committee meeting
3/3
100%
Commitee for monitoring
synergy projects
1/2
50%
Total
13/14
93%
Supervisory Board meeting
7/7
100%
Correspondence meeting
2/2
100%
Total
9/9
100%
Supervisory Board meeting
6/7
100%
Correspondence meeting
1/2
50%
Total
7/9
78%
Supervisory Board meeting
5/7
71%
Correspondence meeting
0/2
0%
Commitee for monitoring
synergy projects
2/2
100%
Total
7/11
64%
Supervisory Board meeting
7/7
100%
Correspondence meeting
2/2
100%
Total
9/9
100%
Supervisory Board meeting
7/7
100%
Correspondence meeting
2/2
100%
Total
9/9
100%
Supervisory Board meeting
7/7
100%
Correspondence meeting
2/2
100%
Audit Committee meeting
3/3
100%
Total
12/12
100%
Supervisory Board meeting
6/7
86%
Correspondence meeting
1/2
50%
Sjednica Komisije za
praćenje sinergijskih
projekata
2/2
100%
Audit Committee meeting
3/3
100%
Total
12/14
86%
Supervisory Board meeting
16/16
100%
Correspondence meeting
1/3
33%
Total
17/19
89%
Supervisory Board meeting
10/10
100%
Correspondence meeting
1/1
100%
Audit Committee meeting
1/1
100%
Total
12/12
100%
Supervisory Board meeting
10/10
100%
Correspondence meeting
1/1
100%
Nomination and
Remuneration Committee
meeting
1/1
100%
Total
12/12
100%
Supervisory Board meeting
3/10
33%
Correspondence meeting
1/1
100%
Total
4/11
36%
Supervisory Board meeting
6/10
60%
Correspondence meeting
1/1
100%
Nomination and
Remuneration Committee
meeting
1/1
100%
Total
8/12
67%
Supervisory Board meeting
10/10
100%
Correspondence meeting
1/1
100%
Audit Committee meeting
1/1
100%
Nomination and
Remuneration Committee
meeting
1/1
100%
Total
13/13
100%
Supervisory Board meeting
10/10
100%
Correspondence meeting
1/1
100%
Audit Committee meeting
1/1
100%
Nomination and
Remuneration Committee
meeting
1/1
100%
Total
13/13
100%
Jelena Noveljić
Igor Vavro
Ariana Bazala-Mišetić
Ana Hanžeković Krznarić
Rozana Grgorinić
Igor Radojković
Pavo Mišković
Marijana Brcko
Danimir Gulin
Blaženka Klobas
Silvija Tadić
Suzana Čepl
Stipanka Ivandić Štefanek
Igor Tepšić
Zlatko Hrbud
Optima
Telekom
Annual Report of the Group for 2021
34
Significant shareholders in the Company as at 31st December 2021
The Supervisory Board accepted all the reports
of the Management Board submitted during
and concluded that the results achieved
had been within expectations and in line with
the current economic environment.
On th December the largest sharehol-
der of the Company is Zagrebačka banka d.d.
with a .% share in the share capital. It is
followed by d.o.o. with a .%
share in the share capital. The largest share-
holder among physical persons on th De-
cember is Krešimir Kopsejak with .%
share, Tomislav Grmek, a member of the Ma-
nagement Board, owns a total of , sha-
res in the Company.
Results of the examination of the Management Board report on
relations with the governing company and affiliated companies
for 2021
The Management Board submitted to the Su
-
pervisory Board the Report of the Manage-
ment Board on relations with the governing
company and affiliated companies thereof
(Report of the Dependent Company), compi-
led in accordance with Articles and
of the Companies Act and in accordance with
the principles of conscientious and truthful
reporting.
In the opinion of the Management Board, the
relationships of affiliated companies in the
business (calendar) year in total, realized
by contractual affiliating and other underta-
ken legal actions, were within the scope of
ordinary business and entrepreneurial relati-
onships, according to standard conditions and
by applying regular prices.
The Company’s auditor, PricewaterhouseCo-
opers d.o.o., Zagreb reported on the results of
its audit of the above Report, in accordance
with International Standards for Assurance
Engagements () (Revised) - Enga-
gements to perform assurance engagements
other than audits or reviews of historical fi-
nancial information and in accordance with
the provisions of article of the Companies
Act, and issued on th May the Indepen-
dent auditor’s reasonable assurance report
on the Related Party Report for the year ,
containing the conclusion as follows:
Auditor’s conclusion
“In our opinion:
a. the statements made in the Report are true
in all material respects; and
b. values of the consideration by the Company
in legal transactions stated in the Report, ac-
cording to circumstances known at the time
when they were carried out, were not ina-
ppropriately high, in all material aspects”.
The Supervisory Board has no objections to
the results of the audit and to the statement
of the Management Board, as stated above.
The Supervisory Board declares that the Com
-
pany, according to the circumstances known
at the time of undertaking legal activities and
actions specified in the Management Board
Report, received appropriate consideration for
each legal transaction, without any damage to
the Company.
35
Optima
Telekom
Annual Report of the Group for 2021
IV.
The Supervisory Board issued an order to
PricewaterhouseCoopers, the Company’s
auditor, for the examination of the annual
financial statements for the year . The
Supervisory Board, after considering the audi-
ted financial statements for the business year
, established that the Company acted in
in accordance with the law, the acts of
the Company and the decisions of the Gene-
ral Assembly, that the annual financial state-
ments were made in line with the situation in
the Company’s ledgers and that they indicate
the correct property and business status of
the Company. The Supervisory Board has no
objections to the auditor’s report on the exa-
mination of the annual financial statements
for the business year .
The Supervisory Board has no objections to
the audited financial statements delivered by
the Management Board and gives its approval
of the delivered audited financial statements.
The Management Board of the Company has
been informed on the consent of the Super-
visory Board to the annual financial state-
ments of the Company and to the consolida-
ted financial statements of group for the
year at the Supervisory Board session.
The said financial statements are considered
adopted by both the Management Board and
the Supervisory Board and are to be presented
to the General Assembly. The Supervisory Bo-
ard has considered the Annual Report on the
status of business operations for the business
year and has no objections to the delive-
red report. Furthermore, the Supervisory Bo-
ard has no objections to the statement on the
Code of Corporate Governance applied, given
within the above Report. The Supervisory Bo-
ard has no objections to the statements made
in the answers within the attached Complian-
ce and Governance Practices Questionnaires
requested to be completed by and the
Zagreb Stock Exchange and states that the
answers given to these questionnaires are to
their best knowledge truthful in their entirety.
The Supervisory Board holds the opinion that
the proposal of the Management Board on
utilization of the profit is in accordance with
the business results, is in accordance with the
business plan for the current year, protects
the Company’s and shareholders’ interests
and is in accordance with the positive regu-
lations of the Republic of Croatia. Therefore,
the Supervisory Board gave its consent to the
proposal of the Management Board for de-
termination of loss before taxation in amount
of ,,. and determined loss will
be covered from Company business in coming
years.
The joint proposal by the Management Board
and the Supervisory Board on loss coverage
for is to be referred to the General As-
sembly of the Company for decision making.
The Supervisory Board continuously monito-
red the activities of the Management Board in
managing the Company’s operations.
The Management Board informed the Super-
visory Board regularly and timely on planning,
business development of the Company and
its various segments, the state of assets and
liabilities, income and organizational and ot-
her changes related to the Company’s ope-
rations, risk and risk management, business
compliance, and on any deviations of business
development in relation to the original plans
and significant business transactions.
Following all the above, the Supervisory Board
submits this Report on the performed super-
vision in the business year and the results
of the examination of the report related to the
conclusion of the business year to the
General Assembly of the Company.
Ditka Maučec,
The Chairman of the Supervisory Board
Results of the examination of the
annual financial statements and
auditor’s report and the proposal
on loss coverage
OT-Optima Telekom d.d.
and Its Subsidiaries
Consolidated and separate financial statements
At 31 December 2021
Together with Independent Auditor's Report
Contents
OT-Optima Telekom d.d. and Its Subsidiaries
37
Page
Independent Auditor’s Report
38 – 46
Responsibility for the consolidated and separate financial statements
47
Consolidated and separate statement of comprehensive income
48
Consolidated and separate statement of financial position
49 - 50
Consolidated and separate statement of changes in shareholders' equity
51 – 52
Consolidated and separate statement of cash flows
53
Notes to the consolidated and separate financial statements
54 - 122
PricewaterhouseCoopers d.o.o., Heinzelova 70, 10000 Zagreb, Croatia
T: +385 (1) 6328 888, F:+385 (1)6111 556, www.pwc.hr
Commercial Court in Zagreb, no. Tt-99/7257-2, Reg. No.: 080238978; Company ID No.: 81744835353; Founding capital: HRK
1,810,000.00, paid in full; Management Board: J. M. Gasparac, President; S. Dusic, Member; T. Macasovic, Member; Giro-
Account: Raiffeisenbank Austria d.d., Petrinjska 59, Zagreb, IBAN: HR8124840081105514875.
Independent Auditor’s Report
To the Shareholders of OT – Optima Telekom d.d.
Report on the audit of the separate and consolidated financial statements
Our opinion
In our opinion, the separate and consolidated financial statements present fairly, in all material
respects, the separate and consolidated financial position of OT – Optima telekom d.d. (the
“Company”) and its subsidiaries (together - the “Group”) as at 31 December 2021, and the Company’s
and the Group’s separate and consolidated financial performance and separate and consolidated cash
flows for the year then ended in accordance with International Financial Reporting Standards as
adopted by the European Union.
Our opinion is consistent with our additional report to the Audit Committee dated 4 May 2022.
What we have audited
The Company’s separate and the Group’s consolidated financial statements comprise:
● the separate and consolidated statements of comprehensive income for the year ended 31
December 2021;
● the separate and consolidated statements of financial position as at 31 December 2021;
● the separate and consolidated statements of changes in equity for the year then ended;
● the separate and consolidated statements of cash flows for the year then ended; and
● the notes to the separate and consolidated financial statements, which include significant
accounting policies and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the separate and consolidated financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Company and the Group in accordance with the International Code of
Ethics for Professional Accountants (including International Independence Standards) issued by the
International Ethics Standards Board for Accountants (IESBA Code). We have fulfilled our other
ethical responsibilities in accordance with the IESBA Code.
To the best of our knowledge and belief, we declare that the non-audit services that we have provided
to the Company and the Group are in accordance with the applicable law and regulations in Croatia
and that we have not provided non-audit services that are prohibited under Article 5(1) of Regulation
(EU) No 537/2014.
The non-audit services that we have provided to the Company and the Group, in the period from 1
January 2021 to 31 December 2021, are disclosed in Note 36 to the separate and consolidated
financial statements.
39
Our audit approach
Overview
● Overall materiality for the financial statements of the Company
and the consolidated financial statements of the Group as a
whole: HRK 4,000 thousand, which represents 0,90% of total
sales revenues.
● We conducted an audit of the Company, while the subsidiaries
are not material within the Group as a whole.
● Our audit scope addressed 100% of the Group’s revenues and
100% of the Group’s absolute value of underlying loss before
tax.
● Revenue recognition
● Capitalisation of content rights
● Lease accounting
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the separate and consolidated financial statements. In particular, we considered
where management made subjective judgements; for example, in respect of significant accounting
estimates that involved making assumptions and considering future events that are inherently
uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including among other matters consideration of whether there was evidence of bias that
represented a risk of material misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance whether the separate and consolidated financial statements are free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the separate and consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall materiality for the separate and consolidated financial statements as a whole as
set out in the table below. These, together with qualitative considerations, helped us to determine the
scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect
of misstatements, if any, both individually and in aggregate on the separate and consolidated financial
statements as a whole.
Overall Company and Group
materiality
The Company: HRK 3,870 thousand
The Group: HRK 3,870 thousand
How we determined it
The Company: 0.90 % of total sales revenues
The Group: 0.90 % of total sales revenues
Rationale for the materiality
benchmark applied
We chose total sales as the benchmark because it is the
benchmark against which the performance of the Company and
the Group is measured, in terms of both their market share and
customer base. In addition, net profit/loss for previous years was
volatile while revenues are a more consistent measure of
performance.
Materiality
Group
scoping
Key audit
matters
40
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the separate and consolidated financial statements of the current period. These matters
were addressed in the context of our audit of the separate and consolidated financial statements as a
whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Revenue recognition
Refer to note 3.20 (Summary of accounting
policies – Revenue recognition) and note 4
(Segment information). The Company and
Group separate and consolidated
statements of comprehensive income
includes sales of HRK 430,013 thousand.
Revenue is subject to considerable inherent
risk due to:
• the complexity of the systems necessary
for properly recording and identifying
revenue,
• the impact of ever-changing business,
price and tariff models (including tariff
structures, customer discounts,
incentives).
Against this background, the proper
application of the International Financial
Reporting Standard 15 – Revenue from
Contracts with Customers (IFRS 15) is
considered to be complex and to a certain
extent based on estimates and assumptions
made by management consequently
revenue recognition was of particular
importance for our audit.
In light of the fact that the high degree of complexity
and estimates and assumptions give rise to an
increased risk of accounting misstatements, we
assessed the Company's and Group’s processes and
controls for recognizing revenue as part of our audit.
Our audit approach included testing of the controls and
substantive audit procedures, including:
• Assessing the environment of the IT systems
related to invoicing and measurement as well as
other relevant systems supporting the accounting of
revenue, including the implemented controls of
system changes.
• Assessing the design of the processes set up to
account for the transactions in accordance with the
IFRS 15.
• Assessing the invoicing and measurement systems
up to entries in the general ledger.
• Examining customer invoices and receipts of
payment on a sample basis.
• We assessed accuracy and completeness of
separate and consolidated financial statements
presentation and disclosures.
Capitalisation of content rights
Refer to note 3.5. (Summary of accounting
policies – Intangible assets) and note 15
(Intangible assets). The Company and
Group separate and consolidated
statements of financial position includes
capitalised intangible assets of HRK
100,896 thousand, which includes
capitalised content rights of HRK 16,430
thousand.
We obtained a detailed analysis of capitalised
content contracts in current period and reconciled
these amounts to the general ledger. No significant
reconciling differences were identified.
We have tested a sample of costs capitalised in the
period by review of related contracts and invoices to
assess whether they have been appropriately
capitalised in line with the following criteria:
• Contracts are for period of more than 12 months;
• Value of the contract is reliably measurable;
• Contract is not cancellable.
41
How we tailored our Group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the consolidated financial statements as a whole, taking into account the structure of the Group,
the accounting processes and controls, and the industry in which the Group operates.
Key audit matter
How our audit addressed the key audit matter
We focused on this area because of the
significance of the costs capitalised and the
fact that there is a judgement involved in
application of the guidance included in IAS
38 – Intangible assets. There are two main
risks that we addressed in our audit: (1) the
risk of whether the criteria required for
capitalisation of such costs have been met,
and (2) the risk that management’s
estimate of future consideration payable
from content contracts is not reasonable.
In addition, we assessed the reasonableness of
assumptions (estimated number of future customers
and discount rate) used for measurement of future
consideration. We compared the future customers
estimate to historical data, and considered the
consistency of the future growth rate assumptions with
management’s business plans. We also compared the
discount rate used to market information.
We assessed accuracy and completeness of separate
and consolidated financial statements presentation and
disclosures.
Lease accounting
Refer to note 3.9. (Summary of accounting
policies – Right-of-use asset), 3.10
(Summary of accounting policies – Lease
liabilities) and note 17 (Rights-of-use asset
and lease liabilities). The Company
separate statement of financial position
includes right of use asset (RoUA) of HRK
50,025 thousand and lease liability of HRK
43,926 thousand.
Significant amount of the RoUA and lease
liabilities and the fact that in their
measurement management used significant
estimates and assumptions (incremental
borrowing rate, lease term), and that during
the year there was a change in the IT
system used for the calculation made this
area of particular importance for our audit.
In light of the fact that the high degree of estimates
and assumptions give rise to an increased risk of
accounting misstatements, we assessed the
Company's and the Group’s processes and controls
for recognising the RoUA and related lease liabilities
as part of our audit. Our audit approach included
testing of the controls and substantive audit
procedures, including:
• Understanding the environment of the IT systems
related to the register of the lease contracts,
calculation of RoUA, lease liabilities, depreciation
and interest expense as well as other relevant
systems supporting the accounting of lease
contracts, including the implemented controls of
system changes.
• Examining sample of lease contracts and comparing
them with data input in the system.
• Checking the calculation on a sample of lease
contracts and comparing with the calculation of the
system.
We assessed accuracy and completeness of separate
financial statement presentation and disclosures.
42
Reporting on other information including the Management Report
Management is responsible for the other information. The other information comprises the
Management Report and Corporate Governance Statement included in the Annual Report, but does
not include the separate and consolidated financial statements and our auditor’s report thereon.
Our opinion on the separate and consolidated financial statements does not cover the other
information.
In connection with our audit of the separate and consolidated financial statements, our responsibility is
to read the other information identified above and, in doing so, consider whether the other information
is materially inconsistent with the separate and consolidated financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
With respect to the Management Report, Corporate Governance Statement, we also performed
procedures required by the Accounting Act in Croatia. Those procedures include considering whether
the Management Report is prepared in accordance with the requirements of Article 21 and 24 of the
Accounting Act, whether the Corporate Governance Statement includes the information specified in
Article 22 of the Accounting Act.
Based on the work undertaken in the course of our audit, in our opinion:
● the information given in the Management Report and the Corporate Governance Statement for the
financial year for which the separate and consolidated financial statements are prepared is
consistent, in all material respects, with the separate and consolidated financial statements;
● the Management Report has been prepared in accordance with the requirements of Article 21 and
24 of the Accounting Act;
● the Corporate Governance Statement includes the information specified in Article 22 of the
Accounting Act.
In addition, in light of the knowledge and understanding of the Company and the Group and their
environment obtained in the course of the audit, we are required to report if we have identified material
misstatements in the Management Report and Corporate Governance Statement and other
information that we obtained prior to the date of this auditor’s report. We have nothing to report in this
regard.
Responsibilities of management and those charged with governance for the separate
and consolidated financial statements
Management is responsible for the preparation and fair presentation of the separate and consolidated
financial statements in accordance with International Financial Reporting Standards as adopted by the
European Union and for such internal control as management determines is necessary to enable the
preparation of separate and consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the separate and consolidated financial statements, management is responsible for
assessing the Company’s and Group’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Company and the Group or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s and the Group’s
financial reporting process.
43
Auditor’s responsibilities for the audit of the separate and consolidated financial
statements
Our objectives are to obtain reasonable assurance about whether the separate and consolidated
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these separate and consolidated financial
statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the separate and consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
● Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s and Group’s internal control.
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
● Conclude on the appropriateness of management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on the Company’s and Group’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw attention
in our independent auditor’s report to the related disclosures in the separate and consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our independent auditor’s report.
However, future events or conditions may cause the Company and the Group to cease to continue
as a going concern.
● Evaluate the overall presentation, structure and content of the separate and consolidated financial
statements, including the disclosures, and whether the separate and consolidated financial
statements represent the underlying transactions and events in a manner that achieves fair
presentation.
● Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable,
actions taken to eliminate threats or safeguards applied.
44
From the matters communicated with those charged with governance, we determine those matters
that were of most significance in the audit of the separate and consolidated financial statements of the
current period and are therefore the key audit matters. We describe these matters in our independent
auditor’s report unless law or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on other legal and regulatory requirements
Appointment
We were first appointed as auditors of the Company and the Group on 22 April 2015. Our appointment
has been renewed annually by shareholder resolution with the most recent reappointment on 9 July
2021, representing a total period of uninterrupted engagement appointment of 7 years.
Report on compliance of the format of the separate and consolidated financial
statements with the requirements of the European Single Electronic Format (“ESEF”)
Regulation
We have been engaged based on our agreement by the management of the Company to conduct a
reasonable assurance engagement for the verification of compliance with the applicable requirements
of the presentation of the separate and consolidated financial statements included in the attached
electronic file 74780000B0KHQRBBB681-2021-12-31-en.zip, (hereinafter: the financial statements) of
the Company and the Group for the year ended 31 December 2021 (the “Presentation of the Financial
Statements”).
Description of a subject matter and applicable criteria
The Presentation of the Financial Statements has been prepared by the management of the Company
to comply with the requirements of Article 462 paragraph 5 of the Capital Market Act (Official Gazette,
No. 65/18, 17/20 and 83/21) (the “Capital Market Act”) and with the Commission Delegated Regulation
(EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European
Parliament and of the Council with regard to regulatory technical standards on the specification of a
single electronic reporting format (the “ESEF Regulation”). Those regulations require that:
● the financial statements included in the separate and consolidated Annual Report, have been
prepared in the XHTML format;
● the data included in the separate and consolidated financial statements required by the ESEF
Regulation and Capital Market Act have been marked up and all the markups meet the following
requirements:
○ the XBRL markup language has been used,
○ the core taxonomy elements listed in the ESEF Regulation with the closest accounting
meaning have been used, unless an extension taxonomy element was created in
accordance with Annex IV of the ESEF Regulation,
○ the markups comply with the common rules on markups under the ESEF Regulation.
The requirements described above determine the basis for application of the Presentation of the
Financial Statements and, in our view, constitute appropriate criteria to form a reasonable assurance
conclusion.
45
Responsibility of the management and those charged with governance
The Company’s management is responsible for the Presentation of the Financial Statements in
accordance with the ESEF Regulation and the Capital Market Act. In addition, the Company’s
management is responsible for maintaining an internal control system that reasonably ensures the
preparation of the Presentation of the Financial Statements which is free from material non-
compliance with the requirements of the ESEF Regulation and the Capital Market Act, whether due to
fraud or error.
Those charged with governance are responsible for overseeing the process of preparing the
Presentation of the Financial Statements in the ESEF format as part of the financial reporting process.
Our responsibility
Our responsibility is to express a reasonable assurance conclusion, based on the audit evidence
obtained, whether the Presentation of the Financial Statements complies, in all material respects, with
the requirements of the ESEF Regulation and the Capital Market Act. We conducted a reasonable
assurance engagement in accordance with the International Standard on Assurance Engagements
(ISAE) 3000 (Revised) - Assurance Engagements Other than Audits or Reviews of Historical Financial
Information. This standard requires that we comply with ethical requirements, plan and perform
procedures to obtain reasonable assurance whether the Presentation of the Financial Statements is
prepared, in all material respects, in accordance with the applicable requirements.
Reasonable assurance is a high level of assurance, but it does not guarantee that the service
performed in accordance with ISAE 3000 (R) will always detect a material misstatement (significant
non-compliance with the requirements).
Procedures performed
The nature, timing and extent of the procedures selected are matters for the professional judgment of
the auditor.
As part of the selected procedures, we performed in particular the following procedures:
● read the requirements of the ESEF Regulation and the Capital Market Act;
● obtaining an understanding of the internal control system and processes relevant to the
application of the Electronic Reporting Format of the Financial Statements, including the
preparation of the XHTML format and marking up the separate and consolidated financial
statements;
● verification whether the XHTML format was applied properly;
● evaluating the completeness of marking up the separate and consolidated financial statements
using the XBRL markup language according to the requirements of the implementation of
electronic format as described in the ESEF Regulation;
● evaluating the appropriateness of the use of XBRL markups selected from the ESEF taxonomy
and the creation of extension markups where no suitable element in the ESEF taxonomy has been
identified; and
● evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
conclusion.
46
Conclusion
In our opinion, based on the procedures performed and evidence obtained, the Presentation of the
Financial Statements for the year ended 31 December 2021 included in the above stated attached
electronic file complies, in all material respects, with the ESEF Regulation and the Capital Market Act.
Our conclusion is not an opinion on the true and fair presentation of the financial statements presented
in electronic format. In addition, we do not express any form of assurance on the other information
disclosed in the documents in the ESEF format.
The engagement partner on the audit resulting in this independent auditor’s report is Kristina Hranić
Ivić.
PricewaterhouseCoopers d.o.o.
Heinzelova 70, Zagreb
4 May 2022.
This version of our report is a translation from the original, which was prepared in Croatian language. All possible care has been
taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of
information, views or opinions, the original language version of our report takes precedence over this translation.
Consolidated and separate statement of comprehensive income
At 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
48
Group
Company
Notes
2021
2020
2021
2020
Sales
4
Other operating income
5
Merchandise, material and energy
expenses
6
(19,341 )
(21,694 )
(19,324 )
(21,666 )
Interconnection fee expenses
(127,796 )
(121,713 )
(127,796 )
(121,713 )
Rent of telecommunication
equipment
(12,352 )
(10,656 )
(12,352 )
(10,656 )
Sales acquisition costs
(10,090 )
(17,277 )
(10,090 )
(17,277 )
Other service expenses
7
(53,264 )
(59,148 )
(53,216 )
(59,042 )
Staff costs
8
(52,500 )
(56,042 )
(52,500 )
(56,042 )
Own work capitalized
Depreciation, amortisation and
impairment charges
9
(168,926 )
(120,317 )
(168,804 )
(120,195 )
Impairment charge on non-current
and current receivables - net
10
(6,504 )
(6,558 )
(6,504 )
(6,558 )
Other operating expenses
11
(23,723 )
(27,051 )
(23,705 )
(26,829 )
(463,975 )
(426,923 )
(463,770 )
(426,445 )
OPERATING PROFIT/(LOSS)
(29,493 )
(29,288 )
Finance income
12
Finance costs
13
(21,046 )
(25,632 )
(21,046 )
(25,642 )
Finance costs - net
(20,137 )
(25,460 )
(20,105 )
(25,460 )
PROFIT/(LOSS) BEFORE
TAXATION
(49,630 )
(49,393 )
Income tax
14
(2,735 )
(1,968 )
(2,734 )
(1,953 )
PROFIT/(LOSS) FOR THE YEAR
(52,365 )
(52,127 )
Other comprehensive income
TOTAL COMPREHENSIVE
INCOME/(LOSS)
(52,365 )
(52,127 )
Earnings/(loss) per share (in HRK)
25
(0.08 )
(0.08 )
The accompanying notes form an integral part of these consolidated and separate financial statements.
Signed on behalf of the Group and the Company on 4 May 2022:
Boris Batelić
Tomislav Grmek
President of the Management
Board
Member of the Management
Board
Consolidated and separate statement of comprehensive income
At 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
49
Group
Company
Notes
31 December
2021
Adjusted
31 December
2020
Adjusted
1. January
2020
31 December
2021
Adjusted
31 December
2020
Adjusted
1. January
2020
ASSETS
Non-current assets
Intangible assets
15
Property, plant and equipment
16
Right-of-use assets
17
Investments in subsidiaries
19
Contract assets
23
Given loans
18
Deposits and other financial assets
21
Available-for-sale financial assets
Deferred income tax assets
14
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
20
Contract assts
23
Given loans
18
Deposits
Other assets
21
Prepaid expenses and accrued income
22
Cash and cash equivalents
24
Total current assets
The accompanying notes form an integral part of these consolidated and separate financial statements.
Consolidated and separate statement of comprehensive income
At 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
50
Group
Company
Notes
31 December
2021
Adjusted
31 December
2020
Adjusted
1. January
2020
31 December
2021
Adjusted
31 December
2020
Adjusted
1. January
2020
EQUITY AND LIABILITIES
Equity
Issued share capital
25
Capital gains
25
Accumulated losses
25
(910,769 )
(858,404 )
(860,062 )
(909,762 )
(857,635 )
(859,211 )
Total equity
(38,102 )
(37,095 )
Long-term borrowings
26
Issued bonds
27
Trade payables and other payables
28
Lease liabilities
17
Provisions
Deferred income
30
Total non-current liabilities
Short-term borrowings
26
Issued bonds
27
Trade payables and other payables
28
Lease liabilities
17
Provisions
Accrued expenses and deferred income
30
Other current liabilities
29
Total current liabilities
TOTAL EQUITY AND LIABILITIES
The accompanying notes form an integral part of these consolidated and separate financial statements.
Consolidated and separate statement of comprehensive income
At 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
51
Group
Issued share capital
Capital gains
Accumulated losses
Total
Balance at 1 January 2020 (Reported)
(859,256 )
Correction of a previous period error (Note 3.3.)
-
-
(806 )
(806 )
Balance at 1 January 2020 (Adjusted)
(860,062 )
Gain for the year
-
-
Total comprehensive income for the year
-
-
Balance at 31 December 2020
(858,404 )
Balance at 1 January 2021
(858,404 )
Gain for the year
-
-
(52,365 )
(52,365 )
Total comprehensive income for the year
-
-
(52,365 )
(52,365 )
Balance at 31 December 2021
(910,769 )
(38,102 )
Consolidated and separate statement of changes in shareholders' equity
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
52
Company
Issued share capital
Capital gains
Accumulated losses
Total
Balance at 1 January 2020 (Reported)
(858,405 )
Correction of a previous period error (Note 3.3.)
-
-
(806 )
(806 )
Balance at 1 January 2020 (Adjusted)
(859,211 )
Gain for the year
-
-
Total comprehensive income for the year
-
-
Balance at 31 December 2020
(857,635 )
Balance at 1 January 2021
(857,635 )
Gain for the year
-
-
(52,127 )
(52,127 )
Total comprehensive income for the year
-
-
(52,127 )
(52,127 )
Balance at 31 December 2021
(909,762 )
(37,095 )
The accompanying notes form an integral part of these consolidated and separate financial statements.
Consolidated and separate statement of cash flows
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
53
Group
Company
Notes
2021.
2020.
Adjusted
2021.
2020.
Adjusted
Operating activities
Total (loss)/profit for the year
(49,630 )
(49,393 )
Adjusted by:
Depreciation and amortisation
9
Interest expense
11,13
Net impairment of trade receivables
Net exchange differences
12, 13
(415 )
(419 )
Net gain on sale of non-current
assets
(337 )
(145 )
(337 )
(93 )
Increase in inventories
Decrease/(increase) in trade and
other receivables
(10,295 )
(10,272 )
Decrease/(increase) in contract
assets
(292 )
(292 )
Increase/(decrease) in trade
payables and other liabilities
(32,005 )
(31,985 )
Decrease in provisions
(37 )
(46 )
(36 )
(46 )
Interest paid
(13,102 )
(15,967 )
(13,102 )
(15,967 )
Income tax paid
(15 )
Repayment of interest lease liability
(1,278 )
(1,850 )
(1,278 )
(1,850 )
Net cash flows from operating
activities
Cash flows from investing
activities
Payments for property, plant and
equipment
(39,900 )
(56,211 )
(39,900 )
(56,211 )
Proceeds from sale of property,
plant and equipment
Repayment of loans
Payment for other assets
(4 )
(4 )
Paymetn for loans
(64 )
(518 )
Net cash used in investing
activities
(39,265 )
(54,912 )
(39,334 )
(55,672 )
Cash flows from financing
activities
Repayment of finance lease liability
and borrowings
(19,321 )
(49,350 )
(19,321 )
(49,350 )
Repayment of content contracts
(35,779 )
(32,656 )
(35,779 )
(32,656 )
Repayment of principal lease liability
(19,062 )
(25,553 )
(19,062 )
(25,553 )
Repayment of Pre-bankruptcy trade
payables
(8,240 )
(37,621 )
(8,240 )
(37,621 )
Net cash used in financing
activities
(82,402 )
(145,180 )
(82,402 )
(145,180 )
Net (decrease)/ increase in cash
and cash equivalents
(19,353 )
(19,348 )
Cash and cash equivalents at 1
January
Cash and cash equivalents at 31
December
24
The accompanying notes form an integral part of these consolidated and separate financial statements.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
54
1. GENERAL INFORMATION
1.1. Corporate information
OT-Optima Telekom until 30 June 2021 under a contract with Zagrebačka banka d.d., by which HT acquired
management rights (Note 25), and therefore Deutsche Telekom AG was the ultimate controlling company.
Zagrebačka banka d.d. has taken over the management rights of OT-Optima Telekom as the largest single
shareholder since 1 July 2021, and therefore the Unicredit Group is the ultimate controlling company.
The registered office address of the Company is Bani 75a, Buzin, Zagreb, Croatia .
The separate and consolidated financial statements for the financial year ended 31 December 2021 were
authorized for issue in accordance with a resolution of the Management Board.
1.2. Principal activities
Telekom’s initial focus was the business segment. However, shortly after the launch, it also began to target the
residential market with its voice packages. For business users, the Company provides direct access and Internet
services as well as voice service via its own network and/or carried preselected services. In addition, the
Company’s flagship corporate services are its IP Centrex solution, which is a first in the Croatian market, and its
IP VPN services. The Company’s existing facilities also allow it to provide co-location and hosting.
On 6 July 2006 OT-Optima Telekom d.d. became the sole owner of Optima Grupa Holding d.o.o., a company
renamed to Optima Direct d.o.o. on 23 September 2008. The principal activity of Optima Direct d.o.o. comprises
trade and provision of various services mostly from within the scope of the telecom industry. In August 2008 the
Company increased the share capital of Optima Direct d.o.o. by HRK 15,888 thousand as a result of a debt-to-
equity swap, the debt comprising the outstanding loan receivables and accrued interest.
The Company set up, as sole owner, Optima Telekom d.o.o., Koper, Slovenia in 2007.
On August 16, 2011, the company as the sole owner founded the company Optima Telekom for real estate
management and consulting d.o.o. which did not operate during the reporting period and is still dormant.
The ownership structure at 31 December 2021 and 2020 is set out below:
Parent
OT-Optima Telekom d.d.
Subsidiaries
Ownership percentage
Optima Direct d.o.o., Croatia
100 %
Optima Telekom d.o.o., Slovenia
100 %
Optima Telekom za upravljanje nekretninama i savjetovanje d.o.o., Croatia
100 %
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
55
1. GENERAL INFORMATION (CONTINUED)
1.3. Employees
At 31 December 2021, the Company and the Group had 324 employees (2020: 330 employees).
1.4. Management and Supervisory Boards
In 2021 members of the Management Board were as follows:
Boris Batelić
President (since 19 June 2018)
Tomislav Grmek
Member (since 02 April 2019)
Tomislav Tadić
Member (up to 30 November 2021)
In 2021 members of the Supervisory Board were as follows:
Igor Vavro
President (since 26 July 2017 – 11 July 2021)
Ariana Bazala-Mišetić
Member and Deputy Chairperson (since 18 June 2014 – 11 July
2021)
Igor Radojković
Member (since 19 June 2018 – 11 July 2021)
Ana Hanžeković Krznarić
Member (since 19 June 2014 – 11 July 2021)
Rozana Grgorinić
Member (since 19 June 2018 – 11 July 2021)
Jelena Noveljić
Member (since 19 June 2018 – 11 July 2021)
Blaženka Klobas
Member (since 19 June 2018 – 11 July 2021)
Silvija Tadić
Member (since 19 June 2018 – 11 July 2021)
Stipanka Ivandić Štefanek
President (since 12 July 2021)
Igor Tepšić
Member and Deputy Chairperson (since 12 July 2021)
Suzana Čepl
Member (since 07 November 2018)
Danimir Gulin
Member (since 11 July 2021)
Zlatko Hrbud
Member (since 11 July 2021)
Marijana Brcko
Member (since 11 July 2021)
Pavo Mišković
Member (since 11 July 2021)
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
56
1. GENERAL INFORMATION (CONTINUED)
1.5. Going concern
The unconsolidated and consolidated financial statements have been prepared on the assumption that the
Company and the Group will continue in business in accordance with the going concern basis. The Group's
cumulative losses as at 31 December 2021 amounted to HRK 910,769 thousand (2020: HRK 858,404 thousand),
and current liabilities exceed current assets by HRK 334,872 thousand (2020: HRK 323,569 thousand).
During 2014, the Company changed its ownership and management structure, as well as increased its share
capital (Note 25), as part of the implementation of the Pre-Bankruptcy Settlement Agreement concluded before
the Commercial Court in Zagreb on 30 April 2014.
The Pre-Bankruptcy Settlement Agreement stipulates that the issuer (parent company) fulfils significant financial
obligations to the pre-bankruptcy settlement creditors within strictly set deadlines during a multi-year period. In
2021, the Company fulfilled all its obligations in accordance with the said agreement, except for the payment of
a claim in the amount of HRK 35,346 thousand, which was temporarily postponed until the relationship with the
creditor Zagrebačka banka d.d. was settled (interest at maturity).
On January 21, 2022, the Agreement on the transfer of OT-Optima Telekom shares was signed between Hrvatski
Telekom d.d., Zagrebačka banka d.d. and Telemach Hrvatska d.o.o. by which HT holding (a company 100%
owned by Hrvatski Telekom d.d.) transferred 17.41% of Optima shares, and Zagrebačka banka 36.90% of
Optima shares to Telemach Hrvatska d.o.o. which thus acquires a total of 54.31% of Optima shares.
On the day in question, the Company received a notice from Hrvatski Telekom d.d. in which it was also informed
that Hrvatski Telekom d.d. with Telemach Hrvatska d.o.o. entered into an agreement on the purchase and sale
of receivables, by which Hrvatski Telekom sold and ceded, and Telemach Hrvatska d.o.o. purchased and
accepted receivables from the Company in the total amount of HRK 238,822 thousand. The receivables in
question relate to cash receivables based on loans in the amount of HRK 203,822 thousand (Note 26) and regular
receivables in the amount of HRK 35,000 thousand.Zagrebačka banka d.d., Telemach Hrvatska d.o.o. and on
21 January, the Company agreed to settle Optima's liabilities in the amount of HRK 166,928 thousand (Note 26)
by Telemach Hrvatska d.o.o. based on Pre-Bankruptcy Settlements of the Company and the merged company
H1 Telekom d.d.
On the same day, the Company entered into loan agreements with Telemach Hrvatska d.o.o. in the amount of
HRK 166,928 thousand and HRK 238,822 thousand. The contracts define the repayment of loans within ten (10)
years and the payment of quarterly interest at 4.65% (per year).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
57
1. GENERAL INFORMATION (CONTINUED)
1.5. Going concern (continued)
On February 25, 2022, Telemach Hrvatska d.o.o. Zagreb, announced a public offer to take over the Company,
since the Croatian Financial Services Supervisory Agency approved the publication of a public offer to take over
the Company by a decision of 24 February 2022. The takeover bid for the Company was published in the Official
Gazette, Official Gazette of the Republic of Croatia on March 2, 2022, with a validity period of 30 days.
Following a public offer to take over the Company, Telemach Hrvatska d.o.o. holds 66,017,169. ordinary shares
of the Company representing 95.07% of the Company's share capital.
On April 8, 2022, Telemach Hrvatska d.o.o. submitted to the Central Depository and Clearing Company a
Request for transfer of shares of minority shareholders of the Company, which request relates to 3,426,095
ordinary shares of the Company.
On April 26, 2022, the Company was notified of the Decision of the Zagreb Stock Exchange d.d. suspending
trading in shares of OT-OPTIMA TELEKOM d.d. with its registered office in Zagreb, Bani 75 / a, PIN:
36004425025, listed on the Official Market under the code: OPTE, ISIN: HROPTERA0001, nominal amount HRK
10.00, dated 27 April 2022. Termination of listing on the Official Market of 69,443,264 ordinary shares will take
place on April 29, 2022.
The Company actively manages cash flow and proactively takes action to maximize working capital (improve
collection days, negotiate favourable terms with suppliers) and reduce capital investment to ensure stable cash
flow in future periods. The Management Board believes that by exploiting synergies through the sales channel
segment and network optimization, owned by Telemach Hrvatska d.o.o., the Company will strengthen its market
position, gradually raise revenue levels and create new opportunities for development and growth of the Group
and the Company.
These financial statements have been prepared on the going concern basis.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
58
1. GENERAL INFORMATION (CONTINUED)
1.6. Business impacts of COVID-19
The Group and the Company continuously monitor the situation regarding COVID-19 and related impacts on its
operations. The emergence of the COVID-19 virus has affected all industries and highlighted the need for a
strong digital infrastructure in business and all segments of society.
Further to the development of risks and impacts associated with COVID-19, the Group and the Company
maintain diverted operations to online channels (where possible) and the provision of field maintenance services,
in compliance with the recommendations of security measures.
As a result of COVID-19, the Group and the Company had a positive impact on total revenues in the amount of
HRK 72 thousand, or 0.02%. The positive impact on revenues was stimulated by the greater inclusion of 0800
number of HZJZ “Cijepise”, which resulted in greater use of public speaking services in the business sales
segment in the amount of HRK 447 thousand or 1.4%. However, due to the pandemic, the positive impact in
question in the segment of private users affected the reduction of revenues from the public voice service (lower
consumption) in the amount of HRK 374 thousand or 0.3%.
Having in mind the further development of the situation with COVID-19, there are potential risks in the segments
of declining revenues and increasing risks of non-payment, which are proportional to the impacts on the entire
Croatian economy and the economic situation of Croatian citizens.
Throughout the period, the Group and the Company seek to minimize the impact on operating operations and
financial results through continuous activities.
1.7. The impact of climate change on business
The Group's management has taken note of global awareness and concerns about the potential impact of climate
change. Currently, this issue has not had a significant impact on the consolidated financial statements, but the
Management Board continues to monitor developments in this area.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
59
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) -
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Company and the Group
Lease reliefs in the context of the COVID-19 pandemic - Amendments to IFRS 16 issued on 28 May 2020 in
effect for annual periods beginning on or after 1 June 2020. The amendment grants tenants’ reliefs in the form
of an optional exemption from assessment obligation if the lease relief introduced due to the effects of the COVID-
19 pandemic constitutes a lease alteration. Tenants can choose whether to express the lease relief in the same
way as they would if it there were no lease alterations. The practical solution applies only to rent reliefs introduced
as a direct result of the COVID-19 disease pandemic and only if all the conditions set out below are met due to
a change in the lease payment, the lease fee is substantially equal to or less than the rent as it was immediately
before the change; any reduction in the amount of the lease payment shall affect only payments due on or before
30 June 2021; and there are no significant changes to other lease terms.
The Company and the Group did not contract with landlords for real estate lease relief and therefore these
amendments did not have an impact on the financial statements of the Company and the Group.
(b) New standards and interpretations not yet adopted
Several new standards and interpretations have been issued that are mandatory for reporting periods beginning
on or after 1 January 2022 and that have not been previously adopted by the Company and the Group.
• Sale or entry of assets between an investor and its associate or joint venture - Amendments to IFRS 10 and
IAS 28 (issued on 11 September 2014 and effective for annual periods beginning on or after the date to be
determined by the IASB).
• IFRS 17 “Insurance Contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after
1 January 2021).
• Amendments to IFRS 17 and the amendment to IFRS 4 (issued on 25 June 2020 and effective for annual
periods beginning on or after 1 January 2023).
• Reform of Reference Interest Rates (IBOR) - Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16 (published on 27 August 2020 and at effective for annual periods beginning on or after 1 January 2021).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
60
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
- Changes in accounting policies and disclosures (continued)
(b) New standards and interpretations not yet adopted
Classification of Liabilities into Short-Term or Long-Term - Amendments to IAS 1 (issued on 23 January 2020
and effective for annual periods beginning on or after 1 January 2022). These narrow scope appendices clarify
the classification of liabilities into short-term or long-term, depending on the rights that exist at the end of the
reporting period. Liabilities are long-term if at the end of the reporting period the entity has a material right to
defer settlement for at least twelve months. The guidelines no longer require such a right to be unconditional.
Management's expectations as to whether they will subsequently exercise the right to defer settlement do not
affect the classification of liabilities. The right to deferment exists only if the entity meets the relevant conditions
at the end of the reporting period. The liability is classified as current in the event of a breach of the condition on
or before the reporting date, even if the lender waives that condition after the end of the reporting period.
Conversely, a loan is classified as long-term in the event of a breach of the terms of the loan agreement only
after the reporting date. Furthermore, the amendments include a clarification of the classification requirements
of debt that a company can meet by converting it into equity. ‘Settlement’ is defined as the closure of a liability
with cash, other resources representing economic benefits or the entity’s own equity instruments. An exception
is provided for convertible instruments that can be converted into equity, but only for those instruments where
the conversion option is classified as an equity instrument if it is a separate component of a complex financial
instrument. The European Union has not yet approved the amendment. The Company and the Group are
currently assessing the impact of the amendments on the financial statements.
Classification of liabilities into short-term or long-term, deferral of effective date - Amendments to IAS 1 (issued
on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023). The amendment to IAS
1 relating to the classification of liabilities into short-term or long-term was issued in January 2020, with the
original effective date on 1 January 2022. However, due to the Covid-19 pandemic, the effective date was
delayed by one year to allow subjects additional time to implement the classification changes resulting from the
revised guidelines. The Company and the Group are currently assessing the impact of the amendments on the
financial statements.
Revenue before intended use, Harmful contracts - contract performance costs, Reference to the Conceptual
Framework - Supplements to the narrow scope of IAS 16, IAS 37 and IFRS 3 and Annual Improvements to IFRSs
for the 2018-2020 Cycle - amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and
effective for annual periods beginning on or after 1 January 2022). The amendment to IAS 16 prohibits an entity
from deducting from the cost of an item of property, plant and equipment that proceeds from the sale of items
produced during the preparation of the asset for its intended use. Revenue from the sale of such items, together
with the cost of producing them, is now recognized in profit or loss. To measure the cost of these items, an entity
shall apply IAS 2. The cost will not include the depreciation of the assets being examined for as it is not ready
for its intended use. The amendment to IAS 16 also clarifies the fact that an entity 'examines whether an asset
is in good working order' when assessing the technical and physical performance of the asset.
The financial effectiveness of the asset is not relevant for this assessment. Assets could therefore be able to
operate in the manner required by management and could be subject to depreciation before reaching the level
of operational efficiency expected by management.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
61
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
Changes in accounting policies and disclosures (continued)
(b) New standards and interpretations not yet adopted
The amendment to IAS 37 clarifies the meaning of “contract performance costs”. The appendix explains that the
direct costs of performing a contract include the additional costs of performing that contract, but also explains the
distribution of other costs directly related to the performance. The appendix also clarifies that before forming a
special provision for an onerous contract, the entity recognizes an impairment loss on the assets used to perform
the contract and not the assets intended for that contract.
IFRS 3 has been amended and now refers to the 2018 Financial Reporting Conceptual Framework to determine
what constitutes an asset or liability in a business merger. Prior to this amendment, IFRS 3 referred to the 2001
Conceptual Framework for Financial Reporting. In addition, a new exception to liabilities and contingent liabilities
has been added to IFRS 3. In line with this exception, for some types of liabilities and contingent liabilities, an
entity applying IFRS 3 should apply IAS 37 or Interpretation (IFRIC) 2, rather than the 2018 Conceptual
Framework. If this new exception had not been introduced, an entity would have recognized some liabilities in a
business merger that it would not have recognized under IAS 37. Therefore, an entity would have to cease
recognizing those liabilities immediately upon acquisition and recognize a gain that does not represent an
economic gain. It is also clarified that the acquirer should not recognize a potential asset at the acquisition date,
as specified in IAS 37.
The amendment to IFRS 9 specifies which fees should be subject to an examination of whether there has been
a change in value of at least 10% in order for a financial liability to be derecognised. Costs or fees may be paid
to third parties or the lender. Subject to the mentioned appendix, costs or fees paid to third parties shall not be
subject to an examination as to whether there has been a change in value of at least 10%.
Illustrative Example 13 published with IFRS 16 has been amended and no longer contains an example of a
lessor's payment relating to an investment in another's property. The example has been amended to remove
potential misunderstandings about the accounting for rental incentives.
IFRS 1 allows for an exemption if a subsidiary adopts IFRSs after the parent has already adopted them. A
subsidiary may measure its assets and liabilities at the book value that would be included in the parent's
consolidated financial statements, considering the date of transition of the parent to IFRSs, provided that no
adjustments have been made for consolidation procedures and business merger by which the parent company
acquired the subsidiary. IFRS 1 has been amended to allow entities that have benefited from this exemption from
IFRS 1 in order to measure cumulative exchange rate differences by applying the amounts reported by the
parent, taking into account the date of the parent's transition to IFRSs. The amendment to IFRS 1 extends this
exemption to cumulative exchange rate differences in order to reduce costs for those entities that adopt IFRSs
for the first time. This appendix will also apply to associates and joint ventures that have applied the same
exemption provided for in IFRS 1.
The requirement by which entities had to exclude cash flows for tax purposes when measuring fair value under
IAS 41 has been abolished. The purpose of this appendix is to comply with the requirement of the standard that
cash flows should be discounted after tax. The European Union has not yet approved the interpretation. The
Company and the Group are currently assessing the impact of the amendments on the financial statements.
COVID-19-related rent Amendments to IFRS 16 (issued on 31 March 2021 and effective for annual periods
beginning on or after 1 April 2021). In May 2020, the IASB published an amendment to IFRS 16 that provided
lessees (but not lessors) with relief in the form of an optional practical expedient from assessing whether a rent
concession related to COVID-19 is a lease modification. Lessees could elect to account for rent concessions in
the same way as if they were not lease modifications.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
62
2. ADOPTION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
Changes in accounting policies and disclosures (continued)
(b) New standards and interpretations not yet adopted
The expedient initially only applied to reductions in lease payments due on or before 30 June 2021, but that date
was subsequently extended to 30 June 2022 through further amendments made in March 2021. The Company
and the Group are currently assessing the impact of the amendments on the financial statements
Unless otherwise stated above, the new standards and interpretations are not expected to have a material impact
on the Company's and the Group's financial statements.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
63
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.1. Basis of preparation
The financial statements of the Group and the Company have been prepared on the historical cost convention,
in accordance with International Financial Reporting Standards as endorsed by European Union (EU).
The Group and the Company maintain its accounting records in the Croatian language, in Croatian Kuna and in
accordance with Croatian laws and the accounting principles and practices observed by enterprises in Croatia.
The preparation of financial statements in conformity with International Financial Reporting Standards (IFRSs)
as endorsed by EU requires the use of certain significant accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s and the Company’s accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant
to the financial statements are disclosed in Note 3. These consolidated financial statements have been prepared
under the assumption that the Group and the Company will continue as a going concern.
The accounting policies are consistently applied by all the Group entities.
3.2. Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and entities controlled
by it (its subsidiaries). Control is present when the Company has the power to manage financial and operational
policies of the investee so as to derive benefits from its operations. The results of subsidiaries acquired or
disposed of during the year are included in the consolidated statement of comprehensive income from the
effective date of acquisition and up to the effective date of the disposal.
Where necessary, adjustments have been made to the financial statements of subsidiaries to bring the
accounting policies used into line with those used by the Group. All significant intragroup transactions, balances,
income and expenses have been eliminated on consolidation.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
64
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3.3. Correction of errors in the financial statements of previous periods
a) Recognition of tax liabilities - The Company and the Group corrected the errors for understated tax liabilities
for the previous periods in the total amount of HRK 806 thousand. The stated correction of errors refers to the
additional liabilities recognised for tax and surtax on personal income tax based on the results of the tax review
for the periods of 2015-2017 years associated with a contractual relationship with the former owner of the
Company. As a result of the correction of error, the Company and the Group increased its tax liabilities in the
amount of HRK 806 thousand in the opening balance of the earliest comparable year and increased the
accumulated loss in the opening balance of the earliest comparable year by the same amount.
b) Reclassification of bonds
) Reclassification of liabilities - In previous periods, the Company and the Group misclassified certain other
payables of its subsidiary H1 Telekom as issued bond liabilities. Mentioned liabilities were contracted as part of
the pre-bankruptcy settlement process of H1 Telekom that was acquired in 2017. .The above errors have been
corrected by reclassifying each of the items in the prior period financial statements as follows:
• Consolidated statement of financial position – 1 January 2020
Group
1. January
2020
As reported
a)Correction
of error –
income tax
liability
b)Correctio
n of error –
Reclassific
ation of
liability
1. January
2020
Restated
Position
Accumulated losses
(859,256)
(806)
-
(860,062)
Total equity
13,411
(806)
-
12,605
Issued bonds- long term
46,038
-
(24,219)
21,819
Trade payables and other liabilities – long term
1,903
-
24,219
26,122
Issued bonds- short term
24,068
(9,524)
14,544
Trade payables and other liabilities – short term
240,721
-
9,524
250,245
Other short term liabilities
7,429
806
-
8,235
• Consolidated statement of financial position – 31 December 2020
Group
31 December
2020
As reported
a)Correction
of error –
income tax
liability
b)Correctio
n of error –
Reclassific
ation of
liability
31
December
2020
Restated
Position
Accumulated losses
(857,598)
(806)
-
(858,404)
Total equity
15,069
(806)
-
14,263
Issued bonds- long term
23,579
-
(16,271)
7,308
Trade payables and other liabilities – long term
2,320
-
16,271
18,591
Issued bonds- short term
23,623
(8,981)
14,642
Trade payables and other liabilities – short term
146,409
-
8,981
155,390
Other short term liabilities
8,993
806
-
9,799
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
65
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.3. Correction of errors in the financial statements of previous periods
• Separate statement of financial position – 1 January 2020
Company
1. January
2020
As reported
a)Correction
of error –
income tax
liability
b)Correctio
n of error –
Reclassific
ation of
liability
1. January 2020
Restated
Position
Accumulated losses
(858,405)
(806)
-
(859,211)
Total equity
14,262
(806)
-
13,456
Issued bonds- long term
46,038
-
(24,219)
21,819
Trade payables and other liabilities – long
term
1,903
-
24,219
26,122
Issued bonds- short term
24,068
-
(9,524)
14,544
Trade payables and other liabilities – short
term
240,721
-
9,524
250,245
Other short term liabilities
6,606
806
-
7,412
• Separate statement of financial position – 31 December 2020
Company
31 December
2020
As reported
a)Correction
of error –
income tax
liability
b)Correctio
n of error –
Reclassific
ation of
liability
31 December
2020
Restated
Position
Accumulated losses
(856,829)
(806)
-
(857,635)
Total equity
15,838
(806)
-
15,032
Issued bonds- long term
23,579
-
(16,271)
7,308
Trade payables and other liabilities – long
term
2,320
-
16,271
18,591
Issued bonds- short term
23,623
-
(8,981)
14,642
Trade payables and other liabilities – short
term
146,383
-
8,981
155,364
Other short term liabilities
8,978
806
-
9,784
• Consolidated statement of cash flows
Grupa
31 December
2020
As reported
b)Correction of
error –
Reclassification
of liability
31 December
2020
Restated
Position
Repayment of finance lease liability and borrowings
(57,590)
8,240
(49,350)
Repayment of Pre-bankruptcy payables
(29,381)
(8,240)
(37,621)
• Separate statement of cash flows
Company
31 December
2020
As reported
b)Correction of
error –
Reclassification
of liability
31 December
2020
Restated
Position
Repayment of finance lease liability and borrowings
(57.590)
8.240
(49.350)
Repayment of Pre-bankruptcy payables
(29.381)
(8.240)
(37.621)
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
66
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
3.4. Business Combinations and Goodwill
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those
returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group and are deconsolidated from the date that that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former
owners of the acquiree, and the equity interests issued by the Group. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date. Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held
equity interest in the acquiree is remeasured to fair value as at the acquisition date through the statement of
comprehensive income.
Any contingent consideration to be transferred by the Group is recognized at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognized either in statement of comprehensive income or as a change to other comprehensive income.
Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is
accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the amount of
non-controlling interest in the acquiree over the fair value of identifiable net assets acquired. If this consideration
is lower than the fair value of the net assets acquired, the difference is recognized in the statement of
comprehensive income. Following initial recognition, goodwill is measured at cost less any accumulated
impairment losses.
Inter-company transactions, balances, income and expenses on transactions between group companies are
eliminated. Profits and losses resulting from inter-company transactions that are recognized in assets are also
eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group. Merger of subsidiaries are accounted for using the predecessor values
method. Under this method the financial statements of the combined entity are presented as if the businesses
had been combined from the date when the combining entities were first brought under common control. The
assets and liabilities of the subsidiary merged are at the predecessor entity’s carrying amounts. Related goodwill
is also recorded in these financial statements. Any difference between the carrying amount of net assets,
including the predecessor entity's goodwill, and the consideration for the acquisition is accounted for in these
financial statements as an adjustment to reserves within equity.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
67
3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.5. Intangible assets
Intangible assets are measured initially at cost. Intangible assets are recognized in the event that the future
economic benefits that are attributable to the assets will flow to the Company and the Group, and that the cost
of the asset can be measured reliably. After initial recognition, intangible assets are measured on a straight-line
basis over the best estimate of their useful life. The amortization method is reviewed annually at each financial
year-end.
Intangible assets include right to provide telecommunication services, licenses and concessions to operate
different types of telecommunication services and are carried at cost less accumulated amortisation and any
accumulated impairment losses.
In addition to directly attributable costs, the costs of internally constructed assets include proportionate indirect
material and labour costs, as well as administrative expenses relating to production or the provision of services.
The economic life of the right, concession and licenses to operate telecommunication services is determined
based on the underlying agreements and amortized on a straight-line basis over the period from the moment
when it has been approved by the regulator until the end of the initial right, concession or license term. No renewal
periods are considered in determining the economic life.
The right to provide telecommunication services is given for period of 30 years, while licenses and concessions
are valid 4 years.
The IPTV programme distribution rights are recognised as part of intangible assets at the inception of the contract
period. In order for the contracts with the content providers to qualify as intangible assets, they should meet the
following requirements:
• the period of the contract must be longer than one year,
• the cost must be identified or identifiable,
• the contractual rights must be continuous, and
• the contracts costs are inevitable.
Assets recognised under those contracts are amortised over the period of the underlying operating agreement.
Content contracts which do not meet the criteria for capitalization are expensed and presented in “other
expenses” in the statement of comprehensive income. Other intangible assets refer to software license and it is
carried at cost less accumulated amortisation and any accumulated impairment loss.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
68
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.5. Intangible assets (continued)
Customer relationships and long-term customer contracts acquired in a business combination are recognised at
fair value at the acquisition date. They have finitive useful life and are subsequently carried at cost less
accumulated amortisation and impairment losses.
Useful lives of intangible assets are as follows:
Licences and rights
30 years
Software
5 years
Content
1,5-5 years
Customer relationship
6,5-10,5 years
Customer base
7-11 years
Assets under construction are not amortized.
Goodwill arises on the acquisition of subsidiaries. For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the Group’s cash generating units, or groups of cash generating
units, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the
goodwill is allocated represents the lowest level within the Group at which the goodwill is monitored for internal
management purposes. Goodwill and intangible assets with indefinite useful lives are reviewed for impairment,
annually or more frequently if events or changes in circumstances indicate that the carrying value may be
impaired.
Impairment for goodwill is determined by assessing the recoverable amount, based on fair value less cost of
disposal, of the cash-generating unit (or group of cash-generating units), to which the goodwill relates. Where
the recoverable amount of the cash-generating unit (or group of cash-generating units) is less than the carrying
amount of the cash-generating unit (group of cash-generating units) to which goodwill has been allocated, an
impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods. The
Group performs its annual impairment test of goodwill as at 31 December. Please see Note 15 for more details.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
69
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.6. Property, plant and equipment
Property, plant and equipment are carried at historical cost less accumulated depreciation and any accumulated
impairment loss, except for land, which is carried at cost.
In addition to directly attributable costs, the costs of internally constructed assets include proportionate indirect
material and labour costs, as well as administrative expenses relating to production or the provision of services.
Property, plant and equipment in use are depreciated on a straight-line basis using the following rates.
Buildings
40 years
Vehicles
5 years
Telecom plant and equipment
5 to 20 years
Office equipment
4 years
CPE equipment
7 years
Mobile devices
2 years
The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting
year, with the effect of any changes in estimates accounted for on a prospective basis.
The cost of property, plant and equipment comprises the invoiced amount, including import duties and non-
refundable taxes and any directly attributable costs of bringing an asset to its working condition and location for
its intended use.
Expenditure incurred after putting an item of property, plant and equipment into use, such as those incurred in
the repair, maintenance and overhaul, is charged to expenses for the period in which it is incurred.
In situations where it can be clearly demonstrated that the expenditures have resulted in an increase of future
economic benefits expected to be obtained from the use of an item of property, plant and equipment beyond its
originally assessed standard performance, they are capitalised, i.e. added to the cost of property, plant and
equipment.
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined
as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or
loss.
3.7. Impairment of non-financial assets
Items of property, plant and equipment and of intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Whenever the
carrying amount of an asset exceeds its recoverable amount, an impairment loss is recognised immediately in
profit or loss.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
70
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.7. Impairment of non-financial assets (continued)
At each date of the statement of financial position, the Company and the Group reviews the carrying amounts of
its property, plant and equipment, and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated to determine the extent of any impairment loss. Where it is not possible to estimate the recoverable
amount of an individual asset, the Company and the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment at least annually, and whenever there is an indication that an asset may be impaired.
The recoverable amount of an asset is the greater of the asset's fair value less cost of disposal and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the
asset.
The net realisable value is the amount obtainable from the sale of an asset in an arm’s length transaction less
selling expenses, while value in use is the present value of estimated future cash flows expected to arise from
the continuing use of an asset and from its disposal at the end of its useful life determined using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset.
If the recoverable amount of an asset (or a cash-generated unit) is estimated to be less that its carrying amount,
the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised immediately as an expense, unless the relevant asset is a piece of land or a building other than an
investment property carried at a revalued amount, in which case the impairment loss is treated as a fair value
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit
or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
3.8. Cash and cash equivalents
Cash and cash equivalents consist of balances with banks and in hand. Cash equivalents comprise demand
deposits and term deposits with original maturities of up to three months.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
71
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.9. Right-of-use assets
Leases are recognised as right-of-use assets and corresponding liabilities at the date at which the leased assets
are available for use by the Company and the Group.
The right-of-use assets is presented separately in the statement of financial position, except for right-of-use
assets that meet the definition of investment property which is presented in statement of financial position in
separate line item – “investment property”.
Right-of-use assets are measured initially at cost comprising the following:
• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs;
• restoration costs.
Subsequently, the right-of-use assets, are measured at cost less accumulated depreciation and any accumulated
impairment losses and adjusted for remeasurement of the lease liability due to reassessment or lease
modifications.
The right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. If the Company and the Group is reasonably certain to exercise a purchase option, the right-of-use
asset is depreciated over the underlying assets’ useful lives. The amortisation periods for the right-of-use assets
are as follows:
Buildings
3 to 5 years
Equipment
3 years
Other
4 to 6 years
Payments associated with all short-term leases are recognised on a straight-line basis as an expense in profit
or loss.
Short-term leases are leases with a lease term of 1 month or less.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
72
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.10. Lease liabilities
At the commencement date, lease liabilities are measured at an amount equal to the present value of the
following lease payments for the underlying right-of-use assets during the lease term:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable;
• amounts expected to be payable by the Company and the Group under residual value guarantees;
• the exercise price of a purchase option if the Company and the Group is reasonably certain to exercise that
option;
• payments of penalties for terminating the lease, if the lease term reflects the Company and the Group exercising
that option.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily
determined, or the Company and the Group incremental borrowing rate.
Each lease payment is allocated between the liability and finance cost. Lease liabilities are subsequently
measured using the effective interest method. The carrying amount of liability is remeasured to reflect any
reassessment, lease modification or revised in-substance fixed payments.
The lease term is a non-cancellable period of a lease; periods covered by options to extend and terminate the
lease are only included in the lease term if it is reasonably certain that the lease will be extended or not
terminated.
3.11. Inventories
Inventories comprise mainly spare parts for telecommunication equipment, other spare parts, office supplies and
are stated at the lower of cost and net realisable value. Management provides for inventories based on a review
of the overall ageing of all inventories and a specific review of significant individual items included in inventories.
3.12. Foreign currencies
The functional currency of the Company and the Group is the Croatian kuna (HRK). Transactions in foreign
currencies are translated into the domestic currency using the middle exchange rate of the Croatian National
Bank on the date of the transaction. Gains or losses arising from changes in foreign exchange rates after the
date of the transaction are recognized in comprehensive income within financial income or financial expenses.
The financial statements of the Company and the Group are presented in the currency of the primary economic
environment in which the Company and the Group operate (the “functional currency”). Non-monetary items that
are measured at fair value in a foreign currency are retranslated at the exchange rate ruling at the date that the
fair value was determined. Non-monetary items denominated in foreign currencies that are stated at historical
cost are not retranslated at the balance sheet date.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
73
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.13. Retirement benefits
The Company and the Group provides to its employee’s one-off benefits upon their retirement. The obligation
and costs of these benefits are determined using a projected unit credit method. The projected unit credit method
considers each period of service as giving rise to an additional unit of benefit entitlement and measures each
unit separately to build up the final obligation. The pension obligation is measured at the present value of
estimated future cash flows using an average discount rate on long-term government bonds. The currency and
terms of the government bonds are consistent with the currency and estimated terms of the benefit obligation.
3.14. Income tax expense
Income tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from the net profit
reported in the statement of comprehensive income because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
Company’s and the Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of
assets and liabilities in the financial statements and the corresponding tax basis used in the computation of
taxable profit and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally
recognised for all taxable temporary differences, and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which the deductible temporary differences can be utilised.
Deferred taxes are measured at the tax rates that are expected to apply in the period in which the liability is
settled or the asset realised, based on tax rates and tax laws enacted or substantively enacted by the reporting
date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Company and the Group expects, at the reporting date, to recover or settle the carrying
amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation
authority and the Company and the Group has the ability and intention to settle on a net basis.
Current and deferred taxes for the period
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in
other comprehensive income, in which case, the current and deferred taxes are also recognised outside the profit
or loss.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
74
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.15. Provisions
Provisions are recognized when, and only when, the Company and the Group has a present obligation (legal or
constructive) as a result of a past event and it is probable (i.e. more likely than not) that an outflow of resources
embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the
amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect the current best
estimate.
Where the effect of the time value of money is material, the amount of the provision is the present value of the
expenditures expected to be required to settle the obligation. When discounting is used, the increase in provision
reflecting the passage of time is recognised as interest expense.
Levies and charges, such as taxes other than income tax or regulatory fees based on information related to a
period before the obligation to pay arises, are recognised as liabilities when the obligating event that gives rise
to pay a levy occurs, as identified by the legislation that triggers the obligation to pay the levy. If a levy is paid
before the obligating event, it is recognised as prepayment.
3.16. Financial assets
All assets are classified and measured as described below:
The business model reflects how the Group manages the assets in order to generate cash flows – whether the
Group’s objective is: (i) solely to collect the contractual cash flows from the assets (“hold to collect contractual
cash flows”,) or (ii) to collect both the contractual cash flows and the cash flows arising from the sale of assets
(“hold to collect contractual cash flows and sell”) or, if neither of (i) and (ii) is applicable, the financial assets are
classified as part of “other” business model and measured at FVTPL.
Classification and measurement
Classification / measurement
Assets
Current assets
Cash and cash equivalents (deposits, commercial
papers)
Hold to collect / Amortized cost
Trade and other receivables
Hold to collect
Amortized cost
Other financial assets
Given loans and other receivables
Hold to collect
Amortized cost
Non-current assets
Trade and other receivables
Hold to collect
Amortized cost
Other financial assets
Given loans and other receivables
Hold to collect
Amortized cost
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
75
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.16. Financial assets (continued)
Debt instruments
For the measurement of debt instruments, it is important which business model applies to each of them, and
whether they have the characteristics of an ordinary loan, i.e. whether their cash flows consist solely of interest
and principal. If they have these characteristics, and if they are not sold according to the business model but are
held to maturity, they must be measured at amortized cost. If the business model aims to sell and partially hold
such instruments, they are to be measured at fair value through other comprehensive income with subsequent
reclassification to the income statement. In all other cases, financial assets are to be measured at fair value
through profit or loss.
Equity instruments
Equity instruments include strategic investments. Valuation of equity instruments is measured through other
comprehensive income (FVOCI) without subsequent reclassification to profit or loss. The reason for this is that
the priority in strategic investments is not a short-term maximization of profits. The acquisition and sale of
strategic investments are based on business policy considerations. Dividends are recognized in the income
statement when they do not represent repayment of principal.
3.17. Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement. Where the terms of a financial liability are renegotiated and the entity
issues equity instruments to a creditor to extinguish all or part of the liability (debt to equity swap), a gain or loss
is recognised in profit or loss, which is measured as the difference between the carrying amount of the financial
liability and the fair value of the equity instruments issued.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting
all of its liabilities. Equity instruments issued by the Company and the Group are recorded at the proceeds
received, net of direct issue costs.
Financial liabilities
Other financial liabilities, including borrowings and bonds, are measured initially at fair value, net of transaction
costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method,
with interest expense recognised on an effective yield basis.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period.
Derecognition of financial liabilities
The Company and the Group derecognises financial liabilities when, and only when, the Company’s and the
Group’s obligations are discharged, cancelled or they expire.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
76
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.18. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payable are classified as current liabilities if payment is due within one year or
less. If not, they are presented as non-current liabilities.
3.19. Contingencies
Contingent assets are not recognized in the financial statements. They are disclosed when an inflow of
economic benefits is probable.
Contingent liabilities are not recognized in the financial statements. They are disclosed unless the possibility of
an outflow of resources embodying economic benefits is remote.
3.20. Revenue recognition
Revenue is income arising in the course of the Company’s ordinary activities.
A five-step model applied to recognize revenue from contracts with customers is:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
Revenue is recognized for each distinct performance obligation in the contract in the amount of transaction price.
Transaction price is the amount of consideration in a contract to which Company expects to be entitled in
exchange for transferring promised goods or services to a customer.
For contracts that contain more than one performance obligation (multiple element arrangements), Company
allocates the transaction price to those performance obligations on a relative stand-alone selling price basis. The
stand-alone selling price (SSP) is the price at which Company would sell a promised good or service separately
to a customer.
Revenue is recognized when performance obligations are satisfied by transferring control of a promised good or
service to a customer. Control of good (e.g. sale of equipment) is transferred when goods are delivered to
customer, the customer has full discretion over goods and there is no unfulfilled obligation that could affect the
customer’s acceptance of the goods. Delivery occurs when goods have been shipped to the specific location,
and the risks of obsolescence and loss have been transferred to customer. Control of good is usually transferred
at point in time.
Control of services (e.g. sales of telecommunication services) transfers over time or at a point in time, which
affects when revenue is recorded. Revenue from providing services is recognized in the accounting period in
which the services are rendered. If service realization extends to more than one accounting period both, input
method (based on cost incurred) and output method (based on units/work delivered) are used to measure
progress towards completion.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
77
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.20. Revenue recognition (continued)
The Company and Group reports revenues in accordance with IFRS 15 applicable to individual contracts.
Adoption effects of IFRS 15 results in following:
Multiple element arrangements – for example, fixes telephone line + Internet + TV (for contracts with contractual
liability) is connected to the contract for devices - tablets. In case of contract with pre-delivered subsidized
products, transaction price is assigned to the contract delivery obligations, taking into account their individual
selling prices. The individual selling price of the product is determined on the basis of the prices from the price
list. As a result of this transaction, part of the compensation is attributed to the pre-delivered product (device –
tablet, TV, scooter), which, according to the standard, results in earlier revenue recognition under the new
Standard compared to the old one, which leads to the higher revenue from the sale of goods (device – tablet,
TV, scooter) and lower revenues from provision of services (fixed communication service). In the statement of
financial position this results in recognition of the what is known as contract assets - a receivable arising from the
customer contract that has not yet legally come into existence. The contract asset is amortized over the remaining
contract period. Contract liabilities are netted off against the contract assets on portfolio level.
Discount on fees (uneven transaction prices); When discounts for services (for contractual commitments) are
granted unequal for certain months during the contract period or monthly service charges are calculated unevenly
for certain months during the contract period and monthly service is equally delivered to the user, service
revenues are recognized in accordance with the standard on a straightforward basis. Contract costs consist of
contract acquisition costs and contract fulfilment costs. Contract acquisition costs mainly relate to commission
costs.
Commissions expense (user acquisition costs) payable to employees are recognized as contractual costs,
capitalized as contractual costs within the contract assets and amortized over the estimated lifetime of the
beneficiary (3 years). The depreciation charge is expressed as the expense of the employee.
Expenses for sales commissions (acquisition costs) paid to indirect partners (assessed as costs to obtain
contracts) are capitalized as Contract costs within Contract asset and amortised over the estimated customer
retention period (3 years). The amortisation expense is reported as other expenses, depending on the sales
channel.
Contract fulfilment costs mainly relate to telecommunication costs related to the fulfilment of contracts with
customers. These costs are capitalized as contract costs and are depreciated over the contract period (usually
24 months).
Goods and services from third parties (vouchers), such as Visa cards, as an additional benefit (for contractual
liabilities) to the person who recommended customer (physical person) and the recommended customer with
whom the Company and the Group entered into a service contract. In the part where the Company and the Group
provide additional benefits (eg VISA card) to the person who recommended the customer (physical person), this
has the same treatment as the sales channel has (acquisition costs). These expenses are stated as the sales
commissions expenses (capitalized as contract costs within the contract assets and amortized over the estimated
customer retention period) in case of contact acquisitions or over contract duration period (usually 24 months) in
case of contract prolongations.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
78
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.20. Revenue recognition (continued)
When the Company or the Group gives the customer with whom a service contract for additional benefit (eg VISA
card) is concluded this will be recognized as a service discount, which results in the recognition of contract asset
and revenues from services are, according to the standard, equally recognized on a straight-lined basis and
revenues are reduced.
Discounts or uneven transaction prices – when discounts on service fees are granted unevenly for specific
months of a contract or monthly service fees are charged unevenly for specific months of a contract while monthly
service is provided evenly to the customer. Service revenue is recognized on a straight- lined basis. With regard
o fixed income, the effects mainly relate to discounts on fees, commission charges (user acquisition costs),
discounts or uneven transaction prices, and goods and services from third parties (vouchers).
3.21. Interconnection fee expenses
Interconnection fee expenses for using telecommunication infrastructure of other telecommunication providers
are recognized in the period in which they are incurred. The revenues and costs are stated gross in the financial
statements.
3.22. Operating segment reporting
International Financial Reporting Standards define an operating segment as a component of an entity:
• that engages in business activities from which it may earn revenues and incur expenses
(including revenues and expenses relating to transactions with other components of the same entity),
• whose operating results are regularly reviewed by the entity’s chief operating decision maker to
make decisions about resources to be allocated to the segment and assess its performance, and
• for which discrete financial information is available.
The business reporting format of the Company and the Group for purpose of segment reporting is determined to
be Residential, Business and Support Function as the Company's and the Group’s risks and rates of return are
affected predominantly by differences in the market and customers.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
79
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.23. Subsequent events
Subsequent events that provide additional information about the Company’s and the Group’s position at the
statement of financial position date (adjusting events) are reflected in the financial statements. Post period-end
events that are not adjusting events are disclosed in the notes when material.
3.24. Earnings per share
Earnings per share are calculated by dividing the profit attributable to equity holders of the Company and the
Group by the weighted average number of ordinary shares in issue during the year excluding ordinary shares
purchased by the Company and the Group and held as treasury shares.
3.25. Significant judgements in applying accounting policies
In the application of the Company’s and the Group’s accounting policies, which are described in Note 3, the
management is required to make judgements, estimates and assumptions about the carrying amounts of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are
based on past experience and other factors that are considered to be relevant.
The estimates and underlying assumptions are continually reviewed. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of
revision and future periods if the revision affects both current and future periods.
The key assumptions concerning the future and other key sources of estimates of uncertainty at the statement
of financial position date that carry a significant risk of material changes in the carrying amounts of assets and
liabilities within the next financial year are as follows:
Expected credit loss (ECL) measurement
With application of IFRS 9, Model of Expected Loss (ECL) is introduced. The measurement of expected loss is
based on reasonable and supporting information that is available without additional expenses and effort and
which include information on past events, current and foreseeable future conditions and circumstances.
When estimating the expected credit loss, historical probabilities of non-collection are usually used,
complemented with future parameters relevant to the credit risk. The general approach of expected credit losses
applies to loans, debt instruments measured at amortized cost and debt instruments measured at fair value
through other comprehensive income. A simplified approach to expected credit losses is applied to customer and
contract assets, which results in earlier recognition of impairment charges.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
80
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.25. Significant judgements in applying accounting policies (continued)
Expected credit loss (ECL) measurement (continued)
In addition to the above-mentioned assets to which the simplified approach is applied, the subsequent
measurement of all other financial assets applies the general approach in estimating credit loss, which consists
of three levels: level 1 (collectible), level 2 (difficult to collect) and level 3 (questionable collectability). The
application of the rate depends on the increase in credit risk per financial instrument after initial recognition, ie
on the credit quality of the financial instrument.
Credit risk is the risk that a party to a financial instrument will incur financial losses for the other party by failing
to meet a contractual obligation. Because the standard does not prescribe a definition of 'significant increase in
credit risk', the Company and the Group decide for themselves how to define it in the context of the types of
instruments it holds, taking into account the availability of information and its own historical data.
The basis for assessing the increase in credit risk is either the probability of default or analysis of overdue
receivables. The applicable credit risk percentages of the simplified approach are reviewed annually for the
purpose of measuring credit risk and historical data to determine the expected credit loss. In addition,
macroeconomic data are analysed - inflation rate, interest rates on consumer loans, GDP per capita,
unemployment and employment rates and consumer price index.
These data are compared with the historical behaviour of the Company's and the Group's clients in order to see
the possibility of changing the applied credit risk percentages.
The standard contains a rebuttable presumption that a “default event” occurs when a financial asset is more than
90 days in maturity. The assumption is supported by the following events:
• The contracting party repeatedly fails to fulfil payment obligations and the service is blocked (the contract
has not yet been terminated)
• The contracting party exceeds the credit limit with unpaid bills and does not pay despite repeated
requests Embargo / countries in recession or countries with restrictions on payments by the state bank.
Estimates based on historical data and existing market conditions are used to make these assumptions.
Simplified approach of expected credit loss measurement i.e measurement on collective basis is applied for trade
receivables, due to large number of analytical data (customers) and homogeneous base of receivables. Trade
receivables are divided into portfolios based on type of customer and tracked according to aging structure.
Portfolios are created based on similarities of the customer behaviour as to historical data and future
expectations. Portfolios are for example residential customers persons, small and medium-sized legal entities,
micro-legal entities, large legal entities, the ICT segment and others. Aging clusters for example are Undue,
Overdue 0-29 days, Overdue 30-59 days and so further. Aging clusters are created based on the steps in
collection process.
The Company and the Group expect that all receivables will be fully adjusted in value for a period of 3 years after
the maturity date. If it is not collected within one year from the due date, all receivables from telecom operators
are sold to debt collection agencies.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
81
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.25. Significant judgements in applying accounting policies (continued)
Historically these trends were stable and there are no known facts nor expected indication that the trend will
change in future periods. During the reporting period there were no significant changes in the gross carrying
amount of financial instruments, so there were no significant impacts on the loss allowance during the reporting
period.
Useful life of property, plant and equipment
The determination of the useful lives of assets is based on historical experience with similar assets as well as
any anticipated technological development and changes in broad economic or industry factors. The
appropriateness of the estimated useful lives is reviewed annually, or whenever there is an indication of
significant changes in the underlying assumptions. We believe that this is a significant accounting estimate since
it involves assumptions about technological development in an innovative industry and is heavily dependent on
the investment plans of the Company and the Group. Further, due to the significant weight of depreciable assets
in Group’s total assets, the impact of significant changes in these assumptions could be material to financial
position and results of operations of the Company and the Group.
The following table demonstrates the sensitivity to a reasonably possible change in useful life on amortization
and depreciation, with all other variables held constant, on the Group’s profit post tax:
Increase/
decrease in
%
Effect on profit
post tax
HRK thousands
Year ended 31 December 2021
+10
(11,377)
-10
9,310
Year ended 31 December 2020
+10
(10,929)
-10
8,942
The following table demonstrates the sensitivity to a reasonably possible change in useful life on amortization
and depreciation, with all other variables held constant, on the Company’s profit post tax:
Increase/
decrease in %
Effect on profit
post tax
HRK thousands
Year ended 31 December 2021
+10
(11,363)
-10
9,299
Year ended 31 December 2020
+10
(10,915)
-10
8,931
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
82
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
3.25. Significant judgements in applying accounting policies (continued)
Impairment of goodwill
The Company tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-
generating units have been determined based on fair value less cost of disposal calculations. These calculations
require the use of estimates (Note 15). The change in ownership affected the change in management's
assumptions for the ten-year (10) period regarding changes in accounting policies and the manner of access to
the market for the acquisition of users. Based on the changed assumptions, a goodwill test was performed, which
led to a decrease in the total residual value of goodwill.
Availability of taxable profits against which the deferred tax assets could be recognised
A deferred tax asset is recognized only to the extent that it is probable that the related tax benefit will be realised.
In determining the amount of deferred taxes that can be recognised significant judgements are required, which
are based on the probable quantification of time and level of future taxable profits, together with the future tax
planning strategy (Note 14).
Content contract liability
As explained in intangible asset accounting policy (Note 3.5) content costs are capitalised with related liability
recognised. The determination of liability for variable content contract requires judgement as it is based on
estimated number of future customer and discount rate. Management believes that no reasonably possible
change in any of the key assumptions would cause the significant change in content contract liability.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
83
4. SEGMENT INFORMATION
The business reporting format of the Company and the Group for purpose of segment reporting is determined to
be Residential, Business and Support Function as the Company's and the Group’s risks and rates of return are
affected predominantly by differences in the market and customers. The segments are organised and managed
separately according to the nature of the customers and markets that the services rendered, with each segment
representing a strategic business unit that offers different products and services.
The Residential Segment includes marketing, sales and customer services, focused on providing fixed line
telecommunications and TV distribution and services to residential customers.
The Business Segment includes marketing, sales and customer services, focused on providing fixed line
telecommunications to corporate customers, small- and medium-sized businesses and the public sector. The
Business Segment is also responsible for the wholesale business.
Support Functions segment performs cross-segment management and support functions, and includes the
Technology, Procurement, Accounting, Treasury, Legal and other central functions. Support Functions is
included in segment information as a voluntary disclosure since it does meet the criteria for an operating segment.
The Management Board, as the chief operating decision maker, monitors the operating results of business units
separately for the purpose of making decisions about resource allocation and performance assessment. Segment
performance is evaluated based on contribution margin or segment results (as calculated in the table below).
The Company's and the Group’s geographical disclosures are based on the geographical location of its
customers.
Management of the Company and the Group does not monitor assets and liabilities by segments and therefore
this information has not been disclosed.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
84
4. SEGMENT INFORMATION (CONTINUED)
Residential and Business segments
The following tables present revenue and direct cost information regarding the Group’s segments:
Year ended 31 December 2021
Residential
Business
Support
functions
Total
Service revenue
264,160
165,853
-
430,013
Usage related direct costs
(142,710)
(76,929)
-
(219,639)
Contribution margin
121,450
88,924
-
210,374
Indirect costs
(29,557)
(12,762)
(36,084)
(78,403)
Other income
-
-
4,469
4,469
Other operating expenses
-
-
2,992
2,992
Depreciation, amortization and
impairment of non-current assets
-
-
(168,926)
(168,926)
Operating profit
91,893
76,162
(197,549)
(29,494)
Year ended 31 December 2020
Residential
Business
Support
functions
Total
Service revenue
294,911
156,918
-
451,829
Usage related direct costs
(157,925)
(68,377)
-
(226,302)
Contribution margin
136,986
88,541
-
225,527
Indirect costs
(33,011)
(12,206)
(39,393)
(84,610)
Other income
-
-
4,180
4,180
Other operating expenses
-
-
4,306
4,306
Depreciation, amortization and
impairment of non-current assets
-
-
(120,317)
(120,317)
Operating profit
103,975
76,335
(151,224)
29,086
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
85
4. SEGMENT INFORMATION (CONTINUED)
The following tables present revenue and direct cost information regarding the Company’s segments:
Year ended 31 December
2021
Residential
Business
Support
functions
Total
Service revenue
264,160
165,853
-
430,013
Usage related direct costs
(142,710)
(76,929)
-
(219,639)
Contribution margin
121,449
88,925
-
210,374
Non-usage related direct
costs
(29,544)
(12,756)
(36,019)
(78,319)
Other income
-
-
4,469
4,469
Other operating expenses
-
-
2,992
2,992
Depreciation, amortization
and impairment of non-current
assets
-
-
(168,804)
(168,804)
Operating profit
91,905
76,169
(197,362)
(29,288)
Year ended 31 December
2020
Residential
Business
Support
functions
Total
Service revenue
294,910
156,919
-
451,829
Usage related direct costs
(157,924)
(68,378)
-
(226,302)
Contribution margin
136,986
88,541
-
225,527
Non-usage related direct
costs
(32,988)
(12,195)
(39,273)
(84,456)
Other income
3,605
3,605
Other operating expenses
-
-
4,508
4,508
Depreciation, amortization
and impairment of non-current
assets
-
-
(120,195)
(120,195)
Operating profit
103,998
76,346
(151,355)
28,989
Revenue by geographical area
Group
Company
2021
2020
2021
2020
Republic of Croatia
388,313
428.212
388,313
428.031
Rest of world
41,700
23.617
41,700
23.798
430,013
451.829
430,013
451.829
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
86
4. SEGMENT INFORMATION (CONTINUED)
Revenue by categories
Group
Company
2021
2020
2021
2020
Revenue from internet services
172,015
186,730
172,015
186,730
Revenue from public speaking services
117,104
130,253
117,104
130,253
Revenue from interconnection services
52,988
36,296
52,988
36,296
Revenue from multimedia services
46,337
46,969
46,337
46,969
Revenues from data services
22,714
24,110
22,714
24,110
Other sales
18,855
27,471
18,855
27,471
430,013
451,829
430,013
451,829
5. OTHER OPERATING INCOME
Group
Company
2021
2020
2021
2020
Revenue from sale of PPE
271
12
271
12
Income from penalties charged
2,225
2,458
2,225
2,458
Other income
1,973
1,710
1,973
1,135
4,469
4,180
4,469
3,605
6. MERCHANDISE, MATERIAL AND ENERGY EXPENSES
Group
Company
2021
2020
2021
2020
Cost of goods sold and services
12,594
14,823
12,594
14,823
Energy costs
5,653
5,527
5,636
5,504
Cost of raw material and supplies
1,094
1,344
1,094
1,339
19,341
21,694
19,324
21,666
7. OTHER SERVICE EXPENSES
Group
Company
2021
2020
2021
2020
Telecommunication service costs
41,012
47,292
41,012
47,292
Invoicing expenses
5,083
4,602
5,083
4,602
Intellectual services
2,084
1,881
2,046
1,794
Bank services
187
162
186
161
Cleaning services
440
454
440
454
Postal services
424
371
424
371
Other service expenses
4,034
4,386
4,025
4,368
53,264
59,148
53,216
59,042
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
87
8. STAFF COSTS
Group
Company
2021
2020
2021
2020
Net salaries
30,445
32,753
30,445
32,753
Taxes and contributions
19,509
20,467
19,509
20,467
Redundancy expenses
-
898
-
898
Long-term employee benefits
15
(4)
15
(4)
Reimbursement of costs to employees
2,531
1,928
2,531
1,928
52,500
56,042
52,500
56,042
Number of staff at 31 December
324
330
330
324
Costs reimbursed to employees comprise daily allowances, overnight accommodation and transport related to
business travels, commutation allowance, and reimbursement of costs for the use of personal cars for business
purposes, and similar.
Long-term employee benefits comprise benefits payable under the Collective Agreements, such as vacation
bonus, Christmas bonus, various supports, and similar. Taxes and contributions at the Company and the Group
include HRK 8,549 thousand (2020: HRK 8,730 thousand) of the mandatory pension contributions paid to the
mandatory state pension fund. Contributions are calculated as a percentage of the employees’ gross salaries.
9. DEPRECIATION, AMORTISATION AND IMPAIRMENT CHARGES
Group
Company
2021
2020
2021
2020
Depreciation
49,520
50,230
8,266
50,108
Amortisation and impairment
100,512
48,128
100,512
48,128
Amortisation IFRS 16
18,894
21,959
18,894
21,959
168,926
120,317
127,672
120,195
10. IMPAIRMENT CHARGE OF NON-CURRENT AND CURRENT RECEIVABLES
Group
Company
2021
2020
2021
2020
Impairment charge on current and
non-current receivables
4,289
2,665
4,289
2,665
Write-off of current and non-current
receivables
8,429
12,207
8,429
12,207
Collection of current and non-current
receivables
(6,214)
(8,314)
(6,214)
(8,314)
6,504
6,558
6,504
6,558
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
88
11. OTHER OPERATING EXPENSES
Group
Company
2021
2020
2021
2020
Maintenance costs
10,350
10,946
10,350
10,946
External labour costs
5,580
6,757
5,580
6,757
Marketing services
2,670
3,320
2,670
3,320
Default interest
1,529
100
1,529
35
Costs of damage
compensations
63
1,295
63
1,286
Taxes and contributions
independent of the results
1,035
967
1,027
956
Insurance premiums
1,012
879
1,012
879
Representation
262
212
262
212
Sponsorships
241
420
241
420
Rent
199
346
199
346
Other operating expenses
782
1,809
772
1,672
23,723
27,051
23,705
26,829
12. FINANCIAL INCOME
Group
Company
2021
2020
2021
2020
Interest income
482
-
485
-
Interest income of related parties
(note 31)
361
94
361
94
Written-off financial liabilities
-
-
25
11
Other financial income
66
78
70
77
909
172
941
182
Foreign exchange gains and losses are offset by HRK 4 thousand (2020: HRK 51 thousand).
13. FINANCIAL EXPENSES
The Group’s expenses in amount of HRK 21,046 thousand (2020: HRK 25,632 thousand) comprises interest
charges on loans, bonds, leases and content contracts and guarantee contracts in the amount of HRK 20,980
thousand (2020.: HRK 23,485 thousand).
The Company’s expenses in amount of HRK 21,046 thousand (2020: HRK 25,642 thousand) comprises interest
charges on loans, bonds, leases and content contracts and guarantee contracts in the amount of HRK 20,980
thousand (2020.: HRK 23,485 thousand).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
89
14. INCOME TAX
The Company is subject to income tax, which is determined according to the laws and regulations of the Republic of Croatia.
The tax base is determined as the difference between revenue and expenses for the period, increased by tax non-deductible
expenses. The corporate income tax rate in Croatia was 18% at 31 December 2021 and 2020 (in Slovenia 19% at 31 December
2021 and 31 December 2020). Optima Telekom d.d. had no corporate income tax liability for 2020 due to tax losses carried
forward.
The relationship between the accounting profit and tax losses carried forward is shown as follows:
Group
Company
2021
2020
2021
2020
Accounting (loss)/profit before
taxation
(49.630)
3,626
(49.393)
3,529
Income tax calculated using the
average weighted rate on the
profits of group companies in the
respective countries
(8,930)
658
(8,891)
635
Effect of elimination of profits in
consolidation
1
(2)
-
-
Effect of expenses not deductible
for tax purposes
9,866
1,227
9,827
1,233
Effect of non-taxable income
(130)
-
(130)
Effect of utilised DTA
(806)
(1,953)
(806)
(1,953)
Effect of utilised loss from
previous periods for which DTA
was not recognised
-
70
-
85
Current tax liability
-
-
-
-
Deffered tax
2,735
1,953
2,735
1,953
Current tax
2,735
1,953
2,735
1,953
Effective tax rate
0.00%
0.00%
0.00%
0.00%
In accordance with the Croatian legislation, the Tax Authority may inspect the Company's and the Group’s books and records
at any time within 3 years following the year in which the tax liability is declared and may impose additional taxes and penalties.
During 2021, the utilization and release of deferred tax assets in the current year was recognized in the amount of HRK
2,735 thousand (2020: HRK 1,953 thousand).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
90
15. INTANGIBLE ASSETS
Group
Concessions
and rights
Software
Assets
under
construction
Goodwill
Other
assets /i/
Total
intangible
assets
As at 1 January 2020
Cost
42.075
163.749
87.629
95.356
388.809
Accumulated amortization and impairment losses
(24.801)
(123.907)
(40.000)
(45.340)
(234.048)
Net book value
17.274
39.842
47.629
50.016
154.761
Year ended 31 December 2020
Openning net book value
17,274
39,842
-
47,629
50,016
154,761
Additions
29,862
4,242
11,140
-
-
45,244
Transfer from assets under development
-
11,140
(11,140)
-
-
-
Charge for the year
(29,332)
(8,213)
-
-
(10,583)
(48,128)
Net book value
17,804
47,011
-
47,629
39,433
151,877
Year ended 31 December 2020
Cost
50,041
179,131
-
87,629
95,356
412,157
Accumulated amortization and impairment losses
(32,237)
(132,120)
-
(40,000)
(55,923)
(260,280)
Net book value
17,804
47,011
-
47,629
39,433
151,877
Year ended 31 December 2021
Openning net book value
17,804
47,011
-
47,629
39,433
151,877
Additions
37,344
3,384
7,556
-
-
48,284
Reductions
1
-
-
-
-
1
Reclassification from tangible assets in preparation
-
-
1,246
-
-
1,246
Transfer from tangible assets in preparation
-
7,556
(7,556)
-
-
-
Charge for the year
(32,931)
(9,370)
-
(47,629)
(10,582)
(100,512)
Net book value
22,218
48,581
1,246
-
28,851
100,896
As at 31 December 2021
Cost
51,437
169,760
1,246
87,629
75,591
385,663
Accumulated amortization and impairment losses
(29,219)
(121,179)
-
(87,629)
(46,740)
(284,767)
Net book value
22,218
48,581
1,246
-
28,851
100,896
/i/ Other intangible assets relate to brand investments and customer base incurred in acquiring H1 Telekom.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
91
15. INTANGIBLE ASSETS (continued)
The Company received the telecommunication service license from the Croatian Telecommunication Agency on 19 November
2004.
In 2017, the Group concluded a Merger Agreement with the electronic communications operator, H1 TELEKOM d.d. Split,
after obtaining the required approvals and consents, H1 as the merged company was merged with Optima as the acquiring
company. Intangible assets of H1 transferred to Optima at the date of the merger amount to HRK 100,434 thousand and
consist of customer relations and brand. The goodwill arising on acquisition is attributable to economies of scale which are
expected to be realised mainly through cost reductions synergies within Optima.
Increase in intangible assets
Significant increase in intangible assets in the reporting period of 2021. relate to capitalized content costs in amount of HRK
37,345 thousand (2020.: HRK 29,862 thousand).
Impairment loss
During 2017, impairment loss for intangible assets of HRK 61,903 thousand was recognised. The Group performed brand
impairment in amount of HRK 19,765 thousand as management decision is to not use brand H1 Telekom. The Group
performed an initial goodwill impairment test immediately after acquisition in respect of anticipated synergies resulting from
the acquisition, and as a result, recorded an impairment in the amount of HRK 40,000 thousand.
During 2021, the Group tested impairment of goodwill in the amount of HRK 47,629 thousand and reduced the remaining value
of the entirety.
.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
92
15. INTANGIBLE ASSETS (continued)
Company
Concessio
ns and
rights
Software
Assets under
construction
Goodwill
Other
assets /i/
Total
intangible
assets
At 1 January 2020
Cost
42.075
163.749
-
87.629
95.356
388.809
Accumulated amortization and impairment losses
(24.801)
(123.907)
-
(40.000)
(45.340)
(234.048)
Net book value
17.274
39.842
-
47.629
50.016
154.761
Year ended 31 December 2020
Opening net book value
Additions
17,274
39,842
-
47,629
50,016
154,761
Transfer from assets under development
29,862
4,242
11,140
-
-
45,244
Charge for the year
-
11,140
(11,140)
-
-
-
Net book value
(29,332)
(8,213)
-
-
(10,583)
(48,128)
17,804
47,011
-
47,629
39,433
151,877
As at 31 December 2020
Cost
Accumulated amortization and impairment losses
50,041
179,131
-
87,629
95,356
412,157
Net book value
(32,237)
(132,120)
-
(40,000)
(55,923)
(260,280)
17,804
47,011
-
47,629
39,433
151,877
Year ended 31 December 2021
Opening net book value
17,804
47,011
-
47,629
39,433
151,877
Additions
37,344
3,384
7,556
-
-
48,284
Reductions
1
-
-
-
-
1
Reclassification from tangible assets in preparation
-
-
1,246
-
-
1,246
Transfer from tangible assets in preparation
-
7,556
(7,556)
-
-
-
Charge for the year
(32,931)
(9,370)
-
(47,629)
(10,582)
(100,512)
Net book value
22,218
48,581
1,246
-
28,851
100,896
As at 31 December 2021
Cost
51,437
169,760
1,246
87,629
95,356
405,428
Accumulated amortization and impairment losses
(29,219)
(121,179)
-
(87,629)
(66,505)
(304,532)
Net book value
22,218
48,581
1,246
-
28,851
100,896
/i/ Other intangible assets relate to brand investments and customer base incurred in acquiring H1 Telekom.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
93
16. PROPERTY, PLANT AND EQUIPMENT
Group
Land and
buildings
Telecom plant
and equipment
Vehicles
Works of
art
Leasehold
improvements
Assets under
development
Total tangible
assets
At 1 January 2020
Cost
6.428
927.288
262
47
23.117
14.991
972.133
Accumulated amortization and impairment losses
(2.716)
(627.488)
(208)
-
(22.422)
-
(652.834)
Net book value
3.712
299.800
54
47
695
14.991
319.299
Year ended 31 December 2020
Opening net book value
3,712
299,800
54
47
695
14,991
319,299
Additions
-
11,454
-
-
743
28,630
40,827
Transfer from assets under development
-
27,018
-
-
-
(27,018)
-
Charge for the year
(163)
(49,766)
-
-
(301)
-
(50,230)
Disposals and retirements
(18)
(938)
-
-
-
-
(956)
Net book value
3,531
287,568
54
47
1,137
16,603
308,940
As at 31 December 2020
Cost
6,249
963,771
262
47
23,862
16,603
1,010,794
Accumulated amortization and impairment losses
(2,718)
(676,203)
(208)
-
(22,725)
-
(701,854)
Net book value
3,531
287,568
54
47
1,137
16,603
308,940
Year ended 31 December 2021
Opening net book value
3,531
287,568
54
47
1,137
16,603
308.940
Additions
-
9,372
-
-
105
27,040
36,517
Reductions
(3)
(337)
-
-
-
-
(340)
Transfer from assets under development
-
20,388
-
-
-
(20,388)
-
Transfer from assets in preparation on intangible
assets
-
-
-
-
-
(7,556)
(7,556)
Transfer from property with the right use
4,685
-
-
-
-
-
4,685
Reclassification on intangible assets
-
-
-
-
-
(1,246)
(1,246)
Charge for the year
(162)
(49,009)
-
-
(349)
-
(49,520)
Net book value
8,051
267,982
54
47
893
14,453
291,480
As at 31 December 2021
Cost
10,929
985,373
262
47
23,887
14,453
1,034,951
Accumulated amortization and impairment losses
(2,878)
(717,391)
(208)
-
(22,994)
-
(743,471)
Net book value
8,051
267,982
54
47
893
14,453
291,480
The most significant increases and decreases in plant and equipment real estate during 2021 relate to investments in telecom-related plant and equipment.
As at 31 December 2021, the net book value of property, plant and equipment given as collateral amounted to HRK 52,825 thousand (2020: HRK 61,386 thousand). Under
a pre-bankruptcy settlement, the creditor retains the lien on the property to secure its claims until payment.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
94
16. PROPERTY, PLANT AND EQUIPMENT (continued)
Company
Land and
buildings
Telecom
plant and
equipment
Vehicles
Works
of art
Leasehold
improvement
s
Assets
under
developmen
t
Total tangible
assets
At 1 January 2020
Cost
1.878
919.908
142
47
23.117
16.036
961.128
Accumulated amortization and impairment
losses
(640)
(621.138)
(142)
-
(22.422)
-
(644.342)
Net book value
1.238
298.770
-
47
695
16.036
316.786
Year ended 31 December 2020
Opening net book value
1,238
298,770
-
47
695
16,036
316,786
Additions
-
11,455
-
-
743
28,630
40,828
Transfer from assets under development
-
27,018
-
-
-
(27,018)
-
Charge for the year
(44)
(49,763)
-
-
(301)
-
(50,108)
Disposals and retirements
(939)
-
-
-
-
(939)
Net book value
1,194
286,541
-
47
1,137
17,648
306,567
As at 31 December 2020
Cost
1,878
956,390
142
47
23,860
17,648
999,965
Accumulated amortization and impairment
losses
(684)
(669,849)
(142)
-
(22,723)
-
(693,398)
Net book value
1,194
286,541
-
47
1,137
17,648
306,567
Year ended 31 December 2021
Opening net book value
1,194
286,541
-
47
1,137
17,648
306,567
Additions
-
9,373
-
-
105
19,484
28,962
Transfer from assets under development
-
20,388
-
-
-
(20,388)
-
Transfer from property with the right use
4,685
-
-
-
-
-
4,685
Reclassification on intangible assets
-
-
-
-
(1,246)
(1,246)
Charge for the year
(45)
(49,004)
-
-
(349)
-
(49,398)
Disposals and retirements
-
(337)
-
-
-
-
(337)
Net book value
5,834
266,961
-
47
893
15,498
289,233
As at 31 December 2021
Cost
6,563
977,930
142
47
23,887
15,498
1,024,067
Accumulated amortization and impairment
losses
(729)
(710,969)
(142)
-
(22,994)
-
(734,834)
Net book value
5,834
266,961
-
47
893
15,498
289,233
The most significant increases in property, plant and equipment during 2021. refer to investments in telecom equipment and equipment.
As of 31 December 2021, the net book value of property, plant and equipment given as collateral amounted to HRK 52,825 thousand (2020: HRK 61,386 thousand).
According to the prebankruptcy agreement, the creditor retains liens on the property to ensure their claims to payments.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
95
16. PROPERTY, PLANT AND EQUIPMENT (continued)
As at 31 December 2021, the Company and the Group contractually assumed liabilities for capital expenditures
for real estate, plant and equipment in the amount of HRK 8,485 thousand (2020: HRK 7,562 thousand).
17. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
The Company and the Group leases network infrastructure, and buildings used for administrative or technical
purposes and vehicles. Rental contracts are typically made for fixed periods of 12 months to 3 years.
In HRK thousands
Note
Buildings
Equipment
Other
Total
Carrying amount at 1 January 2020
27,126
30,587
3,724
61,437
Additions
6,844
4,200
2,975
14,019
Disposals
(6,327)
(5,510)
(1,263)
(13,100)
Depreciation charge
9
(8,478)
(11,841)
(1,640)
(21,959)
Carrying amount at 31 December 2020
19,165
17,436
3,796
40,397
In HRK thousands
Note
Buildings
Equipment
Other
Total
Carrying amount at 1 January 2021
19,165
17,436
3,796
40,397
Additions
-
706
1,405
2,111
Disposals
(7,880)
(1,840)
(968)
(10,689)
Modification
8,815
27,301
984
37,100
Depreciation charge
9
(6,470)
(10.579)
(1.845)
(18.894)
Carrying amount at 31 December 2021
13,629
33,024
3,372
50,025
The Company and the Group recognised lease liabilities as follows:
In HRK thousands
31 December 2021
31 December
2020
Short-term lease liabilities
17,984
15,214
Long-term lease liabilities
25,942
15,105
Total lease liabilities
43,926
30,319
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
96
17. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES (continued)
Interest expense included in finance costs of 2021 was HRK 1,403 thousand (2020.: HRK 1,779 thousand).
Changes in lease liabilities are disclosed in Note 37.
Expenses relating to short-term leases (included in rent expense):
Company and the Group
2021.
2020.
Expense relating to short-term leases
21,099
23,555
Total lease expense
21,099
23,555
Total cash outflow for leases in 2021 was HRK 19,062 thousand plus interest expense HRK 1,278 thousand
(2020: HRK 25,553 thousand plus interest expense HRK 1,850 thousand).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
97
18. NON-CURRENT AND CURRENT LOANS
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Loans to companies
501
505
501
505
Non-current loans
501
505
501
505
Loans granted to subsidiaries
/i/
-
-
3.332
3.268
Current loans
-
-
3.332
3.268
Total given loans
501
505
3.833
3.773
/i/ In January 2015, based on the Framework loan agreement, Optima Telekom d.d. granted to the subsidiary
Optima Direct a one-year loan in amount of HRK 8,000 thousand that was extended until 31 December 2021.
The loan is interest free. The Company recorded the loan at a discounted amount using an assumed interest
rate. The remaining amount of receivables for the loan amounts to HRK 2,615 thousand.
In October 2019 pursuant to the Optima Telekom Loan Agreement d.d. granted to the subsidiary OT-Optima
Telekom doo, Koper, a one-year loan in the amount of HRK 73 thousand for the purchase of a power plant at the
top of the building owned by the subsidiary for the purpose of consolidating the real estate. The interest on the
loan is 3.96% per annum. In July 2020, based on the Loan Agreement, Optima Telekom dd. granted a one-year
loan in the amount of HRK 514 thousand to the subsidiary OT-Optima Telekom d.o.o., Koper for the purpose of
avoiding the sale of the building at auction by settling the claimed claims and costs of the proceedings. Optima
telekom d.d. legal action was taken on the basis of enforcement proceedings. In September 2020, Optima
Telekom d.d. is based on the Loan Agreement to the subsidiary OT-Optima Telekom d.o.o., Koper, a one-year
loan in the amount of HRK 15 thousand for the purpose of settling overdue debts. In December 2020, based on
the Loan Agreement Optima Telekom d.d. granted a one-year loan in the amount of HRK 50 thousand to the
subsidiary OT-Optima OT-Optima Telekom d.o.o., Koper for the purpose of settling overdue debts to the law
firm. Loans granted in 2020 were approved at an interest rate of 3.96%. OT-Optima Telekom d.d, in June,
October, November, and December, 202, approved loans at a total value of HRK 60 thousand for the purpose
of settling due debts (profit tax and liabilities to suppliers, etc.). Loans given in 2021 were approved with an
interest rate of 3.00%
19. INVESTMENTS IN SUBSIDIARIES
The net book value of investments in subsidiaries comprises:
31 December
2021
31 December
2020
Optima Direct d.o.o. Croatia /i/
-
-
Optima Telekom d.o.o. Slovenia /ii/
66
66
Optima Telekom za upravljanje nekretninama i savjetovanje d.o.o. /iii/
20
20
86
86
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
98
19. INVESTMENTS IN SUBSIDIARIES (continued)
/i/ On 6 July 2006 OT-Optima Telekom d.d. became the sole owner of Optima Grupa Holding d.o.o., a company
renamed to Optima Direct d.o.o. on 23 September 2008. The core business of Optima Direct d.o.o. comprises
trade and provision of various services mostly from within the scope of the telecom industry. In August 2008 the
Company increased the share capital of Optima Direct d.o.o. by HRK 15,888 thousand as a result of debt-to-
equity swap, the debt comprising the outstanding loan receivables and accrued interest. During 2014 the
Company tested its investment in Optima Direct d.o.o. for impairment and impaired the entire investment in the
amount of HRK 14,939 thousand./ii/ The Company set up, as sole owner, Optima Telekom d.o.o., Koper,
Slovenia in 2007. Optima Telekom doo, Koper, Slovenia performs the renting of equipment for the needs of the
OT Group.
/iii/ On 16 August 2011 the Company established, as the sole owner, Optima Telekom za upravljanje
nekretninama i savjetovanje d.o.o., a real estate management and consultancy company, which did not operate
during the reporting period and is still dormant.
/iv/ On 29 June 2017 the Company became owner of H1 Telekom, as of 1 August 2017 Company merged with
H1 Telekom, which was fully owned by the Company. On July 29, 2016, the Company entered into a Takeover
Agreement with H1.
Pursuant to the above Agreement, after obtaining the required approvals and consents, H1 as the merged
company was merged with Optima as the acquiring company. Assets, rights and obligations of H1 were
transferred to Optima in their entirety. In consideration for the transferred assets, rights and obligations of H1,
Optima transferred the appropriate ratio of Optima shares to H1 shareholders. Share swap of the Optima's OPTE-
R-C shares for the H1's H1TE-R-A shares was conducted by exchange of one share of the H1TE-R-A in the
nominal value of HRK 10.00 for 0.75 Optima's OPTE-R-C shares in the nominal value of HRK 10.00 (1:0.75).
Pursuant to the Competition Act, on 29 July 2016 Optima filed a Notification of a Proposed Concentration
between Optima and H1 with the Croatian Competition Agency, which then rendered the above-mentioned
positive decision for the Company on 9 June, 2017.Considering these circumstances, on the motion on 29 June
2017, filed by Hrvatski Telekom d.d (HT), AZTN also rendered a positive decision prolonging HT’s temporary
management of Optima for another three years, i.e. until 10 July, 2021. The respective extension of HT's
management of Optima was one of the conditions for the Merger Agreement dated 29 July 2016 to enter into
force and for earlier decisions of the General Assemblies of both companies to have legal effect. Following this,
on 1 August 2017, the court registry of the Commercial Court in Zagreb issued a decision based on which the
registration of merger was made in accordance with the abovementioned decisions of the General Assemblies
and AZTN. With the implementation of the merger, the share capital was increased from HRK 635,568,080.00 in
the amount of HRK 58,864,560.00 up to the total amount of 694,432,640.00 HRK. This was done through
issuance of 5,886,456 new ordinary shares in the nominal value of HRK 10.00.
As mentioned above, the purchase consideration for H1 TELEKOM d.d. was settled in shares. The fair value of
these shares was based on the HRK 7.31 share price on 30 June 2017, which amounted to HRK 53,996
thousand.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
99
20. TRADE AND OTHER RECEIVABLES
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Domestic trade receivables
118,767
136,138
118,767
136,137
Foreign trade receivables
5,354
6,082
5,391
6,094
Impairment allowance on trade
receivables
(56,377)
(55,895)
(56,377)
(55,895)
Total receivables, net
67,744
86,325
67,781
86,336
Receivables from state and
other institutions
429
367
307
254
Advances for services and
inventories
1,376
2,442
1,376
2,418
Other receivables
683
595
600
513
70,232
89,729
70,064
89,521
As at 31 December 2021, the Company and the Group reduced its trade receivables with a nominal value of
HRK 56,377 thousand (31 December 2020: HRK 55,895 thousand).
The following table explains changes in the value adjustment of trade receivables on a simplified ECL model
between the beginning and the end of the annual period:
Group
Company
31
December
2021
31
December
2020
31
December
2021
31
December
2020
As at 01 January
(55,895)
(57,971)
(55,895)
(57,971)
Changes in estimates and
assumptions
(9,825)
(2,665)
(9,825)
(2,665)
Financial assets derecognised
during the period
7,075
5,189
7,075
5,189
Writte-off
2,268
(448)
2,268
(448)
As at 31 December
(56,377)
(55,895)
(56,377)
(55,895)
The maturity analysis of the trade receivables due on December 31, 2021 was as follows:
Group
Total
Neither
past due
nor
impaire
d
1-60
days
61-90
days
91-180
days
>180 days
HRK
thousand
HRK
thousand
HRK
thousa
nd
HRK
thousan
d
HRK
thousan
d
HRK
thousand
31. December 2021
Gross carrying amount
124,121
37,544
26,015
1,271
2,774
56,517
Loss allowance
(56,377)
(362)
(729)
(194)
(946)
(54,146)
ECL (%)
-
0-2.48%
0-
24.49%
0-47.74%
0-76.78%
0-100.0%
Net amount
67,744
37,182
25,287
1,077
1,828
2,371
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
100
20. TRADE AND OTHER RECEIVABLES (continued)
Group
Total
Neither
past due
nor
impaired
1-60
days
61-90
days
91-180
days
>180 days
HRK
thousand
HRK
thousand
HRK
thousan
d
HRK
thousan
d
HRK
thousan
d
HRK
thousand
31. December 2020
Gross carrying amount
142,220
51,058
30,579
2,387
3,514
54,682
Loss allowance
(55,895)
(529)
(1,597)
(590)
(1,389)
(51,790)
ECI (%)
-
1,0%-
3,4%
1,0%-
14,6%
3,4%-
48,7%
3,4%-
90,9%
3,4%-
100,0%
Net amount
86,325
50,529
28,982
1,797
2,125
2,892
Company
Total
Neither
past due
nor
impaired
1-60
days
61-90
days
91-180
days
>180 days
HRK
thousand
HRK
thousan
d
HRK
thousan
d
HRK
thousan
d
HRK
thousan
d
HRK
thousand
31. December 2021
Gross carrying amount
124,158
37,549
26,016
1,278
2,780
56,535
Loss allowance
(56,377)
(362)
(729)
(194)
(946)
(54,146)
ECI (%)
-
0-2.48%
0-24.49%
0-47.74%
0-76.78%
0-100.0%
Net amount
67,781
37,187
25,287
1,084
1,834
2,389
Company
Total
Neither
past due
nor
impaired
1-60
days
61-90
days
91-180
days
>180 days
HRK
thousand
HRK
thousand
HRK
thousand
HRK
thousan
d
HRK
thousan
d
HRK
thousand
31. December 2020
Gross carrying amount
142,231
51,064
30,579
2,391
3,515
54,682
Loss allowance
(55,895)
(529)
(1,597)
(590)
(1,389)
(51,790)
ECI (%)
-
1,0%-
3,4%
1,0%-
14,6%
3,4%-
48,7%
3,4%-
90,9%
3,4%-
100,0%
Net amount
86,336
50,535
28,982
1,801
2,126
2,892
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
101
21. DEPOSITS
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Non-current guarantee
deposits /i/
3,442
3,451
3,442
3,451
3,442
3,451
3,442
3,451
Other financial assets
4
4
4
4
Total deposits and other
financial assets
3,446
3,455
3,446
3,455
/i/ Non-current deposits include two foreign-currency guarantee deposits with Zagrebačka banka provided for
issued bank guarantees. They expire on 30 June 2028. The deposits bear interest at a variable rate in accordance
with the Bank's Decision on interest rates, which was 4.86% at the point of making the deposits.
22. PREPAID EXPENSES AND ACCRUED INCOME
As at 31 December 2021, prepaid expenses for the Company amount to HRK 807 thousand for the Company
and for the Group and (2020: HRK 558 thousand for the Company and the Group). Overdue collected revenues
for the Company amount to HRK 647 thousand while for the Group they amount to HRK 649 thousand (2020:
HRK 510 thousand for the Company and HRK 513 thousand for the Group).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
102
23. CONTRACTUAL ASSETS
The Group and the Company have recognized the assets and liabilities of the customer agreement as shown
below:
Group
Company
31. December
2021
31. December
2020
31. December
2021
31. December
2020
Non-current contract
asset resulting from sale
of equipment and
services (net)
214
1,064
214
1,064
Cost to obtain a contract
4,152
6,834
4,152
6,834
Cost to fulfil contract
94
92
94
92
Total non-current
contract asset
4,460
7,990
4,460
7,990
Current contract asset
resulting from sale of
equipment and services
(net)
2.300
4,328
2.300
4,328
Cost to obtain a contract
1,672
3,566
1,672
3,566
Cost to fulfil contract
280
283
280
283
Total current contract
asset
4,252
8,177
4,252
8,177
8,712
16,167
8,712
16,167
The following table presents information on unsatisfied performance obligations resulting from long-term
contracts with customers.
Group
Company
31. December
2021
31. December
2020
31. December
2021
31. December
2020
Aggregate amount of the
transaction price
allocated to
long term contracts with
customers that are
unsatisfied
21,394
38,521
21,394
38,521
Management expects that 78.4% (HRK 16,763 thousand) of the transaction price allocated to unsatisfied
contracts as at 31 December 2021 will be recognized as revenue during Year 2022. The remaining 21.6% (HRK
4,631 thousand) will be recognized in Year 2023.
Company uses practical expedient not to disclose the outstanding transaction price allocated to performance
obligations that are unsatisfied (or partially unsatisfied) when the revenue is recognized overtime in line with
billed revenue.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
103
24. CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash in hand, current account balances and other balances with banks.
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Bank balances
25,292
25,284
25,280
25,242
Foreign currency account
balance
573
353
573
353
Cash and cash equivalents
25,865
25,637
25,853
25,595
25. ISSUED SHARE CAPITAL
The Financial and Operational Restructuring Plan of the Company, adopted by its creditors in the hearing of 5
November 2013, envisages the conversion of a part of the creditors' claims into equity shares as one of the major
measures.
The share capital increase was registered at the Commercial Court on 9 June 2014 based on the underlying
decision adopted by the Company's General Assembly on 15 April 2014, which was to convert a part of the claims
of certain creditors in the pre-bankruptcy settlement to equity. As a result, share capital was increased from HRK
28,200,700.00 to HRK 563,788,270.00, issuing 53,558,757 new non-materialised ordinary (registered) shares, with
a nominal value of HRK 10.00 each. Based on the master pre-bankruptcy settlement arrangement for (c) category
creditor Zagrebačka banka d.d. – claims from loan relationships secured by lien on movable property and rights in
the total amount of HRK 110,000,000.00, defined to be settled under (MCL) terms and conditions.
Zagrebačka banka d.d. transferred a portion of it’s the Mandatory convertible Loan (MCL) in the amount of HRK
68,870,920.00 to Hrvatski Telekom d.d. (hereinafter: 'HT') which then, as a new creditor of a portion of the MCL
claims, filed a due request to convert this claim to the Company's equity interest.
As a result, on 13 August 2014, Company's share capital was further increase from HRK 563,788,270.00 to HRK
632,659,190.00 through an issue of 6,887,092 ordinary shares, ticker OPTE-R-B, with a nominal amount of HRK
10.00 per share. HT’s Control over Optima was obtained through transfer of managerial rights in accordance with
the agreement with Zagrebačka banka d.d., the single largest shareholder of Optima. The Croatian Competition
Agency has conditionally allowed the concentration of HT with Optima based on the proposed financial and
operational restructuring plan of Optima within the pre-bankruptcy settlement procedure. The Croatian Competition
Agency has determined a set of measures defining the rules of conduct for participant in concentration with regard
to management and control over Optima, among which is the implementation of so called ’’Chinese wall’’ between
Optima’s and HT employees, in relation to all sensitive business information with the exception of reporting of
financial data necessary for consolidation. The control of HT over Optima is limited to a period of four years starting
as at 18 June 2014. Upon the expiration of the four-year period it is automatically terminated, without the possibility
of extension. On the date of expiry of the third year, HT is required to start the process selling all its Optima shares,
during which HT will have the right to sell Optima shares held by Zagrebačka banka as well. On 9 June, 2017 AZTN
rendered a positive decision prolonging HT’s temporary management of Optima for another three years, i.e. until
10 July, 2021 under the same conditions as in previous decision.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
104
25. ISSUED SHARE CAPITAL (continued)
On November 3, 2014, the Company’s General Meeting adopted the Decision on increasing the Company’s share
capital through the issuance of common shares, investment of rights – converting a part of the pre-bankruptcy
creditors’ claims into share capital, with the exclusion of existing shareholders’ priority rights, from the amount of
HRK 632,659,190.00 by an amount not exceeding HRK 2,910,110.00, to the maximum amount of HRK
635,569,300.00, through the issuance of a maximum of 291,011 new registered common shares, having the
nominal value of HRK 10.00 each.
The pre-bankruptcy creditors who submitted a written statement (subscription form) within the subscription
deadline and concluded the agreement on investing rights (claims) into the Company’s share capital, have
invested claims adding up to HRK 2,908,890.00. The share capital increase from the amount of HRK
632,569,150.00 by the amount of HRK 2,908,890.00 to the amount of HRK 635,568,080.00 has been registered
by virtue of the Commercial Court of Zagreb decision, dated February 26, 2015.
After Croatian Financial Services Supervisory Agency had rendered its decision on March 27, 2015 approving
the registration document, the note on the security and the summary of the prospectus which, taken together,
form a prospectus composed of separate documents for the admission of a total of 60,736,738 common
registered dematerialized shares, having the nominal value of HRK 10.00 each and the total nominal value of
HRK 607,367,380.00 to the regulated market; the CDCC has published a notification on conversion of common
shares ticker OPTE-R-B into OPTE-R-A on April 7, 2015. Upon execution of Securities conversion, 63.556.808
securities ticker OPTE-R-A, ISIN: HROPTERA0001, each nominal value of 10.00 HRK will be included in the
Depository and Clearing and Settlement of CDCC. Pursuant to its Decision from April 1, 2015, Zagrebačka Burza
d.d. allowed the admission of 60,736,738 common shares, each having the nominal amount of HRK 10.00, ticker:
OPTE-R-A, ISIN: HROPTERA0001, into the official market of the Zagreb Stock Exchange. Thereby, the
Company has completed the admission of common shares issued in the pre-bankruptcy settlement proceedings.
With the implementation of the status change related to the merger with H1, based on the decision of the
Commercial Court in Zagreb, dated 1 Aug 2017, the share capital was increased from HRK 635,568,080.00 in
the amount of HRK 58,864,560.00 up to the total amount of 694,432,640.00 HRK. This was all done in
accordance with the provisions of Articles 519 and 520 of the Companies Act to implement the merger process
through issuance of 5,886,456 new ordinary shares in the nominal value of HRK 10.00.
After the balance sheet date, the Company changed its majority owner and at the same time the Zagreb Stock
Exchange d.d. decided to suspend trading in the company’s shares, in more detail in Note 37.
Earnings per share:
Group
Company
2021
2020
2021
2020
Loss for the year attributable
to ordinary equity holders of
the Company in HRK
thousand
(52,365)
1,658
(52,127)
1,576
Weitghted average number
of ordinary shares for basic
earnings per share
694,433,264
694,433,264
694,433,264
694,433,264
Loss per share
(0,08)
0,002
(0,08)
0,002
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
105
26. LONG-TERM AND SHORT TERM BORROWINGS
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Amounts due to banks
104,159
122.510
104,159
122.510
Long-term portion
104,159
122.510
104,159
122.510
Amounts due to companies
203,547
204.423
203,547
204.423
Amounts due to banks
53,383
31.514
53,383
31.514
Short term portion
256,930
235.937
256,930
235.937
Total received loans and
borrowings
361,089
358.447
361,089
358.447
The largest portion in the undiscounted amount of HRK 203,547 thousand as of 31 December 2021 (2020: HRK
204,423 thousand) relates to loans provided by HT-Hrvatski Telekom d.d. as a result of refinancing the previous
loan and major part of the due liabilities. The interest rate on the loan in question was 1.85% per annum until
July 8, 2021, and from July 8, 2021, 2.5% in accordance with the annex to the agreement. The new annex to the
agreement defines that in the case of concluding the inter-creditor agreement by 31 December 2021, the loan
matures on 30 June 2025, and otherwise on 30 June 2022.The remaining amount of borrowings of HRK 165,790
thousand as at 31 December 2021 (2020: HRK 164,555 thousand) relates to Zagrebačka banka loans which are
result of the restructuring of liabilities under the pre-bankruptcy settlement. The interest rate on these loans is
4.5% per annum (2020: 4.5% per annum), and the final maturity is June 30, 2028.
The breakdown of the loan debt by individual currencies is provided below.
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
EUR
155,091
151,573
155,091
151,573
HRK
205,998
206,874
205,998
206,874
361,089
358,447
361.089
358,447
The weighted average interest rate on received short-term and long-term loans and borrowings is 3.11% (2020:
3.00%).
All loans and borrowings of the Company and the Group are contracted at a fixed interest rate.
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Fixed rate
361,089
358,447
361,089
358,447
Received loans and
borrowings
361,089
358,447
361,089
358,447
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
106
27. ISSUED BONDS
Group
Company
31
December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
31
December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
Nominal amount – long term
-
7,500
22,500
-
7,500
22,500
Discount
-
(192)
(681)
-
(192)
(681)
-
7,308
21,819
-
7,308
21,819
Nominal amount – short term
7,500
15,000
15,000
7,500
15,000
15,000
Discount
(192)
(490)
(622)
(192)
(490)
(622)
Accrued interest – short term
64
132
166
64
132
166
7,372
14,642
14,544
7,372
14,642
14,544
7,372
21,950
36,363
7,372
21,950
36,363
On 5 February 2007, the Company issued bonds (OPTE-O-124A) with a nominal value of HRK 250 million. The bonds were issued on the Zagreb Stock Exchange.
The interest rate on the bonds is 9.125 %, and the bonds matured on 1 February 2014. The bonds were issued at a price of 99.496 %. The interest due on 1 February
2013 was not paid because of the initiation of the pre-bankruptcy settlements procedure. However, it was included in the estates to be settled under the pre-bankruptcy
settlement. The effective interest rate is 9.226%.
According to the Pre-bankruptcy Settlement Arrangement, SKDD registered in its system the change in the bond type designation of the issuer from OPTE-O-142A,
ISIN:HROPTEO142A5, into a debt security with multiple maturities and the share of notional principal amount outstanding of HRK 0.30 per bond. In the period from
30 May 2014 to 30 May 2017, the Company, as the bond issuer, will pay the interest semi-annually at an interest rate of 5.25 % a year, and since 30 May 2017, the
bond holders will receive, in addition to the interest, a part of the bond principal in the amount of 3%.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
107
27. ISSUED BONDS (continued)
In 2015, the Company complied with its obligations and issued the Prospectus composed of separate documents for the readmission of the bonds and Zagrebačka
burza d.d. approved their admission into the official market of the Zagreb Stock Exchange. Namely, on 31 July 2015 HANFA rendered the decision approving the
Security Note and prospectus summary which, along with the Registration Document approved by the Agency’s decision of 27 March 2015, comprise the prospectus
composed of separate documents for the admission of dematerialized registered bonds, ticker OPTE-O-142A, having the nominal value of HRK 1.00 each and the
total nominal value of HRK 250,000,000.00, with an annual interest of 5.25%, falling due in 2022. On 3 August 2015 the Company filed an application to the Zagreb
Stock Exchange, and on the same day the Stock Exchange rendered the decision approving the admission of HRK 250,000,000.00 worth of bonds, ticker OPTE-O-
142A, ISIN: HROPTEO142A5 into the official market of the Zagreb Stock Exchange, and 6 August 2015 has been determined as the first day of security trading.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
108
28.TRADE PAYABLES AND OTHER PAYABLES
Group
Company
31 December
2021
31 December 2020
Adjusted
1 January
2020
Adjusted
31
December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
Long-term liabilities to content
providers
1,041
226
903
1,041
226
903
Liabilities to suppliers under the Pre-
bankruptcy Settlement Arrangement
8,201
16,271
24,219
8,201
16,271
24,219
Long-term contract liabilites
1,436
2,094
1,000
1,436
2,094
1,000
Non-current
10,678
18,591
26,122
10,678
18,591
26,122
Domestic trade payables
100,546
125,810
191,508
100,542
125,810
191,512
Foreign trade payables
1,865
2,243
3,275
1,850
2,217
3,271
Obligations to suppliers under the
Pre-bankruptcy Settlement
Arrangement /i/
8,865
9,088
40,191
8,865
9,088
40,191
Short term liabilities to content
providers
19,706
15,746
13,504
19,706
15,746
13,504
Short term contract liabilites
2,132
2,503
1,767
2,132
2,503
1,767
Current
133,114
155,390
250,245
133,095
155,364
250,245
Total trade payables
143,792
173,981
276,367
143,773
173,955
276,367
/i/ Obligations to suppliers under the Pre-bankruptcy Settlement Arrangement relates to H1 that was acquired in 2017.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
109
29. OTHER CURRENT LIABILITIES
Group
Company
31 December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
31 December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
VAT payable
1,640
2,876
1,718
1,640
2,876
1,718
Net salaries
2,530
2,553
2,612
2,530
2,553
2,612
Taxes and contributions on salaries
1,419
1,496
1,583
1,419
1,496
1,583
Other liabilities
1,608
2,874
2,322
1,608
2,859
1,499
7,197
9,799
8,235
7,197
9,784
7,412
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
110
30. ACCRUED EXPENSES AND DEFERRED INCOME
Group
Company
31 December
2021
31 December
2020
31 December
2021
31 December
2020
Deferred equipment rental income
13,505
14.734
13,505
14.734
Total long-term
13,505
14.734
13,505
14.734
Deferred equipment rental income
2,091
2.926
2,091
2.926
Accrued expenses - domestic supplier
accruals
12,500
15.502
12,500
15.502
Accrued expenses - foreign supplier
accruals
283
237
283
237
Total short-term
14,874
18.665
14,874
18.665
28,379
33.399
28,379
33.399
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
111
31. RELATED PARTY TRANSACTIONS
Pursuant to Article 21 of the Statute, each Supervisory Board member is entitled to a fee. The fee entitlement
and amount are determined in the General Meeting of the Company's Shareholders by a simple majority of vote.
The total remuneration paid to the Supervisory Board members in 2021 amounts to HRK 119 thousand (2020:
HRK 95 thousand). No loans were provided to the Supervisory Board members. The total remuneration paid to
the Management Board members in 2021 amounts to HRK 2,738 thousand (2020: 2,698 thousand).
According to Article 15 of the Company's Statute, any legal transactions with the shareholders of Hrvatski Telekom
d.d. and Zagrebačka banka d.d. and parties related to them require prior consent of the Supervisory Board.
The main transactions with related parties during 2021 and 2020 were as follows:
Group
Company
2021
2020
2021
2020
Income
Hrvatski telekom d.d.
10,811
12,281
10,811
12,281
Iskon internet d.d.
1,240
1,526
1,240
1,526
Combis d.o.o.
1
4
1
4
Optima telekom d.o.o. Koper, Slovenija
-
-
24
11
Optima direct d.o.o.
-
-
71
70
Zagrebačka banka d.d.
3,916
3,977
3,916
3,977
Deutsche Telekom d.d.
72
72
72
72
T-Mobile Češka d.d.
137
152
137
152
Magyar Telekom d.d.
22
23
22
23
T-Mobile Poljska d.d.
90
90
90
90
BKS banka d.d.
52
-
52
UniCredit Leasing Croatia d.d.
14
-
14
Zagreb nekretnine d.o.o. - ZANE d.o.o.
54
-
54
16,409
18,125
16,504
18,206
Expenses
Hrvatski telekom d.d.
146,470
170,596
146,470
170,596
Combis d.o.o.
210
622
210
622
Iskon internet d.d.
372
581
372
581
Zagrebačka banka d.d.
1,495
7,897
1,495
7,897
Deutsche Telekom d.d.
123
223
123
223
T-Mobile Češka d.d.
-
7
-
7
Magyar Telekom d.d.
36
36
36
36
Hanza Media d.o.o.
-
15
-
15
Telefonica, Češka
5
5
148,711
179,977
148,711
179,977
Capital Expenditures
Hrvatski telekom d.d.
123
429
123
429
Combis d.o.o.
4,061
6,132
4,061
7,289
4,184
6,561
4,184
7,718
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
112
31. RELATED PARTY TRANSACTIONS (continued)
Group
Company
2021
2020
2021
2020
Receivables
Hrvatski telekom d.d.
2,384
3,790
2,384
3,790
Iskon internet d.d.
242
577
242
577
Combis d.o.o.
-
1
-
1
Optima telekom d.o.o. Koper, Slovenija
-
-
749
664
Optima direct d.o.o.
-
-
2,619
2,615
Zagrebačka banka d.d. /i/
27,841
28,613
27,841
28,613
Deutsche Telekom d.d.
12
12
12
12
Telekom Romania d.d.
-
-
-
-
T-Mobile Češka d.d.
22
25
22
25
Magyar Telekom d.d.
5
3
5
3
T-Mobile Poljska d.d.
7
15
7
15
BKS banka d.d.
5
-
5
-
Zagreb nekretnine d.o.o. - ZANE d.o.o.
6
-
6
-
30,524
33,036
33,892
36,315
Liabilities
Hrvatski telekom d.d.
293,636
315,482
293,636
315,482
Iskon internet d.d.
107
140
107
140
Combis d.o.o.
2,228
666
2,228
666
Optima Direct d.o.o.
-
-
-
-
Zagrebačka banka d.d. /ii/
158,246
165,708
158,246
165,708
Deutsche Telekom d.d.
10
18
10
18
Magyar Telekom d.d.
3
3
3
3
454,230
482,017
454,230
482,017
/i/ Cash on bank account
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
113
32. FINANCIAL INSTRUMENTS
During the period, the Company and the Group used most of its financial instruments to finance its operations. The financial instruments comprise loans and
borrowings, bills of exchange, cash and liquid resources and various other items, such as trade receivables and payables, which arise directly from the Company's
and the Group’s operations.
Details of the significant accounting policies and methods adopted, including the recognition criteria, the measurement basis and the basis for recognition of income
and expenses in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 3 to the financial statements.
Categories of financial instruments
Group
Company
31 December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
31 December
2021
31 December
2020
Adjusted
1 January
2020
Adjusted
Financial assets
Non-current and current loans and
deposits
3,943
3,960
3,990
7,275
7,228
6,680
Cash and cash equivalents
25,865
25,637
44,990
25,853
25,595
44,943
Trade receivables
70,232
89,729
86,106
70,064
89,521
85,919
100,040
119,326
135,086
103,192
122,344
137,542
Financial liabilities
Issued bonds
7,372
21,950
44,854
7,372
21,950
44,854
Borrowings
361,089
358,447
278,151
361,089
358,447
278,151
Trade payables
143,792
173,981
267,876
143,773
173,955
267,876
512,253
554,378
590,881
512,234
554,352
590,881
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
114
33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
1. Foreign currency risk management
The carrying amounts of the Group’s foreign-currency denominated monetary assets and monetary liabilities at
the reporting date are provided in the table below.
2021
2020
2021
2020
Group
Liabilities
Assets
EUR
168,735
169,727
11,088
11.831
USD
2
2
-
-
168,737
169,729
11,088
11.831
The carrying amounts of the Company’s foreign-currency denominated monetary assets and monetary liabilities
at the reporting date are provided in the table below.
2021
2020
2021
2020
Company
Liabilities
Assets
EUR
168,735
169,727
11,088
11,831
USD
2
2
-
168,737
169,729
11,088
11,831
Foreign currency sensitivity analysis
The Company and the Group is mainly exposed to the fluctuations in the exchange rate of the Croatian kuna to
the euro and US dollar.
The following table details the Company’s and the Group’s sensitivity to a 10-percent change of the Croatian
kuna in 2021 against the relevant currencies (2020: 10%). The sensitivity analysis includes only outstanding
foreign currency denominated monetary items and adjusts their translation at the yearend for the changes in the
foreign currency rates. The sensitivity analysis includes monetary assets and monetary liabilities in foreign
currencies. A negative number below indicates a decrease in profit where the Croatian kuna changes against
the relevant currency for the percentage specified above. For a weakening of the Croatian kuna against the
relevant currency, there would be an equal and opposite impact on the profit.
2021
2020
2021
2020
Group
Liabilities
Assets
EUR
16,873
16,973
1,109
1,183
USD
-
-
-
-
16,873
16,973
1,109
1,183
2021
2020
2021
2020
Company
Liabilities
Assets
EUR
16,873
16,973
1,109
1,183
USD
-
-
-
-
16,873
16,973
1,109
1,183
The exposure to the 10-percent fluctuation in the exchange rates is mainly attributable to the borrowings, trade
payables and receivables from related companies denominated in Euro (EUR) and US dollar (USD).
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
115
33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
33.1. Interest rate risk
Interest rate cash flow risk is the risk that the interest cost of financial instruments will fluctuate over the time.
The Company and the Group have no exposure to interest rate risk because the majority of its financial
obligations bear interest at fixed rates.
The issued bonds are measured at amortized cost, and changes in the interest rates that could cause the fair
value of the bonds to change do not affect the carrying amount of issued bonds.
33.2. Other price risks
The Company and the Group is not exposed to equity price risks arising from equity investments. There are no
significant equity instruments held by the Company and the Group.
33.3. Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a potential
financial loss to the Company and the Group. The Company and the Group has no significant concentration of
credit risk with any single counter party or group of counterparties with similar characteristics. The Company and
the Group has adopted procedures which it applies in dealing with customers. The Company and the Group
obtains sufficient collaterals, where appropriate, as a means of mitigating the risk of financial loss from defaults.
The Company and the Group does not guarantee obligations of other parties.
The Company and the Group considers that their maximum exposure is reflected by the amount of debtors net
of provisions for impairment recognized at the statement of financial position date.
Additionally, the Company and the Group is exposed to risk through cash deposits in the banks. At 31 December
2021, the Group had business transactions with 11 banks and the Company with 10 banks (2020: 11 banks
Group, 10 banks Company). The Company and the Group held cash in five banks almost exclusively. The
management of this risk is focused on dealing with the most reputable banks in foreign and domestic ownership
at the domestic and foreign markets and on contacts with the banks on a daily basis.
The Company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables and contract assets. To measure the expected credit losses,
trade receivables and contract assets have been grouped based on shared credit risk characteristics and the
days past due. The contract assets relate the same risk characteristics as the trade receivables for the same
types of contracts. The group has therefore concluded that the expected loss rates for trade receivables are a
reasonable approximation of the loss rates for the contract assets.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
116
33. FINANCIAL RISK MANAGEMENT OBJECITVES AND POLICIES (CONTINUED)
33.3. Credit risk (continued)
The banks have no credit rating; however, their parent banks have credit ratings by Standard & Poor’s as
presented below.
Group
Company
2021
2020
2021
2020
A
178
6
178
6
BBB
24,316
24,920
24,314
24,888
No rating
1,371
711
1,361
701
25,865
25,637
25,853
25,595
The credit quality of financial assets that are neither past due nor impaired can be assessed by historical
information about counterparty default rates:
Group
Company
2021
2020
2021
2020
Residential
27,097
31,602
27,097
31,602
Wholesale
1,478
2,624
1,478
2,624
Key Accounts (KA)
2,559
3,162
2,559
3,162
Small and medium
Enterprises (SME)
3,852
3,592
3,852
3,592
Small office / Home office
(SOHO)
1,908
2,515
1,908
2,515
Other
554
7,382
549
7,376
37,448
50,877
37,443
50,871
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
117
33. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
33.4. Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Management Board, which has built an
appropriate liquidity risk management framework for the management of the company’s short, medium and long-
term funding and liquidity management requirements. The Company and the Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring
forecast and actual cash flows and matching the maturity profiles of receivables and payables.
Liquidity and interest rate risk tables
The following tables detail the Company’s and the Group's remaining contractual maturities for its liabilities at
the end of the period.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Company can be required to pay. The table includes both interest and principal cash flows.
Group and Company
Less than
3months
3 – 12
months
1 do 5
years
Over 5
years
Total
2021
Pre-bankruptcy trade payables
9,035
8,240
-
17,275
Liabilities toward related parties
2,547
201,000
-
-
203,547
Liabilities for borrowings
50,681
19,133
93,360
31,285
194,459
Liabilities for bonds
63
7,697
-
-
7,760
Liabilities for content and guarantee
contracts
8,769
12,967
1,049
-
22,785
Trade payables
86,632
17,906
2,360
78
106,976
Lease liabilities
4,459
13,525
23,756
2,186
43,926
Other liabilities
17,000
1,924
11,875
1,630
32,430
179,186
274,152
140,640
35,179
629,157
2020 Adjusted
Pre-bankruptcy trade payables
9,380
-
16,479
-
25,859
Liabilities toward related parties
3,423
202,844
-
-
206,267
Liabilities for borrowings
23,942
19,865
97,223
53,407
194,437
Liabilities for bonds
132
15,853
7,697
-
23,682
Liabilities for content and guarantee
contracts
8,079
9,141
270
-
17,490
Trade payables
121,884
8,719
2,418
-
133,021
Lease liabilities
6,244
8,970
12,701
2,405
30,320
Other liabilities
21,326
1,906
11,156
3,579
37,967
194,410
267,298
147,944
59,391
669,043
Trade payables (including payables of content and guarantee amounts HRK 129,761 thousand for 2021 (2020:
HRK 150,551 thousand). Liabilities toward related parties related to Pre-bankruptcy trade payables and
borrowings.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
118
33. FINANCIAL RISK MANAGEMENT OBJECITVES AND POLICIES (CONTINUED)
33.5. Fair value of financial instruments
Methods and assumptions used in measuring fair values
The fair value of other financial assets and financial liabilities (excluding derivative instruments) is determined in
accordance with generally accepted pricing models based on discounted cash flow analysis using prices from
observable current market transactions and quotes for similar instruments.
Borrowings are classified as Level 2 and their carrying value approximates fair value discounted using market
rate instead of effective interest rate.
The estimated fair value of the bonds in the amount of HRK 7,493 thousand at 31 December 2021 (2020: HRK
22,478) is determined by their market value on secondary capital market (Zagreb stock exchange) as of date of
the statement of financial position and belong to the first hierarchical category of financial instruments. Fair value
is determined as the last closing price in 2021, although during the year there were no significant transactions
with these bonds.
34. OFFSETTING
Following financial assets and liabilities of the Group and Company are subject to off-setting
Group
Company
2021
2020
2021
2020
Financial assets
Gross recognised
amounts
74,353
95,963
74,185
95,756
Offsetting amount
(4,121)
(6,234)
(4,121)
(6,234)
70,232
89,729
70,064
89,522
Financial liabilities
Gross recognised
amounts
147,913
180,215
147,894
180,189
Offsetting amount
(4,121)
(6,234)
(4,121)
(6,234)
143,792
173,981
143,773
173,955
35. AUDITOR’S FEES
The auditors of the Company’s and the Group’s financial statements have rendered services of HRK 990
thousand in 2021 (2020: HRK 980 thousand). Services rendered in 2020 and 2021 mainly relate to audits of the
financial statements. Non-audit services in the years in question relate to the pre-bankruptcy settlement
commissioner as well as business advice regarding the establishment of factual findings in the process of
migrating users to the new billing system.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
119
36. NET DEBT
This table sets out an analysis of the movements in liabilities from financial cash flow:
Group
As at 1
January
2020
Adjusted
Cash flows
Foreign
exchange
adjustments
Other non-
cash
movements
As at 1
January
2021
Adjusted
Cash
flows
Foreign
exchange
adjustments
Other non-
cash
movement
s
As at 31
December
2021
Borrowings
(278,151)
41,364
(2,046)
(119,614)
(358,447)
11,257
517
(14,416)
(361,089)
Issued bonds
(36,363)
16,771
-
(2,360)
(21,950)
15,984
-
(1,406)
(7,372)
Content and
guarantee contracts
(17,174)
36,609
(9)
(39,994)
(20,568)
39,848
(137)
(43,458)
(24,315)
Pre-bankruptcy
trade payables
(64,410)
40,850
-
(1,799)
(25,360)
9,352
-
(1,059)
(17,067)
Lease liabilities
(52,611)
27,403
-
(5,111)
(30,319)
20,340
-
(33,947)
(43,926)
Total debt
(448,709)
162,998
(2,055)
(168,878)
(456,644)
96,782
380
(94,286)
(453,768)
Cash and cash
equivalents
44,990
(19,353)
-
-
25,637
228
-
-
25,865
Loans given
522
(17)
-
-
505
(4)
-
-
501
Deposits
3,468
(17)
-
-
3,451
(9)
-
-
3,442
Total assets
48,980
(19,387)
-
-
29,593
215
-
-
29,808
Total net debt
(399,729)
143,611
(2,055)
(168,878)
(427,051)
96,997
380
(94,286)
(423,960)
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
120
36. NET DEBT
Company
As at 1
January
2020
Adjusted
Cash flows
Foreign
exchange
adjustments
Other non-
cash
movements
As at 1
January
2021
Adjusted
Cash
flows
Foreign
exchange
adjustments
Other non-
cash
movement
s
As at 31
December
2021
Borrowings
(278,151)
41,364
(2,046)
(119,614)
(358,447)
11,257
517
(14,416)
(361,089)
Issued bonds
(36,363)
16,772
-
(2,360)
(21,950)
15,984
-
(1,406)
(7,372)
Content and
guarantee contracts
(17,174)
36,609
(9)
(39,994)
(20,568)
39,848
(137)
(43,458)
(24,315)
Pre-bankruptcy
trade payables
(64,410)
40,850
-
(1,799)
(25,360)
9,352
-
(1,059)
(17,067)
Lease liabilities
(52,611)
27,403
-
(5,111)
(30,319)
20,340
-
(33,947)
(43,926)
Total debt
(448,709)
162,998
(2,055)
(168,878)
(456,644)
96,781
380
(94,286)
(453,769)
Cash and cash
equivalents
44,943
(19,348)
-
-
25,595
258
-
-
25,853
Loans given
3,212
561
-
-
3,773
60
-
-
3,833
Deposits
3,451
-
-
-
3,451
(9)
-
-
3,442
Total assets
51,606
(18,787)
-
-
32,819
309
-
-
33,128
Total net debt
(397,103)
144,211
(2,055)
(168,878)
(423,825)
97,090
380
(94,286)
(420,641)
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
121
37. SUBSEQUENT EVENTS
Changing the ownership structure
On January 21, 2022, the Agreement on the transfer of OT-Optima Telekom shares was signed between
Hrvatski Telekom d.d., Zagrebačka banka d.d. and Telemach Hrvatska d.o.o. by which HT holding (a
company 100% owned by Hrvatski Telekom d.d. ) transferred 17.41% of Optima shares, and Zagrebačka
banka 36.90% of Optima shares to Telemach Hrvatska d.o.o. which thus acquires a total of 54.31% of Optima
shares.
On February 25, 2022, Telemach Hrvatska d.o.o. Zagreb, announced a public offer to take over the
Company, since the Croatian Financial Services Supervisory Agency approved the publication of a public
offer to take over the Company by a decision of 24 February 2022. The takeover bid for the Company was
published in the Official Gazette, Official Gazette of the Republic of Croatia on March 2, 2022, with a validity
period of 30 days.
On March 11, 2022, the Company published the Opinion of the Management Board of OT-Optima Telekom
d.d. and the Opinion of the Trade Union Commissioner on the takeover bid and the Certificate of the Official
Gazette, Official Gazette of the Republic of Croatia, on the publication of the advertisement.
Following a public offer to take over the Company, Telemach Hrvatska d.o.o. holds 66,017,169. ordinary
shares of the Company representing 95.07% of the Company's share capital.
On April 8, 2022, Telemach Hrvatska d.o.o. submitted to the Central Depository and Clearing Company a
Request for transfer of shares of minority shareholders of the Company, which request relates to 3,426,095
ordinary shares of the Company.
Settlement of loan obligations and new loans
On January 21, 2022, an Agreement was concluded between Zagrebačka banka d.d., Telemach and the
Company, which regulates the method of debt repayment and by which Telemach Hrvatska d.o.o. settled
debts to Zagrebačka banka d.d. in the amount of HRK 166,928 thousand arising from Optima Pre-Bankruptcy
Settlement and H1 Pre-Bankruptcy Settlement.
On January 21, 2022, the Company received a Notice from Hrvatski Telekom d.d. which also informed that
Hrvatski Telemach d.d. with Telemach Hrvatska d.o.o. on 21 January 2022 entered into an agreement on
the purchase and sale of receivables, by which Hrvatski Telekom sold and ceded, and Telemach Hrvatska
d.o.o. purchased and accepted, the following monetary receivables he had against the Company:
• Receivables arising from the Loan Agreement in the amount of HRK 201,000 thousand concluded
between Hrvatski Telekom d.d. as a lender and the Company as a borrower on 31 January 2020,
amended Amendment 1 to the Loan Agreement dated 8 July 2021 in the total amount of HRK
203,822 thousand.
• Receivables related to liabilities to Hrvatski Telekom d.d. which fell due more than 30 days in the
total amount of HRK 35,000 thousand.
Consolidated and separate notes to the financial statements
For the year ended 31 December 2021
(All amounts are expressed in thousands of kunas)
OT-Optima Telekom d.d. and Its Subsidiaries
122
37. SUBSEQUENT EVENTS (CONTINUED)
Based on the subject transactions of sale and assignment of receivables and the manner of settling debts to
the companies Hrvatski Telekom d.d. and Zagrebačka banka d.d., with effect from 21 January 2022, the
Company entered into loan agreements with Telemach Hrvatska d.o.o. in the amount of HRK 238,822
thousand and HRK 166,928 thousand. The Loan Agreements in question were signed with a grace period of
10 years for the payment of the principal, and the interest rate was defined at 4.65% with quarterly payments.
On March 25, 2022, the Company signed a Loan Agreement with Telemach Hrvatska d.o.o. on a revolving
basis in the amount of HRK 30,000 thousand to finance the regular operations of the Company. The loan
was approved for 10 years at an annual rate of 4.65% (interest payment quarterly). On 14 April 2022, the
Company withdrew a tranche in the amount of HRK 15,000 thousand and settled due debts to Hrvatski
Telekom d.d.
Other events
Having in mind the war in Ukraine, the Group and the Company do not have business relations with entities
in Ukraine and Russia, nor are any business risks expected due to the development of the mentioned
circumstances.
On April 26, 2022, the Company was notified of the Decision of the Zagreb Stock Exchange d.d. suspending
trading in shares of OT-OPTIMA TELEKOM d.d. with its registered office in Zagreb, Bani 75 / a, OIB:
36004425025, listed on the Official Market under the code: OPTE, ISIN: HROPTERA0001, nominal amount
HRK 10.00, dated 27 April 2022. Termination of listing on the Official Market of 69,443,264 ordinary shares
will take place on April 29, 2022.
In addition, no events or transactions have occurred after 31 December 2021 that are expected to have a
material effect on the financial statements as at or for the period ended 31 December 2021 or are of such
material importance to the Group and the Company that they should be disclosed in the notes to the financial
statements.