Tinkoff
Annual Report 2023

Plain-text annual report

TABLE OF CONTENTS STRATEGIC REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 FINANCIAL REPORT MANAGEMENT REPORT Address from the Chairman of the Board of Directors . . . . . . . . . 4 Address from the CEO/Chairman of the Management Board . . . . 4 Key Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Performance Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Consolidated Financial Statements in Accordance with the International Financial Reporting Standards and Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1 1 TINKOFF — A PIONEERING FINANCIAL ECOSYSTEM TINKOFF GROUP STANDS OUT AS AN INNOVATIVE PROVIDER OF DIGITAL FINANCIAL AND LIFESTYLE SERVICES. ESTABLISHED IN 2006, THE GROUP HAS DEVELOPED A COMPREHENSIVE ARRAY OF TECHNOLOGICAL SOLUTIONS ENCOMPASSING INTERNET BANKING, BROKERAGE SERVICES, TRADE ACQUIRING, AND OTHER MERCHANT SERVICES, INSURANCE, SME BANKING AND OTHERS. On 14 March 2024, the Group unveiled its 2023 IFRS Consolidated Financial Statements . The Management Board of the Group believes that the information contained in the 2023 Financial Statements furnishes a relevant and holistic depiction of the Group's operations, business structure and efficacy, critical risks, HR management approach, and describes the corporate governance specifics, and the responsibilities of the Board of Directors and its committees . All financial data presented in this report is derived from the Consolidated Financial Statements of TCS Group Holding PLC and adheres to the International Financial Reporting Standards endorsed by the European Union, as well as the stipulations of the Cyprus Companies Law, Chapter 113. The information relates to the year ending 31 December 2023 and is included in this report. For a detailed description of the financial and ancillary data, please refer to page F-1 of this report. 2nd Largest Bank in Russia by Number of Active Retail Customers 33,5% Return on Equity (ROE) Total customers 40M 32% YoY Revenue (RUB bn) Assets (RUB tn) 488 33% YoY 2,3 42% YoY Active customers 28M 30% YoY Active SME customers 0,7M 27% YoY Net profit (RUB bn) 80,9 4x YoY Active products per customer 1,8 20% YoY Customer funds (RUB tn) 1,7 44% YoY Net loan portfolio (RUB tn) 1,0 60% YoY 2 3 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTManagement Report Address from the Chairman of the Board of Directors Dear Esteemed Shareholders, We would like to emphasise the priorities of 2023 that will remain relevant in the years ahead . This is my first time addressing you in my capacity as the Chairman of the Board of Directors, which saw significant transformations in 2023 . Allow me to extend profound appreciation on behalf of the Board of Directors to all members of the Board whose dedication has served as the cornerstone of our Group's achievements throughout the years . The first and foremost is the relocation of the headquarters to the Russian jurisdiction . All preparatory measures were completed throughout 2023, and in early 2024, a new chapter began in Tinkoff's history as a public company . This decision will help strengthen corporate govern- ance, expand opportunities for inorganic growth and distribution of profits among shareholders . In 2023, our Board of Directors and management meticulously scrutinised the developmental trajectories of our Group . This thorough assessment encompassed our past accomplishments and a contemplation of future avenues, taking into account the economic and ge- opolitical landscapes . In early 2024, in alignment with your esteemed selves, we collectively decided to relocate the headquarters from the Republic of Cyprus to the Russian Federation . The successful redomiciliation of our Group and the establishment of a full-fledged corporate governance framework have empowered us to launch strategic initiatives aimed at outperforming business expansion, including inorganic growth . Despite the uncertainties of the external environment, 2023 proved the soundness of the strategic path charted in 2021 . Our unwavering commitment to customer-centricity, technological innovation, and financial resilience continues to serve as the bedrock of our endeav- ors . The Tinkoff Group has laid a sturdy groundwork for further solidification of its foothold in the Russian financial landscape and aims to further increase its market share and return on equity . Alexey Malinovskiy, Chairman of the Board, TCS GROUP HOLDING PLC Address from the CEO/Chairman of the Management Board Dear Esteemed Shareholders, Partners, Customers, and Colleagues, In April 2021, we laid out Tinkoff's strategic vision to 2023, with a commitment to doubling the size of the business . It is with great pride that we report the accomplishment of this objective, surpassing even our most ambitious projections . The Tinkoff customer base has now exceeded 40 million individuals, with 28 million active customers . This broad clientele has enabled us to efficiently expand the cross-selling of products within our ecosystem . The average number of products per customer has risen from 1 .5 in 2022 to 1 .8 in 2023, including profitable loan products . The Group's net profit nearly quadrupled YoY compared to 2022 and soared to nearly 81 billion rubles, marking a historic high for Tinkoff . Despite challenging macroeconomic conditions and increased funding expenses, we delivered growth in return on equity and earned a 33 .5% ROE, once again accentuating the resilience of our business model . The loan portfolio surged by more than 1 .5 times YoY compared to 2022, surpassing the 1 trillion ruble milestone . By the end of 2023, we ranked 4th in the country in terms of retail loan portfolio size . Tinkoff’s non-interest income exceeded 50% in 2023, underscoring our suc- cessful revenue diversification efforts . In 2023, capitalising on higher interest rates, we intensified our focus on deepening out penetration into our customers' “savings wallets” . Tinkoff managed to increase the total customers’ funds in the bank to 1 .7 trillion rubles, and with the funds invested by customers in our brokerage business, it reached 2 .5 trillion rubles . Tinkoff also continued to expand its range of financial services for entrepreneurs, leading to a rise in Tinkoff Business's active base to 700 thousand customers . By the end of the year, the small and medium enterprise segment had brought together more than 1 .2 million clients with a total cash balance of 268 billion rubles in their accounts . In late 2023, Tinkoff launched a merchant lending service on all major mar- ketplaces, and the loan portfolio grew fourfold compared to 2022 . The second priority is the implementation of machine learning and robotisation to enhance the customer experience and operational effi- ciency of business . In 2023, we continued our work on specialised Large Language Models to widely integrate artificial intelligence into our ecosystem products . Our aim is to develop specialised technologies to compete where it is truly necessary . We take pride in leading in fraud protection technologies and enhancing the reliability of our ecosystem for customers . We launched the market's first service to protect against phone scammers with refunds — "Protect or Refund ." The bank's and Tinkoff Mobile operator's protective technologies allow us to detect fraud during phone conversations with over 99% probability . We are so confident in our product's quality that we guarantee compensation for losses in the event that customers still become prey to fraudulent activities . The third priority is the importance of talents, recruiting, and retaining the best specialists . In 2023, Tinkoff became a partner of the Central University — the first private university in Russia based on the STEM (Science, Technology, Engineering, Mathematics) model . This com- bines science, technology, engineering, and mathematics to create a holistic approach to education . The university will help train human resources for the Russian IT sector, including Tinkoff . We also continue to actively collaborate with leading universities, IT summer schools, and math competitions to attract highly qualified pro- fessionals . To support our employees' growth, we offer extensive training and wellbeing support programmes, a flexible working environ- ment, and cultivate a strong corporate culture at Tinkoff . Once again, the achievements of 2023 were made possible by the teams that made the impact of sanctions imperceptible to customers and developed innovative solutions for the market . As a responsible corporate citizen, we strive to support vulnerable and socially disadvantaged segments of the population . In 2023, through joint initiatives with charitable and educational organisations, the Group and its customers invested 3 .1 billion rubles in Russian non-profit organisations . Our genuine interest in addressing current social issues combined with cutting-edge technologies enables us to fulfil our mission and have a positive impact on society . Given our exceptional performance in 2023, we expect to maintain our outperforming business growth rates, high return on equity and maximise Tinkoff's shareholder value . Stanislav Blizniuk, CEO/Chairman of the Management Board, Tinkoff Bank JSC 4 5 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTKey Events Innovative Products and Services • The Tinkoff Pay service, which was launched back in 2021, became available for all Android-based smartphones in 2023 and emerged as a reliable alternative to Google Pay, which ceased operations in Russia . • • In order to broaden the range of payment options for customers, Tinkoff introduced transfers in Indian rupees, Thai baht, and Brazilian reals, with expanded transfer opportunities in the currencies of Azerbaijan, Belarus, Kyrgyzstan, and Tajikistan . In 2023, the Tinkoff ID secure online authorisation technology was integrated into third-party platforms, including the Avito classified ads service, the Rustore app store, and the Moscow Exchange’s e-services . Building upon Tinkoff ID, the first unbranded banking solution for phone number authentication was launched, with such online retailers as Technopark and Brandshop already adopting this innovative feature . • Tinkoff introduced the "Business Investments" service for companies to invest surplus funds in stocks and bonds, along with the "Compass” free geoservice, aiding entrepreneurs in discovering optimal business locations through big data analysis . Ecosystem Reliability and Security • Tinkoff launched the industry's pioneering service to safeguard against phone scammers with refund capabilities . This service merges the bank's security technologies with those of Tinkoff Mobile, identifying fraud during phone conversations with over 99% probability . Should a customer fall prey to scammers and transfer funds to them, the bank will reimburse any losses incurred . • In 2023, the Humanoid Robot Factory was launched began operations, deploying a range of robot characters resembling real human beings to engage scammers, prolonging interactions to avert potential fraud . Within only three months of its inception, these robots de- tained almost 87,000 phone scammers, engaging in approximately 575,000 minutes of interaction . The average conversation duration increased by 1 .5 times, nearly reaching 4 minutes . • Tinkoff deployed special mobile teams comprising Tinkoff Security staff to dissuade victims from transferring money to scammers . With the help of technology and staff, Tinkoff Security prevented the theft of over 21 billion rubles from customers who were targeted by scammers . • Tinkoff became the first bank to launch a public bug bounty program . Throughout 2023, the bank expanded the number of public plat- forms for white hat hackers that feature the Tinkoff bug bounty program . Artificial Intelligence In 2023, scientists from the Tinkoff Research's Artificial Intelligence Research Lab made a series of scientific discoveries related to Reinforce- ment Learning and recommender systems . The discoveries were recognised by the global scientific community and accepted to the world's most prestigious AI conferences (NeurIPS, ICML, ACM RecSys) . These discoveries include: • the most efficient AI training and adapting algorithms compared to global analogues, and • an algorithm for more accurate prediction of online consumer purchases considering the timing and periodicity of purchases . • Tinkoff's Artificial Intelligence Technology Centre also announced the development of proprietary specialised Large Language Models (LLMs) for widespread AI integration into ecosystem products, and throughout the year, helped launch numerous products based on other AI technologies . Attracting and retaining IT talents • In 2023, Tinkoff became a partner of the Central University — the first private university in Russia based on the STEM (Science, Technol- ogy, Engineering, Mathematics) model . This combines science, technology, engineering, and mathematics to create a holistic approach to education . The university will help train human resources for the Russian IT sector, including Tinkoff . • Throughout the year, IT’s Tinkoff Solution Cup extensive competitions for experienced IT developers and analyst and IT’s Tinkoff Cap- ture the Flag sports hacking competitions were held in Russia and Belarus . • In 2023, more than 13,000 students participated in the annual scholarship programme for talented students, with 200 winners from 29 Russian universities receiving financial support from Tinkoff . This assistance enabled them to concentrate on their studies and achieve exceptional academic results . • The newly opened Tinkoff Space headquarters in 2023, located in the heart of Moscow, represents a new benchmark for integrating work and daily life . Designed as "a city within a city," this space features cafes, restaurants, a medical clinic, fitness amenities, house- hold services, and a panoramic terrace for work and relaxation . Social Initiatives • In 2023, the Tinkoff ecosystem allowed charitable, educational and other non-profit organisations in Russia to receive RUB 3 .1 billion . The number of customers actively involved in the Group's projects surpassed 3 million . • Tinkoff continues to prioritise social investments directed at improving the quality of education and creating opportunities for talented individuals in Russia . Participation in the establishment of the Central University and Tinkoff Education’s federal projects has benefitted over 15,000 individuals nationwide . • Under the Group's sponsorship, a comprehensive two-year online course called "Math Solves It" was launched for students in grades 4–6 . Additionally, a grant competition named "Contribution to the Generation" was held for proficient mathematics and computer science teach- ers, offering grants of up to 150,000 rubles . Public Recognition • Tinkoff was acknowledged as the most user-friendly online bank for daily operations, winning the Frank Debit Cards Award 2023 . It also received recognition from the expert community for its premium customer services, securing the "High Loyalty of Premium Customers" award as ranked at Frank Premium Banking 2023 . • The Tinkoff mobile app was honored with the Best Mobile App Award at the Annual Banki .ru Awards, and the Tinkoff Pay payment sticker emerged victorious in the "Project of the Year in the Banking Sector" category at the Compare Awards . • Tinkoff was ranked by ECOVIS and Habr as the top fintech employer of 2023. • In the Forbes Employer Ranking, Tinkoff achieved a platinum — top — status, showing an improvement in its performance from the pre- vious year by securing a platinum award in two of the three categories ("Employees and Society" and "Corporate Governance") at once . Furthermore, Tinkoff earned a gold award in the "Environment" category . • Tinkoff was placed in the first — top — group in the RBC Employer Ranking . The results were evaluated based on the following criteria: "employees and working conditions", "business efficiency and innovative development", "social responsibility", "company's business reputation", and "employee feedback" . 6 7 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTOverview of Financial and Operating Performance In 2023, the Group witnessed a 33% YoY growth in total revenue, amounting to 487 .7 billion rubles (compared to 366 .0 billion rubles in 2022) . The Group continued to diversify its revenue sources . Non-lending activities contributed to 52% of the revenue by the end of 2023 . The total number of customers in 2023 saw a 32% increase, reaching 40 .4 million (compared to 30 .7 million in 2022) . The number of active customers increased by 30% to around 28 million individuals . Total customers (million) Active customers (million) DAU (million) The Super App is the primary driver of user engagement and sales 8 9 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTOverview of Financial and Operating Performance (continued) The broad customer base allowed us to effectively expand cross-selling of various products within the Tinkoff ecosystem. During the past year, the Group managed to elevate the average number of products per customer from 1.5 to 1.8, with a strategic emphasis on profitable loan products . Revenue As of the end of 2023, the Group's service coverage included: • Current accounts of 33 .5 million+ customers with a cumulative balance of 1 .347 trillion rubles in current accounts and deposits; • 1 .2 million+ customers in the Small and Medium Enterprise (SME) segment holding a total balance of 268 billion rubles in their accounts; • 3.5 million+ users of Tinkoff Investments services. The gross interest income surged by 46% YoY, totaling 300 .3 billion rubles, driven by a substantial growth in the customer base . Interest expenses increased in 2023 by 12% YoY, amounting to 64 .4 billion rubles, due to growth in the customer base and an increase in interest rates by the end of the year . The net interest income in 2023 experienced a notable upsurge of 60% YoY, reaching 230 .3 billion rubles . The fee and commission income grew by 9% to 128 .1 billion rubles, driven by expansion of customer base and product portfolio . None- theless, the net fee and commission income in 2023 witnessed a 5% decline to 73 .1 billion rubles primarily due to a high base in early 2022 . With the stabilization of the macroeconomic environment, the cost of risk decreased to 6 .2% in 2023 (compared to 9 .9% in 2022) . The Group's total operating expenses in 2023 escalated by 43% YoY, reaching 193 .3 billion rubles owing to customer base growth and investments in IT infrastructure and human resources . The net profit in 2023 increased by 3.9 times YoY to 80.9 billion rubles (compared to 20.8 billion rubles in 2022), marking a historic high for the Group . The return on equity in 2023 surged to 33 .5% (compared to 10 .9% in 2022), despite challenging macroeconomic conditions and in- creased funding expenses . The Group's total assets expanded by 42% YoY in 2023, reaching 2 .270 trillion rubles (compared to 1 .597 trillion rubles as of 31 December 2022). The Group's net loan portfolio, excluding provisions, surged by 60% YoY to 972 billion rubles (compared to 606 trillion rubles as of 31 December 2022). The Group's gross loan portfolio grew by 53% to 1.121 trillion rubles (compared to 732 billion rubles as of 31 December 2022). The proportion of non-performing loans in the Group's loan portfolio stood at 9 .5%, indicating a YoY improvement (compared to 12 .1% as of 31 December 2022). The loan loss provisions to non-performing loans ratio was 140.2% as of 31 December 2023 (compared to 141.5% as of 31 December 2022). The funds in the Group's customer accounts surged by 44%, reaching 1.713 trillion rubles as of 31 December 2023 (compared to 1.192 trillion rubles as of 31 December 2022). Considering customer funds invested in the brokerage business, the total volume of customer funds under the Group's management reached 2 .5 trillion rubles . The Group's equity surged by 38% to 284 billion rubles (compared to 206 billion rubles as of 31 December 2022) due to the capitalisation of net profit. 10 11 All figures are in RUB billion, unless otherwise stated TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTOverview of Financial and Operating Performance (continued) Retail Debit cards Customers (millions) Volume of purchases with debit cards (RUB billion) Credit business Gross loans Customer accounts (RUB billion) Net loans breakdown Net interest income Net interest margin All figures are in RUB billion, unless otherwise stated All figures are in RUB billion, unless otherwise stated 12 13 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTOverview of Financial and Operating Performance (continued) SME Services Customers (thousands) Loan portfolio (RUB billion) InvestTech Customers (millions) Assets under custody All figures are in RUB billion, unless otherwise stated All figures are in RUB billion, unless otherwise stated 14 15 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORTPerformance Overview (continued) Net profit Net profit Return on assets Return on equity All figures are in RUB billion, unless otherwise stated 16 17 TCS GROUP HOLDING PLCANNUAL REPORT 2023MANAGEMENT REPORTFINANCIAL REPORTSTRATEGIC REPORT31 DECEMBER 2023 TCS Group Holding PLC International Financial Reporting Standards Consolidated Financial Statements and Independent Auditor’s Report Board of directors and other officers Board of directors CONTENTS 21 Customer Acquisition Expense . . . . . . . . . . . . . . . . . . . . . . . F-92 22 Insurance Revenue and Insurance Service Expense . . . . . F-93 Except where stated otherwise, all directors served throughout 2023 and through to the date of these consolidated financial statements. 23 Administrative and Other Operating Expenses . . . . . . . . . F-94 Director Role Retirement/ Resignation Appointment Board of directors and other officers . . . . . . . . . . . . . . . . . . . . . . F-2 Consolidated Management Report . . . . . . . . . . . . . . . . . . . . . . . F-3 Independent Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . F-12 CONSOLIDATED FINANCIAL STATEMENTS 24 Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-95 25 Reconciliation of Liabilities Arising from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-99 26 Financial and Insurance Risk Management . . . . . . . . . . . . . F-99 27 Management of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-116 Consolidated Statement of Financial Position . . . . . . . . . . . . . F-19 28 Contingencies and Commitments . . . . . . . . . . . . . . . . . . . F-118 29 Offsetting Financial Assets and Financial Liabilities . . . . F-121 30 Transfers of Financial Assets . . . . . . . . . . . . . . . . . . . . . . . F-123 31 Financial Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-124 32 Fair Value of Financial Instruments . . . . . . . . . . . . . . . . . . F-125 33 Presentation of Financial Instruments by Measurement Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-134 34 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . F-136 35 Material Accounting Policy Information . . . . . . . . . . . . . . .F-138 36 Adoption of New or Revised Standards and Interpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-157 37 New Accounting Pronouncements . . . . . . . . . . . . . . . . . . . F-163 38 Events after the End of the Reporting Period . . . . . . . . . . F-163 Consolidated Statement of Profit or Loss and Other Comprehensive Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21 Consolidated Statement of Changes in Equity . . . . . . . . . . . . . F-23 Consolidated Statement of Cash Flows . . . . . . . . . . . . . . . . . . . F-23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27 2 Operating Environment of the Group . . . . . . . . . . . . . . . . . . F-28 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29 4 Segment Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-33 5 Cash and Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . F-37 6 Due from Other Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-38 7 Investments in Securities and Repurchase Receivables . . F-39 8 Loans and Advances to Customers . . . . . . . . . . . . . . . . . . . F-49 9 Brokerage Receivables and Brokerage Payables . . . . . . . F-76 10 Tangible Fixed Assets, Intangible Assets and Right-of-use Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-77 11 Other Financial and Non-financial Assets . . . . . . . . . . . . . . F-78 12 Due to Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-79 13 Customer Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-80 14 Other Borrowed Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-80 15 Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-81 16 Insurance Contract Assets and Liabilities . . . . . . . . . . . . . . F-82 17 Other Financial and Non-financial Liabilities . . . . . . . . . . . F-86 18 Share Capital, Share Premium and Treasury Shares . . . . . F-88 19 Net Interest Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-89 20 Fee and Commission Income and Expense . . . . . . . . . . . . . F-91 Sergey Arsenyev Independent Non-Executive Director 19 November 2023 Constantinos Economides Chairman of the Board, Executive director 3 November 2023 Margarita Hadjitofi Independent Non-Executive Director 16 February 2023 - - - Alexander Isaev Independent Non-Executive Director Tatiana Kuznetsova Independent Non-Executive Director Chairman of the Board, Independent Non-Executive Director - - - 20 December 2023 22 September 2023 21 July 2023 Executive director 16 February 2023 - Independent Non-Executive Director 29 September 2023 22 September 2023 Alexey Malinovskiy Maria Pavlou Vitaly Pyltsov Dmitry Trembovolsky Independent Non-Executive Director 19 November 2023 22 September 2023 Mary Trimithiotou Executive director 13 December 2023 Daniel Wolfe Independent Non-Executive Director 13 December 2023 - - The Company’s Articles of Association include regulations for the retirement by rotation of Directors at each annual general meeting . These regulations will operate in 2024 on the basis of the composition of the Board at the relevant date . Registered office 25 Spyrou Araouzou Berengaria 25, 5th floor, 3036, Limassol, Cyprus Till 14 December 2023 Company Secretary Caelion Secretarial Limited Since 14 December 2023 Company Secretary Paula Tanasie 25 Spyrou Araouzou Berengaria 25, 5th floor, 3036, Limassol, Cyprus) Ellanikou Street, Myria Court, 102, 3071, Limassol, Cyprus F-1 F-2 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 202331 DECEMBER 2023 Consolidated Management Report The Board of directors presents its report together with the audited consolidated financial statements of TCS Group Holding PLC (the “Company”) and its subsidiaries (collectively the “Group”) for the year ended 31 December 2023 . Principal activities and nature of operations of the Group 1 . The Group’s principal activities are mainly undertaken within the Russian Federation and consist of on-line financial servic- es, through its subsidiaries JSC “Tinkoff Bank” (the “Bank”), LLC Microfinance company "T-Finance", LLC “Phoenix” and other operations through its subsidiaries, such as insurance operations through JSC “Tinkoff Insurance” (the “Insurance Company”) . 2 . The Bank specialises in consumer finance, retail banking for individuals, individual entrepreneurs (“IE”), small and medium enterprises (“SME”), acquiring and payments services and brokerage services . The Bank which is fully licensed by the Central Bank of Russia, launched its operations in the summer of 2007 and is a member of the Russian Deposit Insurance System . The Insurance Company specialises in providing non-life insurance coverage such as accident, property, travel, credit protection and auto insurance . As at 31 December 2023 in accordance with IFRS 10 definition of control the Group has no ultimate controlling party (refer to Note 3) . Changes in the Group’s structure 3 . On 15 January 2024, at an Extraordinary General Meeting, the Company’s shareholders approved the deregistering of the Company from the Register of the Registrar of Companies in Cyprus and the registering of the Company as a continuing company in the Russian Federation (redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incorporated . On the same date, the shareholders also approved amendments to the Com- pany’s Articles of Association that allow the parent structure to continue operating in the jurisdiction other than Cyprus . For further information about redomiciliation, please refer to the section below “Any important events for the Group that occurred after the end of the financial year" in the Consolidated Management Report . 4 . In November 2023 the Group established a new company, LLC “Tinkoff Insurance Future”, which is part of an insurance group with JSC “Tinkoff Insurance”. Review of developments, position and performance of the Group’s business 5 . The Group operates a flexible business model. Its virtual net- work enables it to quickly and easily increase business or slow down customer acquisition depending upon the availability of funding and market conditions . The Bank’s primary customer acquisition channels are Internet and Mobile, but it also uses direct sales agents and partnerships (co-brands) to acquire new customers . These customer acquisition models, com- bined with the Bank’s virtual network, afford it a geographic reach across Russia resulting in a highly diversified portfolio. 6 . The Bank is included to the Bank of Russia’s list of systemically important banking institutions due to the Bank’s growing presence in the financial market and expanding customer base of its ecosystem . As a result, the Bank is obliged to comply with the additional capital adequacy buffers, as well as advanced risk management requirements . The Bank is operating with ample liquidity and capital buffers above regulatory minimums and intends to continue meeting all applicable requirements comfortably . 7 . The key offerings of JSC “Tinkoff Insurance” are personal accident insurance, collective insurance against accidents and illnesses, travel insurance, motor vehicle insurance and property insurance, compulsory third party liability insurance (CTP) and voluntary third party liability insurance (VTP) (Note 22) . The Insurance Company focuses on online sales . 8 . Since February 2022 the economic situation in the Russian Federation has been and is still affected by the escalated military and political conflict and the associated international sanctions against a number of Russian institutions, companies, banks and individuals . In 2023, the following sanctions were imposed on the Bank: • On 25 February 2023, the Bank became subject to an asset freeze in the EU under the Council Implementing Regulation (EU) No 2023/429, implementing Council Regulation (EU) No 269/2014 (the "EC Regulation 269") . • On 19 May 2023, the Bank became subject to an asset freeze in the UK under the Russia (Sanctions) (EU Exit) Regu- lations 2019 (S .I . 2019/855) . • On 20 July 2023, the Bank became subject of the USA and Canada updated sanctions list . The Company and its controlled subsidiary undertakings (other than the Bank and any controlled subsidiary undertakings of the Bank) are not subject to an asset freeze pursuant to stated above regulations . Taking into account the consequences of sanctions, management of the Group continues the transformation of the busi- ness and operating models to improve the efficiency of processes and the profitability of products. 9 . As a result of the sanctions, the Bank’s ability to make interest payments under its Eurobonds issued in 2017 and 2021 through the usual channels was undermined by the assets freeze restrictions . In this regard, the Bank cancelled interest payments for the two coupon periods (March and June 2023) under its Eurobonds to avoid discrimination between bond- holders and to focus on finding a practical and lawful solution to remedy this situation by the time of the next scheduled coupon payment . On 20 September and 20 December 2023 the Group resumed payment of coupons for the 3rd and 4th quar- ters in fulfilment of its obligations under a subordinated loan notes to the holders whose rights are recorded in the Russian depository infrastructure. The fulfilment of Eurobond coupon payment obligations to holders whose rights are registered in foreign depository infrastructure or foreign brokers remains technically impossible due to imposed sanctions . The Group is exploring all options available in the current circumstances for making payments to all categories of investors . On 27 November 2023 the Group replaced USD 146 .2 million of Eurobonds issued in 2017 . The replacement share repre- sents 48 .74% of the original volume with a nominal value of USD 300 million, with coupon rate of 11 .99% and no stated maturity . On 30 November 2023 the Group replaced USD 288 .7 million of Eurobonds issued in 2021 . The replacement share rep- resents 48 .11% of the original volume with a nominal value of USD 600 million, with coupon rate of 6 .0% and no stated maturity . Holders of Eurobonds whose rights are recorded in the Russian depositories may participate in the replacement . The nominal, coupon rate and maturity of the replacement bonds remained the same . All coupon payments on replacement bonds will be made in Russian rubles at the Central Bank exchange rate on the payment date . 10 . In terms of financial performance the profit of the Group for the year ended 31 December 2023 was RR 80,932 million (2022: RR 20,760 million). Such a strong increase in profit by 290%, on the one side, was driven by the growth of loan portfolio and expansion of our customer base, on the other side, by the recovery after a year of adaptation to sanctions and new oper- ating environment caused by geopolitical tensions and macro- economic uncertainty in 2022 . Net interest income increased by 60% to RR 230,323 million (2022: 8 .66% to RR 143,897 million) . The Group’s net loan portfolio increased by 60% year-on-year to RR 972,412 million (2022: RR 606,455 million), while the gross loan portfolio grew by 53% to RR 1,121,435 million (2022: RR 732,185 million) . The 90 days plus overdue loans ratio (“NPL”) decreased to 9 .5% as at 31 December 2023 (2022: 12 .1%) . Cost of risk was 6 .2% as at 31 December 2023, down from 9 .9% in the end of 2022 . Total operating expenses increased by 30% in 2023 (2022: 24%), driven by Group’s long-term strategy to expand customer base and investments in IT platforms and personnel . Environmental matters 11 . The Group, an online-only financial institution, prioritizes addressing climate change and integrating sustainability into our business practices . We also adhere to the precautionary principle, taking proactive measures to minimize potential en- vironmental impacts and ensuring responsible decision-mak- ing in the face of uncertain or emerging risks . 12 . The Group aligns with global standards such as the United Nations Environment Program Finance Initiative (UNEP FI) . Our Sustainability Reports are prepared in line with leading GRI and SASB standards, and we follow the Partnership for Carbon Accounting Financials (PCAF) and the Task Force on Climate-related Financial Disclosures (TCFD). We use the GHG Protocol methodology to analyze emissions . 13 . The Group conducts assessments of both physical and tran- sitional climate risks . This involves evaluating the likelihood and impacts of climate-related risks within specific countries and sectors . Our existing methodology for assessing climate risks is constantly being revised and enhanced to align with a more comprehensive understanding of the industry's factors influencing climate risks and the associated consequences. 14 . As of December 31, 2023, we considered the RCP8 .5 IPCC AR5 scenario as the current and most likely scenario for mid-term (until 2040) physical climate change . 15 . The Group is committed to environmental conservation and climate action, actively contributing to sustainable business practices and a healthier planet . Human resources 16 . Empowerment is an important ingredient in the success of our organization . To achieve this, decision-making is delegated to levels deep below the management team, discussion, idea generation and exchange and transparency are actively pro- moted and encouraged and an open leadership style ensures that information can move freely . The Group applies all types of forums to promote continual dialogue – such as email, online chat rooms, flash meetings, as well as formalized meeting structures. The Group offers clear far-reaching career path for its employees, a unique work environment and fair and transparent compensation . 17 . Clear performance evaluation processes and fair compensa- tion are essential. Compensation is a combination of fixed rate salary and supplemental bonuses and is based on employee performance . Employees are evaluated on a regular basis in order to monitor their achievement against their Key Perfor- mance Indicators as well as to provide feedback which can be used for their career development and to determine incentive compensation . 18 . Prior to its IPO in 2013, the Group set up share-based man- agement long term incentive plans as retention and motiva- tional tools for key and senior managers . In March 2016, the Group announced a consolidated management long-term incentive and retention plan (MLTIP) . Since then the Group has announced an expansion of MLTIP each year by adding new participants to the program . The MLTIP programs are designed to grow the Group's value by aligning more closely managers’ interests with those of shareholders . The Group believes that participation in its share capital is an effective motivation and retention tool . The MLTIP programs embrace a growing number of managers, for two main reasons: firstly, internal pro- F-3 F-4 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 31 DECEMBER 2023 Consolidated Management Report (Continued) motions as some employees were promoted to key managerial positions in line with the growth of the Group; and, secondly, as part of its expansion and transformation into a financial marketplace, the Group has hired a significant number of new managers to develop and manage new business lines and to strengthen internal controls, including cyber security . The total size of the unvested pool of the expanded MLTIP programs was 2 .7% of the Group’s share capital as at 31 December 2023 (2022: 3 .5%) . These risks as well as other risks and uncertainties which affect the Group and how these are managed, are presented in Notes 26 and 28 of the consolidated financial statements. 23 . Analysis of impact of the current geopolitical situation in the region on the Group is disclosed in Note 2 to the consolidated financial statements. 31 . On 31 January 2024 the Company cancelled the listing of its 41 . There were significant changes in the structure and assign- GDRs on the Official List of the Financial Conduct Authority of the United Kingdom and the GDRs’ admission to trading on the LSE’s Main Market (delisting) . ment of responsibilities of the Board of directors . The compo- sition of directors was completely renewed during 2023 . The new list of the Board of directors is presented above . 32 . On 1 March 2024, the Bank became subject of the Japan’s updated sanctions list . Branches Contingencies Share capital Non-Financial Information and Diversity Statement 24 . The Group’s contingencies are disclosed in Note 28 to the consolidated financial statements. 19 . The Group’s policies and other information that provide an understanding of the development, performance, position and impact of the Group’s activities in the areas of environ- mental, social and employee matters, respect for human rights, anti-corruption and bribery matters can be found in the Group’s most recently published Non-Financial Information and Diversity Statement (Sustainability Report) . The Group will publish its Sustainability Report for the year ended 2023, if it forms part of an integrated annual report on the website (www . tinkoff-group.com), no later than 30 June 2024. Principal risks and uncertainties 20 . The Group’s business and financial results are impacted by uncertainties and volatilities in the Russian economic environment which can be impacted by global factors and/or by national factors as disclosed in Note 2 to the consolidated financial statements. 21 . The Group is subject to a number of principal risks which might adversely impact its performance . The principal activities of the Group are banking and insurance operations and so it is within this area that the principal risks occur . Management considers that those principal risks are financial risks, oper- ational risks and legal risks . Financial risk comprises market risks (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk . 22 . The Board has put in place arrangements to identify, evaluate and manage the principal risks and uncertainties faced by the Group . The Group has an established risk management pro- gram that focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance. This is overseen by a dedicated Risk Management function, which works with senior management of the operating companies in Russia as well as the Board of di- rectors in this area. The primary objectives of the financial risk management function are to establish acceptable risk limits, and then ensure that the exposures remain within those limits . The operational and legal risk management functions are in- tended to ensure the proper functioning of internal policies and procedures that minimize operational and legal risks . The risk management strategy is established so as to identify, assess, monitor and manage the risks arising from Group's activities . Future developments 25 . The Group's strategic objective is to grow its customer base profitably by building the most comprehensive, engaging, innovative, and sustainable financial and lifestyle ecosystem in the world . Results 26 . The Group’s results for the year are set out on page 2 of the consolidated financial statements. 27 . There were no dividends declared or paid by the Company during the years ended 31 December 2023 and 2022 . Any important events for the Group that occurred after the end of the financial year 28 . On 15 January 2024, at an Extraordinary General Meeting, the Company’s shareholders approved the deregistering of the Company from the Register of the Registrar of Companies in Cyprus and the registering of the Company as a continuing company in the Russian Federation (redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incorporated . The vast majority of the Company's assets are located and generate revenue in Russia . Therefore, the reasons for redomiciling to Russia include, among other things, maintaining the Company's stra- tegic focus on the Russian market, preserving the equity value for all shareholders, and ensuring execution of their rights . 29 . The full name of the Company will be “International Public Joint-Stock Company TCS Holding” (IPJSC TCS Holding). The place of residence of the Company shall be changed to: Russ- kiy Island, Vladivostok Urban Okrug, Primorsky Krai, Russia . 30 . The par value of the Company’s shares in RR shall be equivalent to the par value of the shares of the Company in U .S . dollar (USD 0.04) at the official exchange rate set by the Bank of Russia as of 12 December 2023 (1 USD = 90 .9846 RUB) . The charter capital of the Company shall consist of 199,305,492 issued ordinary shares, and the amount the charter capital of the Company shall be equal to RR 725 million . 33 . On 28 April 2022 The New Rigi Trust, a major shareholder of the Company, disposed of its entire interest in the Company . IC “Interros Capital”, a leading Russian investment group with a diverse portfolio of assets including in banking, has acquired an interest in the Group, and consequently now holds approxi- mately 35 .08% of the outstanding shares in the Company . The deal was approved by the Central Bank of the Russian Federa- tion . As a result of the aforementioned deal Mr Vladimir Potanin, ultimate beneficiary owner of IC “Interros Capital”, became a minority shareholder with a total shareholding of 35 .08% . 34 . As at 31 December 2023 and 2022 in accordance with IFRS 10 definition of control the Group has no ultimate controlling party. Refer to Note 3 for more information . Treasury shares 35 . At 31 December 2023 the Group held 602,975 (2022: 602,975) of its own GDRs, equivalent to approximately RR 1,885 million (2022: RR 1,885 million) and which represent 0 .3% (2022: 0 .3%) of the issued shares . 36 . Treasury shares are GDRs of TCS Group Holding PLC and in- clude those that are held by a special purpose trust which has been specifically created for the long-term incentive program for the MLTIP (see Note 34 for further information) . 37 . During 2023 no GDRs were repurchased by the Group (2022: same) . Research and development activities 38 . During the years ended 31 December 2023 and 2022 the Group has undertaken research and development activities related to software development including greater use of bi- ometrics, voice assistant, social networking, machine learning and intelligence . 39 . During the year ended 31 December 2023 the Group was actively developing internal software to replace the providers that have ceased operations in Russia . Board of directors 40 . The members of the Board of directors as of 31 December 2023 and at the date of this report are presented above . 42 . The Group did not operate through any branches during the year (2022: same) . Independent auditor 43 . The Independent auditor, Kiteserve Limited, has expressed its willingness to remain in office for the statutory audit of the Company’s consolidated and separate financial statements for the year ended 31 December 2023 and to not seek re-appoint- ment as the Company’s statutory auditor . The shareholders at the Annual General Meeting (AGM) authorized the Board of directors to approve the remuneration in accordance with their terms of engagement . Going concern 44 . The Directors have access to all information necessary to exercise their duties . The Directors continue to adopt the going concern basis in preparing the consolidated financial statements based on the fact that, after making enquiries and following a review of the Group’s business plan and budget for 2024-2025, including cash flows and funding facilities, the Directors consider that the Group has adequate resourc- es to continue in operation for the foreseeable future . This assessment was made based on the information available to the Group as at the date of approving the consolidated financial statements . The Directors also considered the decision of the Company’s shareholders on 15 January 2024, to deregister the Company from the Register of the Registrar of Companies in Cyprus and they ascertained that the Company is going to be registered as a continuing company in the Russian Federation (redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incor- porated . Corporate Governance Statement Global Depository Receipts (GDRs) of TCS Group Holding PLC (a Cyprus incorporated company), with each GDR issued under a deposit agreement dated on or about 24th October 2013 with JP- Morgan Chase Bank N .A . as depositary representing one ordinary share, during the year ended 31 December 2023 were listed on London Stock Exchange . The Company’s GDRs are also listed on the Moscow Exchange. No shares of TCS Group Holding PLC are listed on any other exchange . On 31 January 2024 the standard listing of the Group’s GDRs and F-5 F-6 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 202331 DECEMBER 2023 Consolidated Management Report (Continued) the admission of the GDRs to trading on the LSE’s main market for listed securities have been canceled . The Group has established four Committees of the Board. Specific responsibilities have been delegated to those committees as described below . The Company was required until 31 January 2024 to comply with the UK corporate governance regime to the extent it applies to foreign issuers of GDRs listed on the London Stock Exchange . The Company has not adopted corporate governance measures of the same standard in all respects as those adopted by UK incorporated companies or companies with a premium listing on the London Stock Exchange . As the shares themselves are not listed on the Cyprus Stock Exchange, the Cypriot corporate governance regime, which only relates to companies that are listed on the Cyprus Stock Exchange, does not apply to the Company and accordingly the Company does not monitor its compliance with that regime . The Board is required to undertake a formal and rigorous review annually of its own performance, that of its committees and of its individual directors . That review was recently initiated, in-house, in relation to 2023, looking at overall performance . All directors were invited to provide feedback on the Board’s, the committees’ and in- dividual director’s performance . Analysis of the resultant feedback will be discussed at a meeting of the Board of directors scheduled for early 2024 . The Board has not appointed a senior independent director . As of the year ended 2023 there were three independent non-executive directors, of whom at least one must retire each year . All shares are ordinary shares, each ranking pari passu for all pur- poses and in all respects with all other existing shares . Number of directors The Company’s Home State, for EU regulatory purposes, is Cyprus. A description of the terms and conditions of the GDRs can be found at “Terms and Conditions of the Global Depositary Receipts”, “Summary of the Provisions relating to the GDRs whilst still in Master Form” and “Description of Arrangements to Safeguard the Rights of the Holders of the GDRs” in the Prospectus issued by the Company dated 22 October 2013 and on the website at www .tcsgh .com .cy . Unless and until otherwise determined by the Company in general meeting, the number of directors shall be no less than two . The Articles of Association of the Company provide for the retire- ment by rotation of one-third (or if their number is not a multiple of three, the number nearest to three but not exceeding one-third) of directors at each AGM . Copies of the Articles of Association of the Company adopted on 21 November 2023, the terms of reference of the Committees, and other corporate governance related as well as investor relations related materials can also be found on the website www .tink- off-group.com, at the Company’s main website www.tcsgh.com.cy and at the official site of the Department of Registrar of Companies, Cyprus (http://www .mcit .gov .cy) . The Board of directors The role of the Board is to provide entrepreneurial leadership to the Group within a framework of prudent and effective controls which enable risk to be assessed and managed . The Board sets the Group’s strategic objectives, ensures that the necessary financial and human resources are in place for the Group to meet its objec- tives and reviews management’s performance . The Board also sets the Group’s values and standards and ensures that its obligations towards the shareholders and other stakeholders are understood and met . The Board operates under a formal schedule of matters reserved to the Board for its decision making process, adopted in 2013 . The authorities of the members of the Board are specified by the Articles of Association of the Company and by law . The current Board of directors is comprised of three independent non-execu- tive directors . The changes in the composition of the Board during the year are disclosed above . Committees of the Board of directors The Company has established four Committees of the Board of directors: the Audit Committee, the Remuneration Committee, the Strategy Committee and the Risk and Emerging Risk (Sustainability) Committee . Their terms of reference are summarized below . The Audit Committee and the Remuneration Committees were formed in October 2013, whereas the other two were formed in 2021 . The Board reserves the right to amend their terms of reference and arranges a periodic review of each Committee’s role and activities and considers the appropriateness of additional committees . Committees-current composition The Audit Committee comprises one independent non-executive director . A chair is appointed on a meeting by meeting basis . The Remuneration Committee comprises two independent non-ex- ecutive directors, and is chaired by Mrs Tatiana Kuznetsova . The Risk and Emerging Risk (Sustainability) Committee comprises two independent non-executive directors . A chair is appointed on a meeting by meeting basis . The Strategy Committee comprises one independent non-executive director, and is chaired by Mr Alexey Malinovskiy . All the chairs are (or will be) independent . The current terms of reference of all Committees are available to the public and can be found on the Group’s websites . A short summary of them is set out below . least once each year to review its own performance, constitution and terms of reference to ensure it is operating at maximum effec- tiveness and to recommend any changes it considers necessary for Board approval . Role of the Audit Committee The Audit Committee’s primary purpose and responsibility is to assist the Board in its oversight responsibilities . In executing this role the Audit Committee monitors the integrity of the consolidated financial statements of the Group prepared under International Financial Reporting Standards (“IFRS”) as adopted by the European Union (EU) and any formal announcements relating to the Group’s and the Company’s financial performance, reviewing significant financial reporting judgments contained in them, oversees the financial reporting controls and procedures implemented by the Group and monitors and assesses the effectiveness of the Company’s internal financial controls, risk management systems, internal audit function, the independence and qualifications of the independent auditor and the effectiveness of the external audit process . The Audit Committee is required to meet at appropriate times in the reporting and audit cycle but in practice meets more often as required . Under its terms of reference, the Audit Committee is required, at least once each year, to review its own performance, constitution and terms of reference to ensure it is operating at maximum effec- tiveness and to recommend any changes it considers necessary for Board approval . The Audit Committee operates a structured framework around the extensive work it carries out on specific, non-financial statements related areas within its terms of reference. Role of the Remuneration Committee The Remuneration Committee is responsible for determining and reviewing among other things the framework of remuneration of the executive directors, senior management and its overall cost and the Group’s remuneration policies . The objective is to ensure that the executive management of the Group are provided with appropriate incentives to encourage enhanced performance and are in a fair and responsible manner rewarded for their individual contributions to the success of the Group . The Remuneration Committee’s terms of reference include reviewing the design and determining targets for any performance related pay schemes and reviewing the design of all share incentive plans for approval by the Board . The Remu- neration Committee is required to meet at least twice a year but in practice meets far more often . The Remuneration Committee continued with its work into 2023 on an ongoing review of the operation of the Group’s MLTIP which launched in 2016 and in considering additional awards to existing and new participants for this and subsequent years . It also with the assistance of external consultants carried out an in-depth review of chief executive officer level compensation packages. Under its reference the Remuneration Committee is required at terms of Role of the Risk and Emerging Risk (Sustainability) Committee The primary purpose and responsibility of the Sustainability Committee is to oversee management and advise the Board of the Company on matters required to enable the Group to (a) operate on a sustainable basis for the benefit of current and future genera- tions; (b) embed sustainable practices and adopt best industry practices across the full range of the Group’s businesses; (c) to enhance the Company’s reputation as a good corporate citizen; (d) drive sustainable growth by maintaining and enhancing the Group’s economic, environmental, human, technological and social capital in the long term; and (e) the effective management of the Group’s sustainability-related risks . In this context sustainable and sustainability encompass the following elements (which are all of equal importance): social, environmental and governance, including climate change; health and safety; security and cybersecurity; diversity and inclusion; responsible lending and sustainable finance; relationships with employees; relationships with communities and other stakeholders; and ethical, elements affecting, or relevant to, the Group’s business or operations . Under its terms of reference the Sustainability Committee is required at least once each year to review its own performance, constitution and terms of reference to ensure it is op- erating at maximum effectiveness and to recommend any changes it considers necessary for Board approval . Role of the Strategy Committee The primary purpose and responsibility of the Strategy Committee is (i) to assess the strategic development plans, business plans, major financing and investment proposals and other material issues that affect the development of the Group; (ii) define top-pri- ority areas, strategic targets and major principles of strategic development of the Group and its sustainable development; and (iii) to provide fresh perspectives on strategy and economic trends, act as a sounding board for new ideas, to look at big picture, long range trends, disruptive new technologies and their potential to be or become opportunities or threats to the Group . Under its terms of reference the Strategy Committee is required at least once each year to review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and to recommend any changes it considers necessary for Board approval . F-7 F-8 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 202331 DECEMBER 2023 Consolidated Management Report (Continued) Appointment, retirement, rotation and removal of directors Significant direct/indirect holdings The directors of the Company are appointed by the general meeting of shareholders with the sanction of an ordinary resolution . Such an appointment may be made to fill a vacancy or as an additional director . But no director may be appointed unless nominated by the Board of directors or a committee duly authorised by the Board of directors or by a shareholder or shareholders together holding or representing shares which in aggregate constitute or represent at least 5% in number of votes carried or conferred by the shares giving a right to vote at a general meeting . The Board of directors may at any time appoint any person to the office of director either to fill a vacancy or as an additional director and every such director shall hold office only until the next following annual general meeting and shall not be taken into account in deter- mining the directors who are to retire by rotation . One third of the directors (or if their number is not a multiple of three, the number nearest to three but not exceeding one-third) shall re- tire by rotation at every annual general meeting . Directors holding an executive office are excluded from retirement by rotation. Directors may be removed from office by the shareholders at a general meeting with the sanction of an ordinary resolution, subject to giving 28 days’ notice to that director in accordance with the Articles of Association . The office of director shall be vacated if the director: • becomes bankrupt or makes any arrangement or composition with his creditors generally; or • becomes prohibited from being a director by reason of any court order made under Section 180 (disqualification from hold- ing the position of director on the basis of fraudulent or other conduct) of the Cyprus Companies Law; or • becomes, or may be, of unsound mind; or • resigns his office by notice in writing to the Company left at the registered office; or • is absent from meetings of the board for six consecutive months without permission of the Board of directors and his alternative director (if any) does not attend in his place and the Board of directors resolves that his office be vacated. Changes in the top management team The were no changes in the top management team in 2023, except for the changes in the Board of Directors that are presented above . For the significant direct and indirect shareholdings held in the share capital of the Company, please refer to Note 1 to the consoli- dated financial statements. Internal control and risk management systems in relation to the financial reporting process Policies, procedures and controls exist around financial reporting. Management is responsible for executing and assessing the effec- tiveness of these controls . Financial reporting process The Board of Directors is responsible for the preparation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law, Cap .113, and for such internal control as the Board of directors determines is necessary to enable the preparation of consolidat- ed financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated finan- cial statements, the Board of directors is responsible for assessing the 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 the Board of directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so . The Board has delegated to the Audit Committee the responsibility for reviewing the consolidated financial statements to ensure that they are in compliance with the applicable framework and legis- lation and for recommending these to the Board for approval . The Audit Committee is responsible for overseeing the Group’s financial reporting process . Internal Controls and Risk Management Management is responsible for setting the principles in relation to risk management . The risk management organization is divided between Policy Making Bodies and Policy Implementation Bodies . Policy Making Bodies are responsible for establishing risk manage- ment policies and procedures, including the establishment of limits . The main Policy Making Bodies are the Board of directors, the Management Board, the Finance Committee, the Credit Committee and the Business Development Committee . The policy implementation level of the Group’s risk management organization consists of the Finance Department, the Risk Man- agement Department, the Collections Department and the Internal Control Service . In addition the Group has implemented an online analytical processing management system based on a common SAS data warehouse that is updated on a daily basis . The set of daily reports includes but is not limited to sales reports, application processing reports, reports on the risk characteristics of the card portfolios, vintage reports, transition matrix (roll rates) reports, reports on the pre-, early and late collections activities, reports on compliance with CBR requirements, capital adequacy and liquidity reports, operational liquidity forecast reports and information on intra-day cash flows. Diversity policy The Group is committed to offering equal opportunity to all current and prospective employees, such that no applicant or employee is discriminated in favour of or against on the grounds of sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation in recruitment, training, promotion or any other aspect of employ- ment . Recruitment, training and promotion are exclusively based on merit . All the Group employees involved in the recruitment and manage- ment of staff are responsible for ensuring the policy is fairly applied within their areas of responsibility . The Group applies this approach throughout, at all levels . This includes its administrative, manage- ment and supervisory bodies, including the Board of directors of the Company . The composition and diversity information of the Board of directors of the Group as at 31 December 2023 is set out below: F-9 F-10 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 202331 DECEMBER 2023 Consolidated Management Report (Continued) Name Alexander Isaev Tatiana Kuznetsova Alexey Malinovskiy Age 32 55 48 Male/Female Educational/professional background Male Female Male Bayes Business School, MS in International Finance and Banking, Ple- khanov Russian University of Economics, Bachelor in Accounting, Anal- ysis and Audit, CFA, experienced in M&A and investments management Moscow State University, Psychologist, experience in HR and organi- zational development Moscow Aviation Institute, MS in mathematics, Association of chartered directors, Certified Independent Director, experienced in payments and fintech Further details of the corporate governance regime of the Company can be found on the website: https://tinkoff-group.com/corporate-governance/. By Order of the Board Malinovskiy Alexey Chairman of the Board Limassol 13 March 2024 F-11 F-12 Kiteserve Limited, Correspondence Address: 6, Karaiskakis Street, City House, 3rd floor,CY-3032, Limassol, Cyprus Kiteserve Limited is a private company registered in Cyprus (Reg . No . 435188) . A list of the company's directors including for individuals the present name and surname, as well as any previous names and for legal entities the corporate name, is kept by the Secretary of the company at its registered office at 31 Gladstonos Street, CY-1095 Nicosia, and appears on the company's web site . FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023Independent Auditor’s Report To the Members of TCS Group Holding PLC Report on the Audit of the Consolidated Financial Statements Our Opinion In our opinion, the accompanying consolidated financial statements of TCS Group Holding PLC (the “Company”) and its subsidiaries (together the “Group”) give a true and fair view of the consolidated financial position of the Group as at 31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap . 113 . What we have audited We have audited the consolidated financial statements which are presented in pages 1 to 133 and comprise: • • • • • the consolidated statement of financial position as at 31 December 2023; the consolidated statement of profit or loss and other comprehensive income for the year then ended; the consolidated statement of changes in equity for the year then ended; the consolidated statement of cash flows for the year then ended; and the notes to the consolidated financial statements, which include a summary of material accounting policy information. The financial reporting framework that has been applied in the preparation of the consolidated financial statements is International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap . 113 . 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 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 remained independent of the Group throughout the period of our appointment in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Independence Standards) (IESBA Code) together with the ethical requirements that are relevant to our audit of the consolidated financial statements in Cyprus and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Our audit approach Overview As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial state- ments. In particular, we considered where the Board of Directors made subjective judgements; for example, in respect of significant account- ing 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 Audit scope • Overall group materiality: Russian Rubles (“RR”) 5 680 million, which repre- sents approximately 2% of net assets . • We planned and conducted our audit to cover the two largest business com- ponents of the Group, being Banking and Insurance operations, for which we performed full scope audits of each of their complete financial information. • For the other components, we performed substantive audit procedures where necessary Key audit matters We have identified the following key audit matter: • Credit loss allowance for loans and advances to customers, using the expected credit loss model in line with the requirements of IFRS 9 “Financial Instruments” . Materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the 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 consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall group materiality for the 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, both individually and in aggregate on the consolidated financial statements as a whole. Overall group materiality RR 5 680 million How we determined it Approximately 2% of net assets . Rationale for the materiality benchmark applied We chose net assets as the benchmark because, in our view, it is the benchmark against which the net financial position of the Group is most commonly measured by the users of the consolidated financial statements, and it is a generally accepted bench- mark in particular during periods of volatility of earnings . We chose 2%, which in our experience is an acceptable quantitative threshold for this materiality benchmark . We agreed with the Audit Committee that we would report to them misstatements identified during our audit above RR 284 million as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons . How we tailored our group audit scope TCS Group Holding PLC is the parent of a group of companies. The financial information of this Group is included in the consolidated finan- cial statements of TCS Group Holding PLC. Considering our ultimate responsibility for the opinion on the Group’s consolidated financial statements we are responsible for the direction, supervision and performance of the group audit . In this context, we tailored the scope of our audit and determined the nature and extent of the audit procedures for the components of the Group to ensure that we 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 significance and/or risk profile of the group entities or activities, the accounting processes and controls, and the industry in which the Group operates . The Group has two primary business components, being Banking (which includes retail business for individuals and small and medi- um-sized entities business) and Insurance operations, both of which operate primarily in the Russian Federation . The Banking business comprises a number of reporting units being primarily JSC Tinkoff Bank, LLC Microfinance company Т-Finans and LLC Phoenix. F-13 F-14 TCS GROUP HOLDING PLCANNUAL REPORT 2023The Insurance business comprises primarily JSC Tinkoff Insurance. Full scope audit procedures were performed in respect of the Banking and Insurance operations . Other Group business reporting components are not considered to be primary business components for audit purposes . Where necessary, additional substantive audit procedures were carried out across these non-primary components at the financial statement item level in order to achieve the desired level of audit evidence. The consolidated financial statements are a consolidation of all of the above business reporting components . We determined the level of involvement we needed to have in the audit work at the business reporting components to be able to conclude whether sufficient appropriate audit evidence was obtained as a basis for our opinion on the consolidated financial statements as a whole. We worked with other audit firms in relation to the activities of the Group in the Russian Federation. Overall, we have obtained sufficient and appropriate audit evidence regarding the consolidated financial information of the Group as a whole to provide a basis for our audit opinion on the consolidated financial statements. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the 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 Credit loss allowance for loans and advances to customers, using the expected credit loss model in line with the requirements of IFRS 9 “Financial Instruments”. This is a complex accounting standard for which models have been developed by the Group as a basis to calculate expected credit losses (“ECL”) . These calculations involve the application of significant management judgement and estimates . Therefore, we applied focus to the “expected credit loss” models used by the Management for the purpose of compliance with IFRS 9 . These models are de- scribed in more detail in Note 35 “Material Accounting Policy Information” and Note 26 “Financial and Insur- ance Risk Management” to the consolidated financial statements . An assessment of the credit loss allowance for loans and advances to customers is performed on a portfolio basis, with the key assumptions being the probability of an account falling into arrears and subsequently defaulting (which is impacted by the definitions of “significant increase in credit risk” and “default”), the estimated recoveries from defaulted loans and the lifetime period for revolving credit facilities . Statistical models are used for the assessment of the probability of default, recovery rate and the lifetime period for revolving credit facilities . In addition, calculation of the expected credit loss allowance incorporates forward-looking information, taking into consideration different macro-economic scenarios and adjusting the probability of default . In relation to the ECL models for measuring credit loss allowance we assessed the appropriateness of the key assumptions used in the methodologies and models of the Group and their compliance with the requirements of IFRS 9 . We reviewed the Group’s back-testing of probabilities of default estimated on the basis of the models by comparing them to the actual default rates evidenced in the loan portfolios . In addition, we performed our own back-testing of default prob- abilities based on actual movements into the Stage 3 category of loans in 2023 to ensure the reasonableness of the application of the policies and models used . For a sample of inputs into estimation of recovery rate, we tested them for accuracy and criteria for inclusion into the calculation . With regard to the controls relating to the credit loss allowance calculation process, we assessed and tested on a sample basis the design and operating effective- ness of the key controls over credit loss data and calculations . These key controls included those over classification of certain loans by loan portfolios, allocation of cash received from customers to respective loans and advances to customers, identification of the overdue loans and the data transfer from source systems to the credit loss allowance models . We assessed if and to what extent we could place reliance upon these key controls for the purposes of our audit . In addition, we performed testing, on a sample basis, of the accuracy of allocation of loans to the different “stages” and the completeness of restructured credit- im- paired loans . Key Audit Matter How our audit addressed the Key Audit Matter We assessed the appropriateness of the applied methodology for the post model accounting adjustments and assessed the appropriateness and reasonableness of the source data used, the key assumptions made and consistency with prior periods in the context of the economic environment that is affected by the overall geopolitical situation in the region . We assessed if the disclosures made in the consolidated financial statements com- ply with the relevant accounting standards in terms of completeness and accuracy . The results of the above procedures were satisfactory for the purposes of our audit . Reporting on Other Information The Board of Directors is responsible for the other information . The other information comprises the information included in the Consolidat- ed Management Report including the Corporate Governance Statement, which we obtained prior to the date of this auditor’s report, and the Group’s complete Annual Report and Non-Financial Information and Diversity Statement, which is expected to be made available to us after that date. Other information does not include the consolidated financial statements and our auditor’s report thereon. Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon . In connection with our audit of the 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 consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated . If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact . We have nothing to report in this regard . When we read the Group’s complete Annual Report and Non-Financial Information and Diversity Statement, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance and if not corrected, we will bring the matter to the attention of the members of the Company at the Company's Annual General Meeting and we will take such other action as may be required . Responsibilities of the Board of Directors and Those Charged with Governance for the Consolidated Financial Statements The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRSs as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap . 113, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error . In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the 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 the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so . Those charged with governance are responsible for overseeing the Group’s financial reporting process. Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the 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 F-15 F-16 TCS GROUP HOLDING PLCANNUAL REPORT 2023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 consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit . We also: • Identify and assess the risks of material misstatement of the 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 circum- stances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors . • • In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap . 113 . In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to re- port if we have identified material misstatements in the corporate governance statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus Companies Law, Cap . 113 . We have nothing to report in this respect . Other Matters This report, including the opinion, has been prepared for and only for the Company’s members as a body in accordance with Section 69 of the Auditors Law of 2017 and for no other purpose . We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whose knowledge this report may come to . • Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and, based on the audit The engagement partner on the audit resulting in this independent auditor’s report is Olga Menelaou . Olga Menelaou Certified Public Accountant and Registered Auditor for and on behalf of Kiteserve Limited Certified Public Accountants and Registered Auditors 13 March 2024 evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the 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 auditor’s report to the related disclosures in the 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 auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern . • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves a true and fair view. • 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 inde- pendence, 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 . From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we deter- mine 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 Requirements Pursuant to the additional requirements of the Auditors Law of 2017, we report the following: • • • In our opinion, based on the work undertaken in the course of our audit, the Consolidated Management Report has been prepared in accordance with the requirements of the Cyprus Companies Law, Cap . 113, and the information given is consistent with the consolidat- ed financial statements. In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Consolidated Management Report. We have nothing to report in this respect. In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate governance statement in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap . 113, and which is included as a specific section of the Consolidated Management Report, have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and is consistent with the consolidated financial statements. F-17 F-18 TCS GROUP HOLDING PLCANNUAL REPORT 202331 DECEMBER 2023 Consolidated Statement of Financial Position In millions of RR ASSETS Cash and cash equivalents Mandatory cash balances with the CBRF Due from other banks lnvestments in securities Repurchase receivables Precious metals Loans and advances to customers Financial derivatives Brokerage receivaЫes Guarantee deposits with payment systems lnsurance contract assets Current income tax assets Deferred income tax assets TangiЫe fixed assets and right-of-use assets lntangiЫe assets Other financial assets Other non-financial assets ТОТAL ASSETS LIABILIТIES Due to banks Customer accounts Deьt securities in issue Other borrowed funds Financial derivatives Brokerage рауаblеs Current income tax liabilities Deferred income tax liabilities Subordinated debt lnsurance contract liabilities Other financial liabilities Other non-financial liabilities TOTAL LIABILIТIES Note 31 December 2023 31 December 2022* 1 January 2022* 5 6 7 7 8 31 9 16 24 24 10 10 11 11 12 13 14 31 9 24 24 15 16 17 17 724 154 511 561 316 476 3 189 5 312 1 690 450 8 589 542 332 923 325 802 215 311 845 12 015 - 9 982 5 826 - 972 412 606 455 606 308 2 983 42 345 - 1 463 2 336 212 43 823 36 391 52 557 36 839 1 020 26 747 6 693 109 1 946 34 890 24 097 37 219 14 208 5 963 49 138 15 171 14 3 524 - 13 964 15 069 52 744 8 078 2 269 799 1 596 875 1 316 717 6 843 2 060 11 313 1 713 272 1 191 986 945 723 - 1 061 9 9 416 1 337 2 396 58 538 21 860 129 620 41 532 301 2 199 217 8 258 2 437 7 45 913 15 223 89 873 32 488 21 680 3 806 90 9 634 125 1 860 59 657 9 785 68 946 7 817 1 985 884 1 390 962 1 140 436 In millions of RR EQUITY Share capital Share premium Treasury shares Share-based payment reserve Retained earnings Revaluation reserve for investments in debt securities Translation reserve Other reserves Note 31 December 2023 31 December 2022* 1 January 2022* 18 18 18 230 26 998 (1 885) 2 433 230 26 998 (1 885) 2 731 261 354 180 864 (5 434) (3 214) 4 43 243 2 230 26 998 (2 567) 4 745 159 668 (13 131) - 13 Equity attributaЬle to shareholders of the Company 283 743 205 969 175 956 Non-controlling interest TOTAL EQUITY 172 (56) 325 283 915 205 913 176 281 TOTAL LIABILIТIES AND EQUITY 2 269 799 1 596 875 1 316 717 Approved for issue and signed on behalf of the Board of directors on 13 March 2024 . Malinovskiy Alexey Director Tatiana Kuznetsova Director The notes № 1-38 are an integral part of these Consolidated Financial Statements. The notes № 1-38 are an integral part of these Consolidated Financial Statements. *See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . *See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . F-19 F-20 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023        31 DECEMBER 2023 Consolidated Statement of Profit or Loss and Other Comprehensive Income In millions of RR Note 2023 2022* Interest income calculated using the effective interest rate method Other similar income Interest expense calculated using the effective interest rate method Other similar expense Expenses on deposit insurance programme Net interest income Credit loss allowance for loans and advances to customers and credit related commitments Credit loss allowance reversal/(charge) for debt securities at FVOCI and AC Total credit loss allowance for debt financial instruments Net interest income after сredit loss allowance Fee and commission income Fee and commission expens Customer acquisition expense Net gains/(losses) from derivatives revaluation Net gains from foreign exchange translation Net gains/(losses) from operations with foreign currencies Net gains/(losses) from precious metals revaluation Net losses from disposals of investments in securities Net gains/(losses) from financial assets at FVTPL Insurance revenue Insurance service expense Administrative and other operating expenses Other provisions charge and impairment loss Net gains from repurchase of subordinated debt Other operating income Profit before tax Income tax expense Profit for the year 19 19 19 19 19 19 8 7 20 20 21 22 22 23 15 300 099 205 603 162 149 (62 175) (56 772) (2 265) (5 498) (1 007) (4 076) 230 323 143 897 (51 777) (65 431) 1 538 (2 071) (50 239) (67 502) 180 084 76 395 128 112 118 023 (55 047) (40 973) (70 445) (41 712) 1 604 1 981 1 454 4 234 (120) 419 (8 156) 5 335 (380) (3 785) (130) (7 185) 56 558 41 311 (17 997) (14 147) (122 854) (93 717) (7 641) (6 608) 263 4 564 2 744 935 103 349 29 770 24 (22 417) (9 010) 80 932 20 760 In millions of RR Other comprehensive (loss)/income Items that may be reclassified to profit or loss Debt securities at FVOCI and Repurchase receivables: - Net losses arising during the year, net of tax - Reversal of revaluation reserve, net of tax - Net losses reclassified to profit or loss upon disposal, net of tax Currency translation differences Other reserves Other comprehensive (loss)/income for the year, net of tax Total comprehensive income for the year Profit/(loss) is attributable to: - Shareholders of the Company - Non-controlling interest Total comprehensive income/(loss) is attributable to: - Shareholders of the Company - Shareholders of the Company Note 2023 2022* (2 316) (2 081) - 96 (239) 41 11 894 104 243 (11) (2 418) 10 149 78 514 30 909 80 490 20 982 442 (222) 78 072 31 131 442 (222) Earnings per share for profit attributable to the Shareholders of the Company, basic (expressed in RR per share) Earnings per share for profit attributable to the Shareholders of the Company, diluted (expressed in RR per share) 18 18 405,08 105,59 395,24 102,35 The notes № 1-38 are an integral part of these Consolidated Financial Statements. The notes № 1-38 are an integral part of these Consolidated Financial Statements. *See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . *See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . F-21 F-22 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023                                              31 DECEMBER 2023 Consolidated Statement of Changes in Equity Attributable to shareholders of the Company Attributable to shareholders of the Company Profit/(loss) for the period* - - - - - 20 982 230 26 998 4 745 (13 131) (2 567) 159 668 13 175 956 325 176 281 - 20 982 (222) 20 760 t n e m y a p d e s a b - e r a h S e v r e s e r i m u m e r p e r a h S l a t i p a c e r a h S s e i t i r u c e s t b e d n i s t n e m t s e v - n i r o f e v r e s e r n o i t a u l a v e R s g n i n r a e d e n i a t e R e v r e s e r n o i t a l s n a r T s e v r e s e r r e h t O s e r a h s y r u s a e r T g n i l - l o r t n o c - n o N t s e r e t n I l a t o T y t i u q e l a t o T 230 26 998 4 745 (13 131) (2 567) 159 491 - - 175 766 325 176 091 - - - - - 177 - 13 190 - 190 - - - - - - - 243 - - - - (1 977) 11 894 243 - - (11) (11) - - - - (1 977) 11 894 243 (11) (1 977) 11 894 - - - - - - - - - - - - - - - - 9 917 - 20 982 243 (11) 31 131 (222) 30 909 - (2 014) - 682 214 - - (1 118) - (1 118) - - - - - - - - (159) (159) 230 26 998 2 731 (3 214) (1 885) 180 864 243 2 205 969 (56) 205 913 In millions of RR Balance at 31 December 2021 Effect of initial application of IFRS 17 Balance at 1 January 2022* Other comprehensive (loss)/ income: Revaluation of investments in debt securities at FVOCI and Repurchase receivables Reversal of revaluation reserve Currency translation differences Reserve against changes in discount rates Total comprehensive income/(loss) for the year Share-based payment reserve Changes from business combinations and assets acquisitions Balance at 31 December 2022 - - - - - - - t n e m y a p d e s a b - e r a h S e v r e s e r i m u m e r p e r a h S l a t i p a c e r a h S s e i t i r u c e s t b e d n i s t n e m t s e v - n i r o f e v r e s e r n o i t a u l a v e R s g n i n r a e d e n i a t e R e v r e s e r n o i t a l s n a r T s e v r e s e r r e h t O s e r a h s y r u s a e r T g n i l - l o r t n o c - n o N t s e r e t n I l a t o T y t i u q e l a t o T 230 26 998 2 731 (3 214) (1 885) 180 864 243 2 205 969 (56) 205 913 In millions of RR Balance at 31 December 2022 Profit for the year - - - - - 80 490 - - 80 490 442 80 932 Other comprehensive (loss)/ income: Revaluation of investments in debt securities at FVOCI and Repurchase receivables Currency translation differences Reserve against changes in discount rates Total comprehensive (loss)/income for the year Share-based payment reserve Changes from business combinations and assets acquisitions Balance at 31 December 2023 - - - - - - - - - - - - - - - (298) - - (2 220) - - - - - - - - (2 220) - (2 220) - (239) - (239) - - 41 41 - - (239) 41 (2 220) - 80 490 (239) 41 78 072 442 78 514 - - - - - - - (298) - (298) - - - - (214) (214) 230 26 998 2 433 (5 434) (1 885) 261 354 4 43 283 743 172 283 915 The notes № 1-38 are an integral part of these Consolidated Financial Statements. The notes № 1-38 are an integral part of these Consolidated Financial Statements. *See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . *See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . F-23 F-24 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 31 DECEMBER 2023 Consolidated Statement of Cash Flows In millions of RR Cash flows from/(used in) operating activities Interest income received calculated using the effective interest rate method Other similar income received Interest expense paid calculated using the effective interest rate method Recoveries from written-off loans Expenses on deposits insurance paid Fees and commissions received Fees and commissions paid Customer acquisition expense paid Gains/(losses) from operations with foreign currencies Losses from operations with derivatives paid Insurance premiums received Insurance claims paid Recoveries from the purchased loans received Other operating income received Administrative and other operating expenses paid Income tax paid Windfall tax paid Note 2023 2022* In millions of RR Note 2023 2022* 8 8 298 190 205 096 151 136 (57 820) (57 499) 6 651 (4 951) 5 660 (3 874) 127 825 120 629 (53 465) (68 338) 1 733 (204) 61 564 (18 309) 4 971 1 327 (90 737) (20 261) (924) (35 712) (37 774) (2 532) (1 194) 44 134 (9 655) 3 902 1 403 (82 761) (9 525) - Cash flows (used in)/from investing activities Acquisition of tangible fixed assets Acquisition of intangible assets Acquisition of investments in securities, repurchase receivables and other investments Proceeds from sale and redemption of investments in securities Net cash used in investing activities Cash flows used in financing activities Repayment of debt securities in issue Repayment of securitisation Repayment of principal of lease liabilities Repayment of subordinated debt Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year (12 699) (24 510) (22 168) (2 656) (15 622) (114 997) 26 187 15 686 (33 190) (117 589) (331) (1 135) (3 365) (892) (21 098) (1 604) (659) (4 427) (5 723) (27 788) 22 028 (35 209) 212 593 195 085 511 561 316 476 724 154 511 561 25 25 10,25 25 5 5 Cash flows from operating activities before changes in operating assets and liabilities 187 403 140 434 Changes in operating assets and liabilities Net (increase)/decrease in CBRF mandatory reserves Net (increase)/decrease in due from banks Net increase in loans and advances to customers Net (increase)/decrease in brokerage receivables Net decrease in debt securities measured at FVTPL Net decrease in guarantee deposits with payment systems Net decrease/(increase) in precious metals Net (increase)/decrease in other financial assets Net increase in other non-financial assets Net increase/(decrease) in due to banks Net increase in customer accounts Net increase/(decrease) in brokerage payables Net increase in other financial liabilities Net decrease in non-financial liabilities Net cash from operating activities (1 499) (4 862) 6 899 92 (425 459) (75 511) (15 598) 617 8 22 391 3 509 17 568 2 201 (13 767) (17 865) (19 731) 4 587 3 844 (6 394) (9 924) 484 105 269 993 1 158 34 436 (23) (1 376) 18 098 (185) 229 478 375 671 The notes No 1-38 are an integral part of these Consolidated Financial Statements . The notes No 1-38 are an integral part of these Consolidated Financial Statements . F-25 F-26 FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTTCS GROUP HOLDING PLCANNUAL REPORT 2023 1 Introduction These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (“IFRS”) for the year ended 31 December 2023 for TCS Group Holding PLC (the “Company”) and its subsidiaries (together referred to as the “Group”), and in accordance with the requirements of the Cyprus Companies Law, Cap .113 . The Company was incorporated, and is domiciled, in Cyprus in accordance with the provisions of the Companies Law, Cap . 113 . On 15 January 2024 at an Extraordinary General Meeting, the Company’s shareholders approved the deregistering of the Company from the Register of the Registrar of Companies in Cyprus and the registering of the Company as a continuing company in the Russian Feder- ation (redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incorporated . On the same date, the shareholders also approved amendments to the Company’s Articles of Association that allow the parent structure to continue operating in the jurisdiction other than Cyprus . Till 14 December 2023 the Company Secretary was Caelion Secretarial Limited, 25 Spyrou Araouzou, 25 Berengaria, 5th floor, Limassol 3036, Cyprus . Since 14 December 2023 the Company Secretary is Paula Tanasie, Ellanikou Street, Myria Court, 102, 3071, Limassol, Cyprus . At 31 December 2023 the share capital of the Company is comprised of ordinary shares (31 December 2022: same) . Each ordinary share has a nominal value of USD 0 .04 per share and carries one vote . As at 31 December 2023 the number of issued ordinary shares is 199,305,492 (31 December 2022: same) . Refer to Note 18 for further information on the share capital . On 25 October 2013 the Group completed an initial public offering of its ordinary shares in the form of global depository receipts (GDRs) listed on the London Stock Exchange plc. On 2 July 2019 the Group completed a secondary public offering (SPO) of its shares in the form of GDRs. On 28 October 2019 the Group’s GDRs started trading also on the Moscow Exchange. As at 31 December 2023 in accordance with IFRS 10 definition of control the Group has no ultimate controlling party (31 December 2022: same) . Refer to Note 3 for further information . On 28 April 2022 The New Rigi Trust, a major shareholder of the Company, disposed of its entire interest in the Company . IC “Interros Capital”, a leading Russian investment group with a diverse portfolio of assets including in banking, has acquired an interest in the Group, and consequently now holds approximately 35 .08% of the outstanding shares in the Company . The deal was approved by the Central Bank of the Russian Federation. As a result of the aforementioned deal Mr Vladimir Potanin, ultimate beneficiary owner of IC “Interros Capital”, became a minority shareholder with a total shareholding of 35.08%. The free float of the Company amounts to approx- imately 64 .92% of the Company’s issued share capital and Guaranty Nominees Limited is the company that holds the ordinary shares of the Company for which GDRs were issued up until 31 January 2024 under a deposit agreement made between the Company and JPMor- gan Chase Bank, N .A . (JPM) signed in October 2013 . The Company has notified JPM, the depositary bank for the GDRs, of its intention to change the depositary bank. RCS Issuer Services S .AR .L . ("RCS") has been selected as the new depositary bank . Following the delisting of the Company’s GDRs from the LSE and until the termination of the GDR program, these securities outside Russia will only be available for over-the-counter (OTC) transactions . In fact, this situation existed since 03 March 2022, when the LSE suspended trading of the Company's GDRs . At the same time, the Company is taking measures to ensure that the GDRs continue to be traded on the Moscow Exchange . Following the Company's registration as International Public Joint-Stock Company TCS Holding in Russian Federation the Company will be required to take steps to discontinue its GDR program. TCS Holding shares will be listed on the Moscow Exchange. GDRs accountable for within Russian depositories will be automatically converted into TCS Holding shares in accordance with the pro- cedure and terms approved by the Board of Directors of the Central Bank of the Russian Federation . GDRs accountable for within foreign depositories are not subject to the procedure of automatic conversion of GDRs into TCS Holding shares. Voluntary conversion must be carried out with the assistance of investors’ brokerage firm and/or depositary bank. A GDR holder whose rights are accountable for by a foreign depositary may have to apply for a forced conversion of the GDRs . GDR holders may claim compensation if GDRs are not converted . The material subsidiaries of the Group are set out below . The Group owns 100% of shares and has 100% of voting rights of each of these subsidiaries as at 31 December 2023 and 2022 . JSC “Tinkoff Bank” (the “Bank”) provides on-line retail financial services in Russia, such as retail loans (credit cards, cash loans, consumer loans, car loans, secured loans), deposits and savings, retail debit cards, investment services, SME services, acquiring and payments, other lifestyles and travel services to individuals . JSC “Tinkoff Insurance” (the “Insurance Company”) provides insurance services such as accident, property, travellers', financial risks and auto insurance . LLC "Microfinance company “Т-Finans” provides micro-finance services. LLC “Phoenix” is a debt collection agency . Principal activity. The Group’s principal business activities are retail banking to private individuals, individual entrepreneurs’ and small and medium enterprises’ (“SME”) accounts and banking services, brokerage services, insurance operations, acquiring and payments’ ser- vices mainly within the Russian Federation through the Bank and the Insurance Company . The Bank operates under general banking license No . 2673 issued by the Central Bank of the Russian Federation (“CBRF”) on 8 December 2006 . This license was re-issued on 11 April 2022 due to changes in requirements related to certain banking operations . The Insurance Company operates under an insurance license No . 0191 issued by the CBRF . The Bank participates in the state deposit insurance scheme, which was introduced by Federal Law No . 177-FZ “Deposits insurance in banks of the Russian Federation” dated 23 December 2003 . The State Deposit Insurance Agency guarantees repayment of up to RR 1 .4 mil- lion per individual, individual entrepreneur and small enterprise deposits in case of the withdrawal of a license of a bank or a CBRF-imposed moratorium on payments . Registered address and place of business. Registered address and place of business . The Company’s registered address is 25 Spyrou Araouzou, Berengaria 25, 5th floor, Limassol, 3036, Cyprus. The Bank’s and the Insurance Company’s registered address is 2-nd Khutorskaya Street, 38A, building 26, 127287, Moscow, Russian Federation . The Group’s principal activities are undertaken mainly within the Russian Federation . Presentation currency. These consolidated financial statements are presented in millions of Russian Rubles (RR). 2 Operating Environment of the Group Russian Federation. The Russian Federation displays certain characteristics of an emerging market . Its economy is particularly sensi- tive to oil and gas prices . The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations . In 2023, a significant geopolitical tension persisted. Some countries introduced and continue introducing significant sanctions against Russian individuals and legal entities, including major Russian companies and entire industries, which resulted in disruptions in the global financial markets. Moreover, a number of multinational groups suspended or terminated their business activity in the Russian Federation. Despite the trade volume recovery, the financial and commodity markets continue to demonstrate instability. In 2023, the Russian economy demonstrated a recovery, with a growth of GDP by 5.1%. To limit inflation risks (up to 7.4% in the end of 2023) in the context of gradual recovery of economic activity, the Central Bank of Russian Federation more than once increased the key rate: on 24 July 2023 – from 7,5% to 8,5%, on 15 August 2023 – from 8,5% to 12%, on 18 September 2023 – from 12% to 13%, on 27 October 2023 – from 13% to 15%, on 18 December 2023 – from 15% to 16% . In 2023, the exchange rates to Russian ruble increased significantly compared to the exchange rates valid at 31 December 2022. On 3 June 2022, the European Union imposed sanctions against the National Settlement Depository (NSD) as the largest securities depository in Russia . As a result, the Bank's funds in euros were blocked on the correspondent account in NSD, and all payments on matured coupons and bonds were frozen. The management of the Group made a decision to reclassify these amounts to other financial assets and to create a provision for impairment for these blocked amounts . Refer to Note 11 . On 2 November 2023, the US Treasury imposed sanctions against the St . Petersburg Exchange and added it to the SDN list . As a result, the Group transferred blocked funds in central counterparty St. Petersburg clearing to other financial assets and created a provision for impairment for these blocked amounts . Refer to Note 11 . F-27 F-28 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 2 Operating Environment of the Group (Continued) Statements” definition of control the Group has no ultimate controlling party. On 25 February 2023, the international sanctions list was expanded, with the Bank becoming subject to an asset freeze in the EU under the Council Implementing Regulation (EU) No 2023/429, implementing Council Regulation (EU) No 269/2014 (the "EC Regulation 269") . The Company and its controlled subsidiary undertakings (other than the Bank and any controlled subsidiary undertakings of the Bank) are not subject to an asset freeze pursuant to EC Regulation 269 or to other EU sanctions . On 19 May 2023, the Bank became subject to an asset freeze in the UK under the Russia (Sanctions) (EU Exit) Regulations 2019 (S .I . 2019/855) . The Company and its controlled subsidiary undertakings (other than the Bank and any controlled subsidiary undertakings of the Bank) are not subject to an asset freeze pursuant to stated above Regulations S .I . 2019/855 . On 20 July 2023, the Bank became subject of the USA and Canada updated sanctions list . Taking into account the consequences of sanctions and risks, the transformation of business and operating models continues to improve the efficiency of processes and the profitability of products. As of 31 December 2023 the Group complied with all the required ratios including capital adequacy and liquidity ratios . The Group has formed a liquidity reserve in advance, including cash balances in Russian rubles and foreign currencies, which will ensure the stability of the customer service and stability of the Group . All necessary measures have been taken to ensure uninterrupted non-cash payments and meet the needs of the Group's customers, backing ATMs with cash banknotes . Depending on the stress scenario, the Group provides for liquidity recovery plan that includes a wide range of measures aimed at pro- tecting funds, assets and interests of the customers, as well as ensuring the regular operation of all functions . The Group maintains adequate capital and liquidity levels and closely monitors its foreign exchange position and cash flows, also it has all the necessary technological capabilities for maintaining of its operations without interruptions . The Group regularly performs stress testing of its business to assess the sustainability of its liquidity and capital positions . These tests demonstrate that the Group’s current levels of capital and liquidity are more than sufficient to absorb operational impacts from potential economic shocks and market volatility . 3 Critical Accounting Estimates and Judgements in Applying Accounting Policies The Group makes estimates and assumptions that affect the amounts recognized in the consolidated financial statements and the car- rying amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on the management’s experience and other factors, including expectations of future events that are believed to be reasonable under the existing circumstances . Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognized in the consolidated financial state- ments and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include: Ultimate controlling party. As per IFRS 10 “Consolidated Financial Statements”, an investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee . Control is presumed to exist when an investor holds, directly or indirectly through subsidiaries, 50% or more of the voting power of the investee . In cases where the investor’s shareholding is less than 50%, judgement is required in determining whether the investor exercises control on the investee . In performing this assessment, the Management considers the investor’s representation in the board of directors or other governing body of the Group which could impact the investor’s voting rights, the investor’s participation in policy-making processes and exercise of the voting rights at the Group’s general meetings of shareholders, including participation in decisions about dividends and other distributions as well as any material transactions . In making this judgment, Management considered that the Group’s directors have sole responsibility for decisions over the Group’s relevant activities and dividend distributions and are independent of the shareholders, among whom none is the owner of preference shares, providing any special rights to its’ holders. Hence as of 31 December 2023 in accordance with IFRS 10 “Consolidated Financial ECL measurement. Calculation and measurement of ECLs is an area of significant judgement and involves methodology, models and data inputs . The following components of ECL calculation have a major impact on credit loss allowance: probability of default (“PD”) (impacted by definition of default, SICR, forward-looking scenarios and their weights) and loss given default (“LGD”). The Group makes estimates and judgments, which are constantly analysed based on statistical data, actual and forecast information, as well as manage- ment experience, including expectations regarding future events that are considered reasonable in the current circumstances . An increase or decrease in PDs by 0 .5% compared to PDs used in the ECL estimates calculated at 31 December 2023 would result in an increase or decrease in credit loss allowances of RR 5 .1 billion (31 December 2022: by 0 .5% RR 3 .4 billion) . An increase or decrease in LGDs by 1% compared to LGDs used in the ECL estimates calculated at 31 December 2023 would result in an increase or decrease in credit loss allowances of RR 1 .5 billion (31 December 2022: by 1% RR 1 .3 billion) . In 2022, given the high degree of uncertainty associated with the current geopolitical situation, the Group has assessed the impact of the economic environment on the applicable estimates used in calculating ECLs . In determining the amount of impairment, the Group uses forward looking information based on forecasts and data received in the previous economic crisis, which results in a direct adjustment to the probability of default . As with any forecast, however, the projections and likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected. The effect of the revision of forecast data led to an increase in the amount of the credit loss allowance by RR 15 .1 billion of additional credit loss allow- ance as at 31 December 2022 . Credit exposure on revolving credit facilities. For credit card loans, the Group's exposure to credit losses extends beyond the maximum contractual period of the facility . For such facilities the Group measures ECLs over the period that the Group is exposed to credit risk and ECLs are not mitigated by credit risk management actions . Application of this approach requires judgement: determining a period for measuring ECLs ‒ the Group considers historical information and experience about: (a) the length of time for related defaults to occur on similar financial instruments following a SICR and (b) the credit risk management actions that the Group expects to take once the credit risk has increased (e .g . the reduction or removal of undrawn limits) . For details of the period over which the Group is exposed to credit risk on revolving facilities and which is used as an approximation of lifetime period for ECL calculation for stage 2 and stage 3 loans and advances to customers, refer to Note 26 . Perpetual subordinated debts. A perpetual subordinated bond issue in June 2017 was initially recognised in the amount of USD 295 .8 million (RR 16 .9 billion) . A perpetual subordinated loan participation notes issue in September 2021 was initially recognised in the amount of USD 600 million (RR 43 .5 billion) . Both issues represented by the funds received from investors less issuance costs . Subse- quent measurement of these instruments is consistent with the accounting policy for debt securities in issue . Interest expense on these instruments is calculated using the effective interest rate method and recognised in profit or loss for the year. In the event the accrued interest is paid, the payment decreases the balance of the liability . A cancellation of accrued interest for a given period results in its conversion, at the Group's option, into equity and therefore the respective amount of the liability is reclassified to equity. Foreign exchange translation gains and losses on the bond are recognised in profit or loss for the period. Application of this ap- proach requires judgement: the Group has taken into consideration that there are contingent settlement provisions that could genuinely arise and as such has classified the perpetual subordinated debts instrument in its entirety as a liability, rather than equity, on the basis of the terms of issue which stipulate the possible redemption of the instrument in several cases other than liquidation of the issuer . If the Group had recognized these instruments as equity, then interest expense would only have been recognized when it was paid and treated as a distribution from equity rather than an expense in profit or loss. The Group also from time to time invests in perpetual subordinated debts issued by third parties . The Group has taken into consideration that there are genuine contingent settlement provisions that could arise and as such has classified the investments in perpetual subordi- nated debts as investments in debt securities on the basis of terms of issue which stipulate the possible redemption of the instrument in several cases other than liquidation of the issuer . The investments in these instruments are classified as debt investment securities measured at FVTPL since the analysis of the contrac- tual cash flow characteristics resulted in acquired perpetual bonds not passing SPPI test. If the Group had recognized this instrument as equity instrument, then it could have been measured at FVTPL or FVOCI as the Group does not hold it for trading purposes . F-29 F-30 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT3 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) The provision from restricted assets was estimated by weighting the estimates of expected credit losses for different possible outcomes against probabilities of each outcome. The Group defined at least two possible scenarios for each separate deal, one of which leads to a loss. Individual assessment is mainly based on the expert opinion of the Group’s management, including official projections. Interest income recognition. The effective interest method incorporates significant assumptions around expected loan lives as well as judgements of type of fees and costs that are included in interest income . Refer to Note 35 . Unbundling of loans products. Certain loans issued by the Group are forgivable upon events such as the borrower's death, or the borrower becoming unemployed because the borrower had opted to purchase the Insurance Company's products to cover repayments of the related loan products issued by the Bank in such cases . The Group is able to measure the loans separately . Also the borrowers are able to take a loan without insurance at the time of issuance with no different interest rate and the borrowers can cancel the insurance products at any time, separately from the loan . Accordingly, the Group unbundles the loans from the insurance arrangement . Financial assets sales and securitisations. Group’s securitisation activities involve home equity loans and are predominantly transacted using SPEs. In a typical securitisation, the SPE purchases assets financed by proceeds received from the SPE’s issuance of debt certificates and other notes of indebtedness. These assets and liabilities are recorded on the balance sheet of the SPE and consolidated on the Group’s consolidated statement of financial position, unless the accounting requirements for sale were met. At 31 December 2023 the Group has not made a securitisation transaction that resulted in derecognition of transferred assets . The Group assessed that its secured loan portfolio meets the criteria for held to collect business model and determined that the past securitisation transactions have not resulted in derecognition of the assets and therefore are not inconsistent with the held to collect business model . The Group may have intention to sell home equity loans under securitisation, in this case the derecognition requirements should be applied . The derecognition test is performed in 2 steps: 1) Pass-through arrangement . All the following conditions have to be met to conclude that pass-through arrangements meet the criteria: • An entity has no obligation to pay amounts to the eventual recipients, unless it collects equivalent amounts from the original asset . Short- term advances by the entity to the eventual recipients with the right of full recovery of the amount lent plus accrued interest from the amounts eventually payable to the eventual recipients at market rates do not violate this condition . • An entity is prohibited by the transfer contract’s terms from selling or pledging the original asset other than as security to the eventual recipients for the obligation to pay them cash flows . • An entity has an obligation to remit any cash flows that it collects on behalf of the eventual recipients without material delay (up to 3 months) . 2) Risk-reward assessment . If a transfer meets the pass-through requirements the transferor still needs to assess whether it has trans- ferred sufficient risks and rewards associated with the asset to achieve derecognition. If, as a result of the assessment, majority of risks and associated rewards are deemed to be transferred, the asset is derecognized. Otherwise the sale is accounted for as a finance deal. Investments in securities and repurchase receivables classification. As a result of attaining systemically important status, management made a decision to create a portfolio of investments into debt securities managed under a “hold to collect” business model . These securities were accounted for at amortised cost, as opposed to fair value, as they will be held until full maturity and will not be susceptible to market price fluctuations. Initially this portfolio was created from the Bank’s existing portfolio of high-grade bonds, consisting of Russian government bonds . The described change in accounting treatment of the securities managed under hold to collect model is effective starting from 1 January 2022. Refer to Note 7. Investments in securities and repurchase receivables FV measurement. During the year ended 31 December 2023 revalu- ation of investments in securities has been calculated according to the accounting policy of the Group due to the market recovery . In March 2022 due to the absence of an active market of foreign currency OFZs and сorporate eurobonds, the fair value of these securities measured at FVOCI and FVTPL, for which market quotes were unavailable, was calculated by discounting cash flows, taking into account the transfer of expected coupons to receive in the flow. Refer to Note 32. Restricted assets. Restricted assets are receivables from settlements with banks and other financial institutions which are currently subject to restrictions, and securities blocked in foreign depositories due to imposed sanctions and therefore unavailable to the Group . The Group performed transactions with these counterparties either directly or as an agent. The Group makes all possible efforts to obtain access to those assets and reinstate their payment schedules . Refer to Note 11 . Tax legislation. Russian and Cypriot tax, currency and customs legislation are subject to varying interpretations . Refer to Note 28 . Insurance contracts. The following estimates and assumptions are used for accounting of insurance contracts . Unit of account . For collective personal accident and property insurance contracts of individuals, where the insurance contract is legally concluded with the Bank, the analysis of the scope of the contracts is based on the terms of the individual policies of the insured, and not on the terms of the contract with the Bank, i .e . the accounting unit for such contracts is the combination of policies of insured individuals with the same start and end term dates of the contract within the framework of one monthly register of concluded insurance contracts . Aggregation of insurance contracts . For obligatory motor third party liability insurance of motor vehicle owners (hereinafter – “OMTPL”) the Group applies the right to include onerous contracts in one group with profitable contracts, contracts that at initial recognition have no significant possibility of becoming onerous subsequently, because due to regulatory restrictions on OMTPL tariff corridors, the Group has no practical opportunity to set different tariffs or the level of benefits for policyholders with different characteristics. Measurement model . For contracts measured under the premium allocation approach (PAA) with a coverage period of more than one year the Group verified that contracts meet the PAA eligibility criteria and established that such a simplification would produce a measurement of the liability for remaining coverage (LRC) that would not differ materially from the one that would be produced by applying the general measurement model (GMM) . Estimates of future cash flows to fulfil insurance contracts. The estimates of future cash flows are based on probability weighted expected future cash flows. The Group estimates which cash flows are expected and the probability that they will occur as at the measurement date. In making these expectations, the Group uses information about past events, current conditions and forecasts of future conditions . The forecast of the future cash flow is calculated using mathematical modeling methods as a weighted average of the probability of realiza- tion of the size of individual cash flows. Where estimates of expenses related cash flows are determined at the portfolio level or higher, corresponding to allocation drivers: the amount of the premium, the amount of claims costs, number of claims, labor hours by type of activity and similar indicators . The Group has determined that this method results in a systematic and rational allocation . Similar methods are consistently applied to allocate expenses of a similar nature . Acquisition cash flows are typically allocated to groups of contracts based on gross premiums written. The Group allocates acquisition cash flows to both existing and future groups of insurance contracts. Claims settlement-related expenses are allocated to groups of insurance contracts using actuarial methods or based on the average claim costs . The Group forecasts of an estimate of future expenses related to insurance contracts are based on the current level of expenses . Expenses include expenses that are directly attributable to groups of contracts, including allocation of fixed and variable expenses of the Group. Directly attributable expenses of an administrative policy maintenance nature are allocated by a relevant driver, while not directly attributa- ble expenses are allocated to groups of contracts based on insurance revenue within the certain group . Uncertainty in the estimation of future claims and benefit payments and premium receipts arises primarily from the unpredictability of claims amount and future inflation rates that lead to expenses growth. In determining the assumptions for estimation of future cash flows, the Group used reasonable consistent approaches. Assumptions used to develop estimates about future cash flows are reassessed at each reporting date and adjusted where required. Estimates of liability for incurred claims . The Group estimates insurance liabilities in relation to claims incurred on accident period basis as ultimate cost of outstanding claims . Judgement is involved in assessing the most appropriate technique to estimate insurance liabilities for the claims incurred . The most common methods used to estimate property damage claims incurred are the chain-ladder, the Bornhuet- ter-Ferguson and Expected loss ratio methods . F-31 F-32 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT3 Critical Accounting Estimates and Judgements in Applying Accounting Policies (Continued) The chain-ladder technique is the most appropriate for those accident periods and classes of business that have reached a relatively stable development pattern . The chain-ladder technique is less suitable in cases in which the Group does not have a developed claims history for a particular type of claim . Also, the chain-ladder technique is best suited for estimation of more matured accident periods . The Bornhuetter-Ferguson method uses a combination of a benchmark or market-based estimate and an estimate based on claims experi- ence . The former is based on a measure of exposure, such as gross premiums; the latter is based on the paid or incurred claims to date . The two estimates are combined, using a formula that gives more weight to the experience-based estimate as time passes . This technique is best suited for estimation of more recent accident periods . The Expected loss ratio method assumes the estimation of ultimate level of losses in relation to gross earned premiums . This technique can be used in situations in which claims experience is not available for the projection.In certain instances, different techniques or a combina- tion of techniques have been selected for individual accident periods within the same type of contract . The Group estimates future claim handling costs on incurred claims separately . Under motor own damage insurance (“CASCO”) insurance contracts the Group has the right to pursue third parties for payment of some or all costs . Estimates of subrogation reimbursements are based on historical data of corresponding income . 4 Segment Analysis Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (CODM) and for which discrete financial information is available. The CODM is the person or group of persons who allocates resources and assesses the performance for the Group . The functions of CODM are per- formed by the management of the Bank and the management of the Insurance Company . Description of products and services from which each reportable segment derives its revenue As a result of a rapid change in macroeconomic environment, the management of the Group adopted new eco-system review approach of its business. Thus the management highlights 4 segments: consumer financial services, retail daily and lifestyle transaction services, SME financial services and other investments. Each segment comprises certain services and business lines, thanks to the interaction of which synergy is achieved and the efficiency of the Group's business as a whole is ensured. This impacted overall composition of the comparative information . Description of 4 main business segments: Consumer financial services - representing risk-taking services provided to individuals, including retail loans such as credit cards, cash loans, consumer loans, car loans, secured loans, as well as other associated insurance services . Retail daily and lifestyle transaction services - representing transactional financial and daily lifestyle services provided to retail customers, including mobile app experience, current accounts, debit cards, savings and investments services, loyalty programs, co-branded offers, telecommunications and also daily lifestyle and travel services to individuals . Assets of the segment are represented by placements of the funds attracted in customer funds and investments in securities, treasury transactions, other financial and non-financial assets. SME financial services - representing financial services provided to SME customers and merchants. It includes customer current accounts, deposits, transactional and software services and loans to individual entrepreneurs and small to medium businesses . It also includes providing merchants and businesses the ability to process and acquire payments using online and offline channels. Assets of the segment are represented by placements of the funds attracted from customers into investments in securities, treasury transactions, other financial and non-financial assets. Other investments - representing investments in companies and equity instruments that fall outside of the scope of the other segments . The CODM made a decision to allocate such investments into a separate business segment . F-33 The Group’s principal activities are mainly undertaken within the Russian Federation . Given the retail nature of business of the segments, the Group does not have any significant revenue stream from any single customer. Factors that management used to identify the reportable segments The Group’s segments are strategic business units that focus on different services to the customers of the Group. Their performance is analysed separately by the CODM and they are managed separately because each business unit requires different marketing strategies and represents different types of businesses. Measurement of operating segment profit or loss, assets and liabilities The CODM reviews financial information prepared based on international financial reporting standards adjusted to meet the requirements of internal reporting. The CODM evaluates performance of each segment based on profit before tax. Information about reportable segment assets and liabilities, profit or loss Segment reporting of the Group’s assets and liabilities as at 31 December 2023 is set out below: In millions of RR Consumer financial services Retail daily and lifestyle transaction services SME financial services Other invest- ments Elimina- tions Total Reportable segment assets Reportable segment liabilities 1 352 080 780 679 716 124 189 945 16 381 (4 731) 2 269 799 930 095 279 841 - (4 731) 1 985 884 Segment reporting of the Group’s assets and liabilities as at 31 December 2022* is set out below: In millions of RR Reportable segment assets Reportable segment liabilities Consumer financial services 857 710 346 742 Retail daily and lifestyle transaction ser- vices SME financial services 611 019 131 040 Other invest- ments 12 092 Elimina- tions Total (14 986) 1 596 875 844 319 214 887 - (14 986) 1 390 962 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . All jointly used assets, such as fixed assets, rights of use assets and intangible assets were allocated to the segments on the basis of detailed analysis of usage of those assets by segments . Segment reporting of the Group’s capital expenditures for the year ended 31 December 2023 is set out below: In millions of RR Intangible assets Tangible fixed assets and right-of-use assets Total capital expenditure Consumer financial services Retail daily and lifestyle transaction services SME financial services 13 495 9 828 23 323 8 824 4 290 13 114 3 634 800 Total 25 953 14 918 4 434 40 871 Segment reporting of the Group’s capital expenditures for the year ended 31 December 2022 is set out below: Consumer financial services Retail daily and lifestyle transaction services SME financial services In millions of RR Intangible assets Tangible fixed assets and right-of-use assets Total capital expenditure 8 608 19 388 27 996 5 615 6 532 12 147 2 426 2 018 Total 16 649 27 938 4 444 44 587 F-34 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT4 Segment Analysis (Continued) Segment reporting of the Group’s income and expenses for the year ended 31 December 2023 is set out below: In millions of RR External revenues Interest income Fee and commission income - Fee and commission income on cards' and current accounts' services - Acquiring commission - MVNO and investments services - Other fees receivable Timing of fee and commission income recognition: - At point in time - Over time Total fee and commission income Insurance revenue Other operating income Total external revenues Revenues from other segments Interest income Total revenues from other segments TOTAL REVENUES Interest expense Credit loss allowance charge Fee and commission expense Insurance service expense Administrative and other operating expenses Other gains/(losses) Segment result before acquisition expenses Customer acquisition expense Consumer financial services Retail daily and lifestyle transaction services SME financial services Other invest- ments Elimina- tions Total 228 904 49 909 21 389 59 - 300 261 4 208 - - 3 310 2 470 5 048 7 518 56 558 2 197 295 177 - - 295 177 (76 852) (45 910) (4 220) (17 997) (39 139) 4 124 115 183 (25 727) 19 480 840 25 496 11 065 39 829 17 052 56 881 - 420 26 148 36 611 - 954 53 807 9 906 63 713 - 127 - - - - - - - - - - - - - - - - - - 49 836 37 451 25 496 15 329 96 106 32 006 128 112 56 558 2 744 107 210 85 229 59 - 487 675 35 955 9 401 - (45 356) 35 955 9 401 - (45 356) - - 143 165 (30 702) (1 495) (31 183) - 94 630 (7 740) (2 445) (19 644) - 59 - (389) - - (45 356) 45 356 - - - 487 675 (69 938) (50 239) (55 047) (17 997) (54 997) (5 552) (28 718) (1 342) - 4 964 - (122 854) 2 194 - 19 236 34 741 4 634 (35 417) (9 301) - - - 173 794 (70 445) SEGMENT RESULT 89 456 (16 181) 25 440 4 634 - 103 349 Segment reporting of the Group’s income and expenses for the year ended 31 December 2022* is set out below: Consumer financial services Retail daily and lifestyle transaction services SME financial services Other invest- ments Elimina- tions Total 164 765 30 109 10 867 11 - 205 752 In millions of RR External revenues Interest income Fee and commission income - Fee and commission income on cards' and current accounts' services - Acquiring commission - MVNO and investments services - Other fees receivable Timing of fee and commission income recognition: - At point in time - Over time Total fee and commission income Insurance revenue 3 939 - - 876 2 367 2 448 4 815 41 311 32 532 283 24 792 30 787 17 469 6 788 48 580 8 492 57 072 - 557 51 686 4 450 56 136 - - - - - - - - - - - - - - - - - - - - 61 263 31 070 17 469 8 221 102 633 15 390 118 023 41 311 935 Other operating income 690 84 161 Total external revenues 211 581 87 265 67 164 11 - 366 021 Revenues from other segments Interest income Total revenues from other segments 218 218 19 854 6 131 - (26 203) 19 854 6 131 - (26 203) - - TOTAL REVENUES 211 799 107 119 73 295 11 (26 203) 366 021 Interest expense Credit loss allowance charge Fee and commission expense Insurance service expense Administrative and other operating expenses Other losses Segment result before acquisition expenses Customer acquisition expense SEGMENT RESULT (56 173) (63 842) (2 689) (14 147) (30 641) (4 493) 39 814 (11 364) 28 450 (28 351) (2 002) (21 136) - (3 534) (1 658) (17 148) - - - - - 26 203 - - - (61 855) (67 502) (40 973) (14 147) (39 437) (4 054) (23 639) (1 456) - (6 342) - - (93 717) (16 345) 12 139 25 860 (6 331) (22 816) (7 532) - - - 71 482 (41 712) (10 677) 18 328 (6 331) - 29 770 * Подробная информация о пересмотре учетной политики в связи с применением МСФО 17 с 1 января 2023 года раскрыта в Примечании 36. F-35 F-36 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT For the purpose of ECL measurement cash and cash equivalents balances are included in Stage 1 . The ECL for these balances represents an immaterial amount, therefore the Group did not recognise any credit loss allowance for cash and cash equivalents . Except for reverse sale and repurchase agreements, amounts of cash and cash equivalents are not collateralised . As at 31 December 2023 the fair value of collat- eral under reverse sale and repurchase agreements was RR 493,162 million (31 December 2022: RR 254,683 million) . There is no material impact of collateral on credit loss allowance for cash and cash equivalents . Refer to Note 32 for the disclosure of the fair value of cash and cash equivalents . Interest rate, maturity and geographical risk concentration analysis are disclosed in Note 26 . 6 Due from Other Banks The table below discloses the credit quality of due from banks balances based on credit risk grades: In millions of RR Placements with other banks with original maturities of more than three months Good Monitor Total due from other banks 31 December 2023 31 December 2022 5 312 2 112 3 200 5 312 450 100 350 450 The carrying amount of due from other banks at 31 December 2023 and 2022 also represents the Group's maximum exposure to credit risk on these assets . Refer to Note 26 for the description of credit risk grading system used by the Group . For the purpose of ECL measurement due from other banks balances are included in Stage 1 . The ECL for these balances represents an immaterial amount, therefore the Group did not create any credit loss allowance for due from other banks . Refer to Note 32 for the disclosure of the fair value of due from other banks . Interest rate, maturity and geographical risk concentration analysis are disclosed in Note 26 . 4 Segment Analysis (Continued) Fee and commission income on cards’ and current accounts' services include SME services commission, SMS fee, interchange fee, foreign currency exchange transactions fee, fee for money transfers, cash withdrawal fee and replenishment fee . Interest income and interest expense from other segments for the year ended 31 December 2023 amounted to RR 45,356 million (2022: RR 26,203 million) are calculated using the funds transfer pricing curve . 5 Cash and Cash Equivalents In millions of RR Cash on hand Cash balances with the CBRF (other than mandatory reserve deposits) Placements with other banks and non-bank credit organizations with original maturities of less than three months Total cash and cash equivalents 31 December 2023 31 December 2022 78 905 71 283 56 895 106 693 573 966 347 973 724 154 511 561 Cash on hand includes cash balances in ATMs and cash balances in transit . Placements with other banks and organizations with original maturities of less than three months include placements under reverse sale and repurchase agreements in the amount of RR 476,063 million as at 31 December 2023 (31 December 2022: RR 252,399 million) . The Group has a right to sell or repledge securities received under reverse sale and repurchase agreements . The table below discloses the credit quality of cash and cash equivalents balances based on credit risk grades at 31 December 2023: In millions of RR Excellent Good Monitor Cash balances with the CBRF Placements with other banks and non-bank credit organizations 71 283 - - 4 168 565 023 4 775 Total 75 451 565 023 4 775 Total cash and cash equivalents, excluding cash on hand 71 283 573 966 645 249 The table below discloses the credit quality of cash and cash equivalents balances based on credit risk grades at 31 December 2022: In millions of RR Excellent Good Monitor Cash balances with the CBRF Placements with other banks and non-bank credit organizations 106 693 - - 3 385 326 901 17 687 Total cash and cash equivalents, excluding cash on hand 106 693 347 973 Total 110 078 326 901 17 687 454 666 The carrying amount of cash and cash equivalents at 31 December 2023 and 2022 also represents the Group's maximum exposure to credit risk on these assets . Refer to Note 26 for the description of the risk grades . F-37 F-38 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 7 Investments in Securities and Repurchase Receivables The table below contains an analysis of the credit risk exposure of investments in securities measured at FVOCI at 31 December 2023, for which an ECL allowance is recognised, based on credit risk grades: In millions of RR 31 December 2023 31 December 2022 Securities measured at fair value through other comprehensive income Securities measured at amortised cost Securities measured at fair value through profit or loss Total investments in securities Repurchase receivables at amortised cost Total investments in securities and repurchase receivables 206 376 120 136 6 411 332 923 845 333 768 199 892 121 283 4 627 325 802 - 325 802 Repurchase receivables represent securities sold under sale and repurchase agreements which the counterparty has the right, by contract or custom, to sell or repledge . As at 31 December 2023 repurchase receivables were RR 845 million, short-term and matured in January 2024 (31 December 2022: nil) . Refer to Note 12 for the related liabilities . Refer to Note 32 for the disclosure of the fair value of repurchase receivables . Securities reclassi- fied to repurchase receivables continue to be carried at value in accordance with accounting policies for these categories of assets. As a result of the imposed sanctions against Russian financial system, receivable cash on redeemed bonds and related coupon payments have been postponed, thus the Group reclassified all these receivables to Other financial assets. Refer to Note 11 for more information. 1) Investments in securities measured at fair value through other comprehensive income The table below discloses investments in debt securities measured at FVOCI by classes: In millions of RR Investments in securities Russian government bonds Corporate bonds Municipal bonds Foreign government bonds Total investments in securities measured at FVOCI Including credit loss allowance 31 December 2023 31 December 2022 113 124 86 758 5 656 838 206 376 (1 130) 106 918 80 559 7 811 4 604 199 892 (2 132) The corporate bonds portfolio mainly includes securities from the following sectors: financial, energy, basic materials and industrial. In millions of RR Russian government bonds Excellent Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Corporate bonds Excellent Good Monitor Doubtful Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Municipal bonds Excellent Good Monitor Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Foreign government bonds Doubtful Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Total 115 010 115 010 (120) (1 766) 113 124 69 949 19 501 402 - 89 852 (232) (4 878) 84 742 2 028 3 317 779 6 124 (38) (430) 5 656 - - - - - - - - - - - - - 115 010 115 010 (120) (1 766) 113 124 69 949 19 501 402 2 257 2 257 2 257 92 109 (528) (760) 287 (4 591) 2 016 86 758 - - - - - - - 886 886 (212) 164 838 2 028 3 317 779 6 124 (38) (430) 5 656 886 886 (212) 164 838 F-39 F-40 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT In millions of RR Foreign government bonds Excellent Sub-standard Doubtful Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Total 2 214 1 917 - 4 131 (93) (46) 3 992 - - 709 2 214 1 917 709 709 4 840 (205) 108 612 (298) 62 4 604 There are no stage 3 investments in securities during the year and as at 31 December 2023 and 2022 . 7 Investments in Securities and Repurchase Receivables (Continued) 1) Investments in securities measured at fair value through other comprehensive income (Continued) The table below contains an analysis of the credit risk exposure of investments in securities measured at FVOCI at 31 December 2022, for which an ECL allowance is recognised, based on credit risk grades: In millions of RR Russian government bonds Excellent Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Corporate bonds Excellent Good Monitor Sub-standard Doubtful Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Municipal bonds Excellent Good Monitor Total AC gross carrying amount Credit loss allowance Fair value adjustment from AC to FV Carrying value Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Total 109 575 109 575 (628) (2 029) 106 918 56 565 18 248 8 427 687 - 83 927 (997) (3 161) 79 769 2 694 3 461 1 886 8 041 (90) (140) 7 811 - - - - - 109 575 109 575 (628) (2 029) 106 918 - 56 565 155 18 403 11 - 211 8 438 687 211 377 84 304 (119) (1 116) 532 (2 629) 790 80 559 - - - - - - - 2 694 3 461 1 886 8 041 (90) (140) 7 811 F-41 F-42 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 7 Investments in Securities and Repurchase Receivables (Continued) 1) Investments in securities measured at fair value through other comprehensive income (Continued) Refer to Note 26 for the description of credit risk grading system used by the Group and the approach to ECL measurement, including the defi- nition of default and SICR as applicable to investments in securities at FVOCI . The investments at FVOCI are not collateralised . Refer to Note 32 for the disclosure of the fair value . The following table explains the changes in the credit loss allowance and gross carrying amount for debt securities at FVOCI for the year ended 31 December 2023: Credit loss allowance Gross carrying amount Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) In millions of RR Russian government bonds At 31 December 2022 628 - 628 109 575 - 109 575 Movements with impact on credit loss allowance charge: New originated or purchased Foreign exchange gains Redemption during the year Disposal during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2023 Corporate bonds At 31 December 2022 Movements with impact on credit loss allowance charge: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) Foreign exchange gains Redemption during the year Disposal during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2023 5 8 (88) (1) 7 (9) (430) (508) 120 - - - - - - - - - 5 8 6 971 12 236 (88) (12 210) (1) 7 (9) (430) (378) 8 014 (9 198) - (508) 5 435 - - - - - - - - 6 971 12 236 (12 210) (378) 8 014 (9 198) - 5 435 120 115 010 - 115 010 997 119 1 116 83 927 377 84 304 51 (42) 18 (50) (90) 10 (11) (651) (765) 232 - 42 51 - 24 344 (1 576) 100 118 8 866 (3) - 14 - (53) (90) 24 (11) 256 (395) (8 603) (16 761) 4 921 (5 060) (206) - 24 344 1 576 - 491 9 357 (150) (8 753) - (16 761) 69 (6) 4 990 (5 066) (100) (306) 409 (356) 5 925 1 880 7 805 528 760 89 852 2 257 92 109 Credit loss allowance Gross carrying amount Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) 90 - 90 8 041 - 8 041 (7) 2 (2) (45) (52) 38 - - - - - - (7) 2 (2) (45) (1 749) 500 (668) - (52) (1 917) 38 6 124 - - - - - - (1 749) 500 (668) - (1 917) 6 124 In millions of RR Municipal bonds At 31 December 2022 Movements with impact on credit loss allowance charge: Redemption during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2023 Foreign government bonds At 31 December 2022 93 205 298 4 131 709 4 840 Movements with impact on credit loss allowance charge: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) Foreign exchange gains Redemption during the year Disposal during the year Interest income accrued Other movements Total movements with impact on credit loss allowance charge At 31 December 2023 - (92) - - - - (1) (93) - - 92 39 - - 8 - - 39 - - 8 (132) (133) 69 (1 917) 143 (69) (2 372) 15 - - 1 917 716 - - 69 - 859 (69) (2 372) 91 106 (2 547) (2 547) 7 (86) (4 131) 177 (3 954) 212 212 - 886 886 Other movements of the сredit loss allowance in the tables above are represented mainly by the reversal of ECL for debt securities due to the application the new ECL approach according to the ACRA rating system . F-43 F-44 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT                                                                                                    7 Investments in Securities and Repurchase Receivables (Continued) 1) Investments in securities measured at fair value through other comprehensive income (Continued) The following table explains the changes in the credit loss allowance and gross carrying amount for debt securities at FVOCI for the year ended 31 December 2022: Credit loss allowance Gross carrying amount Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) In millions of RR Russian government bonds At 31 December 2021 79 - 79 17 873 - 17 873 Movements with impact on credit loss allowance charge: New originated or purchased Foreign exchange gains Redemption during the year Disposal during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2022 Corporate bonds At 31 December 2021 Movements with impact on credit loss allowance charge: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) Foreign exchange gains Redemption during the year Disposal during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2022 425 30 - (1) 11 (12) 96 549 628 333 205 (6) - (17) (46) 37 (39) 530 664 997 - - - - - - - - - 425 30 - (1) 11 (12) 96 86 847 5 680 (12) (566) 2 312 (2 559) - - - - - - - - 86 847 5 680 (12) (566) 2 312 (2 559) - 549 91 702 - 91 702 628 109 575 - 109 575 15 348 77 807 465 78 272 - 6 (2) (6) - 4 (3) 105 205 25 541 - 25 541 - (233) 233 - (2) (23) (46) 41 (42) 635 1 231 (7 136) (9 487) 4 187 (4 062) (3 921) (12) 1 219 (300) (7 436) - (9 487) 29 4 216 (29) (9) (4 091) (3 930) 104 768 6 120 (88) 6 032 119 1 116 83 927 377 84 304 In millions of RR Municipal bonds At 31 December 2021 Movements with impact on credit loss allowance charge: New originated or purchased Redemption during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2022 Foreign government bonds At 31 December 2021 Movements with impact on credit loss allowance charge: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) Foreign exchange gains Redemption during the year Disposal during the year Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2022 Credit loss allowance Gross carrying amount Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) 46 3 (6) 6 (6) 47 44 90 39 2 (22) (4) (1) (1) 2 - 78 54 93 - 46 8,747 - 8,747 - - - - - - - - - 22 (9) - - 8 - 3 (6) 6 (6) 47 476 (1,167) 584 (599) - 44 (706) 90 8,041 - - - - - - - 476 (1,167) 584 (599) - (706) 8,041 39 2,408 - 2,408 2 - 4,913 (762) - 4,913 762 - (13) 227 (37) 190 (1) (1) 10 - (2,044) (1,024) 60 (32) 385 - - (2,044) (1,024) 30 (12) (34) 90 (44) 351 184 262 205 259 1,723 709 2,432 205 298 4,131 709 4,840 F-45 F-46 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT                                                                                                        7 Investments in Securities and Repurchase Receivables (Continued) The following table explains the changes in the credit loss allowance (including those pledged under repurchase agreements) and gross carrying amount for debt securities at AC for the year ended 31 December 2022: 2) Investments in securities and repurchase receivables measured at amortised cost In millions of RR Russian government bonds Gross carrying amount Сredit loss allowance Total investments in securities measured at AC Repurchase receivables Gross carrying amount Сredit loss allowance Total repurchase receivables measured at AC 31 December 2023 31 December 2022 120 262 (126) 120 136 846 (1) 845 121 946 (663) 121 283 - - - Total investments in securities and repurchase receivables measured at AC 120 981 121 283 For the purpose of the credit risk analysis investments in securities and repurchase receivables measured at AC are included in Excellent level . For the purpose of ECL measurement investments in securities and repurchase receivables measured at AC are included in Stage 1 . The following table explains the changes in the credit loss allowance (including those pledged under repurchase agreements) and gross carrying amount for debt securities at AC for the year ended 31 December 2023: Credit loss allowance Gross carrying amount Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR)) In millions of RR Russian government bonds At 31 December 2022 663 - 663 121 946 - 121 946 Movements with impact on credit loss allowance charge: Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2023 6 (7) (535) (536) 127 - - - - - 6 (7) (535) 6 631 (7 469) - (536) (838) - - - - 6 631 (7 469) - (838) 127 121,108 - 121,108 Credit loss allowance Gross carrying amount Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) Stage 1 (12- months ECL) Total Stage 2 (lifetime ECL for SICR) In millions of RR Russian government bonds At 1 January 2022 Movements with impact on credit loss allowance charge: Interest income accrued Interest received Other movements Total movements with impact on credit loss allowance charge At 31 December 2022 212 31 (35) 455 451 663 - 212 122 805 - 122 805 - - - - - 31 (35) 455 6 629 (7 488) - 451 (859) - - - - 6 629 (7 488) - (859) 663 121 946 - 121 946 3) Securities measured at fair value through profit or loss The table below discloses investments in securities measured at FVTPL by classes: In millions of RR Investments in securities Corporate shares Corporate bonds Russian government bonds Total investments in securities measured at FVTPL 31 December 2023 31 December 2022 4 151 2 057 203 6 411 2 278 2 349 - 4 627 Corporate shares are measured at FVTPL mandatorily, corporate bonds and russian government bonds are measured at FVTPL designated . The table below discloses the movements in securities at FVTPL for the year ended 31 December 2023 and 2022: In millions of RR Carrying amount at 1 January Purchases Disposals Interest income accrued Interest received Foreign exchange gain/(loss) Revaluation gain/(loss) through profit or loss Carrying amount at 31 December 2023 4 627 3 469 (3 094) 138 (157) 398 1 030 6 411 2022 8 136 2 116 (1 158) 129 (136) (80) (4 380) 4 627 F-47 F-48 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT                                                         POS (“Point of sale”) loans represent loans to fund online and offline purchases through internet and offline shops for individual borrowers, including Buy-Now-Pay-Later (BNPL) loans . Loans to IE and SME represent loans provided by the Bank to individual entrepreneurs and small and medium businesses for the purpose of working capital management . The credit loss allowance for loans and advances to customers recognised in the period is impacted by a variety of factors . The main movements in the tables presented below are described as follows: • new originated or purchased category represents the gross carrying amounts and the related ECL of purchased loans and loans issued during the reporting period (and withdrawals of limits of new credit card borrowers) as at the end of the reporting period or as at the date of transfer of loan out of Stage 1 (whichever date is earlier); • transfers between Stage 1, 2 and 3 due to balances experiencing significant increases (or decreases) of credit risk or becoming credit-impaired in the period, and the consequent "step up" (or “step down”) between 12-month and lifetime ECL . Transfers present the amount of credit loss allowance charged or recovered at the moment of transfer of a loan among the respective stages; • movements other than transfers and new originated or purchased loans category represent all other movements of ECL in particular related to changes in gross carrying amounts (including drawdowns, repayments, and accrued interest), as well as updates of inputs to ECL model in the period; • write-offs of allowances are related to assets that were written-off during the period; • unwinding of discount (for Stage 3) category represents adjustment to credit loss allowance and gross carrying amount for Stage 3 loans to increase it to discounted amount of the expected cash shortfalls to the reporting date using the effective interest rate; Changes to ECL measurement model assumptions and estimates for three months ended 31 March 2023 represent a refined approach to calculation of the car loan recovery rate, as well as impact of the economic environment. The refined approach is that the Group has applied its own car loan portfolio statistics accumulated in sufficient volume, which makes the assessment more precise. Except stated above there were no changes in ECL measurement . Refer to Notes 2 and 3 for more information . Investments in securities measured at FVTPL are carried at fair value, which also reflects any credit risk related write-downs and best represents Group’s maximum exposure to credit risk . The securities measured at FVTPL are not collateralized . Interest rate, maturity and geographical risk concentration analysis of investment in securities are disclosed in Note 26 . 8 Loans and Advances to Customers In millions of RR 31 December 2023 31 December 2022 Gross carrying amount of loans and advances to customers at AC Less credit loss allowance Total carrying amount of loans and advances to customers at AC Loans and advances to customers at FVTPL Total loans and advances to customers 1 121 138 (149 023) 972 115 297 972 412 731 602 (125 730) 605 872 583 606 455 Loans and advances to customers at FVTPL represent a loan that does not meet SPPI requirement . Gross carrying amount and credit loss allowance amount for loans and advances to customers at AC by classes at 31 December 2023 and 2022 are disclosed in the table below: 31 December 2023 31 December 2022 Gross carrying amount Credit loss allowance Carrying amount Gross carrying amount Credit loss allowance Carrying amount 548 062 (90 996) 457 066 399 196 (81 394) 317 802 216 849 (29 436) 187 413 121 267 (22 898) 98 369 356 227 (28 591) 327 636 211 139 (21 438) 189 701 147 205 (15 473) 131 732 114 620 60 217 34 185 (3 800) (4 663) (4 655) 110 820 55 554 29 530 79 177 75 607 47 893 8 462 (11 141) (3 597) (4 913) (1 787) 68 036 72 010 42 980 6 675 1 121 138 (149 023) 972 115 731 602 (125 730) 605 872 In millions of RR Credit card loans Cash loans Other loans Car loans Secured loans POS loans Loans to IE and SME Total loans and advances to customers at AC Credit cards are issued to customers for cash withdrawals or payment for goods or services, within the range of limits established by the Bank . These limits may be increased or decreased from time-to-time based on management decision . Credit card loans are not collateral- ized . Cash loans represent a product for the borrowers who have a positive credit history and who do not have overdue loans in other banks . Cash loans are loans provided to customers via the Bank’s debit cards . These loans are available for withdrawal without commission . Car loans represent loans for the purchase of a vehicle which is used as collateral under the loan . Secured loans represent loans secured with a real estate (home equity loans) or a car . As at 31 December 2023 home equity loans under securitisation amounted to RR 1,857 million (31 December 2022: RR 2,958 million) . Refer to Note 14 for details of the securitisation of home equity loans . F-49 F-50 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT8 Loans and Advances to Customers (Continued) The following tables disclose the changes in the credit loss allowance and gross carrying amount for loans and advances to customers between the beginning and the end of the reporting and comparative periods: Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Credit card loans At 31 December 2022 25 461 9 480 46 453 81 394 314 534 14 539 69 657 466 399 196 Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T - - - 7 347 7 347 (29 872) (29 872) (2 263) (2 263) - (1 202) (1 202) - - - - - - - 7 347 (29 872) (2 637) - - - 7 347 (29 872) (2 637) - (1 202) - (1 202) ) L C E s h t n o m - 2 1 ( 1 e g a t S - - - - In millions of RR Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition Movements with impact on credit loss allowance charge for the year New originated or pur- chased Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measure- ment model assumptions and estimates Movements other than transfers and new origi- nated or purchased loans Total movements with impact on credit loss allowance charge for the year 13 005 - - 13 005 156 318 - (4 921) 9 957 - 5 036 (16 669) 16 669 - - (7 908) (7 488) 33 483 18 087 (30 561) (10 223) 40 784 732 (1 648) (42) (958) 2 475 (2 422) (53) (242) (528) (162) (932) - - - - 156 318 At 31 December 2023 26 622 10 654 53 720 90 996 450 588 17 182 80 044 248 548 062 - - - - - - - - 495 881 (22) 1 354 24 491 (1 381) (3 980) (218) 18 912 1 161 1 174 33 257 35 592 136 054 2 643 36 751 (218) 175 230 F-51 F-52 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T - - - 6 659 6 659 (19 630) (19 630) (1 317) (1 317) - (3 873) (3 873) - - - - - - - 6 659 (19 630) (1 384) - - - 6 659 (19 630) (1 384) - (3 873) - (3 873) ) L C E s h t n o m - 2 1 ( 1 e g a t S - - - - In millions of RR Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition At 31 December 2022 25 461 9 480 46 453 81 394 314 534 14 539 69 657 466 399 196 8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Credit card loans At 31 December 2021 15 028 7 562 30 397 52 987 270 113 11 986 51 396 399 333 894 Movements with impact on credit loss allowance charge for the year: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measure- ment model assumptions and estimates Movements other than transfers and new origi- nated or purchased loans Total movements with impact on credit loss allowance charge for the year 4 891 - - 4 891 75 273 - - 138 75 411 (3,742) 8 574 - 4 832 (14 680) 14 680 - (7,259) (6 251) 32 931 19 421 (32 709) (8 828) 41 537 422 (1 115) (29) (722) 1 661 (1 622) (39) 4 623 18 2 298 6 939 - - - - - - - - - - - 11 498 692 (983) 11 207 14 876 (1 677) (5 009) (71) 8 119 10 433 1 918 34 217 46 568 44 421 2 553 36 489 67 83 530 F-53 F-54 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S - - - - In millions of RR Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition - - - - 1 004 1 004 (6 861) (6 861) (688) (688) (136) (136) (361) - - - - - - - - 1 004 (6 861) (812) (136) (351) - - - - - 1 004 (6 861) (812) (136) (2 061) Other (451) (143) (955) (1 564) (146) At 31 December 2023 10 084 5 606 13 746 29 436 189 829 8 374 17 787 859 216 849 8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Cash loans At 31 December 2022 7 125 4 206 11 567 22 898 98 620 6 707 14 930 1 010 121 267 Movements with impact on credit loss allowance charge for the year New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measure- ment model assumptions and estimates Movements other than transfers and new origi- nated or purchased loans Total movements with impact on credit loss allowance charge for the year 11 262 - - 11 262 160 734 - - 216 160 950 (3 138) 9 006 - 5 868 (9 673) 9 673 - (2 534) (2 733) 9 267 4 000 (6 823) (3 203) 10 026 173 (515) (9) (351) 1 282 (1 271) (11) 102 264 1 367 - - - - - - - - - - - (2 455) (4 479) (38) (6 972) (52 747) (3 386) (2) (367) (56 502) 3 410 1 543 9 221 14 174 92 773 1 813 10 013 (151) 104 448 F-55 F-56 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T - - - - - - 987 987 (4 000) (4 000) (564) (564) - - - - - - 987 (4 000) (590) - - - 987 (4 000) (590) - 7 125 - 4 206 (818) 11 567 (818) 22 898 - 98 620 - 6 707 (818) 14 930 - 1 010 (818) 121 267 In millions of RR Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition At 31 December 2022 8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t - a n i g i r O / d e s - a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Cash loans At 31 December 2021 4 575 2 990 6 556 14 121 109 540 6 392 9 441 922 126 295 Movements with impact on credit loss allowance charge for the year: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measure- ment model assumptions and estimates Movements other than transfers and new origi- nated or purchased loans Total movements with impact on credit loss allowance charge for the year 2 917 - - 2 917 60 803 - - 365 61 168 (1,498) 4 653 - 3 155 (7 788) 7 788 - (1,616) (2 548) 9 271 5 107 (6 979) (3 107) 10 086 77 (234) (5) (162) 872 (867) (5) 2 261 959 425 3 645 - - - - - - - - - - - 409 (1 614) (285) (1 490) (57 828) (3 499) (171) (277) (61 775) 2 550 1 216 9 406 13 172 (10 920) 315 9 910 88 (607) F-57 F-58 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        ) L C E s h t n o m - 2 1 ( 1 e g a t S - - - In millions of RR Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Modification of original cash flows Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T - - - 205 (701) 205 (701) 8 8 - - - - - - 205 205 (701) (701) 8 8 At 31 December 2023 905 1 346 1 549 3 800 103 203 7 951 3 466 114 620 8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Secured Loans At 31 December 2022 769 1 584 1 244 3 597 65 037 7 810 2 760 75 607 Movements with impact on credit loss allowance charge for the year New originated or purchased 751 - - 751 66 555 - - 66 555 Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total movements with impact on credit loss allowance charge for the year (271) 2 184 - 1 913 (6 599) 6 599 - (84) (446) 1 113 583 (935) (1 055) 1 990 56 (248) (9) (201) 2 637 (2 619) (18) - 12 - 12 - - - - - - - (316) (1 740) (311) (2 367) (23 492) (2 784) (778) (27 054) 136 (238) 793 691 38 166 141 1 194 39 501 F-59 F-60 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Secured Loans At 31 December 2021 538 788 660 1 986 65 478 4 907 1 658 72 043 Movements with impact on credit loss allowance charge for the year: New originated or purchased 253 - - 253 26 679 - - 26 679 Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total movements with impact on credit loss allowance charge for the year Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Modification of original cash flows (216) 2 247 - 2 031 (7 239) 7 239 - (57) (302) 938 579 (1 023) (756) 1 779 25 (124) (10) (109) 1 234 (1 211) (23) 276 471 62 809 - - - - - - - (50) (1 496) (262) (1 808) (20 092) (2 369) (510) (22 971) 231 796 728 1 755 (441) 2 903 1 246 3 708 - - - - - - 175 (403) 84 175 (403) 84 - - - - - - 175 175 (403) (403) 84 84 Credit loss allowance Credit loss allowance ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t a n i g i r o / d e s a h c r u P d e r i a p m i t i d e r c l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR POS loans At 31 December 2022 1 343 744 2 826 4 913 42 490 1 667 3 329 407 47 893 Movements with impact on credit loss allowance charge for the year New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Movements other than transfers and new origi- nated or purchased loans Total movements with impact on credit loss allowance charge for the year Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition 1 573 - - 1 573 54 154 - (327) 1 829 - 1 502 (2 745) 2 745 - - (359) (442) 1 832 1 031 (1 555) (621) 2 176 1 54 155 - - - - 16 (53) (4) (41) 215 (211) (4) - - (978) (1 456) (433) (2 867) (37 680) (1 922) (545) (223) (40 370) (75) (122) 1 395 1 198 12 389 (9) 1 627 (222) 13 785 - - - - - - - - 140 140 (1 424) (1 424) (70) (70) (94) (94) - - - - - - - - 140 (1 424) (83) - - - 140 (1 424) (83) (94) - (94) At 31 December 2022 769 1 584 1 244 3 597 65 037 7 810 2 760 75 607 At 31 December 2023 1 268 622 2 773 4 663 54 879 1 658 3 495 185 60 217 F-61 F-62 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t a n i g i r o / d e s a h c r u P d e r i a p m i t i d e r c ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T l a t o T - - - - - - 159 159 (789) (39) (789) (39) - - - - - - 159 (789) (41) - - - 159 (789) (41) - 1 343 - 744 (88) 2 826 (88) 4 913 - 42 490 - 1 667 (88) 3 329 - 407 (88) 47 893 In millions of RR Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition At 31 December 2022 8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S d e t a n i g i r o / d e s a h c r u P d e r i a p m i t i d e r c ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T l a t o T In millions of RR POS loans At 31 December 2021 851 537 1 217 2 605 56 530 1 891 1 538 389 60 348 Movements with impact on credit loss allowance charge for the year: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measure- ment model assumptions and estimates Movements other than transfers and new origi- nated or purchased loans Total movements with impact on credit loss allowance charge for the year 582 - - 582 37 955 - - 150 38 105 (211) 1 080 - 869 (2 838) 2 838 - (262) (529) 2 454 1 663 (2 065) (783) 2 848 10 (35) (1) (26) 219 (219) 667 258 36 961 - - - - - - - - - - - - (294) (567) (123) (984) (47 311) (2 060) (298) (132) (49 801) 492 207 2 366 3 065 (14 040) (224) 2 550 18 (11 696) F-63 F-64 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Car Loans At 31 December 2022 2 637 2 830 5 674 11 141 66 293 5 786 7 098 79 177 Movements with impact on credit loss allowance charge for the year New originated or purchased 4 138 - - 4 138 101 205 - - 101 205 Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total movements with impact on credit loss allowance charge for the year Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition At 31 December 2023 (1 165) 4 161 - 2 996 (5 886) 5 886 - (1 277) (1 333) 5 151 2 541 (4 025) (1 786) 5 811 129 (404) (15) (290) 1 555 (1 536) (19) - (24) - (24) - - - - - - - (469) (2 172) (307) (2 948) (28 529) (1 898) (669) (31 096) 1 356 228 4 829 6 413 64 320 666 5 123 70 109 - - - - - - 488 488 (2 099) (2 099) (11) (11) - - - - - - 488 488 (2 099) (2 099) (11) (11) - 3 993 - 3 058 (459) 8 422 (459) 15 473 - 130 613 - 6 452 (459) 10 140 (459) 147 205 Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Car Loans At 31 December 2021 1 712 1 533 2 097 5 342 71 174 3 769 2 939 77 882 Movements with impact on credit loss allowance charge for the year New originated or purchased 1 011 - - 1 011 30 102 - - 30 102 Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total movements with impact on credit loss allowance charge for the year Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Sales Modification of original cash flows without derecognition (736) 3 035 - 2 299 (5 714) 5 714 - (690) (1 153) 4 104 2 261 (3 452) (1 541) 4 993 52 (163) (8) (119) 722 (712) (10) 798 700 114 1 612 - - - - - - - 490 (1 122) (161) (793) (26 539) (1 444) (352) (28 335) 925 1 297 4 049 6 271 (4 881) 2 017 4 631 1 767 - - - - - - - 358 (643) (5) 358 (643) (5) - (182) (182) - - - - - - - 358 358 (643) (643) (5) (5) - (182) (182) At 31 December 2022 2 637 2 830 5 674 11 141 66 293 5 786 7 098 79 177 F-65 F-66 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        8 Loans and Advances to Customers (Continued) Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Loans to IE and SME At 31 December 2022 400 246 1 141 1 787 6 418 777 1 267 8 462 Movements with impact on credit loss allowance charge for the year New originated or purchased 796 - Transfers: - to lifetime (from Stage 1 to Stage 2) - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total movements with impact on credit loss allowance charge for the year Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs Other 796 17 745 - - 17 745 - - (194) 1 146 952 (3 920) 3 920 - (146) (181) 976 649 (835) (244) 1 079 7 (51) (2) (46) 219 (217) (2) (173) (7) - (180) - - - - - - - 461 949 (448) 962 7 192 1 217 (183) 8 226 751 1 856 526 3 133 20 401 4 676 894 25 971 - - - - - - 169 (434) - 169 (434) - - - - - - 17 169 169 (434) (434) - 17 Credit loss allowance Gross carrying amount ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S ) L C E s h t n o m - 2 1 ( 1 e g a t S ) R C I S r o f L C E e m i t e f i l ( 2 e g a t S t i d e r c r o f L C E e m i t e f i l ( ) d e r i a p m i 3 e g a t S l a t o T ) L C E s h t n o m - 2 1 ( 1 e g a t S l a t o T In millions of RR Loans to IE and SME At 31 December 2021 261 175 338 774 8 809 512 369 9 690 Movements with impact on credit loss allowance charge for the year: New originated or purchased 85 - Transfers: - to lifetime (from Stage 1 to Stage 2) (94) 556 - - 85 2 769 - - 2 769 462 (1 570) 1 570 - - to credit-impaired (from Stage 1 and Stage 2 to Stage 3) - recovered (from Stage 3 to Stage 2 and from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total movements with impact on credit loss allowance charge for the year Movements without impact on credit loss allowance charge for the year Unwinding of discount (for Stage 3) Write-offs (89) (149) 801 563 (647) (202) 849 3 (10) (2) (9) 90 (88) (2) 166 33 7 206 - - - 68 (359) (50) (341) (3 033) (1 015) 4 (4 044) 139 71 756 966 (2 391) 265 851 (1 275) - - - - 193 (146) 193 (146) - - - - 193 193 (146) (146) At 31 December 2022 400 246 1 141 1 787 6 418 777 1 267 8 462 - - - - At 31 December 2023 1 151 2 102 1 402 4 655 26 819 5 470 1 896 34 185 F-67 F-68 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT        8 Loans and Advances to Customers (Continued) Table above only includes credit cards less than 180 days overdue . The following table contains an analysis of the credit risk exposure of loans and advances to customers measured at AC and for which an ECL allowance is recognised . The carrying amount of loans and advances to customers below represents the Group's maximum exposure to credit risk on these loans . Presented below is an analysis of issued, activated and utilised cash loans based on their checks as at the end of the reporting period: In units Cash loans limits Up to 100 RR thousand 100-150 RR thousand 150-250 RR thousand 250-350 RR thousand 350-600 RR thousand More than 600 RR thousand Total number of cash loans (in units) 31 December 2023 31 December 2022 101 686 97 207 138 868 146 731 154 398 105 112 744 002 73 515 64 564 92 655 104 321 115 433 48 507 498 995 The credit loss allowance charge during the year ended 31 December 2023 presented in the tables above differs from the amount presented in the consolidated statement of profit or loss and other comprehensive income for the period due to RR 6,651 million recovery of amounts previously written-off as uncollectible, due to RR 4,971 million recovery from the purchased loans in excess of their gross carrying amount, and due to RR 2,198 million charge of ECL for credit related commitments . The credit loss allowance charge during the year ended 31 December 2022 presented in the tables above differs from the amount presented in the consolidated statement of profit or loss and other comprehensive income for the period due to RR 5,660 million recovery of amounts previously written-off as uncollectible, due to RR 3,902 million recovery from the purchased loans in excess of their gross carrying amount, and due to RR 3,196 million charge of ECL for credit related commitments . The amount of the recovery received from written-off loans and purchased loans during the period was credited directly to the credit loss allowance line in the consolidated statement of profit or loss and other comprehensive income. Uncollectible assets are partly written-off against the related credit loss allowance usually after one year since they become overdue. The amount of uncollectible part of loan is estimated on a loan portfolio basis taking into account defaulted loans recovery statistics . The Group writes-off financial assets that are mostly still subject to enforcement activity, however, there is no reasonable expectation of recovery. The contractual amount outstanding of loans and advances to customers which were written off during the year ended 31 December 2023 and are still subject to enforcement activity is equal to RR 21,583 million (2022: RR 15,029 million) . The amount of the ECL for credit related commitments is accounted separately from ECL for credit card loans and is included in other finan- cial liabilities in the consolidated statement of financial position. During the year ended 31 December 2023 the Group sold credit-impaired loans to third parties (external debt collection agencies) by the means of transferring all subsequent risks and rewards without recourse to the buyer, which resulted into derecognition of gross amount of RR 3,543 million and credit loss allowance of RR 3,032 million. The difference between the carrying amount of these loans and the consider- ation received was recognised as gains in the amount of RR 31 million within credit loss allowance for loans and advances to customers and credit related commitments for the year ended 31 December 2023 . During the year ended 31 December 2022 the Group sold credit-impaired loans to third parties (external debt collection agencies) by the means of transferring all subsequent risks and rewards without recourse to the buyer, which resulted into derecognition of gross amount of RR 2,020 million and credit loss allowance of RR 1,925 million. The difference between the carrying amount of these loans and the consid- eration received was recognised as losses in the amount of RR 41 million within credit loss allowance for loans and advances to customers and credit related commitments for the year ended 31 December 2022 . Presented below is an analysis of issued, activated and utilised cards based on their credit card limits as at the end of the reporting period: In units Credit card limits Up to 20 RR thousand 20-60 RR thousand 60-100 RR thousand 100-140 RR thousand 140-200 RR thousand More than 200 RR thousand Total number of cards (in units) 31 December 2023 31 December 2022 2 458 199 2 252 619 1 859 161 1 506 701 1 552 212 1 275 924 10 904 816 1 796 428 1 695 332 1 494 887 975 006 1 193 358 585 054 7 740 065 F-69 F-70 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 8 Loans and Advances to Customers (Continued) Loans and advances to customers at 31 December 2023 are disclosed as follows: In millions of RR Credit card loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Cash loans - Excellent - Good - Monitor - Sub-standard - NPLе Gross carrying amount Credit loss allowance Carrying amount Secured Loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit impaired) Purchased/ originated credit impaired Total 245 207 174 636 30 745 - - 450 588 (26 622) 423 966 103 944 84 636 1 249 - - 189 829 (10 084) 179 745 82 886 18 687 1 630 - - 103 203 (905) 102 298 - 2 160 5 288 9 734 - 17 182 (10 654) 6 528 - 3 862 1 796 2 716 - 8 374 (5 606) 2 768 - 6 122 1 073 756 - 7 951 (1 346) 6 605 - - - 10 358 69 686 80 044 (53 720) 26 324 - - - 1 447 16 340 17 787 (13 746) 4 041 - - - - 3 466 3 466 (1 549) 1 917 - - - - 245 207 176 796 36 033 20 092 248 69 934 248 548 062 - (90 996) 248 457 066 - - - - 859 859 103 944 88 498 3 045 4 163 17 199 216 849 - (29 436) 859 187 413 - - - - - - - - 82 886 24 809 2 703 756 3 466 114 620 (3 800) 110 820 In millions of RR POS loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Car loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Loans to IE and SME - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit impaired) Purchased/ originated credit impaired Total 35 967 18 755 157 - - 54 879 (1 268) 53 611 87 694 41 358 1 561 - - 130 613 (3 993) 126 620 14 545 11 842 432 - - 26 819 (1 151) 25 668 - 973 319 366 - 1 658 (622) 1 036 - 3 543 1 294 1 615 - 6 452 (3 058) 3 394 - 4 511 345 614 - 5 470 (2 102) 3 368 - - - 42 3 453 3 495 (2 773) 722 - - - - 10 140 10 140 (8 422) 1 718 - - - - 1 896 1 896 (1 402) 494 - - - - 185 185 35 967 19 728 476 408 3 638 60 217 - (4 663) 185 55 554 - - - - - - - - - - - - - - - - 87 694 44 901 2 855 1 615 10 140 147 205 (15 473) 131 732 14 545 16 353 777 614 1 896 34 185 (4 655) 29 530 F-71 F-72 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT8 Loans and Advances to Customers (Continued) Loans and advances to customers at 31 December 2022 are disclosed as follows: In millions of RR Credit card loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Cash loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Secured Loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit impaired) Purchased/ originated credit impaired Total 115 502 163 907 35 125 - - 314 534 (25 461) 289 073 40 434 57 294 892 - - 98 620 (7 125) 91 495 44 532 18 685 1 820 - - 65 037 (769) 64 268 - 2 251 4 617 7 671 - 14 539 (9 480) 5 059 - 3 848 1 203 1 656 - 6 707 (4 206) 2 501 - 6 042 1 019 749 - 7 810 (1 584) 6 226 - - - 10 594 59 063 69 657 (46 453) 23 204 - - - 1 456 13 474 14 930 (11 567) 3 363 - - - - 2 760 2 760 (1 244) 1 516 - - - - 115 502 166 158 39 742 18 265 466 59 529 466 399 196 - (81 394) 466 317 802 - - - - 40 434 61 142 2 095 3 112 1 010 14 484 1 010 121 267 - (22 898) 1 010 98 369 - - - - - - - - 44 532 24 727 2 839 749 2 760 75 607 (3 597) 72 010 In millions of RR POS loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Car loans - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Loans to IE and SME - Excellent - Good - Monitor - Sub-standard - NPL Gross carrying amount Credit loss allowance Carrying amount Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit impaired) Purchased/ originated credit impaired Total 19 349 23 009 132 - - 42 490 (1 343) 41 147 42 970 21 947 1 376 - - 66 293 (2 637) 63 656 2 638 3 738 42 - - 6 418 (400) 6 018 - 982 300 385 - 1 667 (744) 923 - 3 608 1 014 1 164 - 5 786 (2 830) 2 956 - 505 91 181 - 777 (246) 531 - - - 48 3 281 3 329 (2 826) 503 - - - - 7 098 7 098 (5 674) 1 424 - - - - 1 267 1 267 (1 141) 126 - - - - 407 407 19 349 23 991 432 433 3 688 47 893 - (4 913) 407 42 980 - - - - - - - - - - - - - - - - 42 970 25 555 2 390 1 164 7 098 79 177 (11 141) 68 036 2 638 4 243 133 181 1 267 8 462 (1 787) 6 675 F-73 F-74 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT8 Loans and Advances to Customers (Continued) The effect of collateral on credit impaired assets at 31 December 2022 is as follows. Stage 3 includes restructured loans that are less than 90 days overdue which are not considered as NPL according to the Group’s credit risk grading master scale . Refer to Note 26 . Loans in courts are included in Stage 3 and are loans to delinquent borrowers, against which the Group has filed claims to courts in order to recover outstanding balances . As at 31 December 2023 the gross carrying amount of the loans in courts was RR 62,508 million (31 Decem- ber 2022: RR 52,649 million) . Description of collateral held for loans to individuals carried at amortised cost is as follows at 31 December 2023: In millions of RR Loans collateralised by: - residential real estate - cars Total collateralised gross carrying amount (rep- resenting exposure to credit risk for each class of loans at AC) Secured loans Car loans Total 84 947 21 060 - 84 947 104 244 125 304 106 007 104 244 210 251 Description of collateral held for loans to individuals carried at amortised cost is as follows at 31 December 2022: Over-collateralised assets Under-collateralised assets Gross carrying amount of the assets Value of collateral Gross carrying amount of the assets Value of collateral 2 641 1 394 7 211 2 618 119 5 704 65 1 566 In millions of RR Credit impaired assets: Secured loans Car loans The values of collateral considered in this disclosure are after a valuation haircut of 15% (2022: 15%) for residential real estate and 20% (2022: 20%) for cars applied to consider liquidity and quality of the pledged assets . All contractual modifications of loans with the lifetime ECL that did not lead to derecognition did not have gains less losses on modification recognised in profit or loss for the year ended 31 December 2023 (2022: same). Refer to Note 32 for the disclosure of the fair value of loans and advances to customers . Interest rate, maturity and geographical risk con- centration analysis are disclosed in Note 26 . Information on related party balances is disclosed in Note 34 . Secured loans Car loans Total 9 Brokerage Receivables and Brokerage Payables In millions of RR Loans collateralised by: - residential real estate - cars Total collateralised gross carrying amount (rep- resenting exposure to credit risk for each class of loans at AC) 63 277 10 505 - 54 943 63 277 65 448 73 782 54 943 128 725 In the disclosure above the difference between collateralised gross carrying amounts and total gross carrying amount of the respective loans represents unsecured exposures of RR 51,574 million (31 December 2022: RR 26,059 million) . Unsecured loans arise as a result of the fact that the borrowers have two months to register their cars as collateral for car loans as well as the application of a conservative discount in determining the carrying value of collateral for secured and car loans applied . The extent to which collateral and other credit enhancements mitigate credit risk for financial assets carried at amortised cost that are credit impaired, is presented by disclosing collateral values separately for (i) those assets where collateral and other credit enhancements are equal to or exceed carrying value of the asset (“over-collateralised assets”) and (ii) those assets where collateral and other credit enhance- ments are less than the carrying value of the asset (“under-collateralised assets”) . The effect of collateral on credit impaired assets at 31 December 2023 is as follows. In millions of RR Credit impaired assets: Secured loans Car loans Over-collateralised assets Under-collateralised assets Gross carrying amount of the assets Value of collateral Gross carrying amount of the assets Value of collateral 3 183 1 980 9 684 4 271 283 8 160 176 1 880 In millions of RR 31 December 2023 31 December 2022 Amounts receivable from brokers and clearing organizations Total brokerage receivables Amounts payable to brokers and clearing organizations Total brokerage payables 42 345 42 345 9 416 9 416 26 747 26 747 8 258 8 258 Brokerage receivables represent placements under reverse sale and repurchase agreements made by the Bank with central counterparty to provide customers of the Bank who have brokerage accounts with the Bank with the possibility to acquire securities in case those cus- tomers have insufficient own funds to acquire those securities. These balances are fully collateralized by highly liquid securities and have minimal credit risk . As at 31 December 2023 the fair value of collateral of brokerage receivables was RR 43,244 million (31 December 2022: RR 27,250 million) . For the purpose of ECL measurement brokerage receivables are included in Stage 1 . The ECL for these balances represents an immaterial amount, therefore the Group did not recognise any credit loss allowance for brokerage receivables . Brokerage payables represent funds attracted under sale and repurchase agreements made by the Bank with central counterparty to pro- vide customers of the Bank who have brokerage accounts with the Bank with the possibility to borrow securities and make a short sale . As at 31 December 2023 the fair value of collateral of brokerage payables was RR 11,126 million (31 December 2022: RR 9,483 million) . ECL measurement approach, interest rate, maturity and geographical risk concentration analysis are disclosed in Note 26 . Refer to Note 29 for the disclosure of the offsetting assets and liabilities. Refer to Note 32 for the disclosure of the fair value of brokerage receivables and brokerage payables . F-75 F-76 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 10 Tangible Fixed Assets, Intangible Assets and Right-of-use Assets The right of use assets by class of underlying items are analysed as follows: Tangible fixed assets Intangible assets s t n e m e v o r p m i d l o h e s a e L t n e m - p i u q E e l b i g n a t l a t o T s t e s s a d e x fi s e l c i h e V d e s i l a t i p a C d e r i u q c A g n i d l i u B d n a L s t e s s a e l b i g n a t n i l a t o T In millions of RR Cost 31 December 2021 396 4 219 13 819 1 179 61 19 674 8 109 16 190 24 299 Additions Disposals - - - - 2 826 1 025 21 3 872 13 288 2 482 15 770 (262) - (39) (301) (486) (3 117) (3 603) 31 December 2022 396 4 219 16 383 2 204 43 23 245 20 911 15 555 36 466 Additions Disposals - - 878 9 730 - (342) 92 - 41 10 741 18 409 7 544 25 953 - (342) (4 632) (2 410) (7 042) 31 December 2023 396 5 097 25 771 2 296 84 33 644 34 688 20 689 55 377 Depreciation and amortisation 31 December 2021 Charge for the year (Note 23) Disposals 31 December 2022 Charge for the year (Note 23) Disposals 31 December 2023 Net book value - - - - - - - (218) (5 972) (523) (25) (6 738) (2 899) (6 331) (9 230) (43) (1 983) (170) (14) (2 210) (3 886) (2 352) (6 238) - 2 1 6 9 339 2 760 3 099 (261) (7 953) (692) (33) (8 939) (6 446) (5 923) (12 369) (46) (2 593) (136) (1) (2 776) (7 206) (2 855) (10 061) - 150 - - 150 2 675 769 3 444 (307) (10 396) (828) (34) (11 565) (10 977) (8 009) (18 986) 31 December 2022 396 3 958 8 430 1 512 10 14 306 14 465 9 632 24 097 31 December 2023 396 4 790 15 375 1 468 50 22 079 23 711 12 680 36 391 The amortisation of intangible assets charge during the year ended 31 December 2023 presented in the table above differs from the amount presented in the Note 23 due to RR 153 million (2022: RR 74 million) charge included in the insurance service expense according to IFRS 17 requirements . Refer to Note 22 . Intangible assets additions in the amount of RR 18,409 million related to the capitalised software developments by companies of the Group during the year ended 31 December 2023 (2022: RR 13,288 million) . Other intangible assets acquired during the year ended 31 December 2023 and 2022 mainly represent accounting software, retail banking software, insurance software, licenses and development of software . Right-of-use assets and lease liabilities. Right-of-use-assets relate to the office premises leased by the Group. Rental contracts are typ- ically for fixed periods up to 12 years. The Group does not have extension or termination options of its lease agreements other than lease agreements of low value items . In millions of RR Carrying amount at 31 December 2021 Additions Depreciation charge (Note 23) Carrying amount at 31 December 2022 Additions Depreciation charge (Note 23) Carrying amount at 31 December 2023 Office premises 1 028 21 246 (1 690) 20 584 4 177 (3 017) 21 744 In 2022, in accordance with the requirements of IFRS 16, the Group recognized right-of-use-asset amounted to RR 18,531 million and relat- ed lease liabilities amounted to RR 18,061 million as a result of the completion of the construction of a new office building, which the Group signed a lease agreement for . Refer to Note 17 . Lease liabilities included in other similar expense were RR 2,265 million during the year ended 31 December 2023 (2022: RR 1,007 million) . Expenses relating to leases of low-value assets and short-term leases in the amount of RR 1,905 million are included in administrative and other operating expenses (2022: RR 2,026 million). Refer to Note 23. Total cash outflow for long-term rental contract leases during the year ended 31 December 2023 was RR 3,365 million (2022: RR 659 million) . 11 Other Financial and Non-financial Assets In millions of RR 31 December 2023 31 December 2022* 1 January 2022* Other Financial Assets Settlement of operations with plastic cards Restricted assets Trade receivables of the Insurance Company Broker commissions and settlement with exchange receivable Trade receivables Other Total Other Financial Assets Other Non-Financial Assets Prepaid expenses Capital expenditure Other Total Other Non-Financial Assets 29 126 6 604 2 967 4 815 3 977 5 068 52 557 18 923 15 357 2 559 36 839 22 014 5 703 1 405 784 3 899 3 414 37 219 9 380 2 926 1 902 14 208 42 995 - 740 142 8 586 281 52 744 5 996 - 2 082 8 078 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . Settlement of operations with plastic cards represents settlements with payment systems and payment channels on operations of the customers with banking cards due to be settled within 3 working days . This amount also includes prepayment to the payment systems for operations during holiday period . F-77 F-78 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT                                 11 Other Financial and Non-financial Assets (Continued) 13 Customer Accounts Restricted assets represents balances on correspondent and clearing accounts, as well as settlement accounts for payments on matured coupons and bonds blocked in the banks and non-banking organizations under sanctions . In millions of RR Restricted assets Gross carrying amount Provisions charged Total restricted assets 31 December 2023 31 December 2022 19 903 (13 299) 6 604 10 985 (5 282) 5 703 At 31 December 2023, included in other financial assets are receivables and investments in associates (31 December 2022: same). As at 31 December 2023 prepaid expenses consist of prepayments for TV advertising, marketing, IT support, plastic cards, rents, security, ATM-service and others (31 December 2022: same) . The table below discloses the credit quality of other financial assets based on credit risk grades: In millions of RR 31 December 2023 31 December 2022* 1 January 2022* Excellent Good Monitor Итого прочие финансовые активы 7 982 37 693 6 882 52 557 11 742 16 889 8 588 37 219 29 850 21 115 1 779 52 744 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . Refer to Note 26 for the description of the Group’s credit risk grading system . For the purpose of ECL measurement settlement of operations with plastic cards balances and other receivables are included in Stage 1 . The ECL for these balances represents an immaterial amount, therefore the Group did not recognise any credit loss allowance . Refer to Note 26 for the ECL measurement approach. Refer to Note 32 for the disclosure of the fair value of other financial assets. The maturity and geographical risk concentration analysis of amounts of other financial assets is disclosed in Note 26. 12 Due to Banks In millions of RR Correspondent accounts and overnight placements of other banks Sale and repurchase agreements with other banks Total due to banks 31 December 2023 31 December 2022 6 154 689 6 843 2 060 - 2 060 Liabilities of RR 689 million (31 December 2022: nil) represent sale and repurchase agreements with debt securities at AC (Note 7) . At 31 December 2023 collateral for swap contracts was RR 3,003 million and included in the сorrespondent accounts (31 December 2022: RR 1,250 million) . Refer to Note 32 for the disclosure of the fair value of amounts due to banks . Interest rate, maturity and geographical risk concentration analysis of due to banks is disclosed in Note 26 . Refer to Note 29 and 30 for information on the amounts included in due to banks received under sale and repurchase agreements and fair value of securities pledged . In millions of RR Individuals - Current/demand accounts - Term deposits - Brokerage accounts IE and SME - Current/demand accounts - Term deposits Other legal entities - Term deposits - Current/demand accounts Total customer accounts 31 December 2023 31 December 2022 727 314 619 325 98 620 246 323 21 413 1 276 660 537 194 876 116 218 207 054 13 147 150 4 1 713 272 1 191 986 Refer to Note 32 for the disclosure of the fair value of customer accounts . Interest rate, maturity and geographical risk concentration analy- sis of customer accounts amounts is disclosed in Note 26 . Information on related party balances is disclosed in Note 34 . 14 Other Borrowed Funds On 5-6 July 2021 the Group completed the securitisation of home equity loans placed by mortgage agent TB- 1 . The placement included Class A and B bonds secured by a portfolio of home equity loans . Class A bonds are represented by senior tranche totaling RR 5,623 million and were placed with private and institutional investors with a coupon of 7 .9% . Class B bonds are represented by subordinated junior tranche totaling RR 878 million that was retained by the Bank . This junior tranche absorbs substantially all amount of credit risks related to the portfolio . As a result, the securitised home equity loans amounted to RR 5,638 million failed to meet derecognition criteria set out by IFRS 9 and hence continue to be recognised in the Group’s consolidated financial statements. As at 31 December 2023 the carrying value of borrowings through securitisation transaction amounted to RR 1,061 million (31 December 2022: RR 2,199 million) that are represented by Class A bonds . The carrying value of the securitised home equity loans amounted to RR 1,857 million as at 31 December 2023 (31 December 2022: RR 2,958 million) . Refer to Note 8 . The fair value of the securitised home equity loans does not differ materially from the carrying value as at 31 December 2023 (31 December 2022: same). The resulting net position amounted to RR 796 million (31 December 2022: RR 759 million) . F-79 F-80 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT15 Subordinated Debt 16 Insurance Contract Assets and Liabilities In millions of RR Insurance contract assets: - Assets under reinsurance contracts, excluding other previously recognized cash flows Insurance contract assets Insurance contract liabilities: - Insurance contract liabilities other than assets for acquisition cash flows and other occurred cash flows - Assets in relation to acquisition cash flows Insurance contract liabilities 31 December 2023 31 December 2022* 1 January 2022* 1 463 1 463 22 119 (259) 21 860 693 693 15 438 (215) 15 223 14 14 9 921 (136) 9 785 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . In millions of RR 31 December 2023 31 December 2022 Perpetual subordinated loan notes issued in September 2021 Perpetual subordinated loan notes issued in June 2017 Total subordinated debt 38 974 19 564 58 538 30 817 15 096 45 913 On 20 September 2021 the Group issued perpetual subordinated loan participation notes with a nominal value of USD 600 million (RR 43,536 million) with zero premium . The Group has a right to repay the notes at its discretion starting from 20 December 2026 and they are repayable in case of certain events other than liquidation. The notes bear a fixed interest rate of 6.00% p.a. payable quarterly starting from 20 December 2021 . On 15 June 2017 the Group issued perpetual subordinated loan participation notes with a nominal value of USD 300 million (RR 17,109 mil- lion) with zero premium . The Group has a right to repay the notes at its discretion starting from 15 September 2027 and they are repayable in case of certain events other than liquidation. The notes bear a fixed interest rate of 9.25% p.a. payable quarterly starting from 15 September 2017 . Starting from 15 September 2023 the interest rate increased to 11 .99% p .a . During the three months ended 31 December 2023 the Group repurchased 6,734 subordinated perpetual bonds (TCS-perp) at market price for RR 348 million . The net gains from repurchase of subordinated bonds in the amount of RR 263 million are recognised in the consolidated statement of profit or loss and other comprehensive income. All perpetual subordinated loan participation notes have no stated maturity, and interest payments may be cancelled by the Group at any time . The claims of lenders against the Group in respect of the principal and interest on these bonds are subordinated to the claims of other credi- tors in accordance with the legislation of the Russian Federation . As a result of the sanctions, the Group’s ability to make interest payments to the holders under its Eurobonds issued in 2017 and 2021 through the usual channels was undermined by the assets freeze restrictions . In this regard, the Group cancelled interest payments for the two coupon periods (March and June 2023) under its Eurobonds to avoid discrimination between bondholders and to focus on finding a practical and lawful solution to remedy this situation by the time of the next scheduled coupon payment . On 20 September and 20 December 2023 the Group resumed coupon payments for the 3rd and 4th quarters in fulfilment of its obligations under a subordinated loan notes to the holders whose rights are recorded in the Russian depository infrastructure. The fulfilment of Eurobond coupon payment obligations to hold- ers whose rights are registered in foreign depository infrastructure or foreign brokers remains technically impossible due to the imposed sanctions . The Group is exploring all options available in the current circumstances for making payments to all categories of investors . On 27 November 2023 the Group replaced USD 146 .2 million of Eurobonds issued in 2017 . The replacement share represents 48 .74% of the original volume with a nominal value of USD 300 million, with coupon rate of 11 .99% and no stated maturity . On 30 November 2023 the Group replaced USD 288 .7 million of Eurobonds issued in 2021 . The replacement share represents 48 .11% of the original volume with a nominal value of USD 600 million, with coupon rate of 6 .0% and no stated maturity . Holders of Eurobonds whose rights are recorded in the Russian depositories may participate in the replacement. The nominal, coupon rate and maturity of the replacement bonds remained the same . All coupon payments on replacement bonds will be made in Russian rubles at the Central Bank exchange rate on the payment date . The perpetual subordinated loan participation notes are traded on the Moscow Exchange . Interest rate, maturity and geographical risk con- centration analysis of subordinated debt is disclosed in Note 26. Refer to Note 32 for the disclosure of the fair value of financial instruments. F-81 F-82 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT16 Insurance contract assets and liabilities (Continued) Reconciliation of insurance liabilities is presented below: In millions of RR 31 December 2023 31 December 2022 s s o l g n i d u l c x E t n e n o p m o c C R L n e n o p m o c s s o L s s o l g n i d u l c x E t n e n o p m o c n e n o p m o c s s o L C I L l a t o T C R L C I L l a t o T Insurance contract liabilities at 1 January 9 080 275 5 868 15 223 6 422 151 3 212 9 785 Insurance revenue (56 558) - - (56 558) (41 311) - - (41 311) Insurance service expenses (except reinsurance) Incurred claims and other directly attributable expenses Changes that relate to past service - adjustments to the LIC Losses on onerous contracts and reversal of those losses Insurance acquisition cash flows amortisation Insurance service expenses (except reinsurance) - - - - - 133 2 790 - 16 890 16 890 (1 982) (1 982) - - - - - 125 12 306 12 306 (523) (523) - - 125 2 163 133 - - 2 790 2 163 - 2 790 133 14 908 17 831 2 163 125 11 783 14 071 In millions of RR 31 December 2023 31 December 2022 s s o l g n i d u l c x E t n e n o p m o c C R L (26) Investment components Allocation from assets for insurance acquisition cash flows to groups of insurance contracts Cash flows Premiums received 61 661 Claims and other directly attributable expenses paid - Insurance acquisition cash flows (3 015) n e n o p m o c s s o L - - - - s s o l g n i d u l c x E t n e n o p m o c n e n o p m o c s s o L C I L l a t o T C R L C I L l a t o T - (26) (80) - 61 661 43 646 (13 541) (13 541) - - (3 015) (1 865) - - - - - - (80) - 43 646 (9 252) (9 252) - (1 865) (9 252) 32 529 Total cash flows 58 646 - (13 541) 45 105 41 781 Net insurance contract liabilities at 31 December 14 044 408 7 408 21 860 9 077 276 5 870 15 223 Insurance service result (53 768) 133 14 908 (38 727) (39 148) 125 11 783 (27 240) Total insurance finance expenses from insurance contracts issued represent- ed by amounts recognised in profit or loss Total insurance finance expenses from insurance contracts issued represent- ed by amounts recognised in OCI Insurance finance expenses Total changes in the statement of comprehensive income 112 - 112 - - - 227 339 102 (54) 173 (54) 285 - 102 - - - 113 215 14 127 14 229 (53 656) 133 15 081 (38 442) (39 046) 125 11 910 (27 011) F-83 F-84 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 16 Insurance contract assets and liabilities (Continued) 17 Other Financial and Non-financial Liabilities Reconciliation of insurance assets is presented below: 2023 2022 Remaining coverage Excluding indemnity component Losses incurred Total Remaining coverage Excluding indemnity component Losses incurred Total In millions of RR Net balance at 1 January 267 426 693 14 - 14 Net income/(expenses) from reinsurance contracts held Reinsurance expenses (1 611) - (1 611) (415) - (415) - - 1 825 1 825 (48) (48) - - 491 491 - - (1 611) 1 777 166 (415) 491 76 - - 10 10 10 10 - - - - - - (1 611) 1 787 176 (415) 491 76 Claims recovered Changes that relate to past service - adjustments to incurred claims Net income/(expense) from reinsurance contracts held Finance income from reinsurance contracts held Insurance finance income Total amounts recognised in comprehensive income Cash flows Premiums paid net of ceding commis- sions and other directly attributable expenses paid 1 739 - 1 739 Recoveries from reinsurance - (1 145) (1 145) Total cash flows 1 739 (1 145) 594 Net balance at 31 December 395 1 068 1 463 668 - 668 267 - (65) (65) 668 (65) 603 426 693 In millions of RR Other financial liabilities Settlement of operations with plastic cards Trade payables Credit related commitments (Note 28) Loyalty programs Other Total other financial liabilities Other non-financial liabilities Lease liabilities Taxes payable other than income tax Accrued administrative expenses Liabilities under MLTIP Other Total other non-financial liabilities 31 December 2023 31 December 2022* 1 January 2022* 100 547 14 408 8 728 4 055 1 882 129 620 24 364 8 540 4 268 4 247 113 41 532 64 760 12 540 6 530 3 353 2 690 89 873 21 268 2 653 3 349 4 905 313 32 488 48 879 11 510 3 334 2 802 2 421 68 946 1 052 3 167 3 291 - 307 7 817 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . Settlements of operations with plastic cards include funds that were spent by customers of the Bank by usage of plastic cards but have not yet been compensated to payment systems by the Bank . Taxes payable other than income tax are mainly represented by social tax accruals . Accrued administrative expenses are mainly represented by accrued staff costs. F-85 F-86 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT17 Other Financial and Non-financial Liabilities (Continued) The main movements in the table presented above are described as follows: Movements in the credit loss allowance for credit related commitments were as follows for the year ended 31 December 2023: In millions of RR At 31 December 2022 Movements with impact on provision for credit related commitments charge for the year: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to 12-months ECL (from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originated or purchased loans Total charge/(recovery) to profit or loss for the period At 31 December 2023 Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Gross committed amount 6 511 3 684 8 728 (23) (35) (237) (1 182) 2 207 8 718 19 6 530 - 6 530 2 (33) (4) 26 (9) 10 3 684 3 334 (21) (68) (241) (1 156) 2 198 8 728 Movements in the credit loss allowance for credit related commitments were as follows for the year ended 31 December 2022: • new originated or purchased category represents the day one 12-month ECL for the undrawn part of the purchased loans and loans to new borrowers (for this particular product) before the first payment became due; • transfers between Stage 1 and Stage 2 due to undrawn limits experiencing significant increases (or decreases) of credit risk and the consequent “step up” (or “step down”) between 12-month and Lifetime ECL . Transfers present the amount of credit loss allowance for loan commitments charged or recovered at the moment of transfer of a loan commitment among the respective stages; • movements other than transfers and new originated or purchased loans category represents all other movements of ECL for loan com- mitments in particular related to changes in gross carrying amounts of associated loans and other . There are no movements in Stage 3, as in case of becoming credit-impaired, undrawn limits will be blocked . Interest rate, maturity and geographical risk concentration analysis of other financial liabilities is disclosed in Note 26. Refer to Note 32 for disclosure of fair value of other financial liabilities. Refer to Note 26 for analysis of loan commitments by credit risk grades. 18 Share Capital, Share Premium and Treasury Shares In millions of RR except for the number of shares Number of authorised shares Number of outstanding shares Ordinary shares Share premium Treasury shares Total At 1 January 2022 224 218 678 199 305 492 230 26 998 (2 567) 24 661 GDRs and shares transferred under MLTIP - - At 31 December 2022 224 218 678 199 305 492 At 31 December 2023 224 218 678 199 305 492 - 230 230 - 682 26 998 (1 885) 26 998 (1 885) 682 25 343 25 343 At 31 December 2023 the total number of outstanding shares is 199,305,492 shares (31 December 2022: same) with a par value of USD 0 .04 per share (31 December 2022: same) . In millions of RR At 31 December 2021 Movements with impact on provision for credit related commitments charge for the year: New originated or purchased Transfers: - to lifetime (from Stage 1 to Stage 2) - to 12-months ECL (from Stage 2 to Stage 1) Changes to ECL measurement model assumptions and estimates Movements other than transfers and new originat- ed or purchased loans Total charge to profit or loss for the year At 31 December 2022 Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Gross committed amount At 31 December 2023 and 2022 treasury shares represent GDRs of the Group repurchased from the market for the purposes permitted by Cyprus law including contribution to MLTIP . Refer to Note 34 . 3 318 1 745 8 728 (33) (62) 973 570 3 193 6 511 16 3 334 At 31 December 2023 the total number of treasury shares is 602,975 (31 December 2022: same) . - 6 530 4 (28) - 27 3 19 1 745 3 334 (29) (90) 973 597 3 196 6 530 During the year ended 31 December 2023 no GDRs were repurchased by the Group (2022: same) . Basic earnings per share are calculated by dividing the profit or loss attributable to owners of the Company by the weighted average number of ordinary shares in issue during the year, excluding treasury shares . For the purpose of calculating diluted earnings per share the Group considered the dilutive effect of share options granted under MLTIP. Earnings per share are calculated as follows: In millions of RR except for the number of shares Profit for the year attributable to ordinary shareholders of the Company Weighted average number of ordinary shares in issue used for basic earnings per ordinary share calculation (thousands) Weighted average number of ordinary shares in issue used for diluted earnings per ordinary share calculation (thousands) Basic earnings per ordinary share (expressed in RR per share) Diluted earnings per ordinary share (expressed in RR per share) 2023 80 490 2022 20 982 198 703 198 703 203 649 205 010 405,08 395,24 105,59 102,35 F-87 F-88 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT18 Share Capital, Share Premium and Treasury Shares (Continued) No dividends were declared during the year ended 31 December 2023 and 2022 . Reconciliation of the number of shares used for basic and diluted EPS: In thousands Note 2023 2022 Weighted average number of ordinary shares in issue used for basic earnings per ordinary share calculation Number of shares attributable for MLTIP 34 Number of shares that would have been issued at fair value Weighted average number of ordinary shares in issue used for diluted earnings per ordinary share calculation 198 703 198 703 5 406 (460) 7 046 (739) 203 649 205 010 In millions of RR 2023 2022 Interest expense calculated using the effective interest rate method Customer accounts, including: Individuals - Current/demand accounts - Term deposits IE and SME Other legal entities Subordinated debt Due to banks Other borrowed funds RR denominated bonds 56 734 50 436 27 396 22 359 6 854 125 4 560 717 139 25 26 254 20 977 3 054 151 3 784 1 234 251 1 067 19 Net Interest Income In millions of RR Interest income calculated using the effective interest rate method Loans and advances to customers, including: Credit card loans Cash loans Car loans Secured loans POS loans Loans to IE and SME Placements with other banks and non-bank credit organizations Debt securities and repurchase receivables at FVOCI Brokerage operations Debt securities and repurchase receivables at AC 2023 2022 Total interest expense calculated using the effective interest rate method 62 175 56 772 Other similar expense Lease liabilities Total interest expense Expenses on deposit insurance programme Net interest income 2 265 64 440 5 498 230 323 1 007 57 779 4 076 143 897 236 754 147 579 35 464 18 412 14 313 12 353 8 633 33 083 13 734 9 898 6 630 168 550 115 998 18 802 11 157 10 158 8 387 4 048 17 438 7 232 5 754 6 629 Total interest income calculated using the effective interest rate method 300 099 205 603 Other similar income Financial assets at FVTPL Total interest income 162 300 261 149 205 752 F-89 F-90 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 20 Fee and Commission Income and Expense Replenishment fee is a payment from a client for the replenishing an amount greater than the maximum . 2023 2022 Marketing services fee represents a fee from SME for the advertising and information services . In millions of RR Fee and commission income Acquiring commission SME services commission Brokerage fee SMS fee Subscription fee Income from MVNO services Foreign currency exchange transactions fee Fee for money transfers Interchange fee Cash withdrawal fee Lifestyle commission Replenishment fee Marketing services fee Other fees receivable 37 451 19 097 15 905 11 228 10 780 9 591 6 320 6 047 4 058 1 847 1 654 1 239 314 2 581 31 070 14 933 12 702 6 667 5 664 4 767 22 647 9 509 4 773 1 631 754 1 103 438 1 365 Total fee and commission income 128 112 118 023 Fee and commission income represents the following main types: Acquiring commission represents commission for processing card payments from online and offline points of sale. SME services commission represents commission for services to individual entrepreneurs and small to medium businesses . Brokerage fee includes trading fee and brokerage account service fee . SMS fee represents fee for messages sent to the customers for notification and transaction’s authentication. Subscription fee is a payment from a client who has subscribed to receive a discount on card service, more cashback, more income from savings and account balance, special loyalty programs from partners . Income from MVNO services represents income from providing mobile services such as full coverage across Russia and international roam- ing, offering a number of value-added options such as virtual numbers, music and video streaming services, etc. Fee for selling credit protection was reclassified from the line “Fee and commission income” to the line “Insurance revenue” in the consolidated statement of profit and loss and other comprehensive income due to implementation of IFRS 17. Refer to Note 36 for further information . Refer to Note 35 that describes the types of revenues recognized on a point in time basis and on the over time basis . In millions of RR Fee and commission expense Payment system Service fee Costs of MVNO services Banking and other fees Payment channels Total fee and commission expense 2023 2022 30 341 11 941 6 574 5 726 465 55 047 28 830 4 383 3 102 3 672 986 40 973 Payment systems fee represents fee for Mir (National payment card system), through which all transactions on MasterCard, Visa and other payment systems’ services are made . Service fee represents fee for statement printing, mailing service, SMS services and others . Costs of MVNO services represent expenses for the traffic, telecommunications service and roaming. Banking and other fee represents fee for bank- ing, clearing and depository service fee, encashment and ATM service fee . Payment channels represent fee paid to third parties through whom borrowers make loan repayments . 21 Customer Acquisition Expense In millions of RR Marketing and advertising Staff costs Cards issuing expenses Partnership expenses Credit bureaux Telecommunication expenses Other acquisition 2023 41 775 18 453 6 142 1 368 1 242 582 883 2022* 23 704 11 445 3 439 1 246 964 553 361 Foreign currency exchange transactions fee represents a commission for foreign exchange transactions of the Group's customers . Total customer acquisition expenses 70 445 41 712 Fee for money transfers represents commission for money transfers to the bank’s account through various payment channels and services . Interchange fee represents a fee charged to merchants for every credit or debit card transaction . Cash withdrawal fee represents a fee charged for cash withdrawal transactions . Lifestyle commission represent income from the customers received for the lifestyle non-financial services provided by a mobile application (online booking of flights, hotels, theater and cinema tickets, etc.). * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . Customer acquisition expenses represent expenses paid by the Group on services related to origination of customers which are not directly attributable to the recognised assets and are not incremental. The Group uses a variety of different channels for the acquisition of new customers . Staff costs represent salary expenses and related costs of employees directly involved in customer acquisition. Included in staff costs are statutory social contributions to the state non-budgetary funds in the amount of RR 4,112 million for the year ended 31 December 2023 (2022: RR 2,443 million) . F-91 F-92 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 22 Insurance Revenue and Insurance Service Expense 23 Administrative and Other Operating Expenses In millions of RR Insurance revenue Insurance revenue from contracts measured under the PAA Total Insurance revenue Insurance service expense Incurred claims and other directly attributable expenses Changes that relate to past service - adjustments to the LIC Losses on onerous contracts and reversal of those losses Insurance acquisition cash flows amortisation Insurance service expense Net income/(expense) from reinsurance contracts held Reinsurance expenses - contracts measured under the PAA Claims recovered Changes that relate to past service - adjustments to incurred claims Net income/(expense) from reinsurance contracts held Finance expenses from insurance contracts issued Total Insurance service expense Insurance service result 2023 2022* 56 558 56 558 (16 896) 1 983 (133) (2 789) (17 835) (1 611) 1 836 (47) 178 (340) (17 997) 38 561 41 311 41 311 (12 149) 523 (125) (2 249) (14 000) (415) 483 - 68 (215) (14 147) 27 164 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . Incurred claims and other directly attributable expenses include amortisation of intangible assets in the amount of RR 153 million for the year ended 31 December 2023 (2022: RR 74 million) according to IFRS 17 requirements . In millions of RR Staff costs Amortization of intangible assets IT and software support Write-off of fixed and intangible assets Depreciation of right-of-use assets Depreciation of fixed assets Short-term and low-value lease Professional services Office maintenance and office supplies Collection expenses Communication services Security expenses Other taxes and levies Charity Other administrative expenses Note 10 10 10 2023 85 074 9 908 8 470 3 524 3 017 2 776 1 905 1 815 1 108 979 556 545 533 438 2 206 2022* 67 768 6 164 4 665 1 059 1 690 2 210 1 985 1 402 748 604 481 307 3 018 266 1 350 Total administrative and other operating expenses 122 854 93 717 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . The total fees charged by the Company's statutory auditor for the statutory audit of the annual consolidated and separate financial state- ments of the Company for the year ended 31 December 2023 amounted to RR 9 million (2022: RR 6 .4 mln) . The total fees charged by the Company's statutory auditor for the year ended 31 December 2023 for other assurance services amounted to RR 0 .7 million (2022: nil), for tax compliance services amounted to RR 0 .4 million (2022: RR 0 .1 million) and for other non-assurance services amounted to RR 0 .1 million (2022: RR 0 .3 million) . Included in staff costs are statutory social contributions to the non-budget funds and share-based remuneration: In millions of RR Statutory social contribution to the non-budget funds Total Share-based remuneration - Management long-term incentive program - Key employees retention plan Total 2023 15 920 15 920 3 588 9 3 597 2022 11 391 11 391 7 731 106 7 837 Refer to Note 34 for details of each share-based remuneration program . The average number of employees employed by the Group during the reporting year, including those who are working under civil contracts, was 70,414 (2022: 64,857) . F-93 F-94 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT In the context of the Group’s current structure and Russian tax legislation, tax losses and current tax assets of different group companies may not be offset against current tax liabilities and taxable profits of other group companies and, accordingly, taxes may accrue even where there is a consolidated tax loss . Therefore, deferred tax assets and liabilities are offset only when they relate to the same taxable entity and the same taxation authority. The deferred tax assets effect of the movements in temporary differences for the year ended 31 December 2023 is detailed below: In millions of RR Tax effect of deductible and taxable temporary differences Loans and advances to customers Tangible fixed assets Right-of-use assets Intangible assets Revaluation of debt investments at FVOCI Revaluation of debt investments at FVTPL Accrued expenses and other temporary differences Lease liabilities Customer accounts Debt securities in issue Financial derivatives Insurance contract liabilities Deferred tax assets 31 December 2022 (Charged)/ credited to profit or loss 31 December 2023 6 187 (914) (3 942) (313) (4 656) (1 347) 2 758 4 246 21 (27) (165) 98 1 946 (6 187) 914 3 942 329 4 677 1 347 (2 976) (4 246) (21) 27 165 295 (1 734) - - - 16 21 - (218) - - - - 393 212 24 Income Taxes Income tax expense comprises the following: In millions of RR Current tax Deferred tax Total income tax expense 2023 18 063 4 354 22 417 2022 15 006 (5 996) 9 010 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . On 4 August 2023, the President of the Russian Federation approved Federal Law No . 414-FZ on Windfall Tax . Under the provisions of the Federal Law, the Group is a taxpayer of the windfall tax . Windfall tax falls in scope of IAS 12 Income Taxes . The amount of the Group's windfall tax expense and payable, calculated at a rate of 10%, is RR 1,848 million . The Group has made a windfall tax security deposit in the amount of RR 924 million, which in the consolidated statement of cash flows is presented adjacent to the line item Income tax paid. As a result of the security deposit paid, the Group is eligible to a windfall tax deduction in the amount of the above security deposit payment . Accordingly, the applicable windfall tax rate was 5% . The income tax rate applicable to the majority of the Group’s income is 20% (2022: 20%) . The operations of the Group are subject to multiple tax jurisdictions . The income tax rate applicable to the Russian subsidiaries of the Company is 20% . The income tax rate applicable to the Company registered in Cyprus is 12 .5% (2022: 12 .5%) . A reconciliation between the expected and the actual taxation charge is provided below . In millions of RR Profit before tax Theoretical tax expense at statutory rate of 20% (2022: 20%) Tax effect of items, which are not deductible or assessable for taxation purposes: - Non-deductible expenses - Other expenses - Unrecognised tax losses Effects of different tax rates: - Income on government and corporate securities taxed at different rates - Results of companies of the Group taxed at different statutory rates Windfall tax 2023 2022* 103 349 29 770 20 670 5 954 1 778 (51) 1 (906) 1 924 3 547 190 - (676) (5) - Income tax expenses for the year 22 417 9 010 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 January 2023 . Differences between IFRS and taxation regulations in Russia and other countries give rise to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their tax bases. As all of the Group’s temporary differences arise in Russia, the tax effect of the movements in these temporary differences is detailed below and is recorded at the rate of 20% (2022: 20%). F-95 F-96 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT The deferred tax liabilities effect of the movements in temporary differences for the year ended 31 December 2022 is detailed below: In millions of RR Tax effect of deductible and taxable temporary differences Loans and advances to customers Tangible fixed assets Right-of-use assets Intangible assets Revaluation of debt investments at FVOCI Revaluation of debt investments at FVTPL Accrued expenses and other temporary differences Lease liabilities Customer accounts Debt securities in issue Financial derivatives Insurance contract liabilities Deferred tax liabilities 31 December 2021 (Charged)/credited to profit or loss Credited to OCI 31 December 2022 (185) (764) (153) (389) 1 858 (1 093) (38) 206 (73) 3 (1 183) (49) (1 860) 185 764 153 389 325 1 093 31 (206) 73 (3) 1 183 49 4 036 - - - - (2 183) - - - - - - - (2 183) - - - - - - (7) - - - - - (7) 24 Income Taxes (Continued) The deferred tax liabilities effect of the movements in temporary differences for the year ended 31 December 2023 is detailed below: In millions of RR Tax effect of deductible and taxable temporary differences Loans and advances to customers Tangible fixed assets Right-of-use assets Intangible assets Revaluation of debt investments at FVOCI Revaluation of debt investments at FVTPL Accrued expenses and other temporary differences Lease liabilities Customer accounts Debt securities in issue Financial derivatives Insurance provisions Deferred tax liabilities 31 December 2022 (Charged)/ credited to profit or loss Credited to OCI 31 December 2023 - - - - - - (7) - - - - - (7) 3 518 (4 417) (3 925) (187) (10 146) 148 4 840 4 638 170 265 (595) - - - - - 231 - - - - - - - 3 518 (4 417) (3 925) (187) (9 915) 148 4 833 4 638 170 265 (595) - (2 620) 231 (2 396) The deferred tax assets effect of the movements in temporary differences for the year ended 31 December 2022 is detailed below: In millions of RR Tax effect of deductible and taxable temporary differences Loans and advances to customers Tangible fixed assets Right-of-use assets Intangible assets Revaluation of debt investments at FVOCI Revaluation of debt investments at FVTPL Accrued expenses and other temporary differences Lease liabilities Customer accounts Debt securities in issue Financial derivatives Insurance contract assets Deferred tax assets 31 December 2021 (Charged)/credited to profit or loss 31 December 2022 - - - - - - - - - - - - - 6 187 (914) (3 942) (313) (4 656) (1 347) 2 758 4 246 21 (27) (165) 98 6 187 (914) (3 942) (313) (4 656) (1 347) 2 758 4 246 21 (27) (165) 98 1 946 1 946 F-97 F-98 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 25 Reconciliation of Liabilities Arising from Financing Activities The table below sets out an analysis of the Group’s debt and the movements in the Group’s debt for each of the periods presented . The debt items are those that are reported as financing in the consolidated statement of cash flows. • Permanent employment; • Permanent income . Сredit cards are issued with a limit of up to RR 1 million, with monthly debt repayment. Securitisation Lease liabilities Total For POS loans minimum requirements are listed below: For cash loans, minimum requirements are listed below: • The requested loan term is up to 5 years; • Cash loan volume does not exceed RR 5 million . Liabilities from financing activities In millions of RR At 31 December 2021 Cash flows from repayments Foreign exchange adjustments Other non-cash movements At 31 December 2022 Cash flows from repayments Foreign exchange adjustments Other non-cash movements At 31 December 2023 Debt securities in issue Perpetual subordinated debts 21 680 (21 098) - (281) 301 (331) - 30 - 59 657 (4 427) (4 912) (4 405) 45 913 (892) 12 510 1 007 58 538 3 806 (1 604) - (3) 2 199 (1 135) - (3) 1 052 (659) 86 195 (27 788) - (4 912) 20 875 16 186 21 268 69 681 (3 365) - 6 461 (5 723) 12 510 7 495 1 061 24 364 83 963 Other non-cash movements for the lease liabilities are presented by the additions of the net present value of the lease payments according to IFRS 16 . 26 Financial and Insurance Risk Management The risk management function within the Group is carried out with respect to financial risks, operational risks and legal risks by the manage- ment of the Bank and Insurance Company . Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The primary function of financial risk management is to establish risk limits and to ensure that any expo- sure to risk stays within these limits . The operational and legal risk management functions are intended to ensure the proper functioning of internal policies and procedures in order to minimize operational and legal risks . Credit risk. The Group exposes itself to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation . Exposure to credit risk arises as a result of the Group’s lending and other transactions with coun- terparties giving rise to financial assets. The Group grants retail loans and SME loans to customers across all regions of Russia, therefore its credit risk is broadly diversified. The management of the Group takes special measures to mitigate growing credit risk such as decreasing of credit limits for unreliable clients, diversifying of modes of work with overdue borrowers, toughening of scoring for the new borrowers etc . The Group’s maximum exposure to credit risk is reflected in the carrying amounts of financial assets in the consolidated statement of finan- cial position. For financial guarantees issued, commitments to extend credit, undrawn credit lines, the maximum exposure to credit risk is the amount of the commitment (Note 28) . The Bank has a credit committee, which establishes general principles for lending to individual borrowers . According to these principles, the minimum requirements for potential customers are listed below: • Citizenship of the Russian Federation; • Age from 18 to 70 y .o ., but not older than 70 y .o . at the time of loan repayment; • Availability of a cell-phone; • The requested loan amount should exceed RR 3 thousand; • The requested loan term is from 3 to 36 months; • The amount of one POS loan does not exceed RR 500 thousand . For secured loans minimum requirements are listed below: • The requested loan secured with a car amount does not exceed RR 7 million, loan term is up to 7 years . The requirement for the car is in good condition of driving with an age not more than 15 years, availability of a vehicle registration certificate and vehicle passport; • The requested loan secured with a real estate amount does not exceed RR 30 million, loan term is up to 15 years . The requirement for the real estate is an apartment in the apartment building within the Russian Federation, which is free from any encumbrances . For car loans minimum requirements are listed below: • The requested loan term is up to 5 years; • Car loan volume does not exceed RR 8 million; • The requirement for the car is with an age not more than 18 years and availability of vehicle passport . For loans to SME minimum requirements are listed below: • Working capital loan: loan volumes up to RR 10 million and loan term to 6 months; • Credit line under government contract: loan volumes up to RR 10 million, loan term - until the end of the contract, maximum 12 months; • Gap financing: a short-term overdrafts to close cash gaps up to RR 10 million, loan term up to 45 days; • Investment credit line secured by real estate: loan volumes up to RR 15 million and loan term to 10 years . The requirement for the real estate is an apartment in the apartment building within the Russian Federation, which is free from any encumbrances; • For SME with a turnover from RR 120 million per year: loan volumes up to RR 200 million and loan term to 10 years . A credit decision process includes: • Validation of the application data . The system checks the validity of the data provided (addresses, telephone numbers, age, if the appli- cant already uses any other products of the Bank); • Phone verification of the application information about the potential customer, his/her employment, social and property status, etc . This step may be omitted for POS loans; • Requesting of the previous credit history of the applicant from the three largest credit bureaus in Russia – Equifax, UCB (United Credit Bureau) and NBCH (National Bureau of Credit Histories); • Based on all available information, the credit score of the applicant is calculated and a final decision is made about the approval of the credit product; • The approved loan amount, loan term and tariff plan are calculated depending on the score and declared income . F-99 F-100 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 26 Financial and Insurance Risk Management (Continued) Management of the Group manages the credit risk on unused limits on credit cards in the following way: a) if the credit card loan is overdue for more than 7 days, its account will be blocked till repayment; b) if the borrower had lost his/her source of income, then borrower account might be blocked till verification of his/her new employment; c) if borrower’s loan debt burden in other banks is substantially bigger than at the time of loan origination or the credit quality of the bor- rower decreases significantly then the borrower’s limit for credit might be reduced accordingly. When customers experience serious difficulties with their current debt servicing, they may be offered loan restructuring. In this case the Bank stops accrual of interest, commissions and fines and the debt amount is restructured according to a fixed instalment payment plan with not more than 36 equal monthly payments . Another way of working with overdue loans is initiation of the state court process . This collection option statistically gives greater recovery than the sale of credit-impaired loans . Defaulted clients that could be subject to the court process are chosen by the Bank’s Collection Department considering the following criteria: a) b) c) d) e) the client’s account balance was fixed, accrual of interest stopped; information about the client is considered to be up to date; the client denied restructuring program; term of limitation of court actions has not expired; court process is economically justified. When loans become unrecoverable or not economically viable to pursue further collection efforts, the Collection Department may decide to sell these loans to a debt collection agency . The Collection Department considers the following criteria for credit-impaired loans qualifying for sale to external debt collection agencies: Each master scale credit risk grade is assigned a specific degree of creditworthiness: • Excellent – high credit quality with lowest or very low expected credit risk; • Good - good credit quality with currently low expected credit risk; • Monitor – adequate credit quality with a moderate credit risk; • Sub-standard – moderate credit quality with a satisfactory credit risk; and • Doubtful – facilities that require closer monitoring and remedial management . For measuring credit risk and grading loans and advances to customers, credit related commitments and those financial instruments which do not have risk grades estimated by external international rating agencies, the Group applies risk grades and the corresponding range of probabilities of default (PD): Master scale credit risk grade Corresponding interval Excellent Good Monitor Sub-standard NPL For credit cards: non-overdue with PD < 5%; for POS loans and secured loans: not overdue with a probability of default of less than 2 .5%; for other types of loans: not overdue with a probability of default of less than 5% . For credit cards: non-overdue with PD greater than or equal to 5% but less than 25% All non-overdue loans that do not meet the excellent level For credit cards: the PD is greater than or equal to 25%, or from 1 to 30 overdue; for other types of loans: from 1 to 30 days overdue From 31 to 90 days overdue, or restructured loans from 0 to 90 days overdue; More than 90 days overdue . a) loans remain unpaid after all collection procedures were performed (no payment during last 4-6 months); Each master scale credit risk grade is assigned a specific degree of creditworthiness: b) the debtor cannot be either reached or found for the previous 4 months; c) the debtor has no assets and there is no expectation he/she will have any in the future; d) the debtor has died and there is no known estate or guarantor; e) it is determined that it is not cost effective to continue collection efforts. Credit risk grading system. For measuring credit risk and grading financial instruments except for loans and advances to customers by the level of credit risk, the Group applies risk grades estimated by Russian authorized credit rating agency ACRA in case these financial instruments have risk grades estimated by national rating agencies (using ACRA ratings and in case of their absence – Expert RA or National RA ratings adjusting them to ACRA’s categories using a reconciliation table) . The Group applies risk grades and the corresponding range of probabilities of default (PD): Master scale credit risk grade Excellent Good Monitor Sub-standard Doubtful Corresponding interval 31 December 2023 PD < 0 .1% with PD range of or equal to 0 .1% and less than 4 .8% PD in the range of or equal to 4 .8% and less 8 .8% PD in the range of or equal to 8 .8% and less 20 .5% PD in the range of or equal to 20 .5% and less 47 .4% Corresponding interval 31 December 2022 PD < 0 .1% with PD range of or equal to 0 .1% and less than 2 .5% PD in the range of or equal to 2 .5% and less 12 .5% PD in the range of or equal to 12 .5% and less 18 .5% PD in the range of or equal to 18 .5% and less 30% • Excellent – strong credit quality with minimum expected credit risk; • Good – adequate credit quality with low expected credit risk; • Monitor – adequate credit quality with a moderate credit risk and credit cards loans before the first due date; • Sub-standard – low credit quality with a substantial credit risk, includes restructured loans that are less than 90 days overdue; • NPL – non-performing loans, credit-impaired loans more than 90 days overdue . The rating models are regularly reviewed by the Credit Risk Department, backtested on actual default data and updated if necessary . De- spite the method used, the Group regularly validates the accuracy of ratings estimates and appraises the predictive power of the models . Expected credit loss (ECL) measurement – definitions and description of estimation techniques. ECL is a probability-weighted esti- mate of the present value of future cash shortfalls (i .e ., the weighted average of credit losses, with the respective risks of default occurring in a given time period used as weights) . ECL measurement is based on the following components used by the Group: Default occurs when a financial asset is 90 days past due or less than 90 days overdue but with the final statement issued, i.e. the limit is closed, the balance is fixed, interest and commissions are no longer accrued. Probability of Default (PD) – an estimate of the likelihood of default to occur over a given time period . Exposure at Default (EAD) – an estimate of exposure at a future default date, taking into account expected changes in exposure after the reporting date, including repayments of principal and interest, and expected drawdowns on committed facilities . Loss Given Default (LGD) – an estimate of the loss arising on default as a percentage of the EAD. It is based on the difference between debt amount in the event of default and the flows that the Group would expect to receive. F-101 F-102 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 26 Financial and Insurance Risk Management (Continued) Discount Rate – a rate to discount an expected loss to its present value at the reporting date. The discount rate represents the effective interest rate (EIR) for the financial instrument or an approximation thereof. Lifetime period – the maximum period over which ECL should be measured . For POS loans lifetime period is equal to 36 months, cash loans to 60 months, secured loans to 180 months, car loans to 84 months . For revolving facilities, it is based on statistics of the average period between the moment of the loan falling into the Stage 2 until the write-off or attrition. Currently the Group estimates that this period equals to 4 years, though it is subject to periodical reassessment . If the SICR criteria are no longer met, the instrument will be transferred back to Stage 1 . General principle of techniques applied For non-POCI financial assets, ECLs are generally measured based on the risk of default over one of two different time periods, depending on whether or not the credit risk of the borrower has increased significantly since initial recognition. This approach can be summarized in a three-stage model for ECL measurement: • Stage 1 – a financial instrument that is not credit-impaired on initial recognition and its credit risk has not increased significantly since initial recognition, the loss allowance is based on 12-month ECLs; • Stage 2 – if since the date, which was assumed to be the date of initial recognition is identified as a SICR, the financial instrument is Lifetime ECL – losses that result from all possible default events over the remaining lifetime period of the financial instrument. moved to Stage 2 but is not yet deemed to be credit-impaired, the loss allowance is based on lifetime ECLs; 12-month ECL – the portion of lifetime ECLs that represent the ECLs resulting from default events on a financial instrument that are possi- ble within 12 months after the reporting date that are limited by the remaining contractual life of the financial instrument. Forward looking information – the information that includes the key macroeconomic variables impacting credit risk and expected credit losses for each portfolio segment . A pervasive concept in measuring ECL in accordance with IFRS 9 is that it should consider forward-look- ing information . Credit Conversion Factor (CCF) – a coefficient that shows that the probability of conversion of an off-balance sheet amount to exposure on the consolidated statement of financial position within a defined period. It can be calculated for a 12-month or lifetime period. Based on the analysis performed, the Group considers that 12-month and lifetime CCFs are the same . Purchased or originated credit-impaired (POCI) financial assets - financial assets that are credit-impaired upon initial recognition. Default and credit-impaired assets – assets for which a default event has occurred . The default definition stated above should be applied to all types of financial assets of the Group. An instrument is considered to no longer be in default (i .e . to have “cured”) when it no longer meets any of the default criteria . • Stage 3 – if the financial instrument is credit-impaired or restructured, the financial instrument is then moved to Stage 3 and the loss allowance is based on lifetime ECLs . ECL for POCI financial assets is always measured on a lifetime basis (Stage 3), so at the reporting date, the Group only recognises the cumu- lative changes in lifetime expected credit losses . The Group carries out two separate approaches for ECL measurement: • for loans and advances to customers: assessment on a portfolio basis: internal ratings are estimated on an individual basis but the same credit risk parameters (e .g . PD, LGD) are applied during the process of ECL calculations for the same credit risk ratings and homogene- ous segments of the loan portfolio; • for all other financial assets except FVTPL: assessment based on external ratings . The Group performs an assessment on a portfolio basis for the retail loans . This approach incorporates aggregating the portfolio into homo- geneous segments based on borrower-specific information, such as delinquency, the historical data on losses and other. Principles of assessment on portfolio basis – to assess the staging of exposure and to measure a loss allowance on a collective basis, the Group combines its exposures into segments on the basis of shared credit risk characteristics, such as that exposures to risk within a group are homogeneous . Significant increase in credit risk (SICR) - the SICR assessment is performed on an individual basis for all financial assets by monitor- ing the triggers stated below . The criteria used to identify SICR are monitored and reviewed periodically for appropriateness . Examples of shared characteristics include type of customer, product type, credit risk rating, date of initial recognition, overdue level and repayment statistics . The Group considers a financial instrument to have experienced a SICR when one or more of the following quantitative, qualitative or back- stop criteria have been met . The different segments reflect differences in PD. The appropriateness of groupings is monitored and reviewed on a periodic basis by the Risk Management Department . For interbank operations, bonds issued by banks and bonds issued by corporates and sovereigns: • 30 days past due; • award of risk grade “Doubtful”; • decrease of assigned external rating by 2 notches, which corresponds to an approximate increase of PD by 2 .5 times . For credit card loans: • 30 days past due; or • threshold defined on an individual basis using existing scoring models: increase of the 12-month PD compared to 12-month PD esti- mated 18 months ago or as of the date of initial recognition (if it occurred less than 18 months ago) by 3 times and PD reaching 50% and above . 18-month period was determined as the weighted average period of the most recent date where the credit limit was revised by at least 25%, which is considered to be a substantial revision . For all other loans: • 30 days past due; or • if number of overdue payments for the last 6 due dates exceeds 2, or if PD exceeds 50% . In general, ECL is the multiplication of the following credit risk parameters: EAD, PD and LGD (definitions of the parameters are provided above) . The general approach used for ECL calculation is stated below . where: — probability of default (can’t be higher than 100%); — exposure at default; — loss given default; — adjustment to PD and LGD depending on macroeconomic factors . F-103 F-104 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT26 Financial and Insurance Risk Management (Continued) The ECL is determined by predicting credit risk parameters (EAD, PD and LGD) for each future month during the lifetime period for each exposure or segment . The EADs are determined based on the expected payment profile, on an individual basis. For revolving products, the EAD is predicted by taking the current withdrawn balance and adding a “credit conversion factor” that accounts for the expected drawdown of the remaining limit of utilised loans by the time of default. These assumptions vary by product type, current limit utilisation and other borrower-specific behavioral characteristics . For other products debt at the time of default is equal to current exposure as there is no credit limit to utilize . Two types of PDs are used for calculating ECLs: 12-month and lifetime PD: • 12-month PDs – the estimated probability of a default occurring within the next 12 months . This parameter is used to calculate 12-month ECLs . An assessment of a 12-month PD is based on the latest available historic default data using borrower-specific behavioral charac- teristics and adjusted for forward-looking information when appropriate . Based on borrower-specific PDs the exposures are allocated to segments to which average PD for the segment is applied . • Lifetime PDs – the estimated probability of a default occurring over the remaining life of the financial instrument . This parameter is used to calculate lifetime ECLs for Stage 2 and Stage 3 exposures . An assessment of a lifetime PD is based on the latest available historic default data using product specific lifetime periods defined above . To calculate Lifetime PD, the Group developed lifetime PD curves based on the 12-month PD data . LGD represents the Group's expectation of the extent of loss on a defaulted exposure: • For credit cards, POS loans in stages 1, 2 and 3, also car loans in stages 1, 2, losses in the event of default are calculated using the port- folio approach based on statistics of repayments of defaulted loans for the period for 36 months; • For cash loans in stages 1, 2 and 3 and car loans in stage 3 losses in the event of default are calculated using the portfolio approach based on statistics of repayments of defaulted loans for the period for 30 months; • For SME loans - losses in the event of default are calculated using the portfolio approach based on statistics of repayments of defaulted loans for the period for 12 months, for SME overdrafts – 15 months; • For secured cash loans, credit lines for SME and BNPL loans losses in the event of default are calculated using current market data on expected recoveries . ECL measurement for loan commitments. The ECL measurement for these instruments includes the same steps as described above for on-balance sheet exposures and differs with respect to EAD calculation. The EAD is a product of credit conversion factor (“CCF”) and amount of the commitment. CCF for undrawn credit limits of credit cards and overdrafts is defined based on statistical analysis of exposures at default . Principles of assessment based on external ratings – the principles of ECL calculations based on external ratings are the same as for their assessment on a portfolio basis . Credit risk parameters (PD and LGD) are taken from the default and recovery statistics published by national rating agencies - ACRA and in case of rating’s absence – Expert RA or National RA (2022: same) . Forward-looking information incorporated in the ECL models. The calculation of ECLs incorporates forward-looking information . Starting from 2022, given the high degree of uncertainty associated with the geopolitical situation the Group assesses the impact of the economic environment on the applicable estimates used in calculating ECLs based on actual historical data on defaults in previous crises, as well as using expert estimates based on the duration and strength of the crises . As with any forecast, however, the projections and likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected. Backtesting – the Group regularly reviews its methodology and assumptions to reduce any difference between the estimates and the actual loss of credit . Such backtesting is performed on a quarterly basis . The results of backtesting the ECL measurement methodology are communicated to Group Management and further steps for refining mod- els and assumptions are defined after discussions between authorised persons. Market risk. The Group takes on exposure to market risks . Market risks of the Group arise from open positions in (a) currency and (b) inter- est rate, both of which are exposed to general and specific market movements. The priority goal of market risk management is to maintain the risks assumed by the Group at a level determined by the Group in accordance with its own strategic objectives . Management sets limits on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements. Currency risk. In respect of currency risk, the management sets limits on the level of exposure by currency and in total for both overnight and intra-day positions, which are monitored daily . The table below summarizes the Group’s exposure to foreign currency exchange rate risk at the end of the year: At 31 December 2023 At 31 December 2022 l a i c n a n fi y r a t e n o m e v i t a v i r e d - n o N s t e s s a l a i c n a n fi y r a t e n o m e v i t a v i r e d - n o N s e i t i l i b a i l l a i c n a n fi y r a t e n o m e v i t a v i r e d - n o N s t e s s a l a i c n a n fi y r a t e n o m e v i t a v i r e d - n o N s e i t i l i b a i l s e v i t a v i r e D n o i t i s o p t e N s e v i t a v i r e D n o i t i s o p t e N 1 992 953 (1 780 119) (5 524) 207 310 1 321 780 (1 168 650) (5 435) 147 695 97 101 (117 330) 8 506 (11 723) 124 168 (130 134) 6 401 435 28 035 (21 991) 14 741 (17 073) 1 072 (1 848) 101 (837) - - - - 1 197 (1 412) (8) 6 044 31 620 (20 656) - 10 964 (2 332) 23 124 (25 232) (8) (2 116) (776) (736) (223) 3 158 (3 118) 272 (964) - - 6 501 (7 059) (155) 40 (692) (713) 2 135 200 (1 940 610) 2 974 197 564 1 510 623 (1 355 813) 803 155 613 In millions of RR RR USD CNY Euro HKD GBP Others Total Derivatives presented above are monetary financial assets or monetary financial liabilities but are presented separately in order to show the Group’s gross exposure . Amounts disclosed in respect of derivatives represent the fair value, at the end of the reporting period, of the respective currency that the Group agreed to buy (positive amount) or sell (negative amount) before netting of positions and payments with the counterparty . The amounts by currency are presented gross as stated in Note 31 . The net total represents the fair value of the currency derivatives . The above analysis includes only monetary assets and liabilities . The following table presents sensitivities of profit or loss and equity to reasonably possible changes in exchange rates applied at the end of the reporting period, with all other variables held constant: In millions of RR USD strengthening by 20% (2022: by 20%) USD weakening by 20% (2022: by 20%) CNY strengthening by 20% (2022: by 20%) СNY weakening by 20% (2022: by 20%) At 31 December 2023 At 31 December 2022 Impact on profit for the year Impact on total equity Impact on profit for the year Impact on total equity (1 836) (1 836) 1 836 1 836 947 (947) 947 (947) 61 (61) 61 (61) 1 529 1 529 (1 529) (1 529) F-105 F-106 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT    26 Financial and Insurance Risk Management (Continued) Euro strengthening by 20% (2022: by 20%) Euro weakening by 20% (2022: by 20%) HKD strengthening by 20% (2022: by 20%) HKD weakening by 20% (2022: by 20%) GBP strengthening by 20% (2022: by 20%) GBP weakening by 20% (2022: by 20%) (365) 365 (122) 122 (115) 115 (365) 365 (122) 122 (115) 115 (295) 295 6 (6) (97) 97 (295) 295 6 (6) (97) 97 The exposure was calculated only for monetary balances denominated in currencies other than the functional currency of the respective entity of the Group . Interest rate risk. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest margins may increase as a result of such changes but may reduce or create losses in the event that unex- pected movements arise . Management monitors on a daily basis and sets limits on the level of mismatch of interest rate repricing that may be undertaken . The Group is exposed to prepayment risk through providing fixed rate loans, which give the borrower the right to repay the loans early. The Group’s current year profit and equity at the end of the current reporting period would not have been significantly impacted by changes in prepayment rates because such loans are carried at amortised cost and the prepayment right is at or close to the amortised cost of the loans and advances to customers (2022: no material impact) . The table below summarizes the Group’s exposure to interest rate risks. The table presents the aggregated amounts of the Group’s financial and insurance assets and liabilities at carrying amounts, categorized by the earlier of contractual interest repricing or maturity dates: In millions of RR 31 December 2023 Demand and less than 1 month From 1 to 6 months From 6 to 12 months From 1 to 3 years More than 3 years No stated maturity Total Total financial assets 920 911 317 257 202 124 429 834 261 453 6 604 2 138 183 Total financial liabilities (949 502) (358 012) (199 978) (274 218) (158 909) - (1 940 619) Net interest sensitivity gap at 31 December 2023 31 December 2022 (28 591) (40 755) 2 146 155 616 102 544 6 604 197 564 Total financial assets 639 295 224 438 126 055 268 368 247 784 5 703 1 511 643 Total financial liabilities (811 128) (324 587) (95 087) (81 722) (43 506) - (1 356 030) Net interest sensitivity gap at 31 December 2022 (171 833) (100 149) 30 968 186 646 204 278 5 703 155 613 Assets with no stated maturity are represented by the restricted assets . The Group has no significant risk associated with variable interest rates on loans and advances provided to customers or loans received. The aim of interest rate risk management is to maintain the risks assumed by the Group within the limits determined by the Group in accord- ance with its own strategic objectives. The interest rate risk is managed by setting caps and floors in relation to interest rates on financial assets and liabilities depending on their types and maturities and balancing the assets and liabilities which are sensitive to changes in interest rates . The assessment of the magnitude of interest rate risk is carried out by performing a sensitivity analysis which implies assessment of impact on net interest income of a shift in interest rates by 200 basis points . At 31 December 2023, if interest rates at that date had been 200 basis points lower/higher (31 December 2022: 200 basis points), with all other variables held constant, profit for the year would have been RR 3,951 million (31 December 2022: RR 3,205 million) lower/higher, equity would have been RR 3,951 million (31 December 2022: RR 3,205 million) lower/higher . The Group monitors interest rates for its financial instruments. The table below summarizes weighted average interest rates for the years 2023 and 2022 based on reports reviewed by key management personnel . At 31 December 2023 At 31 December 2022 RR USD EURO CNY Other RR USD EURO CNY Other In % p.a. Assets Cash and cash equivalents 0,1 0,0 0,1 1,1 0,0 1,0 0,0 -0,1 0,0 Loans and advances to customers Due from banks Investments in securities Repurchase receivables Brokerage receivables Liabilities Due to banks Customer accounts Other borrowed funds Debt securities in issue Brokerage payables Subordinated debt 30,1 10,6 7,5 7,5 24,6 12,3 8,1 7,9 - 23,7 - 4,0 - 2,8 - 26,4 - 0,2 - - 22,0 7,9 3,4 - - 2,8 2,5 - - - 0,0 - - - - - - - 0,3 1,1 - - - - - - 3,8 - - 28,2 2,0 5,8 - - - 5,4 - 1,7 - 2,9 - 23,9 21,1 21,9 - 12,1 0,0 - - - - 5,8 7,9 0,0 22,5 - 0,0 0,9 - - 21,2 8,2 - 0,5 - - - - - - 3,3 - - - - - - - - - - - - - - - 0,1 - - - - The sign “-” in the table above means that the Group does not have the respective assets or liabilities in the corresponding currency . F-107 F-108 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT   26 Financial and Insurance Risk Management (Continued) The geographical concentration of the Group’s financial and insurance assets and liabilities at 31 December 2022 is set out below: Geographical risk concentrations. The geographical concentration of the Group’s financial and insurance assets and liabilities at 31 December 2023 is set out below: In millions of RR Financial assets Russia OECD Other Non-OECD Listed Total Russia OECD Other Non-OECD Listed Total Cash and cash equivalents 473 552 3 466 34 543 In millions of RR Financial assets Cash and cash equivalents 717 739 1 361 5 054 Mandatory cash balances with the CBRF Due from other banks Loans and advances to customers Financial derivatives Investments in securities Repurchase receivables Brokerage receivables Insurance contract assets Other financial assets Total financial assets Financial liabilities Due to banks Customer accounts Other borrowed funds Financial derivatives Brokerage payables Subordinated debt Insurance contract liabilities Other financial liabilities Total financial liabilities 3 189 5 312 972 115 2 983 328 275 845 42 345 1 463 45 953 2 120 219 6 843 1 713 272 1 061 9 9 416 - 21 860 129 620 1 882 081 Credit related commitments (Note 28) 677 471 - - - - - - - - 6 604 7 965 - - - - - - - - - - - - 297 - 4 648 - - - - 9 999 - - - - - - - - - - - - - - - - - - - - - - - - - - 58 538 - - 724 154 3 189 5 312 972 412 2 983 332 923 845 42 345 1 463 52 557 2 138 183 6 843 1 713 272 1 061 9 9 416 58 538 21 860 129 620 58 538 1 940 619 - 677 471 Mandatory cash balances with the CBRF Due from other banks Loans and advances to customers Financial derivatives Investments in securities Brokerage receivables Guarantee deposits with payment systems Insurance contract assets Other financial assets Total financial assets Financial liabilities Due to banks Customer accounts Debt securities in issue Other borrowed funds Financial derivatives Brokerage payables Subordinated debt Insurance contract liabilities Other financial liabilities 1 690 450 605 872 1 020 - - - - - - 583 - 307 253 13 209 5 340 26 747 - 693 37 147 - 6 - - - - - 72 1 454 424 16 681 40 538 2 060 1 191 986 - 2 199 217 8 258 - 15 223 89 845 - - - - - - - - - - - - - - - - - - 28 28 - - - - - - - - - - - - - - 301 - - - 45 913 - - 511 561 1 690 450 606 455 1 020 325 802 26 747 6 693 37 219 1 511 643 2 060 1 191 986 301 2 199 217 8 258 45 913 15 223 89 873 46 214 1 356 030 - 400 898 Total financial liabilities 1 309 788 Credit related commitments (Note 28) 677 471 400 898 Assets, liabilities and credit related commitments have been based on the country in which the counterparty is located . Cash on hand has been allocated based on the country in which they are physically held . Balances with Russian counterparties actually outstanding to/from offshore companies of these Russian counterparties, are allocated to the caption “Russia”. Other risk concentrations. Management monitors and discloses concentrations of credit risk by obtaining reports listing exposures to borrowers with aggregated loan balances in excess of 10% of net assets. The Group did not have any such significant risk concentrations at 31 December 2023 and 2022 . Liquidity risk. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group is exposed to daily calls on its available cash resources from unused limits on issued credit cards, retail deposits from customers, current accounts and due to banks . Liquidity risk is managed by the Financial Department and the Risk Management Department on a regu- lar basis .The Group seeks to maintain a stable funding base primarily consisting of amounts due to retail and corporate customer accounts and deposits, debt securities . F-109 F-110 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 26 Financial and Insurance Risk Management (Continued) The maturity analysis of financial and insurance liabilities at 31 December 2022 is as follows: The Group keeps all available cash in diversified portfolios of liquid instruments such as a correspondent account with CBRF and overnight placements in high-rated commercial banks, in order to be able to respond quickly and smoothly to unforeseen liquidity requirements . The available cash at all times exceeds all accrued financing costs falling due within half a year plus two months of regular operating costs. In millions of RR Financial liabilities Demand and less than 1 month From 1 to 3 months From 3 to 6 months From 6 to 12 months More than 1 year Total The liquidity management of the Group requires consideration of the level of liquid assets necessary to settle obligations as they fall due; maintaining access to a range of funding sources; maintaining funding contingency plans; and monitoring balance sheet liquidity ratios against regulatory requirements . The liquidity analysis takes into account the covenant requirements and ability of the Group to waive any potential breaches within the grace period . The Bank calculates liquidity ratios on a daily basis in accordance with the requirements of the CBRF . The Bank has complied with these ratios throughout 2023 and 2022. The CFO and the Head of Risk Management Department receive information about the liquidity profile of the financial assets and liabilities. This includes daily, weekly, monthly and quarterly updates on the level of credit card transac- tions and repayments, statistics on credit card issuance and credit card limit utilisation, inflow and outflow of retail deposits, changes in the investment securities portfolio, level of expected outflows such as operating costs and financing activities. The CFO then ensures the availability of an adequate portfolio of short-term liquid assets, made up of an amount on the correspondent account with the CBRF and overnight deposits with banks, to ensure that sufficient liquidity is maintained within the Group as a whole. Liquidity stress testing is carried out on a regular basis by the Finance Department and the Risk Management Department in accordance with various scenarios, taking into account the models of outflow and inflow of cash on account balances and repayments of credit card debt. The table below shows liabilities at 31 December 2023 by their remaining contractual maturity . The amounts of liabilities disclosed in the maturity table are the contractual undiscounted cash flows and net loan commitments. Such undiscounted cash flows differ from the amount included in the consolidated statement of financial position because the consolidated statement of financial position amount is based on discounted cash flows. When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the reporting date . Foreign currency payments are translated using the spot exchange rate at the end of the reporting period . The maturity analysis of financial and insurance liabilities at 31 December 2023 is as follows: In millions of RR Financial liabilities Due to banks Customer accounts Other borrowed funds Financial derivatives Brokerage payables Subordinated debt Insurance contract liabil- ities Other financial liabilities Lease liabilities Credit related commitments (Note 28) Total potential future payments for financial obligations Demand and less than 1 month From 1 to 3 months From 3 to 6 months From 6 to 12 months More than 1 year Total 6 843 - - - - 6 843 812 639 192 165 170 140 191 966 374 593 1 741 503 - 51 9 416 288 4 687 122 566 817 - - - - 51 - 1 061 102 - - 6 193 - 1 061 6 397 9 416 855 1 242 2 350 68 356 73 091 3 743 1 770 2 473 2 757 1 830 2 504 8 868 2 245 4 260 1 805 1 209 21 860 129 620 27 567 37 621 677 471 - - - - 677 471 1 634 778 201 006 178 524 210 852 479 723 2 704 883 Due to banks 810 - - - 1 250 2 060 Customer accounts 753 881 177 987 100 626 85 832 77 387 1 195 713 Debt securities in issue Other borrowed funds Financial derivatives Brokerage payables Subordinated debt Insurance contract liabilities Other financial liabilities Lease liabilities Credit related commitments (Note 29) Total potential future payments for financial obligations - - 53 8 258 302 2 643 84 644 127 - - - - 579 2 225 1 606 352 - - 49 - 772 1 981 1 564 784 301 2 199 103 - - - 6 397 - 301 2 199 6 602 8 258 1 923 43 109 46 685 6 330 1 435 1 721 2 044 624 32 890 15 223 89 873 35 874 400 898 - - - - 400 898 1 251 616 182 749 105 776 99 844 163 701 1 803 686 Financial derivatives receivable and payable are disclosed in the Note 31 . The tables above present only the gross payables . Insurance contract liabilities are disclosed in the table above based on their expected maturities . Customer accounts are classified in the above analysis based on contractual maturities. However, in accordance with the Russian Civil Code, individuals have a right to withdraw their deposits prior to maturity if they forfeit their right to accrued interest . The Group takes on exposure to liquidity risk, which is the risk of cash surplus in case of assets-liabilities cash-flow profile mismatch. Expo- sure to liquidity risk arises as a result of the Group’s borrowing and operational activities that assume cash payment obligations . The Group uses daily, short-term and long-term reporting, stress-testing and forecasting practices to monitor and prevent potential liquidity problems . The Group is actively increasing the number of counterparties for interbank lending, looks for new wholesale markets, improves and creates additional debit and credit products to have more instruments over cash-flow management. The economic situation of recent years could led to an increase in liquidity risk in the banking system of the Russian Federation, but this did not happen due to the adequate response and support measures of the Bank of Russia . In response the management of the Group preserves cash safety cushions for possible cash outflows and has planned Group’s liquidity position for the next year to ensure it can cover all upcoming payment obligations . F-111 F-112 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 26 Financial and Insurance Risk Management (Continued) The expected maturity analysis of financial instruments at carrying amounts as monitored by management at 31 December 2022 is present- ed in the table below . The expected maturity analysis of financial instruments at carrying amounts as monitored by management at 31 December 2023 is present- ed in the table below . Demand and less than 1 month From 1 to 3 months From 3 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years No stated maturity Total In millions of RR Financial assets Total financial assets 1 129 441 154 117 144 768 189 605 424 444 89 091 6 717 2 138 183 6 717 52 557 Financial liabilities In millions of RR Financial assets Cash and cash equivalents Mandatory cash balances with the CBRF 701 854 22 300 - - - Due from other banks - 3 125 2 162 1 501 340 305 347 25 696 - Loans and advances to customers 126 215 128 352 142 301 189 233 341 113 45 198 Financial derivatives 3 Investments in securities 210 535 Repurchase receivables Brokerage receivables Insurance contract assets Other financial assets 845 42 345 1 463 44 680 - - - - - - - - - - - - - - - - - - 2 980 - 78 495 43 893 - - - 1 160 - - - - Financial liabilities Due to banks 6 843 - - - - Customer accounts 805 982 182 907 163 862 186 661 373 860 Other borrowed funds Financial derivatives - 9 Brokerage payables 9 416 - - - - - - 1 061 - - - - - - 1 143 1 143 2 319 53 933 Other financial liabilities 122 566 4 687 3 743 1 770 2 757 1 830 8 868 1 805 2 245 1 209 949 503 189 563 169 592 201 154 430 807 Subordinated debt Insurance contract liabilities Total financial liabilities Net liquidity gap at 31 December 2023 Cumulative liquidity gap at 31 December 2023 - - - - - - - - - - - - 724 154 3 189 5 312 972 412 2 983 332 923 845 42 345 1 463 - - - - - - - - - - - - - - - - - - 6 843 1 713 272 1 061 9 9 416 58 538 21 860 129 620 1 940 619 Demand and less than 1 month From 1 to 3 months From 3 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years No stated maturity Cash and cash equivalents 494 434 17 127 - - - 1 027 - 156 - 131 - 139 - 237 450 Mandatory cash balances with the CBRF Due from other banks Loans and advances to customers 83 847 97 928 102 608 112 147 181 607 28 318 Financial derivatives 61 Investments in securities 202 136 Brokerage receivables 26 747 Guarantee deposits with payment systems Insurance contract assets 1 693 - - - 1 - - - - 1 - - - - 1 - - 2 - 959 - 63 583 60 083 - - - - - - - Other financial assets 24 266 125 81 71 6 867 5 809 37 219 Total financial assets 833 212 115 337 102 821 112 358 253 705 88 401 5 809 1 511 643 Total 511 561 1 690 450 606 455 1 020 325 802 26 747 6 693 - - - - - - - - - Due to banks 810 - - - 1 250 Customer accounts 724 102 110 046 92 656 98 110 167 072 - - 194 8 258 - - - - - - - - 301 2 199 23 - - - - - - 880 880 1 760 42 393 2 643 84 644 2 225 1 606 1 981 1 564 6 330 2 044 1 435 624 820 651 114 757 97 081 110 158 213 383 - - - - - - - - - - - - - - - - - - - 2 060 1 191 986 301 2 199 217 8 258 45 913 15 223 89 873 - 1 356 030 12 561 580 5 740 2 200 40 322 88 401 5 809 155 613 12 561 13 141 18 881 21 081 61 403 149 804 155 613 - Debt securities in issue Other borrowed funds Financial derivatives Brokerage payables Subordinated debt Insurance contract liabilities Other financial liabilities Total financial liabil- ities Net liquidity gap at 31 December 2022 Cumulative liquidity gap at 31 December 2022 179 938 (35 446) (24 824) (11 549) (6 363) 89 091 6 717 197 564 179 938 144 492 119 668 108 119 101 756 190 847 197 564 - All current accounts of individuals are classified using outflow curve (2022: same). F-113 F-114 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 26 Financial and Insurance Risk Management (Continued) under contracts other than life insurance, provided that the other assumptions are constant. This analysis reflects the impact on gross and net liabilities, profit before tax and equity of the Group. The allocation of deposits of individuals considers the statistics of autoprolongations and top-ups of longer deposits with the funds from shorter deposits after their expiration in case when the customers have more than one active deposit . The matching and/or controlled mis- matching of the maturities and interest rates of assets and liabilities is fundamental to the management of the Group . It is unusual for banks ever to be completely matched since business transacted is often of an uncertain term and of different types. An unmatched position potentially enhances profitability but can also increase the risk of losses. The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing liabilities as they mature, are important factors in assessing the liquidity of the Group and its exposure to changes in interest and exchange rates . Management believes that in spite of a substantial portion of customer accounts being on demand, diversification of these deposits by number and type of depositors, and the past experience of the Group would indicate that these customer accounts provide a long-term and stable source of funding for the Group . The Group has developed a Financial Stability Restoration Plan (the “Plan”) in emergency situations . The main purpose of this Plan is, in the event of a liquidity crisis and/or deterioration in the Group’s financial position, to preserve the Group’s capital and identify sources of liquid- ity replenishment. The plan provides for the formation of effective measures that correspond to stress conditions, which should stabilize the situation and restore the liquidity and financial stability of the Group. Insurance risk. Insurance risk is the risk associated with insurance contracts, consisting in the possibility of the occurrence of an insur- ance event and the uncertainty of the amount and time of occurrence of the loss associated with it . The insurance risk management process covers all stages, from the stage of development of insurance rates to the settlement of losses . The main steps in the insurance risk management process include: • Underwriting and regulation of tariff policy; • Efficiency of the loss settlement process; • Diversification of the insurance portfolio . Tariff policy. The process of underwriting and regulation of the tariff policy includes the formation of tariffs for certain areas of activity based on the analysis of results for previous periods, existing market conditions and the Insurance Company's strategy . The insurance tariff is set on the basis of the analysis of the expected loss ratio based on Group’s insurance portfolio and similar products on the market, the commission ratio based on the analysis of product profitability and commission rates for similar products on the market, and the analysis of the average market rate. When developing tariffs, factors such as expected inflation and changes in the legislation of the Russian Federation are also taken into account . The Insurance Company monitors the correctness of the calculation of the insurance premium under the insurance contract by analysing, on a regular basis, the deviations of the actual received premiums from the estimated premiums . Loss settlement process. In accordance with the insurance contract, the policyholder is obliged to notify the insurance company of a loss within a certain period of time . Losses are settled by specialized units, other than selling business units . The insurance claims will be paid only after receiving all the necessary documents confirming the fact of the insured event. Also, if necessary, economic security depart- ment and legal department are involved in checking documents for settlement of losses . If at the time of payment of the insurance claims the policyholder had outstanding debt of the insurance premium, the unpaid part is deducted from the amount of compensation . If there is a third party that caused an insurance loss to the insured client, the Group has a right to pursue third parties responsible for loss for payment of some or all costs related to the claims settlement process of the Group . Diversification of the insurance portfolio. To reduce insurance risk, the Group also uses the diversification of its insurance portfolio - it insures a large number of small risks, which, in particular, is achieved through the remote provision of insurance services almost throughout the Russian Federation . The Insurance Company does not operate outside the Russian Federation and is exposed to risks associated with the geographical features of the regions of the Russian Federation . Sensitivity analysis. The following analyses the possible changes in the key assumptions used in the calculation of insurance liabilities Effect of changes in the key assumptions as at 31 December 2023: In millions of RR except for the number of claims Change in assumtions Effect on insurance obligations other than life insurance Effect on the reinsuers' share in insurance obligations other than life insurance Effect on profit before tax Effect on equity The average cost of insurance claims The average number of claims – 10% + 10% – 10% + 10% (781) 781 (781) 781 108 (108) 108 (108) 673 (673) 673 (673) 422 (422) 422 (422) Effect of changes in the key assumptions as at 31 December 2022: In millions of RR except for the number of claims Change in assumtions Effect on insurance obligations other than life insurance Effect on the reinsuers' share in insurance obligations other than life insurance Effect on profit before tax Effect on equity The average cost of insurance claims The average number of claims – 10% + 10% – 10% + 10% (500) 500 (500) 500 27 (27) 27 (27) 473 (473) 473 (473) 422 (422) 422 (422) 27 Management of Capital The Group’s objectives when managing capital are (i) for the Bank to comply with the capital requirements set by the Central Bank of the Russian Federation (CBRF), (ii) for the Insurance Company to comply with the capital requirements set by the legislation of the Russian Federation, (iii) for the Group to comply with the financial covenants set by the terms of securities issued; (iv) to safeguard the Group’s ability to continue as a going concern . The Group considers total capital under management to be total equity as shown in the consolidated statement of financial position. The amount of capital that the Group managed as of 31 December 2023 was RR 283,915 million (31 December 2022: RR 205,913 million) . In October 2021 the Bank was added to the CBRF’s list of 13 systemically important banking institutions due to a recognition of the Bank’s growing presence in the financial market and expanding customer base of its ecosystem. As a result, from 1 January 2022 the Bank is obliged to comply with the additional capital adequacy buffers +1% to the minimum required statutory equity capital adequacy ratio (N1.0). Compliance with capital adequacy ratios set by the CBRF is monitored daily, and reports with their calculation are reviewed and signed by the Chief Executive Officer and Chief accountant, then submitted to the CBRF in accordance with the deadlines set by the regulator. Other objectives of capital management are evaluated annually . In accordance with information provided internally to key management personnel, the amount of regulatory capital of the Bank calculated in accordance with the methodology set by CBRF as at 31 December 2023 was RR 244,634 million, and the equity capital adequacy ratio (N1 .0) was 12 .84% (31 December 2022: RR 208,776 million and 16 .62%) . Minimum required statutory equity capital adequacy ratio (N1 .0) was 9% as at 31 December 2023 (31 December 2022: 9%) . F-115 F-116 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT27 Management of Capital (Continued) 28 Contingencies and Commitments The Group also monitors capital requirements including capital adequacy ratio under the Basel III methodology of the Basel Committee on Banking Supervision: global regulatory framework for more resilient banks and banking systems (hereinafter “Basel III”) . The composition of the Group’s capital calculated in accordance with the methodology set by Basel Committee with capital adjustments as set out in Basel III is as follows: In millions of RR Share capital Share premium Treasury shares Share-based payment reserve Retained earnings Revaluation reserve for investments in debt securities Translation reserve Other reserves Less intangible assets Non-controlling interest Common Equity Tier 1 (CET1) Additional Tier 1 (Subordinated debt) Tier 1 capital Total capital Risk weighted assets (RWA) Credit risk Operational risk Market risk 31 December 2023 31 December 2022 230 26 998 (1 885) 2 433 261 354 (5 434) 4 43 (36 391) 172 247 524 58 538 306 062 306 062 1 324 997 450 536 39 103 230 26 998 (1 885) 2 731 180 864 (3 214) 243 2 (24 097) (56) 181 816 45 913 227 729 227 729 927 170 340 046 32 072 Total risk weighted assets (RWA) 1 814 636 1 299 288 Common equity Tier 1 capital adequacy ratio (CET1 /Total RWA), % Tier 1 capital adequacy ratio (Tier 1 capital /Total RWA), % Total capital adequacy ratio (Total capital /Total RWA), % 13,6% 16,9% 16,9% 14,0% 17,5% 17,5% Starting from 2022 due to the suspension of services by the international rating agency Fitch, the Group applies risk assessments established by the Russian rating agency ACRA to assess credit risk and classify financial instruments according to the level of credit risk. The Group assessed that the effect of the transition is immaterial for both reporting period and comparative information. The Group and the Bank have complied with all externally imposed capital requirements throughout the year ended 31 December 2023 and 2022 . The size of the solvency margin calculated by the Insurance Company in accordance with the requirements of the legislation of the Russian Federation is presented by the standard ratio of capital and assumed liabilities which was 4 .87 at 31 December 2023 and 2 .64 at 31 December 2022 . Legal proceedings. From time to time and in the normal course of business, claims against the Group may be received . On the basis of its own estimates and internal professional advice, management is of the opinion that no material unprovided losses will be incurred in respect of claims . Tax contingencies. Russian tax legislation which was enacted or substantively enacted at the end of the reporting period, is subject to varying interpretations when being applied to the transactions and activities of the Group . Consequently, tax positions taken by manage- ment and the formal documentation supporting the tax positions may be challenged by the tax authorities . Russian tax administration is gradually strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant counterparties . Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preced- ing the year when decision about review was made . Under certain circumstances reviews may cover longer periods . The Russian transfer pricing legislation is generally aligned with the international transfer pricing principles developed by the Organization for Economic Cooper- ation and Development (OECD), although it has specific features. This legislation provides for the possibility of additional tax assessment for controlled transactions (transactions between related parties and certain transactions between unrelated parties), if such transactions are not on an arm's length . Tax liabilities arising from controlled transactions are determined based on their actual transaction prices . It is pos- sible, with the evolution of the interpretation of transfer pricing rules, that such transfer prices could be challenged . The impact of any such challenge cannot be reliably estimated, however, it may be significant to the financial position and/or the overall operations of the Group. The Group includes companies incorporated outside of Russia . The tax liabilities of the Group are determined on the assumption that these companies are not subject to Russian income tax, because they do not have a permanent establishment in Russia . The Company is a tax resident of Cyprus only and full beneficial owner of the Bank and Insurance Company. This interpretation of relevant legislation may be chal- lenged but the impact of any such challenge cannot be reliably estimated currently, however, it may be significant to the financial position and/or the overall operations of the Group . The Controlled Foreign Company (CFC) legislation introduced Russian taxation of profits of foreign companies and non-corporate structures (including trusts) controlled by Russian tax residents (controlling parties) . The CFC income is subject to a 20% tax rate if the CFC is controlled by a legal entity and a rate of 13% if it is controlled by an individual . As a result, management reassessed the Group’s tax positions and recognised current tax expense as well as deferred taxes that arose from the expected taxable manner of recovery of the relevant Group’s operations to which the CFC legislation applies to and to the extent that the Group (rather than its owners) is obliged to settle such taxes . As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, interpretations of such uncertain areas that may reduce the overall tax rate of the Group . While management currently estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible risk that outflow of resources will be required should such tax positions and interpretations be challenged by the tax authorities . The impact of any such challenge, were it to be successful, cannot be reliably estimated, however, it may be significant to the financial position and/or the overall operations of the Group. As at 31 December 2023 and 2022 no material tax risks were identified. Compliance with covenants. The Group is subject to certain covenants related primarily to its subordinated perpetual debt . Non-com- pliance with such covenants may result in negative consequences for the Group . Management believes that the Group was in compliance with all such covenants as at 31 December 2023 and 2022 . Capital commitment related to the office construction. The future cash outflows to which the Group is exposed due to the construc- tion and repairs of a new office building and which are not reflected in the liabilities amounted to RR 4,826 million as at 31 December 2023 (31 December 2022: RR 19,222 million) . Условные обязательства, связанные со строительством офиса. Будущие оттоки денежных средств, которые ожидает Группа в связи со строительством и ремонтом нового офисного здания и которые не отражены в обязательствах, составили 4 826 млн руб. по состоянию на 31 декабря 2023 года (31 декабря 2022 года: 19 222 млн руб.). Credit related commitments and performance guarantees issued. The primary purpose of these instruments is to ensure that funds are available to a customer as required . Commitments to extend credit represent unused portions of authorisations to extend credit in the form of credit card loans, guarantees . With respect to credit risk on commitments to extend credit, the Group is potentially exposed to loss in an amount equal to the total unused commitments, if the unused amounts were to be drawn down . F-117 F-118 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 28 Contingencies and Commitments (Continued) The following table contains an analysis of credit related commitments by credit quality at 31 December 2022 based on credit risk grades . Most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Group monitors the term to maturity of credit related commitments because longer-term commitments generally have a greater degree of credit risk than shorter-term commitments . Performance guarantees are contracts that provide compensation if another party fails to perform a contractual obligation . Such contracts do not transfer credit risk . The risk under performance guarantee contracts is the possibility that the insured event (i .e . the failure to perform the contractual obligation by another party) occurs. The key risks the Group faces are significant fluctuations in the frequency and severity of payments incurred on such contracts relative to expectations . The Group uses a scoring model to predict levels of such payments . Claims must be made before the contract matures and most claims are settled within short term . This allows the Group to achieve a high degree of certainty about the estimated payments and therefore future cash flows. Outstanding credit related commitments and performance guarantees are as follows: In millions of RR Credit related commitments - Excellent - Good - Monitor Unrecognised gross amount Credit loss allowance 31 December 2023 31 December 2022 Unrecognised net amount Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit impaired) 357 170 46 735 3 004 406 909 (6 511) 400 398 - 152 367 519 (19) 500 - - - - - - Total 357 170 46 887 3 371 407 428 (6 530) 400 898 In millions of RR Unused limits on credit card loans Unused limits on SME loans Credit loss allowance Total credit related commitments, net of сredit loss allowance Performance guarantees issued Total performance guarantees issued, net of provisions 656 648 29 551 (8 728) 677 471 - - 392 204 15 224 (6 530) 400 898 2 2 Also, the Group may decide to increase or decrease a credit card limit using a scoring model, which is based on the client's behaviour model . Therefore, the fair value of the contractual amount of revocable unused limits on contingencies and commitments is close to zero . Credit related commitments are denominated in RR . Mandatory cash balances with the CBRF of RR 3,189 million as at 31 December 2023 (31 December 2022: RR 1,690 million) represent manda- tory reserve deposits which are not available to finance the Bank's day to day operations. The total outstanding contractual amount of unused limits on contingencies and commitments liability does not necessarily represent future cash requirements, as these financial instruments may expire or terminate without being funded. In accordance with credit card service con- ditions the Group has a right to refuse the issuance, activation, reissuing or unblocking of a credit card, and is providing a credit card limit at its own discretion and without explaining its reasons . The following table contains an analysis of credit related commitments by credit quality at 31 December 2023 based on credit risk grades . In millions of RR Credit related commitments - Excellent - Good - Monitor Unrecognised gross amount Credit loss allowance Unrecognised net amount Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit impaired) 629 961 48 664 6 926 685 551 (8 718) 676 833 - 188 460 648 (10) 638 - - - - - - Total 629 961 48 852 7 386 686 199 (8 728) 677 471 F-119 F-120 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT29 Offsetting Financial Assets and Financial Liabilities Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at 31 December 2023: Net amount after offsetting in the consolidated statement of financial position Amounts subject to master netting and similar arrangements not set off in the consolidated statement of financial position Net amount of exposure Gross amounts before offsetting Financial instruments Cash collateral 476 063 42 345 2 979 476 063 493 162 42 345 43 244 - - 2 979 - 6 154 521 387 521 387 536 406 6 154 3 003 689 9 416 1 061 3 003 2 979 689 9 416 1 061 845 11 126 1 857 14 169 14 169 16 807 - - - - - - - - - 24 - - - 24 In millions of RR ASSETS Reverse repurchase agree- ments Brokerage receivables Financial derivatives Total assets subject to offsetting, master netting and similar arrangement LIABILITIES Correspondent accounts and overnight placements of other banks Sale and repurchase agree- ments with other banks Brokerage payables Other borrowed funds Total liabilities subject to offsetting, master netting and similar arrangement Financial instruments subject to offsetting, enforceable master netting and similar arrangements are as follows at 31 December 2022: Net amount after offsetting in the consolidated statement of financial position Amounts subject to master netting and similar arrangements not set off in the consolidated statement of financial position Net amount of exposure Gross amounts before offsetting Financial instruments Cash collateral 252,399 26,747 937 252,399 254,683 26,747 27,250 - - 937 - 2,060 280,083 280,083 281,933 2,060 1,250 8,258 2,199 1,250 8,258 2,199 937 9,483 2,958 11,707 11,707 13,378 - - - - - - - - 313 - - 313 In millions of RR ASSETS Reverse repurchase agree- ments Brokerage receivables Financial derivatives Total assets subject to offsetting, master netting and similar arrangement LIABILITIES Correspondent accounts and overnight placements of other banks Brokerage payables Other borrowed funds Total liabilities subject to offsetting, master netting and similar arrangement As at 31 December 2023 the Group has master netting arrangements with counterparty banks, which are enforceable in case of default . The Group also made margin deposits with clearing house counterparty as collateral for its outstanding derivative positions . The counterparty may set off the Group’s liabilities with the margin deposit in case of default (2022: same). The disclosure does not apply to loans and advanc- es to customers and related customer deposits . F-121 F-122 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT30 Transfers of Financial Assets 31 Financial Derivatives The Group transferred financial assets in transactions that did not qualify for derecognition in the current periods. The table below shows the amount of operations under sale and repurchase agreements which the Group enters into in the normal course of business: The table below sets out fair values, at the end of the reporting period, of currencies receivable or payable under foreign exchange forwards and swap contracts entered into by the Group. The table reflects gross positions before the netting of any counterparty positions (and pay- ments) and covers the contracts with settlement dates after the end of the respective reporting period . In millions of RR Debt securities at FVOCI pledged under repurchase agreements Notes 12 Total 31 December 2023 31 December 2022 Carrying amount of the assets Carrying amount of the associat- ed liabilities Carrying amount of the assets Carrying amount of the associated liabilities - - 689 689 - - - - In the normal course of business, the Group makes borrowings on interbank market using different financial instruments as collateral to support its everyday operations in terms of liquidity . The Group also enters into reverse sale and repurchase agreements . The summary of such operations is provided in the table below: In millions of RR Cash and cash equivalents Brokerage receivables Total 31 December 2023 31 December 2022 Amounts granted under repo agreements Fair value of securities received as collateral Amounts granted unde repo agreements Fair value of securities received as collateral 476 063 493 162 252 399 254 683 42 345 43 244 26 747 27 250 518 408 536 406 279 146 281 933 Notes 5 9 In millions of RR Foreign exchange forwards and swaps: discounted notional amounts, at the end of the reporting period, of - USD receivable on settlement (+) - USD payable on settlement (-) - RR payable on settlement (-) - EUR receivable on settlement (+) - Other currencies receivable on settlement (+) Fair value of foreign exchange forwards and swaps 31 December 2023 31 December 2022 Contracts with positive fair value Contracts with negative fair value Contracts with positive fair value Contracts with negative fair value 8 507 - (5 524) - - 2 983 (1) - - - (8) (9) 6 455 - (5 435) - - 1 020 (31) (23) - (8) (155) (217) F-123 F-124 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 32 Fair Value of Financial Instruments The description of valuation techniques and the description of the inputs used in the fair value measurement for level 2 measurements at 31 December 2023 are as follows: Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (un- adjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuation techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measure- ments are valuations not based on observable market data (that is, unobservable inputs) . (а) Recurring fair value measurements Recurring fair value measurements are those that the accounting standards require or permit in the consolidated statement of financial position at the end of each reporting period . The levels in the fair value hierarchy into which the recurring fair value measurements are categorised are as follows: In millions of RR Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 31 December 2023 31 December 2022 Loans and advances to customers Financial derivatives Total assets recurring fair value measurements LIABILITIES AT FAIR VALUE Financial derivatives Total liabilities recurring fair value measurements 206 338 19 200 2 544 228 082 99 249 114 475 2 380 216 104 - - 9 9 - - 9 9 - - 217 217 - - 217 217 Investments in securities categorised in level 2 are represented by liquid debt securities classified in “Good” credit risk grade. In 2023, the transfer of Investments in securities from level 2 to level 1 occurred as a result of the restoration of market activity, trading volumes rose up following the growth of the Moscow Exchange index after a fall in 2022 . ASSETS AT FAIR VALUE Investments in securities 16 217 Investments in securities 194 323 16 217 2 247 212 787 89 267 113 455 1 797 204 519 Precious metals 12 015 - 12 015 9 982 - - - - 297 297 2 983 - 2 983 - - - 9 982 583 583 1 020 - 1 020 Foreign exchange swaps and forwards Discounted cash flows adjusted for counterparty credit risk 2 983 - - In millions of RR ASSETS AT FAIR VALUE Fair value Valuation technique Inputs used - Selection of an indicative paired bid and ask Cbonds quotes when comparing preliminary pairs of quotes on exchange trading floors, then comparing with the quotes from OTC market participants; - Indicative quotes from the Cbonds price center; - Observable quotes for comparable securities adjusted by multiplicator depending on the degree of the market activity - Quotes from the automated fair val- ue system for financial instruments of NSD price center* . Russian ruble curve . USD Dollar Swaps Curve . EUR Swaps Curve . CDS quotes assessment of coun- terparty credit risk or reference entities . Russian ruble curve . USD Dollar Swaps Curve . EUR Swaps Curve . Discounted cash flows adjusted for counterparty credit risk CDS quotes assessment of coun- terparty credit risk or reference entities . Total recurring fair value measurements at level 2 LIABILITIES AT FAIR VALUE Foreign exchange swaps and forwards Total recurring fair value measurements at level 2 19 200 9 9 * NSD Valuation Center is a fair value measurement service for bonds and other financial instruments, accredited by the CBRF. F-125 F-126 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT  32 Fair Value of Financial Instruments (Continued) The valuation technique, inputs used in the fair value measurement for level 3 measurements and related sensitivity to reasonably possible changes in those inputs are as follows at 31 December 2023: Fair value Valuation technique Inputs used 2 247 Market multiplicators based on the similar publicly traded companies Market capitalization and profitabili- ty ratios of similar publicly traded companies Expected discounted cash flow. Risk-free rate . The description of valuation techniques and the description of the inputs used in the fair value measurement for level 2 measurements at 31 December 2022 are as follows: In millions of RR ASSETS AT FAIR VALUE Fair value Valuation technique Inputs used In millions of RR Corporate shares Loans and advances to customers 297 Discounted cash flows adjusted for counterparty credit risk Total recurring fair value measurements at level 3 2 544 - Selection of an indicative paired bid and ask Cbonds quotes when comparing preliminary pairs of quotes on exchange trading floors, then comparing with the quotes from OTC market participants; - Observable quotes for comparable securities adjusted by multiplicator depending on the degree of the market activity Investments in securities 113 455 Foreign exchange swaps and forwards Discounted cash flows adjusted for counterparty credit risk 1 020 Total recurring fair value measurements at level 2 LIABILITIES AT FAIR VALUE 114 475 Foreign exchange swaps and forwards Total recurring fair value meas- urements at level 2 Discounted cash flows adjusted for counterparty credit risk 217 217 - Indicative quotes from the Cbonds price center; - Quotes from the automated fair value system for financial instru- ments of NSD price center* . Russian ruble curve . USD Dollar Swaps Curve . EUR Swaps Curve . CDS quotes assessment of coun- terparty credit risk or reference entities . Russian ruble curve . USD Dollar Swaps Curve . EUR Swaps Curve . CDS quotes assessment of counterparty credit risk or reference entities . * NSD Valuation Center is a fair value measurement service for bonds and other financial instruments, accredited by the CBRF. There were no changes in the valuation techniques for level 2 recurring fair value measurements during the year ended 31 December 2023 . Level 2 derivatives comprise foreign exchange forwards and swaps . The foreign exchange forwards have been fair valued using forward exchange rates that are quoted in an active market . Foreign exchange swaps are fair valued using forward interest rates extracted from observable yield curves. The effects of discounting are generally insignifi- cant for level 2 derivatives . F-127 F-128 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT32 Fair Value of Financial Instruments (Continued) The valuation technique, inputs used in the fair value measurement for level 3 measurements and related sensitivity to reasonably possible changes in those inputs are as follows at 31 December 2022: In millions of RR Fair value Valuation technique Inputs used Coupon payment schedule, with the transfer of expected coupons to receive in the flow. All coupons with maturity before 30 June 2025 were postponed to this date . The discount rate is calculated on the basis of foreign exchange quotes on the OTC market, adjusted for the credit spread . Market capitalization and profitabil- ity ratios of similar publicly traded companies Discounted cash flows Market multiplicators based on the similar publicly traded companies Discounted cash flows adjusted for counterparty credit risk Expected discounted cash flow. Risk-free rate . Investments in securities Corporate shares Loans and advances to customers 921 876 583 Total recurring fair value meas- urements at level 3 2,380 Changes of the fair value measurements at Level 3 for the year ended 31 December 2023 and 2022 are as follows: In millions of RR Fair value as at 31 December 2021 - Level 3 Other interest income Net losses from foreign exchange translation Net losses from revaluation of convertible loan Fair value as at 31 December 2022 - Level 3 Additions Other interest income Net gains from foreign exchange translation Net losses from revaluation of convertible loan Fair value as at 31 December 2023 - Level 3 Loans and advances to customers 3 971 20 (603) (2 805) 583 144 24 157 (611) 297 (б) Assets and liabilities not measured at fair value but for which fair value is disclosed Fair values analysed by level in the fair value hierarchy and carrying value of assets not measured at fair value are as follows: In millions of RR Level 1 Level 2 Level 3 Carrying value Level 1 Level 2 Level 3 Carrying value 31 December 2023 31 December 2022 FINANCIAL ASSETS CARRIED AT AMORTISED COST Cash and cash equivalents - Cash on hand 78 905 - - 78 905 56 895 - - 56 895 Investments in securities 97 663 Repurchase receivables 729 - Cash balances with the CBRF (other than mandatory reserve deposits) - Placements with other banks and non-bank credit organi- zations Mandatory cash balances with the CBRF Due from other banks Loans and advances to customers Guarantee deposits with payment systems Brokerage receivables Other financial assets Settlement of operations with plastic cards receivable - Restricted assets - Trade receivables - Insurance's financial assets - Broker commissions and settlement with exchange receivable - Other receivables Total financial assets carried at amortised cost - 71 283 - 71 283 - 106 693 - 106 693 - 573 966 - - 3 189 5 312 - - - - 42 345 - - - - - - - - - 973 202 972 115 - - - 42 345 29 126 - 29 126 - 6 604 3 977 2 967 4 815 5 068 - - - - 6 604 3 977 2 967 4 815 5 068 573 966 - 347 973 - 347 973 - - - - - 3 189 5 312 - - 1 690 450 120 136 102 718 845 - - - - 1 690 450 121 283 - 606 577 605 872 6 - 6 26 747 - - - - 26 747 22 014 - 22 014 - 5 703 5 703 3 899 1 405 784 3 414 - - - - 3 899 1 405 784 3 414 - - - - - - - - - - 177 297 742 048 979 806 1 920 653 159 613 515 069 612 286 1 304 828 F-129 F-130 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT  32 Fair Value of Financial Instruments (Continued) Fair values analysed by level in the fair value hierarchy and carrying value of liabilities not measured at fair value are as follows: In millions of RR Level 1 Level 2 Level 3 Carrying value Level 1 Level 2 Level 3 Carrying value 31 December 2023 31 December 2022 FINANCIAL LIABILITIES CARRIED AT AMORTISED COST Due to banks Brokerage payables Customer accounts Individuals - Current/demand accounts - Term deposits - Brokerage accounts SME - Current/demand accounts - Term deposits Other legal entities - Current/demand accounts - Term deposits - - - - - - - - - 6 843 9 416 727 314 638 583 98 620 246 323 22 262 276 1 - - - - - - - - - 6 843 9 416 727 314 619 325 98 620 246 323 21 413 276 1 - - - - - - - - - 2 060 8 258 660 537 175 360 116 218 207 054 14 857 4 150 - - - - - - - - - 2 060 8 258 660 537 194 876 116 218 207 054 13 147 4 150 In millions of RR Level 1 Level 2 Level 3 Carrying value Level 1 Level 2 Level 3 Carrying value 31 December 2023 31 December 2022 Debt securities in issue RR Bonds issued on domestic market Other borrowed funds Borrowings through securitisa- tion transaction Subordinated debt - 889 - - - - 304 - 1 061 1 845 - - - 301 - 2 199 Perpetual subordinated debts - 21 244 19 564 58 538 - 12 770 15 096 45 913 Other financial liabilities Settlement of operations with plastic cards Trade payables Credit related commitments Loyalty programs Other financial liabilities Total financial liabilities carried at amortised cost - 100 547 - 100 547 - 64 760 - - - - 14 408 - 4 055 1 882 - - - - 14 408 8 728 4 055 1 882 - - - - 12 540 - 3 353 2 690 - - - - - 64 760 12 540 6 530 3 353 2 690 889 1 891 774 19 564 1 918 750 2 149 1 280 611 15 096 1 340 590 Fair value is the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced sale or liquidation, and is best evidenced by an active quoted market price . Where quoted market prices are not available, the Group used valuation techniques. The fair value of floating rate instruments that are not quoted in an active market was estimated to be equal to their carrying amount. The fair value of unquoted fixed interest rate instruments was estimated based on estimated future cash flows ex- pected to be received discounted at current interest rates for new instruments with similar credit risk and remaining maturity . As at 31 December 2023 and 2022 the fair value of the debt securities in issue and subordinated debt has been calculated based on quoted prices from the Moscow Exchange, where the Group’s debt securities are listed and traded . Weighted average discount rates used in determining fair value as of 31 December 2023 and 2022 are disclosed below: In % p.a. Assets Cash and cash equivalents Due from other banks Investments in securities Repurchase receivables Loans and advances to customers Brokerage receivables 31 December 2023 31 December 2022 656 648 392 204 0,0 10,6 9,8 11,5 30,1 24,7 1,0 2,0 8,6 0,0 28,2 22,9 F-131 F-132 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT    32 Fair Value of Financial Instruments (Continued) 33 Presentation of Financial Instruments by Measurement Category Weighted average discount rates used in determining fair value as of 31 December 2023 and 2022 are disclosed below (Continued): Liabilities Due to banks Customer accounts Debt securities in issue Other borrowed funds Brokerage payables Subordinated debt Lease liabilities 31 December 2023 31 December 2022 12,3 4,3 - 7,9 23,5 12,0 9,9 12,1 3,6 10,3 7,9 21,8 12,9 10,4 Discount rates used in determining fair value of investments in securities, debt securities in issue, other borrowed funds and subordinated debt represent a weighted average yield as of reporting date . A bond's yield to maturity rises or falls depending on its market value and how many payments remain to be made . For the purposes of measurement, IFRS 9 “Financial Instruments” classifies financial assets into the following categories: (a) financial assets at FVTPL; (b) financial assets at FVOCI and (c) financial assets at AC. Financial assets at FVTPL have two sub-categories: (i) assets measured at FVTPL mandatorily, and (ii) assets designated as such upon initial recognition . The following table provides a reconciliation of classes of financial assets with these measurement categories as of 31 December 2023: In millions of RR AC FVTPL FVOCI Total Cash and cash equivalents - Cash on hand 78 905 - Cash balances with the CBRF (other than mandatory reserve deposits) - Placements with other banks and non-bank credit organizations Mandatory cash balances with the CBRF Due from other banks Loans and advances to customers Financial derivatives Investments in securities Repurchase receivables Brokerage receivables Other financial assets - Settlement of operations with plastic cards receivable - Restricted assets - Insurance's financial assets - Trade receivables - Broker commissions and settle- ment with exchange receivable - Other receivables 71 283 573 966 3 189 5 312 972 115 - 120 136 845 42 345 29 126 6 604 2 967 3 977 4 815 5 068 - - - - - 297 2 983 6 411 - - - - - - - - - - - - - - - 78 905 71 283 573 966 3 189 5 312 972 412 2 983 206 376 332 923 - - - - - - - - 845 42 345 29 126 6 604 2 967 3 977 4 815 5 068 TOTAL FINANCIAL ASSETS 1 920 653 9 691 206 376 2 136 720 F-133 F-134 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 33 Presentation of Financial Instruments by Measurement Category (Continued) The following table provides a reconciliation of classes of financial assets with these measurement categories as of 31 December 2022: 34 Related Party Transactions Parties are generally considered to be related if the parties are under common control or one party has the ability to control the other party or can exercise significant influence over the other party in making financial or operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form . In millions of RR AC FVTPL FVOCI Total The outstanding balances with related parties were as follows: Cash and cash equivalents - Cash on hand 56 895 - Cash balances with the CBRF (other than mandatory reserve deposits) - Placements with other banks and non-bank credit organizations Mandatory cash balances with the CBRF Due from other banks Loans and advances to customers Financial derivatives Guarantee deposits with payment systems Investments in securities Brokerage receivables Other financial assets - Settlement of operations with plastic cards receivable - Restricted assets - Insurance's financial assets - Trade receivables - Broker commissions and settlement with exchange receivable - Other receivables 106 693 347 973 1 690 450 605 872 - 6 121 283 26 747 - 22 014 5 703 1 405 3 899 784 3 414 - - - - - 583 1 020 - 4 627 - - - - - - - - - - - - - - - - 56 895 106 693 347 973 1 690 450 606 455 1 020 6 199 892 325 802 - - - - - - - - 26 747 - 22 014 5 703 1 405 3 899 784 3 414 TOTAL FINANCIAL ASSETS 1 304 828 6 230 199 892 1 510 950 As of 31 December 2023 and 2022 all of the Group’s financial liabilities except derivatives were carried at amortised cost. In millions of RR ASSETS Cash and cash equivalents Loans and advances to customers (average interest rate: 3 .4-8% p .a . (31 December 2022: 1 .7-3 .9% p .a .)): - Gross carrying amount - Credit loss allowance Other financial assets TOTAL ASSETS LIABILITIES Due to banks Customer accounts, including brokerage ac- counts (average interest rate: 4 .0-14 .1% p .a . (31 December 2022: 5 .4-6 .8% p .a .)) Other non-financial liabilities TOTAL LIABILITIES EQUITY Share-based payment reserve - Management long-term incentive program TOTAL EQUITY 31 December 2023 31 December 2022 Key management personnel Associates and other related parties Key management personnel Associates and other related parties - 710 718 (8) - 710 - 12 596 1 517 14 113 1 906 1 906 - - - - 113 113 - 49 - 49 - - - 849 884 (35) - 849 - 9 289 2 787 12 076 2 431 2 431 186 - - - 106 292 20 4 - 24 - - F-135 F-136 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT   34 Related Party Transactions (Continued) The income and expense items with related parties were as follows: In millions of RR Interest income calculated using the effective interest rate method Other similar income Interest expense calculated using effective interest rate method Net gains/(losses) from foreign exchange trans- lation Net losses from financial assets at FVTPL Credit loss allowance for loans and advances to customers 2023 2022 Key management personnel Associates and other related parties Key management personnel Associates and other related parties 148 - (357) - - 27 13 58 (3) 127 - (1 057) 40 - (126) - - - 48 15 - (720) (2 861) - - Administrative and other operating expenses (5 121) (7) (7 428) Key management compensation is presented below: In millions of RR Short-term benefits: - Salaries - Short-term bonuses - Other related compensation - Social tax Long-term benefits: - Management long-term incentive program - Key employees retention plan Total 2023 2022 2 414 1 251 84 566 806 806 5 121 2 545 1 017 40 517 3 297 3 297 7 428 Management long-term incentive program. On 31 March 2016 the Group introduced a MLTIP as both a long-term incentive and a retention tool for the management of the Group . Total number of GDRs granted to the management is 21,929 thousand as at 31 December 2023 (31 December 2022: 21,533) . Participants of the program receive the vested parts of their grants provided that they remain employed by the Group throughout the vesting period . Participants are not entitled to the dividends before the vesting date . Participants leaving the Group lose their right for the unvested parts of the grants . The fair value of the awards as at grant dates, each year during 2016-2022, is determined on the basis of market quotes of GDRs as at those dates . Weighted-average fair value of the awards in 2022 was USD 3 .2 per 1 GDR . In 2022, the grants introduced during 2016-2020 have been fully vested . The fair value of the awards granted in 2023 is determined on the basis of market quotes of GDRs in the Moscow Exchange as at those dates . Weighted-average fair value of the awards in 2023 was RR 3,006 per 1 GDR . Each grant provided in 2021 and 2022 is vested over 5 years . The delivery dates as of which the GDRs are allowed to be sold by the partici- pants correspond to the vesting dates, each subsequent 31 May or 30 June . The only grant provided in 2023 is vested over 3 years . The delivery dates as of which the GDRs are allowed to be sold by the participants correspond to the vesting dates, each subsequent 31 May . The following table discloses the changes in the numbers of GDRs attributable to the MLTIP: In thousands At 31 December 2021 Granted Vested Forfeited At 31 December 2022 Granted Vested Forfeited At 31 December 2023 Number of GDRs attributable to the MLTIP 7 019 4 293 (1 733) (2 533) 7 046 396 (1 197) (839) 5 406 35 Material Accounting Policy Information Basis of preparation. These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law Cap .113 . The consolidated financial statements have been prepared under the historical cost convention, as modified by the initial recognition of financial instruments based on fair value, and by revaluation of financial instruments categorised at fair value through profit or loss (“FVT- PL”) and at fair value through other comprehensive income (“FVOCI”) . The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Refer to Note 36. Management prepared these consolidated financial statements on a going concern basis. Consolidated financial statements. Subsidiaries are those investees, including structured entities, that the Group controls because the Group (i) has power to direct relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of investor’s returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing wheth- er the Group has power over another entity . For a right to be substantive, the holder must have practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made . The Group may have power over an investee even when it holds less than majority of voting power in an investee . In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee . Protective rights of other investors, such as those that relate to fundamental changes of investee’s activities or apply only in exceptional circumstances, do not prevent the Group from controlling an investee . F-137 F-138 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT  35 Material Accounting Policy Information (Continued) Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases . The acquisition method of accounting is used to account for the acquisition of subsidiaries other than those acquired from parties under com- mon control. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest . The Group measures non-controlling interest that represents present ownership interest and entitles the holder to a proportionate share of net assets in the event of liquidation on a transaction by transaction basis, either at: (a) fair value, or (b) the non-controlling interest's proportionate share of net assets of the acquiree . Non-controlling interests that are not present ownership interests are measured at fair value . Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration transferred for the acquiree, the amount of non-controlling interest in the acquiree and fair value of an interest in the acquiree held immediately before the acquisition date . Any negative amount (“negative goodwill”) is recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all liabilities and contingent liabilities assumed, and reviews appropriateness of their measurement . The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed, including fair value of assets or liabilities from contingent consideration arrangements, but excludes acquisition related costs such as advisory, legal, valuation and similar professional services . Transaction costs incurred for issuing equity instruments are deduct- ed from equity; transaction costs incurred for issuing debt are deducted from its carrying amount and all other transaction costs associated with the acquisition are expensed . Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered . The Company and all of its subsidiaries use uniform accounting policies consistent with the Group’s policies . Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests which are not owned, directly or indirectly, by the Group . Non-controlling interest forms a separate component of the Group’s equity . When the Group acquires a dormant com- pany with no business operations holding an asset and this asset is the main reason of acquisition of the company such transaction is treated as an asset acquisition . No goodwill is recognized as a result of such acquisition . Purchases and sales of non-controlling interests. The Group applies the economic entity model to account for transactions with owners of non-controlling interest. Any difference between the purchase consideration and the carrying amount of non-controlling interest acquired is recorded as a capital transaction directly in equity. The Group recognises the difference between sales consideration and carry- ing amount of non-controlling interest sold as a capital transaction in the consolidated statement of changes in equity . Associates. Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompa- nying a shareholding of between 20 and 50 percent of the voting rights . Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The carrying amount of associates includes goodwill identified on acquisition less accumulated credit losses, if any . Dividends received from associates reduce the carrying value of the investment in associates . Other post-acquisition changes in Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the consolidated profit or loss for the year as share of result of associates, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii); all other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit or loss within the share of result of associates. However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate . Otherwise the Group continue to recognise further losses if it has commitments to fund the associate’s operations . Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred . The Group applies the impairment requirements in IFRS 9 to long-term loans and similar long-term interest that in substance form part of the investment in associate before reducing the carrying value of the investment by a share of a loss of the investee that exceeds the amount of the Group’s interest in the ordinary shares . Disposals of subsidiaries, associates or joint ventures. When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addi- tion, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly disposed of the related assets or liabilities . This may mean that amounts previously recognised in other comprehensive income are recycled to profit or loss. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss, where appropriate. Financial instruments – key measurement terms. Depending on their classification financial instruments are carried at fair value or amortised cost as described below . Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market partic- ipants at the measurement date . The best evidence of fair value is price in an active market . An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability and the quantity held by the entity . This is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price. The price within the bid-ask spread which management considers to be the most representative of fair value for quoted financial assets and liabilities is the weighted average price of a trading day (WAP) . WAP calculation takes into account transactions made during main and ad- ditional trading session (for securities admitted to additional trading session may differ from the weighted average price of the main trading session). A portfolio of financial derivatives or other financial assets and liabilities that are not traded in an active market is measured at the fair value of a group of financial assets and financial liabilities on the basis of the price that would be received to sell a net long position (an asset) for a particular risk exposure or paid to transfer a net short position (a liability) for a particular risk exposure in an orderly transaction between market participants at the measurement date . This is applicable for assets carried at fair value on a recurring basis if the Group: (a) manages the group of financial assets and financial liabilities on the basis of the entity’s net exposure to a particular market risk (or risks) or to the credit risk of a particular counterparty in accordance with the entity’s documented risk management or investment strategy; (b) it provides information on that basis about the group of assets and liabilities to the entity’s key management personnel; and (c) the market risks, including duration of the entity’s exposure to a particular market risk (or risks) arising from the financial assets and financial liabilities is substantially the same. Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of finan- cial data of the investees, are used to measure fair value of certain financial instruments for which external market pricing information is not available . Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (un- adjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuation techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three meas- urements are valuations not based on solely observable market data (that is, the measurement requires significant unobservable inputs). Transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period . Refer to Note 32 . Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place . Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs . Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition less any principal repay- ments, plus accrued interest, and for financial assets less any allowance for expected credit losses. Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to maturity amount using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees F-139 F-140 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) deferred at origination, if any), are not presented separately and are included in the carrying values of related items in the consolidated statement of financial position. The effective interest method is a method of allocating interest income or interest expense over the relevant period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the gross carrying amount of a financial asset or to the amortised cost of a financial liability. The calculation does not consider expected credit losses and includes transaction costs, premiums or discounts and fees and points paid or secured that are integral to the effective interest rate such as origination fees. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or discount, which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates . Such premiums or discounts are amortised over the whole expected life of the instrument . The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate . For assets that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted for credit risk, i.e. it is calculated based on the expected cash flows on initial recognition instead of contractual payments. Financial instruments – initial recognition. Financial instruments at FVTPL are initially recorded at fair value. All other financial instru- ments are initially recorded at fair value adjusted for transaction costs that are incremental and directly attributable to the acquisition or the issue of the financial asset or financial liability. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observa- ble current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets . After the initial recognition, an ECL allowance is recognised for financial assets measured at AC and investments in debt instruments meas- ured at FVOCI, resulting in an immediate accounting loss . All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (“regu- lar way” purchases and sales) are recorded at trade date, which is the date on which the Group commits to deliver a financial asset. The Group uses discounted cash flow valuation techniques to determine the fair value of currency swaps, foreign exchange forwards that are not traded in an active market. Differences may arise between the fair value at initial recognition, which is considered to be the transac- tion price, and the amount determined at initial recognition using a valuation technique. The differences are immediately recognised in profit or loss if the valuation uses only level 1 or level 2 inputs . Financial assets – classification and subsequent measurement – measurement categories. The Group classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The classification and subsequent measurement of debt financial assets depends on: • the Group’s business model for managing the related assets portfolio and • the cash flow characteristics of the asset . Financial assets – classification and subsequent measurement – business model. The business model reflects how the Group manages the assets in order to generate cash flows – whether the Group’s objective is: 1) solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”); or 2) 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”); 3) if neither of i) and ii) is applicable, the financial assets are classified as part of “other” business model and measured at FVTPL. Business model is determined for a group of assets (on a portfolio level) based on all relevant evidence about the activities that the Group undertakes to achieve the objective set out for the portfolio available at the date of the assessment . Factors considered by the Group in de- termining the business model include the purpose and composition of a portfolio, past experience on how the cash flows for the respective assets were collected, how risks are assessed and managed, how the assets’ performance is assessed and how managers are compensat- ed . Based on the analysis performed the Group included the following financial instruments in the business model “hold to collect contractual cash flows” since the Group manages these financial instruments solely to collect contractual cash flows: cash and cash equivalents, man- datory cash balances with the CBRF, due from other banks, loans and advances to customers, guarantee deposits with payment systems, brokerage receivables and other financial assets. Debt securities are analysed individually, based on the purpose of the acquisition . Currently, the Group possesses “hold to collect con- tractual cash flows” and “hold to collect contractual cash flows and sell” and “other” business models for its debt securities portfolio. The Group included financial derivatives in the business model “other”. Financial assets – classification and subsequent measurement – cash flow characteristics. Where the business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and sell, the Group assesses whether the cash flows repre- sent solely payments of principal and interest (the SPPI test) . Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are consistent with the SPPI feature. In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement, i.e. interest includes only consideration for credit risk, time value of money, other basic lending risks and profit margin. Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending arrangement, the financial asset is classified and measured at FVTPL. The SPPI assessment is performed on initial recognition of an asset and it is not subsequently reassessed. However, if the contractual terms of the asset are modified, the Group considers if the contractual cash flows continue to be consistent with a basic lending arrangement in assessing whether the modification is substantial. See below for “Financial assets – modifi- cation” . Financial assets – reclassification. Financial instruments are reclassified only when the business model for managing the portfolio as a whole changes. The reclassification has a prospective effect and takes place from the beginning of the first reporting period that follows after the change in the business model . The Group did not change its business model during the current and comparative period and did not make any reclassifications. Financial assets – impairment – credit loss allowance for ECL. The Group assesses on a forward-looking basis the ECL for debt instruments (including loans) measured at AC and FVOCI and for the exposure arising from loan commitments and financial guarantee con- tracts . The Group measures ECL and recognises credit loss allowance at each reporting date . The measurement of ECL reflects: 1) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes; 2) the time value of money; and 3) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions . Debt instruments measured at AC are presented in the consolidated statement of financial position net of the allowance for ECL. For loan commitments (where those components can be separated from the loan) and financial guarantees, a separate provision for ECL is recognised as a financial liability in the consolidated statement of financial position. For debt instruments at FVOCI, changes in amortised cost, net of allowance for ECL, are recognised in profit or loss and other changes in carrying value are recognised in OCI as gains less loss- es on debt instruments at FVOCI . F-141 F-142 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) The Group applies a “three stage” model for impairment in accordance with IFRS 9, based on changes in credit quality since initial recogni- tion: 1) A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter (“12 months ECL”) . 2) If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (“lifetime ECL”) . Refer to Note 26 for a description of how the Group determines when a SICR has occurred . 3) If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a lifetime ECL. Refer to Note 26 for a description of how the Group defines credit-impaired assets and default. For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always measured at a lifetime ECL. Note 26 provides information about inputs, assumptions and estimation techniques used in measuring ECL, including an explanation of how the Group incorporates forward-looking information in the ECL models . As an exception, for certain financial instruments, such as credit cards, that may include both a loan and an undrawn commitment compo- nent, the Group measures expected credit losses over the period that the Group is exposed to credit risk, that is, until the expected credit losses would be mitigated by credit risk management actions, even if that period extends beyond the maximum contractual period . This is because contractual ability to demand repayment and cancel the undrawn commitment does not limit the exposure to credit losses to such contractual notice period . Refer to Note 3 for critical judgements applied by the Group in determining the period for measuring ECL . Financial assets – write-off. Uncollectible assets are partly written-off against the related сredit loss allowance usually after one year since they become overdue . The amount of uncollectible part of loan is estimated on a loan portfolio basis taking into account defaulted loans recovery statistics. The Group writes-off financial assets that are mostly still subject to enforcement activity, however, there is no reasonable expectation of recovery . If credit-impaired loans are sold to third parties, the Group remeasures the amount of ECL prior to sale taking into consideration the expected sales proceeds so that there are no gains or losses on derecognition upon sale . Repayments of written-off loans. Recovery of amounts previously written-off as uncollectible is credited directly to the credit loss allowance line in the consolidated statement of profit or loss and other comprehensive income. Cash flows related to repayments of writ- ten-off loans are separately presented within recoveries from written-off loan in the consolidated statement of cash flows.. Financial assets – derecognition. The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expired or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement while (i) also transferring substantially all risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all risks and rewards of ownership, but not retaining control . Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose restrictions on the sale . Financial assets – modification. The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset, or a significant exten- sion of a loan when the borrower is not in financial difficulties. If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the origi- nal financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred . The Group also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners. In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are sub- stantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets) and recognises a modification gain or loss through a credit loss allow- ance. Usually modifications of stage 3 loans do not result in derecognition since they do not change the expected cash flows substantially and represent the way of collection of past due balances . Financial liabilities – measurement categories. Financial liabilities are classified as subsequently measured at AC, except for finan- cial liabilities at FVTPL: this classification is applied to derivatives, financial liabilities held for trading (e.g. short positions in securities). Financial liabilities – derecognition. Financial liabilities are derecognised when they are extinguished (i .e . when the obligation speci- fied in the contract is discharged, cancelled or expires). An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial mod- ifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% differ- ent from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered . If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability. Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up meth- od, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners . Cash and cash equivalents. Cash and cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and cash equivalents include all interbank place- ments and reverse sale and repurchase agreements with other banks with original maturities of less than three months . Funds restricted for a period of more than three months on origination are excluded from cash and cash equivalents . Cash and cash equivalents are carried at amortised cost as: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not desig- nated at FVTPL . The payments or receipts presented in the consolidated statement of cash flows represent transfers of cash and cash equivalents by the Group, including amounts charged or credited to current accounts of the Group’s counterparties held with the Group, such as loan interest income or principal collected by charging the customer’s current account or interest payments or disbursement of loans credited to the customer’s current account, which represents cash or cash equivalent from the customer’s perspective . Brokerage receivables and brokerage payables. Brokerage receivables represent placements under reverse sale and repurchase agreements made by the Bank with central counterparty to provide customers of the Bank who have brokerage accounts with the Bank with possibility to acquire securities in case those customers have insufficient own funds to acquire those securities. Brokerage payables represent funds attracted under sale and repurchase agreements made by the Bank with central counterparty to provide customers of the Bank who have brokerage accounts with the Bank with the possibility to borrow securities and make a short sale . Brokerage receivables and payables are short-term and accounted at amortised cost . Mandatory cash balances with the CBRF. Mandatory cash balances with the CBRF are carried at amortised cost and represent non-interest bearing mandatory reserve deposits which are not available to finance the Group’s day to day operations and hence are not considered as part of cash and cash equivalents for the purposes of the consolidated statement of cash flows. Due from other banks. Amounts due from other banks are recorded when the Group advances money to counterparty banks with no intention of trading the resulting unquoted non-derivative receivable due on fixed or determinable dates. Amounts due from other banks are F-143 F-144 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) carried at amortised cost as: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL . Certain bank deposits are subject to the “bail-in” legislation that permits or requires a national resolving authority to impose losses on holders in particular circumstances . Where the bail-in clauses are included in the contractual terms of the instrument and would apply even if legislation subsequently changes, the SPPI test is not met and such instruments are mandatorily measured at FVTPL . The Group did not identify such balances due from other banks . Where such clauses in the contract merely acknowledge the existence of the legislation and do not create any additional rights or obligation for the Group, the SPPI criterion is met and the respective instruments are carried at AC . Investments in debt securities. Based on the business model and the contractual cash flow characteristics, the Group classifies invest- ments in debt securities as carried at AC, FVOCI or FVTPL . Debt securities are carried at AC if they are held for collection of contractual cash flows and where those cash flows represent SPPI, and if they are not voluntarily designated at FVTPL in order to significantly reduce an accounting mismatch. Debt securities are carried at FVOCI if they are held for collection of contractual cash flows and for selling, where those cash flows represent SPPI, and if they are not designated at FVTPL. Interest income from these assets is calculated using the effective interest method and rec- ognised in profit or loss. An impairment allowance estimated using the expected credit loss model is recognised in profit or loss for the year. All other changes in the carrying value are recognised in OCI except for foreign exchange translation gains/(losses) and interest income cal- culated using the effective interest rate method. When the debt security is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from OCI to profit or loss. Investments in debt securities are carried at FVTPL if they do not meet the criteria for AC or FVOCI . The Group may also irrevocably des- ignate investments in debt securities at FVTPL on initial recognition if applying this option significantly reduces an accounting mismatch between financial assets and liabilities being recognised or measured on different accounting bases. Precious metals. The Group holds precious metals for the purpose of generating a profit from fluctuations in price. Precious metals are measured at fair value with gains or losses recognised in profit or loss. Loans and advances to customers. Loans and advances to customers are recorded when the Group advances money to purchase or originate a loan due from a customer . Based on the business model and the cash flow characteristics, the Group classifies loans and advances to customers into one of the follow- ing measurement categories: 1) AC: loans that are held for collection of contractual cash flows and those cash flows represent SPPI and loans that are not voluntarily designated at FVTPL; 2) FVTPL: loans that do not meet the criteria for AC or FVOCI are measured at FVTPL (mandatory FVTPL) . Impairment allowances of the loans measured at AC are determined based on the forward-looking ECL model . Note 26 provides informa- tion about inputs, assumptions and estimation techniques used in measuring ECL, including an explanation of how the Group incorporates forward-looking information in the ECL models . Credit related commitments. The Group issues commitments to provide loans . Commitments to provide loans are initially recognised at their fair value, which is normally evidenced by the amount of fees received . Such loan commitment fees are deferred and included in the carrying value of the loan on initial recognition . At the end of each reporting period, the commitments are measured at the amount of the loss allowance determined based on the expected credit loss model . For loan commitments (where those components can be separated from the loan), a separate provision for ECL is recognised as a liability in the consolidated statement of financial position. Performance guarantees. Performance guarantees are contracts that provide compensation if another party fails to perform a con- tractual obligation. Such contracts transfer non-financial performance risk in addition to credit risk. Performance guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received . This amount is amortised on a straight line basis over the life of the contract . At the end of each reporting period, the performance guarantee contracts are measured at the higher of (i) the unamortised balance of the amount at initial recognition and (ii) the best estimate of expenditure required to settle the contract at the end of each reporting period, discounted to present value . Where the Group has the contractual right to revert to its customer for recovering amounts paid to settle the performance guarantee contracts, such amounts will be recognised as an asset upon transfer of the loss com- pensation to the guarantee’s beneficiary. These fees are recognised within fee and commission income in profit or loss. Sale and repurchase agreements and lending of securities. Sale and repurchase agreements (“repo agreements”), which effec- tively provide a lender’s return to the counterparty, are treated as secured financing transactions. Securities sold under such sale and repur- chase agreements are not derecognised. The securities are not reclassified in the consolidated statement of financial position unless the transferee has the right by contract or custom to sell or repledge the securities, in which case they are reclassified as repurchase receiva- bles . The corresponding liability is presented within amounts due to other banks or other borrowed funds . Securities purchased under agreements to resell (“reverse repo agreements”), which effectively provide a lender’s return to the Group, are recorded as due from other banks or loans and advances to customers, as appropriate. The difference between the sale and repurchase price, adjusted by interest and dividend income collected by the counterparty, is treated as interest income and accrued over the life of reverse repo agreements using the effective interest method. Securities lent to counterparties for a fixed fee are retained in the consolidated financial statements in their original category in the consol- idated statement of financial position unless the counterparty has the right by contract or custom to sell or repledge the securities, in which case they are reclassified and presented separately. Securities borrowed for a fixed fee are not recorded in the consolidated financial statements, unless these are sold to third parties, in which case the purchase and sale are recorded in profit or loss for the year within gains less losses arising from trading securities. The obligation to return the securities is recorded at fair value in other borrowed funds . Based on classification of securities sold under the sale and repurchase agreements, the Group classifies repurchase receivables into one of the following measurement categories: AC, FVOCI, FVTPL . Guarantee deposits with payment systems. Amounts of guarantee deposits with payment systems are recorded when the Group advances money to payment systems with no intention of trading the resulting unquoted non-derivative receivable . Amounts of guaran- tee deposits with payment systems are carried at amortised cost . Tangible fixed assets. Tangible fixed assets are stated at cost less accumulated depreciation and provision for impairment, where required . Costs of minor repairs and day-to-day maintenance are expensed when incurred . Costs of replacing major parts or components of premises and equipment items are capitalised, and the replaced part is retired . At the end of each reporting period management assesses whether there is any indication of impairment of tangible fixed assets. If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use. The carrying amount is reduced to the recoverable amount and the impairment loss is recognised in profit or loss for the year . An impairment loss recognised for an asset in prior years is reversed if there has been a change in the estimates used to determine the asset’s value in use or fair value less costs to sell . Gains and losses on disposals determined by comparing proceeds with carrying amount are recognised in profit or loss for the year (within other operating income or expenses) . F-145 F-146 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) Depreciation. Depreciation of each item of tangible fixed assets is calculated using the straight-line method to allocate its cost to its residual value over its estimated useful life as follows: The lease term includes any non-cancellable and optional extension periods which have been assessed as reasonably certain to be exercised . The lease payments are discounted using the interest rate implicit in the lease . If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions . Building Equipment Vehicles Leasehold improvements Others (safes, fireproof cabinets) Useful lives in years 99 3 - 10 5 -7 Shorter of their useful economic life and the term of the underlying lease 20 The residual value of an asset is an estimated amount that the Group would currently obtain from disposal of the asset less the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life . The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period . Intangible assets. Intangible assets are stated at cost less accumulated amortization . The Group’s intangible assets other than insur- ance license have definite useful life and include capitalised acquired computer software and internally developed software. Develop- ment costs that are directly associated with identifiable and unique software controlled by the Group are recorded as intangible assets if the inflow of incremental economic benefits exceeding costs is probable. Capitalised costs include staff costs of the software develop- ment team and an appropriate portion of relevant overheads . Computer software licenses acquired are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. All other costs associated with computer software, e .g . its maintenance, are expensed when incurred . Capitalised computer software is amortised on a straight line basis over expected useful lives of 1 to 10 years . At each reporting date management assesses whether there is any indication of impairment of intangible assets with an indefinite useful life . If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use . The carrying amount is reduced to the recoverable amount and the impairment loss is recognised in profit or loss. An impairment loss recognised for an asset in prior years is reversed if there has been a change in the estimates used to determine the asset’s value in use or fair value less costs to sell. Intangible assets including goodwill with indefinite useful life are tested annually for impairment. Accounting for leases by the Group as a lessee. Leases, where the Group is the lessee, are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group . Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period . The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis . Assets and liabilities arising from a lease are initially measured on a present value basis . Lease liabilities include the net present value of the following lease payments: • fixed payments (including in-substance fixed payments), less any lease incentives receivable under cancellable and non-cancellable Right-of-use assets are measured at cost comprising the following: • • • • the amount of the initial measurement of lease liability, any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and dismantling and restoration costs. As an exception to the above, the Group accounts for short-term leases and leases of low value assets by recognising the lease payments as an operating expense on a straight line basis . Short-term leases are leases with a lease term of 12 months or less, and the lease does not provide for the possibility of repurchase of the asset at the end of the contract . Low value assets are assets with a value of RR 300,000 or less at the date of conclusion of the contract . Right-of-use assets are included in tangible fixed assets, lease liabilities are included in other non-financial liabilities in the consolidated statement of financial position. Depreciation of right-of-use assets are recognised in administrative and other operating expenses in the consolidated statement of profit or loss and other comprehensive income. Finance cost is recognised within other similar expense line of the consolidated statement of profit or loss and other comprehensive income. Repayment of principal of lease liabilities is disclosed within cash flows from financing activities of the consolidated statement of cash flows. Adoption of IFRS 17 "Insurance Contracts". The Group issues insurance contracts without direct participation features . Unit of account. The Group manages insurance contracts issued by product lines within an operating segment, where each product line includes contracts that are subject to similar risks . All insurance contracts within a product line represent a portfolio of contracts . Each portfolio is further disaggregated into groups of contracts that are issued within a calendar year (annual cohorts) and are (i) con- tracts that are onerous at initial recognition; (ii) contracts that at initial recognition have no significant possibility of becoming onerous subsequently; or (iii) a group of remaining contracts . These groups represent the level of aggregation at which insurance contracts are initially recognized and measured . Such groups are not subsequently reconsidered . For each portfolio of contracts, the Group determines the appropriate level at which reasonable and supportable information is available to assess whether these contracts are onerous at initial recognition and whether non-onerous contracts have a significant possibility of becoming onerous. This level of granularity determines sets of contracts. The Group uses significant judgement to determine at what level of granularity the Group has reasonable and supportable information that is sufficient to conclude that all contracts within a set are sufficiently homogeneous and will be allocated to the same group without performing an individual contract assessment. For contracts measured using the PAA, the Group assumes that no such contracts are onerous at initial recognition, unless facts and circumstances indicate otherwise . If facts and circumstances indicate that some contracts are onerous, an additional assessment is performed to distinguish onerous contracts from non-onerous ones . For non-onerous contracts, the Group assesses the likelihood of changes in the applicable facts and circumstances in the subsequent periods in determining whether contracts have a significant possi- bility of becoming onerous . The Group applies IFRS 17 to all components of the contract . The Group does not have any contracts that require further separation or combination of insurance contracts . operating leases; Recognition of insurance contracts. Groups of insurance contracts issued are initially recognized from the earliest of the following: • variable lease payments that are based on an index or a rate and that are initially measured using the index or rate as at the commence- • the beginning of the coverage period; ment date; • amounts expected to be payable by the lessee under residual value guarantees; • the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and • payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option . • the date when the first payment from the policyholder is due or actually received, if there is no due date; and • when the Group determines that a group of contracts becomes onerous . All issued insurance contracts of the Group are accounted under the PAA approach . F-147 F-148 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 35 Material Accounting Policy Information (Continued) Accounting for contract modification and derecognition. An insurance contract is derecognized when it is: • extinguished (i .e . when the obligation specified in the insurance contract expires or is discharged or cancelled); or • the contract is modified and certain additional criteria are met . When an insurance contract is modified by the Group as a result of an agreement with the counterparties or due to a change in regulations, the Group treats changes in cash flows caused by the modification as changes in estimates of the fulfilment cash flows (FCF), unless the conditions for the derecognition of the original contract are met . The Group derecognizes the original contract and recognizes the modified contract as a new contract if any of the following conditions are present: • if the modified terms had been included at contract inception and the Group would have concluded that the modified contract: i . is not in scope of IFRS 17; ii . results in different separable components; iii . results in a different contract boundary; or iv . belongs to a different group of contracts; • the original contract represents an insurance contract with direct participation features, but the modified contract no longer meets that definition, or vice versa; or • the original contract was accounted for under the PAA, but the modification means that the contract no longer meets the eligibility crite- ria for that approach . Initial and subsequent measurement of groups of insurance and reinsurance contracts Fulfilment cash flows within contract boundary. The FCF are the current estimates of the future cash flows within the contract boundary of a group of contracts that the Group expects to collect from premiums and pay out for claims, benefits and expenses, adjust- ed to reflect the timing and the uncertainty of those amounts. The estimates of future cash flows: • are based on a probability weighted mean of the full range of possible outcomes; • are determined from the perspective of the Group, provided the estimates are consistent with observable market prices for market variables; and • reflect conditions existing at the measurement date. The Group adjusts the estimated present value of future cash flow including the compensation that an insurer requires for bearing the uncertainty arising from non-financial risks (Section "Risk adjustment for non-financial risk"). An explicit risk adjustment for non-financial risk is estimated separately from the other estimates. For contracts measured under the PAA, unless the contracts are onerous, the explicit risk adjustment for non-financial risk is only estimated for the measurement of the liability for incurred claims (LIC) . The estimates of future cash flows are adjusted using the current discount rates to reflect the time value of money and the financial risks related to those cash flows, to the extent not included in the estimates of cash flows. The discount rates reflect the characteristics of the cash flows arising from the groups of insurance contracts, including timing, currency and liquidity of cash flows. The determination of the discount rate that reflects the characteristics of the cash flows and liquidity characteristics of the insurance contracts requires significant judgement and estimation. In the estimation of future cash flows at the date of initial recognition, the Group includes all expected cash inflows and outflows under insurance contracts. The subsequent cash flow assessment consists of cash flows of the remaining part of the insurance coverage and cash flows of the incurred claims. Contract boundary. The Group uses the concept of contract boundary to determine what cash flows should be considered in the measurement of groups of insurance contracts . This assessment is reviewed every reporting period . Cash flows are within the boundary of an insurance contract if they arise from the rights and obligations that exist during the period in which the policyholder is obligated to pay premiums or the Group has a substantive obligation to provide the policyholder with insurance coverage or other services . A substantive obligation ends when: • the Group has the practical ability to reprice the risks of the particular policyholder or change the level of benefits so that the price fully reflects those risks; or • both of the following criteria are satisfied: (i) the Group has the practical ability to reprice the contract or a portfolio of contracts so that the price fully reflects the reassessed risk of that portfolio; and (ii) the pricing of premiums related to coverage to the date when risks are reassessed does not reflect the risks related to periods be- yond the reassessment date . In assessing the practical ability to reprice, risks transferred from the policyholder to the Group, such as insurance risk and financial risk, are considered; other risks, such as lapse or surrender and expense risk, are not included . Riders, representing add-on provisions to a basic insurance policy that provide additional benefits to the policyholder at additional cost, that are issued together with the main insurance contracts form part of a single insurance contract with all the cash flows within its boundary . Cash flows outside the insurance contracts boundary relate to future insurance contracts and are recognized when those contracts meet the recognition criteria . Insurance acquisition costs. The Group determines insurance acquisition cash flows as a cash flows arising from the costs of selling, underwriting and starting a group of insurance contracts (issued or expected to be issued) that are directly attributable to the portfolio of insurance contracts to which the group belongs . Acquisition cash flows are attributed to the group of contracts on a systematic and rational basis. Insurance acquisition cash flows directly attributable to a group of insurance contracts: • to that group; and • to groups that will include insurance contracts that are expected to arise from renewals of the insurance contracts in that group . Acquisition cash flows that are not directly attributable to the group of contracts but are directly attributable to a portfolio of contracts, are attributed to groups of contracts that are already included or are expected to be included in the portfolio . Risk adjustment for non-financial risk. The risk adjustment for non-financial risk is applied to the present value of the estimated future cash flows and reflects the compensation the Group requires for bearing the uncertainty about the amount and timing of the cash flows from non-financial risk as the Group fulfils insurance contracts. Initial and subsequent measurement - Groups of contracts measured under the PAA. The Group uses the PAA for measuring contracts with coverage of one year or less, or when the Group reasonably expects that such a simplification would produce a measurement of the LRC that would not differ materially from the one that would be produced by applying the GMM . For insurance contracts issued, insurance acquisition cash flows are deferred and recognized over the coverage period of contracts in a group . For reinsurance contract held brokerage remuneration is recognized during the period of insurance coverage of the contracts that are the part of the group . For insurance contracts issued, on initial recognition, the Group measures the LRC at the amount of premiums received, less any acquisi- tion cash flows paid and any amounts arising from the derecognition of the prepaid acquisition cash flows asset. F-149 F-150 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) For reinsurance contracts held, on initial recognition, the Group measures the remaining coverage at the amount of ceding premiums paid . The carrying amount of a group of insurance contracts issued at the end of each reporting period is the sum of: • the LRC; and • the LIC, comprising the FCF related to past service allocated to the group at the reporting date . For insurance contracts issued, at each of the subsequent reporting dates, the LRC is: • increased for premiums received in the period; • decreased for insurance acquisition cash flows paid in the period; • decreased for the amounts of expected premiums received recognized as insurance revenue for the services provided in the period; • increased for the amortization of insurance acquisition cash flows in the period recognized as insurance service expenses; and • increased for the adjustment of the financing component (if any exists). If a group of contracts becomes onerous, the Group increases the carrying amount of the LRC to the amounts of the FCF determined under the GMM with the amount of such an increase recognized in insurance service expenses . Subsequently, the Group amortizes the amount of the loss component within the LRC by decreasing insurance service expenses . The loss component amortization is based on the passage of time over the remaining coverage period of contracts within an onerous group . If facts and circumstances indicate that the expected profitability of the onerous group during the remaining coverage has changed, then the Group increasing the FCF to the level, that will be gained by applying the GMM while the amount of such increase is recognized in Insurance service expenses, and a loss component is formed in relation to the amount of the recognized loss . For contracts measured under the PAA, the LIC is measured similarly to the LIC’s measurement under the GMM. Future cash flows are adjusted for the time value of money since insurance contracts mainly issued by the Group and measured under the PAA typically have a settlement period of over one year . Due to other banks. Amounts due to banks are recorded when money or other assets are advanced to the Group by counterparty banks . Non-derivative liability is carried at amortised cost . Customer accounts. Customer accounts are non-derivative liabilities to corporate entities and individuals and are carried at amor- tised cost . Debt securities in issue. Debt securities are stated at amortised cost . If the Group purchases its own debt securities in issue, they are removed from the consolidated statement of financial position and the difference between the carrying amount of the liability and the consideration paid is included in a separate line of consolidated statement of profit or loss and other comprehensive income as gains/ losses from repurchase of debt securities in issue . Subordinated debt. Subordinated debt can only be paid in the event of a liquidation after the claims of other higher priority creditors have been met . Subordinated debt is carried at AC . Other borrowed funds. Group’s securitisation activities involve home equity loans and are predominantly transacted using SPEs . In a typical securitisation, the SPE purchases assets financed by proceeds received from the SPE’s issuance of debt certificates and other notes of indebtedness . These assets and liabilities are recorded on the balance sheet of the SPE and consolidated on the Group’s consolidated statement of financial position, unless the accounting requirements for sale were met. At the current reporting date the Group has not made a secu- ritisation transaction that resulted in derecognition of transferred assets . The Group assessed that its secured loan portfolio meets the criteria for held to collect business model and determined that the past securitisation transactions have not resulted in derecognition of the assets and therefore are not inconsistent with the held to collect business model . Financial derivatives. Financial derivatives represented by forwards and foreign currency swaps are carried at their fair value . Derivatives are carried as assets when fair value is positive and as liabilities when fair value is negative . Changes in the fair value of financial derivatives are recorded in profit or loss within Net (losses)/gains from derivatives revaluation. The Group does not apply hedge accounting . Income taxes. Income taxes have been provided for in the consolidated financial statements in accordance with Russian legislation and Cyprus legislation enacted or substantively enacted by the end of the reporting period . The income tax charge comprises current tax and deferred tax and is recognised in profit or loss for the year except if it is recognised in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or directly in equity . Current tax is the amount expected to be paid to or recovered from the taxation authorities in respect of taxable profits or losses for the current and prior periods. Taxable profits or losses are based on estimates if the consolidated financial statements are authorised prior to filing relevant tax returns. Taxes other than on income are recorded within administrative and other operating expenses. Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of the Group. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that future taxable profit will be available against which the deduc- tions can be utilised . Deferred income tax is not recognised on post-acquisition retained earnings and other post acquisition movements in reserves of subsidiaries, where the Group controls the subsidiary’s dividend policy and it is probable that the difference will not reverse through dividends or otherwise in the foreseeable future . Windfall tax. On 4 August 2023 the President of the Russian Federation approved Federal Law #414-FZ on Windfall tax which becomes effective on 1 January 2024. Under the provisions of the Federal Law, the Group is a taxpayer of the windfall tax. Windfall tax falls in scope of IAS 12 Income taxes, is recognized as a current income tax and is subject to respective income tax accounting policy as de- scribed above . Windfall tax is a one-off tax. Windfall tax expense and payable are recognized in the consolidated financial statements from the date when the Federal Law was substantively enacted . Windfall tax not settled is recognized as a payable . Windfall tax expense and payable are measured in the amount expected to be paid by the Group to the budget, using the tax rates and tax laws enacted or substantively enacted by the end of the reporting period . When calculating the expected windfall tax rate, the Group considered whether it has paid security deposit . The Group fully paid windfall tax at 31 December 2023 . Uncertain tax positions. The Group's uncertain tax positions are assessed by management at the end of each reporting period . Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities . The assessment is based on the interpretation of tax laws that have been enacted or substantively enacted at the end of reporting period and any known court or other rulings on such issues . Liabilities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of the expendi- ture required to settle the obligations at the end of the reporting period . Provisions for liabilities and charges. Provisions for liabilities and charges are non-financial liabilities of uncertain timing or amount . They are accrued when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made . 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 F-151 F-152 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) that triggers the obligation to pay the levy . If a levy is paid before the obligating event, it is recognised as a prepayment . Other liabilities. Other liabilities are accrued when the counterparty has performed its obligations under the contract and are carried at amortised cost . Share capital. Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds and debited against share premium . Share premium. Share premium is the difference between the fair value of the consideration receivable for the issue of shares and the nominal value of the shares . The share premium account can only be resorted to for limited purposes, which do not include the distribu- tion of dividends, and is otherwise subject to the provisions of the Cyprus Companies Law on reduction of share capital . Treasury shares. Where the Company or its subsidiaries purchase the Company’s equity instruments, the consideration paid, in- cluding any directly attributable incremental external costs, net of income taxes, is deducted from equity attributable to the owners of the Company until the equity instruments are reissued, disposed of or cancelled . Where such shares are subsequently disposed of or reissued, any consideration received is included in equity . The value of GDRs transferred out of treasury shares for the purposes of the long-term incentive program for management of the Group are determined based on the weighted average cost . Dividends. Dividends are recorded in equity in the period in which they are declared . Any dividends declared after the end of the reporting period and before the consolidated financial statements are authorised for issue, are disclosed in the Note 38. The accounting reports of the Group entities are the basis for profit distribution and other appropriations. The separate financial statements of the Com- pany prepared in accordance with IFRS as adopted by the EU and in accordance with Cyprus Companies Law is the basis of available reserves for distribution . Dividend distribution to the Company's shareholders is recognised as a liability in the Company's consolidated financial statements in the year in which the dividends are appropriately authorised and are no longer at the discretion of the Company. More specifically, interim dividends are recognised as a liability in the period in which these are authorised by the Board of directors and in the case of final dividends, these are recognised in the period in which these are approved by the Company's shareholders . Interest income and expense recognition. Interest income and expense calculated using effective interest method are recorded for all debt instruments, other than those at FVTPL, on an accrual basis using the effective interest method. This method defers, as part of interest income or expense, all fees paid or received between the parties to the contract that are an integral part of the effective inter- est rate, transaction costs and all other premiums or discounts . Fees integral to the effective interest rate include origination fees (e.g. interchange fee on credit card loans) received or paid by the entity relating to the creation or acquisition of a financial asset or issuance of a financial liability. Commitment fees (e .g . annual fee on credit card loans) received by the Group to originate loans at market interest rates are integral to the effective interest rate if it is probable that the Group will enter into a specific lending arrangement and does not expect to sell the result- ing loan shortly after origination. The Group does not designate loan commitments as financial liabilities at FVTPL. For financial assets that are originated or purchased credit-impaired, the effective interest rate is the rate that discounts the expected cash flows (including the initial expected credit losses) to the fair value on initial recognition (normally represented by the purchase price). As a result, the effective interest is credit-adjusted. Other income and expense recognition. All other income is generally recorded on an accrual basis by reference to completion of the specific performance obligation assessed on the basis of measurement of the Group’s progress towards complete satisfaction of that performance obligation . All other expenses are generally recorded on an accrual basis by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided . Other similar income. Other similar income represents interest income recorded for debt instruments measured at fair value through profit or loss (“FVTPL”) and is recognised on an accrual basis using nominal interest rate. Other similar expense. Other similar expense represents finance cost related to the discounted lease payments using the incremental borrowing rate . Fee and commission income and expense. Fee and commission income is recognised over time as the services are rendered, when the customer simultaneously receives and consumes the benefits provided by the Group’s performance. Such income includes SMS fee, part of SME services commission, part of brokerage fee and income from MVNO services which represents fixed monthly payments. Variable fees are recognised only to the extent that management determines that it is highly probable that a significant reversal will not occur . Other fee and commission income is recognised at a point in time when the Group satisfies its performance obligation, usually upon execution of the underlying transaction . The amount of fee or commission received or receivable represents the transaction price for the services identified as distinct performance obligations. Such income includes acquiring commission, part of SME services commission, brokerage fee and income from MVNO services, which represents payments for each transaction, fee for selling credit protection, inter- change fee, cash withdrawal fee, foreign currency exchange transactions fee, fee for money transfers and other . All fee and commission expenses are generally recorded on an accrual basis by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided . Customer loyalty program. The group operates loyalty programs where retail clients accumulate points, which entitle them to reimbursement of purchases made with credit and debit cards. A financial liability is recognised for the amount of fair value of points expected to be redeemed until they are actually redeemed or expire with the corresponding entries to interest income calculated using the effective interest rate method or commission expenses depending on whether the points were accumulated by credit card clients or debit card clients respectively . Insurance service result from insurance contracts issued Insurance revenue. As the Group provides services under the group of insurance contracts, it reduces the LRC and recognizes insurance revenue . The amount of insurance revenue recognized in the reporting period depicts the transfer of promised services at an amount that reflects the portion of consideration the Group expects to be entitled to in exchange for those services. For groups of insurance contracts measured under the PAA, the Group recognizes insurance revenue based on the passage of time over the coverage period of a group of contracts, unless the expected pattern of incurring the insurance service expenses differs significantly from the passage of time, in which case the latter should be used for expected premium receipts allocation to insurance revenue . Insurance service expenses include the following: Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for: • incurred claims and benefits; (а) financial assets that have become credit-impaired (Stage 3), for which interest revenue is calculated by applying the effective inter- est rate to their AC (net of the ECL provision); and (б) financial assets that are purchased or originated credit-impaired, for which the original credit-adjusted effective interest rate is applied to the AC . Customer acquisition expense recognition. Customer acquisition expenses are represented by the costs incurred by the Group on services related to attraction of the client, mailing of advertising materials, processing of responses etc . Those costs, which can be di- rectly attributed to the acquisition of a particular client, are included in the effective interest rate of the originated financial instruments; the remaining costs are expensed on the basis of the actual services provided . • other incurred directly attributable insurance service expenses; • amortizations of insurance acquisition cash flows; • changes that relate to past service (i .e . changes in the FCF relating to the LIC); • changes that relate to future service (i .e . losses/reversals on onerous groups of contracts from changes in the loss components); and • impairment of assets on insurance acquisition cash flows. For contracts measured under the PAA, amortisation of acquisition cash flows is recognized based on the passage of time. F-153 F-154 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT35 Material Accounting Policy Information (Continued) Insurance finance income or expenses. Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from: • the effect of the time value of money and changes in the time value of money; and • the effect of financial risk and changes in financial risk. For contracts measured under the PAA, the main amounts within insurance finance income or expenses are: • interest accreted on the LIC; and • the effect of changes in interest rates and other financial assumptions. The Group disaggregates changes in the risk adjustment for non-financial risk between insurance service result and insurance finance income or expenses: 1) financial gains or losses related to the unwinding of discount rates at the initial recognition of a group of contracts are recognized in profit or loss; 2) the difference between the amount allocated to each period’s profit or loss based on this systematic allocation and the total insurance finance income or expenses of the period is recognized in OCI. Foreign currency translation and operations. The functional currency of the Company and most of its significant subsidiaries is the Russian Ruble (“RR”), which is the currency of the primary economic environment in which each entity operates . Monetary assets and liabilities are translated into each entity’s functional currency at the official exchange rate of the CBRF at the end of the respective reporting period . Foreign exchange gains and losses resulting from the translation of monetary assets and liabilities into each entity’s functional currency at year-end official exchange rates of the CBRF are recognised in profit or loss for the year as Net gains/(losses) from foreign exchange translation . Foreign exchange gains and losses resulting from the settlement of transactions with foreign currencies are recognised in profit or loss for the year as Net (losses)/gains from operations with foreign currencies (except for clients’ foreign currency exchange transactions fee, which is recognised in profit or loss as fee and commission income). Translation at year-end rates does not apply to non-monetary items that are measured at historical cost . At 31 December 2023 the rate of exchange used for translating foreign currency balances was USD 1 = RR 89 .6883 (31 December 2022: USD 1 = RR 70 .3375), and the average rate of exchange was USD 1 = RR 85 .2466 for the year ended 31 December 2023 (the year ended 31 December 2022: USD 1 = RR 68 .5494) . Offsetting. Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must be legally enforceable in all of the following circumstances: (i) in the normal course of business, (ii) the event of default and (iii) the event of insolvency or bankruptcy . Earnings per share. Earnings per share are determined by dividing the profit or loss attributable to owners of the Company by the weighted average number of participating shares outstanding during the reporting year, excluding treasury shares . For the purpose of diluted earnings per share calculation the Group considers dilutive effects of shares granted under employee share option plans. Staff costs and related contributions. Wages, salaries, contributions to the Russian Federation Social Fund, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group. The Group has no legal or constructive obligation to make pension or similar benefit payments beyond the payments to the statutory defined contribution scheme. Segment reporting. Segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker . Segments whose revenue, result or assets are ten percent or more of all the segments are reported separately . Equity-settled share-based payment. The expense is recognized over the vesting period and is measured at the fair value of the award determined at the grant date, which is amortized over the service (vesting) period . The fair value of the equity award is estimated only once at the grant date and is trued up to the estimated number of instruments that are expected to vest . Dividends declared during the vesting period accrue and are paid to the employee together with the sale proceeds of the vested shares upon a liquidity event . Expected dividends (including those expected during the vesting period) are therefore included in the determination of fair value of the share-based payment . Cash-settled share-based program. The expense is recognized gradually over the vesting period and is measured at the fair value of the liability at each end of the reporting period. The fair value of the liability reflects all vesting conditions, except for the requirement of the employee to stay in service which is reflected through the amortization schedule. The liability is measured, initially and at the end of each reporting period until settled, at fair value, taking into account the terms and conditions on which the instruments were granted and the extent to which the employees have rendered service to date . Amendments of the consolidated financial statements after issue. The Board of directors of the Company has the power to amend the consolidated financial statements after issue. Changes in presentation. In 2023 the Group decided to show precious metals as a separate line item in the consolidated statement of financial position outside of the other non-financial assets. The effect of changes described above on the consolidated statement of financial position for the year ended 31 December 2022 is as follows: In millions of RR Precious metals Other non-financial assets As originally presented* - 25 485 Adoption of IFRS 17 - (1 295) Reclassification As reclassified 9 982 (9 982) 9 982 14 208 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 Janu- ary 2023 . In 2023 the Group decided to reclassify liabilities under MLTIP from Other financial liabilities to Other non-financial liabilities in the con- solidated statement of financial position. The management considers that such improved disclosure provides users of these consolidat- ed financial statements with more relevant information. The effect of reclassification on amounts described above on the consolidated statement of financial position for the year ended 31 December 2022 is as follows: In millions of RR Other financial liabilities Other non-financial liabilities As originally presented* 96 229 28 248 Adoption of IFRS 17 (1 451) (665) Reclassification As reclassified (4 905) 4 905 89 873 32 488 * See Note 36 for details about the restatements for the changes in accounting policies as a result of the adoption of IFRS 17 on 1 Janu- ary 2023 . F-155 F-156 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT36 Adoption of New or Revised Standards and Interpretations The Group has adopted on 1 January 2023 IFRS 17 "Insurance Contracts" (issued on 18 May 2017 and effective for annual periods beginning on or after 1 January 2021, the effective date subsequently modified to 1 January 2023 by the Amendments to IFRS 17) and related amendments retrospectively, with a transition date of 1 January 2022, which led to changes in the accounting policy for the recognition and valuation of insurance assets and liabilities with consequent restatements in the comparative financial periods. Changes in accounting policies related to the application of IFRS 17 were made using a full retrospective approach to the transition . The Group has determined that reasonable and supportable information was available for all contracts in force at the transition date . In addition, for insurance contracts originated by the Group that are eligible for the PAA, the Group has concluded that only current and prospective infor- mation was required to reflect circumstances at the transition date, which made the full retrospective application practicable. Accordingly, the Group has recognized and measured each group of insurance contracts and each asset for insurance acquisition cash flows paid at this category as if IFRS 17 had always been applied (except for conducting a retrospective impairment test), derecognized any existing balances that would not exist had IFRS 17 always applied; and recognized any resulting net difference in equity. The impact of the application of IFRS 17 on the Group's consolidated statement of financial position is presented below: In millions of RR ASSETS Cash and cash equivalents Mandatory cash balances with the CBRF Due from other banks Investments in securities Repurchase receivables Loans and advances to customers Financial derivatives Guarantee deposits with payment systems Insurance contract assets Brokerage receivables Current income tax assets Tangible fixed assets and right-of-use assets Intangible assets As originally presented As adopted 31 December 2021 1 January 2022 316 476 316 476 8 589 542 215 311 5 826 606 308 5 963 15 171 - 49 138 3 524 13 964 15 069 8 589 542 215 311 5 826 606 308 5 963 15 171 14 49 138 3 524 13 964 15 069 In millions of RR Other financial assets Other non-financial assets TOTAL ASSETS LIABILITIES Due to banks Customer accounts Debt securities in issue Other borrowed funds Financial derivatives Brokerage payables Current income tax liabilities Deferred income tax liabilities Subordinated debt Insurance contract liabilities Other financial liabilities Other non-financial liabilities TOTAL LIABILITIES EQUITY Share capital Share premium Treasury shares Share-based payment reserve Retained earnings Revaluation reserve for investments in debt securities Other reserves Equity attributable to shareholders of the Company Non-controlling interest TOTAL EQUITY TOTAL LIABILITIES AND EQUITY As originally presented As adopted 31 December 2021 1 January 2022 52 969 8 895 52 744 8 078 1 317 745 1 316 717 11 313 945 723 21 680 3 806 90 9 634 125 1 860 59 657 10 365 69 302 8 099 11 313 945 723 21 680 3 806 90 9 634 125 1 860 59 657 9 785 68 946 7 817 1 141 654 1 140 436 230 26 998 (2 567) 4 745 159 491 (13 131) - 175 766 325 176 091 1 317 745 230 26 998 (2 567) 4 745 159 668 (13 131) 13 175 956 325 176 281 1 316 717 F-157 F-158 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 36 Adoption of New or Revised Standards and Interpretations (Continued) In millions of RR ASSETS Cash and cash equivalents Mandatory cash balances with the CBRF Due from other banks Investments in securities Precious metals Loans and advances to customers Financial derivatives Guarantee deposits with payment systems Insurance contract assets Brokerage receivables Current income tax assets Deferred income tax assets Tangible fixed assets and right-of-use assets Intangible assets Other financial assets Other non-financial assets TOTAL ASSETS As originally presented As adopted 31 December 2022 1 January 2023 511 561 511 561 1 690 450 325 802 - 606 455 1 020 6 - 26 747 109 1 946 34 890 24 097 39 217 25 485 1 690 450 325 802 9 982 606 455 1 020 6 693 26 747 109 1 946 34 890 24 097 37 219 14 208 1 599 475 1 596 875 In millions of RR LIABILITIES Due to banks Customer accounts Debt securities in issue Other borrowed funds Financial derivatives Brokerage payables Current income tax liabilities Deferred income tax liabilities Subordinated debt Insurance contract liabilities Other financial liabilities Other non-financial liabilities TOTAL LIABILITIES EQUITY Share capital Share premium Treasury shares Share-based payment reserve Retained earnings Revaluation reserve for investments in debt securities Translation reserve Other reserves Equity attributable to shareholders of the Company Non-controlling interest TOTAL EQUITY As originally presented As adopted 31 December 2022 1 January 2023 2 060 2 060 1 191 986 1 191 986 301 2 199 217 8 258 2 437 7 45 913 15 844 96 229 28 248 301 2 199 217 8 258 2 437 7 45 913 15 223 89 873 32 488 1 393 699 1 390 962 230 26 998 (1 885) 2 731 180 729 (3 214) 243 - 205 832 (56) 205 776 230 26 998 (1 885) 2 731 180 864 (3 214) 243 2 205 969 (56) 205 913 TOTAL LIABILITIES AND EQUITY 1 599 475 1 596 875 F-159 F-160 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 36 Adoption of New or Revised Standards and Interpretations (Continued) The impact of the application of IFRS 17 on the Group's consolidated statement of profit or loss and other comprehensive Income is presented below: In millions of RR Profit for the period As originally presented As adopted 2022 20 802 2022 20 760 As originally presented As adopted Other comprehensive (loss)/income In millions of RR Interest income calculated using the effective interest rate method Other similar income Interest expense calculated using the effective interest rate method Other similar expense Expenses on deposit insurance programme Net interest income Credit loss allowance for loans and advances to customers and credit related commitments Credit loss allowance for debt securities at FVOCI Total credit loss allowance for debt financial instruments Net interest income after сredit loss allowance Fee and commission income Fee and commission expense Customer acquisition expense Net losses from derivatives revaluation Net gains from foreign exchange translation Net losses from operations with foreign currencies Net losses from precious metals revaluation Net losses from disposals of investments in securities Net losses from financial assets at FVTPL Insurance revenue Insurance service expense Administrative and other operating expenses Other provisions charge and impairment loss Net gains from repurchase of subordinated debt Other operating income Profit before tax Income tax expense 2022 205 603 149 (56 772) (1 007) (4 076) 143 897 (65 431) (2 071) (67 502) 76 395 125 083 (40 973) (43 478) (8 156) 5 335 (380) (3 785) (130) (7 185) 33 793 (10 454) (95 803) (6 608) 4 564 1 608 29 826 (9 024) 2022 205 603 149 (56 772) (1 007) (4 076) 143 897 (65 431) (2 071) (67 502) 76 395 118 023 (40 973) (41 712) (8 156) 5 335 (380) (3 785) (130) (7 185) 41 311 (14 147) (93 717) (6 608) 4 564 935 29 770 (9 010) Items that may be reclassified to profit or loss Debt securities at FVOCI and Repurchase receivables: - Net losses arising during the period, net of tax - Reversal of revaluation reserve, net of tax - Net losses reclassified to profit or loss upon disposal, net of tax Currency translation differences Other reserves Other comprehensive income for the period, net of tax Total comprehensive income for the period Profit/(loss) is attributable to: - Shareholders of the Company - Non-controlling interest Total comprehensive income/(loss) is attributable to: - Shareholders of the Company - Non-controlling interest Earnings per share for profit attributable to the Shareholders of the Company, basic (expressed in RR per share) Earnings per share for profit attributable to the Shareholders of the Company, diluted (expressed in RR per share) (2 081) 11 894 104 243 - 10 160 30 962 21 024 (222) 31 184 (222) 105,81 102,55 (2 081) 11 894 104 243 (11) 10 149 30 909 20 982 (222) 31 131 (222) 105,59 102,35 The following amended standards became effective from 1 January 2023, but did not have any material impact on the Group: International Tax Reform – Pillar Two Model Rules – Narrow-scope amendments to IAS 12 (issued on 23 May 2023 and effective for annual periods beginning on or after 1 January 2023) . Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Esti- mates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting poli- cies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023). The amendments to IAS 12 specify how to account for deferred tax on transactions such as leases and decommissioning obligations . F-161 F-162 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORT 36 Adoption of New or Revised Standards and Interpretations (Continued) Amendments to the IFRS for SMEs Accounting Standard (issued on 29 September 2023 and effective for annual periods beginning on or after 1 January 2023) . 37 New Accounting Pronouncements Certain new amendments have been issued that are mandatory for the annual periods beginning on or after 1 January 2024, which the Group has not early adopted and which are not expected to have any material impact on the Group when adopted: • Sale or Contribution 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 a date to be determined by the IASB). • Classification of Liabilities as Current or Non-current Date (issued on 23 January 2020), Classification of Liabilities as Current or Non-current - Deferral of Effective Date (issued on 15 July 2020) and Non-current Liabilities with Covenants (issued on 31 October 2022) – Amendments to IAS 1 (effective for annual periods beginning on or after 1 January 2024). • Disclosures: Supplier Finance Arrangements - Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments (issued on 25 May 2023 and effective for annual periods beginning on or after 1 January 2024)*. • Lease Liability in a Sale and Leaseback Amendments to IFRS 16 – Amendments to IFRS 16 (issued on 22 September 2022 and effective for annual periods beginning on or after 1 January 2024) . The amendments apply to sale and leaseback transactions where the transfer of the asset qualifies as a ‘sale’ under IFRS 15 and the lease payments include variable lease payments that do not depend on an index or rate . • The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability – Amendments to IAS 21 Foreign Currencies – (issued on 15 August 2023 and effective for annual periods beginning on or after 1 January 2025)*. * Denotes standards, interpretations and amendments which have not yet been endorsed by the European Union . 38 Events after the End of the Reporting Period On 15 January 2024, at an Extraordinary General Meeting, the Company’s shareholders approved the deregistering of the Company from the Register of the Registrar of Companies in Cyprus and the registering of the Company as a continuing company in the Russian Federation (redomiciliation) in the form of international public joint-stock company without being dissolved and without being re-incorporated . The vast majority of the Company's assets are located and generate revenue in Russia . Therefore, the reasons for redomiciling to Russia include, among other things, maintaining the Company's strategic focus on the Russian market, preserving the equity value for all shareholders, and ensuring execution of their rights . The full name of the Company will be “International Public Joint-Stock Company TCS Holding” (IPJSC TCS Holding). The place of residence of the Company be and is hereby changed to: Russkiy Island, Vladivostok Urban Okrug, Primorsky Krai, Russia . The par value of the Company’s shares in RR shall be equivalent to the par value of the shares of the Company in U .S . dollar (USD 0 .04) at the official exchange rate set by the Bank of Russia as of 12 December 2023 (1 USD = 90.9846 RUB). The charter capital of the Company shall consist of 199,305,492 issued ordinary shares, and the amount the charter capital of the Company shall be equal to RR 725 million . On 31 January 2024 the Company cancelled the listing of its GDRs on the Official List of the Financial Conduct Authority of the United King- dom and the GDRs’ admission to trading on the LSE’s Main Market (delisting) . On 1 March 2024, the Bank became subject of the Japan’s updated sanctions list . F-163 F-164 31 DECEMBER 2023Notes to the Consolidated Financial Statements TCS GROUP HOLDING PLCANNUAL REPORT 2023FINANCIAL REPORTSTRATEGIC REPORTMANAGEMENT REPORTtinkoff.ru 2023 

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